What is required for a valid bailment agreement?

A valid bailment agreement is established when there is a temporary transfer of possession of personal property from one party (the bailor) to another (the bailee) for a specific purpose, with the understanding that the property will be returned to the bailor once that purpose is fulfilled. This arrangement does not involve the transfer of ownership; rather, the bailor retains ownership of the property while granting the bailee the right to possess it for a limited time and specific reason, such as storage, repair, or transportation.

This aspect of temporary possession is crucial because it differentiates bailment from other agreements, such as sales or gifts, where ownership is permanently relinquished. The requirement that the purpose must be specific reinforces the idea that the bailment is a legally binding agreement centered around the agreed-upon intent of both parties.

In contrast, the other options present conditions that do not align with the core definition of bailment. The absence of a requirement for both parties to be business entities highlights the accessibility of bailment agreements to individuals and organizations alike, while the option regarding payment illustrates that bailment can exist without compensation, as long as the essential terms of possession and purpose are met.