The Custodians Law

1. Custody and Custodians

(a)        (1) Custody of property is the lawful possession of property not by virtue of ownership; this occurs when the owner of the property requests another to guard it, and the custodian undertakes to do so.

(2)  The custodian is not obligated to guard the property until he has performed an act of acquisition in respect of the object.

(b) A custodian of property who derives no personal benefit from the custody thereof is a gratuitous custodian

(c) A custodian of property who receives compensation for his custody, or derives any other personal benefit therefrom, without using the property, is a paid custodian

(d) A custodian of property who holds it for the purpose of using or enjoying it without giving compensation is a borrower.

(e) A custodian of property who uses it and gives compensation for such use is a lessee.

Civil Law

(a) Safekeeping of property means the lawful possession of property not by virtue of ownership.
(b) A custodian who derives no personal benefit from the safekeeping of the property is a gratuitous bailee.
(c) A custodian who receives consideration for the safekeeping of the property, or who derives any other personal benefit therefrom, and who is not a borrower, is a bailee for reward.

(d) A custodian who holds property for the purpose of using or enjoying it without providing consideration is a borrower.

2. Liability of Custodians

(a) A gratuitous custodian is required to deposit the entrusted property in a secure location; he is liable for the loss, damage, or theft of the property if such occurred due to his negligence.

(b) A gratuitous custodian who failed to guard properly shall be liable even if the loss ultimately occurred through an unavoidable event, provided it may reasonably be attributed to his prior negligence

(c) A gratuitous custodian who, upon the approach of thieves, robbers, or wild beasts, could have saved the property by calling for help but did not do so, is deemed negligent and liable; however, if assistance could only be obtained for payment, he shall be exempt.

(d) A paid custodian must keep the deposit in a highly secure location and guard it with superior care; he shall be liable for its loss, theft, or damage unless such were caused by circumstances he could not reasonably have foreseen or prevented.

(e) A borrower is liable for loss or damage to the property, regardless of the cause, unless the damage was due to the lender himself.

(f) Where the custodian becomes aware of potential damage for which he would not otherwise be liable under subsections (a)–(c), but fails within a reasonable time to inform the owner or take reasonable steps to do so, he shall be liable to the extent that timely notice would have enabled the owner to prevent the damage.

Civil Law

(a) A gratuitous bailee shall be liable for loss of the property or damage thereto if caused by his negligence.
(b) A bailee for reward shall be liable for loss of the property or damage thereto, unless such loss or damage was caused by circumstances which he was not required to foresee and could not have prevented; however, where the purpose of safekeeping was ancillary to the principal purpose of holding the property, the bailee shall be exempt from liability if the loss or damage was not caused by his negligence.
(c) A borrower shall be liable for loss of the property or damage thereto, regardless of the cause thereof, provided that his liability shall not be more onerous than that of a person in unlawful possession of the property.
(d) Where a custodian becomes aware that damage may be caused to the property for which he is not liable under subsections (a) to (c), and fails to notify the owner of the property thereof within a reasonable time or to take reasonable measures to notify him, he shall be liable for such damage to the extent that timely notification would have enabled the owner to prevent the damage. 

2A. Exemption from Duty of Custody

(a) The Custodians Law do not apply to real estate, banknotes, or property that does not belong to members of the covenant.

(b) The Custodians Law do not apply if, at the time of deposit, , the owner was indebted or subordinated to the custodian.

3. Increased Liability

A gratuitous custodian or paid custodian who received property shall not transfer it to another person unless expressly or implicitly authorized to do so; if he does, he shall be liable for any loss or damage to the property.

Civil Law

A gratuitous bailee or a bailee for reward who received property for the purpose of personal safekeeping and who delivered it to another person without having been expressly or impliedly authorized to do so shall be liable for loss of the property or damage thereto as a borrower

4. Limitation of Liability

(a) A custodian is not liable for loss or damage to the property resulting from normal use in accordance with the terms of custody or due to natural wear and tear.

(b) If the property is lost or damaged due to a defect that existed at the time of delivery to the custodian, a gratuitous custodian is exempt from liability, while a paid custodian remains liable, unless the depositor was aware of the defect at the time of deposit.

(c) However, the provisions of subsections (a) and (b) do not reduce liability in cases of negligence.

Civil Law

A custodian shall not be liable for loss of the property or damage thereto resulting from ordinary use of the property in accordance with the terms of the safekeeping, or from natural wear and tear, or from a defect existing at the commencement of the safekeeping; provided that nothing herein shall derogate from his liability for negligence. 

5. Compensation and Indemnification

(a) Where the custodian is liable for the loss or damage of the property, the owner shall be entitled to compensation equal to the value of the deposit at the time of loss or damage.

(b) Where the custodian is not liable for the loss or damage, but has a right of compensation or indemnification against a third party due to the loss or damage —and such right arises from the nature of the property— the owner may recover from the custodian his loss out of such compensation or indemnity.

Civil Law

(a) Where the custodian is liable for loss of the property or damage thereto, the owner of the property shall be entitled to damages recoverable for breach of contract.

(b) Where the custodian is not liable for the loss of the property or damage thereto, but has a right to compensation or indemnification from a third party in respect thereof, the owner of the property may claim his loss from the custodian out of the compensation or indemnification due to the custodian.

6. Authorization as needed

(a) The custodian is obliged to perform any urgent and unforeseeable act that is reasonably necessary to prevent damage that may be caused to the property.

(b) If the act of rescue to prevent damage involves expenses – the gratuitous custodian is exempt from incurring such expenses, whereas the paid custodian is liable for them.

Civil Law

A custodian may perform any urgent and unforeseeable act reasonably required to prevent damage likely to be caused to the property, as though he had been authorized by the owner of the property to do so.

7. custodian Who Transfers to a Sub- custodian

(a) Where a custodian transfers the property to a sub-custodian, the acts and omissions of the sub-custodian shall be deemed those of the custodian himself; and the sub-custodian shall also be liable to the owner of the property to the same extent as to the custodian, if the delivery was without the owner’s authorization.

(b) However, if the transfer of the property was with the owner’s authorization, whether express or implied, the sub-custodian shall be liable only to the owner of the property.

Civil Law

(a) Where a custodian has delivered the property to a sub-custodian, the acts and omissions of the sub-custodian shall be deemed to be the acts and omissions of the custodian, and the sub-custodian shall also be liable to the owner of the property to the same extent as he is liable to the custodian.

 (b) The provisions of subsection (a) shall apply whether or not the delivery of the property was made with the authorization of the owner of the property, provided that nothing therein shall derogate from the custodian’s liability under section 3 or under any other law.

8. Indemnification

(a) The owner of the property is obliged to indemnify a paid or gratuitous custodian, as well as a holder of a pledge or other security, for the reasonable expenses they incurred and for the obligations reasonably undertaken by them in consequence of the custody, up to the value of the property.

(b) Every custodian is entitled to indemnification as stated in subsection (a) for an act performed pursuant to Section 6.

Civil Law

(a) The owner of the property shall indemnify a gratuitous bailee, as well as a holder of a pledge or other security, for reasonable expenses incurred and reasonable obligations assumed by them in connection with the safekeeping.

(b) Any custodian shall be entitled to indemnification as provided in subsection (a) in respect of any act performed pursuant to section 6.

9. Lien

The custodian shall have a right of lien on the property for any amount owed to him by the owner of the property as a result of the custody.

Civil Law

A custodian shall have a right of lien over the property to the extent of any amount due to him from the owner of the property in connection with the safekeeping.

10. Set-Off

Mutual debts between the owner and the custodian arising from the custody may be set off against each other.

Civil Law

Obligations owed by the owner of the property and the custodian to one another in connection with the safekeeping may be set off against one another.

11. Owner Who Has Not Reclaimed the Property

A custodian who is entitled to return the property to its owner and has fulfilled his obligation to do so, but the owner has not accepted it, the custodian may apply to the court for instructions regarding the disposition of the property and shall be exempt from all liability if he acts in good faith according to the court’s instructions; and if he is a paid custodian, his liability for loss of or damage to the property and his right to indemnification shall be as that of a gratuitous custodian, even without applying instructions from the court; and if he is a borrower, his status shall be as that of a paid custodian.

Civil Law

A custodian who is entitled to return the property to its owner and has taken all steps required of him to do so, but the owner has failed to accept it, may apply to the court for instructions as to the disposition of the property and shall be exempt from all liability if he acted in good faith in accordance with the court’s instructions; and where the custodian was a bailee for reward or a borrower, his liability for loss of the property or damage thereto, and his right to indemnification, shall be as those of a gratuitous bailee, even if he did not apply to the court for instructions.

12.The Status of a Hotel Owner

(a) In this section: “Hotel” includes a pension and another guesthouse;

"Hotel owner" – includes any person managing a hotel;

"Guest" – anyone who has been provided with accommodation in the hotel.

(b) With regard to a guest's property located in the hotel, the hotel owner shall be deemed a paid custodian.

(c) If the property consists of money, securities, or other valuable items, subsection (b) shall not apply unless the guest has notified the hotel owner of such items and, at the owner's request, has deposited them with the owner for safekeeping.

(d) The hotel owner shall be liable even if he was not notified of the loss or damage to the property within a reasonable time after the guest became aware, or ought to have become aware, of such loss or damage.

(e) The hotel owner shall have a right of lien over the guest's property located in the hotel, or deposited with him pursuant to subsection (c), to the extent of any amount owed to him by reason of the safekeeping or the hospitality provided.

Civil Law

(a) In this section—

“Hotel” includes a boarding house and any other lodging establishment;

“Hotel owner” includes any person in charge of the management of a hotel;

“Guest” means a person to whom accommodation has been provided in a hotel.

(b) With respect to a guest’s property located in a hotel, the hotel owner shall have the status of a bailee for reward.
(c) Where such property consists of money, securities, or other valuables, subsection (b) shall not apply unless the guest has notified the hotel owner thereof and, upon demand, delivered them into his custody.
(d) A hotel owner shall be exempt from liability under this section if notice of the loss of the property or damage thereto was not given to him within a reasonable time after the guest became aware of it or ought to have become aware thereof.

(e) A hotel owner shall have a right of lien over the guest’s property located in the hotel or delivered into his custody pursuant to subsection (c), to the extent of any amount due to him in connection with both the safekeeping and the accommodation.

13. Definition

For the purposes of this law, "owner of the property" in relation to a custodian – including anyone for whom the custodian holds the property.

Civil Law

For the purposes of this Law, “owner of the property,” in relation to a custodian, means any person on whose behalf the custodian holds the property.

 14. Application

The provisions of this Law shall apply to the custody of property unless a different intention is implied by the agreement between the parties.

Civil Law

The provisions of this Law shall apply to the safekeeping of property where no special provisions governing the matter are prescribed by any other law, and in the absence of any contrary intention implied from the agreement between the parties.

Sections 15–16 are repealed.