Question 1

Article 9 of the Uniform Commercial Code deals with provisions regarding security interests involved in personal property.

Accepted Answer

The subject of security interests in personal property is covered by Article 9 of the UCC.

Question 2

The principal debtor's lack of capacity is a defense for both the principal debtor and the surety if they are sued by the creditor.

Accepted Answer

The lack of capacity can be a defense for the principal debtor but not for the surety.

Question 3

In order for an artisan's lien to be valid,the lien holder normally must have possession of the debtor's property.

Accepted Answer

For the lien to come into play,possession of the goods must have been entrusted to the artisan.If the artisan or other lienholder gives up the goods voluntarily,he loses the lien.

Question 4

A submaterialman is not entitled to a lien,unless specifically stated by the Statute of the State which is applicable to him.

Accepted Answer

Unless the state statute specifically includes submaterialmen,they are not entitled to a lien.

Question 5

Under the common law,artisans,innkeepers,and common carriers were not entitled to liens.

Accepted Answer

Under the common or judge made law,artisans,innkeepers,and common carriers (such as airlines)were entitled to liens to secure the reasonable value of the services they performed.

Question 6

Generally,the procedure for declaring a forfeiture and recovering property sold on a land contract is simpler and less time-consuming than foreclosure of a mortgage.

Accepted Answer

In general,the procedure for declaring a forfeiture and recovering property sold on a land contract is simpler and less time-consuming than foreclosure of a mortgage.

Question 7

Foreclosure is the process by which any rights of the mortgagor or the current property owner are cut off.

Accepted Answer

Foreclosure is the process by which any rights of the mortgagor or the current property owner are cut off.

Question 8

A subcontractor is a person who contracts with the owner of a property to build or remodel.

Accepted Answer

A general contractor is a person who has contracted with the owner to build,remodel,or improve real property.

Question 9

A surety who pays a debtor's debt to the creditor gets all the rights the creditor had against the debtor.This is called surety's right of subrogation.

Accepted Answer

The right of subrogation grants the surety all of the rights that the creditor had against the principal.

Question 10

Chica,a women's fashion retailer,buys merchandise from Tammy,a fashion designer,promising to pay for the merchandise within 30 days after receipt.This is an example of an unsecured credit transaction.

Accepted Answer

In unsecured credit transactions between businesspeople,the buyer can pay after the delivery of the merchandise.

Question 11

A mortgage is a security interest in real property.

Accepted Answer

A mortgage is a security interest in real property or a deed to real property that is given by the owner as security for a debt owed to the creditor.

Question 12

The right of a lienholder to possess goods does not automatically give the lienholder the right to sell the goods or to claim ownership if his charges are not paid.

Accepted Answer

The right of a lienholder to possess goods does not automatically give the lienholder the right to sell the goods or to claim ownership if his charges are not paid.Commonly,there is a procedure provided by statute for selling property once it has been held for a certain period of time.

Question 13

A surety has a right of exoneration.

Accepted Answer

A surety also has what is known as a right of exoneration,which is the right of the surety or guarantor to require the debtor to make good on his commitment to the creditor when he (1)is able to do so and (2)does not have a valid defense against payment.

Question 14

Under the Pennsylvania system,the general contractor's failure to perform his contract or his abandonment of the work has a direct effect on the lien rights of subcontractors and materialmen.

Accepted Answer

Under the New York system,the general contractor's failure to perform his contract or his abandonment of the work has a direct effect on the lien rights of subcontractors and materialmen,whereas under the Pennsylvania system,such breach or abandonment by the general contractor does not directly affect the lien rights of subcontractors and materialmen.

Question 15

In the case of foreclosure by action and sale,the creditor has no right to a deficiency and the debtor has no right to any surplus.

Accepted Answer

In a strict foreclosure,the creditor has no right to a deficiency and the debtor has no right to any surplus.

Question 16

A surety is a person who is liable for the payment of another person's debt.

Accepted Answer

A surety is a person who is liable for the payment of another individual's debt or for the performance of another person's required duties.

Question 17

Most state laws say that a valid mechanic's lien has priority over all other liens that attach after the first work is performed or the first materials are furnished.

Accepted Answer

The provisions for priorities vary widely,but most of the statutes provide that a mechanic's lien has priority over all liens attaching after the first work is performed or after the first materials are furnished.

Question 18

In a foreclosure by "action and sale," deficiency judgments are generally not permitted if the property sold is the residence of the debtor.

Accepted Answer

A deficiency judgment in an action and sale is,as a general rule,entered against the mortgagor and such other persons as are liable on the debt.However,deficiency judgments are generally not permitted where the property sold is the residence of the debtor.

Question 19

Generally,purchases of farm property are financed through real estate mortgage.

Accepted Answer

Purchases of farm property are commonly financed through the use of land contracts.

Question 20

An unsecured credit transaction involves the greatest benefit to the creditor.

Accepted Answer

The unsecured credit transaction involves a maximum of risk to the creditor - the person who extends the credit.

Quiz 28: Introduction to Credit and Secured Transactions

Article 9 of the Uniform Commercial Code deals with provisions regarding security interests involved in personal property.

The principal debtor's lack of capacity is a defense for both the principal debtor and the surety if they are sued by the creditor.

In order for an artisan's lien to be valid,the lien holder normally must have possession of the debtor's property.

A submaterialman is not entitled to a lien,unless specifically stated by the Statute of the State which is applicable to him.

Under the common law,artisans,innkeepers,and common carriers were not entitled to liens.

Generally,the procedure for declaring a forfeiture and recovering property sold on a land contract is simpler and less time-consuming than foreclosure of a mortgage.

Foreclosure is the process by which any rights of the mortgagor or the current property owner are cut off.

A subcontractor is a person who contracts with the owner of a property to build or remodel.

A surety who pays a debtor's debt to the creditor gets all the rights the creditor had against the debtor.This is called surety's right of subrogation.

Chica,a women's fashion retailer,buys merchandise from Tammy,a fashion designer,promising to pay for the merchandise within 30 days after receipt.This is an example of an unsecured credit transaction.

A mortgage is a security interest in real property.

The right of a lienholder to possess goods does not automatically give the lienholder the right to sell the goods or to claim ownership if his charges are not paid.

A surety has a right of exoneration.

Under the Pennsylvania system,the general contractor's failure to perform his contract or his abandonment of the work has a direct effect on the lien rights of subcontractors and materialmen.

In the case of foreclosure by action and sale,the creditor has no right to a deficiency and the debtor has no right to any surplus.

A surety is a person who is liable for the payment of another person's debt.

Most state laws say that a valid mechanic's lien has priority over all other liens that attach after the first work is performed or the first materials are furnished.

In a foreclosure by "action and sale," deficiency judgments are generally not permitted if the property sold is the residence of the debtor.

Generally,purchases of farm property are financed through real estate mortgage.

An unsecured credit transaction involves the greatest benefit to the creditor.