49. The Constitution protects against taking of property:
a. by a corporation.
b. without notice.
c. for public use.
d. without due process.
50. A transaction in which the owner gives possession of his personal property to another to secure a debt is:
a. an extraordinary bailment.
b. a pledge.
c. a consignment.
d. commercial bailment.
51. A type of insurance in which the insured and the insurer share the risk of a loss due to fire is:
a. coinsurance.
b. non-forfeiture insurance.
c. no–fault insurance.
d. reinsurance.
52. The failure by an applicant to disclose material facts that an insurer does not know but has a right to know is called:
a. misrepresentation.
b. concealment.
c. waiver.
d. fidelity.
53. Another term for personal property is:
a. patent.
b. chattel.
c. realty.
d. fixtures.
54. The UCC does not cover:
a. transfer of negotiable instruments.
b. investment securities.
c. sales of goods.
d. sales of copyrights.
55. An insured holds a $32,000 fire insurance policy on a building which is valued at $40,000, and on which there is an
80% co-insurance clause. If the building is totally destroyed by fire, the policyholder will receive:
a. $40,000.
b. $32,000.
c. $30,000.
d. $25,600.
56. A negotiable electronic document of title:
a. is not possible, since a document of title must be in tangible form.
b. running to the order of a named person must be indorsed in order to negotiate it.
c. may be delivered by voluntarily transferring control rather than by voluntarily transferring possession.
d. is tracked by a system of control created and set forth in Revised Article 7 of the UCC.
57. In insurance contracts, warranties:
a. are of little importance.
b. must be expressly included in the insurance contract.
c. only apply to the insurer, not the insured.
d. operate as conditions that must exist before the contract is effective or before the insurer’s promise to pay is
enforceable.
58. A bailee’s duty of care:
a. is always the degree of care necessary to prevent any loss or injury to the bailed goods.
b. varies depending on the nature of the bailment relationship and the character of the bailed property.
c. Both of these.
d. Neither of these.
59. Temporary insurance coverage prior to the issuance of the actual policy may be obtained by use of a(n):
a. premium agreement.
b. coinsurance clause.
c. option clause.
d. binder.
60. To prevent the use of the insurance policy for wagering purposes, the person who is to be indemnified under the
contract must have:
a. good faith.
b. an insurable interest.
c. a binder.
d. a coinsurance clause.
61. Darlene rents an car for her business trip. What is the relationship between Darlene and the car rental company?
a. A bailment for the sole benefit of the bailor
b. A bailment for the sole benefit of the bailee
c. A bailment for mutual benefit
d. Pledgee and pledgor
62. Taylor Corp. rents a warehouse where it conducts a small manufacturing operation. As a condition of its lease, it
pays a fire insurance premium. Taylor needs more room and rents larger quarters. Taylor then subleases its old
warehouse to Mack. Taylor also assigns its already-paid insurance policy to Mack. This action is:
a. appropriate, so long as Taylor and Mack agree to it.
b. appropriate, so long as the landlord agrees to it.
c. not binding on the insurer.
d. totally within the rights of Taylor, who already paid the premium.
63. An insurable interest in property must exist:
a. at the time the insurance policy is obtained.
b. at the time the loss occurs.
c. from the time the policy is obtained to the time the loss occurs without interruption.
d. for only one person at a time in a particular property.
64. In determining whether an item is a fixture, which of the following will be considered?
a. How it is attached to the building or land
b. Whether the item can be removed without harm to the building
c. Whether the item is usually included in that type of real estate
d. All of these factors may be considered.
65. Dr. Olson is a board-certified ophthalmologist who constructs some specially designed examining tables to use in
looking at his patient’s eyes. The tables are firmly attached to the floor of the space he rents for his office. If Dr.
Olson decides to move his office, which of the following is correct?
a. The tables are fixtures that cannot be removed.
b. The tables are not fixtures because Dr. Olson installed them.
c. Dr. Olson may remove the tables if they can be removed without materially damaging the realty.
d. All of these.
66. Margaret told Bill she would give him her tickets to an upcoming concert. Later she changed her mind and decided
to go to the concert after all. Can Bill require Margaret to give him the tickets?
a. No, because there was no intent to make a present gift
b. No, because there was no delivery
c. No, because there was no acceptance
d. All of these are correct.
67. Mark wants to give Susan his car. He can effectively “deliver” it by:
a. giving Susan the keys.
b. giving her a written statement that he plans to give the car to her.
c. letting her drive it for a period of time.
d. telling his wife that he wants to give the car to Susan.
68. Mary cleaned her dorm room in the spring and left a pile of books in Sara’s room. Mary told everybody that the
books were a gift to Sara. Does Sara have to dispose of them?
a. Yes, because there was a present intent and delivery
b. Yes, because they are constructively in Sara’s possession
c. No, because Sara did not accept the books
d. No, because there was no agreement between the two parties
69. Larry leaves his hat under the seat at the movie theater. Is this a bailment?
a. No, because the theater manager does not have physical control of the area in which Larry left the hat
b. No, because Larry did not pay the theater to keep his hat
c. Yes, if the theater manager finds the hat
d. Yes, since the theater controls the building
70. Marilyn brought her $300 silk dress to University Dry Cleaners to be cleaned. On the back of the ticket she received
in exchange for the dress was written, “liability limited to five times the cost of cleaning.” Marilyn’s dress was lost
and University now claims it owes her only $45, five times the cost of cleaning. Is that true?
a. No, because Marilyn is not a bailor.
b. No, because the cleaner is not a common carrier.
c. No, because the limitation was not communicated to her before she bailed the property.
d. Yes, because the cleaner had the right to limit its liability to a reasonable amount.
71. If Jim, Ken, and Lee each deposit 10,000 bushels of wheat in a grain elevator, they would own one-third of the
remaining mixture by:
a. accession.
b. adverse possession.
c. prescription.
d. confusion.
72. A gift causa mortis is contingent upon:
a. the donee’s surviving the donor.
b. the donor’s surviving the donee.
c. the donee’s death as anticipated.
d. the donee’s not revoking the gift prior to the donee’s death.
73. A bill of lading serves as:
a. a receipt for storage of goods.
b. a document of title.
c. a warehouser’s lien.
d. evidence of insurance on the goods covered by the document.
74. Lynne took her earrings off at Marcia’s beauty parlor and put them on the counter. She left the shop without
remembering the earrings. Betty finds them and wants to keep them. Can she?
a. Yes, since she is a finder
b. Yes, she now is the true owner
c. No, since the earrings were personal property
d. No, Marcia would have first claim if the true owner is not discovered
75. Darinel insures a $150,000 building with Morales Insurance Co. for $50,000 and with Washington Insurance Co. for
$100,000. The building is partially destroyed by fire, causing $25,000 in damages. Darinel will be able to collect:
a. one-third of the damages from Morales Insurance Co.
b. one-half of the damages from Morales Insurance Co.
c. from neither Morales nor Washington since it was fraudulent to purchase policies covering the same property
from two different insurance companies.
d. $25,000 from either Morales or Washington Insurance Co., but cannot collect from both insurers.
76. A person, other than a collecting bank or other intermediary, who negotiates a document of title for value:
a. warrants to her immediate purchaser that the document is genuine.
b. warrants to all who later take the document that it is genuine.
c. warrants that nothing impairs the document’s validity or worth.
d. makes no warranties.
77. Which of the following is not a function of a bill of lading?
a. It serves as a receipt for goods.
b. It serves as evidence that the goods specified in the bill of lading are stored in the insured building of the
issuer.
c. It is evidence of the contract of carriage.
d. It serves as a document of title.
78. Insurance protects a business from:
a. tort liability.
b. strict liability.
c. negligence.
d. All of these.
79. Why are delivery and acceptance both necessary to a valid gift? Explain.
80. Explain the difference between lost, mislaid, and abandoned property and who has rights to it.
81. Farmer Brown brings his crop of wheat to the local grain elevator where it is stored along with the grain of several
other farmers. Who owns the grain? Can Farmer Brown get his grain back? Explain.
82.
a. How do you distinguish between tangible and intangible property?
b. How do you distinguish between real and personal property?
83. Name and briefly describe the special features or extraordinary duties of five special types of bailments.
84. The Swails have an 80 percent co–insurance policy on their $100,000 home. Explain what this means. If they have
an 80 percent co-insurance clause, a policy for $80,000, and suffer a covered loss of $40,000, how much will the
insurer pay? If they have an 80 percent co-insurance clause, a $60,000 policy, and suffer a loss of 25% of their
property, how much will the insurer pay?