Asked by Anissa Hoyte on Jul 24, 2024
Verified
Is the bank correct that it has priority because it has a perfected interest in the hang glider?
A) Yes, because it filed a financing statement, thus perfecting its interest.
B) Yes, even though the financing statement is filed under a correct name, the filing of the statement perfected its interest in the hang glider.
C) No, because the financing statement is filed under an incorrect name, thus perfection is likely not effective.
D) No, it takes more than simply filing a financing statement for perfection to be effective.
E) Yes, because banks are excused from minor errors in financial documents, and thus the incorrect name in the financing statement does not affect perfection.
Perfection
In legal and financial contexts, it often relates to the process of securing a security interest in collateral, ensuring priority over other claims.
Financing Statement
A document filed by a creditor to indicate a security interest in the property of a debtor, used in securing loan agreements.
- Comprehend the consequences of inaccurate or misfiled financing statements on securing interests' perfection.
Verified Answer
HM
Henna MirzaJul 30, 2024
Final Answer :
C
Explanation :
C) No, because the financing statement is filed under an incorrect name, thus perfection is likely not effective. For a security interest to be perfected, the financing statement must accurately identify the debtor. Filing under an incorrect name fails to give notice to other potential creditors about the security interest, making the perfection ineffective.
Learning Objectives
- Comprehend the consequences of inaccurate or misfiled financing statements on securing interests' perfection.
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