Article 9

Question 1

Article 9 of the UCC Governs Secured Transactions

Answer 1

Article 9 of the Uniform Commercial Code (UCC) governs any transaction regardless of its form that creates a security interest, including security interests in personal property, consignments, a sale of accounts, chattel paper, and promissory notes.

Question 2

Substance over form in Article 9 secured transactions

Answer 2

it immaterial how the parties classify the transaction and what matters is whether it creates a security interest

Question 3

Enforcing a security interest

Answer 3

Enforcing a security interest depends on two
factors: (1) attachment; and (2) perfection.

Answer 4

Attachment secures the creditor’s rights in the debtor’s collateral, making the security interest valid and enforceable against the debtor
and third parties.

Answer 5

Perfection gives notice of the creditor’s
rights in the collateral to other parties who may have claims to the same, and usually determines which party has priority to the collateral. A security interest CANNOT be perfected, unless it has first attached.

Question 6

all three criteria have been satisfied, X’s security interest in the property described in the loan and security agreement is enforceable and attached

Answer 6

attachment require (1) that the creditor extend value to the debtor, (2) the debtor have rights in the collateral or the power to transfer rights in the collateral and (3) an authenticated record/security agreement, signed, that provides a description of the collateral

Question 7

an authenticated record/security agreement
memorializing the security interest:

Answer 7

either the secured party must take possession of the collateral or the debtor must authenticate a security agreement containing a description of the collateral.
- the agreement that is signed ? = authentication

Question 8

A security interest is perfected when it is attached and when any additional steps required for perfection have occurred.

Answer 8

General, the additional steps will either be possession of the collateral by the secured party or the filing of a financing statement with respect to the collateral.

Answer 9

the collateral indication is sufficient because it identifies the collateral by type of property.

Question 10

inventory

Answer 10

goods that: (a) are leased by a person as lessor; (b) are held by a person for sale/lease or to
be given under a contract of service; (c) are given by a
person under a contract of service; OR (d) consist of raw materials, work in process, or materials used or consumed in a business.

Inventory DOES NOT include farm products or
goods that are only being held for repair.

Question 11

Equipment

Answer 11

“Equipment” consists of goods other than inventory, farm products, or consumer goods.

Question 12

Goods

Answer 12

“Goods” means all things that are movable when a security interest attaches, including fixtures, timber, the unborn young of animals, crops, and manufactured homes.

Question 13

Consumer Goods

Answer 13

“Consumer goods” are those used or purchased primarily for personal, family, or household purposes.

Answer 14

A security interest is subordinate to the rights of a person who becomes a lien creditor before the security interest is perfected

Answer 15

under the UCC, except as otherwise provided in Article 9 “a security interest continues in collateral notwithstanding sale unless the secured party authorized the disposition free of the security interest

Question 16

“purchase money security interests” (PMSI) in consumer goods

Answer 16

automatically perfected (filing a financing statement is not required)

Question 17

In a non-consumer goods transaction,

Answer 17

if a person files a financing statement with respect to a PMSI before or within 20 days after the debtor receives delivery of the collateral, then the security interest takes priority over conflicting
interests

Question 18

Buyer in the ordinary course of business (BIOCB)

Answer 18

Under the UCC, a buyer in the ordinary course of business takes free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence.

Question 19

What is a BIOCB?

Answer 19

a person that buys goods in good faith, w/o knowledge that the sale violates the rights of another person in goods, and in the ordinary course form a person in the business of selling that goods of that kind.