Attach/perfection

Question 1

attachment

Answer 1

SI that is enforceable against the debtor with respect to the collateral is said to have attached to collateral

Question 2

3 conditions for attachment

Answer 2

1) value has been given;
2) debtor has rights in the collateral; ASND
3) debtor has authenticated a SI with a description of the collateral or the secured party has possession or control of the collateral pursuant to the SA

Question 3

PMSI

Answer 3

• ONLY applies to goods and software
• receives special priority status
• can be a lender’s PMSI or a seller’s PMSI
• SI must still attach before a PMSI is created

Question 4

After acquired prop

Answer 4

• A SI attaches only to the collateral described in the agreement. If creditor wishes to also have an interest attach to the collateral acquired subsequent to the attachment, must include an AAP clause
• some courts find that “inventory” implies that it includes AAP inventory due to high turn over inherent to inventory

Question 5

Attachment Security Agreement

Answer 5

must have 3 things to be enforceable
(Restful Days Ahead)
◦ Record- can be any tangible medium or in electronic form
◦ describes collateral- must reasonably describe collateral but cannot be super generic AND
◦ authenticated by debtor- normally a signature but can be any symbol adopted by the debtor

Question 6

Proceeds

Answer 6

No additional cause in the SI is necessary to reach proceeds as attachment of collateral gives the secured party rights to proceeds automatically
Proceeds defined broadly as:
• whatever is acquired upon the same, lease, license, exchange, or other disposition of collateral
• whatever is collected on, distributed on account of collateral
• rights arising out of collateral
• legal claims arising out of the collateral or
• insurance claims arising out of the collateral

Question 7

value

Answer 7

-same consideration needed for K to be valid but no new value need be given

Question 8

debtor’s rights in collateral

Answer 8

-attaches only to the rights the debtor has

Question 9

Alternatives to Written SA

Answer 9

• possession (for tangible collateral; owes duty of reasonable care)
• control (for certain intangible collateral)
• but both must still be pursuant to a SA