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Themis Secured Transactions - July 2025 (MEE) > Ch 1: In General > Flashcards

Ch 1: In General Flashcards

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1
Q

What governs secured transactions?

A

Article 9 of the Uniform Commercial Code (UCC)

The UCC has been amended multiple times, most recently in 2010 and 2022.

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2
Q

What is a secured transaction?

A

A relationship between a debtor and a creditor where the debtor gives a security interest in specific property to assure repayment of an obligation.

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3
Q

What is a security interest?

A

An interest in personal property or fixtures that secures payment or performance of an obligation.

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4
Q

What are the purposes of a security interest?

A
  • Make the debt more collectible.
  • Provide a superior position to other creditors.
  • Grant rights to obtain collateral if sold or transferred.
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5
Q

What are the three types of parties in a secured transaction?

A
  • Secured party
  • Obligor
  • Debtor
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6
Q

Who is a secured party?

A

The person in whose favor a security interest is created under the security agreement.

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7
Q

Who is an obligor?

A

The person who must pay or perform regarding the obligation secured by a security interest.

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8
Q

Who is a debtor?

A

The person who has an interest in the collateral, other than a security interest or lien.

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9
Q

What is collateral?

A

Property subject to a security interest.

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10
Q

What are the classifications of goods?

A
  • Consumer goods
  • Farm products
  • Inventory
  • Equipment
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11
Q

Define consumer goods.

A

Goods acquired primarily for personal, family, or household purposes.

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12
Q

Define farm products.

A

Goods that are crops grown, growing, to be grown, livestock, and supplies used in farming.

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13
Q

What constitutes inventory?

A

Goods held for sale or lease, furnished under a service contract, or materials used in business.

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14
Q

What is equipment in the context of secured transactions?

A

Goods used or bought primarily for business purposes.

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15
Q

What is chattel paper?

A

One or more records that evidence both a monetary obligation and a security interest in specific goods.

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16
Q

What is a document of title?

A

A document that confers ownership rights in goods held by a bailee.

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17
Q

What are negotiable instruments?

A

Instruments that evidence a right to payment of a monetary obligation, such as promissory notes and checks.

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18
Q

What is investment property?

A

Includes certificated and uncertificated securities, as well as securities accounts and commodity contracts.

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19
Q

What is an account in secured transactions?

A

The right to payment for property sold or services rendered.

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20
Q

What are commercial tort claims?

A

Tort claims possessed by an organization or an individual arising in the course of business.

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21
Q

What is a deposit account?

A

A savings, passbook, time, or demand account maintained with a bank.

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22
Q

What is a letter-of-credit right?

A

A right to payment or performance under a letter of credit.

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23
Q

Define general intangibles.

A

The residual category of personal property that is not included in other types of collateral.

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24
Q

What is the general rule for transactions under Article 9?

A

Article 9 governs transactions that create a security interest in personal property or fixtures by agreement.

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25
What governs true leases of goods?
Article 2A.
26
What is a protective filing?
A filing made by a lessor to ensure perfected status if a lease is later determined to be a secured transaction.
27
What are the requirements for consignments to be subject to Article 9?
* Goods must be delivered to a merchant for sale. * Merchant must deal in goods of that kind and not operate under the consignor's name. * Merchant must not be known as selling goods of others.
28
What is required for a person (consignor) to deliver goods under Article 9?
A person must deliver goods to a merchant for the merchant to sell
29
What are the requirements for a merchant (consignee) under Article 9?
The merchant must: * Deal in goods of that kind * Not operate under the name of the consignor * Not be generally known by creditors to be engaged in selling goods of others * Not be an auctioneer
30
What is the minimum value of goods delivered under Article 9?
At least $1,000 at the time of the delivery
31
What type of goods are excluded from Article 9 just before delivery?
Consumer goods
32
Are statutory or common-law liens subject to Article 9?
No, except for the rule regarding the priority of such a lien
33
What is a statutory or common-law lien example?
A mechanic’s lien
34
Are agricultural liens considered security interests?
No, they are interests typically in farm products securing payment or performance of an obligation
35
What creates an agricultural lien?
Statute in favor of a person who furnished goods or services to a debtor in connection with farming operations or leased real property
36
Do agricultural liens need to comply with Article 9?
Yes, they must comply with the rules regarding perfection of the lien to enjoy priority
37
Is the sale of personal property generally subject to Article 9?
No
38
Under what circumstances is the sale of accounts, chattel paper, payment intangibles, and promissory notes subject to Article 9?
Subject to exceptions; not if part of the sale of the business out of which they arose
39
What are exceptions to Article 9 regarding assignments?
Assignments for collection only, single account assignments for preexisting indebtedness, and assignments to an assignee obligated to perform under the contract
40
What is the effect of a seller's retention or reservation of title under Article 2?
Limited to a reservation of a security interest
41
How does Article 9 apply to real property transactions?
It applies to a security interest in a secured obligation, even if the obligation is secured by a transaction to which Article 9 does not apply
42
What is one way value may be given under Article 1?
By providing consideration sufficient to support a simple contract
43
How can value be given in terms of credit?
By extending credit, either immediately or under a binding commitment
44
What happens when a buyer accepts delivery under a preexisting contract?
It converts a contingent obligation into a fixed obligation
45
What is another way value can be given?
In satisfaction of, or as security for, part or all of a preexisting claim
46
What is a secured transaction?
A secured transaction arises when a debtor makes a purchase on credit and agrees to give the creditor a security interest in specific property as collateral for the loan.
47
Which article of the Uniform Commercial Code governs secured transactions?
Article 9 of the Uniform Commercial Code (UCC).
48
What is a security interest?
An interest in personal property or fixtures that secures payment or performance of an obligation.
49
Who is the secured party in a secured transaction?
The person in whose favor the security interest is created under the security agreement.
50
What role does the obligor play in a secured transaction?
The person who must pay (or otherwise perform) with respect to the obligation that is secured by the security interest.
51
Define debtor in the context of a secured transaction.
The person who has an interest—other than the security interest or other lien—in the collateral.
52
What is collateral?
The property subject to the security interest.
53
What are the three effects of collateral characterization?
* Validity of a security interest * Perfection of a security interest * Rights of a third party in the collateral
54
What constitutes tangible collateral?
Goods that are movable at the time the security interest attaches, including fixtures, standing timber, unborn animals, unharvested crops, and manufactured homes.
55
How does the debtor's principal use of goods affect collateral classification?
The debtor’s principal use of the good at the time the security interest attaches determines the classification of the good.
56
What are consumer goods?
Goods acquired primarily for personal, family, or household purposes.
57
Define farm products in the context of secured transactions.
Crops or livestock and supplies used or produced in farming.
58
What is classified as inventory?
Goods held for sale or lease, furnished under a service contract, or consisting of raw materials and work in process.
59
What are equipment goods?
Goods that are not consumer goods, farm products, or inventory.
60
How is software treated when embedded in goods?
It is treated as part of those goods.
61
What is chattel paper?
One or more records that evidence both a monetary obligation and a security interest in specific goods.
62
What does 'documents' refer to in the context of other collateral?
A document of title that confers on the holder ownership rights in goods held by a bailee.
63
What are instruments in secured transactions?
Negotiable and nonnegotiable instruments, such as promissory notes and checks.
64
Define investment property.
Includes certificated and uncertificated securities, as well as securities accounts.
65
What are accounts in secured transactions?
The right to payment for property sold, leased, or licensed or services rendered.
66
What do commercial tort claims include?
Tort claims held by an organization or individual that arose during the course of business.
67
What types of accounts are included in deposit accounts?
* Savings account * Passbook account * Time account * Demand account
68
What are letter-of-credit rights?
The right to payment or performance under a letter of credit.
69
What are general intangibles?
A residual category that includes items such as copyrights.
70
What transactions does Article 9 govern?
* Transactions creating a security interest in personal property or fixtures * Leases treated as secured transactions * Consignments under certain conditions * Agricultural liens
71
True or False: Article 9 governs the sale of personal property.
False.
72
Can Article 9 apply to a security interest in a secured obligation for a real property transaction?
Yes, even if the obligation is secured by a transaction or interest to which Article 9 does not apply.

Themis Secured Transactions - July 2025 (MEE) (5 decks)

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