What Is Bailment?
In commercial law, you’ll often hear about bailment.
It’s a foundational concept — but one that many people misunderstand.
Let’s break it down clearly.
What is Bailment?
Bailment happens when someone (called the bailor) gives a physical item (called a chattel) to another person (called the bailee) —
But here's the key: ownership does not transfer.
The bailee only receives possession, not legal title.
Common Examples of Bailment
-
You rent a car.
The rental company owns it. You only possess it temporarily.
-
You borrow a book from a library.
The library stays the owner. You’re just the user.
-
You leave clothes at the dry cleaner.
They hold your clothes, but don’t own them.
Is Bailment Always a Contract?
Not necessarily.
While many bailments do involve contracts, bailment can exist without a formal contract.
The legal relationship still exists because:
-
One party delivers the goods (the bailor)
-
The other accepts them and takes possession (the bailee)
-
The goods are meant to be returned, or dealt with as agreed
What Makes It a Bailment?
To legally count as a bailment, two things must happen:
-
The bailee must have possession of the goods
This doesn’t mean ownership — just physical control.
-
The bailor must keep a higher right
Meaning: the person giving the item still has the superior legal interest.
Without these two elements, it's not a bailment.
The Different Types
Now that we know the basics of bailment —
Let’s explore the types of bailment and how they change depending on the purpose and whether payment is involved.
Classic Categories of Bailment
The law recognizes several specific types of bailment.
These go all the way back to Coggs v Bernard (1703) — a case that still shapes modern legal thinking.
Here’s a simplified breakdown of those categories:
1. Deposit (Depositum)
-
You give someone your goods just to keep safe, without payment.
-
Example: Leaving a valuable item with a friend while you travel.
2. Loan for Use (Commodatum)
-
You lend an item for free, and expect it to be returned in the same condition.
-
Example: Lending your bike to a neighbor.
3. Hire for Use (Locatio et Conductio)
4. Pledge or Pawn (Vadium)
5. Work on Goods for Reward
-
Goods are delivered so the bailee can do something to them, and the bailor pays for it.
-
Example: Leaving a coat at the tailor for repair.
6. Work on Goods Without Reward
Gratuitous vs For Reward
Bailments can also be divided by whether there’s payment involved:
The Bailee’s Duties and Legal Liability
Once a person takes possession of someone else’s property — even temporarily — they don’t just “hold” it.
They take on legal responsibility for it.
So what exactly does the bailee owe to the owner (the bailor)?
Let’s look closer.
The Duty of Care
A bailee must take care of the goods while they’re in their possession.
But how much care? That depends on the situation.
Historically:
-
If the bailment was gratuitous (no payment), the standard of care was low — the bailee just had to avoid gross negligence.
-
If the bailment was for reward, the bailee had to show greater care, like a professional standard.
However, this clear line began to blur with Houghland v R Low (1962).
In that case, a travel company lost a passenger’s luggage during a coach transfer. The court said:
The required standard of care depends on the facts of the case, not just on whether there was payment.
So now, the standard is more flexible:
But Be Careful: The Old Distinction Still Matters
Even though Houghland challenged the idea, some courts and laws still treat paid and unpaid bailments differently.
For example:
So yes — payment still matters in some legal contexts.
What If a Third Party Causes Damage?
Let’s say someone else — not the bailee — damages or steals the goods.
Does the bailee have the right to sue?
Yes.
In The Winkfield (1902), the court ruled that:
-
A bailee, simply because they have possession, can sue third parties for damage or theft.
-
Even though they’re not the full legal owner.
However:
This makes sense:
The bailee holds the goods on behalf of the owner, so they must act fairly if compensation is recovered.
Why It Matters in Real Life and Business
Now that we understand the core legal structure of bailment — the roles, duties, and liabilities — let’s bring it into the real world.
Bailment isn’t just something that happens in court cases or contracts written in fine print.
It’s part of everyday life and commercial transactions, often without people even realising it.
Real-World Example: Hotel Luggage
You arrive at a hotel and hand your suitcase to the porter while you check in.
You didn’t sign anything. No one mentioned a contract.
But legally? This is bailment.
-
You are the bailor — you still own the suitcase.
-
The porter (and by extension, the hotel) is the bailee — they now have possession.
-
If they lose or damage your bag, they may be liable, depending on whether they exercised reasonable care.
Even though there’s no formal agreement, legal responsibility has passed.
Business Example: Warehousing and Logistics
A company stores its products in a third-party warehouse.
If goods are damaged, mixed, or lost, the bailee may be legally responsible — but only if they breached their duty of care.
This is why contracts for storage or transportation are carefully written:
To define who’s liable, and when.
Why You Should Care (Even If You're Not a Lawyer)
If you ever:
-
Leave your car with a valet
-
Store goods with a moving company
-
Lend equipment to someone
-
Manage customer belongings in your business
…then bailment law affects you.
It determines:
-
Who is responsible if something goes wrong
-
Who has legal rights while the item is in someone else’s hands
-
What duties are owed between the parties
Final Key Points to Remember:
-
Bailment means giving someone possession — not ownership.
-
It creates legal obligations, even without a formal contract.
-
The bailee must take care of the goods and may be liable if they don’t.
-
In business, bailment is everywhere — warehouses, deliveries, repairs, storage, logistics.
-
Always know: when you take control of something that belongs to someone else, the law sees you as more than just a holder — it sees you as a party with legal duties.
In a bailment, who receives possession of the goods but not legal ownership?
