Define Bailment Agreement
Bailment comes from the ancient French word bailler, which means "to carry [water]" or "to deliver." It is the process of transferring temporary control of personal property to another. A bailment is different from a sale, since it transfers only custody, not ownership. Some examples include a vehicle left with valet parking or at a repair shop, or animals left in a kennel. When a "bailor" (owner) leaves his "bailment" (goods) with a "bailee" (custodian), the complete transaction is a "bailment."
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Creating a Bailment
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The custodian must have physical control with the intent to maintain possession of an item to create a bailment. All involved parties decide on the terms and expectations. The law was created to protect both the bailor and the bailee. So, when items are left in a storage facility beyond the paid period, for example, the law protects the bailee, who can dispose of the items according to the bailment contract. However, if the storage facility owner fails to protect the items, the bailment protects the bailor who can sue for liability. If the facility owner did not have keys, however, a court could rule that the the owner did not have either "physical control" or "intent to posses."
Types of Bailment
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There are three types of bailment: service bailment for the benefit of the bailor and bailee, constructive bailment for the benefit of just the bailor and gratuitous bailment for the benefit of the bailee. Usually, bailment is an agreement through paid service such as paid storage. That way, the custodian has incentive to protect the goods. Constructive bailment is when laws surrounding abandoned property require the bailee to continue to care for the items. An example might be when a hotel guest checks out, but forgets a suitcase in the hotel room. Gratuitous bailment means there is no payment for the service such as free attended cloak or locker rooms or even borrowing a library book.
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Factors
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Delivery, acceptance and consideration are required for the existence of a bailment. By law, actual possession of property must transfer to the bailee or the bailor must give the bailee the means of taking custody. You cannot unwittingly become a bailee: knowledge and acceptance of all terms is essential to the contract's success. Finally, consideration, or the exchange of something of value, is required. For bailment contracts, the actual loss of property is counted as a good consideration without additional payment required.
Duty of Care
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The bailee must, at minimum, ensure the safety of the property. If not, he is liable for damages. If a bailee is paid, the standard of care is higher. The two parties may decide not to hold the bailee liable for damage and use of the property. If the bailment benefits only the bailee, the bailee has a duty of extraordinary care. If the bailment benefits bailor and bailee, the bailee owes a duty of ordinary care. Finally, if the bailment benefits only the bailor, the bailee owes only a duty of slight care and can only be liable for gross negligence.
Rights and Liabilities
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The bailment contract details the rights and responsibilities of the bailor and bailee including the duty of care. Depending on the contract, the bailee must either return the property to the bailor, or account for its whereabouts. If return of the property becomes impossible, and it is not the bailee's fault, the bailee is not held liable for lack of delivery. In any other situation, however, the bailee is responsible for unjustifiable failure to produce property.
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References
- Photo Credit Keys with key chain image by Sujit Mahapatra from Fotolia.com
