Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
8 Cards in this Set
- Front
- Back
|
Attachment: Process by which security interest is created and becomes enforceable against debtor so creditor can repossess the collateral if the debtor does not pay
|
3 elements (VCR):
1) creditor gave Value 2) Contract - the security agreement 3) debtor has Rights in collateral - elements may occur in any order - no attachment until all satsified |
|
|
Creditor gives value
|
must loan money or give value on credit
|
|
|
Contract (security agreement)
Contract between debtor & creditor in which the debtor gives the creditor a security interest in the collateral |
Proving the security agreement:
1) Oral: only if collateral is in creditor's possession (pledge). Duty of reasonable care of collateral. 2) Authenticated Record 3) Control |
|
|
Authenticated Record
|
1) Evidence: record may be written or electronic as long as signed or marked electronically with present intent to identify debtor and adopt agreement
2) Description must reasonably identify property (make clear what the creditor may repossess) |
|
|
Control (if collateral is nonconsumer deposit accounts, electronic chattel paper, or investment property)
|
Control basically means creditor has right to sell or cash in the collaterl w/o further action from the debtor
|
|
|
Debtor cannot give up a security interest in property w/o having rights in the property such as ownership or identification to a contract
|
Cannot use another person's property as collateral without that person's permission
|
|
|
After-acquired property
|
1) Can agree new acquisitions of property will serve as additional collateral for old loan (floating lien)
* very common with inventory 2) After-acquired clause works only for consumer goods acquired within 10 days of creditor giving value 3) Doesn't work with commercial tort claims |
|
|
Future Advances
|
Can agree that collateral will serve as collaterl for new loans, as well as current loan (line of credit agreement)
|
