4. Multiple Claimants: Claim Priority

Question 1

The general rule regarding priority under Article 9 is

Answer 1

“first-in time, first-in-right”

Question 2

Perfected vs Perfected:

Answer 2

First to file or perfect wins.

Question 3

Perfected vs Unperfected

Answer 3

perfected SI wins

Question 4

Unperfected vs Unperfected

Answer 4

first to attach or perfect wins.

Question 5

Purchase Money Security Interest

A PMSI is established when

Answer 5

1. The creditor provides funds or credit that enable the debtor to purchase specific goods.
2. The debtor uses those funds or credit to acquire the goods.
3. The creditor retains a security interest in the purchased goods as collateral for the loan or credit provided.

Question 6

PMSI Inventory

Answer 6

beats all other SIs if

(1) perfected before delivery, &

(2) authenticated notification sent to other secured
ptys (one notif’n effective 5 yrs); priority extends to cash proceeds

Question 7

PMSI Other Goods

Answer 7

beats all other SIs if perfected w/in 20 days
of delivery; if not treat as reg SI; priority extends to all proceeds.

Question 8

PMSI VS PMSI:

Answer 8

seller beats lender; otherwise first to file/perfect.

Question 9

Buyers & Transferees

Transferees

Answer 9

Security Interest continues in transferred collateral unless secured party authorizes transfer free of it;

transferee of money or funds from deposit account takes free of any SI unless acting in collusion w/ debtor to violate secured party’s rights

Question 10

Buyers Generally

Answer 10

a buyer takes free of unperfected SI if he
gives value & receives delivery without knowledge of SI;

a buyer takes subject to perfected SI.

Question 11

Buyer in Ordinary Course of Business

Answer 11

(1) buys goods (but not farm products)
by giving new value,
(2) in ord course,
(3) from seller in business
of selling goods of the kind,
(4) in good faith, &
5) w/out actual knowledge of secured pty’s rts;

buyer takes free of any SI.

Question 12

GARAGE SALE RULE

Answer 12

(1) buys consumer goods for value,
(2) for own pers’l/fam use,
(3) from consumer seller, &
(4) w/out knowledge of SI;

buyer takes free of any SI unless FS filed covers the goods.

Question 13

BUYER OF CHATTEL PAPER:

Answer 13

(1) gives new value & has possession or
control;

(2) in good faith & ord course of business; &

(3) chattel paper doesn’t indicate assignment to ID’d assignee if SI claimed as proceeds of inventory or purchase made w/out knowledge of secured pty’s rts if any other SI.

buyer takes priority.

Question 14

BUYER OF NEGOTIABLE INSTRUMENT:

Answer 14

buyer takes free of any SI.

Question 15

Future Advances

Answer 15

buyer took collateral subject to SI & secured
party made future advances to seller after sale;

buyer takes free of that advance if secured party had knowledge of sale or advance was made 45+ days after sale.