When physical possession of property is transferred from one party (referred to as the Bailor) to another person (known as the Bailee) the legal term used to describe this is called Bailment. It is crucial to recognise that while possession of the property is being transferred, ownership is not.
Ownership of the property will always remain with the Bailor. The law doesn’t have any specific definitions for possession, but the law is based on the principles of control and exclusion.
Let’s explore this concept in a little more detail. If for example, you were at work and your employer gave you a box of products to deliver to a third party, you will have custody of the items, but you will not be classed as a bailee.
It will always be your employer who will retain possession of the products. That being said, if a third party gave you some products and ask you to deliver them to your employer, you will become the bailee.
Bailment should also be clearly differentiated from other types of possession through depositing items with a pawnbroker or through leasing for example. Bailment is only applicable to actual goods and can’t be used for items such as the home that you live in.
Licenses or Bailment?
There have been situations in the past where the lines between bailment and licenses have been blurred, particularly when it comes to the management of car parks. While each case should be evaluated on its own merits, a vehicle that has been parked on any land with or without charge forms a licence and not a bailment so the car park owner could not be held accountable for any loss or damage caused while the car was parked there.
It is very unlikely that possession of your car will be transferred to the car park owner so bailment cannot apply. However, if you were to leave your car with a detailer for example, this is considered to be bailment and the associated laws can be applied.
Another example of bailment is in a restaurant when you hand over your coat. The coat becomes possession of the restaurant. As it does so this creates a bailment so if your coat or anything contained within it is stolen the restaurant will be liable. Nevertheless, bailment would not apply if you entered a restaurant and placed your coat on a coat stand because you are technically not transferring possession.
Bailment can only apply when you are given goods for a specific reason. When you hire something such as a carpet cleaner or power tool, the agreement would be that you use the item and then return it to the company you hired it from.
A bank is not a bailee of your money because they are only obliged to return the amount of money that you have in the account and not the exact notes and coins that you deposited.
Rights and Responsibilities
If you find something you cannot assume the role, rights and responsibilities of a bailee because they have not been entrusted to you for a specific purpose.
If you receive something against your will it is very unlikely that you will be under any obligation in terms of the goods or any obligation to the owner.
It is important here to bring in the Unsolicited Goods and Services Acts 1975 and the older legislation from 1971 which concern how unsolicited goods are dealt with.
Under the legislation, fines can be imposed on any individual who demands payment for unsolicited goods.
Bailment and Negligence
It is important to understand what we mean by negligence in the context of bailment and there are a few different elements that are relevant here. If a bailee is rewarded in some way for agreeing to take possession of the item(s), this will play a crucial role in assessing negligence. When you receive something as a bailee, you are under a duty to take good care of the item while it is in your possession, in such a way that you would care for something that is your own. If you receive a reward for the bailment then your duty of care will be even higher and even more so if the item is either fragile or valuable.
If you receive something as a bailee and your profession makes an implication that you have certain expertise, then if you fail in your duty, you will be liable.
It is also important to be aware that bailor negligence can remove liability for the bailee.
The nature of bailments and any associated contract will determine how delegation of bailed property takes place. If permitted, a delegate will assume responsibility as a bailee and as they do, they will owe a duty of care to the bailor.
About the Author
This article was written by a member of the Expert Answers team and posted by Lloyd Barrett, Admin & Customer Services Manager for online advice service Expert Answers. Expert Answers provides legal advice to users in the UK who post a question on their secure platform.