Secured Transactions Flashcards
fixture
tangible goods intertwined with real property
Ex: furnaces, ac systems, elevators, and escalators
inventory
Goods (not including farm products) that are leased, held for sale or lease, or furnished by a person under a contract of service
obligor
owes payment or other performance
consumer goods
goods used primarily for personal, family or household uses.
Goods consumers buy and use for own consumption
equipment
Everything not in consumer goods, farm products, or inventory
account
right to payment of a monetary obligation
deposit account
bank account (checking, savings, demand, CD)
insolvent
unwilling or unable, in the course of ordinary business to meet financial obligations as they become due
Exception: bona fide dispute
letter of credit right
a right to payment or performance manifested in a written or electronic record
- bank letterhead
- line of credit
instrument
A writing evidencing a right to payment of a monetary obligation
(Ex: Promissory Note)
chattel paper
A writing evidencing a right to payment of a monetary obligation plus a security interest in specific goods
Can be tangible or electronic
document
a record or receipt of title
Article 9 does not apply to
1) Federal statutes that preempt Article 9
2) landlord’s liens
3) state and federal statutory liens (tax liens)
4) interests in real property
Scope of Article 9
All security interests by mutual agreement and 1 exception to statutory liens
Mutual agreement interest include:
1) security interests in fixtures
2) consignments
3) types of quasi-tangible and intangible assets (accounts, chattel paper, payment intangibles, & promissory notes)
Exception to statutory liens:
1) agricultural liens
Specific requirement to qualify as consignment under Article 9
3 basic categories of requirements governing:
(1) the parties
(2) the goods, and
(3) the existence of a security interest.
First, for the parties, there must be a person who delivers goods to a merchant for sale. That merchant must be one that: (1) deals in goods of that kind under a name other than the name of the person making the delivery, (2) is not an auctioneer, and (3) is not generally known by its creditors to be substantially engaged in selling the goods of others.
Second, to be a qualifying consignment, each delivery of goods both must be worth $1,000 or more at the time of delivery (in the aggregate) and must not be consumer goods immediately before delivery.
Third, the transaction must not create a security interest that secures an obligation.
collateral
personal property that is subject to security interest or an agricultural lien
farm products
Goods used or produced by a farmer
Ex: crops, aquatic goods, livestock & supplies & product of crops or livestock
Quasi-tangible & intangible assets
1) accounts
2) chattel paper
3) payment intangibles
4) promissory notes
investment property
stocks & bonds
Types of collateral
1) Goods - all things move able at the time security interest attaches to the goods A) consumer goods B) Farm Products C) Inventory D) Equipment
2) Quasi-tangible property - paper recording obligations or value A) instruments B) Chattel paper C) Documents D) Investment Property E) Letter of credit rights
3) Intangible property
Types of collateral
1) Goods - all things move able at the time security interest attaches to the goods A) consumer goods B) Farm Products C) Inventory D) Equipment
2) Quasi-tangible property - paper recording obligations or value A) instruments B) Chattel paper C) Documents D) Investment Property E) Letter of credit rights
3) Intangible property - property that is impossible to touch, move, or be made tangible by recording it on paper A) Accounts B) Deposit Accounts C) Commercial Tort Claims D) General Intangibles
Commercial tort claims
1) Claimant bust be either an individual or organization
2) Claim is tortious and tied to claimant’s business or profession
General intangibles
“Catch - all
Any personal property that isn’t properly categorized as another quasi-tangible or intangible property
Attachment
security interest enforceable against debtor
Requirements:
1) Creditor must provide value to debtor
2) Debtor must have rights to collateral
3) Debtor must authenticate agreement granting rights
A) sign (physical or electronic (SOF)
4) Agreement must reasonably describe collateral
