Janice is a transactional paralegal working for Cynthia Alameda of Alameda & Associates. One of the firm’s clients is Cory’s Concrete Cutting Service, which is in the process of obtaining a business loan so it can expand its operations. The lender has approved the loan to Cory’s, but is requiring that the loan be secured by a security interest in Cory’s concrete cutting equipment. The president of Cory’s, Cory Johnson, is working with Janice on finalizing the list of concrete cutting equipment when Mr. Johnson asks what the financing statement does. Janice explains both security interests and UCC Financing Statements, and how the collateral security agreement could allow the lender to take possession of the concrete cutting equipment if loan payments are not made on time. Later, as the meeting is about to break up, Mr. Johnson says, “Well, I’m sure glad I’m protected against having the lender take my concrete cutting equipment.” From the options listed below, what is Janice’s best approach to responding to Mr. Johnson’s comment?
Explanation
Answer: C - Discuss the security interest, financing statement, and lender’s right to take possession on default to make sure that Mr. Johnson understands the potential consequences. Answer C is the best response because Mr. Johnson may not have understood Janice’s explanation. Answer A is not the best response because Janice, as an employee of an attorney, has an obligation to adequately explain matters to the client. Answer B is not the best response because it states facts about Mr. Johnson that are not stated in the question. Although Janice could arrange for Mr. Johnson and Ms. Alameda to speak, Answer D is not the best response because Janice may be able to explain the matter to Mr. Johnson before involving Ms. Alameda.
