How Bailment Works:

A bailment works when one party transfers goods to another while retaining ownership of goods. The person who is holding the property is known as a bailee. The bailee may hold the property for any length of time until the purpose of the transfer of property is complete.

There are several reasons why a bailment may be necessary. In many cases, a property owner may be unable to process a material fully and would need to send that out for subcontracting. In other cases, storage may simply be a reason to transfer goods while retaining ownership.

Example of bailment:

An example of a bailment would be if Susan owned a logging company that processed cut trees into lumber. Susan's company sold lumber as planks, boards and plywood to large home improvement companies across the country. One day, a new client contacted Susan. This client wanted to purchase boards of a specific type of tree that was difficult to find, which Susan had in limited quantities, and treated with a particular kind of sealant, which Susan did not work with.

Susan did some research and discovered that Jake owned a carpentry company not far from her location. Jake had the type of sealant that Susan needed to treat her planks with for her new client. After some discussion, Jake agreed to seal the boards for Susan in exchange for financial compensation for his services.

Susan loaded a large truck and brought her boards to Jake's carpentry shop. At the end of the week, Jake had treated all of the lumber Susan had brought him and told Susan they were ready for pickup. Susan came, loaded the lumber back onto her vehicle, and paid Jake for his time. While it was in his possession, Jake never owned the lumber and was simply preparing the lumber in a way that Susan's lumber company was unable to do. Had Jake damaged the product in any way, he would have had to compensate Susan.

Bailment vs. Bail

While these two terms sound similar, they are very different. We use bailment to describe the transfer and holding of goods. Bail is a term used in the incarceration industry. Bail is the temporary release of a person from incarceration while they await trial, usually due to a fee.

Bail is not a right, and the accused is not guaranteed to be released from custody while they await their court appearance. The judge presiding over the case decides to grant bail. In addition to the decision of whether to offer bail to an accused, the judge also sets the amount of bail to release the accused.

This amount is often dependent on the type and severity of the crime. In many cases, the more violent crimes charged to the defendant, the higher the bail. However, it is not just if a defendant is considered a danger to the public, but of how likely they are to stand trial if released from custody. In many high-profile cases, the judge will not grant the defendant bail because they may attempt to flee the country.