To ensure the interests of the parties as well as limit disputes, when drafting the contract for bailment of property, the parties should draft the following fundamental contents:
1. Information about the parties to the contract
The parties should state information regarding the bailor and the bailee. Individuals should provide details such as full name, identification card number, contact address, phone number, email, etc. Legal entities should provide their name, head office, tax code, and the authorized signatory (legal representative or authorized representative). When signing the contract, it is important to pay attention to the signing authority of each party, to avoid the case that the person signing the contract does not have the authority to sign the contract.
2. Property to be kept and related information
The contract needs to state the name, quantity, value, and status of the property, as well as relevant information regarding the preservation of the property, such as the means of transport and the location of storage.
3. Terms of contract
The contract for bailment of property needs to have a clear term, specifying the beginning and the end of the agreement.
4. Service fees
According to the regulations of law, the bailor may or may not have to pay fees to the bailee. This will be upon the agreement of the parties. Therefore, this contract should stipulate service fees, payment terms, and payment methods.
5. Responsibility for property preservation
In essence, the contract for bailment of property has the transfer of the property and transfer of possession from the bailor to the bailee. Therefore, the bailee should preserve and safeguard the property within the agreed-upon duration of the parties.
6. Rights and obligations of the parties
The contract should stipulate the rights and obligations of the parties. The parties can refer to the contents as follows:
(i) Rights of bailors of property: (a) Reclaim the property at any time subject to giving reasonable prior notice to the bailee if the bailment contract does not specify a period (the parties should agree on what is considered as a reasonable period); and (b) Demand compensation for loss of or damage to the bailed property caused by the bailee, especially the responsibility of the bailee in case of property damage due to force majeure.
(ii) Obligation of bailors of property: (a) Inform the bailee of the condition of the property and the appropriate safekeeping measures upon delivery of the property; if the bailor fails to inform the bailee and the property is destroyed or damaged as a result of inappropriate safekeeping, the bailor must be liable itself for such destruction of or damage to the bailed property and must compensate for other damage caused; (b) Pay the bailment fees in full, at the time and by the method as agreed.
(iii) Rights of bailees of property: (a) Require the bailor to pay the agreed bailment fees; (b) Require the bailor to pay the reasonable costs of taking care of the property where the bailment is free of charge; (c) Request, at any time, the bailor to take back the property subject to giving reasonable prior notice to the bailor where the bailment is for an indefinite period (the parties should agree on what is considered as a reasonable period); (d) Sell the property in the interests of the bailor where the bailed property is in danger of being damaged or destroyed, inform the bailor thereof and pay the proceeds of the sale to the bailor after deduction of reasonable expenses incurred for the sale of the property.
(iv) Obligation of bailees of property: (a) Take care of the property as agreed and return it to the bailor in the same condition in which the bailee received it; (b) Change the method for safekeeping of the property only where such change is necessary for better safekeeping of such property and provided that the bailor is notified immediately of the change; (c) Notify promptly the bailor in writing and request the bailor to advise, within a certain period, a solution where, due to its nature, the bailed property is in danger of being damaged or destroyed (The parties should agree on the time limit); If the bailor fails to reply within such period, the bailee has the right to take all necessary measures to take care of the property and to require the bailee to reimburse the costs incurred; (d) Compensate for damage where the bailee causes any loss of or damage to the bailed property, except in the case of an event of force majeure.
7. Agreement on termination of contract
The contract should regulate the conditions and procedures to terminate the contract prematurely or when the termination conditions are met.
In addition to the aforesaid provisions, the parties may include additional agreements in the contract regarding the terms of penalties for violations, compensation for damages, dispute resolution, and the responsibilities of each party in case of delayed delivery or receipt of property. It can be seen that, for valuable property, when drafting the contract for bailment of property, the parties should agree clearly on the contract, avoiding vague or ambiguous provisions. Failure to do so may result in disputes if the property is damaged, incur losses, or go missing during the bailment of property.
Above is the content of the article “Skill in drafting the contract for bailment of property”. Hope the above sharing is useful for those who are interested in this issue.