Question 1

Which of the following statements is true of an artisan's lien?

Accepted Answer

A)  It is ineffective against other creditors unless a proper financing statement has been filed. 
B)  It may be given priority even over perfected security interests in collateral if the artisan has possession of the goods. 
C)  It is invalid if the artisan did not inform the debtor that he intended to claim a lien before beginning the work. 
D)  It gives the retailer prevalence over someone who buys the collateral from the debtor if the buyer gives value for goods. 
A)  It is ineffective against other creditors unless a proper financing statement has been filed. 
B)  It may be given priority even over perfected security interests in collateral if the artisan has possession of the goods. 
C)  It is invalid if the artisan did not inform the debtor that he intended to claim a lien before beginning the work. 
D)  It gives the retailer prevalence over someone who buys the collateral from the debtor if the buyer gives value for goods.

Question 2

When a consumer debtor completely fulfills all debts and obligations secured by a financing statement, she is entitled to a termination statement signed by the secured party or an assignee of record.

Accepted Answer

A) True 
 B)False

Question 3

The attachment of a security interest takes place in a physical sense, rather than a legal sense.

Accepted Answer

A) True 
 B)False

Question 4

In terms of the classifications of collateral recognized by Article 9 of the Uniform Commercial Code (UCC), instruments include checks, notes, drafts, and certificates of deposit.

Accepted Answer

A) True 
 B)False

Question 5

As a general rule, an oral security agreement is legally enforceable.

Accepted Answer

A) True 
 B)False

Question 6

A purchase money security interest in noninventory collateral prevails over a prior perfected security interest if the:

Accepted Answer

A)  purchase money security interest is perfected at the time the debtor takes possession or within 20 days afterward. 
B)  notification states that the person expects to acquire a purchase money security interest in inventory of the debtor and describes the inventory. 
C)  holder of the competing security interest received notification within five years before the debtor receives the inventory. 
D)  purchase money secured party gives notification in writing to the prior secured creditor before the debtor receives the inventory. 
A)  purchase money security interest is perfected at the time the debtor takes possession or within 20 days afterward. 
B)  notification states that the person expects to acquire a purchase money security interest in inventory of the debtor and describes the inventory. 
C)  holder of the competing security interest received notification within five years before the debtor receives the inventory. 
D)  purchase money secured party gives notification in writing to the prior secured creditor before the debtor receives the inventory.

Question 7

The least common way of perfecting a security interest is by filing a financing statement in the appropriate public office.

Accepted Answer

A) True 
 B)False

Question 8

Maya borrowed money from Solvent National Bank and gave the bank a security interest in her business equipment, both present and after-acquired. She later borrowed money from Resilient Savings and Loans to purchase additional business equipment. Three and a half weeks after Maya purchased the new equipment and took possession of it, an employee of Resilient discovered the bank has filed financing statement concerning the bank's loan to Maya. Resilient immediately recorded a financing statement, so as to perfect its purchase money security interest in the equipment. Maya then defaulted on the obligation owed to the bank and on the obligation owed to Resilient. Who has the first priority security interest in the equipment purchased by Maya with the funds borrowed from Resilient Savings and Loans?

Accepted Answer

A)  Solvent National Bank 
B)  Resilient Savings and Loans 
C)  Both Resilient and Solvent have equal priority 
D)  Both Maya and Resilient have equal priority 
A)  Solvent National Bank 
B)  Resilient Savings and Loans 
C)  Both Resilient and Solvent have equal priority 
D)  Both Maya and Resilient have equal priority

Question 9

According to Article 9 of the Uniform Commercial Code (UCC), documents of title include the rights to payment for goods sold or leased or for services rendered that are not evidenced by instruments or chattel paper but are carried on open accounts.

Accepted Answer

A) True 
 B)False

Question 10

A perfected security interest:

Accepted Answer

A)  protects a creditor's security interest in collateral against other creditors of a debtor. 
B)  becomes effective even when a creditor does not give anything of value to a debtor. 
C)  gives a creditor protection against other creditors of the collateral but not against other purchasers of the collateral. 
D)  does not provide a creditor rights vis-à-vis a debtor. 
A)  protects a creditor's security interest in collateral against other creditors of a debtor. 
B)  becomes effective even when a creditor does not give anything of value to a debtor. 
C)  gives a creditor protection against other creditors of the collateral but not against other purchasers of the collateral. 
D)  does not provide a creditor rights vis-à-vis a debtor.

Question 11

Which of the following statements is true of change of possession?

Accepted Answer

A)  It is the most common way of perfecting a security interest. 
B)  It is the only way to perfect a security interest in money. 
C)  It is the most convenient way of perfecting a security interest in consumer goods. 
D)  It is not a practical method of perfecting security interests in commercial collateral. 
A)  It is the most common way of perfecting a security interest. 
B)  It is the only way to perfect a security interest in money. 
C)  It is the most convenient way of perfecting a security interest in consumer goods. 
D)  It is not a practical method of perfecting security interests in commercial collateral.

Question 12

Identify the statement that is true of perfection by attachment of consumer goods.

Accepted Answer

A)  If the secured party filed a financing statement for the collateral, the new buyer takes the collateral free of any security interest. 
B)  If the goods are to become fixtures, the creditor can get full protection through perfection by attachment. 
C)  If the new buyer buys from the debtor without knowledge of the interest, for value, and for personal use, the new buyer takes free of the security interest. 
D)  If the consumer goods are motor vehicles for which the state issues certificates of title, perfection by attachment to the vehicle is effective. 
A)  If the secured party filed a financing statement for the collateral, the new buyer takes the collateral free of any security interest. 
B)  If the goods are to become fixtures, the creditor can get full protection through perfection by attachment. 
C)  If the new buyer buys from the debtor without knowledge of the interest, for value, and for personal use, the new buyer takes free of the security interest. 
D)  If the consumer goods are motor vehicles for which the state issues certificates of title, perfection by attachment to the vehicle is effective.

Question 13

Under the revised Article 9 of the Uniform Commercial Code, _____.

Accepted Answer

A)  a creditor cannot protect her security interest in collateral against other creditors of a debtor and other third persons 
B)  a security interest in an after-acquired property cannot attach to that property until the debtor obtains some property rights in the new property 
C)  a creditor cannot use the collateral to protect his interest in repayment of the money advanced to a debtor by covering future advances 
D)  the attachment of a security interest to the collateral does not automatically give a secured party a security interest in the proceeds on the disposal of the collateral by the debtor 
A)  a creditor cannot protect her security interest in collateral against other creditors of a debtor and other third persons 
B)  a security interest in an after-acquired property cannot attach to that property until the debtor obtains some property rights in the new property 
C)  a creditor cannot use the collateral to protect his interest in repayment of the money advanced to a debtor by covering future advances 
D)  the attachment of a security interest to the collateral does not automatically give a secured party a security interest in the proceeds on the disposal of the collateral by the debtor

Question 14

A continuation statement can be filed:

Accepted Answer

A)  a month after the expiration date. 
B)  within ten months before the expiration date. 
C)  within three months after the expiration date. 
D)  within six months before the expiration date. 
A)  a month after the expiration date. 
B)  within ten months before the expiration date. 
C)  within three months after the expiration date. 
D)  within six months before the expiration date.

Question 15

Define future advances and explain how covering future advances in the security agreement benefits the creditor.

Accepted Answer

A security agreement may cover extension

Question 16

A purchase money security interest may be automatically perfected if it covers:

Accepted Answer

A)  future advances. 
B)  inventory. 
C)  consumer goods. 
D)  proceeds. 
A)  future advances. 
B)  inventory. 
C)  consumer goods. 
D)  proceeds.

Question 17

When a consumer debtor completely fulfills all debts and obligations secured by a financing statement, he or she is entitled to a:

Accepted Answer

A)  continuation statement. 
B)  termination statement. 
C)  statement of benefits. 
D)  statement of claims and defenses. 
A)  continuation statement. 
B)  termination statement. 
C)  statement of benefits. 
D)  statement of claims and defenses.

Question 18

Which of the following statements is true of sale of collateral?

Accepted Answer

A)  In disposing of the collateral, the creditor must use a commercially reasonable method to produce the greatest benefit to himself and not to the debtor. 
B)  The creditor must sell the collateral unless the consumer orally objects to the sale, otherwise, the creditor may keep the collateral in satisfaction of the debt. 
C)  If less than 80 percent of the purchase price has been paid, the creditor may propose to the debtor that the creditor keep the collateral in satisfaction of the debt. 
D)  If the creditor has a security interest in consumer goods and the debtor has paid 60 percent or more of the purchase price, the creditor must sell the repossessed collateral. 
A)  In disposing of the collateral, the creditor must use a commercially reasonable method to produce the greatest benefit to himself and not to the debtor. 
B)  The creditor must sell the collateral unless the consumer orally objects to the sale, otherwise, the creditor may keep the collateral in satisfaction of the debt. 
C)  If less than 80 percent of the purchase price has been paid, the creditor may propose to the debtor that the creditor keep the collateral in satisfaction of the debt. 
D)  If the creditor has a security interest in consumer goods and the debtor has paid 60 percent or more of the purchase price, the creditor must sell the repossessed collateral.

Question 19

Which of the following is true of perfecting security interests?

Accepted Answer

A)  A continuation statement may be filed within a year before the five-year expiration date. 
B)  A financing statement is effective for a period of one year from the date of filing. 
C)  Filing a financing statement in the appropriate public office is one of the least used ways of perfecting a security interest. 
D)  Possession, a possible way of perfecting a security interest in inventory, is sometimes achieved through a field warehousing arrangement. 
A)  A continuation statement may be filed within a year before the five-year expiration date. 
B)  A financing statement is effective for a period of one year from the date of filing. 
C)  Filing a financing statement in the appropriate public office is one of the least used ways of perfecting a security interest. 
D)  Possession, a possible way of perfecting a security interest in inventory, is sometimes achieved through a field warehousing arrangement.

Question 20

The basic rule established by the Uniform Commercial Code is that when more than one security interest in the same collateral has been filed, the last security interest to be filed has priority over any that is filed earlier.

Accepted Answer

A) True 
 B)False

Exam 43: Security Interests in Personal Property

Which of the following statements is true of an artisan's lien?

When a consumer debtor completely fulfills all debts and obligations secured by a financing statement, she is entitled to a termination statement signed by the secured party or an assignee of record.

The attachment of a security interest takes place in a physical sense, rather than a legal sense.

In terms of the classifications of collateral recognized by Article 9 of the Uniform Commercial Code (UCC), instruments include checks, notes, drafts, and certificates of deposit.

As a general rule, an oral security agreement is legally enforceable.

A purchase money security interest in noninventory collateral prevails over a prior perfected security interest if the:

The least common way of perfecting a security interest is by filing a financing statement in the appropriate public office.

According to Article 9 of the Uniform Commercial Code (UCC), documents of title include the rights to payment for goods sold or leased or for services rendered that are not evidenced by instruments or chattel paper but are carried on open accounts.

A perfected security interest:

Which of the following statements is true of change of possession?

Identify the statement that is true of perfection by attachment of consumer goods.

Under the revised Article 9 of the Uniform Commercial Code, _____.

A continuation statement can be filed:

Define future advances and explain how covering future advances in the security agreement benefits the creditor.

A purchase money security interest may be automatically perfected if it covers:

When a consumer debtor completely fulfills all debts and obligations secured by a financing statement, he or she is entitled to a:

Which of the following statements is true of sale of collateral?

Which of the following is true of perfecting security interests?

The basic rule established by the Uniform Commercial Code is that when more than one security interest in the same collateral has been filed, the last security interest to be filed has priority over any that is filed earlier.

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Property

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remedies

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

The Agency Relationship-Creation, Duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountants

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers

Introduction to Security

Bankruptcy

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

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