Business Law

Bailment: What It Means Under the Law

Updated by Brian Farkas, Attorney

Bailment is the process of placing personal property or goods in the temporary custody or control of another. The custodian or holder of the property, who's responsible for the safe keeping and return of the property, is know as the "bailee." The person who delivers or transfers the property to the bailee is known as the "bailor."

For a bailment to be valid, the bailee must have actual physical control of the property with the intent to possess it. The bailee is not (in most cases) entitled to the use of the property while it's in his or her possession. A bailor can demand to have the property returned to him or her at any time.

What are the types of bailment, and what liability does the bailee have for the goods?

Types of Bailment

Bailment is usually done through agreement as a paid service, which gives the property custodian a responsibility and obligation to protect the goods. Common examples of service agreement bailments are vehicles parked in a monitored parking garage, securities or bonds left with a bank, animals lodged at kennels, and goods left at a storage facility.

In addition to service agreement bailments where the bailee is paid to care for the property, a bailment can also be involuntary.

A constructive bailment occurs when circumstances create an obligation for the bailee to protect the goods. The bailment is implied by law. For instance, in the case of a tenant, roommate, or boyfriend or girlfriend abandoning property, an involuntary bailment might be created. Depending on the laws of the jurisdiction, a landlord or remaining tenants may have a duty to care for and even return property left behind by an abandoning tenant.

A bailment may also be a gratuitous bailment, for which there's no payment. A gratuitous bailment occurs when someone finds lost property and protects it or places it in the custody of another, such as the police, until the lawful owner can be located.

What the Law of Bailments Says About Abandoned Property

If a bailment agreement is set for a fixed term (for instance, one month) a bailor who fails to claim the property at the end of the term may be deemed to have abandoned the property. Alternatively, the voluntary bailment may be converted into an involuntary bailment.

However, if there's no clear term of bailment agreed upon, the bailor will not be deemed to have abandoned the property unless the bailee gives him or her notice that the bailee no longer wishes to possess and protect the property.

Bailee's Duty of Care

In all bailment situations, the bailee has a minimum duty of care to ensure the safety of the property. A bailee who breaches or fails to uphold that duty can be held legally liable for damages. A bailee can also be held liable for conversion if he or she uses the property without the bailor's permission, or doesn't return the property to the bailor upon request.

A higher standard of care is imposed upon a paid bailee. There's a lower standard of care imposed upon a bailee in a gratuitous bailment. With a bailment agreement or contract, the parties can agree to hold the bailee free from liability.

The bailee's standard of care is determined based upon the purpose of the bailment and whether it's for the benefit of the bailee alone, the bailor alone, or for the benefit of both parties.

If the bailment is for the benefit of the bailee alone, then the bailee owes a duty of extraordinary care. If the bailment is for the benefit of both the bailee and the bailor, then the bailee owes a duty of reasonable or ordinary care. Reasonable care is care that a person of ordinary prudence would exercise in the same or similar circumstances. If the bailment is a gratuitous bailment and is for the benefit of only the bailor, then the bailee owes only a duty of slight care.

Money Damages for Breaching a Bailment Agreement

A bailor is entitled to recover damages for lost or damaged property upon showing that the bailee failed to exercise the required degree of care and thus proximately caused damage or loss of the property.

If the bailee exercised the required degree of care required, then the bailor won't be entitled to damages. With a gratuitous bailment, the bailee won't be liable for damage to the property unless he or she is grossly negligent.

Questions for Your Attorney

  • What do I do if my personal property is damaged by the bailee?
  • How do I know when to trust a person or entity to be a bailee of my property?
  • How can I stop the bailee from using my personal property?
  • As a bailee, am I responsible for damage caused by an act of God, such as a tornado?

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