February 2022 Flashcards
Article 9
Article 9 governs the secured transactions. In order to have a secured party retain their interest in a piece of collateral it must be attached to the collateral. In order to attach to the collateral there must be value given, the debtor must own the collateral, and there must be an authenticated security agreement. The security agreement must be a record that identifies the parties, that is signed by the debtor, and must describe the collateral with some degree of certainty.
Rules of attachment
The rules for attachment are above. A security agreement can have an after acquired clause that allows the secured party to have an interest in after acquired property. This will allow the secured party to be attached to current collateral and collateral that is later acquired by the debtor.
PMSI
A purchase money security interest is a security interest that occurs usually when goods are bought through credit. It is generally attached when it is given. A PMSI will create a security interest in the goods when the line of credit is extended to an identifiable source of goods.
Priority of interest
In order to have priority, a party must perfect its interest. Generally, a perfected party wins over a non-perfected party, and when both parties are perfected, the first to perfect generally will have priority. The way to perfect a security interest is to file a financing statement or have possession or control over the collateral. A PMSI will automatically perfect when the secured party gives goods. A PMSI in equipment will prevail over a perfected security interest if within 20 days a financing statement is filed.
Armed robbery
Armed robbery is theft of property, when in the course of the theft the offender is carrying a dangerous weapon, and either (1) uses force, violence, or assault or (2) puts the victim in fear of serious injury. A dangerous weapon is any firearm, device that was designed for use as a weapon, or device that is being used in a manner likely to produce death or great bodily harm.
The elements for theft include the unlawful taking and carrying away of property from the person or custody of another, with the intent to permanently deprive the owner of the property.
Criminal possession of stolen property
The elements for criminal possession of stolen property occurs when a person possesses property that the person knows or reasonably knows is stolen property with the intent to either (1) benefit that person or a person other than the owner thereof), or (2) to impede the recovery by an owner.
Actual and apparent authority
For a principal to be bound to a contract entered into by the principal’s agent, the agent must have been acting with either actual (express or implied) or apparent authority. Actual authority exists when the agent reasonably believes to have authority based on their dealings with the principal, either by express words or implied by conduct. On the other hand, apparent authority exists when a third party believes that the agent has authority based on the principal having held out that the agent had such authority. Apparent authority does not exist when the third party knows that the agent is acting without authority.
Principal’s ratification
principal has a duty to compensate the agent for their services and also reimburse the agent for purchases made on the principal’s behalf. Even if a principal is ordinarily not liable for a contract when an agent acted without authority, authority may be essentially revived when the principal ratifies the agent’s action that originally lacked authority.
Spendthrift clause
Generally, a beneficiary’s interest in a trust is freely alienable absent a statute or a trust instrument. A spendthrift clause in a trust prevents a beneficiary from transferring her interest in the trust. Additionally, the spendthrift clause also prevents creditors from reaching the trust assets. As a result, the creditor can only reach trust assets when they are distributed by the trustee to the beneficiary. However, public policy exceptions exist for when the creditor is a spouse seeking alimony or unpaid child support, or the creditor paid for necessities.
General power of appointment
A general power of appointment gives the donee broad discretion to make appointments. Pursuant to that power, the donee may appoint herself or creditors to receive the assets. In contrast, a specific power of appointment limits the discretion of the donee in making the power of appointment. A specific power of appointment may narrow the class of potential appointees.
Failure to exercise power of appointment
Traditionally, unless an alternative devise is made, an interest in trust principal lapses if the donee fails to exercise her power of appointment. When a donee fails to exercise her power of appointment, the trust principal is distributed equally among the remaining beneficiaries.
Contracts for sale of goods
Contracts for the sale of goods are governed by the UCC, while contracts for the services are governed by common law. Contracts for the sale of goods over $500 must be evidenced by writing signed by the party to be charged under the statute of frauds.
However, the UCC allows an exception to this rule to be made under the Merchant
Confirmatory Memo rule in which contracts between merchants satisfy the statute of frauds if one of the parties sends the other a signed memo evidencing the contract. A merchant is a one who typically deals with the type of goods in the contract. Typically quantity is a material term which must be included in the writing. If the memo is sent to the other merchant and is not objected to within 10 days of its receipt, the memo binds the merchant and is enforceable under the statute of frauds.
UCC gap fillers
The UCC does not require all terms of the contract to be evidenced by the writing in order to be enforceable. When terms are left blank, such as price or place of delivery, the UCC can fill in the terms with the UCC statutory gap-fillers. Typically, the gap-fillers include a reasonable price and Seller’s place of business for delivery. However, the UCC permits alternative ways to fill in gaps in a contract. If there are no express terms for the particular term, the court may look at the parties’ course of performance, course of dealing, or trade practices, all in that order. Course of performance means the parties will use what was done in the parties’ course of performance in the same contract. Course of dealing means that court will look at how the parties have performed on previous contracts with the same parties. Trade practice are what is typical is the trade.
Breach of contract
Under the UCC, a party breaches the contract if there is not perfect tender. If a party breaches the contract under the UCC between merchants, the non-breaching party may cover her damages by seeking a commercially reasonable contract in good faith that is similar in quality and price to the original contract. If cover damages are sought by the non-breaching party, the non-breaching party is owed the cover damages minus the original contract price plus incidental and consequential damages.
