Question 1

A guarantor is secondarily liable on an obligation.

Accepted Answer

A) True 
 B)False

Question 2

Jessie's debt to Kayla is past due. Kayla brings a legal action against Jessie to collect the debt. Kayla asks the court to order Liberty Bank,in which Jessie has an account,to pay a portion of the funds to Kayla. This is a request for

Accepted Answer

A) a writ of execution. 
B) an order of garnishment. 
C) an order that would violate most state laws. 
D) a composition agreement. 
A) a writ of execution. 
B) an order of garnishment. 
C) an order that would violate most state laws. 
D) a composition agreement.

Question 3

Proceedsare whatever is received when collateral is sold.

Accepted Answer

A) True 
 B)False

Question 4

A security interest that provides for a security interest in collateral subject to future advances is a floating lien.

Accepted Answer

A) True 
 B)False

Question 5

An artisan's lien is possessory.? HYPERLINK "http://assessment.cengage.com/Instructor/TestGenerator.aspx" ?

Accepted Answer

A) True 
 B)False

Question 6

Brass & Woodwind Instruments,Inc.,allows Clifton to keep a professional clarinet that he bought from Brass & Woodwind even though he has not paid the full price. Brass & Woodwind's legally sufficient financing statement in the goods need not include

Accepted Answer

A) a description of the collateral. 
B) a statement of the reason for allowing Clifton to take the goods. 
C) Brass & Woodwind's name. 
D) Clifton's name. 
A) a description of the collateral. 
B) a statement of the reason for allowing Clifton to take the goods. 
C) Brass & Woodwind's name. 
D) Clifton's name.

Question 7

Helen's debt to Imprints Printers is past due. Imprints obtains a judgment against Helen,but sherefuses to pay it. Imprints asks the court for an order that directs the sheriff to seize and sell any of Helen's nonexempt real or personal property that is within the court's geographic jurisdiction. This is a request for

Accepted Answer

A) a writ of execution. 
B) a composition agreement. 
C) an order that would violate most state laws. 
D) an order of garnishment. 
A) a writ of execution. 
B) a composition agreement. 
C) an order that would violate most state laws. 
D) an order of garnishment.

Question 8

Loni delivers her Mazda to be repaired at Nile's Body Shop. Loni agrees to pay cash. Nile performs,but Loni does not pay. Nile tells Loni that he will keep the car until she pays. This is

Accepted Answer

A) a judicial lien. 
B) a mechanic's lien. 
C) an artisan's lien. 
D) aviolation of most states' laws. 
A) a judicial lien. 
B) a mechanic's lien. 
C) an artisan's lien. 
D) aviolation of most states' laws.

Question 9

Fleet Trucking,LLC,buys a white van from Go Motors,Inc.,on credit under a guaranty signed by Herbie,Fleet's president,making him personally liable if the company does not pay. Herbie is

Accepted Answer

A) a surety. 
B) a lienor. 
C) a guarantor. 
D) a creditor. 
A) a surety. 
B) a lienor. 
C) a guarantor. 
D) a creditor.

Question 10

Olaf is the creditor in a transaction with Phil. Once certain require-ments are met,Olaf's rights will attach,which means that Olaf will have

Accepted Answer

A) an indivisible ownership right to Phil's property. 
B) an enforceable security interest in Phil's property. 
C) a notice affixed to Phil's property. 
D) the permission of a court to seize Phil's property. 
A) an indivisible ownership right to Phil's property. 
B) an enforceable security interest in Phil's property. 
C) a notice affixed to Phil's property. 
D) the permission of a court to seize Phil's property.

Question 11

Middling Credit Corporation asks Little Supply Company to agree to a security agreement that provides for coverage of the proceeds from the sale of after-acquired property. This is

Accepted Answer

A) a first-in-time rule. 
B) a floating lien. 
C) a funds guaranty. 
D) in violation of secured transactions law. 
A) a first-in-time rule. 
B) a floating lien. 
C) a funds guaranty. 
D) in violation of secured transactions law.

Question 12

Advances against lines of credit can be subject to a perfected security interest in certain collateral.

Accepted Answer

A) True 
 B)False

Question 13

The payment of Chick's debt to Diamond is guaranteed by Chick's collection of eight restored autos. Their agreement describes Chick's subject property by serial number. To establish Diamond's interest,this is

Accepted Answer

A) not sufficient because it is too specific. 
B) not sufficient if it matches the description in the financing statement. 
C) sufficient if it accurately describes the parties' agreement. 
D) not sufficient without an added description of the autos' other identifying characteristics. 
A) not sufficient because it is too specific. 
B) not sufficient if it matches the description in the financing statement. 
C) sufficient if it accurately describes the parties' agreement. 
D) not sufficient without an added description of the autos' other identifying characteristics.

Question 14

The payment of John's debt to Kirsten is guaranteed by John's personal property. Kirsten is most likely to perfect her interest by

Accepted Answer

A) attaching a bright label to John's property. 
B) calculating the precise amount of John's debt. 
C) correcting grammatical errors in the parties' written agreement. 
D) filing a financing statement with the appropriate authority. 
A) attaching a bright label to John's property. 
B) calculating the precise amount of John's debt. 
C) correcting grammatical errors in the parties' written agreement. 
D) filing a financing statement with the appropriate authority.

Question 15

A surety can use any defenses available to the principal debtor to avoid liability on the debt.

Accepted Answer

A) True 
 B)False

Question 16

Nell's debt to Olsen is past due. Olsen obtains an order of garnishment to require Nell's employer Pro Transmission Service,Inc.,to pay part of Nell's paycheck to Olsen. The law

Accepted Answer

A) limits the amount that can be taken from Nell's take-home pay. 
B) permits Olsen to dismiss Nell because her wages are garnished. 
C) practically does not allow Olsen to collect the awarded amount. 
D) requires Pro to retain Nell as an employee until the debt is paid. 
A) limits the amount that can be taken from Nell's take-home pay. 
B) permits Olsen to dismiss Nell because her wages are garnished. 
C) practically does not allow Olsen to collect the awarded amount. 
D) requires Pro to retain Nell as an employee until the debt is paid.

Question 17

Hal's Hardware store defaults on a debt to Intrastate Bank,which takes possession of the collateral securing the debt. Intrastate sells the collat-eral. The proceeds from the sale are applied first to

Accepted Answer

A) the balance of Hal's debt to Intrastate. 
B) Hal's debts to other creditors. 
C) Intrastate's expenses for the sale. 
D) the minimum amount Hal's needs to stay in business. 
A) the balance of Hal's debt to Intrastate. 
B) Hal's debts to other creditors. 
C) Intrastate's expenses for the sale. 
D) the minimum amount Hal's needs to stay in business.

Question 18

To create an enforceable security interest,the secured party must give something of value to a debtor's other creditors.

Accepted Answer

A) True 
 B)False

Question 19

Frank performs a contract with Gene to add a garage to Gene's property,but Gene does not pay. Frank can file a lien on Gene's property if,from the last date labor or materials were provided,he acts

Accepted Answer

A) immediately. 
B) within 60 to 120 days. 
C) within two years. 
D) within a reasonable time. 
A) immediately. 
B) within 60 to 120 days. 
C) within two years. 
D) within a reasonable time.

Question 20

Elvin fraudulently induces Franz,a consumer,to sign a promissory note to buy a speedboat. Elvin sells the note to Gaston,who takes it for value,in good faith,and without knowledge of the fraud. With respect to the defense against payment on the note to Elvin,Franz can

Accepted Answer

A) assert this defense against Gaston. 
B) file for a property exemption. 
C) exercise the right of subrogation. 
D) obtain a deficiency judgment. 
A) assert this defense against Gaston. 
B) file for a property exemption. 
C) exercise the right of subrogation. 
D) obtain a deficiency judgment.

Exam 25: Security Interests and Creditors Rights

A guarantor is secondarily liable on an obligation.

Jessie's debt to Kayla is past due. Kayla brings a legal action against Jessie to collect the debt. Kayla asks the court to order Liberty Bank,in which Jessie has an account,to pay a portion of the funds to Kayla. This is a request for

Proceedsare whatever is received when collateral is sold.

A security interest that provides for a security interest in collateral subject to future advances is a floating lien.

An artisan's lien is possessory.? HYPERLINK "http://assessment.cengage.com/Instructor/TestGenerator.aspx" ?

Brass & Woodwind Instruments,Inc.,allows Clifton to keep a professional clarinet that he bought from Brass & Woodwind even though he has not paid the full price. Brass & Woodwind's legally sufficient financing statement in the goods need not include

Loni delivers her Mazda to be repaired at Nile's Body Shop. Loni agrees to pay cash. Nile performs,but Loni does not pay. Nile tells Loni that he will keep the car until she pays. This is

Fleet Trucking,LLC,buys a white van from Go Motors,Inc.,on credit under a guaranty signed by Herbie,Fleet's president,making him personally liable if the company does not pay. Herbie is

Olaf is the creditor in a transaction with Phil. Once certain require-ments are met,Olaf's rights will attach,which means that Olaf will have

Middling Credit Corporation asks Little Supply Company to agree to a security agreement that provides for coverage of the proceeds from the sale of after-acquired property. This is

Advances against lines of credit can be subject to a perfected security interest in certain collateral.

The payment of Chick's debt to Diamond is guaranteed by Chick's collection of eight restored autos. Their agreement describes Chick's subject property by serial number. To establish Diamond's interest,this is

The payment of John's debt to Kirsten is guaranteed by John's personal property. Kirsten is most likely to perfect her interest by

A surety can use any defenses available to the principal debtor to avoid liability on the debt.

Nell's debt to Olsen is past due. Olsen obtains an order of garnishment to require Nell's employer Pro Transmission Service,Inc.,to pay part of Nell's paycheck to Olsen. The law

Hal's Hardware store defaults on a debt to Intrastate Bank,which takes possession of the collateral securing the debt. Intrastate sells the collat-eral. The proceeds from the sale are applied first to

To create an enforceable security interest,the secured party must give something of value to a debtor's other creditors.

Frank performs a contract with Gene to add a garage to Gene's property,but Gene does not pay. Frank can file a lien on Gene's property if,from the last date labor or materials were provided,he acts

Elvin fraudulently induces Franz,a consumer,to sign a promissory note to buy a speedboat. Elvin sells the note to Gaston,who takes it for value,in good faith,and without knowledge of the fraud. With respect to the defense against payment on the note to Elvin,Franz can

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