MEE

Question 1

Article 9 of the UCC applies to any transaction intended to create a security interest in ____ or ____.

Answer 1

personal property; fixtures

Question 2

A security interest gives a creditor the right to ____ in order to satisfy a debt.

Answer 2

sell a debtor’s property

Question 3

What are the different types of collateral?

Answer 3

(1) goods
(2) consumer goods
(3) inventory
(4) accounts

Question 4

Goods are all things that are ____ when a security interest attaches.

Answer 4

moveable

Question 5

Consumer goods are goods that are used mainly for ____.

Answer 5

personal, family or household purposes

Question 6

Inventory includes goods that are kept by a person for ____ or ____.

Answer 6

for sale or lease; materials used or consumed in a business in a short period of time

Question 7

A security interest in a debtor’s “account” covers ____, whether or not earned by performance, for property that has been or is to be sold.

Answer 7

any right to payment of monetary obligation

Question 8

(Accounts)
A secured party can collect directly from ____.

Answer 8

the person who owes the debtor if the debtor defaults

Question 9

A valid attachment requires:

Answer 9

(1) security agreement
(2) debtor’s rights in collateral
(3) value given

Question 10

There are three different methods in which a security interest may be perfected:

Answer 10

(1) filing
(2) taking possession
(3) automatic perfection

Question 11

The filing of a ____ or the ____ with the state by an authorized party is the filing method of perfection.

Answer 11

financing statement; security agreement

Question 12

A secured party may perfect a security interest in ____, by taking ____ of such items.

Answer 12

negotiable documents, goods, instruments, or money; mere possession

Question 13

The following security interests are perfected automatically when they are attach:

Answer 13

(a) purchase-money security interest in consumer goods

(b) assignment of accounts that does not transfer significant part of the assignor’s outstanding accounts

Question 14

A perfected security interest has ____ over a conflicting unperfected security interest in the same collateral.

Answer 14

priority

Question 15

Between multiple perfected creditors, the first to ____ obtains priority.

Answer 15

file

Question 16

Some collateral is not subject to the state filing system or cannot otherwise be filed. In these instances, the first to ____ obtains priority.

Answer 16

perfect

Question 17

Knowledge of a prior unperfected interest will ____from filing first to obtain priority.

Answer 17

not prevent a potential secured party

Question 18

Buyers in the ____ are protected even though their interest in the property is created after the attachment or perfection of a security interest.

Answer 18

ordinary course of business

Question 19

Buyers in the ordinary course of business take the collateral ____.

Answer 19

free of the security interest created by the seller

Question 20

The protected buyer may ____ free of the secured party’s security interest.

Answer 20

sell the purchased collateral to a third-party

Question 21

A buyer in the ordinary course of business is a person who:

Answer 21

(1) in good faith and without knowledge that the sale to him is in violation of the security interest of a third party

(2) buys in the ordinary course from a person in the business of selling goods of that kind

Question 22

A buyer of ____ takes the goods free of a security interest, even if perfected, if the buyers buys.

Answer 22

consumer goods

Question 23

A buyer of consumer goods takes the goods free of a security interest, even if perfected, if the buyers buys:

Answer 23

(1) without knowledge of the security interest
(2) for value
(3) primarily for the buyer’s personal, family, or household purposes
(4) before the filing of a financing statement covering the goods

Question 24

Purchase-money security interest (PMSIs) have priority over prior perfected security interests if the PMSI is ____.

Answer 24

properly executed

Question 25

A PMSI is either:

Answer 25

(1) security interest held by the seller of collateral to secure payment of all or part of the price

(2) security interest of a person that gives value to a debtor so that the debtor may acquire rights in or the use of collateral

Question 26

An unperfected PMSI in inventory ____ over a perfected security interest in the same collateral.

Answer 26

will not have priority

Question 27

A PMSI in non-inventory collateral has priority over a conflicting security interest in the same collateral if the PMSI is perfected at the time the debtor ____.

Answer 27

receives possession of the collateral or within 20 days thereafter

Question 28

Upon default, the secured party may attempt to ____ of the collateral without judicial process so long as they do not ____.

Answer 28

take possession; commit a breach of the peace

Question 29

Upon default, a secured party may ____ of any or all of the collateral in its present condition or in any commercially reasonable manner.

Answer 29

sell, lease, license, or otherwise dispose

Question 30

When a creditor makes a non-complying disposition of collateral under Article 9, the debtor can:

Answer 30

(1) recover actual damages

(2) recovery statutory damages

(3) be subject to judicially mandated disposition of the collateral

Question 31

A debtor or any secondary obligor has the right to ____ collateral until the secured party has ____.

Answer 31

redeem (reclaim); disposed of it or entered into a contract for its disposition

Question 32

To redeem collateral, the debtor must:

Answer 32

(1) fulfill all obligations secured by the collateral
(2) pay the reasonable expenses and attorney fees

Question 33

When a secured party sell or disposes of collateral, the amount collected varies from the ____.

Answer 33

amount of the obligation

Question 34

If the sale brings in more than the underlying obligation, the secured party must ____.

Answer 34

pay the debtor for any surplus

Question 35

When the sale brings in less than the underlying obligation, the obligor is ____.

Answer 35

liable for any deficiency

Question 36

Equipment is a good used or bought for use in ____.

Answer 36

business

Question 37

What are the requirements of a written security agreement?

Answer 37

• record showing intent to create security interest
• authenticated by debtor
• describe collateral