B-124
ALTERNATE CASE PROBLEM ANSWERS
CHAPTER 29
SECURED TRANSACTIONS
29-1A. Financing statement
(Chapter 29—Pages 559–562)
The bankruptcy court resolved the issue in AAL’s favor, and EAI of NC and SouthTrust appealed to a
federal district court, which affirmed the decision of the bankruptcy court. The federal district court
concluded in part that AAL perfected its security interest in the assets of EAL of NC before SouthTrust
perfected its interest as part of the renegotiated loan. The court reasoned that AAL’s financing
statements contained minor errors but that those errors “were not seriously misleading.” The court
explained that “the attached Security Agreement, clearly referenced on the financing statement itself as
an ‘attachment,’ identified EAI of NC as the debtor, contained the signature of [the] President of EAI of
29-2A. Sale of collateral
(Chapter 29—Pages 574–576)
APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 29 B-125
29-3A. Purchase-money security interest
(Chapter 29—Page 564)
UCC 9–203. As for whether Sears’ interest constituted a PMSI, the court pointed out that “[a] security
interest is a purchase money security interest to the extent that it is taken or retained by the seller of
29-4A. Perfection
(Chapter 29—Pages 559 & 561)
The court held that the financing statement did not fulfill the requirements of Article 9 because the
name of the partnership was not included on the form. The court noted that the Official Comment to
29-5A. Pledge
(Chapter 29—Pages 562–564)
B-126 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 29
As for the creditor’s duty towards a debtor’s property, the appellate court explained that “[w]here
property has been pledged to secure a note, there is an implied agreement on the part of the pledgee
29-6A. Purchase-money security interest
(Chapter 29—Page 564)
The court ruled in favor of Conry. Sears appealed to a state intermediate appellate court, which reversed
the order of the lower court. The appellate court held that “a security interest was adequately proven by
29-7A. Priorities
(Chapter 29—Pages 562–564 & 566–567)
The court held, among other things, that the equipment belonged to Dean, but Union appealed to a
state intermediate appellate court, which reversed this judgment. The appellate court held that the
29-8A. Sale of collateral
(Chapter 29—Pages 574–576)
APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 29 B-127
29-9A. Repossession
(Chapter 29—Page 572)
The court granted a summary judgment in favor of the defendants (MBCC and LAB), and Headspeth
appealed. The District of Columbia Court of Appeals upheld the lower court’s judgment. The appellate
29-10A. A QUESTION OF ETHICS
1. A principal who hires an independent contractor as an agent is not ordinarily liable for harm
caused to another by the acts of the independent contractor, because the principal does not have the
right to control the details of performance. For this reason, it seems unfair to hold a creditor liable for
2. Self-help repossession simplifies the process of repossession for creditors and reduces the
3. Repossession often occurs during the night or the early morning hours, because it is then that
the effort is least likely to be observed. At those times, confrontation with debtors is more likely to be
B-128 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 29