Exam 21: Security Interests and Creditors Rights

Market Credit Corporation is the secured party in a secured transaction with Northwest Outfitters. Market Credit could also be referred to as

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

A creditor's surrender of collateral to a debtor without the guarantor's consent can reduce the guarantor's obligation.

If a debtor does not pay a mechanic's lien, the debtor's property can be sold to satisfy the debt.

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​

An employee can be discharged due to a garnishment order.

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​

Smartt Software Company borrows $10,000 from Term 'N All Loans, Inc., but cannot repay the loan when it comes due. Term 'N All refuses to extend the time for repayment unless Smartt can provide an acceptable surety. Uno Venture Corporation agrees to act as a surety for the loan after Smartt offers the firm a discount on software and shows Uno financial statements, compiled with Term 'N All's assistance, that misrepresent Smartt's financial situation. Later, after Uno uses the discount to buy software, Smartt again defaults on repayment of the loan, and Term 'N All files a suit against Uno to collect the amount of the debt. Is Uno liable? Why or why not?​

A buyer in the ordinary course of business has priority even if a previously perfected security interest exists as to the goods.

Once default has occurred and the secured party has obtained possession of the collateral, the secured party has no more options.

Fact Pattern 21-1 Petro Oil Refinery asks Quality Bank for a loan to increase its oil inventory. Quality requires Robin, Petro's president, sign a personal guaranty to pay the debt if Petro defaults. Meanwhile, to sell fifty barrels of refined oil to Slick Lubricants, Inc., Petro asks its outside accountant Tina to co-sign a credit application. -Refer to Fact Pattern 21-1. If Robin is a guarantor, then the guaranty is required to be in writing because of​

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

Frances borrows $1,000 from Garden State Bank, using her recreational vehicle (RV) motor home, which she purchased at Hugo's RV Sales & Service, as collateral. To perfect its security interest, the bank must file its financing statement with​

Most of the customers in any business are buyers in the ordinary course of business.

If a creditor wins a judgment against a debtor and the debtor will not or cannot pay the amount due, the dispute is at an end.

Quotient Financial Corporation is a secured party with a security interest in property owned by Retail Sales Company. Perfection of this security interest may not protect Quotient Financial against the claim of​

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​

Attachment gives the creditor an enforceable security interest in the collateral.

A security interest is enforceable only if the debtor has title to the collateral.

Where and how to perfect a security interest sometimes depends on the classification of the collateral.