Secured Transactions Flashcards
Collateral
[Intro to Secured Transaction and Types of Goods – Terminology]
Collateral: the property subject to a security interest or agricultural lien.
Debtor
[Intro to Secured Transaction and Types of Goods – Terminology]
Debtor: a person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor.
Obligor
[Intro to Secured Transaction and Types of Goods – Terminology]
Obligor: a person that, with respect to an obligation secured by a security interest in or an agricultural lien on the collateral, owes payment or other performance of the obligation.
Secured Party
[Intro to Secured Transaction and Types of Goods – Terminology]
Secured Party: a person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding.
Security Agreement
[Intro to Secured Transaction and Types of Goods – Terminology]
Security Agreement: an agreement that creates or provides for a security interest
Scope of Article 9
[Intro to Secured Transaction and Types of Goods – Terminology]
Applies to a transaction, regardless of its form, that creates a security interests in personal property or fixtures by contract
Types of Collateral
[Intro to Secured Transaction and Types of Goods – Terminology]
Goods, Instruments, Documents, Chattel Papers, Deposit Accounts, Commercial Tort Claims, “Intangibles,” Investment Property
Types of Goods
[Intro to Secured Transaction and Types of Goods – Terminology]
Consumer Goods, Farm Products, Inventory, Equipment
Definition of Goods
[Intro to Secured Transaction and Types of Goods – Terminology]
All things that are movable when a security interest attaches, including:
- Fixtures
- Standing timber that is to be cut and removed under a conveyance or contract for sale
- The unborn young of animals
- Crops grown, growing, or to be grown, even if the crops are produced on trees, vines, or bushes
- Manufactured homes
- Computer programs under certain conditions
Definition of Consumer Goods
[Intro to Secured Transaction and Types of Goods – Terminology]
Goods that are used or bought for use primarily for personal, family, or household purposes
Definition of Farm Products
[Intro to Secured Transaction and Types of Goods – Terminology]
Goods, other than standing timber, with which the debtor is engaged in a farming operation and which are:
1. Crops grown, growing, or to be grown, including: crops produced on trees, vines and bushes; and aquatic goods produced in aquacultural operations
2. Livestock, born or unborn
3. Supplies used or produced in a farming operation or
Products of crops or livestock in their unmanufactured states
Definition of Farming Operation
[Intro to Secured Transaction and Types of Goods – Terminology]
Raising, cultivating, propagating, fattening, grazing, or any other farming, livestock, or aquacultural operation
Definition of Inventory
I[ntro to Secured Transaction and Types of Goods – Terminology]
Goods, other than farm products, which
- Are leased by a person as lessor;
- Are held by a person for sale or lease or to be furnished under a contract of service;
- Are furnished by a person under a contract of service; or
- Consist of raw materials, work in process, or materials used or consumed in a business
Definition of Equipment
[Intro to Secured Transaction and Types of Goods – Terminology]
Goods other than inventory, farm products, or consumer goods (catchall category)
Distinguishing between when goods are inventory or equipment with businesses
[Intro to Secured Transaction and Types of Goods – Terminology]
Goods used in a business are equipment if they have fixed assets or have as identifiable units a relatively long period of use. They are inventory, even though not held for sale or lease, if they are used up or consumed in a short period of time in producing a product or providing a service.
Types of Intangibles & Quasi-Intangibles
[Intangibles, Quasi-Intangibles, & Types of Investment Property]
Accounts General Intangibles Documents Chattel Paper Deposit Accounts Commercial Tort Claims
Types of Investment Property – Investment Property Definition
[Intangibles, Quasi-Intangibles, & Types of Investment Property]
“Investment Property” means a security, whether certificated or uncertificated, security entitlement, securities account, or commodities account.
Types of Investment Property – Security Definition
[Intangibles, Quasi-Intangibles, & Types of Investment Property]
“Security,” except as otherwise provided, means an obligation of an issuer or a share, participation, or other interest in an issuer or in property or an enterprise of an issuer: (i) which is represented by a security certificate; (ii) which is one of a class or series or by its terms is divisible into a class or series of shares, participations, interests, or obligations; and (iii) which: (A) is, or is of a type, dealt in or traded on securities exchanges or securities markets; or (B) is a medium for investment and expressly provides that it is a security governed by this Article.
Types of Investment Property – Security Entitlement Definition
[Intangibles, Quasi-Intangibles, & Types of Investment Property]
“Security entitlement” means the rights and property interest of an entitlement holder with respect to a final asset specified in Part 5 of Article 8.
Types of Investment Property – Securities Account Definition
[Intangibles, Quasi-Intangibles, & Types of Investment Property]
“Securities Account” means an account to which a financial asset is or may be credited in accordance with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset.
Types of Investment Property – Commodity Contract Definition
[Intangibles, Quasi-Intangibles, & Types of Investment Property]
“Commodity contract” means a commodity futures contract, an option on a commodity futures contract, a commodity option, or another contract if the contract or option is: (A) traded on or subject to the rules of a board of trade that has been designated as a contract market for such a contract pursuant to federal commodities laws; or (B) traded on a foreign commodity board of trade, exchange, or market, and is carried on the books of a commodity intermediary for a commodity customer.
Types of Investment Property – Commodity Account Definition
[Intangibles, Quasi-Intangibles, & Types of Investment Property]
“Commodity account” means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer.
Three factors for attachment
[The Security Agreement & “Value” Given and Debtors Rights In the Collateral]
(1) value has been given;
(2) the debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party; and
(3) one of the following conditions is met: (A) debtor has authenticated a security agreement that provides a description of the collateral, (B) the collateral is not a certificated security and is in the possession of the secured party, (C) the collateral is a certificated security in registered form and the security certificate has been delivered to the secured party, or (D) the collateral is deposit accounts, electronic chattel paper, investment property, or letter-of-credit rights, and the secured party has control
Key Terms – Signed
[The Security Agreement & “Value” Given and Debtors Rights In the Collateral]
The term signed includes using any symbol executed or adopted with present intention to adopt or accept a writing.
Key Terms – Writing
[The Security Agreement & “Value” Given and Debtors Rights In the Collateral]
Writing includes printing, typewriting, or any other intentional reduction to tangible form. Written has a corresponding meaning.
Key Terms – Record
[The Security Agreement & “Value” Given and Debtors Rights In the Collateral]
Record means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.
Key Terms – Authenticate
[The Security Agreement & “Value” Given and Debtors Rights In the Collateral]
Authenticate means (A) to sign; or (B) with the present intent to adopt or accept a record, to attach to or logically associate with the record an electronic sound, symbol, or process.
Key Terms – Send
[The Security Agreement & “Value” Given and Debtors Rights In the Collateral]
Send, in connection with a record or notification, means:
(A) to deposit in the mail, deliver for transmission, or transmit by any other usual means of communication, with postage or cost of transmission provided for, addressed to any address reasonable under the circumstances; or
(B) to cause the record or notification to be received within the time that it would have been received if property sent under subparagraph (A).
Reasonable Identification of Collateral
[The Security Agreement & “Value” Given and Debtors Rights In the Collateral]
A description of collateral reasonably identifies the collateral by:
(1) specific listing;
(2) category;
(3) a type of collateral defined in the UCC
(4) quantity;
(5) computational or allocational formula or procedure; or
(6) any other method if the identity of the collateral is objectively determinable
Meaning of “giving value”
[The Security Agreement & “Value” Given and Debtors Rights In the Collateral]
A person gives value for rights if the person acquires them: (1) in return for a binding commitment to extend credit or for the extension of immediately available credent, whether or not drawn upon; (2) as security for, or in total or partial satisfaction of, a preexisting claim; (3) by accepting delivery under a preexisting contract for purchase; or (4) in return for any consideration sufficient to support a simple contract.
Two Version of PMSI
[Introduction to the Purchase Money Security Interest & Introduction to Perfection, Perfection by Filing, and Where to File]
Version 1: Debtor acquires rights in the property that is itself used as collateral.
Version 2: Debtor acquires a loan used for the express purpose of buying some item that is used as the collateral for the loan, and the loan is actually used for that purpose.
Close Nexus of PMSI
[Introduction to the Purchase Money Security Interest & Introduction to Perfection, Perfection by Filing, and Where to File]
The concept of PMSI requires a close nexus between the acquisition of collateral and the secured obligation. Thus, a security interest does not qualify as a PMSI if a debtor acquires property on unsecured credit and subsequently creates the security interest to secure the purchase price.
Perfection of Security Interest
[Introduction to the Purchase Money Security Interest & Introduction to Perfection, Perfection by Filing, and Where to File]
A security interest is perfected if it has attached and all of the applicable requirements for perfection have been satisfied. A security interest is perfected when it attaches if the applicable requirements are satisfied before the security interest attaches.
Methods of Perfection
[Introduction to the Purchase Money Security Interest & Introduction to Perfection, Perfection by Filing, and Where to File]
- Filling
- Possession of the collateral by the secured party
- Control
- Automatic Perfection
Law governing perfection
[Introduction to the Purchase Money Security Interest & Introduction to Perfection, Perfection by Filing, and Where to File]
While a debtor is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral
Where to file for perfection
[Introduction to the Purchase Money Security Interest & Introduction to Perfection, Perfection by Filing, and Where to File]
A debtor who is an individual is located at the individual’s principal residence
A debtor that is an organization and has only one place of business is located at its place of business
A debtor that is an organization and has more than one place of business is located at its chief executive office
A registered organization that is organized under the law of a State is located in that State
