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Law
Q:
Angie borrows $20,000 from First Line Credit using a field of timber trees as collateral. To perfect its security interest, First Line Credit must file its financing statement with
a. the county clerk.
b. the mayor.
c. the city counsel.
d. the secretary of state.
Q:
Dora, Ed, and Fran are co-sureties of Glen's debt to Hi-Credit Company. Dora pays Glen's entire debt. Dora's right to seek proportionate payments from Ed and Fran is the right of
a. contribution.
b. redemption.
c. reimbursement.
d. subrogation.
Q:
In Abel v. Baker, a state supreme court held that a minor could cancel a contract for the sale of a car. Now a trial court in the same state is deciding Charles v. Delta, a case with similar facts. Under the doctrine of stare decisis, the trial court is likely to
a. allow the minor to cancel the contract.
b. disregard the previous case.
c. order the minor to cancel the contract.
d. require the minor to fulfill the contract.
Q:
Fiona borrows $1,000 from Garden State Bank, using her motorcycle as colÂlateral. To perfect its security inÂterest, the bank must file its financing statement with
a. the secretary of state.
b. the county clerk.
c. the city treasurer.
d. the ward alderman.
Q:
Rita is a surety for Sue's loan from Total Finance Company. Rita's right to "step into the shoes" of Total Finance, after paying Sue's debt, and exercise any of the Total Finance's rights against Sue is the right of
a. contribution.
b. redemption.
c. reimbursement.
d. subrogation.
Q:
Ross and Sally agree to guarantee Tim's debt. Ross's maximum liability is $30,000, and Sally's is $20,000. Tim owes $20,000 and is in default. Ross pays the creditor the entire amount. In the absence of an agreement to the contrary, Ross can recover from Sally
a. $8,000.
b. $10,000.
c. $20,000.
d. nothing.
Q:
The payment of Yves's debt to Zac is guaranteed by Yves's personal property. Their agreement identifies Yves's property by serial number. To establish Zac's interest, this is most likely
a. irrelevant.
b. not sufficient.
c. sufficient if it accurately describes the collateral.
d. sufficient unless it is too tedious to review.
Q:
Net Corporation files a suit against Omega, Inc., alleging that Omega breached a contract to sell Net a computer system for $100,000. Net is
a. the appellant.
b. the appellee.
c. the defendant.
d. the plaintiff.
Q:
Kwik Delivery Company buys a truck from Lucky Vehicles, Inc., under a guaranty signed by Mina, Kwik's president, who writes "President" after her signature. When Kwik does not pay for the truck, Lucky sues Mina, who claims that she did not intend to be bound by the guaranty. The court would most likely rule in favor of
a. Lucky, because Mina's guaranty is unambiguous.
b. Lucky, because Mina works for Kwik.
c. Mina, because she did not intend to be bound by the guaranty.
d. Mina, because she signed only as a corporate officer.
Q:
Kathy is the secured party in a transaction with Julie, who is the debtor. The collateral is a 2007 Chevrolet F150 pick-up truck. Kathy files a financing statement in which she describes the collateral as "a vehicle." To perfect Kathy's interest this is
a. not sufficient.
b. sufficient.
c. sufficient as long as the financing statement also includes Julie's signature.
d. sufficient as long as the financing statement also includes the location of the collateral.
Q:
In a suit against Charles, Donna obtains the cancellation of a contractual obligation, which is
a. a remedy at law.
b. rescission.
c. restitution.
d. specific performance.
Q:
First State Bank holds a mortgage on Gigi's property. Gigi defaults on the debt. The bank forecloses. If the proceeds of the foreclosure sale are insufficient to pay the costs of the sale and the debt, the bank can
a. obtain a deficiency judgment against Gigi.
b. prorate the costs to its other debtors.
c. reclaim the property as a voidable transfer.
d. use the equity of redemption to redeem the property.
Q:
Khalil holds a security interest in inventory owned by Luc. Khalil proÂtects his claim to the inventory in the event of Luc's default by
a. assignment.
b. perfection.
c. redemption.
d. retention.
Q:
Holly is a state court judge. Ilsa appears in a case in Holly's court, claiming that Jim breached a contract. As in most state courts, Holly may
a. award damages, cancel a contract, or direct a party to do or not to do an act.
b. award damages only.
c. cancel a contract only.
d. direct a party to do or not to do a particular act only.
Q:
Frank's farm is to be sold at a foreclosure sale. For Frank to keep the farm by paying the full amount of the debt, plus any interest and costs that have accrued, is
a. the equity of redemption.
b. the exercise of exemption.
c. the right of contribution.
d. the right of subrogation.
Q:
The payment of Hu's debt to Ian is guaranteed by Hu's personal propÂerty. To give notice of his interest in Hu's property to other creditors, Ian is most likely to
a. attach a bright label to Hu's property.
b. e-mail other potential creditors.
c. file a financing statement with the appropriate authority.
d. publish a collection notice in local newspapers.
Q:
In a suit against Adam, Beth obtains a remedy, which is the means given to a party
a. neither to recover a right nor to redress a wrong.
b. only to recover a right.
c. only to redress a wrong.
d. to recover a right or to redress a wrong.
Q:
Ian's mortgage debt to Jeff is past due. Jeff brings a legal action against Ian to collect the debt. Jeff asks the court to order the sale of the mortgaged property and the payment of a portion of the proceeds to Jeff. This is a request for
a. a deficiency judgment.
b. a foreclosure.
c. a right of reimbursement.
d. redemption.
Q:
The payment of John's debt to Kirsten is guaranteed by John's personal property. Kirsten is most likely to perfect her interest by
a. attaching a bright label to John's property.
b. calculating the precise amount of John's debt.
c. correcting grammatical errors in the partie' written agreement.
d. filing a financing statement with the appropriate authority.
Q:
The federal government and the state governments constitute the U.S. legal system. This system is based on the legal system of
a. Ancient Greece.
b. Ancient Rome.
c. England.
d. France.
Q:
As a judge, Jay applies common law rules. These rules develop from
a. decisions of the courts in legal disputes.
b. regulations issued by administrative agencies.
c. statutes enacted by Congress and the state legislatures.
d. uniform laws drafted by legal scholars.
Q:
Mike owes $12,000 to Nora, $6,000 to Owen, and $6,000 to Pat. The three creditors enter into an agreement with Mike to discharge the debts on payment of a sum of $12,000 to them, to be divided proportionately. This is
a. a composition agreement.
b. a guaranty agreement.
c. a judicial lien.
d. a suretyship agreement.
Q:
The payment of Jose's debt to Klint is guaranteed by Jose's personal property. The process by which Klint can protect himself against the claims of third parties to this property is
a. attachment.
b. default.
c. perfection.
d. termination.
Q:
In a suit against Kate, Lyle obtains specific performance. This is
a. an equitable remedy and a remedy at law.
b. an equitable remedy only.
c. a remedy at law only.
d. neither an equitable remedy nor a remedy at law.
Q:
Khali's debt to Lew is past due. Lew obtains a judgment against Khali to collect the debt, but Khali refuses to pay. Lew asks the court to order Khali's employer to pay a portion of Khali's paycheck to Lew. This is a request for
a. an exemption from most federal limits on creditors' actions.
b. an order of garnishment.
c. an order that would violate most state laws.
d. a right of contribution.
Q:
Sally is the secured party in a transaction with Lilly, who is the debtor. Sally files a financing statement with the appropriate state official. The financing statement must contain
a. Lilly's signature.
b. Sally's bank account information.
c. Lilly's credit report.
d. a photograph of the collateral.
Q:
The Federal Trade Commission is a government agency that issues rules, orders, and decisions. The Georgia state legislature enacts statutes. The Jackson County Board and the Peach City Council enacts ordinances. Administrative law includes which of the following?
a. All law that affects a business's operation.
b. The rules, orders, and decisions of the Federal Trade Commission.
c. Statutes enacted by the Georgia state legislature.
d. Ordinances created by the Jackson County Board and the city council of Peach City, Georgia.
Q:
Larry borrows money from Joan. To use a writ of execution as a remedy, Joan must first
a. be unable to collect the amount of a judgment against Larry.
b. be unable to redeem Larry's exempt property before a sale will occur.
c. notify Larry in writing (in a "writ") of her intent.
d. obtain and maintain possession of Larry's property.
Q:
Jim files a uniform financing statement giving notice to the public that he has a secured interest in collateral belonging to Phil, who is the debtor named in the statement. This uniform statement form is now used in
a. all states.
b. no states.
c. only one statePennsylvania.
d. some states with several different forms used in other states.
Q:
Delia refuses to pay Ewing $500 in cash on their contract to repair certain theater sets, which Ewing still possesses. Ewing's lien on the sets will terminate
a. if Ewing continues to maintain possession.
b. if Ewing does not file a written notice of lien within thirty days.
c. if Ewing surrenders possession.
d. within thirty days.
Q:
Hawaii enacts a state law that violates the U.S. Constitution. This law can be enforced by
a. no one.
b. the federal government only.
c. the state of Hawaii only.
d. the United States Supreme Court only.
Q:
Clear Lake Credit Corporation lends funds to Donny, a consumer, to apply to the cost of a boat, which is the collateral for the loan. An enforceable security interest requires
a. a written agreement and Clear Lake's possession of the boat.
b. a written agreement or Clear Lake's possession of the boat.
c. the boat seller's acknowledgement of the loan in writing.
d. Donny's possession of the boat.
Q:
Olaf is the creditor in a transaction with Phil. Once certain requireÂments are met, Olaf's rights will attach, which means that Olaf will have
a. an indivisible ownership right to Phil's property.
b. an enforceable security interest in Phil's property.
c. a notice affixed to Phil's property.
d. the permission of a court to seize Phil's property.
Q:
In Nebraska, the superior (highest-ranking) law is
a. a case decided by the Nebraska Supreme Court.
b. a provision in the Nebraska constitution.
c. a rule created by a Nebraska state administrative agency.
d. a statute enacted by the Nebraska legislature.
Q:
Donald's debt to Everett is past due. Everett brings a legal action against Donald to collect the debt. To ensure that a judgment in Everett's favor will be collectible, Everett asks the court to order the seizure of Donald's property. This is a request for
a. a guaranty (or suretyship) contract.
b. an order that would violate most state laws.
c. a writ of attachment.
d. a writ of execution.
Q:
The payment of Eden's debt to Flem is guaranteed by Eden's personal property. This property is
a. a secured party.
b. a secured transaction.
c. a security interest.
d. collateral.
Q:
Opie's debt to Pyle is past due. Pyle obtains a judgment against Opie to collect the debt, but Opie refuses to pay. Pyle asks the court to order the seizure and sale of Opie's property. This is a request for
a. a guaranty (or suretyship) contract.
b. an order that would violate most states' laws.
c. a writ of attachment.
d. a writ of execution.
Q:
Voters in North Carolina approve a new state constitution, after which the Ocean City Council passes new ordinances, the North Carolina Department of Parks and Recreation issues new rules, and the Ocean City Chamber of Commerce sends out new instructions. Sources of law do not include
a. ordinances passed by the Ocean City Council.
b. instructions issued by the Ocean City Chamber of Commerce.
c. rules issued by the North Carolina Department of Parks and Recreation.
d. state constitutions passed by popular vote.
Q:
Jason is the creditor in a transaction with Carol, who is the debtor. Which of the following requirements is not necessary for Jason to have an enforceable security interest?
a. The collateral must be in Jason's possession, or there must be a written or authenticated security agreement.
b. Jason must give value to Carol.
c. Carol must have rights to the collateral.
d. The collateral must be tangible.
Q:
Loni delivers her Mazda to be repaired at Nile's Body Shop. Loni agrees to pay cash. Nile performs, but Loni does not pay. Nile tells Loni that he will keep the car until she pays. This is
a. a judicial lien.
b. a mechanic's lien.
c. an artisan's lien.
d. a violation of most states' laws.
Q:
Alan is a judge. The function of Alan and other judges is to
a. decide cases on the basis of their opinions about the issues.
b. decide cases on the basis of their personal philosophical views.
c. interpret and apply the laws.
d. make the laws.
Q:
The payment of Frida's debt to Gianini is guaranteed by Frida's personal property. Gianini is
a. a debtor.
b. a secured party.
c. a secured transaction.
d. a security interest.
Q:
Suha performs a contract with Tyler to add a second story addition to Tyler's house, but Tyler does not pay. In most states, Suha can create a lien and place it on Tyler's property by filing
a. an order of garnishment.
b. a writ of attachment.
c. a writ of execution.
d. a written notice of lien.
Q:
Pruit performs a contract with Quint to reshingle the roof on Quint's house, but Quint does not pay. Pruit notifies Quint that Pruit will foreclose on the house and sell it to satisfy the debt. This is
a. a judicial lien.
b. a mechanic's lien.
c. an artisan's lien.
d. a violation of most state laws.
Q:
Most state trial court decisions are not published.
Q:
Jane is the secured party in a secured transaction with Margaret. Jane could also be referred to as the
a. debtor.
b. secured creditor.
c. collateral.
d. filing officer.
Q:
A reference to "9 U.S.C. Section 4" means that a statute can be found on page 9 of section 4 of the United States Code.
Q:
The Bankruptcy Code's Chapter 12 is intended to aid charitable institutions.
Q:
Criminal law focuses on duties that exist between persons.
Q:
The payment of Waldo's debt to Main Street Bank is guaranteed by Waldo's personal propÂerty. This is governed by
a. the Uniform Commercial Code.
b. the Federal Trade Commission.
c. the U.S. Constitution's commerce clause.
d. the Bankruptcy Reform Act of 2005.
Q:
The procedure and content of a Chapter 12 plan are similar to the procedure and content of a Chapter 13 plan.
Q:
How the courts interpret a statute determines how that statute is applied.
Q:
The payment of Brian's debt to Chuck is guaranteed by Brian's personal property. This is
a. an attachment.
b. a secured transaction.
c. perfection.
d. a violation of most state laws.
Q:
Courts do not depart from precedents.
Q:
Debts based on fraud may be discharged under Chapter 13.
Q:
The price that a secured party obtains on a sale of collateral is all that the creditor can recover on the debt.
Q:
The time for repayment under an individual's Chapter 11 plan is three or five years, depending on the debtor's family income.
Q:
Judges use precedent when deciding a case in a common law legal system.
Q:
To qualify as a commercially reasonable sale, a secured party's sale of colÂlateral, after default and repossession, must be private.
Q:
In most states, a court cannot grant a legal remedy and an equitable remedy in the same case.
Q:
Proceeds from the disposition of collateral after default on the underlying debt are distributed equally among lienholders who have made demands.
Q:
A Chapter 13 plan can be initiated only by the filing of an involuntary petition.
Q:
Equitable remedies include injunctions and decrees of specific performance.
Q:
On default, unless the security agreement states otherwise, the secured party has the right to take possession of the collateral.
Q:
A Chapter 11 plan is binding on confirmation and the debtor is discharged.
Q:
A corporate debtor must be "out of business" before it can file a bankruptcy petition for reorganization under Chapter 11.
Q:
Damages is the normal remedy at law today.
Q:
In most situations, a termination statement must be filed or sent within twenty days after the debt is paid.
Q:
If the assets in a debtor's estate in bankruptcy are insufficient to pay fully all creditors, the debtor is liable for the difference.
Q:
Common law is a term for law that is common throughout the world.
Q:
A secured party can release any colÂlateral described in the financing statement, thereby terminating its security interest in that collateral.
Q:
In general, the claims of all of the creditors of an estate must be satisfied before any remaining amounts can be given to the debtor.
Q:
To take goods free of any security interest, a buyer in the ordinary course of business cannot know about the interest.
Q:
Every state has adopted the Uniform Commercial Code in its entirety.
Q:
Unsecured parties have priority over secured parties to the proceeds from the disposition of collateral on the distribution of a debtor's estate.
Q:
A buyer in the ordinary course of business has priority over any security interest created by the seller.
Q:
Statutory law does not include county ordinances.
Q:
On a debtor's bankruptcy, a secured creditor cannot recover more on a debt than the value of the collateral covering the debt.
Q:
The first security interest to be perfected is the last in priority over any other perfected security interests.
Q:
State constitutions are supreme within their respective borders.