Bailment notes, Commercial Law, Second Year

Commercial Law notes on Bailment

1. SLS 2219: COMMERCIAL LAW

2. bailment Bailment is the voluntary transfer of possession of personal property or a chattel by means of a contract or any other acceptable mode from one person called the bailor to another known as the bailee Unlike a sale or gift of personal property, a bailment involves a change in possession but not in title Bailment relationship may also result from the actions and conduct of the parties when dealing with the property in question

3. bailment A bailment relationship can be implied by law whenever the personal property of one person is acquired by another and held under circumstances in which principles of natural justice require the recipient to keep the property safely and return it to the owner thereafter General principles of the law of contract apply to bailment

4. Purposes of Bailment There are many situations in which the law recognizes that a bailment exists. These include bailments created: For the mutual benefit of both the bailor and the bailee For the sole benefit of the bailor For the sole benefit of the bailee

5. Elements of Bailment A contract of bailment has the following essential features: Contract; Acceptance, Consideration Two parties Delivery of goods; constructive delivery Change of Possession; custody and possession Purpose of delivery is temporary Right of ownership

6. Elements of Bailment A contract of bailment has the following essential features: Change of form Goods in possession of bailee Re-delivery of goods Right of reward

7. Types of Bailment Coggs v Bernard [1703] – any person who undertakes to do an act (e.g. carry goods) is liable to an action if because of his neglect, damage occurs to the goods or they are lost Six instances of bailment: Depositum (simple deposits) Commodatum (goods lent for bailee’s use, gratis) Locatio et conductio Vadium (pawn or pledge)

8. Types of Bailment Locatio operis Mandatum (Coggs case) Bailment for safe custody Constructive bailment Bailment for mutual benefit Bailment for sale Involuntary bailment/ involuntary deposit

9. Bailee’s Standard of Care The standard of care owed by the bailee depends on who benefits from the bailment relationship Gratuitous bailee - In such a scenario, the bailee’s duty of care is at its lowest; liability for ‘gross negligence’ Bailment for hire – Liability for ‘ordinary negligence’ If the bailee is the sole beneficiary – Liability for ‘slight negligence’ Bailee not liable when damage not their fault - BAT Kenya Ltd & Another v Express Transport Co. Ltd & Anor. [1968] EA 171; EA Industries Ltd v B.R. Nyarangi [ 2001] eKLR All bailees are held to strict liability when it comes to re-delivering the property to the true owner. Cf. BAT Kenya case (supra)

10. Rights and Duties Rights of the bailor Right to get back the goods Right to terminate the contract Expenses of separation Compensation for goods Compensation for unauthorised use Compensation for delay in re-delivery Right to share profit

11. Rights and Duties Duties of the bailor To disclose faults To repay necessary expenses To repay extra-ordinary expenses To indemnify the bailee

12. Rights and Duties Rights of the bailee To recover damages Recovery of expenses Recovery of compensation Right of action against third parties Right of lien

13. Rights and Duties Duties of the bailee To take care of goods - Kingsway Motors Ltd v Corner Garage Transport Ltd [2010] eKLR ; EA Industries Ltd v B.R Nyarangi [2001] eKLR Expenses of separation Liability for unauthorised use of goods Inconsistent acts Compensation Return of goods Return of goods at a proper time Return of profit

14. Termination of Bailment Accomplishment of purpose Effluxion of time Death of a party Bailee’s inconsistent act Illegality Operation of the law Mutual agreement of the parties

15. q&a