Question 1

With regard to a prior perfected security interest in goods for which a financing statement has been filed, which of the following parties is most likely to have a superior interest in the same collateral?

Accepted Answer

A)   A buyer in the ordinary course of business who purchased the goods from a merchant.
B)   A subsequent buyer of consumer goods who purchased the goods from another customer.
C)   The trustee in bankruptcy of the debtor.
D)   Lien creditors of the debtor.E) C) and D)
F) B) and C)

Question 2

Perfection by public filing of a financing statement in the appropriate public office serves as a(n)  _____ notice to the world.

Accepted Answer

A)   express
B)   implied
C)   constructive
D)   publicE) B) and C)
F) None of the above

Question 3

Mark filed a financing statement on Daniel's collateral on March 2. However, attachment of this interest did not occur until March 4. Meanwhile, Charles, who had attached a security interest on the same collateral on March 1, filed a financing statement on March 3. Which interest has priority and why?

Accepted Answer

A)   Mark's interest has priority because he filed the security before Charles did.
B)   Charles' interest has priority because he attached the security first.
C)   Mark's interest has priority because his attaching was the latest.
D)   Charles' interest has priority because his filing was the latest.E) None of the above
F) A) and B)

Question 4

Acorn Marina Inc. sells and services boat motors. On April 1, 1989, Acorn financed the purchase of its entire inventory with GAC Finance Company. GAC required Acorn to execute a security agreement and financing statement covering the inventory and proceeds of sale. On April 14, 1989, GAC filed the financing statement pursuant to the UCC Secured Transactions Article. On April 27, 1989, Acorn sold one of the motors to Mike for use in his charter business. Mike, who had once worked for Acorn, knew that Acorn regularly financed its inventory with GAC. Acorn has defaulted on its obligations to GAC. The motor purchased by Mike is:

Accepted Answer

A)   subject to the GAC security interest because he should have considered the fact that GAC financed the inventory purchased by Acorn.
B)   subject to the GAC security interest because he purchased the motor for commercial use.
C)   not subject to the GAC security interest because he is regarded as a buyer in the ordinary course of Acorn's business.
D)   not subject to the GAC security interest because GAC failed to file the financing statement until more than 10 days after April 1, 1989.E) B) and D)
F) C) and D)

Question 5

The state statutory law prescribes the place where the financing statement has to be filed.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is true about possession of collateral by secured party as public notice?

Accepted Answer

A)   Change of possession is a convenient way for perfecting most security interests in consumer goods.
B)   Possession of collateral by the creditor is rarely executed to perfect a security interest in chattel paper and negotiable documents of title.
C)   Possession is a possible way of perfecting a security interest in inventory which is achieved through a field warehousing arrangement.
D)   Possession by the creditor is a practicable way of perfecting a security interest in equipment or farm products.E) None of the above
F) C) and D)

Question 7

What are the three basic requirements for a security interest to be attached to the goods of a debtor?

Accepted Answer

There are three basic requirements for a...

Question 8

A perfected purchase money security interest in a manufacturer's stock has priority over a conflicting security interest in the same stock if the notification states that the person expects to acquire a purchase money security interest in stock of the debtor and describes the stock. Which of the following priority rules does this statement correspond to?

Accepted Answer

A)   PMSI in non-inventory collateral
B)   PMSI in inventory collateral
C)   Buyer in the ordinary course of business
D)   Artisan's and mechanic's lienE) C) and D)
F) All of the above

Question 9

The Total Household Appliance store sells a refrigerator to Alvin, on the condition of making payments in installments. In this case, the store:

Accepted Answer

A)   has to file its purchase money security interest.
B)   need not file its purchase money security interest.
C)   has to take possession of the refrigerator.
D)   need not attach the refrigerator.E) None of the above
F) B) and D)

Question 10

Carter sold a $20,000 boat to Davis on credit for personal use. As part of the deal, Davis completed an installment note payable to Carter and a security agreement giving Carter a security interest in the boat which was attached on July 1. Carter never filed a financing statement. On August 1, Davis borrowed $15,000 from Bank, by completing a security agreement giving the Bank a security interest in the boat. This interest attached on the same day and the Bank filed a financing statement on August 6. Davis defaulted on both his installment payments to Carter and his loan obligation to the Bank. Each of these parties wants to satisfy Davis's obligation by repossessing and selling the boat. Whose security interest in the boat has priority and why?

Accepted Answer

A)   Bank's interest has priority because Carter never filed a financing statement.
B)   Carter's interest has priority because his security interest was perfected before Bank's interest.
C)   Bank's interest has priority because Carter failed to attach his security interest.
D)   Bank's interest has priority because the Bank perfected the interest within ten days after Davis received the collateral.E) A) and D)
F) None of the above

Question 11

Where the creditor has possession of the collateral, the security agreement may be oral.

Accepted Answer

A) True 
 B)False

Question 12

Under the UCC Secured Transactions Article, for a security interest to attach, the:

Accepted Answer

A)   debtor must agree to the creation of the security interest.
B)   creditor must properly file a financing statement.
C)   debtor must be denied of all rights in the collateral.
D)   creditor must take and hold the collateral.E) All of the above
F) C) and D)

Question 13

For which of the following is the filing of a financing statement necessary for perfection to occur?

Accepted Answer

A)   A security interest in documents of title.
B)   A security interest in chattel paper.
C)   A security interest in consumer goods.
D)   A security interest in general intangibles.E) A) and B)
F) B) and D)

Question 14

Which of the following statements is true regarding a secured creditor's disposition of the collateral after the debtor's default?

Accepted Answer

A)   The debtor cannot redeem the collateral after his default.
B)   The collateral must be disposed of by private sale.
C)   The creditor may opt not to repossess the collateral and instead sue the debtor on his underlying obligation.
D)   If the proceeds realized from the sale of the collateral exceed the various expenses that must be satisfied from those proceeds, the surplus goes to the creditor.E) A) and D)
F) A) and C)

Question 15

Which of the following is true about perfection of fixtures?

Accepted Answer

A)   Automatic perfection does not apply for consumer goods that are yet to become fixtures.
B)   A creditor who relies on attachment for perfection will prevail against other creditors who hold an interest in the good to which the consumer good is attached.
C)   Fixture filing is always necessary to perfect the security interest in any good.
D)   A creditor with a security interest in fixtures obtains perfection merely by attachment of her security interest to the good.E) B) and C)
F) B) and D)

Question 16

A secured creditor repossesses the collateral from the debtor and sells it to satisfy the debt. Which of the following has the first claim on the proceeds of the sale?

Accepted Answer

A)   Debtor
B)   Consequential damages suffered by the creditor due to the debtor's default
C)   Court costs
D)   Expenses of repossessing, storing, and selling the collateralE) A) and B)
F) A) and C)

Question 17

In which of the following orders are the proceeds from the sale of collateral by the secured party distributed?

Accepted Answer

A)   Debtor, creditor's debt, selling expenses, and junior interests
B)   Selling expenses, creditor's debt, junior interests, and debtor
C)   Creditor's debt, selling expenses, debtor, and junior interests
D)   Junior interests, debtor, selling expenses, and creditor's debtE) B) and C)
F) A) and D)

Question 18

A _____ serves as constructive notice to the world that the creditor claims an interest in collateral that belongs to a certain named debtor.

Accepted Answer

A)   model audit
B)   financial report
C)   financing statement
D)   continuation statementE) A) and B)
F) A) and C)

Question 19

Which of the following are automatically covered as of the time the security interest attaches to the collateral?

Accepted Answer

A)   Future advances
B)   Loaned funds
C)   Sale expenses
D)   ProceedsE) B) and C)
F) A) and B)

Question 20

Under the UCC, a collateral which has been sold in a private sale by a secured party to a good faith purchaser for value, after the debtor's default:

Accepted Answer

A)   may be redeemed by the debtor within 10 days after the disposition.
B)   may be redeemed by creditors with subordinate claims.
C)   remains subject to the security interests of subordinate lien creditors in all cases where the collateral is disposed of at a private sale.
D)   discharges the security interest pursuant to which such sale was made and any security interest or lien subordinate thereto.E) A) and C)
F) A) and D)

Exam 29: Security Interests in Personal Property

The state statutory law prescribes the place where the financing statement has to be filed.

Correct Answer
verified

A _____ serves as constructive notice to the world that the creditor claims an interest in collateral that belongs to a certain named debtor.

Correct Answer
verified

Correct Answer
verified

Which of the following is true about possession of collateral by secured party as public notice?

Correct Answer
verified

A secured creditor repossesses the collateral from the debtor and sells it to satisfy the debt. Which of the following has the first claim on the proceeds of the sale?

Correct Answer
verified

Under the UCC Secured Transactions Article, for a security interest to attach, the:

Correct Answer
verified

In which of the following orders are the proceeds from the sale of collateral by the secured party distributed?

Correct Answer
verified

For which of the following is the filing of a financing statement necessary for perfection to occur?

Correct Answer
verified

Which of the following is true about perfection of fixtures?

Correct Answer
verified

Where the creditor has possession of the collateral, the security agreement may be oral.

Correct Answer
verified

Correct Answer
verified

Under the UCC, a collateral which has been sold in a private sale by a secured party to a good faith purchaser for value, after the debtor's default:

Correct Answer
verified

Which of the following are automatically covered as of the time the security interest attaches to the collateral?

Correct Answer
verified

The Total Household Appliance store sells a refrigerator to Alvin, on the condition of making payments in installments. In this case, the store:

Correct Answer
verified

Perfection by public filing of a financing statement in the appropriate public office serves as a(n) _____ notice to the world.

Correct Answer
verified

Correct Answer
verified

With regard to a prior perfected security interest in goods for which a financing statement has been filed, which of the following parties is most likely to have a superior interest in the same collateral?

Correct Answer
verified

What are the three basic requirements for a security interest to be attached to the goods of a debtor?

Correct Answer
verified
There are three basic requirements for a...
View Answer

Which of the following statements is true regarding a secured creditor's disposition of the collateral after the debtor's default?

Correct Answer
verified

Correct Answer
verified

Exam 29: Security Interests in Personal Property

The state statutory law prescribes the place where the financing statement has to be filed.

Correct AnswerverifiedShow Answer

A _____ serves as constructive notice to the world that the creditor claims an interest in collateral that belongs to a certain named debtor.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is true about possession of collateral by secured party as public notice?

Correct AnswerverifiedShow Answer

A secured creditor repossesses the collateral from the debtor and sells it to satisfy the debt. Which of the following has the first claim on the proceeds of the sale?

Correct AnswerverifiedShow Answer

Under the UCC Secured Transactions Article, for a security interest to attach, the:

Correct AnswerverifiedShow Answer

In which of the following orders are the proceeds from the sale of collateral by the secured party distributed?

Correct AnswerverifiedShow Answer

For which of the following is the filing of a financing statement necessary for perfection to occur?

Correct AnswerverifiedShow Answer

Which of the following is true about perfection of fixtures?

Correct AnswerverifiedShow Answer

Where the creditor has possession of the collateral, the security agreement may be oral.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under the UCC, a collateral which has been sold in a private sale by a secured party to a good faith purchaser for value, after the debtor's default:

Correct AnswerverifiedShow Answer

Which of the following are automatically covered as of the time the security interest attaches to the collateral?

Correct AnswerverifiedShow Answer

The Total Household Appliance store sells a refrigerator to Alvin, on the condition of making payments in installments. In this case, the store:

Correct AnswerverifiedShow Answer

Perfection by public filing of a financing statement in the appropriate public office serves as a(n) _____ notice to the world.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

With regard to a prior perfected security interest in goods for which a financing statement has been filed, which of the following parties is most likely to have a superior interest in the same collateral?

Correct AnswerverifiedShow Answer

What are the three basic requirements for a security interest to be attached to the goods of a debtor?

Correct AnswerverifiedThere are three basic requirements for a...View AnswerShow Answer

Which of the following statements is true regarding a secured creditor's disposition of the collateral after the debtor's default?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
There are three basic requirements for a...
View Answer

Correct Answer
verified

Correct Answer
verified