chapter 28 a & b

Created by jmbarnes90 

Upgrade to
remove ads

A1. Jen has a claim against Kevin's property that must be satisfied before
the property is available to satisfy the claims of other creditors. This is
a. a lien.
b. a violation of most state laws.
c. a writ of attachment.
d. a writ of execution.

a. a lien.

A2. Pruit performs a contract with Quint to reshingle the roof on Quint's house, but Quint does not pay. Pruit notifies Quint that Pruit will foreclose on the house and sell it to satisfy the debt. This is
a. a judicial lien.
b. a mechanic's lien.
c. an artisan's lien.
d. a violation of most state laws.

b. a mechanic's lien.

A3. Donald's debt to Everett is past due. Everett brings a legal action against Donald to collect the debt. To ensure that a judgment in Everett's favor will be collectible, Everett asks the court to order the
seizure of Donald's property. This is a request for
a. a guaranty (or suretyship) contract.
b. an order that would violate most state laws.
c. a writ of attachment.
d. a writ of execution.

c. a writ of attachment.

A4. Delia refuses to pay Ewing $500 in cash on their contract to repair certain theater sets, which Ewing still possesses. Ewing's lien on the sets will terminate
a. if Ewing continues to maintain possession.
b. if Ewing does not file a written notice of lien within thirty days.
c. if Ewing surrenders possession.
d. within thirty days.

c. if Ewing surrenders possession.

A5. Larry borrows money from Joan. To use a writ of execution as a remedy, Joan must first
a. be unable to collect the amount of a judgment against Larry.
b. be unable to redeem Larry's exempt property before a sale will
occur.
c. notify Larry in writing (in a "writ") of her intent.
d. obtain and maintain possession of Larry's property.

a. be unable to collect the amount of a judgment against Larry.

A6. Flip's debt to George is past due. George brings a legal action against Flip to collect the debt. George asks the court to order Home Bank, in which Flip has an account, to pay a portion of the funds to George. This
is a request for
a. an exemption from most states' limits on creditors' actions.
b. an order of garnishment.
c. an order that would violate most state laws.
d. a right of subrogation.

b. an order of garnishment.

A7. Ian's mortgage debt to Jeff is past due. Jeff brings a legal action against Ian to collect the debt. Jeff asks the court to order the sale of the mortgaged property and the payment of a portion of the proceeds to Jeff.
This is a request for
a. a deficiency judgment.
b. a foreclosure.
c. a right of reimbursement.
d. redemption.

b. a foreclosure.

A8. Liu and Midge—Nero's creditors—contract with Nero for the discharge of Nero's liquidated debts on payment of a lesser sum. This is
a. a composition agreement.
b. a subrogation.
c. a suretyship agreement.
d. in violation of most states' laws.

a. a composition agreement.

A9. Frank's farm is to be sold at a foreclosure sale. For Frank to keep the farm by paying the full amount of the debt, plus any interest and costs that have accrued, is
a. the equity of redemption.
b. the exercise of exemption.
c. the right of contribution.
d. the right of subrogation.

a. the equity of redemption.

A10. First State Bank holds a mortgage on Gigi's property. Gigi defaults on the debt. The bank forecloses. If the proceeds of the foreclosure sale are insufficient to pay the costs of the sale and the debt, the bank can
a. obtain a deficiency judgment against Gigi.
b. prorate the costs to its other debtors.
c. reclaim the property as a voidable transfer.
d. use the equity of redemption to redeem the property.

a. obtain a deficiency judgment against Gigi.

Fact Pattern 28-1A (Questions A11-A14 apply)
Dina asks Edie to co-sign a credit application so that she can borrow money and buy a truck from Finest Quality Motors.

A11. Refer to Fact Pattern 28-1A. If Edie signs the application but fails to condition
her signature on Finest's agreement to pursue its legal remedies
against Dina before looking to her, then Edie is
a. a guarantor and a surety.
b. a guarantor only.
c. a surety only.
d. neither a guarantor nor a surety.

A12. Refer to Fact Pattern 28-1A. If Edie is a guarantor, then the guaranty is
required to be in writing because of
a. the debtor's right of redemption.
b. the co-signer's right of contribution.
c. the creditor's transfer of possession.
d. the Statute of Frauds.

A13. Refer to Fact Pattern 28-1A. If, after the loan agreement is signed, Dina
agrees to a higher rate of interest without telling Edie, then Edie is
a. discharged from the agreement.
b. liable at the higher rate of interest.
c. liable at the lower rate of interest.
d. liable for the principal only.

A14. Refer to Fact Pattern 28-1A. If Edie signs the application only after language
is included that requires Finest to exhaust its legal remedies
against Dina before looking to her, then Edie is
a. a guarantor and a surety.
b. a guarantor only.
c. a surety only.
d. neither a guarantor nor a surety.

A11: c. a surety only.
A12: d. the Statute of Frauds.
A13: a. discharged from the agreement.
A14: b. a guarantor only.

A15. Kwik Delivery Company buys a truck from Lucky Vehicles, Inc., under a guaranty signed by Mina, Kwik's president, who writes "President" after her signature. When Kwik does not pay for the truck, Lucky sues Mina,
who claims that she did not intend to be bound by the guaranty. The court would most likely rule in favor of
a. Lucky, because Mina's guaranty is unambiguous.
b. Lucky, because Mina works for Kwik.
c. Mina, because she did not intend to be bound by the guaranty.
d. Mina, because she signed only as a corporate officer.

a. Lucky, because Mina's guaranty is unambiguous.

A16. Rita is a surety for Sue's loan from Total Finance Company. Rita's right
to "step into the shoes" of Total Finance, after paying Sue's debt, and exercise
any of the Total Finance's rights against Sue is the right of
a. contribution.
b. redemption.
c. reimbursement.
d. subrogation.

d. subrogation.

A17. Dora, Ed, and Fran are co-sureties of Glen's debt to Hi-Credit Company. Dora pays Glen's entire debt. Dora's right to seek proportionate payments from Ed and Fran is the right of
a. contribution.
b. redemption.
c. reimbursement.
d. subrogation.

a. contribution.

A18. Ross and Sally agree to guarantee Tim's debt. Ross's maximum liability is $30,000, and Sally's is $20,000. Tim owes $20,000 and is in default. Ross pays the creditor the entire amount. In the absence of an agreement to the contrary, Ross can recover from Sally
a. $8,000.
b. $10,000.
c. $20,000.
d. nothing.

a. $8,000.

A19. Rhonda's debt to Skyler is past due. Skyler brings a legal action against A to collect the debt. To ensure that a judgment in Skyler's favor will be collectible, Skyler asks the court to order the seizure of Rhonda's property. Exempt from such an order in most states would be
a. all of Rhonda's real property.
b. as much of Rhonda's real property as Rhonda opts to exempt.
c. none of Rhonda's real property.
d. Rhonda's family home in its entirety or up to a specified amount.

d. Rhonda's family home in its entirety or up to a specified amount.

A20. Bret defaults on a loan owed to City Bank. As a creditor, City Bank may attempt to place liens on all of Bret's property except
a. motor vehicles that Bret uses to commute to work.
b. personal property that consists of stock in various corporations.
c. property that Bret elects to exempt.
d. real property on which Bret plans to open a retail store.

a. motor vehicles that Bret uses to commute to work.

B1. Suha performs a contract with Tyler to add a second story addition to Tyler's house, but Tyler does not pay. In most states, Suha can create a lien and place it on Tyler's property by filing
a. an order of garnishment.
b. a writ of attachment.
c. a writ of execution.
d. a written notice of lien.

d. a written notice of lien.

B2. Loni delivers her Mazda to be repaired at Nile's Body Shop. Loni agrees to pay cash. Nile performs, but Loni does not pay. Nile tells Loni that he will keep the car until she pays. This is
a. a judicial lien.
b. a mechanic's lien.
c. an artisan's lien.
d. a violation of most states' laws.

c. an artisan's lien.

B3. Opie's debt to Pyle is past due. Pyle obtains a judgment against Opie to collect the debt, but Opie refuses to pay. Pyle asks the court to order the seizure and sale of Opie's property. This is a request for
a. a guaranty (or suretyship) contract.
b. an order that would violate most states' laws.
c. a writ of attachment.
d. a writ of execution.

d. a writ of execution.

B4. Bob owes $5,000 to Consumer Lender Corporation (CLC). As a prejudgment remedy to collect the debt, CLC could use
a. attachment.
b. contribution.
c. execution.
d. redemption.

a. attachment.

B5. Dolf borrows money from Elin. Dolf defaults. To use attachment as a remedy, Elin must first
a. file a suit against Dolf.
b. lose a suit against Dolf.
c. succeed in a suit against Dolf.
d. take possession of Dolf's property.

a. file a suit against Dolf.

B6. Khali's debt to Lew is past due. Lew obtains a judgment against Khali to collect the debt, but Khali refuses to pay. Lew asks the court to order Khali's employer to pay a portion of Khali's paycheck to Lew. This is a request for
a. an exemption from most federal limits on creditors' actions.
b. an order of garnishment.
c. an order that would violate most state laws.
d. a right of contribution.

b. an order of garnishment.

B7. Mike owes $12,000 to Nora, $6,000 to Owen, and $6,000 to Pat. The three creditors enter into an agreement with Mike to discharge the debts on payment of a sum of $12,000 to them, to be divided proportionately. This is
a. a composition agreement.
b. a guaranty agreement.
c. a judicial lien.
d. a suretyship agreement.

a. a composition agreement.

B8. Ezra's mortgage debt to Foxy is past due. Foxy brings a legal action against Ezra to collect the debt. Foxy asks the court to order the sale of the mortgaged property and the payment of a portion of the proceeds to Foxy. Before the sale, Ezra seeks to keep the property by paying the full
amount of the debt. This is
a. a deficiency judgment.
b. a right of redemption.
c. a right of subrogation.
d. not possible.

b. a right of redemption.

Fact Pattern 28-1B (Questions B9-B11 apply)
Beta Software Corporation is a new company that needs to borrow money to meet its payroll. Cliff, president and owner of Beta, asks First National Bank to loan Beta the funds.

B9. Refer to Fact Pattern 28-1B. If First National insists that Cliff sign the loan application, making himself personally liable for payment whether
or not Beta defaults, Cliff will be
a. a guarantor and a surety.
b. a guarantor only.
c. a surety only.
d. neither a guarantor nor a surety.

B10. Refer to Fact Pattern 28-1B. Generally, for a contract between First National and Cliff with respect to liability for Beta's loan to be enforceable, it must be in writing if Cliff is
a. a guarantor and a surety.
b. a guarantor only.
c. a surety only.
d. neither a guarantor nor a surety.

B11. Refer to Fact Pattern 28-1B. If First National insists that Cliff sign the loan application, making himself personally liable for payment only if
Beta defaults, Cliff will be
a. a guarantor and a surety.
b. a guarantor only.
c. a surety only.
d. neither a guarantor nor a surety.

B9: c. a surety only
B10: b. a guarantor only.
B11: b. a guarantor only.

Fact Pattern 28-2B (Questions B12-B13 apply)
Rico signs a lease on behalf of Start-Up, Inc., with Town Properties Corporation. As part of the lease, Rico signs a document titled "GUARANTY," which states that it is "an absolute guaranty" of the lease's performance.

B12. Refer to Fact Pattern 28-2B. If Start-Up stops paying the rent, it is most likely that liability or loss for the unpaid amount will rest with
a. no one.
b. Rico and Start-Up.
c. Start-Up only.
d. Town Properties only.

B13. Refer to Fact Pattern 28-2B. The reason for the result in the previous question is that
a. Rico signed a "GUARANTY."
b. Rico signed the lease "on Start-Up's behalf."
c. Town Properties probably forced Rico to sign the "GUARANTY."
d. Town Properties still owns the property and is free to re-lease it.

B12: b. Rico and Start-Up.
B13: a. Rico signed a "GUARANTY."

B14. Bill and Cody agree to guarantee Dave's debt. Bill's maximum liability is $60,000, and Cody's is $40,000. Dave owes $40,000 and is in default. Bill pays the creditor the entire amount. In the absence of an agreement to the contrary, Bill can recover from Cody
a. $0.
b. $16,000.
c. $20,000.
d. $40,000.

b. $16,000.

B15. Jay is a surety for Karen's loan from Little Bank. Jay's right to be repaid by Karen after having paid her debt is the right of
a. contribution.
b. redemption.
c. reimbursement.
d. subrogation.

c. reimbursement.

B16. Drew and Earl are brothers. They agree to act as guarantors on a loan made by their sister, Flo. Flo defaults on the payments and Drew refuses to pay. Earl pays the debt. Earl can recover from
a. Drew and Flo under the right of proportionate liability.
b. Drew and Flo under the right of reimbursement.
c. Drew under the right of contribution and Flo under the right of subrogation.
d. no one, because the parties are brothers and sister.

c. Drew under the right of contribution and Flo under the right of subrogation.

Fact Pattern 28-3B (Questions B17-B18 apply)
Mary's home is in a state that has a $30,000 homestead exemption. Mary defaults on a $60,000 debt that she owes to Nina. Mary's home is sold at auction for $80,000.

B17. Refer to Fact Pattern 28-3B. Nina may recover
a. $0.
b. $30,000.
c. $50,000.
d. $60,000.

B18. Refer to Fact Pattern 28-3B. Mary will receive
a. $0.
b. $30,000.
c. $50,000.
d. $60,000.

B17: c. $50,000.
B18: b. $30,000.

B19. Refer to Fact Pattern 28-3B. If Nina recovers less than she is owed, she can realize the difference from
a. any property that Mary owns.
b. only exempt property that Mary owns.
c. only nonexempt property that Mary owns.
d. property that any other member of Mary's family owns.

c. only nonexempt property that Mary owns.

B20. Brick's debt to Conry is past due. Conry brings a legal action against Brick to collect the debt. To ensure that a judgment in Conry's favor will be collectible, Conry asks the court to order the seizure of Brick's property. Exempt from such an order in most states is
a. all of Brick's personal property.
b. as much of Brick's personal property as Brick opts to exempt.
c. equipment that Brick uses in a business up to a specified amount.
d. none of Brick's personal property.

c. equipment that Brick uses in a business up to a specified amount.

Please allow access to your computer’s microphone to use Voice Recording.

Having trouble? Click here for help.

We can’t access your microphone!

Click the icon above to update your browser permissions above and try again

Example:

Reload the page to try again!

Reload

Press Cmd-0 to reset your zoom

Press Ctrl-0 to reset your zoom

It looks like your browser might be zoomed in or out. Your browser needs to be zoomed to a normal size to record audio.

Please upgrade Flash or install Chrome
to use Voice Recording.

For more help, see our troubleshooting page.

Your microphone is muted

For help fixing this issue, see this FAQ.

Star this term

You can study starred terms together

NEW! Voice Recording

Create Set