Lovely Ladies Car Lot has financed its new car inventory through a loan from Thi
ID: 378034 • Letter: L
Question
Lovely Ladies Car Lot has financed its new car inventory through a loan from Third State Bank, using the new cars as collateral. In selling its inventory of new cars, Lovely Ladies will come into possession of used cars traded in by its customers. Under the bank's security agreement, how are the used cars traded in most likely to be treated?
Question 4 options:
Pledges.
Proceeds.
Fixtures.
After-acquired property.
None of the above. The trade-ins were not mentioned in the security agreement.
Pledges.
Proceeds.
Fixtures.
After-acquired property.
None of the above. The trade-ins were not mentioned in the security agreement.
Explanation / Answer
Ans: None of the above. The trade-ins were not mentioned in the security agreement.
As the used card trades were not mentioned in the contract and new cars being treated as collalteral so the trade in will not get affected in this case. There should be cluase in contract ragarding the trade of used card in bank loan agreement to affect the trades.
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