Wen purchased an automobile from Nick for $10,000. Unknown to Wen, Nick had used the automobile as security for a loan from his bank, and the bank had registered its security interest in the automobile under the provincial personal property security registration legislation. A few months after the sale, Nick defaulted on the loan, and the bank discovered that Wen was in possession of the automobile. Nick is liable to Wen for breach of warranty of title, if the bank should seize the automobile.

Question

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When Nick sold the automobile to Wen without disclosing the existing security interest held by the bank, he breached the warranty of title, which implies that the seller has the right to sell the property and that it is free from any undisclosed security interests or liens.

Wen Purchased an Automobile from Nick for $10,000