Bailment defined
Bailment is the transfer of the physical possession of property
from one person, known as the bailor, to another person, known as
the bailee. It is crucial to understand that the property itself is
not being transferred, but only possession of it. Ownership of the
property will remain with the bailor. Although the law does not
precisely define possession, the basic characteristics are control
and an intention to exclude others. If an employer gives goods to
an employee to be delivered to a third party, the employee only has
custody, and so is not considered a bailee. In this situation
possession remains with the employer. Conversely, when a third
party gives goods to an employee to be delivered to their employer,
the employee does obtain possession and does become a bailee.
Bailment is also distinguished from other, similar relationships,
such as leasing or depositing an item with a pawn broker. Bailment
only applies to personal property, such as cars, and not to real
property, such as houses.
Bailment or licence?
- Problems have occurred in distinguishing between bailment and a
licence, most often in the context of car parks. Each case must be
examined on its own facts, but a vehicle parked on land, with or
without charge, may only create a licence and not a bailment, so
there would be no duty of care and liability for loss or damage. In
such a case it is unlikely that possession will have been
transferred, so there will be no bailment. Alternatively, leaving a
car with a valet is considered bailment and has the resultant legal
consequences.
- Another vague situation concerns a customer and their coat at a
restaurant. In Ultzen v Nicols [1894] a waiter took a coat from a
customer, without permission. The coat was stolen. The court held
that the restaurateur was a bailee and liable in negligence for the
loss of the coat. However, it is thought that a customer who simply
hangs up their coat on a stand provided by an establishment will not
be transferring possession, so there will be no bailment.
Other elements of bailment
- Bailment only occurs when a person who is given goods is given
them for a specific purpose. In hire, this would be to use and
return. In carriage, it would be to take the goods from one place
to another. Bankers are not bailees of customers’ money, since they
are obliged only to return an equivalent sum and not the exact same
notes and coins.
Finders
- Those who find goods cannot be considered bailees as they are not
entrusted with the goods for a particular purpose. They could,
however, be liable for loss or damage caused by their own
negligence.
Involuntary recipients
- A person who receives goods against their will is unlikely to be
under any duty to the goods or their owner. But they must not
convert the goods either intentionally or negligently.
- Mention here should be given to the Unsolicited Goods and
Services Acts 1971 and 1975, which deal with unsolicited goods being
sent out and so rendering the recipient an involuntary bailee.
Under the Acts fines can be imposed on those who demand payment for
goods which they know to be unsolicited. If a recipient gives
notice to the sender to collect the goods, the recipient may keep
the goods longer than 30 days. These Acts apply only to private,
not business, recipients.
Negligence in bailment
- Whether the bailee is rewarded for taking possession plays an
important part in determining negligence. A bailee for no reward
must take the same care of the bailed property as a reasonable man
would take of their own property. Consequently, the test is
objective, and it is not enough for a bailee to show that they took
as much care of the bailed property as they would have of their own
property. This duty of care is higher in bailment for reward. A
higher standard of care will also be imposed on a bailee if the
bailed property is very valuable or fragile (see, for example,
Saunders (Mayfair) Furs v Davies [1965]).
- If a bailee’s profession implies that they have a certain
expertise then they will be liable if they fail to show it. A rider
who took a horse out to show a prospective buyer was liable to the
owner when he rode the horse onto wet turf and the horse
subsequently fell and was injured (Wilson v Brett [1843]).
- The bailor’s negligence may also negate the bailee’s liability.
Where a tyre manufacture used a customer’s moulds to make tyres, but
after termination of the contract were not told how to dispose of
the moulds, the customer could not, five years later, demand the
return of the moulds, which by then had been lost. The court
implied a term in the contract that the customer would collect the
moulds within six months of the contract terminating. Failure to do
so had relieved the manufacturer of its obligations as bailees of
the tyre moulds.
Delegation by bailee
Delegation of bailed property by a bailee will depend on the
nature of the bailment and the contract of bailment. But if
allowed, the delegate becomes a bailee and owes a duty of care
directly to the bailor.
