Exam 37: Secured Transactions and Suretyship

Revised Article 9 removes the requirement of from the financing statement.

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?

The surety, as defense to payment, may assert a principal debtor's defense of minority.

In which of the following situations would the buyer not qualify as "buyer in the ordinary course of business"?

If a minor principal disaffirms a contract and returns the consideration, the surety is discharged.

Laura is considering the possibility of becoming a surety to Carl on a debt by David, but she would like more information on the relationship between Carl and David concerning the transaction. If Laura requests such information from Carl, he must disclose it, because his failure to disclose material facts will constitute fraud.

Dale defaults on a car loan secured by his car and guaranteed by both Sam and Dave. Subrogation would allow Sam, who paid Dale's full obligation, to:

First Finance Company perfected its security interest in Donald's auto on March 1. Second Finance Company perfected its security interest in the same auto on April 1. If both parties have properly filed their finance statements, First Finance Company has a priority interest in the auto.

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

Article 9 applies to secured transactions in both real and personal property.

Which of the following would not help a surety defend himself from payment of a debt?

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

_{65. A bond is provided on behalf of a party to a proceeding to cover losses caused by delay or deprivation of the} Use of property resulting from the institution of the action.

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

If the creditor refuses to accept tender of payment by the principal debtor, the surety remains liable until the creditor wants payment.

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?

The delivery of personal property to a creditor as security for the payment of a debt is:

First Bank loaned $100,000 to Marlin's Store to purchase computers for its inventory. Marlin signed a financing agreement, which First Bank duly filed in the appropriate public office. Caroline came into Marlin's Store and purchased a computer that was subject to the security interest held by First Bank. Assuming that Caroline is a buyer in the ordinary course of business, whose interest in the computer has priority?

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.

Because of the , the contractual promise of a surety to the creditor must be in writing to be enforceable.