Exam 30: Secured Transactions

Jack and Reba purchased some furniture on a conditional sale contract. This couple carries no insurance on their household goods. The furniture is stolen one Sunday afternoon. Who will most likely take the loss?

An acceleration clause permits a chattel mortgagor to pay off the mortgage more quickly.

The provinces across Canada have each enacted a stature called the Personal Property Security Act. These acts use a common form of registration to record security interests. This system enables a province to

A properly registered security interest is generally effective against all third parties.

Explain some important criteria to consider before granting credit to a prospective borrower.

Adam Monarch is quite well off. He is selling one of his unincorporated farms and all its equipment to young Carl Gardner. Carl has very little cash but lots of potential for being a good farmer. Adam is willing to finance the sale under the easiest of terms, yet he wants to retain the best security possible. For security, Adam will accept a combination first mortgage and

Where security devices are agreed to in advance as terms in the contract, they are often called

What is collateral security?

What is "perfection' of a secured interest under personal property security legislation? Why is "perfection' relevant to the rights of a secured lender?

It is customary in U.S. and Canadian businesses for suppliers and vendors to

Explain what is meant by the term "financing leases".

Which of the following is not a form of security for bank loans?

Sometimes a lease agreement can be construed as a security agreement rather than a true lease. Why is this distinction important for the lessor to determine?

Alvin Smith bought a car from XYZ Autos Inc., a car dealership, for the price of $15,000. Alvin paid $5,000 cash and entered into a conditional sales contract to finance the remaining $10,000. Alvin had obtained the $5,000 from his bank and executed a chattel mortgage for $9,000 in favour of his bank. This represented $5,000 for the deposit and $4,000 in existing indebtedness. After Alvin obtained the car, he provided the bank with a description and its serial number. The bank completed the chattel mortgage with this information and registered a financing statement under the prevailing personal property security legislation. XYZ Autos Inc. similarly registered a financing statement but was three days later than the bank. Alvin subsequently defaulted under both securities. Which of the creditors has priority to the car and why?