Module 11 - Personal Property & Insurance

Readings: McInnes, M., Kerr, I., & VanDuzer, J. A. (2020).  Managing the law: The legal aspects of doing business  (5th Edition). Pearson. o Chapter 17: Personal Property: Bailment and Insurance Introduction In the last two modules, we discussed real property (immovable property), and now, in this module, we will discuss personal property (moveable property). Personal property can be divided into tangible and intangible property. Tangible property can be touched, whereas intangible cannot. Examples of tangible property includes cars, furniture, equipment, and animals. Examples of intangible property include accounts receivables, cheques, shares in a corporation, and intellectual property (patents, copyrights, trademarks). We will discuss how to acquire rights in personal property and how you can lose or transfer those rights. In our early discussion on real property we looked at leasing, which is a transfer of possession of real property to a tenant for a limited period of time. Similarly, with personal property it is possible to transfer possession of an item to another, which brings us to an area of law known as bailment. We will explore how bailments arise and the legal obligations of the parties involved. Lastly, we will discuss insurance as a risk management tool. We will look at different types of insurance and available coverages, and some important insurance concepts and limitations. Topics and Learning Objectives Topics This module will cover the following topics:  Personal Property Rights o Introduction o Acquiring Personal Property Rights o Losing Personal Property Rights   Bailment o What is a bailment? o Liability of Bailors o Liability of Bailees o Common Carrier and Private Carrier

o Sub-Bailment   Personal Property, Risk Management, and Insurance o Insurance o Property Insurance and Liability Insurance o Property Insurance o Other Forms of Business Insurance Learning Objectives By the end of this module you should achieve the following objectives:  Personal Property Rights o Distinguish between real property and personal property. o Explain the difference between tangible personal property and intangible personal property. o Explain different ways of acquiring rights in personal property and different ways of losing rights in personal property. o Apply the law pertaining to the acquisition of rights in personal property. o Apply the law pertaining to the loss of rights in personal property.  Bailment o Define a bailment and identify the 3 essential elements of a bailment. o Identify examples of bailment relationships. o Distinguish a licence from a bailment. o Apply the law pertaining to a bailor’s liabilities and responsibilities. o Explain a bailor’s lien right and right to sell. o Apply the law pertaining to a bailee’s liabilities and responsibilities. o Apply the law to assess whether a bailee acted reasonably in the circumstances. o Distinguish between a bailee that is a common carrier versus a bailee that is a private carrier. o Apply the standard of care expected from a common carrier and the defences available to a common carrier. o Apply the standard of care expected from a private carrier and the defences available to a private carrier. o Describe the process of sub-bailment. o Apply the law pertaining to the liability and responsibilities of sub-bailor and sub- bailee.   Personal Property, Risk Management, and Insurance o Explain property insurance (first-party insurance) and liability insurance (third- party insurance). o Explain indemnification and deductibles in the context of property insurance. o Explain an insurable interest and why it is important in property insurance.

o Apply the law of the doctrine of contribution and explain how it discourages an insured from purchasing excessive insurance. o Apply a co-insurance clause and explain what it intends to accomplish. o Calculate how much an insurer will pay out at different levels of property damage in light of a co-insurance clause. o Apply the law of subrogation and explain how and when it would be used by an insurer. Acquiring Rights in Personal Property We will look at different ways of acquiring rights and disposing of rights in personal property. We will start with a discussion on acquiring rights. A person can acquire rights in personal property in one of the following ways:  By  Contract o In a contract a buyer intends to acquire rights in an item and the seller intends to transfer their rights. A contract can be used to acquire all the rights (i.e., purchase an item) or some of the rights (i.e., lease the item for a fixed time).   By  Receiving Gift o If you own a book you could gift it to a friend. You intend to give it, and your friend intends to receive it, and then you deliver it to him/her.  By  Possession o Some things have no owner, such as a wild animal or a bike that someone threw in the garbage (i.e., intentionally abandoned the bike). With such items, you can acquire ownership by taking possession and control of the item.  By  Finding o When a person loses an item they are not abandoning their rights. So, if you lost a gold chain on your way home, you were not throwing it away or giving it away; you unfortunately, lost it. If someone finds your gold chain they will acquire the best rights to the chain,  subject to rights of the true owner.  If you were to see the finder with your chain, and you could prove it was yours and you lost it, you would legally be entitled to it back. o What if you found a diamond ring in a business’ premises ? Who is entitled to the ring? You or the business owner? Does it matter whether you found the ring in a part of the premises open to the public versus premises not open to the public? Please see Case Brief 17.1 ( Parker v British Airways Board   1982 CA) for how the court addressed the issue.  By  Creation o For example, an author who writes a book creates property rights. Also, an inventor who invents a new product acquires property rights.  

Activity Please read  Case Brief 17.1 (Parker v British Airways Board)  in your textbook. Question: How did the court decide who should be entitled to the money received from the sale of the found gold bracelet? What was the court’s reasoning? Answer: The court decided that Mr. Parker was entitled to the money from the sale of the bracelet. The court made a distinction between items found in premises available to the public versus items found in the private part of premises.  An occupier is entitled to things that are found in the private area of its premises.  A  private area  is an area that the occupier shows a  “manifest intention” to exercise control. A finder is entitled to items found in the public areas of an occupier’s premises.  In this case Mr. Parker found the bracelet in the occupier’s public waiting area, therefore Mr. Parker was entitled to the money. Losing or Transferring Rights in Personal Property  A person can lose rights or transfer them in the following ways:  By  Contract   o A person can sell  all  his/her rights to another person by contract (i.e., sale). On the other hand, a person can transfer  part  of his/her rights in property to another person for a fixed period of time (i.e., lease).   By  Making a Gift to Someone   o A person can intend to give rights and the other person intend to receive them, and then the item must be delivered.  By  Abandoning    o A person with property rights can intend to give up those rights, such as throwing an item in the garbage. o However, if you lose something or it is stolen, your rights are not extinguished.   By  Destruction   o If personal property is destroyed the rights in it would terminate. For example, if you burned your book, your rights in it would cease to exist.  By  Affixation   o A person that has rights in an item that is attached to, or mixes with, land or other personal property, may lose their property rights.

o The most common example involves  fixtures . A fixture is an item that has been sufficiently affixed or attached to land or a building affixed to land. Generally, in such cases, the rights in the item disappear and the combined property is owned by the owner of the real property. o In some cases, it is not easy to determine whether an item has become a fixture. It will turn upon the specific facts and circumstances. The courts will consider the following factors:  Degree of Attachment    An item that just sits on land or in a building by its weight is unlikely to be a fixture (e.g., chair, table, microwave oven)  Items attached have a greater likelihood of being a fixture, but the degree of attachment will likely also be a factor. A built-in microwave oven may have become a fixture.  Purpose of Attachment    Objective intention  – would a reasonable person think the item was attached to become part of the land (i.e., to add value to the land then it is more likely to be a fixture) or to better use the item (chattel). An installed furnace is likely to be a fixture because it enhances the value of the building. A painting screwed to a wall may be a chattel because the painting was put on the wall to better appreciate the painting. o Tenant Fixtures  There are special rules regarding whether a tenant can remove fixtures that they attached to the real property. The law also varies depending upon whether the tenancy is a residential or commercial tenancy.  Katerina purchased a new computer tablet, so she threw out her old tablet in a public garbage can. A few minutes later Brian walked by the garbage can and saw the tablet. He picked it out of the garbage and saw that it was in good shape. He put it in his knapsack. He walked over to a park bench and sat down. He took the tablet out and opened it. It worked! It had been stripped of any personal information or data so it was impossible to know to whom it belonged. He played with the tablet for a while and then placed it on the bench so he could make a call on his cellphone. Jerry walked up to the park bench and grabbed the computer tablet. Brian yelled “Stop that’s mine”. Jerry responded “ No it’s not. I saw you picked it out of the garbage. It’s mine.”  Question: Who has the best legal rights to the computer tablet?  Answer:  Brian  has the  best legal rights  to the computer tablet.  Katerina abandoned her rights by throwing the tablet in the garbage. This act showed an intention to permanently give up her rights to the tablet. Brian retrieved the abandoned tablet and showed an intention to keep it by possessing it. He placed it in his knapsack and then later used the tablet. When he placed the tablet on the park bench he was not intending to abandon his rights to it, he was merely putting it down, temporarily, so he