Business Law - Chapter 23

Card Set Information

Business Law - Chapter 23
2013-12-09 22:03:15
Business Law

Chapter 23 - Personal Property, Bailments, and insurance
Show Answers:

  1. Define Personal property
    • Personalty or Chattel
    • All property not classified as real property
    • Tangible or intangible
  2. Define Real Property
    • Realty or Real Estate
    • Land and everything permanently attached to it
  3. Define Fee simple
    • The fullest ownership rights in property
    • Owners can use, posses, or dispose of the property as they choose during their lifetimes and pass on the property to their heirs at death
  4. Define Tenancy in Common
    Co-Ownership in which two or more persons own an undivided interest in property.
  5. If a tenant passes away who inherits the property in a tenancy in common ownership?
    His/her heirs
  6. Define Joint Tenancy
    Co-Ownership in which two or more persons own an undivided interest in property.
  7. If a tenant passes away who inherits the property in a joint tenancy
    The tenant's property interest transfers to the remaining tenant(s), not to the heirs of the deceased.
  8. Define Community property
    A co-ownership between a husband and wife in which each spouse owns an undivided one-half interest in property acquired during the marriage.
  9. Ways to acquire personal property
    • Purchase it
    • Possession
    • Gifts
  10. Define possession
    • Acquiring property if no other person has title to it
    • Capturing wild animals or finding abandoned property
  11. Define Production
    Any product or item produced by an individual becomes the property of that individual
  12. What conditions make a gift effective?
    • There is evidence of intent to make a gift of the property in question
    • The gift is delivered to the donee or the donee's agent
    • The gift is accepted by the donee
  13. Define Accession
    • When value is added to personal property by the use of labor or materials, the added value generally becomes the property of the owner of the original property.
    • Rare - good faith accessions that substantially increase the value of the property or change its identity may cause title to pass to the improver
  14. Define Confusion
    • If a person wrongfully and willfully commingles fungible goods with those of another in order to render them indistinguishable, the innocent party acquires title to the whole. 
    • Otherwise, the owners become tenants in common of the commingled goods.
  15. What rights do finders of property have?
    • Mislaid property: Property is placed somewhere voluntarily by the owner and then inadvertently forgotten. The finder does not acquire title. 
    • Lost Property: Property that is involuntarily left or forgotten. The finder can claim title to the property against the whole world except the true owner. 
    • Abandoned property: Property that is discarded by the owner, who has no intention of claiming it in the future. The finder can claim title to the property against the whole world including the original owner.
  16. What are the elements of Bailment
    • Personal Property: Bailments involve only personal property 
    • Delivery of possession: For an effective bailment to exist, the bailee must give exclusive possession and control over the property, and in a voluntary bailment, the bailee must knowingly accept the personal property. 
    • The bailment agreement: Expressly or implicitly provides for the return of the bailed property to the bailor or a third party, or for the disposal of the bailed property by the bailee.
  17. What are some types of bailment
    • Bailment for the sole benefit of the bailor
    • Bailment for the sole benefit of the bailee
    • Mutual-Benefit bailment
  18. What is a bailment for the sole benefit of the bailor
    • A gratuitous bailment undertaken for the sole benefit of the bailor
    • favor to the bailor
  19. What is a bailment for the sole benefit of the bailee
    A gratuitous loan of an article to a person solely for the bailee's benefit
  20. What is a mutual-benefit bailment
    • The most common kind of bailment.
    • Involves compensation between the bailee and bailor for the service provided
  21. Define Bailment
    • A situation in which the personal property of one person is entrusted to another, who is obligated to return the bailed property to the bailor or dispose of it as directed.
    • No passage of title and no intent to transfer title
  22. What are the rights of a bailee
    • The right of possession: Bailee can sue a third person who damage, lose, or convert the bailed property 
    • The right to be compensated and reimbursed for expenses: in the event of an nonpayment a bailee can put a lien on the bailed property
    • The right to limit liability: limit liability for loss or damage.
  23. What are the duties of a bailee
    • Exercise appropriate care over property entrusted to her/him
    • Goods must be returned to the bailor or disposed of according to the bailor's directions.
  24. What happens when a bailee does not return the property to the bailor
    Creates a presumption of negligence and constitutes a breach of contract or the tort of conversion of goods
  25. What are some special types of Bailments
    • Common Carriers: Held to a standard of care based on strict liability
    • Warehouse companies: 1) can issue documents of title 2) subject to state and federal statutes (Article 7 of the UCC). Must exercise due care and are liable for loss or damage to property if they fail to do so
    • Hotel Operators: subject to strict liability for any loss or damage to their guests' personal property. State statutes may limit liability if the hotel provides a safe and properly notifies its guests.
  26. Define Policy
    Insurance contract
  27. Define Premium
    The consideration paid to the insurer for a policy
  28. Define Underwriter
    The insurance company
  29. Define Parties
    Includes the insurer (insurance company), insured (person covered by the insurance), an agent (representative of the insurance company) or a broker (independent contractor), and a beneficiary (person to receive proceeds under the policy)
  30. When does an insurable interest exist?
    Whenever an individual or entity benefits from the preservation of the health or life of the insured or the property to be insured.
  31. When must an insurable interest exist for life insurance
    At the time the policy is issued
  32. When must an insurable interest exist for property insurance
    at the time of the loss
  33. What laws govern insurance contracts
    • General principles of contract law 
    • Regulated by the states
  34. what happens when an applicant makes false statements in an insurance contract
    The applicant is bound by the false statement that appear on the application
  35. When can an insurance contract be void
    Misstatement or misrepresentation on the application
  36. When is the effective date of an insurance contract
    • When a binder (written memorandum indicating that a formal policy is pending and stating its essential terms) is written
    • When the policy is issued
    • At the time of contract formation
    • When certain conditions are met (physical)
  37. What are some provisions and clauses for insurance contracts
    • Ambiguity in the policy will be interpreted against the insurance company.
    • When the written policy has not been delivered (unclear whether an insurance contract exists) the uncertainty will be resolved against the insurance company. The court will presume the policy is in effect unless the company can show otherwise.
  38. What are some defenses an insurance company can use
    Misrepresentation or fraud by the applicant