Management Notes

Reference Notes for Management

Contract of Bailment and Pledge – Concept, Rights and Duties | Business Law

Contract of Bailment and Pledge

Contract of Bailment and Pledge

Bailment is the legal relationship that occurs between two parties, referred to as the bailor and the bailee when the bailor temporarily transfers the bailor’s possession of the personal property to the bailee. Property is held by the bailee on behalf of the bailor and the bailee is responsible for returning it or disposing of it accordingly.

The Civil Code 2074, section, 575(1) states:

”A contract relating to bailment shall be deemed to have been concluded in case a person delivers any property to another person to be returned to him or for handing it over to any other person or selling it as ordered by him.”

The bailor retains ownership of the property in a bailment, but the bailee has temporary control and possession of it. The bailee is responsible for taking reasonable care of the property while it is in their possession and returning it in the same condition as when the bailment began, or as otherwise agreed upon.

Various situations can result in bailments, such as leaving your car with a valet parking service, storing your belongings in a storage facility, or lending a valuable item. The bailor retains ownership, while the bailee has a duty to safeguard the property and use it only as authorized by the bailor.

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