Attachment Flashcards
Effect of attachment
Once SI has attached, SP has the enforcement rights under Article 9 (including right to repossess)
When SI attaches
(1) SP gives VALUE;
(2) Debtor has RIGHTS in the collateral; and
(3) Debtor has authenticated a security AGREEMENT that sufficiently describes the collateral
Description requirement of security agreement
The description of collateral must reasonably identify what is described, including by UCC type (except for a transaction with a consumer for consumer goods)
A super-generic description (e.g., “All Debtor’s property”) is insufficient
Attachment of after-acquired collateral
SI attaches to after-acquired collateral if the agreement contains an express after-acquired- collateral clause
Automatic SI in after-acquired collateral (without clause)
- An interest in INVENTORY or ACCOUNTS receivable automatically creates SI in after-acquired collateral
Attaching future advances
The security agreement can provide that the collateral secured future advances (more money loaned to debtor after agreement, that also turns into collateral) (e.g., revolving-credit agreement)
Attaching proceeds
SI automatically extends to identifiable proceeds of the collateral
After-acquired collateral rule for consumer goods
A security agreement can’t cover after-acquired consumer goods unless Debtor acquires rights in the good within 10 days of the SP giving value