Question 1

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 as the customer places their belongings in the custody of the bank, which has a duty of care to ensure their safekeeping. The other options are incorrect as bailments are generally confined to personal property, trusts involve a transfer of property, chequing accounts do not involve physical property, and assets available to creditors in bankruptcy would only include property owned by the debtor, not property held under bailment.

Question 2

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 bike was left in your garage voluntarily, it falls under the category of a bailment. In this case, you provided a locked garage which met the standard of care required, and the bike was stolen despite that. Therefore, you are not responsible for the loss of the bike. Additionally, your work associate assumed the risk of leaving their bike in your garage.

Question 3

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 guarantee that the lessor will not disturb or interrupt the lessee's use and possession of the leased asset, provided that the lessee follows the terms of the lease agreement.

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

A bailor is better off on the insolvency of its bailee than a creditor is on the insolvency of its debtor.

Accepted Answer

A bailor has the right to reclaim their property from an insolvent bailee, whereas a creditor may only receive a portion of their debt back on the insolvency of their debtor. Therefore, a bailor is better off in such a situation.

Question 6

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 tends to be a short-term lease, while the finance/purchase lease tends to be a long-term lease.

Question 7

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

The answer of Temporary custody of a car belonging to...

Question 8

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 involves the transfer of possession of personal property from the bailor to the bailee, while ownership of the item remains with the bailor.

Question 9

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 10

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 he or she finds, but once the finder does take possession, he or she becomes a bailee for the owner. The finder has a duty to take reasonable care of the property and to make a reasonable effort to find the true owner. However, the law does not require the finder to take any additional steps if the property has little or no value or if the cost of finding the owner would be greater than the value of the property.

Question 11

Bailment is the transfer or deposit of personal property such that the party to whom the property is transferred becomes the owner.

Accepted Answer

Bailment is the transfer or deposit of personal property, but the party to whom the property is transferred does not become the owner. The owner still retains ownership, but the party receiving the property has temporary possession and/or control over it.

Question 12

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 to someone else for a temporary period, but ownership always remains with the original owner.

Question 13

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

The fact that the contract made no provision for early termination means that Miles is legally obligated to finish all the lease payments. This is because the lease is binding for the entire two-year period and he cannot simply return the generator and stop making payments without incurring a penalty or legal consequences. Therefore, Miles will be required to pay the remaining twenty lease payments.

Question 14

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 the bailor or the bailee, or both.

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

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 17

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 18

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 19

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

The standard of care required by a business that hires out equipment is the same as what a prudent and diligent person would take in the use of his or her own property. This means that the business must take reasonable precautions to ensure that the equipment is safe and reliable, and that it is properly maintained and operated.

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

Regarding bailments,which of the following is true?

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?

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.

Which of the following is true regarding bailments?

A bailor is better off on the insolvency of its bailee than a creditor is on the insolvency of its debtor.

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

Bailment

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

A finder,in the legal sense,is

Bailment is the transfer or deposit of personal property such that the party to whom the property is transferred becomes the owner.

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

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

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 .

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

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