Payment Intangibles Flashcards
what are the 4 rights to payments
ACPP
Accounts, Chattel Paper, payment intangibles and promisory notes
Note: it is important to understand that these are sold outright v. a business owner who used Accounts Receivable to secure a loan.
how are rights to payment created
it is just a normal transaction with an IOU to pay
Are “rights to payments” a security interest
Yes: the UCC governs the sale of receivables 9-201(b)(35). which include: Accounts, Chattel paper, Payment intangibles and Promisory notes
label the parties in a transaction of a Right to payment interest (note: that can get tricky)
- Buyer of ACPP is the Secured Party
- Seller is the Debtor (seller retains no interest in the property)
- the Property sold is the Collateral
when buying ACPP, you must Perfect early
- if you perfect after the sale of ACPP you protect yourself from having the original seller, sell to another party.
- if you failed to perfect and another party purchases, two things can happen>
a) they can perfect before you and you are shit out of luck; or
b) you can perfect after the sale to the other seller and this triggers a “fist to file” after bankruptcy.
Definition of account
17 MST
- the right to payment of a monitary obligation. (earned or not earned)
- Right To Payment can arise from sale, lease, assignment, license, other disposition of property, service (not) or rended, insurance policy issued or to be issued, 2ndary obligation (not) or rendered , NRG (2B) or provided; hire a vessel, credit card use, lottery winnings, health-care receivables.
- the tpyical arises when putting something on credit.
- the transaction creates the account.
- interesting note: a contract to recieve payements or goods in the future is an account even though the right to payment is not earned.
Accounts Exclude
Right to Payment evidenced from
1. chattel paper
2. an instrument, commercial tort claim, deposit account, investment property, Letter of Credit rights,
3. payment for money or funds advanced or sold (unless out of a credit card)
Chattel Paper
generally means a record, written or electronic that is evidenced by BOTH Monitary Obligation and a Security Interest in goods or lease of goods, including license of software used in the goods.
NOTE: the lease in chattel paper is a TRUE LEASE.
typically arises from someone (DR) purcahses of goods under a retail installment (monetary Obligation) sales agreement, seller security interest in product sold.
the sellers sells the installment plan, to a third party, this is chattel paper.
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what is a payment intangible
MST at 18
is a general intangible where the account DR’s principle obligation is monetary.
example: a lender sells to a collector the rights to receive repayment of a loan
What is a promisory note
an instrument evidence by a promise to pay a monitary obligation
What are the 4 type of exclusion to ACPP
sales and assignmentx (as they are assigned) by their nature do not concern commercial financing transactions.
1. 1st type: any sale of ACPP that is part of a sale of a business. (bob retires, sells business to include receivables, this is not covered by article 9
2. 2nd type: Assignments and receivables that are for the purpose of collection only. i.e. Bob wants to collect his receivalbles before he sells the business so he assigns them to a collection agency for the purposes of collection only.
3. 3rd Type: right to payment under a K to a transferee who agrees to perfrom the obligation of the K. for example: i have multiple plumbing jobs i assign a job to joe plumber to do the work and assign him the right to payment. not covered.
4. 4th. assignment of a single ACPP that is in full or partial satisfaction of a pre-existing debt from article 9 coverage. Bob owes me the plumber $5K and assigned me the payment for a job completed months ago as payment.
