Chapter 29 a & b

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A1. The payment of Brian's debt to Chuck is guaranteed by Brian's personal property. This is
a. a reorganization.
b. a secured transaction.
c. a suretyship agreement.
d. a violation of most state laws.

b. a secured transaction.

A2. The payment of Frida's debt to Gianini is guaranteed by Frida's personal property. Gianini is
a. a debtor.
b. a secured party.
c. a secured transaction.
d. a security interest.

b. a secured party.

A3. The payment of Hu's debt to Ian is guaranteed by Hu's personal property. To give public notice of his interest in Hu's property, Ian is most likely to
a. attach a bright label to Hu's property.
b. e-mail other potential creditors.
c. file a financing statement with the appropriate authority.
d. publish a collection notice in local newspapers.

c. file a financing statement with the appropriate authority.

A4. Best Credit Corporation lends funds to Cody, a consumer, to apply to the cost of a sport utility vehicle (SUV), which is the collateral for the loan. An enforceable security interest requires
a. a written agreement and Best's possession of the SUV.
b. a written agreement or Best's possession of the SUV.
c. a written agreement only.
d. Best's possession of the SUV only.

b. a written agreement or Best's possession of the SUV.

A5. The payment of Jose's debt to Klint is guaranteed by Jose's personal property. The process by which Klint can protect himself against the claims of third parties to this property is
a. attachment.
b. communication.
c. perfection.
d. search and seizure.

c. perfection.

A6. Lena borrows from Mac and Nicol, using the same collateral for both loans. Only Nicol has a perfected security interest. Lena defaults on both loans. The party with first rights to the collateral is
a. Lena.
b. Mac and Nicol, in proportion to Lena's debt to each.
c. Mac only.
d. Nicol only.

c. Mac only.

A7. Quality Appliance Company allows Reba to take a set of kitchen appliances that she bought from Quality even though she has not paid the full price. Quality's legally sufficient financing statement in the goods need not include
a. a description of the collateral.
b. a statement of the reason for allowing Reba to take the goods.
c. Quality's name.
d. Reba's name.

b. a statement of the reason for allowing Reba to take the goods.

Fact Pattern 29-1A (Questions A8-A10 apply)
Excel Vehicles, Inc., makes and sells automobiles to auto dealers, including Fine Auto Sales. Fine sells the cars to consumers and businesses.

A8. Refer to Fact Pattern 29-1A. A car in Fine's possession is probably
a. a consumer good.
b. an accession.
c. equipment.
d. inventory.

A9. Refer to Fact Pattern 29-1A. Holly, a professional driver, buys an Excel
from Fine to drive in a Grand Prix race. Holly's Excel is
a. a consumer good.
b. an accession.
c. equipment.
d. inventory.

A10. Refer to Fact Pattern 29-1A. Ira, a police officer, buys an Excel from Fine
to drive in his off-duty hours. Ira's Excel is
a. a consumer good.
b. an accession.
c. equipment.
d. inventory.

A8: d. inventory.
A9: c. equipment.
A10: a. a consumer good.

A11. The payment of Yves's debt to Zach is guaranteed by Yves's personal property. Their agreement describes Yves's subject property by serial number. To establish Zach's interest, this is
a. irrelevant.
b. not sufficient.
c. sufficient if it accurately describes the parties' agreement.
d. sufficient unless it is too tedious to review.

c. sufficient if it accurately describes the parties' agreement.

A12. County Bank wants to perfect its security interest in collateral owned by Delta Sales Company. Most likely, a financing statement should be filed with
a. the local chamber of commerce.
b. the county clerk.
c. the federal loan officer.
d. the secretary of state's office.

d. the secretary of state's office.

A13. Mona lives in New Jersey, but she works in New York. Mona borrows $1,000 from National Bank, using her motorcycle as collateral. To perfect its security interest, the bank must file its financing statement in at least
a. every state.
b. New Jersey.
c. New Jersey and New York.
d. New York.

b. New Jersey.

A14. Everyday Loans, Inc., takes possession of Frank's stock in Gamma Corporation to perfect Everyday's security interest in the stock. This is
a. after-acquired property.
b. a pledge.
c. a purchase-money security interest.
d. proceeds.

b. a pledge.

A15. Property Investments, Inc., files a financing statement to provide notice of its security interest in the property of Qwik's Restaurant. The initial effective term of a financing statement is a period of
a. five days.
b. five months.
c. five weeks.
d. five years.

d. five years.

A16. Dependable Credit Corporation asks Electric Supply Company to agree to a security agreement that provides for coverage of the proceeds from the sale of after-acquired property. This is
a. a first-in, first-out rule.
b. a floating lien.
c. a funds guaranty.
d. a future advance.

b. a floating lien.

A17. Expert Capital Company and First National Bank are secured parties with security interests in property owned by Grande Corporation. Between these security interests, the first to be filed or perfected has priority over other filed or perfected security interests in
a. most circumstances.
b. no circumstances.
c. states that have not adopted Article 9 of the UCC.
d. states that require a security agreement to be signed and dated by the creditor.

a. most circumstances.

A18. Elias repays his debt, incurred to buy consumer goods, to First City Bank and immediately files a written request for a termination statement. First City
a. must comply within one month of receipt of the letter.
b. must comply within twenty days of receipt of the letter.
c. must refund $500 to Elias.
d. need not comply.

b. must comply within twenty days of receipt of the letter.

A19. Ron does not make a payment on his car loan for several months. The dealer, Star Auto, repossesses the car by towing it from a public parking lot. Ron sues Star for breach of the peace. Ron will probably
a. prevail, because Ron has not formally defaulted on the car loan.
b. prevail, because the car was parked in a public lot when it was towed.
c. not prevail, because the repossession was not a breach of the peace.
d. not prevail, because a creditor can repossess property in which it holds an interest if no threats or force are used against a debtor.

c. not prevail, because the repossession was not a breach of the peace.

A20. Hal's Hardware store defaults on a debt to Intrastate Bank, which takes possession of the collateral securing the debt. Intrastate sells the collateral. The proceeds from the sale are applied first to
a. Hal's debt to Intrastate.
b. Hal's debts to other creditors.
c. Intrastate's fees for the sale.
d. payments Hal's made on the debt to Intrastate.

c. Intrastate's fees for the sale.

B1. The payment of Mo's debt to Neil is guaranteed by Mo's personal property. This is
a. governed by Article 2 of the UCC.
b. governed by Article 3 of the UCC.
c. governed by Article 9 of the UCC.
d. not governed by the UCC.

c. governed by Article 9 of the UCC.

B2. The payment of Eden's debt to Flem is guaranteed by Eden's personal property. This property is
a. a secured party.
b. a secured transaction.
c. a security interest.
d. collateral.

d. collateral.

B3. Dag is the secured party in a secured transaction with Elmo. In this transaction, Dag
a. has a security interest.
b. owes payment.
c. owes performance.
d. owns collateral.

a. has a security interest.

B4. Olaf is the creditor in a transaction with Phil. Once certain requirements are met, Olaf's rights will attach, which means that Olaf will have
a. an indivisible ownership right to Phil's property.
b. an enforceable security interest in Phil's property.
c. a notice affixed to Phil's property.
d. the permission of a court to seize Phil's property.

b. an enforceable security interest in Phil's property.

B5. The payment of John's debt to Kirsten is guaranteed by John's personal property. Kirsten is most likely to perfect her interest by
a. attaching a bright label to John's property.
b. calculating the precise amount of John's debt.
c. correcting grammatical errors in the parties' written agreement.
d. filing a financing statement with the appropriate authority.

d. filing a financing statement with the appropriate authority.

B6. Rich Financial, Inc., files a financing statement regarding a transaction with Supreme Business Company. To be valid, the financing statement must contain all of the following except
a. a description of the collateral.
b. a statement of the purpose for the transaction.
c. Rich's name.
d. Standard's name.

b. a statement of the purpose for the transaction.

B7. The payment of Nero's debt to Olly is guaranteed by Nero's personal property. Nero is located in Pennsylvania. Olly communicates to the appropriate state official a security agreement that uses only Quality Engineering, the trade name of Nero's business. To perfect Olly's interest, this is
a. irrelevant.
b. not sufficient.
c. sufficient if Quality Engineering is a sole proprietorship.
d. sufficient if the trade name is spelled correctly or misspelled slightly.

b. not sufficient.

Fact Pattern 29-1B (Questions B8-B9 apply)
Tech Support Corporation uses its office equipment as collateral for a loan from United Bank. The bank files a financing statement with the secretary of state in the state in which Tech Support was chartered. One year later, Tech
Support changes its name to Vector, Inc.

B8. Refer to Fact Pattern 29-1B. United Bank's perfection will remain effective for
a. four months after the date of the name change.
b. five business days after the date of the name change.
c. six years after the date of the original filing.
d. no time.

B9. Refer to Fact Pattern 29-1B. To continue the effectiveness of its perfected interest, United Bank must file
a. a continuation statement after the original filing expires.
b. an amendment to the financing statement before the period expires.
c. a new financing statement immediately.
d. a notice of repossession with all interested creditors.

B8: a. four months after the date of the name change.
B9: b. an amendment to the financing statement before the period expires.

B10. Region Bank wants to perfect its security interest in timber owned by Superior Lumber, Inc. Most likely, a financing statement should be filed with
a. the local chamber of commerce.
b. the county clerk.
c. the federal loan officer.
d. the secretary of state's office.

b. the county clerk.

B11. Select Furniture Store sells household consumer goods. To create a purchase- money security interest, Select Furniture must
a. assign, to a collecting agent, a portion of its accounts payable.
b. assign, to a collecting agent, a portion of its accounts receivable.
c. extend credit for part or all of the purchase price of the goods.
d. refer purchasers to a third-party lender.

c. extend credit for part or all of the purchase price of the goods.

B12. City Bank's financing statement in collateral owned by Delta Corporation will expire in less than a year. Filed timely, a continuation statement could extend the effectiveness of the financing statement for
a. one year.
b. two years.
c. five years.
d. ten years.

c. five years.

B13. Kwik Credit Corporation asks Little Supply Company to agree to a security agreement that provides for coverage of the proceeds from the sale of after-acquired property. This is
a. a first-in, first-out rule.
b. a floating lien.
c. a funds guaranty.
d. in violation of secured transactions law.

b. a floating lien.

B14. Excel Investments, Inc., and First State Bank are secured parties with security interests in property owned by GR8 Manufacturing Corporation. Priority between these security interests is generally determined by
a. the amount of the claim.
b. the custom in the trade.
c. the time of perfection.
d. the time the security agreement was signed.

c. the time of perfection.

Fact Pattern 29-2B (Questions B15-B16 apply)
General Leasing Company (GLC) buys equipment for use as inventory, borrowing $1 million from Helpful Finance Corporation for a security interest in the equipment. The next day, GLC borrows $500,000 from Interstate Bank, also for a security interest in the equipment. GLC defaults on the loans.

B15. Refer to Fact Pattern 29-2B. Suppose that Helpful perfects its security interest when GLC takes possession of the equipment. In that circumstance, the party with priority to the collateral on GLC's default would be
a. GLC.
b. Helpful and Interstate proportionately.
c. Helpful only.
d. Interstate only.

B16. Refer to Fact Pattern 29-2B. Suppose that two weeks after GLC takes possession of the equipment, Helpful and Interstate file financing statements, with Interstate filing first. In that circumstance, the party with priority to the equipment is
a. GLC.
b. Helpful and Interstate proportionately.
c. Helpful only.
d. Interstate only.

B15: c. helpful only.
B16: d. Interstate only.

B17. Quotient Financial Corporation is a secured party with a security interest in property owned by Retail Sales Company. Perfection of this security interest may not protect Quotient Financial against the claim of
a. a bank.
b. a buyer in the ordinary course of business.
c. a subsequent lien creditor.
d. a trustee in bankruptcy.

b. a buyer in the ordinary course of business.

B18. Khalil holds a security interest in inventory owned by Luc. Khalil assigns his interest in the inventory to Mal. Mal becomes the secured party of record
a. automatically.
b. if Khalil advises Luc of the assignment.
c. if Mal advises Luc of the assignment.
d. if Mal files a uniform amendment form.

d. if Mal files a uniform amendment form.

B19. Computer World (CW), after repossessing a multimedia system from Dave, a consumer, decides to keep the system instead of reselling it. CW sends written notice to Dave. CW can now keep the system
a. only after attempting an unsuccessful public sale of the system.
b. only after notifying any other appropriate secured party.
c. unless Dave objects.
d. under any circumstances.

c. unless Dave objects.

B20. Green Landscape Company buys a backhoe on credit from Heavy Equipment Corporation, but does not make a payment on the loan for several months. Heavy repossesses the backhoe by towing it from a public street. Green sues Heavy for breach of the peace. Green will probably
a. not prevail, because Heavy did not use judicial process.
b. not prevail, because the repossession was not a breach of the peace.
c. prevail, because Green did not default on the loan.
d. prevail, because the repossession was a breach of the peace.

b. not prevail, because the repossession was not a breach of the peace.

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