1 william h. widen. 2 secured transactions assignment 15 the prototype secured transaction
TRANSCRIPT
![Page 1: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/1.jpg)
1
William H. Widen
![Page 2: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/2.jpg)
2
Secured TransactionsAssignment 15
The Prototype Secured Transaction
![Page 3: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/3.jpg)
3
The Big Picture
Part One: The Creditor-Debtor RelationshipChapter 1-2: Creditors’ remedies
Chapter 3: Creation and scope of security interests
Chapter 4: Default Acceleration and Cure
Chapter 5: The Prototypical Secured Transaction
Part Two: The Creditor Third Party Relationship
![Page 4: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/4.jpg)
4
The Big Picture
Part One: The Creditor-Debtor RelationshipChapter 1-2: Creditors’ remedies
Chapter 3: Creation and scope of security interests
Chapter 4: Default Acceleration and Cure
Chapter 5: The Prototypical Secured Transaction
Part Two: The Creditor Third Party Relationship
![Page 5: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/5.jpg)
5
The Prototype Secured Transaction
ShorelineBoat Co.
DeutscheFinancial
FloorplanAgreement
![Page 6: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/6.jpg)
6
The Prototype Secured Transaction
Bonnie’sBoat World
ShorelineBoat Co.
DeutscheFinancial
Security agreementStatement of transactionFinancing statement
FloorplanAgreement
![Page 7: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/7.jpg)
7
The Prototype Secured Transaction
Bonnie’sBoat World
ShorelineBoat Co.
DeutscheFinancial
Boats
Security agreementStatement of transactionFinancing statement
FloorplanAgreement
![Page 8: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/8.jpg)
8
The Prototype Secured Transaction
Bonnie’sBoat World
ShorelineBoat Co.
DeutscheFinancial
Boats
Security agreementStatement of transactionFinancing statement
FloorplanAgreement
1. Who has the risk of the value of collateral? Shoreline agreed to buy the boats back, Floorplan ¶ 3.a. and b
![Page 9: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/9.jpg)
9
The Prototype Secured Transaction
Bonnie’sBoat World
ShorelineBoat Co.
DeutscheFinancial
Boats
Security agreementStatement of transactionFinancing statement
FloorplanAgreement
1. Who has the risk of the value of collateral? Shoreline agreed to buy the boats back, Floorplan ¶ 3.a. and b
2. Who has the risk of missing collateral? Deutsche
![Page 10: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/10.jpg)
10
The Prototype Secured Transaction
Bonnie’sBoat World
ShorelineBoat Co.
DeutscheFinancial
Boats
Security agreementStatement of transactionFinancing statement
FloorplanAgreement
1. Who has the risk of the value of collateral? Shoreline agreed to buy the boats back, Floorplan ¶ 3.a. and b
2. Who has the risk of missing collateral? Deutsche
3. Who has the risk of Bonnie’s non-payment? Split
![Page 11: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/11.jpg)
11
The Prototype Secured Transaction
Bonnie’sBoat World
ShorelineBoat Co.
DeutscheFinancial
GladysHomer
Boats Boats
First State Bank
FloorplanAgreement
1. Who has the risk of the value of collateral? Shoreline agreed to buy the boats back, Floorplan ¶ 3.a. and b
2. Who has the risk of missing collateral? Deutsche
3. Who has the risk of Bonnie’s non-payment? Split
![Page 12: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/12.jpg)
12
Problem 15.1, page 268
[Read problem]
This is “field warehousing.” Do you see any problems?
![Page 13: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/13.jpg)
13
Problem 15.1, page 268
[Read problem]
This is “field warehousing.” Do you see any problems?
![Page 14: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/14.jpg)
14
Tino De Angelis stands amid steamy clouds in his New Jersey refinery.
Problem 15.1, page 268
The Great Salad Oil Swindle November 1963.
1. The oil is floating on top of water.
2. An underground pumping system moves the salad oil ahead of the floor checkers
![Page 15: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/15.jpg)
15
Tino De Angelis stands amid steamy clouds in his New Jersey refinery.
Problem 15.1, page 268
The Great Salad Oil Swindle November 1963.
1. The oil is floating on top of water.
2. An underground pumping system moves the salad oil ahead of the floor checkers
![Page 16: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/16.jpg)
16
Tino De Angelis stands amid steamy clouds in his New Jersey refinery.
Problem 15.1, page 268
The Great Salad Oil Swindle November 1963.
1. The oil is floating on top of water.
2. An underground pumping system moves the salad oil ahead of the floor checkers
![Page 17: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/17.jpg)
17
Problem 15.2, page 2681. “Miller . . . double collateralized vehicles . . . by using [them]
as collateral on two or more floor plan loans without disclosing [the other pledge].”
Discover the other floor plan lender and cross check lists.
2. “Miller . . . told . . . [the floor checkers] that the missing vehicles were on test drives or were out on loan to a customer whose vehicle was being serviced.”
Find them immediately or repeat the entire floor check.
3. “Miller [told] customers [to] return their vehicles for warranty or service work, . . . the license plates were removed and the financial institutions were called to do a floor plan check on the missing vehicles.”
Check VIN numbers on your own schedule, notice use signs
![Page 18: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/18.jpg)
18
Problem 15.2, page 268
4. “Miller obtained nominee loans (a loan in the name of one party that is intended for use by another) involving the fictitious sales of automobiles, forged and falsified sales contracts for vehicles, in addition to financial contracts for those vehicles. Miller [obtained] vehicle loans on behalf of other individuals without their knowledge or consent.”
“Know your borrower.”
Disburse to the dealer and the borrower.
Miller Ford BorrowerCar
Bank
Check
![Page 19: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/19.jpg)
19
Problem 15.3, page 269
Why should Archer Commercial Finance require personal guarantees when (1) it hurts business and (2) nine out of ten judgments on personal guarantees are uncollectible?
Debtor, Inc.
Owner
Limited liability
Archer
Other creditors
![Page 20: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/20.jpg)
20
Problem 15.3, page 269
Why should Archer Commercial Finance require personal guarantees when (1) it hurts business and (2) nine out of ten judgments on personal guarantees are uncollectible?
ArcherDebtor, Inc.
Owner
Limited liabilityGuarantee
Other creditors
![Page 21: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/21.jpg)
21
Problem 15.3, page 269
Why should Archer Commercial Finance require personal guarantees when (1) it hurts business and (2) nine out of ten judgments on personal guarantees are uncollectible?
Think ahead to the point in time when Owner realizes the corporation is insolvent and Owner will get nothing
ArcherDebtor, Inc.
Owner
Limited liabilityGuarantee
Other creditors
![Page 22: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/22.jpg)
22
Problem 15.3, page 269
Why should Archer Commercial Finance require personal guarantees when (1) it hurts business and (2) nine out of ten judgments on personal guarantees are uncollectible?
Think ahead to the point in time when Owner realizes the corporation is insolvent and Owner will get nothing
ArcherDebtor, Inc.
Owner
Limited liabilityGuarantee
Answer: The guarantees assure Owner will favor Archer in the liquidation
Other creditors
![Page 23: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/23.jpg)
23
Problem 15.4, page 270[Read problem]
a. Does Deutsche have the right to the boats? Yes. §9-609
b. If Bonnie surrenders the boats, what will Deutsche do? Seek deficiency? Seek criminal prosecution?
c. How long can Bonnie keep the boats?
d. What is your advice to Bonnie?
Rule 4.4. In representing a client, a lawyer shall not use means that have no substantial purpose other than to . . . delay or burden a third person.
Rule 1.2. A lawyer shall not counsel a client to engage . . . in conduct that the lawyer knows is criminal or fraudulent . . . but a lawyer may discuss the legal consequences of any proposed course of conduct . . .
![Page 24: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/24.jpg)
24
Problem 15.4, page 270a. Does Deutsche have the right to the boats? Yes. §9-609
b. If Bonnie surrenders the boats, what will Deutsche do? Seek deficiency? Seek criminal prosecution?
c. How long can Bonnie keep the boats?
d. What is your advice to Bonnie?
Rule 4.4. In representing a client, a lawyer shall not use means that have no substantial purpose other than to . . . delay or burden a third person.
Rule 1.2. A lawyer shall not counsel a client to engage . . . in conduct that the lawyer knows is criminal or fraudulent . . . but a lawyer may discuss the legal consequences of any proposed course of conduct . . .
![Page 25: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/25.jpg)
25
Problem 15.4, page 270a. Does Deutsche have the right to the boats? Yes. §9-609
b. If Bonnie surrenders the boats, what will Deutsche do? Seek deficiency? Seek criminal prosecution?
c. How long can Bonnie keep the boats?
d. What is your advice to Bonnie?
Rule 4.4. In representing a client, a lawyer shall not use means that have no substantial purpose other than to . . . delay or burden a third person.
Rule 1.2. A lawyer shall not counsel a client to engage . . . in conduct that the lawyer knows is criminal or fraudulent . . . but a lawyer may discuss the legal consequences of any proposed course of conduct . . .
![Page 26: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/26.jpg)
26
Problem 15.4, page 270a. Does Deutsche have the right to the boats? Yes. §9-609
b. Assume Bonnie has surrendered the boats. Should Deutsche seek a deficiency? How long can Bonnie keep the boats?
d. What is your advice to Bonnie?
Rule 4.4. In representing a client, a lawyer shall not use means that have no substantial purpose other than to . . . delay or burden a third person.
Rule 1.2. A lawyer shall not counsel a client to engage . . . in conduct that the lawyer knows is criminal or fraudulent . . . but a lawyer may discuss the legal consequences of any proposed course of conduct . . .
![Page 27: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/27.jpg)
27
Problem 15.4, page 270a. Does Deutsche have the right to the boats? Yes. §9-609
b. Assume Bonnie has surrendered the boats. Should Deutsche seek a deficiency? Seek criminal prosecution?
Ill. Rev. Stat. 9-315.01. It is unlawful for a debtor . . . who has a right of sale . . . and is to account to the secured party for the proceeds . . . to sell . . . and willfully and wrongfully fail to pay the secured party the amount of said proceeds due under the security agreement. Failure to pay such proceeds . . . within 10 days after the sale . . . is prima facia evidence of a willful and wanton failure to pay. [Such conduct is a Class 3 felony.]
![Page 28: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/28.jpg)
28
Problem 15.4, page 270a. Does Deutsche have the right to the boats? Yes. §9-609
b. Assume Bonnie has surrendered the boats. Should Deutsche seek a deficiency? Seek criminal prosecution?
c. How long can Bonnie keep the boats?
d. What is your advice to Bonnie?
Rule 4.4. In representing a client, a lawyer shall not use means that have no substantial purpose other than to . . . delay or burden a third person.
Rule 1.2. A lawyer shall not counsel a client to engage . . . in conduct that the lawyer knows is criminal or fraudulent . . . but a lawyer may discuss the legal consequences of any proposed course of conduct . . .
![Page 29: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/29.jpg)
29
Problem 15.4, page 270a. Does Deutsche have the right to the boats? Yes. §9-609
b. Assume Bonnie has surrendered the boats. Should Deutsche seek a deficiency? Seek criminal prosecution?
c. How long can Bonnie keep the boats? What is the worst-case scenario for Deutsche?
![Page 30: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/30.jpg)
30
Problem 15.4, page 270a. Does Deutsche have the right to the boats? Yes. §9-609
b. Assume Bonnie has surrendered the boats. Should Deutsche seek a deficiency? Seek criminal prosecution?
c. How long can Bonnie keep the boats? What is the worst-case scenario for Deutsche?
d. What is your advice to Bonnie?
Rule 4.4. In representing a client, a lawyer shall not use means that have no substantial purpose other than to . . . delay or burden a third person.
Rule 1.2. A lawyer shall not counsel a client to engage . . . in conduct that the lawyer knows is criminal or fraudulent . . . but a lawyer may discuss the legal consequences of any proposed course of conduct . . .
![Page 31: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/31.jpg)
31
Problem 15.5.a, page 270
Charge type Days/Date Rate/Amount Description
Finance 31-90 Prime - 1.00% Per annum of ADB
91- 2.4% Per month of ADB equates to over 28% APR (with compounding)
Flat: 31- .2500% Of balance every month
Late rate: Prime + 5.5% Per annum of ADB of late pmt amt
Prime means the highest prime rate or reference rate of interest publicly announced from time to time by Chase Manhattan Bank, N.A., Chemical Bank and Citibank, N.A. . . .
http://www.bankrate.com/brm/ratewatch/leading-rates.asp
![Page 32: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/32.jpg)
32
Is BBW’s lease collateral?
Problem 15.5.b, page 270
![Page 33: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/33.jpg)
33
Is BBW’s lease collateral?
“Dealer grants Deutsche a security interest in all Dealer’s inventory, equipment, fixtures, accounts, contract rights, chattel paper, instruments, reserves, documents and general intangibles, whether now owned or hereafter acquired, all attachments, accessories, accessions, substitutions and replacements thereto and all proceeds thereof.”
Problem 15.5.b, page 270
![Page 34: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/34.jpg)
34
Is BBW’s lease collateral?
“Dealer grants Deutsche a security interest in all Dealer’s inventory, equipment, fixtures, accounts, contract rights, chattel paper, instruments, reserves, documents and general intangibles, whether now owned or hereafter acquired, all attachments, accessories, accessions, substitutions and replacements thereto and all proceeds thereof.”
Problem 15.5.b, page 270
![Page 35: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/35.jpg)
35
Is BBW’s lease collateral?
“Dealer grants Deutsche a security interest in all Dealer’s inventory, equipment, fixtures, accounts, contract rights, chattel paper, instruments, reserves, documents and general intangibles, whether now owned or hereafter acquired, all attachments, accessories, accessions, substitutions and replacements thereto and all proceeds thereof.”
Are BBW’s bank accounts collateral?
Problem 15.5.b, page 270
![Page 36: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/36.jpg)
36
Is BBW’s lease collateral?
“Dealer grants Deutsche a security interest in all Dealer’s inventory, equipment, fixtures, accounts, contract rights, chattel paper, instruments, reserves, documents and general intangibles, whether now owned or hereafter acquired, all attachments, accessories, accessions, substitutions and replacements thereto and all proceeds thereof.”
Are BBW’s bank accounts collateral?
Problem 15.5.b, page 270
![Page 37: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/37.jpg)
37
Does a demonstration ride violate the Agreement?
5. Dealer will:
(b) Not . . . demonstrate . . . any Collateral financed by Deutsche without Deutsche’s prior written consent . . .
Would a demonstration ride be grounds to call the loan?
9. Dealer will be in default under this Agreement if:
(a) Dealer breaches any terms . . . contained herein . . .
In the event of default
(i) Deutsche may at any time at Deutsche’s election, without notice or demand to dealer . . . declare all or any part of the debt . . . immediately due and payable . . . .
Problem 15.5.c, page 270
![Page 38: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/38.jpg)
38
Does a demonstration ride violate the Agreement?
5. Dealer will:
(b) Not . . . demonstrate . . . any Collateral financed by Deutsche without Deutsche’s prior written consent . . .
Would a demonstration ride be grounds to call the loan?
9. Dealer will be in default under this Agreement if:
(a) Dealer breaches any terms . . . contained herein . . .
In the event of default
(i) Deutsche may at any time at Deutsche’s election, without notice or demand to dealer . . . declare all or any part of the debt . . . immediately due and payable . . . .
Problem 15.5.c, page 270
![Page 39: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/39.jpg)
39
Does a demonstration ride violate the Agreement?
5. Dealer will:
(b) Not . . . demonstrate . . . any Collateral financed by Deutsche without Deutsche’s prior written consent . . .
Would a demonstration ride be grounds to call the loan?
9. Dealer will be in default under this Agreement if:
(a) Dealer breaches any terms . . . contained herein . . .
In the event of default
(i) Deutsche may at any time at Deutsche’s election, without notice or demand to dealer . . . declare all or any part of the debt . . . immediately due and payable . . . .
Problem 15.5.c, page 270
![Page 40: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/40.jpg)
40
Does a demonstration ride violate the Agreement?
5. Dealer will:
(b) Not . . . demonstrate . . . any Collateral financed by Deutsche without Deutsche’s prior written consent . . .
Would a demonstration ride be grounds to call the loan?
9. Dealer will be in default under this Agreement if:
(a) Dealer breaches any terms . . . contained herein . . .
In the event of default
(i) Deutsche may at any time at Deutsche’s election, without notice or demand to dealer . . . declare all or any part of the debt . . . immediately due and payable . . . .
Problem 15.5.c, page 270
![Page 41: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/41.jpg)
57
Bonnie’sBoat World
ShorelineBoat Co.
DeutscheFinancial
Problem 15.5.d, page 270
SA andobligation
Prototype deal
Boats
If Shoreline has to buy repossessed boats back, can it get a deficiency from Bonnie’s?
![Page 42: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/42.jpg)
58
Bonnie’sBoat World
ShorelineBoat Co.
DeutscheFinancial
Problem 15.5.d, page 270
SA andobligation
Prototype deal
Boats
“10. Dealer agrees that the purchase of any Collateral by a vendor, as provided in any agreement between Deutsche and the vendor, is a commercially reasonable disposition and private sale of such Collateral under the Uniform Commercial Code . . . .”
If Shoreline has to buy repossessed boats back, can it get a deficiency from Bonnie’s?
![Page 43: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/43.jpg)
59
Bonnie’sBoat World
ShorelineBoat Co.
DeutscheFinancial
Problem 15.5.d, page 270
Repo
Prototype deal
“10. Dealer agrees that the purchase of any Collateral by a vendor, as provided in any agreement between Deutsche and the vendor, is a commercially reasonable disposition and private sale of such Collateral under the Uniform Commercial Code . . . .”
UCC sale for “the total unpaid balance”
![Page 44: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/44.jpg)
60
Bonnie’sBoat World
ShorelineBoat Co.
DeutscheFinancial
Problem 15.5.d, page 270
Repo
Prototype deal
“10. Dealer agrees that the purchase of any Collateral by a vendor, as provided in any agreement between Deutsche and the vendor, is a commercially reasonable disposition and private sale of such Collateral under the Uniform Commercial Code . . . .”
What is the amount of the deficiency?
UCC sale for “the total unpaid balance” 261
![Page 45: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/45.jpg)
61
Bonnie’sBoat World
ShorelineBoat Co.
DeutscheFinancial
Problem 15.5.d, page 270
Repo
Prototype deal
“10. Dealer agrees that the purchase of any Collateral by a vendor, as provided in any agreement between Deutsche and the vendor, is a commercially reasonable disposition and private sale of such Collateral under the Uniform Commercial Code . . .”
What is the amount of the deficiency?
Zero on existing boats; Shoreline pays the entire balance
UCC sale for “the total unpaid balance” 261
![Page 46: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/46.jpg)
62
Bonnie’sBoat World
ShorelineBoat Co.
DeutscheFinancial
Problem 15.5.d, page 270
Repo
Prototype deal
“10. Dealer agrees that the purchase of any Collateral by a vendor, as provided in any agreement between Deutsche and the vendor, is a commercially reasonable disposition and private sale of such Collateral under the Uniform Commercial Code . . . .”
What is the amount of the deficiency?
Zero on existing boats; Shoreline pays the entire balance
The amount owing on nonexisting boats or boats insolvent Shoreline can’t buy.
UCC sale for “the total unpaid balance” 261
![Page 47: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/47.jpg)
63
Problem 15.7, page 271
Deutsche wants out of the deal but Bonnie is not in breach. Can Deutsche get out? Can Deutsche stop making advances?
![Page 48: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/48.jpg)
64
Problem 15.7, page 271
“12. . . .Either party may terminate this Agreement at any time by written notice received by the other party. If Deutsche terminates this Agreement, Dealer agrees that if Dealer: (a) is not in default hereunder, 30 days prior notice of termination is reasonable and sufficient (although this provision shall not be construed to mean that shorter periods may not, in particular circumstances, also be reasonable and sufficient). . . Dealer will not be relieved from any obligation to Deutsche arising out of Deutsche’s advances or commitments made before the effective termination date of this Agreement. Deutsche will retain all of its rights, interests and remedies hereunder until Dealer has paid all Dealer’s debts to Deutsche.
![Page 49: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/49.jpg)
65
Problem 15.7, page 271
“2. . . . Dealer acknowledges that Deutsche maythen elect to terminate Dealer’s financing program . . . and cease making additional advances to Dealer. Any termination for that reason, however, will not accelerate the maturities of advances previously made, unless Dealer shall otherwise be in default of this Agreement.”
![Page 50: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/50.jpg)
66
Problem 15.7, page 271“2. [Dealer can reject a S of T]. . . Dealer acknowledges that Deutsche may then elect to terminate Dealer’s financing program . . . and cease making additional advances [when?] to Dealer. Any termination for that reason, however, will not accelerate the maturities of advances previously made, unless Dealer shall otherwise be in default of this Agreement.”
![Page 51: 1 William H. Widen. 2 Secured Transactions Assignment 15 The Prototype Secured Transaction](https://reader035.vdocuments.net/reader035/viewer/2022081503/56649da25503460f94a8ee65/html5/thumbnails/51.jpg)
67
Problem 15.7, page 271
What if Deutsche wants to send a really expensive Statement of Transaction to percipitate a rejection?