busi law worksheet questions #3

the process by which secured parties protect themselves against third parties who may want a debt settled out of the same collateral

perfection

the secured party in a secured transaction is the party

who has an interest in the collateral

For an individual debtor, the UCC-9 should be filed in the state of the debtor's __________ residence. For a corporation, limited liability company or other organization that is required to file formation papers with the state, the form should be filed in the state where the organization is ___________. For all other entities, it is the state in which the business is _________, or if there is more than one office, the place at which the debtor __________ its operations and affairs.

primary, registered, located, manages

A financing statement must ________ the collateral to provide ______ notice. An improper filing renders the secured party's interest __________ and ________ the secured party's claim in bankruptcy to that of a(n) ________ creditor.

Describe, public, unperfected, reduces, unsecured

the process by which a security interest in the collateral becomes enforceable

attachment

the process by which a person verifies the intent to adopt or accept the document

authentication

If a continuation statement is filed within _______ prior to the expiration date of the original financing statement, the effectiveness of the original statement is continued for another ________.

six months, five years

property that is subject to a security interest

collateral

a legal document that creates the relationship between the debtor and secured party regarding the collateral

security agreement

any party who owes payment or performance of a secured obligation

debtor

a legal right to property or fixtures that secures payment or performance of an obligation

security interest

financing statements are filed publicly so that:

third parties can learn of a security interest that already exists in the collateral

Unless the creditor has _________ of collateral, there must be a written or authenticated security agreement that ___________describes the collateral subject to the security interest and is _________ or authenticated by the debtor. The secured party must give the debtor something of _________. The debtor must have ________ in the collateral.

possession, clearly, signed, value, rights

true or false: a purchase-money security interest (PMSI) is an automatically perfected security interest that arises when on buys consumer goods on credit

true

In secured transactions, _________ means the creditor has met all of the requirements to obtain an enforceable security interest in the collateral.

attachment

which article of the UCC governs secured transactions?

9

What are two situations in which a security interest can be perfected without filing a financing statement?

When the collateral is in the possession of the secured party and when the security interest is automatically perfected

true or false: a secured party can release all or part of any collateral described in the financing statement, thereby terminating its security interest in that collateral

true

A creditor may not be interested in specific pieces of property or inventory and so a ________ lien may be used to continue the security interest even if the collateral changes. A security interest in collateral gives the secured party interest in the _________ from the sale or other disposition of that collateral. Generally, an after-acquired property clause in a security agreement gives the secured party an ________ in newly acquired __________ that replaces old inventory that has been sold. Advances against a line of credit can be ________ to a properly perfected security interest as well.

floating, proceeds, interest, inventory, subject

what is received when the collateral is sold or otherwise disposed of, such as by an exchange

proceeds

the use of an asset that is not the subject of a loan to collaterize that loan

cross-collateralization

property that the debtor receives after the security agreement is executed

after-acquired property

a security interest in collateral that is retained even when the collateral changes character, classification, or location

floating lien

With regard to priorities on collateral, ________ security interests have the highest priority. If there are two or more conflicting _________ security interests, then the ________ to perfect has priority. If there are conflicting _________ security interests, then the first to _________ has priority.

perfected, perfected, first, unperfected, attach

A person who buys in the _______ course of business takes the goods free of any security interest created by the seller, even if the security interest is perfected. This person buys in _________ and without knowledge that the sale ________ the rights of another in the goods being purchased. A perfected ________ has priority over a conflicting security interest in the same inventory.

ordinary, good faith, violates, PMSI

A floating lien is created by a security agreement that provides for a security interest in the proceeds of the sale of collateral as well as in:

after-acquired property and future advances

an action to carry into effect the directions in a court decree or judgement

execution

a judgement for any amount of debt that is not paid after collateral is sold

deficiency judgement

obtaining money by legal process through the seizure and sale of property

levy

every aspect of the disposition of collateral by the secured party must

be commercially reasonable

true or false: Article 9 of the UCC accurately defines the term default so that it is clear to parties involved in a secured transaction.

false

What is the proper order of distribution of proceeds?

pay the expenses to sell the collateral, then pay off the debt, then give the surplus to the debtor

true or false: the general rule when more than one security interest has been perfected in the same collateral is that the first security interest to be perfected has priority

true

true or false: when a debtor has fully paid a debt, the debtor is entitled to have a termination statement filed if a UCC-1 was filed to perfect the security interest

true

On taking possession, the secured party may either _______ the collateral or _______ the goods and apply the proceeds toward the debt.

retain, sell