Question

Where a debt is transferred for the purpose of securing an existing or future debt, the debt so transferred, if received by the transferor or recovered by the transferee, is applicable first in payment of cost of such recovery. This is the provision of:

• A. Mortgaged debt
• B. Gift
• C. Actionable claim
• D. Lease

Hint:

Actionable claims include unsecured debts and claims to beneficial interest in movable property not in possession.

Answer 1

The Correct Option is C

Step 1: Meaning of actionable claim.
Actionable claim refers to a claim to any debt, other than a debt secured by mortgage, hypothecation or pledge of movable property.
Step 2: Application.
When a debt is transferred to secure repayment, any recovery is first applied towards costs of recovery, then to the debt. This is a principle of transfer of actionable claims.
Step 3: Conclusion.
Thus, the correct option is (c) actionable claim.