David Operated a Small Delivery Business

question 48

Essay

David operated a small delivery business. He approached the Empire Bank for money to buy a truck to be used in the business. The bank was willing to loan David the money and took a chattel mortgage over the truck. As further security in the event that David defaulted on the mortgage, the bank required his wife to sign a promissory note for the full amount of the mortgage. After experiencing some financial difficulty, David defaulted on the mortgage and the Empire Bank took possession of the truck and sold it pursuant to the chattel mortgage. The passage of sale was insufficient to cover the full amount of the loan and the bank sued David's wife for the remainder owing on the basis of the promissory note. Discuss the rights and duties of the bank and David's wife, and render a decision.

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Definitions:

Substitution Effect

The economic principle that as prices rise (or incomes decrease), consumers will replace more expensive items with less costly alternatives.

Output Effect

The impact on an organization's total output resulting from a change in price, affecting the quantity supplied or demanded.

Substitute Resource

A resource that can be used in place of another, often relevant in the context of production or environmental sustainability.

MRP Curve

The marginal revenue product curve, which shows the additional revenue generated by one additional unit of an input.