Misc.

Question 1

Secured Transaction

Answer 1

1) transaction
2) intended to create a security interest
3) in personal property or fixtures

Question 2

Debtor

Answer 2

Person who owes $

Question 3

Secured party

Answer 3

A lender or other person in whose favor there is a security interest

Question 4

Security Agreement

Answer 4

Agreement between the debtor and the secured party

Question 5

Secured Interest

Answer 5

1 Interest in personal property or fixtures which secures payment or performance of an obligation.

2) Contingent property interest in the debtor’s collateral that the debtor grants to the creditor.
3) when the contingency (default) occurs, the property interest springs to life and the creditor has rights in the debtor’s collateral.

Question 6

Collateral

Answer 6

1) property
2) subject to a security interest
3) collateral is property that the secured party can repossess upon default to insure that the debt is paid

Question 7

After-acquired property clause

Answer 7

1) often in security agreements
2) interest in only debtor’s present property but also in property that the debtor will obtain in the future
3) doesn’t apply to commercial tort claims

Question 8

Future-acquired property clause

Answer 8

1) when the secured party contemplates making future loans to the debtor, and wants to secure these future loans in the present security agreement
2) permissible and often in security agreements

Question 9

General Scope of Security Interest

Answer 9

1) without an explicit after-acquired property clause in the security agreement, secured party’s security interest only reaches collateral that the debtor had rights in at the time the debtor signed the security agreement
2) courts will often imply an after-acquired property clause when the collateral is of a type that is rapidly depleted and replenished (inventory)
3) includes proceeds so long as identifiable

Question 10

Lowest intermediate Balance test

Answer 10

1) when bank accounts include proceeds from secured collateral and other funds
2) lowest balance during time funds are in the bank = max possible proceeds
3) max = value of cash proceeds originally deposited

Question 11

Default

Answer 11

1) grounds in the security agreement
2) failure to perform or pay obligation when due
3) possible waiver of late or missed payments

Question 12

Self-help repossession

Answer 12

1) generally allowed but may not breach peace
2) breach peace: any conduct by the secured party that has the potential to lead to violence. Generally physical presence by the debtor plus verbal objection is enough

Question 13

Replevin

Answer 13

1) when secured party cannot use self-help

2) may use judicial process of replevin to get the goods

Question 14

Foreclosure sale

Answer 14

1) after default and repossession secured party may propose retaining or selling the collateral
2) may be public or private sale
3) sale discharges security interest and all subordinate interests BUT purchaser subject to senior interests
4) MUST BE COMMERCIALLY REASONABLE
5) public sale must have notice of time and place
6) private sale notice of time after which sale will occur enough

Question 15

Debtor’s right to redeem

Answer 15

1) debtor must tender fulfillment of all obligations secured by collateral
2) if acceleration clause: must tender the entire balance in order to redeem
3) right to redeem any time before SP resold the collateral or has contract for its disposition, or has decided to retain the collateral