Ornak Furniture Inc Had an Operating Line of Credit with the Bank

question 42

True/False

Ornak Furniture Inc had an operating line of credit with the Bank of Brandon.Ornak had given the bank a security interest in all its present and future assets to secure its obligations under the line of credit.The bank had perfected its interest by registration in 2011.Cronin carried on business as a supplier of wicker furniture.In 2012, Cronin delivered 20 wicker chairs to Ornak.Ornak put the chairs on display in its showroom.Under the agreement that Ornak had with Cronin, Ornak was not obliged to buy the chairs, but the act of selling a chair to a customer constituted the agreement by Ornak to buy the chair from Cronin.For every chair sold, Ornak paid Cronin whatever it sold the chair for less 50 percent.In December 2009, Ornak defaulted on its obligations to the bank and the bank seized its assets including the chairs supplied by Cronin.The bank is entitled to the chairs.

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Definitions:

Merchant

An individual or company engaged in the business of selling goods or services in the marketplace.

Ordinary Course of Business

Regular and routine operations of a company, including transactions and activities that are normal for the business.

Acceptance Effective

The point in time when an agreement to the terms of an offer is communicated by the offeree to the offeror, resulting in a legally binding contract.

Dispatched

Sent off to a destination or for a specific purpose, often used in the context of sending out goods, documents, or personnel.