Question 1

When there are two perfected secured creditors in the same collateral: ______.

Accepted Answer

A)  priority goes to the creditor who perfected first. 
B)  priority goes to the creditor who is owed the greatest amount of money. 
C)  each perfected secured creditor has a 50% interest in the collateral. 
D)  both perfected secured creditors are treated like unsecured creditors in regards to the collateral. 
A)  priority goes to the creditor who perfected first. 
B)  priority goes to the creditor who is owed the greatest amount of money. 
C)  each perfected secured creditor has a 50% interest in the collateral. 
D)  both perfected secured creditors are treated like unsecured creditors in regards to the collateral.

Question 2

When the filing of a financing statement is defective: ______.

Accepted Answer

A)  the security interest is lost. 
B)  the filing fails to perfect the security interest. 
C)  the security interest is perfected through the court's application of equitable principles. 
D)  the public notice of the creditor's interest is still effective. 
A)  the security interest is lost. 
B)  the filing fails to perfect the security interest. 
C)  the security interest is perfected through the court's application of equitable principles. 
D)  the public notice of the creditor's interest is still effective.

Question 3

Grund, a professional night club musician, financed the purchase of a drum set to be used in his night club act. Under Article 9, the drum set will be classified as a consumer good.

Accepted Answer

A) True 
 B)False

Question 4

Attachment provides creditors with rights against debtors.

Accepted Answer

A) True 
 B)False

Question 5

All of the following are elements of a security agreement except: ______.

Accepted Answer

A)  identification of the parties involved. 
B)  a reasonable description of the collateral. 
C)  demonstration that the parties intended for the creditor intends to have a security interest. 
D)  statement of the amount of the debt. 
A)  identification of the parties involved. 
B)  a reasonable description of the collateral. 
C)  demonstration that the parties intended for the creditor intends to have a security interest. 
D)  statement of the amount of the debt.

Question 6

Unsecured creditors have equal priority and stand behind secured creditors for repayment of their debts.

Accepted Answer

A) True 
 B)False

Question 7

An after-acquired property clause in a consumer security agreement means that a creditor has a lien in the shifting stock of goods of the debtor.

Accepted Answer

A) True 
 B)False

Question 8

Suppose Harvey is a secured creditor and Joe is the debtor. If Harvey sells the collateral because Joe defaulted, Joe is not liable for any deficiency.

Accepted Answer

A) True 
 B)False

Question 9

Under Revised UCC Article 9, a debtor may authorize a financing statement by acquiring the collateral that is subject to the security agreement.

Accepted Answer

A) True 
 B)False

Question 10

Secured transactions are governed by Article 2 of the Uniform Commercial Code.

Accepted Answer

A) True 
 B)False

Question 11

Claim in a changing or shifting stock of the buyer's goods is known as after-acquired goods.

Accepted Answer

A) True 
 B)False

Question 12

A security agreement must be backed by a written record even if the creditor has possession of the collateral.

Accepted Answer

A) True 
 B)False

Question 13

King Electronics, a retailer of video equipment, sold two DVRs to Larson, a psychologist, for use in her professional practice, which was located in her home. The sale to Larson was made on credit. King retained a security interest in the DVRs sold but did not file a financing statement. Mills, another creditor of Larson, has asserted that his lien on the two DVRs is superior to King's security interest. Is he right? As you decide, remember to classify the DVRs as collateral in the hands of King and Larson.

Accepted Answer

Judgment will be for Mills. The DVRs are

Question 14

What is the purpose of a financing statement?

Accepted Answer

A)  to meet UCC accounting requirements under Article 9 
B)  to create a security interest 
C)  to amend a security agreement 
D)  to alert third persons that a creditor has a security interest in the collateral described 
A)  to meet UCC accounting requirements under Article 9 
B)  to create a security interest 
C)  to amend a security agreement 
D)  to alert third persons that a creditor has a security interest in the collateral described

Question 15

A security interest is like a lien on personal property that allows the creditor to take possession of the property if the debtor defaults.

Accepted Answer

A) True 
 B)False

Question 16

A(n) ______security interest is effective against third persons as well as against the buyer.

Accepted Answer

A)  universal. 
B)  prohibitive. 
C)  perfected. 
D)  protective. 
A)  universal. 
B)  prohibitive. 
C)  perfected. 
D)  protective.

Question 17

Self-help repossession of collateral upon a buyer's default is contrary to public policy and is never allowed.

Accepted Answer

A) True 
 B)False

Question 18

If two creditors have a security interest in the same collateral, their priority is determined according to the "last in-first out" provision.

Accepted Answer

A) True 
 B)False

Question 19

An interest in personal property or fixtures that secures payment or performance of an obligation is called a(n): ______.

Accepted Answer

A)  guaranty holding. 
B)  security interest. 
C)  guaranty interest. 
D)  good-faith guaranty. 
A)  guaranty holding. 
B)  security interest. 
C)  guaranty interest. 
D)  good-faith guaranty.

Question 20

Suzy wants to borrow cash from Bruce. She offers him a security interest in her neighbor's diamond ring, which she has been told that she or her sister will receive after their neighbor passes away. Regarding Suzy's proposal, which of the following statements is true?

Accepted Answer

A)  Bruce cannot take a security interest in the ring, because Suzy does not have rights to the collateral. 
B)  Bruce must have the ring in his possession or have a written agreement from Suzy describing the ring in order to obtain a security interest in it. 
C)  Suzy must not have legal rights to the ring if she is going to give Bruce a security interest. 
D)  Suzy must not give Bruce something of value as a security interest. 
A)  Bruce cannot take a security interest in the ring, because Suzy does not have rights to the collateral. 
B)  Bruce must have the ring in his possession or have a written agreement from Suzy describing the ring in order to obtain a security interest in it. 
C)  Suzy must not have legal rights to the ring if she is going to give Bruce a security interest. 
D)  Suzy must not give Bruce something of value as a security interest.

Exam 33: Secured Transactions in Personal Property

When there are two perfected secured creditors in the same collateral: ______.

When the filing of a financing statement is defective: ______.

Grund, a professional night club musician, financed the purchase of a drum set to be used in his night club act. Under Article 9, the drum set will be classified as a consumer good.

Attachment provides creditors with rights against debtors.

All of the following are elements of a security agreement except: ______.

Unsecured creditors have equal priority and stand behind secured creditors for repayment of their debts.

An after-acquired property clause in a consumer security agreement means that a creditor has a lien in the shifting stock of goods of the debtor.

Suppose Harvey is a secured creditor and Joe is the debtor. If Harvey sells the collateral because Joe defaulted, Joe is not liable for any deficiency.

Under Revised UCC Article 9, a debtor may authorize a financing statement by acquiring the collateral that is subject to the security agreement.

Secured transactions are governed by Article 2 of the Uniform Commercial Code.

Claim in a changing or shifting stock of the buyer's goods is known as after-acquired goods.

A security agreement must be backed by a written record even if the creditor has possession of the collateral.

What is the purpose of a financing statement?

A security interest is like a lien on personal property that allows the creditor to take possession of the property if the debtor defaults.

A(n) ______security interest is effective against third persons as well as against the buyer.

Self-help repossession of collateral upon a buyer's default is contrary to public policy and is never allowed.

If two creditors have a security interest in the same collateral, their priority is determined according to the "last in-first out" provision.

An interest in personal property or fixtures that secures payment or performance of an obligation is called a(n): ______.

Suzy wants to borrow cash from Bruce. She offers him a security interest in her neighbor's diamond ring, which she has been told that she or her sister will receive after their neighbor passes away. Regarding Suzy's proposal, which of the following statements is true?

The Nature and Sources of Law

The Court System and Dispute Resolution

Business Ethics, Social Forces, and the Law

The Constitution As the Foundation of the Legal Environment

Government Regulation of Competition and Prices

Administrative Agencies

Crimes

Torts

Intellectual Property Rights and the Internet

The Legal Environment of International Trade

Nature and Classes of Contracts: Contracting on the Internet

Formation of Contracts: Offer and Acceptance

Capacity and Genuine Assent

Consideration

Legality and Public Policy

Writing, Electronic Forms, and Interpretation of Contracts

Third Persons and Contracts

Discharge of Contracts

Breach of Contract and Remedies

Personal Property and Bailments

Legal Aspects of Supply Chain Management

Nature and Form of Sales

Title and Risk of Loss

Product Liability: Warranties and Torts

Obligations and Performance

Remedies for Breach of Sales Contracts

Kinds of Negotiable Instruments and Negotiability

Transfers of Negotiable Instruments and Warranties of Parties

Liability of the Parties Under Negotiable Instruments

Checks and Funds Transfers

Nature of the Debtor Creditor Relationship

Consumer Protection

Bankruptcy

Insurance

Agency

Third Persons in Agency

Regulation of Employment

Equal Employment Opportunity Law

Types of Business Organizations

Partnerships

LPs, LLCs, and LLPs

Corporate Formation

Shareholder Rights in Corporations

Securities Regulation

Accountants Liability and Malpractice

Management of Corporations

Real Property

Environmental Law and Land Use Controls

Leases

Decedents Estates and Trusts

Filters