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

Question 1

A trade fixture is not intended to become part of the realty.

Answer 1

True

Question 2

Lessees of property and holders of security interests have insurable interests in property.

Answer 2

True

Question 3

A straight bill of lading under which goods are deliverable only to a person named in the bill may be transferred by assignment or negotiation.

Answer 3

False

Question 4

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, making the intended gift invalid.

Question 5

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

Question 6

The same item may not be the object of both tangible and intangible property rights.

Question 7

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

Question 8

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 9

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

Question 10

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 11

A bailee is required to return the identical goods bailed, in the same condition as when the bailee received them.

Question 12

A bailee has the exclusive right to possess the property for the term of the bailment.

Question 13

The Uniform Commercial Code covers all the issues involving ownership and transfer of title to personal property.

Question 14

Although Trina has paid her annual insurance premium, her insurance company sends her a written notification that it is cancelling her policy, which should have had four more months of coverage. The insurer need do nothing more to effect the cancellation.

Question 15

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

Question 16

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

Question 17

Rights represented by a stock certificate or a promissory note are examples of intangible property.

Question 18

Mark finds a camera on a park bench at Disneyland. Mark cannot keep the camera, because it is mislaid property.

Question 19

Terry's loan of his lawnmower to his neighbor cannot be a bailment if Terry receives no compensation for the use.

Question 20

Property insurance policies are freely assignable before, but not after, a loss occurs.

Question 21

If Keisuki insures his building for $300,000 and at the time of its total loss the property is valued at $250,000, under an open policy Keisuki would recover $300,000.

Question 22

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

Question 23

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

Question 24

A negotiable electronic document of title running to the order of a named person or bearer is negotiated by delivery which, according to Revised Article 7 of the UCC, means a voluntary transfer of control.

Question 25

Lack of consideration is the basic distinction between a gift and a sale.

Question 26

Patent rights are considered to be personal property.

Question 27

Ronald 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 28

Fire insurance policies vary from state to state in the United States.

Question 29

Estoppel means that a person is prevented by his own conduct from asserting a position inconsistent with such conduct, on which another person justifiably relied.

Question 30

The basic principles of contract law apply to insurance policies.

Question 31

Clay that has been made into pottery is personal property.

Question 32

An easement is not considered to be real property.

Question 33

The McCarran-Ferguson Act, enacted in 1945, left the regulation of insurance to the states.

Question 34

A carrier or warehouser who receives goods from a thief and later delivers them to a person to whom the thief ordered them to be delivered is liable to the true owner of the goods.

Question 35

Property insurance policies are frequently written for periods of at least five years.

Question 36

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

Question 37

A common carrier is under a duty to serve the public to the limits of its capacity.

Question 38

A document of title symbolizes ownership of the goods it describes; its transfer transfers the ownership or control of the goods without necessitating the physical transfer of the goods themselves.

Question 39

An ordinary bailee becomes liable to the bailor for any loss or injury to the goods, regardless of the cause and without regard to the question of his care or negligence.

Question 40

Clay in its natural form is real property.

Question 41

The UCC does not cover:

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

Question 42

Sales of copyrights and patents are governed by:

A) the UCC.
B) common law.
C) federal statute.
D) real estate law.

Question 43

In insurance contracts, warranties:

A) are of little importance.
B) must be expressly included in the insurance contract.
C) only apply to the insurer, not the insured.
D) operate as conditions that must exist before the contract is effective or before the insurer's promise to pay is enforceable.

Question 44

Mixing identical goods from different owners is:

A) confusion.
B) accession.
C) possession.
D) gift.

Question 45

Another term for personal property is:

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

Question 46

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

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

Question 47

A negotiable electronic document of title:

A) is not possible, since a document of title must be in tangible form.
B) running to the order of a named person must be indorsed in order to negotiate it.
C) may be delivered by voluntarily transferring control rather than by voluntarily transferring possession.
D) is tracked by a system of control created and set forth in Revised Article 7 of the UCC.

Question 48

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 49

Which of the following is characteristic of a bailment?

A) There is a separation of ownership and possession
B) A bailment must be a contract
C) It must last for an indefinite time
D) All of these

Question 50

An insured holds a $32,000 fire insurance policy on a building which is valued at $40,000, and on which there is an 80% co-insurance clause. If the building is totally destroyed by fire, the policyholder will receive:

A) $40,000.
B) $32,000.
C) $30,000.
D) $25,600.

Question 51

A bailee's duty of care:

A) is always the degree of care necessary to prevent any loss or injury to the bailed goods.
B) varies depending on the nature of the bailment relationship and the character of the bailed property.
C) Both of these.
D) Neither of these.

Question 52

A warehouse receipt:

A) is not a document of title.
B) is a receipt issued by a person engaged in the business of storing goods for hire.
C) grants a lien enabling a warehouser to sell goods only at a public sale.
D) All of these.

Question 53

A transaction in which the owner gives possession of his personal property to another to secure a debt is:

A) an extraordinary bailment.
B) a pledge.
C) a consignment.
D) commercial bailment.

Question 54

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 55

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 56

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 57

The finder of lost property is considered to be the owner as against everyone except the true owner by reason of:

A) confusion.
B) accession.
C) possession.
D) gift.

Question 58

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 59

What is the method by which title to new property is acquired when an article of personal property that belongs to one person has a natural increase?

A) Gift
B) Will or descent
C) Purchase
D) Accession

Question 60

The Constitution protects against taking of property:

A) by a corporation.
B) without notice.
C) for public use.
D) without due process.

Question 61

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 control of the area in which Larry left the hat
B) No, because Larry did not pay the theater to keep his hat
C) Yes, if the theater manager finds the hat
D) Yes, since the theater controls the building

Question 62

A bill of lading serves as:

A) a receipt for storage of goods.
B) a document of title.
C) a warehouser's lien.
D) evidence of insurance on the goods covered by the document.

Question 63

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

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

Question 64

Which of the following is not a function of a bill of lading?

A) It serves as a receipt for goods.
B) It serves as evidence that the goods specified in the bill of lading are stored in the insured building of the issuer.
C) It is evidence of the contract of carriage.
D) It serves as a document of title.

Question 65

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 not fixtures because Dr. Olson installed them.
C) Dr. Olson may remove the tables if they can be removed without materially damaging the realty.
D) All of these.

Question 66

Mark wants to give Susan his car. He can effectively "deliver" it by:

A) giving Susan the keys.
B) giving her a written statement that he plans to give the car to her.
C) letting her drive it for a period of time.
D) telling his wife that he wants to give the car to Susan.

Question 67

Taylor Corp. rents a warehouse where it conducts a small manufacturing operation. As a condition of its lease, it pays a fire insurance premium. Taylor needs more room and rents larger quarters. Taylor then subleases its old warehouse to Mack. Taylor also assigns its already-paid insurance policy to Mack. This action is:

A) appropriate, so long as Taylor and Mack agree to it.
B) appropriate, so long as the landlord agrees to it.
C) not binding on the insurer.
D) totally within the rights of Taylor, who already paid the premium.

Question 68

Darlene rents an car for her business trip. What is the relationship between Darlene and the car rental company?

A) A bailment for the sole benefit of the bailor
B) A bailment for the sole benefit of the bailee
C) A bailment for mutual benefit
D) Pledgee and pledgor

Question 69

Darinel insures a $150,000 building with Morales Insurance Co. for $50,000 and with Washington Insurance Co. for $100,000. The building is partially destroyed by fire, causing $25,000 in damages. Darinel will be able to collect:

A) one-third of the damages from Morales Insurance Co.
B) one-half of the damages from Morales Insurance Co.
C) from neither Morales nor Washington since it was fraudulent to purchase policies covering the same property from two different insurance companies.
D) $25,000 from either Morales or Washington Insurance Co., but cannot collect from both insurers.

Question 70

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

Question 71

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 72

A person, other than a collecting bank or other intermediary, who negotiates a document of title for value:

A) warrants to her immediate purchaser that the document is genuine.
B) warrants to all who later take the document that it is genuine.
C) warrants that nothing impairs the document's validity or worth.
D) makes no warranties.

Question 73

Margaret told Bill she would give him her tickets to an upcoming concert. Later she changed her mind and decided to go to the concert after all. Can Bill require Margaret to give him the tickets?

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

Question 74

An insurable interest in property must exist:

A) at the time the insurance policy is obtained.
B) at the time the loss occurs.
C) from the time the policy is obtained to the time the loss occurs without interruption.
D) for only one person at a time in a particular property.

Question 75

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

Question 76

Insurance protects a business from:

A) tort liability.
B) strict liability.
C) negligence.
D) All of these.

Question 77

Marilyn brought her $300 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 only $45, five times the cost of cleaning. Is that true?

A) No, because Marilyn is not a bailor.
B) No, because the cleaner is not a common carrier.
C) No, because the limitation was not communicated to her before she bailed the property.
D) Yes, because the cleaner had the right to limit its liability to a reasonable amount.

Question 78

Lynne took her earrings off at Marcia's beauty parlor 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 first claim if the true owner is not discovered

Question 79

A gift causa mortis is contingent upon:

A) the donee's surviving the donor.
B) the donor's surviving the donee.
C) the donee's death as anticipated.
D) the donee's not revoking the gift prior to the donee's death.

Question 80

In determining whether an item is a fixture, which of the following will be considered?

A) How it is attached to the building or land
B) Whether the item can be removed without harm to the building
C) Whether the item is usually included in that type of real estate
D) All of these factors may be considered.