Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Missouri Bar > Secured Transactions > Flashcards

Secured Transactions Flashcards

You may prefer our related Brainscape-certified flashcards:
MBE flashcards
1
Q

Secured Transaction definition

A

A business agreement, plus a security interest in equipment, inventory or consumer goods. If borrow doesn’t repay, lender can grab personal property and sell it to create value and pay off the debt.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Fivestep analysis for Secured Transaction

A

(1) Determine type of collateral
(2) Attachment
(3) Perfect
(4) Priority
(5) Enforcement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Tangible collateral

A

(1) consumer goods
(2) inventory
(3) farm products
(4) equipment (anything that is not one of the above categories)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Intangible collateral

A

(1) Instruments
(2) Documents
(3) Chattel Paper
(4) Accounts
(5) Deposit Accounts (commercial only)
(6) Investment property
(7) Commercial tort claims
(8) General intangibles

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Attachment versus perfection

A

Attachment - rights against debtor

Perfection - rights against third parties

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

How do you show attachment?

A

ALL THREE MUST BE PRESENT FOR ATTACHMENT:

(1) AGREE to create a security interest, evidenced by:
- security agreement describing collateral with debtor authentication
- creditor taking control
(2) VALUE given by secured party
(3) DEBTOR’S RIGHTS in collateral

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

How do you describe collateral in an agreement?

A

broad categories OK but supergeneric (ie all the debtor’s assets) is not sufficient

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Method for creditor obtaining control over: Nonconsumer deposit account

A

Bank automatically has control. If not a bank, then

(1) Put deposit account in SPs name, or
(2) bank and debtor agree that bank will follow SPs orders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Method for creditor obtaining control over: Chattel Paper

A

hold the tangible paper or for eletronic version have it state the SP as an assignee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Method for creditor obtaining control over: Investment Property Certificated Securities

A

Take possession of certificate.

IF certificate is in registered form, then (1) take possession AND (2) indorse to secured party

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Method for creditor obtaining control over: Investment property securities accounts

A

have owner of account instruct securities intermediatry:

(1) SP has same rights in the account
(2) intermediatry can comply with SPs orders without owner’s further consent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Duty to exercise when holding collateral

A

Reasonable care. Risk of loss on debtor (even if in hands of secured party).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

When does after acquired property attach?

A

(1) If there is an after-acquired property clause in agreement
(2) inventory attaches AUTOMATICALLY

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Does after acquired property attachment apply to consumer goods?

A

NO - unless debtor acquires rights in the goods within 10 days after creditor gives value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What does perfection do?

A

Acquire maximum priortiy in collateral over third parties

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are the five methods of perfection?

A

(1) Filing of financing statement
(2) Possession of collateral
(3) Control
(4) Auto perfection (PMSI)
(5) Temporary perfection

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Elements to perfect by filing

A

File a FINANCING STATEMENT, which states:

(1) Debtor’s name/add (make sure not seriously misleading)
(2) SP’s name/add
(3) Identify colateral
(4) and if real property description of the real property

18
Q

Financing statement vs. security agreement

A

Financing statement - can have supergeneric indications “all assets.” Also does not need to metnion afer-acquired collateral if mentioned in security agreement

Security agreement - CANNOT have supergeneric indications of collateral. Also MUST Mention after-acquired collateral.

19
Q

How long does perfection by filing last?

A

5 years

20
Q

Purchase Money Security Interest (PMSI) definition

A

SI that secures payment of whatever portion of a loan actually used to purchase the collateral

21
Q

Elements to perfect by auto perfection

A

ONLY applies to PMSIs in consumer goods

22
Q

Elements to temporary perfection

A

ONLY lasts 20 days for proceeds

23
Q

Credit seller PMSI

A

Seller extends credit to buyer

24
Q

Lender PMSI

A

Advances money to buyer to buy goods

25
Q

When does attachment occur in PMSI?

A

Not until debtor receives possession

26
Q

Priority: Two unperfected secured parties

A

First to attach wins

27
Q

Priority: Unperfected and perfected

A

Perfected prevails

28
Q

Priority: Perfected secured parties

A

First to file or perfection (attachment doesn’t matter)

29
Q

Priority: Two or more perfected parties over investment property and one has control

A

Party with control prevails over all other parties regardless of when and how they perfected

30
Q

Priority: PMSI in Inventory (or consignment)

A

HAS SUPERPRIORITY over all other perfected parties, if

(1) perfected at time debtor gets possession
(2) Sends written notice to any other party who has an interest before debtor receives possession of the inventory

31
Q

Priority: PMSI in Equipment

A

HAS SUPERPRIORITY over all other perfected parties, if

(1) perfected before or within 20 days of debtor receiving possession.

32
Q

Priority: PMSI in consumer goods

A

HAS SUPERPRIORITY over all other perfected parties, if

(1) AUTO PERFECTS - don’t need to do anything.

33
Q

Priority: Chattel Papers and Instruments

A

(1) buys in good faith
(2) gives new value
(3) takes possession
(4) doesn’t know it violated rights of other secured party

34
Q

Priority: Unperfected secured party and buyer/lessee from debtor

A

buyer/lessee prevails as long as they didn’t know of the security interest, gives value and receives delivery of the collateral

35
Q

Priority: Perfected secured party and buyer/lessee from debtor

A

secured party prevails, unless

(1) secured party consents to buyer taking it free of security interest
(2) BIOCOB (unless they knew of security interest)
(3) consumer purchaser from consumer (unless knows)

36
Q

Priority: Unperfected Secured Party vs. Judicial Lien creditor

A

JLC previals before security interest perfected

37
Q

Priority: Perfected Secured Party vs. Judicial Lien Creditor

A

PRIOR perfected security interest has priority over JLC

38
Q

Remember the order of priorities (from most priority to least)

A

(1) BIOCOB who doesn’t know of other security interests
(2) PMSI
(3) Perfected security interest and Judicial liens
(4) Purchaser without notice of unperfected security interest
(5) Unperfected security interest
(6) Debtor

39
Q

What laws govern perfection?

A

Law of the state where debtor located

40
Q

Remedies when debtor defauls

A

(1) Repossess - doens’t require notice but requires no breach of peace
(2) Sell it - creditor must send notice to debtor. Look at sufficiency of advertising, limited markets, clearning or repair, public auction
(3) Strict Foreclosure - SI keeps collateral to satisfy debts. Give notice that SP keeping it and notify other creditors who have an interest in it, get assent from debtor (automatically assents by failure after 20 days).

41
Q

Who is a BIOCOB?

A

a person that buys goods in good faith
without knowledge of other’s rights in the goods
of goods from
a person who deals in good of the kind

Missouri Bar (15 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions