M6 Secured Transactions

Question 1

MCQ-06881
Under the Secured Transactions Article of the UCC, which of the following statements is correct regarding a security interest that has not attached?

Answer 1

It is NOT effective against either the debtor or third parties.

Question 2

MCQ-01830
Which of the following is included within the scope of the secured transactions article of the code?

Answer 2

The outright sale of accounts receivable.

Question 3

MCQ-01621
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, Year 4.
II. Security interest attached on April 1, Year 4.
III. Purchase money security interest attached April 11, Year 4, and perfected by filing on April
20, Year 4.

Answer 3

III, I, II

A PMSI in equipment has priority over a perfected security interest in the same equipment as long as the PMSI is perfected within 20 days of delivery of the collateral to the debtor. A perfected security interest has priority over an unperfected security interest. Thus, III has highest priority, I has next priority, and II has last priority.

Question 4

MCQ-01560
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

Answer 4

Yes; No; Yes

Attachment requires that: (i) the parties agree to create a security interest— evidenced by either an authenticated security agreement or the creditor’s taking possession or
control of the collateral, (ii) the debtor must have rights in the collateral, and (iii) the creditor must give value. There is no requirement that the security agreement be filed. (Filing is related to perfection.)

Question 5

MCQ-05671
Under the Secured Transactions Article of the UCC, what secured transaction document must be signed by the debtor?

Answer 5

Security agreement

The security agreement must be signed or authenticated by the debtor.

Question 6

MCQ-07207
Under the Secured Transactions article of the UCC, when does a security interest become enforceable?

Answer 6

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.

Question 7

MCQ-07208
Under the Secured Transactions Article of the UCC, which of the following security agreements does not need to be in writing to be enforceable?

Answer 7

A security agreement where the collateral is in the possession of the secured party

Question 8

MCQ-05673
Under the Secured Transactions Article of the UCC, all of the following are needed to create an enforceable security interest, except:

Answer 8

A financing statement must be filed.

Question 9

MCQ-01612
Under the UCC Secured Transactions Article, which of the following after-acquired property may be attached to a security agreement given to a secured lender?
-Inventory
-Equipment

Answer 9

Yes; Yes

A secured party may take a security interest in both after-acquired inventory and after-acquired equipment. The only limits on the effect of after-acquired property clauses involve
consumer goods and commercial tort claims.

Question 10

MCQ-02190
Under the UCC Secured Transactions Article, when collateral is in a secured party’s possession, which of the following conditions must also be satisfied to have attachment?

Answer 10

The debtor must have rights to the collateral.

Question 11

MCQ-08454
Under the Secured Transactions Article of the UCC, a financing statement generally must contain:

Answer 11

The address of the debtor.

Question 12

MCQ-07209
Under the Secured Transactions Article of the UCC, which of the following items can usually be excluded from a filed original financing statement?

Answer 12

The amount of the obligation secured.

Question 13

MCQ-01648
Which of the following transactions would illustrate a secured party perfecting its security interest by taking possession of the collateral?

Answer 13

A pawnbroker lending money.

Question 14

MCQ-02192
Under the UCC Secured Transaction Article, what is the effect of perfecting a security interest by filing a financing statement?

Answer 14

The secured party has priority in the collateral over most creditors who acquire a security interest in the same collateral after the filing.

Question 15

MCQ-05010
Which of the following is not required to be included in a financing statement under the Secured Transactions Article of the UCC?

Answer 15

A statement of the purpose of the transaction.

Question 16

MCQ-02196
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?

Answer 16

A listing or description of the collateral.

Question 17

MCQ-02181
Sun, Inc. manufactures and sells household appliances on credit directly to wholesalers, retailers, and consumers. Sun 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 Sun to:

Answer 17

Consumers.

Question 18

MCQ-01647
Mars, Inc. manufactures and sells VCRs on credit directly to wholesalers, retailers, and consumers. Mars can perfect its security interest in the VCRs it sells without having to file a financing statement or take possession of the VCRs if the sale is made to:

Answer 18

Consumers.

Question 19

MCQ-01582
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 judgment against the debtor

Answer 19

Yes; Yes

When a debtor defaults, the secured creditor can proceed against the collateral, but is not required to. Instead, the creditor can obtain a general judgment.

Question 20

MCQ-12513
Under the Secured Transactions Article of the UCC, in a situation where the financing statement contains no special provisions and the debtor has defaulted, the secured party generally has the right to:

Answer 20

Peacefully take possession of the collateral without judicial process.