Teacher:In this task, you will be shown a prompt from a judicial decision and multiple holding statements derived from citations following text in a legal decision. Holdings represent the governing legal rule when the law is applied to a particular set of facts. There are five answer choices for each citing text. The correct answer is the holding statement that corresponds to the citing text. You should write an incorrect option. Even though there exist multiple wrong answers, we only need a single wrong answer. There is a <HOLDING> token in the position of the citing text prompt where the holding statement was extracted.
Teacher: Now, understand the problem? Solve this instance: in the face of an express warranty stating that no security interest exists. To the contrary, case law supports the proposition that an express "free and clear" warranty precludes a finding of actual knowledge of a security interest. The district court in Black Diamond directly considered this issue in the context of 9-320. Id. The court wrote that "Black Diamond specifically guaranteed that it 'had good title' to the coal, had 'the right to sell' the coal to Commodities, and 'that [the coal] shall he free from all liens, encumbrances and claims.' Consequently, Commodities acquired the coal without knowledge that its purchases violated CIT Group's inventory lien." Id. (emphasis in original); see also Victory Nat'l Bank of Nowata v. Stewart, 6 Kan.App.2d 847, 636 P.2d 788, 790 (1981) (<HOLDING>). The bankruptcy court in Black Diamond also
Holding statements: (A) holding inter alia defendant breached implied warranty of merchantability where an express warranty regarding safety of goods was printed on package and where goods failed to conform to the express warranty (B) holding that where buyer had opportunity to inspect goods and failed to inform seller in timely manner of defects buyer deemed to have accepted goods pursuant to 672606 (C) holding buyer liable for balance of contract price of accepted goods (D) holding that a buyer who purchases goods subject to an express warranty that the goods are free from all liens takes free of any unperfected security interest (E) holding that a statement of conditional sale of goods can be filed with the state auditor before the delivery of goods where statute says the statement must be filed within ten days of delivery of goods
Student:
holding inter alia defendant breached implied warranty of merchantability where an express warranty regarding safety of goods was printed on package and where goods failed to conform to the express warranty