Student Solution

-->

"Education is the most powerful weapon which you can use to change the world”
– Nelson Mandela

1 University

1 Course

1 Subject

Chapter 30 2(2) Secured Transactions assignment

Chapter 30 2(2) Secured Transactions assignment

Q 1) How does a "floating lien" help a secured party's protection against debtor default? 2) Creditor (C) lends money to a debtor (D) to buy inventory and equipment for D's business and attaches and perfects a security interst in all of D's present equipment and inventory PLUS any "after acquired" equipment and inventory. Subsequently D wants to purchase more inventory and equipment from E on credit. Is there any way for E to have priority over ANY of D's equipment ot inventory?

View Related Questions

Solution Preview

A “floating lien” ensures that there is a security interest provided through the implementation of a security agreement in case of proceeds (Clarkson, Miller & Cross, 2016). A “floating lien” also ensures that there is a security interest provided through the implementation of a security agreement in case of after-acquired property. There can also be the utility of a “floating lien” actualized in case of collateral subject. This is because there can be a secured part wanting future advance of collateral subject. In case of “floating lien”, it must be noted that there is continuation of the security interest even if there is disposal, exchange or selling of the collateral (Clarkson, Miller & Cross, 2016).