Deck 33: Secured Transactions and Suretyship

Question 1

Goods, other than farm products, held by a person for sale or lease or consisting of raw materials, works in progress, or material consumed in a business are known as:

A) inventories.
B) consumer goods.
C) equipment.
D) fixtures.
E) accessions.

Answer 1

A

Question 2

If a security interest was not perfected at the time of filing for bankruptcy, a bankruptcy trustee cannot take the collateral.

Answer 2

False

Question 3

A person who owes money or a duty of performance to another is known as an):

A) obligor.
B) creditor.
C) pledger.
D) bailer.
E) debtor.

Answer 3

E

Question 4

A lien creditor is a creditor whose claim is based on operation of law as opposed to a creditor whose claim is based on agreement.

Question 5

After-acquired property refers to the proceeds received from the disposition of the collateral.

Question 6

In strict foreclosure, a secured creditor can accept the collateral in full satisfaction or partial satisfaction of the debt.

Question 7

The debtor's rights in collateral must be immediate rights to the possession but need not necessarily be rights that can be conveyed.

Question 8

A creditor stuck holding a promissory note with only a signature loan will get nothing if the debtor is insolvent.

Question 9

A financing statement requires the debtor's signature, unless the creditor is authorized to make the filing without a signature.

Question 10

Accessions are goods that are physically united with other goods in such a manner that the identity of the original good is lost.

Question 11

The financing statement is effective for ten years from the date of filing.

Question 12

A chattel mortgage refers to a debt secured against land, buildings, and fixtures.

Question 13

A person who owes money to another is known as an obligor.

Question 14

A judicial bond is an assurance, generally purchased by an employer, to cover employees who are entrusted with valuable property or funds.

Question 15

A surety is a person who promises to pay or perform an obligation owed by the guarantor.

Question 16

A lien is security obtained through operation of law.

Question 17

Attachment is the process by which a security interest becomes enforceable against the debtor with respect to the collateral.

Question 18

Security obtained through operation of law is known as a:

A) pledge.
B) bequest.
C) lien.
D) collateral.
E) mortgage.

Question 19

Which of the following is a type of loan for which no collateral is pledged?

A) Commercial loan
B) Signature loan
C) Character loan
D) Unsecured loan
E) Guaranteed loan

Question 20

The property given as security for a debt is known as a:

A) proceed.
B) lien.
C) mortgage.
D) collateral.
E) pledge.

Question 21

Which of the following is true of the rule of priorities regarding the disposal of a debtor's property when the debtor defaults?

A) Persons who become lien creditors before or after the security interest is perfected win.
B) If the security interest was perfected at the time of filing for bankruptcy, the bankruptcy trustee can take the collateral.
C) The Bankruptcy Act provides that a bankruptcy trustee can avoid a transfer of an interest of the debtor in property to or for the benefit of a creditor.
D) A perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods.
E) A mortgage has priority over a perfected security in fixtures, even if the security interest is a purchase-money security interest.

Question 22

A person who promises to act or pay upon the default of another is known as an):

A) surety.
B) debtor.
C) payee.
D) obligor.
E) pledger.

Question 23

The situation where the creditor takes the collateral, discharges the debtor, and has no right to seek any deficiency is known as:

A) exoneration.
B) blockbusting.
C) subrogation.
D) presentment.
E) strict foreclosure.

Question 24

A lien that is expanded to cover any additional property that is acquired by the debtor while the debt is outstanding is known as a:

A) tax lien.
B) possessory lien.
C) floating lien.
D) blanket lien.
E) judgment lien.

Question 25

What are the three different types of suretyship?

Question 26

A surety bond that ensures a property owner of the completion of a construction contract or payment of actual damages to the extent of the bond in the event that the contractor fails to complete it is called a _____ bond:

A) judicial
B) fidelity
C) chattel
D) codicil
E) performance

Question 27

The surety has certain defenses to paying. What are they?

Question 28

If, at a time a surety's obligation has matured, the principal can satisfy the obligation but refuses to do so, the surety is entitled to a court order requiring the principal to perform. This is known as:

A) contribution.
B) perfection.
C) foreclosure.
D) exoneration.
E) subrogation.

Question 29

An assurance, generally purchased by an employer, to cover employees who are entrusted with valuable property or funds is known as a _____ bond.

A) codicil
B) fidelity
C) judicial
D) performance
E) chattel

Question 30

The process by which a security interest becomes enforceable against the debtor with respect to the collateral is known as:

A) foreclosure.
B) attachment.
C) perfection.
D) exoneration.
E) subrogation.

Question 31

The substitution of one person for another who has a legal claim or right is known as:

A) subrogation.
B) exoneration.
C) foreclosure.
D) contribution.
E) perfection.

Question 32

The property given to a creditor as security for a debt is known as:

A) a mortgage.
B) collateral.
C) a pledge.
D) a lien.
E) ademption.