Exam 17: Leasing and Bailment

Zed went into a cafe´ located on the third floor of a department store. The cafe´ was in an enclosed room with no provision for storing parcels or for the storage of coats. Immediately outside the cafe´, however, was a rack with hangers and a shelf overhead. Once inside the cafe´, one could not see the rack or shelf. Zed hung his coat on the rack and placed his hat on top of the rack. When Zed finished his meal and came out of the cafe´, he discovered his hat and coat were missing. Identify the issues. Should Zed be able to successfully sue the department store for his losses?

Miles acquires a power generator under a two- year lease with the manufacturer. After four months, Miles realises he no longer needs the generator. He delivers the generator back to the supplier hoping that his lease payments would stop, but to his dismay, he is informed that he will be expected to pay the remaining twenty payments. Will Miles legally be required to finish all the lease payments?

Explain the difference between an operating lease and a purchase lease.

Sid asks his neighbour Carl to take care of his lawnmower while on holidays. While he's gone, Carl uses the lawnmower to mow his brother's lawn across town. In the legal sense, Sid is the and Carl is the .

Hotelkeepers and common carriers are both insurers of their customers' goods. What is the liability distinction between these two insurers?

What are the bailment rights of the lessee?

A bailee is liable for damage to goods of guests only if the damage was caused by the negligence of the hotel's employees.

Which of the following would NOT be a defence for a carrier that is sued for damage caused to goods during shipping, when there is no contractual limitation of liability:

The operating lease tends to be a long- term lease and the purchase lease tends to be a short- term lease.

Marie drove her car to a parkade and the attendant took her keys saying he would park the vehicle and he needed the keys since the vehicle might be required to be moved. In the parkade, vehicles were parked in two tiers. To remove a vehicle from the second tier, it was necessary to move the vehicle immediately in front of it in the first tier. Marie paid for the parking and was given a ticket with her vehicle license number written on it. At the entrance to the parkade two signs were prominently displayed, one requesting that the conditions on the ticket be read and the other stating that the car with its contents were left at the owner's risk. The conditions on the ticket repeated that the car was parked at the owner's risk and that charges were only for parking space use and that the parkade assumed no responsibility for loss through fire, theft, collision or otherwise to the car or its contents whether due to the parkade's negligence or otherwise. During the day Marie's vehicle was temporarily parked on the street immediately in front of the parkade to accommodate the removal of several vehicles. The attendant threw the keys under the front seat and left the car unlocked. The vehicle was stolen and never recovered. Marie said she did not see the signs nor read the conditions on the ticket. Identify the issues raised by these facts. Should Marie succeed in an action against the parkade?

A gratuitous bailment is always for the benefit of the bailee.

Marcus rented some scaffolding to aid in replacing the siding of his house. This type of lease would be referred to as

Why is a bailor better off on the insolvency of its bailee than a creditor on the insolvency of its debtor?

In leases, who is most likely to carry the insurance and bear the cost of maintenance and repairs?

In the following circumstances, identify the type of bailment created and state what standard of care is imposed on the bailee. a. X being a friend of Y, borrows Y's computer to use its word- processing program to perform an assignment for which Z is paying X. b. X being a friend of Y, borrows Y's computer to help Y complete a project for which Y is solely responsible. c. X being a friend of Y, borrows Y's computer to complete a project for which both X and Y are jointly responsible for completing. d. Y delivers his computer to Computer Warehouse Inc. in order to store it for six months and enters into a storage contract with Computer Warehouse. e. Y delivers his computer to a common carrier in order for it to be shipped to a relative in another province.

Which of the standards of care listed below describe the standard of care required by a business that hires out equipment?

A finder, in the legal sense, is

Yale took a $900 three piece suit into ABC Drycleaning Inc. When he returned to pick it up, he was advised that it had been stolen along with the clothing of a number of other customers. The dry cleaning building had metal bars covering the windows and the clothes of Yale and the other customers were in a locked room. The thief had, with a lot of effort, removed the bars to one of the windows and smashed off the lock to the room containing the clothes. Should Yale be able to succeed in an action against ABC Drycleaning? Give reasons for your opinion.

The notion of an "inherent vice" is a defence.

Given its importance, how does the accounting profession determine whether a lease is an operating lease or a purchase capital lease?