ST big ideas

Question 1

collateral

Answer 1

the property subject to the security interest
A creditor can repossess this property upon the debtor’s default to ensure the debt is paid

Question 2

seller-financed purchase money security interest elements

Answer 2

1. The secured party sells the debtor collateral on credit and
2. retains a security interest in that collateral

Question 3

financer-financed PMSI

Answer 3

1. A loan to the debtor to purchase specific collateral
2. the loan is used to acquire that collateral and
3. the creditor takes a security interest in that specific collateral

Someone other than the seller loans to the debtor

Question 4

after-acquired property clause

Answer 4

a security agreement in which the creditor takes a security interest in the debtor’s present property and property the debtor acquires in the future

Question 5

future advance clause

Answer 5

grant of a security interest in which the debtor’s same collateral is used to secure future loans

Debtor puts a clause in the security contract that says “the car I’m giving you a loan for today is going to be collateral for this loan and for any loan I might make to you in the future”

Question 6

attachment

Answer 6

the steps legally required to create a security interest in collateral effective against the debtor

attachment= security interest created

A creditor is not a secured creditor until attachment

Question 7

perfection

Answer 7

steps necessary to give the secured party an interest in the collateral that is effective against the world (other creditors)

process of giving public notice of the security interest to the world

Question 8

consumer goods

Answer 8

goods used or bought for use, primarily for personal, family, or household purposes

Question 9

equipment goods

Answer 9

A good used or bought for use in business

Question 10

what is the default/catch-all category for goods

Answer 10

equipment

good doesn’t fit the other good definitions -> classify the good as equipment even if it doesn’t fit the def of equipment

Question 11

farm products

Answer 11

goods associated with farming - facts must include a farmer
crops or livestock or supplies used or produced in farming operations
or products of crops or livestock in their unmanufactured state if they are in the possession of a debtor engaged in farming operations

Question 12

inventory

Answer 12

goods held by the debtor who holds them for sale or lease including materials used or consumed in a business in a short period of time (raw materials, consumables)

Question 13

instruments

Answer 13

pieces of paper representing the right to be paid money
intangible/semi-intangible good
ex: promissory notes, drafts, certificates of deposit, checks

Question 14

documents

Answer 14

intangible/semi-intangible good
doc that represents the right to receive goods (warehouse receipt)

Question 15

chattel paper

Answer 15

record or records that evidence:
- monetary obligation (usually a promissory note) AND
- a security interest in or a lease of specific goods (usually a security agreement)

Question 16

record

Answer 16

information that is stored in a tangible medium or an intangible medium

Question 17

electronic chattel paper

Answer 17

Chattel paper that is stored in an electronic medium

Question 18

investment property

Answer 18

stocks, bonds, mutual funds

Question 19

accounts

Answer 19

a right to payment for property sold or services rendered
(account receivable)

NOT bank accounts

Question 20

deposit accounts

Answer 20

a non-consumer account maintained with a bank
non-consumer= business bank account
if you just see “bank account” assume a deposit account

Question 21

commerical tort claim

Answer 21

basically a lawsuit
claim arising in tort to which
1. the claimant is an organization (partnership or corp) or
2. claimaint is an individual, the claim arose of out the claimant’s business or profession, and the claim does not include dmaages for personal injuryor the death of an individual

Question 22

Three requirements for attachment

Answer 22

1. security agreement
2. value given
3. debtor has rights in the collateral

three requirements for creating a security interest

Question 23

requirements for a written security agreement

for attachment

Answer 23

1. a written record that shows an intent to create a security interest
2. that is authenticated by the debtor (signed or by any means that would show the present intent to authenticate the record)
3. and contains a description of the collateral that reasonably identifies the collateral

Question 24

three ways to show evidence of a security agreement

Answer 24

1. the creditor takes possession of the collateral (oral agreements only)
2. the parties create an authenticated security agreement or
3. the creditor takes control of the nonconsumer deposit accounts, electronic chattel paper, and investment property

Question 25

“value given” requirement of attachment

Answer 25

exchange of value between the creditor and debtor (each gives something)
* every debtor gives value by promising (if implicitly) to repay the loan
* consider whether the creditor gave value to the debtor

Question 26

definition of “value given” for attachment

Answer 26

any consideration sufficient to support a simple contract is enough
BUT even past consideration is enough in article 9

Question 27

proceeds

Answer 27

whatever is recceived upon the sale, exchange, collection, or other disposition of collateral or proceeds of the collateral

Question 28

identifiable

in terms of proceeds

Answer 28

the secured creditor can prove that the proceeds can be traced back to the creditor’s original collateral

Question 29

huge idea about proceeds and secured creditors

Answer 29

secured creditors automatically get a security interest in identifiable proceeds

Question 30

when has a security interest been perfected?

Answer 30

1. when it has attached AND
2. one of the methods of perfection has occurred

order is irrelevant

Question 31

methods of perfecting a security interest

Answer 31

1. automatic perfection
2. possession
3. control
4. notation of the lien on certificate of title
5. filing a financing statement

Question 32

situations in which automatic perfection occurs

Answer 32

1. PMSI in **consumer goods **(either PMSI)
2. Secured party takes physical possession of the collateral

consumer goods do not include motor vehicles (see notation on certificate of title)

Question 33

t

when is perfection by physical possession impossible?

Answer 33

When the goods are general intangibles, accounts, electronic chattel papers

Question 34

most common type of collateral that can be perfected by possession

Answer 34

goods (any type)

Question 35

what is the only way to perfect a security interest in money?

Answer 35

posession

Question 36

methods of perfection by control

Answer 36

1. automatic control by the bank maintaining the nonconsumer deposit account
2. putting the deposit account in the secured party’s name
3. control agreement

Question 37

what is the only method for perfection of non-consumer (business bank account) deposit accounts?

Answer 37

perfection by control

Question 38

control agreement

Answer 38

method of perfection by control in which a contract is created between the debtor, creditor, and the bank where the bank account is that gives the bank account permission to give the creditor the debtor’s bank account upon default