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.	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
	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.	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 Chantal’s assets to the bank
	D.	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 Chantal’s assets to the bank

2.

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

3.

Joyce bought a new vehicle for family use from Ace Chrysler and the engine seized 3 days after the expiration of the three-year warranty period. Ace claimed that the stated warranty period had expired and refused to fix it. Joyce disagrees with Ace and sues in small claims court. Who wins?

	A.	Joyce. The ‘warranty’ is actually an exemption clause that attempts to relieve Ace of its obligation to delivery quality goods to the consumer. In this case, since most people would expect a transmission in a modern car to last longer than 3 years, Ace would be required to stand by its product
	B.	Joyce, because Ace breached an implied condition of the contract pursuant to a combination of common-law contract principles and the Sale of Goods Act
	C.	Ace. Because the warranty expired, Joyce was required to sue in tort, not in contract, and Ace was neither negligent nor strictly liable
	D.	Ace, because as a seller, it included a warranty with its product stating the extent of its responsibility for fitness and quality pursuant to the Sale of Goods Act

Answer rating: 100% (QA)

ANSWERS 1 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 If two or more creditors are pro... View the full answer