An LV bag left at a restaurant and thrown away as rubbish: must the restaurant pay?

Case summary

The question "is a restaurant obliged to keep lost property" has recently set off a lively discussion on Weibo. The story began when Ms Xu of Nanjing left an LV bag behind after a meal at a restaurant in about April this year. She realised the bag was missing only when she was already on the motorway, and as it was not easy to turn back she telephoned the reception desk at once and asked whether the bag had been found. The receptionist confirmed that it had and undertook to keep it for her, but the two sides did not fix any period or deadline for the safekeeping.

Ms Xu had become pregnant in April and, feeling unwell, stayed in bed at home, so she did not go to collect the bag promptly. Two months later, in about June, she contacted the restaurant again and the reception desk said the bag was still in the cupboard. It was not until mid-August, when she had recovered, that she went to the restaurant to collect it, and she was then told that because she had not come for so long the staff had assumed she no longer wanted it, and that the cleaning staff had thrown her LV bag out as rubbish. She raised the matter with the restaurant repeatedly, but it refused to compensate on the ground that she had lost the invoice for the bag.

The restaurant has since said that losing a customer's bag was certainly the store's fault, and that so long as Ms Xu can produce evidence of the bag's value, the restaurant is willing to discuss compensation.

Is a restaurant obliged to keep lost property?

Under the relevant laws and regulations, is a restaurant under a duty to keep lost property for a customer?

Here the bag was left at the restaurant and found by the restaurant, and a verbal agreement to keep it was later reached with the reception desk by telephone. The nature of the matter had therefore changed from the finding of lost property into a contract of mandate: Ms Xu entrusted the bag to the restaurant and the restaurant agreed, so as a custodian acting in good faith it was obliged to take care and keep the bag safe.

Article 109 of the Property Law, headed "return of lost property found", provides that lost property that has been found must be returned to the person entitled to it, and that the finder must promptly notify that person to collect it or deliver it to the public security authorities or another competent department.

Article 111, headed "custody of lost property", provides that before the finder delivers the lost property to the competent department, and before the competent department has it collected, the property must be properly kept, and that a person who causes the lost property to be damaged or lost by intent or gross negligence bears civil liability.

Article 374 of the Contract Law, headed "damage to or loss of the deposited property and the liability of the custodian", provides that where the deposited property is damaged or lost during the period of deposit through the custodian's failure to keep it properly, the custodian bears liability for damages, but that where the deposit is gratuitous the custodian is not liable if it proves that it was not grossly negligent.

In this case the restaurant failed to keep the bag properly and did not discharge its duty as a custodian acting in good faith, losing the bag a second time by disposing of it as rubbish. It was therefore at fault to some degree, and that fault was causally connected with the customer's loss of property, so the restaurant should compensate part of the loss. Ms Xu, as the person entitled to the bag, also failed to look after her own property and was at fault herself, so she should bear part of the responsibility as well.

As finder or as owner, what is the right course?

We all often come across property that others have lost, or lose property of our own, so what is the sensible way to proceed?

As the owner, the general rule is that where property is lost through one's own fault in a hotel lobby or another open public place, the hotel or other open public place is not at fault in any way. A customer who spends money at a restaurant has only a contract of sale with it, and property lost within the customer's own sphere of possession is a matter for the owner, who bears full responsibility.

Where lost property is found by another person, however, the finder should trace the owner and return it, and if the owner cannot be found the finder may deliver it to the public security authorities or another competent department. Where the finder incurs necessary expenses, such as the cost of keeping the property, in keeping it or in handing it over before returning it to the owner, the finder may require the owner to pay those necessary expenses. A finder who refuses to return lost property is unjustly enriched, which is a civil wrong, and where the value of the property reaches a certain level it may amount to the crime of misappropriation.

As the owner, then, once the finder or the custodial department is identified, contact should be made promptly to collect the property and the necessary expenses, including the cost of keeping it, should be paid. Where the finder misappropriates the property and refuses to return it, the police may be called for help.