Bailment - Definition. Punch v. Savoy's Jewellers Ltd. et al.
In Punch v. Savoy's Jewellers Ltd. et al. (Ont CA, 1986) the Court of Appeal usefully sets out some basics of bailment:
Duty of bailees
It may be helpful to first consider the nature of bailment and the duty of bailees. Bailment has been defined as the delivery of personal chattels on trust, usually on a contract, express or implied, that the trust shall be executed and the chattels be delivered in either their original or an altered form as soon as the time for which they were bailed has elapsed. It is to be noted that the legal relationship of bailor and bailee can exist independently of a contract. It is created by the voluntary taking into custody of goods which are the property of another. Such is the situation in cases of sub- bailment: see 2 Hals., 4th ed., p. 688, para. 1501. The facts of this case demonstrate that Savoy was a bailee for reward and that Walker and C.N. were sub-bailees for reward. The transfer of the ring to each of these entities fell within the definition of "bailment".
The bailee for reward must exercise due care for the safety of the article entrusted to him by taking such care of the goods as would a prudent man of his own possessions. Significantly, a bailee is liable for the loss of goods arising out of his servant's theft on the grounds that he is responsible for the manner in which his servant carries out his duty. In the result, it matters not whether the servant is careless, whether the goods are stolen by a stranger, or if the servant himself steals them.
In Morris v. C.W. Martin & Sons, Ltd.,  2 All E.R. 725, Lord Denning M.R. confirmed that when goods are damaged or lost while in the possession of a bailee, the bailee must prove either that he took appropriate care of them or that his failure to do so did not contribute to the loss. If the goods are lost or damaged while they are in possession of the bailee, the burden is on the bailee to show that the damage occurred without any neglect, default or misconduct on the part of himself or any of his servants to whom he delegated a duty. To escape liability, he must demonstrate that the loss was without any fault on his part or the part of his servants. Only if he satisfies the owner that he took due care to employ trustworthy servants and that he and his servants exercised all diligence will he be excused from liability.