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Janice Is a Transactional Paralegal Working for Cynthia Alameda of Alameda

Question 58

Multiple Choice

Janice is a transactional paralegal working for Cynthia Alameda of Alameda & Associates. One of the firm's clients is Cory's Concrete Cutting Service, which is in the process of obtaining a business loan so it can expand its operations. The lender has approved the loan to Cory's, but is requiring that the loan be secured by a security interest in Cory's concrete cutting equipment. The president of Cory's, Cory Johnson, is working with Janice on finalizing the list of concrete cutting equipment when Mr. Johnson asks what the financing statement does. Janice explains both security interests and UCC Financing Statements, and how the collateral security agreement could allow the lender to take possession of the concrete cutting equipment if loan payments are not made on time. Later, as the meeting is about to break up, Mr. Johnson says, "Well, I'm sure glad I'm protected against having the lender take my concrete cutting equipment." From the options listed below, what is Janice's best approach to responding to Mr. Johnson's comment?


A) Ignore the comment because she fully and correctly explained security interests, financing statements, and the lender's right to take possession upon default.
B) Ignore the comment because Mr. Johnson is an experienced businessperson and can be expected to understand the consequences of default.
C) Discuss the security interest, financing statement, and lender's right to take possession on default to make sure that Mr. Johnson understands the potential consequences.
D) Arrange for Mr. Johnson to meet with Ms. Alameda so Mr. Johnson's attorney can explain the security interest, financing statement, and lender's right to take possession on default.

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