Exam 2 Guide Flashcards
Which type of personal property is this:
Personal property that can be seen, touched, possessed
Tangible
What type of property is this:
Evidence of ownership of rights or values
Brands, Trademarks, knowledge, goodwill, patents
Intangible
What are the 3 ways one can obtain personal property?
Purchase
- buyer pays the seller and seller transfers property to buyer
- consideration, usually $
Will
- someone dies and leaves a written statement on how they want their property conveyed
Gift
- transfer made without consideration in return
Identify the different types of bailments
Constructive bailment
Bailments for the sole benefit of the bailor
Bailments for the sole benefit of the bailee
Mutual-benefit bailment
What is an example of constructive bailment?
When the neighbor’s package gets delivered to my house instead
What is an example of bailment for the sole benefit of the bailor?
My brother taking care of Aleksandr the guinea pig, for free, while I go to Italy for a month
What is an example of bailment for the sole benefit of the bailee?
When your friend lets you borrow a laptop for 3 months, nothing to be given in return as payment
What is an example of mutual-benefit bailments?
Dog sitting for your friend and they bring you back 3 books from their vacation place
Who are the people involved in bailments?
Bailee
Bailor
Who is the bailor?
The person who gives up possession of bailed property
Who is the bailee?
Person who accepts the possession of the property
Define gift and determine how a gift takes place
Transfer made without consideration in return
Donor gives the gift
Donee receives the gift
Explain what a carrier does
Transporter of goods, people, both
Creates a mutual-benefit bailment
Name the two categories of carriers.
Common Carriers
Private Carriers
What are common carriers?
Transport goods or persons for all who apply for that service
Train, buses, airplanes, ships subways
What are private carriers?
Transport goods or people for a fee
May refuse services if unprofitable
Trucks, moving vans, ships, delivery services
Identify the liabilities of common carriers
Acts of God
Acts of a public authority
Inherent nature of the goods
Acts of the shipper
Acts of a public enemy
Define bill of lading
Receipt and contract between a consignor and a carrier
Consignee alone is designated to whom goods are to be delivered
Consignee’s rights may be transferred, but third party obtains no greater rights than consignee had
Transfer of title to goods for a price
Sale
Moveable personal property
Constitute largest class of contracts
Goods
All physical items except real estate
Moveable Personal Property
Land and things permanently attached to land
Tangible but can’t be moved
Real Property
Consideration in a sales contract
Usually expressed in money
Price
Ownership of the subject matter
Transferred at once upon sale
Document stating ownership
Title
What are identified goods.
Goods picked to be delivered to the buyer
(remember revocation means you can change your mind and return the product at a reasonable time / rejection means you can end up not accepting it because it’s a duplicate or damaged)
What are existing goods?
In existence (aka in stock)
Owned by seller
What are future goods?
Goods that don’t exist at the time of the sales transaction
Will be developed, usually custom goods or pre-orders
Assurance article conforms to a standard;
Statement of insured that relates to the risk and appears in insurance contract
Warranty
Isn’t made by the manufacturer but is imposed by the law (warranty)
Implied Warranty
Specifically spells out the terms of a warranty, orally or in writing
Seller’s opinion doesn’t constitute this warranty
Express Warranty
Are all other (non full) warranties for consumer products
Limited warranties
Warranty: Must remedy any defects in a product during a reasonable time
Aren’t restricted to certain parts, labor, time, periods, etc. etc.
“No questions asked”
Will try to fix but if unable to, will replace it or give a better item
Full warranty
Be able to determine how negotiable instruments are transferred.
Writings that can be transferred from person to person as a substitute for money or an instrument of credit
Examples: gift cards, cashapp, zelle, etc., etc.
Draft drawn on a bank and payable on demand
Check
Written order by one person (drawer) directing another (drawee) to pay sum of money to 3rd party (payee)
Draft
Unconditional written promise to pay a sum of money to another
Has payee and maker (one making the promise)
Promissory Note
Identify the parties involved in each of the negotiable instruments.
Draft:
- Drawer: owner of account, giving order
- Bank: one receiving the order, becoming drawee
- Payee: one receiving the payment
Promissory Note:
- Payee
- Maker: one making the promise
List the seven requirements of negotiability.
- The instrument must be in writing and signed by the party executing it
- The instrument must contain either an order to pay or a promise to pay
- The order of the promise must be unconditional
- The instrument must provide for the payment of a fixed amount of money
- The instrument must be payable either on demand or at a fixed or definite time
- The instrument must be payable to the order of a payee or to bearer
- The payee (unless the instrument is payable to bearer) and the drawee must be designated with reasonable certainty
What is an indorsement
The signature of the owner made on the back of an instrument
Where do banks require the indorsement on a check to be?
On the back
Indorsement:
- Prevents the use of the instrument for anything except the stated use
- For deposit only meaning can’t cash it out
Restrictive Indorsement
Indorsement:
- Can consist of a mere signature
- Most popular and least secure
Blank Indorsement
Indorsement:
- Designates particular person to whom payment is to be made
- Banks don’t like this one
- Indorsee (aka payee) and indorser are both in the back
example: Pay Jane Doe or order Karen Mae
Special Indorsement
Indorsement:
- Limits liability of indorser
- Said to be the most secure but less popular
- “without recourse” meaning if check bounces, it’s not endorser’s fault b/c they’re taking no liability, it’s payee’s fault if bounces
example: Pay to Jane Doe without recourse Kurtis Conner
Qualified Indorsement
Explain how negotiable instruments may be discharged.
- The instrument may simply be paid
- Cancellation (any act that indicates the intention to destroy the validity of the instrument)
- Renunciation (a unilateral act of the holder, usually without consideration)
- Holder gives up rights on the instrument
Contract under which one party is authorized to contract for another
Agency
Identify the parties involved in an agency
Principle - the person who appoints another to contract with a 3rd party
Agent - the person appointed to contract on behalf of another
How is an agency created?
Appointment: oral or written statement of the principle to the agent
Ratification: Approval of unauthorized act (aka confirmation)
Estoppel: Agency arising when one person leads another to believe third party is agent
Necessity: arises out of family relationships and unforeseen emergencies
Determine how agents are classified.
General (Agent authorized to carry out particular kind of business or call business at a place)
Special (Agent authorized to transact specific act or acts)
Brokers (Agent with job of bringing 2 contracting parties together)
Attorneys in Fact (General agent appointed by written authorization)
What are the agents duties to the principle?
Loyalty and good faith
Obedience
(routine and discretionary)
Reasonable Skill and Diligence
Accounting
Information
What are the Principle’s duties to the agent?
Compensation
Reimbursement
Indemnification
What is indemnification?
Contractual payment made by an agent for principle is an expense of principle
Payment of duties included in contract
Describe an agent’s and principal’s liabilities to third parties
- Agents who do their own contracting and don’t disclose names of principles become liable
- Agents may make themselves personally liable to 3rd parties by express agreement to be responsible
- People who assume to act for others but have no authority are personally liable
- Agents incur personal liability for fraud or other wrong doing
State how an agency may be terminated.
Original agreement
Subsequent agreement
Revocation
Renunciation by the agent
What is an original agreement termination (in agency)?
The whole thing is completed as originally stated
What is a Subsequent agreement termination? (in agency)
Extension
After the trial basis, it becomes full time
Cancel contract but make new one for longer
What is a revocation termination? (in agency)
Pay for the full time frame but shorten the actual time
What is a renunciation by the agent termination? (in agency)
Agent quits
Name the duties an employee owes to the employer.
Obey employer’s lawful orders concerning the employment
Exercise good faith toward the employer
Do work carefully or conscientiously
A person or firm that performs services for another
On call / work your own schedule
Independent Contractor
What is this:
Exists because of law, not just individuals who want it
May operate for profit or not for profit, but must be for legal purposes
Corporations
What is this:
Business owned by 1 person
Simplest and most common form of organization
Sole proprietorship
What is this:
Must be 2 or more people
Be voluntarily started
Operate both the business lawfully for a profit
Partnerships
What are the types of partnerships?
General (actively and openly engage in the business and held to everyone as a partner)
Limited (liable up to the amount of their investment)
Silent (takes no active part in the management of a partnership but has capital invested in the business)
What are the disadvantages for partnerships?
Unlimited personal liability
Relative instability of the business
Divided authority, which may lead to disharmony
What are the disadvantages of sole proprietorship?
Unlimited liability - all profit, all losses
Limited management ability
Limited capital
Give two reasons why the corporate form of business organization is important.
