Question 1

A purchase-money security interest (PMSI) in consumer goods is perfected automatically when the PMSI is created.

Accepted Answer

A) True 
 B)False

Question 2

A creditor's composition agreement is usually held to be enforceable.

Accepted Answer

A) True 
 B)False

Question 3

The payment of Eden Valley Farm’s debt to First County Bank is guaranteed by Eden’s personal property. This property is

Accepted Answer

A) a future advance. 
B) after-acquired property. 
C) a floating lien. 
D) collateral. 
A) a future advance. 
B) after-acquired property. 
C) a floating lien. 
D) collateral.

Question 4

Helen's debt to Imprints Printers is past due. Imprints obtains a judgment against Helen, but she refuses 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 5

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 6

When more than one party claims an interest in the same collateral, a perfected secured party's interest has priority over the interests of most other parties.

Accepted Answer

A) True 
 B)False

Question 7

Olaf is the creditor in a transaction with Phil. Once certain requirements 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 8

An artisan's lien is possessory.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Lena borrows from Mac and Nicol, using the same collateral for both loans. Only Nicol has a perfected security interest. Lena defaults on both loans. The party with first rights to the collateral is​

Accepted Answer

A)  ​Lena. 
B)  ​Mac and Nicol, in proportion to Lena's debt to each. 
C)  ​Mac only. 
D)  ​Nicol only. 
A)  ​Lena. 
B)  ​Mac and Nicol, in proportion to Lena's debt to each. 
C)  ​Mac only. 
D)  ​Nicol only.

Question 11

Perfection is usually accomplished without filing a financing statement.

Accepted Answer

A) True 
 B)False

Question 12

When a debtor fails to pay for labor and materials furnished for the repair or improvement of personal property, a creditor can recover payment through a mechanic's lien.

Accepted Answer

A) True 
 B)False

Question 13

Jay is a surety for Karen's loan from Little Bank. Jay's right to be reimbursed by Karen after having paid her debt is the right of​

Accepted Answer

A)  ​contribution. 
B)  ​redemption. 
C)  ​reimbursement. 
D)  ​subrogation. 
A)  ​contribution. 
B)  ​redemption. 
C)  ​reimbursement. 
D)  ​subrogation.

Question 14

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 15

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​

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 16

Lenders Loan Company and Mortgage Service Corporation-Nadya's creditors-contract with Nadya for the discharge of her liquidated debts on payment of a lesser sum. This is​

Accepted Answer

A)  ​a composition agreement. 
B)  ​a subrogation. 
C)  ​a suretyship agreement. 
D)  ​in violation of most states' laws. 
A)  ​a composition agreement. 
B)  ​a subrogation. 
C)  ​a suretyship agreement. 
D)  ​in violation of most states' laws.

Question 17

Consumer Credit, Inc. (CCI), lends $1,000 to Joe. Kay acts as Joe's surety. If Kay pays the loan, she gets​

Accepted Answer

A)  ​any right that CCI had against Joe, but not a right to be repaid by Joe. 
B)  ​a right to be repaid by Joe, but not any right that CCI had against Joe. 
C)  ​any right that CCI had against Joe and a right to be repaid by Joe. 
D)  ​none of the choices. 
A)  ​any right that CCI had against Joe, but not a right to be repaid by Joe. 
B)  ​a right to be repaid by Joe, but not any right that CCI had against Joe. 
C)  ​any right that CCI had against Joe and a right to be repaid by Joe. 
D)  ​none of the choices.

Question 18

In most situations, the state office in which a financing statement should be filed depends on the location of the collateral.

Accepted Answer

A) True 
 B)False

Question 19

Gina borrows from Hilltop Bank the funds to buy a car. The car secures the debt. Gina defaults on the loan. Hilltop takes possession of the car, planning to sell it to recover some of the unpaid debt. Before Hilltop sells the car or enters into a contract for its sale, Gina can pay the bank what she owes and take back the car. This is​

Accepted Answer

A)  ​a deficiency judgment. 
B)  ​a floating lien. 
C)  ​the right of redemption. 
D)  ​the right of retention. 
A)  ​a deficiency judgment. 
B)  ​a floating lien. 
C)  ​the right of redemption. 
D)  ​the right of retention.

Question 20

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

Exam 21: Security Interests and Creditors Rights

A purchase-money security interest (PMSI) in consumer goods is perfected automatically when the PMSI is created.

A creditor's composition agreement is usually held to be enforceable.

The payment of Eden Valley Farm’s debt to First County Bank is guaranteed by Eden’s personal property. This property is

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​

When more than one party claims an interest in the same collateral, a perfected secured party's interest has priority over the interests of most other parties.

Olaf is the creditor in a transaction with Phil. Once certain requirements are met, Olaf’s rights will attach, which means that Olaf will have

An artisan's lien is possessory.

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

Lena borrows from Mac and Nicol, using the same collateral for both loans. Only Nicol has a perfected security interest. Lena defaults on both loans. The party with first rights to the collateral is​

Perfection is usually accomplished without filing a financing statement.

When a debtor fails to pay for labor and materials furnished for the repair or improvement of personal property, a creditor can recover payment through a mechanic's lien.

Jay is a surety for Karen's loan from Little Bank. Jay's right to be reimbursed by Karen after having paid her debt is the right of​

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

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​

Lenders Loan Company and Mortgage Service Corporation-Nadya's creditors-contract with Nadya for the discharge of her liquidated debts on payment of a lesser sum. This is​

Consumer Credit, Inc. (CCI), lends $1,000 to Joe. Kay acts as Joe's surety. If Kay pays the loan, she gets​

In most situations, the state office in which a financing statement should be filed depends on the location of the collateral.

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​

The Legal Environment

Constitutional Law

Courts and Alternative Dispute Resolution

Tort Law

Product Liability

Intellectual Property Rights

Internet Law, Social Media, and Privacy

Criminal Law and Cyber Crime

Business Ethics

Nature and Classification

Agreement

Consideration, Capacity, and Legality

Defenses to Contract Enforceability

Third Party Rights and Discharge

Breach and Remedies

International Law in a Global Economy

The Formation of Sales and Lease Contracts

Performance and Breach of Sales and Lease Contracts

Negotiable Instruments

Banking in the Digital Age

Bankruptcy

Agency Relationships in Business

Employment, Immigration, and Labor Law

Employment Discrimination

Sole Proprietorships and Private Franchises

All Forms of Partnership

Limited Liability Companies and Special Business Forms

Corporations

Investor Protection, Insider Trading, and Corporate Governance

Antitrust Law and Promoting Competition

Consumer and Environmental Law

Liability of Accountants and Other Professionals

Personal Property and Bailments

Real Property and Landlord-Tenant Law

Insurance, Wills, and Trusts

Filters

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

Lena borrows from Mac and Nicol, using the same collateral for both loans. Only Nicol has a perfected security interest. Lena defaults on both loans. The party with first rights to the collateral is

Jay is a surety for Karen's loan from Little Bank. Jay's right to be reimbursed by Karen after having paid her debt is the right of

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

Lenders Loan Company and Mortgage Service Corporation-Nadya's creditors-contract with Nadya for the discharge of her liquidated debts on payment of a lesser sum. This is

Consumer Credit, Inc. (CCI), lends $1,000 to Joe. Kay acts as Joe's surety. If Kay pays the loan, she gets

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