Which creditor has rights to Favi's delivery truck as collateral?

A) First Bank, because in a dispute between two secured but unperfected creditors, the party who attached first takes priority.
B) First Bank, because in a dispute between two secured and perfected creditors, the party who perfected first takes priority.
C) First Bank, because in a dispute between a secured perfected creditor and a secured unperfected creditor, the secured perfected creditor takes priority.
D) The two banks will have equal rights to the property.
E) Second Bank, because "after-acquired property" is not specific enough to grant attachment right to First Bank, and, thus, the secured agreement of Second Bank takes priority.

Question

Kylie White · Accepted Answer

Final Answer : E, Explanation :  The after-acquired property clause in First Bank's security agreement does not automatically attach to the new delivery truck unless it is specifically included. Second Bank's security agreement specifically uses the truck as collateral, giving it priority.

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