Question 1

Instruments are goods that will be so affixed to real property that they are considered a part of the real property.

Accepted Answer

A) True 
 B)False  False

Question 2

A purchase money security interest in noninventory collateral prevails over a prior perfected security interest if:

Accepted Answer

A) the purchase money security interest is perfected at the time the debtor takes possession or within 20 days afterward. 
B) the purchase money secured party gives notification in writing to the prior secured creditor before the debtor receives the inventory. 
C) the holder of the competing security interest received notification within five years before the debtor receives the inventory. 
D) the notification states that the person expects to acquire a purchase money security interest in inventory of the debtor and describes the inventory. 
A) the purchase money security interest is perfected at the time the debtor takes possession or within 20 days afterward. 
B) the purchase money secured party gives notification in writing to the prior secured creditor before the debtor receives the inventory. 
C) the holder of the competing security interest received notification within five years before the debtor receives the inventory. 
D) the notification states that the person expects to acquire a purchase money security interest in inventory of the debtor and describes the inventory. A

Question 3

A security interest in money can be perfected:

Accepted Answer

A) by filing a financing statement. 
B) by change of possession. 
C) by filing a public notice. 
D) by mere attachment. 
A) by filing a financing statement. 
B) by change of possession. 
C) by filing a public notice. 
D) by mere attachment. B

Question 4

Milt borrowed $200 from Anne.He promised to pay the money back in two weeks.As a showing of his good faith,he agreed verbally that Anne could take possession of his baseball card collection and keep it until he had repaid the loan in full.The next day,after Anne had the baseball card collection in her possession,Orin heard that Milt was in need of money.Knowing that Milt's baseball card collection could be worth a great deal of money in a few years,Orin offered to purchase the collection from Milt for $150.Milt accepted the offer,took Orin's money,and promised to retrieve the collection from Anne and deliver it to Orin the next day.Anne,however,refused to give up possession of the collection until she was paid in full.Both Milt and Orin now take the position that Anne has no rights in and to the collection because she does not have a signed security agreement and she has not filed a financing statement.Which of the following statements is true?

Accepted Answer

A) Milt and Orin are correct in their arguments. 
B) Anne's security interest is not attached in the absence of a written security agreement even though she maintained possession of the baseball card collection. 
C) Anne's possession of the collection satisfies the perfection requirement because it puts a third party like Orin on notice of Anne's interest in the property. 
D) Anne's failure to file a public notice rejects the perfection of the agreement even though she is in possession of the collateral. 
A) Milt and Orin are correct in their arguments. 
B) Anne's security interest is not attached in the absence of a written security agreement even though she maintained possession of the baseball card collection. 
C) Anne's possession of the collection satisfies the perfection requirement because it puts a third party like Orin on notice of Anne's interest in the property. 
D) Anne's failure to file a public notice rejects the perfection of the agreement even though she is in possession of the collateral.

Question 5

Article 9 of the Uniform Commercial Code does not include general intangibles,such as copyrights and software,in its definition of personal property.

Accepted Answer

A) True 
 B)False

Question 6

Under the revised Article 9 of the Uniform Commercial Code:

Accepted Answer

A) the debtor is required to sign a security agreement to create an enforceable interest in the collateral that supports the loan obligation. 
B) the security interest in the after-acquired property cannot attach to that property until the debtor obtains some property rights in the new property. 
C) the creditor cannot use the collateral to protect his interest in repayment of the money advanced to the debtor by covering future advances. 
D) the creditor is not allowed to file an "authenticated record" in substitution for a paper "financing statement" using e-commerce applications. 
A) the debtor is required to sign a security agreement to create an enforceable interest in the collateral that supports the loan obligation. 
B) the security interest in the after-acquired property cannot attach to that property until the debtor obtains some property rights in the new property. 
C) the creditor cannot use the collateral to protect his interest in repayment of the money advanced to the debtor by covering future advances. 
D) the creditor is not allowed to file an "authenticated record" in substitution for a paper "financing statement" using e-commerce applications.

Question 7

If no maturity date is stated in the financing statement,it is valid for six months.

Accepted Answer

A) True 
 B)False

Question 8

Under the UCC,when more than one security interest in the same collateral has been filed,the first security interest to be filed has priority over any that is filed later.

Accepted Answer

A) True 
 B)False

Question 9

When the security interest is perfected and the buyer knows of its existence,a buyer in the ordinary course of business:

Accepted Answer

A) is subject to the security interest created by his seller. 
B) takes free from a security interest created by his seller. 
C) takes free from a security interest only if the person is buying farm products from a person engaged in a farming operation. 
D) is not protected if the dealership is in default of its loan agreement. 
A) is subject to the security interest created by his seller. 
B) takes free from a security interest created by his seller. 
C) takes free from a security interest only if the person is buying farm products from a person engaged in a farming operation. 
D) is not protected if the dealership is in default of its loan agreement.

Question 10

Under Article 9 of the UCC,in which order are proceeds from the sale of collateral by the creditor to be distributed?

Accepted Answer

A) First,any expenses of repossessing the collateral are paid.Second,the proceeds are used to satisfy the debt.Third,any other junior liens are paid.Finally,if any proceeds remain,the debtor is entitled to them. 
B) First,the proceeds are used to satisfy the debt.Second,junior liens are paid.Third,any expenses of repossessing the collateral are paid.Finally,if any proceeds remain,the debtor is entitled to them. 
C) First,the proceeds are used to satisfy the debt.Second,any expenses of repossessing the collateral.Lastly,the debtor is entitled to remaining proceeds.Finally,if any proceeds remain,the debtor is entitled to them. 
D) First,the junior liens are paid.Second,any expenses of repossessing the collateral are paid.Third,the proceeds are used to satisfy the debt.Finally,if any proceeds remain,the debtor is entitled to them. 
A) First,any expenses of repossessing the collateral are paid.Second,the proceeds are used to satisfy the debt.Third,any other junior liens are paid.Finally,if any proceeds remain,the debtor is entitled to them. 
B) First,the proceeds are used to satisfy the debt.Second,junior liens are paid.Third,any expenses of repossessing the collateral are paid.Finally,if any proceeds remain,the debtor is entitled to them. 
C) First,the proceeds are used to satisfy the debt.Second,any expenses of repossessing the collateral.Lastly,the debtor is entitled to remaining proceeds.Finally,if any proceeds remain,the debtor is entitled to them. 
D) First,the junior liens are paid.Second,any expenses of repossessing the collateral are paid.Third,the proceeds are used to satisfy the debt.Finally,if any proceeds remain,the debtor is entitled to them.

Question 11

A creditor who loans money to enable a consumer to buy goods can obtain perfection of a security interest by attaching the security interest to the goods.

Accepted Answer

A) True 
 B)False

Question 12

If state law requires a certificate of title for motor vehicles,then a creditor who takes a security interest in a vehicle can rely on attachment of its security interest in the car to perfect it.

Accepted Answer

A) True 
 B)False

Question 13

A perfected security interest in fixtures has priority over the conflicting interest of an encumbrancer or owner of the real property:

Accepted Answer

A) only if the debtor is in possession of the real property. 
B) if the security interest is a purchase money security interest. 
C) even if the interest of the encumbrancer arose after the goods became fixtures. 
D) if the fixtures' security interest is perfected by a "fixtures filing" anytime after the goods became fixtures. 
A) only if the debtor is in possession of the real property. 
B) if the security interest is a purchase money security interest. 
C) even if the interest of the encumbrancer arose after the goods became fixtures. 
D) if the fixtures' security interest is perfected by a "fixtures filing" anytime after the goods became fixtures.

Question 14

Article 9 of the UCC does not define what constitutes default.

Accepted Answer

A) True 
 B)False

Question 15

Nellie borrowed money from Solvent National Bank and gave the bank a security interest in her business equipment,both present and after-acquired.She later borrowed money from Resilient Savings and Loan to purchase additional business equipment.Three weeks after Nellie purchased the new equipment and took possession of it,an employee of Resilient discovered the bank's filed financing statement concerning the bank's loan to Nellie.Resilient immediately recorded a financing statement,so as to perfect its purchase money security interest in the equipment.Nellie then defaulted on the obligation owed to the bank and on the obligation owed to Resilient.Who has the first priority security interest in the equipment purchased by Nellie with the funds borrowed from Resilient?

Accepted Answer

A) Solvent National Bank 
B) Resilient Savings and Loan 
C) Both Resilient and Solvent have equal priority 
D) Both Nellie and Resilient have equal priority 
A) Solvent National Bank 
B) Resilient Savings and Loan 
C) Both Resilient and Solvent have equal priority 
D) Both Nellie and Resilient have equal priority

Question 16

Obtaining a security interest enforceable against third parties is a:

Accepted Answer

A) two-step process consisting of attachment and priority. 
B) two-step process consisting of priority and perfection. 
C) three-step process consisting of priority,attachment,and perfection. 
D) two-step process consisting of attachment and perfection. 
A) two-step process consisting of attachment and priority. 
B) two-step process consisting of priority and perfection. 
C) three-step process consisting of priority,attachment,and perfection. 
D) two-step process consisting of attachment and perfection.

Question 17

An interest in fixtures that a creditor obtains to secure performance of an obligation is called a(n):

Accepted Answer

A) ownership equity. 
B) financial leverage. 
C) security interest. 
D) income trust. 
A) ownership equity. 
B) financial leverage. 
C) security interest. 
D) income trust.

Question 18

A "perfected" security interest:

Accepted Answer

A) protects the creditor's security interest in collateral against other creditors of the debtor. 
B) becomes effective even when the creditor does not give anything of value to the debtor. 
C) gives the creditor protection against other creditors of the collateral but not against other purchasers of the collateral. 
D) does not provide the creditor rights vis-à-vis the debtor. 
A) protects the creditor's security interest in collateral against other creditors of the debtor. 
B) becomes effective even when the creditor does not give anything of value to the debtor. 
C) gives the creditor protection against other creditors of the collateral but not against other purchasers of the collateral. 
D) does not provide the creditor rights vis-à-vis the debtor.

Question 19

If the proceeds of sale of collateral are not sufficient to satisfy the debt,then the creditor is usually entitled to a:

Accepted Answer

A) future advance. 
B) deficiency judgment. 
C) fixture filing. 
D) warehousing arrangement. 
A) future advance. 
B) deficiency judgment. 
C) fixture filing. 
D) warehousing arrangement.

Question 20

Documents of title include:

Accepted Answer

A) stock and bonds. 
B) dock warrants and dock receipts. 
C) certificates of deposit. 
D) conditional sales contracts. 
A) stock and bonds. 
B) dock warrants and dock receipts. 
C) certificates of deposit. 
D) conditional sales contracts.

Exam 43: Security Interests in Personal Property

Instruments are goods that will be so affixed to real property that they are considered a part of the real property.

A purchase money security interest in noninventory collateral prevails over a prior perfected security interest if:

A security interest in money can be perfected:

Article 9 of the Uniform Commercial Code does not include general intangibles,such as copyrights and software,in its definition of personal property.

Under the revised Article 9 of the Uniform Commercial Code:

If no maturity date is stated in the financing statement,it is valid for six months.

Under the UCC,when more than one security interest in the same collateral has been filed,the first security interest to be filed has priority over any that is filed later.

When the security interest is perfected and the buyer knows of its existence,a buyer in the ordinary course of business:

Under Article 9 of the UCC,in which order are proceeds from the sale of collateral by the creditor to be distributed?

A creditor who loans money to enable a consumer to buy goods can obtain perfection of a security interest by attaching the security interest to the goods.

If state law requires a certificate of title for motor vehicles,then a creditor who takes a security interest in a vehicle can rely on attachment of its security interest in the car to perfect it.

A perfected security interest in fixtures has priority over the conflicting interest of an encumbrancer or owner of the real property:

Article 9 of the UCC does not define what constitutes default.

Obtaining a security interest enforceable against third parties is a:

An interest in fixtures that a creditor obtains to secure performance of an obligation is called a(n):

A "perfected" security interest:

If the proceeds of sale of collateral are not sufficient to satisfy the debt,then the creditor is usually entitled to a:

Documents of title include:

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Property

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remedies

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

The Agency Relationship-Creation, Duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountants

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers

Introduction to Security

Bankruptcy

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

Filters