Question 1

Under the common law a creditor can transfer title to goods she does not own.

Accepted Answer

A) True 
 B)False  False

Question 2

One of the rights of a lending bank in the event a borrower defaults is the right to sell the security without notice to the borrower.

Accepted Answer

A) True 
 B)False  True

Question 3

Regarding the remedies of a conditional seller, she

Accepted Answer

A)  has the right to possession of the chattel so long as the terms of the conditional sale agreement are being met. 
B)  loses ownership of the chattel as soon as the buyer makes his final payment. 
C)  is entitled to use force in recovering goods by self help. 
D)  retains a lien on the title to the chattel. 
E)  takes title away from the buyer when he defaults. 
A)  has the right to possession of the chattel so long as the terms of the conditional sale agreement are being met. 
B)  loses ownership of the chattel as soon as the buyer makes his final payment. 
C)  is entitled to use force in recovering goods by self help. 
D)  retains a lien on the title to the chattel. 
E)  takes title away from the buyer when he defaults. B

Question 4

What advantage does a secured creditor have over an unsecured creditor when they both are forced to collect an overdue account?

Accepted Answer

The secured creditor need not

Question 5

When dealing with security interest, the failure of a creditor to register

Accepted Answer

A)  will result in a legal offence which invalidates the creditor's interests. 
B)  may be a matter of too much trouble and expense. 
C)  will risk that the debtor can prevail in a law suit. 
D)  allows the provisions in the Sale of Goods Act to govern where there is an innocent third party. 
E)  would always be quite foolish. 
A)  will result in a legal offence which invalidates the creditor's interests. 
B)  may be a matter of too much trouble and expense. 
C)  will risk that the debtor can prevail in a law suit. 
D)  allows the provisions in the Sale of Goods Act to govern where there is an innocent third party. 
E)  would always be quite foolish.

Question 6

Can the chartered banks require security for loans outside the types indicated in the federal Bank Act?

Accepted Answer

A)  Yes, guarantees by third party. 
B)  Yes, warehouse receipts and order bills of lading. 
C)  No, only those types of security listed in the Act. 
D)  Yes, pledge of shares and bonds. 
E)  Yes, assignment of book debts. 
A)  Yes, guarantees by third party. 
B)  Yes, warehouse receipts and order bills of lading. 
C)  No, only those types of security listed in the Act. 
D)  Yes, pledge of shares and bonds. 
E)  Yes, assignment of book debts.

Question 7

If an owner sells you goods that have been pledged as security for a loan, the claim against those goods is known as

Accepted Answer

A)  a contract pledge. 
B)  collateral. 
C)  creditor interests. 
D)  security interest. 
E)  a secured transaction. 
A)  a contract pledge. 
B)  collateral. 
C)  creditor interests. 
D)  security interest. 
E)  a secured transaction.

Question 8

For consumer goods, how much value to a creditor is the right of repossession?

Accepted Answer

The fear of repossession by the consumer

Question 9

Does a bank have a right of lien against property left in its safekeeping by one of its borrowers?

Accepted Answer

A bank does not have a lien ag

Question 10

Some provinces have provided relief to conditional buyers by

Accepted Answer

A)  making the buyer liable for any deficiency after resale of the goods. 
B)  allowing the use of the acceleration clause. 
C)  knowing that the resale of chattels to be "value destructive", they have required the conditional seller to turn over any surplus realized. 
D)  not allowing any equity position to accumulate with progression of payments. 
E)  giving recovery rights when debt is paid within a given period of time. 
A)  making the buyer liable for any deficiency after resale of the goods. 
B)  allowing the use of the acceleration clause. 
C)  knowing that the resale of chattels to be "value destructive", they have required the conditional seller to turn over any surplus realized. 
D)  not allowing any equity position to accumulate with progression of payments. 
E)  giving recovery rights when debt is paid within a given period of time.

Question 11

In what way could a consignment contract be an indirect type of credit? Use an example to explain.

Accepted Answer

Wholesale distributors or manufacturers

Question 12

A reason that a secured lender should register its secured interest is to:

Accepted Answer

A)  secure the priority of the lender in the event of bankruptcy of the borrower 
B)  allow the lender to seize the security from the borrower 
C)  guarantee the lender repayment of the debt 
D)  prohibit the borrower from reselling the security 
E)  all of the above 
A)  secure the priority of the lender in the event of bankruptcy of the borrower 
B)  allow the lender to seize the security from the borrower 
C)  guarantee the lender repayment of the debt 
D)  prohibit the borrower from reselling the security 
E)  all of the above

Question 13

One of the requirements for the effectiveness of a security interest under the PPSA is that it must "attach".

Accepted Answer

A) True 
 B)False

Question 14

Under the terms of most conditional sale assignments to finance companies, the conditional seller remains liable for payment if their conditional buyers should default. This arrangement is known as

Accepted Answer

A)  recourse financing. 
B)  an equitable assignment. 
C)  discount financing. 
D)  factoring. 
E)  account receivable installment sales. 
A)  recourse financing. 
B)  an equitable assignment. 
C)  discount financing. 
D)  factoring. 
E)  account receivable installment sales.

Question 15

What are the remedies of a conditional seller on default by the conditional buyer?

Accepted Answer

The conditional seller's remedies are:
1

Question 16

For the bank to realize on a section 427 security (Bank Act, 1991), which of the following must the bank receive from the borrower?

Accepted Answer

A)  floating charges 
B)  a chattel mortgage 
C)  the standard form of notice-then filed at the nearest land registry office 
D)  a conditional sale contract 
E)  power of attorney 
A)  floating charges 
B)  a chattel mortgage 
C)  the standard form of notice-then filed at the nearest land registry office 
D)  a conditional sale contract 
E)  power of attorney

Question 17

Sonny bought a computer from The Bad Guys on a conditional sales contract. Two months later Sonny sold the computer to Fred without mentioning it was not paid for. Can The Bad Guys recover the computer from Fred?

Accepted Answer

A)  Yes, if the security device is properly registered with the province. 
B)  Yes, directly from Fred, or they can force Sonny to retrieve the computer. 
C)  Yes, but it would be easier for them to get the money from Sonny. 
D)  No, since this is a consumer transaction where title is guaranteed. 
E)  No, provided Fred is an innocent third party. 
A)  Yes, if the security device is properly registered with the province. 
B)  Yes, directly from Fred, or they can force Sonny to retrieve the computer. 
C)  Yes, but it would be easier for them to get the money from Sonny. 
D)  No, since this is a consumer transaction where title is guaranteed. 
E)  No, provided Fred is an innocent third party.

Question 18

Self liquidating financing is usually the best form of financing for farmers.

Accepted Answer

A) True 
 B)False

Question 19

The Hendersons have purchased their new riding lawnmower on a conditional sale contract. They have just been notified that the contract was assigned to a finance company. The Hendersons may now

Accepted Answer

A)  have to sue for their rights under the contract. 
B)  have the benefits of a cut- out clause. 
C)  have the protection of a holder in due course as guaranteed by the Bills of Exchange Act. 
D)  be subject to all the personal defences that the seller has against the conditional buyer. 
E)  expect to have the same defences they had against the retailer. 
A)  have to sue for their rights under the contract. 
B)  have the benefits of a cut- out clause. 
C)  have the protection of a holder in due course as guaranteed by the Bills of Exchange Act. 
D)  be subject to all the personal defences that the seller has against the conditional buyer. 
E)  expect to have the same defences they had against the retailer.

Question 20

Milton ordered a fancy telescope from a catalogue- using his bank credit card. When it arrived it seemed quite different from that of the catalogue description. Neither the catalogue company nor the manufacturer would take the telescope back. Milton now wants the chartered bank which issued the credit card to reverse the charges. Does Milton have an legal claim against the bank?

Accepted Answer

A)  No, the bank is a lender to Milton and not an assignee of contracts from sellers. 
B)  Yes, but who can afford to sue a chartered bank? 
C)  Yes, the federal Bank Act requires chartered banks to be advocates for consumers in respect to credit card purchases. 
D)  No, Milton must pursue remedies through the Better Business Bureau 
E)  Yes, they are the assignee of the seller. 
A)  No, the bank is a lender to Milton and not an assignee of contracts from sellers. 
B)  Yes, but who can afford to sue a chartered bank? 
C)  Yes, the federal Bank Act requires chartered banks to be advocates for consumers in respect to credit card purchases. 
D)  No, Milton must pursue remedies through the Better Business Bureau 
E)  Yes, they are the assignee of the seller.

Exam 30: Secured Transactions

Under the common law a creditor can transfer title to goods she does not own.

One of the rights of a lending bank in the event a borrower defaults is the right to sell the security without notice to the borrower.

Regarding the remedies of a conditional seller, she

What advantage does a secured creditor have over an unsecured creditor when they both are forced to collect an overdue account?

When dealing with security interest, the failure of a creditor to register

Can the chartered banks require security for loans outside the types indicated in the federal Bank Act?

If an owner sells you goods that have been pledged as security for a loan, the claim against those goods is known as

For consumer goods, how much value to a creditor is the right of repossession?

Does a bank have a right of lien against property left in its safekeeping by one of its borrowers?

Some provinces have provided relief to conditional buyers by

In what way could a consignment contract be an indirect type of credit? Use an example to explain.

A reason that a secured lender should register its secured interest is to:

One of the requirements for the effectiveness of a security interest under the PPSA is that it must "attach".

Under the terms of most conditional sale assignments to finance companies, the conditional seller remains liable for payment if their conditional buyers should default. This arrangement is known as

What are the remedies of a conditional seller on default by the conditional buyer?

For the bank to realize on a section 427 security (Bank Act, 1991), which of the following must the bank receive from the borrower?

Sonny bought a computer from The Bad Guys on a conditional sales contract. Two months later Sonny sold the computer to Fred without mentioning it was not paid for. Can The Bad Guys recover the computer from Fred?

Self liquidating financing is usually the best form of financing for farmers.

The Hendersons have purchased their new riding lawnmower on a conditional sale contract. They have just been notified that the contract was assigned to a finance company. The Hendersons may now

Law and Society

The Machinery of Justice

The Law of Torts

Professional Liability

Formation of a Contract: Offer and Acceptance

Formation of a Contract: Consideration, and Intention to Create Legal Relations

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

Grounds Upon Which a Contract May Be Impeached: Mistake

Grounds Upon Which a Contract May Be Impeached: Misrepresentation, Undue Influence, and Duress

The Requirement of Writing

The Interpretation of Contracts

Privity of Contract and the Assignment of Contractual Rights

The Discharge of Contracts

The Effect of Breach

Remedies for Breach

Sale of Goods

Leasing and Bailment

Insurance and Guarantee

Agency and Franchising

The Contract of Employment

Negotiable Instruments

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Interests in Land and Their Transfer

Landlord and Tenant

Mortgages of Land and Real Estate Transactions

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