Definition

Question 1

DEFINITION OF SECURED TRANSACTION

Answer 1

A secured transaction is a transaction intended to create a security interest in personal property or fixtures.

Question 2

Debtor

Answer 2

The debtor is the person who owes payment or performance of the obligation secured (here, Hilda).

Question 3

Secured Party

Answer 3

The secured party (also called the “creditor”) is a lender, seller, or other person in whose favor there is a security interest (here, First Bank).

Question 4

Security Agreement

Answer 4

The security agreement is the agreement between the debtor (Hilda) and the secured party (First Bank) that creates the security interest.

Question 5

Collateral

Answer 5

Collateral is the property subject to a security interest (here, inventory). It is property that the secured party can repossess upon default to ensure that the debt is paid.

Question 6

Purchase Money Security Interest

Answer 6

A purchase money security interest (“PMSI”) is a special type of security interest in goods. A PMSI can arise in two ways:
* The secured party sells the goods to the debtor on credit and retains a security interest in the goods sold, or
* The creditor loans the funds to the debtor to enable the debtor to buy specific collateral, those funds are used by the debtor to acquire the specific collateral, and the creditor takes a security interest in that collateral. The PMSI secures whatever portion of
the purchase price still has to be paid

Question 7

After-Acquired Property Clause

Answer 7

A secured party often will want to obtain a security interest not only in debtor’s present property, but also in property that the debtor will obtain in the future.

Question 8

Future Advance Clause

Answer 8

A secured party often contemplates making future loans to the debtor and wants to secure these future advances in the present security agreement.

Question 9

Attachment

Answer 9

Attachment deals with those steps legally required to give the secured party a security interest in the collateral that is effective as against the debtor. Once a security interest attaches, it is effective against the debtor and the creditor has all of the rights of a secured creditor under Article 9. A creditor is not a secured creditor until attachment.

Answer 10

Perfection
Perfection deals with those steps legally required to give the secured
party an interest in the collateral that is effective as against the world.
In general, perfection is the process of giving public notice of the
security interest to the world.

Question 11

Financing Statement

Answer 11

A financing statement is the document generally used to provide public notice of the security interest, and so to perfect the security interest.