Outline

Question 1

Consumer Goods

Answer 1

bought for primarily personal, family, or household purposes

Question 2

Inventory

Answer 2

Goods other than farm products

For sale/lease/under contract

Ex. store inventory, raw materials, work in progress, materials used/consumed in a business

Question 3

Farm Products

Answer 3

crops, livestock, and supplies used in farming operations

Question 4

Equipment

Answer 4

Catchall - goods other than consumer, farm, or inventory

Question 5

Three requirements for Attachment of Security Interest

Answer 5

1. Value given by secured party to debtor
2. Debtor has rights in the collateral
3. Binding Security agreement, possession, or control

Question 6

Requirements of a Binding Security Agreement

Answer 6

Did I Agree DIA (Description, Intent, Authentication)

1. Authentication by debtor
2. Intent to create a security agreement
3. Description of Collateral (cannot be super generic)

Question 7

A security agreement is not enforceable unless:

Answer 7

It has attached

Question 8

Perfection of Security Interest Meaning

Answer 8

Perfection = Priority

To acquire maximum priority over others with an interest in the property, the secured party must perfect.

Perfection gives notice of interest to others.

First to file/perfect has priority.

Security interest cannot be perfected before it attaches.

Question 9

Five Methods of Perfection

Answer 9

PFACT to perfect

Possession
Filing
Automatic
Control
Temporary

Question 10

Automatic Perfection - what & when

Answer 10

PMSI in Consumer Goods

Perfected as soon as it attaches

Limitations:
1. Motor vehicles - requires notation on title
2. Fixtures - have priority over encumbrancer of real estate ONLY if there was a fixture filing

Question 11

Fixture Filing Requirements

Answer 11

1. Names of parties
2. Indicate it covers fixtures
3. Description of real property
4. to be filed in real property records
5. Name of real property’s record owner if debtor has no interest

Question 12

Perfection for Motor Vehicles

Answer 12

Perfection requires notation on certificate of title

Dealers: need only file a financing statement

Question 13

Perfection by Control

Answer 13

Can be obtained over non-consumer deposit account by:

1. putting it in secured party’s name OR
2. agreeing in authenticated record with the debtor and bank that bank will comply with secured party’s orders

Question 14

Perfection by Filing requires

Answer 14

Filing a financing statement containing:
1. party names and addresses
2. description of collateral

debtor’s name must match license or for a business, the public organic record

Question 15

Error in debtor’s name of financing statement

Answer 15

Minor errors do not invalidate, seriously misleading errors will

Seriously misleading error = would not be discovered in search

Incorrect indexing by office does not impact effectiveness

Question 16

Debtor name change

Answer 16

Financing statement is effective only against collateral acquired before the change and withing 4 months after.

Collateral acquired later than 4 months after require a new filing with correct name.

Question 17

Supergeneric description of collateral

Answer 17

Security Agreement - NO
Financing Statement - YES

Question 18

Relocation of Debtor

Answer 18

If debtor moves to another state, the security interest generally will become unperfected 4 months after unless SP files a financing statement in the new jurisdiction before then

Question 19

If collateral is transferred to new owner in a new state

Answer 19

the security interest will become unperfected one year after unless creditor files a financing statement before then

Question 20

Temporary Perfection

Answer 20

If perfected, secured party has continued perfection in any proceeds for 20 days.

Interest has continued perfection BEYOND 20 days if:
1. proceeds are identifiable cash
2. interest was perfected by filing, and the proceeds would be perfected by filing in the same place, and not purchased with cash proceeds, OR
3. interest is perfected within the 20-day period

Question 21

Perfected v. Perfected Priority

Answer 21

first to file or perfect wins

Question 22

Unperfected v. Unperfected Priority

Answer 22

First to attach wins

Question 23

Perfected v. Unperfected

Answer 23

Perfected wins

Question 24

PMSI Superpriority

Answer 24

PMSI superior to all IF:

1. Goods other than inventory and livestock if perfected within 20 days of debtor taking possession
2. Inventory and Livestock perfected at time debtor gets possession and other secured parties receive authenticated notification of PMSI before

Question 25

PMSI v. PMSI Priority

Answer 25

Seller PMSI wins over lender PMSI

Otherwise, first to file or perfect wins

Question 26

Buyer in the Ordinary Course

Answer 26

buys goods:
1. in good faith
2. without knowledge the sale violates rights of another, and
3. in the ordinary course of business from a seller in the business of selling goods of that kind

Question 27

Buyer takes consumer goods free of interest if:

Answer 27

buyer buys:

1. without knowledge of the interest
2. for value,
3. for own personal, family, or household purposes, and 4. before a financing statement covering the goods has been filed

It does not matter that consumer goods automatically perfect

Question 28

Secured party v. Judicial Lien Creditor

Answer 28

lien creditor wins IF he becomes such before security interest is perfected

Question 29

Self-Help Repossession

Answer 29

can be done without breach of the pease

Question 30

Breach of the Peace

Answer 30

Generally, presence + objection

Breaking and Entering