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Legal and Ethical Aspects > 3- Security > Flashcards

3- Security Flashcards

1
Q

What is security?

A

a guarantee that the creditor requires from the debtor as protection in case the latter becomes insolvent

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2
Q

___ is a commitment by a third party toward the creditor to perform the debtor’s obligation if the
latter is in default

A

Personal security

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3
Q

is the right a creditor has over an asset belonging to the debtor. This type of security involves a thing as opposed to a person

A

Real security

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4
Q

The first prior claim is for

A

legal costs and expenses incurred in the common interest of the creditors

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5
Q

The second prior claim is that of

A

an unpaid seller of movable property to an individual

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6
Q

The third prior claim is that of

A

creditors who have a right to retain movable property related to their claim

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7
Q

The fourth prior claim is that of

A

the State for amounts owing under tax laws.

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8
Q

The fifth prior claim is that of

A

municipalities and school boards for payment of property and school taxes

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9
Q

The Civil Code of Québec recognizes two types of hypothecs:

A
  • legal hypothecs, which exist by virtue of the law and do not require consent from the debtor.
  • conventional hypothecs, which require consent from the debtor in favour of the creditor
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10
Q

The State and public corporations are protected by a ___ to secure their tax claims or any other claim under special laws

A

legal hypothec

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11
Q

Architects, engineers, materials suppliers, workers, contractors and sub-contractors are protected by a legal hypothec based on ___

A

work done on immovable property ordered by its owner.

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12
Q

The legal hypothec for construction is an exceptional case in that

A

it ranks ahead of all other hypothecs already published against the immovable.

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13
Q

Creditors who obtained a favourable ruling in court ordering the debtor to pay an amount are protected by ___

A

a Legal hypothec

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14
Q

___ result from a contract. They are granted to by the debtor to a creditor to secure the payment of a debt

A

Conventional hypothecs

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15
Q

___ is the person who consents to the hypothec.

A

The grantor

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16
Q

possible to hypothec one’s property to secure another person’s

A

debt

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17
Q

A movable hypothec with delivery is also known as a “__.”

A

pledge

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18
Q

Any person can grant a pledge on one of his or her corporeal assets, by ___

A

delivering the property to the creditor

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19
Q

when can you use a MOVABLE HYPOTHEC WITHOUT DELIVERY

A

when operating a business. can grant a movable hypothec on the enterprise’s movable property, while retaining possession of this property.

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20
Q

Hypothecs without delivery must be published in the ___ to ensure that they may be set up against a third party.

A

Register of Personal and Movable Real Rights

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21
Q

An immovable hypothec must be granted by notarial act and include: (3)

A
  • an attestation as to the identity, quality and legal capacity of the parties
  • a statement that the act is in conformity with their intention
  • a declaration that the title of the hypothecary debtor is validly published
22
Q

The Bank Act prohibits banks from accepting a hypothec on an immovable if it is to secure an amount greater than __ % of its value.

A

80

23
Q

Pursuant to the National Housing Act, the financial institution can, however, accept the hypothec if

A

it is protected by insurance

24
Q

When the creditor is ready to exercise his or her right, he or she must give prior notice describing: (5)

A
  • the default
  • the right to remedy it
  • the amount of the claim
  • a description of the charged property
  • the nature of the hypothecary right
25
Q

This notice must be served on the debtor, the grantor or the person against whom the right is being exercised

A

PRIOR NOTICE

26
Q

The debtor or any person with an interest in the hypothec who has received a prior notice has a period of time known as ___ to remedy the default as described in the notice, or to undertake other action.

A

period of surrender

27
Q

Four rights are available to the hypothecary creditor

A
  • Taking in payment
  • Sale by judicial authority
  • Sale by the creditor
  • Taking possession for the purposes of administration
28
Q

term sale by which the creditor reserves ownership of the property until full payment of the sale price.

A

instalment sale

29
Q

An instalment sale must be published in __ in order to be set up against third parties and subsequent purchasers.

A

the Register of Personal and Movable Real Rights

30
Q

instalment sale - the right of repossession cannot be exercised without the court’s consent if the debtor has performed over __ of his obligation.

A

one-half

31
Q

Chartered banks can accept security pursuant to section 427 of the Bank Act when they lend money or make advances to: (5)

A
  • a dealer
  • a manufacturer
  • a farmer
  • an aquaculturist
  • a forestry producer
32
Q

In Canada, ___ creates a compulsory registration system for commercial and pleasure boats with a gross tonnage of over 15 tons.

A

the Canada Shipping Act (CSA)

33
Q

Registering a ship under the CSA allows it to be used as

A

a security for a mortgage on a ship.

34
Q

Can charges other than a mortgage on a ship be registered under the CSA?

A

No

35
Q

__ is a contract whereby a person, the___ , binds him or herself toward a creditor to perform the obligation of the debtor if the latter fails to fulfil it

A

Suretyship
surety

36
Q

Four principal rights are granted to the surety by the Civil code of Québec

A

obligation of information.
benefit of discussion
benefit of division.
subrogation.

37
Q

entails the creditor’s obligation to provide the surety, at his or her request, with any useful information
concerning the content and terms and conditions of the principal obligation and the progress made in its
performance

A

obligation of information.

38
Q

right of the surety to require that the creditor exhaust all recourses against the property of the
principal debtor before requiring the surety to perform his or her obligation.

A

benefit of discussion

39
Q

invoked in situations where there are several sureties. The sureties may then require the
creditor to divide his or her action proportionally among them.

A

benefit of division.

40
Q

allows the surety who pays the creditor the amounts due by the principal debtor of the obligation to
step into the rights of the creditor against the principal debtor in the attempt to obtain payment.

A

subrogation.

41
Q

The surety’s death ends the suretyship for future and current debts. True or false?

A

False. only future debts.

42
Q

When the borrowers are solidarily liable, each borrower is obligated for ___

A

the full debt

43
Q

liability is solidary only if

A

clearly indicated in the contract

44
Q

The system of publication of rights involves two registers:

A
  • The Land Register;
  • The Register of Personal and Movable Real Rights
45
Q

All rights in immovable property, including the creation, modification, transmission or extinction of these rights, require publication at the ___

A

land register.

46
Q

rights published against a given asset rank according to the moment they have been entered in the
appropriate register. main exceptions to this rule are (5)

A

Immovable hypothecs (date of ownership)
Movable hypothecs (date registered)
Legal hypothecs for construction (rank ahead all other)
Hypothecs on securities or security entitlements
Floating hypothec

47
Q

If a creditor’s rank is superior, this creditor can agree to exchange this rank with another creditor.

A

Floating hypothec

48
Q

The financial institution that holds a security interest on a client’s property has two options

A
  • request that the trustee turn the property over to it
  • file a proof of claim in the bankruptcy as a secured creditor
49
Q

Bankruptcy and Insolvency Act

A

certain creditors have preferences when their debtor is bankrupt.

50
Q

preferred creditors (5)

A
  • funeral and testamentary fees, if the bankrupt dies
  • the trustee, for legal and administrative fees
  • salaries and commissions owed to employees for services provided in the six months immediately preceding bankruptcy
  • municipal taxes or the two years preceding the bankruptcy
  • landlords, for any unpaid rent over the three months preceding the bankruptcy and for a maximum period of three additional months

Legal and Ethical Aspects (8 decks)

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