MEE Rule Statements Flashcards
Inventory under UCC article 9 includes
goods other than farm products, that are held for sale
A security interest that is enforceable against the debtor with respect to the collateral is said to have attached to the collateral and three conditions must exist:
1) secured party must give value
2) debtor must have rights in the collateral AND 3) debtor must authenticate a security agreement that describes the collateral or secured party retains possession of collateral
A security interest is perfected upon
attachment and compliance with one of the methods of perfection
A buyer of collateral subject to a perfected security interest generally takes
the collateral subject to that interest, unless the secured party has authorized its sale free of the security interest
A buyer in the ordinary course of business takes
free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence.
A BOCB is a buyer who
1) buys goods
2) in the ordinary course of business
3) from a merchant in the business of selling goods of that kind
4) in good faith AND
5) without knowledge that the sale violates another’s rights
A purchase money security interest PMSI is a special type of security interest that
exists when a secured party sold goods to the debtor, and then the debtor incurs an obligation to pay the secured party all or part of the purchase price (a sale on credit)
A PMSI in consumer goods is
automatically perfected
A consumer good is acquired for
personal, family, or household purposes
A security interest that is enforceable against the debtor is said to have
attached to the collateral
Attachment requires that
1) value has been given by the secured party
2) debtor has rights in the collateral AND
3) the debtor has authenticated a security agreement that describes the collateral OR the secured party has possession or control of the collateral pursuant to a security agreement.
Inventory includes
goods, other than farm products, that are held for lease or sale.
Perfection of a security interest is generally necessary for the
secured party to have rights in the collateral that are superior to any rights claimed by third parties.
A security interest in the goods can be perfected by
filing a financing statement
A buyer of collateral subject to a perfected security interest generally takes the
collateral subject to that interest
A buyer in the ordinary course of business takes
free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence.
A BOCB is a person who
1) buyers goods
2) in the ordinary course of business
3) from a merchant who is in the business of selling goods of that kind
4) in good faith AND
5) without knowledge that the sale violates the rights of another in the same goods
To qualify as a buyer, the purchaser must
give new value, which in addition to paying cash for the goods includes purchasing the goods on credit
A PMSI in goods exists when a
secured party sold goods to the debtor, and the debtor incurs an obligation to pay the secured party all or party of the purchase price
A PMSI in consumer goods is
automatically perfected upon attachment.
Consumer goods are those goods acquired for
personal, family, or household purposes.
A buyer of collateral subject to a perfected security interest generally takes
the collateral subject to that interest
A consumer buyer of consumer goods takes
free of a security interest, even if perfected, unless prior to the purchase the secured party filed a financing statement covering the goods.
A consumer buyer is a person who
1) buys consumer goods for value
2) for his own personal, family, or household use
3) from a consumer seller AND
4) without knowledge of the security interest.
“Garage Sale” rule
Proceeds include
whatever is acquired upon the sale of collateral.
A security interest in collateral automatically
attaches to identifiable proceeds.
If the proceeds are identifiable cash proceeds (which includes checks) and the security interest in the original collateral is perfected,
the perfected security interest in the proceeds continues indefinitely.
Under article 9, for a security interest to be enforceable against a debtor, the interest
must attach to the collateral
For attachment, three conditions must be met:
1) value must be given by the secured party
2) the debtor has rights in the collateral AND
3) the debtor authenticated a security agreement that describes the collateral (or the secured party has taken possession or control of the collateral pursuant to a security agreement)
A PMSI is a special type of security interest in goods that
has priority over other security interests in the same goods
A PMSI arises when a creditor sells goods
to a debtor on credit and retains a security interest in those goods, or the creditor advances funds, which are then used to purchase the goods and the creditor reserves a security interest in those goods
Perfection of a security interest is generally necessary for
the secured party to have rights in the collateral that are superior to any rights claimed by third parties
A secured party can perfect a security interest by:
1) filing a financing statement
2) possessing the collateral
3) controlling the collateral OR
4) perfecting automatically
A PMSI in consumer goods
perfects automatically (as soon as it attaches)
A consumer good is a good that is acquired primarily for
personal, family, or household purposes
A consumer buyer of consumer goods takes
free of a security interest, even if perfected, unless prior to purchase, the secured party filed a financing statement covering the goods.
The holder of a PMSI in goods could lose to
a consumer buyer if he/she does not file a financing statement
A consumer buyer is a person who
1) buys consumer goods for value
2) for his own personal, family, or household use,
3) from a consumer seller AND
4) without knowledge of the security interest
“Garage sale rule”
If collateral is transferred and the transferee of the collateral is not a buyer, the security interest
generally continues in the collateral, unless the secured party has authorized its sale free of the security interest
