bail·​ment | \ ˈbāl-mənt How to pronounce bailment (audio) \

Definition of bailment

: the act of bailing a person or personal property

First Known Use of bailment

1554, in the meaning defined above

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bail out

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Last Updated

23 May 2019

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The first known use of bailment was in 1554

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Financial Definition of bailment

What It Is

Bailment is a transfer of custody of a piece of property rather than a transfer of ownership of a piece of property.

How It Works

For example, let's say John Doe owns a big piece of farmland on the eastern shore of Maryland. His adult son wants to move to the area and farm the land.

Rather than transferring ownership of the property to his son, John Doe (bailor) transfers possession or custody of the farmland to his son (the bailee). The son might pay rent or a lease fee in return. The son only receives custody and control of the property, but John still owns it. John is thus responsible for paying the property taxes and is liable for what happens on the land (unless the bailee failed to care for the land properly).

In general, there are three kinds of bailments:

Service agreement bailments, whereby the bailee agrees to perform a service for the bailor (such as park or store a car).
Constructive bailment, whereby the bailee agrees to protect the bailor's asset (such as with a safe deposit box).
Gratuitous bailments, whereby the bailor doesn't receive payment from the bailee for the bailment (such as in free coat checks at a restaurant).

Bailment almost always involves a written contract. Sometimes, that contract is printed on the back of a coat check stub or a claim ticket for valet parking. Bailment can occur without compensation, however.

Why It Matters

When we entrust our property or assets to others, we are often putting those things in bailment. In this sense, the concept is similar to that of fiduciary duty. In both cases, someone is being entrusted with others' assets and must act to protect those assets while in their custody.

Bailment happens every day: at the bank, when we put things in a safe deposit box, at a restaurant when we give the car to the valet, and at the dry cleaners when we leave a dress to be cleaned. The person managing your stock portfolio, and the person managing your rental property also are bailees in a sense.

In bailment agreements, the concepts of "reasonable care" and "entrustment" are crucial. Because the bailee does not own the property, he or she must take reasonable care of the bailed property that the bailor has entrusted to the bailee. Failure to do so can lead to a variety of legal consequences. A bailment ends when the parties agree to terminate the agreement or the purpose of the agreement has been achieved. At that point, the bailee returns the property to the bailor.

Source: Investing Answers


bail·​ment | \ ˈbāl-mənt How to pronounce bailment (audio) \

Legal Definition of bailment

: the transfer of possession but not ownership of personal property (as goods) for a limited time or specified purpose (as transportation) such that the individual or business entity taking possession is liable to some extent for loss or damage to the property — compare deposit, loan for consumption and loan for use at loan

Note: The typical elements of a bailment are delivery of the personal property, acceptance of the delivery, and possession or control of the property. Any of these elements may be actual or constructive. Bailments may be created by contracts, either express or implied, which require agreement, and the agreement may also be express or implied. Contracts for the lease of a car, for sale of goods on consignment, and for the transport of goods are examples of bailments.

bailment for hire
: a bailment that either benefits both parties or only the bailee especially : one in which the bailee receives compensation

called also bailment for mutual benefit, compensated bailment

constructive bailment
: a bailment imposed by law when the bailee comes into possession of the property by accident or mistake (as by finding it or receiving a mistaken delivery)

called also involuntary bailment

gratuitous bailment
: a bailment in which there is no compensation or benefit to one party especially : one that benefits only the bailor — compare commodatum
involuntary bailment
: constructive bailment in this entry

History and Etymology for bailment

Anglo-French bayllment, from bailler to hand over — see bail

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Britannica English: Translation of bailment for Arabic Speakers Encyclopedia article about bailment

Comments on bailment

What made you want to look up bailment? Please tell us where you read or heard it (including the quote, if possible).


appealing forcibly to the mind or reason

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