Bailment: Definition, Example and Related Terms
What is a Bailment ?
There are many types of bailment in business, like when goods are shipped, stored, or used for display. But no matter what, the rule is the same: the stuff still belongs to the original owner (the 'bailor'), and the bailee has to take good care of it. Bailment is an important concept in business because it helps protect people's property and makes sure everyone knows their responsibilities.
Scenario Description Penny's Clothing Store sends clothes to a fashion show. In this example, Penny's Clothing Store is the bailor and the fashion show organizers are the bailee. The clothes are in bailment. The fashion show organizers have to take good care of the clothes - they can't lose them or let them get damaged. If they do, they could have to pay Penny's Clothing Store for the loss. TechCo sends a batch of computers to a repair shop. Here, TechCo is the bailor and the repair shop is the bailee. The computers are in bailment. The repair shop has to take reasonable care of the computers while they are in their possession. If they fail to do so, they could be held responsible for any damage or loss.