Bailment can arise when one person has temporary possession of another person’s property with an understanding to return the property to the original owner. It usually occurs when property is given to a person for undertaking a task or to keep the property for an agreed period of time.
Bailment is a contractual arrangement that occurs both in commercial contracts and in everyday situations.
- The Bailor is the person who owns the property.
- The Bailee is the person who takes possession of the property.
The bailee has lawful possession of the property, however, is not the owner.
Bailee’s Duty of Care
In all bailment situations, the bailee has a duty of care to ensure the safe keeping of the property.
The level of care can vary depending on the arrangement.
Types of Bailment and The Varying Levels of Care
- Gratuitous bailment
Only one person (bailor or bailee) benefits from the arrangement. For example, the bailor asks their friend (the bailee) to hold their watch so the bailor can go swimming. In this scenario, a lower standard of care is applied to the bailee as the bailor is receiving the sole benefit of the arrangement. The bailee is liable only for gross or wilful negligence.
Conversely, if the bailee borrows his or her friend’s car for the bailee’s sole benefit, an extraordinary standard of care is applied to the bailee.
- Bailment for the benefit of bailor and bailee (bailment for reward)
The bailor and bailee both receive a benefit from the arrangement. For example, the bailor leases their coffee machine to a café (the bailee). The café uses the coffee machine for commercial purposes in exchange for a cash payment to the bailor.
In this scenario, a reasonable standard of care is applied to the bailee when using the coffee machine. Reasonable care is the level of care that an ordinary, sensible person would have shown in the same or similar circumstances.
About me (Will Sas) – I act for insurance companies involved in liability, quantum, and contract disputes and am an Associate in the William Roberts’ Queensland team.
