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Question

XII. CREDIT TRANSACTIONS E. Personal Property Security Act (R.A. No. 11057)

Scenario 1:

John is a businessman who needs additional funding for his business expansion. He decides to obtain a loan from a bank and offers his company's inventory as collateral. The bank agrees and they enter into a security agreement.

a) What are the essential requirements for a valid security agreement under the Personal Property Security Act?

b) What rights and interests does the bank acquire over John's inventory as a result of the security agreement?

Scenario 2:

Maria, a jewelry store owner, wants to secure a loan from a financing company to purchase additional jewelry items for her store. She offers the existing jewelry in her store as collateral. The financing company agrees to the arrangement and they execute a security agreement.

a) What is the effect of the security agreement on Maria's ownership of the jewelry?

b) What remedies are available to the financing company in case Maria defaults on her loan?

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Answer