In same condition What is a Bailment? Transfer of .... Duty to Return Goods!Bailee must return goods according to the agreement!If bailee is entitled to payment and not ... Bailments.ppt

What is a Bailment?

! Subject is personal property

! Involves a temporary transfer ofpossession

! Involves a temporary transfer of control

! Parties intend the goods to be returned

bailor

bailee

Transfer of Possession & Control

! Actual Bailment – Bailee acceptsand receives goods themselves.

! Constructive Bailment – Baileeaccepts a symbol of the personalproperty in lieu of property itself.

! Your car parked in a parking garage, the keysare in your pocket.

! Your car left with a valet.

! House sitting for a friend.

! A car you rented on Spring Break.

! A pen you borrow from a friend.

! A security guard on night duty at an art gallery.! Custody – temporary control under owner’s direction

! A necklace your friend loans you to wear atprom.

Which of these transfer bothPossession and Control?

Parties Must Intend Goods be Returned

! In same condition (with reasonable aging, usage, etc.)

! Example: Rental car is expected to have additional mileage.

! In improved or modified condition

! Example: repairs or cleaning

! Exceptions:

! Goods may be returned to another party designated by bailor.

! Fungible goods (one unit of goods is the same as the next):only need to return same quantity not exact same goods.

! Example: Rental truck returned to another city, with a full tank ofgas.

Termination of Bailment

! Agreed upon time is up

! Purpose has been achieved

! Parties mutually agree to end

Also

! Death, insanity or bankruptcy of one party

! Except in case of contracted time period,duties are transferred to estate.

Common Examples of Bailments

Bailments for Transport (shipping)

1. Enforce reasonable rules for conduct of business

2. Charge a reasonable rate

3. Charge demurrage (fee for vehicle when not in use)

4. Enforce a carrier’s lien (keep goods until paid)

Bailments for Hire (rentals)

Bailments for Services (repairs)

Who’s responsible for damaged good?

Bailments for Sale (consignment)

4 Characteristics of Bailments

Personal Property

Temporary Transfer of Possession

Temporary Transfer of Control

Intend goods be returned

Why do we care?

Many legal disputes arise whensomething happens to property

before it is returned.

Levels of Expected Care

! Extraordinary Care

! Bailee is strictly liable for any damage or loss

! Expected of common carriers

! Only exceptions are acts of God, war or police

! Examples: hotels, truck lines, UPS, air freight,and gratuitous bailments (bailee is solebeneficiary)

! Borrowing a friends calculator for no charge

Levels of Expected Care

! Ordinary Care

! Liable only if neglect or carelessness

! Mutual benefit to bailor and bailee: bothreceive consideration

! Example: Leave tennis racquet to berestrung for $20.

Levels of Expected Care

! Minimal Care! Bailee must not waste, ignore or destroy

property

! When bailor is sole beneficiary! Example: Care for neighbors house

plants for free

! Involuntary Bailments! Example: row boat washes ashore

! However, if valuable, must make effortto identify owner

What Care Would Be Expected?

! Library Book

! Find a wallet with $2

! Find a wallet with$200

! Leave bike at repairshop

! Furniture on amoving van

! Rental car

! Borrow your neighbor’scar

! Leave your coat at afriend’s house

! Rent a video

! Dog sit for a friend

! Blood left at a bloodbank for future personaluse

Levels of Expected Care

Minimal care:

Involuntary Bailments; Bailor Benefits

Found items, taking care of something for free

Ordinary care:

Mutual Benefit Bailments

Both parties Benefit, example: Rentals

Extraordinary care:

Common Carriers (if no waivers/disclaimers)

Gratuitous Bailments: When Bailee benefits

for example: Borrowing something

Modifications to Level of Care

! By Legislation

! Limited liability laws for airlines responsibility forluggage.

! By Contract

! Parties can determine what kind of care is required

! By Disclaimer

! Sign, label or warning reducing the duty of care.

! Bailor must be aware of disclaimer prior tobailment.

Duty to Return Goods

! Bailee must return goods according tothe agreement

! If bailee is entitled to payment and notpaid – may exercise a bailee’s lien(keep goods until payment)

! If payment is unreasonably delayed,bailee may sell property to recover fee.

Liability Issues

! Mutual Benefit Bailments! Bailor must provide goods fit for intended purpose

! Bailor must inform bailee of any defects

! Bailee cannot collect damages if they were aware of the defect

! Bailments for sole benefit of bailor! Bailor must inform bailee of any defects or dangers

! Bailee may not use bailed items unless necessary to preservethem

! Bailments for sole benefit of bailee! Bailor must inform bailee of any defects

! Bailee may use goods only as agreed.