Intro

Question 1

Governed by what?

Answer 1

Article 9

Question 2

What are the 2 steps a creditor must take in order to be fully protected?

Answer 2

1. Attach a security interest to the collateral

2. Perfect a security interest

Question 3

What is the most common way to attach a security interest?

Answer 3

Use a signed security agreement

Question 4

What are the three things a security interest must have in order to be valid?

Answer 4

1. description of the collateral
2. the party offering the collateral must have rights in it
3. the party gaining the security interest must give value

Question 5

how do you attach a security interest to a collateral without a written agreement?

Answer 5

1. possession

2. control

Question 6

what is the purpose of perfecting a security interest?

Answer 6

1. notifies other parties of your interest

2. helps the creditor be first in line in case of default

Question 7

how are most security interests perfected if not by possession?

Answer 7

by filing a financing statement

Question 8

what is a financing statement?

Answer 8

IDs the debtor, creditor and describes the collateral

Question 9

how do you perfect a security interest in a car?

Answer 9

must note on title

Question 10

how do you perfect a security interest in land or its fixutres?

Answer 10

the financing statement must be filed in the county where the land is and it must describe the land

Question 11

how are most security interest perfected?

Answer 11

simply by possesion

Question 12

how can you perfect an interest in a biz deposit account?

Answer 12

control

Question 13

how do you perfect a purchase money security interest?

Answer 13

automatically perfected

Question 14

what is a PMSI?

Answer 14

A PMSI arises when the lender loans
money to the borrower specifically for the buyer to purchase certain goods, and the
lender takes a security interest in those goods

Question 15

what are the rules of priority?

Answer 15

1. Perfected security interests have priority over unperfected security interests.
2. Between two perfected security interests, the first to have been filed or perfected
   has priority.
3. PMSIs (see below) have priority over non-PMSIs.
4. Perfected security interests have priority over creditors in bankruptcy.
5. A buyer in the ordinary course of business usually takes goods free of any security
   interests (e.g., if a store gets a loan from a bank and gives the bank a security
   interest in its inventory of refrigerators, and then you buy a refrigerator from the
   store, the bank loses its security interest because you are a buyer in the ordinary
   course of business)

Question 16

what are the categories of collateral?

Answer 16

Consumer goods – goods used or bought for personal or household purposes
2. Inventory – goods held for sale or lease and supplies/materials quickly used up in
business
3. Equipment – any physical goods other than consumer goods, inventory, or farm
products
4. Accounts – a right to payment (accounts receivable)
5. Deposit accounts – a bank account