Business Law Test 6

Front 1

Real Property

Back 1

the land and everything permanently attached to it

Front 2

Personal Property

Back 2

Both tangible and intangible

Front 3

Why is distinction important?

Back 3

-Taxed differently

-Transferred differently (Real Estate Property requires formal deeds)

Front 4

Conversion of real to personal property

Back 4

Real property can be turned into personal property by permanently detatching it from the land

Front 5

Fixtures

Back 5

A thing affixed to realty (RP) by toots, embedded in it, or permanently attached by means of cement, plater, bolts, nails or screws

Front 6

Role of Intent

Back 6

1. The property attached cannot be removed without causing substantial damage to the remaining realty
2. The property attached is so adapted to the rest of the realty as to become a part of it

Front 7

Case 49.1
APL Limited v. Washington State, Dept. of Revenue (2012)

Back 7

?

Front 8

Trade fixtures

Back 8

Personal property that is installed for a commercial purpose by a tenant. They remain the property of the tenant and can be removed when the tenant leaves, repairing any damage cause by removal

Front 9

Personal Property Acquisition methods

Back 9

1. Possession
2. Production
3. Gift
4. Will/Inheritance
5. Accession
6. Confusion

Front 10

Posession

Back 10

A person becomes the owner of personal property merely by having it. For example, wild animals and lost or abandoned items

Front 11

Production

Back 11

Gaining property through the fruits of labor. For example, writers, inventors, manufacturers, etc

Front 12

Gift (&3)

Back 12

a voluntary transfer of property ownership for which no consideration is given. The presence of consideration distinguishes a contract from a gift.
1. Donative intent on the part of the donor
2. Delivery
3. Acceptance by the donee

Front 13

Donative Intent

Back 13

Based on circumstances, or relationship between parties

Front 14

Delivery

Back 14

Actual or "constructive" (Symbolic)
-Donor must give up complete control or dominion. Delivery by a third party is okay

Front 15

Case 49.2
In Re Estate of Piper (1984)

Back 15

?

Front 16

Acceptance (2)

Back 16

Intervivos: While the donor is living

Causa Mortis: While the donor is living but made with expectation of imminent death. Gift is revocable if the donor lives

Front 17

Accession

Back 17

Some value is added to another's personal property by use of either labor or materials
-With owners consent
-Without owner's consent

Front 18

Confusion

Back 18

Commingling so that a person's personal property cannot be distinguished from another's.
-Fungible goods consists of identical particles such as grain or oil

Front 19

Mislaid Property

Back 19

Property that has been placed somewhere by the owner and then inadvertently forgotten. A person who finds this property does not obtain title to the goods. The finder is caretaker for the true owner

Front 20

Lost Property

Back 20

involuntarily left property. Property finder acquires title against the whole world, except for the true owner.

Front 21

Conversion of lost property

Back 21

The finder may be liable for the item. In a lot of cases they must make a reasonable effort to locate the true owner or be guilty of the tort of Conversion

Front 22

Estray Statutes

Back 22

If the finder advertises (or the county clerk advertises) the lost property and the true owned does not present themselves after a reasonable amount of time then the finder is granted legal title to the item

Front 23

Abandoned property

Back 23

Property that has been discarded by the true owner with no intention of recovering, Finder acquires title against all the world, including the original owner.
-Trespassers have no title
-Treasure Trove: Title against all world except true owner

Front 24

Bailment

Back 24

Formed by the delivery of personal property, without transfer of title, by one person (bailor) to another (bailee), usually under an agreement for a particular purpose. Differs from sale or gift because property is transferred without passage of title

Front 25

Elements of a Bailment (3)

Back 25

1. Personal property
2. Delivery of possession
3. Agreement to return or dispose of property

Front 26

Involuntary bailments

Back 26

Bailee is responsible to safeguard property for true owner

Front 27

Bailment Agreement

Back 27

-Bailments less than a year do not require a writing under the Statute of Frauds
-Agreement can be express or implied
-Agreement provides for return of property to bailor, a third party or disposal by bailee

Front 28

Ordinary Bailments (3)

Back 28

1. For the sole benefit of the bailor
2. For the sole benefit of the bailee
3. For the mutual benefit of the bailee and the bailor

Front 29

Bailment for the sole benefit of the bailor

Back 29

Bailee owes bailor a low duty of care, liable only for gross negligence

Front 30

Bailment for the sole benefit of the bailee

Back 30

Bailee owes bailor a high duty of care and is liable for even slight negligence

Front 31

Mutual-Benefit bailment

Back 31

Each party owes the other a reasonable duty of care

Front 32

Rights of the bailee (4)

Back 32

1. Right of possession
2, Right to use bailed property
3. Right to compensation: gratuitous bailment, bailee's lein
4. Right to limit liability

Front 33

Duties of the bailee

Back 33

1. Duty of care
2. Duty to return bailed property: Bailee may be liable for breach of contract, conversion and/or negligence

Front 34

Case 49.3 LaPlace v. Briere (2009)

Back 34

?

Front 35

Duties of the Bailor

Back 35

1. Duty to reveal defects
2. Warranty liability for defective goods

Front 36

Common Carriers

Back 36

Publicly licensed to provide transportation services to the general public

Front 37

Common Carriers Strict Liability exceptions

Back 37

1. An act of God
2. An act of a public enemy
3. An order of a public authority
4. An act of the shipper
5. The inherent nature of the goods

Front 38

Warehouse Companies

Back 38

1. Can issue documents of title (warehouse receipts)
2. Owe duty of reasonable care
3. Can't exculpate, can limit

Front 39

Innkeepers

Back 39

1. Owe duty of strict liability, modified by state statutes; if innkeeper provides safe and notifies guests
2. If parking area provided and innkeeper accepts bailment, then may be liable

Front 40

Real property includes (3)

Back 40

1. Land and Structures; land includes the soil, and all natural and artificial structures on it (unless agreed otherwise)
2. Airspace and Subsurface Rights; subsurface rights can be titled and sold separately
3. Plant Life and Vegetation; crops can be sold separately

Front 41

Possessory Interests

Back 41

Interests (fee simple, life or leasehold estate) give the owner a right to possess the land

Front 42

Nonpossessory Interests

Back 42

Interests (easement, profit or license) do not give the land owner a right to possess the land

Front 43

Ownership in fee simple

Back 43

Absolute gives the owner the greatest aggregation of rights, powers and privileges possible under American law
-The owner has indefinite right to exclusive possession and use of property
-Nuisance: interference with another's right to use and enjoy his property

Front 44

Case 50.1 Biglane v. Under the Hill Corp. (2007)

Back 44

?

Front 45

Life Estates

Back 45

An estate that lasts for the life of the individual
-During life tenant's ownership, she can possess, use, and take the fruits of the estate, but not take from the property itself

Front 46

Concurrent ownership

Back 46

1. Tenancy in Common; each owns an undivided interest in the property. At death, interest passes to tenant's heirs
2. Joint Tenancy; each owns undivided interest. At death, interest passes to surviving joint tenants
3. Tenancy by the entirety; uncommon ownership to husband and wife
4. Community property; property acquired during marriage. Each spouse owns an undivided half-interest

Front 47

Leasehold Estates

Back 47

-Created when owner or lessor conveys right to possess or use the property to a lessee (tenant) for certain period of time
-Fixed term tenancy: express contact for specified period of time
-Periodic Tenancy: no definite duration, but rent paid at certain intervals
-Tenancy at will: termination of lease without notice
-Tenancy at Sufferance: tenant wrongfully possesses property

Front 48

Non-possessory Interests

Back 48

Easement: right of a person to make limited use of another person's real property without taking anything from the property
Profit: right to go onto another's land and take away some part of the land itself or some product of the land
Easement or profit Appurtenant: owner of property (dominant) has right to go onto adjacent property (servient). Easement goes with the land at sale or transfer.
Easement or profit in gross: right to go onto non-adjacent property by business or utility company. Easement foes with land at sale or transfer
Termination of an Easement or Profit
License: revocable right of a person to come onto other person's land. Grants no interest in the land

Front 49

Non-possessory Interests; Creation of an Easement or Profit (4)

Back 49

1. Must be in writing created by deed, contract or will
2. Can be created by implication
3. Can be created by necessity
4. Can be created by prescription

Front 50

Listing Agreements

Back 50

Between seller (or buyer) and a Real Estate Agent

Front 51

Real Estate Sales Contracts

Back 51

Must be in writing and signed, to be enforceable under the Statue of Frauds
-Contingencies
-Closing Date and Escrow
-Implied Warranty of Habitability
-Seller's Duty to Disclose Hidden Defects

Front 52

Steps in the Sale of Real Estate

Back 52

1. Buyer's Purchase Offer
2. Seller's Response
3. Purchase and Sale Agreement
4. Title Examination and Insurance
5. Financing
6. Inspection
7. Escrow
8. Closing

Front 53

Deed (&5)

Back 53

Written instrument setting forth the interests in real property being transferred. Necessary components:
1. Names of Grantor and Grantee
2. Words evidencing intent to convey
3. Legally sufficient description of the land (includes metes and bounds)
4. Grantor's signature
5. Delivery of the deed

Front 54

Types of Deeds (5)

Back 54

1. Warranty deeds
2. Special warranty deed
3. Quitclaim deed
4. Grant deed
5. Sheriff's deed

Front 55

Recording Statutes

Back 55

Recording a deed (or any interest in real property) puts the public on notice of the new owner's interest in the land and prevents the previous owner from fraudulently conveying the same interests to another buyer.
Marketable: grantor is obligated to transfer title that iss free from encumbrances and defects
Title Search
Methods of Insuring Good title: most common is insurance

Front 56

Adverse Possession

Back 56

Occurs when one person possesses the property of another for a certain statutory period of time, that person automatically acquires title to the land, just as if there had been a conveyance by deed.
Must be:
-Actual and exclusive
-Open, visible and notorious
-Continuous and peaceable
-Hostile and Adverse

Front 57

Case 50.2 Scarborough v. Rollins

Back 57

?

Front 58

Eminent Domain

Back 58

The fifth amendment gives the government the right to take (condemn) provate land for public use with just compensation to the owner

Front 59

Case 50.3 Kelo v. City of New London, Connecticut (2005)

Back 59

?

Front 60

Restrictive Covenants

Back 60

A private restriction on the use of land and is generally binding on the purchaser of the land because it "runs with the land" and stated in the deed

Front 61

Inverse Condemnation

Back 61

Government takes land without paying compensation

Front 62

Purpose and Scope of Zoning Laws (2)

Back 62

1. Permissible uses of land: Residential, commercial, and industrial
2. Other zoning restrictions

Front 63

Exceptions to Zoning Laws

Back 63

Variances: Allows exception to the zoning rules
Special Use Permits
Special Incentives: Encourages development, usually by tax incentives and abatements

Front 64

Lease agreement

Back 64

Gives the tenant temporary right to exclusively possess the proprty

Front 65

Parties Rights and Duties

Back 65

Possession
Eviction
Use and Maintenance
Implied Warranty
Rent

Front 66

Posession

Back 66

tenant has covenant of "quiet enjoyment"
-landlord has duty to deliver actual (or right to) physical possession

Front 67

Eviction

Back 67

Landlord interferes with tenant;s right to possession
Constructive Eviction: Landlord fails to perform duties under the lease, making use of premises impossible

Front 68

Use and maintainance of the premises

Back 68

-Tenant is responsible for damages to property and cannot be a nuisance and interfere with others quiet use of property
-Landlord is responsible to maintain common areas such as stairs, pools and elevators

Front 69

Implied Warranty of Habitability

Back 69

Premises are safe and habitable for humans to live in. Landlord is responsible to keep leased premises in good repair

Front 70

Rent

Back 70

Can be withheld but it must be put into excrow pending repairs

Front 71

Transferring Rights to leased property

Back 71

Assignment: lessee can transfer lease to assignee, if allowable under lease. Assignor is still liable for rent
Sublease: tenant transfers all or part of premises for less than duration of lease

Front 72

Termination of the Lease

Back 72

Usually a lease terminates when its term ends, and landlord retakes possession.
Release and Merger-Tenant becomes owner, needs writing
Surrender by agreement-parties agree to terminate early, need writing
Abandonment-Tenant abandons; automatic termination, no writing required. Landlord is required to mitigate her damages and rent the property

Front 73

Insurance

Back 73

A contractual arrangement for transferring and allocating risk

Front 74

Risk

Back 74

Prediction concerning potential loss based on known and unknown factors
Risk Management: involves transfer of certain risks from the individual to the insurance company by a contractual agreement

Front 75

Insurance Terminology

Back 75

Policy: Insurance contract
Premium: The consideration to be paid to the insurer
Underwriter: Usually and insurance company
Broke v. Agent

Front 76

Classification of insurance

Back 76

Insurance is classified according to the nature of the risk involved.

Front 77

Insurable Interest (&3)

Back 77

A person can insure anything in which he or she has an insurable interest
-life insurance
-Key-person life insurance
Property insurance

Front 78

Life insurance

Back 78

A person must have a reasonable expectation of benefit from the continued life of another
-insurable interest must exist at the time the policy is obtained
-Interest may be financial or relational

Front 79

Key-Person Life Insurance

Back 79

obtained by an organization on the life a person important to the organization

Front 80

Property Insurance

Back 80

Insured derives a pecuniary benefit from preservation and continued existence of certain property. Owner must have insurance at the time of loss.

Front 81

Application for insurance

Back 81

An offer, which insurance company can either reject or accept. Misrepresentations can void a policy

Front 82

Effective Date

Back 82

Broker v. Agent: broker is agent of applicant. Can be liable if policy is not secured and applicant is injured
Binders and Conditions: binder means policy is pending, but applicant is insured if compensation is paid

Front 83

Provisions and clauses (6)

Back 83

Provisions Mandated by Statute
Incontestability Clauses
Coinsurance Clauses
Appraisal and Arbitration Causes
Multiple Insurance Coverage
Antilapse Clauses

Front 84

Provisions Mandated by Statute

Back 84

to be included in the insurance policy will be deemed to be in the insurance policy- whether they are in the policy or not

Front 85

Incontestability Clauses

Back 85

State Statutes sometimes provide that once a life or health insurance policy has been in force for a specified length of time, the insurer cannot contest statements made in the application

Front 86

Coinsurance Clauses

Back 86

If owner insures her property for at least 80% of its value, owner will be able to recover up to the face value of the policy
If owner insures for less than 80%, owner will be responsible for a proportionate share of the loss

Front 87

Appraisal and Arbitration Clauses

Back 87

If insurer and insured cannot agree on value of property, an appraisal can be demanded. Contract may also provide for arbitration

Front 88

Multiple Insurance Coverage

Back 88

If insured, has multiple insurance policies and the amount of coverage exceeds the loss, insured can collect from each insurer only the company's proportionate share of the liability, relative to the total amount of insurance

Front 89

Antilapse Clauses

Back 89

Policy does not lapse automatically upon nonpayment of premium. Insured has a grace period thirty or thirty-one days within which to pay the overdue premium
-The insurer may pay the insured the case surrender value of the policy

Front 90

Interpreting provisions of an Insurance Contract

Back 90

Courts interpret ambiguity against the insurance company. Uncertainty as to whether policy actually exists is resolved against the insurance company. Insurer must adequately notify insured of any change in policy under an existing policy.

Front 91

Case 51.1 Cary v. United of Omaha Life Insurance Co. (2005)

Back 91

?

Front 92

Case 51.2 Woo v. Fireman's Fund Insurance Co.

Back 92

?

Front 93

Cancellation

Back 93

Insured can cancel policy at any time, and the insurer can cancel according to terms of policy
-Insurer must give written notice of cancellation

Front 94

Duties and Obligations of the Parties

Back 94

Duties of the Insured: Must act in good faith
Duties of the Insurer: Insurer has duty to investigate to determine the facts
Bad Faith Actions: Tort action if insurer denies coverage, insured may seek damages beyond the policy, as well as punitive damages

Front 95

Defenses Against Payment

Back 95

-Insurance policy procured through fraud, misrepresentation
-Insurance company lacked an insurable interest (void from beginning)
-Improper actions, contrary to public policy, or illegal

Front 96

Life Insurance (5)

Back 96

1. Whole Life
2. Limited-Payment Life
3. Term Insurance
4. Endowment Insurance
5. Universal Life

Front 97

Life Insurance (Life and liabilities of parties)

Back 97

Liability
-Adjustment to misstatement of age
-Assignment
Creditors' Rights
-Termination

Front 98

Fire and Homeowner Insurance (rights and liabilities)

Back 98

-Liability
-Proof of Loss
-Occupancy Clause

Front 99

Case 51.3 Estate of Luster v. Allstate Insurance Co. (2010)

Back 99

?

Front 100

Fire and Homeowner Insurance

Back 100

-Assignment: must have the consent of the insurer
Homeowner's Policies:
-Assignment Property Coverage
-Liability Coverage
-Renter's Policies

Front 101

Automobile Insurance

Back 101

-Liability Insurance
-Collision and Comprehensive Insurance
-Other Automobile Insurance
-->Uninsured motorists
-->Accidental Death benefits
-->Medical Payment Coverage
--> Other-driver coverage
--> No-fault Insurance

Front 102

Business Liability Insurance

Back 102

1. General Liability
2. Product Liability
3. Professional Malpractice
4. Worker's Compensation

Front 103

Will

Back 103

The final declaration of how a person desires to have his or her property disposed of after death
(A person with a will dies "testate")

Front 104

Will Personell

Back 104

Executor: Personal Representative named in a will
Administrator: Personal representative appointed by the court when person dies without a will

Front 105

Laws Governing Wills

Back 105

Probate Laws (vary widely among states)
To probate a will means to establish its validity and carry the administration of the estate through a process supervised by a probate court
Uniform Probate Code

Front 106

Gifts By Will

Back 106

Devise: gift of real estate
Bequest or Legacy: gift of personal property
Types of gifts: specific, general. or residuary
Abatement
Lapsed Legacies

Front 107

Requirements of a valid will

Back 107

Testamentary Capacity and Intent: requires a "sound-mind" and testamentary intent
Writing Requirements: can be handwritten, (holographic) will (but oral wills aren't usually valid)
Witness Requirements
Publication requirements not required under the UPC

Front 108

Case 52.1 Shaw Family Archives, Ltd. v. CMG Worldwide, Inc. (2007)

Back 108

?

Front 109

Revocation of Wills (&

Back 109

Executed will is revocable by the maker anytime before death
-Revocation by a Physical Act
-Revocation by Subsequent Writing (Codicil)
-Revocation by Operation of Law

Front 110

Case 52.2 Peterson v. Harrell (2010)

Back 110

?

Front 111

Rights Under a Will

Back 111

The law imposes certain limitations on the way a person can dispose of property in a will.
-Beneficiaries can renounce (disclaim) their shares
-Spouses in some states can renounce what is given to them in the will and elect to take the forced share

Front 112

Probate Procedures

Back 112

Informal: family settlement agreements, and small estates
Formal: larger estates, guardianship appointment, and trusts for minors or incompetent persons

Front 113

Property Transfers outside the Probate Process

Back 113

-Living trusts
-Joint ownership of property
-Gifts Intervivos
-Life insurance policies
-Individual Retirement Accounts

Front 114

Intestacy Laws

Back 114

Statutes of descent and distribution which attempt to carry out the likely intent and wishes of the decedent who died without a will

Front 115

Surviving Spouse and Children

Back 115

Surviving spouse usually recieves 1/2 of the estate if there is one surviving child, 1/3 if there are two or more children. or entire estate if there are no children or grandchildren
Lineal descendants, and then collateral heirs

Front 116

Stepchildren, adopted children, and illegitimate children

Back 116

Stepchildren-not considered children of deceased
Adopted children-considered children of deceased
Illegitimate-must prove paternity

Front 117

Distribution to grandchildren

Back 117

Per Stirpes: heirs take the share their deceased parent would have taken had that parent lived
Per Capita: each person takes an equal share of the estate

Front 118

Trust

Back 118

ant arrangement whereby property is held by one party for the benefit of another

Front 119

Trusts: essential elements

Back 119

1. Designated beneficiary
2. Designated trustee
3. Funds sufficiently identified to enable title to pass to the trustee
4. Actual delivery to the trustee with the intention of passing title

Front 120

Express Trusts

Back 120

1. Living Trusts: revocable living trusts, irrevocably living trusts
2. Testamentary Trusts
3. Charitable trusts
4. Spendthrift trusts
5. Totten Trusts

Front 121

Implied Trusts

Back 121

Constructive Trusts: arises by operation of the law in the interest of equity and fairness
Resulting Trusts

Front 122

The Trustee

Back 122

Person holding trust property

Front 123

Trustees's Duties

Back 123

Honesty, good faith, and prudence in administrating the trust and high degree of loyalty to beneficiaries

Front 124

Trustee's Powers

Back 124

State law governs in the absence of a specific language in will or instrument
Allocation between principal and income

Front 125

Trust Termination

Back 125

occurs when expressly specified in trust; if trust does not provide specification of termination, trust doesn't end at death of beneficiary or trustee, when its purpose has been fulfilled, or when purpose becomes illegal or impossible

Front 126

Power of Attorney

Back 126

Durable Power of Attorney
Health Care Power of Attorney

Front 127

Living Will

Back 127

Advanced health directive that allows a person to control what medical treatment they will receive after a serious accident or illness