1. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning Chapter 21 Personal Property and Bailments Twomey Jennings Anderson’s Business Law and the Legal Environment, Comprehensive 20e Anderson’s Business Law and the Legal Environment, Standard 20e Business Law: Principles for Today’s Commercial Environment 2e

2. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 2 Personal Property Personal property rights consist of whole or partial ownership rights in things that are tangible and movable as well as rights in things that are intangible. Property rights include the right to possess, use, enjoy or dispose of the property.

3. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 3 Title to Personal Property Personal property may be acquired: –By purchase –By gift where the donor has intent to make a gift and delivers possession to the donee or makes a constructive delivery. –By occupation (possession) and, under some statutes, by finding. The state may acquire property by escheat, which is the transfer of unclaimed goods from a (non-owner) holder to the state government.

4. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 4 Inter Vivos Gifts: An ordinary gift between two living persons is called. –Both donative intent and delivery are required. –Delivery can be actual or constructive. –If Donor dies before gift is complete, the gift fails. Gift Causa Mortis: made with contemplation of imminent death. –If Donor survives, gift is revocable. Gifts

5. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 5 Gifts Gifts and Transfers to Minors. –Uniform Gifts to Minors Act. –Gift is final and irrevocable for tax purposes. Conditional Gifts. –Condition precedent must be fulfilled.

6. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 6 Finding of Lost Property Lost Property: owner intends to retain title. –Finder retains title against all except true owner. –If there is no contract, the finder is not entitled to a reward. –Finding in Public Place: finder must give to hotel or manager.

7. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 7 Occupation of Personal Property Wild Animals. –Person who acquires dominion over wild animal becomes its owner. Abandoned Personal Property. –Owner does not intend to reclaim possession. –Finder acquires title to property.

8. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 8 Multiple Ownership of Personal Property All rights in a property can be held by one individual, called being held in severalty. Ownership rights may be held concurrently by two or more individuals, in which case it is said to be held in co- tenancy.

9. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 9 Multiple Ownership of Personal Property The major forms of co-tenancy are: –(1) tenancy in common. –(2) joint tenancy. –(3) tenancy by entirety. –(4) community property.

10. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 10 Tenancy in Common. –Ownership by two or more persons; interest may be transferred or inherited (or bequeathed). Joint Tenancy. –Ownership by two or more persons; has right of survivorship, so when one joint tenant dies, the other(s) take the ownership share of the deceased. –When ownership in a joint tenancy is transferred, a new joint tenancy is formed. Types of Co-Tenancy

11. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 11 Types of Co-Tenancy Tenancy by Entirety. –Ownership by both a husband and wife; like joint tenancy, but only between spouses. –In many states, divorce converts a tenancy by entirety into a tenancy in common. Community Property. –Only property acquired during marriage. –Some states, passes to surviving spouse; other states passes to heirs.

12. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 12 Bailments A bailment occurs when tangible personal property is delivered by the owner (bailor) to another person (the bailee) under an agreement that the identical property will be returned or delivered in accordance with the agreement.

13. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 13 Bailments The bailee has possession, but not title. When a person comes into the possession of the personal property of another without the owner actually delivering it, the law classifies the relationship as a constructive bailment.

14. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 14 Required Elements of Bailment BailorBailee Delivery Agreement Acceptance of Delivery

15. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 15 Classifications of Bailments Bailments may be classified in terms of benefit: –(1) sole benefit of the bailor, –(2) sole benefit of the bailee, or –(3) benefit of both parties (mutual benefit bailment).

16. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 16 Duty of Care In some states, the standard of care required of a bailee is related to the class of bailment: –sole benefit of the bailor: the bailee is required to exercise only slight care and is liable for gross negligence only. –sole benefit of the bailee: the bailee is required to exercise great care and is liable for the slightest negligence.

17. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 17 Duty of Care –for mutual benefit, as in a commercial bailment the bailee must only exercise reasonable care, and is liable for ordinary negligence. In other states, the courts apply a “reasonable care under the circumstances” standard to all bailments.

18. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 18 Duties and Rights of Bailee A bailee: –must perform the bailee’s part of the contract; –must exercise reasonable care of bailed property; –unless otherwise agreed, must bear the repair expenses incidental to the use of property in a bailment for hire situation; and –must return the identical property.

19. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 19 Duties and Rights of Bailee If a bailee injures a third person while driving a rented motor vehicle, the bailee is liable to the third person as though the bailee were the owner of the vehicle.

20. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 20 Breach of Duty Bailor may sue the bailee if the goods are not redelivered according to the agreement. In a mutual benefit bailment, the bailor is under a duty to furnish goods reasonably fit for the purposes contemplated by the parties.

21. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 21 Breach of Duty Liability for Defects in Bailed Property. Contract Modification of Liability.