Question 1

Which of the following is true regarding a security interest in consumer goods?

Accepted Answer

A)  A financing statement must be filed in order to perfect a security interest in consumer goods. 
B)  Under federal consumer protection legislation, a seller may not hold a security interest in consumer goods. 
C)  Under most state laws, a seller may not hold a security interest in consumer goods. 
D)  When a creditor sells a consumer good to a debtor on a credit basis, the security interest perfects automatically. 
E)  When a creditor sells a consumer good to a debtor on a credit basis, the security interest is perfected by the seller's possession. 
A)  A financing statement must be filed in order to perfect a security interest in consumer goods. 
B)  Under federal consumer protection legislation, a seller may not hold a security interest in consumer goods. 
C)  Under most state laws, a seller may not hold a security interest in consumer goods. 
D)  When a creditor sells a consumer good to a debtor on a credit basis, the security interest perfects automatically. 
E)  When a creditor sells a consumer good to a debtor on a credit basis, the security interest is perfected by the seller's possession.

Question 2

Everett buys a new bicycle on credit from Bicycle City.Bicycle City has a security agreement establishing a purchase-money security interest in the bicycle.Everett,however,discovers that he does not have enough money to pay his rent.Therefore,he sells his bicycle to his neighbor,Helen,who is unaware of Bicycle City's security interest in the bicycle.Everett fails to make payments on the bicycle and Bicycle City seeks to repossess it.Discuss the rights and obligations of the parties.

Accepted Answer

Under the UCC,as long as Helen,the buyer

Question 3

List three advantages discussed in the text associated with perfection by possession.

Accepted Answer

First,a secured party does not have to g

Question 4

Which of the following is true regarding Tina's repossession of the pick-up truck?

Accepted Answer

A)  She breached the peace in recovering the collateral. 
B)  Tina did not breach the peace in recovering the collateral unless Joan can establish the existence of actual injuries. 
C)  Tina did not breach the peace because she was entitled to repossess the vehicle and any injury sustained by Joan was her own fault. 
D)  Tina breached the peace, but only because she did not provide Joan with prior notification that she was coming to repossess the collateral. 
E)  Tina breached the peace, but only because she acted to repossess the collateral after 10:00 p.m. at night. 
A)  She breached the peace in recovering the collateral. 
B)  Tina did not breach the peace in recovering the collateral unless Joan can establish the existence of actual injuries. 
C)  Tina did not breach the peace because she was entitled to repossess the vehicle and any injury sustained by Joan was her own fault. 
D)  Tina breached the peace, but only because she did not provide Joan with prior notification that she was coming to repossess the collateral. 
E)  Tina breached the peace, but only because she acted to repossess the collateral after 10:00 p.m. at night.

Question 5

Once a financing statement has been filed with a correct agency,for how long is the statement valid under the UCC?

Accepted Answer

A)  1 year 
B)  2 years 
C)  3 years 
D)  4 years 
E)  5 years 
A)  1 year 
B)  2 years 
C)  3 years 
D)  4 years 
E)  5 years

Question 6

Which of the following was the result in the bankruptcy case in the text In re Robert O.Troupe and Dawn Lynn Troupe involving the issue of whether a tractor dealer's failure to file a financing statement rendered its purchase money security interest unperfected because the tractor was equipment used for business purposes,or whether the security interest was automatically perfected as an interest in a consumer good?

Accepted Answer

A)  The tractor dealer prevailed because classification of collateral is determined as of the time of the creation of the security interest, and the consumers were bound by the representation on the security agreement that the tractor was to be used as consumer goods. 
B)  The tractor dealer prevailed because although representations made by the buyers on the security agreement were not controlling, the buyers were using the tractor as a consumer good at the time of default, the time at which classification of collateral is made in any dispute. 
C)  The bankruptcy trustee prevailed because the consumers made misrepresentations at the time of the sale as to the use of the tractor and wrongfully claimed that it was for consumer use when it was actually to be used as equipment in a business endeavor. 
D)  The bankruptcy trustee prevailed because although no misrepresentations were made at the time of the sale, the tractor was being used as equipment in a business endeavor at the time of default; and the time of default is the point at which issues involving use are determined. 
E)  The bankruptcy trustee prevailed because when at the time of default, collateral is used partly as a consumer good and partly as equipment in a business endeavor, the collateral loses its status as a consumer good. 
A)  The tractor dealer prevailed because classification of collateral is determined as of the time of the creation of the security interest, and the consumers were bound by the representation on the security agreement that the tractor was to be used as consumer goods. 
B)  The tractor dealer prevailed because although representations made by the buyers on the security agreement were not controlling, the buyers were using the tractor as a consumer good at the time of default, the time at which classification of collateral is made in any dispute. 
C)  The bankruptcy trustee prevailed because the consumers made misrepresentations at the time of the sale as to the use of the tractor and wrongfully claimed that it was for consumer use when it was actually to be used as equipment in a business endeavor. 
D)  The bankruptcy trustee prevailed because although no misrepresentations were made at the time of the sale, the tractor was being used as equipment in a business endeavor at the time of default; and the time of default is the point at which issues involving use are determined. 
E)  The bankruptcy trustee prevailed because when at the time of default, collateral is used partly as a consumer good and partly as equipment in a business endeavor, the collateral loses its status as a consumer good.

Question 7

Assuming a purchase-money security interest is not involved,which of the following is true regarding priority when there are two secured parties and neither has perfected?

Accepted Answer

A)  The party who attached its interest first will prevail. 
B)  The party who loaned money first will prevail. 
C)  The parties will divide the proceeds from the sale of the collateral evenly between them. 
D)  The party who loaned the most money on the collateral has priority. 
E)  The party who first notified the debtor of a missed payment has priority. 
A)  The party who attached its interest first will prevail. 
B)  The party who loaned money first will prevail. 
C)  The parties will divide the proceeds from the sale of the collateral evenly between them. 
D)  The party who loaned the most money on the collateral has priority. 
E)  The party who first notified the debtor of a missed payment has priority.

Question 8

What does the UCC provide regarding protection in movable collateral that is moved from one state to another?

Accepted Answer

According to the UCC,a security interest

Question 9

Which of the following is the designation for property acquired by the debtor after a security agreement covering the property is made?

Accepted Answer

A)  Post-dated property. 
B)  After-acquired property. 
C)  Proceeds. 
D)  Post-acquired property. 
E)  Subsequently acquired property. 
A)  Post-dated property. 
B)  After-acquired property. 
C)  Proceeds. 
D)  Post-acquired property. 
E)  Subsequently acquired property.

Question 10

A(n)______ is a transaction in which the payment of a debt is guaranteed by personal property owned by the debtor.

Accepted Answer

A)  Approved transfer 
B)  Approved guarantee 
C)  Secured transaction 
D)  Effected transaction 
E)  Guaranteed debt 
A)  Approved transfer 
B)  Approved guarantee 
C)  Secured transaction 
D)  Effected transaction 
E)  Guaranteed debt

Question 11

Which of the following under the UCC is a good used or bought for use primarily for personal,family,or household purposes?

Accepted Answer

A)  A retail good. 
B)  A consumer good. 
C)  A pledged good. 
D)  A financed good. 
E)  An approved good. 
A)  A retail good. 
B)  A consumer good. 
C)  A pledged good. 
D)  A financed good. 
E)  An approved good.

Question 12

Which of the following is a writing that indicates both a monetary obligation and a security interest in specific goods?

Accepted Answer

A)  Chattel paper. 
B)  Combined paper. 
C)  Transactional paper. 
D)  Monetary and secured paper. 
E)  Specific interest paper. 
A)  Chattel paper. 
B)  Combined paper. 
C)  Transactional paper. 
D)  Monetary and secured paper. 
E)  Specific interest paper.

Question 13

In a dispute between Dennis,ABC Electronics,and XYZ Credit regarding entitlement to the television,who is likely to win and why?

Accepted Answer

A)  ABC Electronics will prevail because, as a seller of consumer goods, it did not need a perfected security interest in order to prevail against other creditors. 
B)  ABC Electronics will prevail because it had a perfected security interest. 
C)  XYZ Credit will prevail because although ABC Electronics had a perfected security interest, it did not file a financing statement. 
D)  XYZ Credit will prevail because a luxury good was involved and, although ABC Electronics had a perfected security interest, it did not file a financing statement as required within 10 days of the sale. 
E)  XYZ Credit will prevail because it had a perfected security interest in a greater amount of goods than did ABC Electronics. 
A)  ABC Electronics will prevail because, as a seller of consumer goods, it did not need a perfected security interest in order to prevail against other creditors. 
B)  ABC Electronics will prevail because it had a perfected security interest. 
C)  XYZ Credit will prevail because although ABC Electronics had a perfected security interest, it did not file a financing statement. 
D)  XYZ Credit will prevail because a luxury good was involved and, although ABC Electronics had a perfected security interest, it did not file a financing statement as required within 10 days of the sale. 
E)  XYZ Credit will prevail because it had a perfected security interest in a greater amount of goods than did ABC Electronics.

Question 14

To become a secured party,the creditor must perfect a security interest in the collateral of the debtor.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is the person or party that holds the interest in the secured property?

Accepted Answer

A)  A debtor. 
B)  A transaction party. 
C)  An approved party. 
D)  A secured party. 
E)  An attached party. 
A)  A debtor. 
B)  A transaction party. 
C)  An approved party. 
D)  A secured party. 
E)  An attached party.

Question 16

Which of the following articles of the UCC governs secured transactions in personal property?

Accepted Answer

A)  Article 1. 
B)  Article 4. 
C)  Article 5. 
D)  Article 7. 
E)  Article 9. 
A)  Article 1. 
B)  Article 4. 
C)  Article 5. 
D)  Article 7. 
E)  Article 9.

Question 17

Which of the following is true regarding priority in a dispute involving a purchase-money security interest in business goods other than inventory?

Accepted Answer

A)  The purchase-money security interest has priority over any other secured perfected interests as long as the purchase-money security interest is perfected within 20 days of the debtor's possession of the collateral. 
B)  The purchase-money security interest has priority over any other secured perfected interests as long as the purchase-money security interest is perfected within 30 days of the debtor's possession of the collateral. 
C)  The purchase-money security interest has priority over any other secured perfected interests as long as the purchase-money security interest is perfected within 40 days of the debtor's possession of the collateral. 
D)  The purchase-money security interest has priority over any other secured perfected interests as long as the purchase-money security interest is perfected within 45 days of the debtor's possession of the collateral. 
E)  The purchase-money security interest has priority over any other secured perfected interests as long as the purchase-money security interest is perfected within 60 days of the debtor's possession of the collateral. 
A)  The purchase-money security interest has priority over any other secured perfected interests as long as the purchase-money security interest is perfected within 20 days of the debtor's possession of the collateral. 
B)  The purchase-money security interest has priority over any other secured perfected interests as long as the purchase-money security interest is perfected within 30 days of the debtor's possession of the collateral. 
C)  The purchase-money security interest has priority over any other secured perfected interests as long as the purchase-money security interest is perfected within 40 days of the debtor's possession of the collateral. 
D)  The purchase-money security interest has priority over any other secured perfected interests as long as the purchase-money security interest is perfected within 45 days of the debtor's possession of the collateral. 
E)  The purchase-money security interest has priority over any other secured perfected interests as long as the purchase-money security interest is perfected within 60 days of the debtor's possession of the collateral.

Question 18

Which of the following is formed when a debtor uses borrowed money from the secured party to buy the collateral?

Accepted Answer

A)  A secured possessory interest. 
B)  A loaned money possessory interest. 
C)  A purchase-money security interest. 
D)  A purchase-cash consumer interest. 
E)  A perfected security interest. 
A)  A secured possessory interest. 
B)  A loaned money possessory interest. 
C)  A purchase-money security interest. 
D)  A purchase-cash consumer interest. 
E)  A perfected security interest.

Question 19

Which of the following is an amendment to a financing statement that states that the debtor has no obligation to the secured party?

Accepted Answer

A)  An ending statement. 
B)  A termination statement. 
C)  A bind-up statement. 
D)  A release statement. 
E)  A reversion statement. 
A)  An ending statement. 
B)  A termination statement. 
C)  A bind-up statement. 
D)  A release statement. 
E)  A reversion statement.

Question 20

Which of the following is not an example of a good?

Accepted Answer

A)  Consumer goods. 
B)  Farm products. 
C)  Documents of title. 
D)  Inventory. 
E)  Equipment. 
A)  Consumer goods. 
B)  Farm products. 
C)  Documents of title. 
D)  Inventory. 
E)  Equipment.

Exam 30: Secured Transactions

Which of the following is true regarding a security interest in consumer goods?

List three advantages discussed in the text associated with perfection by possession.

Which of the following is true regarding Tina's repossession of the pick-up truck?

Once a financing statement has been filed with a correct agency,for how long is the statement valid under the UCC?

Assuming a purchase-money security interest is not involved,which of the following is true regarding priority when there are two secured parties and neither has perfected?

What does the UCC provide regarding protection in movable collateral that is moved from one state to another?

Which of the following is the designation for property acquired by the debtor after a security agreement covering the property is made?

A(n)______ is a transaction in which the payment of a debt is guaranteed by personal property owned by the debtor.

Which of the following under the UCC is a good used or bought for use primarily for personal,family,or household purposes?

Which of the following is a writing that indicates both a monetary obligation and a security interest in specific goods?

In a dispute between Dennis,ABC Electronics,and XYZ Credit regarding entitlement to the television,who is likely to win and why?

To become a secured party,the creditor must perfect a security interest in the collateral of the debtor.

Which of the following is the person or party that holds the interest in the secured property?

Which of the following articles of the UCC governs secured transactions in personal property?

Which of the following is true regarding priority in a dispute involving a purchase-money security interest in business goods other than inventory?

Which of the following is formed when a debtor uses borrowed money from the secured party to buy the collateral?

Which of the following is an amendment to a financing statement that states that the debtor has no obligation to the secured party?

Which of the following is not an example of a good?

An Introduction to Dynamic Business Law

Business Ethics

The Uslegal System

Alternative Dispute Resolution

Constitutional Principles

International and Comparative Law

Crime and the Business Community

Tort Law

Negligence and Strict Liability

Product Liability

Liability of Accountants and Other Professionals

Intellectual Property

Introduction to Contracts

Agreement

Consideration

Capacity and Illegality

Reality of Assent

Contracts in Writing

Third Party Rights to Contracts

Performance,Breach of Contract,discharge,and Remedies

Introduction to Sales and Lease Contracts

Title,Risk of Loss,and Insurable Interest

Performance and Obligations Under Sales and Lease Contracts

Remedies for Breach of Sales and Lease Contracts

Warranties

Negotiable Instruments: Negotiability and Transferability

Negotiation, Holder in Due Course, and Defenses

Liability,defenses,and Discharge

Checks and Electronic Fund Transfers

Other Creditors Remedies and Suretyship

Bankruptcy and Reorganization

Agency Formation and Duties

Liability to Third Parties and Termination

Forms of Business Organizations

Partnerships: Nature, Formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Formation and Financing

Corporations: Directors, Officers, and Shareholders

Corporations: Mergers, Consolidations, and Termination

Corporations: Securities and Investor Protection

Employment and Labor Law

Employment Discrimination

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

The Nature of Property, Personal Property, and Bailments

Real Property

Landlord-Tenant Law

Insurance Law

Wills and Trusts

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