The Vendor's Remedy of Lien Only Exists in Certain Circumstances

question 16

Essay

The vendor's remedy of lien only exists in certain circumstances.List three circumstances in which a contract of sale creates a right of lien for the seller.

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Definitions:

Capital Lease

A lease agreement in which the lessee essentially buys an asset and borrows the funds through the lease, recording the asset and the liability on their balance sheet.

Implicit Interest Rate

An interest rate inferred from leasing transactions or other contractual arrangements, calculated based on the present value of payments and the initial value of the leased asset.

Present Value Factors

A mathematical formula used to determine the present value of a series of future cash flows by applying a specific discount rate.

Capital Lease

A lease classified as a purchase by the lessee for accounting purposes, where the lessee essentially buys the leased asset.