Future Business Leaders of America (FBLA) Business Law Practice Exam

What does bailment refer to?

1. Loan of money for business purposes

2. Transfer of possession of property with intent to return

3. Legal claim over property due to debt

4. Temporary seizure of property by law enforcement

The correct answer is: Transfer of possession of property with intent to return

Bailment refers to a specific legal relationship in which the possession of personal property is transferred from one party to another, with the understanding that the property will be returned to the original owner after a certain purpose has been fulfilled. This essentially means that the bailee takes possession of the property but does not obtain ownership rights over it. The intention behind bailment is clear: the property is to be returned to the owner once the agreed purpose is complete, such as borrowing a tool, storing goods, or taking a car for repairs. This definition differentiates bailment from other legal concepts related to property. For example, the loan of money for business purposes involves a financial transaction rather than the transfer of possession of physical property. Similarly, a legal claim over property due to debt pertains to rights against property rather than the temporary possession associated with bailment. The temporary seizure of property by law enforcement is a completely different scenario that involves state intervention and does not involve the mutual agreement or intention to return that characterizes bailment. Thus, the correct understanding of bailment emphasizes possession and the intent of returning the property, which aligns perfectly with the choice identified.