MEE_Secured Trans

Question 1

Attachment

Answer 1

1) Debtor authenticates sec agmt or creditor takes poss’n or ctrl of collateral
2) Creditor gives value
3) Debtor has rights in collateral

Question 2

How are sec interest in goods Perfected?

Answer 2

perfected by Possession or Filing Financing Stmt

Question 3

PMSI

Answer 3

creditor advances credit/provides funds needed for purchase &
takes sec int in goods purchased

Question 4

PMSI in Consumer Goods

Answer 4

Automatically Perfected on Attachment

Question 5

Consumer goods =

Answer 5

used/bought primarily for personal, family, household purposes

Question 6

Equipment =

Answer 6

goods that aren’t consumer goods, inventory or farm products

catch all for goods

Question 7

Priority btw two perfected sec int

Answer 7

First to file/perfect has priority

Question 8

To attach a security interest:

Answer 8

1) either Debtor must authenticate a Security Agmt granting Creditor sec int in collateral that describes the collateral
OR
Creditor must take Possession or Control of the collateral
(2) Creditor must give value and
(3) Debtor must have rights in collateral

Question 9

Priority - Perfected v Unperfected

Answer 9

Perfected prevails over Unperfected in same collateral

Question 10

Accessions =

Answer 10

goods physically united w/ other goods such that identity is not lost

Question 11

Priority - cert of title v accession

Answer 11

Sec Int. in whole perfected under cert of title prevails over sec int in accession

Question 12

after-acquired property clause =

Answer 12

sec int attaches when Debtor obtains interest in collateral

Question 13

Superpriority Rule

Answer 13

Equipment PMSI has superpriority if PMSI is perfected when debtor gets possession

Question 14

Perfection by Filing

Answer 14

Sec int in all collateral except deposit accounts and money can be perfected by filing financing stmt, generally w/ sec of state

Question 15

Financing Stmt - requirements

Answer 15

Financing stmt must contain Debtor’s name & address, Secured party’s name & address, and indication of collateral

Question 16

Automatic Perfection

Answer 16

may occur w/o filing sec int in small-scale assignment of an Account or Paymt Intangible that does not alone transfer a significant part of the assignor’s outstanding accounts or payment intangibles to creditor

Question 17

Attachment (checking acct)

Answer 17

parties agree to create sec agmt
creditor gives value
debtor has rights in collateral

Question 18

Financing Stmt - Name not seriously misleading

Answer 18

if financing stmt still would be discovered in search of debtor’s correct name using filing office std search logic

Question 19

Waiver of redemption

Answer 19

Debtor can redeem collateral after default -

right to redeem can be waived only after default

Question 20

Lease intended as sec governed by art 9 as sec int

Answer 20

Intent measured by economic realities of transaction

P paid more than cost of over lease term
P could no end lease at any time
L could recoer if P didn’t pay
P had option to buy a end of lease

Question 21

Proceeds of Sale - order of priority

Answer 21

Proceeds of sale go to expenses - then to debt foreclosed - then to junior interests

Question 22

sec int after default

Answer 22

all subordinate sec int discharged if sec party sells collateral after default, unless bad-faith purchaser

Question 23

Inventory

Answer 23

goods including supplies used in manufacturing, raw materials (typically items used quickly in a business) (goods held for sale/lease)

Question 24

BIOC =

Answer 24

buyer in ordinary course of business takes free of nonpossessory sec int created by seller unless he knows sale violates sec agmt

Question 25

Inventory

Answer 25

held by person who holds them for sale or lease or to be furnished under service contracts, materials used or consumed in a business in a short period of time

Question 26

Farm products

Answer 26

crops or livestock or supplies used or produced in farming ops or products of crops or livestock in their unmanufactured states (ginned cotton, wool-clip, maple syrup, milk and eggs)

Question 27

Instruments

Answer 27

pieces of paper representing the right to be paid | promissory notes, drafts, checks, cds

Question 28

Documents

Answer 28

represent the right to receive goods (bill of lading, warehouse receipt)

Question 29

Accounts

Answer 29

includes a right to payment for property sold or services rendered (not evidenced by an instrument or chattel paper)

Question 30

General Intangibles

Answer 30

an personal property not coming /in scope of other definitions (software, patent, trademark, copyrights, goodwill)

Question 31

Classification of a computer program

Answer 31

if sold separately, general intangible when embedded in computer, if in business is equipment or if at home, consumer good

Question 32

To distinguish the "true lease" from the "disguised sale":

Answer 32

Ask: At the time parties entered into transaction, was it reasonably likely Lessor would get item back when it still had meaningful economic value? Lease disguised as secured sale - (1) at end of lease period, lessee becomes owner of x for little or no consideration, OR (2) lessee bound to purchase goods at end of lease or renew lease for remaining economic life of goods OR (3) lease for entire economic life of leased goods, w/ or w/o renewal

Question 33

Ways a security interest Attaches:

Answer 33

1) Security Agreement 2) Possession 3) Control

Question 34

Possession =

Answer 34

collateral in possession of secured party pursuant to oral sec. agmt = pledge (i'll loan you $50, keep your watch until repayment)

Question 35

Control =

Answer 35

if collateral is non-consumer deposit acct, electronic chattel paper, or investment property

Question 36

Security Agreement description must

Answer 36

reasonably identify collateral supergeneric description not sufficient

Question 37

Rule for Proceeds

Answer 37

Sec int automatically gives sec. p arty right to "Identifiable proceeds" Identifiable = traced back to creditor's original collateral

Question 38

Methods of Perfection

Answer 38

1) Automatic Perfection 2) Possession of collateral by secured party 3) Control - non-consumer deposit accounts, electronic chatel paper, invest. property

Question 39

What is the Only way to perfect a Security interest covered by a Certificate of Title Statute?

Answer 39

Secured Party gets relevant gov't authority to note sec. party's lien on Cert of Title Exception: debtor holding car as inventory, must perfect by filing Financing Statement

Question 40

Contents of a Filing Statement

Answer 40

Debtor's name Description of collateral - "reasonably identify" - supergeneric description valid Secured Party's name Authorized Filing by debtor (automatically authorizes fin. stmt if sec agmt covers same collateral) - signature not required

Question 41

Perfection as to Proceeds:

Answer 41

if perfected security interest in collateral, automatic perfected sec. int. in proceeds in exchange for that collateral for 20 days, when cash proceeds are used to acquire different, non-cash proceeds. (does not apply to Cash Proceeds)

Question 42

Same Office Rule - Perfection of Proceeds

Answer 42

a security interest in proceeds need not be re-perfected if the filing would be in the same office as the original financing statement already filed.[27]

Question 43

Priority - Secured Party v Secured Party

Answer 43

1st to file or perfect, whichever occurs first, has priority

Question 44

PMSI in Consumer Goods

Answer 44

Automatically perfected upon attachment

Question 45

Priority - between two Unperfected secured creditors

Answer 45

First to attach has priority

Question 46

Priority - Perfected v Unperfected

Answer 46

Perfected secured creditor has priority

Question 47

Special Priority - PMSI in goods other than Inventory or Livestock

Answer 47

has priority over conflicting security interest in same goods or its identifiable proceeds if PMSI is perfected at time debtor received Possession of collateral OR W/in 20 days thereafter

Question 48

PMSI =

Answer 48

Sale on Credit + Security Interest

Question 49

Special Priority - PMSI in Inventory or Livestock

Answer 49

has priority over a conflicting security interest in same collateral (as well as proceeds) if, before debtor receives possession of inventory or livestock , secured party (1) Perfects and (2) sends authenticated notification to holders of previously filed conflicting security interests in collateral (w/in 5 years) Prior to debtor Possession, Secured party (1) Perfects and (2) Notice

Question 50

Conflicting PMSI

Answer 50

Seller-Financed PMSI has priority over Financer-Financed PMSI

Question 51

Special Priority - Investment Property & Deposit Accounts

Answer 51

Sec Int. perfected by CONTROL trumps sec int perfected by Filing or Automatic if both by control, rank according to Time of obtaining control

Question 52

secured party v buyer of collateral - BIOC general rule

Answer 52

BIOC "takes free of security interest created by his seller even though sec int perfected and even though buyer knows of existence

Question 53

secured party v buyer of collateral - BIOC (not) general rule

Answer 53

Buyer not in ordinary course of business takes "subject to" perfected security interests; Also takes "free from" Unperfected security interests, unless they "know" of sec int.

Question 54

Special priority - Consumer to Consumer Sales

Answer 54

if consumer goods, buyer takes "free of" sec int. even if perfected if buys w/o knowledge of sec int, for value, and for own personal, family or household, unless prior to purchase, sec party filed financing stmt covering such goods (garage sales)

Question 55

Special Priority - Secured Party v Judgment Lien Holders

Answer 55

Lien creditor wins over unperfected security interest Perfected security interest wins over Lien Creditor

Question 56

Special Priority - PMSI v Lien Creditor

Answer 56

If secured party files on PMSI w/in 20 days after debtor received possession of collateral trumps lien creditor which arises btw attachment & filing (perfection)

Question 57

Buyers generally take goods ____ ______ any perfected security interests / OR a perfected security interest generally follows the ________

Answer 57

takes subject to, collateral

Question 58

BIOC takes ____ ____ nonpossessory security interest created by ____, unless he knows the sale violates a ______ ______

Answer 58

free of, seller, security agreement

Question 59

Consumer - Consumer

Answer 59

consumer who buys goods from another consumer, before a financing statement has been filed and w/o knowledge of the interest, takes goods free of security interests / OR a consumer who buys goods subject to an automatically perfected PMSI takes goods free of security interest