MEE Flashcards
Article 9 of the UCC applies to any transaction intended to create a security interest in ____ or ____.
personal property; fixtures
A security interest gives a creditor the right to ____ in order to satisfy a debt.
sell a debtor’s property
What are the different types of collateral?
(1) goods
(2) consumer goods
(3) inventory
(4) accounts
Goods are all things that are ____ when a security interest attaches.
moveable
Consumer goods are goods that are used mainly for ____.
personal, family or household purposes
Inventory includes goods that are kept by a person for ____ or ____.
for sale or lease; materials used or consumed in a business in a short period of time
A security interest in a debtor’s “account” covers ____, whether or not earned by performance, for property that has been or is to be sold.
any right to payment of monetary obligation
(Accounts)
A secured party can collect directly from ____.
the person who owes the debtor if the debtor defaults
A valid attachment requires:
(1) security agreement
(2) debtor’s rights in collateral
(3) value given
There are three different methods in which a security interest may be perfected:
(1) filing
(2) taking possession
(3) automatic perfection
The filing of a ____ or the ____ with the state by an authorized party is the filing method of perfection.
financing statement; security agreement
A secured party may perfect a security interest in ____, by taking ____ of such items.
negotiable documents, goods, instruments, or money; mere possession
The following security interests are perfected automatically when they are attach:
(a) purchase-money security interest in consumer goods
(b) assignment of accounts that does not transfer significant part of the assignor’s outstanding accounts
A perfected security interest has ____ over a conflicting unperfected security interest in the same collateral.
priority
Between multiple perfected creditors, the first to ____ obtains priority.
file
Some collateral is not subject to the state filing system or cannot otherwise be filed. In these instances, the first to ____ obtains priority.
perfect
Knowledge of a prior unperfected interest will ____from filing first to obtain priority.
not prevent a potential secured party
Buyers in the ____ are protected even though their interest in the property is created after the attachment or perfection of a security interest.
ordinary course of business
Buyers in the ordinary course of business take the collateral ____.
free of the security interest created by the seller
The protected buyer may ____ free of the secured party’s security interest.
sell the purchased collateral to a third-party
A buyer in the ordinary course of business is a person who:
(1) in good faith and without knowledge that the sale to him is in violation of the security interest of a third party
(2) buys in the ordinary course from a person in the business of selling goods of that kind
A buyer of ____ takes the goods free of a security interest, even if perfected, if the buyers buys.
consumer goods
A buyer of consumer goods takes the goods free of a security interest, even if perfected, if the buyers buys:
(1) without knowledge of the security interest
(2) for value
(3) primarily for the buyer’s personal, family, or household purposes
(4) before the filing of a financing statement covering the goods
Purchase-money security interest (PMSIs) have priority over prior perfected security interests if the PMSI is ____.
properly executed
A PMSI is either:
(1) security interest held by the seller of collateral to secure payment of all or part of the price
(2) security interest of a person that gives value to a debtor so that the debtor may acquire rights in or the use of collateral
An unperfected PMSI in inventory ____ over a perfected security interest in the same collateral.
will not have priority
A PMSI in non-inventory collateral has priority over a conflicting security interest in the same collateral if the PMSI is perfected at the time the debtor ____.
receives possession of the collateral or within 20 days thereafter
Upon default, the secured party may attempt to ____ of the collateral without judicial process so long as they do not ____.
take possession; commit a breach of the peace
Upon default, a secured party may ____ of any or all of the collateral in its present condition or in any commercially reasonable manner.
sell, lease, license, or otherwise dispose
When a creditor makes a non-complying disposition of collateral under Article 9, the debtor can:
(1) recover actual damages
(2) recovery statutory damages
(3) be subject to judicially mandated disposition of the collateral
A debtor or any secondary obligor has the right to ____ collateral until the secured party has ____.
redeem (reclaim); disposed of it or entered into a contract for its disposition
To redeem collateral, the debtor must:
(1) fulfill all obligations secured by the collateral
(2) pay the reasonable expenses and attorney fees
When a secured party sell or disposes of collateral, the amount collected varies from the ____.
amount of the obligation
If the sale brings in more than the underlying obligation, the secured party must ____.
pay the debtor for any surplus
When the sale brings in less than the underlying obligation, the obligor is ____.
liable for any deficiency
Equipment is a good used or bought for use in ____.
business
What are the requirements of a written security agreement?
- record showing intent to create security interest
- authenticated by debtor
- describe collateral
