Question 1

Allison's bankruptcy on any debt owed by Sean has what effect, if any?

Accepted Answer

A)  Sean is not released and will be liable for the loan amounts. 
B)  Sean is released in the same manner that Allison is released. 
C)  Sean is released only if the bank failed to take sufficient steps to sue Allison and require payment of the loan before she filed for bankruptcy. 
D)  Sean is released only if the bank failed to notify him of the bankruptcy in sufficient time to allow him to make a proper claim against Allison in bankruptcy court. 
E)  Sean is released only if Allison failed to give him sufficient notice of her plans to file bankruptcy. 
A)  Sean is not released and will be liable for the loan amounts. 
B)  Sean is released in the same manner that Allison is released. 
C)  Sean is released only if the bank failed to take sufficient steps to sue Allison and require payment of the loan before she filed for bankruptcy. 
D)  Sean is released only if the bank failed to notify him of the bankruptcy in sufficient time to allow him to make a proper claim against Allison in bankruptcy court. 
E)  Sean is released only if Allison failed to give him sufficient notice of her plans to file bankruptcy.

Question 2

[Bad Hair Day] Tara started a new hair salon and leased space for the salon from Marisa. Unfortunately, Tara's styling caused some problems for customers. One customer's hair turned green from Tara's bleaching process, and Tara burned another customer with a curling iron. Not surprisingly, Tara had little business and was unable to pay her lease payments as they came due. Marisa filed a lawsuit against Tara and obtained a judgment against Tara for $7,000 in past due rent. Marisa asked for a court-ordered judgment permitting the sheriff to seize and sell Tara's equipment, including her hair-dryers, pedicure chair, nail polish, and other items. The judge refused her request. Marisa did, however, obtain an order allowing her to seize $3,000 held in Tara's bank account to partially satisfy the debt. Marisa also discovered that Tara had, for her personal use, a wide-screen television set worth approximately $1,000 which was being held by Franklin, a television repairer, for the costs of repair. Marisa asked him to turn over the television because her lien had priority, but Franklin refused.
-What is the most likely result of the dispute between Franklin and Marisa regarding the television set, assuming no exemption applies?

Accepted Answer

A)  Franklin will win the dispute because he has rights to a super-priority lien, and he will be able to recover amounts to which he is due from the sale of the television before Marisa is entitled to any funds. 
B)  Marisa will win the dispute because a judicial lien is always enforced before any other type of lien, and she will be able to sell the television for amounts owed to her by Tara without sharing any of the funds with Franklin. 
C)  Franklin and Marisa will be required to sell the television and split the proceeds 50-50. 
D)  Franklin and Marisa will be required to sell the television and split the proceeds based upon their percentage of debt. 
E)  Franklin and Marisa will be required to sell the television with Franklin, the holder of an artisan's lien, receiving only 25%, and Marisa receiving the rest. 
A)  Franklin will win the dispute because he has rights to a super-priority lien, and he will be able to recover amounts to which he is due from the sale of the television before Marisa is entitled to any funds. 
B)  Marisa will win the dispute because a judicial lien is always enforced before any other type of lien, and she will be able to sell the television for amounts owed to her by Tara without sharing any of the funds with Franklin. 
C)  Franklin and Marisa will be required to sell the television and split the proceeds 50-50. 
D)  Franklin and Marisa will be required to sell the television and split the proceeds based upon their percentage of debt. 
E)  Franklin and Marisa will be required to sell the television with Franklin, the holder of an artisan's lien, receiving only 25%, and Marisa receiving the rest.

Question 3

A composition agreement is a contract between creditors and a debtor in which the creditors agree to accept a lesser amount to satisfy the debts and discharge the remaining debt.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is false regarding the process of attachment?

Accepted Answer

A)  A creditor typically seeks an attachment as a prejudgment remedy in a legal action. 
B)  The creditor must file a lawsuit prior to seeking an attachment. 
C)  After attachment is complete, the creditor holds the property until judgment. 
D)  The court may attach the debtor's personal or real property. 
E)  The court may attach the debtor's checking and savings accounts. 
A)  A creditor typically seeks an attachment as a prejudgment remedy in a legal action. 
B)  The creditor must file a lawsuit prior to seeking an attachment. 
C)  After attachment is complete, the creditor holds the property until judgment. 
D)  The court may attach the debtor's personal or real property. 
E)  The court may attach the debtor's checking and savings accounts.

Question 5

Ridland has had severe problems staying out of debt. He has several creditors who wish to file a garnishment against his wages. Can all of the creditor's file the garnishment at once?

Accepted Answer

A)  Yes, all of the creditors can take a portion of the wages to satisfy Ridland's debt. 
B)  Yes, the court will collect the garnished wages and divide the money up amongst the creditors. 
C)  No, only one garnishment will be permitted at a time, and the first creditor to file will usually receive the garnished wages. 
D)  No, only one garnishment will be permitted at a time, and the creditor with the largest claim will usually receive the garnished wages. 
E)  No, only one garnishment will be permitted at a time, and the creditor with the smallest claim will usually receive the garnished wages. 
A)  Yes, all of the creditors can take a portion of the wages to satisfy Ridland's debt. 
B)  Yes, the court will collect the garnished wages and divide the money up amongst the creditors. 
C)  No, only one garnishment will be permitted at a time, and the first creditor to file will usually receive the garnished wages. 
D)  No, only one garnishment will be permitted at a time, and the creditor with the largest claim will usually receive the garnished wages. 
E)  No, only one garnishment will be permitted at a time, and the creditor with the smallest claim will usually receive the garnished wages.

Question 6

When considering whether a secured party or a claimant holding a mechanic's lien has priority to a good, how does a court make the determination?

Accepted Answer

By comparing the time at which the lien

Question 7

[Defective Windows] Cecelia hired a contractor, Paul, to put new windows in her home that she purchased herself from Good Windows. Unfortunately, Paul made a mess of the windows. While the windows were initially in good shape, Paul cracked some, scratched others, and did not get the windows properly fitted into their frames. Cecelia received a bill for the windows from Good Windows, but she refused to pay. Cecelia was told that Good Windows would file a lien, but she believed that there was no basis upon which a lien would be granted. Paul, who refused responsibility for any problems, also filed a lien after Cecelia refused to pay him.
-Which of the following is true regarding the type of lien, if any, that Good Windows is entitled to obtain prior to going to court, assuming the court follows the reasoning of Bates County Redi-Mix Inc. v. Windler?

Accepted Answer

A)  Good Windows is entitled to a mechanic's lien. 
B)  Good Windows is entitled to an artisan's lien. 
C)  Good Windows is entitled to a removal lien. 
D)  Good Windows is entitled to a judicial lien. 
E)  Good Windows is not entitled to any lien. 
A)  Good Windows is entitled to a mechanic's lien. 
B)  Good Windows is entitled to an artisan's lien. 
C)  Good Windows is entitled to a removal lien. 
D)  Good Windows is entitled to a judicial lien. 
E)  Good Windows is not entitled to any lien.

Question 8

A(n) ________ permits a debtor to retain all or a portion of the family home so that the family will have some form of shelter if other property is seized to satisfy a debt.

Accepted Answer

A)  caregiver exemption 
B)  homestead exemption 
C)  property right exemption 
D)  occupancy exemption 
E)  shelter exemption 
A)  caregiver exemption 
B)  homestead exemption 
C)  property right exemption 
D)  occupancy exemption 
E)  shelter exemption

Question 9

Which of the following was the result in Fostveit v. Poplin the case in the text involving the right of a contractor who had built storage units to place a lien on the property in which "substantial performance" has occurred according to a contract?

Accepted Answer

A)  The court found that a lien was able to be placed on a property because Fostveit had substantially performed his portion of the work assigned to him pursuant to the parties' contract. 
B)  The court found that a lien not allowed to be placed on the property because Fostveit had multiple violations of building codes. 
C)  The court found that a lien was allowed on the property, but only after Fostveit remedied the building code violations in compliance with local law. 
D)  The court found that a lien was not available because the Poplin's had improved the property pursuant to the contract and a lien would be inequitable. 
E)  The court found that a lien was available but the materials and time associated with the improvements the Poplin's had made would need to be deducted from the lien amount. 
A)  The court found that a lien was able to be placed on a property because Fostveit had substantially performed his portion of the work assigned to him pursuant to the parties' contract. 
B)  The court found that a lien not allowed to be placed on the property because Fostveit had multiple violations of building codes. 
C)  The court found that a lien was allowed on the property, but only after Fostveit remedied the building code violations in compliance with local law. 
D)  The court found that a lien was not available because the Poplin's had improved the property pursuant to the contract and a lien would be inequitable. 
E)  The court found that a lien was available but the materials and time associated with the improvements the Poplin's had made would need to be deducted from the lien amount.

Question 10

A creditor has a secured interest in your artwork and an artist has a lien on your artwork. Who has priority in obtaining the artwork or the proceeds from the sale of the artwork?

Accepted Answer

A)  The creditor with a perfected secured interest will have priority over the artist. 
B)  The creditor with an unperfected secured interest will have priority over the artist. 
C)  The artist will always have priority over the creditor. 
D)  The creditor will always have priority over the artist. 
E)  The property must be sold and the artist and creditor must split the proceeds 50-50. 
A)  The creditor with a perfected secured interest will have priority over the artist. 
B)  The creditor with an unperfected secured interest will have priority over the artist. 
C)  The artist will always have priority over the creditor. 
D)  The creditor will always have priority over the artist. 
E)  The property must be sold and the artist and creditor must split the proceeds 50-50.

Question 11

When can a creditor seek a writ of execution?

Accepted Answer

A)  After entry of judgment in the underlying case. 
B)  Before entry of judgment in the underlying case. 
C)  After attachment but before judgment. 
D)  Only if property has been attached for six months. 
E)  Only if the creditor is a secured creditor. 
A)  After entry of judgment in the underlying case. 
B)  Before entry of judgment in the underlying case. 
C)  After attachment but before judgment. 
D)  Only if property has been attached for six months. 
E)  Only if the creditor is a secured creditor.

Question 12

Which of the following statements accurately describes judicial liens?

Accepted Answer

A)  Attachments, writ of execution, and garnishment are types of judicial liens. 
B)  Writ of execution and attachments are types of judicial liens, but garnishments are not. 
C)  Garnishments and writ of execution are types of judicial liens, but attachments are not. 
D)  Writ of execution is a type of judicial lien, but garnishments and attachments are not. 
E)  Attachments are a type of judicial lien, but garnishments and writ of execution are not. 
A)  Attachments, writ of execution, and garnishment are types of judicial liens. 
B)  Writ of execution and attachments are types of judicial liens, but garnishments are not. 
C)  Garnishments and writ of execution are types of judicial liens, but attachments are not. 
D)  Writ of execution is a type of judicial lien, but garnishments and attachments are not. 
E)  Attachments are a type of judicial lien, but garnishments and writ of execution are not.

Question 13

[Bad Hair Day] Tara started a new hair salon and leased space for the salon from Marisa. Unfortunately, Tara's styling caused some problems for customers. One customer's hair turned green from Tara's bleaching process, and Tara burned another customer with a curling iron. Not surprisingly, Tara had little business and was unable to pay her lease payments as they came due. Marisa filed a lawsuit against Tara and obtained a judgment against Tara for $7,000 in past due rent. Marisa asked for a court-ordered judgment permitting the sheriff to seize and sell Tara's equipment, including her hair-dryers, pedicure chair, nail polish, and other items. The judge refused her request. Marisa did, however, obtain an order allowing her to seize $3,000 held in Tara's bank account to partially satisfy the debt. Marisa also discovered that Tara had, for her personal use, a wide-screen television set worth approximately $1,000 which was being held by Franklin, a television repairer, for the costs of repair. Marisa asked him to turn over the television because her lien had priority, but Franklin refused.
-Which of the following is the most likely reason for the judge's refusal to allow the sheriff to seize Tara's equipment?

Accepted Answer

A)  It would have been worth more than that owed to Marisa. 
B)  It was not listed as assets in the original complaint filed with the court. 
C)  It was exempt as tools and instruments needed to carry on a trade. 
D)  Marisa had a duty to exhaust all other avenues of recovery before seizing those items. 
E)  She incorrectly asked the sheriff to involve law enforcement and should have seized the goods herself. 
A)  It would have been worth more than that owed to Marisa. 
B)  It was not listed as assets in the original complaint filed with the court. 
C)  It was exempt as tools and instruments needed to carry on a trade. 
D)  Marisa had a duty to exhaust all other avenues of recovery before seizing those items. 
E)  She incorrectly asked the sheriff to involve law enforcement and should have seized the goods herself.

Question 14

After judgment is entered against Kylie in a suit for nonpayment by a creditor, the judge orders a local sheriff to seize and sell some of Kylie's valuable jewelry. This is an example of a(n) ________.

Accepted Answer

A)  Writ of execution 
B)  Order of attachment 
C)  Decree of seizure 
D)  Decree of sale 
E)  Writ of discharge 
A)  Writ of execution 
B)  Order of attachment 
C)  Decree of seizure 
D)  Decree of sale 
E)  Writ of discharge

Question 15

A debtor is permitted to retain all or a portion of the family home so that the family will retain some form of shelter through which of the following exemptions?

Accepted Answer

A)  Real estate 
B)  Real 
C)  Personal estate 
D)  Homestead 
E)  Shelter 
A)  Real estate 
B)  Real 
C)  Personal estate 
D)  Homestead 
E)  Shelter

Question 16

[Rough Start] Allison, who just graduated from college, wanted to buy a new car. However, she did not have much of a credit history, and the bank would not give her a loan unless she had a cosigner who agreed to be liable on the loan along with Allison. Allison's father cosigned with Allison on her loan at the bank. Allison also wanted to start a real estate business. She needed funds with which to do so. Her boyfriend, Sean, promised the bank, in writing that he would pay Allison's start-up loan for the real estate business if Allison did not do so. Unfortunately, Allison did not make any money in the real estate business. She went bankrupt along with Sean, who had been acting as her receptionist.
-The agreement entered into between Sean and the bank is called what?

Accepted Answer

A)  A suretyship 
B)  A guaranty 
C)  A certified agreement 
D)  An acknowledged agreement 
E)  An executory promise 
A)  A suretyship 
B)  A guaranty 
C)  A certified agreement 
D)  An acknowledged agreement 
E)  An executory promise

Question 17

Best Bank lends $3,000 to Juan to purchase a car and Juan signs a loan agreement granting Best Bank a lien on the car. This is an example of what type of lien?

Accepted Answer

A)  Statutory 
B)  Consensual 
C)  Judgment 
D)  Approved 
E)  Evaluated 
A)  Statutory 
B)  Consensual 
C)  Judgment 
D)  Approved 
E)  Evaluated

Question 18

When must a lienholder's claim on a property be settled?

Accepted Answer

A)  It depends upon the type of lien 
B)  After property is distributed to other creditors 
C)  After proceeds are distributed to other creditors 
D)  Before property or proceeds are distributed to other creditors 
E)  After both all property and proceeds are distributed to other creditors 
A)  It depends upon the type of lien 
B)  After property is distributed to other creditors 
C)  After proceeds are distributed to other creditors 
D)  Before property or proceeds are distributed to other creditors 
E)  After both all property and proceeds are distributed to other creditors

Question 19

Matilda did not pay Tomas for services Tomas provided. Tomas went to court and sued to have Matilda's wages garnished. What type of lien was Tomas seeking?

Accepted Answer

A)  Judicial 
B)  Mechanic's 
C)  Artisan's 
D)  True 
E)  Contempt 
A)  Judicial 
B)  Mechanic's 
C)  Artisan's 
D)  True 
E)  Contempt

Question 20

A creditor has what type of lien when, through legal action, the creditor seizes a debtor's property to satisfy a debt?

Accepted Answer

A)  Judicial 
B)  Mechanic's 
C)  Artisan's 
D)  True 
E)  Contempt 
A)  Judicial 
B)  Mechanic's 
C)  Artisan's 
D)  True 
E)  Contempt

Exam 31: Other Creditors Remedies and Suretyship

Allison's bankruptcy on any debt owed by Sean has what effect, if any?

A composition agreement is a contract between creditors and a debtor in which the creditors agree to accept a lesser amount to satisfy the debts and discharge the remaining debt.

Which of the following is false regarding the process of attachment?

Ridland has had severe problems staying out of debt. He has several creditors who wish to file a garnishment against his wages. Can all of the creditor's file the garnishment at once?

When considering whether a secured party or a claimant holding a mechanic's lien has priority to a good, how does a court make the determination?

A(n) ________ permits a debtor to retain all or a portion of the family home so that the family will have some form of shelter if other property is seized to satisfy a debt.

Which of the following was the result in Fostveit v. Poplin the case in the text involving the right of a contractor who had built storage units to place a lien on the property in which "substantial performance" has occurred according to a contract?

A creditor has a secured interest in your artwork and an artist has a lien on your artwork. Who has priority in obtaining the artwork or the proceeds from the sale of the artwork?

When can a creditor seek a writ of execution?

Which of the following statements accurately describes judicial liens?

After judgment is entered against Kylie in a suit for nonpayment by a creditor, the judge orders a local sheriff to seize and sell some of Kylie's valuable jewelry. This is an example of a(n) ________.

A debtor is permitted to retain all or a portion of the family home so that the family will retain some form of shelter through which of the following exemptions?

Best Bank lends $3,000 to Juan to purchase a car and Juan signs a loan agreement granting Best Bank a lien on the car. This is an example of what type of lien?

When must a lienholder's claim on a property be settled?

Matilda did not pay Tomas for services Tomas provided. Tomas went to court and sued to have Matilda's wages garnished. What type of lien was Tomas seeking?

A creditor has what type of lien when, through legal action, the creditor seizes a debtor's property to satisfy a debt?

An Introduction to Dynamic Business Law

Business Ethics

The Us Legal System

Alternative Dispute Resolution

Constitutional Principles

International and Comparative Law

Crime and the Business Community

Tort Law

Negligence and Strict Liability

Product Liability

Liability of Accountants and Other Professionals

Intellectual Property

Introduction to Contracts

Agreement

Consideration

Capacity and Legality

Legal Assent

Contracts in Writing

Third-Party Rights to Contracts

Discharge and Remedies

Introduction to Sales and Lease Contracts

Title, Risk of Loss, and Insurable Interest

Performance and Obligations Under Sales and Leases

Remedies for Breach of Sales and Lease Contracts

Warranties

Negotiable Instruments: Negotiability and Transferability

Negotiation, Holder in Due Course, and Defenses

Liability, Defenses, and Discharge

Checks and Electronic Fund Transfers

Secured Transactions

Bankruptcy and Reorganization

Agency Formation and Duties

Liability to Third Parties and Termination

Forms of Business Organization

Partnerships: Nature, Formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Formation and Financing

Corporations: Directors, Officers, and Shareholders

Corporations: Mergers, Consolidations, Terminations

Corporations: Securities and Investor Protection

Employment and Labor Law

Employment Discrimination

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

The Nature of Property, Personal Property, and Bailments

Real Property

Landlord-Tenant Law

Insurance Law

Wills and Trusts

Filters