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39 Cards in this Set
- Front
- Back
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What 4 kinds of goods are there in secured transactions?
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Consumer goods
Equipment Farm products Inventory |
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What do consumer goods pertain to?
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Used or bought for use primarily for personal, family or household purposes.
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What does equipment pertain to?
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Used or bought for use primarily in business (and this is the catchall category).
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What do farm products pertain to?
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Crops or livestock or supplies used or produced in farming operations or products of crops or livestock in their unmanufactured states if they are in the possession of a debtor engaged in farming operations.
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What does inventory pertain to?
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Held by a person who holds them for sale or lease or to be furnished under service contracts; materials used or consumed in a business in a short period of time.
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What is semi-intangible and intangible property?
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Instruments
Documents Chattel Paper Investment property Accounts (accounts receivable) Deposit accounts Commercial tort claims General intangibles |
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What are instruments?
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Negotiable instruments and any other writing which evidences a right to the payment of a monetary obligation, and which are in the ordinary course of business transferred by delivery with any necessary indorsement or assignment (not investment property).
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What are documents?
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A document which in the regular course of business is treated as evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers (bill of lading or warehouse receipt).
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What is chattel paper?
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A record which evidences both a monetary obligation and a security interest in or a lease of specific goods. A record is information that is stored in either a tangible medium or an intangible medium.
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What is investment property?
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Stocks, bonds, mutual funds, brokerage accounts.
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What are accounts?
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Accounts receivable. A right to payment for (1) goods, (2) services, (3) real property, (4) a policy of insurance issued or to be issued, (5) a secondary obligation incurred or to be incurred, (6) energy provided or to be provided, (7) the use or hire of a vessel, (8) arising out of the use of a credit card, or (9) as lottery winnings.
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What are deposit accounts?
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Account maintained with a bank, and only applies to nonconsumer deposit accounts.
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What are commercial tort claims?
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A claim arising in tort with respect to which the claimant is an organization. Or where the claimant is an individual and the claim arose in the claimant's business or profession and does not include damages for personal injury or the death of an individual.
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What are general intangibles?
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Any personal property not coming within the scope of the other definitions. A general intangible under which the account debtor's principal obligation is a monetary obligation is a payment intangible.
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What are the 3 requirements for attachment?
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1. a security agreement
2. secured party must have given value 3. debtor must have rights in the collateral |
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What are the 3 requirements for a security agreement?
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1. Evidenced intent to create a security interest.
2. authenticated by the debtor 3. Description of the collateral |
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When can a security agreement be oral?
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When the secured party has possession of the collateral.
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What are proceeds?
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WHATEVER is received upon the sale, exchange, collection, or other disposition of collateral or proceeds.
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What does a security interest generally automatically give the secured party a right to?
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Identifiable proceeds.
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If you can't fully identify proceeds, what is the test to use?
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Lowest Intermediate Balance Test - look at the balance in a commingled bank account starting at the time the proceeds are deposited and ending at the time you are applying the test. The law deems that the lowest balance during that time period is the secured party's identifiable proceeds.
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What are the methods of perfection of a security interest?
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Automatic perfection
Possession of collateral by secured party Perfection by control Notation of lien on the certificate of title Filing a financing statement |
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How does automatic perfection occur?
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PMSI in CONSUMER GOODS.
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What types of collateral can be perfected through control?
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Investment property
Nonconsumer bank accounts Electronic chattel paper |
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How is an interest in nonconsumer bank accounts perfected?
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1. the bank in which a nonconsumer deposit account is maintained automatically has control over the deposit account.
2. if the secured party is not such a bank, it can obtain control over the deposit account by either (1) putting the deposit account in the secured party's name or (2) agreeing in an authenticated record with the debtor and the bank in which the deposit account is maintained that the bank will follow the secured party's orders without further consent by debtor. |
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What is the only way to perfect a security interest in an automobile?
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Through a notation of the lien on the certificate of title. Except when the debtor is holding the automobile as inventory, then a secured party must perfect by filing a financing statement against inventory.
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What is necessary for filing a financing statement?
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Notice filing
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What are the contents of a financing statement?
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Debtor's name
Description of the collateral Secured party's name Real property - reasonably identify No signature required Authenticated security agreement itself may be filed |
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Where should a financing statement be filed?
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Secretary of State, unless it's real-estate related, then in the Register of Deeds for the county where the real-estate is.
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How does a secured party perfect as to proceeds?
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Automatically for 20 days, then have to take new action to perfect, unless (1) identifiable cash proceeds or (2) the security in the original collateral was perfected by filing a financing statement, a security interest in the type of collateral constituting proceeds would be filed in the same place as the financing statement for the original collateral, and the proceeds were not purchased with case proceeds of the collateral (Same Office Rule).
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What is the general rule as to perfected v. perfected interest priority?
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The first to file or perfect, whichever occurs first, has priority.
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Who has priority between a perfected and an unperfected interest?
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Perfected always wins.
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Who has priority between an unperfected and unperfected interest?
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First to attach has priority.
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Who has priority between conflicting PMSIs?
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Seller PMSI has priority over a financer PMSI.
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How does a PMSI in goods other than inventory or livestock have priority over a conflicting security interest in the same goods or its proceeds?
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If the PMSI is perfected at the time the debtor received possession of the collateral or within 20 days thereafter.
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What are the special priority rules for deposit accounts?
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1. a security interest perfected by control has priority over a security interest perfected via proceeds.
2. if conflicting interests each were perfected by control, they rank according to time of obtaining control 3. a secured party who has obtained control by putting the deposit account in its own name has priority over all other secured parties with control. 4. a bank that has control because it maintains the deposit account has priority over all other secured parties with control except a secured party who has obtained control by putting the deposit account in his name. |
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What is the general rule regarding unauthorized sales?
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a buyer in the ordinary course of business (except farm products from person in farming operations) takes free of a security interest created by his seller even though the security interest is perfected and even though the buyer knows of its existence.
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Who is a buyer in the ordinary course?
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A person who buys goods in good faith, without knowledge that the sale violates the rights of another person in the goods, and in the ordinary course from a person in the business of selling goods of that kind.
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What is the most important aspect of a resale of collateral?
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It must be a commercially reasonable sale.
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What are accessions?
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goods that are physically united with other goods in a manner that identity of the original goods is not lost.
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