Question 1

Which of the following is the only form of perfection that occurs without the giving of public notice?

Accepted Answer

A)  Perfection by public filing 
B)  Perfection by attachment 
C)  Perfection by possession 
D)  Perfection by control 
A)  Perfection by public filing 
B)  Perfection by attachment 
C)  Perfection by possession 
D)  Perfection by control B

Question 2

A typewriter, which was subject to a prior UCC security interest, was delivered to Ed Fogel for repair. Fogel, who is engaged in the business of repairing typewriters, repaired the typewriter. However, the owner of the typewriter now refuses to pay for the services performed by Fogel. The state in which Fogel operates his business has a statute which gives Fogel a mechanics lien on the typewriter. Fogel's mechanics lien:

Accepted Answer

A)  takes priority over a prior perfected security interest under all circumstances. 
B)  is subject to a prior perfected purchase money security interest under all circumstances. 
C)  is subject to a prior unperfected security interest where the statute is silent as to priority. 
D)  takes priority over a prior perfected security interest unless the statute expressly provides otherwise. 
A)  takes priority over a prior perfected security interest under all circumstances. 
B)  is subject to a prior perfected purchase money security interest under all circumstances. 
C)  is subject to a prior unperfected security interest where the statute is silent as to priority. 
D)  takes priority over a prior perfected security interest unless the statute expressly provides otherwise. D

Question 3

Which of the following is an option for the secured creditor when the debtor defaults?

Accepted Answer

A)  Transfer the collateral on to another creditor. 
B)  Forget the collateral, and sue the debtor on his note or promise to pay. 
C)  Sell the collateral and keep the surplus if any. 
D)  Repossess the collateral and conduct a public sale without the knowledge of the debtor. 
A)  Transfer the collateral on to another creditor. 
B)  Forget the collateral, and sue the debtor on his note or promise to pay. 
C)  Sell the collateral and keep the surplus if any. 
D)  Repossess the collateral and conduct a public sale without the knowledge of the debtor. B

Question 4

Generally, a buyer in the ordinary course of business can take a property free from any security interest. Which of the following buyer is an exception?

Accepted Answer

A)  A person who is a consumer of durable goods. 
B)  A person buying inventories from a wholesaler. 
C)  A person buying farm products from a farmer. 
D)  A person who is a consumer of perishable goods. 
A)  A person who is a consumer of durable goods. 
B)  A person buying inventories from a wholesaler. 
C)  A person buying farm products from a farmer. 
D)  A person who is a consumer of perishable goods.

Question 5

A retailer of consumer goods who relies on attachment of a security interest to perfect it does not prevail over a bona fide purchaser:

Accepted Answer

A)  who has knowledge of the security interest. 
B)  who gives value for the goods. 
C)  who buys goods for commercial use. 
D)  who resells the good in the absence of a financing statement. 
A)  who has knowledge of the security interest. 
B)  who gives value for the goods. 
C)  who buys goods for commercial use. 
D)  who resells the good in the absence of a financing statement.

Question 6

If the debtor defaults on his agreement with the creditor, one of the creditor's options is to repossess the collateral and then sell it.

Accepted Answer

A) True 
 B)False

Question 7

A security interest is not legally enforceable against a debtor, if it is not attached to one or more particular items of the debtor's property.

Accepted Answer

A) True 
 B)False

Question 8

Wonder Widget Company manufactures widgets that are sold to there tailers. The retailers, in turn, sell these widgets to consumers for their own use. These widgets are:

Accepted Answer

A)  inventory in the hands of Wonder. 
B)  equipment in the hands of the consumers. 
C)  equipment in the hands of the retailers. 
D)  consumer goods in the hands of Wonder. 
A)  inventory in the hands of Wonder. 
B)  equipment in the hands of the consumers. 
C)  equipment in the hands of the retailers. 
D)  consumer goods in the hands of Wonder.

Question 9

Which of the following is true about financing statements?

Accepted Answer

A)  A financing statement never includes descriptions of the real estate. 
B)  A financing statement serves as an implied notice to the world. 
C)  A financing statement is effective for a period of three years from the date of filing. 
D)  A financing statement must give the name of the secured party. 
A)  A financing statement never includes descriptions of the real estate. 
B)  A financing statement serves as an implied notice to the world. 
C)  A financing statement is effective for a period of three years from the date of filing. 
D)  A financing statement must give the name of the secured party.

Question 10

_____ refer(s) to the goods used or bought primarily for personal purposes.

Accepted Answer

A)  Inventory 
B)  Fixtures 
C)  Consumer goods 
D)  Equipment 
A)  Inventory 
B)  Fixtures 
C)  Consumer goods 
D)  Equipment

Question 11

Which of the following elements is an exception that validates a financing statement which covers goods that are to become fixtures, without it being lapsed?

Accepted Answer

A)  Name of the debtor 
B)  Name of the secured party 
C)  Description of a real estate mortgage 
D)  Description of a nonfixture 
A)  Name of the debtor 
B)  Name of the secured party 
C)  Description of a real estate mortgage 
D)  Description of a nonfixture

Question 12

The two step process for obtaining an enforceable security interest consists of attachment and perfection.

Accepted Answer

A) True 
 B)False

Question 13

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 14

Which of the following is a means of obtaining control over the collateral?

Accepted Answer

A)  The secured party becomes the bank's customer for the deposit account. 
B)  The debtor is the bank with which the deposit is maintained. 
C)  The bank has agreed to comply with the debtor's instructions regarding the funds in the account. 
D)  The debtor becomes the bank's customer for the deposit account. 
A)  The secured party becomes the bank's customer for the deposit account. 
B)  The debtor is the bank with which the deposit is maintained. 
C)  The bank has agreed to comply with the debtor's instructions regarding the funds in the account. 
D)  The debtor becomes the bank's customer for the deposit account.

Question 15

What is the general priority rule established by the Code?

Accepted Answer

The basic rule established by the Code i

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The perfection of a security interest by filing a financing statement:

Accepted Answer

A)  serves to protect the secured party's interest in the collateral against most creditors who acquire a security interest in the same collateral after the filing. 
B)  is necessary to enable the secured party to enforce its security interest against the debtor. 
C)  serves to give the public actual notice. 
D)  gives the secured party priority over all other parties who acquire an interest in the collateral after the filing. 
A)  serves to protect the secured party's interest in the collateral against most creditors who acquire a security interest in the same collateral after the filing. 
B)  is necessary to enable the secured party to enforce its security interest against the debtor. 
C)  serves to give the public actual notice. 
D)  gives the secured party priority over all other parties who acquire an interest in the collateral after the filing.

Question 18

Which of the following is true about continuation statements?

Accepted Answer

A)  A continuation statement must be filled after the lapse of the five year period of the financing statement. 
B)  The continuation statement must be signed by the secured party. 
C)  The effectiveness of the financing statement has nothing to do with the continuation statement. 
D)  Continuation statements may be filed just once. 
A)  A continuation statement must be filled after the lapse of the five year period of the financing statement. 
B)  The continuation statement must be signed by the secured party. 
C)  The effectiveness of the financing statement has nothing to do with the continuation statement. 
D)  Continuation statements may be filed just once.

Question 19

If the debtor defaults on his agreement with the creditor, the creditor repossesses the collateral, and the creditor then sells the collateral. However, the creditor may also retain any surplus if the amount realized on the sale exceeds the amount of the debtor's debt.

Accepted Answer

A) True 
 B)False

Question 20

The basic priority rule for competing security interests is that the first secured party to attach wins.

Accepted Answer

A) True 
 B)False

Exam 29: Security Interests in Personal Property

Which of the following is the only form of perfection that occurs without the giving of public notice?

Which of the following is an option for the secured creditor when the debtor defaults?

Generally, a buyer in the ordinary course of business can take a property free from any security interest. Which of the following buyer is an exception?

A retailer of consumer goods who relies on attachment of a security interest to perfect it does not prevail over a bona fide purchaser:

If the debtor defaults on his agreement with the creditor, one of the creditor's options is to repossess the collateral and then sell it.

A security interest is not legally enforceable against a debtor, if it is not attached to one or more particular items of the debtor's property.

Wonder Widget Company manufactures widgets that are sold to there tailers. The retailers, in turn, sell these widgets to consumers for their own use. These widgets are:

Which of the following is true about financing statements?

_____ refer(s) to the goods used or bought primarily for personal purposes.

Which of the following elements is an exception that validates a financing statement which covers goods that are to become fixtures, without it being lapsed?

The two step process for obtaining an enforceable security interest consists of attachment and perfection.

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

Which of the following is a means of obtaining control over the collateral?

What is the general priority rule established by the Code?

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

The perfection of a security interest by filing a financing statement:

Which of the following is true about continuation statements?

If the debtor defaults on his agreement with the creditor, the creditor repossesses the collateral, and the creditor then sells the collateral. However, the creditor may also retain any surplus if the amount realized on the sale exceeds the amount of the debtor's debt.

The basic priority rule for competing security interests is that the first secured party to attach wins.

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Crimes

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

The Agreement: Acceptance

Consideration

Reality of Consent

Capacity to Contract

Illegality

Writing

Rights of Third Parties

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Introduction to Credit and Secured Transactions

Bankruptcy

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Transfers

The Agency Relationship

Third-Party Relations of the Principal and the Agent

Introduction to Forms of Business Andformation of Partnerships

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, Limited Partnerships, and Limited Liability Limited Partnerships

History and Nature of Corporations

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

Administrative Agencies

The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinsonpatman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

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