Essay Info Flashcards
What is the purpose of Article 9 of the UCC?
It governs security interests and provides rules for their priority.
What is attachment?
It gives the creditor rights against the debtor in the collateral
3 requirements for a security interest to attach:
- Either the debtor must authenticate a security agreement or the creditor must take possession or control of the collateral
- The creditor must give value
- The debtor must have rights in the collateral
What must a secured party do to obtain rights over another claimant?
Perfect their security interest by either filing a financing statement in an authenticated record or take possession.
What is a purchase money security interest?
Created when a creditor advances credit or provides the funds needed to make a purchase possible and take a secutiy interest in the goods purchased.
What are consumer goods?
Goods that are used or bought primarily for personal, household, or family purposes.
What is equipment?
Goods used for primarily business purposes.
What is the original use test?
A debtor’s original intended use of collateral governs the collateral’s classification
Who has priority between two competing perfect security interests?
The party who first files or perfects.
What are accessions?
Goods that are physically united with other goods in such a manner that identity of the original goods is not lost.
Who has priority in security interests of an accession and goods?
If the accension becomes part of the whole that is subject to a security interest perfected in compliance, the security interest in the whole has priority.
When does PMSI have priority over conflicting security interests?
If the PMSI is perfected when the debtor receives possession of the goods or within 20 days thereafter.
3 things a financing statement must contain:
- The name and mailing address of the debtor
- The name and address of the secured party
- An indication of the collateral covered by the financing statement
2 things to know regarding misleading errors in the financing statement:
- Must not contain any misleading errors
2. If the debtor is a registered organization the name must match with the public organic record
When may perfection occur automatically?
In the case of a security interest in a small-scale assignment or an account or payment intangible
2 kinds of collateral that a security may not be perfected to:
- Deposit accounts
2. Money
3 ways a security interest in a nonconsumer deposit account can be perfected
- Control
- Putting the account in the secured party’s name
- Agreeing in an authenticated record with the debtor and the bank that the bank will comply with the secured party’s orders.
When is an incorrect filing name not misleading?
If the financing statement would be discovered in a filing office search under the correct name
When does the creditor have a right to repossess collateral?
After the debtor has defaulted
2 features of self-help under Article 9:
- The secured party can use self-help to repossess after default
- The secured party can use self-help to repossess only if it can do without a breach of the peace.
What is a right to redeem?
Yes; a debtor has a right to redeem after default and this can only be waived after default.
What is a secured party liable to the debtor for?
Any damages caused by a failure to follow any of its rules. and will be prohibited from collecting any deficiency if any of its default rules are broken unless the secured party can show that the breach did not cause the deficiency.
Is a lease a security interest?
Yes if it is intended to have effect as security, the rental obligation is not terminable by the lessee, and at the end of the lease the lessee has an option to purchase the goods for no or nominal compensation.
What happens if a secured party sells the collateral after default by a debtor?
The security interest and all subordinate security interests in the collateral that was sold are discharged, absent bad faith on the part of the purchaser.
