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Exam 34: Secured Transactions in Personal Property

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Question 1

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An interest in personal property or fixtures that secures payment or performance of an obligation is called a:

A) guaranty holding.
B) security interest.
C) guaranty interest.
D) good-faith guaranty.

E) A) and B)
F) A) and C)

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Question 2

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When a seller sells on credit and is given a security interest in the goods, that interest is called:

A) a purchase money security interest.
B) a future transaction.
C) a floating lien.
D) none of the above.

E) A) and B)
F) All of the above

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Question 3

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The concept of perfection concerns:

Morris made two purchases. He purchased his neighbor Cordelia's typewriter and a computer from Crazy Computers. Regarding the typewriter, Cordelia had bought it on credit from Jack's Typewriters. Cordelia had financed the purchase with Jack's and signed a promissory note and a security agreement covering the purchase. The creditor, Jack's, did not file a financing statement, relying on the concept of automatic perfection for purchase money security interests in consumer goods. Morris was unaware of the history of the typewriter. The computer was subject to a security interest in favor of Country Bank, which had perfected its security interest by filing. Morris, by coincidence, knew of this security interest when Morris purchased the computer. Unfortunately, neither Cordelia nor Crazy Computers paid the secured creditors who now seek to repossess the collateral from Morris. What will be the likely outcome of this case?

Compulsory resale of collateral is not recognized by the Uniform Commercial Code.

A security interest will be perfected without filing when:

A financing statement need not be filed in a public place.

Goods held for sale or lease are:

A buyer in the ordinary course of business who purchases inventory goods from a debtor who had placed a security interest on those goods in favor of a creditor:

In most cases, value, which allows attachment of a security interest, is any consideration that supports a simple contract.

When a state statute requires a security interest in a motor vehicle to be noted on the certificate of title, the security interest is perfected:

A security interest need only be attached, not perfected, if there are no competing claims for the collateral.

If two creditors have a security interest in the same collateral, their priority is determined according to the "last in-first out" provision.

Self-help repossession of collateral upon a buyer's default is contrary to public policy and never is allowed.

Consumer goods are classified into different categories based on the debtor's intended use, not the physical characteristics of the goods.

With regard to future goods:

In most states, __________ provides that a security interest in a non-inventory motor vehicle must be noted on the vehicle title registration.

Perfection can occur merely by possession of the collateral by the creditor.

An after-acquired property clause in a consumer security agreement can cover only goods acquired by the debtor within thirty (30) days after the creditor gave value to the debtor.

A security interest may be possessory or nonpossessory.