Management and Organizational Studies 2275A/B Chapter Notes - Chapter 26: Unsecured Creditor, Accounts Receivable, Public Auction

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2275A/B
• Professor: Frederick King

Document Summary

Chapter 26 the legal aspects of credit. Since credit is a contractual relationship, all the fundamental principles of contract law apply: the law of credit forms part of what is known as debtor and creditor law. Secured credit a de(cid:271)t (cid:449)he(cid:396)e the (cid:272)(cid:396)edito(cid:396) has a(cid:374) i(cid:374)te(cid:396)est i(cid:374) the de(cid:271)to(cid:396)"s p(cid:396)ope(cid:396)t(cid:455) to se(cid:272)u(cid:396)e payment. If the debtor defaults in repaying the loan, the secured creditor can seize the secured property and sell it to pay down the debt. Borrowing a large amount of money to purchase a major asset or to finance an expansion is an example of a credit transaction in which the rights and obligations of the parties are carefully negotiated. When providing big loans, banks look at financial health, and what security the debtor can provide. They will also look at the state of the economy, the particular industry in which the debtor carries on business, whether personal guarantees are available, and the state of the credit markets.