Question 1

In Father & Sons Home Improvement II v. Stuart, the court determined that

Accepted Answer

A)  Father & Sons' contract was not enforceable because it was not in writing. 
B)  The parties created a consensual lien that was enforceable. 
C)  Father & Sons committed constructive fraud by misrepresenting facts in the lien. 
D)  Stuart was required to pay the amount of the mechanics lien. 
A)  Father & Sons' contract was not enforceable because it was not in writing. 
B)  The parties created a consensual lien that was enforceable. 
C)  Father & Sons committed constructive fraud by misrepresenting facts in the lien. 
D)  Stuart was required to pay the amount of the mechanics lien. C

Question 2

A mortgage is an example of a

Accepted Answer

A)  Judicial lien 
B)  Consensual lien 
C)  Statutory lien 
D)  Mechanics lien 
A)  Judicial lien 
B)  Consensual lien 
C)  Statutory lien 
D)  Mechanics lien B

Question 3

List and explain the three types of liens available to creditors to collect debt.

Accepted Answer

A judicial lien results from a lawsuit filed by creditors against the debtor. If the creditor is successful in the lawsuit he becomes the judgment creditor and then the judgment itself must be executed by obtaining a lien which could mean simply filing the order.A statutory lien is a lien on the debtor's property authorized by a state statute and varies from state to state as to the process. Some examples of statutory liens are mechanics liens which place an automatic lien on materials used to repair a car without filing a lawsuit.A consensual lien is created when the owner of property voluntarily grants a lien to a creditor such as using personal property as collateral in a secured transaction or with real property when the creditor takes an interest in real property through a mortgage.

Question 4

A creditor will never be able to collect unsecured debt.

Accepted Answer

A) True 
 B)False

Question 5

A surety is a third party who agrees to be liable to pay a loan only if the debtor actually defaults.

Accepted Answer

A) True 
 B)False

Question 6

When a defendant debtor in a lawsuit is said to be "judgement proof" it signifies

Accepted Answer

A)  Clearly the defendant is not at fault for the debt. 
B)  The creditor committed fraud in the judicial process and therefore will not be successful. 
C)  The debtor has no assets which are collectable. 
D)  The creditor has no assets to pursue judicial actions. 
A)  Clearly the defendant is not at fault for the debt. 
B)  The creditor committed fraud in the judicial process and therefore will not be successful. 
C)  The debtor has no assets which are collectable. 
D)  The creditor has no assets to pursue judicial actions.

Question 7

In order to collect an unsecure debt, the creditor must first

Accepted Answer

A)  Force the debtor into bankruptcy proceedings. 
B)  Made a demand on the creditor. 
C)  File criminal charges against the creditor. 
D)  File a lawsuit as the creditor. 
A)  Force the debtor into bankruptcy proceedings. 
B)  Made a demand on the creditor. 
C)  File criminal charges against the creditor. 
D)  File a lawsuit as the creditor.

Question 8

A third party that agrees to be liable to pay a loan only if the debtor actually defaults is a(n)

Accepted Answer

A)  Surety 
B)  Guarantor 
C)  Obligor 
D)  Debtor 
A)  Surety 
B)  Guarantor 
C)  Obligor 
D)  Debtor

Question 9

Which of the following are defenses that a guarantor or a surety could use that would relieve them of payment liability?

Accepted Answer

A)  The agreement is not in writing. 
B)  The subject matter of the loan is destroyed. 
C)  The cosignor no longer desires to be obligated. 
D)  The original debtor never had an intention to pay the loan obligation. 
A)  The agreement is not in writing. 
B)  The subject matter of the loan is destroyed. 
C)  The cosignor no longer desires to be obligated. 
D)  The original debtor never had an intention to pay the loan obligation.

Question 10

A lien that arises from a judicial proceeding, most commonly a lawsuit filed by a creditor is called a(n)

Accepted Answer

A)  Consensual lien 
B)  Statutory lien 
C)  Default lien 
D)  Judicial lien 
A)  Consensual lien 
B)  Statutory lien 
C)  Default lien 
D)  Judicial lien

Question 11

A levy is a court order that authorizes the sheriff to take possession to prevent it from being or transferred by the debtor.

Accepted Answer

A) True 
 B)False

Question 12

A third party that agrees to be primarily liable to pay a loan for another is a(n)

Accepted Answer

A)  Surety 
B)  Guarantor 
C)  Obligor 
D)  Debtor 
A)  Surety 
B)  Guarantor 
C)  Obligor 
D)  Debtor

Question 13

Fred enters into a mortgage with First Star Bank. First Star Bank is the

Accepted Answer

A)  Mortgagee 
B)  Mortgagor 
C)  Promissory 
D)  Obligatory 
A)  Mortgagee 
B)  Mortgagor 
C)  Promissory 
D)  Obligatory

Question 14

To ensure that a loan is repaid, the creditor may require

Accepted Answer

A)  Only that the loan be secured. 
B)  Only that the loan be perfected. 
C)  That the loan is secured by collateral and personal guaranties. 
D)  Either the loan is secured by collateral or personal guaranties, but not both. 
A)  Only that the loan be secured. 
B)  Only that the loan be perfected. 
C)  That the loan is secured by collateral and personal guaranties. 
D)  Either the loan is secured by collateral or personal guaranties, but not both.

Question 15

Copper Construction rents a large office building from Olive Rental. The lease agreement states that should Copper Construction not pay its monthly lease, the principals will be liable for the rent. This is an example of

Accepted Answer

A)  A secured lease 
B)  A personal guaranty 
C)  A creditor guaranty 
D)  A UCC lien 
A)  A secured lease 
B)  A personal guaranty 
C)  A creditor guaranty 
D)  A UCC lien

Question 16

A consensual lien is a lien on what type of property?

Accepted Answer

A)  Personal property 
B)  Real property 
C)  Intellectual property 
D)  Secured property 
A)  Personal property 
B)  Real property 
C)  Intellectual property 
D)  Secured property

Question 17

Destin has missed several payments on his loan from Willshire Bank. While Whillshire Bank has attempted to work with Destin to pay according to the terms of the loan, they have had no success. Therefore, which of the options below is available?

Accepted Answer

A)  Willshire Bank can file a complaint to have Destin evicted from his house. 
B)  Whillshire Bank can declare the loan in default and institute a mortgage foreclosure. 
C)  Whillshire Bank can file a criminal complaint. 
D)  Whillshire Bank can force Destin into bankruptcy proceedings. 
A)  Willshire Bank can file a complaint to have Destin evicted from his house. 
B)  Whillshire Bank can declare the loan in default and institute a mortgage foreclosure. 
C)  Whillshire Bank can file a criminal complaint. 
D)  Whillshire Bank can force Destin into bankruptcy proceedings.

Question 18

Bob secures a judgment against Maria for a loan that she did not repay to Bob. Bob has now become a(n)

Accepted Answer

A)  Obligor 
B)  Assignor 
C)  Judgment creditor 
D)  Statutory creditor 
A)  Obligor 
B)  Assignor 
C)  Judgment creditor 
D)  Statutory creditor

Question 19

Savanna, a creditor, files a complaint against Ashley, a debtor. Ashely fails to answer the complaint. The court will issue a(n)

Accepted Answer

A)  Nolle prosequi 
B)  Dismissal 
C)  Default judgment 
D)  Breach of contract 
A)  Nolle prosequi 
B)  Dismissal 
C)  Default judgment 
D)  Breach of contract

Question 20

Ralph hires Veero Roofing to replace his roof. He pays half of the cost of the job, $5000 at the beginning of the job with the agreement to pay the other half when the job is complete. Shortly after the roofing job is complete Ralph receives the bill for the balance of $5000. Ralph does not pay the bill and in fact avoids Veero Roofing every time they try to contact them which angers the owners of Veero roofing greatly and files for a lien for $15,000. All of the following statements are true except

Accepted Answer

A)  The court will attach a lien to the property for Veero's requested $15,000. 
B)  The lien is fraudulent and unenforceable. 
C)  The court may award damages to anyone who was damaged by the fraudulent lien. 
D)  The court may award damages. 
A)  The court will attach a lien to the property for Veero's requested $15,000. 
B)  The lien is fraudulent and unenforceable. 
C)  The court may award damages to anyone who was damaged by the fraudulent lien. 
D)  The court may award damages.

Exam 24: Creditors Rights

In Father & Sons Home Improvement II v. Stuart, the court determined that

A mortgage is an example of a

List and explain the three types of liens available to creditors to collect debt.

A creditor will never be able to collect unsecured debt.

A surety is a third party who agrees to be liable to pay a loan only if the debtor actually defaults.

When a defendant debtor in a lawsuit is said to be "judgement proof" it signifies

In order to collect an unsecure debt, the creditor must first

A third party that agrees to be liable to pay a loan only if the debtor actually defaults is a(n)

Which of the following are defenses that a guarantor or a surety could use that would relieve them of payment liability?

A lien that arises from a judicial proceeding, most commonly a lawsuit filed by a creditor is called a(n)

A levy is a court order that authorizes the sheriff to take possession to prevent it from being or transferred by the debtor.

A third party that agrees to be primarily liable to pay a loan for another is a(n)

Fred enters into a mortgage with First Star Bank. First Star Bank is the

To ensure that a loan is repaid, the creditor may require

Copper Construction rents a large office building from Olive Rental. The lease agreement states that should Copper Construction not pay its monthly lease, the principals will be liable for the rent. This is an example of

A consensual lien is a lien on what type of property?

Destin has missed several payments on his loan from Willshire Bank. While Whillshire Bank has attempted to work with Destin to pay according to the terms of the loan, they have had no success. Therefore, which of the options below is available?

Bob secures a judgment against Maria for a loan that she did not repay to Bob. Bob has now become a(n)

Savanna, a creditor, files a complaint against Ashley, a debtor. Ashely fails to answer the complaint. The court will issue a(n)

Legal Foundations and Thinking Strategically

Business, Societal, and Ethical Contexts of Law

Business and the Constitution

The American Judicial System, Jurisdiction, and Venue

Resolving Disputes: Litigation and Alternative Dispute Resolution

Contracts: Overview, Definition, Categories, and Source of Law

Mutual Assent: Agreement and Consideration

Capacity and Legality

Enforceability

Performance

Breach and Remedies

Contracts for the Sale of Goods: Overview of Article 2

Sales Contracts: Agreement, Consideration, and the Statute of Frauds

Title, Allocation of Risk, and Insurable Interest

Performance and Cure in Sales Contracts

Breach and Remedies in a Sales Transaction

UCC Article 2A: Lease Contracts

Sales Warranties

Definition, Creation, and Categories of Negotiable Instruments

Negotiation, Endorsements, and Holder in Due Course

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Alternatives for Insolvent Borrowers

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Regulation of Issuance: The Securities Act of 1933

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