Mixed Bag

Question 1

Test for determining whether the agreement is a lease or a security agreement:

Answer 1

1) The “lessee” is obligated to pay the full obligation whether or not the lease is terminated early
2) One of the following:
a) The original term of the lease is equal to or greater than the economic life of the good
b) Lessee is bound to renew for the full economic life of the good
c) lessee has the option to renew the lease for the remaining economic life of the lease for nominal or no consideration
d) Lessee has the option to become the owner of the goods at the end of the day

Question 2

When does a consignee become a secured party?

Answer 2

1) Merchant deals in goods of the kind
2) Merchant not generally known to creditors to be in the business of selling the goods of others
3) goods worth at least $1,000 for immediate delivery
4) goods not consumer goods before delivery