Bailment & Agency

Muhammad Sohaib Ashraf
Lecture # 8
“the transfer of possession, but not the title of
personal property by one party to another, under
agreement”
 Bailor: “the party who gives up possession,
but not title, of property in a bailment”
 Bailee: “the party who acquires possession

but not title of personal property in a
bailment”
 1) parties must agree that the same property
is to be returned to bailor, or accounted for
as directed, although possibly altered in form
 2) there must exist both a delivery and

acceptance of property
 Duty of Bailor:
 Duty of Bailee:
◦ tort of conversion
 1) Sole Benefit of Bailor: possession of
personal property is transferred to another
for purposes that will benefit only the bailor
 2) Sole Benefit of Bailee: transactions in
which the possession of personal property is

transferred for purposes that will benefit only
the bailee
 3) Mutual Bailment: when personal property is
transferred to a bailee with the intent that
both parties will benefit
 Exceptions: a) where property is taken from
bailee under valid legal process

b) when a person to whom property is
delivered has better entitlement to
possession than the bailor
 4) Involuntary Bailment: property comes into
possession unintentionally or by an “act of
God”.
 Mutuum: loan to another with expectation

that goods will be used up and replaced with
like goods of equal amount (not a bailment)
“the relationship that exists between a person identified as
a principal and another by virtue of which the latter may
make contracts with third persons on behalf of the
principal
 Agent: “party appointed by the principal to
enter into a contract with a third party on
behalf of the principal”
 Principal: “party who appoints a second party
to serve as an agent”
 Third Party
 Principal authorizes the agent to deal with a

third party.
 Principal must indicate that the agent is to
act for and under the control of the
principal.
 Agent must consent to act on behalf or and
subject to the control of the principal.
 Principal’s authorization to the agent can be
express or implied.
 Fiduciary relationship.
 Contract is between the principal and third
party.
 Agent has the authority to represent the principal.
 Principal is liable for the agent’s acts.
 Agent’s duties require judgment, discretion and
decision-making.
 Key issue is degree of control.
 Principal requirements:
 Agent requirements:
 Agents are responsible for “tortuous” activity.
 Agents generally cannot appoint sub-agents.
 Agency by Appointment: POA
 Agency by Ratification
 Ratification is a principal's approval of an act of its agent where the agent lacked
authority to legally bind the principal. Ratification defines the international act whereby
a state indicates its consent to be bound to a treaty if the parties intended to show their
consent by such an act.
Agency by Conduct to signify the security given, by authority of the government, under the
great seal
 Agency by Operation of Law

 Universal
 General: “one who is authorized to execute
the principal’s business of a particular kind,

or all the principal’s business at a particular
place”
 Special: “one authorized by the principal to
execute specific acts”

 Borrowed Servant
 Obedience to instructions.
 Good faith/loyalty.
 Skill, judgment, and discretion.
 Obligation to account.
 Relay information.
 Appropriate compensation.
 Reimbursement for expenses.
 Indemnification for losses.
 Right of lien against the agent.
 Protection from injury.
 Contractual liability to the principal.
 Contractual liability to the agent.
 Tort liability.
 Employee/Employer: employee is the
“person hired to perform work and who is
obligated both as to the work to be done
and as to the manner in which it is to be
done”
 Employer is the “party who employs
employees to do certain work”.
 Partnerships: “voluntary association of two
or more people who have combined their
resources to carry on as co-owners of a
lawful enterprise for their joint profit”
 Independent Contractor: “one who contracts
to perform certain tasks for a set fee, but who
is independent of the control of the
contracting party as to means by which the
contract is executed, except for specifications
established in the contract”
 Agreement and Performance
 Mutual Agreement
 Discharge by Principal
 Operation of Law:
◦ death/insanity of agent or principal

◦ bankruptcy
◦ destruction of subject matter
Jazakallah

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Muhammad Sohaib Ashraf

 Bailee: “the party who acquires possession

 2) there must exist both a delivery and

which the possession of personal property is

bailee under valid legal process

 Mutuum: loan to another with expectation

 Principal authorizes the agent to deal with a

 Agency by Operation of Law

the principal’s business of a particular kind,

execute specific acts”

◦ death/insanity of agent or principal

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