Bailment

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.