Comm Law - Chpt 16

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"Which one of the following statements about the position of a guarantor is false?
a. A guarantor is a primary debtor along with the debtor.
b. On default and payment by guarantor, the guarantor has the right to claim any other security.
c. The guarantee is unenforceable if the transaction was not evidenced in writing.
d. On default and payment by the guarantor, the guarantor becomes creditor.
e. The guarantor must consent to any significant changes in the agreement between the debtor and creditor.

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"The credit has significant duties toward a guarantor excluding which one of the following?
a. Not changing significant terms of the agreement.
b. Doing nothing to weaken the position of the guarantor.
c. Suing the debtor first before seeking payment from the guarantor.
d. Ensuring that the guarantor understands the nature of the agreement.
e. Encouraging the guarantor to get independent legal advice."

c. Suing the debtor first before seeking payment from the guarantor.

"3. Which one of the following is a definition for ""a holdback"?
a. The amount a supplier charges to compensate for the possibility of not getting paid.
b. The unpaid portion of the amount earned by the subcontractor or supplier.
c. The unpaid contracted amount owed to the contractor.
d. A portion of the contract fee that an owner must hold back to satisfy potential liens.
e. The sum a contractor must keep in order to pay her employees."

d. A portion of the contract fee that an owner must hold back to satisfy potential liens.

Sung sold his car to Archibald, who paid with a certified cheque drawn on the Red Deer branch of the General Bank. If Sung had the cheque certified after he received it from Archibald, the cheque would be honoured by the bank despite the fraud of Sung.

True

The Bills of Exchange Act does not apply to debit cards

True

Which of the following is incorrect with respect to fraudulent transfers?
a. Arm's-length transfers for fair market value to an unsuspecting third party may be valid and not capable of being unwound.
b. Fraudulent transfers may be void and reversible.
c. Transfers to friends or relatives to avoid a debt are not all fraudulent transfers.
d. A creditor may retrieve property disposed of by way of a fraudulent transfer.
e. None of the above.

c. Transfers to friends or relatives to avoid a debt are not all fraudulent transfers.

Judy, recognizing that her business was in trouble, decided to transfer significant business assets to her children for $1.00. Three months later, the business filed for bankruptcy. Which of the following is false?
a. The transfer would likely not be held as being made for valuable consideration.
b. For the transfer to be void, it must be shown that at the time of the transfer the
business was not able to meet its debts without the relevant assets.
c. Under the Bankruptcy and Insolvency Act, the transfer may be void if effected within a
specified period of time of the bankruptcy.
d. The transfer would be categorized as a settlement under the Bankruptcy and
Insolvency Act.
e. The transfer would likely not be held as being made in good faith.

b. For the transfer to be void, it must be shown that at the time of the transfer the business was not able to meet
its debts without the relevant assets.

To successfully defend a claim by a creditor alleging a fraudulent preference, which of the following does not support the challenged debtor?
a. There was no intention to prefer.
b. The debtor genuinely believed the payment would enable her business to continue. c. The payment was made in the ordinary course of business.
d. The payment was made to a close relative.
e. Payments made to one creditor did not favour that creditor at the expense of another.

d. The payment was made to a close relative.

A creditor who has obtained a judgment against an individual holding property as a joint tenant with her spouse is not able to get an order from the court severing the joint tenancy to force the sale of the property to discharge the debt.

False

Regarding fraudulent preferences, the Bankruptcy and Insolvency Act has the same general intent of the provisions set out in provincial legislation governing fraudulent preferences.

True

Which one of the following is not an accurate statement about bankruptcy?
a. If a bankrupt has paid creditors less than 50 cents on the dollar, the court will usually
put conditions or restrictions on the bankrupt upon discharge.
b. If a bankrupt does not disclose his status upon entering into certain transactions, he
may be fined or imprisoned.
c. Provisions of the Bankruptcy and Insolvency Act enable the trustee to reverse
transactions if she believes that there has been a fraudulent transfer or preference.
d. A payment made to a creditor in preference to other creditors is void; the legislation
states that there is a presumption that such a payment was made to create the
preference, if it was made within three months of the bankruptcy.
e. Before a corporation goes into bankruptcy, it must go into receivership, so that the
receiver can shut down the business prior to the appointment of the trustee in bankruptcy.

e. Before a corporation goes into bankruptcy, it must go into receivership, so that the receiver can shut down the
business prior to the appointment of the trustee in bankruptcy.

12. Which of the following is incorrect regarding a trustee in bankruptcy?
a. A trustee files documents with the Official Receiver necessary to give effect to a bankruptcy.
b. The debtor must file all documents with the Official Receiver necessary to give effect to a bankruptcy.
c. A trustee may sell the assets or continue on with the business.
d. The trustee assists the debtor in the bankruptcy process.
e. A trustee in bankruptcy must be licensed.

b. The debtor must file all documents with the Official Receiver necessary to give effect to a bankruptcy.

The Bankruptcy and Insolvency Act, in certain circumstances, allows a debtor to be forced into bankruptcy by a creditor. Which of the following debtors can be forced into bankruptcy under the provisions of the Bankruptcy and Insolvency Act?
a. Fishers.
b. Insurance companies.
c. Educational companies.
d. Farmers.
e. Trust companies

c. Educational companies

In bankruptcy proceedings, the debtor's assets are transferred to a trustee in bankruptcy who is responsible for dealing with the assets for the benefit of creditors.

True

An assignment in bankruptcy occurs when a creditor obtains a bankruptcy order from the court.

False

Comm Law - Chpt 16

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