Exam 16: Secured Transactions

Dieter is a debtor to Maxwell, the secured party. Dieter lives in Ohio and works in Kentucky. Maxwell lives in Indiana and works in Iowa. Where must the secured party file the financing statement?

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Question 1

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Bagsby owns a business selling insects for organic gardening. Bagsby is seeking a loan from First Natural Bank. The loan officer is asking that the loan be secured by Bagsby's inventory of insects, now owned or hereafter acquired. In order to do this, a new security agreement will need to be signed each time Bagsby gets new insects or sells his insects.

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Question 2

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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.

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Question 3

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Attachment is a vital step in a secured transaction. For an enforceable security interest to be created, or to attach, three steps must occur: the parties must make a security agreement and either the debtor has to authenticate a security agreement describing the collateral or the secured party has to obtain possession of the collateral, the secured party must give value to obtain the security agreement, and the debtor must have rights in the collateral. Ordinarily the agreement is in writing and signed by the debtor or electronically recorded and authenticated by the debtor. In this case, however, it will be sufficient if the parties have an oral agreement since the bank, the secured party, has control of the deposit account being used for collateral. The second element, value, is the money the bank loans. The third element is that the debtor has rights in the collateral. Fowler Bros. has a legal right to its deposit account in Gibralter Bank.

Gateway sold a big-screen TV and entertainment center to Iris for $2,000 on credit. Iris signed a promissory note and gave Gateway a security interest in the TV and entertainment center. Gateway filed a financing statement in the appropriate public office. When Iris defaulted on her monthly payments owing a balance of $1,780, Gateway's attorney made arrangements to have the TV and entertainment center repossessed. The attorney then placed classified ads in the local newspaper to sell the goods. The attorney's fees are $300, the repo company charged $150, and the advertising costs are $50. (A)Is Iris able to redeem the property? (B)If Iris does not redeem and the TV and entertainment center are sold for $1,750, how will the money be disbursed?

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Question 4

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

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Question 5

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.

(True/False)

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Question 6

Article 9 of the UCC governs secured transactions in personal property.

(True/False)

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Question 7

For a security interest to attach, there must be an agreement.

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Question 8

Great State Bank loans money to Seth, securing the loan with property owned by Seth. Great State Bank is advised by its attorney to file a financing statement. Great State Bank doesn't understand why it should spend the extra money for this filing, since Seth has told them that he has no other creditors. Why should Great State Bank file a financing statement?

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Question 9

Hiram is a debtor to Central Credit Union, a secured party. If Hiram fails to maintain insurance on the collateral, he has likely

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Question 10

Country Bank, located in Indiana, loaned Chmelik $5,000 and obtained a security interest in a copyright Chmelik owns. Chmelik lives in Illinois, but works in Indiana. In order to perfect its interest, Country Bank files a financing statement in Indiana. The financing statement provides Chmelik's correct name, his business address, and a reasonable description of the copyright used as collateral. Is the financing statement sufficient?

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Question 11

First Federal had a perfected security interest in Vicor's printing press. Second Credit had a security interest in the same press, but its interest was not perfected. First Federal takes priority over Second Credit.

(True/False)

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Question 12

Article 9 of the UCC only applies to goods and does not include intangibles such as accounts or chattel paper.

(True/False)

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Question 13

A PMSI in consumer goods perfects automatically, without filing.

(True/False)

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Question 14

The initial term for which a financing statement will be effective is

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Question 15

Explain the difference between attachment and perfection.

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Question 16

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.

(True/False)

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Question 17

The property subject to a security interest is called

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Question 18

First Federal loaned Madeline $20,000 to purchase a new van. The van was for Madeline's personal and family use. First Federal's security interest is a purchase money security interest which perfects only upon filing a financing statement.

(True/False)

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Question 19

Ken decided to open a retail boat dealership. He expects that many of his sales will be credit sales. What should Ken do to protect his interests in the collateral in the credit sales that he makes?

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Question 20

Showing 1 - 20 of 27

Exam 16: Secured Transactions

Dieter is a debtor to Maxwell, the secured party. Dieter lives in Ohio and works in Kentucky. Maxwell lives in Indiana and works in Iowa. Where must the secured party file the financing statement?

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.

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

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.

Article 9 of the UCC governs secured transactions in personal property.

For a security interest to attach, there must be an agreement.

Hiram is a debtor to Central Credit Union, a secured party. If Hiram fails to maintain insurance on the collateral, he has likely

First Federal had a perfected security interest in Vicor's printing press. Second Credit had a security interest in the same press, but its interest was not perfected. First Federal takes priority over Second Credit.

Article 9 of the UCC only applies to goods and does not include intangibles such as accounts or chattel paper.

A PMSI in consumer goods perfects automatically, without filing.

The initial term for which a financing statement will be effective is

Explain the difference between attachment and perfection.

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.

The property subject to a security interest is called

First Federal loaned Madeline $20,000 to purchase a new van. The van was for Madeline's personal and family use. First Federal's security interest is a purchase money security interest which perfects only upon filing a financing statement.

Ken decided to open a retail boat dealership. He expects that many of his sales will be credit sales. What should Ken do to protect his interests in the collateral in the credit sales that he makes?

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