Exam 32: Secured Transactions

Sweetwater Café defaults on debts to Town & Country Bank and Uno Loan Company.Town & Country perfected its security interest before Uno.Town & Country takes possession of the collateral in which it has a security interest.On a sale of the collat?eral,the proceeds will be applied first to

To create an enforceable security interest,the secured party must give value.

The price that a secured party obtains on a sale of collateral is all that the creditor can recover on the debt.

Proceeds consist of whatever is received when collateral is sold.

Khalil holds a security interest in inventory owned by Luc.Khalil pro?tects his claim to the inventory in the event of Luc's default by

To qualify as a commercially reasonable sale,a secured party's sale of col?lateral,after default and repossession,must be private.

A floating lien cannot apply to the proceeds of the sale of after-acquired property.

On default,unless the security agreement states otherwise,the secured party has the right to take possession of the collateral.

David is the secured party in a secured transaction with James,who is the debtor.The collateral is James's collection of baseball cards.David is in possession of the baseball cards.David leaves the cards on his kitchen table during a party and a guest spills beer on them and ruins them.David is

Elias repays his debt,incurred to buy consumer goods,to Fidelity Bank and immediately files a written request for a termination state?ment.Fidelity

Everyday Loans,Inc.,issues a line of credit in Glade Electronics Corporation under a security agreement.Later,Glade buys new HD-TVs to add to its inventory.Everyday has a security interest in the new inventory

Olaf is the creditor in a transaction with Phil.Once certain require?ments are met,Olaf's rights will attach,which means that Olaf will have

Select Furniture Store sells household consumer goods on credit for which Select files a financing statement to perfect a security interest in the goods. With the filing of subsequent continuation statements,the ef?fectiveness of the statement can be continued

A continuation statement is effective only if it is filed within six months before the expiration of a financing statement.

The person who owes the payment of a secured obligation is the secured party.

The payment of Mo's debt to Neil is guaranteed by Mo's personal prop?erty.This is governed by

Efrem owns Fans & Players,a retail sporting goods shop.When Great Hill Lodge,a new ski resort,is built in the area,Efrem decides to expand and borrows a large sum from Hometown Bank.The bank takes a secu?rity interest in Efrem's present inventory and any after-acquired inven?tory as collateral for the loan.The bank properly perfects the security in?terest by filing a financing statement.Efrem's business is profitable,and he begins doubling his inventory. A year later,an avalanche destroys the ski slope and lodge.Efrem's business takes a turn for the worse,and he defaults on his debt to the bank.The bank seeks possession of his en?tire inventory,even though the inventory is twice as large as it was when the loan was made.Efrem claims that the bank has rights to only half of his inventory.Is Efrem correct? Explain.

The payment of Jose's debt to Klint is guaranteed by Jose's personal property.The process by which Klint can protect himself against the claims of third parties to this property is

A secured party in possession of the col?lateral must use reasonable care in preserving it.

Perfection refers to the quality of the collateral that secures a creditor's interest in a debtor's debt.