Question 1

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

Accepted Answer

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 thus 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 public registry or will have actual possession of the collateral. 
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 thus 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 public registry or will have actual possession of the collateral.

Question 2

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

Accepted Answer

A)  A garnisheeing order is an order to the sheriff 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 debenture can create a "floating charge" that will not attach to anything specifically until the debtor defaults or until the happening of another "crystallizing" event. 
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 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 debenture can create a "floating charge" that will not attach to anything specifically until the debtor defaults or until the happening of another "crystallizing" event. 
E)  A guarantor may avoid liability if the creditor does some act or enters into an agreement that weakens the guarantor's position.

Question 3

Having a lien perfected simply means the claimant must begin a court action to enforce it.

Accepted Answer

A) True 
 B)False

Question 4

Some debtors can submit a reorganization proposal to avoid bankruptcy.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

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

Question 6

John,a salesperson for the computer division of B & C Machines Ltd.,is meeting with a potential customer at 11:00 tomorrow morning.Because the customer does not have the funds to pay the full price of the system required,John wants to discuss chattel mortgages and conditional sales contracts.Which of the following is false with regard to these contracts?

Accepted Answer

A)  If the seller of goods is willing to allow the buyer to pay by installments, he could use either a conditional sale contract or a chattel mortgage to obtain security for payment of the debt. 
B)  Both contracts are governed by the Personal Property Security Act. 
C)  Both contracts provide that the debtor has quiet possession of the goods given as security as long as he is not in default. 
D)  In both cases, the debtor is entitled to have the lien removed upon final payment. 
E)  Only a conditional seller needs to register his interest for protection against third-party claims; a chattel mortgagee need not do so. 
A)  If the seller of goods is willing to allow the buyer to pay by installments, he could use either a conditional sale contract or a chattel mortgage to obtain security for payment of the debt. 
B)  Both contracts are governed by the Personal Property Security Act. 
C)  Both contracts provide that the debtor has quiet possession of the goods given as security as long as he is not in default. 
D)  In both cases, the debtor is entitled to have the lien removed upon final payment. 
E)  Only a conditional seller needs to register his interest for protection against third-party claims; a chattel mortgagee need not do so.

Question 7

"Bankruptcy is a convenient way to avoid paying your debts." Discuss the accuracy of this statement.

Accepted Answer

Students should note that this attitude

Question 8

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

Accepted Answer

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. 
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 9

Who is responsible for repossessing the goods?

Accepted Answer

The creditor,himself

Question 10

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

Accepted Answer

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

Question 11

Jones did work for Smith,who agreed to pay him in advance by cheque.Smith prepared a cheque for Jones.In which of the following situations would Smith have to honour the cheque to Green after it had been transferred to her by Jones?

Accepted Answer

A)  Where Green was Jones's girlfriend who had been given the note as a gift. Jones had not yet started the job. 
B)  Where Green knew that Jones had taken the completed cheque from Smith's desk while Smith was out to lunch. 
C)  Where Green and Jones had worked together in a scheme to cheat Smith. 
D)  Where Green operated a finance company and, while not knowing Jones but recognizing Smith's signature and knowing his good reputation, had given Jones $400 for the $500 cheque. 
E)  Where Jones had changed the $500 to read $5000 by adding a zero and rubbing out the word "hundred" and writing "thousand" over it. The alteration was clearly visible on the cheque. 
A)  Where Green was Jones's girlfriend who had been given the note as a gift. Jones had not yet started the job. 
B)  Where Green knew that Jones had taken the completed cheque from Smith's desk while Smith was out to lunch. 
C)  Where Green and Jones had worked together in a scheme to cheat Smith. 
D)  Where Green operated a finance company and, while not knowing Jones but recognizing Smith's signature and knowing his good reputation, had given Jones $400 for the $500 cheque. 
E)  Where Jones had changed the $500 to read $5000 by adding a zero and rubbing out the word "hundred" and writing "thousand" over it. The alteration was clearly visible on the cheque.

Question 12

Explain how a bill of sale can be used as a security.

Accepted Answer

A chattel mortgage uses a bill of sale t

Question 13

Student loans survive bankruptcy and remain payable for up to 10 years after the debtor ceases to be a student.

Accepted Answer

A) True 
 B)False

Question 14

What is a floating charge?

Accepted Answer

The term "floating charge" is likely obs

Question 15

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?

Accepted Answer

This varies from province to province.Ge

Question 16

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

Accepted Answer

A)  If you request a search, and the central 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 properly registered chattel mortgagee claims a right to the car, you could lose the car. 
C)  Even if both the seller and the central 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. 
A)  If you request a search, and the central 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 properly registered chattel mortgagee claims a right to the car, you could lose the car. 
C)  Even if both the seller and the central 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 17

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

Accepted Answer

This Act is designed to prohib

Question 18

Which of the following debts continue even after a bankrupt has been discharged?

Accepted Answer

A)  past maintenance for dependents 
B)  secured loans 
C)  judgment debts 
D)  ordinary debt 
E)  unsecured loans 
A)  past maintenance for dependents 
B)  secured loans 
C)  judgment debts 
D)  ordinary debt 
E)  unsecured loans

Question 19

As the fishing season slowed down in the fall,Bob decided that this 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 had only $10 000,so he borrowed the other $5000 from the bank.He also signed a chattel mortgage 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 $3,000+ 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 20

Discuss situations in which a secured creditor may opt not to seize property used as security,and the rationale for taking this approach.

Accepted Answer

When a debtor defaults,a secured credito

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

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

Having a lien perfected simply means the claimant must begin a court action to enforce it.

Some debtors can submit a reorganization proposal to avoid bankruptcy.

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

"Bankruptcy is a convenient way to avoid paying your debts." Discuss the accuracy of this statement.

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

Who is responsible for repossessing the goods?

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

Jones did work for Smith,who agreed to pay him in advance by cheque.Smith prepared a cheque for Jones.In which of the following situations would Smith have to honour the cheque to Green after it had been transferred to her by Jones?

Explain how a bill of sale can be used as a security.

Student loans survive bankruptcy and remain payable for up to 10 years after the debtor ceases to be a student.

What is a floating charge?

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?

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

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

Which of the following debts continue even after a bankrupt has been discharged?

Discuss situations in which a secured creditor may opt not to seize property used as security,and the rationale for taking this approach.

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputesthe Courts and Alternatives to Litigation

Intentional Torts and Torts Impacting Business

Negligence, Professional Liability, and Insurance

The Elements of a Contractconsensus and Consideration

The Elements of a Contract capacity, Legality, and Intention

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Employment

Agency and Partnership

Corporations

Real, Personal, and Intellectual Property

Information Technology and the Internet

Sales and Consumer Protection

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Exam 16: Priority of Creditors

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

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

Having a lien perfected simply means the claimant must begin a court action to enforce it.

Some debtors can submit a reorganization proposal to avoid bankruptcy.

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

"Bankruptcy is a convenient way to avoid paying your debts." Discuss the accuracy of this statement.

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

Who is responsible for repossessing the goods?

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

Jones did work for Smith,who agreed to pay him in advance by cheque.Smith prepared a cheque for Jones.In which of the following situations would Smith have to honour the cheque to Green after it had been transferred to her by Jones?

Explain how a bill of sale can be used as a security.

Student loans survive bankruptcy and remain payable for up to 10 years after the debtor ceases to be a student.

What is a floating charge?

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?

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

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

Which of the following debts continue even after a bankrupt has been discharged?

Discuss situations in which a secured creditor may opt not to seize property used as security,and the rationale for taking this approach.

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputesthe Courts and Alternatives to Litigation

Intentional Torts and Torts Impacting Business

Negligence, Professional Liability, and Insurance

The Elements of a Contractconsensus and Consideration

The Elements of a Contract capacity, Legality, and Intention

Factors Affecting the Contractual Relationship

The End of the Contractual Relationship

Employment

Agency and Partnership

Corporations

Real, Personal, and Intellectual Property

Information Technology and the Internet

Sales and Consumer Protection

Filters