ASSIGNMENT
1.On May 1, Lincoln lends Donaldson $200,000 and receives from Donaldson his agreement to pay this amount in two years and takes a security interest in the machinery and equipment in Donaldson’s factory. A proper financing statement is filed with respect to the security agreement. On August 1, upon Lincoln’s request, Donaldson executes an addendum to the security agreement covering after-acquired machinery and equipment in Donaldson’s factory. A second financing statement covering the addendum is filed. In September, Donaldson acquires $50,000 worth of new equipment from Thompson, which Donaldson installs in his factory. In December, Carter, a judgment creditor of Donaldson, causes an attachment to issue against the new equipment. What are the rights of Lincoln, Donaldson, Carter, and Thompson? What can the parties do to best protect themselves?
2. Anita bought a television set from Bertrum for her personal use. Bertrum, who was out of security agreement forms, showed Anita a form he had executed with Nathan, another consumer. Anita and Bertrum orally agreed to the terms of the form. Anita subsequently
defaulted on payment, and Bertrum sought to repossess the television.
a. Explain who would prevail.
b. Explain whether the result would differ if Bertrum had filed a financing statement.
c. Explain whether the result would differ if Anita had subsequently sent Bertrum an e-mail that met all the requirements of an effective security agreement.
3. Aaron bought a television set for personal use from Penny. Aaron properly signed a security agreement and paid Penny $125 down, as their agreement required. Penny did not file, and subsequently Aaron sold the tele- vision for $800 to Clark, his neighbor, for use in Clark’s hotel lobby.
a. When Aaron fails to make the January and February payments, may Penny repossess the television from Clark?
b. What if instead of Aaron’s selling the television set to Clark a judgment creditor levied (sought possession) on the television? Who would prevail?
c. What if Clark intended to use the television set in his home? Who would prevail?
4. Jones bought a used car from the A-Herts Car Rental System, which regularly sold its used equipment at the end of its fiscal year. First National Bank of Roxboro had previously obtained a perfected security interest in the car based upon its financing of A-Herts’s automobiles. Upon A-Herts’s failure to pay, First National is seeking to repossess the car from Jones. Does First National have an enforceable security interest in the car against Jones? Explain.
5. Allen, Barker, and Cooper are cosureties on a $750,000 loan by Durham National Bank to Kingston Manufacturing Co., Inc. The maximum liability of the sureties is as follows: Allen, $750,000; Barker, $300,000; and Cooper, $150,000. If Kingston defaults on the entire $750,000 loan, what are the liabilities of Allen, Barker, and Cooper?
