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22 Cards in this Set
- Front
- Back
Perfection |
The process by which the secured party gives notice to the entire world of its security interest. A security interest is perfected if it has been attached and all of the requirements for perfection have been met |
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3 requirements for attachment |
1) the security party gives value; 2) the debtor has rights in the collateral; 3) the debtor has authenticated a security agreement that sufficiently describes the collateral |
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5 times article 9 applies |
1) any transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract; 2) Agricultural liens 3) Sales of accounts receivable, chattel paper, negotiable instruments, promissory notes, and payment intangibles; 4) consignments; and 5) certain lease-purchase agreements |
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4 types of collateral |
1) Goods 2) tangible intangibles 3) Intangible intangibles 4) investment property |
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Goods, 4 main categories |
1) consumer 2) inventory 3) farm products; and 4) equipment |
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Tangible Intangibles |
Obligations to pay money that are reduced to written form, often categorized as 1) instruments; 2) documents; 3) chattel paper |
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Security interest in general |
It is created by a written security agreeement or by the secured party's taking possession, delivery, or control of the collateral with the intent to secure a debt, plus attachment of the security interest to the collateral |
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Security agreement must contain-3 things |
1) In writing; 2) contain a granting clause (state that it is creating a security interest) 3) a description of the collateral and be authenticated by the debtor |
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A debtor incurs a PMSI if the obligation is incurred: |
1) as all or part of the price of the collateral; or 2) for value given to enable the debtor to acquire rights in, or use of, the collateral, if the value is in fact used |
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Filing Financing Statement(most common way to perfect a security interest, generally done |
1) In the secretary of state's office; 2) in limited circumstances, in the office of the county clerk in the county where the land to which the collateral is attached or located; or 3) if the secured party is perfecting by filing a financial statement, the security interest is perfected only if the financing statement is filed in the correct office in the correct state. |
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3 types of collateral filing not effective for |
1) A deposit account, which may be perfected only by control; 2) a letter of credit right, which may be perfected only by control; and 3) money, which may be perfected only by possession. |
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Automatic Perfection |
1)If PMSI in consumer goods, perfection is automatic as soon s the security interest attaches and remains effective permanently |
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Reservation of Title |
Reservation or retention of title by seller to goods shipped or delivered to buyer is reservation of security interest |
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Inventory |
Under UCC9, inventory consists of raw materials, work in process, or materials used or consumed in the business Secured party with interest in inventory has interest in raw materials |
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Protected Security Interest |
1) Security interest must be in writing that states creating security interest |
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Filing Statement |
1) A financing statement is a document filed to give notice of security interest, it contains a) Description of collateral; and b) must be authenticated or signed by debtor and creditor gives value to debtor 2) Financing statement perfects security interest |
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Secured Creditor rights in unshipped goods |
Secured creditor has no more rights in inventory than debtor Seller has rights in goods neither shipped nor paid for by debtor, has priority over secured interest to which debtor has no title |
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Attachment requires |
1) Creditor gives value; 2) Debtor has rights in the collateral 3) Security agreement sufficiently describing collateral is authenticated |
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Perfection requires |
1) Attachment and 2) Filing a financing statement, or taking possession or control by the secured party of the collateral |
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Things to consider to follow interest after sale, these are exceptions to general rule of surviving the sale |
1) is the collateral sold a consumer good 2) did the secured parties consent to the sale 3) Is the collateral sold in the ordinary course of business to a good faith purchaser |
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General rule for continuing interest |
continues through sale without an exception |
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Buyer in ordinary course of business is: |
1) Buys in good faith; 2) Buys without knowledge that the sale violates the rights of another person in the goods; 3) Buys in the ordinary course from a person in the business of selling goods of that kind |