22. Milt borrowed $200 from Femi. He agreed verbally that Femi could take posses

Question

22. Milt borrowed $200 from Femi. He agreed verbally that Femi could take possession of his books and keep them until he had repaid the loan in full. The next day, after Femi had the books in her possession, Orin offered to purchase the books from Milt for $150. Milt accepterd the offer and took Orin's money to retrieve the books from Femi, Femi, however, refused to give up possession of the books until she was paid in full. Both Milt and Orin now claim that Femi has no rights to the books because she does not have a signed security agreement and has not filed a financing statement. In this case, which of the following statements is true according to the Uniform Commercial Code? A. Femi's security interest in the collection will protected only if she files a financing statement. B. Femi's security interest is not attached in the absence of a written security agreement C. Femi's possession of the collection satisfies the perfection requirement because it puts a D. Femi's failure to file a public notice rejects the perfection of the agreement even though even though she maintained possession of the books. third party like Orin on notice of Femi's interest in the property. she is in possession of the collateral.

Explanation / Answer

Option C is correct
This is Perfection by Possession without filling financing statement : The Femi a secured creditor can perfect his security interest by taking possession of the collateral (books ) until the debtor (Milt) has paid the debt for which the collateral was pledged.

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