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20 Cards in this Set
- Front
- Back
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Types of intangible collateral covered by article 9
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Patent, trademark, copyright
Stocks, bonds, mutual funds Proceeds Accounts Notes and Drafts |
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Requirements for attachment
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VCR
Value - creditor must give value Contract - transaction evidenced by Security agreement Rights - Debtor must have rights to the collateral |
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Requirements of Security agreement
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Must be authenticated by debtor AND must reasonably describe the collateral
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Methods of perfection
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Filing financing statement or security agreement
Where SP takes possesion or - PMSI in consumer goods (perfects automatically) |
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Priority of creditors
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BIOCOB
PAC LC NonBIOCOB AUPC GUC |
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PAC defeats all but
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BIOCOB
PAC's that filed first PMSI (with additional requirements) |
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For PMSI holder to take priority over an earlier perfected AACF he must:
- for inventory - for equipment |
Equipment: must file properly within 20 days of debtors possession of the collateral
For inventory: must file properly BEFORE debtor takes possession of the inventory AND must notify the competing creditor of its interest before debtors possession |
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SP's Remedies for default
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Self help repossession - if can be accomplished without breach of peace
Repossession via judicial action - where SP goes to court to get a writ ordering sheriff to repossess After repossession: SP can 1. Strict Foreclosure - where the SP retains the collateral in full satisfaction of the debt (subject to the 60% rule for consumer goods) 2. Sale - must be commercially reasonable AND reasonable notice must be sent 3. Defeciency judgment |
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Notice of strict foreclosure (that SP will retain collateral in satisfaction of debt) must be sent to
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WHere collateral is consumer goods: any secondary obligors (guarantor of underlying debt) and debtor
Where collateral is not consumer goods: debtor, other SP's who told foreclosing party of their interest in the collateral, perfected creditors, and secondary obligors If any of these parties objects within 20 days - no strict foreclosure; must be a sale |
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Where is strict foreclosure not allowed
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- where notified parties object within 20 days
or - 60% rule for consumer goods - where debtor has paid back 60% of the value/price of collateral no strict foreclosure - or conversion; instead must sell within 90 days |
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Notice of sale of repossessed property must be sent to whom:
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If consumer goods: debtor and secondary obligors
If not consumer goods:debtor and SP’s that told the foreclosing party of their interest and perfected creditors and secondary obligors |
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Additional requirements of notice of sale of consumer goods
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- must include how defeciency will be calculated
- must provide a way for debtor to redeem |
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presumptively reasonable time to send notice in nonconsumer transaction
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10 days before sale
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Distinguishing a negotiable instrument from a contract
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WOSSUPP
- W - Writing - O - Payable to order or bearer - S - Signed by the maker or the drawer - S - States a Sum certain - U - unconditional promise or order (no additional promises or orders allowed) - P - Payable on demand or at a definite time - P - Payable in currency |
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Who can be liable under the contract/signature theory of liability for commercial paper
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Maker - by signing name to the instrument enters into a contract
Indorser - by signing instrument (usually on back) contract providing that if maker/drawee/drawer does not pay (and indorser has notice of failure to pay) he will be liable Drawer - by signing the draft (check) enter into a contract that if the check bounces drawer must pay |
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Who is liable under the transfer/warranty theories of liability for commercial paper
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Anyone who sells a negotiable instrument (so no donors)
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Warranties that give rise to warranty liability on a negotiable instrument (transfer warranties)
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D promises that:
- D has good title to the instrument - that all signatures are authorized and genuine - that the instrument has not been materially altered - that there is no claim or defense against the D - that D has no knowledge of any insolvence or BK proceedings against the maker/drawer |
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Requirements of a HDC
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Must be a holder
Must take for value - must be more than a mere promise (but old value is good value) Must take in good faith- honesty in fact (subjective) and observance of reasonable commercial standards of fair dealing (objective) Must take without notice of any claimse or defenses - or that it is overdue or dishonored |
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Personal defenses
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(HDC takes free of these)
1. lack of consideration 2. Fraud in the inducement 3. Unconsionability 4. Waiver and estoppel |
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Real defenses
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(HDC does not take free of these)
MADFIF(I4) - MA - Material Alteration (change in the terms of the agreement)- but if maker is negligent he is estopped from this defense - D - Duress - FIF - Fraud in the factum (misrepresenting what the person is actually signing) - I - Illegality - I - Insolvency - I - Incapacity - I - Infancy |
