Law Ch 17 Bailment

A bailment for the sole benefit of the bailor

- MINIMAL CARE - ex: you offer to use your neighbor's lawn mower to mow his lawn while he is away

Common carrier

- an enterprise that agrees, for a fee, to transport goods for anyone who applies, provided the goods are lawful and fit for shipment. - although passengers may be transported by common carriers, only their baggage is governed by bailment law

Involuntary bailments

- arise accidentally without the consent of the bailee ex: a finder of a ring would be an involuntary bailee

Bailments for hire

- arises when the bailor, for a fee, provides personal property (car, tool, machine, etc) for use by the bailee. - under common law the bailee is required to take ordinary care of the items but most contracts are modified to make bailee strictly liable - ex: renting a car

Ordinary care

- bailee will be liable if negligent in some way

Minimal care

- bailee will only be liable for harm to the bailed property if he or she ignores, wastes, or destroys it. - for valuable property, the bailee must make a minimal effort to identify the owner

Bailments for sale

- goods may be bailed on consignment by a manufacturer or wholesaler to a retailer for sale by that retailer - bailment also created when a merchant sends goods on approval to a prospective buyer.

Fixed period

- if there is a contractual bailment for a fixed period, death or incapacity does not end the bailment. - the rights and duties of the deceased transfer to the personal representative of the deceased's estate. *death, insanity, or bankruptcy of one party can end the relation when the bailee's duties cannot be performed by another, or the bailment is one that may be ended at will (only sometimes this happens) Bankruptcy ends bailment

Mutual-benefit bailment

- in which consideration is given and received by both bailor and bailee - ORDINARY CARE - mutual-benefit bailments result from contract while gratuitous bailments do not

Modification by legislation

- laws passed to modify old rules to change the level of care

3 levels of care

- minimal - ordinary - extraordinary

Constructive bailments

- occur when a person already in possession of personal property holds it in such a manner that the law imposes upon him or her a bailee's duty to deliver it to another. ex: bank holding money in dispute between 2 litigants

Bailment specifics

- only personal property can be bailed - transaction is neither a sale nor a gift - personal property does not change ownership

Modification by disclaimer

- sign, label, or warning reducing the bailee's level of care **disclaimers only become a part of the contract when the bailor is aware of the limitation before the purchase. Otherwise it can be argued in court.

Custody

- temporary control of another's personal property but there is NO bailment. Owners retain control. ex: security guard hired to watch a painting. Not given full control

Modification by contract

- the bailor and bailee can agree to modify the level of care when negotiating the contract **bailee cannot be relieved of liability for willful or deliberate injury to the bailed property**

Fungible

- there is no difference between 1 unit and another. ex: can of 87-octane oil is the same as any other can of 87-octane oil so bailee only required to return same number of units of the goods not same exact one

Bailee's liens

- these allow the bailee to retain possession of the goods until paid. If payment is delayed unreasonably, the bailee may sell the property to recover the costs **if the bailee gives the property back to the bailor without receiving payment, the bailor loses the right to force the sale of the bailed property to pay the amount due**

Possession

- usually property is bailed by the person who has title to the goods, but property can be bailed by any person in possession. Includes owner's agent or employee, a finder, or thief.

Extraordinary care

- when goods are bailed w/ common carriers and hotels - means the bailee will be strictly liable for any damage, loss, or injury to the goods. **Only time when the bailee is not liable is when the loss is caused by an act of war, unforeseeable acts of god, or acts of police.

Gratuitous bailment

- when only one of the parties benefits from the bailment - EXTRAORDINARY CARE - if the bailee is the only party benefitted, termed a bailment for the sole benefit of the bailee - ex: you let your friend borrow your calculator

3 ways to modify the level of care

1. by legislation (laws) 2. by contract 3. by disclaimer

Bailments for transport

A common carrier has the right to do the following 1. enforce reasonable rules and regulations for the conduct of its business (ex: stating how goods must be packaged) 2. Charge an amount negotiated with the bailor or, if the carrier is regulated by the government, charge the scheduled rate. 3. Charge demurrage 4. Enforce a carrier's lien

Bailments for the sole benefit of the bailee actions

Bailee - extraordinary care Bailor - still must alert about defects or could be liable

Actual bailment

Bailees receive actual or constructive delivery of the subject matter of the bailment - actual delivery: transferring the actual thing ex: handing over computer - constructive delivery: transfer of a symbol of possession and control ex: car keys

Termination of the bailment

Bailment ends when - the time agreed upon elapses - agreed purpose achieved - parties mutually agree to end it If no termination time stated, either party may end the bailment - If the bailed property is destroyed or damaged so badly that it is not fit for the intended purpose, the bailment ends.

Most common types of bailments

Bailments for - transport - hire - services - sale

Bailments for the sole benefit of bailor actions

Bailor - failure to inform the bailee of known or reasonable discoverable defects or dangerous conditions makes the bailor liable for any possible injuries

Mutual-benefit bailments actions

Bailor - main duty is to provide goods fit for the intended purpose - bailor who fails to inform bailee of defects could be liable Bailee - bailee who has been told about or discovered a defect cannot collect damages bc they are held to have assumed the risk

Bailor vs. bailee

Bailor- party that gives up possession of the property Bailee- party who accepts possession

Control

For a bailment to arise, possession and control both necessary - ex: if you park your car in a garage but take your keys with you, there is no bailment bc you have control - ex: if you park your car in a garage and give them the keys and you get a ticket, there is a bailment

Whether or not the bailee is liable is determined by the type of bailment and the degree of care.

TRUE

Bailment

The transfer of possession and control of personal property subject to an agreement to return the property or deliver it to a 3rd party.

In trial, the burden of showing that the required level of care has been met rests with the _____________

bailee

Bailments for service

ex: bringing clothes to the dry cleaners **if the good are damaged or destroyed, but the bailee has exercised ordinary care, the bailor is liable and must pay bailee for any work done beforehand.

Demurrage

fee for use of the transportation vehicle when it is not loaded or unloaded at the time agreed

Consignment

ownership remains with the manufacturer or wholesaler (bailor) until the goods are sold

Carrier's lien

retain the goods until charges for transportation and incidental services are paid or, if necessary after an appropriate period of time, sell the goods to recover the charges