This document summarizes the law of bailment. It defines a bailment as the transfer of personal property by the owner to another for a specific purpose. The owner is called the bailor and the person who gains possession is the bailee. There are different types of bailments including gratuitous bailments, bailments for reward, storage of goods, bailment for repair, rental of chattels, and carriage of goods. The standard of care required of the bailee depends on the type of bailment. The bailee is generally responsible for returning the goods to the bailor in the same condition, subject to normal wear and tear, and is liable for negligence that causes loss or damage to the
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Willes 721
This document summarizes the law of bailment. It defines a bailment as the transfer of personal property by the owner to another for a specific purpose. The owner is called the bailor and the person who gains possession is the bailee. There are different types of bailments including gratuitous bailments, bailments for reward, storage of goods, bailment for repair, rental of chattels, and carriage of goods. The standard of care required of the bailee depends on the type of bailment. The bailee is generally responsible for returning the goods to the bailor in the same condition, subject to normal wear and tear, and is liable for negligence that causes loss or damage to the
NATURE OF BAILMENT Three elements Delivery of goods by the bailor Possession of the goods by the bailee for a specific purpose Return of the goods to the bailor at a later time, or disposition of goods according to bailor’s wishes
SUB-BAILMENT Sub-Bailment – bailment within a bailment Sub-bailor and sub-bailee Requires special agreement between bailee and bailor or a custom or practice of the trade Sub-bailment allowed Auto repairs, carriage of goods, storage of goods Not allowed if bailor relying on special skill of bailee Terms of sub-bailment must be consistent with original agreement
BAILOR-BAILEE RELATIONSHIP Normal ingredients of a bailment contract The services to be provided by the bailee The bailee’s price and payment requirements The extent to which the bailee is liable for damages or loss The remedies of the parties for failure to perform
BAILOR-BAILEE RELATIONSHIP (Requirements) Delivery into hands of bailee (possession by bailee Constructive possession can be a problem Retention of title by bailor Bailee receives possession only, title never passes Bailee can sue for interference with property or damage to property by third parties Return of goods to bailor Same goods must be returned Fungibles – interchangeable commodities such as grain, fuel, oil, gasoline Must return same grade or quality, and same quantity
LIABILITY FOR LOSS OR DAMAGE Different standards for different forms of bailment Standard of care depends on type of bailment Onus on bailee to show standard of care required of particular bailment was met Loss not a result of bailee’s culpable negligence
LIABILITY FOR LOSS OR DAMAGE General principles Bailee must return goods Bailee must return goods in same condition No damage, normal wear and tear allowed Onus on bailee to show no negligence Only bailee can give evidence of such Must provide reasonable explanation otherwise is liable Principle of res ipsa loquitur
GRATUITOUS BAILMENT Benefit for Bailee Higher standard of care Liable for any damage caused by negligence of bailee bailors must exercise reasonable care to ensure that they are aware of defects and must inform their bailees of the existence of such defects Benefit for Both Standard of an ordinary person, how one would take care of their own goods
BAILMENT FOR REWARD Various scenarios For storage For deposit Repair shops Rental of a chattel Carriage of goods Pledge of goods for security
STORAGE OF GOODS Storage of goods Takes on many form but a bailment if: Possession and control of goods passes into hands of party offering storage facility Known as bailees for reward Safety deposit box, warehouses, grain elevators, parking lots (if parking attendant obtains keys)
WAREHOUSE STORAGE Standard – that of a skilled storekeeper To treat customer’s property as a “skilled storekeeper” would deal with its own property Protect goods from foreseeable risks Special storage facilities Must be in good operating conditions’ Refrigeration Not absolute liability Onus on bailee to show exercised a proper degree of control
WAREHOUSE STORAGE Warehouse receipt Evidence of the contract of bailment Entitles bearer to obtain goods from bailee Common law Bailee can retain goods until storage charges are paid Statute Liens allowed – based on possession May retain goods and seek order of sale Requirements of notice and sale be conducted in fair manner
PARKING LOTS Distinguish True bailment; and Rental of parking space Transfer of possession is necessary Done through transfer of keys Bailment - If parking lot accepts keys and parks car Rental of space – bailor keeps possession of keys and parks own car
EXCULPATORY CLAUSES Must provide adequate notice of such Bring to attention of bailor Simple printing on back of parking lot ticket is not enough Limitation must be forcefully brought to attention of bailor By direct reference Clearly market signs in conspicuous places
BAILMENT FOR REPAIR OR SERVICE Bailment When bailor delivers goods to repair shop Leaves goods with the proprietor Bailment for reward even if no charge for bailment separate from repair charge Bailee responsible for damage For sub-bailee’s negligence also Particular skills – duty of care attendant with the skill in the protection or handling of goods
HIRE OR RENTAL OF A CHATTEL Type of Bailment for reward Bailor delivers goods in return for monetary payment Car rental Usually in writing setting out terms, rights and duties of parties Bailee entitled to use of goods for entire rental period Bailee must not use goods for any other purpose than that for which they were intended No sub-bailment allowed
HIRE OR RENTAL OF A CHATTEL Liability If used for unintended purpose or sub-bailed Absolute liability If used properly Standard of care is that of reasonable care in operation or use of goods Not liable for ordinary wear and tear Bailor must provide in good working condition Goods are reasonable fit for the use intended Responsible for any defects know of or ought to know of If goods have inherent risk in use, bailor must warn of such
CARRIAGE OF GOODS Usually a carrier for reward Three types of carriers Gratuitous carriers Private carriers Common carriers Standard of care for liability varies with each
CARRIAGE OF GOODS Gratuitous Carrier If for benefit of bailor, bailee must use reasonable care in carriage of goods Private carrier May accept or reject goods as it sees fit If accepts Duty to take reasonable care of goods while they are in possession
CARRIAGE OF GOODS Common Carrier Normal part of business – offers to accept goods for shipment and has the facilities to do so Trucking company, railway company Statute limits common carriers liability Standard of care is high Totally in control of the carrier for time of bailment
PLEDGE OF PERSONAL PROPERTY AS SECURITY Pledge – the transfer of securities by a debtor to a creditor as security for the payment of a debt Personal property transferred to a creditor for security on a loan Bonds, share certificates, life-insurance policies Creditor becomes bailee and is responsible for property while in their possession Pawn – transfer of possessions (but not ownership) of chattels by a debtor to a creditor who is licensed to take and hold goods as security for payment of a debt Between debtor and pawnbroker Pawnbrokers are licensed in Canada
INNKEEPERS History – travelers goods were at the mercy of an innkeeper Common law very high standard of care on innkeepers Innkeeper responsible for any loss, even if not innkeepers fault, unless due to negligence of guest Must be an innkeeper by definition Offer both rooms and meals to the public
INNKEEPERS Statute Allows innkeepers to limit their amount of liability Applies when loss not due to negligence of or the willful or deliberate act of innkeeper To obtain protection must post relevant parts of act in each room (private and public)
SUMMARY Bailment created by: Delivery Possession Involves Transfer of possession and not title Gratuitous or for Reward Liability varies depending on type of bailment Governed by common law and statute