Entrustment

Entrustment is the act of delivering property or responsibility to another person to manage, use, or dispose of it on the entrustor’s behalf. In law, ownership often remains with the entrustor while the entrustee gains possession and limited authority, subject to duties and restrictions. The concept appears across private law, including bailment, agency, and trusts, where possession, control, and duties are defined without automatically transferring title.

In bailment, a person hands over goods to another for a specified purpose (such as storage, repair, or transportation), with the entrustee obligated to return the goods or dispose of them as agreed. In agency, an agent acts on behalf of a principal, sometimes affecting legal rights and obligations. In trusts, property is managed by a trustee for the benefit of a beneficiary, often involving a separation of legal ownership and beneficial enjoyment.

In the United States, the Uniform Commercial Code (UCC) addresses entrustment of goods to a merchant who deals in those goods. Under UCC 2-403, entrusting goods to such a merchant gives the merchant the power to transfer all rights of the entruster to a buyer in the ordinary course of business. As a result, the purchaser can acquire good title, even if the goods were stolen or the entruster did not originally hold valid title, provided the sale occurs in the ordinary course. This doctrine promotes commercial certainty but can leave the entruster with limited remedies against the buyer.

Implications include the balance between facilitating commerce and preserving rightful ownership. In other contexts, entrustment relies on contract and fiduciary duties, including care, loyalty, and accounting.