Module: | Guarantee, Indemnity, and Bailment
Q8: Which of the following statements, regarding bailment in banking, are correct?
1. When a bank accepts articles for "safe custody," a contract of bailment is created where the bank is the bailee.
2. The bank's primary duty in a "safe custody" bailment is to take reasonable care of the goods, and return them on demand.
3. A "safe deposit locker" is considered a modified bailment, because the bank does not take custody of the specific contents.
4. In a "safe deposit locker" relationship, the bank's only duty is to provide space, and it is not liable for exercising due care.
2. The bank's primary duty in a "safe custody" bailment is to take reasonable care of the goods, and return them on demand.
3. A "safe deposit locker" is considered a modified bailment, because the bank does not take custody of the specific contents.
4. In a "safe deposit locker" relationship, the bank's only duty is to provide space, and it is not liable for exercising due care.
✅ Correct Answer: B
"Safe custody" creates a standard bailment contract where the bank (bailee) must take reasonable care of the specific goods (Statements 1 & 2). A "safe deposit locker" is a modified bailment; the bank does not take custody of the unknown contents but must still exercise due care and diligence in protecting the locker (Statement 3 is correct, Statement 4 is incorrect).