Question 1
Dennis purchased a big screen television from ABC Electronics (consumer purchase) and financed the purchase through ABC Electronics (ABC is treating the purchased TV as collateral). Later, because Dennis had bought a boat, a new car, an expensive engagement ring for his girlfriend, and some other items, he was unable to continue making payments on the television. The manager from ABC Electronics called and asked Dennis to return the television. Dennis refused on the basis that ABC Electronics never perfected its interest in the television. Which of the following is the term for the type of agreement Dennis had with ABC Electronics? (HINT: look at who provided the collateral)
A pledged money interest.
A collateralized interest.
A purchase-money security interest.
A security perfection interest

Question 2
Dennis purchased a big screen television from ABC Electronics and financed the purchase through ABC Electronics. Later, because Dennis had bought a boat, a new car, an expensive engagement ring for his girlfriend, and some other items, he was unable to continue making payments on the television. The manager from ABC Electronics called and asked Dennis to return the television. Dennis refused on the basis that ABC Electronics never perfected its interest in the television. Which of the following is correct regarding the statement of Dennis that the security interest was not perfected?

Dennis is wrong. Because ABC has a PSMI in consumer goods, the security interest perfected immediately.
Dennis is correct because the security interest perfected when he was still in possession of the collateral 30 days after the purchase.
Dennis is correct because ABC never filed a financing statement.
Dennis is correct because in the case of luxury goods, a financing statement must be filed within 20 days.

Question 3
Molly wanted to start her own dry cleaning business. She borrowed $50,000 from ABC Bank. She used her car as the collateral and also gave ABC Bank an interest in any property she acquired after the security interest was made. The bank perfected its interest. Molly purchased a new computer from XYZ Electronics to use in her business. XYZ obtained a purchase money security interest on the computer and filed a financing statement. Molly was having problems with cash flow and failed to make payments to XYZ Electronics on the new computer. The electronics store sought to repossess the computer, but the bank opposed that. Molly's business picked up and she was able to completely repay her loan to the bank. She requested that the bank discontinue its security interest, but the bank did not do so as requested by Molly, and still had not done so 45 days after Molly had paid off the loan and requested that the bank terminate its interest. After the security interest with the bank was agreed upon, which of the following is the proper designation for any equipment that Molly obtains (after signing the security agreement) that would be subject to the bank's security interest?
After-acquired property.
Post-dated property.
Cover property.
Post-security property.

Question 4
Molly wanted to start her own dry cleaning business. She borrowed $50,000 from ABC Bank. She used her car as the collateral and also gave ABC Bank an interest in any property she acquired after the security interest was made. The bank perfected its interest. Molly purchased a new computer from XYZ Electronics to use in her business. XYZ obtained a purchase money security interest on the computer and filed a financing statement. Molly was having problems with cash flow and failed to make payments to XYZ Electronics on the new computer. The electronics store sought to repossess the computer, but the bank opposed that. Molly's business picked up and she was able to completely repay her loan to the bank. She requested that the bank discontinue its security interest, but the bank did not do so as requested by Molly, and still had not done so 45 days after Molly had paid off the loan and requested that the bank terminate its interest. Which of the following is true regarding priority to the computer?
The bank had priority because the computer was considered after-acquired property properly covered by the initial security interest.
XYZ Electronics had priority only if XYZ Electronics perfected its security interest within 10 days of the purchase.
XYZ Electronics had priority only if XYZ Electronics perfected its security interest within 20 days of the purchase.
The bank had a security interest in the computer because it perfected its security interest before XYZ Electronics did so.

Question 5
Molly wanted to start her own dry cleaning business. She borrowed $50,000 from ABC Bank. She used her car as the collateral and also gave ABC Bank an interest in any property she acquired after the security interest was made. The bank perfected its interest. Molly purchased a new computer from XYZ Electronics to use in her business. XYZ obtained a purchase money security interest on the computer and filed a financing statement. Molly was having problems with cash flow and failed to make payments to XYZ Electronics on the new computer. The electronics store sought to repossess the computer, but the bank opposed that. Molly's business picked up and she was able to completely repay her loan to the bank. She requested that the bank discontinue its security interest, but the bank did not do so as requested by Molly, and still had not done so 45 days after Molly had paid off the loan and requested that the bank terminate its interest. Which of the following is true regarding any compensation that Molly is entitled to from the bank because the bank did not timely file notice that it had no interest in her goods?
She may recover $100 from the bank.
She may recover $200 from the bank
She may recover $500 from the bank.
She may recover $1,000 from the bank.

Question 6
Tina sold used vehicles. She sold a used pick-up truck to Joan and a used convertible to Barry. She properly obtained a security interest in both vehicles. Both Joan and Barry defaulted on payments owed to Tina for the vehicles. Tina was under the belief that her only option was to take possession of the collateral. Tina decided that she would repossess Joan's pick-up at Joan's house. Therefore, Tina slipped into the driveway one evening at midnight and started the engine. Joan immediately ran out and confronted Tina. Tina shoved Joan away and drove off in the pick-up truck. Tina was able to repossess Barry's convertible in a public parking lot with no altercation with him. Which of the following is true regarding Tina's belief that her only option was to take possession of the collateral?
Tina was correct regardless of whether a vehicle or another type of good was involved.
Tina was correct, but only because a vehicle was involved.
Tina was incorrect because regardless of whether a vehicle or another type of good was involved, Tina only had the right to ignore the collateral and proceed to judgment.
Tina was incorrect because regardless of whether a vehicle or another type of good was involved, Tina had the right to either take possession of the collateral or ignore rights in the collateral and proceed to judgment.

Question 7
Tina sold used vehicles. She sold a used pick-up truck to Joan and a used convertible to Barry. She properly obtained a security interest in both vehicles. Both Joan and Barry defaulted on payments owed to Tina for the vehicles. Tina was under the belief that her only option was to take possession of the collateral. Tina decided that she would repossess Joan's pick-up at Joan's house. Therefore, Tina slipped into the driveway one evening at midnight and started the engine. Joan immediately ran out and confronted Tina. Tina shoved Joan away and drove off in the pick-up truck. Tina was able to repossess Barry's convertible in a public parking lot with no altercation with him. Which of the following is true regarding Tina's repossession of the pick-up truck?
She breached the peace in recovering the collateral.
Tina did not breach the peace in recovering the collateral unless Joan can establish the existence of actual injuries.
Tina did not breach the peace because she was entitled to repossess the vehicle and any injury sustained by Joan was her own fault.
Tina breached the peace, but only because she acted to repossess the collateral after 10:00 p.m. at night.

Question 8
Tina sold used vehicles. She sold a used pick-up truck to Joan and a used convertible to Barry. She properly obtained a security interest in both vehicles. Both Joan and Barry defaulted on payments owed to Tina for the vehicles. Tina was under the belief that her only option was to take possession of the collateral. Tina decided that she would repossess Joan's pick-up at Joan's house. Therefore, Tina slipped into the driveway one evening at midnight and started the engine. Joan immediately ran out and confronted Tina. Tina shoved Joan away and drove off in the pick-up truck. Tina was able to repossess Barry's convertible in a public parking lot with no altercation with him.
Which of the following is true regarding Tina's taking possession of Barry's convertible?
Tina breached the peace because she did not provide Barry prior notification that she was going to repossess the vehicle.
Tina breached the peace because she took the vehicle from a public lot.
Tina breached the peace unless she can establish that Barry gave her prior permission to repossess the vehicle in a public lot.
Tina did not breach the peace because she acted in a reasonable manner in taking the collateral.

Question 9
Selina hired a contractor, Rex, to put new windows in her home that she purchased herself from Good Windows. Unfortunately, Rex made a mess of the windows. While the windows were initially in good shape, Rex cracked some, scratched others, and did not get the windows properly fitted into their frames. Selina received a bill for the windows from Good Windows, but she refused to pay. Selina was told that Good Windows would file a lien, but she believed that there was no basis upon which a lien would be granted. Rex, who refused responsibility for any problems, also filed a lien after Selina refused to pay him. Which of the following is the type of lien that Rex would likely seek?
Artisan's
Mechanic's
Removal
Judicial

Question 10
Molly started a new hair salon and leased space for the salon from Peggy. Unfortunately, Molly's styling caused some problems for customers. One customer's hair turned green from her bleaching process, and she burned another customer with a curling iron. Not surprisingly, Molly had little business and was unable to pay her lease payments as they came due. Peggy filed a lawsuit against Molly and obtained a judgment against Molly for $7,000 in past due rent. Peggy asked for a court-ordered judgment permitting the sheriff to seize and sell Molly's equipment including her hair-dryers, pedicure chair, nail polish, and other items. Which of the following is the term for what Peggy requested when she requested that the judge have law enforcement officers seize and sell Molly's equipment? (HINT: pay attention to the timing of the request. Did she request the seizure before or after she obtained a judgment for past due rent?)
Garnishment
Secured lien
Writ of execution
Attachment

Question 1 Dennis purchased a big screen television from ABC Elect...