Bailments and Common Carriers Flashcards
What is a bailment?
The relationship created by the transfer of personal property by the bailor to the bailee for the accomplishment of a certain purpose
* No transfer of title to bailee, who possesses property and is obligated to return or dispose of property only in accord with terms of bailment
When does a bailment exist?
Where the bailee possesses the property, which entails (1) physical control over the property (i.e., custody) with (2) an intent to exercise control
* Bailee must consent to possession and mere custody is insufficient
* Bailee must have actual or constructive knowledge of article’s presence
What is distinct about safe deposit boxes?
Regarded as bailment even though the bank usually has no idea of what’s in the box
* Militates requirement of knowledge
What is distinct about parking lots and garages?
Need to check to see if the person parking the car gave up the keys to see if it’s regarded as a bailment
* If YES–bailment
* If NO–not bailed
What standard of care does a bailee owe?
Depends on the situation (to determine specific degree of negligence applicable)
* Note that a bailee is NOT an insurer of goods
Applicable standards of care to specific situations
(1) Where for sole benefit of bailor (i.e., “gratuitous bailee”)
* Bailee only liable for gross negligence
* Example–friend fixes watch free of charge
(2) Where for sole benefit of bailee
* Bailee liable for even slight negligence
* Example–friend loans you their watch for an exam
(3) Where mutual benefit
* Standard is ordinary due care
* Dry cleaner
When will a bailee be held strictly liable?
(1) Any intentional unauthorized use of the goods or departure from the terms of the bailment that results in loss or damage renders bailee absolutely liable to bailor
(2) Misdelivery
* If bailee fails to deliver or misdelivers chattel, even to someone using forged signature, strictly liable
* Exception is misdelivery of vehicle in parking garage to someone who shows up with forged claim check
Are exculpatory clauses valid?
A bailee can limit their liability for ordinary negligence so long as the bailor has received effective notice of the limitation
* If someone scribbles something on the back of a ticket, there might not be notice
* Will only be good against bailee’s ordinary negligence
Bailments and bankruptcy
Items on consignment are bailed and bailed items cannot be included in the bankruptcy estate of the bailee and remain property of bailor
What are the requirements to be considered a common carrier?
(1) Must be holding out to perform the service to all who apply
(2) Carriage must be for hire
(3) Service must be for carriage
What is the general rule for common carier liability?
A common carrier is an insurer of goods given to it by a shipper and is liable for loss or damage under any circumstances (with some exceptions)
What are the exceptions to absolute liability for common carriers?
(1) Act of God
(2) Act or fault of the shipper
(3) Inherent nature of the goods (e.g., perishables expire)
