Asked by Neala Kelly on Jul 06, 2024
Verified
Equipment Company holds a lien on Fertile Farm's equipment. The equipment can be sold to satisfy the debt
A) if, before the sale, notice is given to Fertile Farm.
B) if, before the sale, notice is given to Fertile Farm's other creditors.
C) if, before the sale, notice is given to the general public.
D) without notice.
Lien
A legal right or claim against a property, typically used as security for a debt or loan, ensuring payment.
Satisfy Debt
To fully pay off or settle a debt, meeting the terms agreed upon by the debtor and creditor.
Equipment
Equipment consists of the necessary tools, machinery, devices, or any tangible items required for the specific purpose of executing a task or activity.
- Gain insights into the significance and repercussions of liens in debt security.
Verified Answer
JR
Jacob RosalesJul 07, 2024
Final Answer :
A
Explanation :
A lienholder can sell the collateral (in this case, equipment) to satisfy the debt, but they must give notice to the debtor (Fertile Farm) before doing so. This ensures that the debtor is aware of the impending sale and has a chance to respond or satisfy the lien before the sale occurs. Notice to other creditors or the general public is not a legal requirement for the sale of collateral under a lien.
Learning Objectives
- Gain insights into the significance and repercussions of liens in debt security.