UCC Article 9 - Introduction and creation of security interests

Question 1

Define “collateral.”

Answer 1

Subject of the security interest

Question 2

Define “intangibles.”

Answer 2

Any personal property other than goods, accounts, chattel paper, documents, instruments, money, deposit accounts, letters of credit, and investment property Examples: oil or book royalties, patents, copyrights

Question 3

Describe what happens to a security interest when a debtor has signed and executed a security agreement, but the collateral has not been shipped to the debtor from the seller

Answer 3

The security interest does not attach until the debtor has an interest in the goods (i.e., until identification has occurred)

Question 4

Describe when a creditor can have a valid oral security agreement

Answer 4

When the creditor is in possession of the collateral

Question 5

Define “security interest.”

Answer 5

The interest in the collateral that secures payment or performance of an obligation

Question 6

Describe the criteria necessary for a security interest attachment when the collateral is not in possession of the secured party.

Answer 6

1. )Written or authenticated agreement describing collateral, signed or authenticated by the debtor.
2. )Secured party must give the debtor something of value.
3. )The debtor must have rights in the collateral

Question 7

What type of property is subject to a security interest?

Answer 7

1. )Personal property
2. )Fixtures
3. )Sales of accounts
4. )Chattel paper
5. )Promissory notes
6. )General intangibles
7. )Commercial tort claims

Question 8

Define “chattel paper.”

Answer 8

Writing(s) that evidence both a security interest in a good (or software) and a monetary obligation to pay - example of a security agreement

Question 9

Define “secured party.”

Answer 9

The creditor who has a security interest in the debtor’s collateral

Question 10

Define “debtor.”

Answer 10

The person who owes payment

Question 11

Define “security agreement.”

Answer 11

Agreement that creates a security interest

Question 12

Define “attachment.”

Answer 12

It is the time when security interest becomes valid. It requires a security agreement and a debtor with interest in the property, and a creditor who gives value.