Bailee wants bailor to execute release of all claims before returning property.
The letter you describe is a bailment release in which the bailee releases the bailor from all claims. This response contains general information about bailors, bailees, and bailment. At the end of this reponse is a link to a form of release available from US Legal for a bailor's release of bailee from all claims. The form is specifically for bailment of an automobile, but language describing personal property may be substituted for the word automobile.
Bailor Law & Legal Definition.
A bailor is a person who transfers possession of property or goods to the custody of another (bailee), usually under a contract of bailment. A bailment is an act of transferring/placing property or goods in the custody and control of another. A bailment is created by the voluntary taking into custody or possession of goods or property which belongs to another. The bailor need not be the real owner of the property or goods transferred to the bailee, but can be a finder (ex: jewelry) of the property who places it with the bailee. A bailor must act in good faith towards the bailee.
Bailee Law & Legal Definition
A bailee is a person who receives possession of a property or goods through a contract of bailment. Unlike a contract of sale, the bailee has to return the goods or property to the bailor, under a contract of bailment. A bailee is responsible for the safekeeping and return of the property to the bailor or otherwise disposing it off according to the contract of bailment. A bailee is also referred to as a custodian. The bailee owes a duty of care towards the property or the goods of the bailor, when the bailee is in possession of the property. Generally, a bailment is for the exclusive benefit of the bailee. A bailee must have actual physical control of the goods or property and an intention to possess it, in order to create a bailment. However, a bailee has no power to make contracts on behalf of the bailor. A bailee cannot make a bailor liable for his/her own acts. The bailee is responsible for the safekeeping of the property or the goods so transferred. Leaving goods in a sealed and rented box will not amount to bailment, and the holder is not a bailee since he cannot manage or control the goods.
Bailment Law & Legal Definition.
A bailment is the act of placing property in the custody and control of another, usually by agreement in which the holder (bailee) is responsible for the safekeeping and return of the property. Examples include securities left with the bank, autos parked in a garage, animals lodged with a kennel, or a storage facility (as long as the goods can be moved and are under the control of the custodian). There are different types of bailments- "bailments for hire" in which the custodian (bailee) is paid, "constructive bailment" when the circumstances create an obligation upon the custodian to protect the goods, and "gratuitous bailment" in which there is no payment, but the bailee is still responsible.
There is a lower standard of care imposed upon the bailee in a gratuitous bailment, and the parties may contract to hold the bailee free from liability in any bailment. As the law of bailments establishes a lower standard of care for the bailee in a gratuitous bailment agreement, such an agreement or receipt should indicate explicitly that the bailee is acting without compensation.
When a bailment is for the exclusive benefit of the bailee, the bailee owes a duty of extraordinary care. If the bailment is for the mutual benefit of the bailee and bailor, the bailee owes a duty of ordinary care. A gratuitous bailee must use only slight care and is liable only for gross negligence.
To create a bailment, the alleged bailee must have actual physical control with the intent to possess. Physical control and intent to possess will be interpreted according to the expectations of the parties. If a court thinks that liability would be unexpected or unfair, it can usually find that the defendant did not have “physical control” or “intent to possess.”
For example, courts are more likely to find a bailment of a car exists in a garage with an attendant than in a park and lock garage.