QUESTION 7 (5 Marks)

REQUIRED:

a) You are a loans officer at a bank. I want to borrow $100,000. What are two questions that you will ask me to determine whether you will approve the loan?(2 marks)

b) You approve the loan with security on my sportscar and business assets. Distinguish between attachment and perfection, including the legal result at each stage. (2 marks)

c) My wife guaranteed my loan and when I default, she repays the loan.What is one right she has in that situation? (1 mark)

QUESTION 8 (5 Marks)

Mr. Solomon operates his shoe business as a sole proprietorship. He owes $100,000 to Royal Bank secured by shoe inventory and manufacturing equipment and has a $25,000 unsecured line of credit with CIBC. Sales have decreased due to the pandemic, since everyone now sits at their home computers in their shorts with bare feet. GST and payroll withholdings of $5,000 are owed to Canada Revenue Agency, plus this month's employee wages. Mr. Solomon has converted all money in his bank account into gold coins, disposed of his i-phone and booked a one-way plane ticket to South America.

REQUIRED:

a) What is one act of bankruptcy that Mr. Solomon may have committed? (1 mark)

b) In a bankruptcy what is the order (priority) of payment for each of Mr. Solomon's different creditor groups? Put the creditors in order of priority starting with the front of the line. (4 marks)

QUESTION 9 (3 Marks)

REQUIRED:

For each of the following explain when the risk transfers from the party currently in possession of the goods (1 mark each)

a) On Monday a contract is signed to sell goods to a Calgary buyer FOB Edmonton. The goods arrive in Edmonton on Wednesday. The goods are shipped and delivered Thursday late afternoon to Calgary.

b) On Sunday Nick agrees to purchase a new dining room set if the store changes the cushions on the chairs. On Monday the cushions are changed. On Tuesday Nick receives a text that the cushions have been changed and the dining room set is ready for pick. Nick picks up the dining room set on Wednesday.

c) On Monday Mario signs a contract to purchase a new truck, which is on the lot ready to go. He gets insurance and licence plates on Wednesday and picks the truck up on Friday.