Themis Essay 893 Flashcards
A security interest is enforceable if
it has been attached to the collateral.
Three conditions must co-exist for the security interest to attach to the collateral:
(i) the secured party must give value (e.g., providing a loan); (ii) the debtor must have rights in the collateral; and (iii) the debtor must have authenticated a security agreement that describes the collateral, or the secured party must have possession or control of the collateral pursuant to the security agreement.
A security interest may apply to the collateral the debtor owns at the time
the security interest is granted and also to collateral the debtor acquires in the future.
No new security agreement is necessary when the collateral is acquired later if
the original security agreement provides that it applies to after-acquired collateral.
Equipment consists of
goods that are not consumer goods, farm products, or inventory.
There are four ways by which a secured party can perfect a security interest:
(i) filing a financing statement; (ii) possession of the collateral; (iii) control over the collateral; and (iv) automatic perfection.
Article 9 sets out rules governing the
priorities of conflicting interests in collateral.
Unlike in bankruptcy, which provides a pro rata share to all creditors, Article 9
prioritizes the claims and pays them in order.
Where there are two or more perfected secured parties with rights in the same collateral,
the first to file or perfect has priority.
A Purchase Money Security Interest (PMSI) is a special type of security interest that may be accorded special rules with respect to two types of collateral:
(i) goods, including fixtures, and (ii) software.
A PMSI exists in goods that:
(i) a secured party gave value (e.g., made a loan) to the debtor to enable the debtor to acquire rights in or use the goods, and the value given was so used; and (ii) a secured party sold the goods to the debtor, and the debtor incurs an obligation to pay the secured party all or part of the purchase price (i.e., a sale of goods on credit).
A PMSI in goods other than inventory or livestock prevails over all the other security interests in the collateral, even if they were previously perfected, if
the secured party perfects before or within 20 days after the debtor receives possession of the collateral.
Knowledge by the PMSI secured party of a conflicting prior security interest does not
prevent the priority of the PMSI over the earlier perfected security interest.
A general creditor is one who has a claim, including a judgment, but who
has no lien or security interest with respect to the property in question (i.e., the collateral).
A general creditor has no
interest to assert under Article 9, and therefore no claim to any particular property owned by the debtor.
