Copyright © 2006 by Pearson Prentice-Hall. All rights reserved Slides developed by Les Wiletzky PowerPoint Slides to Accompany ESSENTIALS OF BUSINESS AND

Slides developed byLes Wiletzky Copyright © 2006 by Pearson Prentice-Hall. All rights reserved

PowerPoint Slides to AccompanyESSENTIALS OF BUSINESS AND

ONLINE COMMERCE LAW1st Edition

by Henry R. Cheeseman

Chapter 24Personal Property, Bailments, and Insurance

Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. 24 - 2

There are two kinds of property:1.1. Real PropertyReal Property – includes land and property

that is permanently attached to it e.g., buildings, trees, soil, minerals, timber, and

plants

2.2. Personal PropertyPersonal Property – consists of everything that is not real property


Personal Property Tangible PropertyTangible Property – All real property and

physically defined personal property e.g., buildings, goods, animals and minerals.

Intangible PropertyIntangible Property – Rights that cannot be reduced to physical form e.g., stock certificates, certificates of deposit,

bonds, and copyrights


Acquiring Ownership of Personal Property (1 of 4)

Possession or CapturePossession or Capture A person can acquire ownership in unowned

personal property by taking possession of it or capturing it

Purchase or ProductionPurchase or Production PurchasePurchase – purchasing the property from its

rightful owner ProductionProduction – producing a finished product from

raw materials and supplies


Acquiring Ownership in Personal Property (2 of 4)

GiftGift A voluntary transfer of title to property without

payment of consideration by the donee Three elements necessary to be a valid gift:

1. Donative Intent2. Delivery3. Acceptance



GiftsGifts (continued) Types of gifts:

Gifts inter viosGifts inter vios – gifts made during a donor’s lifetime that are irrevocable present transfers of ownershipGifts causa mortisGifts causa mortis – gifts that are made in anticipation of death

Uniform Gifts to Minors Act Revised Uniform Gifts to Minors Act



Will or InheritanceWill or Inheritance WillWill – gift to beneficiaries named in a will InheritanceInheritance – heirs stipulated in an inheritance

statute DivorceDivorce

When a marriage is dissolved by a divorce, the parties obtain certain rights in the property of the marital estate


Mislaid Property Property is mislaidmislaid when its owner voluntarily

places the property somewhere and then inadvertently forgets it

The owner of the premises where the personal property is mislaidmislaid is entitled to take possession of the property against all except the rightful owner


Lost Property Personal property that an owner leaves

somewhere because of negligence, carelessness, or inadvertence

The finder of lost propertylost property obtains title to the found property against everyone except the true owner

The lost property must be returned to its rightful owner whether he or she discovers the loser’s identity or the loser finds him or her


Estray Statutes Most 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 Advertising the lost property The owner not claiming the property within a

stated time period (e.g., one year)


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 of mislaid property gives up any further attempts to locate it

Anyone who finds abandoned property acquires title to it


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 BailorBailor – the owner of property in bailment BaileeBailee – a holder of goods who is not a seller

or a buyer e.g., a warehouse or common carrier


Parties to a Bailment

BailorBailor BaileeBaileeGoods transferred for Goods transferred for

safekeeping, storage, or safekeeping, storage, or transportationtransportation


Elements Necessary to Create a Bailment (1 of 2)

Personal PropertyPersonal Property Only personal property can be bailed

Delivery of PossessionDelivery of Possession The bailee has exclusive control over the

personal property The bailee must knowingly accept the personal

property


Elements Necessary to Create a Bailment (2 of 2)

Bailment AgreementBailment Agreement A bailment may be either expressexpress or impliedimplied Express bailmentsExpress bailments can be either written or oral Under the Statute of FraudsStatute of Frauds, a bailment must

be in writing if it is for more than one year A bailment may be implied from the

circumstances


Ordinary Bailments1. 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


Ordinary Bailee’s Duty of CareType of Bailment Duty of Care Owed by

BaileeBailee 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


Duration and Termination of Bailments

Bailment for a Fixed TermBailment for a Fixed Term A bailment that

terminates at the end of the term or,

Sooner by mutual consent of the parties

Bailment at WillBailment at Will A bailment without a

fixed term Can be terminated at

any time by either party


Common Carriers Offer transportation services to the general

public (i.e., the baileebailee) ConsignorConsignor – the person shipping the goods

(i.e., the bailorbailor) ConsigneeConsignee – the person to whom the bailed

goods are to be delivered Common carriers are held to a duty of strict duty of strict

liabilityliability


Warehouse Companies BaileesBailees engaged in the business of storing

property for compensation They owe a duty of reasonable careduty of reasonable care to protect

the bailed property Warehousers are liable only for loss or

damage to the bailed property caused by their own negligence


Innkeepers InnkeeperInnkeeper – the owner of a facility that provides lodging

to the public for compensation (e.g., a hotel or motel)

Strict liability standardStrict liability standard – common law duty that says innkeepers are liable for lost, damaged, or stolen goods of guests even if they were not at fault for the loss

Innkeepers’ statutesInnkeepers’ statutes – state statutes that limit an innkeeper’s common law liability


Type of Bailee Liability Limitation on LiabilityCommon Carrier Strictly liable except for:

1. Act of god2. Act of a public enemy3. Order of the government4. Act of the shipper5. 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.

Special Bailees’ Duty of Care (1 of 2)


Type of Bailee Liability Limitation on Liability

Innkeeper Strictly liable State statutes may limit the liability of an innkeeper for others’ rights

Special Bailees’ Duty of Care (2 of 2)


Insurance (1 of 2)

Insurance is defined as a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event

It is a means of transferring and distributing risk of loss

The risk of loss is pooled


Insurance (2 of 2)

InsuredInsured – the party who pays a premium to a particular insurance company for insurance coverage

Insurernsurer – the insurance company that underwrites the insurance coverage

PolicyPolicy – the insurance contract PremiumPremium – the money paid to the insurance

company


Insurable Interest (1 of 2)

A person who purchases insurance must have a personal interest in the insured item or person

If the insured does not have an insurable insurable interestinterest in the property being insured, the contract is treated as a wager and cannot be enforced

Ownership creates an insurable interest


Insurable Interest (2 of 2)

BeneficiaryBeneficiary – a person or organization who will receive money from the insurer at the time of the insured’s death

The beneficiary does not have to have an insurable interest in the insured’s life


Types of Insurance (1 of 3)

Life InsuranceLife Insurance Whole life Term Universal life Double indemnity Key person Annuity

Health and Disability Health and Disability InsuranceInsurance

Health Disability Dental



Fire and Homeowners Fire and Homeowners InsuranceInsurance

Standard fire insurance policy

Homeowners policy Personal articles Renters insurance

Automobile InsuranceAutomobile Insurance Collision Comprehensive Liability Medical payment Uninsured motorist



Other Types of InsuranceOther Types of Insurance Credit Title Marine Umbrella

Business InsuranceBusiness Insurance Business Interruption

Insurance Workers’ Compensation

Insurance Fidelity Insurance Key-Person Life Insurance Liability Insurance


No-Fault Automobile Insurance An automobile insurance system where the

driver’s insurance company pays for any injuries or death the driver and other covered persons suffer in an accident, no matter who caused the accident

Provides coverage for medical expenses and lost wages

Provides coverage for pain and suffering


The Insurance Contract Deductible clause Coinsurance clause Exclusions from coverage clause Suicide clause Endorsements Rider Grace Period


Duty to Defend An insurance company owes a duty to defend

an insured against a lawsuit

This includes: Expenses for a lawyer Court costs Deposition fees


Subrogation If an insurance company pays a claim to an

insured for liability or property damage caused by a third party, the insurer succeeds to the right of the insured to recover from the third party

Subrogation does not apply to life insurance policies

An insurer has no right of subrogation against his or her own insured


Incontestability Clause Prevents insurers from contesting statements

made by insureds in applications for insurance after the passage of a stipulated number of years

The typical length of time is two to five years

Documents

Copyright © 2006 by Pearson Prentice-Hall. All rights reserved Slides developed by Les Wiletzky PowerPoint Slides to Accompany ESSENTIALS OF BUSINESS AND