There are three different types of bailments: those that benefit both parties, those that benefit only the bailor, and those that benefit only the bailee. We’ve outlined some of the most important details about each below.
Bailments That Benefit Both Bailor and Bailee
This type of bailment is referred to as a service agreement bailment. For instance, parking your car in a paid parking lot benefits both parties, because the bailor is able to park their car in a secure lot while the lot owner is paid for the service. In service bailments, a bailee is liable for any damage that results to the bailed items if they are negligent in their duties.
Bailments That Benefit Only the Bailor
This is referred to as a gratuitous (free) bailment. Free valet service would be an example of this because the valet service (in this case, the bailee) doesn’t receive compensation for parking your car. A bailee can face liability for damaging the bailed items if they are grossly negligent or act in bad faith while safeguarding the asset.
Bailments That Benefit Only the Bailee
These bailments are called constructive bailments. Checking a book out of the library is a common example. When you check the book out, you become the bailee while the library is the bailor, which gets no benefit from the relationship. It does, however, still expect you to return the book at the end of the rental period.
In this type of bailout, the bailee faces liability for basically any damage to the bailed item. This is the highest standard of care required out of the three categories.