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BARRRR > Secured > Flashcards

Secured Flashcards

1
Q

What are goods?

A

Anything moveable at the time that the SI attaches and includes fixtures.

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2
Q

What are the four types of goods

A

Consumer goods
Farm products
Inventory
Equipment

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3
Q

What are consumer goods

A

Are goods acquired primarily for personal, family, or household purposes

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4
Q

What are farm products?

A

Crops grown, growing or to be grown, livestock born or unborn, supplies used in farming and products of crops and livestock in an unmanufacrtured state

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5
Q

What is inventory?

A

Goods, other than farm products held for sale or lease;
furnished under a service contract;
Raw materials, works in process or
Material used and consumed in business

Note difference in these raw material and “equipment” used in business

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6
Q

What is equipment?

A

Goods that are not consumer goods, farm products or inventory.

*This is things primarily bought to use at work such as a desk or machines etc

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7
Q

What are the other types of collateral other than goods?

A

Chattel paper
Documents
Instruments
Investment property
Accounts
Commercial tort claims
Deposit accounts
Letter of credit
General intangibles

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8
Q

When does attachment occur making a SI enforceable?

A

(I) value has been given by the secured party
(ii) the debtor has rights in the collateral and
(iii) the debtor has authenticated a security agreement that describes the collateral or the secured party has possession or control of the collateral pursuant to a security agreement.

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9
Q

When is a security agreement authenticated?

A

SA should be in a record (tangible medium), contain a description of the collateral and be authenticated by the debtor (usually signed by debtor)

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10
Q

What is chattel paper?

A

Records evidencing
(1) a monetary obligation and
(2) security interests in specific goods or a lease of specific goods

*can be electric or tangible

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11
Q

What is a document?

A

Document if title, which confers on the holder ownership rights in the goods help by a bailee. (Bill of landing, transportation docs, warehouse receipt, order for delivery)

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12
Q

What are instruments?

A

Negotiable and nonnegotiable instruments evidencing a right to payment of monetary obligations and transferred in the ordinary course of business by delivery. (Ex: certificates of deposit from bank)

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13
Q

What is investment property?

A

Certificates and uncertificated securities. (Such as stocks, bonds, securities accounts)

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14
Q

What are accounts?

A

Right to payment for property sold, leased, licensed, or otherwise disposed of or services rendered or to be rendered.

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15
Q

What is a deposit account?

A

Includes savings, passport, time, or demand account maintained with a bank. (NO accounts such as investment or evidence by instruments)

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16
Q

What are general intangibles?

A

Catch all, any personal property not in another category.

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17
Q

When is a lease a security interest?

A

When although in the form of a lease, it’s really a secured transaction.

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18
Q

Note for possession under attachment, the possession must be pursuant to a SA which may be oral or written.

A
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19
Q

What is after acquired collateral?

A

Collateral the debtor acquires in the picture.

Ex: all inventory owned now and hereafter acquired.

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20
Q

Majority rule is after acquired collateral is presumed but argue minority too.

A
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21
Q

What are proceeds and what is the accept on a SI?

A

Proceeds automatically attach to identifiable proceeds.

Anything acquired upon the sale, lease, or exchange of collateral.

22
Q

What does a PMSI apply to?

A

Goods and software

23
Q

What is an accession?

A

Goods that are physically united with other so that the original identity is NOT lost. (Tires in car, memory of computer?

24
Q

What is commingled goods?

A

Goods that are physically united with others such that their identity is lost in a product or mass.

(Ex: cakes)

25
Q

Why is perfection necessary/ a good idea?

A

Perfection is generally necessary for a secured party to have rights in the collateral that is superior to any claimed by a 3rd party.

26
Q

What are the four ways to perfect?

A

Filing a FS in central filing office
Possession
Control
Automatic Perfection

27
Q

What can a filing not be used for?

A

Deposit account money or letter of credit rights.

28
Q

What must a FS contain?

A

Debtor name
Secured party’s name or their representative
Collateral covered

29
Q

Where is real property and fixtures filed?

A

Local Real property records.

30
Q

How long is perfection good for?

A

5 years

31
Q

What does perfection by possession not work for?

A

Money

32
Q

What collateral can be perfected through control?

A

Investment property
Deposit accounts
Letter of credit rights
Electronic chattel paper or electronic documents

33
Q

What can ONLY be perfected by control?

A

Deposit account.

Secured party is the bank which has the account or becomes the banks customer

34
Q

What is automatic perfection?

A

The collateral will be automatically perfected upon attachment.

35
Q

What can be automatically perfected indefinitely?

A

PMSI in consumer goods

36
Q

What can be temporary perfected automatically for 20 days?

A

New value given under a SA or a SI in certificates securities, negotiable docs, or instruments.

37
Q

When is perfection accomplished?

A

Perfected upon the attachment of a security interest and compliance with one of the other methods of perfection.

38
Q

What is the priority rule for a judicial lien creditor?

A

A creditor who has a lien on the collateral by judicial process with take subject to an existing perfected SI but has priority over those unperfected.

39
Q

A statutory or common law creditor with a lien on property of another by a statute or common law will have priority over a SI even if perfected in goods.

A
40
Q

A buyer of goods, tangible chattel paper, tangible documents or a security certificate takes free of an [unperfected] SI in the same collateral if the buyer:

A
  1. Gives value
  2. Receives delivery of the collateral and
  3. Does so without knowledge of the existing SI.

**if it’s perfected they take subject to the perfected interest unless the secured party authorizes sale free of the SI

41
Q

What is a buyer in the ordinary course of business? HIGHLY TESTED

A

Take free of a SI EVEN IF perfected and they know of its potential existence if:

  1. Buy goods (other than farm products)
  2. In the ordinary course
  3. From a seller who is in the business of selling goods of that kind
  4. In good faith and
  5. Without actual knowledge of the existing SI

*** notice or reason to know is not enough must be Actual

42
Q

BOCB doesn’t work for them Farmers or their products

A
43
Q

What is the consumer buyer rule for perfection?

A

Takes free of a SI, EVEN IF perfected UNLESS prior to the purchase the secured party filed a FS covering the goods if:

  1. Buys consumer goods for value
  2. For his own personal, family or household use
  3. From a consumer seller and
  4. Without knowledge of the SI

***remember if filed then this won’t apply and won’t take free

44
Q

What is the priority rule for a secured party vs a secured party?

A

First to file or perfect has priority.

45
Q

Who has priority between a perfected and unperfected SI?

A

Perfected wins

46
Q

Unperfected vs Unperfected?

A

First in time, first in right. Critical time is attachment.

47
Q

A PMSI in goods other than livestock or inventory…

A

Prevails over all other SI in collateral even those previously perfected.

48
Q

Once default has occurred, a secured party can:

A

1) Seek possession and either sell or retain in full or partial satisfaction.
2) initially a judicial action or
3) pursue any court of action with the obligor and EBT or agreed

49
Q

A secured party does not have to give notice of default or his intent to take possession of the collateral.

A
50
Q

What are the limitations on possession?

A

Cannot breach the peace

Anything criminal is breach

Can render the equipment unusable but still cannot breach peace. Courts look at public harm or loss of public order.

51
Q

All aspects of the disposition of collateral must be in a commercially reasonable manner. What is reasonable?

A

If conducted

1) usual manner in a recognized market
2) at the price current in any recognized market and
3) in conformity with reasonable commercial practices among dealers of the type of property

52
Q

Who must notice of disposition be sent to?

A

Debtor
Secondary obligors
Any other secured party or lien holder

BARRRR (14 decks)

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