Roger, a lawyer, borrowed money from Jax to start a business. He gave a promissory note to Jax promising to pay the money back anytime within the next five years. But in order to accept the note, Jax demanded a security deposit. Roger gave the gold that he owned as security. Roger in turn demanded that a specific clause be added to the promissory note to allow faster repayment of the loan in case he inherited money within the next five years. But even after five years, Roger was unable to complete payment. He made a new promissory note promising to finish payment within the next year, and promised to provide free legal service to Jax for the next two years. What kind of promissory note did Jax secure from Roger for the original amount?
A) a collateral note
B) a mortgage note
C) an installment note
D) a time note

Question

Quizplus · Accepted Answer

The promissory note given by Roger to Jax is a collateral note because it is secured by the gold that Roger owned. A collateral note is a promissory note secured by a collateral, which in this case is the gold.

Roger, a Lawyer, Borrowed Money from Jax to Start a Business