Bailor Beware: Limitations and Exclusions of Liability in Commercial Bailments

In the United States, bailees often include in contracts exculpatory clauses for limited liability while in the possession of a tangible item of personal property. However, whether the bailee may properly avoid liability through a contract with the bailor is still an issue which is not yet fully developed in the United States. This article examines the use and ramifications of using exculpatory clauses limiting liability for negligence in bailment contracts. The article discusses several techniques that bailees use to limit their negligence liability, the feasibility of applying the U.C.C.’s Article 2 to bailment transactions, and how a bailor may procure insurance to protect against bailee negligence.