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Chapter 17 - Law 603.doc

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Department
Law and Business
Course Code
LAW 603
Professor
Andre Serero

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Chapter 17: Personal Property: Bailment and Insurance • Real Property is immoveable & personal property is moveable. Can’t carry a piece of land around w. you, but can take a cat/car 4m one place to the next. Real property is usually perm, whereas personal property tends to be transitory. Diff owners will come & go, but a particular piece of land will always exist. Cats & cars come into the world through birth & manufacture & pass away through death & destruction. 3 distinction is beginning to disappear; wealth & power. • Personal property diff categories  1) tangible – can be touched, pick up cat & sit in your car; goods & chattels 2) intangible – cant be touched, rights that a cheque reps; can require the debtor to fulfill an obligation. Acquiring Personal Property Rights • Through the intention of 1+ ppl. Example: Bought the textbook, bookseller intended to transfer ownership in exchange 4 a pmt of $. Same for renting, rights again arise 4m a contractual arrangement. Major diff btwn purchasing & renting is that u get a smaller package of rights when you rent. • Not always by contract; gift • Can get rights alone. Example fox that is running wild/intentionally abandoned bike by the side of the road. Can acquire ownership of the things by taking possession of it w. the intention of controlling it for urself. Finders keepers depends on the circum. Occupier is entitled to things that r found in the private but not public part of its premises. Parker v British Airways Board occupier is entitled to personal prop. if it is found in an area over which the occupier had a “manifest intention” to exercise control. • Rights acquired through an act of creation; author enjoys copyright as a result of writing a new book; owner of a cow acquires rights to any calves tht r born. Losing Personal Property Rights • Rights don’t last forever. Sell the textbook, destroyed in a fire. Rights will continue to exist even if book is lost/stolen, situation is diff if you abandon the text w. an intention of giving up control. • Rights can also disappear if your personal prop becomes attached to, mixed w., land/other chattels. • Fixtures – chattel that has been sufficiently affixed, attached, to land/a building. Impt point is that once a chattel becomes a fixture, it belongs to the owner of the land. Bought a dishwasher to use in your apartment. Court would be influenced by the following factors in deciding whether the machine became a fixture: a) Degree of attachment: chattel is more likely to be considered a fixture if it is attached to a building rather than merely sitting under its own weight. But if you simply wheeled a dishwasher into the corner of the kitchen, it would presumably remain urs. But if u installed it under the kitchen counter w. screws & plumbing, it might be a fixture & belong to landlord. b) Purpose of attachment: court would be more concerned w. the objective intention served by placing the dishwasher in the apartment. Key issue is whether a reasonable person would believe that the dishwasher became part of the building. If it was installed to enhance the value of the apartment = fixture. If it was merely done to make better use of the dishwasher itself, then it is less likely to be a fixture. c) Tenants’ fixtures: Special rules that would apply b/c ur apartment was rented. Courts r concerned that tenants might unfairly lose ownership over things that they add to their premises. Even if the dishwasher did become the landlord’s fixture, u could turn it back into ur chattel if u removed it, within a reasonable time after the end of the lease & w.o doing irreparable damage to the apartment. Same rules applies to trade fixtures. Example prob could remove shelves & signs tht u installed in a warehouse that u rented 4 storage. st Acquiring – purchase through contract w. previous owner, gift received 4m previous owner, 1 possession of things, finding of lost prop (good against everyone except true owner), creation of new property Losing – sale through contract to new owner, gift through intention & delivery to new owner, abandonment w. intention to give up rights, fixture of chattel to land/building (subject to right of tenant’s fixtures) Bailment • Contractual rights can be assigned, goods can be sold, cheques can be negotiated. • Bailment – when 1 person temp gives up possession of prop w. the expectation of getting it back. Bailer – person who delivers prop. Bailee –person who get prop. • Various ways of bailment – consignment – when an owner gives prop to another person 4 the purpose of selling it. Consignor - owner, consignee person making the sale. When consignee sells the prop on behalf of the consignor to a purchaser, ownership passes directly 4m the consignor to the purchaser. Consignee only ever had control & possession of the prop 4 the purpose of making the sale – never owner. • Other ex. Of bailment : renting a circular saw 4m hardware store, shipping furniture w. a moving comp, delivering a machine to a shop 4 repairs, placing equipment in a storage unit, leasing a vehicle 4m a dealership, borrowing a book 4m a lib, sending a package by courier, lending a lawnmower to a neighbour. Satisfy these requirements: a) 1 person voluntarily delivery prop to another – general rule, bailment exists only if 1 person intends to deliver control & possession of prop to another person. Sometimes diff to distinguish btwn a bailment & licence. Licence simply person mission to do something tht would otherwise be wrongful . - Example: Park ur car on my lot, if we created a licence then u r r entitled to park on my land, but u haven’t given me control & possession of ur car, therefore am not obliged to protect your vehicle. Bt if I did receive control & possession of ur car under bailment, then I will have some obligation to take care of your vehicle. RISK MANAGEMENT - BAILMENT – possession & control handed over if not license. PAGE 420 b) For a particular purpose c) W. the intention that the prop will be returned/disposed of as directed Liability of Bailors • Most bailment occur w.o incident. Bailor delivers the prop to the bailee, it is held 4 the intended purpose & then returned in good condition. • Example: Lease; Suppose u r in bus of renting heavy machinery to construction firms. If you sold the same equipment, ur transaction would be caught by the Sale of Goods act, might be required amongst other things, to ensure that it was fit 4 its intended purpose. LEASE IS NOT A SALE. It is a bailment b/c u expect that the prop will be returned to u @ the end of the transaction. Law requires u, as a bailor who is receiving consideration 4 the use of ur prop, to use reasonable care in providing appropriate machines. If a backhoe collapses & injures a worker, u might be held liable if u knew, should have known, of the defect that caused the accident. Might also be required to provide a special warning regarding any unusual dangers, unless the bailee was already familiar w. the type of equipment it was renting. • Bailor’s failure to pay a charge. EX. Deliver your car to a garage 4 repairs/leave your furniture in a storage unit. Expected to pay for the benefit that u get 4m the mechanic/warehouse. Ensure that you do so, bailee Is entitled to exercise a lien over your property . Lien is the bailee’s right to retain possession of the prop until the bailor pays a debt. Bailee is entitled only to retain ur prop. If u somehow honestly recover ur goods, lien usually disappears. If a lien is exercised, if u don’t respond to it in a timely manner, bailee may also be entitled to exercise a statutory right of sale – allows a bailee to see the bailor’s prop to obtain pmt of the bailor’s debt. Sale proceeds r larger than the debt, bailor is entitled to the extra money. Liability of Bailees • Bailee’s primary obligation is to return the prop, in good condition to the bailer @ the end of the arrangement. • Bailment exposes bailor to risk. EX U deliver ur truck to me. Vehicle might become lost, damaged, or destroyed. General rule in private law requires the plaintiff to prove that the defendant wrongfully caused a loss; tort of negligence. But here, the bailor proves that goods were lost/damaged during a bailment, then the burden of proof shifts to the bailee. I would be required to prove that I wasn’t to blame. If I can’t I would be held liable, even though u didn’t actually show that I was responsible for ur loss. Great benefit to the bailor, it is avail only if the court is satisfied that the loss occurred during the bailment & that shift in the burden of proof wouldn’t be unfair to the bailee. • If the burden of proof does shift, bailee isn’t generally required to guarantee the safety of the bailor’s property. • How much care? Reasonable person would act. Several factors r impt : a) Contract, custom, statute – if a bailment is contained within a contract, parties r generally free to agree upon the level of care that the bailee must use. Court may also formulate the standard of care to reflect a practice that is customarily used in a certain type of bus. Ex. Diamond merchant use greater care than ppl who deal in bricks. b) Benefit of the bailment – greater care must be used if a bailment is entirely 4 the benefit of the bailee. That would be the case if I borrowed a truck 4m u, as a friend, b/c I was moving to a new apartment. In contract, a lower level of care may be acceptable if a bailment is entirely 4 the bailor’s benefit. EX. I had possession of ur car b/c I allowed u as a favour to park it in my garage while u were on vacation. c) Gratuity/reward – bailee’s burden also depends upon whether it was gratuitous (free of charge) or for reward (for pmt). If I were using ur truck to move my furniture, I would have to exercise more care if I didn’t pay 4 the privilege. After all I was getting something 4 nothing, but if I rented the truck 4m ur, a court might be more lenient because the transaction benefitted u too. d) Value & nature of the property - reasonable person’s behaviour is influenced by the nature & value of the prop. I would be expected to behave more cautiously if the truck tht I borrowed 4m u was a fragile & priceless antique rather than a sturdy but well used pickup. e) Bailee’s expertise – might be expected to exercise greater care if I claimed to have special experience/training in handling the prop.Ex. standard would be higher if u stored ur truck in my commercial parking complex rather than the garage in my house. • In exceptional circumstances, the bar is set even higher: bailee is treated as an insurer. Bailee can be held liable even if they weren’t careless. Bailer is entitled to compensation simply b/c their prop has been lost/damaged. Common carriers ex. Common Carriers • A company that offers to deliver any goods 4 any person in exchange 4 a standard price (assuming that it has available space) Companies that transport by trains, trucks, ships/airplanes; companies must also offer its services w.o reserving the right to refuse to delivery some goods while taking others. EX. Railways often common carriers BUT a moving company is a private carrier, rather than a common carrier, if it owner frequently turns away work tht involves particularly heavy lifting. An airline that reserves the right to refuse some sorts of goods is also a private carrier. • Private carrier is liable only if it fails to exercise the level of care tht is reasonably xpected 4m some1 in its line of work. Shipper – person who shipped the property usually found it difficult to prove carelessness b/c they had no way of knowing exactly what happened. Loss occurred while the goods were out of their possession. Remedy courts held that a common carrier was generally liable for any loss/damage, even if they were not personally @ fault. Shipper has to prove: a) carrier was a common carrier b) prop was given to the carrier in 1 condition c) prop either wasn’t properly delivered to its destination/was delivered to its destination in worse condition. • Defences for common carriers a) War and act of god: carrier isn’t liable if goods r harmed as a result of war or an act of God, which is a natural catastrophe, uh as an earthquake/flood. Carrier may be held responsible if it carelessly exposed the shipper’s property to danger. Trucker might damage goods as a result of unreasonably driving under treacherous weather conditions. b) Inherent vice & shipper’s fault: shipper’s goods may have suffered damage as a result of an inherent vice, which is a defect in the goods. Cattle may die in transit b/c they were already diseased when they were bro
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