Business Law Secured Transactions Scenerio Uniform Commercial Code UCC On Novemb
ID: 453015 • Letter: B
Question
Business Law Secured Transactions Scenerio Uniform Commercial Code UCC
On November 1, Mike purchased a Razr Scooter from The Really Big Scooter Store "RBS" for $1,000, promising in writing to pay the balance at $100 per month and granting to RBS a security interest in the property in terms consistent with and incorporating provisions of the UCC. A financing statement covering the transaction was also properly filled out and signed, and RBS properly filed it on November 30.
After Mike failed to make the December or January payments, RBS went to his home to collect the payments or take the scooter. Finding no one home and the scooter outside beside the garage, RBS took the scooter. Two hours later, Chad, a third party and the present occupant of the house, who had purchased the scooter for his own use, stormed into RBS, demanding the return of the scooter. He showed RBS a bill of sale from Mike to him, dated December 15, that listed the bicycle and other furnishings in the house.
1. Answer the following in legal terms
(a) What are the rights of RBS, Mike and Chad?
(b) Would your answer to part (a) change if RBS had not filed a financing statement? Why?
Explanation / Answer
(a) Rights of RBS:-
RBS can actually take over the asset which is the scooter, if few of the balance at 100$ have not been paod by Mike, since he signed and gave in writing to pay the balance at $100 per month and granting to RBS a security interest in the property in terms consistent with and incorporating provisions of the UCC. A financing statement covering the transaction was also properly filled out and signed, and RBS properly filed it on November 30.
Rights of Mike:-
Since Mike bought the scooter from RBS, he has all the rights over the scooter, but he has to pay that balance amount off back to RBS, so that no claim can be made against it at a later stage. In short, Mike cannot sell it to anyone, if the balance doesn't get cleared and the NOC is not obtained from RBS,
Rights of Chad:-
Since Chad has purchased the scooter from Mike and hold all the paper work, he owns the vehicle on papers, but legally do not have the right over the scooter, as Mike has forged him and also RBS. Ideally, Chad doesn't have any rights over the scooter.
(b) Yes, I would definately change my answer to Part (a), as the financing statement obligated Mike from holding any rights on the scooter, and RBS to recover the scooter if the financing statement wouldn't have been changed.
Similarly, Chad would also have all rights on the scooter, since RBS would not be carrying any right over on it, if Mike have sold this to Chad, in absence of a financing statement.
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