Question 1

Control is the only available perfection method,if the collateral is a deposit account.

Accepted Answer

A) True 
 B)False

Question 2

Carter sold a $20,000 boat to Davis on credit for personal use.As part of the deal,Davis completed an installment note payable to Carter and a security agreement giving Carter a security interest in the boat which was attached on July 1.Carter never filed a financing statement.On August 1,Davis borrowed $15,000 from Bank,by completing a security agreement giving the Bank a security interest in the boat.This interest attached on the same day and the Bank filed a financing statement on August 6.Davis defaulted on both his installment payments to Carter and his loan obligation to the Bank.Each of these parties wants to satisfy Davis's obligation by repossessing and selling the boat.Whose security interest in the boat has priority and why?

Accepted Answer

A)  Bank's interest has priority because Carter never filed a financing statement. 
B)  Carter's interest has priority because his security interest was perfected before Bank's interest. 
C)  Bank's interest has priority because Carter failed to attach his security interest. 
D)  Bank's interest has priority because the Bank perfected the interest within ten days after Davis received the collateral. 
A)  Bank's interest has priority because Carter never filed a financing statement. 
B)  Carter's interest has priority because his security interest was perfected before Bank's interest. 
C)  Bank's interest has priority because Carter failed to attach his security interest. 
D)  Bank's interest has priority because the Bank perfected the interest within ten days after Davis received the collateral.

Question 3

If there are conflicting security interests but neither has been perfected then the interest that attaches to the collateral first will have priority.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is most likely to be perfected by the secured party's possession of the collateral?

Accepted Answer

A)  A security interest in inventory 
B)  A security interest in consumer goods 
C)  A security interest in general intangibles 
D)  A security interest in equipment 
A)  A security interest in inventory 
B)  A security interest in consumer goods 
C)  A security interest in general intangibles 
D)  A security interest in equipment

Question 5

According to the Code classifications of collateral,which of the following includes dock warrants and dock receipts?

Accepted Answer

A)  Chattel paper 
B)  Documents of title 
C)  Deposit accounts 
D)  General intangibles 
A)  Chattel paper 
B)  Documents of title 
C)  Deposit accounts 
D)  General intangibles

Question 6

What are the three basic requirements for a security interest to be attached to the goods of a debtor?

Accepted Answer

There are three basic requirements for a

Question 7

The state statutory law prescribes the place where the financing statement has to be filed.

Accepted Answer

A) True 
 B)False

Question 8

Smith Auto Sales has a secured loan on the inventory of the business with Northshore Credit Union which is filed in February.In March Smith Auto Sales has another secured loan made on the inventory of the business from GMAC credit.GMAC files their security interest in May.Who will have priority in the event of a default by Smith Auto Sales?

Accepted Answer

A)  Neither will have priority and both will share equally revenue from sale of inventory 
B)  Northshore Credit Union will have priority and they will have their debt satisfied prior to GMAC receiving funds 
C)  Since GMAC came last they will have priority and will have their debt satisfied before Northshore Credit Union 
D)  Since there is a conflict with the security with the inventory,neither security interest will be recognized and both creditors will get nothing 
A)  Neither will have priority and both will share equally revenue from sale of inventory 
B)  Northshore Credit Union will have priority and they will have their debt satisfied prior to GMAC receiving funds 
C)  Since GMAC came last they will have priority and will have their debt satisfied before Northshore Credit Union 
D)  Since there is a conflict with the security with the inventory,neither security interest will be recognized and both creditors will get nothing

Exam 29: Security Interests in Personal Property

Control is the only available perfection method,if the collateral is a deposit account.

If there are conflicting security interests but neither has been perfected then the interest that attaches to the collateral first will have priority.

Which of the following is most likely to be perfected by the secured party's possession of the collateral?

According to the Code classifications of collateral,which of the following includes dock warrants and dock receipts?

What are the three basic requirements for a security interest to be attached to the goods of a debtor?

The state statutory law prescribes the place where the financing statement has to be filed.

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