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Flashcards in Default Deck (28)
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1

default

-not defined by article 9
-refer to the SA and the rules of K interpret
-can be more than just non-payment to default on a SA

2

Seek to possess the collateral after default

1) judgment- SP goes to court, proves up default, gets judgment OR
2) non-judicial re-possession- after default, a SP is entitled to take possession of the collateral through self-help repossession

3

self-help repossession

-possession cannot breach the peace
-typically any criminal act is BOP
-if SP brings a cop to the repossession and there is not a writ of execution, officer's presence is a per se breach of peace
-typically must be some potential for violence

4

alternative to self-help repossession

-after a default, the Sp may render the equipment (heavy machinery) unusable (like go put a boot on it)
-this may also apply to consumer goods by agreement

5

accounts- self-help

-SP has the option to step into the debtor's shoes for 3P that owe the debtor
-SP can collect directly

6

fixtures self-help

-SP is entitled to repossess (remove fixture)
-if RP owner to which the fixture is attached is someone other than the debtor, the SP must reimburse the owner for any damages caused by the removal BUT NOT for any diminution in value caused by the absence of the goods

7

disposition of collateral

-a SP may sell, lease, license, or otherwise dispose of all or any collateral so long as the disposition is in all ways commerically reasonable.
-a SP may dispose of the collateral publicly or privately

8

commerically reasonable stnd for disposition

-IS if
1) is sold in the usual manner on a recognized market
2) at the price current in any recognized market at the time if disposition OR
3) in conformity with reasonable commercial practices amount dealers in the type of property that was subject to disposition

9

commercially reasonable price

-price alone doesn't etablish it wasn't commerically reasonable
-a low price can trigger careful scrutiny by the court of all aspects of the disposition and its reasonableness

10

commerically reasonable time

-art 9 does not mandate a specific time in which a disposition must occur
-surrounding circumstances may dictate what is a commercially reasonable time for disposition

11

notice of disposition

must give to:
1) debtor
2) any other secured party or lienholder that was perfected by filing or pursuant to a statute and
3)any other party from whom the secured party has received authenticated notice of a claim or interest in the collateral

12

notice-timing

-must be given in a reasonable time period
-art 9 provides a safe harbor that 10 days notice to disposition is reasonable

13

notice- content

MUST contain:
1) debtor and SP's name
2) description of the collateral
3) how, when, where the collateral will be disposed, and
4) a statement that the debtor is entitled to an accounting of the unpaid indebtedness and the charge if any for providing the accounting

14

Notice of disposition-- consumer good

must also include:
1) description of any liability for a deficiency of the person to whom the notification is sent
2) phone number from which redemption amount is available AND
3)telephone number or mailing address from which additional information concerning the disposition and secured obligation is available

15

proceeds of disposition

a SP must apply, or pay over for application, cash proceeds of a disposition in the following order:
1)reasonable expenses for collection and enforcement (atty fee if in SA);
2) satisfy the debt owed to the foreclosing SP
3)satisfy any subordinate SI (provided that junior SP makes a demand prior to distrubof proceeds
4) remainder of the proceeds to the debtor

16

order of proceed distribution from disposition

1) reasonable expenses
2) secured party
3) subordinate liens
4) debtor

Rusty Elders Should Play Soccer Late Dear

*senior liens dont get proceeds, they continue to have a SI in the collateral; junior liens distinguished by the sale*

17

proceeds of disposition insufficient

-secured party can seek a deficiency judgment for the remaining amount (but may be an unsecured creditor for that amount)

18

Acceptance of collateral

-a Sp can opt to keep the collateral in lieu of disposing of the collateral
-can be full or partial satisfaction if certain conditions are met
-

19

Full Satisfaction

-may accept collateral in full satisfaction of an obligation secured by the collateral when:
1) debtor consents, after default, to the acceptance in an authenticated record, OR
2) debtor does not object to the SP's proposal to accept the collat within 20 days after the proposal is sent

20

partial satisfaction

-SP may accept collat in partial satisfaction of an obligation secured by the collateral when the debtor consents after default to the acceptance in an authenticated record

21

notice for partial/full satis

-SP must send notice to other SPs who have an interest in the same collat and cannot accept the collat in full or parital satis if it receives objection to the proposed acceptance within 20 days after such notice was sent
-EXCEPTION: consumer debtors- a SP can accept colat only in full satis of the obligation
-Except to Except: if goods are CG and the debtor has paid 60% of the cash price in cas of a PMSI, or 60% of the obligation secured in a non-PMSi case, then the goods must be sold unless the debtor waives this right to force a sale of the collat, provided it is done after default in an autenticated agreement

22

redemtpion

-up to any point before SP has disposed of (or entred K to dispose of) collat, debtor can fulfill all obligations and redeem collat.
-includes reasonable expenses for repossession

23

SP fails to comply with art 9

-can lead to injunctive relief, damages, and the reduction of any deficiency judgment sought by the secured creditor

-EX: BOP, no notice of disposition, failing to dispose in commercially reasonable manner,

24

Actual damages

-debtor or other SP can seek damages for any loss caused by the SP's failure to comply
-can be inability to obtain other financing, or increased cost of obtaining such financing

25

Statutory minimim for CG

-debtor may recover an amount not less than 10% of principal amount of the obligation or the time-price differential, plus 10% of the cash price, even if the actual damages are less

26

reduction of deficiency in non-consumer transaction

- rebuttable presumpt that SP is not entitled to collect a deficiency which can be overcome by showing the deficiency would have existed even if the SP complied with Art 9

27

reduction of deficiency in consumer transaction

-If tranaction is a consumer transaction and he SP's collection, enforcement, disposition, or acceptance is not in accord with art 9, courts apply an absolute bar rule where non-complying SP cannot recover a deficiency
-Texas is minority in this regard

28

conversion action for improper repossession

-when SP improperly repossesses collateral, the debtor may be able to pursue a conversion action under non-UCC law.