Question 1

Payment of the debt or performance of the obligation discharges both the principal debtor and the surety.

Accepted Answer

A) True 
 B)False

Question 2

Bill lends Harvey $1,500 and the loan is secured by Harvey's furniture.If Bill files a financing statement on January 30, 2012 how long will it be effective?

Accepted Answer

A)  For 30 days. 
B)  Until July 30, 2012. 
C)  Until January 30, 2017. 
D)  Until January 30, 2032 
A)  For 30 days. 
B)  Until July 30, 2012. 
C)  Until January 30, 2017. 
D)  Until January 30, 2032

Question 3

Every consensual secured transaction involves:

Accepted Answer

A)  a debtor and  a secured party. 
B)  collateral. 
C)  a security agreement and a security interest. 
D)  All of these. 
A)  a debtor and  a secured party. 
B)  collateral. 
C)  a security agreement and a security interest. 
D)  All of these.

Question 4

First Finance Company filed its financing statement for a purchase money security interest in Donald's lawn tractor on March 1.Donald purchased the lawn tractor on February 21.If Donald files for bankruptcy on February 28, the trustee will have priority because the bankruptcy petition is filed before the creditor perfects.

Accepted Answer

A) True 
 B)False

Question 5

Monica owes a debt to Patricia, and Andrew is a surety for Monica.   If Monica properly tenders full payment and Patricia refuses it, both Monica and Andrew are discharged from the debt.
 ​

Accepted Answer

A) True 
 B)False

Question 6

Gary decided to borrow from Jones Bank since it promised that his loan interest rate would be systematically reduced every year when the board met.The loan rate was never reduced, but actually increased monthly.Gary refused to pay the interest demanded and sued for rescission of the contract.The bank attempted to collect from Lewis, a surety under the loan.Does Lewis have to pay?

Accepted Answer

A)  No, because the surety stands in the shoes of the debtor for all purposes. 
B)  Yes, because there is no defense. 
C)  Yes, since the surety obligation is separate from the underlying contract. 
D)  No, because a fraud perpetrated upon Gary will be a defense. 
A)  No, because the surety stands in the shoes of the debtor for all purposes. 
B)  Yes, because there is no defense. 
C)  Yes, since the surety obligation is separate from the underlying contract. 
D)  No, because a fraud perpetrated upon Gary will be a defense.

Question 7

Mary financed her 72" high-definition TV with a bank, but is now delinquent on her payments.The bank holds a security interest in the TV.In most states, when Mary is not at home and without her knowledge, bank personnel may enter Mary's home to repossess the TV.

Accepted Answer

A) True 
 B)False

Question 8

Under Article 9 of the UCC, a pledge is:

Accepted Answer

A)  the delivery of personal property to a creditor as security for the payment of a debt. 
B)  a form of indispensable paper. 
C)  a requirement that the secured party and the debtor agree to certain collateral. 
D)  an equipment transfer before a forced sale. 
A)  the delivery of personal property to a creditor as security for the payment of a debt. 
B)  a form of indispensable paper. 
C)  a requirement that the secured party and the debtor agree to certain collateral. 
D)  an equipment transfer before a forced sale.

Question 9

Attachment must occur in order to make a security interest enforceable against the debtor and against third parties.

Accepted Answer

A) True 
 B)False

Question 10

Article 9 of the UCC governs financing transactions involving security interests in real property.

Accepted Answer

A) True 
 B)False

Question 11

A security interest in electronic chattel paper is perfected by automatic perfection.

Accepted Answer

A) True 
 B)False

Question 12

The surety does not have the right of contribution from cosureties.

Accepted Answer

A) True 
 B)False

Question 13

If the principal debtor defaults, the surety has rights against the principal debtor, third parties, and cosureties.These rights would include:

Accepted Answer

A)  exoneration. 
B)  contribution. 
C)  reimbursement. 
D)  subrogation. 
E)  All of these. 
A)  exoneration. 
B)  contribution. 
C)  reimbursement. 
D)  subrogation. 
E)  All of these.

Question 14

With the exception of pledges, a security agreement must:

Accepted Answer

A)  be in an authenticated record. 
B)  contain at least a generic description of the collateral, such as "all my personal property." 
C)  be signed by the debtor with his personal, not business, name. 
D)  All of these. 
A)  be in an authenticated record. 
B)  contain at least a generic description of the collateral, such as "all my personal property." 
C)  be signed by the debtor with his personal, not business, name. 
D)  All of these.

Question 15

"Attachment" occurs when a secured party gives value, the debtor has acquired rights in the collateral, and:

Accepted Answer

A)  the collateral is delivered to the borrower. 
B)  the debtor has completed his obligation to pay. 
C)  the debtor and secured party have an agreement. 
D)  All of these. 
A)  the collateral is delivered to the borrower. 
B)  the debtor has completed his obligation to pay. 
C)  the debtor and secured party have an agreement. 
D)  All of these.

Question 16

Dr.Wells purchased a refrigerator for use in storing medications at his office.The refrigerator will be classified as:

Accepted Answer

A)  equipment. 
B)  consumer goods. 
C)  inventory. 
D)  a fixture. 
A)  equipment. 
B)  consumer goods. 
C)  inventory. 
D)  a fixture.

Question 17

A security interest:

Accepted Answer

A)  in fixtures, even if perfected, will not have priority over a mortgage in the real property to which the goods are attached. 
B)  may arise in fixtures under UCC Article 9. 
C)  is an interest only in personal property to secure payment or performance of an obligation. 
D)  is effective against third parties, but not the debtor, when it "attaches." 
A)  in fixtures, even if perfected, will not have priority over a mortgage in the real property to which the goods are attached. 
B)  may arise in fixtures under UCC Article 9. 
C)  is an interest only in personal property to secure payment or performance of an obligation. 
D)  is effective against third parties, but not the debtor, when it "attaches."

Question 18

Possession is available as a means of perfecting a security interest in accounts and letter-of-credit rights.

Accepted Answer

A) True 
 B)False

Question 19

Article 9 of the UCC applies to a security interest without consent that arises by operation of law, such as a mechanic's lien.

Accepted Answer

A) True 
 B)False

Question 20

Hank's tractor is collateral for a loan and Hank moves to the next county.In most states, the security instrument must be re-filed in the proper county or it will render the security interest ineffective.

Accepted Answer

A) True 
 B)False

Exam 37: Secured Transactions and Suretyship

Payment of the debt or performance of the obligation discharges both the principal debtor and the surety.

Bill lends Harvey $1,500 and the loan is secured by Harvey's furniture.If Bill files a financing statement on January 30, 2012 how long will it be effective?

Every consensual secured transaction involves:

Monica owes a debt to Patricia, and Andrew is a surety for Monica. If Monica properly tenders full payment and Patricia refuses it, both Monica and Andrew are discharged from the debt. ​

Mary financed her 72" high-definition TV with a bank, but is now delinquent on her payments.The bank holds a security interest in the TV.In most states, when Mary is not at home and without her knowledge, bank personnel may enter Mary's home to repossess the TV.

Under Article 9 of the UCC, a pledge is:

Attachment must occur in order to make a security interest enforceable against the debtor and against third parties.

Article 9 of the UCC governs financing transactions involving security interests in real property.

A security interest in electronic chattel paper is perfected by automatic perfection.

The surety does not have the right of contribution from cosureties.

If the principal debtor defaults, the surety has rights against the principal debtor, third parties, and cosureties.These rights would include:

With the exception of pledges, a security agreement must:

"Attachment" occurs when a secured party gives value, the debtor has acquired rights in the collateral, and:

Dr.Wells purchased a refrigerator for use in storing medications at his office.The refrigerator will be classified as:

A security interest:

Possession is available as a means of perfecting a security interest in accounts and letter-of-credit rights.

Article 9 of the UCC applies to a security interest without consent that arises by operation of law, such as a mechanic's lien.

Hank's tractor is collateral for a loan and Hank moves to the next county.In most states, the security instrument must be re-filed in the proper county or it will render the security interest ineffective.

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

Filters

Monica owes a debt to Patricia, and Andrew is a surety for Monica. If Monica properly tenders full payment and Patricia refuses it, both Monica and Andrew are discharged from the debt.