Ted and Alice Own Their Recreational Vehicle Subject to a Security

question 39

Multiple Choice

Ted and Alice own their recreational vehicle subject to a security agreement to Third U.S.Bank to secure the repayment of the purchase money loan.Ted and Alice sell their RV to Bob and Carol,who agree to take over the loan payments to the bank.There is no novation with the bank.Under these facts,if Bob and Carol do not make the loan payments,Third U.S.Bank

• A)can sue Bob and Carol only.
• B)can sue Ted and Alice only.
• C)can sue Bob,Carol,Ted,and Alice.
• D)cannot sue anyone but can repossess the RV.

Recognize the legal implications of strict product liability.

Understand discrimination prohibitions in credit applications.

Know the FTC's rules and regulations related to sales and advertising practices.

Explain the concept of "risk-adaptability" in legal decisions.

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account that represents the estimated amount of accounts receivable that may not be collected.

Aging of Accounts Receivable

A method used to estimate the collectability of accounts receivable by categorizing them according to the length of time an invoice has been outstanding.

Credit Sales

Credit Sales are transactions in which goods or services are provided to customers with the understanding that payment will be made at a later date.

Credit Cards

Financial instruments issued by banks or financial institutions allowing cardholders to borrow funds at the point of sale, subject to repayment terms and interest rates.