Exam 37: Secured Transactions and Suretyship

Automatic perfection means that:

Payment of the debt or performance of the obligation discharges both the principal debtor and the surety.

Hank's tractor is collateral for a loan and Hank moves to the next county. In most states, the security instrument must be re-filed in the proper county or it will render the security interest ineffective.

A creditor will have to exhaust all the possible legal procedures to try to collect from the principal debtor before he can collect from a conditional guarantor of collection.

A security interest in electronic chattel paper is perfected by automatic perfection.

Explain how the 1998 Revisions to Article 9 facilitate electronic filing of a financing statement.

Under Article 9 of the UCC, a pledge is:

A field warehouse, under Article 9 of the UCC, is:

"Value" under Article 9 of the UCC is defined as including:

If Regency Services, Inc. wishes to protect itself against the possible dishonesty of Chad, an employee who will be handling corporate funds, Regency may purchase a(n):

Two or more sureties bound for the same debt of a principal debtor are known as:

Diane, who is seventeen years old, purchased an auto from Elvira on credit. Florence agreed to act as surety and signed a written surety agreement. At the time of purchase, Diane specifically asked Elvira about the condition of the car's motor and was told that it had just been replaced with a new one and was in fine condition. This was blatantly untrue, because Elvira knew it was in terrible shape and would only last a short time. The auto has now stopped running and Diane refuses to make any more payments. Elvira is now proceeding against Diane and Florence. What defenses, if any, are available to (a) Diane and (b) Florence?

Subrogation includes:

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

Karl loaned Linda $100,000. Madeline agreed to act as surety for $100,000. Nora agreed to act as surety for $75,000 and Orville agreed to act as surety for $25,000. Linda later defaulted on the loan, and Karl is now demanding payment from Nora and Orville. What amount do Nora and Orville have to pay? If Nora and Orville pay, does Madeline have any obligation? Explain.

A bond, which guarantees the performance of the terms of a contract, is a(n):

When Mark bought new office furniture on credit, Bartin's Office Supply Co. filed a financing statement. What would be required on the financing statement?

Assume you are the creditor in each of the following situations. Identify the kind of security agreement that is involved in each transaction and explain how you would perfect that agreement. a. You are the creditor (Everby Bank), and you lend Brisco Gaines $5,000 for a sound system. b. First Bank loans Doris $10,000 to purchase inventory for her store. c. First Bank loans Brad $5,000 to purchase a computer network for use in his store office. d. Kevin needs cash for gambling debts. He brings in his high-definition TV to secure a $500 loan.

The Code's classifications of collateral according to nature are: (a) goods; (b) tangibles; and (c) dispensable paper.