Deck 23: Personal Property, Bailments, and Insurance

Question 1

If the bailed property has been lost or is returned damaged, a court will presume that the bailee was negligent.

Answer 1

True

Question 2

A hotel owner may be strictly liable for any loss or damage to their guests' personal property.

Answer 2

True

Question 3

In a bailment of fungible goods, the bailee must return the identical goods given by the bailor.

Answer 3

False

Question 4

Insurance coverage is always effective the moment an insurance broker accepts the applicant's first payment toward the premium.

Question 5

Constructive delivery confers the right to take possession of an object.

Question 6

The insured can cancel an insurance policy at any time.

Question 7

Only personal property, not real property or persons, can be the subject of a bailment.

Question 8

To be effective, a gift causa mortis must meet only two requirements: intent and acceptance.

Question 9

A person who obtains insurance from an insurance company's agent is not usually protected until a formal written policy is issued.

Question 10

All transactions involving the delivery of property from one person to another create a bailment.

Question 11

The delivery of goods to a common carrier creates a bailment relationship between the shipper and the carrier.

Question 12

Under an antilapse clause, an insurance policy will not lapse under any circumstances.

Question 13

A gift is essentially a voluntary transfer of property ownership for which no consideration is given.

Question 14

Insurance policies are governed by the general principles of contract law.

Question 15

An absolute defense against payment exists if the insurer can show that the insured lacked an insurable interest.

Question 16

A bailment agreement must be express.

Question 17

Only tangible personal property can be bailed.

Question 18

For estray statutes to apply, property must be mislaid, not merely lost.

Question 19

There is little state regulation of the insurance industry.

Question 20

A business organization cannot obtain insurance on the life of a person, even on the life of an individual who is important to that organization.

Question 21

An insurance company can cancel an insured's policy at any time.

Question 22

The words used in an insurance contract are given their ordinary meanings in light of the nature of the coverage involved.

Question 23

Under a coinsurance clause, if a homeowner insures a home for less than the policy's specified percentage, the homeowner is not responsible for a proportionate share of the loss.

Question 24

Generally, a finder of lost property can claim title to the property against the whole world-except the true owner.

Question 25

Without an insurable interest, there is no enforceable insurance contract.

Question 26

Automobile insurance cannot be canceled for nonpayment of premiums.

Question 27

Manufacturers acquire ownership of their work through production.

Question 28

Lauren owns a 1967 Ford Mustang, which Mike customizes and details to Lauren's specifications. The car earns several awards at regional vehicle customizing competition shows. The result of Mike's efforts is​

A)accession.
B)acquisition.
C)conversion.
D)a bailment.

Question 29

In the insurance context, risk management is the transfer of certain risks from an insured to an insurance company by contractual agreement.

Question 30

Someone who finds abandoned property acquires title to it and that title is good against the whole world, except the true owner.

Question 31

Warehouse companies are not liable for loss or damage to property resulting from negligence.

Question 32

The implied warranties of merchantability and fitness for a particular purpose extend to bailments that include rights to use the bailed goods.

Question 33

An incontestability clause prohibits an insurer from contesting statements made in an insurance application until a specified time has elapsed.

Question 34

Nagel allows O'Neill to store his trailer on Nagel's property for $50 a month while O'Neill is out of town on a job for Plain States Construction, his employer. The bailor is​

A)Nagel.
B)O'Neill.
C)Plain States.
D)no one.Fact Pattern 23-1 Truck & Transfer Inc.agrees to pick up two containers for United Home Products Corporation and store their contents, to be delivered later.While Truck & Transfer un-loads one container, the other disappears from the company's loading dock.

Question 35

Accession occurs when someone adds value to an item of personal property by the use of labor or materials.

Question 36

Refer to Fact Pattern 23-1. Truck & Transfer can avoid liability​

A)by proof that Truck & Transfer was not negligent.
B)by proof that Truck & Transfer's loading dock is in a high-crime area.
C)by proof that United Home was negligent in hiring TTC.
D)under any circumstances.

Question 37

Emily checks her luggage at Flyaway Airlines's ticket counter before boarding her flight to Houston. Subject to a bailment is​

A)Emily.
B)Emily's luggage.
C)Emily's ticketed seat on the flight.
D)none of the choices.Fact Pattern 23-1 Truck & Transfer Inc.agrees to pick up two containers for United Home Products Corporation and store their contents, to be delivered later.While Truck & Transfer un-loads one container, the other disappears from the company's loading dock.

Question 38

When there is an ambiguity in an insurance policy, the provision generally is interpreted against the insurance company.

Question 39

The owner of the place where property was mislaid becomes the caretaker of the property.

Question 40

​Refer to Fact Pattern 23-1. These facts give rise to

A)a presumption of negligence by Truck & Transfer.
B)a presumption of theft by a third party.
C)a presumption of theft by Truck & Transfer.
D)United Home's liability for the container's loss.

Question 41

Bram finds a tablet on the counter at Caffe Café. He takes the tablet to a police station. A police officer tells Bram that under state law if the tablet is not claimed by a certain time, Bram can obtain title to it. This is acquiring possession by

A)an estray statute.
B)a bailment.
C)confusion.
D)production.

Question 42

Gretel, an inventor, has tools in her workshop, including hammers, a table saw, and drills. She has a patent on her most recent invention, a kitchen gas grill. She licenses the patent to Housewares, Inc. Her tangible personal property includes​

A)the tools.
B)the license.
C)the patent.
D)all of the choices.

Question 43

EquipLease Company leases a thresher to Farm Harvest, Inc., a firm that contracts with farm owners to harvest their crops. The machine is seriously damaged through Farm Harvest's neglect. Most likely liable for the damage is​

A)EquipLease.
B)Farm Harvest.
C)the farm owners.
D)no one.

Question 44

Rhett works at Scarlett's Service Station. After work, in the station's restroom, Rhett finds a diamond ring lost by Thalia. Title to the ring belongs to

A)Rhett.
B)Scarlett's.
C)Thalia.
D)the state.

Question 45

​Estelle owns and operates a commercial dairy farm with her son Gabe. Estelle applies to obtain an insurance policy from Farm & Ranch Insurance Company to pay $1 million to Gabe on Estelle's death. This is​

A)a violation of state law.
B)an attempt at wagering, but not a violation of state law.
C)liability insurance.
D)life insurance.

Question 46

Ester sells stock in Fast Food Franchise Inc. to Gayle. Ester does not hand the stock certificates to Gayle, but gives her the key to a safety-deposit box in Heartland Bank in which the certificates are locked. This is​

A)incomplete delivery.
B)constructive delivery.
C)accession.
D)conversion.

Question 47

​Donatella owns factory machinery and the tools to service it, as well as office furniture, including computers. Emilio owns patents, trademarks that identify the products made under those patents, and stock in the company that sells those products. Personal property includes items owned by

A)Donatella and Emilio.
B)Donatella only.
C)Emilio only.
D)neither Donatella nor Emilio.

Question 48

Portia is the beneficiary of a life insurance policy on Quentin's life that Quentin obtained from Renewall Insurance Company through Stan, an insurance broker. The insured of this policy is

A)Portia.
B)Quentin.
C)Renewall.
D)Stan.

Question 49

Earth's Bounty Farms arranges to have Fresh Express, Inc., a common carrier, transport a load of almonds from California to Delaware. Greg is Fresh Express's driver. Fresh Express will not be liable to Earth's Bounty for failing to deliver the almonds on time if​

A)authorities are stopping and searching all trucks leaving California.
B)Fresh Express's dispatcher mistakenly delays Greg's departure.
C)Fresh Express's truck is broken into and the almonds are stolen.
D)Greg has to wait two days in Sacramento for the truck to be repaired.

Question 50

Oleg takes a PowerMade-brand rototiller to QuikFix Inc. for repairs. Lacking certain parts, QuikFix ships the rototiller to Repair & Parts Company. While in Repair & Parts's possession, the machine is damaged by its failure to exercise the appropriate degree of care. QuikFix can recover for the damage from

A)no one.
B)Oleg.
C)PowerMade.
D)Repair & Parts.

Question 51

Phil is an insurance broker. This means that Phil is​

A)an employee of an insurance company.
B)an independent contractor.
C)not allowed to deal directly with an insurance company.
D)in charge of determining the appropriate premium for an insurance policy.

Question 52

One morning, Rochelle agrees to lend her bike to Steve, who promises to return it in the evening. This is​

A)a constructive bailment.
B)an involuntary bailment.
C)an express bailment.
D)no bailment.

Question 53

​Orin is a doctor with Physicians Health Clinic, which obtains insurance from Quotient Insurance, Inc., on Orin's life. Orin dies. The proceeds of the policy belong to

A)Orin's heirs.
B)Physicians Health Clinic.
C)Quotient Insurance.
D)none of the choices.

Question 54

In contemplation of death during risky surgery, Donnelly, a guitarist, gives his guitars to Cathy. The surgery is successful, and Donnelly does not die. The gift of the guitars is

A)not revoked because it was a gift causa mortis.
B)not revoked because it was a gift inter vivos.
C)revoked because Donnelly survived.
D)revoked because it was a gift inter vivos.

Question 55

U-Rents Company wants to insure the equipment that it rents to consumers. To obtain insurance, U-Rents must have an insurable interest in the property​

A)at the time U-Rents rents the equipment.
B)at the time a loss occurs.
C)at the time a policy is obtained.
D)continuously from the time a policy is obtained to the time a loss occurs.

Question 56

Yogi loans his laptop to Zoey under an agreement to return the laptop in a week. This is

A)a bailment.
B)acquiring ownership by possession.
C)a gift.
D)accession.

Question 57

Energy Industries, Inc., obtains insurance policies with Fidelity Insurance, Inc., and Goodworth Insurance Company against the risk of loss of Energy's property. Each policy includes a multiple insurance clause. A fire partially destroys one of Energy's buildings. Energy can collect from Fidelity​

A)all of the loss.
B)half of the loss.
C)its proportionate share of the loss to the total amount of insurance.
D)none of the loss.

Question 58

​Nancy asks Octavio if she can store her car in his garage while she serves in the U.S. Peace Corps. Octavio agrees. This is

A)a bailment.
B)accession.
C)a gift.
D)abandoned property.

Question 59

Adrian applies for a life insurance policy that is expressly contingent on him passing a physical examination. The effective date of the policy is the date

A)Adrian submits the application, but before passing his physical.
B)the life insurance company accept the first premium.
C)the life insurance company issues the policy.
D)continuously from the application date if Adrian pays the first premium and passes his physical.

Question 60

Logan borrows Morris's bike to ride over mountain trails. The bike is damaged during the ride by Logan's failure to exercise the required degree of care. Liable for the cost of repairing the bike is

A)Logan and Morris in equal measure.
B)Logan.
C)Morris.
D)all of the choices.

Question 61

Donovan obtains from Equity Insurance Company a policy that provides that if the parties cannot agree on the amount of a loss covered by the policy, an estimate of the value by an impartial third party can be de-manded. This is​

A)an antilapse clause.
B)an arbitration clause.
C)an appraisal clause.
D)an incontestability clause.

Question 62

Marcy owns land in North Dakota under which deposits of oil shale are discovered. Marcy sells the rights to the shale to Oil Mining & Refining Inc. Once the oil in the rock is removed, it will be considered​

A)personal property.
B)real property.
C)intangible property.
D)none of the choices.

Question 63

Greg obtains from Helpful Insurance Company a policy that provides that Greg has thirty days after a premium's due date to pay it before the policy will be canceled. This is​

A)a multiple insurance clause.
B)an antilapse clause.
C)an appraisal clause.
D)an incontestability clause.

Question 64

Mena applies for a homeowners' insurance policy on her house with Neighbors Insurance Company through Obie, an agent who works for Neighbors. In this transaction, Obie is​

A)an agent for both parties.
B)Mena's agent, and not Neighbors's agent.
C)Neighbors's agent, and not Mena's agent.
D)not an agent.

Question 65

During a storm in Tornado Alley, a house is destroyed, but its owner Dorothy survives. Dorothy plans to return to the site to salvage her possessions, but she delays. Meanwhile, Elliott combs through the ruins and removes all useful items. Dorothy learns of the recovery and files a suit against Elliott, claiming that the items are hers. Elliott responds that the destroyed house was abandoned and therefore he has good title to whatever he took possession of. What is the court likely to rule, and why?

Question 66

Estimable Credit Company loans funds to Farmland Granaries, LLC, to buy a silo. Estimable obtains an insurance policy from Grangers Insurance, Inc., to cover the silo. Farmland also obtains a policy from Grangers to cover the silo. Later, Farmland sells the silo to Hi-Yield Harvest Company but keeps the policy. Hi-Yield also obtains a pol-icy from Grangers to cover the silo. Estimable agrees to finance Hi-Yield's purchase of the property. A fire totally destroys the silo. Who can recover for the loss?

Question 67

Commerce & Business Insurance, Inc., has a valid reason to cancel a policy issued to DIY Auto & Truck Parts Company. In most states, Commerce & Business could cancel the policy on​

A)advance oral or written notice.
B)oral or written notice but only after arbitration.
C)no notice.
D)advance written-not oral-notice.

Question 68

Miranda delivers her bridesmaid's dress to Nina for alterations. Nina promises that the dress will be ready within five business days. Miranda agrees to pay the charge when she picks up the dress. This is​

A)an implied bailment.
B)an involuntary bailment.
C)an express bailment.
D)not a bailment.

Question 69

Anna obtains a business liability insurance policy for her Brew & Bagels Coffee Shop from ChoiceFirst Insurance Company. When an event occurs that gives rise to a claim, each party has a duty to​

A)cooperate in an investigation to determine the facts.
B)file a suit against the other so that a court can settle the claim.
C)find a third party on whom to impose liability.
D)pay any outstanding premium or refund any unearned amount.

Question 70

Ruby stores her furniture with Stow-Away, Inc., under a contract that limits the dollar amount of its liability. A fire due to Stow-Away's negligence destroys the furniture. The loss is most likely to be imposed on

A)neither Ruby nor Stow-Away.
B)Ruby and Stow-Away in equal proportions.
C)Ruby only.
D)Stow-Away, subject to the contractual limitation.

Question 71

Nero and Omar agree to buy natural gas to sell to Power Fuel Company and to share storage costs until Power Fuel can take delivery. The gas is commingled so that Nero's cannot be distinguished from Omar's. This is​

A)accession.
B)confusion.
C)conversion.
D)a bailment.

Question 72

GR8 Vision, Inc., hires Haul-Way Company to transport fifty large-screen HDTVs from GR8's warehouse in San Diego to an Ideal Electronics retail store in Phoenix. The bailee is​

A)GR8 Vision.
B)Haul-Way.
C)Ideal Electronics.
D)no one.