A secured transaction is a transaction intended to ___. It generally involves, as to a transaction, a ___ or a ___ and, as to security, a ___
Create an interest in personal property or fixtures.
Sale or loan
Lien in favor of the creditor on personal property
A debtor is ___.
Someone who borrows
A secured party is ___.
The creditor who takes the security interest
A security agreement is ___.
The agreement that defines the terms of the security
Collateral is ___.
The property that serves as the property for the security interest.
A purchase money security interests is a ___ or a ___ and when you see one of these, ___ rules apply.
A transaction where the debtor sells collateral to a party
Enabling loan: a loan enabling someone to buy something.
A subsequent loan on a piece of collateral, as to PMSIs, ___.
Allows the first PMSI to remain in place.
When there is multiple collateral for a loan and the loan is to be used to purchase one of the pieces of the collateral, as to PMSIs, ___.
The loan is still a PMSI
When a PMSI is refinanced, as to the orignal PMSI, ___.
The PMSI retains its original characterization.
An after-aquired property clause is a ___.
A clause that allows a creditor to take collateral on to-be-purchased property.
A future advance clause is ___. When these are in place, ___.
Allows a creditor to make subsequent loans within a prior security agreement.
You don't need a new security agreement for each advance.
Attachment deals with ___ as against ___.
Those steps legally required to give the secured party a security interest in the collateral that is effective
Perfection deals with ___ as against ___.
Those steps legally required to give the secured party an interest in the collateral that is effective
Against the world.
A financing statement is ___.
the document used to provide public notice of the security interest, as so to perfect the security interest.
The most common way to perfect collateral is to ___ this is called a ___ under the UCC.
File a financing statement.
We need to know what the collateral because, primarily, ___.
A security agreement and a financing statement must reasonably describe collateral.
Collateral, on the bar exam, is usually ___.
Goods are ___ and include ___ and ___.
Anything that is movable at the time the security interest attaches, including
Unborn young of animals
Goods are classfied as one of four things
1 -- Consumer goods
2 -- Equipment
3 -- Farm products
4 -- Inventory
A guitar, as to collateral, put up by a dad for a gift to his son, is a ___
A consumer good.
A guitar put up by a rock musician, as to collateral, ___.
Regarding collateral, Milk to a farm is ___ but as to milh held in inventory __
Cars held for rental, as to collateral, is ___
Pencils used by Sears in its credit offices is, as to collateral, ___
Inventory includes ___.
Material used or consumed in a business in a short period of time.
Consumer goods are:
Used or bought for the use primarily fro personal, family, or household products
used or bought for use primarily in business
Farm Products are:
Crops or livestock or supplies used or pordcued in farming operations or products of crops or livestock in their unmanufactured states -- such as ginned cotton, wool-clip, maple syrup, milk and eggs -- if they are in the possession of a debtor engagned in farming operations.
Held by a person who held them for sale or lease or to be furnished under service contracts; materials used or consumed in a business
There are eight types of semi-intangibles
Documents referencing goods
Commercial Tort Claims
Chattle paper is
A record or recrords which evidence both a monetary obligation and a security interest in or a lease of specific goods
Accounts, not evidenced by an instrument or chattel paper, is one of nine things
1 -- for goods
2 -- for services
3 -- for real property
4 -- policies of insurance to be issued
5 -- for a secondary obligation incurred or to be incurred
6 -- for energy provided or to be provided
7 -- for the use or hire of vessle
8 -- arising out of the use of a credit card
9 -- lottery winnings
A contractual obligation arising out of a loan of money is not and is, instead, a ___.
A general intangible
Article 9 does not apply to ___ for consumer protection reasons. Therefore, the use of a ___ must be ___.
An assignment of a deposit account in a consumer transaction.
A business account
Tort claims can be used when they arise out of ___ but not when they arise out of ___.
If collateral isn't a semi-intangible it is probably a
As to classifications of collateral, a receipt given to a farmer by a silo operator when the farmer stored her grain there:
As to classifications of collateral, a written contract that grants a security interest and does other stuff, it is ___
As to classifications of collateral, selling tires on credit is ___.
As to classifications of collateral, monies due from various health plans are ___.
Health care insurance receivables.
As to classifications of collateral, credit card transactions are ___.
As to classifications of collateral, a promissory note is ___.
As to classifications of collateral, a checking account is a ___.
As to classifications of collateral, general intangibles are ___.
Patent and trademark rights etc
As to classifications of collateral, a right to sue a corporation for wooing away a corporation is a ___.
A commercial tort claim.
As to classifications of collateral, a tort claim that has been reduced to a contract settlement is ___
A payment general intangible
As to classifications of collateral, a computer program is ___ if it is embedded in the goods but if it is sold separately then ___.
part of the good
Its a general intangible
As to scope, the UCC Art. 9 applies to ___.
Any transaction that has a security interest.
When using the commercial tort claim classification of collateral, the claim must arise out of ___ and not realted to ___
A business claim
personal injury or the death of an individual
Under the revised Article 9, deposit accounts can be ___.
A subset of the general intangible categories is ___.
A payment intangible.
When you outright sell a security account, chattel paper, payment intangibles, or promissory notes, the UCC ___.
True consignments under old Article 9, ___. Under the new Article 9 ___ because ___. However, the definition of a consignment is that ___ . [5 points]
Art. 9 didn't apply.
Art. 9 generally applies.
You have an interest, as the consignor, in the goods.
> $1000, the consignor didn't use the goods, the consignee deals in goods, consignee isn't an auctioneer, and the consignee is not generally known by her creditors to be substantially engaged in selling the goods of others.
Generally, with consignments, you should just ___.
File the damn financing statements.
A secured sale disguised as a lease will be found when ___, ___, or ___. The idea is to spot leases where, at the end of the lease, ___.
At the end of the lease period, the lessee becomes the owner of the machine for little or no consideration,
The lessee is bound to purchase the goods at the end of the lease or to renew the lease for the remaining economic life of the goods.
The lease is for the entire economic life of the leased goods, with or without renewal.
There isn't any economic life left in the property.
As to leases, the UCC ___.
Does not govern.
To create a security interest, you need ___, ___, and ___.
An authenticated security agreement.
Secured party given value
Rights in the collateral
A security agreement can be ___ under ___ but generally needs to be ___ and stored ___. However, none of that applies if ___
The collateral is in the possession or control of the secured party.
A security agreement needs to include ___ but there are not ___ words like in property.
An intent to create a security interest
A security interest is ___ when it is signed by the debtor
A security agreement, as to collateral, requires ___.
A description of the collateral.
A security agreement needs three things:
Intent to create a security interest
A description of the collateral.
To create a security interest the secured party must have ___.
As ot the "given value" requirement, you can ___ as to time.
Give the value earlier that when you receive the collateral.
To give collateral, the debtor must have ___.
Rights in the collateral.
___ is sufficient to show rights in collateral.
Permission to use some other person's collateral.
Debt secured can include ___ under one security agreement if there is ___.
A future advance clause.
In the absence of a future advance clause, subsequent advances are ___ unless you ___.
Execute another security agreement.
A lien that secures a loan an "any other obligation" will be read ___ by a court when the parties are sophisticated business people. But, when you deal with an unsophisticated consumer, some courts won't ___.
Read the UCC 9 so broad.
A security agreement with an "after-acquired property clause" usually will read like ___ and that means ___. When inventory and accounts are put up as collateral, the courts presume ___.
The creditor has a lien on inventory now owed or hereafter acquired.
As new stuff comes in, the creditor's security agreement attaches to that property.
That the arrangement includes an implied after-acquired property clauses.
An after acquired property clause, as to consumer, will only apply ___.
To purchases made within 10 days after the execution fo a security interest.
When you have a lien on collateral, even if it doesn't mention proceeds, your security interest ___.
Automatically attaches to proceeds.
Proceeds, for the purposes of collateral, is ___. This means that "second generation proceeds" are ___.
Anything you get in exchange for your collateral.
The identifiable **** you got from the sale of the collateral.
As to after-acquired property clauses and tort claims, ___.
The clause is ineffective.
When proceeds are commingled with other funds in a bank account, ___. The proceed dollars are assumed to be ___.
The law assumes the proceed dollars are still in the account.
The last dollars to leave the account.
ex., when you put 3k in an account, as long as the account has 3k in it, there are proceeds in the account.
Once proceed dollars leave an account that has commingled funds, the dollars ___
NEVER COME BACK
The attachment of the security interest in collateral also, as to sureties, ___.
Includes any supporting obligation.
Perfection can be perfected by ___, ___, ___ or by ___.
When certificate of title acts apply, the state will note the ___ and that's he only way ___.
Lien on the title.
To perfect the collateral.
Automatic perfection, as to a PMSI, occurs when there is a PMSI in ___.
The bar usually test automatic perfection for ___.
Assingment of accounts will automatically perfect when ___.
There isn't a significant part of the accounts assigned.
As to automatic perfection of assignment of accounts, a significant portion of the accounts refers to ___ test or ___ and is a question of ___ for a court.
Casual and isolated test
***NOTE: There isn't much case law on this.
If you sell a promissory note for value, in good faith and with notice then ___.
You are a holder in due course.
A holder in due course is
A buyer for value, in good faith with notice.
A security interest created by a health care receivable you don't need to ___.
File a financing statement.
As to supporting obligations and perfection, a perfection as to the account receivable automatically ___.
Perfects as to the surety obligation.
Temporary automatic perfection means:
So long as the security interest arises for new value given under an authenticated security agreement, a security interest in certified securities, neg instruments, or instruments is automatically perfected without filing or taking of possession for a period of 20 days from the time it attaches.
A pledge of collateral is ___.
Perfection by possession of the secured party.
As soon as the creditor gives up possession of collateral, ___. So, ___. As an exception to this rule, ___.
The creditor is unperfected.
In a priority dispute, you are unsecured.
A secured party may make available to the debtor on a temporary basis an instrument, neg instrument, cert security, or goods not covered by a neg document that are in the possession of the bailee and will remain perfected for 20 days.
When you cannot physically take possession of an item, ___. But when you can take possession you can perfect by ___ unless ___.
The state title laws apply -- and then you have to note the lien on the title to perfect.
___, ___, and ___ may be perfected by control.
Nonconsumer deposit accounts
Electronic chattel paper
The only way to perfect a bank account is to ___.
To exercise control.
As to certified stock, to exercise you need to ___. It its order paper, then ___.
Take physical control of the stock certificate.
It has to be indosed by the debtor
As to uncertified stock, to exercise control, ___ and ___ will accomplish control-based perfection.
re-register the stock in the name of the secured party
Agree to follow the party's instructions
As to securities accounts, to perfect by control you need ___.
1 -- Tell intermediary you have control
2 -- tell intermediary that it must follow creditor's instructions
To control a non-consumer deposit account, because the bank ultimately has control over an account, when the secured party is not the bank the creditor can take control by ___ or ___.
1 -- get the account put in the creditor's name
2 -- get the bank to agree to follow the creditor's instructions
The best way to perfect by control, as to deposit accounts, is to ___.
Have the account put in your name.
To control electronic chattel paper you need ___ (3 items)
1 -- A single authoritative record exists
2 -- Copy identifies the secured party as the assignee of the record
3 -- copy is communicated and maintained by the secured party or its designated custodian.
When holding cars as inventory, you need ___. But when you want to buy are car, ___ because ___.
To file a financing statement.
List the lien on the title.
State laws require this.
When filing a financing statement, you can do it as to all types of collateral except ___.
As to proceeds you can perfect by financing statement because you can ___.
File a fin stmt as to the original equipment.
A notice filing is designed to ___. So, it requires ___
Enough information that leads you to find more information.
The debtor's same.
As to financing statements, when there is a trade name, file under ___.
The individual name.
When there is a mistake in the debtor's name, as to the financing statement is ___ unless ___.
It is still effective
It is seriously misleading.
If a filing officer messes up, then the financing statement is still ___.
Under an after-required property clause, you aren't perfected as to any collateral that comes iin more than ___ after a name change.
In financing statements, you have to describe the collateral by ___.
A general desriotion -- reasonably identifies collateral.
A super generic collateral description is a description that is ___ and, as to the security agreement, ___. However, its ok in the ___.
In R/E transactions, you need to do ___ and, as to property records, ___ in the financing statement.
Reasonably described the property (not be metes and bounds)
Indicate that the interest will be filed in the property records.
To file a financing statement, you need ___ from the ___. This can be accomplished by a showing of a ___.
Signature on the financing statement.
If you file a security agreement rather than a financing statement, then as to perfection, ___.
That's an adequate substitute for a financing statement.
***NOTE: Why would you ever do this? The world doens't need to know your interest rate.
You file a financing statement, as to geography, in ___.
The SoS's office.
When there is more than one state involved, you file the financing state in ___. The old test was the ___ and it ___. So, ___.
Where the debtor is located.
We don't use that **** anymore.
As to filing, you file where the debtor is located, for the purposes of an organization, you go to the place ___. If the organization is informally organized, then you file ___ and if there are multiple places of business then its ___.
Where the business is located
Where the primary office is located.
When you change your name, there is a ___, as to time, grace period.
Perfect farm product collateral, as to location, ___.
Where the farm product is located.
A financing statement is good for, as to time, ___. After that time, you need to file a ___.
You have to terminate a financing agreement when ___. If you don't ___.
The time is right.
There is $500 fine.
GO BACK TO PAGE 18
And do the top of the page.
If you perfect as to the collateral, for 20 days you are perfected as to ___. To perfect longer than that you need to take more action unless___ you don't need to refile.
There is identifiable cash.
When perfected by filing, If the new filing would take place in the same place, and there weren't cash proceeds.
If you trad inventory for new equipment, as to filing, then ___. However, if you sell the inventory and buy equipment then ___.
You don't need to refile.
You do have to refile.
As to priority disputes, when two secured parties are fighting over priority, the general rule is that ___. It is NOT based on ___. So we call these statutes ___.
Whoever files first has priority.
Who was the first to obtain a security interest.
Pure race statutes.
If no value is given for a security interest, then ___ until you ___. However, as to filing, ___.
You don't have a security interest that attaches.
You can still file or perfect.
Can more than one creditor can have perfected security interest in one piece of a collateral?
If neither party files or perfects, then ___ establishes priority
The first to achieve an attachment.
When there is a PMSI and no filing, then ___ because ___.
Perfection was automatic.
If a PMSI is made before a financing statement is filed by another creditor, then as to priority, ___ because ___.
The PMSI wins
the rule is first to file or PERFECT.
As an exception to the PMSI general rule, a PMSI wins when ___ within ___.
There is already a filing for equipment and the perfection comes later.
20 days of possession.
If a PMSI for equipment isn't filed within 20 days, then ___.
You fall back to the general rule.
If there is a PMSI in inventory or livestock then ___.
The PMSI beats a conflicting interest if, before the debtor receives possession, the secured party perfects and you send authenticated notice to the people that filed ahead of you. Then you have to make delivery within 5 years for inventory and livestock within 6 months.
If a PMSI holder doesn't send notice (authenticated that is) to prior filers in livestock and inventory then __.
Revert to the basic rule.
If you borrow a down payment for an equipment loan, then the lender and the equipment dealer ___. The current code says that the ___ prevails if ___.
Both have a PMSI
Both creditors file within 20 days.
A security interest perfected by control, with regard to stock, ___. If two people perfect by control, then ___. If both perfect by filing and neither perfects by control, then ___.
Prevails over any other method of perfection.
Whoever did it first wins.
Whoever files first wins.
A security interest that is perfected by control, as to deposit accounts, when there is both original collateral and proceeds in a bank account, then ___.
The creditor perfected in the original collateral wins.
Look at page 22
Do the note on page 22
Purchasers of chattel paper were concerned about ___ and ___. So, ___ and ___ unless ___ and ___.
1 -- someone else already having a lien on proceeds (the inventory guy -- who, btw, likes it when the chattel paper is sold on)
2 -- having to check to see if the debtor put up the chattel paper as collateral for someone else.
If a purchasers of chattel paper puts up new value in good faith then the purchaser of chattel paper beats the proceeds holder.
The chattel paper buyer beats a;sdklfja;kjsf
The chattel paper says its encumbered.
If you have security in chattel paper and the chattel paper is sold, then its sold clear of the security interest when ___. Even if its not authorized, then ___.
There is express or implied authorization.
The buyer is usually a buyer in due course.
Implied authorization occurs when ___. This is all based on the theory of ___.
someone acquiesces in the sale.
Farm products are excluded because
they are governed by federal law
if a seller usually sells this stuff and the buyer usually sells it in that manner then ___. Also, look for ___. Note that people are not ___.
You're a buyer in the ordinary course.
If you know that sale to you violates the terms of the security agreement, then ___.
You're not a buyer in the ordinary course and you don't take free.
If you are a buyer in the ordinary course, you take free of a security interest ___. But watch out for suits based on ___.
Created by yourself.
The warranty of title.
If you're a buyer NOT in the ordinary course of business, you take ___ unless ___.
Subject to the perfected security interest.
The security interest is unperfected and the buyer not in the ordnary course didn't have knowledge of the security interest.
If under a future advance clause the lender keeps making advance loans, then ___.
The buyer not in the orduary course WHAT THE EFF!
Usually in consumer sales, a PMSI ___. But, as it pertains to consumer to consumer sales, ___ unless ___.
Usually automaticall perfects and beats other creditors.
The buyer takes free of a security interest so long as its for consumer use and the transaction is in good faith for value
UNLESS a financing statement has been filed
***NOTE: This is about a garage sale.
Aticle 9 defines a lien creditor as ___.
An unsecured creditor who has obtained a judgment an leveyed on it, then ___
That person is a judgment lein creditor.
If there is a levely before perfection, then ___.
The judgement creditor has priority.
If a perfection occurs before a lien creditor levies, then ___.
The first interest holder has priority.
There is some 20 day exception to the levy rule
If after a levey, you continue to make advances, then ___.
the lien creditor wins...
In about 45 states, the statutory lien on a car (mechanic's lien) has priority over a ___ because ___.
Prior perfected security interest.
He helped preserve the value of the collateral.
As to default, the right of the secured party to proceed agains the debtor requires ___.
Default in the UCC is ___. So, make sure that the creditor hasn't ___.
Waived his right to argue default. (allowing late payments for six months).
If a default has not been waived, a secured party can repossess as long as ___.
Whenever you want and as long as there is no breach of the peace.
A breach of the peace is anything that ___ but that term is, under the UCC, ___. Its like a breach wehn the collateral is ___ and that includes when ___.
Is likely to lead to violence.
Taken over the debtor's objection.
Constructive force -- like causing fear in someone.
Unauthorized entry into a home, even if via a ___, then its probably a ___. However, a ___ is probably ok.
Window or an open door.
Breach of the peace.
Garage that is open.
If you have to ___ to get into a part of the home to repossess a piece of property, the farther you are from the home the more likely ___.
It won't be a breach of the peace.
If the security doesn't give you a right of repossession, then there is (probably) ___.
An implied right of repossession.
Once you have repossessed an item, with consumer goods, keeping the collateral has to be in ___. In other settings, it can be in ___. If you go this route, you have to ___ and if anyone objects then they can force you to ___.
Full satisfaction of the debt.
Notify all the parties (including sureties)
Sell that ****.
After repossession, the creditor can, as to condition, ___.
Sell or lease the property in the condition it was taken or after reasonable preparation.
Liquidating the collateral can be done via ___ or via ___.
If there is a superior interest in goods, at an auction, then ___.
The new buyer has to take subject to the superior creditor
To hold an auction, you have to ___.
Notify just about everyone. Figure that out.
Notice of a judicial sale must be sent, as to time, ___. Genearlly that means ___, but its a question of ___.
Within a reasonable time.
As to notice, the UCC says that the notice must contain ___.
A secured party cannot sell to themselves at a ___.
If the secured party gets a deficiency, then ___.
The debtor gets a knock on the door.
If you failed to comply with article 9, there is a rebuttable presumption that ___.
The value of the collateral = the value of the debt.
Personalty attached to r/e with the intent to become a permanent part is considered a ___.
Ordinary building are/are not fixtures?
TO perfect an interest in a fixture, you need to ___.
Follow the same rules as if it wasn't a fixture.
A fixture filing is necessary for ___ but not as to ___.
Establishing priority of r/e interests.
Other security interests in the fixture.
UCC 2-702(2) holds that ___
When an insolvent buyer buys goods on credit, the seller can order recovery of the goods w/i ten days.
If there is an after-acquired property clause for inventory and an insolvent buyer buys inventory, then as between the seller and the secured party, ___
The lender is a good faith purchaser of the inventory by function of the after acquired property clause and so the seller's 10 day right to reclaim the inventory is cut off.
If you file a financing statement before attachment, whever attachemtn is complete the financing statement is good as to what time for the first to file or perfect rule?
When it was originally filed.