UCC Secured Transactions

Question 1

Scope of Article 9

Answer 1

“Article 9 of the UCC governs any transaction regardless of its form that creates a security interest. This includes security interests in both tangible and intangible property.”

Question 2

Attachment

Answer 2

Attachment gives the creditor rights against the debtor and creates a secured transaction. Attachment requires: (1) value given from the creditor to the debtor; (2) debtor must have rights in the collateral; and (3) there must be a binding security agreement. To create a binding security agreement, the agreement must: (1) be authenticated, typically through a signature; (2) evidence an intent to enter into an agreement; and (3) sufficiently describe the collateral.”

Question 3

Perfection

Answer 3

Perfection gives a creditor the right in the collateral against other creditors. Perfection can occur through filing a financing statement,
possession (tangible)/control(intangible), or automatic perfection (PMSI)

Question 4

Purchase Money Security Interest

Answer 4

is a security interest in goods where the goods are given as collateral for an obligation the debtor incurred to acquire the goods

Question 5

Perfected vs Unperfected Interests

Answer 5

Unperfected vs Unperfected: attached first
Perfected takes priority over Unpefected

Question 6

Multiple Perfected Creditors

Answer 6

“As between two perfected interests, generally the rule is that the first to file or perfect has the superior interest. However, purchase money security interests (i.e., where the seller is also the creditor who takes interest in the collateral) have priority over all other perfected interests. For equipment, perfection must occur within 20 days of the debtor receiving possession

Question 7

Buyers in the Ordinary Course of Biz

Answer 7

1. buy the goods in good faith
2. Without knowledge the sale violates the security interest of someone else
3. From a seller that is in the business of selling goods of that kind

Question 8

Types of Collateral

Answer 8

Article 9 classifies goods into 4 categories: consumer goods, inventory, farm products and equipment. Consumer goods are goods primarily used for family, personal, and/or household purposes. Inventory are goods for sale or lease in connection with business operations. Farm products are goods used for farming operations. Equipment is any good that is not a consumer good, inventory, or farm product.

Question 9

Right to Dispose of Collateral

Answer 9

After default and repossession, a secured party may sell, license, or otherwise dispose of any or all of the collateral. Disposal may occur by public or private sale. However, before disposing of the collateral the secured party must send notice to the debtor and any secondary obligor.

Question 10

Debtor’s Rights

Answer 10

They can (1) give up the collateral to the secured party, (2) keep the collateral by fully paying the debt (called redemption), or (3) if it’s consumer goods and they’ve paid 60% of it the loan they can give the secured party the goods back to sell in a “reasonable manner” and hope that covers the rest of the loan