Question 1

How is the debtor rehabilitated under the bankruptcy legislation?

Accepted Answer

The debtor, after a period of time during which the assets are distributed to the creditors, is discharged from the bankruptcy and allowed to continue on with his activities, no longer burdened by debt. Note exceptions such as student loans and family maintenance obligations.

Question 2

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

Accepted Answer

A)  A person who wins in an action and is awarded damages is called a "judgment creditor." 
B)  A garnisheeing order is an order to the sheriff to seize assets of a judgment creditor to satisfy a judgment debt. 
C)  A guarantor is a person who agrees to be responsible for a debt if the borrower (the person primarily liable) defaults. 
D)  A guarantor may avoid liability if the creditor does some act or enters into an agreement that weakens the guarantor's position. 
E)  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. 
A)  A person who wins in an action and is awarded damages is called a "judgment creditor." 
B)  A garnisheeing order is an order to the sheriff to seize assets of a judgment creditor to satisfy a judgment debt. 
C)  A guarantor is a person who agrees to be responsible for a debt if the borrower (the person primarily liable) defaults. 
D)  A guarantor may avoid liability if the creditor does some act or enters into an agreement that weakens the guarantor's position. 
E)  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. B

Question 3

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?

Accepted Answer

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

Question 4

Joe bought a car from Harry's Fine Car Lot and owed him $5,000 on the deal, which he was paying back at $500 a month under a conditional sale agreement. Harry assigned that conditional sale 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 5

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

Accepted Answer

The creditor's rights under the Personal

Question 6

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 knew that Jones had taken the completed cheque from Smith's desk while Smith was out to lunch. 
B)  Where Green was Jones's girlfriend who had been given the note as a gift. Jones had not yet started the job. 
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 knew that Jones had taken the completed cheque from Smith's desk while Smith was out to lunch. 
B)  Where Green was Jones's girlfriend who had been given the note as a gift. Jones had not yet started the job. 
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 7

In a creditor/debtor transaction, explain the purpose of security and how that purpose can be realized.

Accepted Answer

This requires that students understand a

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Discuss the bankruptcy and insolvency process from the point of view of the creditor, indicating how that creditor's interests are or are not protected.

Accepted Answer

Bankruptcy involves the assets of the de

Question 10

With regard to negotiable instruments, which of the following is false?

Accepted Answer

A)  A drawer of a cheque can refuse to pay any holder of it if the drawer can prove that the payee obtained the cheque by fraud. 
B)  A cheque is a bill of exchange drawn on a bank, payable on demand. 
C)  Bills of exchange can be made payable for some future date. 
D)  A negotiable instrument used to advance credit in a consumer transaction must be marked "consumer purchase". 
E)  A cheque that has been certified cannot be countermanded by the drawer. 
A)  A drawer of a cheque can refuse to pay any holder of it if the drawer can prove that the payee obtained the cheque by fraud. 
B)  A cheque is a bill of exchange drawn on a bank, payable on demand. 
C)  Bills of exchange can be made payable for some future date. 
D)  A negotiable instrument used to advance credit in a consumer transaction must be marked "consumer purchase". 
E)  A cheque that has been certified cannot be countermanded by the drawer.

Question 11

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 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. 
B)  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. 
C)  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. 
D)  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. 
E)  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. 
A)  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. 
B)  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. 
C)  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. 
D)  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. 
E)  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.

Question 12

Attachment takes place when

Accepted Answer

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

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Once the bankrupt has been discharged, explain his status.

Accepted Answer

He is free of debt and is no l

Question 15

Distinguish between receivership and bankruptcy where corporations are concerned.

Accepted Answer

Bankruptcy is the formal process done un

Question 16

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; i.e., 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 failed to file his lien on time, he can file it late if he uses the right form. 
C)  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. 
D)  The workers and subcontractors have an action against Wip for breach of contract. 
E)  If the carpenter properly files a lien in the appropriate office, he can be assured that he will recover the entire amount owed. 
A)  The subcontractors, but not the workers, are entitled to place a lien on Mauri's property. 
B)  If the electrician failed to file his lien on time, he can file it late if he uses the right form. 
C)  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. 
D)  The workers and subcontractors have an action against Wip for breach of contract. 
E)  If the carpenter properly files a lien in the appropriate office, he can be assured that he will recover the entire amount owed.

Question 17

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?

Accepted Answer

This varies from jurisdiction to jurisdi

Question 18

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

Accepted Answer

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

Question 19

A company in the delivery business bought a $29,000 truck under a conditional sale contract. Because of business reverses they are now unable to make the payments. Which of the following is accurate with respect to the legal position of the parties?

Accepted Answer

A)  The seller would have to get a court order before it could seize the truck. 
B)  If the secured creditor seized the truck, under the Personal Property Security Act the debtor has a set period of time in which to pay what is owing and costs and get the truck back. 
C)  The creditor would have to serve notice on all interested parties before it could seize the truck. 
D)  The seller would have been in a far more favourable position if it had obtained a chattel mortgage instead of using a conditional sale agreement. 
E)  The remedy of the conditional seller, as a secured creditor, is limited to the seizure of the truck. 
A)  The seller would have to get a court order before it could seize the truck. 
B)  If the secured creditor seized the truck, under the Personal Property Security Act the debtor has a set period of time in which to pay what is owing and costs and get the truck back. 
C)  The creditor would have to serve notice on all interested parties before it could seize the truck. 
D)  The seller would have been in a far more favourable position if it had obtained a chattel mortgage instead of using a conditional sale agreement. 
E)  The remedy of the conditional seller, as a secured creditor, is limited to the seizure of the truck.

Question 20

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

Accepted Answer

A) True 
 B)False

How is the debtor rehabilitated under the bankruptcy legislation?

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

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?

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

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?

In a creditor/debtor transaction, explain the purpose of security and how that purpose can be realized.

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

Discuss the bankruptcy and insolvency process from the point of view of the creditor, indicating how that creditor's interests are or are not protected.

With regard to negotiable instruments, which of the following is false?

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

Attachment takes place when

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

Once the bankrupt has been discharged, explain his status.

Distinguish between receivership and bankruptcy where corporations are concerned.

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?

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

A company in the delivery business bought a $29,000 truck under a conditional sale contract. Because of business reverses they are now unable to make the payments. Which of the following is accurate with respect to the legal position of the parties?

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

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes the Courts and Alternatives to Litigation

Intentional Torts

Negligence, Professional Liability, and Insurance Law

Formation of Contracts

Formation of Contracts Continued

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

How is the debtor rehabilitated under the bankruptcy legislation?

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

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?

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

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?

In a creditor/debtor transaction, explain the purpose of security and how that purpose can be realized.

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

Discuss the bankruptcy and insolvency process from the point of view of the creditor, indicating how that creditor's interests are or are not protected.

With regard to negotiable instruments, which of the following is false?

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

Attachment takes place when

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

Once the bankrupt has been discharged, explain his status.

Distinguish between receivership and bankruptcy where corporations are concerned.

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?

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

A company in the delivery business bought a $29,000 truck under a conditional sale contract. Because of business reverses they are now unable to make the payments. Which of the following is accurate with respect to the legal position of the parties?

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

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes the Courts and Alternatives to Litigation

Intentional Torts

Negligence, Professional Liability, and Insurance Law

Formation of Contracts

Formation of Contracts Continued

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