Q&A Hero

Q: Delivery of intangible personal property is never accomplished by constructive delivery.

Q: Constructive delivery occurs when property is physically transferred.

Q: A gift is effective whether or not it is accepted.

Q: A gift must be supported by legally sufficient consideration.

Q: Writers acquire ownership of their work through production.

Q: Killing a wild animal amounts to assuming ownership of it.

Q: One cannot acquire ownership by possession by "capturing" a wild animal.

Q: Property used by a government for a public purpose such as a park is community property.

Q: If property is owned as community property, each spouse owns an undivided one-half interest in it.

Q: It is presumed that a co-tenancy is a tenancy in common unless it is clear that the parties intended to establish a joint tenancy.

Q: A joint tenant's sale of his or her interest terminates the joint tenancy.

Q: In a tenancy in common, the interests are divided.

Q: A person who holds the entire bundle of rights in property is the owner in fee simple.

Q: Intangible personal property represents a set of rights and interests but has no real physical existence.

Q: A copyright is tangible personal property.

Q: A car is tangible personal property.

Q: Patents are not considered personal property.

Q: There are three categories of property.

Q: French's Fast Fries (3F) requires that its employees wear uniforms and protective clothing while on the job. 3F provides a locker room for the employees to leave their street clothes and personal items while working. A sign on the back of the locker room door states, "French's is not responsible for the loss of any property in the locker room." Grant, a 3F employee, changes his clothes in the locker room before starting work and leaves his wallet and watch in a pocket of his jacket hanging in his locker. When he returns after his shift, the wallet and watch are gone. Does Grant's leaving personal items in the locker room constitute a bailment? If so, what type of bailment? If not, what legal relationship is it? Does 3F's sign exculpate the company for Grant's loss? Why or why not?

Q: During a storm on Blue Lake, a boat sinks, but its owner Cappy survives. Cappy plans to return to the site of wreck to salvage its equipment and his possessions, but he delays. Meanwhile, Dick, an amateur diver, discovers the wreck and strips it clean of useful items. Cappy learns of the recovery and files a suit against Dick, claiming that the items are his. Dick responds that the sunken boat was abandoned and therefore he has good title to everything to which he took possession. What is the court likely to rule, and why?

Q: Venerable Company leases office furniture to Design Architects, Inc., under a contract that states, "Bailee agrees to pay Bailor for any damage to the furniture." During the lease, while the furniture is in Design's possession, it is stained by inks used in computer printers, copiers, fax machines, and so on. Most likely liable for the damage is a. Venerable. b. Design. c. "Bailor." d. no one.

Q: Owen takes a Paisley-made pinball machine to Quality Games, Inc., for repair. Lacking certain parts, Quality ships the game to Regal Repair Company. Regal does not return the game. Most likely to suffer the loss is a. no one. b. Owen. c. Paisley. d. Regal.

Q: Uri discovers a boat adrift, and retrieves and anchors it. The boat features a number on its side and other evidence pointing to its owner, Vera. This is a. an involuntary bailment. b. a voluntary bailment. c. an express bailment. d. no bailment.

Q: Early one morning, Tab agrees to lend his bike to Sheila, who promises to return it in the evening. Because there is no consideration, there is no contract. This is a. a constructive bailment. b. an involuntary bailment. c. an express bailment. d. no bailment.

Q: Stan rents a safe-deposit box at Main Street Bank under a contract that gives Stan exclusive knowledge and control over its contents. This is a. a bailment. b. accession. c. production. d. confusion.

Q: Emily checks her luggage at Flyaway Airlines's ticket counter before boarding her flight to Houston, Texas. Subject to a bailment is a. Emily. b. Emily's luggage. c. Emily's ticketed seat on the flight. d. none of the choices.

Q: Victor leaves his Dodge sport utility vehicle at Gordo's Auto Service for an oil change. This is a. a bailment. b. a gift. c. accession. d. production.

Q: Wally asks Eddie if he can store his furniture in Eddie's garage while he serves a tour of duty with the U.S. Marines Corps. Eddie agrees. This is a. a bailment. b. accession. c. a gift. d. abandoned property.

Q: Chatsworth loans his laptop to Zelda. This is a. a bailment. b. a tenancy in common. c. a gift. d. lost property.

Q: GR8 Vision, Inc., hires Haul-Way Company to transport fifty large-screen HDTVs from GR8's warehouse in San Diego to an Ideal Electronics retail store in Phoenix. The bailee is a. GR8 Vision. b. Haul-Way. c. Ideal Electronics. d. no one.

Q: Ben allows Cody to store his trailer on Ben's property for $20 a month while Cody is out of town on a job for Plains States Sales, his employer. The bailor is a. Ben. b. Cody. c. Plains States. d. no one.

Q: Rhett works at Scarlett's Sandwich Caf. After work, in the parking lot, Rhett finds a diamond ring lost by Thalia. Title to the ring is possessed by a. Rhett. b. Scarlett's. c. Thalia. d. the state.

Q: Gilbert finds an iPad on the counter at Starbucks. He takes the iPad to the police station's lost and found desk. The officer at the desk tells Gilbert that if the iPad is not claimed in a certain amount of time, Gilbert can obtain title to it. This is an example of acquiring possession by a. an estray statute. b. a bailment. c. confusion. d. production.

Q: Inadvertently, Brent leaves his backpack at Chat n" Coffee when he stops for coffee and an hour of Facebook. The backpack is a. abandoned property. b. bailed property. c. lost property. d. mislaid property.

Q: Nero and Olav each buy certain quantities of oil to sell to Petro Refinery, and agree to share storage costs until Petro can take delivery. The oil is commingled so that Nero's oil cannot be distinguished from Olav's. This is a. accession. b. confusion. c. conversion. d. irresolution.

Q: Lauren owns a 1967 Ford Mustang, which Mike customizes and details to Lauren's specifications. The car earns several awards at regional vehicle customizing competition shows. The result of Mike's efforts is a. accession. b. acquisition. c. conversion. d. resolution.

Q: John steals an old, battered bicycle that is parked, unlocked, in front of a convenience store. He repairs, paints, and replaces parts on the bike until it is like new. The original owner, Kim, claims the bike. The bike belongs to a. John and Kim as tenants in common. b. John because he made substantial improvements to it. c. John because Kim claimed it only after John improved it. d. Kim because John stole it.

Q: Ruby is young and healthy when she gives Pearl a prize-winning horse. The gift meets all the requirements to be effective. This is a gift a. inter vivos. b. causa mortis. c. by accession. d. by confusion.

Q: In contemplation of death during risky surgery, Donnelly, a guitarist, gives his guitars to Cathy. The surgery is successful, and Donnelly does not die. The gift of the guitars is a. not revoked because it was a gift causa mortis. b. not revoked because it was a gift inter vivos. c. revoked because it was a gift causa mortis. d. not revoked because it was a gift largesse.

Q: Procter, who is not in contemplation of imminent death, tells his daughter Opal that she can have his Dodge truck on his death, whenever that happens. This is a. an effective gift causa mortis. b. an effective gift inter vivos. c. an effective gift largesse. d. not an effective gift.

Q: Clancy sells shares in Darling Pool & Spa Company to Eton. Clancy does not deliver the actual possession of the shares to Eton, but gives him the key to a safety-deposit box in First State Bank in which the stock certificates are locked. Presenting the key is a. real delivery. b. constructive delivery. c. delivery by agent . d. no delivery.

Q: Ira is declared mentally incompetent. Jay, Ira's son, is named his guardian. At Jay's insistence, Ira transfers his assets to Jay "for safekeeping." A court might conclude that this gift is not effective on the ground that there was no a. acceptance. b. delivery. c. donative intent. d. donor's acknowledgment.

Q: Mallory's sister gives Mallory a leather working kit for Christmas. Mallory uses the kit to make a saddle. Mallory's acquisition of the saddle is by a. a bailment. b. accession. c. confusion. d. production.

Q: Marcy goes hunting out of season and shoots an endangered species of deer in a national park. Marcy's acquisition of the deer is a. by production. b. illegal. c. by confusion. d. by possession.

Q: Bowie, a certified public accountant, prepares and certifies Candy Products Corporation's financial statements. These statements are included in Candy's registration statement filed with the Securities and Exchange Commission before Candy's offering of securities. Dona buys a security covered by the registration statement. Based on this transaction, Dona files a suit against Bowie under Section 11 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934. To succeed in the suit, what must Dona prove? Bowie responds that Dona was not in privity with him and that even if she had been in privity, she cannot prove his lack of due diligence. Can Bowie prevail on these grounds? Why or why not?

Q: Dominique, a certified public accountant, provides accounting services to Eagle Corporation. The services include preparing Eagle's financial reports and issuing opinion letters based on the reports. In 2008, Eagle falls into serious financial trouble, but neither Dominique's reports nor her opinion letters indicate this situation. Relying on Dominique's portrayal of Eagle's financial situation, Eagle borrows a large sum of money to build a new shipping facility. In lending Eagle the money, First National Bank relies on Dominique's opinion letter. Dominique is aware of this reliance. If Dominique did not engage in intentional fraud but was negligent, what is her potential liability?

Q: Bryce's accountant is Caleb and his attorney is Delilah. All states protect, as privileged information, Bryce's communications with a. Caleb and Delilah. b. Caleb only. c. Delilah only. d. neither Caleb nor Delilah.

Q: Flynn, an accountant, helps Grange Supply Company prepare and file a false federal corporate income tax return. Under the Internal Revenue Code, this is a. a felony punishable by a fine and imprisonment. b. a felony punishable only by a fine. c. a misdemeanor punishable only by a fine. d. a civil violation subject to a liability suit but not a crime.

Q: Pace is an attorney, whose clients include Quikfeet Running Shoes Company. Unless Quikfeet has violated securities law, the contents of Pace's file on Quikfeet may be disclosed to someone other than Quikfeet a. only to a third party who is a foreseeable user of the information. b. only under a court order (with or without Quikfeet's consent). c. only with Quikfeet's consent. d. under any circumstances.

Q: Feder prepares federal corporate income tax returns for Giant Stores, Inc., and other firms. Under the Internal Revenue Code, with respect to an understatement of a client's tax liability, Feder may be liable for a. negligent or willful misconduct. b. no misconduct. c. only negligent misconduct. d. only willful misconduct.

Q: Lacy is an accountant who prepares her clients' tax returns. Muff is not an accountant, but he also prepares tax returns for clients. Under the Internal Revenue Code, liability for preparing a false return may be imposed on a. Lacy and Muff. b. Lacy only. c. Muff only. d. neither Lacy nor Muff.

Q: Jerzy is an accountant whose clients include Kopper Kettle Restaurants, Inc. For a violation of securities laws, Jerzy may be subject to a. comprehensive liability. b. corporate liability. c. criminal liability. d. no liability.

Q: Longway Trucking, Inc., files a suit against Midge, an accountant, under the antifraud provisions of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities and Exchange Commission. To succeed in recovering damages, Longway must show that Midge a. acted with scienter. b. bought or sold a security. c. is incompetent. d. knows nothing about securities.

Q: Beth is an accountant with Coffee Sales Corporation. Doral buys Coffee Sales stock and loses money on the investment. To recover from Beth under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, Doral must prove a. none of the choices. b. fraud and reliance only. c. fraud, reliance, and materiality only. d. scienter, fraud, reliance, materiality, and causation only.

Q: Meri, an accountant, includes a false statement in a report for Novelty Paper Products, Inc. (NPPI) that is filed with the Securities and Exchange Commission. When Otho buys stock in NPPI and loses money on the investment, he files a suit against Meri, alleging fraud under the 1934 Securities Exchange Act. To avoid liability, Meri can show that she a. intended to defraud NPPI, not Otho. b. intended to profit on stock trades generally, not only with Otho. c. is an otherwise competent accountant. d. was not aware her statement was false.

Q: Pat, an accountant, includes a false statement in a report for Quantity Overstock, Inc., that is filed with the Securities and Exchange Commission. Quantity publishes a misleading ad about its future prospects. Rita sees the ad and calls Stan, who buys stock in Quantity. Under Section 18 of the Securities Exchange Act of 1934, liability may attach to a. Pat's report. b. Quantity's ad. c. Rita's call. d. Stan's purchase.

Q: Mona, an accountant, prepares for NuTech Corporation a financial statement that omits a material fact. The financial statement is included in NuTech's registration statement, which Pam reads. Pam buys NuTech stock. Under Section 11 of the Securities Act of 1933, for Mona to be liable for the omission, Pam must show that a. Pam relied on the omission. b. Pam suffered a loss on the stock. c. Pam knew about the omission before making her purchase. d. the omission had no causal connection to her loss.

Q: Quin, an accountant, prepares for Reddy, Inc., a financial statement that omits a material fact. The statement is included in Reddy's registration statement with the Securities and Exchange Commission. Timor, who reads the statement, and Ubi, who does not, each buy Reddy stock. Velma reads the statement but does not buy the stock. Under Section 11 of the Securities Act of 1933, Quin may be liable to a. no one. b. Timor and Ubi. c. Timor, Ubi, and Velma. d. Ubi only.

Q: Lulu, an accountant, conducts an audit of Microstuff Toys, Inc. After the conclusion of the audit, the working papers created in preparing the audit must be a. disposed of immediately. b. kept until the Public Company Accounting Oversight Board's review. c. maintained for seven years. d. retained forever.

Q: Hadley, an accountant, accumulates working papers while performing an audit for Ilene. After the audit, these documents belong to a. Hadley, with Ilene having a right of access to the papers. b. Ilene, with Hadley having a right of access to the papers. c. neither Hadley nor Ilenethe papers must be disposed of. d. the Public Company Accounting Oversight Board.

Q: Craig is an accountant whose clients include Digby Excavation Corporation. Elbert is Craig's attorney. Under the common law and by statute in many states, working papers that Craig develops when preparing financial reports for Digby are owned by a. Craig. b. Digby. c. Elbert. d. no onethe papers must be destroyed immediately after use.

Q: Bruno is an accountant. Under the Sarbanes-Oxley Act, the degree of government oversight over the public accounting practices of Bruno and other accountants was a. decreased. b. increased. c. eliminated. d. unchanged.

Q: Quibble Game Company's liabilities exceed its assets. Quibble hires Roo & Slay, an accounting firm, to prepare a balance sheet. Through Roo & Slay's negligent omissions, the sheet shows a positive net worth. Town Bank relies on the balance sheet to make a loan to Quibble. When Quibble defaults, Town files a suit against Roo & Slay. Under the Restatement rule, Roo & Slay is most likely a. liable because Roo & Slay owed a duty of care to Quibble. b. liable because Roo & Slay owed a duty to any foreseeable user. c. liable if Roo & Slay knew that Town would rely on the balance sheet. d. not liable because Roo & Slay and Town were not in privity.

Q: Toby is an accountant whose clients include U-All Company. If Toby is negligent in his work for U-All, most courts would hold him liable to U-All and a. any third party. b. no third party. c. third parties who are foreseen users of the work. d. third parties who are reasonably foreseeable users of the work.

Q: Doug is an accountant whose clients include Everyday Products, Inc. (EPI). Under the Ultramares rule, if Doug is negligent in his work for EPI, he could be liable to a. EPI and any third party. b. EPI and third parties who are foreseen users of his work for EPI. c. EPI and third parties who are reasonably foreseeable users of his work for EPI. d. EPI only.

Q: Marquis Company's liabilities exceed its assets, but the firm's employees falsify its books to reflect a positive net worth. Marquis hires Nan & Ollie, an accounting firm, to prepare a balance sheet, which is certified to show a positive net worth. Pure Credit Corporation relies on the balance sheet to make a loan to Marquis. When the firm defaults, Pure Credit files a suit against Nan & Ollie. Under the Ultramares rule, the accounting firm is most likely a. liable because Nan & Ollie owed a duty of care to all third parties. b. liable because Nan & Ollie owed a duty of care to Marquis. c. liable because Nan & Ollie owed a duty to any foreseeable user. d. not liable because Nan & Ollie and Pure Credit were not in privity.

Q: Grover Nut Company files a suit against Hud, its former accountant, alleging actual fraud. Grover must prove a. intent to deceive. b. misrepresentation of a non-material fact. c. the lack of an injury. d. unjustifiable reliance.

Q: Filtration Products, Inc., files a suit against Emmett, its former accountant, alleging constructive fraud. Emmett may be held liable a. if Filtration cannot prove actual fraud. b. if Emmett was grossly negligent in the performance of his duties. c. only if Emmett acted with fraudulent intent. d. only if Emmett impersonated someone else who could be liable for fraud.

Q: Ezra, an accountant, intentionally misstates a material fact to mislead Fruit Packing Industries, Inc., a client. Fruit Packing justifiably relies on the misstatement to its detriment. Ezra is most likely liable for a. actual fraud. b. constructive fraud. c. destructive fraud. d. virtual fraud.

Q: Lars accuses Moe, an attorney, of committing malpractice. Malpractice is a. a breach of ethics. b. a defalcation. c. a mistake in judgment. d. professional negligence.

Q: Lebron, an attorney, allows a statute of limitations to lapse on a claim by Midwest Metal Fabrication Company, a client. Lebron a. can be held liable for malpractice. b. has violated an ethical standard but cannot be held liable. c. is subject to criminal penalties under the statute of limitations. d. will be automatically disbarred.

Q: Dwayne can be described as "a reasonably competent general practitioner of ordinary skill, experience, and capacity." This is the normal standard for judging the performance of a. a client. b. an accountant. c. an attorney. d. a tax preparer.

Q: Yves is an accountant charged with negligence by Zesty Soup Company, a client. Yves may successfully defend against the claim if he can show that a. scienter was lacking. b. he complied with all International Financial Reporting Standards. c. the negligence was not the proximate cause of the client's losses. d. the negligence was only contributory.

Q: Gert, an accountant, contracts to conduct an audit for Hailey. In performing the audit, Gert fails to detect certain misconduct. Gert is most likely a. liable if a normal audit would have revealed the misconduct. b. liable if Gert issues a specifically qualified opinion. c. not liable if Gert generally disclaims any liability. d. not liable if the misconduct was due to Hailey's negligence.

Q: Pluto accuses Quark, an accountant, of committing defalcation. This is a. embezzlement. b. general misconduct. c. professional negligence. d. throwing something out of a window.

Q: Estes, an accountant, contracts to perform services for Frasier. In performing those services, Estes uncovers a suspicious financial transaction. Estes is most likely not liable if he a. acted negligently in failing to discover the transaction sooner. b. conceals the discovery and otherwise finishes the work. c. investigates and reports the discovery to Frasier. d. obtains restitution from the perpetrator without Frasier's knowledge.

Q: Jaime, an accountant, contracts to perform services for Kase. Jaime acts in good faith and conforms to generally accepted accounting principles, but makes a mistake in judgment. Jaime is most likely a. liable if Jaime failed to discover a defalcation. b. liable if Jaime failed to discover a fraud. c. liable if Jaime failed to discover an impropriety. d. not liable.

Q: Tiny is an accountant. Tiny's violation of generally accepted accounting principles and generally accepted auditing standards a. does not indicate that Tiny was negligent. b. is prima facie evidence that Tiny was negligent. c. precludes Tiny from raising any defense against a negligence claim. d. will never subject Tiny to liability.

Q: Leslie, an accountant, enters into a contract to provide services to Marty. Leslie does not finish the work within the contract's deadline. Leslie is a. liable for breach of contract. b. not liable, because Leslie is a professional. c. not liable, because Leslie's failure must have been Marty"˜s fault. d. not liable, because the work took longer than foreseen.

Q: Rex, an accountant, enters into a contract to provide services to Sofi. Rex does not finish the work within the contract's deadline. Sofi pays a penalty as a result of the missed deadline and hires Trey to complete the job. Rex is most likely liable for a. nothing. b. Sofi's penalty and the cost to hire Trey. c. Sofi's penalty only. d. the cost to hire Trey only.