Exam 23: Credit and Secured Transactions

What risks are there for lenders who rely on the debtor's inventory for collateral? Although the rule that a buyer in the ordinary course of business takes the item free from an inventory security interest makes buyers more willing to purchase items from inventory,does it not discourage lenders from financing inventory? What can lenders,who rely on merchants' inventory for collateral,do to protect themselves?

Ajax Corporation borrowed $50,000 from National Bank,giving National a security interest in its factory equipment.The agreement stated that the equipment would be security for this $50,000 loan and any future loans that National made to Ajax.National filed a valid financing statement.Over the next several months,Ajax borrowed another $100,000 from National.No additional financing statements were filed.Ajax has not made any payments on its loans from National.Ajax defaults on these loans.National wants to foreclose on the collateral.Assuming this security agreement is valid and perfected,how much of National's debt is secured?

Antideficiency statutes usually apply only to ________ purchase money mortgages.

Attachment is a(n)________ court order that permits the seizure of a debtor's property that is in the debtor's possession while a lawsuit against the debtor is pending.

A person who perfects a security interest by possession of the collateral is not required to file a formal financing statement,but must publish notice in a newspaper announcing the existence of the lien.

Under a power of sale,the procedure for that sale is provided in the mortgage or deed of trust,and no court action is necessary.

A mechanic's lien will take priority over a perfected lien that predates the creating of the mechanic's lien.