Caveat Venditor: Ensure Debtor Has Authority To Pay

Law360 (April 20, 2010, 2:22 PM EDT) -- Imagine that you are the head of a major petroleum company that has a sales agreement with a distributor of motor fuel. Under the terms of the agreement, if the distributor wants your products, you are contractually obligated to deliver them. And the sales volume is significant, say $1 million per week. Assume further that the distributor, as is often the case, has pledged all of its personal property, including cash and inventory, to obtain financing....

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