JLcpa
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Joined: 22 Sep 2009
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Posts: 202
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| Posted: 27 May 2011 at 07:59 | IP Logged
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Pursuant to a purchase order generated over the internet, Maine Scientific, Inc., purchased a Model U 1131 Universal Milling and Casting Machine from Hermes Manufacturing Co. The sale was on credit, with $1,000 of the $30,000 purchase price paid in advance, the balance due and payable under a written lease agreement which listed the collateral and which provided for payments of $1,000 per month for 36 months._ Both parties signed the lease which provided a 12 month on-site repair warranty and a $1 purchase option at the end of the lease. Hermes Manufacturing Co. recorded the lease in the state office where UCC filings were made. Which of the following statements is not correct?
A The lease may qualify as a negotiable instrument.
B Hermes Manufacturing Co. has a perfected security interest in the Universal Milling and Casting machine.
C Perfection of Hermes Manufacturing Co. in the Universal Milling and Casting machine was not automatic.
D All of the above are correct.
Ans A
The lease could not qualify as a negotiable instrument since it contains promises in addition to the promise to pay money. Hermes Manufacturing Co. has a perfected security interest in the Universal Milling and Casting machine since all the requirements for perfection have occurred. Recordation of a lease in lieu of a financing statement is valid. Perfection of Hermes Manufacturing Co. in the Universal Milling and Casting machine could not have been automatic since it did not involve consumer goods.
My question is- since the financing is under a lease agreement, does the title to the goods pass on to the debtor- Maine Scientific until the end of the lease period? If it does not, then there is no attachment & hence there can be no perfection by filing.
Any suggestions?
Thanks!
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Jas, Jersey City, NJ
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Topic: Perfected security interest
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