Perfection Strategies for Foreign Inventory Consignors Facing Secured Floating Charges
Foreign inventory consignors defeat prior floating charges by completing PMSI registry filings and notifying existing lenders before destination delivery occurs.
Bailment Bailor Bailee
Meaning
Legal arrangements governing the temporary transfer of physical possession of goods without transferring ownership define the relationships between parties who deliver and receive materials. Under a contract of bailment bailor bailee relationships arise when the owner of the goods transfers them to another party for a specific purpose like storage or transport. The receiving party assumes a duty of care to protect the items until they are returned or disposed of according to instructions.
This arrangement terminates once the purpose of the transfer is completed.
Transfer Duty
Responsibilities assigned during the holding period require the receiving party to exercise reasonable care to prevent damage to the transferred assets. In a commercial bailment bailor bailee agreement the level of care is often defined by the mutual benefit of the transaction. A failure to meet this standard results in financial liability for any loss incurred.
Possession Boundary
The separation of physical control from legal title marks the threshold where this arrangement differs from a sale or a gift. Within the scope of a bailment bailor bailee contract the owner retains the ultimate right of ownership while the custodian holds temporary custody. This distinction protects the owner from third party claims against the custodian.
Return Standard
Redelivery of the exact assets or their designated substitutes remains the final performance obligation of the custodian. Under typical bailment bailor bailee terms the return must occur promptly upon the expiration of the agreed period. The custodian is liable for unauthorized retention if the goods are not returned as scheduled.