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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

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0% found this document useful (0 votes)
20 views30 pages

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

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Sharan Biradar
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PART 5 – SPECIAL CONTRACTUAL

RELATIONSHIPS
 Chapter 21 – The Law
of Bailment

Prepared by Douglas H. Peterson, University of


Alberta

Copyright © 2004 McGraw-Hill Ryerson Limited 1


THE LAW OF BAILMENT

 Nature of Bailment
 Types of Bailment
 Innkeepers

Copyright © 2004 McGraw-Hill Ryerson Limited 2


NATURE OF BAILMENT
 Bailment – transfer of a chattel by the owner
to another for some purpose, with the
chattel to be later returned or dealt with in
accordance with the owner's instructions
 A temporary transfer of possession of personal
property
 Car rental, repair of goods, storage of goods
 Bailor – the owner of property in a bailment
 Bailee – the person who gains possession in
a bailment
Copyright © 2004 McGraw-Hill Ryerson Limited 3
THE LAW OF BAILMENT
THE SIMPLE BAILMENT RELATIONSHIP

Obligation to Return Chattel

Transfer of Possession of Chattel


BAILOR BAILEE

Owner of Chattel Possesses Chattel for


Use, Storage,
Title to Chattel Transport, etc.
Remains in Bailor

Copyright © 2004 McGraw-Hill Ryerson Limited 4


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

Copyright © 2004 McGraw-Hill Ryerson Limited 5


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

Copyright © 2004 McGraw-Hill Ryerson Limited 6


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

Copyright © 2004 McGraw-Hill Ryerson Limited 7


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

Copyright © 2004 McGraw-Hill Ryerson Limited 8


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

Copyright © 2004 McGraw-Hill Ryerson Limited 9


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

Copyright © 2004 McGraw-Hill Ryerson Limited 10


TYPES OF BAILMENT
 Gratuitous Bailment
 Bailment for Reward
 Storage of Goods
 Warehouse Storage
 Parking Lots
 Bailment for Repair or Service
 Hire or Rental of a Chattel
 Carriage of Goods
 Pledge of Personal Property as Security
Copyright © 2004 McGraw-Hill Ryerson Limited 11
GRATUITOUS BAILMENT
 For the benefit of the bailee or the bailor, or
both
 Without monetary reward
 Liability varies with respective benefits received
by the parties to the bailment
 Unless parties have specified a standard of care
 Benefit for Bailor
 Bailee’s liability is minimal
 Depends on nature of goods

Copyright © 2004 McGraw-Hill Ryerson Limited 12


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

Copyright © 2004 McGraw-Hill Ryerson Limited 13


BAILMENT FOR REWARD
 Various scenarios
 For storage
 For deposit
 Repair shops
 Rental of a chattel
 Carriage of goods
 Pledge of goods for security

Copyright © 2004 McGraw-Hill Ryerson Limited 14


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)

Copyright © 2004 McGraw-Hill Ryerson Limited 15


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

Copyright © 2004 McGraw-Hill Ryerson Limited 16


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

Copyright © 2004 McGraw-Hill Ryerson Limited 17


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

Copyright © 2004 McGraw-Hill Ryerson Limited 18


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

Copyright © 2004 McGraw-Hill Ryerson Limited 19


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

Copyright © 2004 McGraw-Hill Ryerson Limited 20


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

Copyright © 2004 McGraw-Hill Ryerson Limited 21


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

Copyright © 2004 McGraw-Hill Ryerson Limited 22


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

Copyright © 2004 McGraw-Hill Ryerson Limited 23


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

Copyright © 2004 McGraw-Hill Ryerson Limited 24


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

Copyright © 2004 McGraw-Hill Ryerson Limited 25


CARRIAGE OF GOODS
 Often contract of carriage limits amount of
liability
 Liabilities, rights and duties of parties mainly
set forth in statute

Copyright © 2004 McGraw-Hill Ryerson Limited 26


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

Copyright © 2004 McGraw-Hill Ryerson Limited 27


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

Copyright © 2004 McGraw-Hill Ryerson Limited 28


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)

Copyright © 2004 McGraw-Hill Ryerson Limited 29


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

Copyright © 2004 McGraw-Hill Ryerson Limited 30

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