General Terminology Flashcards
(34 cards)
Security Interest
Arises when a
1) Debtor
2) Uses property as collateral
3) To secure repayment of funds to another (Secured Party/Creditor)
Creditor’s interest in collat = sec. interest
Default = creditor takes possession of collat + applies to balance owed
UCC 9 Applicability
1) Any transaction, regardless of form, that creates a sec. interest in personal prop. or fixtures by contract AND
2) Leases IF substance of lease financed purpose v. true lease AND
3) Sales of accounts receivable, chattel paper, negotiable interests, + payment intangibles
NOT applicable if landlord’s lien
NOT applicable if interest in real prop (prop law, not UCC –ex leases ,rents)
Transaction Creating a Security Interest
Look to substance of transaction, NOT label given by parties
Transaction and seller of goods retains/reserves title = limited to reservation of sec. interest
UCC 9 Leases
UCC 9 applies IF substance of lease financed purpose, v. actual lease
1) Lease term not subject to early termination by lessee AND
2) Term for econ. life of goods (ex. 5 yr “lease” for printer, + printer only good for 5 yrs) OR
3) Lessee has purchase option at end of term for zero or nominal consideration (ex. $10)
Sales included in UCC 9 (even though tech. sales, not sec. trans)
1) Accounts receivables
2) Chattel paper
3) Negotiable instruments
4) Payment intangibles
UCC 9 Broad Collateral Types
1) Goods
2) Tangible Intangibles
3) Intangible Intangibles
4) Investment Property
Also includes any proceeds derived from secured collateral
Types of Goods
Based on capacity + how primarily used
1) Consumer Goods
2) Inventory
3) Farm Products
4) Equipment
Types of Tangible Intangibles
1) Instruments
2) Documents
3) Chattel Paper
Types of Intangible Intangibles
1) General Intangibles
2) Accounts
Goods (general)
All things that are moveable at time sec. interest attaches
Includes fixtures + computer programs embedded in computers
4 categories: 1) Consumer Goods; 2) Inventory; 3) Farm Product; 4) Equipment
Det type by primary use–CAN be diff types in diff contexts (dishwasher–consumer good in house, inventory in Lowes, equip in laundromat)
Consumer Goods
Goods used or bought primarily for personal, family, or household purposes (ex. table, chair)
Inventory
Goods, other than farm products, that are held for sale and lease OR furnished under contracts of service
Also includes raw materials, work in process, + material used + consumed in business (ex. paper, pencils, for bookkeeping, etc.)
Used/consumed/sold quickly–“here today, gone tomm’w”
Accounts Recievables
Money owed when businesses sell stuff/render services (sold x, did x, customer owes y but hasn’t yet paid)
Sell under UCC 9 = sell rt to collect $$
Not tech. sec. interest–sale–but want notice of this sort of stuff, so treat like is
Farm Products
“Goods, other than standing timber (live trees) w/ respect to which debtor engaged in farming op
Ex. crops, livestock, products of crops/livestock in unmanufactured state, aquatic goods made in aquaculture ops, supplies used or produced in farming
Ex. corn, cows, milk, tractor, feed, fertilizer
Equipment
Catch-all– goods “other than inventory, farm products, or consumer goods
Usually = used + bought primarily for business (ex. heavy machinery, tools, delivery van–don’t go in + out quickly–> not inventory like pencils, etc)
Tangible Intangibles (General)
Intangibles reduced to tangible/written form
Tangible intangible if interest transfers when writing does (writing important only b/cause = intangible rt)
Ex. check, IOU, warehouse receipt
3 types: 1) Instruments; 2) Documents; 3) Chattel Paper
Instrument
TLDR = Legally sig piece of paper that signifies rt to get $$ (vs. document–rt to get goods)
Negotiable instruments like drafts (ex. check), note (ex. promissory note) + any writing evincing rt to payment of monetary obligation
“Of a type that in ord. course of bus. transferred by delivery w/out any necc. endorsement or assignment”
Documents
TLDR = legally sig piece of paper that signifies rt to get goods (vs. instrument–rt to get $$)
Docs of title–doc which, in the ord. course of bus. treated as dem. that the person in possession of doc entitled to receive, hold, + dispose of doc + goods it describes (ex. warehouse receipt)
MUST
1) Be issued by/addressed to bailee (ex. warehouse person) AND
2) Purport to cover goods in bailee’s possession (“whoever has receipt entitled to x widgets”) AND
3) Goods IDed or fungible pts of IDable mass (ex. stack of oranges)
Intangible Intangibles (general)
Intangible rts that may be associated w/ piece of paper, but not indispensable (paper ≠ rt)
Ex. monetary obligation, literary rts, website domain name, rt to sue
2 types: 1) General; 2) Accounts
General Intangible Intangible
Intangible collateral that fails to fit any other category
Legally capable of being bought + sold and doesn’t fit any other category = prob. gen. intangible intangible
Ex. literary rights, website names, software not yet on computer
Chattel Paper
Record/s evincing BOTH monetary obligation AND sec. interest/lease in goods
Ex. Sell car, gets promissory note ($$) + sec. agreement for sec. interest in car–package/bundle of note + interest = chattel paper
Electronic chattel paper = chattel paper stored in elec. medium
Accounts
Rts to payment of a monetary obligation
Gen. for prop. sold/to be sold, services rendered/to be rendered
Ex. sold x, have rt to be paid in future-> can transfer rt to get paid
Investment Property
Certified + uncertified securities, securities accounts, entitlements–basically “stuff bought for investment purposes”
Rule to keep in mind re: different types of collateral
Consumer goods often get special protection (as do PMSIs–sec. agreement used to buy that item)
