Bailment
Relationship created by the transfer of personal property by one called the bailor to the bailee for the accomplishment of a certain purpose. There is no transfer of title, the bailee possesses the property and is obligated to return or dispose of the property only in accordance with the terms of the bailment
Elements of Bailment
- Possession of the Property- Bailee must possess, which entails physical custody with intent to exercise control
- Consent- Bailee must consent; mere custody is insufficient
- Knowledge of Presence- Bailee must have actual or constructive knowledge of article’s presence
Consignment
A consignee is authorized to sell the goods in the ordinary course of trade. Therefore, can be described as a special bailment for the purpose of sale
Bailment vs. Sale
- Risk of Loss- A sale involves the transfer of title whereas a bailment only transfers possession- he who has title has risk of loss
- Test- when the identical thing delivered is to be returned in the same or altered form- bailment. When there is no obligation to restore the specific article and receiver is at liberty to return another thing of equal value or money and title has changed- sale
- Sale on Approval and “Sale or Return”- Sale on approval is a bailment with the bailee having an option to purchase. A sale or return is a sale with the vendee having a privilege to reinvest title in the vendor, and upon notice the vendee becomes a bailee
Bailee’s Rights in Bailed Chattel
- Possession
2. Use
Bailor’s Rights in Bailed Chattel
- Actions Against Bailee for damaged/lost due to wrongful acts
- Actions Against 3d Party
Bailee’s Duties
Duty of Care- good faith, ordinary care, great diligence, absolute liability
Duty to Redeliver upon termination of bailment
Bailment for Mutual Benefit
Bailee entitled to agreed upon or reasonable compensation
Termination of Bailment
May be terminated by agreement, upon lapse of time, by accomplishment of specified purpose, or by specific conduct of the parties
