Secured Transactions Flashcards
What are the four types of tangible collateral?
- consumer goods
- equipment
- farm products
- inventory
what are consumer goods?
goods used or bought primarily for personal, family, or household purchases
What is equipment?
goods that are used or bought for use in a business - default category for goods
What are farm products?
crops, livestock, or supplies used or produced in farming operations
Used by a farmer
What is inventory?
goods held for sale or lease and materials used or consumed in a short period of time
What is a PMSI?
Purchase money security interest - can be created in two ways:
- secured party sells the goods to the debtor on credit and retains a security interest in the goods sold; or (seller-financed PMSI)
- creditor loans the funds to debtor to enable the debtor to buy the specific collateral, the funds are used by the debtor to buy the specific collateral, and the creditor takes a security interest in that collateral (financer-financed PMSI)
When does a creditor become secured?
upon attachment
rights against the debtor
When does the creditor have rights against other debtors?
at perfection - process of giving public notice of the security interest
What is the financing statement?
provides public notice of the security interest and perfects it
what is the security agreement?
agreement between the debtor and secured party that creates the security interest
What is a security interest?
contingent property interest in the debtor’s collateral that the debtor grants the creditor
How do you determine what kind of collateral a tangible good is?
how the debtor is using it
How do you determine the category of intangible/semi-tangible collateral?
the nature of the collateral
What is an instrument?
promissory notes, drafts (checks)
What is investment property?
stocks, bonds, mutual funds, brokerage accounts
What are accounts?
right to payment for property sold or services rendered
- accounts receivable
What is a deposit account?
an account maintained with a bank - nonconsumer deposit account
What is a commercial tort claim?
(1) claimant is an organization; or (2) claimant is an individual, the claim arose out of the claimant’s business or profession, and the claim does not include damages for personal injury or death of individual
What are general intangibles?
default – intellectual property
What is chattel paper?
- monetary obligation
2. security interest in or lease of specific goods
What are the three steps for attachment?
- parties must agree to create a security agreement;
- value must be given by the secured party; and
- debtor must have rights (ownership) in the collateral
How to form an authenticated security agreement
- record with intent to create a security interest
- must be authenticated by debtor (any symbol will work)
- there must be a description that reasonably identifies the collateral (no supergeneric descriptions)
What is sufficient for value given for attachment?
any consideration even past consideration