Attachment of SI Flashcards
Attachment: Definition
Linking a debt to a particular piece of collateral
Upon attachment, SI becomes ENFORCEABLE AGAINST DEBTOR
Three Requirements for Attachment
(1) VALUE given by secured party;
(2) Debtor has RIGHTS in the collateral; and
(3) SECURITY AGREEMENT
Attachment Requirement: VALUE Given by Secured Party
Can be consideration sufficient to form a contract
Attachment Requirement: RIGHTS in the Collateral
SI only attaches to the rights the DEBTOR HAS in the collateral
Attachment Requirement: Security Agreement
(1) RECORD (authenticated by debtor); and
(2) Must REASONABLY DESCRIBE the collateral
Super generic description NOT ok
Attachment by POSSESSION Pursuant to a Security Agreement
Can satisfy SOF
If you can hold it in your hands, a creditor can attach by possession
Attachment by CONTROL Pursuant to a Security Agreement
Can satisfy SOF
Types of collateral: electronic chattel paper, investment property, letter of credit rights, and deposit accounts
After-Acquired Property Clause
SI may cover collateral debtor acquires after SI is given if the Security Agreement contains an after-acquired property clause
Accessions
Goods united with other goods so that identify of original goods is NOT LOST
Accessions: Attachment of SI
If collateral becomes an accession, a security interest in that collateral is NOT LOST
The SI CONTINUES in the accession
Commingled Goods: Definition
Goods that are physically united with other goods to the point that their identity IS LOST in a product or mass
Commingled Goods: Attachment of SI
SI DOE NOT CONTINUE in the original goods
SI WILL ATTACH to the larger product or mass that results
Proceeds: Definition
Whatever results when collateral is sold, leased, licensed, exchanged, or otherwise disposed of
Proceeds: Attachment of SI
If SI attaches to the original collateral, it also attaches to the proceeds AUTOMATICALLY
Does not matter if SI states that it covers proceeds or not
