Canadian Accredited Insurance Broker (CAIB) One Practice Exam

How does tort law dictate a bailee's responsibility for customer goods?

1. Must exercise ordinary care

2. Assume complete ownership

3. Is not liable for any damages

4. Only responsible under contract

The correct answer is: Must exercise ordinary care

A bailee is someone who temporarily takes possession of someone else's property with the understanding that it will be returned after a certain purpose is fulfilled. Under tort law, the bailee's responsibility is centered on the standard of care they are required to exercise regarding the goods in their possession. The standard dictated by tort law states that a bailee must exercise ordinary care. This means that they have the duty to handle the goods with the level of caution and diligence that an average, reasonable person would apply in similar circumstances. The failure to do so could lead to liability for any damages or loss that occur while the property is under their care, as they have not upheld their legal obligation. In contrast, assuming complete ownership does not align with the concept of a bailee's role, since the bailee does not have ownership rights over the goods—they merely possess them. Additionally, stating that a bailee is not liable for any damages is inaccurate because tort law provides accountability for failure in exercising ordinary care. Lastly, being only responsible under contract overlooks the broader implications of tort law, which can impose liability regardless of the existence of a contract if ordinary care is not fulfilled. Thus, emphasizing the requirement to exercise ordinary care accurately reflects the legal expectations placed upon a bailee