SECURED TRANSACTIONS Flashcards
Security Interest
Under UCC, a security interest is an interest in personal property or fixtures that secures payment or performance or an obligation.
Debtor
A debtor is a person who has interest, other than a security interest or lien, in the collateral, whether or not the person is an obligor; a debtor may be a seller of accounts, chattel paper, payment intangibles, or promissory notes; or a consignee.
Obligor
An obligor is a person who is responsible in whole or in part for payment or other performance of an obligation secured by a security interest.
Goods
Goods includes all things that are movable at the time the security interest attaches, or that are fixtures, including (1) consumer goods, (2) farm products, and (3) inventory, and (4) equipment. “Goods” does not include:(1) money, (2) minerals before extraction, (3) and other categories of intangible collateral.
Consumer Goods
Consumer goods are those primarily used or bought for use for personal, family, or household purposes.
Inventory
Inventory is goods to be sold, leased, or furnished under contracts of service (including merchandise held by a dealer, merchant or wholesaler for resale, and the appliances of the local rent-all shop), raw materials to be processed or those being processed, such as cotton or wool being made into yarn and the yarn into cloth, and materials to be used or consumed in a business, such as envelopes and pens, by-products of the manufacturing process, and fuels.
Farm Products
Farm products are crops, livestock, or supplies used or produced in farming operations, and products of crops or livestock in their unmanufactured states if they are in the possession of a debtor engaged in raising, fattening, grazing or other farming operations.
Purchase Money Security Interest (PMSI)
Under UCC Article 9, a purchase money security interest is a loan or extension of credit for the purpose of allowing the debtor to purchase the particular property in which he gives the security interest, which creates a security interest with priority over all other security interest in the same goods.
Lien Creditors
Lien creditors are persons who acquire a lien on the collateral by attachment, levy, or similar methods.
General Creditors
General Creditors are creditors that do not have liens on the property.
Transferees
Transferees are persons who obtain full title to the goods by purchasing the collateral form the debtor. The main issues here is whether the transferee takes the title subject to the security interest.
Buyers in the Ordinary Course of Business
A buyer in the ordinary course of business is a person who, in good faith and without knowledge that the sale to him is in violation of the ownership rights or security interest of a third party in the goods, buys in the ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker.
