Essay Rules Flashcards
What is required for perfection of a security interest?
To have a perfected security interest (1) value must be given, (2) debtor must have rights in the collateral, and (3) debtor must authenticate a security agreement OR secured party takes possession (only perfected as long as possession occurs).
Rules for security interest in collateral that is SOLD to a third party.
If interest is unperfected, buyer takes goods free of the security interest. If the interest is perfected, generally buyer will take the collateral subject to the security interest. However, buyer can argue that he was a buyer in the ordinary course of business. A BIOCOB takes the collateral free of security interest, even when the interest has been perfected. BIOCOB requires that SELLER must be in the business of selling goods of that kind.
