Author Question: Sale of Collateral. To pay for the purchases of several aircraft, Robert Wall borrowed funds from ... (Read 72 times)

PhilipSeeMore · **on:** Jun 24, 2018

Sale of Collateral. To pay for the purchases of several aircraft, Robert Wall borrowed funds from the Cessna Finance Corp, using the aircraft as collateral. Wall defaulted on the loans. Cessna took possession of the collateral (the aircraft) and sold it. Cessna filed a suit in a federal district court against Wall for the difference between the amount due on the loans and the amount received from the sale of the aircraft. Wall claimed that he could have obtained a higher price for the aircraft if he had sold them himself. How does the question of whether a better price could have been obtained affect the issue of whether the sale was commercially reasonable? Discuss.

Question 2

Emile owns Emile's Used Car Emporium. Several people work for him at the Emporium. When Emile is gone, he leaves one of his best salespersons, Meg, in charge. Over the years, Emile has given Meg the authority to contract with vendors, negotiate sales, and conclude car sales contracts in his name. One August, Emile takes a long vacation, leaving Meg in charge. While he is gone a hurricane hits Florida where the Emporium is located, causing severe damage. Because Emile is floating down the Amazon, Meg cannot reach him for instructions. She decides that rather than leave the place in shambles, she will hire people to repair the Emporium. Meg hires a carpenter to rebuild a wall that was blown down by the storm. Phil, the carpenter, is busy at work on his scaffold when Meg's Scottish terrier Adam, who she keeps with her at work, plows into the scaffolding while chasing a cat. Phil is knocked off the scaffold and falls ten feet to the ground, suffering a broken leg. One day while Emile is out of the office, Josef, another sales person, enters into a contract on Emile's behalf with a local coffee vendor who stopped by to offer daily coffee service to the dealership. Emile:
a. is bound by the contract if Josef was acting beyond his authority b. is not bound by Josef's actions
c. may be bound by the action if he ratifies the contract
d. is bound by the contract if Josef was acting beyond his authority and may be bound by the action if he ratifies the contract
e. is not bound by Josef's actions or may be bound by the action if he ratifies the contract

Cnarkel · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

Sale of collateral
The court held that the fact that a better price could have been obtained by a sale at a different time or in a different method from that selected by the secured party is not in and of itself sufficient to establish that the sale was not made in a commercially reasonable manner. The court added that 'blue book' values for the merchandise indicate that a fair market value was obtained. (This case was decided before the effective date of the revision of Article 9, but the result under the revised Article 9 would likely have been the same. See UCC 9-627(a).)

Answer to Question 2

e