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Business Law Exam: Bailment
Chapter 17
25
Law
Undergraduate 2
04/05/2011

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Term
Bailment
Definition
A transfer of possession of personal property without a transfer of ownership
Term
Bailor
Definition
Rightful owner of property
Term
Bailee
Definition
Holder of property
Term
Contractual (type of bailment)
Definition
Designed to benefit both parties
Bailment for value
Term
Non-Contractual (type of bailment)
Definition
Can benefit either party or both parties
Gratuitous - where there is no consideration or intention to create a legal relationship
Term
Lowest Standard of Care for a Bailment
Definition
For the gratuitous bailment where the benefit is for the bailor
Term
Highest Standard of Care for a Bailment
Definition
For the gratuitous bailment where the benefit is for the bailee
Term
Liens
Definition
Gives the right to the bailee to retain possession of the goods
Payment must come due while the goods are still in the possession of the bailee
Term
Right of Sale
Definition
Provides the bailee/lienholder the right to sell the goods in their possession to cover costs
Term
Requirements for Right of Sale (4)
Definition
1. Provide a specifies period of time to bailor to come up with funds
2. Advance notice of the bailee's intention to sell the goods must be provided to the bailor
3. Sale must be advertised
4. Sale must be by public auction
Term
Storage of Safekeeping (Special type of Bailment)
Definition
Storer is required to exercise due care of goods to protect them from harm
Goods brought in must be same ones returned unless fungible
Storer can only obtain right to lien through statute or by contracting for the right
Statutory right to lien applies only to professional storers
Term
Transportation - Special types of Bailment (3)
Definition
Gratuitous Carrier: Reasonable person
Private Carrier: Competent carrier in their line of business
Common Carrier: Insurer as well as bailee - highest standard of care; Undertakes to indemnify shipper against loss regardless of fault
Term
Defenses available to Common Carrier (3)
Definition
- Act of God (fire does not count, unless caused by lightning)
- Inherent vice in the goods
- Default by shipper
Term
Bill of Lading
Definition
Document signed by a carrier acknowledging that specified goods have been delivered for shipment
Term
Remedies for a carrier when shipper defaults (for both common carrier and private carrier)
Definition
Common carrier - right of lien by common law
Private carrier - has no right of lien by common law or statute, can only obtain by contract
NEITHER has the right to sell by common law or by statute, but can obtain only by contract
Term
Duties of innkeeper, as well as defense
Definition
- Take reasonable care; to avoid negligent acts causing damage or loss
- Additional duty to protect the goods of their guests/patrons from loss or theft
- Innkeeper can avoid liability for lost goods if they can shoe that the guest was negligent
Term
Requirements for innkeeper act ($40.00 limit)
Definition
1. Innkeeper must conspicuously display copy of act
2. Innkeeper must provide safekeeping if a guest requests it
Term
Pledge/Pawn
Definition
A bailment of personal property as security for the repayment of a loan where possession passes to the bailee
Term
Rules of Pawning (4) (Steps)
Definition
- Pawnbroker obtains title to goods pledged
- Must send notice of last opportunity to pledgor
- Must advertise in newspaper the final notice to pledgor
- Pawnbroker then obtains absolute ownership over the goods
Term
Gratuitous Bailment
Definition
A bailment where one party provides no consideration, or where there is no intention to create a contractual relationship
Term
Remedies available for Bailee (rights and duties)
Definition
- Regular contract remedies apply
- Can sue for quantum meruit (if part performance exists)
Term
Pledgee
Definition
Ceditor is the pledgee
Pledgee obtains a lien on property and right to sell to recover debt and costs
Term
Pledgor
Definition
- Borrower is the pledgor
- Surplus funds belong to the pledgor
Term
Standard of Care: Dependent on (5) things:
Definition
Type of goods bailed
Extent of promise to look after the goods
Value of the bailed property
Whether property is easily damaged
Whether property is easily stolen
Term
Fungible Goods
Definition
Goods that may be replaced with different but identical goods
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