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Copyright © 2004 by Prentice-Hall. All rights reserved. PowerPoint Slides to PowerPoint Slides to Accompany Accompany BUSINESS LAW BUSINESS LAW E-Commerce and Digital Law E-Commerce and Digital Law International Law and International Law and Ethics Ethics 5 5 th th Edition Edition by Henry R. Cheeseman by Henry R. Cheeseman Slides developed by Les Wiletzky Wiletzky and Associates, Puyallup, WA Chapter 48 Personal Property and Bailments
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Page 1: Bailment and Real Property

Copyright © 2004 by Prentice-Hall. All rights reserved.

PowerPoint Slides to AccompanyPowerPoint Slides to AccompanyBUSINESS LAWBUSINESS LAW

E-Commerce and Digital Law E-Commerce and Digital Law International Law and EthicsInternational Law and Ethics

55thth Edition Editionby Henry R. Cheesemanby Henry R. Cheeseman

Slides developed by

Les Wiletzky

Wiletzky and Associates, Puyallup, WA

Chapter 48Personal Property and Bailments

Chapter 48Personal Property and Bailments

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48 - 2Copyright © 2004 by Prentice-Hall. All rights reserved.

There are two kinds of property:There are two kinds of property:

1.1. Real Property –Real Property – includes land and property includes land and property that is permanently attached to it.that is permanently attached to it.

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

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

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Personal PropertyPersonal Property

Tangible Property –Tangible Property – All real property and All real property and physically defined personal property.physically defined personal property. e.g., buildings, goods, animals and minerals.e.g., buildings, goods, animals and minerals.

Intangible Property –Intangible Property – Rights that cannot be Rights that cannot be reduced to physical form.reduced to physical form. e.g., stock certificates, certificates of deposit, e.g., stock certificates, certificates of deposit,

bonds, and copyrightsbonds, and copyrights

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48 - 4Copyright © 2004 by Prentice-Hall. All rights reserved.

Acquiring Ownership in Personal PropertyAcquiring Ownership in Personal Property

By PossessionBy Possession A person can acquire ownership in unowned A person can acquire ownership in unowned

personal property by personal property by taking possessiontaking possession of it of it or or capturingcapturing it. it.

By Purchase or ProductionBy Purchase or Production Purchase –Purchase – purchasing the property from its purchasing the property from its

rightful owner.rightful owner. Production –Production – producing a finished product producing a finished product

from raw materials and supplies.from raw materials and supplies.

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Acquiring Ownership in Personal Property Acquiring Ownership in Personal Property (continued)(continued)

By GiftBy Gift A voluntary transfer of title to property without A voluntary transfer of title to property without

payment of consideration by the donee.payment of consideration by the donee. Three elements necessary to be a valid gift:Three elements necessary to be a valid gift:

1. Donative Intent1. Donative Intent

2. Delivery2. Delivery

3. Acceptance3. Acceptance

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Acquiring Ownership in Personal Property Acquiring Ownership in Personal Property (continued)(continued)

GiftsGifts (continued)(continued)

Types of gifts:Types of gifts:

Gifts Gifts inter viosinter vios – – gifts made during a donor’s gifts made during a donor’s lifetime that are irrevocable present transfers lifetime that are irrevocable present transfers of ownership.of ownership.

Gifts Gifts causa mortiscausa mortis – gifts that are made in – gifts that are made in anticipation of death.anticipation of death.

Uniform Gifts to Minors ActUniform Gifts to Minors Act Revised Uniform Gifts to Minors ActRevised Uniform Gifts to Minors Act

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Acquiring Ownership in Personal Property Acquiring Ownership in Personal Property (continued)(continued)

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

statute.statute. By AccessionBy Accession

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

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Acquiring Ownership in Personal Property Acquiring Ownership in Personal Property (continued)(continued)

By ConfusionBy Confusion Occurs when Occurs when fungible goodsfungible goods are commingled. are commingled. The owners share title to the commingled The owners share title to the commingled

goods in proportion to the amount of goods goods in proportion to the amount of goods contributed.contributed.

By DivorceBy Divorce When a marriage is dissolved by a divorce, the When a marriage is dissolved by a divorce, the

parties obtain certain rights in the property of parties obtain certain rights in the property of the marital estate.the marital estate.

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Mislaid PropertyMislaid Property

Property is Property is mislaidmislaid when its owner voluntarily when its owner voluntarily places the property somewhere and then places the property somewhere and then inadvertently forgets it.inadvertently forgets it.

The owner of the premises where the personal The owner of the premises where the personal property is property is mislaidmislaid is entitled to take is entitled to take possession of the property against all except possession of the property against all except the rightful owner.the rightful owner.

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Lost PropertyLost Property

Personal property that an owner leaves Personal property that an owner leaves somewhere because of negligence, somewhere because of negligence, carelessness, or inadvertence.carelessness, or inadvertence.

The finder of The finder of lost propertylost property obtains title to the obtains title to the found property against everyone except the found property against everyone except the true owner.true owner.

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Estray StatutesEstray Statutes

Many states have enacted estray statutes that Many states have enacted estray statutes that give a finder of mislaid or lost property clear give a finder of mislaid or lost property clear title to the property if certain requirements are title to the property if certain requirements are met:met: Reporting the find to an appropriate government agencyReporting the find to an appropriate government agency Advertising the lost propertyAdvertising the lost property The owner not claiming the property within a stated time The owner not claiming the property within a stated time

period (e.g., one year)period (e.g., one year)

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Abandoned PropertyAbandoned Property

Property is classified as abandoned if:Property is classified as abandoned if: An owner discards the property with the intent An owner discards the property with the intent

to relinquish his or her rights in it, orto relinquish his or her rights in it, or An owner of mislaid property gives up any An owner of mislaid property gives up any

further attempts to locate itfurther attempts to locate it Anyone who finds abandoned property Anyone who finds abandoned property

acquires title to it.acquires title to it.

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BailmentBailment

Occurs when the owner of personal property Occurs when the owner of personal property transfers the property to another to be held, transfers the property to another to be held, stored, delivered, or for some other purpose.stored, delivered, or for some other purpose.

Title to the property does not transfer.Title to the property does not transfer. Bailor –Bailor – the owner of property in bailment. the owner of property in bailment. Bailee –Bailee – a holder of goods who is not a seller a holder of goods who is not a seller

or a buyer.or a buyer. e.g., a warehouse or common carriere.g., a warehouse or common carrier

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Parties to a BailmentParties to a Bailment

BailorBailor BaileeBaileeGoods transferred for Goods transferred for

safekeeping, storage, or safekeeping, storage, or transportationtransportation

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Elements Necessary to Create a Bailment Elements Necessary to Create a Bailment (1 of 2)(1 of 2)

Personal PropertyPersonal Property Only personal property can be bailed.Only personal property can be bailed.

Delivery of PossessionDelivery of Possession The bailee has exclusive control over the The bailee has exclusive control over the

personal property.personal property. The bailee must knowingly accept the personal The bailee must knowingly accept the personal

property.property.

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Elements Necessary to Create a Bailment Elements Necessary to Create a Bailment (2 of 2)(2 of 2)

Bailment AgreementBailment Agreement A bailment may be either A bailment may be either expressexpress or or impliedimplied.. ExpressExpress bailments can be either written or oral. bailments can be either written or oral. Under the Under the Statute of FraudsStatute of Frauds,, a bailment must a bailment must

be in writing if it is for more than one year.be in writing if it is for more than one year. A bailment may be A bailment may be impliedimplied from the from the

circumstances.circumstances.

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Types of BailmentsTypes of Bailments

Bailment for a Fixed TermBailment for a Fixed Term A bailment that A bailment that

terminates at the end terminates at the end of the term or,of the term or,

Sooner by mutual Sooner by mutual consent of the partiesconsent of the parties

Bailment for a Fixed TermBailment for a Fixed Term A bailment that A bailment that

terminates at the end terminates at the end of the term or,of the term or,

Sooner by mutual Sooner by mutual consent of the partiesconsent of the parties

Bailment at WillBailment at Will A bailment without a A bailment without a

fixed termfixed term Can be terminated at Can be terminated at

any time by either any time by either partyparty

Bailment at WillBailment at Will A bailment without a A bailment without a

fixed termfixed term Can be terminated at Can be terminated at

any time by either any time by either partyparty

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Ordinary BailmentsOrdinary Bailments

1.1. Bailments for the sole benefit of the bailorBailments for the sole benefit of the bailor

2.2. Bailments for the sole benefit of the baileeBailments for the sole benefit of the bailee

3.3. Bailments for the mutual benefit of the Bailments for the mutual benefit of the bailor and baileebailor and bailee

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Ordinary Bailee’s Duty of CareOrdinary Bailee’s Duty of Care

Type of BailmentType of Bailment Duty of Care Owed by Duty of Care Owed by BaileeBailee

Bailee Liable to Bailor Bailee Liable to Bailor forfor

For the sole benefit of For the sole benefit of the bailorthe bailor

SlightSlight Gross negligenceGross negligence

For the sole benefit of For the sole benefit of the baileethe bailee

GreatGreat Slight negligenceSlight negligence

For the mutual benefit of For the mutual benefit of the bailor and baileethe bailor and bailee

OrdinaryOrdinary Ordinary negligenceOrdinary negligence

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Bailee’s RightsBailee’s Rights

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

providedprovided

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Bailor’s DutiesBailor’s Duties

The bailor owes the duty to:The bailor owes the duty to: Pay the agreed-upon compensation to the Pay the agreed-upon compensation to the

baileebailee Not interfere with the bailee’s possessory Not interfere with the bailee’s possessory

interest during the term of the bailmentinterest during the term of the bailment Notify the bailee of any defects in the bailed Notify the bailee of any defects in the bailed

property that could cause injury to the bailee or property that could cause injury to the bailee or othersothers

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Special BailmentsSpecial Bailments

Common CarriersCommon Carriers

Warehouse Warehouse CompaniesCompanies

InnkeepersInnkeepers

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Special Bailee’s Duty of Care Special Bailee’s Duty of Care (1 of 2)(1 of 2)

Type of BaileeType of Bailee LiabilityLiability Limitation on LiabilityLimitation on Liability

Common CarrierCommon Carrier Strictly liable except for:Strictly liable except for:1. Act of god1. Act of god2. Act of a public enemy2. Act of a public enemy3. Order of the government3. Order of the government4. Act of the shipper4. Act of the shipper5. Inherent nature of the goods5. Inherent nature of the goods

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

Warehouse CompanyWarehouse Company Ordinary negligenceOrdinary negligence May limit the dollar amount of May limit the dollar amount of liability by offering the bailor liability by offering the bailor the right to declare a higher the right to declare a higher value for the bailed goods for value for the bailed goods for an additional charge.an additional charge.

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Special Bailee’s Duty of Care Special Bailee’s Duty of Care (2 of 2)(2 of 2)

Type of BaileeType of Bailee LiabilityLiability Limitation on LiabilityLimitation on Liability

InnkeeperInnkeeper Strictly liableStrictly liable State statutes may limit the State statutes may limit the liability of an innkeeper for liability of an innkeeper for others’ rightsothers’ rights

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Documents of TitleDocuments of Title Negotiable instruments developed to represent Negotiable instruments developed to represent

the interests of the different parties in a the interests of the different parties in a transaction that uses storage or transportation transaction that uses storage or transportation between the parties.between the parties. Warehouse ReceiptsWarehouse Receipts Bills of LadingBills of Lading

Article 7 of the UCCArticle 7 of the UCC governs documents of governs documents of title.title.

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Warehouse ReceiptsWarehouse Receipts

A written document issued by a person who A written document issued by a person who is engaged in the business of storing goods is engaged in the business of storing goods for hire.for hire. e.g., warehouse company or storage e.g., warehouse company or storage

companycompany Often a preprinted form drafted by the Often a preprinted form drafted by the

warehouseman.warehouseman.

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Bill of LadingBill of Lading

Document of title that is issued by a carrier Document of title that is issued by a carrier when goods are received for transportation.when goods are received for transportation.

Issued by:Issued by: Common carriersCommon carriers Contract carriersContract carriers Freight forwardersFreight forwarders Other persons engaged in the business of Other persons engaged in the business of

transporting goods for hiretransporting goods for hire

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Through Bill of LadingThrough Bill of Lading

A bill of lading that provides that A bill of lading that provides that connecting connecting carrierscarriers may be used to transport the goods may be used to transport the goods to their destination.to their destination.

Original carrier that issued the bill of lading is Original carrier that issued the bill of lading is liable for any damages or loss to the goods liable for any damages or loss to the goods caused by the connecting carrier.caused by the connecting carrier.