Asked by Veronica Lovtsova on May 05, 2024
Verified
Which of the following statements about security agreements is false?
A) The security agreement must reasonably describe the collateral so that it can readily be identified.
B) The security agreement cannot require the debtor to insure the goods.
C) The security agreement usually contains a promise by the debtor to pay certain amounts of money in a certain way.
D) The security agreement usually specifies which events constitute a default.
Security Agreements
Legal contracts that create a lien on assets, providing a lender with a security interest in the assets of the borrower.
Collateral
Assets pledged as security for repayment of a loan, subject to seizure on default.
- Gain insight into the mechanisms and legal aspects necessary for the formation and completion of a security interest.
Verified Answer
VP
Vivek PatelMay 06, 2024
Final Answer :
B
Explanation :
The security agreement must reasonably describe the collateral so that it can readily be identified.For example,it should list the year,make,and serial number of an automobile.The security agreement usually spells out the terms of the arrangement between the creditor and the debtor.Also,it normally contains a promise by the debtor to pay certain amounts of money in a certain way.The agreement specifies which events,such as nonpayment by the buyer,constitute a default.In addition,it may contain provisions that the creditor feels are necessary to protect his security interest.For example,the debtor may be required to keep the collateral insured,not to move it without the creditor's consent,or to periodically report sales of secured inventory goods.
Learning Objectives
- Gain insight into the mechanisms and legal aspects necessary for the formation and completion of a security interest.
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