Deck 23: Personal Property, Bailments, and Insurance

Question 1

A joint tenant's sale of his or her interest terminates the joint tenancy.

Answer 1

True

Question 2

Adding value to a piece of personal property by labor or materials is accession.

Answer 2

True

Question 3

One cannot acquire ownership by possession by "capturing" a wild animal.

Answer 3

False

Question 4

A finder of mislaid property is an involuntary bailee.

Question 5

Most bailments are created by agreement, but not necessarily by contract.

Question 6

A bailee must exercise reasonable care in preserving the bailed property.

Question 7

For an effective bailment, the bailor must deliver title and possession of the bailed property.

Question 8

A finder acquires title to mislaid property good against the whole world, in?cluding the true owner.

Question 9

A gift is effective whether or not it is accepted.

Question 10

A finder of abandoned property acquires title to it, and the title is good against the whole world, including the original owner.

Question 11

Patents are not considered personal property.

Question 12

In a bailment, possession of the property is transferred to the bailee.

Question 13

A bailment must be in writing to be valid.

Question 14

It is presumed that a co-tenancy is a tenancy in common unless it is clear that the parties intended to establish a joint tenancy.

Question 15

Constructive delivery occurs when property is physically transferred.

Question 16

A car is tangible personal property.

Question 17

Confusion of fungible goods results in the owners' loss of their rights in the property.

Question 18

A gift must be supported by legally sufficient consideration.

Question 19

In a tenancy in common, the interests are divided.

Question 20

Constructive delivery satisfies the delivery requirement for an ef?fective bailment.

Question 21

An insurance application is part of the insurance contract.

Question 22

Insurance coverage is never effective until a formal written policy is issued.

Question 23

A party must own property to have an insurable interest in it.

Question 24

An insurer has a duty to avoid the payment of claims.

Question 25

In most bailments, the bailee can retain the goods given by the bailor and return equivalent property.

Question 26

Faye owns the land on which Golden Spurs Ranch is situated, plus the ranch house, barn, and other structures permanently attached to the land. Faye's brother Huey owns everything else in the ranch's opera?tion-livestock, feed, and so on. The personal property is owned by

A) Faye and Huey.
B) Faye only.
C) Golden Spurs Ranch.
D) Huey only.

Question 27

An applicant for insurance has a duty to disclose only material facts that the insurer asks for.

Question 28

The consideration paid to an insurer to obtain an insurance policy is the premium.

Question 29

T.J. owns a red sports car. T.J. can use the car as he wishes and he can also dispose of it if he wishes. When T.J. dies, the car will descend to his son. With respect to the car, T.J. is

A) a joint tenant.
B) a tenant in common.
C) an owner in fee simple.
D) an owner of community property.

Question 30

Insurance is classified according to the amount of the payment on a claim.

Question 31

Sara has a flat-screen TV, a Blu-ray disc player, set of computer games and an investment portfolio that includes stock in the Internet game company Zynga. Sara's intangible property includes

A) the TV and Blu-ray player.
B) the computer games.
C) the Zynga stock.
D) the TV only.

Question 32

Liability insurance protects against liability imposed on the insured as a result of injuries to the person or property of another.

Question 33

State law may mandate that an incontestability clause be included in an insur?ance policy.

Question 34

A person can insure anything in which he or she has an insurable interest.

Question 35

The words used in an insurance contract are interpreted against the party who applied for the policy.

Question 36

Edna and Flavia buy a boat that they dock in a marina near Gulfport, Mississippi. On the death of either owner, that owner's interest in the boat passes to her heirs. This is

A) a joint tenancy.
B) community property.
C) a tenancy in common.
D) ownership in fee simple.

Question 37

A coinsurance clause provides that two or more people will be covered by the same life insurance policy.

Question 38

In defense against payment, an insurance company can raise any of the de?fenses that would be valid in an ordinary action on a contract.

Question 39

Klondike and Leola own 10,000 shares of stock in My-T Gro Corporation. On the death of either owner, that owner's interest in the stock passes to the surviving owner. This is

A) a joint tenancy.
B) community property.
C) a tenancy in common.
D) ownership in fee simple.

Question 40

A business firm may have an insurable interest in the life of any of its employees, except a key employee.

Question 41

Ruby is young and healthy when she gives Pearl a prize-winning horse. The gift meets all the requirements to be effective. This is a gift

A) inter vivos.
B) causa mortis.
C) by accession.
D) by confusion.

Question 42

Inadvertently, Rachel leaves her backpack at Chat n' Coffee when she stops for an hour of coffee and Facebook. The backpack is

A) abandoned property.
B) bailed property.
C) lost property.
D) mislaid property.

Question 43

John steals an old, battered bicycle that is parked, unlocked, in front of a convenience store. He repairs, paints, and replac?es parts on the bike un?til it is like new. The original owner, Kim, claims the bike. The bike be?longs to

A) John and Kim as tenants in common.
B) John because he made substantial improvements to it.
C) John because Kim claimed it only after John improved it.
D) Kim because John stole it.

Question 44

Derrick buys a hunting license and goes hunting. He shoots a deer, cleans it, and takes it back to his truck. He takes the deer to town and has the meat processed. Derrick's acquisition of the deer is by

A) possession.
B) a bailment.
C) confusion.
D) production.

Question 45

Bret obtains a fire insurance policy on his rental house with Continental Insurance Company. Like all insurance, this policy is an arrangement for

A) avoiding the assumption of responsibility.
B) predicting a potential loss based on unknown factors.
C) shifting the imposition of liability.
D) transferring and allocating risk.

Question 46

Ira is declared mentally incompetent. Jay, Ira's son, is named his guard?ian. At Jay's insistence, Ira transfers his assets to Jay "for safekeeping." This gift may not be effective on the ground that there was no

A) acceptance.
B) delivery.
C) donative intent.
D) donor's acknowledgment.

Question 47

Mallory's sister gives Mallory a leather working kit for Christmas. Mallory uses the kit to make a saddle. Mallory's acquisition of the saddle is by

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

Question 48

Wally asks Eddie if he can store his furniture in Eddie's garage while he serves a tour of duty with the U.S. Marines Corps. Eddie agrees. This is

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

Question 49

Shingle & Tile Roofing Contractor, LLC, obtains an insurance policy against liability for injuries or losses sustained by employees during the course of their employment. The policy covers claims not covered by workers' compensation insurance. This is

A) casualty insurance.
B) fidelity or guaranty insurance.
C) key-person life insurance.
D) employer's liability insurance.

Question 50

Doctors Medical Associates obtains an insurance policy that protects its members against negligence claims by their pa?tients. This is

A) casualty insurance.
B) fidelity or guaranty insurance.
C) malpractice insurance.
D) workers' compensation insurance.

Question 51

Venerable Company leases office furniture to Design Architects, Inc., under a contract that states, "Bailee agrees to pay Bailor for any damage to the furniture." During the lease, while the furniture is in Design's possession, it is stained by inks used in computer printers, copiers, fax machines, and so on. Most likely liable for the damage is

A) Venerable.
B) Design.
C) "Bailor."
D) no one.

Question 52

Grace applies for a homeowners' insurance policy on her house with Heroic Insurance Company through Ian, a broker. In this transaction, Ian is

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

Question 53

Fred and Joanne are married. Joanne purchases a car. Fred and Joanne each technically own an undivided one-half interest in the car. This is

A) a joint tenancy.
B) fee simple ownership.
C) community property.
D) illegal.

Question 54

Clancy sells shares in Darling Pool & Spa Company to Eton. Clancy does not deliver the actual possession of the shares to Eton, but gives him the key to a safety-deposit box in First State Bank in which the stock certifi?cates are locked. Presenting the key is

A) real delivery.
B) constructive delivery.
C) delivery by agent .
D) no delivery.

Question 55

Victor leaves his Dodge sport utility vehicle at Gordo's Auto Service for an oil change. This is

A) a bailment.
B) a gift.
C) accession.
D) production.

Question 56

Stan rents a safe-deposit box at Main Street Bank under a contract that gives Stan exclusive knowledge and control over its contents. This is

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

Question 57

Early one morning, Tab agrees to lend his bike to Sheila, who promises to return it in the evening. Because there is no consideration, there is no contract. This is

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

Question 58

Uri discovers a boat adrift, and retrieves and anchors it. The boat features a number on its side and other evidence pointing to its owner, Vera. This is

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

Question 59

Gilbert finds an iPad on the counter at Starbucks. He takes the iPad to the police station's lost and found desk. The officer at the desk tells Gilbert that if the iPad is not claimed in a certain amount of time, Gilbert can obtain title to it. This is an example of acquiring possession by

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

Question 60

Rocco gives Sequoia a smartphone as a gift. Sequoia develops a new game app for the phone. She obtains intellectual property protection, and forms Titan Games, LLC, to make and market the game. Sequoia's ac?quisition of the game is by

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

Question 61

Edy obtains a property insurance policy with First Source Insurance Company for Edy's fishing trawler. First Source can cancel the policy

A) if Edy appears as a witness in a case against First Source.
B) if Edy fails to pay the premiums.
C) if Edy makes changes that add to the trawler's value.
D) under no circumstances.

Question 62

Speedy Shipping Corporation applies to TransInsurance Company for a fire insurance pol?icy on Speedy's warehouse. On the application, Speedy misrepresents the age of the property to obtain a lower premium. When a fire soon destroys the ware?house, TransInsurance can

A) deny payment, because a fire destroyed Speedy's warehouse.
B) deny payment, because of Speedy's fraud in the application.
C) not deny payment, because a fire destroyed Speedy's warehouse.
D) not deny payment, because the application is not part of the policy.

Question 63

Haya obtains an insurance policy from Inviolable Insurance Corporation (IIC). IIC may cancel, or refuse to renew, the policy because of

A) Haya's appearance as a witness against IIC.
B) Haya's gender.
C) Haya's national origin.
D) none of the choices.

Question 64

Ginny obtains a health-insurance policy for her family from Hope Insurance Company. The policy includes an incontestability clause. Under such a clause, after a policy has been in force for a specified period or time, such as two or three years

A) Ginny cannot contest Hope's insurable interest.
B) Ginny cannot contest Hope's refusal to pay a claim under the policy.
C) Hope cannot contest Ginny's eligibility for continued coverage.
D) Hope cannot contest Ginny's statements in the application.

Question 65

Kelsey obtains a business liability insurance policy from Loyal Insurance Company for Kelsey's Framing & Art Supplies store. When an event occurs that gives rise to a claim, Loyal has a duty to

A) investigate to determine the facts.
B) file a suit against Kelsey so that a court can settle the claim.
C) find a third party on whom to impose liability.
D) refund any unearned amount of the premium.

Question 66

Donald applies for a life insurance policy with Equity Insurance Company through Fletch, an agent who works for Equity. Donald pays the initial premium. Fletch writes a binder, which

A) acknowledges the application and promises to consider it.
B) attests to the truth of each statement in the application
C) evidences receipt of the payment of the initial premium.
D) indicates that a policy is pending and states its essential terms.

Question 67

Myles obtains a property insurance policy from Nova Insurance Company for Myles's restored 1957 Chevy. Nova can cancel the policy

A) if Myles increases the risk assumed by the Nova.
B) if Myles files a claim under the policy.
C) if Myles appears as a witness in a case brought against Nova.
D) under no circumstances.

Question 68

Feta is a partner in the game design firm GR8 Games, Inc., which ob?tains key-person life in?surance on Feta in the amount of $1 million from Halo Insurance Company. Feta quits GR8 Games to join Icy Applications, Inc. Feta dies. Under the principle of insurable interest, Halo must pay the $1 million to

A) Feta's spouse Jo.
B) GR8 Games.
C) Icy Applications.
D) no one.

Question 69

Isabel obtains a fire insurance policy on her home from Justice Insurance Company. The home is lost in a fire, but the parties dispute the amount of Justice's liability under an ambiguous clause in the policy. A court would most likely

A) interpret the clause against Isabel.
B) interpret the clause against Justice.
C) rewrite the clause and apply it as rewritten.
D) strike the clause from the policy.

Question 70

Root & Branch Lumber Company obtains a fire insurance policy from Statistical Insurers, Inc., on a $400,000 warehouse. The policy includes an 80-percent coinsurance clause. Root & Branch insures the property for $320,000. In a fire, the warehouse suffers $200,000 in damage. Root & Branch can recover

A) $400,000.
B) $320,000.
C) $200,000.
D) $80,000.

Question 71

During a storm on Blue Lake, a boat sinks, but its owner Cappy survives. Cappy plans to return to the site of wreck to salvage its equipment and his possessions, but he delays. Meanwhile, Dick, an amateur diver, discovers the wreck and strips it clean of useful items. Cappy learns of the recovery and files a suit against Dick, claiming that the items are his. Dick responds that the sunken boat was abandoned and therefore he has good title to everything to which he took possession. What is the court likely to rule, and why?

Question 72

French's Fast Fries (3F) requires that its employees wear uniforms and protective clothing while on the job. 3F provides a locker room for the employees to leave their street clothes and personal items while working. A sign on the back of the locker room door states, "French's is not re?sponsible for the loss of any property in the locker room." Grant, a 3F employee, changes his clothes in the locker room before starting work and leaves his wallet and watch in a pocket of his jacket hanging in his locker. When he returns after his shift, the wallet and watch are gone. Does Grant's leaving personal items in the locker room constitute a bailment? If so, what type of bailment? If not, what legal relationship is it? Does 3F's sign exculpate the com?pany for Grant's loss? Why or why not?