MBA535 - Instructor’s Outline and Notes Module 1 1. To what does property refer? Property refers directly to an object, specifically, an object that may be owned. That object may be a parcel of land or any other item that does not consist of a parcel of land, but which may also be owned. If the object consists of a parcel of land only, then that property may be defined as real property. If the object is other than a parcel of land, then that property is defined as personal property. It is often helpful to think in terms of whether an object is movable. If an object is movable, regardless of the size of the object, then that object is personal property. For example, the space shuttle is personal property. Despite the enormous size and the fact that it is housed in the largest building in the world, the shuttle itself is still movable. Further, the shuttle is not a parcel of land. It is therefore personal property. If the property cannot be moved, then the property must be real property. This is also true regardless of size. For example, a 12" by 12" square of land (1 square foot) is very small; nonetheless, it is a parcel of land, and therefore real property. Additionally, it is not movable either; this confirms its status as real property. Another helpful analysis tool is to first determine whether some object is real property or not. If it is not, regardless of any other characteristics it may have, that object is deemed personal property. In other words, all property must first be discerned as real or personal. Certainly, there are numerous and varied types of real and personal property (which we will explore in depth at a later period), however, initially, in all instances of sorting through any legal issue concerning property, we must first determine whether such property is real or personal. There is no third alternative. 2. Is an object that constitutes property always material or substantive? No. Property distinctions divide into two distinctions; tangible property and intangible property. Tangible property is property that is actual to our senses (may be seen, touched, physically taken into possession, etc.). Examples of tangible property include objects such as automobiles, appliances, clothing, and personal effects. Intangible property is the converse. Intangible property may not be seen, touched or physically taken into possession, but rather serve as evidences of an intangible object which contains an inherent value or right. Examples include copyrights, checks, promissory notes and certificates of deposit. 3. What is the role of the law with regard to property? The law of business is essentially concerned with two distinct aspects or concerns of property. The first concern is always a determination of where ownership of the property lies. The second concern is how, or in what manner, may ownership determine how the property may be used and/or transferred and what limitatio ...

1. MBA535 - Instructor’s Outline and Notes
Module 1
1. To what does property refer? Property refers directly to an
object, specifically, an object that
may be owned. That object may be a parcel of land or any other
item that does not consist of a
parcel of land, but which may also be owned.
If the object consists of a parcel of land only, then that property
may be defined as real property.
If the object is other than a parcel of land, then that property is
defined as personal property.
It is often helpful to think in terms of whether an object is
movable. If an object is movable,
regardless of the size of the object, then that object is personal
property. For example, the space
shuttle is personal property. Despite the enormous size and the
fact that it is housed in the largest
building in the world, the shuttle itself is still movable. Further,
the shuttle is not a parcel of land. It
is therefore personal property.
If the property cannot be moved, then the property must be real
property. This is also true
regardless of size. For example, a 12" by 12" square of land (1
square foot) is very small;
nonetheless, it is a parcel of land, and therefore real property.
Additionally, it is not movable

2. either; this confirms its status as real property.
Another helpful analysis tool is to first determine whether some
object is real property or not. If it
is not, regardless of any other characteristics it may have, that
object is deemed personal
property. In other words, all property must first be discerned as
real or personal. Certainly, there
are numerous and varied types of real and personal property
(which we will explore in depth at a
later period), however, initially, in all instances of sorting
through any legal issue concerning
property, we must first determine whether such property is real
or personal. There is no third
alternative.
2. Is an object that constitutes property always material or
substantive? No. Property
distinctions divide into two distinctions; tangible property and
intangible property. Tangible
property is property that is actual to our senses (may be seen,
touched, physically taken into
possession, etc.). Examples of tangible property include objects
such as automobiles, appliances,
clothing, and personal effects. Intangible property is the
converse. Intangible property may not be
seen, touched or physically taken into possession, but rather
serve as evidences of an intangible
object which contains an inherent value or right. Examples
include copyrights, checks, promissory
notes and certificates of deposit.
3. What is the role of the law with regard to property? The law
of business is essentially

3. concerned with two distinct aspects or concerns of property.
The first concern is always a
determination of where ownership of the property lies. The
second concern is how, or in what
manner, may ownership determine how the property may be
used and/or transferred and what
limitations, if any, may exist. Examples of this would include
the right to exclusive possession,
right to transfer by gift or sale, right to dispose or destroy and
right to leave by will.
The law is also fundamentally concerned with the manor in
which property may be gained or lost.
That is, how may one acquire and transfer title of property
whether real or personal?
First and foremost is the precept that no title to property of any
type may be acquired by theft.
From this, it logically follows that any person who may have
attempted to receive property title
from one who claimed title unlawfully (as in the instance of the
thief) has, in fact, failed to receive
title. The fundamental principle is that one may only transfer
that which she owns. A thief does
not own the object of his theft, nor can he hold title to the
object of the theft. It is therefore
impossible for the thief to transfer title (something his does not
own) to anyone. It is of no legal
consequence that the person attempting to receive title did not
know of the theft. It remains the
case that one may only transfer title of an object that one
lawfully owns and that one may only
rightfully receive title to an object (property) from the lawful

4. owner.
4. What are the lawful means of obtaining property and title to
property? Typically, property
of all types is acquired and transferred in the following five
ways; gift, purchase, inheritance,
creation and the possession of abandoned property.
When one acquires property by means of a gift, the donor
(person gifting the property)
demonstrates an intent to make a gift (by words, writing or
implied action) and subsequently
causes delivery of the property to come into the possession of
the donee (person receiving the
gift). Therefore, the two elements essential in the completion of
a lawful gift are 1.) A
manifestation of intent by the donor to make a gift (words or act
that a reasonable person would
believe to be the basis of a gift), and 2.) Delivery of the
property from the donor to the donee.
Delivery of the gift can occur in either of two manners; first,
the delivery may be actual (i.e., a
prospective groom physically/actually giving an engagement
ring to a prospective bride). The
actual and physical item is transferred from the donor to the
donee. Secondly, the delivery may
take the form of constructive delivery. In the instance of
constructive delivery, the donee provides
an indirect means for the donor to take possession of the gift.
For example, the donor may
provide the donee with the number combination to open a safe
in which an item exists that the
donor wishes to gift to the donee. Also, the donor may provide a
key to the donee of an
automobile that the donor wishes to gift to the donee. The

5. simplest analysis is to discern whether
the donor gave the actual item to the donee physically or not. If
not, then the delivery is said to
have been constructive delivery.
There exist two distinct types of gifts of property, each known
by their respective Latin name. The
first is the inter vivos gift. The inter vivos gift is the normal,
ordinary gift between two living
persons as described in the immediately previous paragraph. A
second type of gift is also
recognized by the law. This gift is the gift causa mortis. The
gift causa mortis occurs when a
property owner (with title and possession), upon the
contemplation of imminent and impending
death (such as one gravely injured in an automobile accident)
chooses to make a gift to another
person. In this type of gift, the donor chooses to make the gift
specifically because of the
circumstance of the close prospect of death. The additional
requirement remains the same; there
must be: 1.) Intent to make a gift and 2.) Delivery of the gift
(either actual or constructive). Both
elements remain essential. The difference with the gift causa
mortis is that a third element is
added (death of the donor). If the donor does not die in the
circumstances surrounding the timing
of the gift, the gift legally fails and the donor is entitled to
regain ownership and title of the
property. This gift is a holdover from the influence of the five-
centuries-old common law.
Purchase of property occurs when a buyer compensates a seller
for having acquired the seller’s
rights, possession and/or control over an object. Upon payment,
the seller conveys his interests

6. (rights of property ownership) to the buyer.
Property may also be transferred by means of inheritance. That
is, one may, upon the time of her
death, determine to gift to another, by will, property owned
during the lifetime of the giver. In this
instance, the decedent leaves to another person property the
decedent owned at the time of her
death. Title to said property is transferred only after death and
only after the necessary judicial
proceedings have occurred after the death.
In the instance in which one creates property, typically the
creator of such property acquires
ownership of the creation as well as title to same. Examples
include an author writing a book; the
author is the creator of the narrative of the book and receives a
copyright. The book came into
existence from the effort and design of the author and the law
accordingly grants property title,
ownership and possession to the author. This is an instance of
creation of an intangible property
right and title. Creation of property may also be in the form of a
physical entity, such as a painting,
or sculpture. Again, the property would have been acquired
through creation and belong to the
creator, both title and possession.
Property may be acquired through possession of abandoned
property. In this instance, a
distinction must be made between lost property and abandoned
property. Lost property occurs
when the owner of the property no longer has possession of the

7. property because of an
unintended inadvertence, negligence or accident, yet the owner
had no intention of disclaiming
title or possession of the property at the time she no longer had
possession of the property. An
example is someone inadvertently leaving a purse or wallet in a
store. In the absence of evidence
to the contrary, a reasonable person would assume that such
property was not left by the true
owner on purpose, but rather through accident and inadvertence.
The purse or wallet in this
instance would most likely be determined by a court of law to
have been lost, not abandoned. In
the case of lost property, no finder may ever acquire lawful title
to the property. The true owner
continues to have title despite not having possession or
knowledge of where the item is.
Abandoned property may come into being only if two qualifying
criteria exist. Property may only
be abandoned when the true owner actually and purposively
discards the property while intending
simultaneously not to reclaim the property at a later time. To
effectively prove that property was
abandoned, one must demonstrate evidence of a physical act
(the property was found discarded)
along with a mental act (at the time, the previous owner
indicated, verbally or otherwise, that she
had no intent to retain possession or title to the discarded
property). If these elements are
demonstrated, the person coming into possession of the
abandoned property obtains the right of
title and possession of the property.
5. What is a bailment of personal property? A bailment occurs

8. any time one person transfers,
to another, possession of personal property, but not title of said
property. The party that
relinquishes possession of the property is the bailor. The party
receiving possession of the item is
the bailee. The bailee never receives ownership (title) to the
property, rather, the bailee only
receives possession.
6. What are the essential elements of a bailment? All bailments
are premised on the notion
that the transfer of property is temporary and that the property
will ultimately be returned to the
bailor or to whomever the bailor designates. Common examples
of simple bailment include
loaning a friend your car, leaving your school books in a
friend's locker, renting a tent and gas grill
for the family reunion. Each of these is an instance in which a
bailment has occurred. Possession
of property has changed, but title to the property has not. The
first element of an action of
bailment is 1.) The parties have an agreement that an object of
property will change possession
from one party to another (although title to the property will
not), and 2.) An actual delivery and
acceptance of the property has occurred between the parties. In
this respect the bailment is
similar to the gift; there must be an intent to transfer property
and there must follow a delivery and
acceptance. Further, the delivery of the bailment must be such
that it is clear that the bailee, and
the bailee alone, has complete and exclusive control over the
property of the bailment. The
reason, as we will see somewhat later, is that accepting a
bailment is not without a degree of

9. responsibility.
7. Is there more than one type of bailment? Bailments fall into
one of three primary areas. The
first is where the underlying purpose of the bailment is for the
bailor only (this is often referred to
as a gratuitous bailment for the bailor). The second type is
where the bailment exists to provide
benefit only for the bailee (this is often referred to as a
gratuitous bailment for the bailee). The
final type of bailment is where both parties gain from the
bailment (otherwise known as a mutual-
benefit bailment).
8. What are the responsibilities and liabilities with regard to
bailments? The responsibility of
the bailee to the bailor depends primarily upon whom the
benefit of the bailment falls.
When the bailment is for the benefit of the bailor, as would be
the case if a student (the bailor and
owner of the books) wanted to leave his textbooks in the school
locker of another student (the
bailee and the person accepting the property) for the purpose of
avoiding having to carry the
textbooks to his own locker (at a much greater distance away),
the only benefit is to the bailor.
This is a gratuitous bailment for the benefit of the bailor only.
In this instance, the bailee only need
exercise minimal care to protect the books. Further, the bailee is
only responsible to the bailor for
the books if the bailee is greatly negligent with regard to

10. protecting the books, for example,
refusing to use the combination lock on the locker.
In a bailment in which any benefit clearly accrues to the bailee,
a different degree of care is
required. For example, if one borrowed a friend's car, the owner
of the car (the bailor) certainly
does not receive any benefit, however, the person borrowing the
car, and taking possession of
the car (the bailee) would receive the only benefit- the use of
the car for the convenience of the
bailee. This too is a gratuitous bailment, however, here the
bailee benefits. In any instance in
which only the bailee benefits, the bailee must exercise great
care of the property. If great care is
not demonstrated and the bailment (property) is harmed or
destroyed, the bailee is liable to the
bailor. The single qualification is this; if the bailment is harmed
or destroyed by a third party, or
circumstances beyond the control of the bailee despite her best
efforts, then the bailee is not
responsible for the property to the bailor.
Mutual-Benefit Bailment exists primarily in commercial
business transactions. For example, one
leaves her automobile in the care of the repair garage for the
purpose of having the car repaired.
The owner of the car expects to receive a repaired car and the
owner of the garage expects
payment for the services rendered for the repair. In this
instance, the car owner is the bailor and
the garage owner is the bailee. In mutual benefit bailments, the
bailee is under obligation to use
“reasonable care under the circumstances." This obligation is
somewhat less stringent that the
"extraordinary degree of care" required when the bailee receives

11. the sole-benefit of the bailment,
as discussed above.