Cengage Advantage Books: Fundamentals of Business Law 9th Edition by Roger LeRoy Miller

Exercise 24

Disposition of Collateral. PRA Aviation, LLC, borrowed $3 million from Center Capital Corp. to buy a Gates Learjet 55B. Center perfected a security interest in the plane. PRA defaulted on the loan less than two years later and surrendered the jet. Center hired Business Air International, an aircraft broker, to sell it. Business Air reviewed the market, design, and mechanical condition of similar aircraft to arrive at a value estimate of $1.45 million. Business Air marketed the jet in trade publications, on the Internet, and by direct advertising to select customers for $1.59 million. There were three offers. The high bid was $1.35 million subject to an inspection. Center offered $1.3 million for a "cash deal, as is, where is, kick the tires, start the engines" deal. The buyer agreed. Center filed a suit in a federal district court against PRA to collect the deficiency PRA argued that the jet should have sold for $2.4 million to $2.9 million, considering the asking prices for newer aircraft. Was the sale commercially reasonable? Explain. [ Center Capital Corp. v. PRA Aviation, LLC, ____ FSupp.2d ___ (E.D.Pa. 2011)]