COMM231 Chapter Notes - Chapter 26: Unsecured Creditor, Secured Creditor, Security Interest
14 Feb 2016
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Document Summary
Credit transactions are a typical part of business. Depending on the transaction a business may be a debtor or a creditor. A credit transaction is a contractual relationship, which means the laws of contract that you have already studied will apply. Make sure you read the entire chapter, as there is important background material. We will, however, touch only lightly on personal property security legislation in class. New legal concepts you will need to understand: The difference between secured and unsecured credit, and secured creditors and unsecured creditors. Use of security or collateral to reduce the risk to lender. The right of secured vs. unsecured creditors when there is a default. Unsecured credit: creditor only has contractual right to receive payment from debtor: trade credit (e. g. you agree to pay your supplier within 20 days, or your customers debt agree to pay you within one month) usually unsecured.
