The Security Interest and Attachment

Question 1

Security Agreement Requirements

4

Answer 1

1. must be in writing
2. debtor’s affirmative granting of security interest
3. Description of the collateral
4. Authenticated by the debtor (signed)

Question 2

What is a security agreement by Pledge?

Answer 2

When the debtor gives possession of the collateral to the secured party

Question 3

When is the only time that an oral security agreement is valid?

Answer 3

When it is a Pledge (possession given to secured party)

Question 4

Attachment is

Answer 4

the process by which the security interest becomes valid on the collateral

Question 5

The security interest attaches when

3

Answer 5

1. The secured party must give value
2. Debtor must have rights in the collateral
3. Must authenticate a security agreement (signed) sufficiently describing the collateral

Question 6

A secured party gives value when?

Answer 6

making a loan of money

Question 7

A description of collateral is deemed sufficient if:

Answer 7

1. specifically identify the collateral
2. UCC type (e.g. all inventory)
   3.

Question 8

Granting rights over all assets in a security agreement as collateral

Answer 8

super generic, too vague, does not fulfill description requirement

Question 9

When will a security agreement attach to after acquired property?
(2)

Answer 9

1. When the security agreement specifically provides for it.
2. A security agreement specifying an interest in “inventory” or “accounts receivable” creates an interest in after-acquired collateral

Question 10

a security interest in after-acquired consumer goods requires that debtor acquire rights in the consumer goods within

Answer 10

presumptively void

-can’t give after acquired consumer goods you acquire

Question 11

How to secure future advances from creditor?

Answer 11

A security agreement may also provide that collateral secures future advances.

Question 12

What is a creditor’s security interest in proceeds?

Answer 12

When you sell/trade collateral, the security interest automatically attaches to proceeds

Question 13

If a debtor sells collateral, what happens to the creditor’s security interest in the collateral?
(2)

Answer 13

Get’s attachment over proceeds
+
A secured party’s security interest in collateral will continue regardless of a sale, lease, or other disposition of the collateral, unless the secured party authorized its disposition free of the security interest.