special types of bailments

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TYPES OF PROPERTY

Property: Legally protected rights and interests in
anything with an ascertainable value that is subject to
ownership.

Real Property: Land and everything of value
attached to it, such as foliage and permanent
structures, or found under it, such as minerals and
water.

Personal Property: Property that is movable -sometimes referred to as chattel or personalty. There
are two types of personal property:

Tangible Personalty: Personal property, such as
a television set or car, that has physical
substance; and

Intangible Personalty: Personal property, such
as stocks, bonds, patents, and copyrights, the
value of which does not depend on physical
existence.
Ch. 36: Personal Property and Bailments - No. 1
© West Legal Studies in Business (2000)
PROPERTY OWNERSHIP

Fee Simple: Absolute ownership entitling the property
owner to possess, use, or dispose of the property as he or
she chooses. Upon death, the property descends to heirs.

Concurrent Ownership

Tenancy in Common: Co-ownership of property in
which each party owns an undivided interest in the
whole property that passes to heirs at death.

Joint Tenancy: Joint ownership of property in which
each co-owner owns an undivided interest in a portion
of the whole property that passes to the surviving joint
tenants upon death.

Tenancy by the Entirety: Joint ownership of
property by husband and wife, where neither party can
transfer his or her interest in the property without the
other’s consent.

Community Property: Joint ownership of property
by husband and wife in which each spouse owns an
undivided one-half interest in property acquired
during marriage.
Ch. 36: Personal Property and Bailments - No. 2
© West Legal Studies in Business (2000)
ACQUIRING OWNERSHIP: NON-GIFTS

Ownership of personal property may be obtained in the
following ways:

Purchase: Property rights may be acquired in
exchange for money or other valuable consideration.

Possession: Property rights may be acquired by
taking possession of unclaimed, lost, or abandoned
property.

Production: Property rights may be acquired by
creating the property.

Accession: Property rights may be acquired by
adding value to existing property by either personal
labor or materials.

Confusion: Property rights may be acquired by
mixing together goods belonging to two or more
persons in such a way so that the separately owned
goods can no longer be identified.
Confusion
frequently happens with fungible goods.
Ch. 36: Personal Property and Bailments - No. 3
© West Legal Studies in Business (2000)
ACQUIRING OWNERSHIP: GIFTS

Gift: Any voluntary transfer of property made without
consideration, past or present.

In order for a transfer of property to be considered a
gift, the following conditions must be satisfied:
(1) Donative Intent: The donor (the person giving
the gift) must intend for the transfer to be a gift;
(2) Delivery: The gift must be delivered to the
donee (the person for whom the gift is intended),
who, as a result of the gift, must be free to
exercise dominion (ownership rights) over the
property in question; and
(3) Acceptance: The donee must accept the gift.

Inter Vivos Gift: A gift made during the donor’s
lifetime and not in contemplation of imminent death.

Causa Mortis Gift: A gift made in contemplation of
the donor’s death. The donee must survive the donor
in order to accept the gift. If the donor does not die as
expected, the gift is revoked.
Ch. 36: Personal Property and Bailments - No. 4
© West Legal Studies in Business (2000)
MISLAID, LOST, OR ABANDONED PROPERTY

Mislaid Property: Property with which the owner has
voluntarily parted and then cannot find or recover. When
mislaid property is found, the finder does not obtain title to
the mislaid property, but rather holds it in trust for the true
owner.

Lost Property: Property with which the owner has
involuntarily parted and then cannot find or recover. When
lost property is found, the finder can claim title to the
property superior to that of any other person except the true
owner. Estray statutes provide that after notices are
published and after a period of time, the finder acquires
legal title to found property.

Abandoned Property: Property with which the owner has
voluntarily parted with no intention of recovering it. When
abandoned property is found, the finder can claim title to
the property superior to that of any other person including
the true owner.
Ch. 36: Personal Property and Bailments - No. 5
© West Legal Studies in Business (2000)
BAILMENTS

Bailment: A situation in which the personal property of
one person (the bailor) is entrusted to another person (the
bailee), who is obligated to return the bailed property to the
bailor or dispose of it as directed by the bailor.

Bailments involve only personal property -- real
property cannot be the subject of a bailment.

Possession of the bailed property must be transferred
(physical or constructive delivery) to the bailee in
such a way that:
(i)
the bailee is given exclusive possession and
control over the property (subject to the bailor’s
superior rights), and
(ii) the bailee knowingly accepts the personal
property delivered by the bailor.

A bailment agreement may be either express (i.e., in
writing) or implied (i.e., not in writing) and presumes
that the bailed property will be returned to the bailor
or a third party designated by the bailor or will be
disposed of by the bailee in the manner agreed to by
the bailee and the bailor.
Ch. 36: Personal Property and Bailments - No. 6
© West Legal Studies in Business (2000)
ORDINARY BAILMENTS

Three types of ordinary bailments are legally recognized:
(1) Bailment for the Sole Benefit of the Bailor: A
gratuitous bailment made for the convenience and
benefit of the bailor;
(2) Bailment for the Sole Benefit of the Bailee: A
gratuitous bailment made for the convenience and
benefit of the bailee; and
(3) Bailment for the Mutual Benefit of the Bailor and
Bailee: This most common kind of bailment involves
some compensation by the bailor for services rendered
by the bailee such as storing items or holding property
while it is being repaired or serviced.
Ch. 36: Personal Property and Bailments - No. 7
© West Legal Studies in Business (2000)
RIGHTS AND DUTIES

Rights of Bailees: Certain rights are implicit in any
bailment agreement (absent explicit terms to the contrary),
namely:
(1) The right to control and possess the bailed property
during the term of the bailment agreement;
(2) In some cases, the right to use the bailed property;
(3) Except in cases of gratuitous bailments, the right to
be compensated; and
(4) The right to limit their liability for damage to the
bailed property so long as the limitations are called to
the attention of the bailor and are not against public
policy.

Duties of the Bailee: A bailee must:
(1) Take proper care of the bailed property; and
(2) Surrender to the bailor or dispose of the property in
accordance with the bailor’s instructions.

Duties of the Bailor: A bailor must provide the bailee
with goods or chattels that are free from known (obvious or
hidden) defects that could cause injury.
Ch. 36: Personal Property and Bailments - No. 8
© West Legal Studies in Business (2000)
SPECIAL TYPES OF BAILMENTS COMMON CARRIERS AND WAREHOUSERS

Common Carrier: An owner and provider of publicly
available transportation services who renders those services
in return for compensation.


The delivery of goods to a common carrier creates a
bailment relationship between the person whose
property is being shipped (the bailor) and the common
carrier (bailee), who is held strictly liable for the
bailed personal property except for damages caused by
a common law exception. Common carriers can not
contract away their liabilities but can contract to limit
the dollar amount of a claim.
Warehouser: A provider of storage for compensation.

Unlike the strictly liable common carrier, a
warehouser is liable for loss or damage to bailed
property resulting from the warehouser’s negligence.
However, the warehouser is expected to exercise a
higher degree of care, commensurate with the
warehouser’s status as a professional bailee, rather
than an ordinary bailee.
Ch. 36: Personal Property and Bailments - No. 9
© West Legal Studies in Business (2000)
SPECIAL TYPES OF BAILMENTSINNKEEPERS


 Innkeepers: Innkeepers, hotel owners, and others who
provide lodging to the public for compensation as a regular
business are strictly liable for any loss of or damage to their
guests’ property. However, in many states, innkeepers may
avoid strict liability by providing a safe for guests to keep
their valuables in.
Ch. 36: Personal Property and Bailments - No. 10
© West Legal Studies in Business (2000)
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