Exam 33: Secured Transactions in Personal Property

An interest in personal property or fixtures that secures payment or performance of an obligation is called a(n): ______.

Field warehousing is an example of perfection by the mere by possession of the collateral.

Morris made two purchases.He purchased his neighbor Cordelia's typewriter and a computer from Crazy Computers.Regarding the typewriter,Cordelia had bought it on credit from Jack's Typewriters.Cordelia had financed the purchase with Jack's and signed a promissory note and a security agreement covering the purchase.The creditor,Jack's,did not file a financing statement,relying on the concept of automatic perfection for purchase money security interests in consumer goods.Morris was unaware of the history of the typewriter.The computer was subject to a security interest in favor of Country Bank,which had perfected its security interest by filing.Morris,by coincidence,knew of this security interest when Morris purchased the computer.Unfortunately,neither Cordelia nor Crazy Computers paid the secured creditors who now seek to repossess the collateral from Morris.What will be the likely outcome of this case?

King Electronics,a retailer of video equipment,sold two DVRs to Larson,a psychologist,for use in her professional practice,which was located in her home.The sale to Larson was made on credit.King retained a security interest in the DVRs sold but did not file a financing statement.Mills,another creditor of Larson,has asserted that his lien on the two DVRs is superior to King's security interest.Is he right? As you decide,remember to classify the DVRs as collateral in the hands of King and Larson.

When a consumer gives a creditor a security interest in forthcoming health insurance proceeds,the creditor must file a statement with the insurance company in order to have a perfected security interest.

Mark purchased a very expensive automobile on credit.Within a week,Mark discovered that a tune-up was necessary,for he was in the habit of driving at an excessive rate of speed.When the car was repaired,the bill was more than $1,000.Mark does not have the money to pay for the car repairs or the monthly car payments.The credit company as well as the repair shop are concerned over who has priority of repayment.Who has priority and why?

Unsecured creditors have equal priority and stand behind secured creditors for repayment of their debts.

If the collateral is in the possession of the creditor: ______.

A(n)______security interest is effective against third persons as well as against the buyer.

A security agreement must be backed by a written record even if the creditor has possession of the collateral.

Suzy wants to borrow cash from Bruce.She offers him a security interest in her neighbor's diamond ring,which she has been told that she or her sister will receive after their neighbor passes away.Regarding Suzy's proposal,which of the following statements is true?

A(n)__________ statement is a document,which may be requested by a paid-up debtor,stating that a security interest is no longer claimed under the specified financing statement.

Whatever is received upon the sale,exchange,collection or other disposition of collateral is known as: ______.