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167 C HAPTER 21 T ITLE , R ISK , AND I NSURABLE I NTEREST A NSWERS TO Q UESTIONS AT THE E NDS OF THE C ASES CASE 21.1 (PAGE 425) THE ETHICAL DIMENSION Given that Euro Motorcars had had prior dealings with Figueroa on a number of occasions and did not suspect that Figueroa would commit theft, was the result in this case fair? Why or why not? Yes, it is fair, because among the parties that would potentially bear the loss in this case, Euro, as the original dealer with Figueroa, was in the best position to avoid the loss. Also, the system according to which the transactions were conducted in this case is common among car dealers, and thus all of the parties, including Euro, would be aware of the risk that they were taking. No, it is not fair, because none of the parties, including Euro, knew that Figueroa would defraud the other. THE E-COMMERCE DIMENSION If automobile title documents were available online, would that have helped Euro to avoid loss in this situation? What problems might the online availability of the documents lead to? The transactions among all of the parties to this case were founded largely on trust. If title documents were generally available online, it would likely obviate the need for such trust, as well as reduce the amount of litigation and other legal controversies, and simplify the application of the law when disputes arise. All of the steps in a transaction could arguably be easily followed and verified online, undercutting the ability of defrauding parties to take advantage of, and otherwise betray, such trust. Of course, the online availability of such documents could lead to their easy duplication, alteration, or manipulation for fraudulent and other illegal purposes. CASE 21.2 (PAGE 427) THE ETHICAL DIMENSION
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168 UNIT FOUR: DOMESTIC AND INTERNATIONAL SALES AND LEASE CONTRACTS How did the ―usual and customary‖ methods of dealing in the art business help Malmberg deceive the other parties in this case? What additional steps might those parties have taken to thwart this deceit? The apparently heavy reliance in the art industry on dealers and their representations significantly helped Malmberg to deceive all of the parties in this case. As the Connecticut Supreme Court noted, ― in the art industry, it was the ordinary and customary practice that if an individual regularly worked with a particular art dealer or an art dealer was identified on the identification label of a loaned work of art, inquiries about an art transaction would be presented to the art dealer rather than directly to the principal. Buyers ordinarily and customarily relied on representations made by respected dealers regarding their authority to sell works of art. Purchases and sales of works of art were documented solely by a single invoice from seller to buyer. It was also ordinary and customary to proceed with the purchase of valuable works of art without requesting or receiving documentary proof that the selling dealer had the authority to sell the work of
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This note was uploaded on 09/23/2010 for the course BLAW blaw 4203 taught by Professor Farguson during the Spring '09 term at LSU.

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