Sale of Collateral. To pay for the purchases of several aircraft, Robert Wall borrowed funds from the Cessna Finance Corp, using the aircraft as collateral. Wall defaulted on the loans. Cessna took possession of the collateral (the aircraft) and sold
it. Cessna filed a suit in a federal district court against Wall for the difference between the amount due on the loans and the amount received from the sale of the aircraft. Wall claimed that he could have obtained a higher price for the aircraft if he had sold them himself. How does the question of whether a better price could have been obtained affect the issue of whether the sale was commercially reasonable? Discuss.
Sale of collateral
The court held that "[t]he fact that a better price could have been obtained by a sale at a different time or in a different method from that selected by the secured party is not in and of itself sufficient to establish that the sale was not made in a commercially reasonable manner." The court added that " 'blue book' values for the merchandise indicate that a fair market value was obtained." (This case was decided before the effective date of the revision of Article 9, but the result under the revised Article 9 would likely have been the same. See UCC 9-627(a).)
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