Attachment

Question 1

*Attachment: definition

Answer 1

creation of the security interest

Without attachment, creditor cannot repossess

Question 2

*Attachment: required elements

Answer 2

VCR

• creditor gives value (lending money, giving goods on credit, etc.)
• contract - such as a security agreement (see below)
• debtor has rights in collateral (can’t use another person’s property; can also be rights debtor owns in a contract)

*no attachment until all three are met

Question 3

*Proving the security agreement

Answer 3

1) the creditor taking possession of the collateral (pledge)
2) the debtor’s authentication (*signed) of a security agreement reasonably describing the collateral; or
3) The security agreement may be demonstrated by control if the collateral is non-consumer deposit accounts, electronic chattel paper, or investment property.

Control basically means the creditor has the right to sell or cash in the collateral without further action from the debtor.

Question 4

Attachment vs Perfection

Answer 4

attachment: establishes rights against debtor
perfection: establishes rights as to third parties

Question 5

*Vagueness of security interest

Answer 5

“inventory” “equipment” etc. is fine

“all other assets” is way too vague