Question 1

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

Accepted Answer

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

Question 2

How might the assignment of book debts (owed to the assignor)seriously prejudice the position of general creditors and prospective general creditors?

Accepted Answer

The answer of How might the assignment of book debts...

Question 3

Use this fact situation to answer the related questions that follow. A is buying a video business including the inventory of DVDs,which is valued at half the worth of the business,but A only has half the purchase price,so B agrees to help A out.
In this case,to help A buy the business,B will

Accepted Answer

A) take back a floating charge over the inventory. 
B) take a chattel lease over the inventory for the balance of the purchase price. 
C) take back a mortgage/charge on the inventory. 
D) take back a chattel mortgage on the inventory. 
E) none of the above

Question 4

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) a secured transaction. 
C) security interest. 
D) creditor interests. 
E) collateral.

Question 5

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

Accepted Answer

A) chattel mortgage 
B) assignment of office furniture 
C) assignment of book debts 
D) guarantee of a third party 
E) mortgage of real estate

Question 6

Use the fact situation in Q2 to answer the related question that follows. In this situation,if B takes back a chattel mortgage on the inventory,title to the inventory

Accepted Answer

A) remains with A. 
B) is immediately transferred to A and retransferred to B. 
C) remains with B until A has made the first payment. 
D) remains with B until B gives notice to A to transfer title to B. 
E) remains with B until A makes the last payment.

Question 7

Can the chartered banks require security for loans outside section 427 of the federal Bank Act?

Accepted Answer

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

Question 8

Self-liquidating financing is usually the best form of financing for

Accepted Answer

A) doctors. 
B) students. 
C) teachers. 
D) lawyers. 
E) farmers.

Question 9

Sometimes conditional sale contracts exist between the manufacturer and the retailer.How does the consumer know she or he is getting clear title to the goods purchased?

Accepted Answer

A) In this case the Mercantile Agency Rule would be suspended. 
B) Because if she didn't,it would fly in the face of consumer expectations. 
C) She doesn't know for sure,that's wherein the problem lies. 
D) The federal Personal Property Security Act guarantees it to consumers. 
E) By provincial statute-buyer acquires good title if the goods are resold in the ordinary course of business.

Question 10

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) No,they cannot,provided Fred is an innocent third party. 
B) No,they cannot,since this is a consumer transaction where title is guaranteed. 
C) Yes,they can,but it would be easier for them to get the money from Sonny. 
D) Yes,they can,if the security device is properly registered with the province. 
E) Yes,they can directly from Fred,or they can force Sonny to retrieve the computer.

Question 11

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) would always be quite foolish. 
C) may be a matter of too much trouble and expense. 
D) will risk that the debtor can prevail in a lawsuit. 
E) allows the provisions in the Sale of Goods Act to govern where there is an innocent third party.

Question 12

Phillip,who has a loan on his car at the bank,has placed his car on consignment at the local used car lot.His law professor tells Phillip that consignments can amount to a secured type of credit.If this is true,who is the creditor?

Accepted Answer

A) the consignor 
B) nobody,because in this case,the professor is wrong 
C) the next purchaser of the car 
D) the consignee 
E) the bank

Question 13

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

Accepted Answer

The answer of Does a bank have a right of...

Question 14

How is it that security devices mislead innocent third parties?

Accepted Answer

The answer of How is it that security devices mislead...

Question 15

Which one of the following requires permission from the security holder before the item(s)used as collateral can be sold?

Accepted Answer

A) chattel mortgage 
B) pledge 
C) real estate mortgage 
D) stock-in-trade 
E) floating charges

Question 16

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

Accepted Answer

A) True 
 B)False

Exam 28: Secured Transactions