Secured Transaction

Question 1

Attachment

Answer 1

(1) Debtor authenticates security agreement or creditor takes possession or control of collateral (2) creditor gives value (3) debtor has rights in collateral.

Question 2

perfection

Answer 2

Security interests in goods can be perfected by possession or by filing authorized financing statement
PMSI = creditor advances credit/provides funds needed for purchase. takes a security interest in goods purchased.
PMSI in consumer goods automatically perfected on attachment. Consumer goods = used or bought primarily for personal, family, household purposes
equipment = goods that aren’t consumer, inventory, farm products

Equipment PMSI has superiority if PMSI is perfected when debtor gets possession or within 20 days

Question 3

Priority

Answer 3

Between two perfected security interests the first to file/perfect has priority.

perfected security interest prevails over unsecured security interest in same collateral

Equipment PMSI has superiority if PMSI is perfected when debtor gets possession or within 20 days

prior perfected interest trumps judicial lien

Question 4

Perfection of vehicles

Answer 4

filing not effective for vehicles if state statute requires perfection by note on certificate of title.

Question 5

accession

Answer 5

= goods physically united with other goods such that identity is not lost. Security interest in whole perfected under certificate of title prevails over security interests in accession.

Question 6

after acquired property clause

Answer 6

= security interest attaches when debtor obtains interest in collateral

Question 7

Filing statement (authorized in writing that is signed usually the security agreement)

Answer 7

statement must contain debtor’s name and address, secured party’s name and address. and indication of collateral. Financing statement is insufficient if uses debtor’s trade name, or doesn’t use name on corp. debtor’s public organic record.
Name not seriously misleading if the financing statement will still be discovered in search of debtor’s correct name.

CANNOT PERFECT NONCONSUMER DEPOSIT ACCOUNTS AND MONEY BY FILING. (CONTROL)

Question 8

non-consumer deposit accounts

Answer 8

perfected by control. Bank where maintained automatically has control over NDA.

Question 9

Repo

Answer 9

Creditor can repo collateral if debtor defaults on secured transaction. Secured party can use self help to repo only without breach of the peace (Usually includes repo over debtor’s protest)

Question 10

Redeem / liability of secured party for not following Art. 9 rules

Answer 10

Debtor can redeem collateral after default. Right to redeem can be waived only after default.

secured party liable to debtor for any damage caused by a failure to follow article 9.
secured party cannot collect deficiency if Art. 9 rules broken unless it shows breach didn’t cause deficiency. (commercially reasonable)

Question 11

Buyers

Answer 11

Buyers generally take subject to perfected security interests but Buyer in ordinary course from seller engaged in biz of selling goods of that kind
BIOC takes free of nonpossessory security interests CREATED BY HIS SELLER unless he knows sale violates security agreement (not allowed expressly or impliedly).

consumer who buys goods from consumer before financing statement is filed and without knowledge takes free of security interests.