Security Interests & Agreements Flashcards
Does UCC Article 9 apply to Real Property transactions?
No (e.g., mortgages)
Four Types of Tangible Goods
Farming Goods
Consumer Goods
Inventory
Equipment
Farming Goods
items used/produced in farming (e.g., crops)
Consumer Goods
items used for personal, household uses
Inventory
goods kept for sale or lease
Equipment
catchall for tangible items (e.g., factory machinery)
5 Kinds of Intangible Goods
Instruments Documents Chattel Paper Accounts General Intangibles
Instruments
writings representing the right to be paid money (e.g., promissory notes, checks)
*intangible good
Documents
writings representing the right to receive goods (e.g., bills of lading, receipts)
*intangible good
Chattel Paper
record evidencing an obligation and SI in goods or a lease of goods (e.g., promissory note and a security agreement)
*intangible good
Accounts
A right to payment not evidenced by an instrument or chattel (e.g., account receivable)
*intangible good
General Intangible
e. g., patent rights, software
* intangible good
Consignments
a transaction where an owner of goods/cosignor delivers goods to a merchant for the purpose of sale
When can a consignment be considered a SI?
if the inventory consignee is selling on consignment is difficult to distinguish from the inventory consignee actually owns
How is a SI created?
by contract (security agreement) between debtor and creditor
What requirements must a security agreement satisfy?
writing
signed by debtor
describes the collateral
authenticated
What is the legal affect of attachment of a SI?
the SI becomes secured, meaning creditor has a right to take the collateral if the debtor defaults
Requirements for Attachment
Valid Security Agreement
Secured Party gives value
Debtor has rights in the collateral
When does a debtor have “rights in the collateral”?
ownership or a possessory interest is generally sufficient
When does a creditor “give value”?
Almost any consideration is sufficient (e.g., a loan, delivery in exchange for a SI)
What is an “after-acquired property clause”?
a provision in a security agreement that gives the creditor a SI in property acquired by debtor using the funds loaned pursuant to the security agreement
What is a “future advance(s)”?
SA may contemplate future loans/advances from creditor to debtor based on debtor’s present collateral or collateral to be acquired in the future
