Bailments (Only read pages1061 to 1066. DO NOT Read

Documents of Title)

Chapter 49

Bailments• A bailment is the legal relationship that results

whenever one person (the bailor) transfers possession (but not title) of his/her personal property to another person (bailee) to return it or otherwise dispose of it, according to his/her instructions.– only exists with personal property

• To form a bailment, there must be an agreeement. Owner must make DELIVERY of property. Bailee must have clear intent to CONTROL the property, and bailee must ACCEPT it.– Delivery can be constructive, symbolic rather

than actual (i.e., keys to car)

Bailments vs. Sales & Gifts• Bailments are distinguished from a sale or gift

in that the bailee does not receive title, & at the end of the bailment term, the bailee must return or account for the property.– Bailee has absolute duty to restore possession of the

property to the bailor - can’t misdeliver or bailee will be liable for conversion. Bailee is presumed negligent if property is damaged.

– Generally, the bailee is required to return the specific property unless property is fungible (i.e.,grain), the bailee need only return goods of the same quality and quantity.

Constructive Bailments

• Involuntary bailments. Bailee comes into possession without the affirmative consent of its true owner.

• Taking or having possession of lost or mislaid property.

• Involuntary bailee owes the owner a slight duty of care and is only liable for gross negligence

Classification of Ordinary Bailments; Bailee’s Duty of Care• Gratuitous Bailments - for sole benefit of

bailor. Bailee has a duty of slight care; only liable for gross negligence.

• Bailment for the Sole Benefit of Bailee - Bailee owes a duty of great care, the utmost care. Liable for slight negligence.

• Mutual Benefit Bailments - Bailee owes a duty of ordinary care. Liable for ordinary negligence (Includes commercial bailments)

Extraordinary (Special) Bailments

• Common carriers

• Innkeepers

• Public warehousers

Limitation of Liability• Limitation of liability for negligence or breach

of contract.• Limitation must be contained in a separate

agreement, or within the bailment contract. • Liability for wrongful misconduct may not be

limited.• The ability to modify may be restricted by

statute.• Limitation must be brought to the attention of

bailor, and he must agree, or it’s unenforceable...against public policy.

Termination

• Expiration of specified term

• Purpose of bailment is accomplished

• Mutual agreement between bailor and bailee.

• Serious misuse of bailed property by bailee.

• Decision by either party if bailment is at will