A purchase money security interest
A) will be automatically subordinate to any general security agreeement, even if registered within the specified time period.
B) will prevail over a general security agreement covering all of a merchant's assets, if it registered within the specified time period.
C) is also known as floating charge.
D) is now obsolete, in light of the Personal Property Security Act.
E) is prohibited in most provinces.

Question

Quizplus · Accepted Answer

A purchase money security interest (PMSI) refers to a type of security interest that arises when a seller or other creditor extends credit to a buyer or debtor to help them acquire specific collateral. A PMSI can have priority over a pre-existing security interest in the same collateral granted by the debtor to another creditor, provided that certain conditions are met, such as registration within the specified time period. As a result, choice B is the best since it correctly states that a PMSI will prevail over a general security agreement covering all of a merchant's assets if it is registered within the specified time period.

A Purchase Money Security Interest