Business Law: Secured Transactions

Question 1

Which security interests has priority over others?

Answer 1

The general rule among competing security interests is that the creditor who is the first to file or to perfect has priority. A purchase money security interest (PMSI) in non inventory goods has priority over all other security interests in the same collateral if the PMSI is perfected within 20 days of the debtor’s getting possession of the non inventory goods.

Question 2

When is a security interest in consumer goods perfected?

Answer 2

If a seller retains a security interest for the sale price of consumer goods, the security interest is automatically perfected; neither filing nor possession by the secured party is necessary.
(Consumer goods i.e., used for personal purposes as opposed to business purposes).

Question 3

Is the security interest automatically perfected for consumer goods?

Answer 3

If a seller retains a security interest for the sale price of consumer goods, the security interest is automatically perfected; netter filing nor possession by the secured party is necessary

Question 4

What does attachment require?

Answer 4

Attachment requires that: (i) the parties agree to create a security interest - evidenced by either an authenticated security agreement or the creditor’s taking possession or control of the collateral, (i) the debtor must have rights in the collateral, and (iii) the creditor must give value. There is no requirement that the security agreement be filed. (Filing is related to perfection.)