Chapter 35 - Secured Transactions

Question 1

Secured Transactions

Answer 1

• Loan transaction in which the creditor has security.

Question 2

Secured Party

Answer 2

• The creditor

Question 3

Security Interest

Answer 3

• What the creditor has.

Question 4

Secured Creditor

Answer 4

• The creditor

Question 5

Unsecured Creditor

Answer 5

• Can’t possess assets of debtor.

Question 6

Collateral

Answer 6

• If I fail to pay, the creditor can possess the collateral.

Question 7

Security AGreement

Answer 7

• The debtor signs agreement allowing creditor to have a security interest in debtor’s collateral.

Question 8

Attached

Answer 8

• One debtor signs agreement, security interest attaches.

- If sign agreement with two different people, they both have right and would have to fight. Solved by perfecting.

Question 9

Perfecting

Answer 9

• The first to perfect a security interest has a better claim to the collateral.
• To perfect the interest, you must submit financing statements with the state of Utah. Becomes public information.

Question 10

Farm Credit Services v. Wilson

Answer 10

• Farm loans money to someone to buy farm equipment.
• People sold equipment to Wilson who took it to a different state.
• The farm didn’t know of the sale and they didn’t have a perfected security interest in OK.
• They didn’t get paid from anyone.
• Court ruled that the Farm could come to OK to repossess even though their security interest wasn’t perfected.

Question 11

Termination Statement

Answer 11

• Creditor should file this once all is paid off.

Question 12

Floating Lien

Answer 12

• Possible for a creditor to have a lien in inventory even though the inventory fluctuates.

Question 13

PMSI

Answer 13

• Purchase Money Security Interest.
• When you buy a product on credit from the store.
• No doc. has to be filed to be perfected…it automatically happens.

Question 14

Woven Treasures v. Hudson Capital

Answer 14

• Sell rugs and put them on consignment.
• Hudson Capital had a perfected security interest in inventory of business that went out of business.
• Woven Treasures rugs were part of other business that died so Hudson sold all their inventory.
• Hudson Capital wins because they had security interest.

Question 15

Foreclosing on a Security Interest

- self-help -

Answer 15

• If I sold something with interest and it hasn’t been paid, I can foreclose by doing self-help.
• Take collateral without breaching the peace.

Question 16

Foreclosing on a Security Interest

- Court Order -

Answer 16

• I can get a court order to foreclose on a security interest.