1. Bernard wants to buy a 60" high-definition television from his local appliance store, Rip M Off, Inc. The store, which caters to low-income clientele and offers electronics and other household goods at highly inflated prices and at the highest interest rate that the law allows in his state, agrees to sell the set to him at a price of $5,000 financed over a six-year period at a 25% rate of interest. The financing agreement makes it clear that the store retains a purchase money security interest in the television set. As part of the deal, Bernard also executes a second security agreement covering his $5,000 synthesizer (he is a professional musician) and a $2,000 diamond ring that he inherited from his dad. He turns the ring over to the appliance store as security in a verbal agreement, but it is agreed that he will be allowed to keep the synthesizer as long as he makes timely payments, and he provides a written, signed copy of an agreement to this effect to Rip M Off. Rip M Off promptly perfects its interest in the synthesizer by forwarding a financing statement to his state's secretary of state with the appropriate fee and in the form required by local law, but it does not send financing statements covering the television set or ring to the secretary of state. Two years later, Bernard stops making payments on the television set because he realizes that he made a bad bargain when agreeing to buy the set.

a. Has Rip M Off perfected its security interest with regard to the ring under the facts given?

b. May Rip M Off enforce the security agreement against the synthesizer if the outstanding loan amount at the time of Bernard's default is $4,000 and the actual value of the television set at the time is $500?

c. If the value of the synthesizer at the time of the debtor's default is $3,000 and the market value of the television set is $500, what are the creditor's rights with regard to the secured property? Discuss fully.

2. Assume the same facts as in the previous question.

a. If you were to represent Bernard, what argument would you make (if any) in his defense if Rip M Off chooses to sue him personally for the outstanding loan balance?

b. While Bernard might argue that Rip M Off engages in predatory practices in enticing consumers residing in the poorest neighborhoods to enter into purchases that they can ill afford, Rip M Off would counter that selling expensive equipment to individuals with no credit or poor credit histories and limited means is a high-risk business and that its high prices and high-interest rates are merely the only means to cover its business risk and the extremely high default rates of customers who are often judgment-proof. Analyze these issues and argue either for or against the validity of Rip M Off's business practices from the perspective of law, business, and ethics.