I recently wrote about my ongoing project on bailments and the rule of law. Here I will develop the argument.
A bailment is a voluntary assumption of responsibility for another's property. A bailment relationship may exist between A and C where A contracts with B and A consents that B may sub-contract the work to C. The law of contract says the terms C performs on are not binding on A because no consideration for the promise made by A moved from C. However, bailment on terms is a rule that allows C to rely on the terms they perform on against A when A consents to B sub-contracting the work to C on those terms or A and B consent that C should benefit from those terms.
I argue this is contrary to the rule of law, first because it is a duplication. A duplication is where two rules function to resolve one dispute. To avoid duplication we must be able to rationally distinguish the rule in bailments from the rule in contract. If not, duplication is contrary to the rule of law because the rules are only distinguishable based on the language the court is speaking. That is a discretion, not law.
Whether bailments on terms can be rationally distinguished from contract depends on whether bailments is a contextual or conceptual category of law. Conceptual categories of law are based on generic conceptions of events that give rise to rights according to the formal rules of the category a dispute falls into. Contextual categories of law bring together all the law on a particular topic, such as medical law or company law. The formal conceptual rules are the tools that function to resolve the dispute the context it arises in. Therefore, if bailments is a contextual category of law, the formal conceptual rules apply to it. If it is a conceptual category of law, its rules are not dependent on other categories.
Therefore, if bailments is a contextual category of law, if we are to rationally distinguish bailment on terms from contract, it must be performing a function independent of binding consenting parties to terms. Otherwise, there would be two rules functioning to resolve one dispute, and 'bailments' is not a rational reason for distinction, it is the language spoken, a discretion. I explained in my last post why the reasons for the rule cannot place it within the existing conceptual framework, therefore the reason for it to function must be that it is unique to bailments as an independent conceptual category.
If bailments is a conceptual category of law, formally categorising the rule as unique does not overcome the problem of duplication because the reasoning is circular. We cannot rationally distinguish the rule from contract if all we can say is the rule applies where there is a voluntary assumption of responsibility for another's property. That is to reason a consenting third party is bound because there was a bailment and in bailments consenting third parties are bound. Likewise, a bailee is liable because they volunteered and a volunteer is liable because there was a bailment. There is nothing rational here to distinguish why volunteering or consenting means a distinct result is achieved in bailments, only that it is. They are descriptive terms, not substantive reasons for reaching a distinct result. The only difference is the language spoken.
No doubt consent is a rational reason to bind someone to terms. Therefore, it might be argued that the rule should be followed to promote the rule of law. The precedent it sets becomes an independent, authoritative reason because we can be certain that where there is a bailment consenting third parties are bound and it takes priority over contract. That ensures equality before the law to an acceptable degree, even if bailments is not rationally distinguishable from contract. The passage of time means that to treat the next bailments case differently would result in unequal treatment.
However, if contract rules are under-inclusive relative to its substantive objectives, the way to resolve that is to have an open discussion of when parties should be bound to contractual terms. Instead, by resorting to verbal formulae to bind consenting but non-contracting parties causes a second problem for the rule of law. Because bailments is defined only by its descriptive terms, it is only those descriptive terms that determine the boundaries of bailments. Therefore, they can be lightly manoeuvred whenever a judge, at their discretion, thinks the third party should be bound. 'Bailments', therefore, is an inherently uncertain concept. Stapleton, for example, referred to assumptions of responsibility as "labile", while Atiyah called them "contract". The lack of certainty as to what a bailment is means that to follow the rule would continue to erode the rule of law. There is reduced legal certainty because the parties cannot be sure which language the court will speak, contract or bailments, and there is not equality before the law because the rights and liabilities of the parties will depend on what language the court does choose to speak.
That discretion being exercised can be evidenced by looking at the facts in the like cases of The Starsin, The Eurymedon, The New York Star, Scruttons, The Rigoletto, and Singer. I shall not go into the details but they evidence that the descriptive term 'continuous possession' is lightly manoeuvred to reach the desired outcome in the cases without rationalising why continuous possession should matter in reaching a distinct outcome to what the formal rules of contract demand. The outcome is that these like cases have been treated differently in an inconsistent and unequal way. If The Eurymedon, The New York Star, and Scruttons were correct in their judgments, The Rigoletto, Singer, and The Starsin were incorrectly decided on the bailments issues.
Therefore, the duplication of the rules matters because if parties cannot be certain when consent to contractual terms is binding, the rule risks foisting contractual liability on to the parties even if they did not intend their consent to sub-contract to be binding with the sub-contractor. That risks redistributing the contractual allocation of risk and undermining their individual liberty.
In turn, foisting contractual liability, and thus personal rights, onto the parties can reorder established legal rules, such as in secured credit transactions. If courts speak the language of bailments, a creditor's security, and property right, may be treated as inferior to a sub-purchasers personal right to the property. That may be undesirable because a rational response for the increased risk to the creditor is for the creditor to increase the cost of security, or to limit the use of the property bailed over, which is rarely desirable.
Finally, the uncertainty of bailments erodes the rule of law at a principled level. If its boundaries are uncertain, parties can take advantage of that uncertainty by switching between causes of action to avoid limitations of the other. Parties can then win or lose cases without good reason and the law is harder to apply.
The duplication has produced a schism in law, a conceptual incoherence that should be resolved. Maybe consent should be binding, and/or the rule is worth retaining in particular contexts but the way to resolve it is not resort to verbal formulae or semantic tricks because it weakens the rule of law. There should be one rule, not two.
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