CHAPTER
Bailments
16
16-1 Bailments
16-2 Bailor and Bailee Duties
Law for Business and Personal Use
© Thomson South-Western
16-1 Bailments
GOALS
 Discuss the ways in which bailments
are created and ended
 Identify common real-life bailments
Chapter 16
Slide 2
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FOCUS
 What is a bailment and have you been
involved in one?
Chapter 16
Slide 3
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HOW ARE BAILMENTS
CREATED AND ENDED?
 Bailment
 Transfer of possession and control of
personal property subject to an agreement
to return the property or deliver it to a 3rd
party
 Delivery
 Acceptance
 Consideration
 Bailor
 Bailee
Chapter 16
Slide 4
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Examples
 Business
 Hold something as security
 You give someone something of yours to
sell
 Dispose of as you direct
 Personal
 Have someone look after for safekeeping
 Lending something to someone to keep
Chapter 16
Slide 5
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HOW ARE BAILMENTS
CREATED AND ENDED?
 Possession
1. Actual bailments
 Actual or constructive delivery
2. Constructive bailments
 Person in possession of property holds it while
law decides who to deliver it to
 Control
 Custody
Chapter 16
Slide 6
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Disposition of Goods
 Typically agreed that goods get returned to
bailor
 Sometimes goes to another party
 Goods must be returned identical to previous
state
 Wear and tear
 Modifications
 Fungible
 No difference
Chapter 16
Slide 7
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Termination of the Bailment
 Previously agreed upon time, purpose,
or mutual decision to end bailment
 Death, insanity, or bankruptcy
 Rights can be transferred to deceased’s
estate
Chapter 16
Slide 8
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What are the three ways in which
bailments are ended?
Chapter 16
Slide 9
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COMMON EXAMPLES OF
BAILMENTS
 Bailments for transport
 Common carrier
 Bailments for hire
 Rental of property
 Bailments for services
 Repairs
 Bailments for sale
 Consignment
Chapter 16
Slide 10
Law for Business and Personal Use
© Thomson South-Western
Name four common examples of
bailments.
Chapter 16
Slide 11
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16-2 Bailor and Bailee Duties
GOALS
 Describe the duties owed by the bailee
in a bailment
 State the bailor’s duties in a bailment
Chapter 16
Slide 12
Law for Business and Personal Use
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FOCUS
Characteristics of bailment




The subject is tangible personal property
The bailor transfers temporary possession to the bailee
The bailor transfers temporary control to the bailee
The goods must be returned to the bailor or to someone
the bailor specifies
Chapter 16
Slide 13
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Levels of Care
 Extraordinary bailment
 Goods are bailed with common carriers
and hotels
 Extraordinary care
 Generally means the bailee will be strictly
liable for any damage, loss, or injury to the
goods
 Only exception is act of war, unforeseeable
acts of nature, or acts of police
Chapter 16
Slide 14
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Levels of Care
 When only one party benefits from the
bailment
 Gratuitous bailment
 Ordinary care
 The bailee will be liable only if negligence
occurs
 Mutual benefit bailment
Chapter 16
Slide 15
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Levels of Care
 Involuntary bailments
 Typically arise accidentally and without
consent of the bailee
 Minimal care
 Only liable for harm to the bailed property if
they ignore, waste, or destroy it
Chapter 16
Slide 16
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DUTIES OWED BY THE BAILEE
IN A BAILMENT
 Duty to care for the property (previously
mentioned)
 Modification of the level of care
 Modification by legislation
 Modification by contract
 Modification by disclaimer
 Duty to return the goods
Chapter 16
Slide 17
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Modification of the Level of Care
 By legislation
 Airline industry limiting liability for luggage
 By contract
 By disclaimer
 A sign, label, or warning reducing the
bailee’s duty of care
Chapter 16
Slide 18
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Duty to Return the Goods
 According to terms
 Bailee’s lien
 Right of a bailee to retain possession of
the bailed property until payment is made
 Bailee gives property back to bailor
without payment, the bailor loses the right
to force the sale of the bailed property to
pay the amount due
Chapter 16
Slide 19
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Name the three levels of care
owed bailed goods.
Chapter 16
Slide 20
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WHAT DUTIES ARE OWED BY
THE BAILOR IN A BAILMENT?
 Mutual-benefit bailments
 Bailments for the sole benefit of bailor
 Bailments for the sole benefit of bailee
Chapter 16
Slide 21
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Name the types of bailments in
which a bailor has duties.
Chapter 16
Slide 22
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