1. What is a security interest? What right does the holder of a security interest have that other creditors do not ? Will a title search at the FAA Aircraft Registry in Oklahoma City reveal all kinds of valid security interests in aircraft ? 4. You are the manager of an FBO. A customer purchases a new airplane through your business. A bank finances that purchase , obtains a security interest in the aircraft through a written security agreement signed by the purchaser, and files that security agreement with the FAA Aircraft Registry and the International Registry. Later, the customer has your shop install upgraded avionics, including a full glass cockpit " set of multifunction displays (MFD ) integrating flight , navigation , engine , and sensor data . a. Do you have the right to require the customer to pay the bill for the equipment and installation in full before you release the aircraft back to the customer ? Explain b. If the aircraft owner went bankrupt at that point (when the work has been done , the bill has not been paid , and the FBO still has the aircraft ), who will be paid first from the sale of the aircraft , the FBO or the bank ? Why ? C. In initial discussions over the price of the equipment and installation , the customer indicates that she wants to buy the unit and have your shop install it, but she would like to pay the price for the equipment and installation in three monthly payments , rather than all at once . This is acceptable to you . Is there anything you can require as a condition of releasing the aircraft back to its owner before the debt is paid in full to protect the FBO's security interest in the aircraft for this installation ? If so, describe d. After the transaction described in c, above , your shop installs the equipment in the aircraft and releases it to the owner. Before the bill is paid, the aircraft owner files bankruptcy. Now who is in the superior I position to be paid first out of the proceeds from the sale of the aircraft : the FBO or the bank ? Explain 5. You are about to buy an aircraft, and have a particular one in mind. Develop a checklist of things you should do at each of the following stages of the purchase transaction a. Prior to entering into a final agreement to purchase the aircraft b. At closing of the sale C- After closing , but before flight d. After closing , but not necessarily before flight 6. You are an aircraft broker specializing in airline-size jets. A customer contacts you, indicating that he is the CEO of an international cattle -breeding operation in Texas . He advises you that neither he nor anyone on his staff knows much about large airplanes , but they need to purchase an aircraft capable of transporting 100 bulls weighing an average of 1,600 pounds each , each in a 150 -pound shipping cage measuring 5 feet wide by 8 feet long by 6 feet high . He states the aircraft will also need to be capable of carrying that load from Dallas to Buenos Aires , Argentina , nonstop . If you sell an aircraft to this customer for that purpose , what warranties will you be making to the buyer ? 7. You are a co-owner of a business that has a dealership for a major manufacturer of general aviation aircraft . The aircraft typically arrive at your dealership f from the factory ready for delivery to the customer , and your company does not usually perform any inspection or other work on the aircraft prior to sale and delivery to the buyer. A new aircraft your company recently sold to a customer has crashed , killing everyone aboard . It appears that the crash was caused by a design or manufacturing defect - a. Is your business exposed to any risk of being found liable ? Explain b. If such liability is found , will it make any difference to you whether your company organized as a partnership or a corporation ? Explain