QUESTION 27 The Tasty Restaurant was catering a reception, and discovered that i

Question

QUESTION 27 The Tasty Restaurant was catering a reception, and discovered that it did not have enough coffee mugs for the number of guests expected at the reception. The reception was scheduled for a Monday, and right next door to the Tasty Restaurant was the Happy Grounds Coffee Shop, which was closed on Monday. The owner of the Tasty Restaurant asked the owner of the Happy Grounds if he could borrow 50 coffee mugs for the reception, and the owner of the Happy Grounds agreed. What type of bailment is this? If 20 of the mugs are broken during the reception, what liability will the Tasty have to the Happy Grounds? Why?

Explanation / Answer

The bailment between Tasty restaurant and Happy grounds is a Gratuitous bailment. A bailment with no considerations is called a gratuitous bailment. In this kind of bailment neither the bailor, nor the bailee is entitled to any remuneration or reward. Such a bailment may be for the exclusive benefit of either party. Here, Bailor is Happy Grounds and Bailee is Tasty Restaurant. There is no remuneration or reward involved in this bailment, but there some kind of benefit involved. In this case, benefit is to Tasty Restaurant and Happy grounds has no derived benefit out of this. If 20 mugs are broken during reception, a liability called "trade payables" is applicable. It means, Tasty Restaurant has to pay Happy grounds for the loss incurred or replace the coffee mugs.

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