Transcript #4 Secured Transactions >> Well sure, we're having trouble paying the bill but to keep working, we need this

[answerhappygod]

Transcript #4
Secured Transactions
>> Well sure, we're having trouble paying the bill but to
keep working, we need this machine so the bank can't be allowed to
take it back.
>> Well the letter the bank just sent us won't help us
much. They say the loan is past due and we are in default and
they're going to take your prize machine. Laura, we did sign a loan
document. It has your signature as COO and how much we owe.
>> 10,000 dollars. That much I know. That much I'm very
aware of.
>> And if you'll notice, midway down the loan document, it
refers to another document.
>> What other document?
>> Well this one. It states what the money was borrowed
for which in this case was the editing equipment. So taken
together, I do believe these two documents show that the bank can
take the editing equipment if we default on paying on the loan.
>> But those are two separate documents.
>> Yes.
>> I only signed one of them; the loan agreement. How can
they take the equipment on the basis of something I haven't signed?
They have a signature saying I owe them money, but they don't have
a signature saying I owe them the equipment.
>> [Laughs] Well that's a very interesting approach.
>> You see what I mean?
>> Well yes, there's no single document with your
signature with language creating a security interest and a piece of
collateral and a description of that collateral. You know you could
try to argue that you don't owe them anything at all.
>> We could? You think it would work?
>> No. Laura, the one document clearly refers to the
equipment.
>> Can you please work with me since you're working for me
and if we don't keep this equipment, you might not even be able to
do that?
>> Yes, ok.
>> The bank should only be able to say I'm in debt for the
money I signed for. I didn't sign a second document that gives them
the right to take my equipment, did I?
>> This is all standard procedure. There's one document
which says how much money is being lent and one document which says
what the money is being used to buy. Together the two documents
give the bank what it needs. So if you can't repay the money, they
take the thing you bought with it, no matter how much you want them
to do something else.
question to answer based on above text: What will happen to
Laura's editing equipment? Does the bank have an enforceable
interest? why?