Chapter 11 Property Law

Acct 215 – Business Law:
Final Exam Study Guide
Supplemental Instruction
IowaStateUniversity / Leader: / Jordan K.
Course: / Acct 215
Instructor: / Bootsma
Date: / 12/7-12/9/15

Chapter 11 Property law

Know the facts, holding and relevance of each case found in the textbook. (see separate handout)

Real property vs personal property vs fixtures
Real Property: D

efined as land and everything permanently attached to the land.

Personal Property: Defined as all property that is not real property; generally moveable objects
Fixture: a piece of personal property that has been attached to real property in such a manner that the personal property becomes a part of the real property
Trade Fixture: an item of personal property attached by a tenant who wishes to carry out a trade or business in a leased area

Why the distinction is important? (2 reasons)
Taxes  property taxes (the amount you pay depends on the type of property)
Legal requirements for transfer
Rule of Capture: Holds the first person to take possession of a property owns it
Now capture of wild animals is restricted at both the federal and state level
Endangered Species: a species that may face extinction if not protected
Still often applies to oil and gas deposits
Water Rights
Percolating Water: the water that exists underneath the surface of land
Reasonable use standard: the water can be used only to benefit the property where the water source is located and the use must be reasonable
Correlative Rights Doctrine: the owner of land overlaying percolating water is to be a joint owner with other property owners whose property overlays the percolating water
Prior Appropriation Rights Doctrine: the first person to use a water sources has a greater priority than a subsequent user
Surface Water: water that has no natural stream or way of passage

Common Entity Doctrine: a landowner could use any means possible to divert surface water from their property
Natural Servitude Doctrine: the landowner is considered to be a servant of surface water and cannot change the natural flow of the water by building a dam to push water backwards or by building a drainage mechanism that would hasten the flow of the water to other property owners

Stream Water and Lake Water
Riparian Rights: a person who owns land that adjoins or butts up against the stream or lake
Definition and legal issues regarding use

Acquiring Ownership by
Creation (3 general rules)
1. If Y adds labor to X’s property, X is generally still the owner
2. If Y adds substantial labor and materials to X’s property, Y can become the owner if acting in good faith
3. If X and Y commingle their property, they become proportionate owners of the property
Possession (distinguish between and know who has superior rights regarding title)
Mislaid property: property that was intentionally placed but subsequently forgotten by the person who placed the property

-Does the finder obtain the title?

Lost property: property that was unintentionally lost, which means the owner accidentally lost possession of the object and did not misplace the property

-Does the finder obtain the title?

Abandoned property: property that an owner intentionally leaves or discards

-Does the finder obtain the title?

Adverse possession: if a party does not sue another for possessing their property within a required period of time, the original owner loss their ability to protect their property interest
Requirements for proving adverse possession: (4 requirements)
1. Actual entry and exclusive possession: cannot share possession with true owner
2. Open and notorious possession: cannot hide the fact that one is adversely possessing the land of another
3. Adverse or hostile possession: cannot have consent of true owner to use the property
4. Continuous possession: cannot have interruption in the possession of the land of another
Why have this law? Society is better if the land is used
Gift (know the elements of a gift). Know the definitions of the following and the legal significance of each (for example, gift causa mortis automatically revoked upon survival)
3 requirements of a gift
1. Donor must intend to give gift
2. Delivery by donor or third party
3. Acceptance by the donee
Testamentary: gifts made as part of a will
Inter vivos: made during a life-time
Irrevocable once gift is made
Causa mortis: made in contemplation of death
Automatically revoked if death does not occur and revocable until that time because three elements of a gift are not met
Classifications of ownership interests in property
Fee simple: perpetual ownership of real property
Life estate: an ownership interest which allows a person to possess real property for their lifetime
Leasehold estate: gives a tenant the right to possess property for a certain period of time
Absolute ownership: ownership of personal property which lasts perpetually
Trust: trustee holds legal title to property held for the benefit of beneficiaries
Both _____ property and ______property can be held in trust
Legal title vs equitable title
Legal title: means ownership granted by the government and respected by a court
Equitable title: ownership providing benefit to owner such as use
Easement vs license
Easement: an interest in land which allows another to use the land as though they are the owner
License: the right to enter the land of another
Rule against perpetuities:: prevents person from devising property unless it vests within 21 years
Types of tenancy
Tenancy in common: exists when multiple owners own a distinct share of an undivided piece of property
Joint tenancy with right of survivorship: undivided ownership interest held by two or more persons
Upon death of one owner, who gets ownership?
Tenancy by the entirety: owners

hip interest held by a husband and wife as one person

Devise: means to transfer ownership by use of a will
Convey: means a grantor transfers legal title to a grantee

Tenant Landlord Law
Tenancy for years vs periodic tenancy
Tenancy for years: tenancy which ends after a certain date

-What notice is necessary?

Periodic tenancy: tenancy for a fixed period of time such as a week or a month or a year

-What notice is necessary?

Duties of the landlord
Implied warranty of habitability: landlord must maintain premise to be fit for habitation before and after tenant takes possession
Landlord cannot interfere with tenant’s right of possession (i.e. must generally give notice before entering rented property)
Fair Housing Act of 1968: landlord cannot base rental decisions upon mental or physical disability, race, color, sex, national origin, familial status, or religion
Duties of the tenant
Must make timely rent payments

Methods for transferring ownership
Bill of sale: written statement from a seller that evinces transfer of ownership

Deed: legal instrument which allows grantor to transfer real property to grantee

Grantor: person transferring ownership
Grantee: person receiving ownership
Types of deeds
Quitclaim deed: seller warrants nothing besides that they are giving their interest in the property to the buyer
Warranty deed:(best deed option)makes the promise the seller has good title free from ownership claims by another
Special warranty deed: promises against ownership claims only applies to the period during which the seller owned the property

Bailment: occurs when a piece of property is possessed lawfully by someone other than the owner
Bailee: The person who rightfully possesses the property
Bailor: the true owner of the property
three elements of a bailment
1. Intent
2. Possession
3. Physical control
constructive delivery vs physical delivery
Example: Car actually providing the car vs giving the bailee the keys to the car
Involuntary Bailments
Finding lost property constitutes a bailment even though the person who lost the property did not voluntarily deliver it
Know the legal consequences of
A bailment for the benefit of the bailorThe bailee is only liable if grossly negligent
A bailment for the benefit of the baileeThe bailee is liable for any negligence no matter how slight
A bailment for mutual benefitordinary duty of care required
Bailee rights:
1. Right of possession can be limited by agreement
2. Right to use bailed property can be limited by agreement
3. Right of compensation is conferred by agreement

-Gratuitous bailee can recover costs of bailment

-Bailee can place a temporary lien on property

Bailor duties
Has the duty to compensate (if not gratuitous) and to reveal defects to bailee since bailee may be liable for damages
Types of carriers and liability imposed on each
Common carriers: licensed by government to provide transportation services to general public

-Strict liability unless what?act of God, enemy of the government, bailor’s actions, the goods themselves

Private Carriers: provide services to whomever they choose

-Ordinary rules of a bailment apply

Contract Carriers: routinely transport goods for a select group of customers

Liability of an innkeeper
Only those who provide lodging are held to strict liability standard
Must warn of hidden risk

Restrictions on ownership
Covenant: promise to do something or not do something with one’s property
Real covenant: applies to real property
Zoning: the process by which municipalities divide their geographic locations and limit the permissible uses
Variance: an exception granted from a zoning ordinance
Eminent domain: process by which the government confiscates land for public purposes
Rights of land owner: government must provide just compensation

Chapter 12 Consumer Law

Government Agencies Involved in Regulating Marketing
Federal Trade Commission (FTC): regulates anti-competitive behavior and consumer fraud
Federal Communications Commission (FCC): regulates communication made through television, radio, and telephone
US Food and Drug Agency (FDA): regulates food products, cosmetics, drugs, and medical devices
Fraud
Intentional Misrepresentation (4 requirements):
1. Defendant intentionally told plaintiff an untruth
2. The untruth was a material fact
3. The untruth made a difference in the decision making process of the plaintiff
4. Plaintiff was justified in relying upon the untruth
Negligent Misrepresentation: The untruth was not told intentionally but was carelessly made by the defendant (there was a breach of duty)
Deceptive Advertising
Caveat emptor: buyer beware
Puffery: consists of making statements or assertions about a product which the average person would believe to be potentially inaccurate or hard to prove

-Not fraud

Opinions of experts: not considered fraud unless buyer was justified to rely upon the opinion

Know the prohibitions regarding
Deceptive advertising: advertising which misleads a consumer about a material fact
Unfair advertising: advertising that is likely to cause substantial injury that cannot be avoided and is not outweighed by the benefits

-FTC will get involved

Obscene advertising: Not at all allowed; determined using

-Miller Test:

Appeals to prurient interest in sex based upon community standards
Depicts a patently offensive sexual act or conduct
Lacks serious literary, artistic, or scientific value

Indecent material: less offensive than obscene material but cannot be aired on public airways between 6am and 10pm
Profane language: language that is grossly offensive and constitutes a nuisance to the general public; banned between 6am and 10pm on the public airways

Food Package Labeling
Required disclosures (5 requirements)
No duty to disclose known facts about a product (Caveat emptor)
State law often requires certain disclosures when an object such as a car or house is sold
Certain warnings may have to be present on the package (ex: cirgarettes)
Quantities of certain raw material inputs might have to be specified
Requirements in regards to packaging and labeling may come from both state and federal governments
Minimum disclosure requirements
1. Serving size or other common household unit
2. Number of servings per container
3. Number of calories per serving and derived from total fat and saturated fat
4. Amount of total fat, saturated fat, cholesterol, sodium, total carbohydrates, complex carbohydrates, sugars, total protein, and dietary fiber per serving or other unit
5. Amount of vitamins, minerals, or other nutrients subject to certain conditions
6. Daily value of items listed above
Nutrition content claims are generally restricted
To claim that a product is a “good source” of a nutritional item: , such as vitamin C, a product must contain between 10 and 19% of the daily recommended value of such item
To be a “high source”:the product must have more than 20% of the daily recommended value
To be “low” or “free”: only food products which typically have a high amount of an nutritional item can claim
Licensing Laws
States generally require you be licensed to operate as a restaurant or bar; certain trades generally have licensing requirements as well (ex: lawyers, CPA’s appraisers, cosmetologists, and plumbers)
Direct Marketing: the process by which marketing is made directly to a consumer
Telemarketers: the use of a phone or similar electronic device to make a sale of a product or service
3 Restrictions:
Calls cannot occur before 8am or after 9pm if placed to a personal residence
Consumers can be asked to be put on a do not call list for the company
Telemarketing Sales Rule of 1995: They must identify the name of the company, product or service, material facts, cost of the product, and quantity being offered
Mobile marketers: the process by which sellers market to a consumer through a mobile device such as a cell phone
Cannot have a machine automatically dial personal cell phones
Those using email, fax or text to promote their product
commercial email must identify?sender, physical postal address for the sender, and method for opting out of emails
the harvesting of ______is prohibited
Warranties
Express warranties: oral or written assertions about a product or service
Implied warranties: nonverbal or nonwritten warranties
Implied warranty of merchantability: the product is fit for its intended purpose

-Ex: Katie buys a new computer. The computer should start and work for normal computing purposes

Implied warranty of fitness for a particular use: the product will work for a specific function

-Ex: Amy tells the salesman she needs a truck that can haul 10,000 lbs of rock. He sells her a truck. It’s implied that the truck should be able to haul 10,000 lbs of rock

Merchant: (Reference chapter 7)someone who deals in the kind of goods contracted for or who otherwise holds himself or herself out as having special knowledge or skill related to the goods involved.

Sales Tax: levied on the gross price of a good or service
Optional sales tax: taxes which a jurisdiction can decide to implement if it wants
Use tax: a tax paid by a buyer instead of a seller. It is the sales tax that should have been paid by the seller in many cases
Value added tax: a tax on value added by a manufacturer or distributor
Collection of Payment
If a customer will not pay a debt owed, a company can (3 actions)
Sue for breach of contract
Contract with a collection agency
Report the debt to a collection agency
Collection Agents cannot: (5 items)
Call at inconvenient times
Continue to contact the debtor once the debtor has stated they will not pay the debt
Harass the debtor
Use abusive language
Contact a 3rd party as a general rule unless a court allows them to do so
Consumer Credit Protection Laws
Regulation Z requires the clear disclosure of all credit terms
What are these credit terms? APR, finance charges, length of time required to pay off debt, and amount financed
Credit cards cannot be authorized unless requested by consumer
Consumers are not liable for more than ______in unauthorized credit card purchases as a general rule
Prohibited practices of credit card companies under the CARD act: (4 practices)
Payments must go to higher rate balances first
Statement must be provided 21 days before payment is due
Statements must show how long it will take you and how much it will cost you to pay your balance if you continue to make the minimum payment
Interest rates cannot generally be increased unless two consecutive payments have been missed
Credit Score – 5 factors
Amount of Outstanding Debt
History of Making Timely Payments
History of Maintaining Credit Accounts (example: number of years you maintained a credit card with a specific bank)
How Many Inquiries a Consumer Has Had (example: how many creditors have done credit checks)
Types of Outstanding Debt (Home mortgages and student loan debt generally have less of a negative effect as opposed to credit card debt)
Consumer rights under the Fair Credit Reporting Act of 1970: (5 rights)
To request information maintained in their personal file by a credit-reporting agency
To be notified if a creditor has used a credit score against the consumer
To contest inaccurate information contained in a credit score report
To request a copy of a their personal credit report
To have negative credit actions removed after seven years (or ten years if a bankruptcy was involved)

Chapter 13 Employment Law and Discrimination

Employment at-will: employee can be fired at anytime without liability for any reason except:
Reasons they can’t: (5 reasons)
If an implied contract exists
If a tort was committed by employer as part of the firing (ex: defamation or fraud)
For public policy reasons (discrimination, whistle blowers)
Wrongful Discharge: wrongful firing
For cause (need a reason) vs. at-will (doesn’t need a reason)
Other terms
Protected classes
Race: has been interpreted as encompassing ancestry, cultural identification, cultural association, or perceived relationships based upon such characteristics
National Origin: encompasses those who are born in a certain nation or is a descendant of someone who was born in a certain nation
Color: encompasses a person’s skin pigmentation or the general shade of their complexion
Iowa