1. On September 1, Abco Electronics Co. sold a computer from out of its inventory to Rice who intended to use it for business purposes. Rice paid 25% of the purchase price and executed and delivered to Abco a promissory note for the balance. A security agreement was signed only by the Abco sales representative. Abco failed to file a financing statement. Rice is in default under the promissory note. Rice claimed that Abco does not have an effective security interest in the computer because Rice did not authenticate the security agreement, and because Abco did not file a financing statement.

State whether the claims of Rice are correct and give the reasons for your conclusions.