Question

True or false

1. ABC, Inc. sues Tess, its tenant, for unpaid rent. Tess withheld rental payments because ABC failed to rid her apartment of cockroaches. Tess cannot countersue ABC because she should have filed a lawsuit againt ABC first.  

2. All offers to purchase real estate must be in writing in order to be binding.

3. Instruments that are payable on demand are called order instruments.

4. Sally writes a check "Bill and Tom". Both Bill and Tom must indorse that check for it to be negotiable.

5. Mary after married made a will that left $10,000 to her best friend Hazel, Mary had a falling out with Hazel and wanted to cut her out of the will. Mary can execute a codicil to change her will.

6. Sam enters a restaurant and hangs his coat in an unattended coat room near the entrance of the restaurant. In this situation, the restaurant is not a bailee of Sam's coat.

Answer 1

1. ABC, Inc. sues Tess, its tenant, for unpaid rent. Tess withheld rental payments because ABC failed to rid her apartment of cockroaches. Tess cannot countersue ABC because she should have filed a lawsuit againt ABC first.  

Answer: False

Reason: A tenant can sue the landlord as long as the statute of limitations on the claim has not expired. In this case, since ABC Inc. has already filed a claim against Tess, Tess would need to deposit the claim amount of unpaid rent with the court at the time of filing a counter-suit.

2.  All offers to purchase real estate must be in writing in order to be binding.

Answer: False

Reason: An offer to purchase Real Estate may be verbal or in writing. However, a contract or agreement to purchase real estate must be in writing in order to be binding.

3. Instruments that are payable on demand are called order instruments.

Answer: False

Reason: An order instrument is a negotiable instrument that is payable only to a specified person or its assignee. It is an order to pay that specific assignee the amount on demand.

e.g. A bearer cheque is not an order instrument as it has no specific payee however a cheque drawn to someone is an order instrument.

4. Sally writes a check "Bill and Tom". Both Bill and Tom must indorse that check for it to be negotiable.

Answer: True

Reason: When a cheque is made out to two or more parties, they key factor deciding whose signature is required for endorsement is the wording used in the cheque. If the cheque is made out to A and B, then both must sign. If the cheque is made out to A or B, then either can sign. Since sally has made the cheque out to "Bill and Tom", both their signatures are required.

5. Mary after married made a will that left $10,000 to her best friend Hazel, Mary had a falling out with Hazel and wanted to cut her out of the will. Mary can execute a codicil to change her will.

Answer: True

Reason: A person can make a will at any time in their life. They can further make changes at any time of their life. However, upon death, only the final will shall be considered when dealing with the deceased's estate. A will can be changed in two ways: either by creating a new will or by creating an amendment to the existing will called a codicil.

6. Sam enters a restaurant and hangs his coat in an unattended coat room near the entrance of the restaurant. In this situation, the restaurant is not a bailee of Sam's coat.

Answer: True

Reason: A bailment is a legal relationship formed when the owner transfers a physical possession to the bailee for a certain time period but retains ownership of the item. For a bailment to be created, the owner must transfer the property to the bailee.

eg. If you leave your car with a valet at the restaurant, a bailment is created. However, if you leave your car in an unattended parking space, it is not a bailment as the parking space does not take possession over the car.

Taking possession of the item means the ability to exercise control over the item.

Therefore, in this case, a bailment is not created as the restaurant space where the coat is left is unattended and the restaurant does not take possession of the coat.