Picture a night out on the town. You drive downtown to a restaurant and drop your keys off with the valet. At the restaurant, you check your coat with plans to pick it and your car up at the end of the night. You’ve just participated in two instances of bailment—one with the valet service and the other with the restaurant.
Bailment is common, and you’ve probably already been a bailor. So, when is a bailment created and what’s your role in it? This article covers the different kinds of bailment and discusses what duty of care is required from the bailee under each kind of bailment.
But laws around bailment and duties of care are specific to each state. So, if you find yourself in a bailment that’s resulted in damaged or lost property, you might want to speak to a lawyer.
What Is a Bailment?
Bailment is the process of placing personal property or goods in the temporary custody or control of another. The custodian or holder of the property—who's responsible for the safekeeping and return of the property—is known as the "bailee." The person who delivers or transfers the property to the bailee is known as the "bailor."
For a bailment to be valid, the bailee must have:
- actual physical control of the property, and
- the intent to possess it.
The bailee isn't (in most cases) entitled to use the property while it's in their possession. And a bailor can demand to have the property returned to them at any time, at which point the bailee has to give it back.
Types of Bailment
Bailments can be split into three primary types that are defined by whom the bailment benefits—the bailor, the bailee, or both. Two secondary types of bailment—gratuitous and involuntary—are defined by the circumstances of the bailment.
Bailment for the Benefit of the Bailor and the Bailee
A bailment that benefits both the bailor and the bailee is mutually beneficial, and each party walks away with something from the arrangement. This kind of bailment—also known as “service agreement bailment”—is usually done through an agreement as a paid service.
Common examples of service agreement bailments are:
- vehicles parked in a monitored parking garage
- securities or bonds left with a bank
- animals lodged at kennels, and
- goods left at a storage facility.
Bailment for the Sole Benefit of the Bailor
In a bailment for the sole benefit of the bailor, the bailor receives some sort of benefit but the bailee doesn’t. Bailments for the sole benefit of the bailor typically don’t involve payment, in which case they can also be referred to as “gratuitous bailments.”
An example of a bailment for the benefit of the bailor is a free locker at an amusement park. The guest is receiving the benefit of having a place to store their items while they ride roller coasters. But the bailee—the amusement park—isn’t receiving a benefit because it’s not receiving anything (like money) in exchange for the locker service. Here, the bailment is also gratuitous because there’s no payment.
Bailment for the Sole Benefit of the Bailee
As the name would imply, a bailment for the sole benefit of the bailee is when the bailee receives some sort of benefit but the bailor doesn’t. This form of bailment is also usually gratuitous. But bailments that benefit only the bailee are less common than bailments for the sole benefit of the bailor.
For instance, if your friend loans you their jacket or lets you stay at their cabin for the week, then you—the bailee—are receiving the sole benefit. The friend doesn’t benefit from loaning you their jacket or cabin. In this situation, the bailment is also gratuitous.
What Is Constructive or Involuntary Bailment?
Constructive bailment is when someone acquires the property of another by:
- mistake
- accident, or
- force of circumstances.
In a constructive bailment, the law sees the person who has the property as a “constructive bailee,” and there’s an expectation that this bailee will return the property to the bailor. There’s also an expectation for the bailee to protect the property while they have it.
A constructive bailment is also called an “involuntary bailment” because the bailment wasn’t meant to be created by the bailor or bailee. The bailment is instead implied by law.
For example, a constructive bailment occurs when someone finds lost property and protects it or places it in the custody of another, such as the police, until the lawful owner can be located. In this example, the bailment is constructive because the person who lost the property didn’t intend for another to possess it and the person who found the property didn’t mean to take care of someone else’s property. The bailment is also gratuitous (the bailor and bailee didn’t exchange money) and for the sole benefit of the bailor.
Consider another example. In the case of a tenant abandoning property, a constructive or involuntary bailment might be created with the tenant’s abandoned property. Depending on the laws of the state, a landlord might have a duty to care for and even return property left behind by an abandoning tenant. In this case, the bailment is constructive, gratuitous, and for the sole benefit of the bailor.
Bailment and Abandoned Property
If a bailment agreement is set for a fixed term—for instance, one month—the law might deem property abandoned if the bailor fails to claim their property at the end of the term. For example, if your office is cleaning out the kitchen and your manager tells you that any food or supplies left over the weekend will be thrown away, you’ve abandoned your food if you don’t take it home before the weekend.
Alternatively, instead of property becoming abandoned, the law might require a voluntary bailment to become an involuntary bailment. From our earlier tenant example, the bailment turned from voluntary to involuntary when the tenant left their apartment and what was in it. The bailee, or landlord, now involuntarily must hold on to things like the tenant’s clothes and furniture until their duty—as the law defines it—ends.
However, if there’s no law requiring the bailee to hold on to the bailor’s property, and the bailee and bailor don’t agree on a clear term of bailment—that is, how long the bailee should hold on to the bailor’s property—the analysis is different. In this situation, the bailor won’t usually be deemed to have abandoned their property unless the bailee gives them notice that the bailee no longer wishes to possess and protect the property.
Bailee's Duty of Care
In all bailment situations, the bailee has at least a minimum duty of care to ensure the safety of the property. State negligence law generally determines the duty of care required from the bailee.
The standard of care required of the bailee in a bailment is usually based on:
- the purpose of the bailment
- whether there was payment or the bailment was gratuitous, and
- whether the bailment was for the benefit of the bailee alone, the bailor alone, or both parties.
A higher standard of care is imposed upon a paid bailee. There's a lower standard of care imposed upon a bailee in a gratuitous bailment, where there’s no payment.
Reasonable care. If the bailment is for the benefit of both the bailor and the bailee, then the bailee generally owes a duty of reasonable or ordinary care. Reasonable care is the level of care that an ordinary, sensible person would show in the same or similar circumstances. But if the parties have a bailment agreement, regardless of the level of care that the bailee ends up using, they can agree to hold the bailee free from liability.
Extraordinary care. If the bailment is for the sole benefit of the bailee, then the bailee normally owes a duty of extraordinary care. Because the bailee is essentially getting to enjoy free property and the bailor isn’t being compensated, it’s reasonable to expect the bailee to be extra careful with the property they’re borrowing.
Slight care. If the bailment is gratuitous and for the sole benefit of the bailor, then the bailee owes only a duty of slight care. For example, a bailee might only be liable if they showed willful or gross negligence.
Consequences for Breach of a Bailment Agreement
A bailee who fails to uphold (or “breaches”) their duty of care can be held legally liable for damages. A bailee can also be held liable for “conversion” if they use the property without the bailor's permission or don't return the property to the bailor upon request.
A bailor can recover money damages for lost or damaged property if they can show that the bailee failed to use the required degree of care, and that that lack of care caused damage to or loss of the property.
If the bailee used the required degree of care, then the bailor won't be entitled to damages. With a gratuitous bailment for the sole benefit of the bailor, the bailee usually won't be liable for damage to the property unless they were grossly negligent.
Typically, if found responsible, the bailee will owe the bailor compensatory damages—that is, the amount needed to fix, recover, or replace the lost or damaged property.
In some situations, a bailment gone wrong can result in criminal charges. For instance, if you give your car to a valet at a restaurant, and then they drive away with your car, never to return, they could be prosecuted for theft.
Questions for Your Attorney About Bailment
The duty of care required and the damages you can recover are determined by each state. You should check your state’s laws on negligence and duty of care or talk with a lawyer to determine which level of care applies to your particular situation.
If you do consult an attorney—perhaps because you’re considering entering a bailment relationship or filing a lawsuit—you’ll undoubtedly have questions. Here are some questions you can consider asking if they apply to your situation:
- What do I do if my personal property is damaged by the bailee?
- How do I know when to trust a person or entity to be a bailee of my property?
- How can I stop the bailee from using my personal property?
- As a bailee, am I responsible for damage caused by an act of God, such as a tornado?
- As a landlord, how long do I have to take care of my renter’s abandoned property?