Deck 39: Security Devices

Question 1

When the rights of a seller to the collateral are inferior to those of third persons, the seller has a perfected security interest.

Answer 1

False

Question 2

Articles purchased with the intention of reselling or leasing them are called consumer goods.

Answer 2

False

Question 3

When sellers retain the right to repossess the items sold if the buyers breach the sales contracts, the transactions are unsecured credit sales.

Answer 3

False

Question 4

Which of the following is a requirement of a security agreement?

A) It must be an unwritten agreement.
B) It must describe the collateral.
C) It must be signed by a seller.
D) It must contain the specific instrument of payment.

Question 5

A contract of guaranty must be in writing.

Question 6

A security agreement contains the terms of payment and names of the parties.

Question 7

A party who undertakes to be responsible for another is a _____.

A) guarantor
B) creditor
C) principal
D) debtor

Question 8

Suretyship given for someone who handles another's money is known as _____.

A) credit bond
B) default bond
C) fidelity bond
D) principal bond

Question 9

Explain the right of subrogation of a surety.

Question 10

Which of the following best describes the right to indemnity?

A) It is the right of a creditor to receive interest on the debt.
B) It is the right of a principal to receive compensation from the creditor.
C) It is the right of a creditor to withhold payment in the case of a dispute.
D) It is the right of a guarantor to be reimbursed by the principal.

Question 11

Discharge of a surety occurs:

A) if the creditor extends the time of the debt with the consent of the surety.
B) if the creditor extends the time of the debt without the consent of the surety for a consideration.
C) in case of any reduction in the rate of interest.
D) in the case of return of collateral security to the debtor.

Question 12

A surety or guarantor may call on the creditor to proceed to compel the payment of the debt.

Question 13

Which of the following is true of a financial statement?

A) It is not signed by a debtor.
B) It can be substituted by a security agreement.
C) It does not describe the collateral.
D) It contains the mailing address of a principal.

Question 14

A contract of suretyship is an agreement whereby one party promises to be responsible for the debt of another.

Question 15

_____ are items used or bought primarily for personal, family, or household purposes.

A) Industrial goods
B) Club goods
C) Capital goods
D) Consumer goods

Question 16

A party who has primary liability is the creditor.

Question 17

If a creditor damages collateral security given to secure a debt, surety is not discharged.

Question 18

If a creditor extends the time of the debt without the consent of the surety, for a consideration, the surety is discharged from further liability.

Question 19

A guarantor's right to have a creditor compel the payment of debt is known as the right of _____.

A) exoneration
B) subrogation
C) alteration
D) contribution

Question 20

A buyer has the right to transfer the collateral and require a determination of the amount owed.