Question 1

Fact Pattern 20-3 
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 $500,000 from Interstate Bank,also for a security interest in the equipment.GLC defaults on the loans.
-Refer to Fact Pattern 20-3.Suppose that two weeks after GLC takes possession of the equipment,Helpful and Interstate file financing statements,with Interstate fil?ing first.In that cir?cum?stance,the party with priority to the equipment is

Accepted Answer

According to the rule of "first to file or perfect," the party that files or perfects their security interest first has priority over subsequent parties. In this case, Interstate Bank filed first, giving them priority over Helpful Finance Corporation. Therefore, Interstate Bank has priority to the equipment.

Question 2

Computer World (CW),after repossessing a multimedia system from Dave,a consumer,decides to keep system instead of reselling it.CW sends written notice to Dave.CW can now keep the system

Accepted Answer

CW can keep the system unless Dave objects, as per the Uniform Commercial Code (UCC) which allows a secured party to retain collateral in satisfaction of the debt if the debtor does not object.

Question 3

Qwik Credit Corporation lends $20,000 to Ross.A financing statement is filed on May 1,but the security agreement is not signed until Ross gets the money on May 4.Ross also borrows money from State Bank,which advances funds,files a financing statement,and signs a security agree?ment on May 2.Ross used the same property as collateral for both loans.In a dispute between the lenders over rights to the collateral,Qwik Credit will

Accepted Answer

State Bank perfected its interest first by filing a financing statement and having a signed security agreement on May 2, whereas Qwik Credit's interest did not attach until May 4 when the security agreement was signed.

Question 4

Consumer Credit Corporation loans $15,000 to Dave to buy a car,which is used as collateral to secure the loan.Dave pays less than half of the loan,before he defaults.What are the lender's alternatives?

Accepted Answer

The answer of Consumer Credit Corporation loans $15,000 to Dave...

Question 5

Ed repays his debt,incurred to buy consumer goods,to First City Bank and immediately files a written request for a termination statement.First City

Accepted Answer

According to the Uniform Commercial Code, First City Bank must comply with Ed's request for a termination statement within 20 days of receipt of the letter. This statement will indicate that Ed's debt has been fully satisfied and there are no further obligations to the bank. Option C (refunding $500 to Ed) and option D (not complying with the request) are not accurate according to UCC regulations. Option A (complying within one month) is also not accurate, as the UCC specifies a shorter timeframe of 20 days.

Question 6

Fred,a debtor,wishes to know the amount of his outstanding secured debt with Genuine Credit Corporation.Fred may submit a written statement for approval to Genuine Credit,without paying a fee,

Accepted Answer

The answer of Fred,a debtor,wishes to know the amount of...

Question 7

Edie needs $1,500 to buy textbooks and other school supplies.Frank agrees to loan Edie $1,500,accepting as collateral Edie's car.They put their agreement in writing and sign it.Edie keeps possession of the car.Does Frank have an enforceable security interest? How can Frank let other creditors know of his interest in the car?

Accepted Answer

The answer of Edie needs $1,500 to buy textbooks and...

Question 8

EZ Credit,Inc. ,repossesses a TV set (a consumer good that is not a pur?chase-money security interest)from Fran,intending to install it in EZ's office instead of reselling it.EZ tells Fran of this in?tent.EZ must notify

Accepted Answer

The answer of EZ Credit,Inc. ,repossesses a TV set (a...

Question 9

Fact Pattern 20-3 
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 $500,000 from Interstate Bank,also for a security interest in the equipment.GLC defaults on the loans.
-Refer to Fact Pattern 20-3.Suppose that Helpful perfects its se?curity in?ter?est when GLC takes possession of the equipment.In that cir?cum?stance,the party with pri?ority to the collateral on GLC's default would be

Accepted Answer

Helpful Finance Corporation would have priority to the collateral as they perfected their security interest before Interstate Bank. The fact that GLC took possession of the equipment before Helpful perfected their interest is irrelevant since Helpful still has priority as long as they perfected before the other lender. Therefore, Interstate Bank would not have any priority to the collateral.

Question 10

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

Accepted Answer

The proceeds from the sale of collateral are first applied to cover the costs and fees associated with the sale, such as Intrastate's fees for the sale, before being applied to the debt itself.

Question 11

Ron does not make a payment on his car loan for several months.The dealer,Star Auto,repossesses the car by towing it from a public parking lot.Ron sues Star for breach of the peace.Ron will probably

Accepted Answer

If no threats or force were used in the repossession of the car, the creditor (Star Auto) has the right to repossess the property in which it holds an interest. However, if the repossession was done using force, threats or any other means that could be considered a breach of the peace, Ron can sue Star Auto for damages. In this case, the repossession was done by towing the car from a public parking lot. While this may not have been ideal, it does not constitute a breach of the peace, and therefore Ron is unlikely to prevail in his lawsuit.

Question 12

Manuel holds a security interest in inventory owned by Newt.Manuel assigns his interest in the inventory to Olan.Olan becomes the secured party of record

Accepted Answer

The answer of Manuel holds a security interest in inventory...

Quiz 20: Security Interest in Personal Property

Computer World (CW) ,after repossessing a multimedia system from Dave,a consumer,decides to keep system instead of reselling it.CW sends written notice to Dave.CW can now keep the system