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Exam 30: Secured Transactions

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Question 1

True/False

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A security agreement must describe the collateral because no security interest can exist unless the parties agree on the property subject to it.

A) True
B) False

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Question 2

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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

A) insuring the property for the full amount of its value.
B) calculating the precise amount of the debt.
C) correcting grammatical errors in the parties' written agreement.
D) filing a financing statement with the appropriate authority.

E) B) and D)
F) A) and B)

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Question 3

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A security interest in proceeds is not perfected unless it is specifically provided in the security agreement.

One of a creditor's main concerns is having priority over other creditors who have rights in the same property of the debtor.

Highway Autos Inc. borrows funds from Investment Company under a security agreement. Later, the borrower buys new vehicles to add to its inventory. The lender has a security interest in the new vehicles if

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 the business.

A party who owes payment or performance of a secured obligation is a secured party .

In a security agreement with AAA Machine Parts Inc., Business Loan Company wants to include a description of the collateral. A sufficient description would be

When a debtor defaults, a secured creditor can take possession of the collateral without a court order and either retain or resell 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

A floating lien is a security interest retained in collateral even when the collateral changes in character, classification, or location.

Because the UCC encourages a debtor and creditor to include in their security agreement the standards to measure their rights and duties, the parties can stipulate the conditions that will constitute a default.

Guaranty Capital Corporation is given value by Housewares Wholesale Inc. in the form of a commitment to sell goods on credit. In terms of creating an enforceable security interest, this is

Redevelopment Capital Inc. is the secured party in a secured transaction with Skyway Airport Corporation. Redevelopment Capital is also known as

A secured party may be liable to a debtor for failing to comply with the debtor's request for confirmation of the amount of an unpaid debt.

Improper filing of a financing statement can render a security interest unperfected.

Bond Bank assigns to Capital Invest LLC the bank's security interest in certain real property owned by Developer Inc. Capital Invest becomes the secured party of record. The bank's security interest in the collateral is

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

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

Several documents may be considered together to comprise a security agreement.