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These 10 free CBF questions are organized by exam domain, so you can see how each part of the Credit Business Fellow blueprint is tested. Reveal the answer and explanation under each question.
An authorized trade-reference request asks for a customer's complete account status. The supplier's ledger shows $80,000 past due, including $25,000 under a timely, unresolved short-delivery dispute. All other overdue charges are undisputed. Which reply conveys the facts without prejudging the dispute?
Correct answer: C - $80,000 is past due, including $25,000 subject to an unresolved delivery dispute.
A proposed federal collection action concerns only a $180,000 state-law contract claim, excluding interest and costs. The plaintiff corporation is incorporated in Delaware and headquartered in New York; the defendant corporation is incorporated in Delaware and headquartered in Texas. Each headquarters is its principal place of business. The parties selected that federal court in their contract. Is diversity jurisdiction available?
Correct answer: B - No; their shared Delaware citizenship defeats complete diversity.
An agreed price increase for undelivered resin changes neither the quantity nor the supplier's other obligations. Both parties freely sign the amendment in good faith following a supply disruption, satisfying all writing requirements. Under UCC Article 2, the buyer's later objection that the supplier furnished no new consideration:
Correct answer: A - Fails, because a good-faith modification needs no new exchange of consideration.
Two merchants agree by telephone on a $42,000 sale of 600 cartons. The seller promptly sends a signed confirmation accurately stating those terms. The buyer reads it that day but sends no written objection. Fourteen days later, before shipment, the buyer refuses to proceed because it never signed a contract. Under UCC Article 2, does that missing signature defeat the seller's claim?
Correct answer: B - It does not defeat enforcement; the merchant-confirmation exception satisfies the Statute of Frauds.
After a supplier breaches a $48,000 components contract, the buyer promptly makes a reasonable, good-faith substitute purchase for $55,000. Arranging the replacement purchase costs another $1,200 in reasonable expenses. The breach also saves the buyer $700 in handling expenses it would have incurred under the original contract. Nothing was prepaid, and no consequential losses or contractual remedy limits apply. What amount belongs in the buyer's cover-damages demand under UCC Article 2?
Correct answer: C - $7,500
'F.O.B. seller's loading dock, Toledo' appears in a domestic UCC sales contract. The seller properly delivers conforming goods to a carrier, fulfilling all packaging and shipment-notice requirements. A highway fire destroys the goods in transit while the invoice remains unpaid. Neither party has breached, and no other risk-of-loss term applies. As between seller and buyer, who bears the loss?
Correct answer: B - The buyer, because risk passed when the goods were duly delivered to the carrier.
Bank North already holds a properly filed, perfected security interest in a distributor's present and future inventory. On June 3, a generator supplier delivers generators for resale under a valid purchase-money security agreement. The supplier first files its financing statement on June 12, when Bank North also receives the required authenticated notification. No subordination agreement exists. Who has priority in the generators under UCC Article 9?
Correct answer: D - Bank North, because the supplier missed the timing requirements for inventory purchase-money priority.
The bankruptcy court values a corporate Chapter 7 debtor's machine at $100,000; its accounting book value is $60,000. A bank holds a first-priority lien securing $55,000. The only junior lien belongs to a supplier with an allowed $90,000 recourse claim, secured solely by that machine. Both liens are valid, and no sale expenses or other charges reduce the collateral available to them. How should the supplier's claim be classified for distribution?
Correct answer: D - $45,000 secured and $45,000 general unsecured.
Harbor Manufacturing tells a supplier in writing that its purchasing manager, Morgan, may place routine inventory orders up to $40,000. Harbor later lowers Morgan's spending limit to $15,000 without notifying the supplier. Unaware of the change and reasonably relying on Harbor's letter, the supplier fills Morgan's routine $28,000 order on credit. Harbor rejects the invoice solely because Morgan exceeded the revised limit. California law governs. What is the strongest basis for holding Harbor to the order?
Correct answer: A - Apparent authority based on Harbor's letter and the supplier's reasonable reliance.
To buy production machinery, a manufacturer signs a negotiable promissory note after reading and understanding it. The seller knowingly lies about the machine's output. Before any payment is overdue, a finance company takes the note for value, in good faith, without notice of the fraud, and qualifies as a holder in due course. The maker later discovers the lie and refuses payment. In this commercial transaction, what follows from the type of fraud described?
Correct answer: B - Fraud in the inducement does not defeat enforcement by this holder in due course.
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