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Bar Exam > Secured Transactions > Flashcards

Secured Transactions Flashcards

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1
Q

Under Article 9, a creditor must take 2 steps to gain the full protection of secured transactions law

A

attach a security interest to the collateral and
perfect the security interest

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2
Q

Attachment

A

security agreement
possession
control
(rights visa vi the debtor)

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3
Q

security agreement

A

a written agreement that certain personal property will serve as collateral
(1) describe collateral
(2) the party offering the collateral must have rights in it
(3) party exchanging security interest must give value in exchange

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4
Q

Perfection

A

steps necessary to create a security interest effective against the world (creditor rights visa vi other creditors)

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5
Q

consumer goods

A

goods used or bought for personal or household purposes

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6
Q

inventory

A

goods held for sale or lease and supplies/materials quickly used up in business

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7
Q

equipment

A

any physical goods other than consumer goods, inventory, or farm products

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8
Q

accounts

A

a right to payment (accounts receivable)

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9
Q

deposit accounts

A

a bank account

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10
Q

PMSI

A

Purchase money security interest
* arises when the lender loans money to the borrower specifically for the buyer to purchase certain goods, and the lender takes a security interest in those goods.

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11
Q

Seller-financed PMSI

A

secured party sells collateral on credit
retains security interest in collateral

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12
Q

Financer-financed PMSI

A

loan to purchase collateral
load used to acquire that collateral
creditor takes security interest in that collateral

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13
Q

after acquired property clause (provision in K)

A

gen rule - security interest only reaches collateral debtor had rights in at time of signing security agmt (want diff? - say it)

exception - collateral if of a type rapidly depleted and replenished (ex. inventory accts)

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14
Q

future advance clause

A

grant of security agreement securing future loans with same collateral

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15
Q

1 way to perfect?

A

filing a financing statement

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16
Q

intangible property includes

A

accounts - right to payment for property sold or services rendered

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17
Q

a secured sale disguised as a lease

A

lessor receives item (rental car) when still has some meaningful economic value
- reasonably likely lessor will get item back? if no, governed by art. 9

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18
Q

Creation of security interest (attachment)

A
  1. security agreement
    - can be oral if collateral in possession of secured party (pledge)
    1. record w/ intent to create a security interest (any language)
    2. authenticated by debtor (signed)
    3. describe collateral (reasonably identify, not super generic)
  2. value given
  3. debtor has rights in collateral
19
Q

How to perfect

A
  1. Attached &
  2. another method of perfection
20
Q

methods of perfection

A

A perfect cat naps frequently

  1. automatic perfection
  2. possession
  3. control
  4. notation on certificate of title
  5. perfecting by filing a financing statement
21
Q

automatic perfection

A

ex. PMSI in consumer goods (auto perfection upon attachment)

22
Q

possession

A

ex. goods

$ - this is the only way

23
Q

control

A

non-consumer deposit accts - this is the only way

  • automatic control
  • putting deposit account in secured partys name
  • control agmnt
24
Q

notation on certificate of title

A

ex. cars and trucks
- gov’t authority notes lien (only way for perfection here - title status)

exception - holding a car/truck as inventory

25
Q

perfecting by filing a financing statement

A

(UCC-1)
- debtors name
- mistakes in statement ok unless statements seriously misleading
- not seriously misleading if SOS record would pull
- name change ok for 4 months
- describe collateral (super generic description ok here
- does not have to state after acquired property
- secured party’s name
- no signature required, however, must be authorized.
- file w/ SOS
- if real estate related - county clerk

26
Q

where to file financing statement

A

where debtor located
corp - where incorporated
LLP - place of business
if debtor moves out of state - 4 months
if collateral moves out of state - 12 months

27
Q

how long is a financing statement good for

A

5 years

28
Q

how can you continue financing statement

A

by filing a CONTINUATION STATEMENT 6 months before the 5 year mark.

29
Q

after creditor pays off

A

termination statement (20 days)

30
Q

priority rules

A

determined which creditor is 1st in line to get paid.

31
Q

perfected secured party v. perfected secured party

A

first to file or perfect (whatever is earlier)

32
Q

unperfected secured party v. unperfected secured party

A

first to perfect wins

33
Q

unperfected v. perfected

A

perfected wins

34
Q

PMSI in goods (priority)

A

not inventory or livestock….jumps to front of priority line if perfected immediatley or within 20 days

35
Q

superiority for PMSI in inventory/livestock

A

takes priority over conflicting security interest if
before debtor receives possession
- secured party perfects &
- sends authenticated notice to other holders &
- notice received within 5 years of debtor getting possession

36
Q

special priority rules for conflicting security interests in deposit accounts

A

deposit accts control
best - co-owner
next best - maintain acct.
worst - control agmt

37
Q

Secured party v. buyer

A

secured party wins unless authorized sale

38
Q

BIOC rule

A

buyer in the ordinary course
- takes free of a security interest
- created by his/her seller
BIOC means -
buyer in good faith
without knowledge of violations
in ordinary course
from seller of goods of that kind

39
Q

buyers not in ordinary course

A

take subject to perfected interests
take free of unperfected security interests

40
Q

consumer to consumer special rule

A

buyer takes free of security interest if
- no knowledge
- value
- personal use
- no financing statement

41
Q

secured party v. judgment lienholder

A

judgment lienholder wins if lien arose before security interest was perfected

42
Q

secured party v. possessory (statutory) lien holder

A

statutory lienholder wins if they maintain possession of callateral

43
Q

replevin

A

ct. proceeding to repo collateral if equipment can render it unusable

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