Question 1

On July 1,Acledes Bank attaches and perfects a security interest in all of Playo Inc.'s present and after-acquired equipment.On July 15,Richard sells and delivers a new toy-manufacturing machine to Playo Inc.Richard attaches a security interest in the machine on July 16 and perfects it by filing on July 17.Which security interest has priority and why?

Accepted Answer

Richard's interest has priority.A purcha...

Question 2

Acorn Marina Inc.sells and services boat motors.On April 1,1989,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 14,1989,GAC filed the financing statement pursuant to the UCC.On April 27,1989,Acorn sold one of the motors to Mike for use in his charter business.Mike,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 Mike is:

Accepted Answer

A)  subject to the GAC security interest because he should have considered the fact that GAC financed the inventory purchased by Acorn.
B)  subject to the GAC security interest because he purchased the motor for commercial use.
C)  not subject to the GAC security interest because he 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 1,1989.E) A) and B)
F) All of the above

Question 3

Control is the only available perfection method if the collateral is a deposit account.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is the only form of perfection that occurs without the giving of public notice?

Accepted Answer

A)  Perfection by public filing
B)  Perfection by attachment
C)  Perfection by possession
D)  Perfection by controlE) A) and C)
F) C) and D)

Question 5

Which of the following is the "catchall" category for Code classifications of collateral?

Accepted Answer

A)  General intangibles
B)  Chattel paper
C)  Goods
D)  InstrumentsE) A) and B)
F) C) and D)

Question 6

The attachment of the security interest takes place in a legal sense rather than in a physical sense.

Accepted Answer

A) True 
 B)False  True

Question 7

A creditor who sells consumer goods to a consumer on credit has a purchase money security interest in the goods.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is true about possession of collateral by the secured party as public notice?

Accepted Answer

A)  Change of possession is a convenient way for perfecting most security interests in consumer goods.
B)  Possession of collateral by the creditor is rarely executed to perfect a security interest in chattel paper and negotiable documents of title.
C)  Possession is a possible way of perfecting a security interest in inventory which is achieved through a field warehousing arrangement.
D)  Possession by the creditor is a practicable way of perfecting a security interest in equipment or farm products.E) All of the above
F) C) and D) C

Question 9

Which of the following corresponds to the priority rule for purchase money security interests in inventory?

Accepted Answer

A)  The PMSI has priority if it is perfected at the time the debtor receives possession of the inventory.
B)  The PMSI has priority if it is perfected within 20 days after the debtor receives possession of the inventory.
C)  The PMSI has priority if the holder of the competing security interest received notification within three years before the debtor receives the inventory.
D)  The PMSI has priority when it has been filed or perfected before the other interest on the same collateral.E) C) and D)
F) A) and D)

Question 10

In the case in the text,In re Lance,the court held that the credit union's security interest in the snowmobile automatically perfected because:

Accepted Answer

A)  the snowmobile was a consumer good.
B)  the credit union filed a financing statement with the secretary of state.
C)  the credit union possessed the snowmobile.
D)  the credit union filed a continuation statement before the financing statement lapsed.E) A) and B)
F) B) and D) A

Question 11

Each state specifies by statute where the financing statement has to be filed.

Accepted Answer

A) True 
 B)False

Question 12

________ refer(s) to the goods used or bought primarily for personal purposes.

Accepted Answer

A)  Inventory
B)  Fixtures
C)  Consumer goods
D)  EquipmentE) None of the above
F) B) and C)

Question 13

Safeco Corporation manufactures toys for distribution to retailers.In Safeco's hands,the toys are consumer goods.

Accepted Answer

A) True 
 B)False

Question 14

As discussed in Giles v.First Virginia Credit Services,Inc. ,the case in the text,creditors that act improperly in repossessing collateral:

Accepted Answer

A)  lose their security interest in the collateral.
B)  must return the repossessed collateral.
C)  are liable to the parties injured.
D)  lose priority in bankruptcy proceedings.E) A) and C)
F) B) and C)

Question 15

If there are conflicting security interests,but neither has been perfected,then the interest that attaches to the collateral first will have priority.

Accepted Answer

A) True 
 B)False

Question 16

What type of agreement is required in nearly all security interest transactions?

Accepted Answer

A)  An authenticated security agreement
B)  An international depositor's agreement
C)  Foreign assignment agreement
D)  Title conveyance agreementE) A) and B)
F) A) and C)

Question 17

Which of the following is not a class of goods?

Accepted Answer

A)  Equipment
B)  Farm products
C)  Software
D)  FixturesE) B) and D)
F) A) and D)

Question 18

Carter sold a $20,000 boat to Davis on credit for personal use.As part of the deal,Davis completed an installment note payable to Carter and a security agreement giving Carter a security interest in the boat,which was attached on July 1.Carter never filed a financing statement.On August 1,Davis borrowed $15,000 from Bank,by completing a security agreement giving the Bank a security interest in the boat.This interest attached on the same day and the Bank filed a financing statement on August 6.Davis defaulted on both his installment payments to Carter and his loan obligation to the Bank.Each of these parties wants to satisfy Davis's obligation by repossessing and selling the boat.Whose security interest in the boat has priority and why?

Accepted Answer

A)  Bank's interest has priority because Carter never filed a financing statement.
B)  Carter's interest has priority because his security interest was perfected before Bank's interest.
C)  Bank's interest has priority because Carter failed to attach his security interest.
D)  Bank's interest has priority because the Bank perfected the interest within ten days after Davis received the collateral.E) B) and C)
F) All of the above

Question 19

A security agreement may grant a creditor a security interest in the after-acquired property of the debtor.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements about a creditor's right to repossess collateral is false?

Accepted Answer

A)  The Code authorizes a creditor to repossess collateral when the debtor defaults.
B)  The creditor can obtain the collateral through self-help if she can obtain possession peacefully.
C)  If the collateral cannot be obtained without disturbing the peace,the creditor must go through the courts to repossess the collateral.
D)  If the collateral is intangible,the secured party can get payments made to her,even if performance has not been rendered to the debtor.E) A) and D)
F) None of the above

Exam 29: Security Interests in Personal Property

Correct Answer
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Richard's interest has priority.A purcha...
View Answer

Correct Answer
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Control is the only available perfection method if the collateral is a deposit account.

Correct Answer
verified

Which of the following is the only form of perfection that occurs without the giving of public notice?

Correct Answer
verified

Which of the following is the "catchall" category for Code classifications of collateral?

Correct Answer
verified

The attachment of the security interest takes place in a legal sense rather than in a physical sense.

Correct Answer
verified
True

A creditor who sells consumer goods to a consumer on credit has a purchase money security interest in the goods.

Correct Answer
verified

Which of the following is true about possession of collateral by the secured party as public notice?

Correct Answer
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C

Which of the following corresponds to the priority rule for purchase money security interests in inventory?

Correct Answer
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In the case in the text,In re Lance,the court held that the credit union's security interest in the snowmobile automatically perfected because:

Correct Answer
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A

Each state specifies by statute where the financing statement has to be filed.

Correct Answer
verified

________ refer(s) to the goods used or bought primarily for personal purposes.

Correct Answer
verified

Safeco Corporation manufactures toys for distribution to retailers.In Safeco's hands,the toys are consumer goods.

Correct Answer
verified

As discussed in Giles v.First Virginia Credit Services,Inc. ,the case in the text,creditors that act improperly in repossessing collateral:

Correct Answer
verified

If there are conflicting security interests,but neither has been perfected,then the interest that attaches to the collateral first will have priority.

Correct Answer
verified

What type of agreement is required in nearly all security interest transactions?

Correct Answer
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Which of the following is not a class of goods?

Correct Answer
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Correct Answer
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A security agreement may grant a creditor a security interest in the after-acquired property of the debtor.

Correct Answer
verified

Which of the following statements about a creditor's right to repossess collateral is false?

Correct Answer
verified

Exam 29: Security Interests in Personal Property

Correct AnswerverifiedRichard's interest has priority.A purcha...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Control is the only available perfection method if the collateral is a deposit account.

Correct AnswerverifiedShow Answer

Which of the following is the only form of perfection that occurs without the giving of public notice?

Correct AnswerverifiedShow Answer

Which of the following is the "catchall" category for Code classifications of collateral?

Correct AnswerverifiedShow Answer

The attachment of the security interest takes place in a legal sense rather than in a physical sense.

Correct AnswerverifiedTrue

A creditor who sells consumer goods to a consumer on credit has a purchase money security interest in the goods.

Correct AnswerverifiedShow Answer

Which of the following is true about possession of collateral by the secured party as public notice?

Correct AnswerverifiedC

Which of the following corresponds to the priority rule for purchase money security interests in inventory?

Correct AnswerverifiedShow Answer

In the case in the text,In re Lance,the court held that the credit union's security interest in the snowmobile automatically perfected because:

Correct AnswerverifiedA

Each state specifies by statute where the financing statement has to be filed.

Correct AnswerverifiedShow Answer

________ refer(s) to the goods used or bought primarily for personal purposes.

Correct AnswerverifiedShow Answer

Safeco Corporation manufactures toys for distribution to retailers.In Safeco's hands,the toys are consumer goods.

Correct AnswerverifiedShow Answer

As discussed in Giles v.First Virginia Credit Services,Inc. ,the case in the text,creditors that act improperly in repossessing collateral:

Correct AnswerverifiedShow Answer

If there are conflicting security interests,but neither has been perfected,then the interest that attaches to the collateral first will have priority.

Correct AnswerverifiedShow Answer

What type of agreement is required in nearly all security interest transactions?

Correct AnswerverifiedShow Answer

Which of the following is not a class of goods?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A security agreement may grant a creditor a security interest in the after-acquired property of the debtor.

Correct AnswerverifiedShow Answer

Which of the following statements about a creditor's right to repossess collateral is false?

Correct AnswerverifiedShow Answer

Correct Answer
verified
Richard's interest has priority.A purcha...
View Answer

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True

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C

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A

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