overview
- nature and classification of bailment
- duties of a bailee
- duties of a bailor
- termination of bailments
- special types of bailee
what is a bailment?
a delivery of goods from the bailor to the bailee on a condition, either express or implied, that when the purpose for which the goods were bailed has been fulfilled, the goods will be returned to the bailor or delivered according to the instructions
e.g.
- leaving a car at a garage for repair
- depositing items at a bank for safe custody
- hiring goods
- handing goods over to a carrier for delivery
nature and classification of bailments
the relationship of bailor and bailee gives rise to certain liabilities and duties which do not apply to licensors and licensees
it is not always easy to determine whether the relationship between the parties is that of bailor and bailee or licensor and licensee
10.30
greenwood v council of the municipality of waverley
classification of bailments
gratuitous
the deposit of goods for gratuitous safekeeping by the bailee
- e.g. handing over jewellery to a bank for safe custody at no charge
the delivery of goods to a bailee for work to be done on the goods for the bailor without reward
- e.g. a leaves his watch for b for repairs without being charged for the repair
the delivery of goods by way of gratuitous loan for use by the bailee
- e.g. a lends her car to her friend b without charge
classification of bailments
for reward
the deposit of goods for safekeeping for reward
the delivery of goods to have something done for reward
- e.g. a car is left at a garage for repair
the delivery of goods for use by the bailee for reward
- e.g. hiring of goods
the delivery of chattels to be held as security for a loan
- e.g. pleadge of pawn
duties of a gratuitous bailee
courts tend to apply the same principle to bailment for reward and gratuitous bailment: such care of the goods as was reasonable in the circumstances
what constitutes a breach of that duty will depend upon the particular circumstances and the nature of the bailment
duties of a bailee for reward
a bailee for reward has a duty to take such care of the goods as is reasonable in the circumstances (not as onerous as an insurer of the goods)
when goods are lost or damaged, the bailee has the onus of proving that it was not due to their failure to take reasonable care
- e.g. if goods are stolen from a bailee, the latter will be liable to the bailor for the loss of the goods unless the bailee can show that he or she took reasonable precautions to secure the premises against intruders
10.80
pitt son & badgery ltd v proulefco sa
liability of bailee for employees and agents
a bailee for reward is liable for their own negligence and vicariously liable for the negligence of their employees (1)
similarly, a bailee whose employee or agent sells the goods entrusted to the bailee is liable in damages to the owner of goods, unless an exemption clause in the contract of bailment precludes liability (2)
10.170 (2)
makower, mcbeath & co pty ltd v dalgety & co ltd (1)
haulage pty ltd v simsmetal pty ltd (2)
duties of a bailee for reward
a bailee’s primary duty is to redeliver the goods as the bailor directs
- if the bailee delivers the goods other than according to the bailor’s express authority (even if not negligently), the bailee will be liable for their loss
additional obligations:
- if bailee holds themselves out as being skilled to do particular work, then the bailee warrants he/she has the technical skill/ability to do that work
- where the bailee is a common carrier, more onerous rules of liability for loss or damage apply
10.110
jackson v cochrane
sub-bailments
sub-bailment: where the bailee transfer possession of the goods to a third party
third party assumes the role of a special class of bailee:
- owes to original bailor all the common law duties traditionally arising on a direct bailment of the kind in question
in an action by the goods’ owner against a sub-bailee for loss of the goods:
- sub-bailee can rely on the contract terms between the bailee and the sub-bailee if the owner has expressly/implied agreed to the bailee making a sub-bailment containing such terms
exclusion of liability
a bailee may seek to limit or exempt their liability for negligence in a contract of bailment
thomas national transport (melbourne) pty ltd v may & baker (aust) pty ltd
statutory obligations
where services are provided to a consumer
statutory guarantees protect “consumers” in respect of the quality of the work or services so provided:
- services must rendered be with due care and skill; and
- services must be reasonably fit for any particular purpose made
known by the consumer: acl, ss60-61
the obligations imposed by these acl provisions cannot be excluded (s 64(1)):
- where the services are of a kind ordinarily acquired for personal, domestic or household use or consumption
duties of a bailor
where a bailment for reward is for a fixed term, the bailor is under a duty not to interfere with the bailee’s possession of the goods until the expiry of the period of the bailment
the bailor must inform the bailee of dangers in the goods of which the bailor is aware:
- applies to both gratuitous bailment and bailment for reward
- where the bailee accepts possession of the goods after being sufficiently warned of their dangerous qualities, the bailor will not be liable for subsequent loss or damage suffered by the bailee
10.250
pivovaroff v charnabaeff
bailment and return of goods
bailment contemplates return of goods in their original or
altered form
- whether it is a bailment or a sale (transfer of property for consideration), will depend on the intention of the parties (1)
- a bailment may, depending on its terms, involve an obligation to return goods in an altered form (2)
pangallo estate lty ltd v killara no 10 pty ltd 2007 nsw sc 1528 (1)
chapman bros v verco bros & co ltd 1933 49 CLR 306 (2)
bailment and identity of goods
a bailment will not be created in the context of a sale, where the contract contemplates the immediate destruction of the identity of the goods
chapman bros v verco bros & co ltd 1933 49 CLR 306
bailment and identity of goods
general rule: if goods lose their identitym they cannot be bailed (e.g. wheat case)
exception: parties to a bailment can agree to a transformation of the goods into something else and for there to still be a bailment (1)
pangallo estate pty ltd v killara no 10 pty ltd 2007 nsw sc 1528 (1)
hire of goods
at common law
- where goods are hired for use by the hirer, the common law implies in the contract of hire a condition that the goods are reasonably fit for the particular purpose made known to the bailor/lessor for which they are being hired (1)
- since the condition of fitness for purpose is implied at common law, it can be excluded by an appropriately drafted exclusion clause
10.270
derbyshire building co pty ltd v becker (1)
hire of goods
australian consumer law
- non-excludable guarantees of undisturbed possession and conditions of correspondence with description, acceptable quality and fitness for purpose apply to contracts for the hire of (consumer) goods
ss52, 54-56
termination of bailments
- by expiry of the term
- by demand of a gratuitous bailor
- by wrongful act of the bailee
- by destruction of the subject matter
repossession of bailed goods
at common law the owner of a bailed chattel cannot use force to repossess the chattel since the bailee’s possession was not wrongful from its inception (1)
in some jurisdictions legislation has provided that limited force may be used in repossessing a chattel
10.370
toyota finance australia ltd v dennis 2002 (1)
rights against third parties
- if a third party commits a wrongful act against the chattel bailed, the bailor has the right to sue the third party in tort for damages for conversion if the bailment is a bailment at will
- a bailee is entitled to bring an action against a tortfeasor who has negligently caused damage to the bailed chattel while the chattel was in the bailee’s possession
where the bailment is for reward, the bailor’s right to
possession of the goods is suspended:
- only the bailee can sue the third party for the wrongful
interference with the goods
where the bailee wrongfully disposes of the chattel, the bailor may terminate the bailment and receive an immediate right to possession of the goods:
- enabling the bailor to sue not only the bailee but also the third party in an action for conversion
special types of bailee
at common law a bailee is under a duty to take reasonable care of the goods entrusted to their possession
in two cases, namely that of the common carrier of goods and the innkeeper:
- common law imposes a strict liability to make good any loss of the goods of the bailor
- effect is to make the common carrier or innkeeper an insurer of the goods in their possession
common carriers
special types of bailee
the person must carry on business as a carrier and must not simply be a casual carrier
if the carrier reserves the right to accept or reject the transport of goods irrespective of whether their vehicles are full or not, they are not a common carrier (1)
it is always a question of fact whether a person is a common carrier:
- the holding out of ebing a common carrier may be express or implied by a course of business or other conduct
10.400
james v commonwealth (1)
private carriers
special types of bailee
a private carrier does not hold themselves out as willing to convey the goods of any person who chooses to employ them and usually considers the terms and nature of every offer before accepting
onus is on carrier to prove that the damage was not caused through their neglect (1)
carrier liable for damages if the loss is caused through their neglect, unless the contract of carriage specifically exempts them from liability
10.410
hobbs v petersham transport co lty ltd (1)
