Contract Law & Commercial Transactions Flashcards

Under UCC Article 9, which of these is NOT required for a security interest to attach?

Answer: Filing a financing statement

Filing is a way to perfect a security interest, not a requirement for attachment.

A security interest in a deposit account as original collateral can be perfected only by:

Answer: Control

Under UCC 9-312(b)(1), control is the only way to perfect a security interest in a deposit account as original collateral.

An appliance store sells a refrigerator to a consumer on credit and keeps a purchase-money security interest. Without filing, the store's security interest is:

Answer: Automatically perfected on attachment

A PMSI in consumer goods is automatically perfected when it attaches, without filing (except for goods covered by certificate-of-title laws).

To disclaim the implied warranty of merchantability in writing, the disclaimer must:

Answer: Mention merchantability and be conspicuous

Under UCC 2-316(2), a merchantability disclaimer must mention merchantability and, if written, be conspicuous.

Which defense can a maker assert even against a holder in due course?

Answer: Infancy

Infancy is a real defense that holds up even against a holder in due course, unlike personal defenses such as fraud in the inducement.

A buyer has reasonable grounds for insecurity about a seller's performance and makes a written demand for adequate assurance. If the seller does not respond within a reasonable time, which can be no more than:

Answer: 30 days, the failure is a repudiation

Under UCC 2-609(4), failure to give adequate assurance within a reasonable time, not over 30 days, is a repudiation.

An owner leaves a watch for repair with a jeweler who also sells used watches. The jeweler sells it to a buyer in the ordinary course of business. Under UCC 2-403(2), the buyer:

Answer: Gets all of the owner's rights in the watch

Under the entrustment rule, a merchant who deals in goods of that kind can pass all of the entruster's rights to a buyer in the ordinary course of business.