Discussion: Bailments or Sale by an Entrustee

Bailments or Sale by an Entrustee
A bailee can pass good title to a good-faith purchaser even when the sale was not authorizedby the owner and the bailee has no title to the goods but is in the business of sellingthose particular types of goods.13 For Example, if Gunnells Jewelry sells and repairswatches and Julie has left her watch with Gunnells for repair, she has created a bailment.If Gunnells Jewelry sells Julies watch by mistake (because Gunnells is both a new and oldwatch dealer) to David, a good-faith purchaser, David has valid title to the watch. Julie willhave a cause of action against Gunnells for conversion, and in some states, if Gunnellssold the watch knowing that it belonged to Julie, the sale could constitute a crime, suchas larceny. However, all of these legal proceedings will involve Gunnells, Julie, and possiblya government prosecution, but not David who will take good title to the watch.In the case of an entrustee who is not a merchant, such as a prospective customertrying out an automobile, there is no transfer of title to the buyer from the entrustee.Similarly, there is no transfer of title when a mere bailee, such as a repairer who is not aseller of goods of that kind, sells the property of a customer.

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