UCC 9 & 3

Question 1

Attachment (Elements)

Answer 1

1. a security agreement (document which evidences an intent to create a security interest);
2. value given
3. debtor has rights to collateral

The “security agreement” requirement can be met by way of a “pledge.”

Question 2

Methods of Perfection

Answer 2

1. Filing a UCC Financing Statement
2. Obtaining possession (will work for most tangible property)
3. Obtaining control (only words for bank accounts and investment accounts)
4. Automatic (PMSI in consumer goods ONLY)
5. Temporary (after-acquired)

Question 3

Accessions (what are they)

Answer 3

Goods which become united with other goods but which “do not lose their original identity.” (Exception: accessions to vehicles will become part of the vehicle and will be subject to valid security interest noted on certificate of title).

Question 4

Fixtures (what are they)

Answer 4

Goods which become united with real property such that they become part of an interest in real property.

Question 5

Who has priority to accessions?

Answer 5

Generally, first creditor to file or perfect (and PMSI superpriority rules apply).

Question 6

Who has priority to fixtures?

Answer 6

Generally, first to file a fixture statement or record against the real property.

Question 7

What is a Holder in Due Course?

Answer 7

A bona fide purchaser of a negotiation instrument for value, in good faith, and without notice of any defenses or claims to the property.

Question 8

What is a Holder?

Answer 8

One who: 1) has possession of a negotiate instrument (e.g., check, money order, cashiers check, promissory note) and 2) has the right to enforce the payment obligation.

Question 9

What is a Buyer in the Ordinary Course of Business (BOCB)?

Answer 9

A bona fide purchaser of goods in the ordinary course of business from a seller who deals in goods of the kind for value, in good faith and without notice of any other security interests or claims to the goods.

Question 10

What is “superpriority?”

Answer 10

A creditor whose security interest has priority over a prior security interest?

Question 11

How do you obtain “superpriority” over equipment?

Answer 11

Creditor must perfect by filing a financing statement within 20 days of the date the debtor acquires the equipment.

Question 12

How do you obtain “superpriority” over inventory?

Answer 12

Creditor must perfect by: 1) conducting a UCC search for all other creditors; 2) providing notice of intent to take a PMSI to all other creditors and 3) filing a UCC statement. All three MUST occur prior to the debtor acquiring possession on the new shipment of inventory, or the creditor will lose priority.

Question 13

How do you obtain “superpriority” over investment property?

Answer 13

Obtain control (having creditor’s name added to the title).

Question 14

Framework of analysis for UCC 9 problems

Answer 14

1. Categorize the collateral
2. Has there been an ATTACHMENT of a security interest?
3. What is the SCOPE of the security interest?
4. Has the security interest been PERFECTED?
5. Which creditor has priority (PMSI)?
6. Remedies available?

Question 15

Classifications of tangible property?

Answer 15

(“FFICE”)

1. Farm Products; 2) Fixtures; 3) inventory; 4) equipment; 5) consumer goods.

Question 16

Classifications of intangible property?

Answer 16

1. negotiable instruments; 2) investment property; 3) deposit accounts; 4) commercial documents; 5) accounts receivable; 6) chattel paper; 7) commercial tort claims; 8) general intangibles.

Question 17

General Priority Rule?

Answer 17

First to file (financing statement) or perfect

*do not confuse “filing” with “attachment”

Question 18

Name the five transfer warranties

Answer 18

1. right to enforce (good title)
2. all signatures authorized
3. document has not been altered
4. no known defenses to enforcement
5. no known insolvency of maker or drawer

Question 19

Name the two presentment warranties

Answer 19

1. right to enforce (good title)
2. all authorized signatures obtained
3. no alteration of instrument

Question 20

Name all Real Defenses (to Enforcement)

Answer 20

(“DAFFIDILS”)
1. Duress; 2) Alteration; 3) Fraud in the Factum; 4) Forgery; 5) Infancy; 6) Discharge in Bankruptcy; 7) Illegality; 8) Lack of capacity; 9) statute of limitations.