Chapter 21 - Personal Property and Bailments
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Chapter 21 - Personal Property and Bailments

Course Number: MGMT 354, Spring 2011

College/University: Purdue

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Chapter 21 Personal Property and Bailments I. Personal Property a. Personal Property in Context i. Property refers to a piece of land or a thing or an object 1. In legal terms it also includes the rights of any person to possess, use, enjoy, and dispose of a thing or object of value ii. Real Property: 1. Land and things embedded in the land, such as oil tanks a. Also includes things attached to the earth, such as...

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21 Chapter Personal Property and Bailments I. Personal Property a. Personal Property in Context i. Property refers to a piece of land or a thing or an object 1. In legal terms it also includes the rights of any person to possess, use, enjoy, and dispose of a thing or object of value ii. Real Property: 1. Land and things embedded in the land, such as oil tanks a. Also includes things attached to the earth, such as buildings or trees, and the rights in any of these things iii. Personal Property: 1. Property that is movable or intangible, or rights in such things 2. Consists of a. Whole or fractional rights in things that are tangible and movable, such as furniture and books b. Claims and debts i. Called choses in action 1. Intangible personal property in the nature of claims against another, such as a claim for accounts receivable or wages c. Intangible property rights, such as trademarks, copyrights, and patents b. Title to Personal Property i. Not title is acquired by theft 1. The thief acquires possession only, and if the thief makes a sale or gift of the property to another, the latter acquires only possession of the property a. The true owner may reclaim the property from the thief or a thiefs transferee ii. Gifts: 1. Title to personal property may be transferred by the voluntary act of the owners without receiving anything in exchange a. The donor may do so because of things that the recipient of the gift, the donee, has done in the past or is expected to do in the future i. These are not deemed consideration 2. Five types of gifts: a. Inter Vivos Gifts: i. Ordinary gift that is made between two living persons ii. Takes into effect when the donor 1. Expresses an intent to transfer title a. Intent to make a gift requires an intent to transfer title at that time 2. Makes delivery, subject to the right of the donee to disclaim the gift within a reasonable time after learning that is has been made a. No breach of contract if the donor fails to complete the gift since there is no consideration b. Gifts Causa Mortis: i. Made when the donor, contemplating imminent and impending death, delivers personal property to the donee with the intent that the donee shall own it if the donor dies 1. Conditional gift and the donor is entitled to take the property back if a. The donor does not die b. The donor revokes the gift before dying c. The donee dies before the donor c. Gifts and Transfers to Minors: i. Uniform acts provide for transferring property to a custodian to hold for the benefit of a minor 1. When a custodian holds property, the custodian has discretionary power to use the property for the support, maintenance, education, and benefit of the minor ii. Custodianship terminates and the property is distributed when the minor reaches the age of 21 d. Conditional Gifts: i. This car is yours when you graduate, etc 1. A condition precedent must be satisfied before any gift or transfer takes place ii. Most courts regard engagement rings as a conditional gift subject to the condition subsequent of a failure to marry e. Anatomical Gifts: i. Persons may make gifts of parts of their bodies, as in the case of kidney transplants iii. Finding of Lost Property 1. Personal property is lost when the owner does not know where it is located but intends to retain title to or ownership of it a. Person finding lost property does not acquire title but only possession i. Required to surrender the property to the true owner when the latter establishes ownership 1. Meanwhile, the finder is entitled to retain possession as against everyone else 2. Finding in Public Place: a. If the property is found in a public place, such as a hotel, the finder is not entitled to possession of the property i. Must give it to the proprietor or manager of the public place to keep it for the owner 1. Does not apply if it appears that the property was not intentionally placed where it was found 3. Statutory Change: a. If after waiting a certain period of time for the owner to reclaim the lost property, and after giving notice such as in the form of a newspaper publication, the finder is entitled to keep or sell the property iv. Occupation of Personal Property 1. In some cases, title to personal property may be acquired by occupationby taking and retaining possession of the property a. Wild Animals: i. If an animal is killed or captured on the land of another while the hunter is on the land without the permission of the landowner, the animal, when killed or captured, belongs to the landowner b. Abandoned Personal Property: i. Personal property is deemed abandoned when the owner relinquishes possession with the intention to disclaim title to it 1. Thrown away items ii. Title to these items may be acquired by the first person who obtains possession and control of it iii. Only occurs when the owner voluntarily leaves property c. Conversion: i. Tort of Conversion: 1. Wrongful exclusionary retention of an owners physical property well as as electronic records v. Escheat 1. Transfer to the state of the title a decedents property when the owner of the property dies intestate and is not survived by anyone capable of taking the property as heir vi. Multiple Ownership of Personal Property 1. Severalty: a. Ownership of property by one person 2. Cotenancy: a. When two or more persons hold concurrent rights and interests in the same property b. Various Forms: i. Tenancy in Common: 1. Two or more persons own undivided interests in property a. Interest of one of the tenants can be transferred or inherited in which case the taker becomes a tenant in common with the others ii. Joint Tenancy: 1. Right of survivorship: a. On the death of joint tenant, the remaining tenants take the share of the deceased tenant i. Last surviving joint tenant takes the property as a holder in severalty 2. A joint tenants interest may be transferred to a third person a. Destroys the joint tenancy and becomes tenancy in common iii. Tenancy by Entirety: 1. Transfer of property to both husband and wife 2. Same as joint tenancy a. Right of survivorship cant be extinguished b. One spouses interest cannot be transferred to a third person vii. Community Property 1. Cotenancy held by husband and wife in property acquired during their marriage under the law of some of the states, principally in the southwestern United States II. Bailments a. Definition i. Relationship that arises when one person delivers possession of personal property to another under an agreement, express or implied, by which the latter is under a duty to return the property or to deliver it or dispose of it as agreed 1. Person who turns over the possession of the property is the bailor 2. Person who accepts is the bailee b. Elements of Bailment i. Agreement: 1. Generally, it contains all of the elements of a contract 2. Bailment transaction in fact consists of a. A contract to bail b. The actual bailing of the property 3. No need for written bailment a. Real property cannot be bailed ii. Delivery and Acceptance: 1. Bailment arises when, pursuant to the agreement of the parties, the property is delivered to the bailee and accepted by the bailee as subject to the bailment agreement a. In absence of prior agreement to the contrary, a valid delivery and acceptance generally require the bailee to be aware that the goods have been placed within the bailees exclusive possession or control c. Nature of the Parties Interests i. Bailors Interest: 1. The bailor is usually the owner, but ownership by the bailor is not required a. Sufficient for the bailor to have physical possession ii. Bailees Interest: 1. Title to the property does not pass to the bailee, and the the bailee cannot sell the property to a third person d. Classification of Ordinary Bailments i. Sole benefit of the bailor ii. Sole benefit of the bailee iii. The mutual benefit of both iv. On the basis of compensation, bailments may be classified as 1. Bailments for Mutual Benefit a. One party takes the personal property of another into her care or custody in exchange for payment or another benefit 2. Gratuitous Bailments a. The transfer of possession and use of the bailed property is without compensation i. Bailments for sole benefit of either the bailor or the bailee v. Constructive Bailment: 1. Arises when one person has lawfully acquired possession of anothers personal property other than by virtue of a bailment contracts and holds it under such circumstances that the law imposes the recipient of the property the obligation to keep it safely and redeliver it to the owner a. Must protect the property e. Duties and Rights of the Bailee i. The bailee has certain duties concerning performance, care, and return of the bailed property 1. Must perform his part of a contract and is liable for ordinary contract damages for failure to perform the contract ii. Sole Benefit of the Bailor: 1. Example, allowing someone to store their belongings in your house a. Liable only for gross negligence relating to damage to the belongings iii. Sole Benefit of the Bailee: 1. Example, borrowing someones guitar a. Liable even for slight negligence iv. Mutual Benefit Bailments: 1. Bailee is responsible for using reasonable or ordinary care under the circumstances while using the borrowed equipment 2. Bailor has the responsibility to warn the bailee of any known defects or defects that could be discovered on reasonable inspection v. Bailee has the right to receive payment for charges due for storage or repair 1. Bailees lien: a. Gives the bailee the right to keep possession of the bailed property until charges are paid f. Liability for Defects in Bailed Property i. Mutual Benefit Bailment: 1. Bailor must inform the bailee of known defects and make a reasonable investigation to discover defects a. Bailor is liable for harm resulting from such defects ii. Sole Benefit of the Bailee: 1. Bailor must inform the bailee of known defects

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