Quiz

Question 1

Instruments are pieces of paper that represent

Answer 1

the right to be paid money.

Question 2

Perfection gives a secured party

Answer 2

greater priority as against others with competing interests in the collateral.

Question 3

Filing an authorized financing statement is _____________ for a security interest to attach, but rather is one way to perfect a security interest.

Answer 3

not necessary

Question 4

Attachment establishes

Answer 4

the secured party’s rights against the debtor.

Question 5

A security interest cannot be perfected until

Answer 5

it’s attached.

Question 6

In most states, and for most types of collateral, including goods, a financing statement must be filed

Answer 6

with the secretary of state of the state where the DEBTOR is located.

Question 7

Where must a creditor file a fixture filing?

Answer 7

Wherever a mortgage on real property would be filed in the jurisdiction where the land is.

Often a county clerk’s office.

Fixture filings do not following the general rule in most states that the financing statements must be filed with the secretary of state of the state where the debtor is located.

Question 8

A purchase money security interest (PMSI) in consumer goods is perfected as soon as:

Answer 8

it attaches.

Question 9

A PMSI arises where the creditor

Answer 9

(1) sells goods to the debtor on credit and reserves a security interest in those goods, or
(2) advances the funds used to purchase goods and reserves a security interest in those goods.

Question 10

Automatic perfection does not apply

Answer 10

to PMSI’s in other types of goods, and security interests in noninventory motor vehicles generally can be perfected only by notation on the vehicle’s certificate of title, even if that car would be categorized as a consumer good.

Question 11

The original filing of a financing statement generally is effective for

Answer 11

5 years.

Question 12

To continue the effectiveness of a financing statement, a continuation statement must be authorized by

Answer 12

the secured party only.

Question 13

Continuation statements may be filed during

Answer 13

the last 6 months of the effective period of a prior filing, and will continue the effectiveness of the filing for 5 more years.

Question 14

If a secured party in a nonconsumer transaction fails to comply with default rules of the UCC, what happens?

Answer 14

The value of the collateral is presumed to equal the amount of the debt.

Question 15

In nonconsumer transactions, the rebuttable presumption rule applies, which holds

Answer 15

that the value of the collateral is presumed to equal the amount of the debt unless the secured party proves otherwise.

Question 16

A purchase money security interest in most goods has priority over conflicting security interests in the same goods only if

Answer 16

the PMSI is perfected before or within 20 days after the debtor receives possession of the goods.

Question 17

May a security agreement contain a clause giving the secured party rights in property the debtor will acquire in the future?

Answer 17

Yes, for all types of collateral other than commercial tort claims.

Question 18

in general, Article 9 applies to

Answer 18

contractual security interests in personal property and fixtures, but not other forms of real property. Thus, it does not apply to a sale or mortgage of a single family home or a mechanic’s lien on a commercial building. But it does apply to a security interest in a car.

Question 19

Equipment is defined as

Answer 19

goods that are not consumer goods, farm products or inventory.

Question 20

Documents are

Answer 20

pieces of paper that represent the right to receive goods.

Question 21

Instruments are

Answer 21

pieces of paper that represent the right to be paid money, such as a check.

Question 22

Investment property includes

Answer 22

items such as stocks, bonds and mutual funds.

Question 23

A repossession made over any protest by the debtor

Answer 23

constitutes a breach of the peace, even though no violence or significant disturbance occurs.

Question 24

“dont take my car”

Answer 24

breach of the peace.

Question 25

Constructive force or actions that contain implied threats

Answer 25

not peaceful. Ditto re carrying a weapon or dressing as a law enforcement officers are implied threats that constitute breaches of the peace.

Question 26

Breaking and entering

Answer 26

generally a breach of peace.

Question 27

Entering unlocked garage

Answer 27

breach of peace

Question 28

Taking car from debtor’s driveway

Answer 28

trespass, not breach of peace.

Question 29

A description that describes collateral simply as all of the debtors assets is sufficient for:

Answer 29

identifying the collateral in a financing statement, but not in a security agreement.

Question 30

The description of the collateral in an authenticated security agreement is sufficient if it

Answer 30

reasonably identifies the collateral.

Question 31

A security interest in equipment may be perfected by

Answer 31

filing a financing statement or by creditor’s possession of the collateral.

Question 32

Security interests in every kind of collateral except deposit accounts and money may be perfected by

Answer 32

filing.

Question 33

Security interests in tangible collateral, such as equipment, also may be perfected

Answer 33

by the secured party taking possession (by pledge).

Question 34

Only security interests in investment property, nonconsumer deposit accounts, and electronic chattel paper

Answer 34

may be perfected by the creditor’s control of that collateral.

Question 35

The only tangible collateral that is automatically perfected are

Answer 35

PMSIs in consumer goods.

Question 36

Article 9 remedies for security party on debtor’s default include:

Answer 36

possession by self-help w/o judicial process IF she can do it w/o breach of peace;

sell, lease or license the collateral by public sale, private sale, or K.

keep the collateral to satisfy the debt;

selling the collateral and bringing ordinary judicial action for the amounts due and levy on the collateral.

Question 37

Funds the secured party has agreed to loan the debtor in the future

Answer 37

are NOT proceeds.

Question 38

Garage sale rule

Answer 38

If the buyer of a consumer goods in turn resells them to another consumer, the 2nd buyer takes the consumer goods free of the security interest if he buys w/o knowledge of it, for value, and before a financing statement covering the goods has been filed.