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Exam 12: Bailment and Insurance Law

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Question 41

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Simon requested Simple Delivery Service to pick up a refrigerator at his home and deliver it to his cottage,some 100 miles away.Simple Delivery picked up the refrigerator,but through a mix- up in delivery bills,lost the refrigerator. -Common carriers,such as Simple Delivery Service,are bailees for reward.

A) True
B) False

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Question 42

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When a bailor's goods are not returned or are returned in a damaged condition

A) the bailor must satisfy the court that the standard of care fixed for the bailment was not maintained.
B) the bailor must prove that a bailment existed and show his loss.
C) the bailee's liability will be limited by the existence of an exemption clause that is brought to the bailor's attention before the bailment is completed.
D) a bailee will not be liable if it was a gratuitous bailment as there was no consideration in the arrangement.
E) b and c.

F) D) and E)
G) A) and B)

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Question 43

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An insurer's liability is limited by

The sub-bailor may enter into a sub-bailment agreement which is inconsistent with the original bailment agreement without any legal repercussions.

One of the principal functions of a bill of lading is to act as evidence of title to the goods being carried.This allows for considerable ease in transferring ownership of the goods during transit.

Smith agreed to store Brown's canoe for the winter months in a garage that was attached to his house.The next June,Smith moved the canoe from the garage to a shed at the back of the house,"where it would be safer." The house and shed were later struck by lightning,and burned to the ground.Brown's canoe was destroyed in the fire. -Smith's only duty was to care for the canoe as if it were his own.

If a building insured against fire burns to a source of fire totally unforeseen by the insured and the insurer,no obligation to indemnify rests upon the insurer.

Since there is no Common Law right for a warehouse operator to hold goods until storage charges are paid,the operator must rely on either express provisions in the storage contract,or statutory provisions for lien.

The insurance agent

The particulars of the insurable interest in a contract of insurance are very important to the insurer in determining how to evaluate the risk of an application.How does an insurer assess the risk it is undertaking,and what are the consequences of an incorrect assessment-however caused?

Henry parked his automobile in Allison's Car Park,and was requested by the attendant to leave the keys in the car and the car unlocked.Henry received a receipt for the parking that contained the following note on the reverse side of the ticket."Proprietor of lot will not be responsible for damage to car or contents." A similar sign was located at the entrance to the car parking area.When Henry returned to the lot he discovered that his car had a damaged front end. -Because Henry did not give the keys to the attendant,there was no transfer of possession,and therefore,no bailment created.

Simon requested Simple Delivery Service to pick up a refrigerator at his home and deliver it to his cottage,some 100 miles away.Simple Delivery picked up the refrigerator,but through a mix- up in delivery bills,lost the refrigerator. -A common carrier,such as Simple Delivery Service,is virtually an insurer in the event of a loss of goods placed in its possession.

Jane shipped a parcel with a passenger bus company acting as a private carrier.The parcel contained semi-breakable gifts for her parents in another city.When the parcel arrived,Jane's parents notified her of damage to the parcel's contents.Jane visited the bus station to complain.An employee of the bus company who dealt with her complaint told her she should have used a courier and,as a private carrier,the company had no obligation to exhibit reasonable care of shipped goods.

Chris stops at a motel and leaves his bags in the room.As the nearest restaurant is some distance away,he is occupied for some time.Upon his return he finds his valuables gone and sues the owner.The owner may be somewhat protected by statute law.

To be a common carrier is to be a virtual insurer of the goods carried.

This case is based on Way Sagless Spring Co.v.Bevradio Theatres Ltd. ,[1942] O.W.N.236.The plaintiff will claim a bailment in which the bailee,the theatre,has a duty of care to protect vehicles in its lot from risk of harm,and will be liable if damage occurs as a result of a failure to meet its standard of care.The theatre,in its defence,will argue that the relationship was not one of bailment,as in the typical parking lot cases where the lot requires the vehicle to be left in its care and the keys deposited with the attendant.This situation is simply the use of space for the convenience of the patron and for which the theatre receives no remuneration.Moreover,the disclaimer sign was posted in the lot. The arrangement here may be described as a gratuitous bailment for the benefit of both the bailor and bailee.The patron receives the benefit of free parking while attending the theatre and the theatre receives the benefit of the patron's attendance by providing the service.In such a case,the standard of an ordinary prudent person applies.The court held that the theatre,having invited the public to attend,offered a further inducement to do so in the form of free parking.By offering this inducement it undertook to take care of the patrons' cars.There was no evidence that the disclaimer sign was brought to the driver's attention.Furthermore,after noticing the free parking sign,patrons were unlikely to look for additional signs. -Jack was a licensed mechanic employed by the Zippy Car Rental Co.He maintained all of Zippy's cars between rentals at several locations in the same city.Jack spent portions of each day at the various Zippy locations working on the vehicles.As was the custom of the trade,Jack owned his own tools,which he used in the performance of his work although he was an employee of Zippy. At the end on each day Jack usually packed up all of his tools in his trunk and took them home.This way he would be able to go directly from home to the first location that had work scheduled for him without having first to retrieve his tools from a specific company location.One evening Jack left his tool box at the location where he was working since he would be returning there to finish work the following morning. When he returned in the morning he discovered that his tools had been stolen.Jack decided to take legal action against Zippy for the loss of his tools.Identify the arguments that will be raised by the parties and render a decision.

Oded,the owner of a vehicle with a leaky gas tank,takes his vehicle to Boucher Auto Repair Shop (Boucher) to be repaired.Boucher is not qualified to weld gas tanks,so while the vehicle is under its control,Boucher delivers the vehicle to Welding Unlimited Limited,which repairs the tank and returns the vehicle to Boucher.

Anisa,Kim,and Natasha carried on business together in partnership.Arrangements were made whereby each partner held a policy of life insurance on the other partners,and were the beneficiaries named in the policies.Several years later,Anisa murdered Kim. -Natasha may collect the proceeds of the insurance policy she held on Kim's life,because she was the named beneficiary.

Where an insurer pays indemnity to an insured,the insurer could have a right of salvage and will have a right of subrogation if a third party caused the damage.

Anisa,Kim,and Natasha carried on business together in partnership.Arrangements were made whereby each partner held a policy of life insurance on the other partners,and were the beneficiaries named in the policies.Several years later,Anisa murdered Kim. -Anisa cannot collect the proceeds of the insurance policy on Kim's life,because Anisa was responsible for Kim's death.