Secured Transactions

Question 1

UCC Article 9 Applicability

Answer 1

To any transaction intended to create a security interest in property or fixtures

Question 2

Tangible Goods

Answer 2

(1) Farm products
(2) Consumer goods – goods bought primarily for personal use
(3) Inventory – goods held by person for sale/lease to be furnished under a contract of service
(4) Equipment

Question 3

Intangible Goods

Answer 3

(1) Instruments – writings representing right to be paid money
(2) Documents
(3) Chattel paper (eg. promissory note and security agreement)
(4) Accounts – right to payment not evidenced by instrument or chattel
(5) Deposit Accounts – bank accounts
(6) General Intangibles

Question 4

Requirements for attachment

Answer 4

(1) Valid security agreement
(2) Value must be given
(3) debtor has rights in the collateral

Question 5

Rule for after-acquired property

Answer 5

A security agreement can cover after-acquired property and does not need to specifically reference it to be effective

Question 6

Once a security interest is attached it is enforceable but it must be …

Answer 6

perfected

Question 7

Methods of perfecting a security interest

Answer 7

(1) Filing
(2) Taking possession
(3) Automatic perfection (PMSI)
(4) Control

Question 8

Method of perfecting: Filing

Answer 8

Filing a financing statement requires:
(1) identify the debtor
(2) identify secured party/creditor
(3) adequate description of collateral

Question 9

PMSI in consumer goods

Answer 9

Creditor sells goods to a debtor and/or advances funds to debtor to buy goods, reserving a security interest in the goods themselves

Question 10

Priority between secured creditor vs unsecured creditor

Answer 10

Secured creditor prevails

Question 11

Priority between perfected and unperfected SI

Answer 11

perfected SI prevails

Question 12

Priority between perfected SI vs perfected SI

Answer 12

First to file OR perfect prevails

Question 13

PMSI Superpriority

Answer 13

PSMI’s are superior to prior perfected SI’s in the same goods

Question 14

PSMI in inventory

Answer 14

Has priority over other SI’s in the inventory or proceeds if:
(1) PMSI is perfected when debtor takes possession of inventory; and
(2) Other parties who filed their SI’s in inventory receive authenticated notification of the PMSI before debtor takes possession of inventory

Question 15

Buyer in the ordinary course of business

Answer 15

Generally takes free of any security interest created by buyer’s seller