Study your flashcards anywhere!

Download the official Cram app for free >

  • 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

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


Play button


Play button




Click to flip

88 Cards in this Set

  • Front
  • Back
UCC 9 does not apply to real estate but does apply to ?
What is consumer goods
Primary used for famuly purposes
Example of farm products
anything grown on farm (wheat)
Example of consumer goods
fridge in house (anything for family purpose)
Example of farm products
anything grown on farm (wheat)
Example of inventory
Fridge sold at Best Buy
Example of equipment
Fridge used at MCdonads
If collateral is used for 2 different purposes how do you determine what use it is?
Primary use test which says whatever it is used for the most in a week is that type of collateral is
How to determine what type of collateral something is when its use has changed?
Changed use test says whatever original use was is what type of collateral is always will be
Please explain the only exception to the changed use test
If farmer takes his famr product of nuts and procecees them into peanut butter which would be inventory
What is software?
It is whatever type of collateral the cpu is if embedded in the computer
Can accounts be collateral?
Yes money owed to stores can be collateral
What rights does Secured party have if he has a SI on Debtor's acccounts?
then can make account holder pay secured party after notifying account holder
Explain proceeds collateral
Money for sale sale of collateral
3 requirements for attachment?
1) debtor agrees to create SI either by giving SP possession or signing Security agreement 2) Value must be given by secured party 3) Debtor has rights in collateral
What must be contained in description of security agreement?>
Description of collateral by category or type but no SUPERGENERIC DESCRIPTION
What is not considered giving value in security agreement
GIFT, but antecedet debt is okay
Types of collateral an attachment occurs by control
1) nonconsumer deposit accounts 2) electronic chattel paper, investment property
2 types of collateral in which secured party will have a future interest in?
1) after acquired property clause
2) Future advances clauses
Explain after acquired property clause?
Get security interest on property that will be acquired in the future
When will there automatically be an attachment without an after acquired clause?
to proceeds, new accounts, and new items of inventory collateral
Explain the after acquired clause exception to consumer goods?
Only goods purchased within 10 days can be used as SI by secured party, anything purchased after 10 days will not be attached
What can an after acquired property clause never apply to?
Future commercial tort claims
Describe a future advance clause?
the collateral will serve as security for future advances the secured party creditor makes to the debtor in future
4 ways to perfect?
1) Filing financing statement
4)Automatic perfection
How to perfect? 2 steps?
1) Attach
2) Perfect
How to perfect by filing?
Just file financing statement
What must be in financing statement?
1) name, address and description of collateral (Supergeneric description is OK) 2) Name of debtor
What happens if no address of debtor signature
nothing does not impair financing statement
Describe result if major problem and minor problem in financing statement?
Major problem then not effective
Minor problem then effective still
What county do you file financing statement based off of?
Where debtor is located
Whch office do you file with
Secretary of state
When is it ok to file with local
if real estate collateral
What result if debtor changes name to financing statement?
financing statement only effective against collateral acquired by debtor before the name change and within 4 months after the change
Effect if FS missing debtor or secured party address
WHAT makes erroronous name minor problem only?
Name is sufficinet if could be found using office's search logic and not major problem)
How long does lenght of filing last?
5 yrs
What must SP do to amend and extend FS time?
Amend within 6 months of expiring
WHat can be perfected by possession?
Is authorizatuon of debtor required for amending FS?
What 2 things occur automatically upon Possession of collatera
Attachment and perfection
What type of collateral cannot be attacthed and perfected by possession?
intangibles, nonconsumer depsoit accounts, nonnegotiable docs, electronic chattel paper, certificate of title goods, accounts
What is the duty of Secured party when has possession of collateral
owes duty of reasonable care and debtor must remiburse creditor for any reasonable expenses)
At what point is perfection by possession occur?
Secured party takes actua possession of collateral and continues as long as possession retained
Exception to posssession occuring in hands of secured party?
In hands of bailee when baileee authneticates record acknowledging he is holding collateral for Sp's benefit
Only way to perfect deposit accounts?
BY CONTROL where bank agrees it will act on SP's instructions w/o any furtehr debtor action)
What types of collateral can be perfected by control?
Letter of credit rights, deposits, and investment properties
Explain PMSI in consumer goods?
Automatically perfection as soon as attachment and no need to file or have possession
Does a PMSI in inventory or equipment automatically perfected upon attachment?>
NO must file financing statement
Explain 2 situations where secured party gets automatic 4 month temporary perfection?
1)When goods and debtor move to new state
2)If organization changes name
Explain 20 day temporary perfection period for proceeds
When proceeds are acquired for collateral then secured party is automatically perfectec on proceeds for 20 days from the debtor's receipts of proceeds but will becomes unperfected on 21st day
Explain 20 day temporary perfection for instruments, negotiable instruments, and certificated securities?
When secured party gives new value under security agreement and collateral is a negotiabe doc, instrument, or certified security then gets automatic temporary perfection for 20 days
When 20 days temporary perfection of proceeds will be continued to be perfected past 20th day if:1 of 3 ways?
1) SAME OFFICE RULE= Security interest in original collateral wss perfected by FILING FS, security interes in the type of collateral constituting the proceeds would be filed in the same place a the FS for the original collateral, and proceeds were not purchased with cash proceeds of the collateral

2) CASH PROCEEDS RULE=the proceeds are identifiable cash proceeds or

3) The security interest in the proceeds is perfected within the 20 day period
Secured Party v. Lien Creditor?
Secured party always wins unless Lien creditor gets judgment before SP perfects
Unperfected SP v Unperfected SP?
First to perfect
General Rule on Pefected SP v Perfected SP?
First who files or perfects wins
Explain superpriority exception to getting new PMSI on inventory?
New PMSI gets superpriority over prior PMSI who has after acquired inventory clayse if new PMSI 1) gives written notice to earlier perfected PMSI SP before debotor takes possession
Describe PMSI superpriority in Equipment/proceeds?
1) New PMSI must perfect within 20 days after debtor receives possession and 2) no notice whatsoever need to be given to earlier PMSI
How can PMSI prevail over fixture security interest?
First to file wins
Superpriority exception to fixtures
PMSI party makes fixture filing within 20 days will prevail over prior real estate filing
Exception to exception on fixtures
construction mortgagee prevails so long as recorded before goods became fixtures, and goods became fixtures before the completion of construction.
Who prevails on accession (added value to personal property)?
First to file or perfect wins
Exception to assession
: If accession (tires) became part of whole asset subject to certificate of title law (aitomobiles) the SI in the whole (car) has priority over the SI in the accession
2 exceptions where secured party will never beable to prevail agaisnt consumer purchaser?
1) Buyer of goods in ordinary course of business

2) Garage sale rule
Explain buyer of consumer goods in ordinary course of business exception
A buyer who purchases goods in the ordinary course of business from a dealer's inventory takes free of a SI held by the dealer's creditors in the inventory, even if buyer knows of SI existence (buying fridge from Best Buy)
How to determine if buyer bought in ordinary course of business
1) look at purchase price, and 2) relationship between buyer and seller (is it arms length or insider)
Explain the garage sale rule?
Purchaser who buys from purchaser who has SI in it will take free unless knowledge of filing of FS
What is default?
Not defined usually not paying payment but if prior course of dealings of accepting late payment then cannot claim default
2 ways to repossess upon default?
Replevin by court action or Self help without breach of peace
What must be done to reposses by self help?
Do not attempt to or actually breach the peace or breach the peace and can recover but when do must resort to replevin
What is consdiered always breach of peace
When bringing cop with and breaking and entering
Is trickery BOP?
jurisdicitons split
In self help must notice be given to debtor?
Can debtor waive that there can be BOP?
If just verbal objections is this BOP?
What is replevin and what is required?
Court action to get back collateral, notice and fair hearing must be given to debtor
What must be given in mandatory notice to consumers upon default?>
1. Liability for deficiency judgment
2. telephone number to redeem
3. number for additional info Debtor can call
When collateral is repossesed and is being disposed of what must happen in all phases of disposition?
everything must be commercially reasonable
If sale not CR then what effect
Debtor not liable for deficinecy and might get back damages
If not CR and sale does not get all it could have will Debtor get damages?
YES fair market value
What things can be scrutinized to see if CR?
a. Duty to fix up or repair or leave as is
b. duty to sell in lots or as whole
c. immediate (perisable) or delayed sale
d. private or public sale
e. sell at place of repossession or move (big tractor)
f. Was notice good enough
g. Sufficinet advertisement
h. Notice must be sent within reasonable time before sale (nonconsumer goods 10 days considered reasonable)
i. Seller must have made best efforts to obtain best price
j. Low price alone is not presumption that sale was no CR, but ct will scrutinze all aspects when low price
k. Were all people in market contacted if collateral had limited market
If not CR and debtor is consumer what is he entitle to
Not liable for deficinecy and gets 10% of sale price
If low price can this be not CR?
No but ct will scrutinize every part of sale if really low price but not per si not CR
Can debtor waive redemoption?
Only upon default never before agaisnt article 9
Can consumer ever agree to partial satisfaction by turning over and just be liable for deficinecy?
NO just non-consumers
Can consumer or non consumer agree to full satisfaction where no liability for deficinecy
When collateral sold how distributed?
#1 Expenses of retaining, holding, preparing, and disposing of collateral, and attorney fees
#2 Satisfaction of obligation (balance owed on collateral)
#3 Satisfaction of obligation secured by subordinate security interest if SP received demand
#4 Dedntor or trustee if in BK if anything left over
Are accellaeration clauses valid