PowerPoint Slides to Accompany
CONTEMPORARY BUSINESS AND
ONLINE COMMERCE LAW
5th Edition
by Henry R. Cheeseman
Chapter 36
Personal Property and
Bailments
Slides developed by
Les Wiletzky
Wiletzky and Associates
Copyright © 2006 by Pearson 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
2. Personal Property – consists of
everything that is not real property
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Personal Property
 Tangible Property – All real property and
physically defined personal property

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
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Acquiring Ownership of Personal
Property (1 of 5)
 By Possession or Capture
 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
 Production – producing a finished product
from raw materials and supplies
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Acquiring Ownership in Personal
Property (2 of 5)
 By Gift
 A voluntary transfer of title to property without
payment of consideration by the donee
 Three elements necessary to be a valid gift:
1. Donative Intent
2. Delivery
3. Acceptance
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Acquiring Ownership in Personal
Property (3 of 5)
 Gifts (continued)
 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
 Revised Uniform Gifts to Minors Act
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Acquiring Ownership in Personal
Property (4 of 5)
 By Will or Inheritance
 Will – gift to beneficiaries named in a will
 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
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Acquiring Ownership in Personal
Property (5 of 5)
 By Confusion
 Occurs when fungible goods are commingled
 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
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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
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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
 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
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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)

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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
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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
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Parties to a Bailment
Bailor
Bailee
Goods transferred for
safekeeping, storage, or
transportation
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Elements Necessary to Create a
Bailment (1 of 2)
 Personal Property
 Only personal property can be bailed
 Delivery of Possession
 The bailee has exclusive control over the
personal property
 The bailee must knowingly accept the
personal property
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Elements Necessary to Create a
Bailment (2 of 2)
 Bailment Agreement
 A bailment may be either express or implied
 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
 A bailment may be implied from the
circumstances
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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
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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
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Duration and Termination 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 at Will
 A bailment without a
fixed term
 Can be terminated at
any time by either
party
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Bailee’s Rights
 Depending on the type of bailment, bailees
may have the right to:
Exclusive possession of the bailed property
 Use of the bailed property
 Compensation for work done or services
provided

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Bailor’s Duties
 The bailor owes the duty to:
 Pay the agreed-upon compensation to the
bailee
 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
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Special Bailments
 Special (or extraordinary) bailees include:
 Common carriers
 Inn keepers
 Warehouse companies
 Special bailees must follow the rules
applicable to ordinary bailees
 They are also subject to special liability
rules contained in Article 7 of the Uniform
Commercial Code (UCC)
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Special Bailees’ 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
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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.
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Special Bailees’ 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
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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
 Bills of Lading

 Article 7 of the UCC governs documents
of title
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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
 Often a preprinted form drafted by the
warehouseman
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Bill of Lading
 Document of title that is issued by a
carrier when goods are received for
transportation
 Issued by:
Common carriers
 Contract carriers
 Freight forwarders
 Other persons engaged in the business of
transporting goods for hire

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