Business Law Chapter 21 (Personal Property)

Contract Modification of Liability*

A bailee may limit liability by agreement or contract unless it is barring a liability for negligent violations of common law standards of care where a public interest is involved (the responsibility of theft under a repair shop).

Bailments

Bailment - the relationship that exists when personal property is delivered into the possession of another under an agreement, express or implied, that the identical property will be returned or will be delivered in accordance with the agreement. Bailor - the person who turns over the possession of a property. Bailee - person who accepts possession of a property.

Liability for Defects in Bailed Property*

Bailor is responsible for letting bailee know of any defects and should have investigated any possible defects. The bailor is also responsible for any harm caused by these defects to the bailee.

Classification of Ordinary Bailments*

Ordinary bailments are generally classified as being for the sole benefit of the bailor, sole benefit of the bailee, or the mutual benefit of both. Bailments may or may not provide compensation to the bailee.

Finding Lost Property*

Personal property is lost when the owner does not know where it is located but intends to retain title to or ownership of it. The person finding the lost property only possesses it but does not acquire title. He or she is subjected to return the property without a reward or compensation unless specified otherwise.

Duties and Rights of the Bailee*

The bailee has duties concerning performance, care, and return of the bailed property. However, the duty of care owed differs according to classification based in terms of "benefit." If for sole benefit of bailor, the bailee is subject to gross negligence. If for sole benefit of bailee, the bailee is subject to slight negligence. Unless both bailee and bailor benefit mutually.

Renting of Space Distinguished*

The placing of property in a rented space does not constitute a bailment, therefore, does not hold the renting place liable for the property.

Title to Personal Property*

Title to personal property is general acquired via purchase under the law of sales, but other ways of acquiring personal property include gifts, finding lost property, occupation, and escheat. No title can ever be acquired by theft

Occupation of Personal Property*

Title to personal property may be acquired by occupation (taking and retaining possession of the property)

Breach of Duty of Care*

When bailor sues the bailee for damages, the bailor has to give proof that bailee was at fault. The bailee can avoid losing in a lawsuit if given proof that the damage or loss or property was not caused by mishandling.

Bailee's Lien

a specific possessory lien of the bailee upon the goods for work done to the. It is commonly extended by statute to any bailee's claim for compensation (can sell it), eliminating the necessity of retention of possession (but have to give notice or will be liable for conversion).

Elements of Bailment

a) Agreement - may be expressed or implied. It consists of 1) a contract to bail and 2) the actual bailing of the property. Real Property cannot be bailed. b) Delivery and Acceptance - the bailment arises when the property is delivered to the bailee and accepted by the bailee as subject to the bailment agreement. If prior agreement is absent and a valid delivery is made, the bailee must be aware that goods have been placed within the bailee's exclusive possession or control.

Finding Lost Property (Public Place, Statutory Change)

a) Finding in Public Place - if lost property is found in a public place (hotel), it is expected that it was left intentionally and will be returned for. Anyone else who finds it is subject to returning it to a manager unless the property was not intentionally placed where it was found, which more than likely would have been forgotten by the owner. b) Statutory Change - In some states, statutes have been adopted permitting the finder to sell or keep property in due time under the conditions of giving notice to attempt to reach the owner.

5 Types of Gifts

a) Inter Vivos Gifts - any transaction that takes place between living persons and creates rights prior to the death of any of them. This gift takes effect when the donor expresses an intent to transfer title and makes delivery. Intent - the intent to make a gift requires an intent to transfer title at that time opposing to an intent to confer a benefit at a future date which is insufficient to create any right in the intended donee. Delivery - the delivery required to make a gift will be an actual handing over to the donee. It can also be delivered symbolically or constructively, where the delivery is done by the means of control such as key or a relevant document of title such as a negotiable bill of lading. Failure to meet the "delivery" requirement will result in an ineffective gift. Donor's Death - if the donor dies before doing what is required to make an effective gift, the gift fails. b) Gifts Causa Mortis - a gift, made by the donor in the belief that death was immediate and impending, that is revoked or is revocable under certain circumstances (if the donor does not die, the donor revokes the gift before dying, or the donee dies before the donor). c) Gifts and Transfers to Minors - uniform acts provide for transferring property to a custodian to hold for the benefit of a minor. The custodian has discretionary power to use the property "for the support, maintenance, education, and benefit" of the minor but not for the custodian's own personal benefit. The gift is final and irrevocable for tax and all other purposes on complying with the procedures of the acts. d) Conditional Gifts - a gift made subject to a condition (graduate and get a car, engagement ring and get married, etc.) e) Anatomical Gifts - persons may make gifts of parts of their bodies (kidney transplant) subject to a loved one's restrictions

Occupation of Personal Property (Wild animals, abandoned personal property)

a) Wild Animals - these animals are owned by someone who exercised dominion via killing, tying, holding for captivity unless the animal was located in someone else's land which therefore makes the landowner the owner of the wild animal as well. If the animal escapes, it goes back to the status of being a wild animal. b) Abandoned Personal Property - title on personal property is disclaimed once the owner relinquishes possession of it. If the person flees and a property is left behind, it is not abandoned.

Constructive Bailment

imposed by law as opposed to one created by contract, whereby the bailee must preserve the property and redeliver it to the owner. (towed cars must be redelivered if fees are paid)

Real Property

land and all rights (things embedded in the land) in land such as oil tank, buildings, trees, and rights in any of these things.

Bailments for Mutual Benefit

one party takes the personal property of another in exchange for payment or other benefit.

Bailor's Interest

ownership by the bailor of the item is not required although common. It is sufficient that the bailor has physical possession.

Severalty

ownership of property by one person

Personal Property

property that is movable or intangible, or rights in such things including rights in intellectual property (writings, computer programs, inventions, and trademarks) which consists of 3 aspects- personal property has: 1) whole or fractional rights in things that are tangible and movable (furniture or books) 2) Choses in action - claims and debts which are intangible personal property in the nature of claims against another (accounts receivable or wages) 3) other intangible property rights (trademarks, copyrights, and patents)

Community Property

the Cotenancy held by husband and wife in property acquired during their marriage under the law of some of the states, principally in the southwestern United States. It is common that property acquired by either spouse during the marriage is prima facie, or sufficient by itself to lead to a particular conclusion, even though the title is taken in the spouse's individual name.

Bailee's Interest

the bailee has possession of the property only. The bailee's attempt to sell or transfer of the property will only be recovered by the actual owner.

Joint Tenancy

the estate held jointly by two or more with the right of survivorship (share of the deceased tenant) as between them, unless modified by statute. The last tenant takes the property as a holder in severalty. The transferring of interest to a third party ruins the joint tenancy and the third person becomes a tenant in common with the remaining owner unless some words of survivorship are specified under a statute.

Tenancy in Common

the relationship that exists when two or more persons own undivided interests in property. (person given half of the property becomes new co-owner & if owner dies, half would be bequeathed to the heir, not the other co-owner)

Gift

the title to an owner's personal property voluntarily transferred by a party not receiving anything in exchange. Donor - person making a gift Donee - recipient of a gift

Tenancy in its entirety

the transfer of property to both husband and wife where the rights of survivorship cannot be extinguished nor the interest could be transferred to a third person.

Escheat

the transfer to the state of the title to a decedent's property when the owner of the property dies intestate and is not survived by anyone capable of taking the property as heir. (unclaimed corporate dividends, bank deposits, insurance payments, refunds and layaway purchases are subject to escheat to the state)

Cotenancy

when two or more persons hold concurrent rights and interests in the same property which include: Tenancy in Common, Joint Tenancy, Tenancy by Entirety

Gratuitous Bailments

where the transfer of possession and use of the bailed property is without compensation. If bailment is made without exchange of something physical but with something like extending a business interest, it is not gratuitous.