Purchase-Money Security Interest. Barbara Wiegert and her ...

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Purchase-Money Security Interest. Barbara Wiegert and her daughter, Darcie Wiegert, went shopping at Sears, and Darcie bought a mattress and box spring for 396.11. Barbara later purchased from Sears a television set for 239.96. Both purchases of consumer goods were charged to the credit card of Barbara (and her husband, Harold). On both credit slips was printed the following statement: I grant Sears a security interest or lien in this merchandise, unless prohibited by law, until paid in full. When the Wiegerts filed their bankruptcy petition, the balance due to Sears was 587.26, plus interest. The Wiegerts claimed that Sears was an unsecured creditor. Sears claimed that it was a secured creditor, arguing that the sales slip contained all of the information needed for a valid security agreement under UCC 9-203: (1) a description of the goods, (2) the signature of the debtor, and (3) language indicating that the debtor was granting Sears a security interest in the goods being purchased on credit. Sears further argued that it did not need to file a financing statement to perfect its security interest because UCC 9-302(1)(d) allows for automatic perfection for a purchase-money security interest in consumer goods. Was Sears correct in making these claims? Discuss fully.

Question 2

If a person could be expected to possibly cause problems and an employer hires them anyway, the employer could be held liable for ______ if the employee commits a tort against a customer.
 a. negligence in hiring b. irreverence in hiring
  c. irresponsibility in hiring
  d. lack of foresight in hiring e. lack of care in hiring

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Answer to Question 1

Purchase-money security interest
The court held that Sears had a purchase-money security interest (PMSI) in the goods. The court agreed with the merchant that the sales slip contained the essential terms of a security agreement. It identifies the collateral. It is signed by the debtor, and it grants Sears a security interest.    The terms of the security agreement are those set forth on the sales slips and in the Sears Charge Security Agreement.    Sears gave value because it provided goods and debtors obtained rights in the goods at the time of sale. The court concluded that these circumstances satisfied all of the requirements of UCC 9-203 . As for whether Sears' interest constituted a PMSI, the court pointed out that a security interest is a purchase money security interest to the extent that it is taken or retained by the seller of the collateral to secure all or part of its price. Since Sears retained a security interest in merchandise sold to secure the unpaid purchase price, it is clear that Sears initially held a purchase money security interest in the goods. The court held that the PMSI did not lose its status simply because several purchases were combined into the same account.

Answer to Question 2

a