UCC Secured Transactions

Question 1

Scope of Article 9

Answer 1

Applies to any transaction intended to create a security interest in personal property or fixtures

Question 2

Attachment of the Security Interest

Answer 2

a. There is a valid security agreement memorializing the security interest, (reasonable description of collateral and intent to authenticate writing) b. the debtor possesses rights in collateral; AND c. the creditor extends value to the debtor. (Almost any consideration will suffice)

Question 3

Perfection of the Security Interest

Answer 3

Once SI attaches, it’s enforceable. Perfection only enhances rights to collateral
Three ways:
1. Filing: Filing of a financing statement with state that includes debtor’s name, secured party’s name, adequate description of collateral and a filing fee

2. Taking Possession: Perfects negotiable documents goods, instruments or money
3. Automatic Perfection: a. SIs automatically perfected when they attach - purchase money SI in consumer goods
   b. An assignment of accounts which does not by itself or in conjunction with other assignmts to the same assignee transfer a significant part of assignor’s outstanding accounts

Question 4

Purchase Money Security Interest

Answer 4

1. A SI held by seller of collateral to secure payment of all or part of price; OR
2. A SI of a person that gives value to debtor so debtor may acquire rights in or the use of collateral

*Generally have priority if properly executed

Question 5

Perfected vs. Unperfected Interests

Answer 5

A perfected SI has priority over a conflicting unperfected SI in the same collateral (even if unperfected SI is a PM SI in inventory)

Question 6

Multiple Perfected Creditors

Answer 6

1. Multiple perfected creditors: First to file obtains priority (even if they file before the perfect)
2. Collateral not subject to state filing system or cannot be filed - first to perfect obtains priority
3. Knowledge of prior unperfected interest will not bar a secured party from filing first to obtain priority

Question 7

Buyers in the Ordinary Course of Biz

Answer 7

Protected even though their interest in the prop is created after the attachment or perfection of a security interest. They take collateral free of SI created by the seller.

Must be:
a. In good faith and without knowledge that sale to him is in violation of SI of third party

b. Buys in the ordinary course from a person in the business of selling goods of that kind

Question 8

Types of Collateral

Answer 8

*Collateral extends to identifiable proceeds from prop serving as collateral.
1. Goods - movable
2. Consumer Goods - goods for personal or household use
3. Inventory - good kept for sale or lease
4. Accounts - Covers any right to payment of a monetary obligstion, whether earned by perf or not, for prop that has been or is to be sold

Question 9

Right to Dispose of Collateral

Answer 9

Upon default, secured party may sell, lease, license or otherwise dispose of collateral in its present condition or in any commercially reasonable manner. Types:
1. Non Judicial Forclosure
2. Strict Forclosure

Question 10

Debtor’s Rights

Answer 10

When creditor makes non-complying disposition of collateral under Article 9, debtor can:
1. Recover actual damages;
2. Recover statutory damages; OR
3. Be subject to judicially mandated disposition of collateral

Question 11

Security Interest

Answer 11

Gives creditor the right to sell a debtor’s property to satisfy a debt