Secured Transactions Paper 3

1

Wine purchased a computer using the proceeds of a loan from MJC Finance Company. Wine gave MJC a security interest in the computer. Wine executed a security agreement and financing statement, which was filed by MJC. Wine used the computer to monitor Wine’s personal investments. Later, Wine sold the computer to Jacobs, for Jacobs’ family use. Jacobs was unaware of MJC’s security interest. Wine now is in default under the MJC loan. May MJC repossess the computer from Jacobs?






2

Rally Co. has purchased some inventory from Kantar Corporation to sell to customers who will use the inventory primarily for consumer use. Which of the following is not correct?






3

On June 15, Harper purchased equipment for $100,000 from Imperial Corp. for use in its manufacturing process. Harper paid for the equipment with funds borrowed from Eastern Bank. Harper gave Eastern a security agreement and financing statement covering Harper’s existing and after-acquired equipment. On June 21, Harper was petitioned involuntarily into bankruptcy under Chapter 7 of the Federal Bankruptcy Code. A bankruptcy trustee was appointed. On June 23, Eastern filed the financing statement. Which of the parties will have a superior security interest in the equipment?






4

Drew bought a computer for personal use from Hale Corp. for $3,000. Drew paid $2,000 in cash and signed a security agreement for the balance. Hale properly filed the security agreement. Drew defaulted in paying the balance of the purchase price. Hale asked Drew to pay the balance. When Drew refused, Hale peacefully repossessed the computer. Under the Revised UCC Secured Transaction Article, which of the following remedies will Hale have?






5

Drew bought a computer for personal use from Hale Corp. for $3,000. Drew paid $2,000 in cash and signed a security agreement for the balance. Hale properly filed the security agreement. Drew defaulted in paying the balance of the purchase price. Hale asked Drew to pay the balance. When Drew refused, Hale peacefully repossessed the computer. Under the Revised UCC Secured Transaction Article, which of the following rights will Drew have?






6

Under the Revised UCC Secured Transaction Article, which of the following statements is correct concerning the disposition of collateral by a secured creditor after a debtor’s default?






7

Bean defaulted on a promissory note payable to Gray Co. The note was secured by a piece of equipment owned by Bean. Gray perfected its security interest on May 29 Bean had also pledged the same equipment as collateral for another loan from Smith Co. after he had given the security interest to Gray. Smith’s security interest was perfected on June 30. Bean is current in his payments to Smith. Subsequently, Gray took possession of the equipment and sold it at a private sale to Walsh, a good-faith purchaser for value. Walsh will take the equipment






8

In what order are the following obligations paid after a secured creditor rightfully sells the debtor’s collateral after repossession? I. Debt owed to any junior security holder. II. Secured party’s reasonable sale expenses. III. Debt owed to the secured party.






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