Attachment

Question 1

What is required for a security interest to attach to collateral?

Answer 1

1. Value given by secured party
2. Debtor has rights in collateral
3. Debtor has authenticated a security agreement that describes it, OR secured party has possession or control of collateral

Question 2

What is sufficient value given by a secured party?

Answer 2

Consideration sufficient to form a contract, extend credit, etc.

Question 3

Can future advances be secured by collateral?

Answer 3

Yes

Question 4

What are a debtor’s rights in collateral?

Answer 4

SI attaches only to the rights the debtor has in the collateral

Question 5

What are a debtor’s rights in a consignment?

Answer 5

If the consignor retains title to the consigned goods, the consignee does not have rights in them

Question 6

What are the ways for a security agreement to satisfy Article 9’s statute of frauds?

Answer 6

1. Authenticated record
2. Possession of colleteral
3. Control of collateral

Question 7

What must an authenticated security agreement contain?

Answer 7

1. Must be in a record
2. Describe the collateral
3. Be authenticated by the debtor

Question 8

What must a description in a security agreement contain?

Answer 8

It can list specific items or just identify the Article 9 type of collateral.

Question 9

When is a super-generic description not valid for a security agreement?

Answer 9

If it is a consumer good or a commercial tort

Question 10

What duties are imposed on someone in possession of collateral?

Answer 10

1. Reasonable care
2. Keep collateral identifiable
3. Relinquish collateral once obligation satisfied

Question 11

Can someone in possession of collateral bill reasonable expenses to a debtor?

Answer 11

Yes, to maintain the collateral

Question 12

What kind of things can be possessed?

Answer 12

Consumer goods, equipment, farm products, chattel paper, tangible docs, certified securities, instruments, money

Question 13

What kind of things can be controlled?

Answer 13

e-chattel paper, investment property, letter of credit rights, and deposit accounts

Question 14

Can a security interest cover collateral subsequently acquired by the debtor?

Answer 14

Yes, except for consumer goods and commercial tort claims

Question 15

When is an after-acquired clause effective against consumer goods?

Answer 15

When the debtor acquires them within 10 days after the secured party gives value

Question 16

When does an SI attach to identifiable proceeds?

Answer 16

Automatically

Question 17

Does someone with control or possession of collateral have the right to use it?

Answer 17

Yes

Question 18

What rights does a debtor have?

Answer 18

Accounting and notification of when they no longer need to pay debts

Question 19

When does a PMSI in goods exist?

Answer 19

1. SP gave value enabling the debtor to buy goods, OR

2. SP sold goods to the debtor, and the debtor is boliged to pay the SP all/part of the price

Question 20

When does a PMSI in software exist?

Answer 20

Only when the debtor acquired his interest in software in an integrated transaction, i.e. one in which they got an interest in other goods, AND when they got the interest for the principal purpose of the software in the goods

Question 21

What is an accession?

Answer 21

An accession is a good that physically unites with other goods such that the identity is not lost

Question 22

Does an accession cause a SI to be lost?

Answer 22

No

Question 23

What are commingled goods?

Answer 23

Goods that are physically united such that their identity is lost

Question 24

Does a commingled goods cause an SI to be lost?

Answer 24

Yes, but it can transfer to the product or mass of the commingled goods