Question 1

Which of the following is true?

Accepted Answer

A) A security agreement may create or provide for a security interest in property that the debtor presently does not own or have rights to. 
B) Obligations covered by a security agreement may not include future advances. 
C) Federal regulation allows a credit seller or lender to obtain a nonpossessory security interest in a consumer's household goods, such as furniture, appliances, and clothing, whether as a purchase money security interest or otherwise. 
D) Encryption of a record cannot serve as a debtor's authentication of a security agreement. 
A) A security agreement may create or provide for a security interest in property that the debtor presently does not own or have rights to. 
B) Obligations covered by a security agreement may not include future advances. 
C) Federal regulation allows a credit seller or lender to obtain a nonpossessory security interest in a consumer's household goods, such as furniture, appliances, and clothing, whether as a purchase money security interest or otherwise. 
D) Encryption of a record cannot serve as a debtor's authentication of a security agreement.

Question 2

What contractual defenses are available to those parties involved in surety relationships?

Accepted Answer

A) The nonexistence of the principal debtor's obligation. 
B) Discharge of the principal debtor's obligation. 
C) Modification of the principal debtor's contract. 
D) All of the above. 
A) The nonexistence of the principal debtor's obligation. 
B) Discharge of the principal debtor's obligation. 
C) Modification of the principal debtor's contract. 
D) All of the above.

Question 3

A surety may set off his claims against the creditor if the creditor is solvent.

Accepted Answer

A) True 
 B)False

Question 4

A bankruptcy trustee may invalidate a granting of a security interest from the debtor if it was made on the date of or within 90 days before the filing of the bankruptcy petition and it was for the benefit of a creditor for an antecedent debt and was made before the debtor became insolvent.

Accepted Answer

A) True 
 B)False

Question 5

What term is used to describe the creation of a security interest that is enforceable against the debtor?

Accepted Answer

A) Attachment. 
B) Pledge. 
C) Perfection. 
D) Lien. 
A) Attachment. 
B) Pledge. 
C) Perfection. 
D) Lien.

Question 6

The creditor's rights against the principal debtor are determined by the contract between them.

Accepted Answer

A) True 
 B)False

Question 7

When Mark bought new office furniture on credit,Bartin's Office Supply Co.filed a financing statement.What would be required on the financing statement?

Accepted Answer

A) The trade name of Mark's business. 
B) Mark's signature. 
C) Mark's name and an indication of what collateral is covered by the agreement. 
D) All of the above. 
A) The trade name of Mark's business. 
B) Mark's signature. 
C) Mark's name and an indication of what collateral is covered by the agreement. 
D) All of the above.

Question 8

Possession is available as a means of perfecting a security interest in accounts and letter-of-credit rights.

Accepted Answer

A) True 
 B)False

Question 9

Two or more sureties bound for the same debt of a principal debtor are known as:

Accepted Answer

A) absolute sureties. 
B) cosureties. 
C) conditional guarantors of collection. 
D) co-creditors. 
A) absolute sureties. 
B) cosureties. 
C) conditional guarantors of collection. 
D) co-creditors.

Question 10

Article 9 of the UCC is flexible,simple,and it allows a variety of forms of secured financing.

Accepted Answer

A) True 
 B)False

Question 11

According to the UCC,a computer purchased by a CPA for use in her office will be classified as inventory.

Accepted Answer

A) True 
 B)False

Question 12

Hank's tractor is collateral for a loan and Hank moves to the next county.In most states,the security instrument must be re-filed in the proper county or it will render the security interest ineffective.

Accepted Answer

A) True 
 B)False

Question 13

Article 9 of the UCC governs financing transactions involving security interests in real property.

Accepted Answer

A) True 
 B)False

Question 14

Karl loaned Linda $100,000.Madeline agreed to act as surety for $100,000.Nora agreed to act as surety for $75,000 and Orville agreed to act as surety for $25,000.Linda later defaulted on the loan,and Karl is now demanding payment from Nora and Orville.What amount do Nora and Orville have to pay? If Nora and Orville pay,does Madeline have any obligation?

Accepted Answer

Nora must pay $75,000 and Orville must p

Question 15

The right of a surety who has paid the creditor to be repaid by the principal debtor is:

Accepted Answer

A) exoneration. 
B) subrogation. 
C) reimbursement. 
D) None of the above. 
A) exoneration. 
B) subrogation. 
C) reimbursement. 
D) None of the above.

Question 16

Payment of the debt or performance of the obligation discharges both the principal debtor and the surety.

Accepted Answer

A) True 
 B)False

Question 17

If the surety is a(n)___________,then the creditor may hold the surety liable as soon as the principal debtor defaults.

Accepted Answer

A) absolute surety 
B) conditional surety 
C) subrogee 
D) mortgagee 
A) absolute surety 
B) conditional surety 
C) subrogee 
D) mortgagee

Question 18

A debtor need not sign the financing statement.

Accepted Answer

A) True 
 B)False

Question 19

Explain how the 1998 Revisions to Article 9 facilitate electronic filing of a financing statement.

Accepted Answer

The 1998 Revisions to Article 9 no longe

Question 20

Article 9 of the UCC applies to a security interest without consent that arises by operation of law,such as a mechanic's lien.

Accepted Answer

A) True 
 B)False

Exam 37: Secured Transactions and Suretyship

Which of the following is true?

What contractual defenses are available to those parties involved in surety relationships?

A surety may set off his claims against the creditor if the creditor is solvent.

A bankruptcy trustee may invalidate a granting of a security interest from the debtor if it was made on the date of or within 90 days before the filing of the bankruptcy petition and it was for the benefit of a creditor for an antecedent debt and was made before the debtor became insolvent.

What term is used to describe the creation of a security interest that is enforceable against the debtor?

The creditor's rights against the principal debtor are determined by the contract between them.

When Mark bought new office furniture on credit,Bartin's Office Supply Co.filed a financing statement.What would be required on the financing statement?

Possession is available as a means of perfecting a security interest in accounts and letter-of-credit rights.

Two or more sureties bound for the same debt of a principal debtor are known as:

Article 9 of the UCC is flexible,simple,and it allows a variety of forms of secured financing.

According to the UCC,a computer purchased by a CPA for use in her office will be classified as inventory.

Hank's tractor is collateral for a loan and Hank moves to the next county.In most states,the security instrument must be re-filed in the proper county or it will render the security interest ineffective.

Article 9 of the UCC governs financing transactions involving security interests in real property.

The right of a surety who has paid the creditor to be repaid by the principal debtor is:

Payment of the debt or performance of the obligation discharges both the principal debtor and the surety.

If the surety is a(n)___________,then the creditor may hold the surety liable as soon as the principal debtor defaults.

A debtor need not sign the financing statement.

Explain how the 1998 Revisions to Article 9 facilitate electronic filing of a financing statement.

Article 9 of the UCC applies to a security interest without consent that arises by operation of law,such as a mechanic's lien.

Introduction to Law

Business Ethics

Civil Dispute Resolution

Constitutional Law

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Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Introduction to Sales and Leases

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Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

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Transfer and Holder in Due Course

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Relationship of Principal and Agent

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Formation and Internal Relations of General Partnerships

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Nature and Formation of Corporations

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Fundamental Changes of Corporations

Bankruptcy

Securities Regulation

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Interests in Real Property

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