Question 1

Generally,purchases of farm property are financed through the use of land contracts.

Accepted Answer

A) True 
 B)False  True

Question 2

A ________ is a security interest in real property or a deed to real property that is given by the owner as security for a debt owed to the creditor.

Accepted Answer

A) bill of sale 
B) note of trust 
C) mortgage 
D) quasi-contract 
A) bill of sale 
B) note of trust 
C) mortgage 
D) quasi-contract C

Question 3

Explain why the surety-guarantor distinction is important.

Accepted Answer

The surety-guarantor distinction is important because a surety is liable for the payment of another person's debt or the performance of another person's duty.The surety joins with the person primarily liable in promising to make the payments or perform the duty.The surety is primarily liable for the debtor's obligation and the debtor can demand performance from the surety at the time the debt is due.The creditor does not need to establish a default by the debtor or proceed first against the debtor on his obligation.A guaranty contract is similar,in that the promisor agrees to answer for the obligations of another.However,a grantor does not join the principal in making a promise: rather,a grantor makes a separate promise and agrees to be liable upon the happening of a certain event.A guarantor is secondarily liable and can be held to his guarantee only after the principal defaults.

Question 4

Foreclosure is the process by which any rights of the mortgagor or the current property owner are cut off.

Accepted Answer

A) True 
 B)False

Question 5

Possession of the goods must have been entrusted to the artisan for the artisan lien to come into play.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is true regarding an accommodation surety?

Accepted Answer

A) An accommodation surety must provide adequate collateral to the creditor. 
B) An accommodation surety is usually a professional such as a bonding company,who is paid for serving as a surety. 
C) An accommodation surety receives relatively more protection from courts. 
D) An accommodation surety is secondarily liable for the payment of the debt. 
A) An accommodation surety must provide adequate collateral to the creditor. 
B) An accommodation surety is usually a professional such as a bonding company,who is paid for serving as a surety. 
C) An accommodation surety receives relatively more protection from courts. 
D) An accommodation surety is secondarily liable for the payment of the debt.

Question 7

If a commercial contractor specifies parties to the contract are jointly and severally liable,this creates what type of relationship?

Accepted Answer

A) A grantor relationship 
B) A surety relationship 
C) A secondary liability relationship 
D) A principal relationship 
A) A grantor relationship 
B) A surety relationship 
C) A secondary liability relationship 
D) A principal relationship

Question 8

A(n)"________" is a person who is liable for the payment of another person's debt or for the performance of another person's duty.

Accepted Answer

A) beneficiary 
B) trustee 
C) surety 
D) executor 
A) beneficiary 
B) trustee 
C) surety 
D) executor

Question 9

Marie wants to buy Ted's farm.She agrees to pay Ted a monthly payment towards the farm,to take possession and to insure the property.Ted retains the legal title while Marie is making payments.What happens if Marie misses a payment?

Accepted Answer

A) Ted can increase Marie's monthly payments. 
B) Ted can declare a forfeiture and take possession. 
C) Ted can exercise his rights under strict foreclosure. 
D) Ted must sue Marie for the missed payment. 
A) Ted can increase Marie's monthly payments. 
B) Ted can declare a forfeiture and take possession. 
C) Ted can exercise his rights under strict foreclosure. 
D) Ted must sue Marie for the missed payment.

Question 10

The right of a lienholder to possess goods does not automatically give the lienholder the right to sell the goods or to claim ownership if his charges are not paid.

Accepted Answer

A) True 
 B)False

Question 11

If a party in interest to a mortgage wishes to exercise his right of redemption in a foreclosure sale,he must ________.

Accepted Answer

A) attend the foreclosure sale and pay the purchaser an equity fee 
B) act before the foreclosure sale 
C) pay the purchaser the amount the purchaser paid plus interest up to the time of redemption if he exercises his right of redemption after the foreclosure sale 
D) secure a co-signer to guarantee the mortgage loan 
A) attend the foreclosure sale and pay the purchaser an equity fee 
B) act before the foreclosure sale 
C) pay the purchaser the amount the purchaser paid plus interest up to the time of redemption if he exercises his right of redemption after the foreclosure sale 
D) secure a co-signer to guarantee the mortgage loan

Question 12

Which of the following is the oldest and also the simplest security device?

Accepted Answer

A) Pledge 
B) Chattel mortgage 
C) Deed of trust 
D) Surety 
A) Pledge 
B) Chattel mortgage 
C) Deed of trust 
D) Surety

Question 13

Chica,a women's fashion retailer,buys merchandise from Tammy,a fashion designer,promising to pay for the merchandise within 30 days after receipt.This is an example of an unsecured credit transaction.

Accepted Answer

A) True 
 B)False

Question 14

What does the term "judgment-proof" imply about a debtor?

Accepted Answer

A) He/she has defaulted on a mortgage. 
B) He/she has paid the full amount for the transaction. 
C) He/she has provided a security interest for the debt. 
D) He/she has no property subject to execution. 
A) He/she has defaulted on a mortgage. 
B) He/she has paid the full amount for the transaction. 
C) He/she has provided a security interest for the debt. 
D) He/she has no property subject to execution.

Question 15

Why did common law give an innkeeper the right to claim a lien on property a guest brought into the hotel to secure payment on food and lodging?

Accepted Answer

A) Because the innkeeper was required by law to provide service to anyone seeking it. 
B) Because the innkeeper was considered to be an artist. 
C) Because of statutory lien laws. 
D) Because of a contract signed by guests when staying in an inn. 
A) Because the innkeeper was required by law to provide service to anyone seeking it. 
B) Because the innkeeper was considered to be an artist. 
C) Because of statutory lien laws. 
D) Because of a contract signed by guests when staying in an inn.

Question 16

As a condition of giving Doyle a thirty-year loan for $100,000,the Caldwell Bank requires that Doyle procure a surety.Doyle pays Sal $5000 to serve in this role.Later,Doyle and the bank make a binding contract to extend the term of the debt from thirty years to thirty years and three months.Will this change discharge Sal from his obligation? Make no assumptions except those stated here.

Accepted Answer

It is very unlikely that this change wou

Question 17

A surety is a person who is liable for the payment of another person's debt.

Accepted Answer

A) True 
 B)False

Question 18

Artisans liens were created by statute to provide additional protection for artists in recovering unpaid funds for services.

Accepted Answer

A) True 
 B)False

Question 19

The principal debtor's lack of capacity is a defense for both the principal debtor and the surety if they are sued by the creditor.

Accepted Answer

A) True 
 B)False

Question 20

Joe Smith obtains a credit card from First National Bank.The credit card is what type of credit?

Accepted Answer

A) Secured credit 
B) Unsecured credit 
C) Mortgage 
D) Subsidized loan 
A) Secured credit 
B) Unsecured credit 
C) Mortgage 
D) Subsidized loan

Exam 28: Introduction to Credit and Secured Transactions

Generally,purchases of farm property are financed through the use of land contracts.

A ________ is a security interest in real property or a deed to real property that is given by the owner as security for a debt owed to the creditor.

Explain why the surety-guarantor distinction is important.

Foreclosure is the process by which any rights of the mortgagor or the current property owner are cut off.

Possession of the goods must have been entrusted to the artisan for the artisan lien to come into play.

Which of the following statements is true regarding an accommodation surety?

If a commercial contractor specifies parties to the contract are jointly and severally liable,this creates what type of relationship?

A(n)"________" is a person who is liable for the payment of another person's debt or for the performance of another person's duty.

Marie wants to buy Ted's farm.She agrees to pay Ted a monthly payment towards the farm,to take possession and to insure the property.Ted retains the legal title while Marie is making payments.What happens if Marie misses a payment?

The right of a lienholder to possess goods does not automatically give the lienholder the right to sell the goods or to claim ownership if his charges are not paid.

If a party in interest to a mortgage wishes to exercise his right of redemption in a foreclosure sale,he must ________.

Which of the following is the oldest and also the simplest security device?

Chica,a women's fashion retailer,buys merchandise from Tammy,a fashion designer,promising to pay for the merchandise within 30 days after receipt.This is an example of an unsecured credit transaction.

What does the term "judgment-proof" imply about a debtor?

Why did common law give an innkeeper the right to claim a lien on property a guest brought into the hotel to secure payment on food and lodging?

A surety is a person who is liable for the payment of another person's debt.

Artisans liens were created by statute to provide additional protection for artists in recovering unpaid funds for services.

The principal debtor's lack of capacity is a defense for both the principal debtor and the surety if they are sued by the creditor.

Joe Smith obtains a credit card from First National Bank.The credit card is what type of credit?

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Criminal Law and Procedure

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

The Agreement: Acceptance

Consideration

Reality of Consent

Capacity to Contract

Illegality

Writing

Rights of Third Parties

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Security Interests in Personal Property

Bankruptcy

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Transfers

The Agency Relationship

Third-Party Relations of the Principal and the Agent

Introduction to Forms of Business and Formation of Partnerships

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, limited Partnerships, and Limited Liability Limited Partnerships

History and Nature of Corporations

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

Administrative Law

The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinsonpatman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

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