Exam 14: The UCC: Sales and Secured Transactions

Inez contracted with Filippo Furnaces Co. for the installation of a new furnace. Inez selected the furnace she wanted, accepting no suggestions from Filippo Furnaces' heating engineer. The furnace operated fine, but it did not heat the entire house. The size of the blower on the furnace was too small to accommodate the third floor of the house. Inez sued Filippo Furnaces Co. for the breach of the implied warranties of merchantability and fitness. What result?

Which of the following would be considered a merchant under the UCC?

Uncle Brandon promises to give his motorcycle to you for free at the end of the month. This transaction is governed by UCC, Article 2, because a motorcycle is within the definition of "goods."

A buyer who accepts nonconforming goods may revoke the acceptance under limited circumstances.

Which of the following is correct concerning termination statements?

Spicy & Hot, Inc. is interested in expanding its Mexican food restaurant into a Mexican food catering business. Spicy & Hot, Inc. buys a new delivery van from Van World. Spicy & Hot, Inc. is a buyer in the ordinary course of business when purchasing the van.

To perfect a security interest in a negotiable document, Second State Savings and Loan should

Maddie enters into a secured consumer debt transaction with Friendly Bank. When Maddie pays the loan in full, Friendly Bank is required to file a statement indicating that it no longer claims a secured interest in the collateral. This statement must be filed within one month from the date the debt is fully paid.

Which of the following is TRUE regarding an open price term?

Great State Bank and First Federal Bank have a security interest in TriColor's equipment. If neither secured party is perfected, the first to sue or repossess has priority over the collateral.

Fowler Bros. has applied to Gibralter Bank for a $50,000 loan for its business expansion. If Fowler Bros. plans to use its account at Gibralter Bank as collateral, discuss what the bank needs to do for a security interest to attach.