Commercial Law, 2012 Bar — Question 9

MULTIPLE CHOICE

X secured a loan from BBB Bank to pay for the importation of some dried fruits. Upon arrival of the goods consisting of dried fruits imported by X but before delivery to him, a trust receipt was executed by X to cover the transfer of the dried fruits to his possession. The dried fruits were so saleable but instead of turning over the proceeds of the sale, X used the funds to pay for the medical expenses of his mother who was sick of cancer of the bone. Which statement is most accurate? A) X cannot be held criminally liable because although he did not pay the bank he used the proceeds for a good reason. B) Fraud or deceit is a necessary element to hold X criminally liable for non-payment under the Trust Receipts Law. C) X can be held criminally liable under the Trust Receipts Law regardless of the purpose or intention for the use of the proceeds. D) X cannot be held criminally liable because the underlying obligation is one of simple loan.

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