Friday, April 17, 2015

Exams are done!

Today is my first free day. Law school exams for me ended yesterday which means I have several weeks now with no classes, no reading and no homework!  Surprisingly, I find myself wanting to immediately start working on reading and assignments for next term. I guess good habits die hard. 

Anyway, here’s a test of your Secured Transactions knowledge:

On June 1, Bank One perfected a security interest in Debtor’s inventory by properly filing a financing statement stating that it had a security interest in all of Debtor’s inventory. On July 1, Bank Two perfected a security interest in Debtor’s accounts by properly filing a financing statement stating that it had a security interest in all of Debtor’s accounts. On August 1, Debtor sold some of its inventory to Buyer in the ordinary course of business. Buyer’s payment for the inventory was due on September 1. On August 15, Debtor defaulted on both of its loans from Bank One and Bank Two. Which of the banks has priority to the amount payable by Buyer (an “account”)?

Answers:
A. Bank One, because it filed its financing statement before Bank Two did.
B. Bank Two, because Bank One did not have a security interest in Debtor’s accounts.
C. Bank Two, because Bank One’s financing statement did not reference any of Debtor’s accounts as collateral, only Debtor’s inventory.
D. Neither, because Buyer bought the inventory in the ordinary course of business.

         ....*HINT*.... it's a proceeds question.

 Correct Answer is A. law-school-exam111

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