Law 332

a certificate of title state

missouri

Kiosk Jewelers borrows from Lender Inc. and Mortgage company, using the same collateral. only mortgage company has a perfected security interest. kiosk defaults on both loans. the party with first rights to the collateral is

mortgage company

a person who transfers an instrument for payment warrants to any other person who in good faith accepts or pays the instrument (with exceptions) that the instrument has not been altered

true

an instrument that orders that drawee to pay a certain sum of money, usually to the third-party payee, is a draft

true

any debtor who is eligible for bankruptcy relief under chapter 7 is eligible under chapter 11 bankruptcy

true

attachment ensures that a security interest between a debtor and a secured party is effective

true

The payment of Jose's debt to Klint is guaranteed by Jose's personal property. The process by which Klint can protect himself against the claims of third parties to this property is

attachment

the UCC's classification or definition of collateral does not affect where or how to perfect a security interest

false

Lamont and marcel collaborate to defraud Nina, who is induced to give Marcel a note payable to Marcel's order. Marcel indorses the note for value to Orson, and HDC. Later, Orson sells the note to Lamont. Under the shelter principle,

Lamont cannot acquire HDC rights in the note

Lon is Mill Corporation's agent and is authorized to write checks on the firm's account in North Bank. Lon writes a check "pay to the order of Ocean Shipping." Lon signs the check "Mill Corporation by Lon, agent." the bank dishonors the check. Liability extends to

Mill Corporation

Ann is the payee of a bearer instrument, a promissory note in the amount of $10,000. Burt offers to irrigate Ann's ranch next week in exchange for the note today. Anne agrees and delivers the note to Burt. Given these facts, Burt is

Not an HDC, because he did not yet give value for the instrument

ranch west owes Silo and Barn Inc. $5,000 on their contract, but refuses to pay. to collect, Silo files a mechanic's lien, under which security for the debt is represented by

Ranch's real estate

Mike receives a payroll check from National Computer Systems, Inc. and indorses it by signing his name on the back of the check. this is

a blank endorsement

Coki receives a payroll check from Data Solutions Inc. and indorses it by signing her name on the back of the check. this is

a blank indorsement

Elmer pays Fidelity Bank $1,000 plus a service fee to draw a check on itself made payable to Go Delivery Service. This is

a cashier's check

in addition to financial statements, each voluntary petition in bankruptcy must include

a certificate proving the receipt of credit counseling

Ciera presents an instrument that states "pay to the order of Duff" to East Bank for payment. As the most common type of negotiable instrument regulated by the Uniform Commercial Code, this is

a check

resources inc. receives a check from steel products company and indorses it with a stamped imprint of its name on the back. this converts the check to

an order instrument

Khali's debt to Lew is past due. Lew obtains a judgment against Khali to collect the debt, but Khali refuses to pay. Lew asks the court to order Khali's employer to pay a portion of Khali's paycheck to Lew. this is a request for

an order of garnishment

Jen makes a gift of a check to Kilroy who takes it in good faith and without notice of any claim, defense, or defect. with respect to this check, Kilroy is

an ordinary holder

leno makes a gift of a check to Millie who takes it in good faith and without any notice of any claim, defense, or defect. With respect to this check, Millie is

an ordinary holder

quint signs a check "pay to the order of Rona" drawn on quint's account at suburban bank. quint has $400 in his account but the amount of the check is $500, which the bank pays. this is

an overdraft

tony signs a promissory note in favor of United Freight Company, on whose behalf Van attempts to obtain payment. a negotiable promissory note is

an unconditional promise to pay the holder of the note

to purchase office supplies for her medical clinic, Becky executes a draft in favor of Sonya. A draft is

an unconditional written order to pay money

eligible for relief on a petition in bankruptcy under chapter 11 is

any debtor who is eligible under Chapter 7, and the railroads

under chapter 7, once the proceeds of the bankruptcy estate have been distributed, the debtor's remaining debts

are discharged

Loan office inc. has a security interest against Manufacturing company that is enforceable. in other words, with respect to the collateral, the creditor's rights are said to

attach

the payment of commerce inc.'s debt to debt service llc is guaranteed by the firm's property. debt service is most likely to perfect its interest by

filing a financing statement with the appropriate authority

Jaime signs an instrument using a "J" with a swirl around it. With this mark for a signature, the instrument is

negotiable

Jim signs an instrument using a "J" with a circle around it. with this mark, the instrument is

negotiable

a bank is not obligated to pay an uncertified check presented for payment more than six months from its date

true

a lender can require a borrower to maintain the property in such a way that the lender's investment is protected

true

a mortgage gives a creditor a lien on a debtor's real property as security for payment of a debt

true

a person who takes a demand instrument knowing that demand has been made has notice that the instrument is overdue

true

a person who transfers an instrument for consideration warrants to all subsequent transferees and holders who take the instrument in good faith that all signatures on the item are authentic and authorized

true

because liability for payment on a negotiable instrument is immediate when the instrument is signed or issued, no action by the holder is required

true

every party who signs a negotiable instrument is potentially liable for payment of that instrument when it comes due

true

for most collateral, possession by a secured party is impractical because it denies the debtor the right to use or derive income from the property to pay the debt

true

if a bank's payment over a stop-payment order causes subsequent checks written on the drawer's account to be returned for insufficient funds, the bank will be liable for the drawer's resulting costs

true

if the numerical and written amounts on a check differ, the check is payable in the written amount.

true

improper filing of a financing statement can render a security interest unperfected

true

in a chapter 13 proceeding, the debtor retains possession of his or her assets

true

in a chapter 7 proceeding, the bankruptcy trustee collects the debtor's estate and reduces it to cash, preserving the interests of the debtor and creditors

true

in missouri, mechanic's liens are recorded in the circuit court clerk's office for the county where the job is physically located

true

it is not a material alteration to change the figures on a check so that they agree with the written amount, and thus, any holder is entitled to enforce the check

true

the borrower typically is required to pay all property taxes, assessments, and other claims against the property

true

the destruction or mutilation of an instrument is considered cancellation, and thus discharges the liability of al parties, only if it is done with the intention of eliminating obligation on the instrument

true

the notation "without recourse" may be used by an indorser to avoid secondary liability for payment on the instrument

true

to avoid liability for negligence, a customer must examine monthly bank statements and canceled checks promptly and with reasonable care, and report and forged signatures to the bank

true

to avoid the risk of loss from theft, a holder can convert a blank indorsement to a special indorsement by writing, above the signature of the indorser, the name of the indorsee.

true

to be negotiable, an instrument must include an unconditional promise or order to pay

true

to be negotiable, if an instrument is not payable on demand, it must be payable at a definite time.

true

usually, an indorsement is unqualified, which means that the indorser is guaranteeing payment on an instrument, in addition to transferring title to it

true

when a bank certifies a check, the bank is agreeing in advance to accept the check when it is presented for payment and to make payment with funds reserved for the purpose

true

when a bank wrongfully dishonors a check, it is liable to the customer for any resulting damages.

true

united contractors inc. holds a lien on Vista Estate's real property. This property can be sold to satisfy the debt if, before the sale, notice is given to

vista estate

Colin signs a note "payable to the order of Debit Bank." The bank indorses the note in blank and negotiates it to Equity Funds, which sells it to Financial Investments. The transfer of the note from Equity to Financial gives rise to

warranty liability

because a mortgage involves the transfer of real property, to comply with the statute of frauds, it must me

written

compared to chapter 7 and 11 plans, a chapter 13 plan

allows a debtor to retain possession of his or her assets

to make credit bank a collecting agent on a check "payable to the order of Duane", Duane should

indorse the check "for deposit only"

exceptions to go to jail for not paying debts

-failure to pay child support - debtor chooses not to pay court imposed debts - failure to appear or contempt of court during asset and discovery proceedings

debts for family fishermen must be at least __ related to commercial fishing

80%

Brie, Cam, and Dei are co-sureties of Edie's debt to Finance LLC. Brie pays the entire debt. her right of contribution entitles her to recover any amount paid above the surety's obligation from

Cam and Dei

Bob's barber shop borrows from first credit company and then debit loans LLC, using the same property as collateral for both loans. Debit loans perfects its security interest. credit company does not. the debtor defaults on both loans. the party with first rights to the collateral is

Debit Loans LLC

to buy a truck under warranty from Detour Motors, Eli, a consumer, signs a note payable to the dealer. the note includes the notice required by FTC rule 433. the dealer sells the note to finance company, which takes it in good faith, for value, and unaware of any defenses against payment. Eli discovers that the truck is defective and returns it to Detour Motors. the consumer can assert the breach of warranty to avoid payment on the note against

Detour Motors only

perfect roofing company receives a check from Quik Mart for fixing its roof, and indorses the check to Repair Supplies, inc. (RSI). Sam, RSI's owner, gives the check to Todd as a gift. In this situation, the party who is not an HDC of the check but who acquires HDC rights under the shelter principle is

Todd

a certificate of deposit (CD) is issued when Lo-Risk Invest LLC deposits funds with Money Bank on the bank's promise to repay the funds, with interest, on a certain date. Lo-Risk cannot withdraw the funds before the date of maturity because

a CD is a time deposit

yang files a petition in bankruptcy under Chapter 7. Zhen takes control over her property and reduces it to money for distribution. Zhen is

a bankruptcy trustee

geraldo owes $10,000 to Dave, $5,000 to Van, and $5,000 to Curt. the three creditors enter into an agreement with Geraldo to discharge the credits on payment of a sum of $10,000 to them, to be divided on proportionately. this agreement is

a creditors composition agreement

to buy a home, Lois pays part of the purchase price up front in cash and borrows the rest of the funds from members credit union. the part of the purchase price paid up front is

a down payment

alpha company issues a trade acceptance with itself and Beta company as parties. a trade acceptance is

a draft

capital inc. holds a security interest in Discount Store's inventory. the parties agree that the interest will continue in the collateral even if it is sold, exchanged, or disposed of in some other way. this is

a floating lien

construction company has a claim against diners cafe to satisfy a debt that takes priority over claims against the same property. this is

a lien

a voluntary petition in bankruptcy must include

a list of the debtor's creditors and the amount of the debt owed to each

construction inc. wants to agree with its creditors on a plan under which it pays a portion of its debt and is discharged of the rest. to accomplish this goal, the corporation should file a petition in bankruptcy under chapter 11 for relief through

a reorganization

to purchase a house, Elma obtains a mortgage loan from Fidelity Bank. Later, Elma is unable to make payments on the loan. Meanwhile, the market value of the house has declined. fidelity agrees to a sale of the property for less than the amount due on the loan. this is

a short sale

Dag signs a check "pay to the order of Eton" drawn on Dag's account at First Bank and dates the check "May 1" Eton presents the check to the bank for payment on December 15. this is

a stale check

because a party's authenticating intent with respect to a note is shown by the name of the party written on the line that calls for the name of that party

a stamped imprint of the name can be sufficient to transfer the note

to make a sale to gourmet inc. hill valley commodities asks gourmet's outside accountant Ingre to co-sign a credit application. according to the terms, if Gourmet defaults, Hill valley can look to Ingre for payment without first pursuing legal remedies against Gourmet. Ingre is

a surety

Rico agrees to buy a bicycle from Salvatore for $250. Salvatore agrees to deliver the bike on September 1. Rico writes a draft for $250 payable to Salvatore on September 1. This is

a time draft

business inc.'s debt to cartage company is past due. Cartage brings a legal action against Business to collect. to ensure that a judgment in the creditor's favor will be collectible, Cartage asks the court to order the seizure of the debtor's property. this is a request for

a writ of attachment

brew pup company's debt to credit service is past due. credit obtains a judgment against Brew, but the firm refuses to pay. credit asks the court to order the seizure of brew's property. this is a request for

a write of execution

the shelter principle permits a holder with notice of a claim or defense to attain HDC status by reacquiring the instrument from a later HDC

false

Loni delivers her Mazda to be repaired at Nile's Body shop. Loni agrees to pay cash. Nile performs, but Loni does not pay. Nile tells Loni that he will keep the car until she pays. this is

an artisan's lien

under chapter 13, all debts are dischargeable

false

personal property that is most often exempt from satisfaction of a creditor's judgment debt on a debtor's default, up to a specified amount, includes

all of the choices - certain classified animals, usually including livestock - a vehicle for transportation - equipment used in a business or trade, such as tools

motor sales inc. signs an instrument that promises to pay National Parts Company a certain price, with interest, for a shipment of auto parts. it is necessary to know when the instrument is due in order to

all of the choices - know when the interest will accrue - determine the value of the instrument - calculate when a statute of limitations may apply

under chapter 7 and chapter 11

all of the choices - the same principles govern the entry of the order for relief - petitions can be filed voluntarily or involuntarily - the automatic stay provision applies

in missouri, which of the following types of collateral are subject to local filings in the county recorder of deeds office where the collateral is located?

all of these choices - mineral rights (including gas, oil, coal, precious metals) - timber to be cut - fixtures

in good faith and for value, Joya gets from Kyle a negotiable bearer instrument. Joya does not know that Kyle stole the instrument. Joya is

an HDC

to buy a condo, Mary obtains a thirty-year mortgage with an interest rate that is fixed for three years and then adjusts annually. Mary's mortgage is

an adjustable-rate mortgage

voluntary petitions may be filed to initiate Chapter 7 or Chapter 11, but not Chapter 13, bankruptcies

false

to buy a townhouse, Becky obtains a mortgage loan from Countywide Bank. The lender should record the mortgage to

be officially on record as holding an interest in the property

when a customer makes a deposit into a checking account, the customer becomes a debtor, and the bank a creditor, for the amount deposited

false

an instrument, such as a check, drawn payable to an organization

can be negotiated by an authorized representative of the entity

a payee or indorsee whose name is misspelled on an instrument

can indorse with the misspelled name, the correct name, or both

Dana draws a check on Equity Bank, and asks the bank to agree in advance to accept the check by setting aside sufficient funds to cover the amount. if equity agrees, the bank will be considered

certified

mechanic's lien artisan's lien garnishments mortgage foreclosures

chapter 429 chapter 430 chapter 425 chapter 443

auto sales and finance wants to get paid for its goods and services, so it will not sell goods or lend funds unless payment is guaranteed. to obtain those goods or services, a customer or borrower might pledge

collateral

the payment of eden's debt to Flem is guaranteed by Eden's personal property. this property is

collateral

Steve, the manager of Cineplex, deposits the box office receipts in the theater's account at First State Bank. Regarding these receipts, the relationship between Cineplex and the bank is

creditor and debtor

the instrument normally filed to give public notice to third parties of a secured party's security interest is collateral

false

all bankruptcy proceedings are held in

federal bankruptcy courts

Rico borrows funds from Suburban Bank secured by Rico's house. Rico defaults on the debt. the bank's options include

disposing of the collateral in any commercially reasonable manner

under chapter 7, creditors are paid in a certain order of priority. the highest-priority class comprises claims for

domestic support

A difference between the handwriting body of a check and in the signature affects the validity of the item and will bar a holder from HDC status

false

a debtor must have title to collateral to give a secured party interest in the property

false

a fixed-rate mortgage is a standard mortgage with an adjustable rate of interest

false

a holder can impair the value of collateral given to secure payment of an instrument without affecting the liability of parties who would benefit from the collateral in the event of nonpayment

false

a holder who takes a negotiable instrument from a thief cannot become a HDC even if the item was acquired in good faith and there was no reason to be suspicious of the transaction.

false

a promissory note is both a debt and evidence of the debt

false

a secured party perfects a claim by filing a financing statement with the debtor

false

a security interest can cover only property in which the debtor has present rights

false

a security interest cannot become perfected without the filing of a security agreement

false

an instrument is nonnegotiable unless the word "negotiable" is printed on it

false

bankruptcy relief is provided under state, not federal, law

false

because a mortgage involves a transfer of real property, it need not be in writing

false

because a write of attachment is a prejudgment remedy, a debtor does not need to be given notice and an opportunity to be heard before the property is seized

false

businesses must be technically insolvent to file for bankruptcy relief

false

equitable redemption allows a lender to gain title and regain possession of a property

false

for a negotiable instrument to operate practically as a substitute for cash, it must be easily transferable and uncollectible

false

if a check is made "payable to the order of Marcus or Nathan" both parties' indorsements are necessary for negotiation

false

in missouri, all financing statements are filed with the recorder of deeds in the county where collateral is located

false

in missouri, artisan's liens are always filed with the circuit court clerk's office for the county where the debtor is located

false

missouri's version of financing statement forms substantially deviate from the UCC formats approved by the International Association of Commercial Administrators

false

most creditors require a borrower to purchase mortgage insurance if the borrower makes a down payment of at least 20% of the purchase price

false

once a bankruptcy petition is properly filed, creditors can commence or continue most legal actions against the debtor to recover claims

false

providing only a debtor's trade name in a financing statement is sufficient for perfection even if the trade name is not the legal name of business

false

the death of a customer automatically revokes a bank's authority to accept, pay, or collect an item drawn by the customer on an account with the bank

false

Gillis writes a check to Harley as payment for a game player but soon discovers it is broken. Gillis goes to the drawee bank and orally authorizes Ilene, a bank officer, to stop payment on the check. this order is valid for

fourteen days

default percentage of interest in missouri

generally 9%

at the time of the filing, of the petition and the time of the filing of the plan, Chapter 13 imposes on the debtor the requirement of

good faith

housewares inc. warrants its goods to be free of defects. ivy issues an instrument to housewares for the purchase of an appliance that proves to be defective. with respect to payment on the instrument, ivy

has a personal defense

under missouri law, for any workweek, a creditor can garnish the lesser of which of the following

i. ii. and iii. - 25% of your disposable earnings - 10% of your disposable earnings if you're the head of a family and a resident of the state - iii. the amount by which your weekly disposable earnings exceed 30 times the federal hourly minimum wage

Faro is an agent authorized to sign negotiable instruments on behalf of Global Supply Inc. To protect against potential liability on a note signed on the corporation's behalf, Faro should

identify Global Supply and indicate his agency status

oscar holds a security interest in inventory owned by Janet. Oscar assigns his interest in the inventory to Bob. Bob becomes the secured party of record

if Bob makes a note of the assignment on the financing statement

on the back of a check "payable to Huan," Huan signs her name and negotiates the item to Ito. to avoid liability on the item if it is later dishonored, Ito should

indorse the check "without recourse"

to buy furniture, gina, a consumer, signs a purchase agreement with home store the seller, to pay $100 down and $50 per month until the price is paid. Home store takes a security interest in the furniture. Because it was created as part of purchase agreement with a consumer, the security interest i

is automatically perfected

an involuntary bankruptcy occurs when a debtor

is forced into bankruptcy proceedings by his or her creditors

ruth takes her car to service center, which repairs the car and bills her for $500. she writes out a check drawn on tempo bank, but later, believing that service center did not fix the car properly, issues a stop-payment order. if tempo pays the check, the bank

is liable for Ruth's loss due to the wrongful payment

bauxite mine borrows $60,000 from Commerce Bank, with the loan secured by the borrower's property. the debtor defaults on the loan. commerce relinquishes its security interest to seek a judicial remedy. to obtain funds to satisfy the debt by a seizure and sale of the borrower's nonexempt property, after a writ is issued, the creditor can use the process of

levy

chapter 7 of the bankruptcy code provides for

liquidation proceedings

Gary writes a check drawn on Hill Bank for $400 "payable to Ian" on May 1. Gary dies on May 3. Ian presents the check to the bank of May 5. Unaware of Gary's death, the bank

may pay the check

Bok buys an espresso machine from Coffee Gadgets, which bills him for $100. He writes out a check drawn on Dios Bank, but later, believing that the machine is defective, issues a stop-payment order. Dios

must stop payment if the bank has a reasonable time to act

bosley, a jeweler, repairs linda's necklace and returns it to her when she comes to his shop to collect it even though she does not pay for the repairs. Bosely may seek to recover payment for the repairs because he can claim

none of the above - not a mechanic's lien - not an artisan's lien - not an innkeeper's lien

Marin writes on a piece of paper, "I owe you $600," signs it, and gives it to Nye. this instrument is

nonnegotiable, because it does not include an express promise to pay

Fern has six nieces, ages five to sixteen. She writes an instrument for $50 that states, "Pay to the order of my niece." the instrument is

nonnegotiable, because there is no specific person identified

Edna is the payee of a bearer instrument - a promissory note in the amount of $10,000. Flem offers to irrigate Edna's ranch next week in exchange for the note. she agrees and delivers the note to Flem. Flem is

not an HDC, because he did not yet give value for the instrument

gravel and sand inc. buys a backhoe on credit from Heavy equipment corporation, but does not make a payment on the loan for several months. Heavy repossesses the backhoe by towing it from a public street. Gravel and sand sues heavy for breach of the peace. Gravel and Sand will probably

not prevail, because the repossession was not a breach of the peace

Noah signs Ola's name to a check without Ola's authorization. Noah can be held personally liable for a payment on the check by

only and HDC

Bogart presents a sight draft to Commerce Bank for payment. A bank employee writes accepted across the face of the instrument, and adds the date and the bank's signature. the draft is

payable immediately or within a stated time after sight

ready credit inc. holds a security interest in inventory owned by Soy Products Inc. Ready credit can protect its claim to the inventory in the event of soy products' default by

perfection

Bravo co-signs a $15,000 note payable to College Loan Company enabling Dios to obtain a student loan. The terms of the note stated that Bravo signed "on behalf of" Dios. if dios stops making payments on the debt, Bravo is

primarily laible

Bass signs a note "payable to the order of Credit Bank" Unless Bass has a valid defense against payment, his liability on this note is

primary

with respect to debtors, the main goal of bankruptcy law is to

provide a new start without creditors' claims

if a voluntary petition in bankruptcy is found to be proper, the court's entry of an order for relief

puts into place an automatic stay

an instrument payable to two or more persons without an "and" or an "or" between the parties' names, such as a check "payable to the order of Gerhard Hans,"

requires the indorsement of only one of the parties to be negotiated

to create an enforceable security interest for a loan, in terms of the collateral, the debtor must have

rights in it

the UCC does not define the term default. this encourages the parties to a secured transaction to

stipulate the conditions that will constitute a default

Rita is a surety for Sue's loan from Total Finance Company. Rita's right to "step into the shoes" of Total Finance, after paying Sue's debt, and exercise any of the Total Finance's rights against Sue is the right of

subrogation

special requirements for the form and content of negotiable instruments are imposed by

the Uniform Commercial Code

Faye forges Greta's signature on a check "payable to the order of Faye" drawn on Greta's account at Home Bank. Most likely, if the bank pays the check

the bank will have to recredit Greta's account

to create an enforceable security interest between finance corporation and global trade inc. in a written security agreement, the agreement must contain the description of

the collateral

to create an enforceable security interest between mortgage bank and national property company in a written security agreement, the agreement must be signed by

the debtor

under any chapter of the bankruptcy code, failing to file the necessary documents with the debtor's petition for relief can result in

the dismissal of the petition

Mara has a checking account at North Bank. Mara signs a check "payable to Ovid" drawn on Mara's account. North Bank is

the drawee

Bern signs a check "pay to the order of College Bookstore" drawn on his account at Debit Bank to buy textbooks. Bern is

the drawer

franco buys a sofa from Grey at a garage sale. Franco writes Grey a check for $50 to pay for the couch. Grey is

the payee

Because he or she was in the best position to prevent wrongdoing with respect to an instrument, transfer and presentment warranties attempt to shift liability to

the person who dealt face to face with the wrongdoer

under chapter 13, a repayment plan must provide for

the same treatment of each claim within a particular class of claim

Baer writes a check for $500 "payable to Cary" drawn on Baer's account at Debit Bank. Cary indorses and sells the check to Esau, who deposits the check in his account at Fidelity Bank. Fidelity dishonors the check. Baer or Cary may be liable for payment of the check if

timely notice of dishonor is given

transfer of a note "payable to the order of Credit Company" by delivering to Debit Associates, with the payee's indorsement, for consideration, extends warranty liability

to any subsequent holder who takes the instrument in good faith

to operate practically as a substitute for cash or a credit devise, a negotiable instrument must be

transferable without the danger of being uncollectable