DEFINITION of 'Bailment'

The contractual transfer of possession of assets or property for a specific objective. In bailment, the deliverer of the asset is the bailor, and the receiver is the bailee. In a bailment transaction, ownership is never transfered, and the bailor is generally not entitled to use the property while it's in possession of the bailee. In these ways, bailment differs from gifting and leasing.


Bailment is a legal relationship between two parties, whereby the owner retains full rights to the assets or property but the possesses the property. For example, when a bank holds a borrower's asset as collateral for a secured loan, this is a form of bailment. In this case, the bank is the bailee and the borrower is the bailor.

  1. Bailee

    An individual who temporarily gains possession, but not ownership, ...
  2. Bailor

    An individual who temporarily relinquishes possession but not ...
  3. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  4. Lien

    The legal right of a creditor to sell the collateral property ...
  5. Lease

    A legal document outlining the terms under which one party agrees ...
  6. Consignment

    An arrangement whereby goods are left in the possession of another ...
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