Exam 37: Secured Transactions and Suretyship

A bond,which is an evidence of indebtedness,may serve as collateral.

A creditor will have to exhaust all the possible legal procedures to try to collect from the principal debtor before he can collect from a conditional guarantor of collection.

Kay borrowed $200,000 for her business.First Bank loaned the money but required a surety and collateral.Kay put up her boat,valued at $110,000,and Anson agreed to guarantee the entire loan.After Kay had paid $50,000 of the loan,she asked First Bank to release the collateral since she wanted to sell it to her brother.The bank looked at her perfect payment record and agreed.Two weeks later,she sold the business,took the boat to Brazil,and never was heard from again.Can First Bank collect from Anson?

If the principal debtor defaults,the surety has rights against the principal debtor,third parties,and cosureties.These rights would include:

A dealer sells goods on credit to a buyer who uses the goods as equipment.The dealer keeps a purchase money security interest in the goods.The dealer then borrows against the security agreement of the buyer along with the dealer's security interest in the collateral.The collateral provided by the dealer to his lender in this type of transaction is:

A primary reason for requiring a surety is to reduce the creditor's risk of loss.

Thomas borrowed $100,000 from First Bank,which asked that he both put up collateral and provide a surety.Consequently,Thomas provided the bank with a security interest in his antique car collection and asked Victor to act as a surety.Victor agreed to do so and signed a surety agreement with the bank.Thomas made several payments on the loan and then asked First Bank for permission to sell three of his cars.First Bank agreed,but it never notified Victor of the sale of the collateral.Thomas then defaults on the loan.First Bank now wants Victor to pay the remainder of the loan.Must Victor pay? Explain.

A defense that can only be asserted by the principal debtor is called a ____ defense.

A discharge of the principal debtor's obligation in bankruptcy does not discharge the surety's liability to the creditor on that obligation.

Substantial compliance with Article 9's financing statement requirements is sufficient for a valid perfection,despite minor errors in the statement that are not seriously misleading.

Elmer agreed to act as the conditional guarantor of collection on a debt of $50,000 that Fred owed to Gloria.Fred paid Elmer a premium to serve as surety.If Fred defaults on the debt,what are Gloria's rights against Elmer?

Jill owns and operates a donut shop.Under the Code,the flour,sugar,and other goods used by Jill to make donuts are classified as:

Mr.Chickilini is a surety for Wayne on a debt owed to Melvin.If Wayne fails to pay,what defenses might Mr.Chickilini have to avoid payment of the debt?

Revised Article 9 of the Code greatly complicates the provisions regarding the place(s)for filing a financing statement.

Conner lends Harvey $2000 and the loan is secured by Harvey's furniture.If Conner files a financing statement on January 30,2018,how long will he keep his security interest?

A buyer of goods who buys without knowledge of a security interest,for value,and primarily for personal,family,or household purposes takes the goods:

Indispensable paper includes:

Gary owns and operates a farm and a farm machinery dealership.Under the Code,a new tractor that Gary has for sale at his dealership is classified as:

Which of the following is NOT a method by which a security interest be perfected in collateral?

UCC Article 9 defines a secondary obligor as being a consignee.