Question
Chapter 34 addresses secured transactions in personal property (as opposed to real property). Clearly, as a means to minimize risks, lenders want and need certain
Chapter 34 addresses secured transactions in personal property (as opposed to real property). Clearly, as a means to minimize risks, lenders want and need certain assurances that debtors will be repaid. Article 9 provides the basis for secured transactions and the different means whereby a creditor's (lender's) interests may be perfected using a debtor's personal property. However, let's look at the issue of inventory. What risks are there for lender who relies on the debtor's inventory for collateral? Although the rule (a buyer in the ordinary course of business takes the item free of an inventory security interest) makes buyers more willing to purchase items from inventory, doesn't this same rule discourage lenders from financing inventory? What can lenders, who rely on merchants' inventories for collateral, do to protect themselves?
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