Asked by Rachel Oftedahl on May 10, 2024
Verified
Overextended Debtor.Dennis purchased a big-screen television from ABC Electronics and financed the purchase through ABC Electronics based on an agreement granting ABC Electronics a security interest in the television and requiring that Dennis make monthly payments.Three months later,Dennis was unable to continue making payments on the television because he had bought a boat,a new car,an expensive engagement ring for his girlfriend,and some other items.The manager from ABC Electronics called and asked Dennis to return the television.Dennis refused on the basis that ABC Electronics never perfected its interest in the television.Which of the following is the term for the type of agreement Dennis had with ABC Electronics?
A) A pledged-money interest
B) A collateralized interest
C) A purchase-money security interest
D) A security perfection interest
E) A cash-deferred security interest
Purchase-Money Security Interest
A legal claim that allows a creditor priority in reclamation over the bought property if the debtor defaults on a loan used to purchase the property.
Security Interest
A legal claim or right granted on an asset as a security for the performance of an obligation, such as the repayment of a loan.
Perfected Interest
A legal claim or lien that has been formally acknowledged or registered, typically securing priority over others in the same asset or property.
- Review the legal rights and obligations of parties in dealings secured by personal property.
Verified Answer
SR
Sarrvin Raj KanagasarpaiMay 16, 2024
Final Answer :
C
Explanation :
A purchase-money security interest (PMSI)is formed when a debtor uses borrowed money from the secured party to buy the collateral.
Learning Objectives
- Review the legal rights and obligations of parties in dealings secured by personal property.