Commercial Law Survey Question And
Answers
Parol Evidence Rule - Correct Answer - Evidence may not be introduced to contradict a
written agreement intended to be a final expression of the parties agreement.
Evidence of additional consistent terms may be introduced unless the court finds the
written form to a complete and exclusive statement of the terms of the agreement.
Evidence of course of performance, course of dealing, and usage of the trade may be
used to supplement of a contract, no matter the level of integration.
Redemption Rights - Correct Answer - The right of the debtor, existing up to the point of
confirmation of foreclosure sale, to pay all sums due and avoid foreclosure.
How are the proceeds of judicial sale applied? - Correct Answer - (1) costs of the sale;
(2) money is given to secured creditors based on priority order;
(3) anything left over goes to the debtor (or if there's a deficiency, does a deficiency
statute govern?)
Lowest Intermediate Balance Rule - Correct Answer - The proceeds sink to the bottom
of a commingled account. Whatever is spent from that account is non-proceeds if the
proceeds amount remains.
Proceeds - Correct Answer - Anything of value received in exchange for, or to cause the
nonexistence of the collateral.
Tie-Breakers for Priority between TWO LIEN CREDITORS - Correct Answer - (1) Date
of levy by sheriff;
(2) Date of delivery of the writ to the sheriff;
(3) Date of service of the writ;
(4) Date of recordation of the judgment.
Future Advances v. Lien Creditors - Correct Answer - If the SA is silent on FA's, then
the FA is totally unsecured. Otherwise, the advance by the secured creditor will take
priority over the perfected lien if:
(1) The future advance is made within 45 days of perfection of the lien (levying of the
property); OR
(2) the future advance is made without knowledge of the lien; OR
(3) the future advance is made pursuant to a commitment that was entered into without
knowledge of the lien (regardless of timing or knowledge (choice3)).
Answers
Parol Evidence Rule - Correct Answer - Evidence may not be introduced to contradict a
written agreement intended to be a final expression of the parties agreement.
Evidence of additional consistent terms may be introduced unless the court finds the
written form to a complete and exclusive statement of the terms of the agreement.
Evidence of course of performance, course of dealing, and usage of the trade may be
used to supplement of a contract, no matter the level of integration.
Redemption Rights - Correct Answer - The right of the debtor, existing up to the point of
confirmation of foreclosure sale, to pay all sums due and avoid foreclosure.
How are the proceeds of judicial sale applied? - Correct Answer - (1) costs of the sale;
(2) money is given to secured creditors based on priority order;
(3) anything left over goes to the debtor (or if there's a deficiency, does a deficiency
statute govern?)
Lowest Intermediate Balance Rule - Correct Answer - The proceeds sink to the bottom
of a commingled account. Whatever is spent from that account is non-proceeds if the
proceeds amount remains.
Proceeds - Correct Answer - Anything of value received in exchange for, or to cause the
nonexistence of the collateral.
Tie-Breakers for Priority between TWO LIEN CREDITORS - Correct Answer - (1) Date
of levy by sheriff;
(2) Date of delivery of the writ to the sheriff;
(3) Date of service of the writ;
(4) Date of recordation of the judgment.
Future Advances v. Lien Creditors - Correct Answer - If the SA is silent on FA's, then
the FA is totally unsecured. Otherwise, the advance by the secured creditor will take
priority over the perfected lien if:
(1) The future advance is made within 45 days of perfection of the lien (levying of the
property); OR
(2) the future advance is made without knowledge of the lien; OR
(3) the future advance is made pursuant to a commitment that was entered into without
knowledge of the lien (regardless of timing or knowledge (choice3)).
