Is there a bailment relationship?
Bailment law disputes - February 2024
Bailment law disputes - February 2024
When assessing whether a service provider may be liable for damage to their customer’s property caused by a disaster, you will first need to establish that a bailment relationship exists. This is because the obligations of a service provider to take care of their customer’s goods arise automatically out of the bailment relationship.
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A bailment relationship arises when one person is given possession (but not ownership) of goods by another person temporarily and for a specific purpose. Most commonly, this purpose is the provision of a service, such as having an item repaired or cleaned. The owner of the goods is the ‘bailor’ and they take the goods to the ‘bailee’ who will temporarily possess or hold the goods to deliver the service.
In this resource and throughout, we use the terms “consumer” to describe the owner of the goods (or the bailor) and “service provider” to describe the party in possession of the goods for commercial reasons (or the bailee).
Ordinarily, a bailment relationship will arise when the following elements are satisfied:
Delivery: the consumer delivers a good to the service provider, so that the service provider can provide labour or services in relation to the goods and requires possession of the goods to do so;
Acceptance: the parties enter into a contract (which can be informal, such as oral) for the provision of labour or services in connection with that good; and
Consideration: the consumer has agreed to pay the service provider an amount of money or some other form of reward in return for their labour or services.
Once a bailment relationship arises, certain obligations arise to ensure the rights of all parties involved are protected. We discuss these obligations in the next resource.
Once you have established that there is a bailment relationship you can consider what obligations a service provider has in relation to their customer’s property. We discuss these obligations here:
This resource was last updated on 14 February 2024. This is legal information only and does not constitute legal advice. You should always contact a lawyer for advice specific to your situation. You can read our full disclaimer here: Disclaimer and copyright for our Disaster Legal Support Resource Hub – Justice Connect.