Bailment

Question 1

What is bailment?

Answer 1

Bailee voluntarily takes into possession goods knowing they belong to another, that possession imposes on the bailee a duty of care to a bailor (exception: modifying clause in agreement).

Question 2

What are the categories of bailment?

Answer 2

Borrowing, finding:
Lease, hire:

Question 3

Explain the bailee’s duty

Answer 3

Liability for breach of bailment is fault based

Duty to take reasonable care:
“Care and diligence which a careful and diligent man would exercise in custody of his own chattel of like character and in like circumstances” (Conway v Cockram motors).

Question 4

What is the bailee and bailor required to prove?

Answer 4

Bailor to prove:
1. Existence of the bailment relationship
2. Chattel lost or damaged

Bailee to prove: (ONE OF)
1. No fault e.g. took reasonable care and damage occurred anyway; OR

2. No causal link: e.g. failed to take reasonable care, but that didn’t cause the damage/loss.

Question 5

Remedies for bailment

Answer 5

Compensation for loss

Question 6

Conway v Cockram Motors

Answer 6

Ratio: Bailees duty is to protect against all types of harm that could occur. However must be a causal link.

Facts: Did not take reasonable care (no alarm) to protect the BMW but no causal link as likely theft would have occurred anyway.

Question 7

Skyway Service Station v McDonald

Answer 7

Ratio: Clauses to limit duty need to be clear and unambiguous. Inadequacy of bailment conditions does not limit duty as the default standard set at common law is duty of care.

Facts: Skyway stored McDonalds car (fee: $30). He did not see the storage facility; thought it was fenced. Car got stolen.

Question 8

If there is no breach of bailment, what are the alternatives?

Answer 8

Conversion or detinue but Bailor needs right to immediate possession at the time

Question 9

Bailment terminable at will (gratuitous bailment)

Answer 9

Bailor retains right to immediate possession.

Question 10

Bailment for a term

Answer 10

Bailee has the immediate right to immediate possession during the fixed term. However, if the bailee does something fundamentally inconsistent with the bailment, or “wholly repugnant to the holding as bailee” (Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204) the bailor’s right to possession immediately revives.

Question 11

Southland Hospital Board v Perkins Estate

Answer 11

Ratio: Constructive bailment. You cannot rely on an exclusion clause if it is too vague – it will be read in favour of the bailor - contra proferentem (even if no election as in case of finders).

Facts: Patient died in hospital, lost engagement ring. Hospital relied on vague exclusion clause to protect from bailment relationship.

Question 12

The Pioneer Container case

Answer 12

Ratio:
- Sub-bailee owes duty of care to the head bailor if the sub-bailee knows that someone other than the bailee owns the goods. (Morris v Martin)

• The terms of the original bailment applied to the sub-bailment.
• Bailor is bound by the terms of the sub-bailment contract only if the bailor had expressly or impliedly consented to those terms.

Question 13

Remedies against third parties for bailee

Answer 13

Damages: for bailee
Bailee can claim damages for full value
Can retain damages to extent of his loss (cost of hiring another bike)
Holds the remainder on trust for bike rentals

Bailee does not have to sue nor can the bailor make them sue.

Question 14

Remedies for bailor towards bailee

Answer 14

Damages: for bailor (towards bailee)
- Breach of bailment (conway/skyway) reasonable care taken

Trespass
Concept of extended possession. Bailors have possession through the bailee (bailment at will, granted possession terminable at any time) Allows the bailor OR Bailee to sue in trespass interference.

Conversion
is a possibility in the instance that the bailor has immediate right to possession (Gratuitous bailment OR; bailee acts repugnantly)

Question 15

Remedies against third parties when no conversion, trespass, or bailment?

Answer 15

Bailor (or sub-bailors) can have a reversionary interest:

• Entitled to get the item back.
• There can be damage to their reversionary interest

Cannot be actionable if the bailee has sued already

Question 16

What is a reversionary interest?

Answer 16

Plaintiff to prove:
1. Damage to the goods

2. Damage will last beyond term of bailment: it will continue unless repaired or remedied
3. Damage is to claimants reversionary interest: it cannot or will not be repaired or remedied
4. Damage would be claimable by bailor if the bailor had title to sue.

Question 17

HSBC Rail (UK) Ltd. v Network Rail Infrastructure Ltd

Answer 17

Ratio: Damage is to claimant’s reversionary interest (it cannot or will not be repaired or remedied).

Facts: damage to the train had already been repaired.