Chp 26 dis Essay Example | Topics and Well Written Essays - 250 words

Chp 26 dis - Essay Example This is because the lawnmower by Sears was a non-inventory collateral because the debtor (Cosmo Fiscante) retained the good. This therefore automatically perfects the PMSI of Sears and hence the Sears have the legal obligation to regain the lawnmower and take it back and not the other creditors who claim it. A Purchase Money Security Interest (PMSI) is a type of legal guarantee for a seller against other creditors in case the debtor becomes bankrupt or is unable to meet his or her obligation. The PMSI is only considered valid if it is perfected by the seller. Perfecting of the PMSI depends on whether the good sold is an inventory or non-inventory collateral. Inventory collateral has to be followed by a notification to the debtor in order for the PMSI to be considered perfected. In the case of non-inventory collateral, no notification is required and once the good is given to the debtor, then the PMSI is considered to be perfected (Miller and Jentz,