In General Flashcards
Security Interest
A security interest is generally an interest in personal property or fixtures that secures payment or performance of an obligation.
Article 9
Applies to a consensual agreement that provides for a security interest. It is the substance of the transaction, not its form, that determines applicability.
Secured Party
A secured party is the person in whose favor a security interest is created under the security agreement.
Obligor
An obligor is a person who must pay (or otherwise perform) with respect to the obligation that is secured by a security interest in the collateral.
Debtor
A debtor is a person who has an interest, other than a security interest or other lien, in the collateral, such as the sole owner of the collateral.
Collateral
Property subject to a security interest.
Tangible Collateral–Goods
“Goods” encompasses anything that is moveable at the time that a security interest attaches.
Consumer goods
Goods acquired primarily for personal, family, or household purposes.
Farm products
Goods that are crops grown, growing, or to be grown, livestock born or unborn, supplies that are used or produced in farming, and products of crops or livestock in their unmanufactured state.
Inventory
Goods, other than farm products, that are held for sale or lease; are furnished under a service contract; or consist of raw materials, works in process, or materials used or consumed in a business.
Equipment
A catchall class, consists of goods that are not consumer goods, farm products, or inventory.
Chattel paper
Consists of one or more records that evidence both (i) a monetary obligation and (ii) a security interest in specific goods or a lease of specific goods.
Document
Refers to a document of title, which confers on the holder ownership rights in goods held by a bailee.
Instruments
Encompass negotiable instruments, such as promissory notes and checks.
Accounts
Include the right to payment for property sold, leased, licensed, or otherwise disposed of, or services rendered or to be rendered.
Deposit account
Includes a savings, passbook, time, or demand account maintained with a bank.
Leases creating a security interest
A lease creates a security interest if the lessee must pay consideration to the lessor for the right to possess and use the goods for the term of the lease, the payment obligation cannot be terminated by the lessee, and one of the following is also met:
(i) The original term of the lease is equal to or greater than the remaining economic life of the goods;
(ii) The lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become owner of the goods;
(iii) The lessee has an option to renew the lease for the remaining economic life of the goods for no additoinal consideration or nominal additional consideration upon compliance with the lease agreement; or
(iv) The lessee has an option to become the owner of the goods, for no additional compensation or nominal consideration, upon completion of the lease agreement.
Consignments
In order for a consignment to be subject to Article 9, the following must be met:
(i) A person (consignor) must deliver goods to a merchant for the merchant to sell;
(ii) The merchant (consignee) must:
a) Deal in goods of that kind,
b) Not operate under the name of the consignor,
c) Not be generally known by its creditors to be substantially engaged in selling the goods of others, and
d) Not be an auctioneer;
(iii) With respect to each delivery, the value of the goods delivered must be at least $1,000 at the time of the delivery; and
(iv) The goods must not be consumer goods immediately before the delivery.
Value
(may be given by)
(i) By providing consideration sufficient to support a simple contract;
(ii) By extending credit, either immediately or under a binding commitment to do so;
(iii) By accepting delivery under a preexisting contract.
