• Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

image

Play button

image

Play button

image

Progress

1/79

Click to flip

79 Cards in this Set

  • Front
  • Back
When Repossession Finance Company declared a default and repossessed all the office equipment of attorney Portia Moot, as allowed by the security agreement, the company then did nothing with the collateral except let it sit in a storage room for 17 months. Finally it conducted a resale with appropriate notices and then sued Portia for the deficiency. She defended by arguing that actions speak louder than words and that, in effect, by doing nothing for such a long period, the finance company had constructively elected strict foreclosure and had forfeited any right to a deficiency.
Is this correct?
No. But she could claim the creditor is not behaving in a commercially reasonable manner, which could
affect the right to deficiency.
If Dudley had made only one payment and then defaulted, causing AAI to repossess, could AAI
have sent him a proposal that it would keep the painting and forgive half the remaining debt only?
. No.
§9-620: Acceptance of collateral in full or partial satisfaction of obligation—“in a consumer transaction, a SP may not accept collateral in partial satisfaction of the obligation it secures.”
After default, a secured party may sell the collateral ____
In its present condition or following any commercially reasonably prep or processing.
Who must you notify during the disposition of collateral?
debtors, sureties, other creditors of record
When must you provide notice of default?
After default and a reasonable time before the date of disposition of collateral
During Repo and Resale, after a default, the secured party may ____.
Take possession of the collateral
During Repo and Resale can a secured party proceed without judicial process?
Yes if it proceeds without breach of the peace.
What is the subjective test during Default?
the creditor who in fact feels insecure may accelerate the debt even though no reasonable person in the creditors position would feel insecure
What is the objective test during Default?
doesnt allow repo unless the creditor has made a diligent and honest effort to check the grounds of insecurity and a reasonable person in the same circumstances would repo as well.
Can a trustee avoid any transfer (including the creation of an art ( security interest) that is a fraudulent transfer?
Yes
During a floating Lien in Bankruptcy, the court must compare the debt:collateral ratio at what two points?
90 days before the filing of the petition AND the date of the filing of the petition.
When will a security interest that is neither fraudulent nor attackable by the trustee still be vulnerable?
If the perfection of the security interest constitutes a preference
What is a preference?
a transfer of any property of the debtor made to or for the benefit of a creditor on account of an antecedent debt made by the debtor while insolvent
Filing of bankruptcy petition creates an ________ of any further creditor collection activity.
Automatic stay
The strong arm clause allows the trustee to do what?
acquire a lien on all the debtors property as of the moment of the filing of the bankruptcy.
What is an accession?
a good attached to another good. ex: a telephone installed in a car
When does commingling occur?
Occurs when goods are physically united with other goods so that their identity is lost
What steps can a prior creditor take to protect its interest when it has notice?
A prior creditor can take WHATEVER STEPS NECESSARY to protect its interest.
What can a creditor do when it receives notice to ensure payment?
it can do nothing at all, or it can call the loan (forcefully)
What remedy does a prior creditor have if a Purchase money creditor gave notice and prevails to the inventory?
As long as notice was given, the prior creditor has NO remedy
What is a floating lien on inventory?
A perfected interest in existing and after-acquired inventory.
When does a Purchase Money Creditor receive super priority over other creditors?
If the Purchase Money Security Interest is perfected at the time the debtor receives possession AND they file notice.
What does priority decide?
Which creditor gets what
Who receives priority when the dispute involves an unperfected creditor vs another unperfected creditor?
Whoever attached first
Who receives priority when the dispute involves an unperfected creditor vs a perfected creditor?
Perfected creditor
Who receives priority when the dispute involves an unperfected creditor vs a buyer?
Buyer
Who receives priority when the dispute involves an unperfected creditor vs a lien creditor?
Lien creditor
Who receives priority when the dispute involves a perfected creditor vs another perfected creditor?
First to file or perfect has priority
What is the grace period if a new certificate of title is issued?
4 months- only protects innocent purchasers (buyers, not used car sellers)
What laws are the parties bound to during a multi-state transaction?
Bound by the law of any state or nation bearing a "reasonable relation" to the transaction
If a debtor's location changes, when is reperfection required?
within 4 months after the change
If a debtors identity changes, when is reperfection required?
within 1 year
Does a debtors location govern perfection?
Yes! Individuals by domicile; corporations by state incorporation;
How long is a financing statement effective for?
5 years unless a continuation statement is filed
How long must the filing office keep records of lapsed financing statements?
For 1 additional year
When is an assignment statement filed?
If a secured party assigns the security interest to another creditor
An argument that a "sale" hasnt taken place when owner keeps an ___ of ownership.
Keeps an indicia of ownership.
Does automatic perfection take place when the owner keeps some ownership of the good?
No!, buyer must still take usual steps for perfection
What does a transfer "with recourse" resemble? Sale or loan
Loan
What does automatic perfection mean?
that the secured party need only make sure that its security interest has attached.
Is a purchase money security interest automatically perfected?
Yes- consumer goods are unlikely to be used as collateral twice
What is perfection?
Perfection is the process that the parties must go through to amke sure that the creditors security interest is good against other creditors
What must happen before a security interest can be perfected?
It must attach/be effective
What two ways can a creditor perfect their security interest in tangible collateral?
Possession or filing a financing statement
What two ways can a creditor perfect their security interest in intangible collateral?
Control or filing a financing statement
How long does perfection by possession last?
as long as possession is continued.
What is attachment?
the process by which the security interest in favor of the creditor becomes effective against the debtor
What are the three requirements of attachment?
1. an agreement
2. value must be given by the secured party
3. debtor must have rights in collateral
Are generic descriptions allowed in the security agreement? the financing statement?
Not ok in security agreement; ok in the financing statement
What must the security agreement always contain?
a description of the collateral involved.
What is a financing statement?
a document filed in the appropriate public office by the creditor to perfect the creditors rights
Who must sign the financing statement?
No one needs to sign it. (Although debtor must authenticate it
When does a change in the debtors identity force a refiling of the financing statement?
any change that makes the financing statement seriously misleading.
What is a security agreement?
an agreement between the debtor and the creditor which the debtor grants to the creditor a security interest in the collateral.
Is a written security agreement necessary when collateral is in the possession of the secured party?
No.
Goods (movables) include ____, ____, ____ and _____.
Consumer goods, farm products, inventory, and equipment
Consumer goods are used and bought primarily for ____.
personal, family or household purposes
Inventory is ____.
goods held for sale or lease to others in the ordinary course of business
Farm products include goods used or produced in farming operations including ____.
crops; livestock; products of crops and livestocks as long s they are in their unmanufactured state (milk, eggs) and supplies used in farming operations (cattle feed)
Equipment includes ____.
anything not included in consumer goods, inventory, and farm products.
Four types of indispensable paper include...
1. documents (receipts, bills of lading)
2. instruments (notes and drafts)
3. chattel paper
4. investment property
Four types of intangibles include ....
1. Accounts
2. deposit accounts
3. commercial tort claims
4. general intangibles (catch all category)
What two types of liens are excluded from Article 9?
1. statutory lien
2. landlords lien
A ____ is an interest in the debtors property given by law to protect a creditor.
Lien
A consenual lien in personal property or fixtures is called a _____ and is governed by Art 9 of the UCC.
Security interest
A judicial lien arises from ___.
a lawsuit/ judicial proceedings
What type of lien is created by statute?
a statutory lien.
What is the strong arm clause?
It is a provision of the Bankruptcy code that makes the trustee conclusively presumed to occupy the legal position of a judicial lien creditor who has levied on all of the bankrupts property.
What is a pledge?
When the debtor (pledgor) gives physical possession to the creditor (pledge) until the debt is paid.
What are the drawbacks of a pledge?
1. only for tangible items.
2. For some types of collateral the debtor needs to keep possession. (machines etc.)
In which 3 circumstances can an unpaid seller repossess?
1. When §2-701 applies
2. when the buyer has specifically granted the seller a security interest in the object sold
3. when the seller sues, recovers judgment and has sheriff seize property
What is a security interest?
an interest in personal property or fixtures which secures payment of performance of an obligation.
When does Article 9 apply?
To ANY transaction which is intended to create a security interst in personal property or fixtures.
Who is the debtor?
person with interest in collateral
who is the obligor?
person who owes the debt.
What is a true consignment?
neither a sale nor a security device, but a procedure where the owner (consignor) sends (consigns) them to a retailer (consignee) for sale.
When is a consignment NOT a true consignment?
when a security interest is intended, a true consignment has not occurred. It rather is a sale on credit.
Are true consignments covered by Article 9?
Yes.
When is a lease covered by Article 9?
When it looks like a lease but actually acts likes a secured transaction.