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21 Cards in this Set
- Front
- Back
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Janet is the secured party in a secured transaction with Michelle. Janet could also be referred to as the: a. debtor b. secured creditor c. collateral d. filing officer |
b. secured creditor
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The payment of Fritz’s debt to Gianini is guaranteed by Fritz’s personal property. Gianini is a. a debtor. b. a secured party. c. a secured transaction. d. a security interest. |
b. a secured party.
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Sally is the secured party in a transaction with Lilly, who is the debtor. Sally files a financing statement with the appropriate state official. The financing statement must contain a. Lilly’s signature. b. Sally’s bank account information. c. Lilly’s credit report. d. a photograph of the collateral. |
a. Lilly’s signature.
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Khalil holds a security interest in inventory owned by Luc. Khalil pro¬tects his claim to the inventory in the event of Luc’s default by a. assignment. b. perfection. c. redemption. d. retention. |
b. perfection.
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Lenders Bank files a financing statement regarding a transaction with Metro Construction Company. To be valid, the financing statement must contain all of the following except a. a description of the collateral. b. a statement of the purpose for the transaction. c. Lenders’ name. d. Metro’s name. |
b. a statement of the purpose for the transaction.
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The payment of Olinda’s debt to Pari is guaranteed by Olinda’s personal property. Pari is most likely to perfect her interest by a. insuring Olinda’s property for the full amount of its value. b. calculating the precise amount of Olinda’s debt. c. correcting grammatical errors in the parties’ written agreement. d. filing a financing statement with the appropriate authority. |
d. filing a financing statement with the appropriate authority.
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Kathy is the secured party in a transaction with Julie, who is the debtor. The collateral is a 2007 Chevrolet F150 pick-up truck. Kathy files a financing statement in which she describes the collateral as “a vehicle.” To perfect Kathy’s interest this is a. not sufficient. b. sufficient. c. sufficient if the financing statement also includes Julie’s signature. d. sufficient if the financing statement also includes the location of the collateral. |
a. not sufficient.
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Corporate Bank wants to perfect its security interest in inventory owned by Outdoor Outfitters, Inc. Most likely, a financing statement should be filed with a. the bank manager. b. the county clerk. c. the U.S. Department of the Interior. d. the secretary of state. |
d. the secretary of state.
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Super Discount Store sells goods to consumers and businesses in several states in the Midwest. Most of the goods are sold on credit. Super Discount often takes a security interest with the goods as collateral. The state in which a financing statement should be filed depends on the location of a. the debtor. b. the collateral. c. the store in which the goods were sold. d. the place from which Super Discount manages its operations |
a. the debtor.
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Home2U Stores, Inc., sells household consumer goods. To create a pur¬chase-money security interest, Home2U must a. assign, to a collecting agent, a portion of its accounts payable. b. assign, to a collecting agent, a portion of its accounts receivable. c. extend credit for part or all of the purchase price of the goods. d. refer purchasers to a third-party lender. |
c. extend credit for part or all of the purchase price of the goods.
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City Bank’s financing statement in collateral owned by Delta Waters Corporation will expire in less than a year. Filed timely, a continuation statement could extend the effectiveness of the financing statement for a. one year. b. two years. c. five years. d. ten years. |
c. five years.
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Joan borrows money from Jake under a security agreement. After borrowing the money, Joan buys a new kayak. The kayak is considered a. a floating lien. b. after-acquired property. c. a future advance. d. proceeds. |
b. after-acquired property.
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Debit & Credit Financing, Inc., and Equity Lending Company are secured parties with security interests in property owned by Fleet Shipping Corporation. Priority between these security interests is generally determined by a. the amount of the claim. b. the custom in the trade. c. the time of perfection or attachment. d. the “float” of the liens. |
c. the time of perfection or attachment.
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Dredging, Inc., borrows $50,000 from Equity Financing Corporation in a secured transaction using Dredging’s equipment as collateral. Dredging then borrows $70,000 from First Choice Lenders, Inc., using the same equipment as collateral. Neither Equity Financing nor First Choice perfects its security interest. Dredging defaults on the loans. The party with priority is a. Equity Financing, because its interest was the first to attach. b. First Choice, because Dredging owes it more money. c. First Choice, because its interest was the second to attach. d. Equity Financing, because Dredging owes it less money. |
b. First Choice, because Dredging owes it more money.
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Fact Pattern 21-1B (next two flashcards apply) for use in its operations, borrowing $1 million from Security Finance Corporation for a security interest in the equipment. The next day, Resource Drilling borrows $500,000 from Touchstone Loans, also for a security interest in the equipment. Resource Drilling defaults on both loans.
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next two cards
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Suppose that Security Finance perfects its security interest when Resource Drilling takes possession of the equipment. In that circumstance, the party with priority to the collateral on Resource Drilling’s default would be a. Resource Drilling. b. Security Finance and Touchstone Loans proportionately. c. Security Finance only. d. Touchstone Loans only. |
a. Resource Drilling.
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Suppose that two weeks after Resource Drilling takes possession of the equipment, Security Finance and Touchstone Loans file financing statements, with Touchstone Loans filing first. In that circumstance, the party with priority to the equipment is a. Resource Drilling. b. Security Finance and Touchstone Loans proportionately. c. Security Finance only. d. Touchstone Loans only. |
a. Resource Drilling.
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Rural Financial Corporation is a secured party with a security interest in property owned by Strawberry Fields, Inc. Perfection of this security interest may not protect Rural Financial against the claim of a. a bank. b. a buyer in the ordinary course of business. c. a subsequent lien creditor. d. a trustee in bankruptcy. |
c. a subsequent lien creditor.
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A-One Loans, Inc., holds a security interest in kitchen and restaurant equipment owned by Brunch n’ Lunch Bistro. A-One assigns its interest in the equipment to Commercial Investments Corporation. Commercial Investments becomes the secured party of record a. automatically. b. if A-One advises Brunch n’ Lunch of the assignment. c. if Commercial Investments advises Brunch n’ Lunch of the assignment. d. if Commercial Investments files a uniform amendment form. |
d. if Commercial Investments files a uniform
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Pizza Now!, a delivery, dine-in, or takeout restaurant, buys a delivery vehicle on credit from Quality Auto & Truck Dealers Corporation, but does not make a payment on the loan for several months. Quality Auto repossesses the vehicle by towing it from a public street. Pizza Now! sues Quality Auto for breach of the peace. Pizza Now! will probably a. not prevail, because Quality Auto did not use judicial process. b. not prevail, because the repossession was not a breach of the peace. c. prevail, because Pizza Now! did not default on the loan. d. prevail, because the repossession was a breach of the peace. |
a. not prevail, because Quality Auto did not use judicial process.
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Sweetwater Café defaults on debts to Town & Country Bank and Uno Loan Company. Town & Country perfected its security interest before Uno. Town & Country takes possession of the collateral in which it has a security interest. On a sale of the collateral, the proceeds will be applied first to a. Sweetwater’s previous payments on the debts. b. Sweetwater’s unpaid payments on the debts. c. the balance of Sweetwater’s debt to Town & Country. d. the balance of Sweetwater’s debt to Uno. |
d. the balance of Sweetwater’s debt to Uno.
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