Question

Overextended Debtor. Dennis purchased a big screen television from ABC Electronics and financed the purchase through ABC Electronics based on an agreement granting ABC Electronics a security interest in the television and requiring that Dennis make monthly payments. Three months later, because Dennis had bought a boat, a new car, and an expensive engagement ring for his girlfriend, and some other items, he was unable to continue making payments on the television. The manager from ABC Electronics called and asked Dennis to return the television. Dennis refused on the basis that ABC Electronics never perfected its interest in the television. Which of the following is the proper designation under the UCC for the television?
A. Pledged goods.
B. Acknowledged goods.
C. Illegal security.
E. Defined security.
F. Collateral.

Answer 1

Answer: (F) Collateral

Explanation:

  According to the given question, Collateral is referred to proper designation under UCC in which the Dennis refused to return television to the ABC electronics company.

The term Collateral is referring as assets such as television that is typically used to secure the loan as it provides a low internet rate and due to collateral they also makes the duration of the loan length.

Television is represented as collateral so ABC company cannot perfect its interest so due to this reason Dennis refuses to return television to the company. Collateral is known as the secured loan and it is used by the following ways:

• Purchasing personal assets
• Vehicles
• Investment purpose
• Paychecks

  Therefore, Option (F) is correct answer.