CHAPTER 8
Protecting Patrons’ Property
CONTENTS
A. Chapter Competencies
B. Introduction
C. Risks to Property in the Hotel
D. Limited Liability—Modern
Limitations on the Absolute
Liability Rule
E. Clothes and Other Personal
Property
F. Fire
G. Estoppel: Loss of Limited
Liability
H. Hotel’s Negligence
I. Liability During Check-In and
Check-Out
J. Bailment
K. Answers to Case Example
Questions
L. Answers to End-of-Chapter
Questions
Chapter Summary
The liability of hotels and restaurants for their guests’ and patrons’ property has appropriately changed over
time. The common law imposed unlimited liability on inns and food establishments. Most states have since
passed limiting statues that significantly reduce this liability.
For money, jewels, and securities, limiting statues typically require that hotels provide safes and post
notices in prescribed places announcing the availability of the safes and the hotel’s limited liability.
The specifics of these statues vary from state to state. Only if the hotel strictly complies with the statutory
requirements will it benefit from limited liability. Less than complete compliance may result in full
liability.
Other guest property that is brought to a hotel, such as clothes or sporting equipment, limiting statutes
provide limited liability for hotels unless the loss is caused by the hotel’s negligence. An exception is the state
of Nevada, which limits the liability of innkeepers even when they are negligent.
For property not covered by the limiting statutes, the liability of a hotel or restaurant is based on laws
regarding bailment. If no bailment exists, the business is not liable for loss or theft of property. If a bailment
does exist, the hotel or restaurant will be liable for the loss only if it failed to exercise the requisite degree of
care for the bailed goods. The level of care required varies depending on whether the bailment is for the sole
benefit of the bailor, the sole benefit of the bailee, or a mutual-benefit bailment. If the hotel or restaurant
renders the care required, the establishment will be free from liability even though property is stolen or
otherwise disappears.
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A. Chapter Competencies
After studying Chapter 8, the student should be able to
1. identify common items thieves steal from hotels.
2. describe a typical profile of a hotel thief.
3. identify some of the strategies used by hotels to stem the increase of hotel thefts.
4. identify the problems with traditional keys.
5. provide solutions to avoid problems with traditional keys.
6. explain the role of insurance and guest property.
7. describe the doctrine of “infra hospitium.”
8. list the exceptions to the absolute liability rule.
9. describe the prima facie liability rule.
10. identify the six states that have adopted the prima facie liability rule.
11. list the provisions to the modern limitations to the absolute liability rule.
12. discuss the reasoning behind limited liability.
13. explain the provisions of the limited liability rule.
14. identify the three requirements for limited liability.
15. state the meaning of “posting” with reference to the availability of a safe.
16. discuss the interpretation of posting requirements.
17. state the meaning of the term “conspicuous” with reference to posting.
18. identify the type of property to be deposited in a safe as required by most state statutes.
19. discuss the liability of hotels considering property not required to be placed in a safe.
20. state the reason for the requirement of door locks and window fastenings mandated by some states’
limiting statutes.
21. discuss the liability for property in checkrooms and baggage rooms.
22. explain the term “merchandise samples.”
23. discuss the provisions for merchandise samples under limiting liability statutes.
24. discuss the liability for guest property in transit.
25. identify the property not covered by limiting liability statutes.
26. discuss the liability of hotels and inns for property lost due to fire.
27. define the term “equitable estoppel.”
28. identify the circumstances under which the principle of estoppel can be imposed.
29. discuss the liability for valuables during check-in and check-out.
30. discuss the role of guest status for purposes of limiting liability during the check-out process.
31. define “bailment.”
32. define “bailor.”
33. define “bailee.”
34. identify at least three essential elements of a bailment.
35. discuss the bailment of cars.
36. discuss the effect of bailment on liability.
37. identify three types of bailment.
38. identify the circumstances under which each type of bailment exists.
39. give examples of each type of bailment.
40. discuss the burden of proof in bailment cases.
41. define “prima facie case.”
42. discuss the liability for items inside a bailed property.
43. identify the exception to the liability for items inside a bailed property.
44. discuss the rules particular to the bailment of cars.
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45. discuss the liability for a patron’s property in a restaurant, bar, or cloakroom.
46. define “constructive bailment.”
47. discuss the application of limiting liability to concessionaires.
B. Introduction
❊Ask the students about the various types of property guests bring to hotels and the areas where
property might be left on the premises.
C. Risks to Property in the Hotel
❊Emphasize the problem of theft in hotels.
■Hotel theft is a problem the hospitality industry has not fully solved.
■The liability of the innkeeper for losses has lessened over time.
❊Hotel theft.
■Hotel thefts are not rare. Hotel crime is an industry-wide problem.
■Describe the profile of a typical thief.
■Discuss various strategies hotels use to stem the increase of hotel thefts.
❊Keycards and keys.
■Explain the role of technology in hotel locks.
■Discuss the advantages and disadvantages of traditional keys and electronic keycards.
■Ask the students to suggest strategies to avoid problems if a hotel or an inn uses traditional keys.
❊Guests’ insurance does not protect hotels.
■Explain the liability in cases where patron’s property has insurance coverage.
■The hotel is not relieved from liability even if the patron’s property has insurance coverage.
■Normally the insurance policy provides that the insurance company is subrogated (substituted)
to the rights of the guest.
❊Absolute liability for guests’ goods.
■Explain the background of the doctrine of infra hospitium.
•The innkeeper was liable to reimburse the guest.
•This strict rule originated several centuries ago when inns were not always safe and the
innkeeper was often the culprit.
•The rule contributed in no small measure to an increase in the level of safety associated with
travel.
•The rule of absolute liability has been modified.
❊Exceptions to the absolute liability rule.
■The outdated rule that held the innkeeper absolutely liable for guests’ goods was tempered by
three exceptions.
•Act of God, which includes earthquakes, lightning, snowstorms, tornadoes, and floods.
•Public enemy, which includes war time and terrorists activities.
•Negligence by the guest, such as leaving luggage unattended in the lobby.
❊Prima facie liability rule (minority view).
■Explain how six states have adopted a rule that modified the common-law absolute liability rule.
•The six states that have adopted this rule are Illinois, Indiana, Maryland, Texas, Vermont, and
Washington.
•Hotelkeepers are liable for property loss only if the loss occurs through their negligence.
•If the innkeeper can prove that the loss resulted from some other cause, for example, the
innkeeper is not liable.
•If, however, the innkeeper cannot prove that he or she is free from negligence, the innkeeper
will be liable for the loss.
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D. Limited Liability—Modern Limitations on the Absolute Liability Rule
❊Discuss the changes in the hotels’ business environment and their impact on the safety of guests’
property.
■Current law recognizes that the absolute liability rule is unnecessarily burdensome to modern-
day hotels and innkeepers.
■All state legislatures have adopted statutes to significantly limit hotelkeepers’ liability for guests’
property losses, provided the hotels follow specific procedures.
■Maximum recovery allowed to a guest is prescribed by statute.
■Explain that the details of these statutes vary from state to state, although certain common pro-
visions exist.
■If the hotel deviates from the statute in any manner, the common-law rule the hotel will apply
and the hotel will have unlimited liability.
■To qualify for reduced liability, the hotel must strictly comply with the statute’s mandates. Courts
interpret them very strictly.
■The required locations and contents vary from state to state. Typically, notice must be posted at
the registration desk, on the check-in form, and in Guest rooms.
❊Strict interpretation of posting requirements.
■Explain that failure by a hotel to comply strictly with the posting requirements will result in loss
of the limited liability.
❊Conspicuous posting.
■The notice must be displayed in such a way that people are likely to see it.
■It must be clearly visible and readable.
■Explain that some hotels print the information required to be posted on registration cards or on
the register in which arriving guests sign their names. This is generally not a permissible substi-
tute for mandated posting elsewhere.
❊Posting notice of hotel’s limited liability.
■Explain that it is not enough for a hotel to conspicuously post the availability of a safe. Virtually
every state’s limiting statute requires that the posted notice also inform guests that the hotel’s
liability is limited. Without that notice, guests are led to believe that if valuables are deposited in
the safe, the guest will be protected for the full value of the deposited items.
❊What property belongs in the safe?
■Explain that not all property brought to a hotel by a guest is appropriate for a safe.
■Explain the ambiguities, giving examples.
❊Theft during check-out.
■The hotel’s freedom from liability is not altered by the fact that the loss occurred as the guest
was preparing to leave the hotel.
❊Languages other than English.
■If a hotel can anticipate guests who speak languages other than English, the hotel is well-advised
to post notices written in those other languages in addition to English. By so doing, the hotel
avoids an argument by non-English-speaking guests that they had not been provided notice of
the availability of a safe or of the hotel’s limited liability.
❊Hotel guest in hotel restaurant.
■Explain the liability under circumstances occurring in other locations in the hotel other than
Guest rooms.
E. Clothes and Other Personal Property
❊Does a hotel have unlimited liability as to items that cannot be put in a safe? The generally appli-
cable answer is no.
■Explain that most states have a statute that limits the hotel’s liability for these types of
property.
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■Where the loss or damage to clothes and other personal property is caused by negligence on the
part of the hotel, in most states, the hotel is not entitled to the benefit of the limiting statute and
will be liable for the full amount of the guest’s loss.
❊Door locks and window fastenings.
■Explain that some states’ limiting statutes require a hotel seeking to benefit from limited liabil-
ity to maintain suitable locks and bolts on doors and fastenings on windows.
❊Checkrooms.
■Explain that while many provisions of limiting statutes may apply only to hotels, those that have
a separate section for checkrooms may also cover restaurants because both hotels and restaurants
typically have a coat-check area.
❊Baggage rooms.
■Explain that most states’ limiting statutes restrict a hotel’s liability for loss or damage caused to
guests’ property while stored in a baggage or storage room.
■However, if the loss or damage to property stored in the baggage room is caused by negligence
on the part of the hotel, the statutes customarily provide that the hotel is liable for the full
amount of the guest’s loss.
❊Merchandise samples.
■Explain that merchandise samples refer to goods for sale brought to a hotel by a salesperson-
guest.
■Even in common-law days, the unlimited liability rule applied only to property brought to the
hotel for personal use and not to property brought for commercial purposes.
■Many limiting liability statutes provide that innkeepers have no liability for damage to or loss of
merchandise samples unless the innkeeper receives written notice that the samples are in the
hotel and acknowledges in writing that a guest has such property and its value. If the guest gives
the necessary notice and the hotel makes the required written acknowledgment, the statutes cus-
tomarily limit the hotel’s liability. Strict compliance with the statute is mandatory if the guest
seeks to hold the hotel liable.
■Some states’ limiting statutes require that a guest who keeps merchandise samples in his room
declare to (inform) the hotel the value of the merchandise. Without that notification, the hotel
is not liable if the property is stolen.
❊Property in transit.
■Explain that most states have limiting statutes that restrict a hotel’s liability for guests’ property
while in transit.
■These statutes customarily provide that if the loss is due to the hotel’s negligence, the hotel’s
liability is unlimited.
❊Property not covered by limiting liability statutes.
■The limiting liability statutes do not cover all property that might be stolen or disappear in or
around a hotel. These statutes apply only to the property of hotel guests; they do not cover the
property of nonguests. The limiting statutes also do not apply to cars.
F. Fire
❊Just as the innkeeper was liable at common law for virtually all losses to guests’ property occurring
at the hotel, the innkeeper was likewise liable where the loss was caused by fire.
■If, however, a fire is caused by the hotel’s failure to exercise reasonable care, the hotel will be
fully liable for the resulting loss.
G. Estoppel: Loss of Limited Liability
❊Hoteliers or their agents may make comments to a guest that result in the hotel losing the benefits
of a limiting liability statute. This is known as the doctrine of equitable estoppel, a legal principle
that precludes a person from claiming a right or benefit because that person made a false repre-
sentation to another person who relied on the statement to his detriment.
❊Implying greater liability.
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❊Misrepresenting risk.
■The principle of estoppel will also be imposed if the innkeeper or an employee misleads a guest
into believing that property can be left safely at a particular place in the inn, causing the guest to
disregard posted directions for safekeeping property.
H. Hotel’s Negligence
❊As we have learned, most limiting statutes do not protect an innkeeper in situations where the loss
of guests’ property is due to the hotel’s negligence.
❊Comparative negligence.
■Consider a circumstance when the hotel and the guest are both negligent and the guest’s loss is
due to the combined negligence. What liability does the hotel have?
■In states that adopted the comparative negligence rule, the hotel’s liability will be reduced by the
extent of responsibility for the loss attributed to the guest.
❊Nevada’s limiting statute.
■Its limitation of liability (maximum $750) applies even if the hotel is not only negligent, but
grossly negligent.
I. Liability During Check-In and Check-Out
❊Generally, when goods are stolen or disappear during check-in or check-out, the courts have found
the limiting statutes applicable and the hotel is not liable for the full loss.
❊Guest status.
■If the person whose property disappears during check-in or check-out is a hotel guest at the time
of the loss, the limiting statute applies.
❊Liability after check-out.
■In many cases, guests retain their status after check-out, and limiting liability statutes still apply.
■At what point in the check-out process does a guest cease to be a guest for purposes of a limit-
ing liability statute?
J. Bailment
❊Another basis of potential liability for a hotel when a guest’s property is lost or stolen is the law of
bailment.
❊Explain the meaning of bailment, bailor, and bailee.
■The guest is the bailor, the hotel is the bailee, and the arrangement is a bailment.
❊Identify the essential elements of a bailment.
■Bailments involve only movable, tangible objects such as cars, clothing, sporting equipment, and
the like. Bailment does not apply to real property (land and buildings).
■Possession of the personal property must be transferred to the bailee.
■The bailee must knowingly accept possession of the bailed property.
■Part of every bailment is an agreement, express or implied, by the bailee to return the bailed
goods to the bailor.
❊Effect of bailment on liability.
■The existence or nonexistence of a bailment directly affects liability. If no bailment exists, nei-
ther does liability.
■A bailee is liable only if it fails to exercise the amount of care required by law in tending to the
bailed goods.
■The requisite care varies depending upon the type of bailment.
❊Bailments are classified into three types.
■The required level of care differs for each classification.
❊Duty of bailor in mutual-benefit bailment.
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■In a mutual-benefit bailment, the bailor has responsibilities as well as the bailee. The bailor is
obligated to warn the bailee of any defects in the bailed property that might result in injury to
the bailee or interfere with the use of the property. This is a form of strict liability; the bailor is
liable for failing to disclose defects even if it is unaware of their existence.
❊Proof of negligence in bailment cases.
■A bailor need only prove delivery of the bailed property to the bailee, acceptance by the bailee,
and either a failure on the part of the bailee to return the bailed property or return the property
in a damaged condition.
■If the bailee is unable to prove it acted reasonably in caring for the bailed property, the bailee
will be liable for any resulting loss or damage.
❊Items inside bailed property.
■Is a bailee liable when valuable property is located inside the bailed property and its presence is
unknown to the bailee?
•Apply the elements necessary for a bailment.
•One exception applies: Most cases hold that, although a bailee may not have known of spe-
cific property in a car, a bailment of that property will nonetheless exist if the bailee could
reasonably anticipate that the property would be in the vehicle.
❊Rules particular to bailment of cars.
■Because of the quasi-public nature of the accommodations industry, hoteliers are not allowed to
limit their liability for loss or damage to bailed property caused by their own negligence. There-
fore, disclaimers of liability on signs or receipts are not effective.
■A hotel with a parking lot or garage that takes possession of guests’ car keys must establish
effective security procedures and systems to avoid liability. The high cost of cars dictates the
importance of proper management and planning.
■A much better practice is to place all the keys in a specified location accessible only to author-
ized employees.
■We have discussed car bailments as involving transfer of the key. Customarily, if a person parks a
car in a lot and retains the key, in the eyes of the law he has not delivered possession of the vehicle
to the lot owner and therefore no bailment exists.
❊Liability for a patron’s property in a restaurant, bar, or cloakroom.
■If a bailment does exist, the hotel or restaurant will be liable if it fails to exercise the necessary
care.
■A constructive bailment, like a mutual-benefit bailment, requires the bailee to exercise reason-
able care of the bailed goods.
❊Checkrooms.
■Many hotels, restaurants, clubs, concert halls, museums, and other public businesses have check-
rooms available to safeguard guests’ valuables.
■In many states, the limiting liability laws cover attended checkrooms and baggage rooms and
limit the restaurant or hotel’s liability for losses occurring there.
■Unless all the terms of the statute are satisfied, the limitation of liability is not applicable.
❊Concessionaires.
■Several plaintiffs whose checked property was not returned from concessionaires have argued
that the concessionaire is not entitled to the benefits of the limiting statutes because those
statutes were designed to protect only innkeepers and restauranteurs. Courts have accepted this
argument and denied the concessionaire limited liability.
K. Answers to Case Example Questions
8-1-1. Did the hotel violate any law by closing the safe during the night?
No, neither a statute nor common law requires that a hotel keep its safe open and available to
guests at all times.
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