LAW 603 Study Guide - Midterm Guide: Official Receiver, Trade Credit, Secured Loan

• School: Ryerson University
• Department: Law and Business
• Course: LAW 603
• Professor: Allan Kaufman

Document Summary

There are two main ways to manage the risk that the debtor will not pay the creditor: security interests, guarantees. A security interest allo(cid:449)s a (cid:272)(cid:396)edito(cid:396) to seize so(cid:373)e of a de(cid:271)to(cid:396)"s pe(cid:396)so(cid:374)al p(cid:396)ope(cid:396)t(cid:455) if a de(cid:271)t is (cid:374)ot repaid, usually without the delay and expense of going to court. This is called granting a security interest in the asset. Property that is subject to a security interest is called collateral. A creditor that has a security interest is called a secured party: a security interest gives the bank advantages over an ordinary creditor. Granting a security interest in a specific asset. In a lending transaction, the debtor often agrees to provide the creditor with ownership, or some form of security interest, in a specific piece of its personal property. When the debtor transfer title in a specific asset to a secured party, the transaction is sometimes called a chattel mortgage.