General

Question 1

A secured Transaction is…

Answer 1

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

A security interest is an interest in personal property or fixtures that secures payment or performance of an obligation.

Question 2

What must creditor do to gain the full protection of secured transactions law?

Answer 2

Under Article 9, a creditor must take two steps to gain the full protection of secured transactions law:
1. Attach a security interest to the collateral, and
2. Perfect the security interest.

Rights against the debtor are established by attachment (makes the SI enforceable);
rights against third parties are established by perfection.

Question 3

Article 9 applies to:

Answer 3

[All security interests in personal property or fixtures by contract].
A transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract.

Lease agreements that are not true leases. A secured sale disguised as a lease—that is, leases that are intended to serve as security arrangements (but not true leases);

Commercial consignments of goods - as defined in article 9

Sale of payment intangibles, promissory notes, accounts receivable, chattel paper, instruments.

Health insurance receiveabls.

Commercial tort claims

A seller’s retention of title - if S will retain title to giiods after they’re delivered until the B has paid for them, this is treated as S’s retention of a SI.

Agricultural liens - nonpossessory liens on farm products that are created by state statute in favor of persons providing goods, services, or rental land to farmers (perfection and priority is Article 9).

Question 4

Leases as disguised secured transactions

Answer 4

Lease where the rental obligation is not terminable by the lessee and either:
(1) the lease term is equal to or greater than the remaining economic life of the goods,
(2) the lessee is bound to (i) purchase the goods at the end of the lease or (ii) to renew the lease for the remaining economic life of the goods, or
(3) at the end of the lease, the lessee has an option to purchase the goods or renew the lease for the remaining economic life of the goods for no or nominal consideration