P rint S ave As 1) B eca us e there a re s ome res trictions on the type of property tha t ma y be s ubjected to a s ecurity interes t under Article 9, a creditor ca nnot a cquire s uch a n interes t in: A) B) P ers ona l property Fixtures C ) R ea l property D) None of the a bove 2) Which of the following is not neces s a ry for a s ecurity interes t to a tta ch? A) B) The debtor ha s rights in the colla tera l A proper filing C ) The debtor s igns a s ecurity a greement or the creditor ha s pos s es s ion of the colla tera l D) Va lue is given by the creditor 3) A purcha s e-money s ecurity interes t ma y be crea ted when: A s eller reta ins or ta kes a s ecurity interes t in colla tera l to s ecure pa rt or a ll of the purcha s e price of the property s erving a s colla tera l B ) S ome other pa rty ta kes a s ecurity interes t in the colla tera l to s ecure the pa rty's a dva nces or other obliga tion a ctua lly us ed by the debtor to a cquire rights in or to us e the colla tera l C ) A pers on a s s igns a s ma ll portion of his or her a ccounts receiva ble to a collecting a gent D) B oth (a ) a nd (b) A) 4) Which of the following does not crea te a purcha s e-money s ecurity interes t? A) A lien on equipment purcha s ed with funds from a ba nk B ) A lien on equipment purcha s ed on a n ins ta llment pla n from a s eller C ) A lien on equipment previous ly owned by the debtor D) A lien on equipment purcha s ed by giving a 120 da y note to the s eller 5) R on owes money to Ma ry. Ma ry becomes unea s y a bout R on's a bility to pa y a nd s he dema nds tha t R on s ign a s ecurity a greement giving her a n interes t in R on's bus ines s equipment. Ma ry does not file a fina ncing s ta tement. Ma ry's s ecurity interes t: A) Did not a tta ch beca us e s he did not give new va lue to R on B) Did not a tta ch beca us e the equipment wa s owned by R on before the fina ncing s ta tement wa s filed C ) Atta ched but did not perfect beca us e Ma ry did not file a fina ncing s ta tement D) Atta ched a nd perfected; only a ba nk or a s eller of colla tera l needs to file a fina ncing s ta tement 6) The mos t common method of perfecting a s ecurity interes t is for the: A) C reditor to reta in pos s es s ion of the colla tera l B) C reditor to file a fina ncing s ta tement with the a ppropria te public office C ) Debtor to give va lue to the creditor D) Debtor to reta in rights in the property 7) A s ecurity interes t in a negotia ble ins trument ma y be perfected: A) B y pos s es s ion only B) B y filing a fina ncing s ta tement only C ) E ither (a ) or (b) is correct D) None of the a bove 8) A fina ncing s ta tement is va lid for: A) Five months but ma y be renewed for five yea rs B ) Five yea rs but ma y be renewed for one yea r C ) Five yea rs but ma y be renewed for five yea rs D) Five yea rs but ma y not be renewed 1/5 9) A s ecurity a greement tha t provides for covera ge of proceeds , a fter-a cquired property, inventory, a nd future a dva nces will proba bly be cha ra cterized a s : A) A perfected interes t B ) A floa ting lien C ) C ha ttel D) A pledge 10) The firs t s ecurity interes t to be filed or perfected ha s priority over other filed or perfected s ecurity interes ts in: A) B) All circums ta nces , unles s the s ubs equent s ecurity interes t to be firs t perfected is a P MS I in a fter-a cquired colla tera l, which is perfected within 20 da ys of pos s es s ion by the debtor S ta tes tha t ha ve not a dopted Article 9 of the U C C C ) S ta tes tha t require fina ncing s ta tements to be filed with the s ta te legis la ture D) None of the a bove 11) If B ill purcha s es a tra ctor from Os ca r's Tra ctor a nd confectionery s tore but the tra ctor, unbeknowns t to B ill, is s ubject to a s ecurity interes t perfected by filing held by Ma gna nimous B a nk, then B ill s hould be a ble to a cquire the tra ctor free from the interes t of the ba nk if B ill ma kes the purcha s e: A) B) As a buyer in the ordina ry cours e of bus ines s In good fa ith C ) Without knowledge tha t the s a le will viola te the s ecurity interes t held by Ma gna nimous B a nk D) All of the a bove 12) Firs t B a nk lends $20,000 to C rook. A fina ncing s ta tement is filed on October 1, but the s ecurity a greement is not s igned until C rook gets the money on October 4. C rook a ls o borrows money from S econd B a nk, which a dva nces funds , files a fina ncing s ta tement, a nd s igns a s ecurity a greement on October 2. In a dis pute between Firs t a nd S econd B a nk over rights in the s a me colla tera l: A) B) Firs t B a nk will win beca us e it filed firs t Firs t B a nk will win beca us e its interes t a tta ched firs t C ) S econd B a nk will win beca us e it perfected firs t D) S econd B a nk will win beca us e its interes t a tta ched firs t 13) Whether ta ngible property is cla s s ified a s cons umer goods , equipment, fa rm products , inventory, or a cces s ions depends on: A) Its mos t obvious us e given its inherent phys ica l cha ra cteris tics B ) The debtor's s ta tement a t the time a s ecurity a greement is s igned a s to how he or s he intends to us e the property C ) The principa l us e to which the property is put by the debtor D) None of the a bove 14) Which of the following is a prejudgment remedy? A) B) Foreclos ure C ontribution C ) Atta chment D) E xecution 15) Which of the following ha s priority over perfected s ecurity interes ts ? A) B) C reditor who obta ins a lien before the s ecurity interes t wa s perfected C reditor who obta ins a lien a fter the s ecurity interes t wa s perfected C ) B oth (a ) a nd (b) a re correct D) None of the a bove 16) As s ume tha t G era ldo owes $10,000 to Da ve, $5,000 to Va n a nd $5,000 to C yrus . If a ll three of G era ldo's creditors enter into a n a greement with G era ldo to dis cha rge the debts on pa yment of a s um of $10,000 to the creditors , to be divided on a pro ra ta ba s is , then this a greement is : A) An a ccord B) A mortga ge 2/5 C ) A compos ition D) An a s s ignment 17) When a creditor believes tha t the debtor ma y dis pos e of the a s s ets tha t it expects to receive a s pa yment for the debtor's obliga tion before the creditor ca n obta in a judgment, then the creditor ma y s eek to ha ve the a ppropria te court is s ue a writ of: A) B) Atta chment E xecution C ) Ma nda mus D) Quo wa rra nto 18) As s ume tha t B ea trice obta ins a judgment a ga ins t S ta n for a debt a nd wis hes to order the s heriff to s eize a nd s ell a ny rea l or pers ona l property owned by S ta n. S he mus t then return to the court tha t is s ued the judgment a nd obta in a writ of: A) Atta chment B) E xecution C ) Ma nda mus D) Quo wa rra nto 19) Fa c t P a ttern 32-3 (Ques tions 19-22 a pply ) As s ume tha t S unris e, Inc. is a new corpora tion tha t needs to borrow money to meet its pa yroll. J im, its pres ident a nd owner of 80 percent of S unris e, a s ks Firs t Na tiona l B a nk to loa n S unris e the funds . S a ma ntha is J im's friend but ha s no interes t in S unris e. R efer to Fa ct P a ttern 32-3. If Firs t Na tiona l ins is ts tha t J im s ign the loa n a pplica tion, ma king hims elf pers ona lly lia ble for pa yment only if S unris e defa ults , then J im will be cons idered: A) A s urety B ) A gua ra ntor C ) B oth (a ) a nd (b) D) None of the a bove 20) R efer to Fa ct P a ttern 32-3. If Firs t Na tiona l ins is ts tha t J im s ign the loa n a pplica tion, ma king hims elf pers ona lly lia ble for pa yment whether or not S unris e defa ults , then J im will be cons idered: A) A s urety B) A gua ra ntor C ) B oth (a ) a nd (b) D) None of the a bove 21) R efer to Fa ct P a ttern 32-3. If J im is the only s a la ried employee of S unris e a nd a gua ra ntor, the loa n: A) Mus t be in writing under the S ta tute of Fra uds to be enforcea ble B ) Need not be in writing under the ma in-purpos e exception to the S ta tute of Fra uds to be enforcea ble C ) Mus t be in writing under the one-yea r-rule exception to the S ta tute of Fra uds to be enforcea ble D) None of the a bove 22) R efer to Fa ct P a ttern 32-3. If S a ma ntha a grees to be lia ble for the a mount of loa n, ins tea d of J im, only if S unris e defa ults , then the loa n: A) B) Mus t be in writing under the S ta tute of Fra uds to be enforcea ble Need not be in writing under the ma in-purpos e exception to the S ta tute of Fra uds to be enforcea ble C ) Mus t be in writing under the one-yea r-rule exception to the S ta tute of Fra uds to be enforcea ble D) None of the a bove 23) J ohn buys a s tereo from Nois e Inc. J ohn s igns a 2-yea r ins ta llment note a nd Nois e, Inc. files a fina ncing s ta tement. J ohn gets tired of the s tereo a nd s ells it to his next door neighbor, Dea f N. Dumb a nd defa ults on the ins ta llment note to Nois e, Inc. Which of the following s ta tements is true? Nois e, Inc.'s s ecurity interes t wa s voided when J ohn s old the s tereo to Dea f N. Dumb Nois e, Inc.'s s ecurity interes t wa s a purcha s e money s ecurity interes t tha t even if not filed would ha ve been va lid a ga ins t a s ubs equent purcha s er C ) B eca us e Nois e, Inc. filed its fina ncing s ta tement, it ca n now recover the s tereo from Dea f N. Dumb A) B) 3/5 D) None of the a bove 24) As s ume tha t R ex, a creditor, ma inta ins pos s es s ion of a motorcycle tha t he s old to G lenda . E ven though he refus es to tra ns fer phys ica l pos s es s ion of the motorcycle to G lenda until s he ha s finis hed pa ying for it, s he mus t s till execute a written s ecurity a greement. True Fa ls e 25) A s ecurity interes t is not enforcea ble unles s the creditor's rights ha ve a tta ched to the colla tera l. True Fa ls e 26) Atta chment es ta blis hes the rights between a debtor a nd a creditor under a s ecurity a greement. True Fa ls e 27) If Ama nda , the owner of a clothing s tore, wis hes to obta in a loa n tha t is s ecured only by her inventory, s he ma y give a creditor a s ecurity interes t not only in exis ting inventory but a ls o in inventory tha t s he expects to a cquire in the future. True Fa ls e 28) The concept of the floa ting lien a pplies to proceeds , a fter-a cquired inventory, pres ent inventory, a nd future a dva nces , but not to a s hifting s tock of goods . True Fa ls e 29) A perfected s ecurity interes t will a lwa ys ha ve priority over a n unperfected s ecurity interes t. True Fa ls e 30) A fina ncing s ta tement is effective for s ix months from the da te of filing. True Fa ls e 31) If a ca rpenter builds a new room onto the ba ck of a home but is not pa id immedia tely for his la bor, then he ma y pla ce a mecha nic's lien on the property. True Fa ls e 32) U nlike mecha nic's liens , a rtis a n's liens a re pos s es s ory in tha t they a re effective only if the lienholder reta ins pos s es s ion of the property. True Fa ls e 33) In a contra ct of s uretys hip, the s urety is s econda rily lia ble on the obliga tion a nd becomes prima rily lia ble only when the debtor ca nnot pa y the debt. True Fa ls e 34) In a contra ct of gua ra nty, the gua ra ntor is s econda rily lia ble on the obliga tion a nd becomes prima rily lia ble only when the debtor ca nnot pa y the debt. True Fa ls e 35) Homes tea d exemptions a re des igned to permit debtors to reta in s ome pa rt or a ll of the va lue of their homes , free from the cla ims of uns ecured creditors or trus tees in ba nkruptcy. True Fa ls e