Flash Cards for Bar Courses - Secured Transactions

Question 1

Goods

Answer 1

Include all things which are movable at the time the SI attaqches.

• Consumer Goods - primarily for personal, family, or househodle purposes
• Equipment - use or bought for business. ALSO the default type of good
• Farm Products - crops or livestock or suppl;ies used or produced in farminig operations or products of crops or livestock in their unmanufactured state. In the possession of a farmer
• Inventory - held for sale or lease, goods that are furnished under a service K, and materials used or consumed in a business in a short period of time.

Question 2

Intangible or semi-intalngible collateral

Answer 2

Instruments- piecxes of paper representing the right to be paid money, like promissory notes, drafrts, and cert. of deposits

Documents- represents the right to recieve goods

Chattel Paper - a record which evidence both (1) a monetary obligation, and (2) a SI in or a lease of specific goods.

Investment Property - items such as stocks, bonds, mutual funds, and brokerage acctounts containing such items

Accounts- includes a right to payment for propery sold or servidces rendered

Deposit accts- accft maintained w/ a bank and is must be nonconsumer (or a business acct)

Commercial Tort Claims- tort claim where (1) the claimant is an org., or (2) the claimaint is an individual, the claim arose out of the claimant’s business or profession, and the claim does not incluide damages for personal injury or the death of an individual

General Intangiblkes - any personal property not cominng w/in the scope of other definitions, such as patent and trademark rights, copyrights, and goodwill.

Question 3

Attachement

Answer 3

3 req.

1) Parties must agree to create a SI, evidenced by creditor taking POSSESSION or colalteral, an AUTHENTICATED SECURITY AGREEMENT, or creditor takes CONTROL of nonconsumer deposit accts, electronic chattel paper, and investment property

2) VALUE must be given to secured party

3) debtor must have RIGHTS in the COLLATERAL

Question 4

Security Agreement req.

Answer 4

• must be WRITTEN and an INTENT to create an SI
• must be AUTHENTICATED (signed or any symbol by debtor)
• DESCRIPTION OF COLLATERAL (must REASONABLY IDENTIFY collateral) – NO SUPERGENERIC

Question 5

Proceeds

Answer 5

SI in collateral auto attaches to identifiable proceeds…

In case of cominggled cash proceeds, use the lowest intermediate rule… you look at the bank acct starting at the time the proceeds are deposited and ending at the time you are applying the rule. The lowest balance during that time period is the securted party’s indentifiable proceeds

Question 6

Auto perfection – PMSI in consumer goods

Answer 6

PMSI in consumer goods is perfected as soon as it attaches. NO NEED FOR FILING W/in 20 days!!!

**But a SI in a car can only be perfected by notation on the vehicles cert. of title

Question 7

Perfection by possession

Answer 7

SI can be perfected by taking possession of the collateral… perfected at the moment of possession and remains perfected as long as possession is retained

Question 8

Perfection by control

Answer 8

Can perfect by taking control of investment property, business deposit accts, electronic chattel paper… can only perfect business deposit accts by taking control

Business deposti acct:
- by putting SP’s name on acct
- authenticated records w/ the debtor and the bnanlk in which acct is maintained that the bank will comply w/ the Sp’s orders

Question 9

Car Dealer perfection of cars

Answer 9

Vehicles held in inventory for sale or lease are perfectretd by filing a financing statemetn under the ordinary code rules. Perfect by filing

Question 10

Items needed in a record or financing statement

Answer 10

• Debtor’s name and mailing address - name on DL OR individuals name OR entitty name – NOT TRADE NAME
• SP’s name and mailing address -
• description of collateral – Supergeneric OK

Question 11

Debtor name chane

Answer 11

if name of debtor changes, the financing statemetn is effective only against collateral acquired BEFORE the name change and w/in 4 months after.

Question 12

Debtor’s authorization of filing a financing statement

Answer 12

Debtor muyst authorize the filing in any signed writing. Debtor auto authorizes the financing statements if debtor authenticates the financing staemetn or authenticartes a security agreement

Question 13

Place of filing a financing statement

Answer 13

• General Rule: in the office of the SOS of the state where the debtor has their principal residence (corp. = state where organized)
• ## fixture: in the cty where the real property is

Question 14

Relocation of Debtor

Answer 14

If debtor moves from one state to another, the SI will become unperfected 4 months after teh debtor’s move, unless the SP files a fianncig statement in the new jurisdiction b4 the 4 month period is up.

Question 15

Continuation statments

Answer 15

Financing statement is valid for 5 years – the continuation statemetn can only be filed within 6 months b4 the lapse of the filed statement

Question 16

Temporary perfection

Answer 16

Sp auto perfects SI in any proceeds of collateral for 20 days after receipts of the proceeds… And beyond 20 days if:
- proceeds are identifiable cash
- Si in the original collateral was perfected by filing a financing statement filed in the same place as the financing statement of the og collateral (same office rule)
- The SI is perfected w/in 20 days

Question 17

Priorities: SP v. SP

Answer 17

First to file or perfect

Question 18

Priorities: unsecured party v. unsecured party

Answer 18

first to attach has priority

Question 19

Priorities: SP v. Unsecured party

Answer 19

a perfected sp generally prevails

Question 20

Priorities: PMSI superpriority

Answer 20

PMSI is superior to prior perfected SI’s in the same colleral if:
- Goods other than inventory & livestock: PMSI has priority if the interest is perfected b4 20 days after debtor recieves possession of goods

• Inventory or livestock: PMSI has priority if it is perfected at the itme the debtor gets possession, other SPs get notification (authenticated), and notification is good for 5 years
• consignor: has PMSI in consigned goods considered in inventory.
• Conflicting PMSI: seller has priority over lender, or first to file or perfect wins

Question 21

Priorities: Control

Answer 21

A SI perfected by control has priority over a SI perfected by any other method
- and for business deposit accts: putting name on acct has priority is superior or bank that has the acct has priority

Question 22

Priorities: SP v. Buyer or Leasee

Answer 22

Buyer generally takes something wiuthy SI on it EXCEPT:
- Authorized sales: sale authorized by SP to take free of SI
- Buyer in the Ordinary Course (BIOC): takes freew of a nonpossessory SI in the goods created by buyer’s seller
- Consumer to COnsumer sales: buyer takes free of a perfected SI

Question 23

Priorities: SP v. Judicial lied creditor

Answer 23

Lien creditor prevails over SP ifg the lien creditor becomes before the SI is perfected. If perfected before, then SI wins.
- Lien creditor becomes a lien credioty at the time of the levy

PMSI files within 20 day still has priority over a lien creditor

Question 24

Priorities: SP v. Holder of possessory lien

Answer 24

Like a mechanics lien,,, a lien imposed by other who supply goods or services.
- Has priority over SI as long as the goods or services were provided in the ordinary course of business and the collateral remains in the lien holder’s possession.

Question 25

Self-help repossession

Answer 25

Can be done w/o a breach of peace
-Conduct that has the potential to lead to violence – usually physical presence + verbal objection by debtor

Question 26

Forclosure Sales

Answer 26

Public: notice of time and place

Private: notice of time after which the sale will occur must be given

Sales must be COMMERCIALLY REASONABLE

Question 27

Priorities: fixtures

Answer 27

SP in fixtures has priority over an other real estate intertest
-PMSI takes priority over an earlier in time realty iunterst if it is perfected by fixuyre filin before

Question 28

Buyer in the Ordinary course of business

Answer 28

A BIOC takes free of nonpossessor Si created by the seller unless they know the sale violates the SA

Question 29

Subsequent Buyers of Consumer Goods

Answer 29

a buyer of consumer goods that resells them to another consumer for value, then the buyer takes free from SI’s he has no knowledge of, if there is no financing statement covering the goods that has been filed.

Question 30

Consigned Goods

Answer 30

An agreement that a seller will retain title to delivered goods until the buyer has paid from them. (it is also treated as a security agreement).

Must perfect.

If perfected has a PMSI

Question 31

Lease purchase agreements

Answer 31

Lease agreements intended for security, rather than as “true” leases are governed by article 9.

Transaction will be deemed to create a SI when the leasee
(1) cannot terminate the rental agreemetn
(2) haas the option to purchase goods for no or nominal consideration at the end of. the lease.