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ADMS 2610 Study Guide - Operating Lease, Hire Purchase, Force Majeure

Administrative Studies
Course Code
ADMS 2610
Robert Levine

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Copyright Robert Levine
NOTE: The following notes are in addition to the materials on Bailment in your
Bailment is a voluntary transfer of possession of personal property from the owner
(called the bailor) to a third party (called the bailee) for a certain period of time or term,
with the expectation that the property will be returned at the end of that period of time or
term. Bailment can be either without money:
A lends his lawnmower to B for a couple of days after which B returns it to
or with payment of money:
A stores his furniture with a storage company, B, for a period of 6 months
under a contract which requires A to pay B $ 150.00 per month.
In both cases, A is the bailor and B is the bailee. In the first example, the
bailment is gratuitous as no money changes hands. In the second example, the bailment
is said to be for reward, because payment by the bailor is required.
As can be seen from the two examples above and from its definition/explanation,
bailment usually arises by way of some sort of contract between the bailor and bailee.
Leaving aside commercial leases of personal property (operating lease, financing
lease and hire purchase agreement) which I referred to in the lecture, the main types of
bailment are:
1. Gratuitous bailment, where no money changes hands. Such bailments can be
for the benefit of the bailor: A stores his car in B’s garage for the winter. Here
B, the owner of the garage, gets no benefit, only A gets the benefit and the
standard of care is very low. That is, the bailee has a duty to take reasonable care
of the goods by protecting them from foreseeable risk of harm.
Where the bailment is for the benefit of the bailee: e.g. A borrows B’s
lawnmower. Here A, the bailee, gets the benefit and the standard of care is very
high. A has a duty of care to take strict care of the goods, reasonable wear and
tear excepted. Thus, the bailee would be liable for any damage caused to the
goods, except for reasonable wear and tear.
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