Jeremy owns WorldWide Volkswagon, Inc., a VW dealership. On September 1, Collinsville National Bank (Bank) loaned Jeremy $40,000. Bank prepared a security agreement, which purported to grant Bank a security interest in all of WorldWide Volkswagon’s “inventory, accounts, and equipment.” Jeremy signed the security agreement and used the $40,000 to buy a 1963 Chevrolet Corvette for himself, since he had always wanted one. Six months later, Jeremy defaulted on his loan and Bank wishes to repossess the Corvette. Can it do so?
1. Yes, because the car was inventory covered by the security agreement.
2. Yes, because the car was equipment covered by the security agreement.
3. No, because Jeremy did not have the power to transfer rights in the collateral to Bank.
4. No, because the Corvette is not collateral covered by the security agreement.