Questions Flashcards
X was in the business of selling radios. Y wanted to buy one of X’s radios, but was unable to do presently. X decided to give the radio to Y and Y could pay the purchase price later. In return, X would hold security interest in the radio. What type of interest does X have over the radio?
PMSI
- Consumer goods (radio)
- Y purchased radio on credit (Y to pay purchase price later)
X was in the business of selling radios. Y wanted to buy one of X’s radios, but was unable to do presently. X decided to provide a loan to Y to purchase the radio. In return, X would hold security interest in the radio until Y repaid the loan. What type of interest does X have over the radio?
PMSI
- Consumer goods (radio)
- Y purchased radio with advance funds from X (Y to pay purchase price later)
X had bought bicycles for him and his girlfriend to use on vacation. X wanted to borrow a loan from Bank. X agreed that Bank could obtain a security interest over X’s bicycles. What type of good is this?
Consumer goods (Article 9)
- Tangible goods
- For personal use (vacation)
X is a business that sells new and used bicycles and bicycle equipment. X needed a loan for his business and borrowed £25,000 from Y. In return, Y obtained a security interest over X’s bicycles. What type of good is this?
Inventory (Article 9)
- Tangible goods
- For sale
X is a farmer who looks after cows and sheep for collecting milk. X began to lose profit on his milking farm. X needed a loan. Y was happy to lend $15,000 in exchange for an interest over X’s cow and sheep. What type of good is this?
Farm products (Article 9)
- Tangible goods
- For farm use (collect milk from animals)
X needed a heater for his company. Y was happy to lend a heating system to X. X then borrowed a loan from a Bank, who obtained a secured interest over the heating system. What type of good is this?
Equipment (Article 9)
- Tangible goods
- For business use (heating)
X lent a loan to Y for $10,000 to be paid in monthly instalments. X was short on money so he borrowed money from Z. Z retained an interest over X’s ‘present and future accounts’. What type of collateral is this?
Accounts receivables (Article 9)
- Intangible goods
- Nature of goods => Receive debts from TP (Y)
X lent a loan to Y for $10,000 to be paid in monthly instalments. X then decided to transfer his interest in his bank account to Z. Y was desperate to borrow more money, so he asked X how much he still owes him. X has not told Y about Z as of yet. What must X do?
1) Notify Y re Z
- Assignee
2) Notify Y re X’s disclaimer in bank account within 14 days after Y’s notice
X was renting Y’s apartment for a few months. The contract included an option for X to purchase the apartment once his rent was finished. Does this fall within Article 9?
Yes
- Option to purchase at end of lease => Lease was intended as secured transaction
X wanted to sell his house to Y that included installed heating systems. In the meantime, X needed a loan and would borrow from Bank. Bank wanted security over X’s sale of his house, as well as his heating systems. Is this allowed under Article 9?
Heating systems
- Fixture (considerable damage if removed) => Covered by Article 9
NOT house sale
- Land transfers are covered by common law (NOT covered by Article 9)
X borrowed a loan from Y. In return, Y wanted security over X’s car. Y never took possession of the car and X never signed any agreement to provide security. However, Y did look after the car and handle financial rights over it. Eventually, X defaulted and Y wants to take the car. But X refuses. What must Y do?
Attachment
1) Y gave value to X (loan)
2) X had ownership rights over car
3) Y agreed to take security interest
- NO authenticated agreement/possession
- Y had control over car (provided reasonable care + reimbursed expenses and/or profit to X by using car)
X borrowed a loan from Bank for his business. In return, Bank wanted security over X’s deposit in his account in Bank. X never signed any agreement to provide security. Eventually, X defaulted and Bank wants to take money from X’s account. Can Bank take X’s money?
Attachment
1) Bank gave value to X (loan)
2) X had ownership rights over account
3) Bank agreed to take security interest
- NO authenticated agreement/possession
- Bank had control over X’s account (non-consumer - for business) (Bank is secured party) => Automatic attachment
X borrowed a loan from Y for his business. In return, Y wanted security over X’s deposit in his account in Bank. X deposited the money in his name. X and Y agreed that Y could take security. Eventually, X defaulted and Y wants to take money from X’s account. Can Y take X’s money?
NO attachment
- NO consent from Bank + X’s deposit in his own name (NOT Y’s)
X borrowed a loan from Y for his business. In return, Y wanted security over X’s deposit in his account in Bank. X deposited the money in Y’s name. X and Y agreed that Y could take security, with Bank’s consent later on. Eventually, X defaulted and Y wants to take money from X’s account. X refused and told Bank not to give access to Y. Can Y take X’s money?
Attachment
1) Y gave value to X (loan)
2) X had ownership rights over deposit
3) X agreed to security interest
- X deposited in Y’s name
- X + Y + Bank signed authenticated agreement
- Bank to comply with Y’s orders (NOT X’s orders)
- X’s refusal/consent NOT required
X borrowed a loan from Y. In return, Y wanted security over X’s car. X agreed to sign a loan agreement that provided Y with a security interest in ‘all property owned by X’. Eventually, X defaulted and Y wants to take the car. But X refuses. Can Y take X’s car?
NO attachment
- NO agreement to take security interest (NO authenticated agreement)
- Supergeneric description (all property owned by X)
X borrowed a loan from Y. In return, Y wanted security over X’s car. X agreed to sign a loan agreement that provided Y with a security interest in X’s personal property, including a serial number for the car. Eventually, X defaulted and Y wants to take the car. But X refuses. Can Y take X’s car?
Attachment 1) Y provided value to X (loan) 2) X had ownership rights over car 3) X agreed to security interest - Authenticated agreement - Broad description (type - personal property) - Serial number of car => Enough to put subsequent creditors on notice of Y's secured interest over car
X asked Y to help him with his university dissertation. In return, Y wanted security over X’s laptop. X agreed to sign a loan agreement that provided Y with a security interest. Eventually, Y finished the dissertation and wants X’s laptop. But X refuses. Can Y take X’s laptop?
NO attachment
- Y did NOT provide value to X (dissertation services)
X borrowed a loan from Y. Months later, Y wanted security over X’s car because Y realised X may not pay the loan in time. X agreed to sign a loan agreement that provided Y with a security interest in X’s car. Eventually, X defaulted and Y wants to take the car. But X refuses. Can Y take X’s car?
Attachment
1) X signed authenticated agreement to give security to Y over X’s car
2) X had ownership rights over car
3) Y provided value to X
- Pre-existing debt
X borrowed a loan from Y. Y wanted security over X’s car, which he never purchased from the actual owner. X agreed to sign a loan agreement that provided Y with a security interest in X’s car. Eventually, X defaulted and Y wants to take the car. But X refuses. Can Y take X’s car?
Attachment
1) Y provided value to X
2) X signed authenticated agreement to give security to Y over X’s car
3) X had ownership rights over car
- NO title required
- Possession required
X borrowed a loan from Y. Y wanted security over X’s car. X agreed to sign a loan agreement that provided Y with a security interest in X’s car, prohibiting any alienation of the car. But the Federal Government decided to seize X’s car for failure to pay outstanding federal loans. Eventually, X defaulted on Y’s loan and Y wants to take the car. But X refuses. Can Y take X’s car?
NO attachment
- X’s car was transferred involuntarily to Fed Gov
- Prohibition on alienation NOT relevant
X is a business that sells new and used bicycles. X needed a loan for his business and borrowed £25,000 from Y. In return, Y obtained a security interest over X’s bicycles including ‘all of X’s inventory whether now owned or hereafter acquired’. 2 weeks later, X received 30 more bicycles for sale from the bicycle manufacturer. However, X defaulted and Y now wants all of X’s bicycles. X refuses and has just received 10 more bicycles. Is Y entitled to X’s bicycles?
Attachment over X’s pre-existing + 30 bicycles
1) X signed authenticated agreement to create security interest over X’s bicycles
2) Y provided value to X (loan)
3) X had ownership rights over bicycles
- After-acquired property clause (hereafter acquired)
- Non-consumer goods (bicycles for sale) => Automatic attachment once X received 30 bicycles (NOT 10 bicycles)
X tended to purchase a new game console at the end of every year. X purchased a playstation 4. X wanted to borrow a loan from Bank. X agreed that Bank could obtain a security interest over ‘all of X’s game consoles, whether now owned or hereafter acquired’. 2 weeks later, X purchased an xbox. However, X defaulted and Y now wants all of X’s game consoles. X refuses. Is Y entitled to X’s game consoles?
Attachment over X’s playstation 4
1) X signed authenticated agreement to create security interest over X’s game consoles
2) Y provided value to X (loan)
3) X had ownership rights over game consoles
- After-acquired property clause (hereafter acquired)
- Consumer goods (for personal use)
- X acquired ownership rights over playstation 4 at time of receiving loan => Y is entitled
- X did NOT acquire ownership rights over xbox within 10 days after receiving loan => Y is NOT entitled
X tended to purchase a new game console at the end of every year. X purchased a playstation 4. X wanted to borrow a loan from Bank. X agreed that Bank could obtain a security interest over ‘all of X’s game consoles, whether now owned or hereafter acquired’. 10 days later, X purchased an xbox. However, X defaulted and Y now wants all of X’s game consoles. X refuses. Is Y entitled to X’s game consoles?
Attachment over X’s playstation 4 + xbox
1) X signed authenticated agreement to create security interest over X’s game consoles
2) Y provided value to X (loan)
3) X had ownership rights over game consoles
- After-acquired property clause (hereafter acquired)
- Consumer goods (for personal use)
- X acquired ownership rights over playstation 4 at time of receiving loan => Y is entitled
- X acquired ownership rights over xbox within 10 days after receiving loan => Y is entitled
X loaned some money to Y. In return, X wanted to have security over Y’s car. X was concerned other creditors may claim priority over the car. Therefore, X filed a financing statement with the secretary of state. Has X’s security interest been perfected?
NO
- NO attachment => NO perfection
X purchased a stereo from Y on credit, giving a written promissory note and written security agreement in exchange for the stereo. X then obtained a loan from a secured creditor, Z with security over the stereo as well. X defaulted and Z claims the stereo is his. Who should take priority?
Y
- Y took control of promissory note => Y’s interest was perfected
X borrowed a loan from Y for his business. In return, Y wanted security over X’s deposit in his account in Bank. X deposited the money in Y’s name. X and Y agreed that Y could take security, with Bank’s consent later on. After a few months, Y requested access from Bank to X’s account, without informing X. Another creditor, Z, obtained a security over X’s account for a loan. Eventually, X defaulted and Y wants to take money from X’s account. Z claims he is entitled to the account. Who should take priority?
Y
- Y took control of non-consumer deposit account => Y’s interest was perfected
X wanted to buy bicycles for him and his girlfriend to use on vacation. X purchased the bicycles from Y with funds and promised to pay back Y. X signed an agreement providing that Y could obtain a security interest over X’s bicycles. Y is concerned whether his security interest has priority over other creditors. Is this true?
Perfection
- Consumer goods (bicycles for personal use)
- PMSI (advanced funds) + Attachment (agreement, ownership, value) => Perfection
X had bought bicycles for him and his girlfriend to use on vacation. X wanted to borrow a loan from Bank. X signed an agreement providing that Bank could obtain a security interest over X’s bicycles. Y is concerned whether his security interest has priority over other creditors. Is this true?
NO perfection
- Consumer goods (bicycles for personal use)
- NO PMSI + Attachment (agreement, ownership, value) => Financing statement filing required
X wanted to install a heating system into his house. X purchased the heating system from Y with funds and promised to pay back Y. X signed an agreement providing that Y could obtain a security interest over X’s heating system. Y is concerned whether his security interest has priority over other creditors. Is this true?
Perfection
- Fixture (heating system)
- PMSI (advanced funds) + Attachment (agreement, ownership, value) => Perfection
X purchased a heating system for his house. X wanted to borrow a loan from Bank. X signed an agreement providing that Bank could obtain a security interest over X’s heating system. Y is concerned whether his security interest has priority over other creditors. Is this true?
NO perfection
- Fixture (heating system)
- NO PMSI + Attachment (agreement, ownership, value) => Financing statement filing required
X wanted to drive a car to work. X purchased the car from Y with funds and promised to pay back Y. X signed an agreement providing that Y could obtain a security interest over X’s car. Y is concerned whether his security interest has priority over other creditors. Is this true?
NO perfection
- Motor vehicle (car)
- Attachment (agreement, ownership, value) => Notation on certificate of title required
X is a business that sells new and used bicycles and bicycle equipment. X wanted to purchase more bicycles to sell for his business. X purchased bicycles from Y by borrowing a loan and promised to pay back Y. In return, Y obtained a security interest over X’s bicycles. Y is concerned whether his security interest has priority over other creditors. Is this true?
NO perfection
- Inventory (bicycles for sale)
- Attachment (agreement, ownership, value) => Filing of financing statement required
X borrowed a loan from Y. In return, Y wanted security over X’s car. X agreed to sign a loan agreement that provided Y with a security interest over the car. Additionally, X signed a financing statement including X and Y’s names and addresses. For X’s name, he included his nickname that no one else addressed him by. However, it was still searchable under the filing office standard search logic. X forgot to include a description of the car and simply wrote ‘all property owned by X’. X filed the statement with the secretary of state. A year later, another creditor, Z, obtained perfection over the car. Five years later, X defaulted and both Y and Z claim the car is theirs. Who takes priority?
Z
- Consumer good (car) + NO PMSI => Financing statement filing required
- Y had attachment (agreement, ownership + value)
- Y had perfection (financing statement included; (1) X’s nickname (searchable under filing office standard search logic => NOT seriously misleading error); (2) Y’s name; (3) Description of car (‘all property’ => supergeneric is acceptable); (4) X signed statement; and (5) X filed with SoS => 5 years’ effective)
- After 5 years => Y lost perfection over car
- Z takes priority (still 4 years’ perfection)
X borrowed a loan from Y. In return, Y wanted security over X’s car. X agreed to sign a loan agreement that provided Y with a security interest over the car. Additionally, X signed a financing statement and filed the statement with the secretary of state. A year later, another creditor, Z, obtained perfection over the car. A year later, X changed his address in the financing statement. X defaulted. Who takes priority?
Z
- Y amended financing statement => Dated on date of amendment (1 year after Z’s perfection date) => Z takes priority over Y
X wanted to buy bicycles for him and his girlfriend to use on vacation. X purchased the bicycles from Y with funds and promised to pay back Y. X signed an agreement providing that Y could obtain a security interest over X’s bicycles. Another creditor, Z, obtained a security interest over the bicycles. After using the bicycles on vacation, X wanted to start making profit by providing them at his gym for members to use. Who takes priority?
Z
- Consumer goods (bicycles for personal use)
- PMSI (advanced funds) + Attachment (agreement, ownership, value) => Y’s perfection
- Z perfected after Y
- Changed use from consumer goods to inventory (for business use) => Y did NOT file financing statement => Z takes priority
X entered an agreement with Y to receive present and future advances from Y for the next six months. X signed an agreement providing that Y could obtain a security interest over X’s bicycle that he used for work, followed by filing a financing statement. After four months, Y now wanted to terminate the financing statement. Is this allowed?
NO
- Y still has to pay outstanding future advances (2 months left)
X wanted to buy bicycles for his work. X purchased the bicycles from Y with funds and promised to pay back Y. X signed an agreement providing that Y could obtain a security interest over X’s bicycles, followed by filing a financing statement. Eventually, X received the bicycles. Within a week, Y now wants to terminate the financing statement. Is this allowed?
NO
- X has bicycles in possession
- PMSI
