Deck 47: Introduction to Property, Property Insurance, Bailments, and Documents of Title

Question 1

Accession means the right of the owner of property to any increase in it.

Answer 1

True

Question 2

A thief stole Harold's car and installed a tape deck in it. Later the police caught the thief and returned the car to Harold. Harold now owns the tape deck by accession.

Answer 2

True

Question 3

A furnace would often be classified as a "fixture."

Answer 3

True

Question 4

An heir of a person who dies receives title to the property of the decedent by reason of a gift.

Question 5

A bailment may be made of either real or personal property.

Question 6

Claudia hires Greg to plant a tree in her yard. Greg discovers a shoebox buried in the ground. Greg owns the shoebox and its contents since he is the finder.

Question 7

Sales of tangible personal property involve the transfer of title.

Question 8

The most frequently used documents of title are the warehouse receipts issued by warehousers and the bills of lading issued by carriers.

Question 9

A negotiable electronic document of title running to the order of a named person or to bearer is negotiated by delivery, which means voluntary transfer of control.

Question 10

Barbara put her old clothes in a box in the bedroom of her roommate. The roommate now owns the clothes, because they are presumed to be a gift.

Question 11

Insurance companies have been successful in limiting the authority of local selling agents to bind the company through waiver or estoppel.

Question 12

The finder of lost property is entitled to possession of it, even against the true owner.

Question 13

The coverage of fire insurance policies varies by state, but the policies are written for no more than one-year terms.

Question 14

Clara receives a telephone call from her Aunt Mary in which Mary says she has decided to give Clara her pet python as a gift. Clara may refuse to accept the gift.

Question 15

Bailments for the bailee's sole benefit are usually limited to the gratuitous loan of personal property for use by the bailee.

Question 16

If Clark buys a tomato plant, he owns the tomatoes produced by the plant based on "confusion."

Question 17

Mark finds a camera on a park bench at Disneyland. Mark can keep the camera if the true owner cannot be found, because it is lost property.

Question 18

The delivery necessary for a gift may be accomplished constructively.

Question 19

An example of a bailment for the bailor's sole benefit is when Sherri, without compensation, lends her Cappuccino maker to Ed for Ed's party.

Question 20

The transfer of personal property involves formalities not required in the transfer of real property.

Question 21

Bailed property must be tangible.

Question 22

A friendly fire is one that is contained to an intended place, such as a fireplace, stove, or barbecue grill.

Question 23

Property insurance may be either a valued policy or an open policy.

Question 24

Intangible property does not exist in a physical form.

Question 25

The anthropology department of Towers University is doing an excavation on property that belongs to the Browns. If, in the process of excavation, the university finds some valuable lost items, they will belong to the Browns and not to the university.

Question 26

Coinsurance is common in property insurance as a means of sharing risk between the insurer and insured.

Question 27

All bills of lading are negotiable and may be transferred like a check.

Question 28

The holder of a negotiable document of title to whom the document has been duly negotiated has legal title to the goods covered by the document.

Question 29

The regulation of insurance has been left to the states.

Question 30

Patent rights are considered to be personal property.

Question 31

Albert offers his nephew, Tom, his 2001 car which would only need about $1,000 in repairs to put it in running order. Tom has no right to reject the car.

Question 32

No warranties are given out by the person who negotiates or transfers a document of title.

Question 33

Harold says in the presence of three other people that he is giving his automobile to his nephew, and then hands the keys to the car to the nephew. Delivery of the auto has taken place.

Question 34

A lease for office space is considered to be personal property.

Question 35

An insurable interest in property is a financial interest that justifies insuring such property.

Question 36

Melissa cannot transfer control of the goods held by a bailee by transferring a document of title.

Question 37

At the end of a bailment, a bailee may correctly deliver the bailed property to a third party (other than the bailor) in certain cases.

Question 38

When goods have been commingled, it is sometimes possible to get title by confusion.

Question 39

Robert steals a truckload of electronic equipment and stores it in Eastside Warehouse. After five weeks, Robert instructs Eastside to make the goods available to Charles for pickup. Even if Eastside acts reasonably and in good faith, it will be liable to the true owner of the goods if it allows Charles to take the goods.

Question 40

The basic principles of contract law apply to insurance policies.

Question 41

Which of the following is a requirement of a valid gift?

A) An adult donor.
B) Payment of money.
C) A writing.
D) Delivery.

Question 42

The fixture test of purpose or use applies only if the item:

A) is affixed to the realty in some way.
B) can be removed without material injury to the realty.
C) is affixed to the realty in some way and also  can be removed without material injury to the realty.
D) is distinct from the realty but could be affixed to it.

Question 43

A type of insurance in which the insured and the insurer share a risk of loss due to fire is:

A) co-insurance.
B) non-forfeiture insurance.
C) no-fault insurance.
D) reinsurance.

Question 44

Another term for personal property is:

A) patent.
B) chattel.
C) realty.
D) fixtures.

Question 45

The failure by an applicant to disclose material facts that an insurer does not know but has a right to know is called:

A) misrepresentation.
B) concealment.
C) waiver.
D) fidelity.

Question 46

Transfer of title to personal property can occur by all but which of the following ways?

A) By deed.
B) By gift.
C) By will or descent.
D) By accession.
E) Transfer can occur by any of the above.

Question 47

To prevent the use of the insurance policy for wagering purposes, the person who is to be indemnified under the contract must have:

A) good faith.
B) an insurable interest.
C) a binder.
D) a coinsurance clause.

Question 48

A $40,000 fire insurance policy covers a building, which is valued at $50,000, and there is an 80% co-insurance clause. If the building is totally destroyed by fire, the policyholder will receive:

A) $50,000.
B) $40,000.
C) $32,000
D) $8,000

Question 49

Personal property so firmly attached to real property that an interest in it arises under real property law is known as a(n):

A) fixture.
B) tangible property.
C) intangible property.
D) None of these.

Question 50

The UCC does not cover:

A) negotiable instruments.
B) investment securities.
C) sales of goods.
D) gifts.

Question 51

Temporary insurance coverage prior to the issuance of the actual policy may be obtained by use of a(n):

A) premium agreement.
B) coinsurance clause.
C) option clause.
D) binder.

Question 52

Defenses of the insurer include:

A) misrepresentation.
B) judgment pro rata.
C) concealment.
D) Both misrepresentation  and concealment.
E) Both judgment  pro rata.  and concealment.

Question 53

An inter vivos gift is a gift:

A) of live animals.
B) contingent upon the donee's surviving the donor.
C) made by a donor during her lifetime.
D) None of these.

Question 54

An example of property that is intangible is a:

A) song.
B) computer.
C) book.
D) pencil.

Question 55

Which of the following is tangible real property?

A) Corn harvested and stored in a grain bin.
B) The mortgage on an office building.
C) A copyright.
D) The freight elevator in an office building.

Question 56

Don asked Karen to marry him and gave her a 1/2-carat diamond engagement ring. Three months later, Karen broke the engagement because she decided she was not ready for marriage yet. According to most courts, Don may:

A) not recover the ring because it was a gift.
B) recover the ring because he did not break the engagement and the gift was conditional.
C) not recover the ring even if the marriage does not take place because gifts cannot be conditional.
D) not recover the ring unless the reason the marriage was called off was Karen's death.

Question 57

Harvey's Car Rental rents Darlene an intermediate-size car at $159 per week for her business trip. What is the relationship between Harvey's and Darlene?

A) A bailment for mutual benefit.
B) A bailment for the sole benefit of the bailee.
C) A bailment for the sole benefit of the bailor.
D) The temporary transfer of title to Darlene.

Question 58

A gift causa mortis is a gift:

A) made by a donor after death in her will.
B) that is conditional.
C) made in the contemplation of the donor's imminent death.
D) T hat is both conditional and  made in the contemplation of the donor's imminent death
E) T hat is both conditional and  made by a donor after death in her will.

Question 59

Which of the following is NOT personal property?

A) Trees that have been cut into logs.
B) An air-conditioning system before it is installed in a house.
C) Building materials.
D) A 140-acre farm.

Question 60

Which of these elements determine the existence of a bailment?

A) A separation of ownership and possession of the property.
B) A duty on the party in possession to redeliver the identical property to the owner or to dispose of it according to the owner's directions.
C) Neither of these.
D) Both a  separation of ownership and possession of the property  and also a  duty on the party in possession to redeliver the identical property to the owner or to dispose of it according to the owner's directions.

Question 61

Warranties in insurance contracts:

A) are of great importance.
B) may be expressly included in the contract, be clearly incorporated by reference, or be implied.
C) may be used to avoid liability in all states, whether or not the breach of warranty is material.
D) are becoming increasingly easy to use as a basis for an insurer to avoid liability on a policy when an insured breaches.

Question 62

The rights of a holder of a negotiable document of title to whom it has been duly negotiated include:

A) title to the document.
B) title to the goods.
C) all rights accruing under the law of agency or estoppel.
D) All of these are rights.

Question 63

Showplace insures its $160,000 building with two insurers: with Hometown Insurance for $60,000 and with National Insurance for $120,000. The building suffers a fire loss of $75,000. From whom and for how much can Showplace collect?

Question 64

Mark wants to give Susan his car. How can he effectively "deliver" it?

A) By giving Susan the keys.
B) By giving her an indorsed title certificate.
C) By making her take it for a period of time.
D) By giving her a bill of sale for it.
E) By giving her an indorsed title certificate or by  giving Susan the keys.

Question 65

Which of the following is/are the criteria for a common carrier?

A) The carriage must be part of its business.
B) The carriage must be for remuneration.
C) The carrier must represent to the general public that it is willing to serve the public in the transportation of property.
D) All of these are criteria.

Question 66

Intangible real property includes all of the following except:

A) leases.
B) fixtures.
C) easements.
D) None of these. All real property is tangible.

Question 67

Margaret told Bill she would give him her concert tickets. Later she changed her mind and decided she wanted to use the tickets after all. Is Margaret required to give Bill the tickets?

A) No, because there was no intent to make a present transfer.
B) No, because there was no delivery.
C) No, because there was no acceptance.
D) All of these are correct.

Question 68

Carol took her earrings off at Marcia's beauty shop and put them on the counter. She left the shop without remembering the earrings. Betty finds them and wants to keep them. Can she?

A) Yes, since she is a finder.
B) Yes, she now is the true owner.
C) No, since the earrings were personal property.
D) No, Marcia would have the right to keep them as against anyone but Carol.

Question 69

Dr. Olson is a board-certified ophthalmologist who constructs some specially designed examining tables to use in looking at his patient's eyes. The tables are firmly attached to the floor of the space he rents for his office. If Dr. Olson decides to move his office, which of the following is correct?

A) The tables are fixtures that cannot be removed.
B) The tables are trade fixtures.
C) Dr. Olson may remove the tables if they can be removed without materially damaging the realty.
D) The tables are trade fixture and that  Dr. Olson may remove the tables if they can be removed without materially damaging the realty.

Question 70

Larry leaves his hat under the seat at the movie theater. Is this a bailment?

A) No, because the theater manager does not have physical possession of the goods.
B) No, because Larry did not pay the theater to keep his hat.
C) Yes, if the theater manager finds it.
D) Yes, since the theater controls the building.

Question 71

Why are delivery and acceptance both necessary to have a valid gift? Explain.

Question 72

Mary cleaned her dorm room in the spring and left a pile of books in Sara's room. Mary told everybody that the books were a gift to Sara. Does Sara have to dispose of them?

A) Yes, because there was a present intent and delivery.
B) Yes, because they are constructively in Sara's possession.
C) No, because Sara did not accept the books.
D) No, because there was no agreement between the two parties.

Question 73

Which of the following statements is not true of insurance policies?

A) The basic principles of contract law apply to insurance policies.
B) Insurance companies tend to standardize their policies.
C) Some states forbid standardization of insurance policies.
D) All of these.

Question 74

If Jim, Ken, and Lee each deposit 10,000 bushels of wheat in a grain elevator, they would own one-third of the mixture by:

A) accession.
B) adverse possession.
C) prescription.
D) confusion.

Question 75

All but which of the following hold an insurable interest?

A) Shareholders in a closely held corporation to the extent of their interest in the corporation's property.
B) A lessee of property.
C) A seller with a purchase money security interest.
D) A buyer of a truck, whether or not the buyer had knowledge of the fact that the truck was stolen by the seller.

Question 76

Explain the difference between lost, mislaid, and abandoned property and who has rights to it.

Question 77

Insurance protects a business from:

A) tort liability.
B) strict liability.
C) negligence.
D) damage from natural causes.
E) All of these are protected.

Question 78

Farmer Brown brings his crop of wheat to the local grain elevator where it is stored along with the grain of several other farmers. A few months later, the grain elevator declares bankruptcy. Who owns the grain? Can Farmer Brown get his grain back? Explain.

Question 79

A bill of lading serves as:

A) a receipt for the storage of goods.
B) evidence of the contract of insurance.
C) a document of title.
D) a contract for employment.

Question 80

Marilyn brought her $400 silk dress to University Dry Cleaners to be cleaned. On the back of the ticket she received in exchange for the dress was written, "Liability limited to five times the cost of cleaning." Marilyn's dress was lost and University now claims it owes her no more than $53.25, five times the cost of cleaning. Is that true?

A) No, because Marilyn is not a bailor.
B) No, because University is a common carrier.
C) No, because the limitation was not communicated to her.
D) No, because the limitation is unconscionable.