Twomey  Jennings
Anderson’s Business Law and the Legal Environment, Comprehensive 20e
Anderson’s Business Law and the Legal Environment, Standard 20e
Business Law: Principles for Today’s Commercial Environment 2e
Chapter 21
Personal Property
and Bailments
Copyright © 2008 by West Legal Studies in Business
A Division of Thomson Learning
Personal Property
• Personal property rights consist of whole
or partial ownership rights in things that
are tangible and movable as well as rights
in things that are intangible.
• Property rights include the right to
possess, use, enjoy or dispose of the
property.
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Title to Personal Property
• Personal property may be acquired:
– By purchase
– By gift where the donor has intent to make a gift
and delivers possession to the donee or makes a
constructive delivery.
– By occupation (possession) and, under some
statutes, by finding.
• The state may acquire property by escheat,
which is the transfer of unclaimed goods from a
(non-owner) holder to the state government.
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Gifts
• Inter Vivos Gifts: An ordinary gift between
two living persons is called.
– Both donative intent and delivery are
required.
– Delivery can be actual or constructive.
– If Donor dies before gift is complete, the gift
fails.
• Gift Causa Mortis: made with
contemplation of imminent death.
– If Donor survives, gift is revocable.
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Gifts
• Gifts and Transfers to Minors.
– Uniform Gifts to Minors Act.
– Gift is final and irrevocable for tax
purposes.
• Conditional Gifts.
– Condition precedent must be fulfilled.
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Finding of Lost Property
• Lost Property: owner intends to retain
title.
– Finder retains title against all except true
owner.
– If there is no contract, the finder is not
entitled to a reward.
– Finding in Public Place: finder must give
to hotel or manager.
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Occupation of Personal
Property
• Wild Animals.
– Person who acquires dominion over wild
animal becomes its owner.
• Abandoned Personal Property.
– Owner does not intend to reclaim
possession.
– Finder acquires title to property.
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Multiple Ownership of
Personal Property
• All rights in a property can be held by
one individual, called being held in
severalty.
• Ownership rights may be held
concurrently by two or more individuals,
in which case it is said to be held in cotenancy.
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Multiple Ownership of
Personal Property
• The major forms of co-tenancy are:
– (1) tenancy in common.
– (2) joint tenancy.
– (3) tenancy by entirety.
– (4) community property.
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Types of Co-Tenancy
• Tenancy in Common.
– Ownership by two or more persons;
interest may be transferred or inherited (or
bequeathed).
• Joint Tenancy.
– Ownership by two or more persons; has
right of survivorship, so when one joint
tenant dies, the other(s) take the ownership
share of the deceased.
– When ownership in a joint tenancy is
transferred, a new joint tenancy is formed.
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Types of Co-Tenancy
• Tenancy by Entirety.
– Ownership by both a husband and wife; like
joint tenancy, but only between spouses.
– In many states, divorce converts a tenancy
by entirety into a tenancy in common.
• Community Property.
– Only property acquired during marriage.
– Some states, passes to surviving spouse;
other states passes to heirs.
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Bailments
• A bailment occurs when tangible
personal property is delivered by the
owner (bailor) to another person (the
bailee) under an agreement that the
identical property will be returned or
delivered in accordance with the
agreement.
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Bailments
• The bailee has possession, but not
title.
• When a person comes into the
possession of the personal property of
another without the owner actually
delivering it, the law classifies the
relationship as a constructive
bailment.
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Required Elements
of Bailment
Bailor
Agreement
Bailee
Delivery
Acceptance
of Delivery
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Classifications of Bailments
• Bailments may be classified in terms of
benefit:
– (1) sole benefit of the bailor,
– (2) sole benefit of the bailee, or
– (3) benefit of both parties (mutual benefit
bailment).
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Duty of Care
• In some states, the standard of care
required of a bailee is related to the class
of bailment:
– sole benefit of the bailor: the bailee is
required to exercise only slight care and is
liable for gross negligence only.
– sole benefit of the bailee: the bailee is
required to exercise great care and is liable for
the slightest negligence.
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Duty of Care
– for mutual benefit, as in a commercial
bailment the bailee must only exercise
reasonable care, and is liable for ordinary
negligence.
• In other states, the courts apply a
“reasonable care under the
circumstances” standard to all
bailments.
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Duties and Rights of Bailee
• A bailee:
– must perform the bailee’s part of the contract;
– must exercise reasonable care of bailed
property;
– unless otherwise agreed, must bear the repair
expenses incidental to the use of property in a
bailment for hire situation; and
– must return the identical property.
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Duties and Rights of Bailee
• If a bailee injures a third person while
driving a rented motor vehicle, the bailee
is liable to the third person as though the
bailee were the owner of the vehicle.
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Breach of Duty
• Bailor may sue the bailee if the goods
are not redelivered according to the
agreement.
• In a mutual benefit bailment, the
bailor is under a duty to furnish goods
reasonably fit for the purposes
contemplated by the parties.
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Breach of Duty
• Liability for Defects in Bailed
Property.
• Contract Modification of Liability.
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