Question 1

Which of the following is a term used to identify a person who routinely buys goods in good faith from a person who routinely sells these goods?

Accepted Answer

A) An approved buyer. 
B) A buyer in the ordinary course of business. 
C) An exchanger in the typical course of business. 
D) A buyer in the typical course of business. 
E) An approved buyer in the ordinary course of business. 
A) An approved buyer. 
B) A buyer in the ordinary course of business. 
C) An exchanger in the typical course of business. 
D) A buyer in the typical course of business. 
E) An approved buyer in the ordinary course of business. B

Question 2

Which methods)of perfection can be used for stocks and bonds?

Accepted Answer

A) Perfection by filing or perfection by possession. 
B) Automatic perfection. 
C) Perfection by possession. 
D) Any method of perfection is acceptable for stocks and bonds. 
E) Perfection by filing. 
A) Perfection by filing or perfection by possession. 
B) Automatic perfection. 
C) Perfection by possession. 
D) Any method of perfection is acceptable for stocks and bonds. 
E) Perfection by filing. C

Question 3

Which statement is correct regarding any compensation that Morgan is entitled to from the bank because the bank did not timely file notice that it had no interest in her goods?

Accepted Answer

A) She may recover $1,000 from the bank. 
B) She may recover $200 from the bank. 
C) She may recover $100 from the bank. 
D) She may recover $500 from the bank. 
E) She may not recover anything unless she incurred damages;and,in that event,she may recover the amount of her compensatory damages. 
A) She may recover $1,000 from the bank. 
B) She may recover $200 from the bank. 
C) She may recover $100 from the bank. 
D) She may recover $500 from the bank. 
E) She may not recover anything unless she incurred damages;and,in that event,she may recover the amount of her compensatory damages. D

Question 4

How long does a debtor have in which to object to a secured party's retention of collateral to satisfy a debt?

Accepted Answer

A) 20 Days. 
B) 60 Days. 
C) 10 Days. 
D) 30 Days. 
E) 5 Days. 
A) 20 Days. 
B) 60 Days. 
C) 10 Days. 
D) 30 Days. 
E) 5 Days.

Question 5

Which statement is correct regarding Meredith's taking possession of Caleb's convertible?

Accepted Answer

A) Meredith breached the peace because she did not provide Caleb prior notification that she was going to repossess the vehicle. 
B) Meredith did not breach the peace because Caleb sustained no documented physical injury. 
C) Meredith breached the peace because she took the vehicle from a public lot. 
D) Meredith breached the peace unless she can establish that Caleb gave her prior permission to repossess the vehicle in a public lot. 
E) Meredith did not breach the peace because she acted in a reasonable manner in taking the collateral. 
A) Meredith breached the peace because she did not provide Caleb prior notification that she was going to repossess the vehicle. 
B) Meredith did not breach the peace because Caleb sustained no documented physical injury. 
C) Meredith breached the peace because she took the vehicle from a public lot. 
D) Meredith breached the peace unless she can establish that Caleb gave her prior permission to repossess the vehicle in a public lot. 
E) Meredith did not breach the peace because she acted in a reasonable manner in taking the collateral.

Question 6

According to the UCC,which of the following should a financing statement list?

Accepted Answer

A) Two items: 1)the names and addresses of all the parties involved and 2)a description of the collateral. 
B) Three items: 1)the names and addresses of all the parties involved,2)a description of the collateral,and 3)the signature of the debtor. 
C) Three items: 1)the name of the financing bank,2)the name of the debtor,and 3)a description of the collateral. 
D) The names and addresses of all parties involved only. 
E) Three items: 1)the name of the financing bank,2)the signature of the debtor,and 3)a description of the collateral. 
A) Two items: 1)the names and addresses of all the parties involved and 2)a description of the collateral. 
B) Three items: 1)the names and addresses of all the parties involved,2)a description of the collateral,and 3)the signature of the debtor. 
C) Three items: 1)the name of the financing bank,2)the name of the debtor,and 3)a description of the collateral. 
D) The names and addresses of all parties involved only. 
E) Three items: 1)the name of the financing bank,2)the signature of the debtor,and 3)a description of the collateral.

Question 7

Which statement is false regarding types of collateral?

Accepted Answer

A) Collateral may include indispensable paper such as documents of title. 
B) Collateral may include goods such as equipment. 
C) Collateral may include farm products. 
D) Collateral may include proceeds. 
E) Collateral may include intangibles such as chattel paper. 
A) Collateral may include indispensable paper such as documents of title. 
B) Collateral may include goods such as equipment. 
C) Collateral may include farm products. 
D) Collateral may include proceeds. 
E) Collateral may include intangibles such as chattel paper.

Question 8

Jo purchases a car from Used-Carz and signs a security agreement that identifies Jo's "blue car" as the collateral.If Jo is unable to make payments,how likely would Used-Carz be in a suit to recover the collateral if Jo defaults on her payments?

Accepted Answer

A) Unlikely,because the collateral is not clearly described in the written agreement. 
B) Very likely because Jo's car is identified as collateral. 
C) Very likely,because collateral need not be identified in a security agreement. 
D) Unlikely,because Used-Carz must first attempt to repossess the car. 
E) Very likely,because,although the collateral is not clearly described in the written agreement,creditors cannot lose rights to collateral. 
A) Unlikely,because the collateral is not clearly described in the written agreement. 
B) Very likely because Jo's car is identified as collateral. 
C) Very likely,because collateral need not be identified in a security agreement. 
D) Unlikely,because Used-Carz must first attempt to repossess the car. 
E) Very likely,because,although the collateral is not clearly described in the written agreement,creditors cannot lose rights to collateral.

Question 9

A[n] ________ is the transfer of collateral to a secured party for the purpose of perfection.

Accepted Answer

A) Allonge 
B) Allegiant 
C) Transfer 
D) Pledge 
E) Release 
A) Allonge 
B) Allegiant 
C) Transfer 
D) Pledge 
E) Release

Question 10

The person who fails to make payments is said to have defaulted on a loan.

Accepted Answer

A) True 
 B)False

Question 11

Which statement is true regarding Michael's statement that the security interest of ABC was not perfected?

Accepted Answer

A) Michael is correct only because in the case of luxury goods,a financing statement must be filed within 20 days of the sale in order for the seller to establish perfection. 
B) Michael is correct because the security interest perfected when he was still in possession of the collateral 30 days after the purchase. 
C) Michael is wrong because the security interest perfected immediately. 
D) Michael is correct because no financing statement was filed. 
E) Michael is correct because the security interest perfected when he was still in possession of the collateral 60 days after the purchase. 
A) Michael is correct only because in the case of luxury goods,a financing statement must be filed within 20 days of the sale in order for the seller to establish perfection. 
B) Michael is correct because the security interest perfected when he was still in possession of the collateral 30 days after the purchase. 
C) Michael is wrong because the security interest perfected immediately. 
D) Michael is correct because no financing statement was filed. 
E) Michael is correct because the security interest perfected when he was still in possession of the collateral 60 days after the purchase.

Question 12

What did the court conclude in the Case Opener,the case in which the plaintiff claimed that her repossessed vehicle was not sold in a commercially reasonably manner and that she was wrongly left with a deficiency?

Accepted Answer

A) That while not every aspect of the sale had to be commercially reasonable,the seller failed to show that sufficient advertisement of the sale was accomplished,thereby rendering the sale itself commercially unreasonable. 
B) That the secured party failed to prove that its sale of the vehicle conformed with established industry practices. 
C) That showing that the sale grossed more than 50% of the vehicle's value established that the sale was commercially reasonable. 
D) That there was no obligation on the seller to engage in a commercially reasonable sale because the plaintiff was in default. 
E) That good faith in selling the vehicle established commercial reasonableness as a matter of law. 
A) That while not every aspect of the sale had to be commercially reasonable,the seller failed to show that sufficient advertisement of the sale was accomplished,thereby rendering the sale itself commercially unreasonable. 
B) That the secured party failed to prove that its sale of the vehicle conformed with established industry practices. 
C) That showing that the sale grossed more than 50% of the vehicle's value established that the sale was commercially reasonable. 
D) That there was no obligation on the seller to engage in a commercially reasonable sale because the plaintiff was in default. 
E) That good faith in selling the vehicle established commercial reasonableness as a matter of law.

Question 13

Is the bank correct that it has priority because it has a perfected interest in the hang glider?

Accepted Answer

A) Yes,because it filed a financing statement,thus perfecting its interest. 
B) Yes,because banks are excused from minor errors in financial documents,and thus the incorrect name in the financing statement does not affect perfection. 
C) No,because the financing statement is filed under an incorrect name,thus perfection is likely not effective. 
D) Yes,even though the financing statement is filed under a correct name,the filing of the statement perfected its interest in the hang glider. 
E) No,it takes more than simply filing a financing statement for perfection to be effective. 
A) Yes,because it filed a financing statement,thus perfecting its interest. 
B) Yes,because banks are excused from minor errors in financial documents,and thus the incorrect name in the financing statement does not affect perfection. 
C) No,because the financing statement is filed under an incorrect name,thus perfection is likely not effective. 
D) Yes,even though the financing statement is filed under a correct name,the filing of the statement perfected its interest in the hang glider. 
E) No,it takes more than simply filing a financing statement for perfection to be effective.

Question 14

A description of the collateral does not need to be included in a security agreement.

Accepted Answer

A) True 
 B)False

Question 15

A security interest may apply to personal property that is not yet in the debtor's possession.

Accepted Answer

A) True 
 B)False

Question 16

Regarding protection in movable collateral that is moved from one state to another,what does the UCC provide?

Accepted Answer

According to the UCC,a security interest

Question 17

Before perfecting its interest,if the kiln manufacturer examines the van's title but does not find any notation of a secured interest,which of the following statements is true?

Accepted Answer

A) The kiln manufacturer would have to check if any other creditors filed financing statements with the state in order to determine if any other creditors have priority,and if not,the kiln manufacturer would have priority if it made a notation on the van's title. 
B) The kiln manufacturer would have to check if any other creditors filed financing statements with the state in order to determine if any other creditors have priority. 
C) The bank's interest in the van would take priority over the kiln manufacturer because it filed first. 
D) The kiln manufacturer can assume that no other creditors have a secured interest in the vehicle and thus it would have priority if it perfected its interest by making a notation on the van's title. 
E) The kiln manufacturer would have to check if any other creditors filed financing statements with the state in order to determine if any other creditors have priority,and if not,the kiln manufacturer would have priority if it filed its financial statement. 
A) The kiln manufacturer would have to check if any other creditors filed financing statements with the state in order to determine if any other creditors have priority,and if not,the kiln manufacturer would have priority if it made a notation on the van's title. 
B) The kiln manufacturer would have to check if any other creditors filed financing statements with the state in order to determine if any other creditors have priority. 
C) The bank's interest in the van would take priority over the kiln manufacturer because it filed first. 
D) The kiln manufacturer can assume that no other creditors have a secured interest in the vehicle and thus it would have priority if it perfected its interest by making a notation on the van's title. 
E) The kiln manufacturer would have to check if any other creditors filed financing statements with the state in order to determine if any other creditors have priority,and if not,the kiln manufacturer would have priority if it filed its financial statement.

Question 18

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 30 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 60 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 20 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 45 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 30 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 60 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 20 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 45 days of the debtor's possession of the collateral.

Question 19

The bank should have done what to terminate its interest in any property belonging to Morgan?

Accepted Answer

A) The bank should have filed a waiver statement within 20 days. 
B) The bank should have filed a termination statement within one month. 
C) The bank should have filed a stopgap statement by the time Morgan's next payment was due had she not paid off the loan. 
D) The bank should have filed a termination statement within 20 days. 
E) The bank should have filed a waiver statement within one month. 
A) The bank should have filed a waiver statement within 20 days. 
B) The bank should have filed a termination statement within one month. 
C) The bank should have filed a stopgap statement by the time Morgan's next payment was due had she not paid off the loan. 
D) The bank should have filed a termination statement within 20 days. 
E) The bank should have filed a waiver statement within one month.

Question 20

Which of the following is false regarding a creditor's rights to collateral upon a debtor's default?

Accepted Answer

A) If a debtor defaults on a loan,the secured party can take possession of the collateral so long as the secured party does not breach the peace. 
B) Under the UCC,the secured party can sell,lease,or transfer the collateral in any commercially reasonable method. 
C) Instead of disposing of the collateral,the secured party may choose to keep the collateral in full or partial satisfaction of the debt. 
D) Regardless of where the collateral is sold,the secured party must strive to receive the best price for the collateral. 
E) A debtor in default has no rights in regard to whether collateral is retained by the secured party or sold. 
A) If a debtor defaults on a loan,the secured party can take possession of the collateral so long as the secured party does not breach the peace. 
B) Under the UCC,the secured party can sell,lease,or transfer the collateral in any commercially reasonable method. 
C) Instead of disposing of the collateral,the secured party may choose to keep the collateral in full or partial satisfaction of the debt. 
D) Regardless of where the collateral is sold,the secured party must strive to receive the best price for the collateral. 
E) A debtor in default has no rights in regard to whether collateral is retained by the secured party or sold.

Exam 30: Secured Transactions

Which of the following is a term used to identify a person who routinely buys goods in good faith from a person who routinely sells these goods?

Which methods)of perfection can be used for stocks and bonds?

Which statement is correct regarding any compensation that Morgan is entitled to from the bank because the bank did not timely file notice that it had no interest in her goods?

How long does a debtor have in which to object to a secured party's retention of collateral to satisfy a debt?

Which statement is correct regarding Meredith's taking possession of Caleb's convertible?

According to the UCC,which of the following should a financing statement list?

Which statement is false regarding types of collateral?

Jo purchases a car from Used-Carz and signs a security agreement that identifies Jo's "blue car" as the collateral.If Jo is unable to make payments,how likely would Used-Carz be in a suit to recover the collateral if Jo defaults on her payments?

A[n] ________ is the transfer of collateral to a secured party for the purpose of perfection.

The person who fails to make payments is said to have defaulted on a loan.

Which statement is true regarding Michael's statement that the security interest of ABC was not perfected?

What did the court conclude in the Case Opener,the case in which the plaintiff claimed that her repossessed vehicle was not sold in a commercially reasonably manner and that she was wrongly left with a deficiency?

Is the bank correct that it has priority because it has a perfected interest in the hang glider?

A description of the collateral does not need to be included in a security agreement.

A security interest may apply to personal property that is not yet in the debtor's possession.

Regarding protection in movable collateral that is moved from one state to another,what does the UCC provide?

Before perfecting its interest,if the kiln manufacturer examines the van's title but does not find any notation of a secured interest,which of the following statements is true?

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

The bank should have done what to terminate its interest in any property belonging to Morgan?

Which of the following is false regarding a creditor's rights to collateral upon a debtor's default?

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 Legality

Legal Assent

Contracts in Writing

Third-Party Rights to Contracts

Discharge and Remedies

Introduction to Sales and Lease Contracts

Title,risk of Loss,and Insurable Interest

Performance and Obligations Under Sales and Leases

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 Organization

Partnerships: Nature, formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Formation and Financing

Corporations: Directors, officers, and Shareholders

Corporations: Mergers, consolidations, terminations

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

Filters