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1. Jerry enters a restaurant and hangs his coat in an unattended cloakroom near the entrance of the restaurant. Even though
no employee of the restaurant is present, the provision of the cloakroom makes Jerry think it will be safe. In this situation,
the restaurant is the bailor of Jerry’s coat.
a.
True
b.
False
2. Charles agrees to store Tuan's car in Charles's garage for the winter months while Tuan visits his grandmother in
California. As a bailee, Charles is automatically entitled to use Tuan's car while Tuan is away.
a.
True
b.
False
3. Ed wants to give Howard his old car, but Howard says he doesn’t want it. Howard later reconsiders and tells Ed he does
want the car. His previous repudiation means there is no gift, and Howard has no rights in the car.
a.
True
b.
False
4. If property is mislaid, the finder of the property will have a superior claim to possession of the property against
everyone except the true owner.
a.
True
b.
False
5. While shopping at the mall, Everett's wallet fell out of his pocket. Jon found the wallet. The wallet is abandoned
property and Jon may keep it.
a.
True
b.
False
6. The difference between an inter vivos gift and a gift causa mortis is that the inter vivos gift is made during the donor's
lifetime and a gift causa mortis is a gift is made after the donor's lifetime by the donor's estate.
a.
True
b.
False
7. All bailments have to be by agreement between the bailor and bailee.
a.
True
b.
False
8. Jimmy stole Dave’s motorcycle and completely revamped the engine and changed the body. These accessions were
very expensive, but Jimmy was completely satisfied with the results, intending to sell the motorcycle for a huge profit. If
the motorcycle is recovered from Jimmy, Dave must pay Jimmy for the improvements.
a.
True
b.
False
9. If one party makes accessions without agreement and the improvements can be “undone” without damaging the
property, the improver must undo them.
a.
True
b.
False
10. A bailment was created for the parties' mutual benefit. This means that the bailee must use ordinary care with the
property.
a.
True
b.
False
11. Stephen wants to give his niece, Dawn, a piece of jewelry as a gift. Stephen gives Tracy, his agent, the bracelet to take
to Dawn. The delivery element of making a gift has been completed.
a.
True
b.
False
12. Mega Corporation, the bailor, negotiates a bailment agreement with Huge Corporation, the bailee. Huge Corporation
insists that an exculpatory clause be included in the terms and conditions of the bailment agreement. Later, Huge
Corporation negligently (ordinary negligence, not gross negligence) damages the property which is the subject of the
bailment. Most courts will allow Huge Corp. to stand behind its exculpatory clause and deny liability.
a.
True
b.
False
13. After a meeting with his advisor to register for a class at State University, Ron forgot his calculator in the dean's outer
office. Theresa, another student, found the calculator. The calculator is treasure trove and Theresa may keep it.
a.
True
b.
False
14. In January, Erwin told David, his nephew, that he would give him a car when he graduates from college. David
graduated in May. If Erwin refuses to give David a car, David can sue him for breach of an inter vivos gift.
a.
True
b.
False
15. Dersett Trucking hauls granite for the major granite companies in Minnesota. Dersett Trucking does not make its
trucking services available to the general public. Dersett Trucking is a contract carrier and does not incur strict liability.
a.
True
b.
False
16. Jody loaned her neighbor, Phil, her snow blower. Phil set it near his driveway, and later accidentally ran over and
destroyed it. In a suit to recover damages, Jody as plaintiff has the burden of proving that Phil was negligent and caused
the destruction of her snow blower.
a.
True
b.
False
17. In order to constitute as a gift,
a.
the donor must intend to transfer ownership of property within his or her lifetime.
b.
the donee need not actually accept the gift.
c.
the donor must deliver the gift property to the donee.
d.
the donor may revoke the gift at any time.
18. Percival takes his computer to a repair shop to have the disk drive repaired. This is most likely a
a.
bailor benefit bailment.
b.
bailee benefit bailment.
c.
mutual benefit bailment.
d.
leasehold arrangement.
19. Buck, fearing death from severe injuries suffered in a machinery accident, assigned over a certificate of deposit worth
$100,000 and delivered the certificate to Pearl, a friend, who gladly accepts. Buck ends up recovering from the injuries.
Why must Pearl give the certificate of deposit back to Buck?
a.
This type of gift is known as a gift causa mortis. It is a conditional gift which is conditioned on Buck's actually
dying. Because Buck recovered, the gift is automatically revoked.
b.
This is an inter vivos gift because Buck was still alive when the gift was made. Any inter vivos gift is
revocable because there is no consideration to make Buck's delivery of the certificate binding under contract
law.
c.
This is an inter vivos gift and due to state laws, gifts in contemplation of death must be written into a valid will
or otherwise the deceased's assets will be distributed according to state statute.
d.
This gift is an ordinary gift, but it is revocable because we don't know if the certificate of deposit has matured
or not.
20. Rhonda is a server in a restaurant. One day she finds a purse while clearing a table. The purse is most likely
a.
lost property.
b.
mislaid property.
c.
treasure trove.
d.
abandoned property.
21. Which of the following occurs when a person uses labor and/or materials to add value to personal property belonging
to another?
a.
accession
b.
bailment
c.
an inter vivos gift
d.
a mutual-benefit bailment
22. A bailee always has a right
a.
to possession of the bailed property.
b.
to use the bailed property.
c.
to compensation.
d.
All of the answers are correct.
23. George gave his great-grandfather's pocket watch to Nurse Nadene because he expected to die soon. This is
a.
a testamentary gift.
b.
an inter vivos gift.
c.
an executed gift.
d.
a gift causa mortis.
24. Hanna intends to give her granddaughter, Melodee, her antique hat pin. This heirloom has been kept under lock and
key in the wall vault in the library of Hanna’s house in Virginia. The hat pin is currently the only item in the vault. When
Hanna is visiting Melodee in Connecticut, Hanna gives Melodee the only key to the vault. Melodee is grateful for the
present and excitedly accepts. In this situation has there been a completed gift?
a.
No. There has been no physical delivery of the hat pin.
b.
Yes. There has been physical delivery of the hat pin.
c.
No. There has only been constructive delivery of the hat pin.
d.
Yes. There has been constructive delivery of the hat pin.
25. Bertha, from Chicago, traveled to San Francisco to attend a conference. Her sister, Martha, lives in San Francisco and
consequently, Bertha made arrangements to spend a couple of days with her sister. The next morning sitting at the
breakfast table, Bertha realizes that she packed a mismatched pair of shoes (one is black and the other is blue). Luckily,
Martha wears the same size of shoes and lends Bertha a pair of black leather pumps. During the day, the shoes are
damaged while Bertha is wearing the shoes. Bertha's duty of care would be a duty of
a.
extraordinary care, because this is a bailment for the sole benefit of the bailee.
b.
ordinary care, because this is a bailment with both parties receiving mutual benefits.
c.
only slight care, because this is a bailment for the sole benefit of the bailor.
d.
none, as the sisters would share without condition.
26. The element that distinguishes a contract from a gift is
a.
performance of the offeror's or donor's promise.
b.
the element of consideration which is present in a contract, but not in a gift.
c.
whether or not the offeree or donee accepts the offer.
d.
whether or not the subject of the gift or contract is illegal.
27. Personal property means all property EXCEPT
a.
soil, plants, and trees removed from the land.
b.
minerals and crops removed from the land.
c.
land and all things permanently attached to the land.
d.
intangible property.
28. Select the correct answer:
a.
Rosie rents a locker at the airport, and she puts a bag in the locker. Rosie keeps the locker key. In this case, the
bag has been delivered to and accepted by the airport. The airport is a bailee.
b.
Hill rents a boat to Dan. The boat is located at a lake 30 miles away. Hill gives Dan keys to the boat. Dan
drives to the lake and takes possession of the boat. In this case, the boat has been delivered to and accepted by
Dan, and Dan is a bailee.
c.
Unknown to Lon, Jeff left a bike at Lon's house. Lon has not found the bike and he is not likely to find it
because Jeff left the bike under the front porch. In this case, Lon is a bailee of the bike.
d.
Ken parked a car in a self-service lot and Ken kept the keys. The parking lot is a bailee.
29. Which of the following is/are generally subject to a standard of strict liability for bailed goods?
a.
contract carriers and common carriers
b.
common carriers and innkeepers
c.
common carriers
d.
contract carriers
30. Sarah works for a company that has offered a promotion if she was willing to relocate. Sarah accepted the position and
put her house on the market right away. She sold her house the first day that the realtor held an open house. The buyer
agreed to pay cash for the full purchase price of the house. Sarah was thrilled, except that it meant that she would have to
put her furniture in storage until she found another house in her new city. She entered into a written contract with Safe
Storage, Inc. The agreement included a clause excusing Safe Storage, Inc. from any liability for loss or damage, even if
the loss or damage resulted from Safe Storage's negligent acts. Because of Self Storage's negligence, a fire destroyed the
warehouse and all of its contents, including Sarah's household goods and furniture. Sarah claims that Safe Storage, Inc. is
liable for the full value of the contents, which is approximately $10,000. Is Sarah correct?
a.
Yes, because storage warehouses are strictly liable for loss or damage, regardless of fault and regardless of
exculpatory clauses.
b.
No, because there was equal bargaining power between Sarah and Safe Storage, Inc.
c.
Yes, because exculpatory clauses are illegal and never enforceable.
d.
Probably, because often a court will reject an exculpatory clause against a bailor who is a consumer.
31. Jeannie carelessly packed her grandmother's antique glassware and had it shipped to her 30-year-old daughter, Abby,
via Common Freight Carriers. When the china arrived at Abby's house, most of the pieces were broken. As between
Jeannie and Common Freight Carriers, who will bear the loss?
a.
Under the Carmack Amendment, Jeannie is liable for the loss if Common Freight Carriers shows it was not
negligent and that the loss was caused by Jeannie’s failure to wrap and pack the glassware properly.
b.
Under the Carmack Amendment, Common Freight Carriers is liable. A common carrier is strictly liable.
c.
Under the Carmack Amendment, Common Freight Carriers is liable because of its negligence in not inspecting
Jeannie's packing job.
d.
Liability is governed by state statute and will depend on which state law will control.
32. Ali took a seat at a booth at Midway Diner. Between the salt and pepper shakers, Ali noticed something glittering. It
was a diamond ring. The ring is
a.
abandoned property.
b.
an accession.
c.
mislaid property.
d.
treasure trove.
33. Lacy set her textbook under her chair in her business law class and then forgot to take it with her when she left the
classroom. A janitor later discovered the textbook and gave it to the Dean of the Business College. In this situation,
a.
the college is a constructive bailee, obligated to return the textbook to Lacy, and until it does, it is liable for
harm to the property.
b.
the college is a bailee by agreement because holding items in a lost and found box is generally part of the
college-student agreement when the student enrolls for classes.
c.
the college is responsible for the discovered textbook because in this situation, the college is subject to implied
warranties unless the college has disclaimed such warranties in the student handbook.
d.
this is a bailment for the sole benefit of the bailee.
34. A bailment is different from a gift because
a.
a gift requires consideration, but a bailment does not.
b.
a gift requires delivery, but a bailment does not.
c.
in a bailment, only possession of the property is transferred to the bailee, whereas with a gift, both possession
and ownership must pass to the donee.
d.
a gift is always a contract, but a bailment is generally not a contract.
35. Farmer Fred is leasing pasture land from Wealthy Warren. Farmer Fred is working the soil to turn the pasture land into
land that will be able to grow crops. As Farmer Fred is preparing the field, he discovers a treasure chest full of gold and
silver coins. The coins are all dated before 1810. A finder of treasure trove under common law,
a.
was entitled to keep the treasure trove.
b.
was required to turn the property over to the owner. Here, under common law, Farmer Fred is required to turn
the treasure trove over to Wealthy Warren.
c.
was required to turn the treasure trove over to the State.
d.
was required to turn the treasure trove over to the federal government who will give the treasure trove to the
closest Native American reservation.
36. In the Tannenbaum v. New York Dry Cleaning, Inc. case,
a.
there was a bailment for hire, and the fact that the bailee was unable to return the bailed item except in a
damaged condition created an irrebuttable presumption that the damage to the item was attributable to the
bailee’s negligence.
b.
the court stated that a company cannot, under New York law, use an exculpatory clause to relieve itself from
liability for the consequences of its own negligence.
c.
the court found that the claimant was not bound by the terms of the dry cleaning company’s limitation clause
because, even if it applied to the situation before the court, the claimant had not read the clause nor had he
assented to its terms.
d.
the court found that the claimant was negligent in not reading the limitation clause on the back of his claim
ticket, so he could not recover the cost of his shirt.
37. Jake owns an old piece of exercise equipment. He has been using the equipment merely to hang his clothes on, so Jake
decides to get rid of the thing. He takes the unused exercise machine to the landfill and throws it off the back of the truck.
Maggie, a teenager, is at the landfill rummaging for useful items. Maggie sees the exercise equipment and decides it is just
the thing to give her sister for Christmas, so she decides to take it home. As she is loading it into the back of her pickup
truck, Jake stops and tries to get it back. The landfill owner sees the commotion and decides he would like to have the
equipment as well. Who has the best rights in the exercise equipment?
a.
They are all joint owners.
b.
Maggie.
c.
Jake.
d.
The landfill owner.
38. Beth owned an original United States flag. She had previously loaned the flag to Ross, a lawyer, so that he could
display the flag on the wall behind his office desk. One day while visiting Ross in his office and admiring the flag, Beth
said to Ross, "You are so fond of that flag, I would like you to have it!" Ross responded with a gracious "thank you." In
this situation
a.
Beth has not made a valid, binding gift of the flag because gifts are never binding and can always be revoked
by the donor.
b.
Beth has not made a valid, binding gift of the flag because the donor must deliver the property to the donee,
which was not done here.
c.
Beth has made a valid, binding gift if Beth agreed to give the flag in exchange for Ross's legal services.
d.
Beth has made a valid, binding gift because she intended to transfer present ownership to Ross and Ross
accepted the flag.
39. Mitch takes his two best suits to Quality Cleaners and receives a ticket as a receipt. Quality tells Mitch his suits will be
cleaned and will be ready to be picked up on Monday. Another customer overhears the exchange and early on Monday
goes to Quality, convinces the worker he is Mitch but that he has lost his receipt. He identifies and retrieves the suits,
which happen to fit him perfectly, too. Quality Cleaners
a.
is strictly liable to Mitch for the suits.
b.
is liable to Mitch only if Mitch can prove Quality was grossly negligent.
c.
has no liability unless Mitch proves Quality did not use ordinary care.
d.
will avoid liability if the receipt contained an exculpatory clause excluding gross negligence.
40. Bruce tells his son, “You can have my 1990 truck, but if your grades fall, I’m taking it back.” Bruce
a.
has made no gift.
b.
has made a “revocable gift,” which is effective as a gift as long as the stated condition is met.
c.
intended to transfer ownership.
d.
has made a constructive gift.
41. Griffith Manufacturing ships 40 crates of goods by Trusty Shipping, a common carrier. Trusty offers Griffith a
shipping rate of $725 for a limited liability of $5,000 or a rate of $975 for full liability for any harm to the goods. Griffith
chooses the $725 rate. In transit, Trusty’s driver has an accident during an ice storm and all of Griffith’s goods are
destroyed, causing a loss of $12,000. If Griffith sues Trusty,
a.
Trusty will be liable for only $5,000 because a common carrier is allowed to limit its liability by contract.
b.
Trusty will be liable for the full $12,000 because common carriers have strict liability.
c.
Trusty will automatically be liable for the full $12,000 under the Carmack Amendment.
d.
Trusty is subject to normal bailment rules and can escape liability for any damage to the goods by proving that
it exercised due care of the property and that the loss was caused by an act of God.
42. Bill was shopping at the mall. As he was walking to Tonne's Department Store, his wallet fell out of his pants. While
trying on a new suit, Bill left his leather jacket in the change room. Sue found Bill's wallet. Arnie, a sales associate, found
his coat. What kind of found property is Bill's wallet? What kind of property is his jacket? What rights do Sue and Arnie
have in the found property?
43. Most of the goods contained in a freight train (a common carrier) were destroyed when a tornado wrecked the train.
The carrier was sued for damages by all the shippers that had merchandise on the train. Is the carrier strictly liable for the
damage done to the goods by the tornado?
44. Distinguish between a contract and a gift. Give an example of each.
45. Discuss whether or not the following common transactions are bailments and if so, who is the bailor/bailee, and what
type of bailment is involved.
A)
Renting storage space in Farmer's Frank's huge barn to keep your classic car out of the snow and ice of winter. The rental
agreement provides for $100/month rent and Farmer Frank has the only access to the barn.
B)
Hiring a moving company to move your belongings to a new residence.
C)
Loaning your lawn mower to your neighbor.
D)
Parking your car in a "park and lock" parking lot.
