V.
(5%)
C contracted D to renovate his commercial building. D ordered construction materials from E and received delivery thereof. The following day, C went to F Bank to apply for a loan to pay for the construction materials. As security for the loan, C was made to execute a trust receipt. One year later, after C failed to pay the balance on the loan, F Bank charged him with violation of the Trust Receipts Law.
(a) What is a Trust Receipt?
(b) Will the case against C prosper? Reason briefly.
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1 comment:
V.
a.
A trust receipt is a commercial document whereby the bank releases the goods in the possession of the entrustee but retains ownership thereof while the entrustee shall sell the goods and apply the proceeds thereof for the full payment of his liability with the bank.
b.
No, because the transaction between C and F Bank is not covered by the Trust Receipts Law. The transaction between them is simply a contract of loan.
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