Secured Transaction

Question 1

Perfecting PMSI in Equipment

Answer 1

• Anytime (usually by filing) within 20 days of debtor getting possession of collateral, get priority

Question 2

Perfecting PMSI in Inventory

Answer 2

• Must be perfected (usually by filing) by the time the debtor gets possession
• No 20 day grace period
• Previously filed interests must be given notice

Question 3

Consumer-to-Consumer Sale Exception

Answer 3

• Buyer takes free of perfected security interest if buyer buys:
  
  • Without knowledge of the security interest
  • For value
  • For consumer purposes; and
  • Before creditor files

Question 4

Perfection by Filing is Valid for All Types of Collateral Except…

Answer 4

• Deposit Accounts
• Money

Question 5

Filing Statement Must Contain

Answer 5

• Debtor and creditor’s name and address
• Description of collateral

Question 6

Types of Goods

Answer 6

• Consumer goods (used primarily for personal, family, or household purposes)
• Inventory
• Farm Products
• Equipment (default)

Question 7

Perfecting an Interest in Goods

Answer 7

• Filing; or
• Taking possession

Question 8

Perfecting an Interest in a Vehicle

Answer 8

• Under Article 9, a filing statement is not effective to perfect if:
  
  • The vehicle is subject to a state statute that provides for perfection by notation on the certificate of title

Question 9

Accession

Answer 9

• A good that is physically united with another good such that
• the identity of the original good is not lost
• A security interest in the whole perfected under a certificate of title statute has priority over a security interest in the accession

Question 10

A PMSI Arises When…

Answer 10

• Creditor sells the good to the debtor on credit retaining a security interest in the goods for all or part of the purchase price; or
• A creditor advances funds that are used by the debtor to purchase the goods

Question 11

Perfecting a Security Interest in a Nonconsumer Deposit Account

Answer 11

• Automatic for the bank maintaining the account
• Putting creditor’s name on account
• Agreeing, in an authenticated record with the debtor and the account’s bank that it will comply with secured party’s orders without debtor’s consent

Question 12

Self-Help Repossession

Answer 12

• Interest must be attached
• Can’t breach the peace (not defined in Art. 9)

Question 13

When Can You Waive the Right to Redemption

Answer 13

• After default
• Not before

Question 14

Creditor Duties at Default Sale and Consequences of Breach

Answer 14

• Duty to hold commercially reasonable sale
• Duty to mitigate damages
• Can’t collect deficiency if Art. 9 rules broke unless
  
  • Creditor shows breach didn’t cause deficiency (bidding at the sale)

Question 15

Attachment

Answer 15

• Parties agree to create a security interest
• Creditor gives value
• Debtor has rights in collateral

Question 16

Proceeds of a Foreclosure Sale Go To…

Answer 16

• Expenses
• The debt foreclosed on
• Junior interests

Question 17

Buyer in the Ordinary Course

Answer 17

• Buyers generally take goods subject to perfected security interests unless:
  
  • Buys in the ordinary course
  • From a seller engaged in business of selling goods of the kind
  • Without notice