Question 1

With regard to debt collection, which of the following is false?

Accepted Answer

A)  Any assets obtained by a bankrupt after his being discharged can still be claimed by former creditors who placed him into bankruptcy. 
B)  Under the execution procedure, the assets of a judgment debtor can be seized satisfy a judgment debt. 
C)  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. 
D)  A person who wins in an action and is awarded damages is called a "judgment creditor." 
E)  The Bankruptcy and Insolvency Act provides for a procedure for an insolvent debtor to make a proposal to his creditors that, if accepted by his creditors, will not result in bankruptcy. 
A)  Any assets obtained by a bankrupt after his being discharged can still be claimed by former creditors who placed him into bankruptcy. 
B)  Under the execution procedure, the assets of a judgment debtor can be seized satisfy a judgment debt. 
C)  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. 
D)  A person who wins in an action and is awarded damages is called a "judgment creditor." 
E)  The Bankruptcy and Insolvency Act provides for a procedure for an insolvent debtor to make a proposal to his creditors that, if accepted by his creditors, will not result in bankruptcy.

Question 2

When the value of the security is not great enough to cover the debt, a secured creditor is an unsecured creditor for that outstanding amount.

Accepted Answer

A) True 
 B)False

Question 3

John, a salesman 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, he wants to discuss chattel mortgages and conditional sales contracts. Which of the following is false with regard to these contracts?

Accepted Answer

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

Question 4

Identify which of the following statements is true about secured transactions in provinces having a personal property security act.

Accepted Answer

A)  Only tangible personal property can be used as security. 
B)  All kinds of security arrangements involving personal property as collateral now come under one statute. 
C)  Various kinds of secured transactions, such as conditional sales, chattel mortgages, etc., are regulated by their own distinct statutes. 
D)  This kind of transaction, which formerly was legal, is now prohibited by law in all provinces. 
E)  An assignment of an account receivable does not qualify as a security arrangement because no tangible property is involved. 
A)  Only tangible personal property can be used as security. 
B)  All kinds of security arrangements involving personal property as collateral now come under one statute. 
C)  Various kinds of secured transactions, such as conditional sales, chattel mortgages, etc., are regulated by their own distinct statutes. 
D)  This kind of transaction, which formerly was legal, is now prohibited by law in all provinces. 
E)  An assignment of an account receivable does not qualify as a security arrangement because no tangible property is involved.

Question 5

Last night at the dinner table, Uncle Isaac started on again about his company buying a truck on time. Which of these statements by his friends is false with regard to conditional sales contracts?

Accepted Answer

A)  If the company is in default and the conditional seller seizes the truck, the relevant statute provides that it still has the right to redeem it within a short period of time. 
B)  If goods are repossessed under a conditional sales contract, the creditor must use commercially reasonable care to protect the goods and keep them in good repair. 
C)  The rights and obligations of the company differ substantially if the company buys the truck under a chattel mortgage rather than a conditional sale contract. 
D)  If the company is in default, in some provinces the conditional seller can seize the truck, sell it, and sue for any deficiency between the amount received and the amount the company owes. 
E)  If the company were in default, the conditional seller could sell the truck, but it must return any of the proceeds from that sale beyond the debt and costs owed. 
A)  If the company is in default and the conditional seller seizes the truck, the relevant statute provides that it still has the right to redeem it within a short period of time. 
B)  If goods are repossessed under a conditional sales contract, the creditor must use commercially reasonable care to protect the goods and keep them in good repair. 
C)  The rights and obligations of the company differ substantially if the company buys the truck under a chattel mortgage rather than a conditional sale contract. 
D)  If the company is in default, in some provinces the conditional seller can seize the truck, sell it, and sue for any deficiency between the amount received and the amount the company owes. 
E)  If the company were in default, the conditional seller could sell the truck, but it must return any of the proceeds from that sale beyond the debt and costs owed.

Question 6

Elizabeth gave a guarantee to the Bank in support of a loan to Tomasz. Over the next few years, the Bank and Tomasz made a number of alterations to the loan agreement. The effect of these changes was to significantly increase the amount owing to the Bank. Elizabeth had no notice or knowledge of these changes, nor she did not consent to any such changes. What is the likely result?

Accepted Answer

A)  Guarantees are a mere formality; only Tomasz has obligations to the Bank. 
B)  The failure to notify Elizabeth would release both Elizabeth and Tomasz from their obligations. 
C)  Elizabeth is bound by the changes to the loan, because guarantees are, by their nature, continuing. 
D)  The guarantees are likely to be invalid and unenforceable against Elizabeth. 
E)  A guarantee is executed under seal, therefore it will be presumed valid regardless of defect. 
A)  Guarantees are a mere formality; only Tomasz has obligations to the Bank. 
B)  The failure to notify Elizabeth would release both Elizabeth and Tomasz from their obligations. 
C)  Elizabeth is bound by the changes to the loan, because guarantees are, by their nature, continuing. 
D)  The guarantees are likely to be invalid and unenforceable against Elizabeth. 
E)  A guarantee is executed under seal, therefore it will be presumed valid regardless of defect.

Question 7

What is the effect of a payment made in preference to one creditor over another?

Accepted Answer

The answer of What is the effect of a payment...

Question 8

Hank sold three properties for Mr. W and had been paid his commission for the first, but not for the last two. Hank had done everything according to the contract and according to the relevant statutes, but Mr. W wouldn't pay. Hank knows that Mr. W has a bank account with the Bank of Montreal and has money owing to him from a Mr. Gregory. With regard to the collecting of the debt owed, which of the following is false?

Accepted Answer

A)  Hank could sue Mr. W for breach of contract. 
B)  Hank's claim for commission is unenforceable because he failed to secure the debt by retaining title until the amounts were paid. 
C)  After obtaining judgment, Hank could force the bank to pay into court an amount of money from Mr. W's account to satisfy the debt. 
D)  If Hank got judgment against Mr. W, he could get an order commanding seizure of enough of Mr. W's goods to satisfy the judgment debt. 
E)  If Mr. W goes into bankruptcy, Hank may not get paid. 
A)  Hank could sue Mr. W for breach of contract. 
B)  Hank's claim for commission is unenforceable because he failed to secure the debt by retaining title until the amounts were paid. 
C)  After obtaining judgment, Hank could force the bank to pay into court an amount of money from Mr. W's account to satisfy the debt. 
D)  If Hank got judgment against Mr. W, he could get an order commanding seizure of enough of Mr. W's goods to satisfy the judgment debt. 
E)  If Mr. W goes into bankruptcy, Hank may not get paid.

Question 9

Here comes your neighbour Max who wants to ask you more questions about buying an Apple computer for use at home under a conditional sales contract. Which one of the following statements told to him at work is true?

Accepted Answer

A)  If Max were in default, the conditional seller could sell the computer and keep all the proceeds of that sale, even if they were greater than the debt and costs. 
B)  If Max has paid two-thirds of the amount owing under the conditional sale contract, the conditional seller could never seize the computer, even if Max were in default. 
C)  In a conditional sales contract, the result of satisfying the condition is that the lien or charge will be removed from the goods used as security. 
D)  If Max is in default and the conditional seller seizes the computer, the relevant statute provides that it can be sold immediately with no further notice to Max. 
E)  Max's rights would be much greater and his obligations fewer if he bought it under a chattel mortgage rather than a conditional sales contract. 
A)  If Max were in default, the conditional seller could sell the computer and keep all the proceeds of that sale, even if they were greater than the debt and costs. 
B)  If Max has paid two-thirds of the amount owing under the conditional sale contract, the conditional seller could never seize the computer, even if Max were in default. 
C)  In a conditional sales contract, the result of satisfying the condition is that the lien or charge will be removed from the goods used as security. 
D)  If Max is in default and the conditional seller seizes the computer, the relevant statute provides that it can be sold immediately with no further notice to Max. 
E)  Max's rights would be much greater and his obligations fewer if he bought it under a chattel mortgage rather than a conditional sales contract.

Question 10

Owen bought a car from Ace Fancy Cars Ltd. on time. The salesman claimed that it had a new engine and new transmission. Security was registered against the vehicle under the Personal Property Security Act, and Owen's father was required to sign a guarantee to support the debt. Two months later, the car broke down, and upon inspection, it was discovered that, in fact, a used motor and transmission had been installed, not a new one. Owen refused to make any further payments and demanded his money back. The car dealership ignored their right to repossess the vehicle and demanded payment from Owen's father. Explain Owen's father's rights in these circumstances.

Accepted Answer

Owen's father has the same defences avai

Question 11

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 12

Which of the following is the consequence of an unpaid subcontractor failing to file his lien on time? The owner had contracted with the general contractor who in turn had contracted with this subcontractor.

Accepted Answer

A)  He would lose his right to place a charge against the owner's property, but he can sue the contractor on the contract. 
B)  He can submit documents giving his reason and he will be allowed to file the lien late. 
C)  He loses his right to claim against the building but can sue the owner of the property directly. 
D)  He will lose all of his remedies. 
E)  He will lose his right to place a charge against the owner's property, but he can sue the owner directly for the amount owed him, because his work and materials went into the owner's house. 
A)  He would lose his right to place a charge against the owner's property, but he can sue the contractor on the contract. 
B)  He can submit documents giving his reason and he will be allowed to file the lien late. 
C)  He loses his right to claim against the building but can sue the owner of the property directly. 
D)  He will lose all of his remedies. 
E)  He will lose his right to place a charge against the owner's property, but he can sue the owner directly for the amount owed him, because his work and materials went into the owner's house.

Question 13

Holtz hires Joe, a builder, to convert his attic into an apartment, so that Holtz's mother can move in. Joe employs two carpenters, an electrician, and a plumber to do the actual work. When making payments to Joe, Holtz holds back the 10% required by statute. After waiting the legislated minimum period, Holtz discovers that several liens have been registered against his property. It turns out that Joe failed to pay the various subcontractors for their work. Which one of the following statements best describes Holtz's position?

Accepted Answer

A)  Holtz bears the sole liability to the lien claimants for any debts arising out of their work on his property. 
B)  Holtz's mother will be liable to both Holtz and the lien claimants, as she will be taking the benefit of the renovations. 
C)  If Holtz has complied with the statutory requirements, his obligation will be limited to the amount of the holdback, even if the amount owed under the liens far greater. 
D)  Holtz and Joe are equally liable to the lien claimants, because of recent amendments to the builders' lien legislation. 
E)  Holtz has no liability to any of those involved with the job except Joe, because he has a contract only with Joe. 
A)  Holtz bears the sole liability to the lien claimants for any debts arising out of their work on his property. 
B)  Holtz's mother will be liable to both Holtz and the lien claimants, as she will be taking the benefit of the renovations. 
C)  If Holtz has complied with the statutory requirements, his obligation will be limited to the amount of the holdback, even if the amount owed under the liens far greater. 
D)  Holtz and Joe are equally liable to the lien claimants, because of recent amendments to the builders' lien legislation. 
E)  Holtz has no liability to any of those involved with the job except Joe, because he has a contract only with Joe.

Question 14

A security not fixed on any particular assets until default or some other specified event is known as a ________.
ESSAY. Write your answer in the space provided or on a separate sheet of paper.

Accepted Answer

The answer of A security not fixed on any particular...

Question 15

Compare assignment of contractual rights with negotiation of a negotiable instrument, indicating the advantages and disadvantages of each.

Accepted Answer

This can be a relatively short response

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

A purchase money security interest

Accepted Answer

A)  will prevail over a general security agreement covering all of a merchant's assets, if it registered within the specified time period. 
B)  is prohibited in most provinces. 
C)  is now obsolete, in light of the Personal Property Security Act. 
D)  is also known as floating charge. 
E)  will be automatically subordinate to any general security agreeement, even if registered within the specified time period.
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 
A)  will prevail over a general security agreement covering all of a merchant's assets, if it registered within the specified time period. 
B)  is prohibited in most provinces. 
C)  is now obsolete, in light of the Personal Property Security Act. 
D)  is also known as floating charge. 
E)  will be automatically subordinate to any general security agreeement, even if registered within the specified time period.
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

Question 18

Legislation and the principles of contract and common law primarily protect the interests of the debtor in the event of a default.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

In case of default by either the creditor or debtor, breach of contract remedies apply.

Accepted Answer

A) True 
 B)False

With regard to debt collection, which of the following is false?

When the value of the security is not great enough to cover the debt, a secured creditor is an unsecured creditor for that outstanding amount.

Identify which of the following statements is true about secured transactions in provinces having a personal property security act.

Last night at the dinner table, Uncle Isaac started on again about his company buying a truck on time. Which of these statements by his friends is false with regard to conditional sales contracts?

What is the effect of a payment made in preference to one creditor over another?

Here comes your neighbour Max who wants to ask you more questions about buying an Apple computer for use at home under a conditional sales contract. Which one of the following statements told to him at work is true?

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

Which of the following is the consequence of an unpaid subcontractor failing to file his lien on time? The owner had contracted with the general contractor who in turn had contracted with this subcontractor.

A security not fixed on any particular assets until default or some other specified event is known as a ________. ESSAY. Write your answer in the space provided or on a separate sheet of paper.

Compare assignment of contractual rights with negotiation of a negotiable instrument, indicating the advantages and disadvantages of each.

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

A purchase money security interest

Legislation and the principles of contract and common law primarily protect the interests of the debtor in the event of a default.

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

In case of default by either the creditor or debtor, breach of contract remedies apply.

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

Exam 16: Priority of Creditors

With regard to debt collection, which of the following is false?

When the value of the security is not great enough to cover the debt, a secured creditor is an unsecured creditor for that outstanding amount.

Identify which of the following statements is true about secured transactions in provinces having a personal property security act.

Last night at the dinner table, Uncle Isaac started on again about his company buying a truck on time. Which of these statements by his friends is false with regard to conditional sales contracts?

What is the effect of a payment made in preference to one creditor over another?

Here comes your neighbour Max who wants to ask you more questions about buying an Apple computer for use at home under a conditional sales contract. Which one of the following statements told to him at work is true?

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

Which of the following is the consequence of an unpaid subcontractor failing to file his lien on time? The owner had contracted with the general contractor who in turn had contracted with this subcontractor.

A security not fixed on any particular assets until default or some other specified event is known as a ________. ESSAY. Write your answer in the space provided or on a separate sheet of paper.

Compare assignment of contractual rights with negotiation of a negotiable instrument, indicating the advantages and disadvantages of each.

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

A purchase money security interest

Legislation and the principles of contract and common law primarily protect the interests of the debtor in the event of a default.

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

In case of default by either the creditor or debtor, breach of contract remedies apply.

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