Terminal warehouse agreements
A) are particularly useful where large bulky items are used as collateral.
B) give the lender a lien against all inventories while only removing representative items.
C) remove control of the inventory from the borrower.
D) are less costly than field warehouse agreements.

Question

Quizplus · Accepted Answer

Terminal warehouse agreements remove control of the inventory from the borrower and place it with the lender. This is useful for situations where the lender needs to have more control over the inventory, such as when they need to ensure the collateral is protected and used in the appropriate manner. Option A is incorrect because terminal warehouse agreements do not specify the type of collateral that can or cannot be used. Option B is incorrect because terminal warehouse agreements give the lender a lien against all inventories, not just representative items. Option D is incorrect because there is no clear evidence that terminal warehouse agreements are less costly than field warehouse agreements.

Terminal Warehouse Agreements