General Principle

Question 1

When is UCC9 applicable?

5 points

Answer 1

1- any transaction that creates a security interest in personal property or fixtures by contract

2- agriculture liens

3- sales of accounts receivable, chattel paper, negotiable instruments, promissory notes, and payment intangibles

4- consignments

5- certain lease-purchase agreements

Question 2

When is UCC9 not applicable

Answer 2

1- landlords liens

2- a lien given by statute or other rule of law for services or materials

3- assignment of a claim for wages or compensation

4-

Question 3

What are the 4 main types of collateral (4 points)

Answer 3

1- goods- consumer goods; inventory; farm products; equipment

2- tangible intangibles- instruments; documents; chattel paper

3- intangible intangibles- accounts, commercial tort claims, general intangibles

4- investment property- certificated & uncertificated securities, securities accounts, commodity contract

Question 4

What are goods generally?

Answer 4

Any good that is movable at the time the security interest attaches

***includes fixtures and computer programs

Question 5

What are accessions?

Answer 5

Goods that are physically united with other goods in such a manner that the identity of the original goods is not lost

***if security is perfected when the collateral becomes an accession, the security interest remains perfected

***opposite of comingled goods

Question 6

What are proceeds?

Answer 6

The result of the disposition of any collateral subject to a security interest

***2 types- cash & noncash

Question 7

How is a security interest created? (3 points)

Answer 7

1- a written security agreement

2- the secured party’s taking possession, delivery, or control of the collateral

3- attachment of the security interest to the collater

Question 8

What must a security agreement contain?

Answer 8

1- in writing

2- granting clause

3- a description of the collateral

4- authenticated by the debtor

***cant be just a financing statement

*** a security statement is effective between the parties, the creditors and the purchasers of the collateral

Question 9

When is a written security agreement not necessary to create a security interest?

Answer 9

1- When the secured party has possession or control of the collateral; in that case all that is needed is an oral agreement

Question 10

What is attachment?

Answer 10

1. The process by which the security interest is created

2. Once the security interest has attached, the secured party has all enforcement rights of UCC9

Question 11

What are the required elements for attachment? (3 points)

Answer 11

1- secured party gives value

2- the debtor has full rights in the collateral

3- the debtor has authenticated a security agreement that sufficiently describes the collateral

Question 12

When is a description of the collateral sufficient?

Answer 12

1- if it reasonably describes what is described

2- consumer goods cannot be described by type, must be a more specific description

Question 13

When does a security agreement automatically create an interest in after-acquired collateral?

Answer 13

When it specifies an interest in inventory or accounts receivable.

Question 14

What is a Future Advances Clause?

Answer 14

A clause in the security agreement that indicated that the collateral secures future debt

Question 15

What is the rule for Proceeds?

Answer 15

A security interest in collateral automatically extends to identifiable proceeds of the collateral

Question 16

When does a debtor incur a Purchase Money Obligation?

Answer 16

1- when the obligation is incurred as all or part of the price of the collateral; or

2- for value given to enable the debtor to acquire rights in, or the use of, the collateral if the value is in fact so used

Question 17

When is a security interest in goods a PMSI? ( 3 points)

Answer 17

1- to the extent the goods are given as collateral for an obligation the debtor incurred for the purchase of goods and actually used to purchase the goods

2- if the SI is in inventory that is or was purchase-money collateral, also to the extent that the security interest secures a purchase-money obligation incurred with respect to other inventory in which the secured party holds or held a PMSI

3- the extent that the security interest secures a purchase-money obligation incurred w/ respect to software in which the secured party holds or held a PMSI

Question 18

When is a security interest is perfected?

Answer 18

1- if it has attached and if all of the requirements for perfection have been met

***perfection requirements can be met before attachment

Question 19

What law governs perfection of a security interest?

Answer 19

1- The law of the jurisdiction where the debtor is located

2- Where collateral is located in a jdxn, the local law of that jdxn will govern

Question 20

How is a financial statement filed?

Answer 20

1- in the secretary of states office; for land records, the county clerk’s office

2- perfection is only valid if the financing statement is filed in the correct office in the correct state

Question 21

For what types of collateral is the filing method not effective?

Answer 21

1- a deposit account/ requires control

2- a letter of credit right/ requires control

3- money/ requires possession

Question 22

Which types of collateral can only be perfected by possession?

Answer 22

1- negotiable documents

2- goods

3- instruments

4- money; or

5- tangible chattel paper

***possession requires the use of reasonable care preservation

Question 23

Perfection by possession is NOT permitted for which types of collateral?

Answer 23

1- accounts

2- commercial tort claims

3- deposit accounts

4- investment property

5- letter-of-credit rights

6- letters of credit

7- oil, gas or other minerals before extraction

Question 24

Which types of collateral can be perfected by Control?

Answer 24

1- investment securities

2- letter-of-credit rights

3- deposit accounts

4- electronic chattel paper

Question 25

When does automatic perfection occur?

Answer 25

1- PMSI in consumer goods , as soon as attachment occurs