Attachment Flashcards
When does a security interest become enforceable?
When it attaches
What is required for a security interest to attach?
(i) value given by the secured party;
(ii) the debtor has rights in the collateral; and
(iii) the debtor has authenticated a security agreement that describes the collateral, or the secured party has possession or control of the collateral
What can constitute “value given” to form a security interest?
Value given by the secured party can be consideration sufficient to form a contract, extending credit, accepting delivery under a preexisting contract, or in satisfaction of a preexisting claim
Value can be either future advances or new value
What rights in collateral can a security interest attach to?
Generally, only the rights that the debtor has in the collateral
How can the secured party satisfy the Statute of Frauds?
Authenticated record, possession, or control
What is required in an authenticated record of a security agreement?
the security agreement must (i) be in a record; (ii) contain a description of the collateral; and (iii) be authenticated by the debtor
The description can list specific items or can identify the Art. 9 type of collateral (“all debtor’s equipment”) unless the collateral is consumer goods or a commercial tort
claim; a super-generic description (“all debtor’s assets”) is not sufficient
Can a security interest cover after-acquired property?
the SI may cover collateral owned when the security is granted and also collateral that the debtor acquires after the SI is given.
Can an after-acquired collateral clause cover consumer goods?
Generally not effective for consumer goods unless the debtor acquires them within 10 days after the secured party gives value
NOTE: sellers of consumer goods are prohibited from taking a SI in any property other than goods sold
When does a security interest attach to proceeds of collateral, and for how long?
Immediately and indefinitely where proceeds are identifiable.
When does a PMSI exist?
- A secured party gave value to the debtor that enabled the debtor to acquire goods and the value given was so used; or
- A secured party sold goods to the debtor, and the debtor incurred an obligation to pay the secured party all or part of the purchase price
What happens to a security interest with accessions?
SI created in collateral that becomes an accession—not lost due to the collateral becoming an accession; also, an SI can be created in collateral that is an accession
What happens to a security interest with commingled goods?
No SI in specific goods that have been commingled—but an SI may attach to the product or mass that results when the goods are commingled
