Bailee

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Russian: Хранитель груза


Contents

Definitions

A person or party to whom goods are delivered for a purpose, such as further transportation, custody or repair, without transfer of ownership.In the ordinary bailment, the relationship is arms-length. The bailee is a receiving party of a bailment contract, where the other party is presented by a bailor. The bailment is a delivery of goods or personal property by one person (the bailor) to another (the bailee) on an express or implied contract and for a particular purpose related to the goods while in possession of the bayee, who has a duty to redeliver them to the bailor or otherwise dispose of them in accordance with the bailor’s instructions once the purpose has been accomplished. A bailment arises, for example, when a seller delivers goods to a shipping company with instructions to transport them to a buyer at a certain destination. [1]


The bailor has no control over the bailee or the handling of the bailed property. The bailee is an independent party not subservient to the bailor. The bailee is not a fiduciary and owes neither loyalty nor obedience to the bailor. It is in business for itself dealing with a customer and in many cases has interests antagonistic to those of the bailor. The parties do not contemplate that the bailee has power to bind the bailor. In brief, the bailee is a fully independent contractor; it is not an agent.[2]


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 generally not entitled to the use of the property while it's in his possession. A bailor can demand to have the property returned to him at any time[3].


Types of Bailment

  • Service agreement bailment. Bailment is usually done by agreement as a paid service, which gives the property custodian are sponsibility 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 under the control of the bailee. In addition to service agreement bailments where the bailee is paid for caring for the property, a bailment can also be involuntary.
  • Constructive bailment. A constructive bailment occurs when circumstances create an obligation for the bailee to protect the goods. With a constructive bailment, the bailment is implied by law. 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, the landlord or remaining tenants may have a duty to care for the property and return it to the abandoning tenant.
  • Gratuitous bailment. 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 himself or places it in the custody of another, such as the police, until the lawful owner can be located.


Features of Bailment

Bailee's Duty of Care. In all bailment situations, the bailee has a minimum duty of care to ensure the safety of the property. If the bailee breaches or fails to uphold that duty, he can be legally liable for damages. A bailee can also be held liable for conversion if he 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.

Abandoned Property. If a bailment agreement is set for a fixed term and the bailor fails to claim the property at the end of the term, he may be deemed to have abandoned the property. Alternatively, the voluntary bailment be converted into an involuntary bailment. However, if there's no clear term of bailment agreed upon, the bailor won't be deemed to have abandoned the property unless the bailee gives him notice that he no longer wishes to possess and protect the property.

Damages. A bailor is entitled to recover damages for lost or damaged property if he can show that the bailee failed to exercise the required degree of care and 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's grossly negligent.


References

  1. Hinkelman, E.G. Dictionary Of International Trade: Handbook Of The Global Trade Community. World Trade Press, Novato, CA, 2005.
  2. The concept of bailment generally - http://www.lawteacher.net/criminal-law/essays/the-concept-of-bailment-generally.php -= accessed 05/13/2012
  3. Bailment - http://www.scribd.com/doc/49240687/Bailment
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