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Although the word “bailment” is somewhat arcane it actually relates to one of the commonest legal relationships as well as one of the oldest and most versatile. It is a staple transaction for both commercial concerns and private individuals and it has some pioneering modern uses. Every time a company hires a fleet of cars for the use of its employees, or a debtor pledges its mobile assets as security for a loan, or a trucking or shipping company receives goods to be transported, or a seller supplies goods on title retention terms, or a buyer takes goods on approval, or a private consumer delivers goods to a repairer or cleaner to be serviced, a bailment arises. There are an almost infinite number of further modern examples.
The standard bailment typically arises when two parties have a contract that either obliges or entitles one of them to take possession of the other’s goods for some limited period or purpose. The function of the bailment may be the storage or carriage of the goods by the bailee or the hiring of the goods to the bailee. In the first example the bailee provides the service and receives the reward, while in the second it is the bailor who confers a service on the bailee and draws the reward from him. Other commercial examples are the pledge of goods or the performance of professional skill and labour on them.
What is bailment?
Bailment comes about whenever one person is voluntarily and knowingly in possession of goods that belong to another.
Under a standard bailment, the owner or “bailor” retains the reversionary right to the goods while the recipient or “bailee” gets possession for a limited period or purpose.
The requirements for bailment are:
- Voluntary possession by one person (A) of another person’s (B) goods.
- The goods must be tangible movable chattels.
- A must consent (expressly or impliedly) to the possession of B’s goods.
There can be a bailment even where the owner of the goods has not consented to the bailee’s taking possession of them. In other words, the bailee must consent to possession but the bailor need not.
In its early form, bailment involved a delivery of goods by their owner to a person who got possession but not ownership (the word “bailment” comes from the French “bailler” meaning to deliver). Nowadays however a bailment can arise without any formal transfer or physical delivery.
The bailor need not be the owner of the goods (but frequently will be).
Documents for Alinea Law Members
The following documents are available to Alinea Law members in relation to bailment: