R5 Module 6

Question 1

Purchase money security interest under UCC

Answer 1

1) creditor sells collateral to debtor on credit, retaining a security interest for purchase price
2) creditor advances funds used by debtor to purchase collateral
3) creditor does not need to be seller of collateral

Question 2

how does a security interest attach?

Answer 2

1) debtor has rights in the collateral
2) value given by creditor
3) no proper filing of security agreement is required

Question 3

how does a security interest become enforceable?

Answer 3

1) debtor gives securer rights to collateral
2) value given by creditor
3) security agreement signed by debtor and attach to collateral

Question 4

when do you not need a security agreement

Answer 4

when the securer takes possession of collateral

Question 5

after-acquired property that can be attached to a security agreement given to secured lender

Answer 5

-inventory and equipment
EXCEPTION is consumer goods and commercial tort claims

Question 6

when a security interest is not attached

Answer 6

it is not effective against anyone before it attaches to collateral

Question 7

financing statement

Answer 7

gives the names and addresses of debtor and creditor and indication of type of collateral covered by statement
-does not need amount of consideration

Question 8

priority of security interest

Answer 8

1) perfected and within 20 days of delivery of collateral to debtor if in the same type
2) perfected
3) unperfected

Question 9

perfection by possession

Answer 9

occurs secured party to take possession of collateral and retains possession

Question 10

when does a person not have to file a financing statement to be perfected?

Answer 10

if its a purchase money security interest in consumer goods
-its automatic perfected interest

Question 11

secured party has a right to without provisions in a financing statement when debtor has defaulted to…

Answer 11

peacefully take possession of collateral without judicial process

Question 12

remedies for securer when debtor defaults

Answer 12

-can proceed against collateral or obtain a general judgement

Question 13

what is a purchase money security interest?

Answer 13

a security interest that can have super priority. It arises when:
1) creditor sells collateral to debtor on credit and retains security interest in collateral for price OR
2) creditor advances funds used by debtor to purchase collateral and retains security interest in collateral for price

Question 14

what is the significance of an attachment of security interest?

Answer 14

gives the secured party right to take property from its owner (debtor) if debtor defaults on secured transaction

Question 15

five ways to perfect security interest?

Answer 15

1) file financing statement
2) possession of collateral
3) automatic perfection upon PMSI in consumer goods or small scale assignment of accounts
4) secured party given control
5) temporary (20 day period for proceeds and four month grace period for movement of debtor)

Question 16

under the secured transactions article (Article 9), what is the significance of perfection of a security interest?

Answer 16

perfection establishes creditor’s rights in collateral as against 3rd parties who also might have right in same collateral

Question 17

what is the effect of the sale of collateral to a good faith purchaser at a default sale?

Answer 17

sale discharges security interest in collateral and all subordinate liens

Question 18

what are a secured party’s basic rights after a debtor defaults on secured obligation?

Answer 18

1) take possession of collateral through self-help if can be done without a breach of peace and sell or keep collateral to satisfy secured obligation
2) if collateral an account, notify account debtor to pay secured party
3) bring judicial action to replevy collateral
4) bring ordinary judicial action to enforce obligation