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PowerPoint Slides to Accompany BUSINESS LAW E-Commerce and Digital Law International Law and Ethics 5th Edition

by Henry R. Cheeseman

Chapter 48 Personal Property and Bailments
Slides developed by Les Wiletzky Wiletzky and Associates, Puyallup, WA
Copyright © 2004 by Prentice-Hall. All rights reserved.

There are two kinds of property:
1. Real Property – includes land and property that is permanently attached to it.

e.g., buildings, trees, soil, minerals, timber, and plants

2. Personal Property – consists of everything that is not real property.

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Personal Property

Tangible Property – All real property and physically defined personal property.

e.g., buildings, goods, animals and minerals.

Intangible Property – Rights that cannot be reduced to physical form.

e.g., stock certificates, certificates of deposit, bonds, and copyrights

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Acquiring Ownership in Personal Property

By Possession

A person can acquire ownership in unowned personal property by taking possession of it or capturing it.

By Purchase or Production
Purchase – purchasing the property from its rightful owner.  Production – producing a finished product from raw materials and supplies.

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Acquiring Ownership in Personal Property
(continued)

By Gift
A voluntary transfer of title to property without payment of consideration by the donee.  Three elements necessary to be a valid gift: 1. Donative Intent 2. Delivery 3. Acceptance

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Acquiring Ownership in Personal Property
(continued)

Gifts (continued)
Types of gifts: Gifts inter vios – gifts made during a donor’s lifetime that are irrevocable present transfers of ownership. Gifts causa mortis – gifts that are made in anticipation of death.  Uniform Gifts to Minors Act  Revised Uniform Gifts to Minors Act

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Acquiring Ownership in Personal Property
(continued)

By Will or Inheritance
Will – gift to beneficiaries named in a will.  Inheritance – heirs stipulated in an inheritance statute.

By Accession

Occurs when the value of personal property increases because it is added to or improved by natural or manufactured means.

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Acquiring Ownership in Personal Property
(continued)

By Confusion
Occurs when fungible goods are commingled.  The owners share title to the commingled goods in proportion to the amount of goods contributed.

By Divorce

When a marriage is dissolved by a divorce, the parties obtain certain rights in the property of the marital estate.
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Mislaid Property
Property is mislaid when its owner voluntarily places the property somewhere and then inadvertently forgets it.  The owner of the premises where the personal property is mislaid is entitled to take possession of the property against all except the rightful owner.

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Lost Property
Personal property that an owner leaves somewhere because of negligence, carelessness, or inadvertence.  The finder of lost property obtains title to the found property against everyone except the true owner.

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Estray Statutes

Many states have enacted estray statutes that give a finder of mislaid or lost property clear title to the property if certain requirements are met:
Reporting the find to an appropriate government agency  Advertising the lost property  The owner not claiming the property within a stated time period (e.g., one year)

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Abandoned Property

Property is classified as abandoned if:
An owner discards the property with the intent to relinquish his or her rights in it, or  An owner of mislaid property gives up any further attempts to locate it

Anyone who finds abandoned property acquires title to it.

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Bailment
Occurs when the owner of personal property transfers the property to another to be held, stored, delivered, or for some other purpose.  Title to the property does not transfer.  Bailor – the owner of property in bailment.  Bailee – a holder of goods who is not a seller or a buyer.

e.g., a warehouse or common carrier
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Parties to a Bailment

Bailor
Goods transferred for safekeeping, storage, or transportation

Bailee

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Elements Necessary to Create a Bailment
(1 of 2)

Personal Property

Only personal property can be bailed.

Delivery of Possession
The bailee has exclusive control over the personal property.  The bailee must knowingly accept the personal property.

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Elements Necessary to Create a Bailment
(2 of 2)

Bailment Agreement
A bailment may be either express or implied.  Express bailments can be either written or oral.  Under the Statute of Frauds, a bailment must be in writing if it is for more than one year.  A bailment may be implied from the circumstances.

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Types of Bailments
Bailment for a Fixed Term  A bailment that terminates at the end of the term or,

Bailment at Will  A bailment without a fixed term

Sooner by mutual consent of the parties

Can be terminated at any time by either party

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Ordinary Bailments
1. Bailments for the sole benefit of the bailor 2. Bailments for the sole benefit of the bailee 3. Bailments for the mutual benefit of the bailor and bailee

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Ordinary Bailee’s Duty of Care
Type of Bailment For the sole benefit of the bailor For the sole benefit of the bailee Duty of Care Owed by Bailee Slight Great Bailee Liable to Bailor for Gross negligence Slight negligence

For the mutual benefit of the bailor and bailee

Ordinary

Ordinary negligence

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Bailee’s Rights

Depending on the type of bailment, bailees may have the right to:
Exclusive possession of the bailed property  Use of the bailed property  Compensation for work done or services provided

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Bailor’s Duties

The bailor owes the duty to:
Pay the agreed-upon compensation to the bailee  Not interfere with the bailee’s possessory interest during the term of the bailment  Notify the bailee of any defects in the bailed property that could cause injury to the bailee or others

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Special Bailments
Common Carriers

Warehouse Companies

Innkeepers

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Special Bailee’s Duty of Care (1 of 2)
Type of Bailee Common Carrier Liability Strictly liable except for: 1. Act of god 2. Act of a public enemy 3. Order of the government 4. Act of the shipper 5. Inherent nature of the goods Limitation on Liability May limit the dollar amount of liability by offering the bailor the right to declare a higher value for the bailed goods for an additional charge.

Warehouse Company Ordinary negligence

May limit the dollar amount of liability by offering the bailor the right to declare a higher value for the bailed goods for an additional charge.

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Special Bailee’s Duty of Care (2 of 2)
Type of Bailee Innkeeper Liability Strictly liable Limitation on Liability State statutes may limit the liability of an innkeeper for others’ rights

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Documents of Title
Negotiable instruments developed to represent the interests of the different parties in a transaction that uses storage or transportation between the parties.  Warehouse Receipts  Bills of Lading  Article 7 of the UCC governs documents of title.

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Warehouse Receipts

A written document issued by a person who is engaged in the business of storing goods for hire.

e.g., warehouse company or storage company

Often a preprinted form drafted by the warehouseman.

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Bill of Lading
Document of title that is issued by a carrier when goods are received for transportation.  Issued by:

Common carriers  Contract carriers  Freight forwarders  Other persons engaged in the business of transporting goods for hire

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Through Bill of Lading
A bill of lading that provides that connecting carriers may be used to transport the goods to their destination.  Original carrier that issued the bill of lading is liable for any damages or loss to the goods caused by the connecting carrier.

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