PRIORITIES

Question 1

Priorities General Rule

Answer 1

1st in time 1st in right

Exceptions:
1. Buyer in Ordinary Course of Business
2. PMSI

Question 2

Buyer in Ordinary Course of Business

Answer 2

1. Buys goods (not farm products);
2. In ordinary course;
3. From seller who is in business of selling goods of that kind;
4. In good faith; and
5. W/o knowledge that sale violates another’s rights in the same goods

Takes free of SI even if perfected & even if buyer knows of SI’s existence

Question 3

Approach to Determine Priority

Answer 3

1. CHARACTERIZE STATUS of each claimant (whether BOCB, PMSI, secured v. unsecured)
2. DETERMINE APPLICABLE RULE of priority (include time limits if relevant
3. APPLY THE RULE & any applicable exception (1st in time, 1st in right, 1st to file/perfect)

Question 4

Secured Party v. Judicial Lien Creditor

Answer 4

SP wins (if perfected before levied) (if unperfected, SP gets priority only if reason is valued not yet given)

Question 5

Garage Sale Buyer

Answer 5

Takes free of a SI (even perfected, unless before purchase, SP filed FS covering the goods). Consumer buyer is a person who:

1. Buys consumer goods for value;
2. For his own personal/family/household use;
3. From a consumer seller; AND
4. w/o Knowledge of the SI

Question 6

Secured Party v. Purchaser

Answer 6

1. perfected v. AUTHORIZED BUYER
2. perfected v. BOCB
3. PERFECTED v. non-bocb
4. perfected v. GARAGE SALE BUYER
5. unperfected v. BUYER (if w/o knowledge of SI)

Question 7

Secured Party v. Secured Party

Answer 7

GENERALLY: 1st in time 1st in right

1. PERFECTED v. unperfected
2. PMSI v. non-pmsi
3. PMSI SELLER v. pmsi lender
4. PMSI IN FIXTURES v. real estate lender
5. PERFECTION BY CONTROL v. other perfection method

Question 8

Unperfected v. Unperfected

Answer 8

First to attach wins

Question 9

Secured Party v. Unsecured Party

Answer 9

Secured party wins