Exam 28: Secured Transactions and Suretyship

A lien creditor is a creditor whose claim is based on operation of law as opposed to a creditor whose claim is based on agreement.

A financing statement requires the debtor's signature, unless the creditor is authorized to make the filing without a signature.

In which situation would a buyer not be one "in the ordinary course of business"?

Which of the following is a type of loan for which no collateral is pledged?

The property given to a creditor as security for a debt is known as:

Able induced Baker to stand as surety on a debt to Carr. When Able defaulted and Carr demanded performance from Baker, Baker raised as a defense that he had been defrauded by Able. The defense is good against Carr.

Colleen agrees, for nothing, to stand as surety for her brother's purchase of an automobile. If she is called on to perform, she may use lack of consideration as a defense to having to pay.

After-acquired property refers to the proceeds received from the disposition of the collateral.

A person who promises to act or pay upon the default of another is known as a(n):

What are the three different types of suretyship?

The substitution of one person for another who has a legal claim or right is known as:

Alice Ace was the owner of Ace Construction, Inc., (ACI). Her income was, of course, tied to the productivity of her company. When the firm's computer system needed replacing, she went to Computer Store and orally agreed to pay the $25,000 cost of the new system if ACI did not. Indeed ACI did not pay, but when Computer Store tapped Alice, she raised the statute of frauds as a defense: her agreement to pay if ACI did not was not in writing. Now what?

An assurance, generally purchased by an employer, to cover employees who are entrusted with valuable property or funds is known as a _____ bond.

A defense for a surety is the principal debtor's infancy.

Smalltown contracted with Construction Co. (CC) to repave a street. CC was required to obtain a performance bond, which it did, from Bond Co. While the crew was paving, a distracted driver whizzed by the flagger and crashed into the paving machinery. All three CC employees were injured and hospitalized. Bond Co. performed to Smalltown, and now seeks compensation from the distracted driver. ___________.

The surety has certain defenses to paying. What are they?

"Perfection" is required before the secured party can repossess the collateral.

A surety bond that ensures a property owner of the completion of a construction contract or payment of actual damages to the extent of the bond in the event that the contractor fails to complete it is called a _____ bond:

A surety has a right to reimbursement from the principal debtor, or from any entity that caused the principal debtor's default.

If a security interest was not perfected at the time of filing for bankruptcy, a bankruptcy trustee cannot take the collateral.