Sandy purchases a piece of equipment to use in her business.The seller of the equipment extended credit to Sandy to enable her to purchase the equipment.Sandy signs a security agreement,but the seller of the equipment does not file a financing statement anywhere.Sandy defaults on the loan,and the seller of the equipment wants to get possession of the equipment.The amount owed to the seller of the equipment is Sandy's only debt.Can the seller repossess the equipment?

Question

Quizplus · Accepted Answer

The seller can repossess the equipment because there is a valid security agreement in place, which gives the seller a security interest in the equipment. The fact that the seller did not file a financing statement does not affect the validity of the security agreement between Sandy and the seller. Option A is incorrect because the type of goods (consumer or non-consumer) is not relevant in this case. Option B is also incorrect, as the lack of a financing statement does not invalidate the security agreement. Option D is incorrect because automatic perfection applies only to certain types of collateral (such as bank deposits or securities), and not to equipment. Option E is incorrect because a deficiency judgment is not necessary for the seller to repossess the equipment.

Sandy Purchases a Piece of Equipment to Use in Her