Law for Business and Personal Use© Thomson South-Western

CHAPTER 16Bailments

16-1 Bailments

16-2 Bailor and Bailee Duties

Law for Business and Personal Use© Thomson South-Western

Chapter 16Slide 2

16-1 Bailments

GOALS Discuss the ways in which bailments

are created and ended Identify common real-life bailments

Law for Business and Personal Use© Thomson South-Western

Chapter 16Slide 3

FOCUS

What is a bailment and have you been involved in one?

Law for Business and Personal Use© Thomson South-Western

Chapter 16Slide 4

HOW ARE BAILMENTS CREATED AND ENDED?

Bailment Transfer of possession and control of

personal property subject to an agreement to return the property or deliver it to a 3rd party

Delivery Acceptance Consideration

Bailor Bailee

Law for Business and Personal Use© Thomson South-Western

Chapter 16

Examples

Business Hold something as security You give someone something of yours to

sell Dispose of as you direct

Personal Have someone look after for safekeeping Lending something to someone to keep

Slide 5

Law for Business and Personal Use© Thomson South-Western

Chapter 16

HOW ARE BAILMENTS CREATED AND ENDED?

Possession1. Actual bailments

Actual or constructive delivery

2. Constructive bailments Person in possession of property holds it while

law decides who to deliver it to

Control Custody

Slide 6

Law for Business and Personal Use© Thomson South-Western

Chapter 16

Disposition of Goods Typically agreed that goods get returned to

bailor Sometimes goes to another party

Goods must be returned identical to previous state Wear and tear Modifications Fungible

No difference

Slide 7

Law for Business and Personal Use© Thomson South-Western

Chapter 16

Termination of the Bailment

Previously agreed upon time, purpose, or mutual decision to end bailment

Death, insanity, or bankruptcy Rights can be transferred to deceased’s

estate

Slide 8

Law for Business and Personal Use© Thomson South-Western

Chapter 16Slide 9

What are the three ways in which bailments are ended?

Law for Business and Personal Use© Thomson South-Western

Chapter 16Slide 10

COMMON EXAMPLES OF BAILMENTS

Bailments for transport Common carrier

Bailments for hire Rental of property

Bailments for services Repairs

Bailments for sale Consignment

Law for Business and Personal Use© Thomson South-Western

Chapter 16Slide 11

Name four common examples of bailments.

Law for Business and Personal Use© Thomson South-Western

Chapter 16Slide 12

16-2 Bailor and Bailee Duties

GOALS Describe the duties owed by the bailee

in a bailment State the bailor’s duties in a bailment

Law for Business and Personal Use© Thomson South-Western

Chapter 16Slide 13

Characteristics of bailment

The subject is tangible personal property The bailor transfers temporary possession to the bailee The bailor transfers temporary control to the bailee The goods must be returned to the bailor or to someone

the bailor specifies

FOCUS

Law for Business and Personal Use© Thomson South-Western

Chapter 16

Levels of Care

Extraordinary bailment Goods are bailed with common carriers

and hotels Extraordinary care

Generally means the bailee will be strictly liable for any damage, loss, or injury to the goods Only exception is act of war, unforeseeable

acts of nature, or acts of police

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Law for Business and Personal Use© Thomson South-Western

Chapter 16

Levels of Care

When only one party benefits from the bailment Gratuitous bailment

Ordinary care The bailee will be liable only if negligence

occurs Mutual benefit bailment

Slide 15

Law for Business and Personal Use© Thomson South-Western

Chapter 16

Levels of Care

Involuntary bailments Typically arise accidentally and without

consent of the bailee Minimal care

Only liable for harm to the bailed property if they ignore, waste, or destroy it

Slide 16

Law for Business and Personal Use© Thomson South-Western

Chapter 16Slide 17

DUTIES OWED BY THE BAILEE IN A BAILMENT

Duty to care for the property (previously mentioned)

Modification of the level of care Modification by legislation Modification by contract Modification by disclaimer

Duty to return the goods

Law for Business and Personal Use© Thomson South-Western

Chapter 16

Modification of the Level of Care

By legislation Airline industry limiting liability for luggage

By contract By disclaimer

A sign, label, or warning reducing the bailee’s duty of care

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Law for Business and Personal Use© Thomson South-Western

Chapter 16

Duty to Return the Goods

According to terms Bailee’s lien

Right of a bailee to retain possession of the bailed property until payment is made

Bailee gives property back to bailor without payment, the bailor loses the right to force the sale of the bailed property to pay the amount due

Slide 19

Law for Business and Personal Use© Thomson South-Western

Chapter 16Slide 20

Name the three levels of care owed bailed goods.

Law for Business and Personal Use© Thomson South-Western

Chapter 16Slide 21

WHAT DUTIES ARE OWED BY THE BAILOR IN A BAILMENT?

Mutual-benefit bailments Bailments for the sole benefit of bailor Bailments for the sole benefit of bailee

Law for Business and Personal Use© Thomson South-Western

Chapter 16Slide 22

Name the types of bailments in which a bailor has duties.