Chapter 1: Legal Ethics 1

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Learning Objectives 1.What is real property? What is personal property? 2.What is the difference between a joint tenancy and a tenancy in common? 3.What are the three elements necessary for an effective gift? 4.What are the three elements of a bailment? 5.What are the basic rights and duties of a bailee? Of a bailor? 2

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Introduction  Property consists of legally protected rights and interests a person has in anything with an ascertainable value that is subject to ownership. 3

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Introduction  Property is divided into real and personal property. – Real property includes land everything permanently attached to it. – Personal property is both tangible and intangible. 4

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Property Ownership  Introduction. Property ownership is viewed as a “bundle of rights”, including the: – Right to possess. – Right to sell. – Right to give. – Right to lease. – Right to destroy. 5

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Property Ownership  Fee Simple. – Owns the entire “bundle of rights”. – Gives the owner the maximum possible estate or right of ownership of real property, continuing forever. – Chapter 28 will deal with realty estates. 6

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Concurrent Ownership. – Tenancy in Common: A and B own an undivided interest in the property. Upon B’s death interest passes to B’s heir, “C”. AB C Property Ownership 7

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Concurrent Ownership. – Joint Tenancy: A and B own an undivided interest in property but, upon B’s death, B’s interest passes to A, the surviving joint tenant. Property Ownership AB 8

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Property Ownership  Concurrent Ownership. – Community Property (limited # of states) Property acquired by couple during their marriage is owned as an undivided ½ interest in property (real and personal). 9

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Personal property can be acquired through: – Possession.  – Production.  – Gift.  – Will or Inheritance.  – Accession.  – Confusion.  Acquiring Ownership of Personal Property 10

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Possession: – Capture of wild animals (wild animals belong to no one). – Finding of abandoned property. – Adverse Possession. Acquiring Ownership of Personal Property 11

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Production: – Writers, inventors, manufacturers, and others who produce personal property acquire title to it. Acquiring Ownership of Personal Property 12

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Gifts. – Voluntary transfer of property ownership from Donor (owner) to Donee (recipient) for no consideration. Three elements: Donative Intent: based on circumstances, or relationship between the parties. CASE 27.1 G OODMAN V. A TWOOD (2011). What factors indicated capacity? CASE 27.1 G OODMAN V. A TWOOD (2011). What factors indicated capacity? Acquiring Ownership of Personal Property 13

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Gifts. – Three elements: Delivery—actual or “constructive” (symbolic, such as keys to car). – Donor must give up complete control or dominion. Delivery by a 3 rd party is OK. – CASE 27.2 I N R E E STATE OF P IPER (1984). – CASE 27.2 I N R E E STATE OF P IPER (1984). Why was the gift ineffective?  Acquiring Ownership of Personal Property 14

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Gifts. – Three elements: Acceptance. – Gifts Intervivos and Gifts Causa Mortis. Intervivos: while the donor is living. Causa Mortis: while the donor is living but made with an expectation of imminent death. Gift is revocable if the donor lives. Acquiring Ownership of Personal Property 15

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Acquiring Ownership of Personal Property  Accession. – Some value added to another’s personal property by use of either labor or materials. – With owner’s consent. – Without owner’s consent. 16

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Acquiring Ownership of Personal Property  Confusion. – Commingling so that a person’s personal property cannot be distinguished from another’s. – Fungible goods consists of identical particles such as oil or grain. 17

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Mislaid, Lost, and Abandoned Property  Mislaid Property: Voluntarily placed somewhere, then inadvertently forgotten. Finder is caretaker for true owner. 18

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Mislaid, Lost, and Abandoned Property  Lost Property : Involuntarily left. Property owner acquires title against whole world, except for true owner. – Conversion of Lost Property: finder may be liable. – Estray Statutes. 19

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Mislaid, Lost, and Abandoned Property  Abandoned Property : Discarded by true owner with no intention of recovering. Acquires title against all the world, including the original owner. – Trespassers: no title. – Treasure Trove: Title against all world except true owner. 20

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Bailments  A bailment is formed by the delivery of personal property, without transfer of title, by one person (Bailor) to another (Bailee), usually under an agreement for a particular purpose. 21

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Bailments  Differs from sale or gift because property is transferred without passage of title.  Elements of a Bailment: – (1) personal property, (2) delivery of possession, and (3) agreement to return or dispose of property.  22

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Bailments  Elements of a Bailment. – Personal Property. (Tangible or Intangible--not persons or realty.) – Delivery of Possession. Bailee given physical or constructive possession, and knowingly accept. Involuntary Bailments: bailee is responsible to safeguard property for true owner. 23

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Bailments  Elements of a Bailment. – Bailment Agreement. Bailments for less than a year do not require a writing under the Statute of Frauds. Agreement can be express or implied. Agreement provides for return of property to bailor, a third party or disposal by bailee. 24

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Bailments  Ordinary Bailments. – Bailment for the Sole Benefit of the Bailor (Gratuitous Bailment): Bailee owes Bailor a low duty of care, liable only for gross negligence. – Bailment for the Sole Benefit of the Bailee: Bailee owes Bailor a high duty of care and is liable for even slight negligence.  25

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Mutual Benefit Bailment (most common): Each party owes the other a reasonable duty of care. Bailments Bailor’s Sole Benefit Mutual BenefitBailee’s Sole Benefit Slight Care Reasonable Care Great Care 26

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Bailments  Ordinary Bailments. – Rights of the Bailee. Right of Possession. Right to Use Bailed Property. Right to Compensation: gratuitous bailment, bailee’s lien. Right to Limit Liability. 27

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Bailments  Ordinary Bailments. – Duties of the Bailee. Duty of Care. Duty to Return Bailed Property. Bailee may be liable for breach of contract, conversion and/or negligence. CASE 27.3 L A P LACE V. B RIERE (2009). CASE 27.3 L A P LACE V. B RIERE (2009). In your view, was the bailee negligent? 28

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Bailments  Ordinary Bailments. – Duties of the Bailor. Bailor’s Duty to Reveal Defects. – Mutual Benefit Bailment: bailor must notify bailee of all known defects and hidden defects the bailor knew about or could have discovered with reasonable inspection. Warranty Liability for Defective Goods. 29

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Bailments  Special Types of Bailments. – Common Carriers. Publicly licensed to provide transportation services to general public. Common Carriers are strictly liable for damages, unless damages caused by: – An act of God. – An act of a public enemy. – An order of a public authority.  30

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Bailments  Special Types of Bailments. – Common Carriers. Common Carriers are strictly liable unless damages caused by: – An act of the shipper. – The inherent nature of the goods. Not permitted to contract away their liability, but can limit dollar liability. 31

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Bailments  Special Types of Bailments. – Warehouse Companies. Can issue documents of title. Owe duty of reasonable care. Can’t exculpate, can limit.  32

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Bailments  Special Types of Bailments. – Innkeepers. Owe duty of strict liability, modified by state statutes; if innkeeper provides safe and notifies guests. If parking area provided and innkeeper accepts bailment, then may be liable. 33