TevCo Inc Supplies Tennis Racquets to Olympus Sports Inc, a Retail

question 66

Multiple Choice

TevCo Inc supplies tennis racquets to Olympus Sports Inc, a retail sporting goods store.TevCo and Olympus have entered into a supply agreement which provides that TevCo has a security interest in all racquets it supplies until they are paid for by Olympus.TevCo filed a financing statement to register its security interest on January 1, 2011.Prior to that date, Olympus had entered into an agreement with the Bank of Ottawa for an operating line of credit.As part of that agreement, Olympus gave the bank a security interest in all its present and future assets.The bank filed a financing statement to register its interest on December 1, 2009, indicating an interest in all of the debtor's assets including inventory.On March 1, 2012, TevCo delivered to Olympus its first shipment of 100 tennis racquets.Olympus never paid for them.A few days later, Olympus went into default under its agreement with the bank.Both TevCo and the bank claim to be entitled to the tennis racquets.Which of the following best describes the legal position of the two secured parties?

• A)TevCo's security interest prevails over the bank's because it is a purchase money security interest.
• B)The bank's security interest prevails over TevCo's because it was perfected first and TevCo does not have priority as a purchase money security interest in inventory because it failed to give notice to the bank.
• C)The bank's security interest prevails over TevCo's because it registered first, even though TevCo has a purchase money security interest.
• D)TevCo's security interest prevails over the bank's because conditional sellers always prevail over other secured parties with respect to the assets they sell.
• E)TevCo's security interest prevails over the Bank's because Olympus defaulted on its obligation to TevCo before it defaulted on its obligation to the bank.

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Definitions:

Species-specific Defense Response

Innate protective behaviors particular to certain species that are elicited in the presence of threats.

Environmental Danger

Any threat or harmful event that arises from the surrounding environment, potentially causing damage or harm to organisms.

Bolles

Robert C. Bolles was a psychologist known for his work on learning, avoidance behavior, and the theory of species-specific defense reactions (SSDRs).

Behavior Systems Approach

An approach in psychology that studies behavior as part of a functional system, including its adaptive purposes and evolutionary history.