Carol borrows $50,000 to purchase seven industrial Xerox copying machines,and open up her own copy shop.The bank loan requires that Carol grant the bank a security interest in any property acquired after the original agreement is signed.After she shows the loan letter to Xerox,it agrees to sell her the copiers for $80,000 to be paid over five years.Who has priority in the copying machines?

Question

Quizplus · Accepted Answer

Xerox has priority because this is a purchase money security interest, meaning that the loan was used specifically to purchase the equipment. The bank's security interest only applies to property acquired after the original agreement was signed, and Xerox's interest in the equipment takes priority over the bank's security interest.

Carol Borrows $50,000 to Purchase Seven Industrial Xerox Copying Machines,and