Question

On July 8, Ace, a refrigerator wholesaler, purchased 50 refrigerators. This comprised Ace's entire inventory and was financed under an agreement with Rome Bank that gave Rome a security interest in all refrigerators on Ace's premises, all future acquired refrigerators, and the proceeds of sales. On July 12, Rome filed a financing statement that adequately identified the collateral. On August 15, Ace sold one refrigerator to Cray for personal use and four refrigerators to Zone Co. for its business.Which of the following statements is correct?A. The refrigerators sold to Zone will be subject to Rome's security interest.B. The refrigerator sold to Cray will not be subject to Rome's security interest.C. The security interest does not include the proceeds from the sale of the refrigerators to Zone.D. The security interest may not cover after-acquired property even if the parties agree.

Answer 1

OPTION (B) is correct.

Step-by-step explanation:

Because, already the interest has been improved, then also Cray gets to keep the refrigerator. The consumer in the ordinary course of business buy a good or a product which is free from a security interest even if the customer knows about the agreement which is made during the lending, that is known as security agreement.

Because in security agreement is a agreement which decides that who is lending, have to pay security interest.