Bailment Law: Property Held by Another & Your Legal Rights

May 20, 2020


When someone is holding on to property for another person, bailment law usually applies. This often includes storage facilities, warehouses, and transportation companies, for example.

What is Bailment?

“Bailment is the legal relation arising upon delivery of goods without transference of ownership under an express or implied agreement that the goods be returned.” Wallinga v. Johnson, 131 N.W. (2d) 216 (Minn. 1964).

How is a Bailment Relationship Created?

To create a bailment relationship, “there must be delivery of goods from one person (the bailor) to another (the bailee) without a transfer of ownership and acceptance of such delivery by the bailee upon an agreement, either express or implied, that the goods are to be returned to the bailor or otherwise accounted for.” Nat’l Fire Ins. Co. v Commodore Hotel, Inc., 107 N.W.2d 708, 709 (Minn. 1961).

“The bailee’s duty to exercise due care with respect to the goods arises because of his acceptance of their possession and his subsequent custody and control over them.” Id.

The term “bailment” derives from bajulare, a Latin verb that means “to bear a burden,” and bailler, a French word that means “to deliver.”

Bailment Examples

Examples include:

  • you left your vehicle with a friend, valet, mechanic, or auto repair shop
  • you stored products at a location you don’t own (warehouse or storage facility)
  • you left a product at a company to be repaired
  • you left jewelry with a jeweler
  • you left clothing with a tailor
  • you used a safe deposit box at a bank
  • you sent furniture to a restoration or refurbishing company
  • you mailed or delivered goods using a courier, trucking, or delivery service (FedEx, trucking company, etc.)

When Doesn’t Bailment Apply?

Bailment law usually does not apply to relationships governed by a statute that essentially overrules the default common law doctrine of bailment.

In addition, bailment law usually does not apply to property rental, sales, and leases.

Property Rental

Bailment law usually does not apply to the landlord-tenant relationship in residential housing and real estate leases. Imagine a tenant leaves clothing, a bike, and a computer after leaving a rental unit when the lease ends. In this example, the rights and obligations of a landlord and tenant are established in Minnesota Statutes section 504B.271 (tenant’s personal property remaining in premises or abandoned).

Sales

Bailment law usually does not apply to the sale or purchase of goods. A seller is not holding property of another; this is a transaction where ownership changes. For rights in the sale of goods, see Article 2 of the Uniform Commercial Code.

Leases

Bailment law usually does not apply to the lease of goods or products.  For rights in the lease of goods, see Article 2A of the Uniform Commercial Code.

What Liability is a Bailee Accepting?

Usually, a bailee (the company or person holding the property) is accepting liability for risks like the following:

  • burglary
  • collision
  • damage during transportation
  • earthquake
  • explosion
  • fire
  • flooding
  • lightning
  • robbery
  • theft
  • wind damage

How Can a Bailee Minimize Risks of Liability?

Often, the risks associated with bailment liability can be mitigated with a good insurance policy. This insurance policy would cover another’s property in your possession.

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