Secured Transactions Under The Ucc

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1. Which UCC Aricle governs secured transactions?

Explanation

Article 9 of the UCC governs secured transactions. It provides rules and regulations for creating and enforcing security interests in personal property as collateral for loans or other obligations. This article covers various aspects of secured transactions, including attachment, perfection, priority, and enforcement of security interests.

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About This Quiz
Secured Transactions Under The Ucc - Quiz

This quiz covers the basics of secured transactions under the Uniform Commercial Code, Article 9. It is intended as review for the Bar Exam.

2. A creditor may repossess collateral by any means, so long as he does not _______________________.

Explanation

The correct answer is "breach the peace." This means that a creditor has the right to repossess collateral through any legal means as long as they do not engage in any actions that would disturb the peace or cause a disruption. This ensures that the repossession process is carried out in a peaceful and orderly manner, without any unnecessary conflict or harm to individuals or property.

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3. After repossession, the debtor can _____________ the collateral by paying off the debt plus the creditor's repossession expenses and fees.

Explanation

After repossession, the debtor has the option to redeem the collateral by paying off the debt along with the repossession expenses and fees incurred by the creditor. This means that the debtor can regain ownership of the collateral by fully satisfying the outstanding obligations.

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4. After collateral is sold and the disposing creditor has been paid for any costs associated with the sale, any remaining proceeds are next paid for what?

Explanation

After collateral is sold and the disposing creditor has been paid for any costs associated with the sale, any remaining proceeds are next paid towards the secured debt owed to the disposing creditor. This means that the creditor who sold the collateral will receive payment for the outstanding debt before any other creditors or the debtor themselves receive any proceeds from the sale.

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5. Can accounts be repossessed simply by directing the account holder to pay the creditor rather than the debtor?

Explanation

Accounts can be repossessed simply by directing the account holder to pay the creditor rather than the debtor. This means that if the creditor has the legal authority to do so, they can instruct the account holder to make payments directly to them instead of the debtor. By doing this, the creditor can ensure that they receive the payments owed to them and potentially recover any outstanding debts. This method is often used in cases where the debtor is unable or unwilling to make the necessary payments.

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6. What defines default in a secured transaction?

Explanation

The correct answer is "The agreement." In a secured transaction, the terms and conditions of the agreement between the parties involved define what is considered as default. This means that the specific terms agreed upon by the parties will determine the actions or events that would be considered a default in the transaction. It could include things like failure to make payments, breach of contract, or any other specified conditions outlined in the agreement.

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7. After collateral is sold and the proceeds are used to pay for the cost of the sale and the secured debt to the disposing creditor, the excess (if any) is paid next for what?

Explanation

After collateral is sold and the proceeds are used to pay for the cost of the sale and the secured debt to the disposing creditor, the excess amount is paid next to other secured creditors with an interest in the same collateral who make a demand. This means that if there are other creditors who have a security interest in the same collateral and they request payment, they will receive the excess funds before any other parties. This ensures that all creditors with a claim on the collateral are treated fairly and have the opportunity to receive their share of the proceeds.

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8. After default, must a secured creditor notify the debtor of his intent to repossess the collateral?

Explanation

No, after default, a secured creditor is not required to notify the debtor of their intent to repossess the collateral. In some cases, the creditor may choose to provide notification as a courtesy or to facilitate a resolution, but it is not a legal requirement. The creditor has the right to repossess the collateral without prior notice as long as they follow the appropriate legal procedures.

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9. After collateral is sold, and the disposing creditor has been paid for the costs of the sale and the secured debt, and any other secured creditor with an interest in the same collateral who made a demand has also been paid, the excess (if any) is paid to whom?

Explanation

After the collateral is sold and all the necessary payments have been made, any excess amount is paid to the debtor. This means that if there is any money left over after satisfying the costs of the sale and the secured debt, it belongs to the debtor. This excess amount can be used by the debtor for any purpose they choose.

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10. The sale of collateral by the creditor to satisfy the debt must be commercially _____________.

Explanation

The sale of collateral by the creditor to satisfy the debt must be commercially reasonable. This means that the creditor must make a good faith effort to obtain the highest possible price for the collateral, considering factors such as market value and prevailing prices. The sale should be conducted in a fair and transparent manner, ensuring that all potential buyers have an opportunity to participate. By requiring the sale to be commercially reasonable, it protects the debtor from unfair and undervalued sales that could result in a greater loss for the debtor.

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11. After collateral is sold, the proceeds are first paid for what?

Explanation

After collateral is sold, the proceeds are first used to cover the creditor's cost of sale. This refers to any expenses incurred by the creditor in the process of selling the collateral, such as advertising costs, legal fees, or auction fees. By deducting these costs from the proceeds, the creditor can recover the expenses they have incurred before distributing the remaining funds to other parties, such as other secured creditors or the debtor.

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12. When a creditor negotiates to buy collateral from the debtor in exchange for forgiveness of some or all of the debt, it is known as:

Explanation

Strict foreclosure refers to a situation where a creditor negotiates with a debtor to buy collateral in exchange for forgiving some or all of the debt. In this process, the creditor takes ownership of the collateral without going through a foreclosure sale. This allows the debtor to satisfy the debt by transferring the collateral to the creditor, rather than going through a forced default or negotiation process.

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13. Can the debtor waive notice of impending sale of his repossessed collateral?

Explanation

The correct answer is "Yes, but only after default." This means that the debtor can waive notice of the impending sale of their repossessed collateral, but only after they have defaulted on their obligations. This suggests that once the debtor has failed to meet their obligations, they have the option to waive their right to notice and allow the sale of their collateral to proceed without notification.

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14. If the collateral property is not consumer goods, who must be notified of its impending sale (select all that apply)?

Explanation

The debtor, any secondary obligor, other parties the seller actually knows have a security interest in the collateral property, and other parties who have filed UCC-1 filings on the collateral property must be notified of its impending sale. This is because these parties have a legal interest in the collateral property and should be informed about its sale to protect their rights and interests.

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15. If the collateral property is consumer goods, who must be notified of its impending sale (select all that apply)?

Explanation

The debtor and any secondary obligor must be notified of the impending sale of the collateral property. This is because they have a direct interest in the property and need to be informed about its sale. Other parties who have filed UCC-1 filings on the collateral property may also need to be notified as they have a security interest in the property. However, the state and other parties the seller actually knows have a security interest in the collateral property may not necessarily need to be notified, as their interest may not be directly affected by the sale.

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16. Which types of collateral may be sold without notice to the debtor, secondary obligors, or other creditors (select all that apply)?

Explanation

Collateral that is customarily sold on a recognized market can be sold without notice to the debtor, secondary obligors, or other creditors because the market provides transparency and fair value for the sale. Perishable collateral can also be sold without notice as its value will quickly diminish over time. Similarly, collateral that will depreciate quickly can be sold without notice to prevent further loss in value.

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17. When may a creditor himself bid on collateral put up for sale at a private sale (select all that apply)?

Explanation

A creditor may bid on collateral put up for sale at a private sale when the sale involves an item that is customarily sold on a recognized market and when the item is the subject of widely distributed standard price quotations. In these situations, it is considered acceptable for the creditor to bid on the collateral as it ensures a fair market value for the item.

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18. The debtor has the right to redeem property until (select all that apply):

Explanation

The debtor has the right to redeem the property until foreclosure because foreclosure is the legal process by which a lender takes possession of a property due to the borrower's failure to meet the terms of the loan agreement. The debtor also has the right to waive the right of redemption, which means voluntarily giving up the right to reclaim the property after it has been foreclosed upon.

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Which UCC Aricle governs secured transactions?
A creditor may repossess collateral by any means, so long as he does...
After repossession, the debtor can _____________ the collateral by...
After collateral is sold and the disposing creditor has been paid for...
Can accounts be repossessed simply by directing the account holder to...
What defines default in a secured transaction?
After collateral is sold and the proceeds are used to pay for the cost...
After default, must a secured creditor notify the debtor of his intent...
After collateral is sold, and the disposing creditor has been paid for...
The sale of collateral by the creditor to satisfy the debt must be...
After collateral is sold, the proceeds are first paid for what?
When a creditor negotiates to buy collateral from the debtor in...
Can the debtor waive notice of impending sale of his repossessed...
If the collateral property is not consumer goods, who must be notified...
If the collateral property is consumer goods, who must be notified of...
Which types of collateral may be sold without notice to the debtor,...
When may a creditor himself bid on collateral put up for sale at a...
The debtor has the right to redeem property until (select all that...
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