1285
Unit Ten
Focus on Ethics:
Property and Its Protection
See Separate Lecture Outline System
INTRODUCTION
The legal structures that support our ideas about property are crucial to the continuation of the basically capitalist
economic system in which we live. Private property is at the heart of pure capitalist ideology. That does not prevent ethical
issues from arising over the control, transfer, use, and protection of private property.
ADDITIONAL RESOURCES—
VIDEO SUPPLEMENTS
The following video supplements relate to topics discussed in this feature—
Business Law Digital Video Library
1286 INSTRUCTOR’S MANUAL TO ACCOMPANY BUSINESS LAW, TWELFTH EDITION
• Drama of the Law
Personal Property and Bailments: Rug Cleaner Rental?— Entrusting property to another can raise issues of
fiduciary duties. When a lack of care is evident, trust can be broken as well as property.
FOCUS OUTLINE
I. Defining Rights in Personal Property
The text illuminates the who-owns-what aspect of divorce with a brief description of the division of property in
community property and equitable distribution states. The text notes the difficulty of determining the value of, for
example, a professional license to practice medicine and an academic degree earned during marriage by one party with
the financial assistance of the other. (In most states, neither are considered property.)
II. Finder’s Rights
The text uses an early case to illustrate, in the context of finders’ rights, the doctrine of the relativity of title. If two
contestants, neither of whom can claim absolute title to property, are before the court, the one who can claim prior
possession will likely have established sufficient rights to the property to win the case. This can be the rule even when
both contestants acquired the property illegally—only the true owner would have better title than both.
III. Bailee’s Duty of Care
Both legal and ethical questions sometimes arise in the context of bailments. Bailees can limit their liability for the loss
of bailed goods, but not exclude liability for their own negligence. Of course, the degree of care required can depend
on which party most benefited from the bailment.
IV. Land-Use Regulations and the “Takings Clause”
The Fifth Amendment to the U.S. Constitution gives the government the power to “take” private property for public
use. The Fifth Amendment attaches an important condition to this power: when private land is taken for public use,
the landowner must be paid “just compensation.” But there is no rule for determining when a government exercise of
power will require “just compensation.”
A. THE COURTS DISAGREE
When a hurricane reduced the size of a beach, the state proposed to extend the shore by adding sand to land that
was submerged. Under state law, the sudden reduction wrought by the hurricane caused beachfront property
owners to suffer a loss, and the state’s sudden extension of the beach meant that the new land belonged to the
UNIT TEN: FOCUS ON ETHICS—PROPERTY AND ITS PROTECTION 1287
Local governments need authority to regulate land use to preserve natural resources. Private property owners
complain that they should not have to bear the costs of creating a benefit that all members of the public enjoy.
1288 INSTRUCTOR’S MANUAL TO ACCOMPANY BUSINESS LAW, TWELFTH EDITION
V. Discrimination in Housing
The Fair Housing Act prohibits redlining. Are lenders thus coerced into lending money toward the purchase of homes in
neighborhoods in which criminal activity is on the increase and property values are rapidly declining? Should they be?
VI. Insurance
A. INSURANCE AGENTS AND FIDUCIARY DUTIES
Does an agent have to advise a potential customer as to all types of possible coverage? The text discusses a case in
which the answer, in the context of a driver’s omission of uninsured motorist coverage, is no. An agent is the agent
of the insurer, not the insured.
B. LIFE INSURANCE POLICIES ON RANK–AND-FILE EMPLOYEES
VII. Inheritance Rights
What are the inheritance rights of posthumously conceived children? The same as those of natural children, according
to a case summarized in the text, subject to the requirements of a “demonstrable genetic relationship” between a child
and his or her deceased parent, who must have consented to the conception. This result may be different in another
state.
TEACHING SUGGESTIONS
1. Ask the class to discuss whether an academic degree or a professional licenses should be considered marital
property in view of the fact that they are not transferable property rights. Would a better remedy be to grant the
spouse a right to a share of the income realized by the holder of the degree or license?
2. Have students debate the issues raised by the section on the bailment of textbooks. Should the person who has
possession of the textbook always be liable for the loss? Should the standard always be one of reasonable care, or are
there some situations that should involve a greater or lesser standard? Are there any circumstances in which strict
liability should be the standard?
step with fiscal conservatism? Are these courts peopled with activist jurists who are attempting to legislate
environmental policy by forcing government to “pay up or shut up”?
4. “Moral hazard” occurs when individuals or companies have an incentive to act negligently or to engage in activities
that will result in payment by an insurance company. Ask students to discuss whether the so–called “moral hazard”
problem is more illusory than real. The fact that people obtain insurance in the first place does not necessarily mean
UNIT TEN: FOCUS ON ETHICS—PROPERTY AND ITS PROTECTION 1289
that they will be less careful with their property because there is always a chance that the insurance company will not
pay the claim. Ask students whether the securing of insurance will invariably increase the likelihood of moral hazard
because most people who obtain insurance are presumably prudent individuals who wish to safeguard their property.
Cyberlaw Link
which unauthorized duplications can be reduced?
ADDITIONAL QUESTIONS
1. What is the legal basis for treating university degrees and professional licenses as marital property? In most
2. Who owns body tissue? Should patients have the right to share in any proceeds that may result from experiments with
tissues that have been removed from their bodies? The courts have not yet permitted patients to benefit financially from the
3. How should a court decide which of two possessors—both of whom have wrongfully acquired the same property—is
entitled to keep the property? In general, the courts award possession to the party who possessed the property first—even
4. When does a land use regulation become so onerous as to constitute a taking? A regulation that deprives the owner of
5. Can a bailment be created without actual or constructive delivery of the item to the bailee? No. A bailment cannot be
6. Why are adverse possessors permitted to acquire title to land? The doctrine of adverse possession was developed not
7. Are domain names property? Are they subject to garnishment? A domain name qualifies as property, albeit arguably
8. If a landlord feels it violates his or her religious principles to rent premises to an unmarried couple, should the law, in
the interest of preventing discrimination in housing, compel the landlord to rent? As usual, courts reached different
9. Must a person who insures his property refrain from taking any actions that might otherwise increase the risk of
catastrophic loss on the property? Because the terms of the insurance contract are based on the inherent characteristics of the
10. Should illegitimate children be barred from inheriting property absent a will or specific state statute to the contrary?
Illegitimate children have traditionally been accorded few rights under the law regarding their right to inherit property from
their biological parents. Recent changes in the law, however, have made it easier for illegitimate children to inherit property.
Whether it is right or wrong for such children to be able to inherit property depends on whether one believes that it is more
ACTIVITY AND RESEARCH ASSIGNMENTS
1. Ask students to do a little research to determine the effects of the ban on redlining and what the effects might be
without it. Does prohibiting redlining help to revitalize decaying neighborhoods? Does it result in more loan defaults? Are
lenders’ profits undercut? When redlining was allowed, how was it used and what were the results? If redlining were allowed
today, would some neighborhoods decay faster? Would the cost of loans go down? Are any of these results appropriate ends
2. Obtain copies of several standard property insurance policies and pass them out to the class. Ask students to read the
3. Have students talk to insurance agents or agencies to learn about the insurability of persons with serious health
problems—cancer, for example, or AIDS, or a family history of early death. Are there people who are uninsurable? If so, why
are they uninsurable? Is it unethical to refuse to insure those who are most likely to need the insurance? What happens to
those who are refused coverage? Ask students to share with the class what they learn and what they think. In the same vein, is
it ethical to refuse coverage to those whose genes reveal a high probability that a currently healthy person may some day
contract a disease?
PROPERTY AND ITS PROTECTION—
ANSWERS TO DISCUSSION QUESTIONS
1. Do you think that the law strikes a fair balance between the rights of parties with respect found property? Why or
why not? It seems that the perspective of the disappointed finder is only basis on which to disagree with the law’s
contestants, neither of whom can claim absolute title to property, come before a court, the one who can claim prior
personal property. If this owner cannot be located, then its finder acquires the right. This is a fair balance of the parties’
2. Do the different standards of care that apply to bailed goods reflect underlying ethical values? If so, how? Yes, the
different standards of care that apply to bailed goods reflect underlying ethical values. The text fills out the answer to
this question by setting out the principles and illustrating them with simple-to-grasp examples.
The standard of care expected of a bailee clearly shows how property law reflects ethical principles. For example, a
would have to purchase another one, and if you could not, you might find it difficult to do well on your homework
parent of any posthumously conceived biological child—unless he or she consented in writing to being a parent after
death. California further requires that the child be in utero within two years from the date of the decedent’s death for
return in the fall. In this situation, a bailment for the sole benefit of the bailor (you) exists. If your books are destroyed
3. Do you believe that it is fair for courts to decide whether a regulatory taking has occurred on a case-by-case basis
and not to articulate a general rule on which landowners can rely? Why or why not? Regulations to control land use,
4. Should posthumously conceived children have the same inheritance rights as children born during the decedent’s
life? Why or why not? How can a balance be struck between the interests of children born during the lifetime of the
decedent and those born after the parent’s death? The answer to this question is an obvious yes. All children are
