What You Should Know about Bailments for Small Claims Court

A bailment is a temporary transfer of possession of property from one person — the bailor — to another — the bailee. This is common in small claims court because it’s not a transfer of ownership. It’s the understanding of both parties that the property will be returned by the bailee to the bailor when the purpose of the bailment is complete.

Numerous situations in everyday life create bailments. What makes bailments interesting, from a legal standpoint at least, is that a bailment is a contract relationship but it uses a negligence standard in regard to the care the bailee has to use while in possession of the property.

Types of bailment

The law recognizes three categories of bailment:

  • Bailment for the sole benefit of the bailor.

  • Bailment for the sole benefit of the bailee.

  • Bailment for the mutual benefit of both the bailor and bailee.

Why do you care about this? Because depending on the nature of the bailment, the rights and obligations of the parties — which includes you —differ.

When it benefits the bailor

A bailment for the sole benefit of the bailor is sometimes called a gratuitous bailment. In this situation, the bailee does something solely for the benefit of the bailor. Essentially, the bailee is doing a favor for the bailor, so the bailee owes the bailor only a duty of slight care and is responsible only for gross negligence.

Say your neighbor’s employer is temporarily assigned to an office in another state. He asks if he can store his 1928 Duesenberg in your garage while he’s away. You agree to do it as a favor. That is, you’ll receive no money for the storage and you can’t use the car.

While the car is in your garage, the San Francisco earthquake startles Mrs. O’Leary’s cow, who kicks over a lantern starting a fire, and a spark from the fire catches your garage in Kansas, causing your garage to burn to the ground with the Duesenberg inside. Because this is a bailment for the sole benefit of the bailor, and you did nothing wrong, you have no liability.

When it benefits the bailee

A bailment for the sole benefit of the bailee occurs when the bailor delivers the property to the bailee only for the benefit or convenience of the bailee. In this case the standard of duty is slight negligence, which means that any damage suffered, aside from an act of God, is the bailee’s responsibility.

For example, you ask to borrow your neighbor’s Duesenberg to use at your daughter’s wedding. While opening the door for the bridal party, your walking stick inadvertently breaks the window. You’re liable to your neighbor for the damage and the repair costs. Because the standard is slight negligence, just about any fault on your part makes you liable.

When it benefits both bailor and bailee

The most common bailment is the mutual benefit bailment. The bailor delivers the personal property to the bailee for a particular purpose, the bailee is expected to perform some service involving the property and expects to be compensated for that service when the property is returned to the bailor. The standard of care is ordinary negligence — how a reasonable person would act in the same circumstances.

Using the example of a fender bender, taking your car to the repair shop is a mutual benefit bailment. You, the bailor, expect to get the car back repaired, and the bailee shop owner expects to get paid for the repairs. There is a mutual benefit to both parties.

At the car rental business you, the bailee, want the use of the vehicle while the bailor car rental company wants to be paid for the time you use the car and wants it returned in one piece. Again, there’s a mutual benefit in the transaction.

When bailments occur

A bailment occurs when a bailor delivers some type of goods to another person, the bailee. As the bailor, you want the goods back when you request them or want them disposed of according to your instructions.

Here’s an example: You take your clothes to the dry cleaners. You’re surrendering possession of the clothes with the intent that they will be returned to you when you pay for the services.

Here’s another example: You’re in a fender bender. This often creates two bailments: One when you take your car to be repaired, and the second when you borrow a car from your neighbor. When you deliver your car to the repair shop, you’re the bailor and the repair shop is the bailee. When you borrow your neighbor’s car, you’re the bailee and your neighbor is the bailor.

The problem with litigation based on a bailment is not necessarily proving that you’re the original owner and that you deserve to have the item given back, it’s proving that you suffered damages and how much they should be. Unless you had a prior agreement, you don’t get replacement value or the cost of the item when it was new.

Say you take a business suit to the cleaner. When you pick it up, it no longer fits you because it’s shrunk. Your problem is to establish the value of a two-year-old suit. Further, if you’re a man, and the pants are ruined, the defendant may argue that you can still wear the jacket, so you may not get the full value of the suit.

By the way, a good merchant knows that the customer is always right and will attempt to make good in these situations, especially if you’re a regular customer. If he doesn’t, you should probably find a new dry cleaner.

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