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BU231 (317)

Textbook notes Ch 15 & 17.docx

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David Scallen

Chapter 15: Bailment and Leasing Bailment: a transfer of possession of personal property without transfer of ownership. Relationship between a bailor and bailee. Sale, trust, debt, and licence are not example of bailment because the possession must be transferred without the intention of transferring ownership. The property shall be returned back to the bailor. Sub-bailee: a person who receives bailment of property from a bailee To avoid liability in a sub-bailment: • The bailor must consent for the sub-bailment to have possession • The sub-bailee must be aware of the bailor’s interests • If the sub-bailee was not known to the original bailor while damage occurred in the possession of the sub-bailee, then they are all liable to the bailor. • If the sub-bailee has allowed sub-bailment, only the sub-bailee would be liable for damages All bailees are under a duty to take care of property bailed to them. The duty of care required by the law of torts applies in circumstances not covered expressly or impliedly by the bailment contract, and also applies to gratuitous bailments involving no contracts at all. Sometimes a contract states that the bailee is not liable for anything even though she damaged it herself, but the courts rarely allow this, especially if the damage occurred for any reason not related to the actual performance contemplated by the contract- not protected by exemption clause. The burden is on the bailee to show that she was not negligent. Standard of care is the lowest when the benefit is of the bailor or when its gratuitous. Highest standard of care is when the benefit is of the bailee. Bailment for value: contractual bailment; benefit for both A bailee for value is expected to take the same care of goods as a prudent and diligent person should take of goods belonging to those with whom she transacts business Remedies Quantum Meruit: the bailee pays the bailor the equivalent value of the good lost or damaged Lien: the bailee may hold the good until he is paid what is due after a certain time Right of Sale: Bailee has the right to sell the possession in a public auction with the notice to the bailor that he is going to sell it • must inform the bailor that this is happening • must be advertised and sold in ways described by the terms in contract • All surplus of sale belongs to the bailor Special Types of Bailment Storage and Safekeeping • Fungible goods: goods that can be replaced with different but identical goods • In Canada, common law allows every warehouse a right of lien on goods stored • Right of sale Repairs and Work on a Chattel • Most are bailee for value • Under a duty to take care of the article while in possession • Breach of contract if damaged • Bailor may not pay for service or sue for damage (depends) • Common law does not allow them to right of sale Transportation • Common carrier: public transporter of goods for reward; cannot discriminate requests • Common carrier carries the most responsibilities out of gratuitous carrier and private carrier • For the shipper to sue the carrier, he needs to prove that the carrier received it in good condition and returned it in a bad condition; or failed to return at all • Now the burden is on the carrier to prove that the cause of loss was within one of the defenses: - An act of God- natural catastrophe - Inherent vice in the goods (defective product or something) - Default by the shipper (something wrong with the way the shipper handed it to him- wrong instructions; contributory negligence) Innkeepers • Person or firm that maintains an establishment offering lodging to any member of the public • Duty to take reasonable care of their belognings • Under common law, they are liable for lost or stolen goods • Avoid liability if proven that the bailor was careless • Can only be sue for negligence of employees, technically • Right of sale Pledge or Pawn • A bailment of personal property as security for repayment of a loan • Borrower of loan (pledgor) and the lender (pledgee) • Pawnbroker: business that loans money on the security of pawned goods • Pledgee has right of lien and right of sale Checklist- Types of Bailment • Gratuitous bailment for the benefit of bailee • Bailment for value (contractual bailment) • Gratuitous bailment for the benefit of the bailor • Sub-bailment Special Types of bailment • Storage and safekeeping • Repairing • Transportation • Innkeeping • Pledge or pawn Chapter 17: Agency and Franchising Agent: person acting for a principal in contractual relations with third parties Dependent Agent: an agent who acts exclusively for a single principal Independent agent: an agent who carries on an independent business and acts for a number of principals Commission agent: receives compensation through commissions Creation of agency relationship: By agreement: may be express/implied, oral, written. If an agreement is to extend beyond one year, it should be in writing to be enforceable • Agreement should include the agent’s authority clearly • Power of attorney: agency where the agent can sign documents on behalf of the principal Through conduct: implied agency where a principal allows a person to act like agent- if afterwards principal denies this, agency is created by estoppel Retroactively: person negotiates contract, principal ratif
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