Exam 37: Secured Transactions and Suretyship

If two parties have unperfected security interests in the same collateral, the first to attach has priority.

A security agreement may include only presently owned inventory, accounts, or equipment of the debtor, not property that is subsequently acquired.

Rodrigo lends money to Isaac on Linda's promise to act as a surety. Rodrigo's extension of credit is the consideration to support Isaac's promise to repay the loan and Linda's suretyship undertaking.

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

Glenn decided to borrow from Jones Bank since it promised that his loan interest rate would be systematically reduced every year when the board met. The loan rate was never reduced, but actually increased monthly. Glenn refused to pay the interest demanded and sued for rescission of the contract; thereupon, the bank attempted to collect from Lewis, a surety under the loan. Does Lewis have to pay?

Authentication of a security agreement may occur by the debtor's encrypting a record in part, with the present intent of the authenticating party's accepting the record.

Which of the following contractual defenses are not available to those parties involved in surety relationships?

Although in theory there is a distinction between a surety and a guarantor, in common usage the two terms are almost synonymous.

Sureties have a right of exoneration against their cosureties.

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.

In a suretyship, the creditor's rights against the principal debtor are determined primarily by the contract between them.

A buyer in the ordinary course of business takes collateral free of a perfected security interest created by the buyer's seller.

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:

A perfected security interest has priority over:

First Bank repossessed Bob's television after he missed his last two $50 payments on it. He came to the bank with the $100 plus service charges and expenses of repossession. The bank will have to give him the television as long as they have not disposed of the television or have not made a contract to sell it.

Dr. Wells purchased a refrigerator for use in his home. The refrigerator will be classified as:

Inventory includes:

The purpose of bail bond in a criminal proceeding is to assure the appearance of the defendant in court.

A bond which guarantees the performance of the terms of a contract is a(n) bond.

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: