Secured Transaction Misses

Question 1

A security interest attaches when:

Answer 1

RAV - Rights, Agreement, Value

1. debtor agrees to give security interest, evidenced by authenticate security agreement;
2. creditor gives value for the interest; and
3. debtor has rights in the collateral

Question 2

Waiver of redemption

Answer 2

Waiver of right to redeem is permissible ONLY AFTER there has been default

Question 3

Secured party will be liable to debtor for

Answer 3

Any damages caused by a failure to follow Article 9 rules.

Question 4

Secured party prohibited from collecting deficiency if:

Answer 4

Article 9 default rules are violated UNLESS

He can show the breach did not cause the deficiency

Question 5

Whether a lease is a security depends upon

Answer 5

the economic realities of the transaction.

The transaction will be deemed to create a security interest if:

1. the rental obligation is not terminable by the lessee and
2. at the end of the lease, the lessee has an option to purchase for no or nominal consideration

Otherwise, it is an installment contract

Question 6

A security interest is terminated when

Answer 6

the collateral is sold by a foreclosing party

Question 7

Upon sale of collateral proceeds will be distributed

Answer 7

In the following order:
1. to the expenses of repossession and sale
2. to satisfy the foreclosed debt
3. junior third party interest

Question 8

Durable Goods Used in a business are classified as:

Answer 8

Equipment

Question 9

Lease or Security

Answer 9

You just can’t let those bastards disguise a secured transaction as a lease to avoid Art. 9

If characterized as a lease, but intended to be a security, it’s a security.

Whether its a lease or security depends on economic realities of the transaction

If not terminable by lessee and lessee has option to purchase for nominal/no consideration, its an interest