Twomey, Business Law and the Regulatory Environment (14th Ed.) Chapter 22 Bailments Twomey, Business Law and the Regulatory Environment (14th Ed.)

Definitions [22-1] Bail Bail v. to entrust one’s property to another for a special purpose under an agreement Bailee n. person who accepts possession of property in trust Bailment n. the legal relationship that arises when one person delivers possession of personal property to another under an agreement, express or implied, by which the latter is under a duty to return the identical property to the former or to deliver it or dispose of it as agreed Bailor n. owner of the property, or person with physical possession of the property who turns over possession under a bailment (c) 2000 West Legal Studies Chapter 22

Bailment of Personal Property Agreement Delivery Bailor Bailee Acceptance of Delivery (c) 2000 West Legal Studies Chapter 22

Chapter 22 Summary A bailment is the relationship that exists when tangible personal property is delivered by the bailor into the possession of the bailee under an agreement, express or implied, that the identical property will be returned or delivered in accordance with the agreement. No title is transferred by a bailment. The bailee has the right of possession. When a person comes into the possession of the personal property of another without the owner’s consent, the law classifies the relationship as a constructive bailment. (c) 2000 West Legal Studies Chapter 22

Chapter 22 Summary [2] Bailments may be classified in terms of benefit—that is, for the (1) sole benefit of the bailor, (2) sole benefit of the bailee, or (3) benefit of both parties (mutual benefit bailment). Some courts state the standard of care required of a bailee in terms of the class of bailment. Thus, if the bailment is for the sole benefit of the bailor, the bailee is required to exercise only slight care and is liable for gross negligence only. When the bailment is for the sole benefit of the bailee, the bailee is liable for the slightest negligence. (c) 2000 West Legal Studies Chapter 22

Chapter 22 Summary [3] When the bailment is for the mutual benefit of the parties, as in a commercial bailment, the bailee is liable for ordinary negligence. In other states, the courts do not make the above distinctions based on the class of bailment but apply a “reasonable care under the circumstances” standard. An ordinary bailee may limit liability except for willful misconduct or where prohibited by law. (c) 2000 West Legal Studies Chapter 22

Chapter 22 Summary [4] A bailee (1) must perform the bailee’s part of the contract; (2) unless otherwise agreed, must bear the repair expenses incidental to the use of property in a bailment for hire situation; and (3) must return the identical property. The bailee has a lien on the bailed property until paid for storage or repair charges. (c) 2000 West Legal Studies Chapter 22

Chapter 22 Summary [5] In a mutual benefit bailment, the bailor is under a duty to furnish goods reasonably fit for the purposes contemplated by the parties. The bailor may be held liable for damages or injury caused by the defective condition of the bailed property. If a bailee injures a third person while driving a rented motor vehicle, the bailee is liable to the third person as though the bailee were the owner of the vehicle. (c) 2000 West Legal Studies Chapter 22