Question 1

A secured party's interest in proceeds lasts for after the debtor receives the proceeds,under the UCC.

Accepted Answer

A) 1 Year 
B) 10 Days 
C) 60 Days 
D) 5 Days 
E) 30 Days 
A) 1 Year 
B) 10 Days 
C) 60 Days 
D) 5 Days 
E) 30 Days

Question 2

The creditor becomes the secured party who has a security interest in the collateral when ________ occurs.

Accepted Answer

A) Attachment. 
B) Transformation. 
C) Perfection. 
D) Security. 
E) Reaffirmation. 
A) Attachment. 
B) Transformation. 
C) Perfection. 
D) Security. 
E) Reaffirmation.

Question 3

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

Question 4

________ is formed when a debtor uses borrowed money from the secured party to buy the collateral.

Accepted Answer

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

Question 5

On January 1,Yuka purchases a pickup truck in Arizona and the car dealership properly perfects its security interest in the truck.On February 1,Yuka moves to Colorado and takes out a loan with Rocky Bank to start an internet business,using the truck as collateral.Rocky Bank properly perfects its security interest in the truck.Yuka never opens her business,stops making payments on the truck,and leaves town on December 31.Which creditor's security interest has priority?

Accepted Answer

A) The dealership,because it properly perfected its security interest,which automatically perfected when Yuka moved to Colorado. 
B) Rocky Bank,because,although the dealership properly perfected its security interest before Rocky Bank,the dealership failed to re-perfect its interest in the new state. 
C) Rocky Bank,because even if the dealership had perfected its security interest in Colorado within four months of when the truck was brought into the state,the bank would have priority over a car dealership. 
D) The dealership,because even though it did not re-perfect its interest in Colorado,a secured party does not lose protection if the initial perfection was proper. 
E) The dealership,because it properly perfected its security interest before Rocky Bank. 
A) The dealership,because it properly perfected its security interest,which automatically perfected when Yuka moved to Colorado. 
B) Rocky Bank,because,although the dealership properly perfected its security interest before Rocky Bank,the dealership failed to re-perfect its interest in the new state. 
C) Rocky Bank,because even if the dealership had perfected its security interest in Colorado within four months of when the truck was brought into the state,the bank would have priority over a car dealership. 
D) The dealership,because even though it did not re-perfect its interest in Colorado,a secured party does not lose protection if the initial perfection was proper. 
E) The dealership,because it properly perfected its security interest before Rocky Bank.

Question 6

If Favi sells the truck,what is First Bank's best option?

Accepted Answer

A) File a financing statement within 90 days after the debtor receives the proceeds of the sale of the truck. 
B) File a financing statement within 10 days after the debtor receives the proceeds of the sale of the truck. 
C) Seek repossession of the truck. 
D) File a financing statement within 30 days after the debtor receives the proceeds of the sale of the truck. 
E) File a financing statement within 60 days after the debtor receives the proceeds of the sale of the truck. 
A) File a financing statement within 90 days after the debtor receives the proceeds of the sale of the truck. 
B) File a financing statement within 10 days after the debtor receives the proceeds of the sale of the truck. 
C) Seek repossession of the truck. 
D) File a financing statement within 30 days after the debtor receives the proceeds of the sale of the truck. 
E) File a financing statement within 60 days after the debtor receives the proceeds of the sale of the truck.

Question 7

Which statement is correct regarding a secured party's interest in proceeds when a debtor sells collateral?

Accepted Answer

A) The secured party may not acquire a security interest in proceeds. 
B) A secured party has an interest in proceeds only if a financing statement is filed on the proceeds. 
C) A secured party automatically has an interest in proceeds. 
D) A secured party has an interest in proceeds only if the proceeds are taken into the possession of the secured party. 
E) A secured party has an interest in proceeds only if the secured party has a signed statement from the debtor granting an interest in proceeds. 
A) The secured party may not acquire a security interest in proceeds. 
B) A secured party has an interest in proceeds only if a financing statement is filed on the proceeds. 
C) A secured party automatically has an interest in proceeds. 
D) A secured party has an interest in proceeds only if the proceeds are taken into the possession of the secured party. 
E) A secured party has an interest in proceeds only if the secured party has a signed statement from the debtor granting an interest in proceeds.

Question 8

Which of the following is true regarding the definition of default under the UCC?

Accepted Answer

A) The UCC defines default as failure to make a payment within 90 days after a payment is due. 
B) The UCC defines default as failure to make a payment within 30 days after a payment is due. 
C) The UCC defines default as failure to make any payment when due. 
D) The UCC defines default as failure to make a payment within 60 days after a payment is due. 
E) The UCC does not define default. 
A) The UCC defines default as failure to make a payment within 90 days after a payment is due. 
B) The UCC defines default as failure to make a payment within 30 days after a payment is due. 
C) The UCC defines default as failure to make any payment when due. 
D) The UCC defines default as failure to make a payment within 60 days after a payment is due. 
E) The UCC does not define default.

Question 9

The owner of Potter's Pottery also purchased two laptop computers under the name "Potter's Pottery" from BigBox Store for use in the store.Does BigBox Store's security interest automatically perfect?

Accepted Answer

A) No,even though the laptops are used primarily for business,the laptops are consumer goods and the secured party would have to file a financing statement to perfect the security interest in them. 
B) No,the laptops are purchased for business use and the secured party would have to make a notation on the title to perfect the security interest in them. 
C) Yes,even though the laptops are used primarily for business,the laptops are consumer goods. 
D) Yes,because the laptops are consumer goods,and,for public policy reasons,the security interest in them will always perfect automatically. 
E) No,the laptops are purchased for business use and the secured party would have to file a financing statement to perfect the security interest in them. 
A) No,even though the laptops are used primarily for business,the laptops are consumer goods and the secured party would have to file a financing statement to perfect the security interest in them. 
B) No,the laptops are purchased for business use and the secured party would have to make a notation on the title to perfect the security interest in them. 
C) Yes,even though the laptops are used primarily for business,the laptops are consumer goods. 
D) Yes,because the laptops are consumer goods,and,for public policy reasons,the security interest in them will always perfect automatically. 
E) No,the laptops are purchased for business use and the secured party would have to file a financing statement to perfect the security interest in them.

Question 10

If both First Bank and Second Bank had properly perfected their security interest,which creditor's interest would take priority?

Accepted Answer

A) First Bank,because in a dispute between two secured but unperfected creditors,the party who attached first takes priority. 
B) First Bank,because in a dispute between two secured and perfected creditors,the party who perfected first takes priority. 
C) The two banks will have equal rights to the property. 
D) First Bank,because in a dispute between a secured perfected creditor and a secured unperfected creditor,the secured perfected creditor takes priority. 
E) Second Bank,because "after-acquired property" is not specific enough to grant attachment right to First Bank,and,thus,the secured agreement of Second Bank takes priority. 
A) First Bank,because in a dispute between two secured but unperfected creditors,the party who attached first takes priority. 
B) First Bank,because in a dispute between two secured and perfected creditors,the party who perfected first takes priority. 
C) The two banks will have equal rights to the property. 
D) First Bank,because in a dispute between a secured perfected creditor and a secured unperfected creditor,the secured perfected creditor takes priority. 
E) Second Bank,because "after-acquired property" is not specific enough to grant attachment right to First Bank,and,thus,the secured agreement of Second Bank takes priority.

Exam 30: Secured Transactions

A secured party's interest in proceeds lasts for after the debtor receives the proceeds,under the UCC.

The creditor becomes the secured party who has a security interest in the collateral when ________ occurs.

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?

________ is formed when a debtor uses borrowed money from the secured party to buy the collateral.

If Favi sells the truck,what is First Bank's best option?

Which statement is correct regarding a secured party's interest in proceeds when a debtor sells collateral?

Which of the following is true regarding the definition of default under the UCC?

The owner of Potter's Pottery also purchased two laptop computers under the name "Potter's Pottery" from BigBox Store for use in the store.Does BigBox Store's security interest automatically perfect?

If both First Bank and Second Bank had properly perfected their security interest,which creditor's interest would take priority?

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