Exam 43: Security Interests in Personal Property

The preference given to a purchase money security interest prevents a single creditor from closing off all other sources of credit to a particular debtor and thus possibly preventing the debtor from obtaining additional inventory or equipment needed to maintain its business.

Under Article 9 of the Uniform Commercial Code, in what order are proceeds from the sale of collateral by the creditor to be distributed?

Change of possession is a common and convenient way for perfecting most security interests in consumer goods.

Explain a creditor's three potential courses of action upon default.

A financing statement is valid:

An interest in fixtures that a creditor obtains to secure performance of an obligation is called a(n):

A purchase money security interest in noninventory collateral prevails over a prior perfected security interest if the purchase money security interest is perfected at the time the debtor takes possession or within twenty (20) days afterward.

Usually the creditor and debtor state in their agreement what events constitute default by the buyer, without being subject to the Uniform Commercial Code (UCC) requirement that the parties act in "good faith" in doing so.

A financing statement is effective for a period of seven (7) years from the date of filing.

Explain what a purchase money security interest in consumer goods is, and provide an example.

Obtaining a security interest enforceable against third parties is a:

Documents of title include:

If the proceeds of sale of collateral are not sufficient to satisfy the debt, then the creditor is usually entitled to a:

The law covering security interests in personal property is contained in Article _____ of the Uniform Commercial Code.

A conditional sales contract is an example of a(n):

A creditor protects her security interest in collateral against other creditors of the debtor and other third persons, including some buyers of the collateral, by perfecting the security interest.

If the creditor has possession of the collateral, the security agreement:

Denis bought a diamond ring on credit from Pavel as an engagement present for his fiancée. He signed a purchase money security agreement giving Pavel a security interest in the ring until it was paid for. Pavel did not file a financing statement covering its security interest. Denis filed for bankruptcy. The bankruptcy trustee claimed that the diamond ring was part of the bankruptcy estate because Pavel did not perfect his security interest. Pavel claimed that it had a perfected security interest in the ring. Did Pavel have to file a financing statement to perfect its security interest in the diamond ring?

Explain what it means to perfect a security interest, and list the three (3) main ways to perfect a security interest.

Milt borrowed $200 from Femi. He agreed verbally that Femi could take possession of his books and keep them until he had repaid the loan in full. The next day, after Femi had the books in her possession, Orin offered to purchase the books from Milt for $150. Milt accepted the offer and took Orin's money to retrieve the books from Femi. Femi, however, refused to give up possession of the books until she was paid in full. Both Milt and Orin now claim that Femi has no rights to the books because she does not have a signed security agreement and has not filed a financing statement. In this case, which of the following statements is true according to the Uniform Commercial Code?