Business Law Chapter 7

What does at will mean?

"for as long as both shall agree."

What is adverse possession?

- another form of ownership through possession - gives you ownership of land under state statue when the possession is open and notorious, actual and exclusive, continuous, wrongful, for a prescribed period of time. most states specify 10 to 20 years before the possessor becomes the new owner.

Whose the bailee and bailor

- bailee: the person who takes possession of an object owned by another and must return it or otherwise dispose of it - bailor: the person who transfers possession of tangible, personal property to another person with the understanding that the other person must return the object at some point or otherwise dispose of it.

What 3 categories do bailments fall in

- for the sole benefit of the bailor: bailee owes only a slight duty of care - sole benefit of the bailee: bailee owes a very high duty of care - mutual benefit of both parties

what does property indicate?

- legal ownership, that something is recognized by law as being "mine" or "yours" - indicates exclusiveness

What's a warranty deed?

- promises the grantee, usually the buyer, that the grantor, seller, has good ownership and the full power to convey it. - the buyer can sue the seller if someone else claims the land

What's a special warranty deed?

- specifies that certain legal claims against the land, like mortgages, exist but guarantees that no other claims exist.

who do things that have been mislaid go to?

- the person who owns the premises where the item was mislaid. - idea that the original owner will know where to come back and reclaim mislaid things.

Define mortgage

...

What are the three illegal ways to obtain property?

1. force - called robbery 2. theft - various forms of stealing 3. fraud - intentionally lying and harming others to get what belongs to them

the rules of gift specify that the gift does not generally take place until the donor does what 2 things?

1. intends to make the gift 2. delivers the gift by physical transfer to the donee.

Generally, the private legal fence of property allows an owner to exclude others from interfering with what 3 things?

1. the possession of an object or resource 2. the transfer of all the object or interest by gift or through exchange with other owners 3. all uses of the object that do not harm other owners in what belongs to them

what are the five basic legal ways to become an owner of something in a property system?

1. through exchange 2. through possession 3. through confusion 4. through accession 5. through gift

buyer in the ordinary course of business

A buyer who buys from someone who ordinarilu sells such goods in his or her business

what does property refer to?

A particular system of laws, rather than to useful resources

purchase money security interest

A security interest given to the party that loans the debtor the money that enables the debtor to buy the collateral.

mortagees

A transfer of an interest in property for the purpose of creating a security for a debt. A type of security interest in land, usually securing an extension of credit.

land sales contract

A type of document to secure an extension of credit through an interest in the land purchased.

deeds of trust

A type of document to secure an extension of credit through an interest in the land.

financing statement

An established form that a secured party files with a public officer, such as a state official or local court clerk, to perfect a security interest under the UCC. It is a simple form that contains basic information such as a description of the collateral, names, and addresses. It is designed to give notice that the debtor and the secured party have entered into a security agreement.

public nuisance

An owner's use of land that causes damage or inconvenience to the general public.

private nuisance

An unreasonable use of one's land so as to cause substantial interference with the enjoyment or use of another's land

secured transactions

Any credit transaction creating a security interest; an interest in personal property that secures the payment of an obligation.

What are the 3 reasons that lenders are willing to loan money at affordable rates?

Because property guarantees... 1. that a borrower's house is on an identifiable piece of land recognized by the state 2. the state recognizes a borrower's claim to the house 3. the state permits lenders to enforce the mortgage agreement through the courts and sell a borrower's house to satisfy the loan if the borrower fails to repay it.

How does the law determine whether or not someone has abandoned what they own?

By measuring intent, whether it was intended to be abandoned. The law measures intent by the circumstances of the situation.

foreclosure

If a mortgagor fails to perform his or her obligations as agreed, the mortgage may declare the whole debt due and payable, and she or he may foreclose on the mortgaged property to pay the debt secured by the mortgage. The usual method of foreclosure authorizes the sale of the mortgaged property at a public auction. The proceeds of the sale are applied to the debt.

When would the engine's owner get ownership?

If the engine is substantially more valuable than the additions to it.

deficiency

In a land based security interest, the amount of the loan which remains unpaid after the land has been sold.

What's a negative easement

It means that an adjoining landowner can't do anything that would cause your land to cave in or collapse.

What's an easement

It's often a right to cross over land. It places a particular use of land behind the exclusive legal fence.

What are two other forms of concurrent ownership?

Joint tenancy and tenancy in common. In both forms, the property interest is undivided, but the tenants in common can own different shares of the resource, whereas the joint tenants must have equal ownership shares.

zoning ordinances

Laws that limit land use based usually on residential, commercial or industrial designations.

What's a quitclaim deed?

Makes no guarantees other than that the grantor surrenders all claims against the land.

What does private property establish?

Maximum conditions for wealth creating through promoting incentive

What's the most significant indicator that a country's economy is ready for international trade?

Observing legally enforceable contracts

Who has a qualified possession, use, and transfer of the land, qualified in that they cannot waste the land.

Tenants

eminent domain

The government's constitutional power to take private property for public use upon the payment of just compensation.

Buyers and lenders are protected by registration statues. What are those?

The law enables buyers to register their deeds to land and lenders to register their mortgage claims against land.

mortgagors

The owner of the land who places a mortgage on it.

right of redemption

The right to buy back. A debtor may buy back or redeem his or her mortgaged property when he or she pays the debt.

rule against perpetuities

The rule that prohibits an owner from controlling what he or she owns beyond a life in being at the owner's death, plus 21 years.

perfection

The status ascribed to security interests after certain events have occurred or certain prescribed steps have been taken - the filing of a finance statement.

attachment

The term attachment has three meanings. First, attachment is a method of acquiring in rem jurisdiction of a nonresident defendant who is not subject to the service of process to commence a lawsuit. By "attaching" property of the non resident defendant, the court acquires jurisdiction over the defendant to the extent of the value of the property attached. Second, attachment is a procedure used to collect a judgment. A plaintiff may have the property of a defendant serized, pending the outcome of a lawsuit, if the plaintiff has reason to fear that the defendant will dispose of the property before the court renders its decision. Third, attachment is the event that creates an enforceable security interest under the UCC. In order that a security interest attach, there must be a signed, written security agreement, or posession of the collateral by the secured party; the secured party must give value to the debtor; and the debtor must maintain rights in the collateral.

collateral

The valuable thing put up by someone to secure a loan or credit.

What are "originally possessed" resources? What are they protected by?

They're resources like your capacity for work and health and they're protected by the property right in that you can legally exclude others from interfering with them or sue others if they harm these resources.

What is "pass title"

When an owner transfers ownership, the owner is said to "pass title"

Whats a deed

a document of title that transfers ownership of land

define real property

a law that applies ownership to land and interests in land such as mining rights or leases

What's the difference in the two systems?

a matter of degree

What does a deed contain

a precise legal description of the land that specifies the exact location and boundaries according to a napping or surveying system

the rule that when someone has _____ what they own, the first person to reduce it to possession owns it

abandoned

The fee simple ___ estate has no limiations or conditions attached. The free simple ___ may have a condition attached to its conveyance (transfer)

absolute; defeasible

If the builder ____ picked up someone else's engine and builds it into an airplane, a court will probably give ownership of the airplane to the builder, requiring only that the builder adequately compensate the engine's original owner.

accidentally

For the property system to function most effectively in promoting prosperity, how should it be applied?

according to the rule of law, which means it should be applied generally and equally to everyone.

define personal property

all other types of resources are protected under the law of personal property

What's a natural easement

also called easement by necessity. It is to get from their land to the nearest public road.

define security interests

an application of property that gives someone an interest in what belongs to another, usually to secure an extension of credit

A life estate grants...

an ownership in land for the lifetime of a specified person.

What does a resource include

anything that someone may need or want. someone's labor or efforts are also resources

what is tangible property

applies to things one can touch, that is, to physical things. The scale of tangible things, also known as goods, is contracted by the UCC

the doctrine of confusion illustrates the importance of ____ to the concept of property, and it explains one determination of ownership when resource boundaries are not certain

boundaries

the fixtures go with the land to the..

buyers. manufacturing equipment is a fixture when its sold along with a manufacturing plant, etc.

property helps generate prosperity by establishing the conditions necessary for, what?

capital formation, which refers to the quality of resources that produces new or different resources.

Unless prohibited by the lease, the rights owned by tenants can be, what?

capitalized by transfer to someone else.

In some cases, a ____ ___, like turning over the keys to a car or deed to land, constitutes an adequate delivery

constructive delivery

john locke said that the principle of property was justified when someone...

contributed labor to a previously unowned natural resource.

A landlord can lease land for a ____ duration or an ____ duration

definite or indefinite, with rent payable at periodic intervals like monthly, or simply at will.

a final contribution property makes to prosperity is to make resources easily _____

divisible. divisibility also relates to capital formation and refers to how property permits resources to be broken into parts and used in many ways while the owner still retains a property interest in each part.

contract rules make agreements to...

exchange resources between owners legally binding and enforceable

What terms usually apply to land ownership, but ownership of movable and intangible things can be held practically in the same way?

fee simple, life estate, leasehold estate, concurrent ownership

reversion and remainder property interests are also called...

future interests as opposed to the life estate, which is a present interest.

Whats the most significant issue for any society?

how it order the relationships among people concerning limited and valued resources, resources needed to survive and flourish - resources include: land, food, raw materials, manufactured products, some types of info

what was the homestead act of 1862

illustrates ownership through possession. act allowed those who lived on certain public land to obtain legal ownership of it by possessing it for five years and making certain improvements - ex. gov't today granting land to squatters

What does property promote?

incentive. they'll expend more effort when they have a protected property in what they produce than when they do not. Willing to produce more when they don't have to spend time defending their homes, etc.

Define fixture

is an object of personal property that has become an object of real property by 1. physcal annexation, attachment, to the land or its buildings 2. whose use has become closely associated with the use to which the land is put.

What's the role of the state in the private property system?

is to recognize legally when people have exclusive property rights in scare resources and to allow them to enforce their rights through legal institutions like courts

What's an easement by prescription

it arises when one person had used another's land, such as by crossing it openly, wrongfully, and continuously for a period of years, frequently 20, and once an easement by prescription arises, a titleholder of the land can no longer prevent a person from continuing to use the land by crossing it.

how can an easement be acquired

it can be bought directly from a titleholder or reserved in a deed as part of the purchase and sale of land

What's the doctrine of partition?

its when the owners themselves, or the creditors, of a joint tenancy or tenancy in common can usually force the seperation of these concurrent ownerships until this doctrine.

Who can have the right of survivorship?

joint tenants. it means that if one of the joint tenants dies, the remaining tenant becomes the sole owner of the entire resource

Things that are ____ also can acquire a new owner through possession

lost. The finder of a lost item becomes its owner by reducing it to possession and following a statutory procedure, which may require the finder to turn the item over to the police, etc. By the end of the statutory period, the finder becomes the new owner.

what is concurrent ownership?

more than one person can own the same thing. both personal property and real property interests can have concurrent owners. the ownership is undivided, meaning that no concurrent owner owns a specific piece of the resources that are owned. - ex. shareholdres

What're the two principal types of security interest?

mortgages and secured transactions

What does personal property apply to

movable resources

receiving a gift is also a way of acquring ownership. In the making of a gift, no ___ ____ of resources occur.

mutual exchange

under the deed of trust, a borrower signs a ____

note; which shoes the borrower's debt to the lender, and then signs a deed of trust, which grants the lender a security interest in the building.

Whats a testamentary gift

one that is made through a will - pass ownership is by death of the donor, not by delivery

the law of accession also explains that when you apply your efforts or ingenuity to any raw materials you own and change their nature into finished products, you....

own the finished products

What's bailment

owner's placement of an object into the intentional possession of another person with the understanding that the other person must return the object at some point or otherwise dispose of it

A second legal framework that orders how people relate to each other concerning scarce resources is...

private property. It's a system of law under which the state recognizes and enforces an individual's rights to acquire, possess, use, and transfer scare resources

What's the doctrine of accession

property acquired by adding something to an owned object

What system produces more for a society than a state planning system?

property system

what acts like a legal fence

property that protects resources inside the fence from the acquisitiveness of others

land ownership is also known as what two things

real estate or realty

what are the two basic legal divisions of property?

real property and personal property

Land, cars, and in many states boats, require a ____ of ownership called time

registration

If the land goes to someone other than the grantor, that person has a ____ Interest

remainder

at least two basic legal frameworks exist. In one, framework the state itself....

represented by a ruler or legislature makes the major decisions about the production and distribution of resources. - takes ownership of resources or acquires them through taxation - ex. communism

Divisibility facilitates the development of what?

resources, which creates new wealth and causes prosperity

define contract

rules control the way owners make agreements to exchange resources in the property based legal system

whats a leasehold estate

simply the property right granted to tenants by a landlord

t or f: many leases require that a tenant obtain approval from a landlord or even of the other tenants before transferring leasing rights.

t

What's the first rule of possession?

that the first person to reduce previously unowned things to possession becomes their owners

Whats a fee simple?

the bundle of rights and powers of land ownership are called an estate. Fee simple represents the max estate allowed under law, the owner having the fullest legal rights and powers to possess, use, and transfer the land.

ownership means the same thing as property. both terms refer to, what?

the legal right that makes resources exclusive

define property

the legal right to exclude others from resources that are originally possessed or are acquired without force, theft, or fraud.

how does the state establish how property applies to various resources?

through its legislatures and courts

ownership is frequently referred to by the term ___

title. Thus, someone who owns something has title to it.

T or F: real property laws are very formal

true

t or f: agreements transferring interests in land ownership should be written

true

true or false: property is an absolute right, but it does not extend infinitely: the property fence has limits

true

The deed is held by a third party called a ___

trustee, who holds full legal ownership to the land.

Whats a reversion

upon a life estate grant persons death, the land reverts to the original grantor who is said to keep a reversion interest in the land.

how does ownership through confusion arise?

when fungible goods, which are goods that are identical, are mixed together.