Chapter 12: Bailments and Documents of Title

Question 1

elements of bailments/documents of title

Answer 1

1. a transfer (actual or constructive) of control of personal property
2. to a bailee from a bailor (who may or may not have title)
3. pursuant to an agreement (may or may not be a contract)
4. with the property to be returned to bailor or to whom the bailor directs after purpose of bailment is accomplished

Question 2

what happens if bailee does not meet required level of care?

Answer 2

then the bailee is liable to bailor

Question 3

types of bailments

Answer 3

1. for the bailor’s sole benefit
2. for bailee’s sole benefit
3. mutual benefit bailment

Question 4

for the bailor’s sole benefit

Answer 4

• you let me store my car in your garage while I’m on vacation
• low level of care required for bailee

Question 5

for bailee’s sole benefit

Answer 5

• you loan your friend your computer

- high level of care required for bailee

Question 6

mutual benefit bailment

Answer 6

• you take your clothes to the dry cleaner

- ordinary level of care required of bailee

Question 7

rules regarding bailee liability

Answer 7

• bailee is not an insurer
• there is a presumption that bailee is liable if bailed property is damaged or lost-but bailee can overcome this presumption if bailee shows that the required level of care was met

Question 8

what does it mean when we say the bailee is not an insurer?

Answer 8

bailee is not absolutely liable if failed property is damaged or lost

Question 9

when bailee becomes absolutely (strictly) liable for any loss to the bailed property

Answer 9

• bailee fails to insure property after agreeing to do so
• bailee deviates from the purpose of the bailment
• bailee delivers the bailed property to the wrong person

Question 10

effect of exculpatory clauses

Answer 10

unless its super obvious, it as no impact on duty of care imposed

Question 11

documents of title

Answer 11

• created when goods are shipped by common carrier or stored in a public warehouse
• evidence a right to receive, hold, and dispose of the document and the goods it covers (ownership)

Question 12

utility documents of title

Answer 12

transfer of a document of title represents transfer of the goods without the necessity or inconvenience of the physical transfer of the goods themselves

Question 13

types of documents of title

Answer 13

warehouse receipt

bill of lading

Question 14

warehouse receipt

Answer 14

issued by person (warehouser who is bailee) engaged in the business of storing goods to customer

Question 15

bill of lading

Answer 15

issued by a common carrier (the bailee) on receipt of goods to be shipped (seller ships goods to a buyer using a common carrier and the carrier gives to the seller a document of title called a bill of lading)

Question 16

purposes served by a document of title

Answer 16

• receipt for the goods
• evidence of the contract btw bailor and bailee
• creates rights and obligations of the parties under article 7

Question 17

negotiability of a document of title

Answer 17

• a doc. of title is negotiable if the goods are to be delivered to the order of acme hardware or delivered to bearer
• all others are non-negotiable

Question 18

if order form (to the order of)

Answer 18

negotiation requires endorsement and delivery

Question 19

if bearer form (deliver to bearer of this instrument)

Answer 19

negotiation requires delivery alone

Question 20

If document of title is non-negotiable

Answer 20

it is transferred by assignment and assignee/buyer takes the document of title subject to defenses and claims that may exist in the chain of title

Question 21

transferee gets the following when in negotiation

Answer 21

• title to the document
• title to the goods
• the direct obligation of the issuer to abide by the document
• all other rights arising under the document or article 7 of the UCC