MEE Rule Statements

Question 1

Inventory under UCC article 9 includes

Answer 1

goods other than farm products, that are held for sale

Question 2

A security interest that is enforceable against the debtor with respect to the collateral is said to have attached to the collateral and three conditions must exist:

Answer 2

1) secured party must give value
2) debtor must have rights in the collateral AND 3) debtor must authenticate a security agreement that describes the collateral or secured party retains possession of collateral

Question 3

A security interest is perfected upon

Answer 3

attachment and compliance with one of the methods of perfection

Question 4

A buyer of collateral subject to a perfected security interest generally takes

Answer 4

the collateral subject to that interest, unless the secured party has authorized its sale free of the security interest

Question 5

A buyer in the ordinary course of business takes

Answer 5

free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence.

Question 6

A BOCB is a buyer who

Answer 6

1) buys goods
2) in the ordinary course of business
3) from a merchant in the business of selling goods of that kind
4) in good faith AND
5) without knowledge that the sale violates another’s rights

Question 7

A purchase money security interest PMSI is a special type of security interest that

Answer 7

exists when a secured party sold goods to the debtor, and then the debtor incurs an obligation to pay the secured party all or part of the purchase price (a sale on credit)

Question 8

A PMSI in consumer goods is

Answer 8

automatically perfected

Question 9

A consumer good is acquired for

Answer 9

personal, family, or household purposes

Question 10

A security interest that is enforceable against the debtor is said to have

Answer 10

attached to the collateral

Question 11

Attachment requires that

Answer 11

1) value has been given by the secured party
2) debtor has rights in the collateral AND
3) the debtor has authenticated a security agreement that describes the collateral OR the secured party has possession or control of the collateral pursuant to a security agreement.

Question 12

Inventory includes

Answer 12

goods, other than farm products, that are held for lease or sale.

Question 13

Perfection of a security interest is generally necessary for the

Answer 13

secured party to have rights in the collateral that are superior to any rights claimed by third parties.

Question 14

A security interest in the goods can be perfected by

Answer 14

filing a financing statement

Question 15

A buyer of collateral subject to a perfected security interest generally takes the

Answer 15

collateral subject to that interest

Question 16

A buyer in the ordinary course of business takes

Answer 16

free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence.

Question 17

A BOCB is a person who

Answer 17

1) buyers goods
2) in the ordinary course of business
3) from a merchant who is in the business of selling goods of that kind
4) in good faith AND
5) without knowledge that the sale violates the rights of another in the same goods

Question 18

To qualify as a buyer, the purchaser must

Answer 18

give new value, which in addition to paying cash for the goods includes purchasing the goods on credit

Question 19

A PMSI in goods exists when a

Answer 19

secured party sold goods to the debtor, and the debtor incurs an obligation to pay the secured party all or party of the purchase price

Question 20

A PMSI in consumer goods is

Answer 20

automatically perfected upon attachment.

Question 21

Consumer goods are those goods acquired for

Answer 21

personal, family, or household purposes.

Question 22

A buyer of collateral subject to a perfected security interest generally takes

Answer 22

the collateral subject to that interest

Question 23

A consumer buyer of consumer goods takes

Answer 23

free of a security interest, even if perfected, unless prior to the purchase the secured party filed a financing statement covering the goods.

Question 24

A consumer buyer is a person who

Answer 24

1) buys consumer goods for value
2) for his own personal, family, or household use
3) from a consumer seller AND
4) without knowledge of the security interest.

“Garage Sale” rule

Question 25

Proceeds include

Answer 25

whatever is acquired upon the sale of collateral.

Question 26

A security interest in collateral automatically

Answer 26

attaches to identifiable proceeds.

Question 27

If the proceeds are identifiable cash proceeds (which includes checks) and the security interest in the original collateral is perfected,

Answer 27

the perfected security interest in the proceeds continues indefinitely.

Question 28

Under article 9, for a security interest to be enforceable against a debtor, the interest

Answer 28

must attach to the collateral

Question 29

For attachment, three conditions must be met:

Answer 29

1) value must be given by the secured party
2) the debtor has rights in the collateral AND
3) the debtor authenticated a security agreement that describes the collateral (or the secured party has taken possession or control of the collateral pursuant to a security agreement)

Question 30

A PMSI is a special type of security interest in goods that

Answer 30

has priority over other security interests in the same goods

Question 31

A PMSI arises when a creditor sells goods

Answer 31

to a debtor on credit and retains a security interest in those goods, or the creditor advances funds, which are then used to purchase the goods and the creditor reserves a security interest in those goods

Question 32

Perfection of a security interest is generally necessary for

Answer 32

the secured party to have rights in the collateral that are superior to any rights claimed by third parties

Question 33

A secured party can perfect a security interest by:

Answer 33

1) filing a financing statement
2) possessing the collateral
3) controlling the collateral OR
4) perfecting automatically

Question 34

A PMSI in consumer goods

Answer 34

perfects automatically (as soon as it attaches)

Question 35

A consumer good is a good that is acquired primarily for

Answer 35

personal, family, or household purposes

Question 36

A consumer buyer of consumer goods takes

Answer 36

free of a security interest, even if perfected, unless prior to purchase, the secured party filed a financing statement covering the goods.

Question 37

The holder of a PMSI in goods could lose to

Answer 37

a consumer buyer if he/she does not file a financing statement

Question 38

A consumer buyer is a person who

Answer 38

1) buys consumer goods for value
2) for his own personal, family, or household use,
3) from a consumer seller AND
4) without knowledge of the security interest

“Garage sale rule”

Question 39

If collateral is transferred and the transferee of the collateral is not a buyer, the security interest

Answer 39

generally continues in the collateral, unless the secured party has authorized its sale free of the security interest