Final Exam – Bailment, Agency, and Employment Law Study Guide (2026)

Class 9: Bailment, Agency & Employment Law

Bailment
Nature of Bailment
● Transfer of possession of personal property without the transfer of ownership
○ Normally the property will be returned
● Owner of the property is the bailor
○ Transferor of the property
● Person who receives custody of it → bailee
○ During bailment, possession is held by the bailee

Types of Bailment
● Bailment may be contractual or non-contractual
○ Contractual bailment benefits both parties → involves payments
○ A non-contractual or gratuitous bailment may be for the benefit of either
party
○ gratuitous bailment → a bailment where one party provides no
consideration, where there is not intention to create a contractual
relationship
■ the bailment of the coat benefits the bailor (person who owns it)
● Involuntary bailment
○ Ex. customer leaves a coat behind, the restaurateur becomes a bailee of the
coat and cannot refuse to return it at the customer’s request

Rights & Duties of Bailee
● All bailees must take care of the property bailed to them
● Contractual bailments rmay rinclude rexemption rclauses
○ a rcontract rof rbailment rincludes ra rterm rthat rthe rbailee ris rnot rliable rfor
rdamage rto rthe rgoods rwhile rin rher rcustody
○ The rcourts rconstrue rthis rtype rof rexemption rclause rvery rstrictly
■ If rthe rgoods rare rdamaged rfor rany rreason rnot rrelated rto
rthe r actual rperformance r→ rbailee ris rnot rprotected runder
rthe rclause
● Will rbe rstrictly rconstrued ragainst rbailee
● The rstandard rof rcare rvaries rby rthe rtype rof rbailment

Standard rof rCare
● The rstandard ris rlowest rwhen rthe rbailment ris rboth rgratuitous rand rfor rthe rbenefit rof
rthe rbailor.
○ Ex r→ rA rpermits rB rto rleave rher rcar rin rA’s rgarage rwithout rcharge.
● The rstandard rof rcare ris rhighest ron ra rbailee rwhen rthe rbailment ris rgratuitous
rand rfor rthe rbenefit rof rthe rbailee
○ Ex r → r one r borrows r a rfriend’s rcar rfor r personal r use.

Remedies rof ra rBailee
● The rremedies rof ra rcontractual rbut runpaid rbailee rinclude
● Breach rof rcontract r→ rdo rnot rwant rto rpay rfor rservices
Damages rand rquantum rmeruit


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, ● remedies rfor rbreach rby rthe rbailor r→ r main rconcern rof ra rbailee ris
rcollecting rcompensation
○ When ra rbailee rhas rperformed rher rpart rof ra rcontract
■ remedy ris ran raction rfor rthe rcontract rprice
● The rcarrier rmay rthen rsue rquantum rmeruit
○ for rthe rvalue rof rthe rservices rit rhas rperformed rand rfor
rdamages rcompensating rit rfor rits rloss rof rprofits
Lien
● This rgives rthe rbailee ra rright rto rretain rpossession rof rthe rgoods runtil rthe rbailor
rpays rwhat ris rdue rfor rthe rservices
● bailor rcannot rnormally rrepossess rthe rgoods runtil rhe rhas rpaid rthe rsum rdue r(90
rdays)


Right rof rSale r → r after r 90 r days, r can r sell
● The rbailor ris runable rto rpay roff rthe rcharges—say, rhe rbecomes rinsolvent—the
rbailee ris rleft rwith rgoods rshe rcannot ruse rbecause rshe rhas rno rtitle rto rthem,
○ has rthe rburden rof rstoring rthem
● The rbailment rcontract rmay rcontain ra rright rof rsale,
● Until rthe rtime rof rsale, rthe rowner rof rthe rgoods r(or rother rperson rentitled rto
rpossession) ris rusually rentitled rto rrecover rthem ron rpayment rin rfull rof rthe
rbailee’s rcharges
● sale rare rused,
○ first, rto rreimburse rthe rbailee rfor rher rcosts rof rholding rthe rsale rand,
○ second, rto rpay rthe roverdue rcharges rfor rher rservices
○ Any rsurplus rbelongs rto rthe rbailor

Agency
The rNature rof rAgency
● Agency ris ra rrelationship rin rwhich rone rperson, rknown ras ran ragent, ris
rauthorized rby ranother rfor rwhom rthe ragent racts, rknown ras rthe rprincipal, rinto
rcontractual rrelations rwith rthird rparties.
○ The rrelationship rbetween ragent rand rprincipal ris rusually ra rcontractual
rone, rwith rthe ragent rbeing rpaid rby rthe rprincipal
● A rdistinction ris rdrawn rbetween rdependent rand rindependent ragents.
○ An rindependent ragent ris rone rwho rcarries ron ran rindependent rbusiness
rand racts rfor ra rnumber rof rprincipals.
■ Ex. rstockbrokers r→ rplace rorders rwith rclients rto rbuy ror
rsell rshares
○ A rdependent ragent ris rone rwho racts rexclusively ror rmostly rfor ra rsingle
rprincipal.
■ Ex. rinsurance ragents r→ rrepresent ronly rone
rinsurance rcompany


● Sometimes rthe rterm r“agent” ris rused rin ra rgeneral rsense rto rmean r“representative.”
○ Ex. rreal restate ragent r→ rdoes rnot rhave rauthority rto rsell rthe
rproperty rof ra rclient
● Without rthe rpower rto rcontract, ra rrepresentative ris rnot ran ragent rin rthe rlegal rsense

Creation rof ran rAgency rRelationship
● An ragent’s rpower rto rcontract ron rbehalf rof rher rprincipal ris rlimited rto rthe rcapacity
rthe rprincipal rpossesses


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