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Canada (162,158)
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BU231 (317)
Chapter 17

BU231 Chapter 17

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Keith Masterman

1 READING NOTES CHAPTER 17: Leasing and Bailment Bailment • Definition o Bailment is a transfer of possession of personal property without a transfer of ownership o Transferor / owner of property is the bailor o Party that receives custody is the bailee • Non-Contractual Bailments o Essential elements of bailment are:  Change in possession without change in ownership  Intention that the property shall be returned to the bailor • The intention that the object shall be returned need not be stated expressly between parties but may be presumed from circumstances • Bailment can occur involuntarily such as when someone forgets an object at your restaurant, you become a bailee • Benefit of Bailment o Bailments may be for the benefit of the bailor, bailee or both parties o A gratuitous bailment may benefit both parties such as when a car is left with a friend for safekeeping, but the friend has permission to use it occasionally o A bailment for value can go both ways as well such as when a car dealership gives you a car to play with for a weekend (and hopefully buy) so you can enjoy it Rights and Duties of a Bailee • Liability Under Contract and Tort o In contract often the terms (express or implied) outline the duties and liabilities of the bailee  Exemption clauses written into contracts for liability of bailees are construed very strictly by the court  If goods are damaged for any reason not related to performance related to the contract, bailee is not protected by the exemption clause o The standard of care required by the law of torts applies in circumstances not covered expressly or impliedly by the bailment contract  Also applies to gratuitous bailments o Law of bailment places the burden on bailee of showing they were not negligent, must offer a reasonable alternative explanation (reverse onus)  Eg. You send your car in for repairs and it gets blown up there, you need only establish the condition of the car when you dropped it off, and the condition it was in when you received it  As a result of this, it may be easier for a bailor to sue under the rules of bailment than tort 2 • Standard of Care o Gratuitous bailment for benefit of Bailor  Least strict  Bailee should not be under a particularly high duty towards bailor because the bailee is doing a favour for bailor  Still liable for gross negligence  Eg. “Can I put my car in your garage for the winter?” o Gratuitous bailment for benefit of Bailee  Most strict  Bailor receives no consideration, thus the bailee should compensate the bailor when damage occurs to goods as result of any slight carelessness  Eg. “Can I borrow your lawnmower?” o Bailment for Value  Falls between the two above  A bailee for value is expected to take the same care of goods as a prudent and diligent person should take care of goods  “My car will be at your shop while you service it” o Note: The type of goods affects the standard of care, as very valuable and easily damaged goods require more care than otherwise • Remedies of a Bailee for Value of Services Rendered o Main concern of a bailee is to receive compensation for services rendered, can’t undo a repair job o Usual remedy is an action for the contract price o If a carrier is transporting goods in several installments and only partly delivers the total cargo the carrier can sue quantum meruit • Lien (Repair and Storage Liens Act) o Liens give the bailee a right to retain possession of goods until the bailor pays what is due for the services o Arises only when the service has already been performed and payment is past- due o A right of lien is available to bailees who perform services in nature of repairs or improvements to goods, innkeepers, common carriers and to lawyers and bankers • Right of Sale (Repair and Storage Liens Act) o If a bailor is unable to pay off charges (such as when they become
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