A bailment is a legal relationship where one person, the bailee, holds physical possession of property belonging to another person, the bailor. For example, if you take your car to a mechanic to have the radiator replaced, the mechanic will take physical possession of your car during the repair. You are the bailor and the mechanic is the bailee. The mechanic has physical possession of your car, but does not have any ownership interest in your car. However, the bailee (the mechanic) does have certain legal duties to you, the bailor. If the bailee does not honour those duties, the bailee can be liable to you, the bailor, for damages.
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Bailments and Duties Generally
Because a bailment involves the transfer of physical possession only, the bailee (the mechanic, in the example above) does not have an ownership interest in the property. You, the bailor, retain full ownership rights in the property. However, the bailee does owe you certain legal duties. A legal duty is a responsibility or obligation, the violation of which results in legal liability. Legal liability usually takes the form of money damages to compensate for the breach of the legal duty. Bailment duties generally include the duty of reasonable care and the duty to return the property.
Duty of Reasonable Care
The bailee must exercise reasonable care when holding physical possession of your property. This means that the bailee must take care of the property and not allow it to get damaged or stolen. In our car mechanic example, the mechanic has a duty to prevent your car from being crashed into, from being damaged by weather, or from being stolen from the repair shop.
Duty to Return
The bailee always has a duty to return the property under bailment. The property must be returned in a reasonable time, which usually means the property must be returned when the purpose of the bailment has been accomplished. Thus, when the mechanic finishes repairing your radiator, the mechanic must return your car to you.
A bailee breaches a bailment agreement when the bailee fails to fulfil one of its bailment duties. The bailee might breach either the duty of reasonable care, or the duty to return the property. For example, if the mechanic takes your car for a test drive and accidentally crashes your car into a concrete median, the mechanic has obviously breached the duty of reasonable care. Or, if the mechanic repairs your radiator, then immediately takes your car on a week-long road trip, the mechanic has breached the duty of care by putting needless miles on your car. He also has breached the duty to return your car because the purpose of the bailment (i.e., the repair of your radiator) has already been accomplished.
If a bailee breaches on of its duties then the bailor can usually recover damages. The damages are usually in an amount reasonably necessary to compensate the bailor for the damage caused by the breach. In the car example, if the mechanic crashes your car so that your car is declared a total loss, the mechanic will have to pay you enough money to purchase a replacement car of equal value. Or, if the mechanic does not return your car for two weeks and as a result you miss two weeks worth of work, you will probably be able to recover lost wages for the work missed as damages for the breach of the duty to return your car.
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