The text offers a hypothetical case concerning Tele‑Maker, which sells 500 televisions to Retailer, keeping a security interest in the sets and proceeds. Customers sign chattel paper when they purchase on credit. The chattel paper is proceeds, so Tele‑Maker’s security interest extends to the paper. Retailer sells the chattel paper to Financer. Retailer then defaults on its obligation to Tele‑Maker.

Tele‑Maker cannot repossess the televisions, because each customer was a BIOC. Tele‑Maker is also barred from seizing the chattel paper, because the buyer of chattel paper (Financer) takes it free of a perfected security interest.

Questions:

What could Tele‑Maker have done to prevent this disaster?