Question 1

When Mark bought new office furniture on credit, Bartin's Office Supply Co.filed a financing statement.What would be required on the financing statement?

Accepted Answer

A)  Mark's signature. 
B)  Mark's name and an indication of what collateral is covered by the agreement. 
C)  The trade name of Mark's business. 
D)  All of these. 
A)  Mark's signature. 
B)  Mark's name and an indication of what collateral is covered by the agreement. 
C)  The trade name of Mark's business. 
D)  All of these.

Question 2

The principal debtor's lack of capacity due to his status as a minor may be used by the surety to avoid payment of the obligation.

Accepted Answer

A) True 
 B)False

Question 3

If the main purpose of the promisor (surety) is to obtain an economic benefit that he did not previously enjoy, the promise is not within the statute of frauds.

Accepted Answer

A) True 
 B)False

Question 4

A defense that can only be asserted by the principal debtor is called a:

Accepted Answer

A)  real defense. 
B)  joint defense. 
C)  personal defense. 
D)  subrogated defense. 
A)  real defense. 
B)  joint defense. 
C)  personal defense. 
D)  subrogated defense.

Question 5

A debtor need not sign the financing statement.

Accepted Answer

A) True 
 B)False

Question 6

If Regency Services, Inc.wishes to protect itself against the possible dishonesty of Chad, an employee who will be handling corporate funds, Regency may purchase a(n):

Accepted Answer

A)  fidelity bond. 
B)  judicial bond. 
C)  performance bond. 
D)  official bond. 
A)  fidelity bond. 
B)  judicial bond. 
C)  performance bond. 
D)  official bond.

Question 7

Upon the surety's payment of the principal debtor's entire obligation, the surety gets no rights.

Accepted Answer

A) True 
 B)False

Question 8

A security interest in consumer goods is always automatically perfected upon attachment.

Accepted Answer

A) True 
 B)False

Question 9

Jill owns and operates a donut shop.Under the Code, the flour, sugar, and other goods used by Jill to make donuts are classified as:

Accepted Answer

A)  farm products. 
B)  inventory. 
C)  consumer goods. 
D)  fixtures. 
A)  farm products. 
B)  inventory. 
C)  consumer goods. 
D)  fixtures.

Question 10

The right of exoneration allows the surety to require the principal debtor to pay his obligation to the creditor.

Accepted Answer

A) True 
 B)False

Question 11

If the debtor is in default and the secured party wants to repossess the collateral in order to sell it, he must get a court order to do so.

Accepted Answer

A) True 
 B)False

Question 12

The UCC defines a debtor's "rights in collateral" in Article 9.

Accepted Answer

A) True 
 B)False

Question 13

Subrogation includes:

Accepted Answer

A)  no rights against cosureties. 
B)  no rights against co-makers. 
C)  creditor's rights in security of the principal debtor. 
D)  creditor's rights against the principal debtor, but not including the creditor's priorities in a bankruptcy proceeding. 
A)  no rights against cosureties. 
B)  no rights against co-makers. 
C)  creditor's rights in security of the principal debtor. 
D)  creditor's rights against the principal debtor, but not including the creditor's priorities in a bankruptcy proceeding.

Question 14

Diane, who is seventeen years old, purchased an auto from Elvira on credit.Florence agreed to act as surety and signed a written surety agreement.At the time of purchase, Diane specifically asked Elvira about the condition of the car's motor and was told that it had just been replaced with a new one and was in fine condition.This was blatantly untrue, because Elvira knew it was in terrible shape and would only last a short time.The auto has now stopped running and Diane refuses to make any more payments.Elvira is now proceeding against Diane and Florence.What defenses, if any, are available to (a) Diane and (b) Florence?

Accepted Answer

(a) Diane is a minor.She may assert her

Question 15

Under the Code, collateral is classified according to:

Accepted Answer

A)  the fundamental rights of the secured party. 
B)  the fundamental rights of the debtor. 
C)  its nature and use. 
D)  None of these. 
A)  the fundamental rights of the secured party. 
B)  the fundamental rights of the debtor. 
C)  its nature and use. 
D)  None of these.

Question 16

A car buyer in the ordinary course of business will take free and clear of a security interest created by any person who owned the automobile prior to the dealer.

Accepted Answer

A) True 
 B)False

Question 17

A bond, which guarantees the performance of the terms of a contract, is a(n):

Accepted Answer

A)  judicial bond. 
B)  performance bond. 
C)  fidelity bond. 
D)  official bond. 
A)  judicial bond. 
B)  performance bond. 
C)  fidelity bond. 
D)  official bond.

Question 18

What contractual defenses are available to those parties involved in surety relationships?

Accepted Answer

A)  The nonexistence of the principal debtor's obligation. 
B)  Discharge of the principal debtor's obligation. 
C)  Modification of the principal debtor's contract. 
D)  All of these. 
A)  The nonexistence of the principal debtor's obligation. 
B)  Discharge of the principal debtor's obligation. 
C)  Modification of the principal debtor's contract. 
D)  All of these.

Question 19

Bill owns and operates a farm and a farm machinery dealership.Under the Code, a new tractor that Bill uses on his farm is classified as:

Accepted Answer

A)  consumer goods. 
B)  inventory. 
C)  equipment. 
D)  farm products. 
A)  consumer goods. 
B)  inventory. 
C)  equipment. 
D)  farm products.

Question 20

"Value" under Article 9 of the UCC is defined as including:

Accepted Answer

A)  consideration under contract law. 
B)  a binding commitment to extend credit. 
C)  antecedent debt. 
D)  All of these. 
A)  consideration under contract law. 
B)  a binding commitment to extend credit. 
C)  antecedent debt. 
D)  All of these.

Exam 37: Secured Transactions and Suretyship

When Mark bought new office furniture on credit, Bartin's Office Supply Co.filed a financing statement.What would be required on the financing statement?

The principal debtor's lack of capacity due to his status as a minor may be used by the surety to avoid payment of the obligation.

If the main purpose of the promisor (surety) is to obtain an economic benefit that he did not previously enjoy, the promise is not within the statute of frauds.

A defense that can only be asserted by the principal debtor is called a:

A debtor need not sign the financing statement.

If Regency Services, Inc.wishes to protect itself against the possible dishonesty of Chad, an employee who will be handling corporate funds, Regency may purchase a(n):

Upon the surety's payment of the principal debtor's entire obligation, the surety gets no rights.

A security interest in consumer goods is always automatically perfected upon attachment.

Jill owns and operates a donut shop.Under the Code, the flour, sugar, and other goods used by Jill to make donuts are classified as:

The right of exoneration allows the surety to require the principal debtor to pay his obligation to the creditor.

If the debtor is in default and the secured party wants to repossess the collateral in order to sell it, he must get a court order to do so.

The UCC defines a debtor's "rights in collateral" in Article 9.

Subrogation includes:

Under the Code, collateral is classified according to:

A car buyer in the ordinary course of business will take free and clear of a security interest created by any person who owned the automobile prior to the dealer.

A bond, which guarantees the performance of the terms of a contract, is a(n):

What contractual defenses are available to those parties involved in surety relationships?

Bill owns and operates a farm and a farm machinery dealership.Under the Code, a new tractor that Bill uses on his farm is classified as:

"Value" under Article 9 of the UCC is defined as including:

Introduction to Law

Business Ethicspart Ii: the Legal Environment of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Negligence and Strict Liabilitypart Iii: Contracts

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remediespart Iv: Sales

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remediespart V: Negotiable Instruments

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transferspart Vi: Agency

Relationship of Principal and Agent

Relationship With Third Partiespart Vii: Business Associations

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporationspart Viii: Debtor and Creditor Relations

Bankruptcypart Ix: Regulation of Business

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

International Business Lawpart X: Property

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

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