Quiz 3 Multistate Transactions Flashcards
General Choice of Law Rules
parties may select the state whose laws will govern their rights and duties, assuming the transaction bears a reasonable relation to the chosen state
Domicile Approach
The general choice of law rule under Article 9 is that if the debtor is located in a particular jurisdiction, that jurisdiction’s laws govern:
- Perfection of the security interest
- The effect of perfection or nonperfection, and
- The priority of the security interest relative to competing interests in the same collateral
Physical Collateral
if the collateral has physical form, the law of the jurisdiction in which the collateral is located will govern issues involving priority and other Article 9 matters; §9-301(1) and (3)
Domicile Approach and Physical Collateral
If debtor is in different location than collateral, domicile approach for perfection and physical collateral for priority
Minerals to be Extracted From the Ground
governed by where the Minehead or wellhead is located
Agricultural Liens
where the farm products are located
Goods Covered by Certificate of Title
law of the jurisdiction where there is a valid certificate of title for the item
Deposit Accounts
if the collateral is a deposit account, the law of the bank’s jurisdiction governs perfection, its effects, and priority
Bank’s Jurisdiction
(1) If an agreement between the bank and its customer governing the deposit account expressly provides that a particular jurisdiction is the bank’s jurisdiction for purposes of this part, this article, or [the Uniform Commercial Code], that jurisdiction is the bank’s jurisdiction.
(2) If paragraph (1) does not apply and an agreement between the bank and its customer governing the deposit account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the bank’s jurisdiction.
(3) If neither paragraph (1) nor paragraph (2) applies and an agreement between the bank and its customer governing the deposit account expressly provides that the deposit account is maintained at an office in a particular jurisdiction, that jurisdiction is the bank’s jurisdiction.
(4) If none of the preceding paragraphs applies, the bank’s jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the customer’s account is located.
(5) If none of the preceding paragraphs applies, the bank’s jurisdiction is the jurisdiction in which the chief executive office of the bank is located.
Investment Property
- Certificated security = While a security certificate is located in a jurisdiction, the local law of that jurisdiction governs
- Uncertificated security = The local law of the issuer’s jurisdiction as specified in Section 8-110(d) governs
- Security entitlement or securities account = The local law of the securities intermediary’s jurisdiction as specified in Section 8-110(e) governs
- Commodity K or account = The local law of the commodity intermediary’s jurisdiction governs
The local law of the jurisdiction will govern
a. Perfection of a S.I in an investment property by filing
b. Automatic perfection of a S.I in investment property created by a broker or a securities intermediary and
c. Automatic perfection of a S.I. in a commodity K or account created by a commodity intermediary
Letter of Credit Rights
- the local law of the issuer’s jurisdiction or a nominated person’s jurisdiction governs perfection, the effect of perfection or non-perfection, and the priority of a security interest in a letter-of-credit right if the issuer’s jurisdiction or nominated person’s jurisdiction is a State
- an issuer’s jurisdiction or nominated person’s jurisdiction is the jurisdiction whose law governs the liability of the issuer or nominated person with respect to the letter-of-credit right as provided in Section 5-116.
Debtors Location - Individual
If they are an individual then their principal residence
DL - Organization with 1 place of business
If an organization with only one place of business then at its place of business
DL - Organization with many places of business
If an organization with more than one place of business then at the chief executive office
DL - Located Abroad
If they are located abroad they can only file there if it has the equivalent of A9 filing non possessory S.I in public records otherwise it must be filed in D.C.
Most places do not have an equal system
DL - Place of Business
e. “Place of business” is defined as an agency, an office; a place actually occupied, either continually or at regular periods, by a person or his clerks, or those in his employment; a place devoted by the proprietor to the carrying on of some form of trade or commerce; a place where people generally congregate for the purpose of carrying on some sort of traffic, or where people are invited or expected to come to engage in some sort of mercantile transaction; a place where a calling for the purpose of gain or profit is conducted; a place where business is carried on by persons under their control and on their own account; some particular locality, appropriated exclusively to a local business, such as a farm, store, shop, or dwelling place; that specific place within a city or town at which a person transacts business. An occasional use or occupation of a place for business purposes is not sufficient to constitute it as a place of business.
Timing
A security interest perfected pursuant to the law of the jurisdiction designated remains perfected until the earliest of (UCC 9-316):
(1) the time perfection would have ceased under the law of that jurisdiction;
(2) the expiration of four months after a change of the debtor’s location to another jurisdiction; or
(3) the expiration of one year after a transfer of collateral to a person that thereby becomes a debtor and is located in another jurisdiction.
