1. You are an Ontario lawyer. One day, an electrician-subcontractor comes into your office and complains. It seems as if the electrician made a contract with a general contractor who builds homes, and the electrician has yet to be paid for his services. The owner of the home has already paid the general contractor $300,000 to build the home. The electrician asks you if he may successfully obtain any money from the general contractor or the owner of the home. What do you tell him?

	A.	The electricians recourse is limited to the general contractor, and therefore must sue only the general contractor in court pursuant to Ontarios contract law.
	B.	Provided that the electrician promptly attached and perfected a secured interest pursuant to the Ontario PPSA after completing his services, the electrician has recourse both against the general contractor and the owners holdback.
	C.	Provided that the electrician promptly registered a lien pursuant to the Construction Lien Act after completing his services, the electrician has recourse both against the general contractor and the owners holdback.
	D.	Provided that the electrician promptly registered a lien pursuant to the Construction Lien Act after completing his services, the electricians sole recourse is against the owner of the home. The electrician is entitled to a pro-rated amount of the holdback (a pro-rated fraction of $30,000).

2.

Mr. Biggs, a successful businessman, guaranteed the debts of his corporation, Textile Industries (Textile). This guarantee made him personally responsible when Textile ran into financial difficulties. Someone sued Mr. Biggs and Textile and won in court. Textile went out of business, and Mr. Biggs was forced to claim personal bankruptcy. Shortly before his bankruptcy, he transferred his interest in the matrimonial home to his wife and continued to live there with her. The Court reversed the transfer. Why?

	A.	The transfer of the house to the wife amounted to a prohibited settlement under the Bankruptcy and Insolvency Act.
	B.	The transfer of the house to the wife was done to defeat or defraud the creditors and amounted to a fraudulent conveyance under the Fraudulent Conveyances Act.
	C.	The transfer of the house to the wife was done to defeat or defraud the creditors and amounted to a fraudulent conveyance under the Fraudulent Conveyances Act, and it also amounted to an attached but unperfected transaction under the provincial PPSA.
	D.	The transfer of the house to the wife amounted to a prohibited settlement under the Bankruptcy and Insolvency Act, and it was done to defeat or defraud the creditors and amounted to a fraudulent conveyance under the Fraudulent Conveyances Act.

3.

Farm Rite Equipment Ltd. made a general assignment of all its property, including all after-acquired property, to the Royal Bank to secure a debt. Royal Bank properly registered the general assignment as a security pursuant to the provincial PPSA. A few years later, Dahlen Chev Olds Ltd. sold 2 trucks to Farm Rite through a conditional-sales agreement that was not registered. Dahlen Chev Olds Ltd. then assigned the conditional-sales agreement to the Bank of Nova Scotia. The Bank of Nova Scotia immediately registered its interest pursuant to the provincial PPSA. Farm Rites business began to falter after this, so the Royal Bank took over Farm Rites property, including the 2 trucks. The Royal Bank sold the 2 trucks, and then both the Royal Bank and the Bank of Nova Scotia claimed the proceeds. Who gets to keep the proceeds?

	A.	The Royal Bank, because it attached and perfected its security over all of Farm-Rites property, including all after-acquired property, before the Bank of Nova Scotia did, and thus gains priority pursuant to the provincial PPSA.
	B.	The Royal Bank, because it perfected its security interest by taking possession of the trucks.
	C.	The Bank of Nova Scotia, because this particular provincial PPSA required the registration of vehicles to include the serial number, which could not happen with a general assignment of property.
	D.	The Bank of Nova Scotia, because once a conditional-sales agreement that applies to specific property is registered, it will always take precedence over a secured interest that applies to all property, even if the secured interest that applies to all property was registered at a prior time.

4.

1. Chantal is an Ontario retail merchant who sells furniture. She secured a loan from the bank by granting a security to the bank on all of her assets, including all of her after-acquired assets. The bank promptly secured its interest pursuant to the PPSA. Crystal is a wholesaler who supplied Chantal with furniture on credit after Chantal secured her bank loan. What must Crystal do so that she may secure her interest in the furniture she sells to Chantal and thus gain priority over the bank?

   	A.	Crystal must secure and register her interest as a purchase money security interest, or PMSI, within 15 days of selling the furniture on credit in order to prevail over the general assignment of Chantals assets to the bank.
   	B.	Crystal must sign a contract with Chantal in which Chantal agrees to give Crystal priority over the bank; then Crystal must attach and perfect that interest.
   	C.	There is nothing that Crystal can do, because the bank was the first to attach and perfect its PPSA interest, and a creditor who registers his interest first gains priority over all creditors.
   	D.	Crystal must secure and register her interest as a purchase money security interest, or PMSI, within 30 days of selling the furniture on credit in order to prevail over the general assignment of Chantals assets to the bank.

5.

Every province in Canada has enacted a Personal Property Security Act, or PPSA. What are the steps of creating a secured relationship between debtor and the creditor pursuant to this statute?

	A.	There are two stages. First, the parties must enter into a contractual agreement; second, the secured interest under the contract must be perfected.
	B.	There are three stages. First, the parties must enter into the contractual agreement; second, the secured interest must attach to the collateral that has been identified to provide the security; and third, the secured interest must be perfected.
	C.	There are four stages. First, the parties must enter into the contractual agreement; second, the secured interest must attach to the collateral that has been identified to provide the security; third, the secured interest must be perfected; and fourth, the secured party must obtain physical possession.
	D.	There is only one stage the stage of attachment.