Quiz 3 Classifying Collateral

Question 1

Three Categories of Collateral

Answer 1

Goods, Quasi-Tangible Property, Intangible Property

Question 2

What categories under goods?

Answer 2

Consumer Goods, Farm Product, Inventory, Equipment

Question 3

Goods - What Are Consumer Goods?

Answer 3

goods that are used or bought for use primarily for personal, family, or household purposes

Question 4

Goods - What Is Farm Product?

Answer 4

goods other than standing timber that are the subject of a debtor’s farming operation, including:

• Any supplies the debtor uses in the farming operation,
• Crops,
• Livestock, and
• Unmanufactured products of crops and livestock

Question 5

Goods - What is Inventory?

Answer 5

goods sold, leased, or consumed in the debtor’s business. Includes:

• Leased goods
• Goods held for sale or lease
• Goods furnished by a person under a contract of service
• Raw materials
  -Materials used or consumed in a business

Question 6

Goods - What is Equipment?

Answer 6

catch-all category; goods other than inventory, farm products, or consumer goods not for sale but used by a business for a relatively long period of time

Question 7

What Categories Under Quasi-Tangible Property?

Answer 7

Instruments, Chattel Papers, Documents, Investment Property, Letter of Credit Rights

Question 8

QTP - What is Instruments?

Answer 8

generally any negotiable writing that:

-Embodies or evidences a financial obligation
-On its own, does not evidence a lease or a security interest in specific goods
-In the ordinary course of business, is transferred by delivering the writing with any needed endorsement or assignment

Ex. Promissory notes and checks

Question 9

QTP - What is Chattel Paper?

Answer 9

a record evidencing not only a monetary obligation, but also any security interest in specific goods that secures the obligation

-Chattel paper grants security interest, instruments do not
-Tangible or electronic

Question 10

QTP - What is Documents?

Answer 10

a record, or sometimes simply a receipt, of title

Ex. Warehouse receipt and bills of lading

Question 11

QTP - What is Investment Property

Answer 11

includes securities, security entitlements, securities accounts, commodity contracts, and commodity accounts

Ex. stocks and bonds and rights to accounts containing same

Question 12

QTP - What is Letter of Credit Rights?

Answer 12

a right to payment or performance manifested in a written or electronic record

The record is one of an issuer’s promise to a customer that it will honor a beneficiary’s demand for payment or performance

Letter format; generally, informs the potential beneficiary that the issuer has certain sum of money available for the beneficiary’s use, regardless of whether the beneficiary has yet demanded payment or performance from the issuer

Question 13

What Categories Under Intangible Goods?

Answer 13

Accounts, Deposit Account, Commercial Tort Claim, General Intangibles

Question 14

IP - What is Accounts?

Answer 14

right to payment of money, regardless of whether the right has yet been earned by performance; accounts receivable

Ex. Account may be created if property is sold, licensed, or assigned, or if services are rendered or to be rendered

Health-Care Insurance Receivable – right to payment of money that arises from an insurance policy and is for healthcare goods or services

Question 15

IP - What is Deposit Account?

Answer 15

a savings account, demand account, certificate-of-deposit account, or other account at a bank

Different than account

The term does not include investment property or accounts evidenced by an instrument.

Question 16

IP - What is Commercial Tort Claim?

Answer 16

a claim arising in tort with respect to which:

• the claimant is an organization; or
• the claimant is an individual and the claim:
  —-arose in the course of the claimant’s business or profession; and
  —-does not include damages arising out of personal injury to or the death of an individual.

Question 17

IP - What is General Intangibles?

Answer 17

catch-all category for collateral other than goods

any personal property, including things in action, other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money, and oil, gas, or other minerals before extraction. The term includes controllable electronic records, payment intangibles and software.

Include all intangible collateral not falling into another category.

Payment Intangibles – any general intangible in which the relevant obligation is monetary