I. REVIEWING WHAT YOU LEARN
1. Name and give an example of each of the two kinds of personal property.
There are 2 kind of personal property
+ Tangible personal property: television, clothing and automobile.
+ Intangible personal property: ownership interests in partnerships or corporations, copyright, trademarks
2. What is the different between a fixture and a trade fixture?
- A fixture is when personal property is physically attached to real property and become part of the real property
- A trade fixture is when a business tenant physically attaches personal property, such as machinery, that is necessary to carry on the trade or business to real property
3. What do “goods” include?
- Good include personal property, anything that is movable
4. What is the name given to the type of goods that are usually sold by weight or measure and are stored in bulk quantities?
- Goods that are usually sold by weight or measure and are stored in bulk quantities are called fungible goods.
5. Why is gift not a sale?
- A gift is not a sale because the person receiving the gift pays no price to the person making the gift
6. Under what circumstances do express warranties come about?
- Express warranties comes about when sellers, as part of transaction, make statements made of fact or promise about the goods, describe them, or show samples of them.
7. What is the difference between a full warranty and a limited warranty?
- Full warranty: when full warranty is given for consumer goods, the seller must repair or replace, without cost to the buyer, defective goods or else refund the purchase price.
- Limited warranty: An express warranty given for consumer goods that is less than a full warranty\
8. Under what condition is the warranty of merchantability made, and what does it include?
- Warranty of merchantability is made whenever merchants sell goods. It is not given by private parties.
9. Under what condition is the warranty of fitness for a particular purpose made?
- Warranty of fitness for a particular purpose is made when a buyer relies on a seller’s skill and judgment in selecting the goods
10. How many implied warranties be excluded?
- There are 2 implied warranties: the implied warranty of merchantability, the implied warranty of fitness for a particular purpose.
11. What is the warranty of title, and who makes it?
- Warranty of title is made by all sellers of goods, whether merchants or not. This warrants that the title being conveyed is good, that the transfer is rightful, and that no unknown liens on the goods exist.
12. Under what circumstances does a bailment occur?
- A bailment occurs whenever one person places personal property in the possession of another person without intending to transfer title to that person.
13. Why is it not a bailment when someone borrows a cup of sugar from a neighbor?
- It is not a bailment when someone borrows something such as a cup of sugar and intends to return a similar amount of the same goods, because the exact item that was borrowed will not be returned.
14. Give an example of mutual benefit bailment.
- When someone leaves a watch with a jeweler to be repaired, the watch owner receives the benefit of having the watch repaired, and the jeweler to be repaired, and the jeweler receives the benefit of being paid for the service rendered.
15. Give an example of a bailment for the sole benefit of the bailor.
- If someone stores his or her car in a friend’s garage for safekeeping while away on a trip.
16. Why does the bailee in a bailment for the sole benefit of the bailor owe a duty to use only slight care over the property?
- Because he or she is receiving no benefit.
17. Give an example of a tortious bailee.
- A person who takes another's good without authority, or keeps another's goods after they should be returned, or uses another's goods for a purpose other than agreed upon.
II. UNDERSTANDING LEGAL CONCEPTS
Indicate whether each statement is true or false. Then, change the italicized word or phrase of each false statement to make it true.
ANSWERS
1. Tangible personal property is property that is not perceptible to the senses and cannot be touched. FALSE (intangible)
2. Goods that are not yet in existence or under anyone’s control are called fungible goods. FALSE (future)
3. Under federal law, when a limited warranty is given for consumer goods, the seller must repair or replace, without cost to the buyer, defective good or else refund the purchase price. FALSE (full)
4. The warranty of merchantability is made whenever merchants sell goods. TRUE
5. Implied warranties maybe excluded by writing “as is” on the sales slip. FALSE
(Implied warranties maybe excluded by writing “as is” or “with all faults” on the sales slip.)
6. The warranty of title cannot be excluded by the seller. TRUE
7. It is a bailment when someone borrows a cup of sugar from a neighbor. FALSE (mutuum)
8. In a mutual benefit bailment, the bailee owes a duty to use slight care toward the property. FALSE (ordinary)
9. In a bailment for the sole benefit of the bailee, the bailee owes a duty to use great care with the property. TRUE
10. A person who uses another’s goods for a purpose other than agreed upon is a tortious bailee. TRUE
III. CHECKING TERMINOLOGY PART A
1. Auction sale: A sale of property to the highest bidder.
2. Auction with reserve: An auction in which the auctioneer may withdraw the goods without accepting the highest bid.
3. Auction without reserve: An auction in which the auctioneer must sell the goods to the highest bidder.
4. Bailee: The person whom personal property is delivered under a contract of bailment.
5. Bailment: The relationship that exists when possession (but not ownership) of personal property is transferred to another for a specific purpose.
6. Bailment for the sole benefit of the bailee: A gratuitous bailment benefiting only the bailee.
7. Bailment for the sole benefit of the bailor: A gratuitous bailment benefiting only the bailor.
8. Bailor: The owner of personal property that has been temporarily transferred to a bailee under a contract of bailment.
9. Bidder: Offeror.
10. Bill of sale: A signed writing evidencing the transfer of personal property from one person to another.
11. Bulk transfer: A transfer not in the ordinary course of business, but in bulk, of major part of the materials, supplies, merchandise, or other inventory of an enterprise.
12. Chose in action: Evidence of the right to property, but not the property itself.
13. Conforming goods: Goods that are in accordance with the obligations under the contract.
14. Contract to sell: A contract under which title to goods is to pass at a future time.
15. Cover: The right of a buyer, after breach by a seller, to purchase similar goods from someone else.
16. Cure: Correct.
17. Destination contract: A contract that requires the seller to deliver goods to a destination.
18. Donee: A person who receives a gift.
19. Donor: A person who gives a gift.
20. E-commerce: The buying and selling of goods and services or the transfer of money over the internet.
21. Express warranty: A statement of fact or promise that goods have certain qualities.
22. Fixture: Personal property that is physically attached to real property and becomes part of the real property.
23. F.o.b the place of destination: Free-on-board (no delivery charges) to the place of destination (the receiver).
24. F.o.b the place of shipment: Free-on-board (no delivery charges) to the place of shipment (the shipper).
25. Full warranty: An express warranty given for consumer goods under which the seller must repair or replace, without cost to the buyer, defective goods or else refund the purchase price.
26. Fungible goods: Goods such as grain or oil, of which any unit is the same as any like unit.
27. Future goods: Goods that are not yet in existence or under anyone’s control.
28. Goods: Anything that is movable.
IV. CHECKING TERMINOLOGY (PART B)
1. Chattels/Personal property/Personalty: Anything that is the subject of ownership other than real property.
2. Gratuitous bailment: A bailment for the sole benefit of either the bailor or the bailee, in which no consideration is given by one of the parties in exchange for the benefits bestowed by the other.
3. Identified goods: Goods that have been selected as the subject matter of contract
4. Implied warranty: A warranty that is imposed by the law rather than given voluntarily
5. Intangible personal property: Property that is not perceptible to the senses and that cannot be touched
6. Limited warranty: An express warranty given for consumer goods that is less than a full warranty
7. Merchant: A person who sells goods of the kind sold in the ordinary course of business or who has knowledge or skills peculiar to those goods.
8. Mutual benefit bailment: A bailment in which both the bailor and the bailee receive some benefit.
9. Mutuum: A loan of goods, on the agreement that the borrower may consume them and will return to the lender an equivalent in kind and quantity
10. Nonconforming goods: Goods that are not the same as those called for under the contract
11. Output contract: A contract to sell “all the goods a company manufactures” or “all the crops a farmer grows”
12. Puffing: Statements made by a seller that are opinions and attempts to put their goods in the best light possible; not warranties
13. Puffing: Statements made by a seller that are opinions and attempts to put their goods in the best light possible; not warranties
14. Requirements contract: A contract to buy ‘all the fuel (or other goods) needed for one year
15. Risk of loss: Responsibility in case of damage or destruction.
16. Sale: The passing of title from the seller to the buyer for a price
17. Sale on approval: A sale of goods that are for the buyer’s use rather than for resale and that may be returned even though they conform to the contract
18. Sale or return: A sale of goods that are primarily for resale and may be returned even though they conform to the contract
19. Shipment contract: A contract under which the seller turns the goods over to a carrier for delivery to a buyer
20. Title: Ownership
21. Tortious bailee: A person who is wrongfully in possession of another’s personal property
22. Trade fixture: Personal property, necessary to carry on a trade or business that is physically attached to real property, but does not become part of the real property.
23. Uniform Commercial Code: A law in every state that governs different types of commercial transactions.
24. Warranty of fitness for a particular purpose: An implied warranty, given when a buyer relies on any seller’s skill and judgment in selecting goods, that the goods will be fit for a particular purpose.
25. Warranty of merchantability: An implied warranty, given by merchants in all sales unless excluded, that goods are fit for the ordinary purpose for which such goods are used
26. Warranty of Title: A guarantee that title is good, that the transfer is rightful, and that no unknown liens on the goods exist.
V. USING LEGAL LANGUAGE
Roland went shopping for an outdoor gas grill to give to his friend Rita for her birthday. Broadly speaking, the grill would be called personal property, personalty or chattels because it is the subject of ownership other than real property. Because it has substance and can be touched, it is tangible. It is also called Goods because it is movable. The grill that Roland looked at had a 90 day guarantee, which is known as an express warranty in legal terminology. The guarantee was not a full warranty however, because any defective part would have to be shipped at the buyer's expense to the factory for repair or replacement. For that reason, the guarantee is known as a limited warranty. In addition, an implied warranty would exist that is, a type of guarantee that is imposed by law. Called the warranty of merchantability it guarantees that the goods are fit for the ordinary purpose for which they are to be used and is made when goods are sold by a merchant that is, one who sells goods of the kind sold in the ordinary course of business. This guarantee was not a warranty of fitness for a particular purpose because Roland did not rely on the seller's skill and judgment in selecting the grill. When Roland bought the grill, it was a sale because title (ownership) passed from the seller to the buyer for a price. Had title passed at a future time, it would have been called a contract to sell. Under its warranty of Title the store guaranteed that title to the grill was good and that its transfer was rightful.
When Roland gave the grill to Rita, he was the donor and she was the donee The next morning, Rita left the gas tank in the possession of a bottled-gas company to be filled and picked up later, creating a bailment Rita was the bailor; the bottled gas company was the bailee. Because both parties benefited from the transaction, it was a mutual benefit bailment. The gas that was put into the tank is known as fungible goods because any unit is the same as any like unit. Rita paid for the gas by check, which is a bill of sale or a type of sale on approval. Rita's neighbor Ruth borrowed not only her grill, but also some hot dogs that Rita had in the freezer. The loan of the grill was a gratuitous bailment because no consideration was given, and the loan of the hot dogs was a mutuum because the identical ones would not be returned. Ruth moved away without returning Rita's grill, becoming a tortious bailee.
VI. PUZZLING OVER WHAT YOU LEARN
Caveat: Allow squares for spaces between words and punctuation (apostrophes, hyphens, etc.) when filling in crossword.
Across
2. The right of a buyer, after breach by a seller, to purchase similar goods from someone else. COVER
5. Anything that is the subject of ownership other than real property. PERSONAL PROPERTY
8. A person who gives a gift. DONOR
9. The passing of title from the seller to the buyer for a price. SALE
12. Ownership. TITLE
13. Personal property attached to real property. FIXTURE
14. Correct. CURE
16. Goods such as grain or oil, of which any unit is the same as any like unit. FUNGIBLE GOODS
17. Written evidence of the transfer of personally from one person to another. BILL OF SALE
18. A transfer in bulk of the majority of a merchant's inventory. BULK TRANSFER
Down
1. Evidence of the right to property but not the property itself. CHOSES IN ACTION
2. Anything that is the subject of ownership other than real property. CHATTELS
3. Anything that is movable. GOODS
4. Person who sells goods of the kind sold in the ordinary course of business. MERCHANTS
5. Another name for personal property. PERSONALTY
6. Personal property attached to real property necessary for business. TRADE FIXTURE
7. Contract under which title to goods is passed at a future time. CONTRACT TO SELL
10. Owner of personal property that has been temporarily transferred to a bailee. BAILOR
11. Goods that are not yet in existence or under anyone's control. FUTURE GOODS
15. A person who receives a gift. DONEE
Source: Brown, G. W., & Kauffman, K. D. (1998). Legal terminology. Prentice Hall.
Chapter 21: Personal Property and Bailments, Book 1, pages 207-212
Edited by Nguyễn Nhật Linh
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