Question 1

An interest in personal property that a creditor obtains to secure payment of an obligation is a security interest.

Accepted Answer

A) True 
 B)False

Question 2

A purchase money security interest in noninventory collateral prevails over a prior perfected security interest if the:

Accepted Answer

A)  purchase money security interest is perfected at the time the debtor takes possession or within 20 days afterward. 
B)  notification states that the person expects to acquire a purchase money security interest in inventory of the debtor and describes the inventory. 
C)  holder of the competing security interest received notification within five years before the debtor receives the inventory. 
D)  purchase money secured party gives notification in writing to the prior secured creditor before the debtor receives the inventory. 
A)  purchase money security interest is perfected at the time the debtor takes possession or within 20 days afterward. 
B)  notification states that the person expects to acquire a purchase money security interest in inventory of the debtor and describes the inventory. 
C)  holder of the competing security interest received notification within five years before the debtor receives the inventory. 
D)  purchase money secured party gives notification in writing to the prior secured creditor before the debtor receives the inventory.

Question 3

Obtaining a security interest enforceable against third parties is a:

Accepted Answer

A)  two-step process consisting of attachment and priority. 
B)  two-step process consisting of priority and perfection. 
C)  three-step process consisting of priority, attachment, and perfection. 
D)  two-step process consisting of attachment and perfection. 
A)  two-step process consisting of attachment and priority. 
B)  two-step process consisting of priority and perfection. 
C)  three-step process consisting of priority, attachment, and perfection. 
D)  two-step process consisting of attachment and perfection.

Question 4

Explain the meaning of a purchase money security interest in consumer goods with an example.

Accepted Answer

Students' answers may vary.A creditor wh

Question 5

A retailer of consumer goods who relies on attachment of a security interest to perfect its security interest prevails over other creditors of the debtor-buyer.

Accepted Answer

A) True 
 B)False

Question 6

A financing statement is valid:

Accepted Answer

A)  for a period of five years from the date of filing. 
B)  till a continuation statement is filed after its expiry. 
C)  till the creditor is in possession of the collateral. 
D)  for a period of ten years from the date of filing. 
A)  for a period of five years from the date of filing. 
B)  till a continuation statement is filed after its expiry. 
C)  till the creditor is in possession of the collateral. 
D)  for a period of ten years from the date of filing.

Question 7

A creditor can perfect a security interest by filing a public notice of the security interest.

Accepted Answer

A) True 
 B)False

Question 8

Change of possession of commercial collateral from a debtor to a creditor/secured party perfects the security interest.

Accepted Answer

A) True 
 B)False

Question 9

If the proceeds of sale of collateral are not sufficient to satisfy the debt,then the creditor is usually entitled to a:

Accepted Answer

A)  future advance. 
B)  deficiency judgment. 
C)  fixture filing. 
D)  warehousing arrangement. 
A)  future advance. 
B)  deficiency judgment. 
C)  fixture filing. 
D)  warehousing arrangement.

Question 10

Which of the following statements is true of an artisan's lien?

Accepted Answer

A)  It is ineffective against other creditors unless a proper financing statement has been filed. 
B)  It may be given priority even over perfected security interests in collateral if the artisan has possession of the goods. 
C)  It is invalid if the artisan did not inform the debtor that he intended to claim a lien before beginning the work. 
D)  It gives the retailer prevalence over someone who buys the collateral from the debtor if the buyer gives value for goods. 
A)  It is ineffective against other creditors unless a proper financing statement has been filed. 
B)  It may be given priority even over perfected security interests in collateral if the artisan has possession of the goods. 
C)  It is invalid if the artisan did not inform the debtor that he intended to claim a lien before beginning the work. 
D)  It gives the retailer prevalence over someone who buys the collateral from the debtor if the buyer gives value for goods.

Question 11

Explain a creditor's three potential courses of action upon default.

Accepted Answer

If a debtor defaults,a secured creditor

Question 12

Which of the following statements is true of change of possession?

Accepted Answer

A)  It is the most common way of perfecting a security interest. 
B)  It is the only way to perfect a security interest in money. 
C)  It is the most convenient way of perfecting a security interest in consumer goods. 
D)  It is not a practical method of perfecting security interests in commercial collateral. 
A)  It is the most common way of perfecting a security interest. 
B)  It is the only way to perfect a security interest in money. 
C)  It is the most convenient way of perfecting a security interest in consumer goods. 
D)  It is not a practical method of perfecting security interests in commercial collateral.

Question 13

A perfected security interest:

Accepted Answer

A)  protects a creditor's security interest in collateral against other creditors of a debtor. 
B)  becomes effective even when a creditor does not give anything of value to a debtor. 
C)  gives a creditor protection against other creditors of the collateral but not against other purchasers of the collateral. 
D)  does not provide a creditor rights vis-à-vis a debtor. 
A)  protects a creditor's security interest in collateral against other creditors of a debtor. 
B)  becomes effective even when a creditor does not give anything of value to a debtor. 
C)  gives a creditor protection against other creditors of the collateral but not against other purchasers of the collateral. 
D)  does not provide a creditor rights vis-à-vis a debtor.

Question 14

Under the revised Article 9 of the Uniform Commercial Code,_____.

Accepted Answer

A)  a creditor cannot protect her security interest in collateral against other creditors of a debtor and other third persons 
B)  a security interest in an after-acquired property cannot attach to that property until the debtor obtains some property rights in the new property 
C)  a creditor cannot use the collateral to protect his interest in repayment of the money advanced to a debtor by covering future advances 
D)  the attachment of a security interest to the collateral does not automatically give a secured party a security interest in the proceeds on the disposal of the collateral by the debtor 
A)  a creditor cannot protect her security interest in collateral against other creditors of a debtor and other third persons 
B)  a security interest in an after-acquired property cannot attach to that property until the debtor obtains some property rights in the new property 
C)  a creditor cannot use the collateral to protect his interest in repayment of the money advanced to a debtor by covering future advances 
D)  the attachment of a security interest to the collateral does not automatically give a secured party a security interest in the proceeds on the disposal of the collateral by the debtor

Question 15

Identify the statement that is true of perfection by attachment of consumer goods.

Accepted Answer

A)  If the secured party filed a financing statement for the collateral, the new buyer takes the collateral free of any security interest. 
B)  If the goods are to become fixtures, the creditor can get full protection through perfection by attachment. 
C)  If the new buyer buys from the debtor without knowledge of the interest, for value, and for personal use, the new buyer takes free of the security interest. 
D)  If the consumer goods are motor vehicles for which the state issues certificates of title, perfection by attachment to the vehicle is effective. 
A)  If the secured party filed a financing statement for the collateral, the new buyer takes the collateral free of any security interest. 
B)  If the goods are to become fixtures, the creditor can get full protection through perfection by attachment. 
C)  If the new buyer buys from the debtor without knowledge of the interest, for value, and for personal use, the new buyer takes free of the security interest. 
D)  If the consumer goods are motor vehicles for which the state issues certificates of title, perfection by attachment to the vehicle is effective.

Question 16

A creditor who loans money to enable a consumer to buy goods can obtain perfection of a security interest by attaching the security interest to the goods.

Accepted Answer

A) True 
 B)False

Question 17

Maya borrowed money from Solvent National Bank and gave the bank a security interest in her business equipment,both present and after-acquired.She later borrowed money from Resilient Savings and Loans to purchase additional business equipment.Three weeks after Maya purchased the new equipment and took possession of it,an employee of Resilient discovered the bank has filed financing statement concerning the bank's loan to Maya.Resilient immediately recorded a financing statement,so as to perfect its purchase money security interest in the equipment.Maya then defaulted on the obligation owed to the bank and on the obligation owed to Resilient.Who has the first priority security interest in the equipment purchased by Maya with the funds borrowed from Resilient Savings and Loans?

Accepted Answer

A)  Solvent National Bank 
B)  Resilient Savings and Loans 
C)  Both Resilient and Solvent have equal priority 
D)  Both Maya and Resilient have equal priority 
A)  Solvent National Bank 
B)  Resilient Savings and Loans 
C)  Both Resilient and Solvent have equal priority 
D)  Both Maya and Resilient have equal priority

Question 18

Possession of collateral by _____ is often the best way to perfect a security interest in chattel paper and negotiable documents of title.

Accepted Answer

A)  the creditor 
B)  the debtor 
C)  the court 
D)  a third secure party 
A)  the creditor 
B)  the debtor 
C)  the court 
D)  a third secure party

Question 19

If state law requires a certificate of title for motor vehicles,then a creditor who takes a security interest in a vehicle can rely on attachment of its security interest in the car to perfect it.

Accepted Answer

A) True 
 B)False

Question 20

When a consumer debtor completely fulfills all debts and obligations secured by a financing statement,he or she is entitled to a:

Accepted Answer

A)  continuation statement. 
B)  termination statement. 
C)  statement of benefits. 
D)  statement of claims and defenses. 
A)  continuation statement. 
B)  termination statement. 
C)  statement of benefits. 
D)  statement of claims and defenses.

Exam 43: Security Interests in Personal Property

An interest in personal property that a creditor obtains to secure payment of an obligation is a security interest.

A purchase money security interest in noninventory collateral prevails over a prior perfected security interest if the:

Obtaining a security interest enforceable against third parties is a:

Explain the meaning of a purchase money security interest in consumer goods with an example.

A retailer of consumer goods who relies on attachment of a security interest to perfect its security interest prevails over other creditors of the debtor-buyer.

A financing statement is valid:

A creditor can perfect a security interest by filing a public notice of the security interest.

Change of possession of commercial collateral from a debtor to a creditor/secured party perfects the security interest.

If the proceeds of sale of collateral are not sufficient to satisfy the debt,then the creditor is usually entitled to a:

Which of the following statements is true of an artisan's lien?

Explain a creditor's three potential courses of action upon default.

Which of the following statements is true of change of possession?

A perfected security interest:

Under the revised Article 9 of the Uniform Commercial Code,_____.

Identify the statement that is true of perfection by attachment of consumer goods.

A creditor who loans money to enable a consumer to buy goods can obtain perfection of a security interest by attaching the security interest to the goods.

Possession of collateral by _____ is often the best way to perfect a security interest in chattel paper and negotiable documents of title.

If state law requires a certificate of title for motor vehicles,then a creditor who takes a security interest in a vehicle can rely on attachment of its security interest in the car to perfect it.

When a consumer debtor completely fulfills all debts and obligations secured by a financing statement,he or she is entitled to a:

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Propertypart Two Contracts

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remediespart Three Sales

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contractspart Four Agency and Employment

The Agency Relationship-Creation, duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws-Part Five Business Organizations

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountantspart Six Property

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance-Part Seven Commercial Paper

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers-Part Eight Credit Transactions

Introduction to Security

Bankruptcy-Part Nine Government Regulation

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

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