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Chapter 15

BUS 393 Chapter Notes - Chapter 15: Bailment, Fee Simple, Easement

Business Administration
Course Code
BUS 393
Richard Yates

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Chapter 15 – Personal and Real Property
Real property – land and things permanently attached to land, such as
buildings; fixed and immovable
Personal property – movable, either chattels (tangible personal property
that can be measured and weighed) or chose in action (intangible, claim one
person has against another, such as a claim for debt)
oIntellectual property – copyright (gives author control over
use/reproduction of his work), patents (give inventors right to profit
from his inventions), trade-marks (protect name or logo of a business,
industrial designs, confidential information, trade secrets)
Personal Property
Movable things, eg. clothes, radios, animals, boats
Chattels can become part of real property when it is attached to land (eg.
installing a heater), but owner of the land is free to remove a chattel that has
become a fixture
oTest: Whether attachment was a) to enhance the land, or b) for better
use of the chattel as a chattel
Tenant can remove trade fixtures, which are chattels used to enhance trade
or carry on business, and non-trade fixtures, added for comfort, convenience,
or taste (eg. mirrors, paintings) can also be removed
oIf fixtures are clearly intended to stay, or removal will cause damage,
they must stay
oCan only be removed during term of tenancy
Finders Keepers
Finder gets good title against everyone but original owner (or a secured
If found on private property, owner of property normally has right to the item
If finder is an employee, employer gets item subject to claim by original
Bailment – when one person takes temporary possession of personal
property owned by another (eg. rentals, goods left for
repair/storage/transport, borrowing of goods)
License permission to leave property upon land with no responsibility for
Bailor is owner that gives up possession, and bailee acquires possession
Fungibles – goods identical with others of the same nature (eg. timber, oil,
wheat); exact goods need not be returned, only goods of similar
Bailees responsible for willful, negligent, or fraudulent acts of themselves or
their employees that cause damage to the goods
Bailment for Value
Involves mutual benefit or consideration, usually commercial (eg.
bailor pays bailee to repair, store, or transport the goods or friend
stores good in exchange for right to use it)

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Standard of care is ordinary standard of negligence
Sometimes, if subject is lost/damaged, onus is on bailee to prove he
was not negligent
Exculpatory clauses must be clear and brought to attention of
Common Carriers
Offers general transport service to public and undertakes standard of
an insurer, eg. trucking/bus companies, railroads, airlines, pipelines – if
goods damaged/destroyed while in its care, carrier is liable even if not
caused by its own negligence (unless beyond its control)
Innkeepers’ Liability
Duty of insurer, responsible for lost/stolen goods of guests, unless it
can be shown that they were lost because of ‘act of God’ or negligence
by guest
Liability reduced by statute, so only liable when provided that they or
their employees were at fault
Gratuitious Bailment
Only one side receives a benefit
Usually, if bailee received the benefit, standard of care was high, and if
bailor received benefit, standard of care was low; now, courts moving
towards imposing ordinary tests of negligence for all gratuitous
Involuntary Bailment
As soon as you exercise control (eg. pick up a lost watch, put away a
coat left behind at your restaurant) you become a gratuitous bailee for
benefit of bailor, and duty of care applies
The Rights of the Bailee
Bailment for value governed by contract
Unpaid bailee has right to payment if he has repaired or worked on the
goods, but not if the goods were only stored or transported
When bailor is unpaid, he can reclaim goods and seek normal
contractual remedies, can recover reasonable payment (quantum
Real Property
Interests in Land
Owner only has claim to the portion of land that he can permanently
use/occupy (eg. not underground, or the air above – airplanes)
Crown usually retains rights to minerals, oil, and gas
Estates in Land
Estate in land – right to uninterrupted, exclusive possession of land for a
time, as determined by nature of the estate; all land is owned by Crown
Fee Simple
Greatest interest possible, comparable with ownership, can be
Right to use/sell land subject only to local restrictions/regulations
Life Estate
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