Uniform Commercial Code Question Mike owns a scrapbooking store. he borrowed $10

Question

Uniform Commercial Code Question

Mike owns a scrapbooking store. he borrowed $100,000 from City Bank and executed a security agreement granting a security interest in “all of my presently-owned and after-acquired inventory” to City Bank. City Bank properly filed a financing statement to perfect its interest. Without notifying City Bank, Mike sold a Cricut from his inventory to Kelly for use in her home. Does City Bank have priority over Kelly with respect to the Cricut purchased by Kelly? Explain in legal terms.

Explanation / Answer

Pledging inventory to bank does not prevent Mike from selling any item to a customer. The bank can only ask for the sale proceeds to be deposited in a screw account ointly operated by Mike and the bank. The bank will deduct its installments before releasing the balane to Mike

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