3010. Security Interests. Nick Sabol, doing business in the recording industry as Sound Farm Productions, applied to Morton Community Bank for a $58,000 loan to expand his business. Besides the loan applica-tion, Sabol signed a promissory note that referred to the banks rights in any collateral. Sabol also signed a let-ter authorizing Morton Community Bank to execute, file, and record all financing statements, amendments, and other documents required by Article 9 to establish a security interest in his state. Sabol did not sign any other documents, including the financing statement, which contained a description of the collateral. Two years later, without having repaid the loan, Sabol filed SBA loan. FIB then asked Denton to pay the other loans out-standing balance ($98,460), plus interest. When Denton refused, FIB initiated proceedings to obtain his business assets. Denton filed a suit in a Montana state court against FIB, claim-ing, in part, that Andersons equipment was the collateral for the loan that FIB was attempting to collect from Denton. [Denton v. First Interstate Bank of Commerce, 2006 MT 193, 333 Mont. 169, 142 P.3d 797 (2006)] (See page 586.)

(a) Dentons assets served as the security for Andersons loan because Anderson had nothing to offer. When the loan was obtained, Dean Gillmore, FIBs loan offi-cer, explained to them that if Anderson defaulted, the proceeds from the sale of the logging equipment would be applied to the SBA loan first. Under these circumstances, is it fair to hold Denton liable for the unpaid balance of Andersons loan? Why or why not?

(b) Denton argued that the loan contract was unconscio-nable and constituted a contract of adhesion. What makes a contract unconscionable? Did the transac-tion between the parties in this case qualify? What is a contract of adhesion? Was this deal unenforce-able on that basis? Explain.