Exam 37: Secured Transactions and Suretyship

Elmer agreed to act as the conditional guarantor of collection on a debt of $50,000 that Fred owed to Gloria. Fred paid Elmer a premium to serve as surety. If Fred defaults on the debt, what are Gloria's rights against Elmer?

"Perfection" is required in order for the secured party to enforce rights against the debtor.

If the main purpose of the promisor (surety) is to obtain an economic benefit that he did not previously enjoy, the promise is not within the statute of frauds.

Mr. Chickilini is a surety for Wayne on a debt owed to Melvin. If Wayne fails to pay, what is Mr. Chickilini's defense to avoid payment of the debt?

The most common method of perfecting a security interest under Article 9 is filing a completed financing statement.

The right of a surety who has paid the creditor to be repaid by the principal debtor is:

Gary decided to borrow from Jones Bank since it promised that his loan interest rate would be systematically reduced every year when the board met. The loan rate was never reduced, but actually increased monthly. Gary refused to pay the interest demanded and sued for rescission of the contract. The bank attempted to collect from Lewis, a surety under the loan. Does Lewis have to pay?

Jill owns and operates a donut shop. Under the Code, the flour, sugar, and other goods used by Jill to make donuts are classified as:

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

Upon paying the principal debtor's entire obligation, the surety is __________ the rights of the creditor.

The UCC defines a debtor's "rights in collateral" in Article 9.

Which of the following is a type of collateral involving rights evidenced by indispensable paper?

Bill lends Harvey $1,500 and the loan is secured by Harvey's furniture. If Bill files a financing statement on January 30, 2012 how long will it be effective?

A surety may set off his claims against the creditor if the creditor is solvent.

Article 9 of the UCC is flexible, simple, and it allows a variety of forms of secured financing.

A security interest in consumer goods is always automatically perfected upon attachment.

A primary reason for requiring a surety is to reduce the creditor's risk of loss.

The right of exoneration allows the surety to require the principal debtor to pay his obligation to the creditor.

Tony is a surety for Monica on a debt she owes to Francis. If Monica properly tenders full payment and Francis refuses it, both Monica and Tony are discharged from the debt.

A bankruptcy trustee may invalidate a granting of a security interest from the debtor if it was made on the date of or within 90 days before the filing of the bankruptcy petition and it was for the benefit of a creditor for an antecedent debt and was made before the debtor became insolvent.