Question 1

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

Accepted Answer

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. 
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 2

Some debtors can submit a reorganization proposal to avoid bankruptcy.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

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. 
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 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

What obligations are placed on the owner of property in respect of builders' liens?

Accepted Answer

Under the relevant legislation, the owne

Question 7

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?

Accepted Answer

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. 
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 8

Which one of the following statements about bankruptcy is false?

Accepted Answer

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. 
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 9

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

Accepted Answer

A) True 
 B)False

Question 10

Explain how, in a creditor/debtor transaction, the exposure of a guarantor is limited and his rights protected.

Accepted Answer

A guarantor is in a unique position and

Question 11

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.

Accepted Answer

A) True 
 B)False

Question 12

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?

Accepted Answer

Any surplus must be returned t

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Who is responsible for repossessing the goods?

Accepted Answer

The creditor instruc

Question 15

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?

Accepted Answer

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. 
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 16

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?

Accepted Answer

Harry's Fine Car Lot had the right to as

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

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 
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 19

What is the purpose of the Fraudulent Conveyances Act? (The name varies with the province.)

Accepted Answer

This act is designed to prohib

Question 20

"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.

Accepted Answer

The statement is inaccurate. In fact, Ha

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

Some debtors can submit a reorganization proposal to avoid bankruptcy.

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

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

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

What obligations are placed on the owner of property in respect of builders' liens?

Which one of the following statements about bankruptcy is false?

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

Explain how, in a creditor/debtor transaction, the exposure of a guarantor is limited and his rights protected.

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.

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?

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

Who is responsible for repossessing the goods?

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

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

What is the purpose of the Fraudulent Conveyances Act? (The name varies with the province.)

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes: the Courts and Alternatives to Litigation

Intentional Torts and Torts Impacting Business

Negligence, Professional Liability, and Insurance

The Elements of a Contract: Consensus and Consideration

The Elements of a Contract: Capacity, Legality, and Intention

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Agency and Partnership

Corporations

Employment

Intellectual Property

Real and Personal Property and Protection of the Environment

Sales and Consumer Protection

Filters

Exam 15: Priority of Creditors

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

Some debtors can submit a reorganization proposal to avoid bankruptcy.

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

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

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

What obligations are placed on the owner of property in respect of builders' liens?

Which one of the following statements about bankruptcy is false?

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

Explain how, in a creditor/debtor transaction, the exposure of a guarantor is limited and his rights protected.

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.

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?

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

Who is responsible for repossessing the goods?

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

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

What is the purpose of the Fraudulent Conveyances Act? (The name varies with the province.)

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes: the Courts and Alternatives to Litigation

Intentional Torts and Torts Impacting Business

Negligence, Professional Liability, and Insurance

The Elements of a Contract: Consensus and Consideration

The Elements of a Contract: Capacity, Legality, and Intention

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Agency and Partnership

Corporations

Employment

Intellectual Property

Real and Personal Property and Protection of the Environment

Sales and Consumer Protection

Filters