ACCY 411 19.6-
A filing requirement for perfection applies to which of the following transactions under Article 9 (Secured Transactions) of the Uniform Commercial Code? A. The factoring of a significant amount of the assignor's accounts receivable. B. A collateralized bank loan, with certificated securities serving as the collateral. C. The transfer of an interest in a life insurance policy to secure a loan. D. The retention of title by a seller of land to secure payment under the terms of a land contract.
A
A fixture is a good that has become so related to particular real property that an interest in the fixture arises under real property law. Perfection of a security interest in a fixture usually requires A. Filing of a financing statement in the office where a mortgage on the real estate would be recorded. B. Filing in the office where financing statements covering other kinds of goods are recorded. C. No filing if the secured party has a purchase money security interest. D. Filing in both the personal property and real estate records.
A
A secured creditor wants to file a financing statement to perfect its security interest. Under the UCC Secured Transactions Article, which of the following must be included in the financing statement? A. An indication of the collateral. B. An after-acquired property provision. C. The creditor's signature. D. The collateral's location.
A
Burn Manufacturing borrowed $500,000 from Howard Finance Co., secured by Burn's current and future inventory, accounts receivable, and its proceeds. Burn's representative authenticated a sufficient security agreement that described the collateral. The security agreement was filed in the appropriate state office. Burn subsequently defaulted on the repayment of the loan, and Howard attempted to enforce its security interest. Burn contended that Howard's security interest was unenforceable. In addition, Green, who subsequently gave credit to Burn without knowledge of Howard's security interest and filed a financing statement but did not have a purchase money security interest (PMSI) in inventory, is also attempting to defeat Howard's alleged security interest. The security interest in question is valid with respect to A. Both Burn and Green. B. Neither Burn nor Green. C. Burn but not Green. D. Green but not Burn.
A
Case Corporation manufactures electric drills and sells them to retail hardware stores. Under the Uniform Commercial Code, it is likely that A. The drills are inventory in Case's hands. B. The drills are equipment in Case's hands. C. The raw materials on hand to be used in the manufacturing of the drills are not inventory in Case's hands. D. The drills are considered equipment in the hands of the hardware stores who purchased them.
A
Edie owned and operated a bowling alley. She obtained a loan from Bank secured by "the equipment and all other chattels and personal property used in the business." Bank properly filed a financing statement. Edie then borrowed funds from S & L, giving a first mortgage on "all real property used in the business." Edie became insolvent and filed a petition in bankruptcy. Which of the following is true? A. Bank is entitled to resort to the personal property even against a trustee in bankruptcy. B. Bank has a priority in bankruptcy and is entitled to defeat the claims of all creditors that are asserted against the personal property. C. Bank has a security interest in Edie's central air conditioning system. D. Edie's sale of all the business property to a bona fide purchaser will defeat Bank's security interest.
A
Jay Thrush, a wholesaler of television sets, contracted to sell 100 sets to Kara Kelly, a retailer. Kelly signed a security agreement with the 100 sets as collateral. The security agreement provided that Thrush's security interest extended to the inventory, to any proceeds therefrom, and to the after-acquired inventory of Kelly. Thrush filed his security interest. Later, Kelly sold one of the sets to Myra Haynes who purchased with knowledge of Thrush's perfected security interest. Haynes gave a note for the purchase price and signed a security agreement using the set as collateral. Kelly is now in default. Thrush can A. Not repossess the set from Haynes but is entitled to any payments Haynes makes to Kelly on her note. B. Repossess the set from Haynes because he has a purchase money security interest. C. Repossess the set because his perfection is first, and first in time is first in right. D. Repossess the set in Haynes's possession because Haynes knew of Thrush's perfected security interest at the time of purchase.
A
Mozart Pianos has a perfected security interest in pianos owned by the Virtuoso Piano School. Virtuoso sends one of the pianos to Rachmaninoff Repair Service, which makes extensive repairs to the instrument. Virtuoso is unable to make payment for the repairs, and the piano remains in Rachmaninoff's possession. A state statute establishes an artisan's lien but is silent with regard to priority as against a perfected security interest. A. Rachmaninoff will prevail in a priority contest because the statute did not expressly provide that the security interest took priority. B. Mozart will prevail because its interest was perfected before Rachmaninoff gained possession. C. Mozart will prevail because its interest was first in time. D. Rachmaninoff will prevail because it has perfected by possession, which is superior to perfection by filing.
A
Mozart Pianos of Florida crafted and sold three pianos to Virtuoso Piano School of Vandelay, Florida in a credit transaction. Mozart properly filed a 5-year financing statement with regard to the pianos in Florida on February 2, the day after the sale. On May 2 of the same year, Virtuoso moved its business to Atlanta, Georgia. On September 1, Mozart properly filed a financing statement in Georgia. What is the status of Mozart's security interest? A. Mozart's security interest was continuously perfected. B. Mozart's security interest was unperfected during the interval of May 2 through September 1. C. Mozart's filing on September 1 was retroactive to May 2. D. Mozart's Georgia filing was unnecessary to continue perfection.
A
Retailer Corp. was in need of financing. To secure a loan, it made an oral assignment of its accounts receivable to J. Roe, a local investor, under which Roe lent Retailer, on a continuing basis, 90% of the face value of the assigned accounts receivable. Retailer collected from the account debtors and remitted to Roe at intervals. Before the debt was paid, Retailer filed a petition in bankruptcy. Which of the following is true? A. As between the account debtors and Roe, the assignment is not an enforceable security interest. B. Roe is a secured creditor to the extent of the unpaid debt. C. Other unpaid creditors of Retailer Corp. who knew of the assignment are bound by its terms. D. An assignment of accounts, to be valid, requires the debtors owing the accounts to be notified.
A
Roth and Dixon both claim a security interest in the same collateral. Roth's security interest attached on January 1, and it was perfected by filing on March 1. Dixon's security interest attached on February 1, and it was perfected on April 1 by taking possession of the collateral. Which of the following statements is true? A. Roth's security interest has priority because Roth perfected before Dixon perfected. B. Dixon's security interest has priority because Dixon's interest attached before Roth's interest was perfected. C. Roth's security interest has priority because Roth's security interest attached before Dixon's security interest attached. D. Dixon's security interest has priority because Dixon is in possession of the collateral.
A
Tawney Manufacturing approached Worldwide Lenders for a loan of $50,000 to purchase vital components it used in its manufacturing process. Worldwide decided to grant the loan but only if Tawney would agree to a field warehousing arrangement. Pursuant to their understanding, Worldwide paid for the purchase of the components, took a negotiable bill of lading for them, and surrendered the bill of lading in exchange for negotiable warehouse receipts issued by the bonded warehouse company that had established a field warehouse in Tawney's storage facility. Worldwide did not file a financing statement. Under the circumstances, Worldwide A. Has a security interest in the goods that has attached and is perfected. B. Does not have a security interest that has attached because Tawney has not signed a security agreement. C. Must file an executed financing statement in order to perfect its security interest. D. Must not relinquish possession of any of the components to Tawney for whatever purpose, unless it is paid in cash for those released.
A
Under the Secured Transactions Article of the UCC, what would be the order of priority for the following nonpurchase money security interests in consumer goods? I. Financing statement filed on April 1 II. Possession of the collateral by a creditor on April 10 III. Security interest perfected on April 15 A. I, II, III. B. II, I, III. C. II, III, I. D. III, II, I.
A
Under the Secured Transactions Article of the UCC, which of the following remedies is available to a secured creditor when a debtor fails to make a payment when due? Proceed against the Collateral/ Obtain a General Judgement against the Debtor A. Yes / Yes B. Yes / No C. No/ Yes D. No/ No
A
Under the UCC Secured Transactions Article, for a security interest to attach, the A. Debtor must agree to the creation of the security interest. B. Creditor must properly file a financing statement. C. Debtor must have title to the collateral. D. Creditor must be in possession of part of the collateral.
A
Under the UCC Secured Transactions Article, which of the following after-acquired property may be covered by a debtor's security agreement with a secured lender? Inventory /Equipment A.Yes/Yes B.Yes/No C.No/Yes D.No/No
A
Under the UCC Secured Transactions Article, which of the following remedies will Hale have? A. Obtain a deficiency judgment against Drew for the amount owed. B. Sell the computer and retain any surplus over the amount owed. C. Retain the computer over Drew's objection. D. Sell the computer without notifying Drew.
A
Under the UCC Secured Transactions Article, which of the following statements is most likely true concerning the disposition of collateral by a secured creditor after a debtor's default? A. A good-faith transferee for value and without knowledge of any defects in the sale takes free of any subordinate liens or security interests. B. The debtor may not redeem the collateral after the default. C. Secured creditors with subordinate claims retain the right to redeem the collateral after the collateral is sold to a third party. D. The collateral may only be disposed of at a public sale.
A
When collateral covered under the Secured Transactions Article of the UCC is in the secured party's possession, A. The risk of accidental loss is on the debtor to the extent of any deficiency in any effective insurance coverage. B. The secured party will lose his or her security interest if (s)he commingles fungible collateral. C. Reasonable expenses incurred to preserve the collateral are chargeable to the secured party. D. The secured party may not operate the collateral.
A
With regard to a prior perfected security interest in goods for which a financing statement has been filed, which of the following parties is most likely to have a superior interest in the same collateral? A. A buyer of goods in the ordinary course of business. B. A subsequent buyer of consumer goods who purchased the goods from another consumer. C. The trustee in bankruptcy of the debtor. D. Lien creditors of the debtor.
A
Clear Lake Finance, a secured party under UCC Article 9, has perfected a security interest in certain personal property of the debtor, Clara, by taking possession. Which of the following statements is false? A. To maintain perfection, Clear Lake can file a financing statement. B. If Clear Lake's employee makes an unauthorized use of Clara's collateral, Clear Lake can avoid liability by showing that it exercised reasonable care to prevent such occurrences. C. Clear Lake will be held strictly liable if delivery of the collateral is made to someone other than Clara, her agent, or her assignee. D. While in possession of Clara's property, Clear Lake must exercise reasonable care and is liable for damage caused by its negligence.
B
Cross has an unperfected security interest in the inventory of Safe, Inc. The unperfected security interest A. Is superior to the interest of subsequent lenders who obtain a perfected security interest in the property. B. Is subordinate to lien creditors of Safe who become such prior to any subsequent perfection by Cross. C. Causes Cross to lose important rights against Safe as an entity. D. May only be perfected by filing a financing statement.
B
For purposes of the Secured Transactions Article of the Uniform Commercial Code, a security interest includes A. An interest in any property that secures payment or performance of an obligation. B. An interest in personal property or fixtures that secures payment or performance of an obligation. C. The special interest of a buyer of goods acquired on identification of the goods to a contract for sale. D. The interest of a consignor when title is retained regardless of whether the arrangement is intended as security.
B
Lombard, Inc., manufactures exclusive designer apparel. It sells through franchised clothing stores on consignment, retaining a security interest in the goods. Gifford is one of Lombard's franchisees pursuant to a detailed contract signed by both Lombard and Gifford. For the security interest to be valid against Gifford with respect to the designer apparel in Gifford's possession, Lombard A. Must retain title to the goods. B. Does not have to do anything further. C. Must file a financing statement. D. Must perfect its security interest against Gifford's creditors.
B
Maxim Corporation, a wholesaler, was indebted to the Wilson Manufacturing Corporation in the amount of $50,000 arising out of the sale of goods delivered to Maxim on credit. Maxim authenticated a security agreement creating a security interest in certain collateral of Maxim. The collateral was described in the security agreement as "the inventory of Maxim Corporation, presently existing and thereafter acquired." In general, this description of the collateral A. Applies only to inventory sold by Wilson to Maxim. B. Is sufficient to cover all inventory. C. Is insufficient because it attempts to cover after-acquired inventory. D. Must be more specific for the security interest to be perfected against subsequent creditors.
B
Motor Sales, Inc., sells motor vehicles at retail. It borrowed money from Finance Company and gave a properly executed security agreement in its present and future inventory and in the proceeds therefrom to secure the loan. The security interest was duly perfected under the laws of the state where Motor does business and maintains its entire inventory. Thereafter, Motor sold a new pickup truck from its inventory to a consumer and received a certified check in payment of the full price. Which of the following is true? A. Finance must file an amendment to the financing statement every time Motor receives a substantial number of additional vehicles from the manufacturer if Finance is to obtain a valid security interest in subsequently delivered inventory. B. Finance's security interest in the certified check Motor received is perfected against Motor's other creditors. C. Unless Finance specifically included proceeds in the financing statement it filed, it has no rights to them. D. The term "proceeds" does not include used cars received by Motor because they will be resold.
B
On January 1, Shemwell Co. signed a security agreement giving Jones a security interest in a crane Shemwell was planning to buy for its business. In exchange for the security agreement, Jones signed a contract to lend Shemwell $10,000 on request. On January 9, Shemwell purchased the crane. On January 15, Jones delivered $10,000 to Shemwell. On January 20, Jones filed the security agreement with the appropriate public officials. Under the UCC, when did Jones's security interest in the crane attach? A. On January 1, when the security agreement was signed. B. On January 9, when Shemwell purchased the crane for its business. C. On January 15, when Jones delivered $10,000 to Shemwell. D. On January 20, when Jones filed the security agreement.
B
On July 8, Ace, a refrigerator wholesaler, purchased 50 refrigerators that constituted Ace's entire inventory. They were financed under an agreement with Rome Bank that gave Rome a security interest in all refrigerators on Ace's premises, all future acquired refrigerators, and the proceeds of sales. On July 12, Rome filed a financing statement sufficiently indicating the collateral covered. On August 15, Ace sold one refrigerator to Cray for personal use and four refrigerators to Zone Co. for its business. Which of the following statements is true? A. The refrigerators sold to Zone will be subject to Rome's security interest. B. The refrigerator sold to Cray will not be subject to Rome's security interest. C. The security interest does not include the proceeds from the sale of the refrigerators to Zone. D. The security interest may not cover after-acquired property even if the parties agree.
B
On March 1, Green went to Easy Car Sales to buy a car. Green spoke to a salesperson and agreed to buy a car that Easy had in its showroom. On March 5, Green made a $500 down payment and signed a security agreement to secure the payment of the balance of the purchase price. On March 10, Green picked up the car. On March 15, Easy filed the security agreement. On what date did Easy's security interest attach? A. March 1. B. March 5. C. March 10. D. March 15.
B
Shemwell Co. purchased a printing press from Jones Equipment, Inc. Shemwell signed a promissory note for the purchase price and signed a security agreement stating, "The buyer waives as against any assignee of the security interest any claim or defense that the buyer may have against the seller." Jones assigned the promissory note and security agreement to 1st Bank. The waiver-of-defenses clause is not enforceable against Shemwell if A. Jones had issued a written warranty on the press. B. 1st Bank did not give value for the assignment from Jones. C. Jones knew the printing press could malfunction. D. After the assignment, 1st Bank learned the printing press had malfunctioned.
B
The Wu Wei Company manufactures abacuses. The Yin and Yang is the most complex model. The agreements with Wu Wei's customers take the form of leases. Wu Wei expressly retains title but grants the customer an option to purchase at the end of the lease period for an additional sum equal to 1% of the aggregate lease payments. Does Article 9 of the UCC on secured transactions govern the lease? A. Yes. The inclusion of the option to purchase in itself makes the lease one intended for security. B. Yes. The lease is one intended for security because the lessee has the option to become the owner of the property for a nominal consideration. C. No. The express retention of title indicates that the transaction is a true lease and not a sale with retention of a security interest. D. No. For the UCC to apply, Wu Wei would have to have filed a financing statement.
B
Under the Secured Transactions Article of the UCC, which of the following statements is(are) correct regarding the filing of a financing statement? I. A financing statement must be filed before attachment of the security interest can occur. II. Once filed, a financing statement is effective for an indefinite period of time provided continuation statements are timely filed. A. I only. B. II only. C. Both I and II. D. Neither I nor II.
B
Under the UCC Secured Transactions Article, which of the following actions will best perfect a security interest in a negotiable instrument against any other party? A. Obtaining control. B. Taking possession of the instrument. C. Perfecting by attachment. D. Obtaining a duly executed financing statement.
B
Which of the following is most likely covered by Article 9 (Secured Transactions) of the UCC? A. A sale of accounts as part of the sale of a business. B. A transaction intended to create a security interest in personal property. C. The assignment of promissory notes for collection only. D. A statutory lien.
B
Winona Owner planned to add a wing to her house and to install central air conditioning. She obtained a loan from Bank to finance the construction and gave a mortgage on the realty as security. Bank recorded the mortgage on August 1. On July 29, Owner purchased on credit a central air conditioning unit from Seller. Seller took a security interest in the unit and made a proper fixture filing of a financing statement on August 2. The air conditioning unit was permanently installed on August 15 and construction of the house was completed on August 30. A. Bank has priority over Seller because it has a recorded real estate mortgage against a perfected security interest in a fixture. B. Bank has priority over Seller because the conditions for priority of a construction mortgage have been met. C. Seller has priority over Bank because it recorded first. D. Seller has priority over Bank because it has a perfected PMSI in fixtures that was perfected by a fixture filing before the goods became fixtures.
B
Acorn Marina, Inc. sells and services boat motors. On April 1, Acorn financed the purchase of its entire inventory with GAC Finance Company. GAC required Acorn to execute a security agreement and financing statement covering the inventory and proceeds of sale. On April 14, GAC properly filed the financing statement pursuant to the UCC Secured Transactions Article. On April 27, Acorn sold one of the motors to Mary Wilks for use in her charter business. Wilks, who had once worked for Acorn, knew that Acorn regularly financed its inventory with GAC. Acorn has defaulted on its obligations to GAC. The motor purchased by Wilks is A. Subject to the GAC security interest because Wilks should have known that GAC financed the inventory purchase by Acorn. B. Subject to the GAC security interest because Wilks purchased the motor for a commercial use. C. Not subject to the GAC security interest because Wilks is regarded as a buyer in the ordinary course of Acorn's business. D. Not subject to the GAC security interest because GAC failed to file the financing statement until more than 10 days after April
C
In what order are the following obligations paid after a secured party rightfully sells the debtor's collateral after repossession? I. Debt owed to any junior security holder II. Secured party's reasonable sales expenses III. Debt owed to the secured party A. I, II, III. B. II, I, III. C. II, III, I. D. III, II, I.
C
Larkin is a wholesaler of computers in the state of Whiteacre. Larkin sold 40 computers to Elk Appliance, which also does business in the state of Whiteacre, for $80,000. Elk paid $20,000 down and signed a promissory note for the balance. Elk also executed a security agreement giving Larkin a security interest in Elk's inventory, including the computers. Larkin perfected its security interest by properly filing a financing statement in the state of Whiteacre. Six months later, Elk moved its business to the state of Blackacre, taking the computers. On arriving in Blackacre, Elk secured a loan from Quarry Bank and signed a security agreement, putting up all inventory (including the computers) as collateral. Quarry perfected its security interest by properly filing a financing statement in the state of Blackacre. Two months after arriving in Blackacre, Elk went into default on both debts. Which of the following statements is true? A. Quarry's security interest is superior because Larkin's time to file a financing statement in Blackacre had expired prior to Quarry's filing. B. Quarry's security interest is superior because Quarry had no actual notice of Larkin's security interest. C. Larkin's security interest is superior even though at the time of Elk's default Larkin had not perfected its security interest in the state of Blackacre. D. Larkin's security interest is superior provided it repossesses the computers before Quarry does.
C
Mansfield Financial lends money on the strength of negotiable warehouse receipts. Its policy is always to obtain a perfected security interest in the receipts against the creditors of the borrowers and to maintain it until the loan has been satisfied. Insofar as this policy is concerned, which of the following is true? A. Mansfield may transfer the warehouse receipts to another lending institution without the debtor's consent. B. Relinquishment of the receipts is not permitted under any circumstances without the loss of the perfected security interest in them. C. Mansfield has a perfected security interest in goods represented by the receipts. D. If the receipts are somehow wrongfully duly negotiated to a holder, Mansfield's perfected security interest will not be prejudiced.
C
On October 1, Winslow Corporation obtained a loan commitment of $250,000 from Liberty National Bank. Liberty filed a financing statement on October 2. On October 5, the $250,000 loan was consummated, and Winslow signed a security agreement granting the bank a security interest in inventory, accounts receivable, and proceeds from the sale of the inventory and collection of the accounts receivable. Liberty's security interest was perfected A. On October 1. B. On October 2. C. On October 5. D. By attachment.
C
Perfection of a security interest permits the secured party to protect its rights by A. Avoiding the need to file a financing statement. B. Preventing another creditor from obtaining a security interest in the same collateral. C. Establishing priority over the claims of most subsequent secured creditors. D. Denying the debtor the right to possess the collateral.
C
Pine has a security interest in certain goods purchased by Byron on an installment contract. Byron has defaulted on the payments resulting in Pine's taking possession of the collateral. Which of the following is true? A. Byron may waive his right of redemption at the time he executes the security agreement. B. Pine must sell the collateral if Byron has paid more than 60% of the cash price on a purchase money security interest in business equipment. C. The collateral may be sold by Pine at a private proceeding and, if it is consumer goods, without notice to other secured parties. D. Unless otherwise agreed, Pine must pay Byron for any increase in value of the collateral while it is in Pine's possession.
C
Taso Corp. sells laptop computers to the public. Taso sold and delivered a laptop to Cara on credit. Cara gave Taso a purchase money security interest in the laptop by executing and delivering to Taso a promissory note for the purchase price and a security agreement covering the laptop. Cara purchased the laptop for personal use. Taso did not file a financing statement. Under the Secured Transactions Article of the UCC, is Taso's security interest perfected? A. No, because the laptop is a consumer good. B. No, because Taso failed to file a financing statement. C. Yes, because it was perfected at the time of attachment. D. Yes, because Taso retained possession of the collateral.
C
The UCC provides for the filing of termination statements. Which of the following is true? A. The requirements for filing termination statements are the same for all forms of property of the debtor. B. If the collateral is inventory, the secured party must file a termination statement within one month after termination of any obligation. C. If collateral in the form of consumer goods secures no obligation and no commitment to give value exists, a termination statement must be filed. D. A termination statement need not be filed with respect to consumer goods.
C
The Uniform Commercial Code contains numerous provisions relating to the rights and remedies of the parties upon default. With respect to a buyer, these provisions may A. Not be varied even with the agreement of the buyer. B. Only be varied if the buyer is apprised of the fact and initials the variances in the agreement. C. Not be varied insofar as they require the secured party to account for any surplus realized on the disposition of collateral securing the obligation. D. All be varied by agreement as long as the variances are not manifestly unreasonable.
C
Under the Secured Transactions Article of the UCC, if a secured creditor rightfully repossesses and sells a debtor's collateral, which of the following obligations is the first to be paid from the proceeds of the sale? A. The debt owed any creditor with a subordinate security interest in the collateral. B. The balance of the debt owed the primary secured creditor. C. The reasonable expenses incurred by the sale. D. The refund of the debtor's payments made prior to the date of the sale.
C
Under the Secured Transactions Article of the UCC, which of the following requirements is necessary to have a security interest attach? Debtor Has Rights in the Collateral/ Proper Filing of a Security Agreement/ Value Given by the Creditor A.Yes / Yes / Yes B.Yes / Yes / No C. Yes / No / Yes D. No / Yes / Yes
C
Under the Secured Transactions Article of the UCC, which of the following security agreements does not need to be in writing to be enforceable? A. A security agreement collateralizing a debt of less than $500. B. A security agreement where the collateral is highly perishable or subject to wide price fluctuations. C. A security agreement where the collateral is in the possession of the secured party. D. A security agreement involving a purchase money security interest.
C
Under the UCC Secured Transactions Article, perfection of a security interest in goods by a creditor provides added protection against other parties in the event the debtor does not pay its debts. Which of the following parties is not affected by perfection of a security interest? A. Other prospective creditors of the debtor. B. The trustee in a bankruptcy case. C. A buyer in the ordinary course of business. D. A subsequent personal injury judgment creditor.
C
Under the UCC Secured Transactions Article, what is the order of priority for the following security interests in store equipment? I. Security interest perfected by filing on April 15. II. Security interest attached on April 1. III. Purchase money security interest attached April 11 and perfected by filing on April 20. A. I, III, II. B. II, I, III. C. III, I, II. D. III, II, I.
C
Under the UCC Secured Transactions Article, which of the following events will always prevent a security interest from attaching? A. Failure to authenticate a security agreement. B. Failure of the creditor to have possession of the collateral. C. Failure of the debtor to have rights in the collateral. D. Failure of the creditor to give present consideration for the security interest.
C
Under the UCC Secured Transactions Article, which of the following rights will Drew have? A. Redeem the computer after Hale sells it. B. Recover the sale price from Hale after Hale sells the computer. C. Force Hale to sell the computer. D. Prevent Hale from selling the computer.
C
Which is the true classification of goods under UCC Article 9? A. Consumer goods, instruments, and inventory. B. Accounts, equipment, inventory, unextracted minerals. C. Consumer goods, equipment, farm products, inventory. D. Accounts, consumer goods, equipment, inventory.
C
Which of the following is a false statement about priority under UCC Article 9? A. A security interest in fixtures has priority over any earlier recorded real estate interest if it is a purchase money security interest perfected by fixture filing within 20 days after the goods become fixtures. B. A purchase money security interest in inventory has priority over a security interest in the same collateral perfected after the debtor took possession if (1) the PMSI is perfected when the debtor receives possession and (2) the secured party sends an authenticated notice to any prior secured party before the debtor receives the inventory. C. A lien arising by operation of law subsequent to the perfection of any security interest will be subordinate to the earlier perfected security interest because of the first-in-time, first-in-priority rule. D. A purchase money security interest in collateral other than inventory or livestock prevails over a prior perfected security interest if the PMSI is perfected when the debtor takes possession or within 20 days afterward.
C
Wine purchased a computer using the proceeds of a loan from MJC Finance Company. Wine gave MJC a security interest in the computer. Wine executed a security agreement and financing statement, which was filed by MJC. Wine used the computer to monitor Wine's personal investments. Later, Wine sold the computer to Jacobs, who used it for family purposes. Jacobs was unaware of MJC's security interest. Wine now is in default under the MJC loan. May MJC repossess the computer from Jacobs? A. No, because Jacobs was unaware of the MJC security interest. B. No, because Jacobs intended to use the computer for family or household purposes. C. Yes, because MJC's security interest was perfected before the purchase by Jacobs. D. Yes, because the purchase by Jacobs of the computer made Jacobs personally liable to MJC.
C
Wurke, Inc., manufactures and sells household appliances on credit directly to wholesalers, retailers, and consumers. Wurke can perfect its security interest in the appliances without having to file a financing statement or take possession of the appliances if the sale is made by Wurke to A. Retailers. B. Wholesalers that then sell to distributors for resale. C. Consumers. D. Wholesalers that then sell to buyers in the ordinary course of business.
C
A party who filed a financing statement covering inventory on April 1 would have a superior interest to which of the following parties? A. A holder of a mechanic's lien whose lien was filed on March 15. B. A holder of a purchase money security interest in after-acquired inventory filed on March 20. C. A purchaser in the ordinary course of business who purchased on April 10. D. A judgment lien creditor who filed its judgment on April 15.
D
ABC Co. loaned XYZ Co. $5,000. Under the Secured Transactions Article of the UCC, which of the following items would give ABC the best position in the event of default on the loan by XYZ? A. A signed security interest not filed. B. A financing statement. C. Common stock promised as collateral for the loan. D. Possession of XYZ's service truck as collateral.
D
Forward Motors, Inc., is a franchised automobile dealer for National Motors. National provides the financing of the purchase of its automobiles by Forward. It sells Forward 25 to 50 automobiles at a time and takes back promissory notes, a security agreement, and a financing statement on each sale. The agreement between Forward and National includes an after-acquired property clause. The financing statement covering this revolving inventory has been duly filed. A. Each automobile sold to Forward must be described and the serial number listed on the financing statement. B. Sales by Forward to buyers in the ordinary course of business will be subject to the rights of National. C. No filing is required against the creditors of Forward because the automobiles are "consumer goods" in its hands. D. As against the creditors of Forward, National has a valid "floating lien" against the automobiles and the proceeds from their sale.
D
If a secured party does not comply with the UCC rules with respect to collateral after a debtor's default, the secured party will A. Lose his or her security interest. B. Be required to dispose of the collateral. C. Be liable for any better price available by any other method of sale. D. Be liable to another known secured party for losses resulting from not sending notification of sale.
D
Milo Manufacturing Corp. sells baseball equipment to distributors, who in turn sell it to various retailers throughout the United States. The retailers then sell the equipment to consumers who use it for their own personal use. In all cases, the equipment is sold on credit with a security interest taken in the equipment by each of the respective sellers. Which of the following is true? A. The security interests of all of the sellers remain valid and will take priority even against good faith purchasers for value, despite the expectation of resales. B. The baseball equipment is inventory in the hands of all the parties concerned. C. Milo's security interest is automatically perfected because Milo qualifies as a purchase money secured party. D. Milo and the distributors must file a financing statement or take possession of the baseball equipment to perfect their security interests.
D
On June 15, Harper purchased equipment for $100,000 from Imperial Corp. for use in its manufacturing process. Harper paid for the equipment with funds borrowed from Eastern Bank. Harper gave Eastern an authenticated security agreement covering Harper's existing and after-acquired equipment. On June 21, Harper was petitioned involuntarily into bankruptcy under Chapter 7 of the Federal Bankruptcy Code. A bankruptcy trustee was appointed. On June 23, Eastern duly filed a sufficient financing statement. Which of the parties will have a superior security interest in the equipment? A. The trustee in bankruptcy, because the filing of the financing statement after the commencement of the bankruptcy case would be deemed a preferential transfer. B. The trustee in bankruptcy, because the trustee became a lien creditor before Eastern perfected its security interest. C. Eastern, because it had a perfected purchase money security interest without having to file a financing statement. D. Eastern, because it perfected its security interest within the permissible time limits.
D
The Town Bank makes collateralized loans to its customers at 1% above prime on securities owned by the customer, subject to existing margin requirements. In doing so, which of the following is true? A. Notification of the issuer is necessary to perfect a security interest. B. Filing is not a permissible method of perfecting a security interest in the securities. C. Any dividend or interest distributions during the term of the loan belong to the bank. D. Town Bank can obtain a perfected security interest in the securities by control.
D
The scope of secured transactions under Article 9 of the Uniform Commercial Code does not include A. Consignments. B. Transactions in which title to the collateral has not passed. C. After-acquired collateral. D. Sale of corporate debentures.
D
Under the Secured Transactions Article of the UCC, a financing statement generally must contain A. The signature of a witness to the execution of the financing statement. B. The dollar amount of the consideration provided by the secured party. C. The date the underlying debt will be paid. D. The name of the debtor.
D
Under the Secured Transactions Article of the UCC, a secured party generally must comply with each of the following duties except A. Filing or sending the debtor a termination statement when the debt is paid. B. Confirming, at the debtor's request, the unpaid amount of the debt. C. Using reasonable care in preserving any collateral in the secured party's possession. D. Assigning the security interest to another party at the debtor's request.
D
Under the Secured Transactions Article of the UCC, which of the following items most likely can be excluded from a filed original financing statement? A. The name of the debtor. B. The address of the debtor. C. A description of the collateral. D. The amount of the obligation secured.
D
Under the Secured Transactions Article of the UCC, which of the following purchasers will own consumer goods free of a perfected security interest in the goods? A. A merchant who purchases the goods for resale. B. A merchant who purchases the goods for use in its business. C. A consumer who purchases the goods from a consumer purchaser who gave the security interest. D. A consumer who purchases the goods in the ordinary course of business.
D
Under the Secured Transactions Article of the UCC, which of the following statements is correct regarding a security interest that has not attached? A. It is effective against the debtor but not against third parties. B. It is effective against both the debtor and third parties. C. It is effective against third parties with unsecured claims. D. It is not effective against either the debtor or third parties.
D
Under the Secured Transactions article of the UCC, a security interest becomes enforceable when A. A contract is executed between a debtor and a secured party under which the debtor gives the secured party rights in collateral if the debtor violates any of the terms contained in the contract. B. The debtor and the secured party execute a security agreement describing the transfer of the collateral and, after doing so, the secured party files it with the requisite agency. C. The debtor and the secured party execute a security agreement describing the transfer of collateral from seller to buyer, and the secured party retains possession of the agreement. D. The value has been given, the secured party receives a security agreement describing the collateral authenticated by the debtor, and the debtor has rights in the collateral.
D
Under the UCC Secured Transactions Article, if a debtor is in default under a payment obligation secured by goods, the secured party has the right to Reduce the Claim to a Judgement/ Sell the Goods and Apply the Proceeds toward the Obligations Secured/ Peacefully Reposes the Goods without Judicial Process A. Yes / Yes / No B. Yes / No/ Yes C. No / Yes/ Yes D. Yes / Yes / Yes
D
Under the UCC Secured Transactions Article, what is the effect of perfecting a security interest by filing a financing statement? A. The secured party can enforce its security interest against the debtor. B. The secured party has a permanent priority in the collateral even if the debtor moves to another state. C. The debtor is protected against all other parties who acquire an interest in the collateral after the filing. D. The secured party has priority in the collateral over most creditors who acquire a security interest in the same collateral after the filing.
D
Vega Manufacturing, Inc., manufactures and sells stereo systems and components to the trade and at retail. Repossession is frequently made from customers who are in default. Which of the following statements is true concerning the rights of the defaulting debtors who have had property repossessed by Vega? A. Vega has the right to retain all the goods repossessed as long as it gives notice and cancels the debt. B. It is unimportant whether the goods repossessed are defined as consumer goods, inventory, or something else in respect to the debtor's rights upon repossession. C. If the defaulting debtor voluntarily authenticates a statement waiving rights in the collateral, the creditor must nevertheless resell them for the debtor's benefit. D. If a debtor has paid 60% or more of the cash price of consumer goods in satisfaction of a purchase money security interest, the debtor has the right to have the creditor dispose of the goods.
D
Which is the true statement about the rights of the debtor and the secured party after default? A. The secured party has no general right to repossess the collateral except in the case of consumer goods. B. The secured party may retain or dispose of the collateral at his or her discretion. C. If the debtor has paid 50% of the debt in the case of consumer goods, disposition is mandatory unless the debtor renounces his or her rights. D. If the security interest secured an indebtedness, the debtor has an absolute responsibility to pay any deficiency remaining following disposition.
D
Which of the following statements about a debtor's notice for foreclosure sales is false? A. Notice is not required if the collateral is normally sold on a recognized market. B. A debtor may waive the right to notice of the sale. C. Notice is reasonable if it allows the debtor adequate time to protect his or her interests. D. Notice required for a public disposition is the same as notice required for a private disposition.
D
Which of the following transactions illustrates a secured party's perfection of its security interest by taking possession of the collateral? A. A bank's receiving a mortgage on real property. B. A wholesaler's borrowing to purchase inventory. C. A consumer's borrowing to buy a car. D. A pawnbroker's lending money.
D
Winslow Co., which is in the business of selling furniture, borrowed $60,000 from Pine Bank. Winslow executed a promissory note for that amount and used all of its accounts receivable as collateral for the loan. Winslow executed a security agreement that described the collateral. Pine Bank did not file a financing statement. Which of the following statements best describes this transaction? A. Perfection of the security interest occurred even though Pine Bank did not file a financing statement. B. Perfection of the security interest occurred when Pine Bank obtained rights in the accounts receivable. C. Attachment of the security interest did not occur because Pine Bank failed to file a financing statement. D. Attachment of the security interest occurred when the loan was made and Winslow executed the security agreement.
D