Ontario Barrister and Solicitor Practice Exam

What will a General Security Agreement (GSA) usually contain?

1. Only positive covenants

2. Only negative covenants

3. Both representations and warranties and positive and negative covenants

4. Only bailment agreements

The correct answer is: Both representations and warranties and positive and negative covenants

A GSA typically contains both representations and warranties as well as positive and negative covenants. This is because a GSA is a document that outlines the terms and conditions of a secured loan, which includes obligations and restrictions both parties must adhere to. Positive covenants are obligations that the borrower must fulfill, such as maintaining the collateral in good condition. Negative covenants are restrictions that limit the borrower's actions, such as prohibiting the sale of the collateral without the lender's consent. Bailment agreements, on the other hand, involve the transfer of possession of personal property from one party to another, and are not directly related to secured loans. Therefore, D is incorrect as it does not pertain to the context of a GSA.