Exam 37: Secured Transactions and Suretyship

Darlene uses her computer 75 percent of its usage time for her business and 25 percent of its usage time for personal and family purposes.Under Article 9, the computer would be classified as equipment.

Article 9 of the UCC is flexible, simple, and it allows a variety of forms of secured financing.

A creditor will have to exhaust all the possible legal procedures to try to collect from the principal debtor before he can collect from a conditional guarantor of collection.

Steve defaults on a car loan secured by his car and guaranteed by both Sam and Dave.Subrogation would allow Sam, who paid Steve's full obligation to:

Assume you are the creditor in each of the following situations.Identify the kind of security agreement that is involved in each transaction and explain how you would perfect that agreement. a. You are the creditor (Everby Bank), and you lend Brisco Gaines $5,000 for a sound system. b.First Bank loans Doris $10,000 to purchase inventory for her store. c.First Bank loans Brad $5,000 to purchase a computer network for use in his store office. d.Kevin needs cash for gambling debts.He brings in his high-definition TV to secure a $500 loan.

A PMSI is created in goods when a seller retains a security interest in the goods sold on credit by a security agreement.

The types of indispensable paper include:

A field warehouse, under Article 9 of the UCC, is:

If the surety is a(n) ___________, then the creditor may hold the surety liable as soon as the principal debtor defaults.

Generally, when may a security interest be perfected in collateral?

Which of the following is a type of collateral involving rights evidenced by indispensable paper?

A surety may set off his claims against the creditor if the creditor is solvent.

A tangible or electronic record that evidences both a monetary interest and security interest in or a lease of specific goods is known as:

The promise of a surety is binding even without consideration.

The most common method of perfecting a security interest under Article 9 is filing a completed financing statement.

A buyer in the ordinary course of business takes collateral (other than farm products) free of any security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.

What term is used to describe the creation of a security interest that is enforceable against the debtor?

Mr.Chickilini is a surety for Wayne on a debt owed to Melvin.If Wayne fails to pay, what is Mr.Chickilini's defense to avoid payment of the debt?

Karl loaned Linda $100,000.Madeline agreed to act as surety for $100,000.Nora agreed to act as surety for $75,000 and Orville agreed to act as surety for $25,000.Linda later defaulted on the loan, and Karl is now demanding payment from Nora and Orville.What amount do Nora and Orville have to pay? If Nora and Orville pay, does Madeline have any obligation? Explain.

Automatic perfection means that: