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Explaining Bailment, Quasi-Bailment, Sub-Bailment and Substitutional Bailmen

by Paul Bugden (Hextalls)

(Ed. Note: Paul Bugden, the General Editor for the United Kingdom, specializes in advising freight forwarders, terminals, transport operators, carriers, insurers and just about everybody who is in the international freight business. His commentary on bailment will bring some clarity to an area of the law that may not be well understood. Go to his resume on the Editors Page.)

What is Bailment and Quasi-Bailment?

A bailment is effected by a transfer of possession (but not of ownership) from one party, the bailor, to another, the bailee. A party is not a baillee unless he takes actual possession of the goods. Still this party can assume, in contract, similar obligations where he agrees to take possession, but does not actually do so, and delegates this task to a sub-contractor (e.g. where an NVOC carrier subcontracts to a shipping line). This is known as quasi-bailment,

What is sub-bailment and substitutional bailment?

Where a baillee receives the goods, but subsequently passes the possession of goods to a subcontract, he will generally make a sub-bailment, so that he as the original baillee, and the sub-contractor as a sub-bailee, both remain answerable to the bailor throughout the duration of the bailment. However, where the baillee delivers possession to another under or at the direction of the bailor in fulfilment and termination of his contract, he will generally be held to have thereby terminated his obligations as bailee entirely, so that, in delivering possession to the new party, he does so on behalf of his bailor and so as to make a co-called substitutional bailment.

Examples of Substitutional Bailment

An examples of a substitu5tional bailment would be the transfer of possession of the goods from container terminal to carrier in the case of a port to port bill of lading where the terminal and carrier each only assume segmented responsibility for their part of the movement. Upon the above principles the container terminal operator at the load and discharge ports will be either bailee or sub-bailee of the goods as well the actual carrier.

Who is the bailor?

In practice there may be considerable difficulty in ascertaining the identity of the bailor of the goods. Generally speaking this will be the shipper, as it cannot be presumed in the absence of any specific acknowledgement by the bailee of the the rights of later persons) that the identity of the bailor or head bailor will necessarily correlate wit the identity of the holder from tie to time of the bill of lading.

Claims in Tort

A carrier will have contractual liabilities to those with whom he contracts, but this is not his only liability: me may be liable to those and even third parties in tort or bailment. Any party with ownership or some possessory interest in the goods can bring a claim in tort for negligence resulting in physical damage to or destruction of the goods. Furthermore any person with an immediate rigght to possession can bring a claim in the tort of conversion for misdelivery or other deliberate act of wrongful interference with the goods.

Bailment on Terms

A bailment may be a bare bailment or a bailment on terms. Furthermore, any claim against a bailee or subbaillee may be subject to the terms of a co-called HImalaya Clause or a circular indemnity clause in the bill of lading.

Any claims against a tortious wrongdoer may also, as with a claim in bailment be subject to the terms of the bill of lading. Further, where the wrongdoer is in a relationship of bailment with the Claimant (i.e. the claimant is his bailor or head bailor) the terms of any such bailment may be relevant to any liability in tort.

March 16, 2003

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