Bailment Loan Agreement: Fill & Download for Free

A frequently asked everyday legal question if there ever was one!Personally, I was raised to believe you never loaned anybody your car anymore than you would loan someone money, or your underwear, not unless you knew them really well, made sure they were protected, and set expectations in advance in writing.Absent any agreement on the subject, liability for damage to your car while a friend has borrowed it will fall under state law, insurance policy rules, and background common law regarding negligence and bailment.Your insurance, if you have it, will generally cover damage to your vehicle while being driven or otherwise borrowed by another party. It will certainly be the primary source of coverage for damage your friend causes to other people and their property. That’s generally on your insurance, not theirs even if they have it. There is a deductible and exclusions (e.g. if they’re driving drunk, recklessly, in a contest of speed, off-road, for hire, out of country, and so on), and they may count it against your safe driver policy and raise your insurance rates.If the damage, presumably in a wreck, came from negligent (or reckless, or intentional) acts by your friend, you and your insurance company have a likely cause of action against your friend for negligence. In other words, they are liable. But it would be hard to collect if they are unwilling, and your insurance company probably won’t try unless a lot of money is at stake.Things get more interesting if it wasn’t your friend’s fault, for example it was an unavoidable road hazard, another driver, or a thief, vandal, flood, elephant attack, a tree fell on it while parked, etc. Common sense would say that if the extra risk came from your friend driving it or while having the benefit of its use (e.g. they parked it in a public lot or at his house, where it got broken into), they should accept the costs associated with operating a car if they are going to enjoy the benefits. Just as they should pay for the parking lot for a week, and cleaning, and filling up the gas, if they are borrowing the car for a week, they should also assume the risk of random damage. An auto rental or lease contract would say the same. This is a grey area as far as I know, but one that ends many friendships. For example, your friend is out at nightclubs. While parked, somebody vandalizes the car. You say that your friend should pay because if they hadn’t been out clubbing it wouldn’t have happened. They say it was a stranger’s fault, not theirs. I think common sense would say they should pay, or at least split it 50/50. But legal liability is unclear.Another sticky situation is if the car develops car trouble while they borrow it — a blown head gasket, flat tire, ruptured oil pan, cracked windshield, stuff that comes from use but it’s impossible to tell if the extra use contributed to the problem.If they borrowed it without permission, or if you loaned it to them with the expectation and understanding that they would take care of any incidents, then you have a bailment. They are holding your car with a promise that they will not let harm come of it.

PledgeBailment of goods as security against the debt for the performance of the obligation or the payment thereon, is known as the pledge.The title of goods remains with the pawnor but the possession of goods passes to the pawnee. Deposit of goods with the lender is the precondition for pledge. There can be actual or constructive possession of goods. It is the duty of the pawnee, not to make unauthorized use of the pawnor’s goods and take reasonable care of the goods pledged.HypothecationHypothecation is the pledging of goods, against the debt without delivering them to the lender.In this arrangement the asset is not delivered to the lender, but kept by the borrower until he defaults in payment of debt. So the possession of asset belongs to the debtor only. There are two parties to hypothecation, where hypothecator is the borrower while hypothecatee is the lender. The right of the two parties depends on the agreement signed between them.MortgageMortgage is used for creating charge against immovable property which includes land, buildings or anything that is attached to the earth or permanently fastened to anything attached to the earth (However, it does not include growing crops or grass as they can be easily detached from the earth). The best example when mortage is created is when someone takes a Housing Loan / Home Loan. In this case house is mortgaged in favour of the bank / financer but remains in possession of the borrower, which he uses for himself or even may give on rent.

Short practical answer, yes, a mortgage looks and acts like a contract: it is a document written in legal language for people to sign in connection with a commercial transaction, that can be enforced in court, and has lots of terms and conditions describing what each party must do, is allowed to do, and may expect of the other party.Like many legal terms (stocks and other securities, loans, bailments, tickets, licenses, settlements) the word mortgage has several meanings, referring alternately to the instrument itself, the transaction the instrument sets out, the relationship or situation thereby created, and the act of doing it.Thus, you can sign a mortgage, which yes, is in that sense of the word a contract (a signed legal agreement) that has a few special rules and conditions under the law. You can also take out a mortgage on a house or other real property, which means a transaction by which the title to the property but not possession is conveyed to a lender, with that conveyance to be undone when the debt is repaid. A house can have a mortgage, which is the condition of having a securitized loan on it. And finally, you can mortgage a house, which is the act of getting a mortgage. In these latter senses, the word mortgage describes the substance of the loan, not the contract that sets out its terms. But these can all describe the same mortgage, just different aspects of the thing.