Bailment

The operation and applicability of the law of bailment can be overlooked in the course of commercial relationships. The recent case of Petroleo Brasiliero v E.N.E. Kos 1 Limited is a timely example of how the historical principles of bailment remain highly relevant today and how the law on bailment is still developing.

Recap

A bailment relationship occurs when goods are transferred to another party for a specific purpose on condition that the goods are returned to the owner, dealt with according to the owner's instructions or kept until the goods are reclaimed. Ownership of the goods never changes; the only variable being the party that has possession of the goods.

Where a bailment relationship exists, certain duties are imposed on both parties.