UCC Flashcards
UCC Art. 1
Defines basic terminology.
UCC Art. 1: Security Interest
An interest in personal property or fixtures, which secures payment or performance of an obligation.
· Consensual encumbrance on personal property or fixtures usually made in connection w/ a loan
· Protects creditor in cases where the debtor is unable or unwilling to pay a debt when it comes due
· Security interest induces creditor to extend financing
UCC Art. 9: GENERAL
Provides a comprehensive set of rules that, if followed, permit creditors to look to particular personal property of insolvent debtors to help satisfy outstanding obligations.
UCC Art. 1: Debtor
Anyone that has an ownership interest in collateral.
· Also includes particular sellers
–> SUCH AS: Those selling accounts OR promissory notes.
· Does not need to have an obligation of payment or other performance ALTHOUGH DEBTORS CAN BE OBLIGORS.
UCC Art. 1: Obligor
Anyone that owes payment or other performance of an obligation.
· Responsible for paying back the debt incurred from a creditor
–> SUCH AS: Someone guaranteeing a loan, parent co-signing a car loan
· Doesn’t necessarily need to be responsible for the whole obligation
–> May take responsibility for part of a payment or other performance obligation
UCC Art. 1: Creditor
One to whom a debtor or obligor owes payment or performance of an obligation.
· May refer to a:
–> General creditor;
–> Secured creditor;
–> Lien creditor; OR
–> Any representatives of creditors.
UCC Art. 1: Insolvent Debtor
Unwilling or unable, in the ordinary course of business, to meet its financial obligations as they become due
· Someone that cannot pay their debts
· BUT if there’s a BONA FIDE DISPUTE of what is owed
–> AND the debtor ceases to pay for that reason
= is NOT considered insolvent
UCC Art. 1: Money
Actual currency adopted by a domestic of foreign government.
· NOT cryptocurrency b/c hasn’t been adopted as actual currency
UCC Art. 1: Bank
Entity engaged in the business of banking
· Providing financial services
Secured Transactions: GENERAL
The mutually consensual commercial transaction creating a security interest in personal property.
UCC Art. 9: Agricultural Lien
Statutory lien that is non-consensual.
· Statutory lien on farm products.
· Secures payment OR performance of an obligation relating to goods or services provided in connection w/ debtor’s farming operation.
Four Types of Commercial Transactions: UCC Art. 9
- Security Interest in Fixtures
- Agricultural Lien
- Consignments
- Sale of Certain Types of Quasi-Tangible and Intangible Assets
UCC Art. 9: Fixtures
Tangible goods that are intertwined with real property
· So related to particular real property that it makes sense for an interest in them to arise under real property law
UCC Art. 9: Consignments
Marketing procedure whereby an owner of goods (consignor) turns the goods over to a retailer (consignee) for sale to the public.
· Consignor retains control over the terms of the retail sale
· MUST satisfy very specific requirements to qualify as a consignment under Art. 9
UCC Art. 9: Statutory Liens
Liens that arise by operation of law.
· Art. 9 generally doesn’t include statutory liens because liens are NON-CONSENSUAL
UCC Art. 9: Consignments: REQUIREMENTS
- Consignor MUST delivery goods to a merchant NORMALLY DEALING IN GOODS OF THAT KIND under a name other than the name of the person making the delivery.
- Merchant MUST NOT be an auctioneer
–> NOR the merchant generally known by its creditors to be substantially engaged in selling the goods of others. - Each delivery of goods MUST have an aggregated V of $1k OR MORE AT THE TIME OF DELIVERY.
- Must NOT be classified as consumer goods BEFORE delivery.
Collateral
Personal property that is subject to a:
· Security Interest; OR
· Agricultural Lien
