Question 1

Bailment
A)requires transfer of possession of personal property.
B)arises only from a contract between bailor and bailee.
C)is a consignment with transfer of title.
D)alters ownership of a specific item.
E)cannot include a chattel.

Accepted Answer

Bailment requires transfer of possession of personal property. Ownership is not necessarily transferred, only possession is transferred temporarily from the bailor to the bailee. Bailment can arise from a contract or can be implied by law. It can include tangible personal property (chattel), but does not necessarily involve a transfer of title or ownership.

Question 2

Miles acquires a power generator under a two-year lease with the manufacturer.After four months,Miles realizes he no longer needs the generator.He delivers the generator back to the supplier,hoping that his lease payments will 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?
A)Yes,he will,because this is an operations lease.
B)No,he won't,because the lessor has the chattel in his possession.
C)No,he won't,since he is no longer receiving benefits under the lease.
D)Yes,he will,since the contract made no provision for early termination.
E)No,he won't,since he no longer requires the use of the generator.

Accepted Answer

Since the contract made no provision for early termination, Miles will be legally required to finish all the lease payments. This is because the terms of the lease agreement are binding and Miles agreed to them when he signed the lease. Therefore, he cannot simply return the generator and stop making payments without violating the terms of the lease.

Question 3

Which of the standards of care listed below describe the standard of care required by a business that hires out equipment?
A)care equivalent to what a prudent and diligent person would take in the use of his or her own property
B)care equivalent to a gratuitous bailment for the benefit of the bailor
C)care equivalent to a gratuitous bailment for the benefit of both parties
D)bailment standards set by the Universal Commercial Code
E)care equivalent to bailment of a common carrier

Accepted Answer

A business that hires out equipment is required to exercise care equivalent to what a prudent and diligent person would take in the use of his or her own property. This is known as the "ordinary prudence" standard.

Question 4

Which of the following is TRUE regarding bailments?
A)A change of ownership does not occur; the bailee is only putting his or her property in the bailor's custody.
B)The courts want to keep contracts alive,so they will often rescind a bailment.
C)Under a bailment arrangement,there can arise a time when the possessor can sell the goods against the owner's wishes.
D)If Sally were suing her dry cleaners for the loss of her coat,Sally must prove that the dry cleaners were negligent.
E)John put his house under the care of a neighbour until he returns from vacation.For John to take custody of it again is an example of a bailment.

Accepted Answer

The answer of Which of the following is TRUE regarding...

Question 5

Rex,a licensed contractor,rented a heavy duty brush cutter from YouRentAll Inc.Within the first few minutes of use,the blade came off and extensively damaged the shroud and housing of the machine.It was determined that the bolts that held the blade on were left loose by some previous user.YouRentAll sued Rex for the repair costs,claiming Rex should have checked out the machine before using.Assuming the lease contract did not speak to this type of situation,how would the court rule?
A)The plaintiff would win,since there is an implied condition here.
B)The defendant would win,since there is an implied warranty of fitness.
C)The plaintiff would win,since they are in the business of renting chattels.
D)The defendant would win,because lessor needs to take care of all repairs.
E)The plaintiff would win,because proper standard of care was not shown.

Accepted Answer

The defendant (Rex) would win because there is an implied warranty of fitness when renting equipment, which means the equipment is expected to be in a condition suitable for the purpose for which it is rented. This implies that the equipment should be safe to use without the need for the renter to inspect it for basic operational safety, such as ensuring the blade is securely attached.

Question 6

Sid asks his neighbour Carl to take care of his lawnmower while Sid is 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 ________.
A)bailee; bailor
B)consignee; user
C)lessor; lessee
D)owner; renter
E)bailor; bailee

Accepted Answer

In a bailment situation, the person who temporarily hands over possession of an item (but not ownership) is called the bailor, and the person who receives the item is the bailee. Since Sid asks Carl to take care of his lawnmower, Sid is the bailor and Carl is the bailee.

Question 7

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

Accepted Answer

The operating lease is a short-term lease, while the finance (purchase) lease is a long-term lease.

Question 8

Lucy brought her badly stained Persian rug in to be cleaned.The cleaners gave her a receipt in which a clause disclaimed all liability for damage arising from normal handling.When Lucy returned for the rug,it was in an advanced state of deterioration.The cleaners claimed it was exempted from damages by its written disclaimer.The courts would
A)exempt the cleaners from liability based on the exemption clause.
B)interpret the clause most strongly against the plaintiff.
C)side with Lucy's claim for damages.
D)explain why the exemption clause would not apply.
E)require a reasonable explanation as to why the damage was not the result of negligence.

Accepted Answer

The answer of Lucy brought her badly stained Persian rug...

Question 9

Temporary custody of a car belonging to a friend who has no garage and is going away on a business trip is an example of
A)a bailment service.
B)bailment borrowing.
C)bailment for value.
D)bailment benefiting bailor.
E)gratuitous bailment-bailee benefit.

Accepted Answer

This situation is a bailment benefiting the bailor, as the friend (bailor) benefits from the arrangement by having a safe place to store the car while away.

Question 10

Regarding bailments,which of the following is TRUE?
A)Articles held under bailment form assets available to creditors in bankruptcy.
B)Bailments are not confined to personal property.
C)Trusts are bailments because there is a transfer of property.
D)Chequing accounts at the bank are a form of bailment.
E)Contents in a safety deposit box are a form of bailment.

Accepted Answer

Contents in a safety deposit box are a form of bailment. A bailment is a legal relationship in which one party (the bailor) temporarily gives possession and control of property to another party (the bailee) for a specific purpose, with the understanding that the property will be returned or disposed of in a particular way at a later time. Safety deposit boxes held at a bank are a common example of bailment, where customers entrust valuable items for safekeeping in a secure location.

Question 11

For $5600,Jackstone Inc.agreed to repackage and ship nine container loads of toys from China.These containers from China were to be received during the next three months.Two containers arrived and were serviced according to the contract.The other seven containers never arrived and neither did any payment.What is Jackstone legally entitled to?
A)Since a lien is no longer possible,Jackstone should sue on price.
B)He is entitled to the entire $5600 since a fundamental breach has occurred.
C)He is entitled to $1200,since that is the proportion serviced.
D)He is entitled to quantum meruit on two containers plus loss of profits on the rest of the containers.
E)Since this is a service,it warrants specific performance.

Accepted Answer

Jackstone is entitled to quantum meruit for the services already provided on the two containers, and additionally, they can claim for loss of profits on the seven containers that were never delivered, as they had a reasonable expectation of income from servicing those containers.

Question 12

A gratuitous bailment can only be for the benefit of the bailee,never for the benefit of the bailor.

Accepted Answer

A gratuitous bailment can be for the benefit of either the bailor or the bailee, or for both parties. However, in a gratuitous bailment, there is no exchange of consideration, so the bailment is generally created for the benefit of the bailee.

Question 13

A finder,in the legal sense,is
A)a keeper,if she or he owns the land the goods are found on.
B)not bound to take possession of what he or she finds; but once he or she does,he or she becomes a bailee for the owner.
C)obligated,regardless of how valueless the goods are,to find the owner of the goods.
D)a keeper,as long as property has no monetary value.
E)a gratuitous bailor of the goods found.

Accepted Answer

A finder is not obligated to take possession of what they find, but if they do, they become a bailee for the owner. This means they have a duty to take care of the property and return it to the rightful owner. The other answer choices are not correct because a finder's ownership of the land or the value of the goods found does not determine their obligations as a finder.

Question 14

An example of a gratuitous bailment for the benefit of the bailee would be
A)the lending of a car for the bailee to take a trip.
B)giving a friend your camera so he can take pictures for you on his trip.
C)a lawnmower left with a friend who had offered to repair it.
D)valuables left in a relative's safe.
E)a pet left with a neighbour during vacation.

Accepted Answer

A gratuitous bailment for the benefit of the bailee occurs when the bailor lends an item to the bailee without expecting any payment, and the bailee receives the primary benefit from the use of the item. In choice A, lending a car for the bailee to take a trip is a clear example of this, as the bailee benefits from using the car without providing any compensation to the bailor.

Question 15

Where a licence is given,unlike with a bailment,the licensee assumes responsibility for safekeeping.

Accepted Answer

In a licence, the licensee is granted the right to use property or land but does not assume responsibility for its safekeeping, unlike in a bailment where the bailee is responsible for the safekeeping of the bailed property.

Question 16

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?
A)reasonable care
B)act of God
C)inherent vice
D)fault of the shipper
E)All of the above would be defences to liability.

Accepted Answer

Reasonable care is not a defense for a carrier in the absence of a contractual limitation of liability; the carrier is typically held strictly liable unless an exception like act of God, inherent vice, or fault of the shipper applies.

Question 17

In relation to chattel leases,quiet possession means that the lessor will not interfere with the lessee's possession or use of the chattel so long as the lessee complies with the terms of the lease.

Accepted Answer

Quiet possession is a standard provision in chattel leases, which guarantees the lessee the right to possess and use the chattel without interference from the lessor, as long as the lessee fulfills their obligations under the lease agreement.

Question 18

In both chattel leases and bailment,ownership remains with the property owner who gives possession of the property to another for a period of time on the understanding that it will be returned.

Accepted Answer

Both chattel leases and bailment involve giving possession of property for a period of time while ownership remains with the original owner with the expectation that it will be returned.

Question 19

A work associate leaves his bike each day in your garage while both of you commute to work in your car.(This associate pays $5 per day for riding in your car.)One day the bike is stolen out of your locked garage.Are you responsible for the loss of this bike?
A)No,you are not,because you met the standard of care required.
B)No,you are not,because your work associate automatically assumed this risk.
C)No,you are not,since it was gratuitous bailment with a low standard of care.
D)Yes,you are,because your home owner's insurance will pay for it.
E)Yes,you are,since it was stolen from your property.

Accepted Answer

As the owner of the garage, you met the standard of care required by providing a locked garage for your work associate to store their bike. Additionally, the work associate assumed the risk of leaving their bike in your garage. Therefore, you are not responsible for the loss of the bike.

Question 20

A hire-purchase agreement gives only possession of the chattel,not ownership.

Accepted Answer

The answer of A hire-purchase agreement gives only possession of...

Quiz 15: Bailment and Leasing

Bailment

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

Which of the following is TRUE regarding bailments?

Sid asks his neighbour Carl to take care of his lawnmower while Sid is 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 .

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

Temporary custody of a car belonging to a friend who has no garage and is going away on a business trip is an example of

Regarding bailments,which of the following is TRUE?

A gratuitous bailment can only be for the benefit of the bailee,never for the benefit of the bailor.

A finder,in the legal sense,is

An example of a gratuitous bailment for the benefit of the bailee would be

Where a licence is given,unlike with a bailment,the licensee assumes responsibility for safekeeping.

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?

In relation to chattel leases,quiet possession means that the lessor will not interfere with the lessee's possession or use of the chattel so long as the lessee complies with the terms of the lease.

In both chattel leases and bailment,ownership remains with the property owner who gives possession of the property to another for a period of time on the understanding that it will be returned.

A work associate leaves his bike each day in your garage while both of you commute to work in your car.(This associate pays $5 per day for riding in your car.) One day the bike is stolen out of your locked garage.Are you responsible for the loss of this bike?

A hire-purchase agreement gives only possession of the chattel,not ownership.