Deposit

From Max-EuP 2012

by Simon Schwarz

1. Subject matter and purpose

The deposit (or safekeeping) is recognized by all codifications in the European tradition as a specific type of contract (dépôt, depósito, bewarneming, Verwahrungsvertrag); the same is true, for example, for the uncodified Scottish law. The contract of deposit is defined as an agreement whereby a person (depositor) delivers property to another (depositary) who undertakes the safe custody of that property and, after termination, its return in specie to the depositor (or to a third party identified by the depositor). Under English law, these situations are covered by the general principles of bailment. The latter’s ambit, however, is much broader than the concept of deposit. It covers any agreement relating to the entrustment of property to another irrespective of a particular contractual purpose or the existence of consideration. In addition, bailment can apply to the taking of possession even without the consent of the proprietor. Hence, bailment may be characterized as a hybrid legal concept comprising elements of contract, property and tort. In the following, however, only the aspect of depositum is analysed.

A contract of deposit may relate to any possible form of safekeeping of movable things belonging to someone else. Within this general framework special rules have been developed for particular types of custody. For instance, this holds true for safekeeping in the context of contracts of carriage (carriage, contract of) as well as for the custody of investment instruments, ie the legal and operational infrastructures relating to dealings in financial instruments (intermediated securities). Similarly, the ‘safekeeping of cash’ in bank accounts is subject to a special regime (bank transfers (cross-border)). Another subset of special provisions, to a large extent rooted in uniform law, applies to property which is surrendered by guests to the keepers of inns or hotels (innkeepers’ liability). Finally, some codifications devote a subsection to contracts relating to commercial storage or warehousing (depósito mercantile, magasin general, Lagergeschäft), which is modelled on the general principles of deposit but is supplemented by additional rights and obligations typical for contracts of commercial law (eg Austria, France, Germany, Poland, Spain and Russia).

2. Depositum under Roman law

The contract of deposit represents a very old legal concept whose origins may be traced back to the depositum of Roman law (D. 16,3). It was characterized by two core elements. First, it was considered to be a gratuitous contract; the safekeeping for money was a lease (locatio conductio). Secondly, it was construed as a ‘real’ contract (contractus re), ie its effectiveness was dependent on the real element of delivery of the thing to the depositary. This delivery related only to the transfer of actual physical control over the property, it did not encompass the transfer of title or that of possession in a legal sense (possessio) including the rights resulting therefrom. Hence, the depositor continued to be the legal possessor while the depositary was a mere keeper (detentor).

The task of the depositary was limited to taking proper care of and returning the whole item, including possible fruits obtained during the period of safekeeping, at the (reasonable) request of the depositor. The depositary had no right of use and was neither entitled to remuneration nor granted a property interest in the item. Thus, according to the common understanding in Roman law, a depositum was exclusively in the interest and for the benefit of the depositor. The depositor chose a person of trust who, during the absence of the depositor (eg due to a military campaign), was prepared to look after the depositor’s belongings for no pay. It followed that the contractual liability of the depositary was limited. If the depositary could not return the property or handed back only a damaged item, he was only liable in case he had acted with wilful intent (dolus) or gross negligence (culpa lata). Some jurists argued that the depositary was also liable for failing to display the standard of care that he would have displayed in his own affairs (diligentia quam in suis). This relative or subjective criterion as a yardstick for the due standard of care appeared for the first time in the context of the depositum. If the depositor had to give the items to the depositary in an emergency situation such as insurrection, fire, collapse or shipwreck (depositum miserabile), Roman law foresaw a stricter degree of liability up to the double value (duplum) because in such situation the depositary committed a particularly objectionable abuse of confidence. This continues to be reflected in several codifications as statutory examples of the depot nécessaire (Belgium, France, Luxembourg, Spain, in substance also Québec).

The depositary was entitled to claim reimbursement of the expenses incurred by him on the object while it was in his custody by way of the actio depositi contraria. Furthermore, the depositor had to indemnify the depositary for the loss he sustained as a result of the safekeeping of the property without having to prove the fault of the depositor. Hence, in this respect, a strict liability of the depositor was implemented. This allocation of liability resulted from the principle of utility: only the depositor benefited from the depositum so that the depositary, in principle, should not suffer any economic loss.

Finally, the concept of irregular deposit (depositum irregulare) was known to Roman law. An irregular deposit occurred where money was lodged with the depositary, permitting the latter to use such money and to return an identical amount instead of handing back the very same coins. Such an agreement resembled a loan (mutuum). This is, inter alia, shown by the fact that the parties could also agree that interest be paid. It follows that the depositum irregulare was not necessarily gratuitous. However, the functional difference between a loan and an irregular deposit was that the former was concluded in order to raise money while the latter served the depositor’s need to deposit an item.

3. Regulatory structures of modern legal systems

Apart from some important modifications, many of the above-mentioned elements of the Roman depositum may still be identified in modern legal systems. This is reflected in the Roman terminology still employed in several national legal systems, eg of the Romanistic legal family (depot, depósito, deposito), or Scotland (deposit); similarly, the basic form of the English bailment is explicitly labelled depositum (Coggs v Bernard (1703) 2 Ld Raym 909).

a) Basic elements of the contract of deposit

In several legal systems the gratuitousness of the contract of deposit is still seen as one of its basic elements (Belgium, France, Luxembourg, Spain and Scotland). However, unlike Roman law, they allow for an express agreement for remuneration or consideration (Spain, implicitly Belgium, France and Luxembourg). In Scotland, by contrast, such a contract is not characterized as a genuine deposit, but as a so-called onerous deposit or location custodiae. The English bailment, however, can be for consideration or for no consideration. Some more modern codifications still assume that the contract of deposit is, in principle, gratuitous. At the same time, however, they allow the parties to arrange for remuneration; the latter may be implied from, for instance, the depositary’s profession or general commercial practice (Austria, Czech Republic, Greece, Italy, Switzerland, Louisiana, Québec). If, according to the circumstances, the deposit is usually performed for a consideration, other legal systems reverse the presumption and assume that the usual remuneration has been agreed upon (Germany, Netherlands, Portugal). This development from an agreement imposing primary duties on one party alone towards a truly bilateral (synallagmatic) contract is completed by those legal systems deeming the contract of deposit to be always non-gratuitous, unless there is proof to the contrary (Hungary, Poland, in substance also Russia). A contract of commercial storage in any case relates to the provision of professional services against payment in all legal systems regulating this type of contract.

A similar development may be noted in respect of the concept of depositum as a ‘real’ contract. Indeed, the actual delivery of the thing is still seen as an indispensable prerequisite for the effective constitution of a contract of deposit according to many codifications (Austria, Belgium, France, Greece, Italy, Luxembourg, Spain, Louisiana, Québec) as well as, for example, the uncodified principles of the English bailment or the Scottish deposit. An increasing number of legal systems, however, classify the deposit as being purely consensual in nature so that its effectiveness does not depend on the occurrence of any physical act (Czech Republic, Hungary, Netherlands, Poland, Russia, Switzerland, and the prevailing opinion in Germany). This is due to the fact that the original purpose of the real element of the contract (ie the protection of the depositary against the assumption of a spontaneous and binding obligation to keep something gratuitously in safe custody) has become obsolete because of the general recognition of the depositary’s claim for remuneration.

Predominantly, and consistent with its Roman law origins, only physical movables may constitute the subject matter of a contract of deposit. According to a few legal systems, however, immovables may also be covered (Austria, Portugal, South Africa, English bailment) without the deposit being necessarily re-characterized as a service contract or contract for work.

b) Obligations of the depositary

In principle, the main obligations of the depositary have not changed since the age of Roman law. He is obliged to take reasonable care of the object deposited and must restore it to the depositor in specie whereas he is generally not allowed to use the object (unless this is necessary for its preservation). According to nearly all legal systems, restoration must be made when demanded by the depositor, regardless of any period of time agreed upon between the parties. This still reflects the idea that a depositum is concluded primarily for the benefit of the depositor. In Italy, however, it is possible for the parties to agree upon a minimum term (likewise England). Some legal systems provide for a special right to compensation for the depositary in case of an early termination by the depositor (Austria, Germany, Hungary, Portugal, Switzerland, Russia, Québec, and possibly Scotland) while others allow the depositor to terminate the contract at any time without explicitly providing for any compensation under the law of deposit (Belgium, Czech Republic, France, Greece, Luxembourg, Netherlands, Poland, Spain, Louisiana). However, a corresponding claim may result from general principles of contract law. In addition to the object, the depositary must also restore possible fruits obtained in the course of the deposit (Austria, Belgium, Czech Republic, Germany, France, Italy, Luxembourg, Netherlands, Portugal, Scotland, Spain, Louisiana, Québec).

In many legal systems, the extent of the depositary’s liability depends on whether he receives remuneration for his services. If so, he is liable for any negligence; the onus for exonerating himself rests upon him (Austria, Germany, England, Greece, Hungary, Italy, Spain, Louisiana; Québec (only in case of force majeure)). As to a gratuitous deposit, the idea of Roman law according to which the required standard of care should be mitigated due to the altruistic nature of the contract can still be found in many legal systems, ie the depository may only be held liable if he does not meet the standard of care that he displays in his own affairs (Germany, Louisiana, Russia, in substance also Italy; in England, this question remains unanswered). In some countries the legal rule/exception relationship is effectively reversed (due to the presumption of gratuitousness): in principle, the depositary is merely liable for diligentia quam in suis, unless the parties (exceptionally) agreed upon a remuneration (eg Belgium, France, Greece, Luxembourg, Scotland). Other legal systems do not provide for any limitation of the liability of the depositary (Hungary, Netherlands, Switzerland). If, on the other hand, the depositary alters the place or type of safekeeping, or uses the object without authorization of the depositor, a number of legal systems provide for a stricter standard of liability for any loss or damage (eg Austria, Czech Republic, England, Poland, Spain). Finally, some codifications still deal with the case of the so-called necessary deposit arising from a state of emergency. However, they do not provide for an aggravation of liability sensu stricto in these situations (as Roman law did) but an alleviation of the burden of proof for the depositor, admitting (in contrast to general contract law) proof by witnesses even with regard to high values in dispute (Belgium, France, Luxembourg). According to the law of Québec, by contrast, the depositary’s liability is limited to the level applied in case of a gratuitous deposit, but the depositary is obliged to accept the object. In Spain, the general principles of deposit apply.

Traditionally, the contract of deposit amounts to a personal relationship between the depositor and the person on whom he relies. Hence, the depositary may enter into a sub-deposit only with the depositor’s consent or in case of an emergency (Austria, England, Germany, Greece, Hungary, the Netherlands, Poland, Portugal, Russia; in Scotland, sub-depositing is generally admitted). A further, more modern reason for this is the fact that, in practice, the depositor must know exactly where his objects are deposited so that he is able to request their immediate return for further use (eg in case of ‘just-in-time deliveries’). Moreover, the depositor’s insurance might refuse to cover the lodging of the property with a third person. If a sub-deposit is allowed, some legal systems limit the liability of the main depositary to culpa in eligendo (eg Germany, Greece, Portugal) while others provide for full liability for the actions of the sub-depositary (eg Hungary, Netherlands, Scotland, Russia).

c) Obligations of the depositor

In line with the Roman tradition, some countries still adhere to the basic principle that the deposit is not construed as a fully bilateral contract, ie there is no corresponding (synallagmatic) main obligation on the part of the depositor. However, all legal systems today allow the parties to agree upon a remuneration (or even presume such an agreement) so that the gratuitous deposit only plays a minor role in practice. Typically, therefore, the depositor is obliged to pay to the depositary the sum (implicitly) agreed upon. This remuneration does not usually become due before the return of the deposited object so that the depositary (unless otherwise agreed upon) is required to perform first. However, the depositary often has a right of retention until after full payment of the remuneration (eg Belgium, France, Germany, Luxembourg, Spain; however, Austria, for instance, does not provide for such a right of retention).

Even in case of a gratuitous deposit, the depositor has to reimburse the depositary for his (necessary or reasonable) expenses incurred on the object during the period of safekeeping (Austria, Czech Republic, Belgium, France, Germany, Greece, Hungary, Italy, Luxembourg, the Netherlands, Poland, Spain, Louisiana, Québec; in England only in case of gratuitousness). Furthermore, the depositor is obliged to indemnify the depositary for all the loss he has sustained as a result of the safekeeping. In this regard, in accordance with Roman law, some codifications provide for a strict liability on the part of the depositor (eg Belgium, France, Italy, Luxembourg, Spain). This also applies to legal systems which presume (at least in practice) an implicit agreement on remuneration (Czech Republic, the Netherlands, Louisiana, Québec). In contrast, other countries provide for a liability of the depositor only in case of fault (Austria, Greece, Portugal, Switzerland, in substance also Germany; in Scotland, this question still remains unclear).

Finally, the depositor is obliged to take back the object deposited after termination of the contract (Belgium, France, Luxembourg). If a period for the deposit has been agreed upon, the depositary (in contrast to the depositor) is only entitled to request the early return of the property for a good reason (Austria, Czech Republic, Germany, Greece, Italy, the Netherlands, Poland, Spain, Switzerland, Louisiana; also possibly the case in France).

d) Irregular deposit

A characteristic element of the contract of deposit is that neither ownership nor a general right of use is transferred to the depositary (Belgium, England, France, Germany, Greece, Hungary, Italy, Luxembourg, the Netherlands, Poland, Portugal, Scotland, Spain, Russia, Louisiana, Québec). If the parties provide differently, the contract is not a deposit but an irregular deposit which is (like under Roman law) governed by the rules on loans (eg Austria, Germany, Greece, Italy, Poland, Portugal, Scotland, Spain).

4. Projects of uniform law

In 2007, the Study Group on a European Civil Code presented a European body of rules on service contracts, viz the ‘Principles of European Law—Service Contracts’ (PEL SC), which contain a chapter on deposit (‘storage’, Arts 4:101 ff). These provisions have been incorporated with little (editorial) changes into the Common Frame of Reference (CFR) (Arts IV.C.-5:101 ff). The PEL SC constitute a restatement of the common core of the European legal systems without any major changes. According to its provisions, the contract of deposit is a purely consensual contract which is typically concluded for remuneration and for which the PEL SC establish rather detailed rights and obligations of both parties. In essence, this set of rules corresponds to the existing law. In this regard, a tendency can be observed to assimilate the contract of deposit with the general principles for bilateral (ie synallagmatic) contracts and to abandon the Roman law notion of a gratuitous and altruistic agreement (eg the PEL SC neither provide for a strict liability of the depositor nor for a presumption of a more lenient liability on the part of the depositary).

The liability for items which have been brought by guests into inns or hotels is dealt with in an international Convention concluded under the auspices of the Council of Europe in 1962 (innkeepers’ liability) which is effective in 17 states. Issues relating to the safe custody of financial instruments are covered by a (draft) Convention adopted in 2009 by UNIDROIT (intermediated securities).

5. Private international law

Since the contract of deposit pertains to the law of obligations, the Rome I Regulation (Reg 593/ 2008, contractual obligations (PIL)) is applicable. Concerning the proprietary aspects in the context of deposit (eg possession, protection of possession, ownership) the traditional connecting factor (connecting factors (PIL)) of the actual place of safekeeping (lex rei sitae) applies (property law (international)). As far as rights in rem relating to the depositing of intermediated securities are concerned, both European and uniform law provide for special regimes (financial collateral).

Literature

Herbert Hausmaninger, ‘Diligentia quam in suis’ in Festschrift Max Kaser (1976) 265; Wiesław Litewski, Studien zur Verwahrung im Römischen Recht (1978); The Law Society of Scotland, The Laws of Scotland, vol 8 (1992), entry ‘Deposit’; Reinhard Zimmermann, The Law of Obligations (1996) 204 ff; Andrew Bell, ‘The Place of Bailment in the Modern Law of Obligations’ in Norman Palmer and Ewan McKendrick (eds), Interests in Goods (2nd edn, 1998) 461; Jérôme Huet, Traité de droit civil, Les principaux contrats spéciaux (2nd edn, 2001) 1549 ff; Dieter Reuter, ‘§§ 657–704 (Geschäftsbesorgung)’ in von Staudingers Kommentar zum Bürgerlichen Gesetzbuch (2006); Graham S McBain, ‘Modernising and Codifying the Law of Bailment’ [2008] Journal of Business Law 1; Len S Sealy and Richard JA Hooley, Commercial Law, Text Cases and Materials (4th edn, 2009) 78 ff.

Retrieved from Deposit – Max-EuP 2012 on 22 May 2022.

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