Deck 15: Priority of Creditors

Question 1

Hank sold three properties for Mr.W and had been paid his commission for the first,but not for the last two.Hank had done everything according to the contract and according to the relevant statutes,but Mr.W wouldn't pay.Hank knows that Mr.W has a bank account with the Bank of Winnipeg and has money owing to him from a Mr.Gregory.With regard to the collecting of the debt owed,which of the following is false?

A)Hank could sue Mr.W for breach of contract.
B)After obtaining judgment,Hank could force the bank to pay into court an amount of money from Mr.W's account to satisfy the debt.
C)Hank's claim for commission is unenforceable because he failed to secure the debt by retaining title until the amounts were paid.
D)If Hank got judgment against Mr.W,he could get an order commanding seizure of enough of Mr.W's goods to satisfy the judgment debt.
E)If Mr.W goes into bankruptcy,Hank may not get paid.

Answer 1

C

Question 2

Consider the following statements about the use of personal property as security for a creditor in a creditor-debtor transaction.Indicate the false statement.

A)If the transaction involves the use of consumer goods as collateral,upon default of payment by the debtor,the creditor can seize the goods and sell them,but also always retains the right to sue the debtor on his personal covenant to pay for any deficiency.
B)Regardless of the type of personal property involved,whether tangible or intangible,as long as it is being used as security then the transaction is governed by the Personal Property Security Act,and therefore an unpaid creditor may be able to repossess them.
C)Real estate professionals need to be aware of the Personal Property Security Act because items that constitute fixtures under real property law may also constitute chattel security,and thus an unpaid creditor may be able to repossess them.
D)Before a creditor who has been promised an interest in personal property as security can claim priority rights,two processes must have taken place: the security interest must have attached to the collateral item,and the security must have been perfected.
E)If the required procedures have taken place,a potential buyer from an unscrupulous debtor who has already given personal property as security will be protected; i.e.,the creditor will either have registered his interest in the Personal Property Registry or will have actual possession of the collateral.

Answer 2

A

Question 3

When the transaction is registered,the creditor's rights include all of the following except

A)contractual remedies upon default.
B)the right to seize the security.
C)the right to resell the security.
D)the right to sue the debtor rather than seize security.
E)the right to order the debtor arrested or detained.

Answer 3

E

Question 4

Which of the following statements regarding the securing of debt is true?

A)The term guarantee,otherwise known as an indemnity,refers to a primary debt obligation.
B)To avoid problems related to consideration,lending institutions often require that guarantees be placed under seal.
C)In every province,there is now a requirement that a guarantor appear before a notary public.
D)Because of the principle of caveat emptor,a creditor has no obligation to protect the interests of a guarantor.
E)As guarantees are mere formalities,there is little point in getting legal advice prior to executing one.

Question 5

Amy Carr looked at a 2016 Ford being sold by a private party who told Carr that the car was free and clear of all encumbrances.Carr had the Ford inspected by Automobile Association,which reported it to be in good condition.Carr bought the Ford for $8000.Two months later,the car was seized by a bank that had properly perfected and attached its security interest.On these facts,which of the following is true?

A)Carr would be able to keep the Ford because the seller had represented that the Ford was free and clear of encumbrances.
B)Carr would be able to keep the Ford because she was an innocent purchaser without notice of any lien or charge.
C)The bank would get the Ford because it had title to it as security,and it could claim its right to title whether it perfected and attached the security interest or not.
D)The bank would get the Ford because it properly perfected and attached its security interest.
E)Carr will lose the car and has no recourse against anyone.

Question 6

Which one of the following statements about the Personal Property Security Act is true?

A)This legislation applies only to all present transactions where personal property is given as security interest to enforce an obligation.
B)Unless a creditor in a secured transaction covered by this act takes steps to attach and perfect his security interest,he could lose that interest to someone outside the contract.
C)In a situation where a debtor fraudulently attempts to transfer property that he has given as security,the Act is designed to protect both the debtor and the secured creditor.
D)If a secured creditor fails to register his security interest in the Personal Property Registry,he loses his rights against the debtor.
E)If someone suspects that an item of personal property has been given as security by a particular person,he can sue on the breach of a condition.

Question 7

A continuing guarantee

A)allows a creditor to advance further funds without affecting the obligation of the guarantor to pay in the event of default.
B)is a primary obligation of a third party to pay a debt along with a debtor.
C)is a written commitment not to pursue a legal claim against another.
D)is an equitable principle assuring that when security is repossessed,there will be a period of time during which the debtor can still make payment.
E)allows a breaching party to pay an amount specified in a contract,rather than facing a lawsuit for damages.

Question 8

Which of the following is false with regard to property?

A)Both real and personal property can be given as security to a creditor that he will be repaid.
B)Real property consists of land but does not include the buildings on that land.
C)Personal property includes intangible rights.
D)Personal property includes chattels.
E)Real property includes fixtures.

Question 9

After a creditor has taken possession of collateral,the debtor's right to reclaim it on payment of any money owing is known as a

A)right to salvage.
B)right of settlement.
C)right to redeem.
D)constructive trust.
E)collateral contract.

Question 10

If you want to buy a car from a private party (other than a dealer),which of the following is false?

A)If you request a search and the Personal Property Registry states that the car is free and clear of liens and encumbrances,then title is clear.
B)If the seller tells you that the car is free and clear,and two months later a holder of a properly perfected and attached security interest claims a right to the car,you could lose the car.
C)Even if both the seller and the Personal Property Registry indicate to you that the car's title is clear,you could still lose it to a third party.
D)If the seller indicates to you that the title is clear,but after the sale the car is seized by someone with the legal right to do so,you could still sue the seller.
E)If the seller makes no representations whatsoever about the car and the car is seized by a creditor,you can still sue the seller because he had an obligation to deliver good title.

Question 11

A company named Printers World Ltd.bought a $9000 plotter secured by a Security Agreement and,because of business reverses,is unable to make the payments.Which of the following is accurate with respect to the legal position of the parties?

A)The seller could seize the goods only if it obtained a court order.
B)The seller could seize the goods without a court order only if it had properly registered the conditional sale contract.
C)The seller could seize the goods but,before resale can take place,the debtor must be given notice and an opportunity to redeem.
D)The seller could only seize the goods and could not instead opt to sue the company.
E)The seller could seize and sell the same day because it had already waited three months after default before taking any action.

Question 12

Identify which of the following statements best describes the legal position of a conditional seller.

A)The conditional seller must comply with the provisions of the Personal Property Security Act to protect his interest.
B)He is given first priority over all of the other creditors with respect to all of the conditional buyer's assets.
C)The conditional seller is in a better legal position than if instead he had been the chattel mortgagee of the same assets.
D)The conditional seller loses all legal rights against the conditional buyer if he fails to register.
E)The conditional seller has no legal rights because such contracts are void.

Question 13

Elizabeth gave a guarantee to the Bank in support of a loan to Tomasz.Over the next few years,the Bank and Tomasz made a number of alterations to the loan agreement.The effect of these changes was to significantly increase the amount owing to the Bank.Elizabeth had no notice or knowledge of these changes,nor did she consent to any such changes.What is the likely result?

A)Elizabeth is bound by the changes to the loan because guarantees are,by their nature,continuing.
B)Guarantees are a mere formality; only Tomasz has obligations to the Bank.
C)The guarantees are likely to be invalid and unenforceable against Elizabeth.
D)A guarantee is executed under seal,therefore it will be presumed valid regardless of defect.
E)The failure to notify Elizabeth would release both Elizabeth and Tomasz from their obligations.

Question 14

As the fishing season slowed down in the fall,Bob decided that it might be a good time to find a real bargain in used equipment for his boat.He found a navigation instrument for sale for $15,000,a great price.However,he only had $10,000,so he borrowed the other $5,000 from the bank.He also signed a Security Agreement on the equipment as collateral in favour of the bank,which promptly registered its interest in the Personal Property Registry.Bob made his payments for a while,but things started to go badly for him.He was unable to make any further payments,although he still owed over $3000.Desperate and not thinking too clearly,Bob sold his boat to his friend Claude for $50,000 and left for Central America with the funds.When the bank realized what Bob had done,it located the boat and demanded that Claude pay off the $3000+ or lose the navigational equipment.Claude was outraged because he had paid Bob in good faith and argued that he had never borrowed anything from the bank and therefore owed it nothing.Which one of the following statements accurately describes the legal situation here?

A)Because Bob transferred the boat and equipment to Claude,that was an assignment of his obligations and he no longer owed the debt.
B)Claude is right,and the bank's only remedy is to sue Bob.
C)If Claude is unwilling to pay off the $3000,the bank has the right to remove the equipment from the boat.
D)If the bank does seize the equipment and sells it for $2000,the bank can still sue Claude for the $5000.
E)If the bank had failed to register the chattel mortgage,it would still have a better right to the equipment than Claude,because the mortgage was signed before Bob sold the boat to him.

Question 15

With regard to guarantees and indemnities,which of the following is false?

A)A guarantor can use any defence against the creditor that the debtor could use.
B)A legally binding promise to be primarily responsible for someone else's obligation is an indemnity.
C)A guarantee cannot be enforced in court unless it satisfies the writing requirements set out in statute.
D)Subrogation can result in a guarantor's being able to sue successfully the very debtor whose obligation he guaranteed.
E)A legally enforceable guarantee must satisfy all the elements required to create a binding contract except consideration.

Question 16

Attachment takes place when

A)a contract is executed.
B)notice of a security arrangement is given.
C)after-acquired assets are secured.
D)a debtor receives some value under the contract.
E)a purchase money security interest arises.

Question 17

Identify which of the following statements is true about secured transactions in provinces having a personal property security act.

A)This kind of transaction,which formerly was legal,is now prohibited by law in all provinces.
B)Various kinds of secured transactions,such as conditional sales,chattel mortgages,etc.,are regulated by their own distinct statutes.
C)An assignment of an account receivable does not qualify as a security arrangement because no tangible property is involved.
D)All kinds of security arrangements involving personal property as collateral now come under one statute.
E)Only tangible personal property can be used as security.

Question 18

With regard to guarantees,which of the following is false?

A)A guarantor can use any defence against the creditor that the debtor could use.
B)A legally binding promise to be primarily responsible for someone else's obligation is an indemnity.
C)A verbal guarantee is as enforceable as a written one.
D)Subrogation can result in a guarantor's being able to sue successfully the very debtor whose obligation he guaranteed.
E)A legally enforceable guarantee must satisfy all the elements required to create a binding contract.

Question 19

Which of the following is the consequence of an unpaid subcontractor failing to file his lien on time? The owner had contracted with the general contractor who in turn had contracted with this subcontractor.

A)He can submit documents giving his reason and he will be allowed to file the lien late.
B)He will lose all of his remedies.
C)He will lose his right to place a charge against the owner's property,but he can sue the owner directly for the amount owed him,because his work and materials went into the owner's house.
D)He would lose his right to place a charge against the owner's property,but he can sue the contractor on the contract.
E)He loses his right to claim against the building but can sue the owner of the property directly.

Question 20

Which one of the following is true with respect to the builder's lien acts?

A)Various provincial statutes give suppliers of work and materials a claim for payment against the land enhanced by their services.
B)If a lien claimant files his lien within the time set,he can be assured that he will collect the full amount of his claim.
C)Compliance with the statutory holdback provisions is required,but gives an owner no protection against potential lien claims.
D)If a lien claimant loses the right to file a lien,he also loses the right to sue for breach of contract.
E)A lien claimant owed money by a general contractor can choose to pursue either the general contractor or the property owner for the full amount of the claim.

Question 21

Which one of the following actions by a debtor constitutes an act of bankruptcy?

A)A fraudulent conveyance of liabilities to one of the creditors
B)A fraudulent transfer of money or assets
C)Assignment of liabilities to a trustee
D)Having more debts than assets
E)Generally meeting liabilities as they become due

Question 22

A purchase money security interest

A)will be automatically subordinate to any general security agreement,even if registered within the specified time period.
B)will prevail over a general security agreement covering all of a merchant's assets if it registered within the specified time period.
C)is also known as a floating charge.
D)is now obsolete in light of the Personal Property Security Act.
E)is prohibited in most provinces.

Question 23

Which one of the following is false with respect to the Builders' Lien Act?

A)The lien claim is required to be filed at the appropriate registry in order to establish a claim against the property.
B)If a lien claimant files his lien within the time set,he can be assured that he will collect the full amount of his claim.
C)The Builders' Lien Act gives some protection for those in the building trades,and these include contractors,subcontractors,workers,and materialmen.
D)If a lien claimant loses the right to file a lien,he still has the right to sue the party who failed to pay him for breach of contract.
E)A lien claimant has a limited period of time from filing his lien within which to begin his court action.

Question 24

In Re Fancy,a businessman knew that he was facing substantial losses from pending litigation.Shortly before declaring bankruptcy,he transferred his interest in the matrimonial home to his wife.What was the result?

A)The Court reversed the transfer,because it was unnecessary: The wife would automatically receive the matrimonial home once the bankruptcy took effect.
B)The Court allowed the transfer,determining the wife was not a co-conspirator.
C)The Court allowed the transfer,because transfers between spouses are exempt under the Bankruptcy and Insolvency Act.
D)The Court reversed the transfer,determining it was a prohibited settlement under the Bankruptcy and Insolvency Act.
E)The Court declined to exercise jurisdiction because a bankrupt has no status to appear in court.

Question 25

Real and personal property can be used to secure a loan.

Question 26

Which of the following debts is not subject to a stay of proceedings even after a bankrupt has been discharged?

A)Past maintenance for dependents
B)Family loans
C)Judgment debts
D)Ordinary debt
E)Unsecured loans

Question 27

Which of the following is a goal of the Bankruptcy and Insolvency Act?

A)To determine the process by which debtors convey their assets to a trustee in bankruptcy who distributes them to the creditors
B)To provide an alternative to criminal charges
C)To allow persons with impossible burdens of debt to discharge all of their debts
D)To protect the interests of debtors
E)To help incorporated companies after discharge to carry on without the same burden of debt

Question 28

With regard to bankruptcy and debt collection,which of the following is false?

A)The Bankruptcy and Insolvency Act provides for a procedure for an insolvent debtor to make a proposal to his creditors that may or may not result in bankruptcy for the debtor.
B)Both fraudulent conveyance and fraudulent preferences acts attempt to prohibit the debtor from delaying,hindering,or defrauding the creditor.
C)Corporations that go into receivership may not be involved in bankruptcy; the receivership may be based on contract.
D)The commission of a bankruptcy offence could prevent a bankrupt debtor from being discharged.
E)Any assets obtained by a discharged bankrupt can still be claimed by former unsecured creditors who placed the former bankrupt into bankruptcy.

Question 29

The bulk sales acts in place in some provinces are designed to do which of the following?

A)To set minimum statutory standards for goods sold by description in large,unpackaged quantities
B)To provide relief to commercial purchasers when a ship's cargo is destroyed
C)To enable commercial debtors to sell their products at a reduced price in order to pay back their creditors in a more timely way
D)To give priority to creditors who are owed money in respect of inventory sold to the debtor within the last 30 days
E)To prevent merchants from selling all or almost all of their business's assets before a creditor can take action to stop them

Question 30

Which one of the following statements about bankruptcy is false?

A)Bankruptcy law is identical in every province of Canada.
B)Bankruptcy refers to a situation in which a debtor who cannot pay debts transfers his assets to a trustee who acts on behalf of creditors.
C)Bankruptcy law may allow a debtor to escape from having to pay his debts.
D)All creditors of a bankrupt debtor are treated equally and will receive shares of the assets directly in proportion to how much is owed to each of them.
E)A debtor who has been discharged from bankruptcy is released from his previous financial obligations.

Question 31

Bret decided to enlarge the fishpond in his backyard.He contracted with a general contractor,Conan.Conan subcontracted with Darson to do the excavation and with Ericson to do the plumbing.Conan's own workers did the masonry work.Bret made "progress payments" to Conan,since Conan said such payments were necessary to pay his workers and subcontractors.Bret learned that the workers and subcontractors had not been paid and Conan had used the payments to pay debts unrelated to the job on Bret's pond.Which of the following best describes Bret's position?

A)Because of the doctrine of privity of contract,Bret will not face any liability whatsoever.
B)If Bret held back the 10% required by statute from his payments to Conan,but then later paid it out despite liens having been filed against his property,Bret would still face no liability as he technically complied with the legislation.
C)Bret will be liable for all unpaid amounts because the work was on his land and for his benefit.
D)If Bret held back the 10% required by statute from his payments to Conan,his obligation would generally be limited to the amount of that holdback.
E)Bret had no obligation to hold back any amount of the payments made to Conan as the hold back requirement doesn't apply to progress payments.

Question 32

________ requires the debtor to make the stipulated payments into court,such that all of his debts will be paid in full within three years,unless the creditors consent to a longer period.

A)An OPD program
B)Restructuring
C)An unsecured creditor
D)A consolidation order
E)A Division 1 proposal

Question 33

The owner of the house had contracted with a general contractor,Mr.Hadrian,for a greenhouse addition to the house at a cost of $20,000.In accordance with legislation,the owner withheld 10% and waited the legislated period of time within which any liens were to be filed.Which of the following correctly describes the owner's liability?

A)The owner is liable to any unpaid subcontractors,whether or not a lien was filed,but can use the holdback money to reduce his liability a certain extent.
B)Whether or not there are liens registered,the owner is free to pay out the retained holdback once the legislated time period has expired.
C)Unpaid subcontractors can no longer place liens on the owner's property because of the doctrine of privity of contract.
D)If the owner checks the registry and there are no liens registered,he is free to pay out the retained holdback.
E)Lien holders would have no claim against the property but would be entitled to the 10% holdback,in addition to being able to sue the owner for the amount not satisfied by the holdback.

Question 34

You are in debt to three creditors for $200,000,and the debt is increasing because you are not able to meet your monthly financial obligations.Which of the following is false with regard to your situation?

A)It is illegal for you to transfer assets to a spouse or friend to shield them from your creditors.
B)If you become bankrupt,your assets are conveyed to a trustee in bankruptcy who deals with them for the benefit of your creditors.
C)If you become bankrupt,you are restricted from carrying on certain activities until you are discharged.
D)If your long-time financial well-being would be served by bankruptcy,you must ask your creditors to begin the procedure,since you cannot begin it yourself.
E)The Bankruptcy and Insolvency Act provides a procedure to avoid bankruptcy by making a proposal to your creditors for satisfying their claims.

Question 35

Which one of the following is false with regard to creditors' remedies?

A)A garnisheeing order is an order to the sheriff or civil enforcement agent to seize assets of a judgment creditor to satisfy a judgment debt.
B)A person who wins in an action and is awarded damages is called a judgment creditor.
C)A guarantor is a person who agrees to be responsible for a debt if the borrower (the person primarily liable)defaults.
D)A General Security Agreement debenture can create a security interest in "all present and after acquired property."
E)A guarantor may avoid liability if the creditor does some act or enters into an agreement that weakens the guarantor's position.

Question 36

Greg told Rick that he would be willing to pay a high rate of interest for a two-month loan of $2000.Rick agreed to lend Greg this amount at an annual rate of 20%,repayable March 1,2016.Greg agreed to these terms.Greg did not pay on March 1.Rick learned that Greg had recently completed some work for Martinson for which Greg was owed $2000.Now that Greg is in default,which of the following is false?

A)Rick could sue Greg for breach of contract.
B)Rick could execute against Greg even if Rick had not obtained judgment against him.
C)Rick could not place Greg into bankruptcy unless Greg had committed an act of bankruptcy.
D)If Rick obtained a judgment against Greg,he could compel him to be examined about his income,property,and debts.
E)Once he has obtained judgment,Rick can garnishee the money owed to Greg by Martinson.

Question 37

Holtz hires Joe,a builder,to convert his attic into an apartment so that Holtz's mother can move in.Joe employs two carpenters,an electrician,and a plumber to do the actual work.When making payments to Joe,Holtz holds back the 10% required by statute.After waiting the legislated minimum period,Holtz discovers that several liens have been registered against his property.It turns out that Joe failed to pay the various subcontractors for their work.Which one of the following statements best describes Holtz's position?

A)Holtz has no liability to any of those involved with the job except Joe,because he has a contract only with Joe.
B)Holtz and Joe are equally liable to the lien claimants because of recent amendments to the builders' lien legislation.
C)Holtz bears the sole liability to the lien claimants for any debts arising out of their work on his property.
D)Holtz's mother will be liable to both Holtz and the lien claimants,as she will be taking the benefit of the renovations.
E)If Holtz has complied with the statutory requirements,his obligation will be limited to the amount of the holdback,even if the amount owed under the liens far greater.

Question 38

They couldn't remember exactly how it happened,but the Mauri's ended up a three-computer family with the consequent mess of books and papers in three different rooms.Mr.Mauri hired a general contractor,Mr.Wip,to build a "computer room." Wip had several qualified workers but still sub-contracted with an electrician and a carpenter.The work went well.Mauri held back 10%,but paid out 90% in good faith.That is,when he paid,there were no complaints or liens filed.It turned out,however,that before anyone had completed his work-and no one expected payment until the job was finished-Wip disappeared with the money.On these facts,which of the following is true?

A)The subcontractors,but not the workers,are entitled to place a lien on Mauri's property.
B)If the electrician fails to file his lien on time,he can file it late if he uses the right form.
C)If the carpenter properly files a lien in the appropriate office,he can be assured that he will recover the entire amount owed.
D)If all those entitled to file a lien do file and prove in court the amounts owed,Mauri is responsible for the sum total of those claims.
E)The workers and subcontractors have an action against Wip for breach of contract.

Question 39

Both a chattel and a chose in action can be used to secure a debt.

Question 40

Which one of the following statements about bankruptcy is true?

A)Bankruptcy law is different in every province of Canada.
B)Bankruptcy refers to a situation in which a debtor who cannot pay debts transfers his assets to the creditors directly.
C)Bankruptcy law forces a debtor to pay all his debts,regardless of his financial position.
D)All creditors of a bankrupt debtor are treated equally and will receive shares of the assets directly in proportion to how much is owed to each of them.
E)A debtor who has been discharged from bankruptcy is free from recovery proceedings from most of his unsecured creditors previous to bankruptcy.

Question 41

Because of the special nature of a guarantee,there is no requirement for consideration.

Question 42

Student loans survive bankruptcy and remain payable for up to seven years after the debtor ceases to be a student.

Question 43

A "confirmed letter of credit" is another name for a "standby letter of credit."

Question 44

When a tenant fails to pay rent on a leased commercial property,the common law right of distress is available to the landlord.

Question 45

The Bankruptcy and Insolvency Act allows a supplier of goods to a bankrupt to seek return of those goods.

Question 46

In case of default by either the creditor or debtor,breach of contract remedies apply.

Question 47

When the value of the security is not great enough to cover the debt,a secured creditor is an unsecured creditor for that outstanding amount.

Question 48

Any substantial change in the nature of the contract between the creditor and the debtor without the guarantor's consent will relieve the guarantor of any obligation.

Question 49

If no builders' liens are registered within the specified time,the owner gives the holdback to the general contractor.

Question 50

If a fraudulent transfer is made to a bona fide purchaser for value,the transaction can still be reversed for a period of one year.

Question 51

The debtor usually retains possession of the goods used to secure a debt while the creditor has the right to seize them for default.

Question 52

As long as the debtor lives up to the terms of an accepted consumer proposal,creditors cannot take action against him/her.

Question 53

When creditors receive notice of a consumer proposal from an insolvent debtor,they must demand a meeting or the proposal will be automatically accepted.

Question 54

When a security interest is taken on personal property in a PPSA jurisdiction,the borrower temporarily transfers title to lender.

Question 55

Some debtors can submit a reorganization proposal to avoid bankruptcy.

Question 56

Legislation and the principles of contract and common law primarily protect the interests of the debtor in the event of a default.

Question 57

Bankruptcy is a wholly voluntary process designed primarily to protect debtors from abusive creditors.

Question 58

The practice of paying out one creditor over another is known as fraudulent preference.

Question 59

Crops still in the ground and products in the process of being made can be used by Chartered Banks as security.

Question 60

Settlements involve the transfer of assets for nominal or no consideration.

Question 61

A guarantee must be supported by consideration,just like any other contractual obligation.Explain what consideration is present when one person guarantees the debt of another.

Question 62

Distinguish between attachment and perfection under the Personal Property Security Act.

Question 63

"Joe bought a car from Harry's Fine Cars on time secured by a Security Agreement.It ran fine for a while,then he had a series of problems with it that made Joe regret ever entering into the transaction.Joe simply stopped paying,knowing that the only thing that Harry could do was repossess the goods." Explain the accuracy of the final statement.

Question 64

Explain the purpose of the Personal Property Security Act.

Question 65

Who is responsible for repossessing the goods?

Question 66

Why is the distinction between a guarantee and an indemnity important?

Question 67

In the event of a default,if the creditor elects to repossess and resell the goods,how does he protect his right to claim for deficit?

Question 68

Owen borrowed money from a credit union,guaranteed by his father,to buy a car.The credit union also registered a security interest under the Personal Property Security Act against the vehicle.Owen defaulted and,instead of repossessing the vehicle,the credit union demanded payment from the father.Explain the legal position of the father under these circumstances.

Question 69

Where,in the face of default,goods are repossessed and resold,but the amount recovered is not enough to cover what is owing,what are the rights of the creditor?

Question 70

What is the primary remedy available when goods have been used to secure a loan which has been defaulted?

Question 71

Where a debtor has defaulted and the creditor,under the Personal Property Security Act,repossesses and resells the goods,what is his obligation with respect to overages or underages?

Question 72

"The main purpose of security is to provide some recourse to the person claiming to be paid if some dispute arises about the quality of the performance of the contract." Discuss the accuracy of this statement.

Question 73

With few exceptions,once a bankrupt is discharged,there is no longer an obligation to pay back the unsecured creditors.

Question 74

Explain what is meant by a "chose in action."

Question 75

Distinguish between a guarantee and an indemnity.

Question 76

In a secured transaction pursuant to the Personal Property Security Act,etc.,what is the purpose of a registration?

Question 77

A Division I proposal is available only to consumer debtors with less than $75,000 in claims against them.

Question 78

Give three examples of types of things that can be used as security under the Personal Property Security Act.

Question 79

Owen had borrowed money from a credit union to purchase a car,and the credit union had required a security interest against the car,which they registered under the Personal Property Security Act.As well,Owen's father guaranteed the loan.Some months later,Owen decided to go back to school,and he had to sell the car to do so.He returned to the credit union and,at his request,the credit union gave up the security they had against the vehicle,knowing that they still had the loan guaranteed by Owen's father.Explain the wisdom of this move.

Question 80

Joe bought a car from Harry's Fine Car Lot and owed him $5000 on the deal,which he was paying back at $500 a month under a Security Agreement.Harry assigned that Security Agreement to Ace Finance Company,and they served notice on Joe that he was to make his payments in future to them.Joe knew,however,that his deal was with Harry,and he ignored the notification and continued to make the payments to Harry.What danger does he face in these circumstances?