Secured Transactions Flashcards
Article 9 security interest
consensual lien on personal property
Types of personal property (goods)
- Consumer goods
- Farm products
- Inventory
- goods held for sale
- goods held for lease
- goods that are rapidly consumed - Equipment (residual category)
Account (definition)
Right to payment arising out of one of the transactions w/n article 9
Types of Accounts
- Sale of goods
2. Rendition of services
Article 9 instrument
Article 3 negotiable instrument
Types of Personal Property (non-goods)
- Accounts
- NIs
- Chattel Paper
- Deposit Accounts
- Documents
- Investment Property
- Commercial Tort Claims (CTCs)
- General Intangibles
Chattel Paper
- Written lease of personal property
2. Documentation generated by a secured transaction
Deposit Accounts (not included)
Consumer account when the transaction is for a consumer purpose
CTCs
- Any tort claim that a business has is a CMT
2. Tort claims by individuals are CMTs if they arise out of the operation of a biz + do not involve PI.
General intangibles
Residual category for all non-goods
Attachment (effect)
Article 9 event when a creditor acquires a security interest and becomes a secured party.
Attachment creates rights against the debtor
Attachment events (Very Rich Shit)
- Value given
- Debtor has to have rights in the collateral
- SOF
Article 9 SOF
- Debtor must authenticate
- Evidences grant of security interest
- Describe collateral
Article 9 SOF description
*Cannot be super-generic
OK:
“All inventory”
“All equipment”
“All chattel paper”
Description of CTCs
Must be somewhat specific (date)
Description of consumer goods
Even more specific:
OK:
“All furniture”
“All snowmobiles”
SOF Exception
Possession by secured party
After acquired property clauses
OK
Exceptions:
- CMTs
- Consumer goods must be acquired w/n 10 days of value given
Future advance clauses
Eliminates the need for multiple security agreements
Proceeds (effect)
Security interest will automatically attach to identifiable proceeds
Proceeds (definition)
Anything the debtor acquires as a consequence of the debtor’s rights int he collateral
Perfection by Financial Statement
Perfects a security interest in all types of collateral except - deposit accounts
Correct filing state
Where debtor is located regardless of the location of collateral
Financial Statement Elements
- Debtor name
- Secured party name
- Description of collateral
- Authorized by debtor
Filing statement duration
5 years
Perfection by possession
Valid but not for:
- account
- CTC
- general intangible
- deposit account
Perfection by control
ok for deposit accounts
Automatic perfection (def)
Perfection upon attachment
Purchase-money security interest
Applies only to goods
How to get a PMSI
- sell goods on credit
- lend an enabling loan
Priority: two secured interests, both unperfected
1st to attach
Priority: two secured interest, one unperfected
Perfected security interest
Priority: two secured interest, both perfected
1st to file or perfect
Priority: Secured party vs buyer
Presumption goes to secured party
Priority: Secured party vs buyer (exceptions)
- BOCB
- Yard Sale
- Latest buyer exception
BOCB exception
- Buy goods
- From someone in the business of selling the type of goods in question
- w/o notice
- Seller created the security interest
Yard Sale exception
- consumer goods
- sold as consumer goods
- W/o notice
- Secured interest relies on automatic perfection (didn’t file)
Latest buyer exception
- Applies to unperfected security interests
- w/o notice
Priority: Secured party vs. judicial lien creditor
General rule: perfected SI gets priority
Insecurity clause
Secured party right to declare default if uneasy about possibility of repayment
- good faith
Secured party rights upon default
right to possession
Self-help repossession no-no’s
Cannot:
breach the peace!
go into an enclosure!
continue against debtor objection!
Secured party rights upon repossession
- Sell by public or private sale
- Must be commercially reasonable
- Must notify debtor
