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Exam 25: Security Interests and Creditors Rights

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Question 21

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Bonds Bank assigns to Capital Invest 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

A) extended.
B) terminated.
C) floated to other property owned by Developer Inc.
D) subordinated to the assignee's interest.

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

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Question 22

Multiple Choice

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Business Sales Inc.'s debt to Cartage Company is past due. Cartage brings a legal action against Business Sales to collect. To ensure that a judgment in the creditor's favor will be collectible, Cartage asks the court to order the seizure of the debtor's property. This is a request for

A) an artisan's lien.
B) a mechanic's lien.
C) a writ of attachment.
D) a writ of execution.

E) A) and D)
F) A) and C)

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Question 23

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Kelly's Autos Inc. borrows funds from Loan Company under a security agreement. Later, Kelly's buys new vehicles to add to its inventory. Loan Company has a security interest in the new vehicles

With a binding agreement to extend credit, a secured party can obtain a security interest.

Consideration to support a simple contract is not sufficient value to support the acquisition of a security interest.

A secured party perfects a claim by filing a financing statement with the debtor.

To create an enforceable security interest between Finance Corporation and Global Trade Inc. with a written security agreement, the agreement must contain a description of

Reg borrows funds from Suburban Bank secured by Reg's house. Reg defaults on the debt. The bank's options include

When a debtor defaults, a secured party who does not choose to retain the collateral must relinquish the security interest to the debtor.

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

Most liens have little practical use, because liens generally do not take priority over other claims to the same property.

Attachment ensures that a security interest between a debtor and a secured party is effective.

The last security interest to be perfected is the first in priority over any other perfected security interests.

Ready Credit Inc. holds a security interest in inventory owned by Soy Products Inc. Ready Credit can protect its claim to the inventory in the event of Soy Products' default by

Brewery Company's debt to Credit Service is past due. Credit obtains a judgment against Brewery, but the firm refuses to pay. Credit asks the court to order the seizure of Brewery's property. This is a request for

The UCC's classification or definition of collateral does not affect where or how to perfect a security interest.

Secure Bank lends funds to Trucking Corporation to add a maintenance garage to Trucking's property. Payment of the loan is guaranteed by the building. The law covering this transaction is provided by

Business as we know it could not exist without secured transactions because otherwise sellers and lenders would be less likely to sell and lend on credit.

To create an enforceable security interest between Mortgage Bank and Nations Property Company with a written security agreement, the agreement must be signed by