II. SCOPEOFARTICLE9 Flashcards
A. SUBJECT MATTER OF ARTICLE 9
1. Collateralized Transaction
Any transaction (regardless of its form) which is intended to create a security interest in __personal property__ or __fixture_.
The property used as collateral may be:
a. Already owned by the debtor
b. To be acquired with loan, that is, a purchase money security interest PMSI
c. After-Acquired (inventory in future)
- Sales of Receivables
The outright sale of accounts, chattel paper, payment intangibles, and promissory notes are covered by Article 9.
- Agricultural Liens Created by Statute
Article 9 covers agricultural liens, that is, nonpossesory liens on _farm products__ such as crops and livestock created by state law in favor of a person who provides goods or services to a farmer.
- Lease-Purchase Agreements
Article 9 does not govern true leases of personal property in any manner. Thus, when lease term is over, lessor can recover the leased property without complying with Article 9 free of lessee’s creditors.
But,
a lease which is actually an _installment sale__ is covered.
Examples of evidence of secured transaction:
Lessee cannot terminate the lease and:
lease term is equal to or greater than remaining ____economic life___ of goods, or
lessee _owns__ property at end of lease term, or
lessee has option to buy for __nominal _ consideration at end of lease term.
B. EXCLUSIONS FROM ARTICLE 9
- Rights Governed by _fed law__
- Real Property (except fixtures)
- Tort Claims
However, __commercial tor claims (unfair competition)___, i.e., business claims that do not involve personal injury, are covered. - Deposit Accounts in consumer Transactions
- Statutory Liens
Examples: __landlord’s lien, mechanic lien_ - Wage Assignments