Bailments Flashcards
What are the two key questions on bailments?
- Is it a bailment?
- If it is a bailment, what is the liability of the bailee if the chattel is damaged, destroyed or missing?
How do you determine whether there is a bailment?
You have a bailment when the alleged bailee has taken over custody of a chattel with the intent serve as a bailee.
What are the two special bailment situations?
- Safe deposit boxes are generally regarded as a bailment, even though the bank usually has no idea what is in the box. So the contents are bailed even if the back does not know they are there.
- For parking lots or garages, the way to determine if the care is bailed is to see whether the person parking the care gave up the keys.
- If the parking lot or garage keeps the keys, the car is bailed.
- If it is a self-park lot where the driver keeps the keys, the car is NOT bailed.
What is the standard of care of a bailee? When is the bailee liable?
- The sole benefit of the bailor situation, where the bailee will be liable only for gross negligence.
- The sole benefit of the bailee situation, where bailee will be liable for even slight negligence.
- the mutual benefit situation, where the standard is ordinary care.
NOTE: The MODERN TREND in the law today is to forget the three special rules and apply the ordinary care standard to ALL bailments.
What are the two situations were a bailee wil be held strictly liable? Are there any exceptions?
- the unauthorized use situation:
Bailee will be strictly liable if anything happens during any unauthorized use. - **the misdelivery situation: **If bailee misdelivers the chattel, even to someone using a forged instrument, then bailee is strictly liable.
MISDELIVERY EXCEPTION: misdelivery of a vehicle in a
parking lotto someone who shows up with a forged claim check brings NO strict liability.
In a bailment setting, what are exculpatory clauses? What do they permit the bailee to do?
These clauses are where the bailee tries to limit liability
for damage to the chattel.
A bailee can limit liability for bailee’s ordinary negligence
so long as bailor received effectivenotice of the limitation.
Remember that the limitation of liability can be good only against the bailee’s ordinary negligence; it will not serve to hold bailee harmless if the bailee engages in some higher level of culpability, such as gross negligence, recklessness, or intentionally tortious conduct.
Are items in consignment bailed? Can bailed items be included in a bankruptcy estate of the bailee or remain the property of the bailor?
Items on consignment are bailed. Bailed items cannot
be included in a bankruptcy estate of the bailee and remain the property of the bailor.
Chip owned an expensive BMW motorcycle that he wanted to sell. He gave the motorcycle on consignment to Let’s Roll BMW Motorcycles, Inc. Let’s Roll agreed to try to sell the motorcycle for Chip in return for 15% of the sale price. While the motorcycle was sitting on the Let’s Roll sales floor Let’s Roll BMW Motorcycles, Inc. filed for bankruptcy. Is the motorcycle a part of the bankruptcy estate?
No. Items on consignment are bailed. Bailed items CANNOT be included in a bankruptcy estate of the bailee and remain the property of the bailor.
Ralph took his watch to a jewelry store downtown to get it fixed. The jeweler examined it and said it would cost $40.
What is bailee jeweler’s standard of care?
Ordinary care. This is a mutual benefit bailment; Ralph gets his watch fixed, the jeweler gets $40.
Jane realized that she had forgotten her watch just before her last law school final. She borrowed Susan’s watch for use during the exam. What is bailee Jane’s standard of care?
Slight negligence. Susan is a gratuitous bailor; the bailment is for the sole benefit of bailee.
Bob’s old college roommate Jack was a watch repairman. Bob brought his watch to Jack and Jack said he would fix it without charge. What is bailee Jack’s standard of care?
Gross negligence. He is a gratuitous bailee; the bailment is for the sole benefit of bailor.
Madonna went to dinner at the best restaurant in Manhattan. She drove her Rolls up to the front door and checked the car with the restaurant’s valet parking. She then entered the restaurant and checked her fur coat at the coat check counter of the restaurant. In the glove compartment of the car was a diamond necklace, a
gold ring, and a pair of diamond earrings. In the pocket of the fur coat was a pearl necklace, a gold chain, and a jade ring. Is the restaurant a bailee of any of those chattels: the car, the coat, and the jewelry in the glove compartment of the car and the jewelry in the pocket of
the coat?
The car: Yes
The fur coat: Yes.
NOTE: The restaurant had possession of the care and the fur coat with the intent to serve as a bailee of both.
The jewelry: No. The restaurant had possession but there was not intent to serve as a bailee of the jewelry the restaurant knew nothing about.
The spare tire in the trunk and the car’s jack: Yes. We would presume that the restaurant intended to serve as bailee of the car and whatever would usually be found in the trunk of any car.
