Bailment is the name given to a process of making delivery of an asset or other type of property. Generally, this type of transaction involves the process in which the owner of the assets opt to temporarily place his asset in the control of another individual. The person by whom the asset is delivered is usually referred to as the bailor, while the person who has received the assets is referred to as the bailee.
Process of Bailment
The process of bailment is not just a casual situation where an individual is asked to act as a caretaker of an asset for a short period of time. Part of the procedure with bailment is that it involves the establishment of a legal relationship between the owner and recipient. The physical possession of the assets is granted to the recipient, while the owner retains full rights to the assets. Certain powers of administration that are related to management of the assets may also be granted to the bailee along with the physical possession of the property or assets.
What does the legal documentation contains?
The legal documentation usually also contains specific instructions on how long the state of bailment will be in effect along with defining the rights of management during the time that the bailment is in effect. Typically, some sort of out clauses are also included in most bailment agreements, these out clauses are related to both the bailor and the bailee.
For example, the bailor has the right to revoke the bailment if there was evidence that the bailee was mismanaging the asset. At the same time, the bailee can terminate the arrangement and he is able to return the property if he finds that the bailor is not living up to the terms of the agreement in some manner.
Bailee can manage rental property in the absence of the owner
When the owner will be unavailable to manage or oversee an asset for a short period of time then a legal state of bailment can be a great option. It might be possible that a bailee may be designated that he can manage rental property in the absence of the owner, or perhaps he is allowed to oversee a stock portfolio for a given period of time. The purpose behind the bailment is to ensure the safety of the assets as the owner knows that even if he is not in a position to manage the asset at the present time then also the asset is in good hands.
Trust must exist between Bailor and Bailee
If someone has delivered assets into the possession of another person then it is nothing to be taken lightly. There must be an existence of a great deal of trust between the owner and the bailee in order for the business relationship to work. Whether you are an owner granting temporary care of assets to another individual, or you are the person who is being asked to serve as a bailee, you have to take great care before entering into a bailment agreement.
