Unit 4 Biz Law test

Which is an unconditional order to pay?

"I will pay $5,000 for the painting."

Dieter is a debtor to Maxwell, the secured party. Dieter lives in Ohio and works in Kentucky. Maxwell lives in Indiana and works in Iowa. Where must the secured party file the financing statement?

Ohio

Maia wrote a check which said, "Pay to the order of Kevin Mathews $10.97." The next line of the check stated, "One thousand ninety-seven Dollars." In applying the rules of interpretation, how much should the drawee pay?

One thousand, ninety-seven dollars or $1,097.00. Words control over numbers.

In which case would the holder in due course not receive payment?

Ricardo forges Amberly's name to a promissory note and sells it to Divine.

Great State Bank loans money to Seth, securing the loan with property owned by Seth. Great State Bank is advised by its attorney to file a financing statement. Great State Bank doesn't understand why it should spend the extra money for this filing, since Seth has told them that he has no other creditors. Why should Great State Bank file a financing statement?

The financing statement will protect Great State's priority rights with other creditors by giving notice to other creditors that it claims a security interest in the collateral.

Generally, Rita signs her name using an infinity symbol rather than her legal name. Rita signed an instrument using this symbol. Which statement is correct?

The instrument can be negotiable. Rita intended to indicate her signature.

An instrument is negotiable if it satisfies six standards. Which of the following is a standard of negotiability?

The instrument must state a definite sum of money.

George's Wholesaling 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 George's business but needs the money now. Chickadee (as drawer) prepares an instrument ordering George's (as drawee) to pay $390 to Primary Bank (the payee). This is an example of

a trade acceptance.

Value means that the holder of an instrument

has already done something in exchange for the instrument.

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 a(n)

mechanic's lien; it was created by improving real property.

Sprock is a holder in due course on an instrument issued by Klingon. Which of the following defenses could be successfully raised by Klingon?

mental incapacity

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.

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 free of All Purpose's security interest because she is a buyer of consumer goods.

Lucky loses in a high-stakes poker game to Fat Chance. To pay his debt, Lucky writes a check to Fat Chance, who negotiates the check to Convenient, who then tries to cash the check at Lucky's bank. Lucky has already stopped payment on the check, so the check is not honored by his bank. Convenient then tries to collect the check by suing Lucky. High-stakes poker games are illegal in this state. Which statement is correct?

Convenient will not prevail.

Which of the following is correct concerning termination statements?

For consumer debt, the secured party must complete a termination statement in every place that it filed a financing statement.

Florence borrows $1,500 from Fremont, leaving her gold necklace with Fremont as collateral. Two weeks earlier, Florence had borrowed $1,000 from Corner Bank. Florence signed a security agreement and a financing statement giving Corner Bank a security interest in the same gold necklace. The financing statement is filed in the appropriate location. If Florence defaults on both loans, which creditor has the superior rights to the necklace?

Fremont, because possession takes priority over filing.

Eduardo is starting a floral shop and owns a 10-year-old delivery van. He borrows $50,000 from First National Bank, which takes a security interest in the van. When Eduardo purchases a greenhouse in which to grow plants and a large cooler to keep them fresh, the bank's security interest attaches to these items, which are referred to as

after-acquired property.

A "holder" of order paper can be described as

any person in possession of the instrument if it is payable to or indorsed to him.

The property subject to a security interest is called

collateral.

If repossessed collateral is sold or otherwise disposed of by the creditor, then the time, place, manner, and method of disposal must be

commercially reasonable.