Code III Flashcards
2
Q
4 steps to security interest analysis
A
CAPP
- Categorize the collateral
- Attachment
- Perfection
- Priority
3
Q
Attachment (3 steps)
A
- Value given
- Debtor has rights in collateral
- a: written security agreement
b: signed (“authenticated”) by debtor
c: containing adequate description of collateral
4
Q
Perfection (5 methods)
A
- Filing UCC-1 Finance statement
- Possession
- Automatic Perfection
- Control
- Perfection as a matter of law
5
Q
Intangible Rights - Collateral (6)
A
- Account
- Deposit account
- Instrument
- Chattel Paper
- Investment property
- General intangibles
- Tort claims
6
Q
Tangible movable collateral
A
- Inventory
- Equipment
- Consumer goods
- Rights in immovable property not governed by UCC-9 except fixtures and as extracted collateral
7
Q
Several obligations
A
Each obligor owes an individual and complete performance
8
Q
Joint obligations
A
Obligors together owe one performance and no obligor is bound for the whole
9
Q
3 year Liberative Rx
A
- Past due rent
- Open accounts
- Money lent
- Compensation for rendered services
10
Q
5 year Liberative Rx
A
Promissory notes & negotiable instruments
11
Q
Interruption vs. suspension of Rx
A
Interrupted - commences anew
Suspended - continues where left off
12
Q
Warranty against eviction
A
Warranty against complete or partial loss or reasonable fear of losing the thing sold because of 3rd party’s right that existed at time of sale.
Buyer has duty of reasonable inspection - does not cover apparent SERVITUDES
13
Q
Lease
A
Nominative K that is perfected when there is an agreement between 1. Thing 2. Rent
14
Q
How long is a mortgage valid
A
10 years if maturity date is under 9 years or if longer, six years after the date of maturation.
15
Q
Aleatory contract
A
Performance by a party depends on an uncertain event
16
Q
Warranty against redhibition
A
Defect that is
- Non apparent
- Not known by buyer at time of sale
- Existed at delivery
- Defect renders thing (a or b)
a: useless or so inconvenient that buyer would have either not purchased it, or
b: usefulness diminished such that buyer would have purchased for less.
17
Q
Length of time a finance statement is good for
A
5 years
18
Q
Vendors privilege
A
Privilege on any property sold to secure purchase price
- Movable still in buyer’s possession
- Immovables - must have recorded act of sale in mortgage records
19
Q
Conventional mortgage
A
- Written
- Signed by mortgagor
- State amount or maximum debt secured
- Precise description of immovable
WASP - written, amount, signed, precise
20
Q
Make mortgage effective against 3rd parties
A
Record in mortgage records of parish where immovable located.
21
Q
Suspensive condition
A
An uncertain event that will make an obligation enforceable if it occurs
22
Q
Resolutory condition
A
An uncertain event that if it occurs will bring an obligation to an end
23
Q
Purchase Money Security Interest (PMSI)
A
A security interest that secures repayment of whatever portion of a loan actually used to purchase the collateral.
- Super Priority if finance statement filed before delivery (inventory) or w/in 20 days of delivery (everything else) and provide notice to other parties with security interest (inventory only)
24
Q
Lessor’s privilege
A
By operation of law. Lessor has privilege on all of lessees movable property located on the leased immovable to secure rental price and other obligations under the lease
25
Q
What MOVABLES can be used as collateral?
A
Tangibles, intangibles & proceeds
26
Objective vs. subjective novation
Objective novation - substitution of a new performance in place of the original one
Subjective novation - substitution of a new obligor
27
Valid mortgage requirements
1. Written
2. Signed by mortgagor
3. State amount or maximum amount secured
4. Precise description of immovable
28
Duration of inscription of mortgage
10 years from date of mortgage if under 9 years maturation date.
6 years after maturation date for mortgage if matures over 9 years from date of mortgage.
29
Detrimental reliance
1. promisee relied on promissor to his detriment
2. Promissor knew or should have known that promisee would so rely
3. Promisee was reasonable in so relying.
30
Error
1. Concerns the principle cause and but for the error, the obligation wouldn't have been made
2. Cause was known or should have been known to the other party
3. Error substantially influenced consent
31
Fraud
1. Misrepresentation or suppression of the truth
2. Intent to obtain unjust advantage, or cause a loss or inconvenience to the other party.
3. Fraudulent conduct must have substantially influenced consent to contract.
32
Requirement for a valid K
1. Capacity
2. Consent
3. Lawful cause
4. Lawful object
33
Absolutely null K
Violates rule of public order, Illegal or immoral
- Cannot be confirmed
- Doesn't prescribe
34
Relatively null K
Violates a rule intended for the protection of a partyCan be confirmedWaiver or rule can only be invoked by party the rule protects
35
Absolute Simulation
Parties intended no effect
36
Relative Simulation
Parties intend an effect different than recited
37
Compromise
K whereby one or more parties make concessions to settle a dispute or uncertainty concerning an obligation
1. In writing, or
2. In open court
38
Accord and Satisfaction
Claimant accepts payment tendered by other party with clearly expressed written condition that payment will extinguish the debt.
39
Valid sale
K whereby a person transfers ownership of a thing to another for money
Perfected when there is an agreement as to
1. Thing, and
2. Price (in money)
40
3 types of suretyship
1. Legal
2. Commercial
3. Ordinary
41
Lump sale
Perfected upon agreement
42
Sale on view or trial
Ownership transfers after inspection
43
Option K
Unilateral K where the grantor is bound to buy or sell if grantee accepts w/in time stipulated.
1. Specify thing
2. Specify price
3. Term
44
Right of first refusal
Unilateral k inn which a party agrees that they will not sell a thing without first offering it to a certain person
- 30 days to exercise if immovable, and if refused may offer to sell to another party up to six months later, at which time it must be offered again if not sold.
45
Lesion
Applies to corporeal ImmovablesSeller can rescind based on lesion if buyer paid less than 1/2 FMV
46
Authentic act
Signed in presence of Notary + 2 witnesses
47
Legal subrogation
Effect - new obligee can only recover to the extent that he has performed
48
Conventional subrogation
Effect - obligee can get the whole amount of the original debt, no matter what his performance .
49
Oral transfer exception to writing requirement in transfer of immovable
Valid if there has been1. Delivery, and2. Transferor recognizes the transfer under oath
50
Sale without warranty
Restitution of price if buyer didn't know of danger of eviction
51
Sale at buyer's own peril and risk
Buyer gets nothing if evicted if1.buyer aware of danger2. Buyer declared he was buying at own risk3. Seller's obligation expressly excluded and pointed out to buyer.
52
GF Breach
Only liable for damages that were reasonably foreseeable at time K was made
53
BF Breach
Liable for all damages that are a direct consequence of his failure to perform
54
Warranty against eviction
Warranty against complete, partial or reasonable fear of loss that existed at the time of the sale
Extends to undeclared non apparent conventional SERVITUDES
55
Warranty sale
Eviction entitles buyer to
1. Restitution of price
2. Fruits and revenues
3. Costs
4. Damages
56
Assignment
K to transfer rights and duties - assignee promises to fulfill assignor's Contractural commitment. Lessor is 3rd party beneficiaryOriginal lessee and new lessee are bound in solido
57
Process to Reinscribe mortgage
Mortgagee signs and files notice if reinscription that:
1. States name of mortgagor and mortgagee
2. States recordation number of original mortgage
3. Declares mortgage reinscribed
58
Redhibition claim - seller in GF
Seller entitled to an opportunity to cure/repair Rx - 4 years from delivery or one year from delivery if residential immovable Must restore purchase price and reasonable expenses or reduction in price (quanti minoris)
59
Redhibition claim - seller in BF
Must refund purchase price, damages, expenses and atty feesNo opportunity to repairRx - 1 year from discovery
60
Private works act
PV on the imm, to secure labor, materials and costs to construct or improve an immovable
PV outranks all private interests if filed in mortgage records w/in 1-2 months after construction is complete in mortgage records
61
Waiver of warranty
Waiver of warranty is effective when
1. Clear and unambiguous terms
2. Brought to the attention of the buyer
EXCEPTION: if seller intentionally misrepresents thing to have qualities that he knows it doesn’t possess, buyer’s rights are governed by redhibition. Otherwise look to K.
62
Duties of lessor
1. Delivery
2. Maintain the thing in a condition suitable for its purpose
3. Warrant Peaceful possession
4. Warrant against vices and defects
63
Duties of lessee
1. Pay rent
2. Use as prudent administrator
3. Return at end of lease
64
Suretyship
an accessory conventional obligation whereby the surety binds himself to the creditor to fulfill one or more obligations of the principal debtor upon his failure to do so; may secure any principal obligation – past, present, or future;
65
surety’s rights against the principal obligor
can seek reimbursement directly or can go after principal obligor by subrogation
66
Reinscription
File a notice of reinscription that states:
1. the name of the mortgagor,
2. the recordation number of the original filing,
3. must be signed by the creditor, and
4. declares the mortgage reinscribed
Must reinscribe before the expiration of the original inscription in order to save your priority date;
the reinscription is effective 10 years from the date of filing the notice.
67
With mortg. Qs, ask three questions:
1. is the underlying promissory note still enforceable?
2. Is mortgage enforceable against property?
3. Against 3ds?
68
Perfection by UCC-1 financing statement requirements
UCC-1 financing statement must be filed in the UCC records office of any parish.
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Requires:
1. Debtor full accurate legal name
2. Creditor's name
3. Collateral must be described
(can be generic)
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69
What law is applicable regarding perfection of assets covered by a finance statement?
The law of the debtor's location is applicable.
If moveable assets move out of state or are located out of state, they are still secured as long as the finance statement was filed in the proper state where the debtor is located
Ex: if debtor is a Louisiana citizen, the fact that the asset is in MS, is of no consequence as long as the UCC-1 finance statement was filed in Louisiana.
70
Assuming that the finance statement was authorized, is a UCC-1 finance statement tied to a particular loan if the loan is extinguished?
No, unless it has been terminated
71
If an item is sold by a debtor on credit and the funds are deposited in the deposit account of said debtor, will it be perfected if only a finance statement covers "accounts," and there is no control agreement with the bank?
Yes, it is perfected as identifiable proceeds.
The sale on credit creates an "account." If the security agreement lists accounts, it has a SI in the identifiable proceeds - which are automatically and continually perfected as long as the original collateral (item sold) was perfected.
