Secured Transactions Introduction

Question 1

Secured Transaction

Answer 1

A transaction intended to create a security interest in personal property or fixtures. It generally involves a sale on credit or a loan in which the lender obtains a lien on some or all of the debtor’s property for payment.

Question 2

Seller Financed Purchase Money Security Interest

Answer 2

Secured party sells debtor collateral on credit and retains a security interest in the item sold

Question 3

Financer financed purchase money security interest

Answer 3

loan to a debtor for the purpose of enabling the debtor to buy specific collateral, which is used by the debtor to acquire the specific collateral, and the creditor takes a security interest in that collateral.

Question 4

Future Advance Clause

Answer 4

a secured party often contemplates future loans to the debtor and wants to secure these future advances in the present security agreement. Therefore, a new security agreement is not needed for future advances.

Question 5

Consumer Goods

Answer 5

Goods that are used or bought for use primarily for personal, family, or household purposes

Question 6

Equipment

Answer 6

Goods used or bought for business. This is the default category for goods.

Question 7

Farm Products

Answer 7

Crops or livestock or supplies used or produced in farming operations or products of crops or livestock in their unmanufactured states if they’re in possession of a debtor engaged in farming operations.

Question 8

Inventory

Answer 8

Goods held by a person who holds them for sale or lease or to be furnished under a services contract or materials used and consumed in business in a short period of time.

Question 9

Instruments

Answer 9

Pieces of paper representing the right to be paid money, like notes or drafts

Question 10

Documents

Answer 10

A document that represents the right to receive goods (bill of lading, warehouse receipt)

Question 11

Chattel paper

Answer 11

record or records which evidence both a monetary obligation and a security interest in or a lease of specific. goods. A record is information that is stored in either a tangible medium (written on paper) or intangible medium (stored electronically). Chattel paper that is stored in an electronic medium is also called electronic chattel paper.

Question 12

Investment Property

Answer 12

Items like stocks, bonds, mutual funds, and brokerage accounts containing such items.

Question 13

Accounts

Answer 13

Includes a right to payment for property sold or services rendered

Question 14

Deposit accounts

Answer 14

an account maintained in a bank. Article 9 only applies to security interests in nonconsumer deposit accounts and account monies that are claimed as proceeds of other collateral

Question 15

commercial tort claims

Answer 15

claim arising in tort with respect to which the claimant is an organization or claimant s an individual and clam arose in claimant’s business and doesn’t include damages for personal injury or the death of another

Question 16

general intangibles

Answer 16

any personal property not coming within scope of other definitions. a general intangible under which the account debtor’s principal obligation is a monetary obligation is a payment intangible

Question 17

Scope of Article 9

Answer 17

Article 9 applies to: a transaction, regardless of form, that creates a security interest in personal property or fixtures by contract; an agricultural lien; a sale of accounts, chattel paper, payment intangibles, or promissory notes; certain consignments; secured sales disguised as leases

Question 18

When is a lease actually a lease and not a disguised sale

Answer 18

If when the parties entered into the transaction it was reasonably likely that the lessor would get the item back when it still had meaningful ecnomic value