Copyright © 2004 by Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany BUSINESS LAW E-Commerce and Digital Law International Law and Ethics 5 th Edition by Henry R. Cheeseman Slides developed by Les Wiletzky Wiletzky and Associates, Puyallup, WA Chapter 48 Personal Property and Bailments Chapter 48 Personal Property and Bailments

48 - 2Copyright © 2004 by Prentice-Hall. All rights reserved. There are two kinds of property: 1.Real Property – includes land and property that is permanently attached to it. e.g., buildings, trees, soil, minerals, timber, and plants e.g., buildings, trees, soil, minerals, timber, and plants 2.Personal Property – consists of everything that is not real property.

48 - 3Copyright © 2004 by Prentice-Hall. All rights reserved. Personal Property  Tangible Property – All real property and physically defined personal property. e.g., buildings, goods, animals and minerals. e.g., buildings, goods, animals and minerals.  Intangible Property – Rights that cannot be reduced to physical form. e.g., stock certificates, certificates of deposit, bonds, and copyrights e.g., stock certificates, certificates of deposit, bonds, and copyrights

48 - 4Copyright © 2004 by Prentice-Hall. All rights reserved. Acquiring Ownership in Personal Property  By Possession A person can acquire ownership in unowned personal property by taking possession of it or capturing it. A person can acquire ownership in unowned personal property by taking possession of it or capturing it.  By Purchase or Production Purchase – purchasing the property from its rightful owner. Purchase – purchasing the property from its rightful owner. Production – producing a finished product from raw materials and supplies. Production – producing a finished product from raw materials and supplies.

48 - 5Copyright © 2004 by Prentice-Hall. All rights reserved. Acquiring Ownership in Personal Property (continued)  By Gift A voluntary transfer of title to property without payment of consideration by the donee. A voluntary transfer of title to property without payment of consideration by the donee. Three elements necessary to be a valid gift: Three elements necessary to be a valid gift: 1. Donative Intent 2. Delivery 3. Acceptance

48 - 6Copyright © 2004 by Prentice-Hall. All rights reserved. Acquiring Ownership in Personal Property (continued)  Gifts (continued) Types of gifts: Types of gifts: Gifts inter vios – gifts made during a donor’s lifetime that are irrevocable present transfers of ownership. Gifts causa mortis – gifts that are made in anticipation of death. Uniform Gifts to Minors Act Uniform Gifts to Minors Act Revised Uniform Gifts to Minors Act Revised Uniform Gifts to Minors Act

48 - 7Copyright © 2004 by Prentice-Hall. All rights reserved. Acquiring Ownership in Personal Property (continued)  By Will or Inheritance Will – gift to beneficiaries named in a will. Will – gift to beneficiaries named in a will. Inheritance – heirs stipulated in an inheritance statute. Inheritance – heirs stipulated in an inheritance statute.  By Accession Occurs when the value of personal property increases because it is added to or improved by natural or manufactured means. Occurs when the value of personal property increases because it is added to or improved by natural or manufactured means.

48 - 8Copyright © 2004 by Prentice-Hall. All rights reserved. Acquiring Ownership in Personal Property (continued)  By Confusion Occurs when fungible goods are commingled. Occurs when fungible goods are commingled. The owners share title to the commingled goods in proportion to the amount of goods contributed. The owners share title to the commingled goods in proportion to the amount of goods contributed.  By Divorce When a marriage is dissolved by a divorce, the parties obtain certain rights in the property of the marital estate. When a marriage is dissolved by a divorce, the parties obtain certain rights in the property of the marital estate.

48 - 9Copyright © 2004 by Prentice-Hall. All rights reserved. Mislaid Property  Property is mislaid when its owner voluntarily places the property somewhere and then inadvertently forgets it.  The owner of the premises where the personal property is mislaid is entitled to take possession of the property against all except the rightful owner.

Copyright © 2004 by Prentice-Hall. All rights reserved. Lost Property  Personal property that an owner leaves somewhere because of negligence, carelessness, or inadvertence.  The finder of lost property obtains title to the found property against everyone except the true owner.

Copyright © 2004 by Prentice-Hall. All rights reserved. Estray Statutes  Many states have enacted estray statutes that give a finder of mislaid or lost property clear title to the property if certain requirements are met: Reporting the find to an appropriate government agency Reporting the find to an appropriate government agency Advertising the lost property Advertising the lost property The owner not claiming the property within a stated time period (e.g., one year) The owner not claiming the property within a stated time period (e.g., one year)

Copyright © 2004 by Prentice-Hall. All rights reserved. Abandoned Property  Property is classified as abandoned if: An owner discards the property with the intent to relinquish his or her rights in it, or An owner discards the property with the intent to relinquish his or her rights in it, or An owner of mislaid property gives up any further attempts to locate it An owner of mislaid property gives up any further attempts to locate it  Anyone who finds abandoned property acquires title to it.

Copyright © 2004 by Prentice-Hall. All rights reserved. Bailment  Occurs when the owner of personal property transfers the property to another to be held, stored, delivered, or for some other purpose.  Title to the property does not transfer.  Bailor – the owner of property in bailment.  Bailee – a holder of goods who is not a seller or a buyer. e.g., a warehouse or common carrier e.g., a warehouse or common carrier

Copyright © 2004 by Prentice-Hall. All rights reserved. Parties to a Bailment BailorBailee Goods transferred for safekeeping, storage, or transportation

Copyright © 2004 by Prentice-Hall. All rights reserved. Elements Necessary to Create a Bailment (1 of 2)  Personal Property Only personal property can be bailed. Only personal property can be bailed.  Delivery of Possession The bailee has exclusive control over the personal property. The bailee has exclusive control over the personal property. The bailee must knowingly accept the personal property. The bailee must knowingly accept the personal property.

Copyright © 2004 by Prentice-Hall. All rights reserved. Elements Necessary to Create a Bailment (2 of 2)  Bailment Agreement A bailment may be either express or implied. A bailment may be either express or implied. Express bailments can be either written or oral. Express bailments can be either written or oral. Under the Statute of Frauds, a bailment must be in writing if it is for more than one year. Under the Statute of Frauds, a bailment must be in writing if it is for more than one year. A bailment may be implied from the circumstances. A bailment may be implied from the circumstances.

Copyright © 2004 by Prentice-Hall. All rights reserved. Types of Bailments Bailment for a Fixed Term  A bailment that terminates at the end of the term or,  Sooner by mutual consent of the parties Bailment for a Fixed Term  A bailment that terminates at the end of the term or,  Sooner by mutual consent of the parties Bailment at Will  A bailment without a fixed term  Can be terminated at any time by either party Bailment at Will  A bailment without a fixed term  Can be terminated at any time by either party

Copyright © 2004 by Prentice-Hall. All rights reserved. Ordinary Bailments 1.Bailments for the sole benefit of the bailor 2.Bailments for the sole benefit of the bailee 3.Bailments for the mutual benefit of the bailor and bailee

Copyright © 2004 by Prentice-Hall. All rights reserved. Ordinary Bailee’s Duty of Care Type of Bailment Duty of Care Owed by Bailee Bailee Liable to Bailor for For the sole benefit of the bailor Slight Gross negligence For the sole benefit of the bailee Great Slight negligence For the mutual benefit of the bailor and bailee Ordinary Ordinary negligence

Copyright © 2004 by Prentice-Hall. All rights reserved. Bailee’s Rights  Depending on the type of bailment, bailees may have the right to: Exclusive possession of the bailed property Exclusive possession of the bailed property Use of the bailed property Use of the bailed property Compensation for work done or services provided Compensation for work done or services provided

Copyright © 2004 by Prentice-Hall. All rights reserved. Bailor’s Duties  The bailor owes the duty to: Pay the agreed-upon compensation to the bailee Pay the agreed-upon compensation to the bailee Not interfere with the bailee’s possessory interest during the term of the bailment Not interfere with the bailee’s possessory interest during the term of the bailment Notify the bailee of any defects in the bailed property that could cause injury to the bailee or others Notify the bailee of any defects in the bailed property that could cause injury to the bailee or others

Copyright © 2004 by Prentice-Hall. All rights reserved. Special Bailments Common Carriers Warehouse Companies Innkeepers

Copyright © 2004 by Prentice-Hall. All rights reserved. Special Bailee’s Duty of Care (1 of 2) Type of Bailee Liability Limitation on Liability Common Carrier Strictly liable except for: 1. Act of god 2. Act of a public enemy 3. Order of the government 4. Act of the shipper 5. Inherent nature of the goods May limit the dollar amount of liability by offering the bailor the right to declare a higher value for the bailed goods for an additional charge. Warehouse Company Ordinary negligence May limit the dollar amount of liability by offering the bailor the right to declare a higher value for the bailed goods for an additional charge.

Copyright © 2004 by Prentice-Hall. All rights reserved. Special Bailee’s Duty of Care (2 of 2) Type of Bailee Liability Limitation on Liability Innkeeper Strictly liable State statutes may limit the liability of an innkeeper for others’ rights

Copyright © 2004 by Prentice-Hall. All rights reserved. Documents of Title  Negotiable instruments developed to represent the interests of the different parties in a transaction that uses storage or transportation between the parties. Warehouse Receipts Warehouse Receipts Bills of Lading Bills of Lading  Article 7 of the UCC governs documents of title.

Copyright © 2004 by Prentice-Hall. All rights reserved. Warehouse Receipts  A written document issued by a person who is engaged in the business of storing goods for hire. e.g., warehouse company or storage company e.g., warehouse company or storage company  Often a preprinted form drafted by the warehouseman.

Copyright © 2004 by Prentice-Hall. All rights reserved. Bill of Lading  Document of title that is issued by a carrier when goods are received for transportation.  Issued by: Common carriers Common carriers Contract carriers Contract carriers Freight forwarders Freight forwarders Other persons engaged in the business of transporting goods for hire Other persons engaged in the business of transporting goods for hire

Copyright © 2004 by Prentice-Hall. All rights reserved. Through Bill of Lading  A bill of lading that provides that connecting carriers may be used to transport the goods to their destination.  Original carrier that issued the bill of lading is liable for any damages or loss to the goods caused by the connecting carrier.