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52 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Priority of liens are determined in this order, with this pnemonic:
U Lien Jdgm Sec SPL St B or PUJ S SP Stat Buy |
Unsecured creditor
Judgment Lien creditor Secured Secured and perfected In order of perf Stat Lien Buyer in ordinary course |
U
judL Sec SPL Order perf Stat Buyer |
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Goods, what are they for purposes of Art 9
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Goods, movables or fixtures including planted crops.
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Wby is it important to classify secured transactions correctly?
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Because otherwise secured interest may not become perfected.
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How do we define consumer goods for Art. 9 purposes?
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Something used by debtor for household family or personal reasons.
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How do we define farm products for the purpose of Art. 9
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Livestock and products used in farming and the unprocessed products of both (manure not in a bag)
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What is inventory for purposes of Art. 9?
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Inventory is those items held in the normal course of business or held for sale
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What is the catch all category of those things that can be the subject of a secured transaction?
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Equipment
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What are instruments for the purpose of the UCC?
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Negotiable or non-negotiable promises to pay money including checks stocks or bonds.
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What are documents for the purpose of Art 9?
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Are bills of lading and warehouse receipts.
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What is chattel paper?
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Those things that evidence an obligation to pay and a security interest.
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What are accounts for the purpose of Art. 9?
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Any obligation to pay not evidenced by a writing
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What is a security agreement?
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A writing which evidences a security agreement which is
in writing is signed by the debtor describes the collateral. |
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When does security interest attach?
SCD |
Security agreement
Creditor gives value Debtor has rights in property that is collateral |
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What does perfection affect?
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PRIORITIES. Without perfection creditor still has interest in the property, just not a prioritized interest.
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How is secured interest evidenced?
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A financing statement.
1 doc creates security agreement, attaches and perfects |
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What does financing statement contain?
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Names debtor, creditor and describes collateral. If it is attached to land, then the land needs to be identified.
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What happens if debtor changes their name in re financing statement
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They have 120 days to change it.
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Can a creditor perfect by means other than filing, and if so, how?
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Yes, by control. (Think pawnshop)
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How can deposit accounts, letter of credit or money perfected?
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Only by control.
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Possession/Control is sufficient for perfection when the collateral is
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Negotiable documents, instruments chattel paper or goods
ND I CP G |
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What is automatic perfection (other than a sports book)?
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PMSI in goods, where seller's interest in goods perfected without filing.
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PMSI, not consumer goods. What kind of stuff, what does it mean?
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This is for equipment or inventory and the PMSI takes priority over earlier perfected security interests.
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For an non consumer PMSI, how long does lender have to perfect interest in equipment so as to have priorit?y?
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Twenty days.
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For a non consumer PMSI how long does lender have to perfect interest in inventory so as to have priority
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To take priority it must be perfected when delivered
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Can a financing statement be effective with after acquired collateral?
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Yes financing statement must so provide for after acquired collateral
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What happens to proceeds of the sale of inventory subject to a PMSI?
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The lien attaches to the proceeds from the sale of inventory so lienholder gets paid back
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Three elements of creating a security interest are:
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Agreement
creditor gives value debtor has rights in item |
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As between unperfected SP and perfected SP, who wins?
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Duh. Perfected.
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As between JLC and unperfected SP, who wins?
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JLC
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How can a buyer prevail over an unperfected SP?
V-BRK no SI Val BuyRec K |
Value given/No SI
Buys tangibles, chattel, paper, goods Receives them No Knowledge |
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As between two SP who prevails?
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The first to file
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As between two PMSI SP, who takes priority?
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2 PMSI creditors with interest in same collateral
If the D buys goods on credit (PMSI for the seller), the buyer may also borrow money to make the payments, thus creating a PMSI for the lender. Top priority is given to the seller of the goods. |
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Goods are
ICE F |
Inventory
Consumer products Equipment Farm products |
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Collateral can also be
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Chattel paper
Documents Instruments and paper Accounts |
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Security interest created by contract between creditor and debtor
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Called a security agreement
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Elements of a security agreement are
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Writing
Signed by debtor Describe the collateral |
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Security interest attaches when
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There is a SA
Debtor has rights in collateral Creditor gives something |
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Perfection affects priorities
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But lack of perfection does not destroy creditors entire rights in the collateral
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Financing statement must include
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Description of the collateral(if attached to property must specify location)
Parties secured Name collateral |
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How long does creditor have to file>?
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20 days
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Where is perfection done?
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Place where debtor has main business outlet
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Old Art 9 had to have actual debtor signature but now
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With electronic signatures, they are fine
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If trade name is used, then under what name should SI be filed?
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Trade name insufficient unless debtor can be found under that name.
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Once debt satisfied, how many days does creditor have to file termination statement?
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20, or else Code provides for penalty.
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Deposit accounts can be subject to control in three ways what are they?
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1. Document at primary bank with assignment
2. Letter assigning Bank 3 control over account at Bank 2 3. Letter of credit which can only be perfected by control |
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Securities and other investment vehicles can only be perfected by
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Control
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purchase money security interest in goods
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New inventory
Fin by seller/creditor Takes priority over other perfected secured goods OTHER CREDITORS NOTIFIED |
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After acquired clause good if
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It describes interest carefully as collateral, usually inventory or equipment
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Proceeds of the sale of secured items....who gets them?
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Sec Interest in inventory attaches to the sale and remains with proceeds
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What happens to security interest when goods are sold>?
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Purchase by buyer in ordinary course cuts that interest off.
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Repossessing creditor must dispose of reasonably; if not, what are debtor's measures of damages?
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Actual damages
UCC built in penalty 10% of loan balance Absolute bar |
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To have super priority seller must have already perfected security agreement when
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Debtor takes possession
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