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23 Cards in this Set

  • Front
  • Back
The Cast of Characters
- security interest
security interest- an interest in personal property that secures the payment of an obligation
security agreement
the contract that creates the security agreement
security agreement
the contract that creates a security interest
Security agreement
the contract that creates a security interest
owes the obligation
Secured party
the creditor
the personal property subject to the security interest
transaction in which the owner of goods retains title to goods but transfers possession of the goods to a bilee for the purpose of sale.

The consignee never has title but gets commision.
Key things excluded
- deliveries to an autioneer or merchant generally known by its creditors to be substantially engaged in selling goods for others

Also excludes ytransacitns in which the good swere consumer good immediately prior to the delivery.
In Re Georgetown Steel
- need to list key things
- with consignment or lease issue you have a scope of Art. 9 question.
- Consignment= normally included
- lease= could be
Creation and scope of security interest

A security interest attaches when it becomes enforceable agains the debtor with respect to the collateral.

3 Requirements must be met:
1. Security agreement satisfies the Statute of Frauds
2. The debtor has rights in the collateral or the power to transfer to a secured party
3. The secured party has given value
Statute of frauds req.
- No security interest if SOF not satisfied.
- if the secured party is in possession of the collateral or has control over certain types of collateral (inc. deposit accounts) an oral security agreement is enforceable.

- If secured pty. does not have possession/controlof the collateral, the debtor must have authenticated a security agreement that provides description of the collateral.
Sufficient security agreement
The writing or writing will be sufficient of they establlish that a security interest was, in fact, created. A financing statement standing alone is not a sufficient security agreement.
With a written security agreemeent...
the debtor will authenticate tha agreement by signing it. Def. of authenticate includesexecuting or encrypting a record with the present intent to adopt the record.
Sufficient description of collateral
general descriptions are o.k.
(ie. "equipment")(Additionally, this would likely include all after acquired personal property but is subject to contract interpretation)

1. "commercial tort claims" and
2. "consumer goods, a security entitlement, a securities account, or a commodity account" are all not sufficient
Super-generic descriptions
ie. "all personal property," or "all inventory" etc.

- is not good enough of a description under revised article 9

Thus, "all personal property" description does not create an enforceable security interest.
Scope of security interest
"floating lien"- a secured party may be able to assert not only the debtors present property but also in property the debtor aquires after theexecurtion of the agreement.
A security interest automatically attaches to identifiable proceeds.

Proceeds includes whatever is acquired upon the sale, exchange, or other disposition of collateral.
Basically, a method of locateing the proceeds of a sale etc of collateral
"lowest intermediate balance"
1. withdrawls from a comingled acct. are deemed made frst from non-proceeds funds. Only when non-proceeds are exhausted are proceeds invaded.
2. Second, subsequent deposits of non-proceeds funds do not replenish invaded proceeds unless the debtor made the deposti with an intent to make restitution.
After acquired property
A security agreement must contain such a clause for a security interest to attach to after acquired property.
(some courts have refused to find interest in after aquired property for "all equitment" phrases.
Key difference b/t proceeds and after acquired property
A security interest attaches automatically to proceeds

A security interest attaches to after acquired propery ofnly if the security agreement so provides.
Future advances
If drafted the clause can obligate a secured party to make loans subsequent tothe execution of the security agreement. This is a matter of convience for the secured party so they don't have to have a new security agreement with every subsequent loan.

If this arrangement is made it has to be expressly provided that the