LA Bar Secured Transactions 3

Question 1

A PMSI in inventory takes priority over an earlier perfected conflicting security interest in the same inventory ONLY IF the PMSI holder perfects before the debtor receives the inventory AND:

Accepted Answer

Sends authenticated notification to the holder of the conflicting interest before the debtor receives possession

Answer

UCC 9-324(b) requires the inventory PMSI holder to both perfect before the debtor receives possession AND give authenticated notification to any competing secured party who has filed a financing statement covering the same inventory type.

Question 2

A buyer in ordinary course of business who buys goods from a merchant takes the goods:

Accepted Answer

Free of a security interest created by the seller, even if the security interest is perfected and the buyer knows of it

Answer

UCC 9-320(a) protects buyers in ordinary course from security interests created by their seller, even when the security interest is perfected and the buyer has actual knowledge of it.

Question 3

When two perfected security interests conflict in the same collateral, the general priority rule under Article 9 awards priority to whichever secured party:

Accepted Answer

First filed a financing statement or first perfected, whichever occurred earlier

Answer

Under UCC 9-322(a)(1), priority between conflicting perfected security interests is determined by which party first filed a financing statement or first perfected — whichever of those events happened first.

Question 4

A lien creditor (a judgment creditor who levied on collateral) has priority over a security interest that was in what state when the lien arose?

Accepted Answer

Attached to the collateral but not yet perfected

Answer

Under UCC 9-317(a)(2), a lien creditor defeats an unperfected security interest, so a security interest that has attached but not been perfected when the lien arises is subordinate to the lien creditor.

Question 5

A PMSI in equipment (goods other than inventory) takes priority over a conflicting earlier-perfected security interest if the PMSI is perfected:

Accepted Answer

When the debtor receives possession of the equipment or within 20 days thereafter

Answer

UCC 9-324(a) grants PMSI super-priority in non-inventory goods if the PMSI is perfected when the debtor receives possession or within 20 days after the debtor receives delivery.

(LA Bar) Louisiana Bar Exam Practice Test

(LA Bar) Louisiana Bar Exam Practice Test

LA Bar Secured Transactions 3