Question 1

A bailee (a hotel)is liable for damage to goods of guests only if the damage was caused by the negligence of the hotel's employees.

Accepted Answer

A) True 
 B)False

Question 2

A reason to sue for breach of a contract of bailment rather than for negligence is that in a contract of bailment,

Accepted Answer

A) the bailee must disprove negligence. 
B) no limitation clause will protect the bailee against liability for damage to the goods. 
C) the bailee is strictly liable for any damage to the goods. 
D) the bailee owes the bailor a higher standard of care. 
E) all of the above 
A) the bailee must disprove negligence. 
B) no limitation clause will protect the bailee against liability for damage to the goods. 
C) the bailee is strictly liable for any damage to the goods. 
D) the bailee owes the bailor a higher standard of care. 
E) all of the above

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

The tax advantage in leasing arrangements is most apparent

Accepted Answer

A) for the lessee. 
B) for the lessor. 
C) where payments are being expensed rather than capitalized. 
D) in the off-balance-sheet financing. 
E) for the government. 
A) for the lessee. 
B) for the lessor. 
C) where payments are being expensed rather than capitalized. 
D) in the off-balance-sheet financing. 
E) for the government.

Question 5

A takes his car into B's car repair shop.B does substantial repairs to A's car and presents A with an invoice for $1500.00.A says,"I'll come back later to pay you" and leaves.A couple of months go by and A has not returned to pay for the repairs.B has which of the following options?

Accepted Answer

A) B can sue A for the cost of repairs. 
B) B has a lien on the car for the amount of repairs. 
C) B can sell the car to recover the cost of repairs after a certain period of time. 
D) B can retain possession of the car pending payment. 
E) all of the above 
A) B can sue A for the cost of repairs. 
B) B has a lien on the car for the amount of repairs. 
C) B can sell the car to recover the cost of repairs after a certain period of time. 
D) B can retain possession of the car pending payment. 
E) all of the above

Question 6

A and B enter into an agreement for a car whereby A will make lease payments for a certain term,after which A will have the option of buying the car by a final payment of $5000.00.In this case,the lease is best described as

Accepted Answer

A) a hire-purchase agreement. 
B) an operating lease. 
C) a security lease. 
D) a finance lease. 
E) an agreement of purchase and sale. 
A) a hire-purchase agreement. 
B) an operating lease. 
C) a security lease. 
D) a finance lease. 
E) an agreement of purchase and sale.

Question 7

Identify which of the following statements correctly describes a hire-purchase agreement.

Accepted Answer

A) The contract does not create a bailment and the hirer has no contractual obligation to pay the purchase price. 
B) The contract gives the hirer a lien on the goods preventing the owner from selling the goods to another. 
C) This is simply another name for a chattel mortgage on an automobile. 
D) The contract creates a bailment,but the hirer has a contractual obligation to pay the purchase price. 
E) The contract creates a bailment and the hirer has an option to purchase the item at the end of the stipulated term. 
A) The contract does not create a bailment and the hirer has no contractual obligation to pay the purchase price. 
B) The contract gives the hirer a lien on the goods preventing the owner from selling the goods to another. 
C) This is simply another name for a chattel mortgage on an automobile. 
D) The contract creates a bailment,but the hirer has a contractual obligation to pay the purchase price. 
E) The contract creates a bailment and the hirer has an option to purchase the item at the end of the stipulated term.

Question 8

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 ________.

Accepted Answer

A) bailee;bailor 
B) consignee;user 
C) lessor;lessee 
D) owner;renter 
E) bailor;bailee 
A) bailee;bailor 
B) consignee;user 
C) lessor;lessee 
D) owner;renter 
E) bailor;bailee

Question 9

Quincy owns a metal fabricating company.He is desperately in need of working capital in order to carry out several large orders.Therefore he sells his heavy stamping equipment to Beneficial Leasing Inc.in a five-year purchase lease plan.This arrangement amounts to

Accepted Answer

A) a sale and leaseback. 
B) an operating lease. 
C) the mortgaging of assets. 
D) the ducktail plan. 
E) one of the highest costs in asset financing. 
A) a sale and leaseback. 
B) an operating lease. 
C) the mortgaging of assets. 
D) the ducktail plan. 
E) one of the highest costs in asset financing.

Question 10

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

A) True 
 B)False

Question 11

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?

Accepted Answer

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. 
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.

Question 12

A and B agree that A will lease a truck owned by B.The truck is valued at $30 000 and the term,which cannot be cancelled,is three years,by which time A will have paid slightly more than $22 500.00 in lease payments.In this situation,the lease is best described as

Accepted Answer

A) a hire-purchase agreement. 
B) a security lease. 
C) a financing lease. 
D) an operating lease. 
E) a purchase or capital lease. 
A) a hire-purchase agreement. 
B) a security lease. 
C) a financing lease. 
D) an operating lease. 
E) a purchase or capital lease.

Question 13

If goods are damaged while in the possession of a bailee,the bailee is strictly liable.

Accepted Answer

A) True 
 B)False

Question 14

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?

Accepted Answer

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. 
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.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

The relationship of bailment may occur without any contract between the bailor and the bailee.Explain,giving an example.

Accepted Answer

Bailments that are without rew

Question 17

Given its importance,how does the accounting profession determine whether a lease is an operating lease or a purchase capital lease?

Accepted Answer

A) by observing what ledger account the transaction was recorded in 
B) by determining the intentions of the lessee 
C) based on whether the item being leased is a capital asset or not 
D) based on whether title is likely to pass at the end of the lease period 
E) by asking whether the asset is to be used short-term or long-term 
A) by observing what ledger account the transaction was recorded in 
B) by determining the intentions of the lessee 
C) based on whether the item being leased is a capital asset or not 
D) based on whether title is likely to pass at the end of the lease period 
E) by asking whether the asset is to be used short-term or long-term

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Which of the following would NOT be a defence for a carrier that is sued for damage caused to goods during shipping when there is no contractual limitation of liability?

Accepted Answer

A) reasonable care 
B) act of God 
C) inherent vice 
D) fault of the shipper 
E) all of the above would be defences to liability 
A) reasonable care 
B) act of God 
C) inherent vice 
D) fault of the shipper 
E) all of the above would be defences to liability

Question 20

Define Bailment.

Accepted Answer

Bailment is a transfer or deposit of per

Exam 15: Bailment and Leasing

A bailee (a hotel)is liable for damage to goods of guests only if the damage was caused by the negligence of the hotel's employees.

A reason to sue for breach of a contract of bailment rather than for negligence is that in a contract of bailment,

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

The tax advantage in leasing arrangements is most apparent

A takes his car into B's car repair shop.B does substantial repairs to A's car and presents A with an invoice for $1500.00.A says,"I'll come back later to pay you" and leaves.A couple of months go by and A has not returned to pay for the repairs.B has which of the following options?

A and B enter into an agreement for a car whereby A will make lease payments for a certain term,after which A will have the option of buying the car by a final payment of $5000.00.In this case,the lease is best described as

Identify which of the following statements correctly describes a hire-purchase agreement.

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 ________.

Quincy owns a metal fabricating company.He is desperately in need of working capital in order to carry out several large orders.Therefore he sells his heavy stamping equipment to Beneficial Leasing Inc.in a five-year purchase lease plan.This arrangement amounts to

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 and B agree that A will lease a truck owned by B.The truck is valued at $30 000 and the term,which cannot be cancelled,is three years,by which time A will have paid slightly more than $22 500.00 in lease payments.In this situation,the lease is best described as

If goods are damaged while in the possession of a bailee,the bailee is strictly liable.

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

The relationship of bailment may occur without any contract between the bailor and the bailee.Explain,giving an example.

Given its importance,how does the accounting profession determine whether a lease is an operating lease or a purchase capital lease?

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

Which of the following would NOT be a defence for a carrier that is sued for damage caused to goods during shipping when there is no contractual limitation of liability?

Define Bailment.

Law, society, and Business

The Machinery of Justice

Government Regulation of Business

The Law of Torts

Professional Liability: the Legal Challenges

Formation of a Contract: Offer and Acceptance

Formation of a Contract: Consideration and Intention

Formation of a Contract: Capacity to Contract and Legality of Object

Grounds Upon Which a Contract May Be Set Aside: Mistake and Misrepresentation

Writing and Interpretation

Privity of Contract and the Assignment of Contractual Rights

The Discharge of Contracts

Breach of Contract and Its Remedies

Sale of Goods and Consumer Contracts

Insurance and Guarantee

Agency and Franchising

The Contract of Employment

Negotiable Instruments

Intellectual Property

Interests in Land and Their Transfer

Landlord and Tenant

Mortgages of Land and Real Estate Transactions

Sole Proprietorships and Partnerships

The Nature of a Corporation and Its Formation

Corporate Governance: the Internal Affairs of Corporations

Corporate Governance: External Responsibilities

Secured Transactions

Creditors Rights

International Business Transactions

Electronic Commerce

Privacy

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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 .