Default

Question 1

Right to respossess

Answer 1

Upon default, the secured party may attempt to take possession of the collateral without judicial process so long as they do not commit a breach of the peace. Article 9 does not define what actions constitute a breach; however, breaking into locked property will generally suffice. Some case law suggests that ANY opposition to the entry or seizure, however slight, normally results in a breach of the peace.

Question 2

Right to dispose of collateral

Answer 2

Upon default, a secured party may sell, lease, license or otherwise dispose of any or all of the collateral in its present condition or in any commercially reasonable manner.

sale (Non-judicial Foreclosure)

Strict foreclosure (Purchase rules)

Question 3

sale (Non-judicial Foreclosure)

Answer 3

Upon default, a secured party may dispose of collateral in its possession by the way of sale so long as it is commercially reasonable as to the method, manner, time, place and terms.

Article 9 requires the secured party to send reasonable notification of the time and place of any public to the debtor and any secondary obligor in a timely manner such that the debtor and any secondary obligor have sufficient time to take appropriate steps to protect their interests.

Question 4

Strict Foreclosure (Purchase Rules)

Answer 4

Unless otherwise agreed, a secured party purchase the collateral at a public or public sale only if the collateral is a kind that is customarily sold on a recognized market

Question 5

Right to Collect Directly

Answer 5

Upon default, a secured party has a right to collect directly from the account debtor. To exercise this right, the secured party must send an authenticated notification to the account debtor informing the account debtor that the amount due to the assigned and that the payment is to be made to the assignee.
Upon receipt of proper notification, the account debtor may discharge its payment obligation ONLY by payment to the assignee (the secured party).

Question 6

Non-complying disposition of Collateral

Answer 6

When a creditor makes a non-complying disposition of collateral under Article 9, the debtor can:

(1) Recover actual damages:
(2) Recover statutory damages OR
(3) Be subject to judicially mandated disposition