Secure Transactions MEE Rules Flashcards
When Art. 9 applies
To all security interests in personal property or fixtures by contract.
Consumer goods
Goods that are bought for us primarily for personal, family, or household purposes.
Inventory
Goods, other than farm products, that are held by a person for sale or lease.
Materials used or consumed by a business over a short period of time (ex: pens, etc.)
Equipment
Goods, other than inventory, farm products, or consumer goods.
Catch-all for tangible collateral.
Farm products
Crops, livestock, supplies produced in a farming operation or products of crops or livestock in their unmanufactured state.
Attachment requirements
(1) value must be given by secured party to debtor, (2) debtor must have rights in the collateral, and (3) there must be a binding security agreement.
Valid security agreement
(1) authentication (signed), (2) intent to create a security agreement, and (3) description of the collateral.
After-acquired property
A security agreement can cover after-acquired property and does not need to specifically reference it to be effective.
Methods of perfection
-Filing a financing statement
-Automatic
-Possession
-Control
Chattel paper
Records which evidence monetary obligation + security interest in or a lease of a specific good.
Electronic = electronic chattel paper
Instruments
Pieces of paper representing the right to be paid money (ex: promissory notes, checks, etc.)
Documents
Document representing right to be paid goods (ex: warehouse receipt)
Perfection
Public notice of a security interest, must have attachment + one of the methods of perfection
Accounts
Includes a right to payment for property sold of services rendered.
Perfection
Public notice of a security interest, must have attachment + one of the methods of perfection
Goods (tangible collateral)
All things which are movable at the time security interest attaches.
Includes: consumer goods, inventory, equipment, and farm products.
Perfection by control
Security interest in investment property, non consumer deposit accounts, and electronic chattel paper may be perfected by control.
Investment property
Items such as stocks, bonds, mutual funds, and brokerage accounts containing such items.
Evidence of intent to enter into a security agreement
(1) creditor taking possession of collateral, (2) authentication, or (3) creditor taking control of nonconsumer deposit account, elec. chattel paper, and investment property.
Priority between unperfected secured parties
First to attach has priority
Deposit account
An account maintained with a bank.
Art. 9 only applies to security interests in nonconsumer deposit accounts.
General intangibles
Any personal property not w/in the scope of the other definitions (ex: patent and trademark rights, copyrights, etc.)
Catch-all for intangible collateral
Purchase money security interest (PMSI)
Arises when a secured party sells goods to debtor on credit (seller-financed) or loans funds to enable creditor to buy collateral (financer-financed). Creditor then retains a security interest in the collateral.
Automatic perfection
PMSI in consumer goods perfects as soon as an interest attaches.
Except motorized vehicles - only perfected by notation on the cert. of title
Perfection by filing
Filing a financing statement that contains (1) debtor’s name and address, (2) secured party’s name and address, and (3) description of collateral.
Priority between unperfected and perfected secured parties
Perfected security interest generally prevails
PMSI superiority
PMSIs are superior to prior perfected security interests in the same collateral of goods or their proceeds.
PMSI superiority - equipment
PMSI has superiority if perfected when debtor gets possession.
Accessions
Goods physically united with other goods such that the identity is not lost.
Buyer in ordinary course of business
Generally takes free of any security interest created by buyer’s seller.
A buyer not in ordinary course of business
Takes collateral subject to a perfected interest.
Does not take subject to an unperfected interest if value given and buyer did not know about interest.
Consumer to consumer goods (garage sale exception)
A buyer not in the ordinary course of business takes free of security interest, even perfected, if he buys w/o knowledge, for value, and for personal/family/household use.
UNLESS secured party filed a financing statement covering the goods.
Priority between secured party and a lien creditor
Secured party takes priority if perfected before lien arises.
Breach of peace
Considers whether repossession took place at debtor’s premises and whether debtor objected.
Debtors means of protection
(1) sale must be commercially reasonable, and (2) debtor must receive written notice of sale (10 days+ prior to w/adequate description)
Remedies
(1) damages, (2) ct may order sale, (3) rebuttable presumption that collateral is worth the amount of the debt (no deficiency) or deficiency is barred.
Evidence of intent to enter into a security agreement
(1) creditor taking possession of collateral, (2) authentication, or (3) creditor taking control of nonconsumer deposit account, elec. chattel paper, and inventory property.
Perfection
Public notice of a security interest, must have attachment + one of the methods of perfection
