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Exam 18: Security Interests in Personal Property

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Question 31

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The payment of Yves's debt to Zac is guaranteed by Yves's personal property.Their agreement describes Yves's subject property by serial number.To establish Zac's interest,this is

A) irrelevant.
B) not sufficient.
C) sufficient if it accurately describes the parties' agreement.
D) sufficient unless it is too tedious to review.

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

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Question 32

Multiple Choice

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Rich Financial,Inc. ,files a financing statement regarding a transaction with Supreme Business Company.To be valid,the financing statement must contain all of the following except

A) a description of the collateral.
B) a statement of the purpose for the transaction.
C) Rich's name.
D) Standard's name.

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

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Question 33

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Efrem owns Fans & Players,a retail sporting goods shop.When Great Hill Lodge,a new ski resort,is built in the area,Efrem decides to expand and borrows a large sum from Hometown Bank.The bank takes a security interest in Efrem's present inventory and any after-acquired inventory as collateral for the loan.The bank properly perfects the security interest by filing a financing statement.Efrem's business is profitable,and he begins doubling his inventory.A year later,an avalanche destroys the ski slope and lodge.Efrem's business takes a turn for the worse,and he defaults on his debt to the bank.The bank seeks possession of his entire inventory,even though the inventory is twice as large as it was when the loan was made.Efrem claims that the bank has rights to only half of his inventory.Is Efrem correct? Explain.

Khalil holds a security interest in inventory owned by Luc.Khalil assigns his interest in the inventory to Mal.Mal becomes the secured party of record

A buyer in the ordinary course of business has priority over any security interest created by the seller.

A security interest cannot be perfected without the filing of a financing statement.

A continuation statement is effective only if it is filed within six months before the expiration of a financing statement.

Select Furniture Store sells household consumer goods.To create a purchase-money security interest,Select Furniture must

The payment of Mo's debt to Neil is guaranteed by Mo's personal property.This is

Fact Pattern 18-2 General Leasing Company (GLC) buys equipment for use as inventory, borrow¬ing $1 million from Helpful Finance Corporation for a security in¬terest in the equipment. The next day, GLC borrows $513,000 from Interstate Bank, also for a security interest in the equipment. GLC defaults on the loans. -Refer to Fact Pattern 18-2.Suppose that Helpful perfects its security interest when GLC takes possession of the equipment.In that circumstance,the party with priority to the collateral on GLC's default would be

The payment of Brian's debt to Chuck is guaranteed by Brian's personal property.This is

Hal's Hardware store defaults on a debt to Intrastate Bank,which takes possession of the collateral securing the debt.Intrastate sells the collateral.The proceeds from the sale are applied first to

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

A future advance against a line of credit must be of the same type as the original advance to be subject to the same collateral.

An improper filing renders a secured party unperfected.

Intermittent advances against a line of credit can be subject to the same collateral.

The payment of John's debt to Kirsten is guaranteed by John's personal property.Kirsten is most likely to perfect her interest by

The payment of Hu's debt to Ian is guaranteed by Hu's personal property.To give public notice of his interest in Hu's property,Ian is most likely to

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

Proceeds consist of whatever is received when collateral is sold.