business law 24-28

The initial term for which a financing statement will be effective is:

5yrs

Which of the following is an example of a purchase money security interest in consumer goods

A doctor purchasing a TV/VCR unit on credit to place in her office waiting room. WRONG

Great State Bank took a security interest in Gresham, Inc."s meat processing equipment. Gresham defaulted on the loan. Which statement is correct?

Both a and b are courses of action that Great State Bank may follow

Jim agreed to show Donna"s car to a potential buyer. Donna was not able to be home since she had to attend a meeting. After showing the car, Jim left the keys in it and the car was stolen. Which statement is correct?

Since Jim is a gratuitous agent, he will be liable for the loss of the car if his conduct constitutes ordinary negligence. WRONG

Wedney, Inc. sold a meat processing machine to Yoro Chickens, taking a security interest in the machine. Yoro Chickens defaulted on the loan. Wedney repossessed the machine. Wedney would like to retain the machine to use as a model. Which of the following statements is correct

Since the machine is equipment, Wedney cannot retain the machine. Wedney must dispose of the collateral in a commercially reasonable manner*

Mrs. O"Leary hired Jenna to sell her house in Michigan. She executed a power of attorney in favor of Jenna authorizing her to do 'anything and everything associated with the sale of real estate, acting as a prudent person.' On May 30, Jenna finalized a deal with Brandon for the purchase of the house. Brandon and Jenna signed the real estate contract that day. Jenna learned the next day that Mrs. O"Leary had died May 29.

The contract is void since the agency terminated May 29.

Janet was employed as a sales representative for Esday, Inc. An appreciative customer gave her a diamond bracelet for all her hard work on a complicated contract. Can Janet keep the bracelet?

Yes, but only if she discloses the gift to Esday and Esday consents to her keeping the bracelet.

Wombart Manufacturing sells a machine on credit to Cryslie Printing Co. Wombart insists on a security interest in the machine to:

a &c

An agent may not engage in inappropriate behavior that reflects badly on the principal. This rule applies to conduct:

during both working hours and off-duty time.

As a general rule, an agent is liable on contracts entered into on behalf of a fully disclosed principal.

f

Micky, a mechanic, repaired Daphane"s Dodge. Daphane failed to pay the repair bill of $595. Since Micky was still storing the car, he could therefore claim a landlord"s lien on the car.

f

Pharm-Ace holds a patent on a drug. Pharm-Ace used the patent (evidenced by the patent certificate) to secure a $1 million loan from First Bank. The patent is chattel paper

f

Rob agrees to act as an agent for Diane in selling her car. Diane has a duty of loyalty to Rob.

f

The bankruptcy of an agent automatically terminates an agency relationship.

f

There is no way to attach a security interest in electronic chattel paper

f

Chance is a traveling marketing representative for a publishing company. He is an independent contractor. One afternoon while driving to a meeting, he negligently runs a stop sign and causes an accident. Judy is injured. Judy can:

hold chance only

The doctrine of estoppel would most often apply in situations of:

implied WRONG

Landscaper Lottie used her machinery, employee labor, and her expertise to landscape Opal"s new guest home. Opal fails to pay for the landscaping because she has run out of money. Lottie files a lien against the real property. This lien is called:

mechanic"s lien

When a principal is partially disclosed:

only the principal can be liable. WRONG

To perfect a security interest in a negotiable instrument, Second State Savings and Loan should

perfection is automatic*

Wanderlust gave a security interest in his Conestoga wagon to Iowa Bank who perfected its security interest by filing a financing statement with the appropriate officials in Iowa. Five months later, Wanderlust hit the trail again, moving to Montana. If Iowa Bank wants to continue its perfected interest in the Conestoga wagon, it should

re-perfect by filing a financing statement in the appropriate place in Montana, according to Montana law, within four months of Wanderlust"s entering Montana.

George"s Wholesale agrees to purchase 1,000 pounds of bananas from Chickadee Exports at 39 cents per pound. George"s does not have the money for the bananas now, but promises to pay in two months. Chickadee Exports wants to make the sale, but is worried about waiting for the payment, knowing the bananas are not 'appealing' collateral. So, Chickadee prepares an instrument claiming George"s $400 sorting machine as collateral. George"s never signs the agreement, but accepts the shipment of bananas. This is an example of a

security interest WRONG

Tom, the production manager at Esday, was told by his supervisor to hire Elton, a 15- year-old, to operate an industrial machine. Hiring the 15-year-old violates the child labor laws. Tom:

should not hire Elton. Tom has a duty to obey Esday"s instructions only if they are legal and ethical.

An agent is always liable for his or her own torts committed within the scope of the agency relationship.

t

First Federal had a perfected security interest in Vicor"s printing press. Second Credit had a security interest in the same press, but its interest was not perfected. First Federal takes priority over Second Credit

t

For a security interest to attach, there must be an agreement

t

Generally, either party to an agency relationship has the power to terminate it at any time.

t

If Denise is hired to work as a cashier, she has the implied authority to do acts reasonably necessary to carry out her job.

t

If apparent authority is present, the principal is liable for even the unauthorized acts of the agent.

t

Larry decided to relocate to Germany. Larry hired Happy Homes, Inc. to find a buyer and contract for the sale of his house in the U.S. The agency relationship between Larry and Happy Homes must be evidenced with a written agreement.

t

Masterview, Inc. purchased a new computer system, which included some computer programs. When Masterview developed financial troubles, two competing creditors of Masterview claimed the right to repossess the computer system and the programs. The UCC distinguishes 'software' from 'goods' and treats them differently for some purposes, which would be important in this situation.

t

Under Revised Article 9 of the UCC, electronic chattel paper may be used as collateral in a secured transaction.

t

If the agent is disloyal to the principal:

the agency agreement automatically terminates and the principal may rescind the transaction. WRONG

At her neighbor"s garage sale, Constance buys a vanity dressing table from her neighbor, Carlos, for $160. Constance purchased the vanity table for her own personal use, without any knowledge that Carlos had signed a security agreement giving All Purpose Furniture, Inc. a security interest in the vanity table. All Purpose Furniture did not file a financing statement. Constance does not know that Carlos is still paying off the purchase money security interest and owes All Purpose Furniture, Inc. $400. Under these circumstances:

Constance takes the vanity table subject to All Purpose"s security interest because All Purpose"s security interest automatically perfected. A perfected security interest takes priority. WRONG

HBR Accounting hired Denise, a CPA, to prepare tax returns. Which statement is correct?

Denise, as a CPA, is an agent with special skills. She is held to a higher duty than ordinary negligence.

A PMSI can be created only in goods and software.

F

Wedney, Inc. has a purchase money security interest in one of Yoro Chicken"s meat processing machines. Wedney filed a financing statement on the day the machine was delivered, perfecting its interest. Great State Bank already had a security interest in the machine. Which party has superior priority rights in the meat processing machine?

Great State Bank, since it had an earlier security interest. WRONG

Linda borrowed $2,500 from Tonya. They agreed that Tonya could take a grouping of Linda"s antiques as collateral. If Linda could not pay, then Tonya could sell the antiques to recover her money. When Linda could not pay off the loan, Tonya sold the antiques and paid Linda the proceeds after deducting the balance of the loan. Which of the following statements is correct?

all

The equal dignities rule relative to agency law applies to an agent:

authorized to enter into a two-year lease for her principal. WRONG

Morefield Custom Design sends 30 recliners by rail to Danville Furniture. To show where the goods will be shipped and who gets them when they arrive, Morefield will obtain ____, which can be used as collateral in a secured transaction

bill of lading