secured transactions

Question 1

Substance over form controls

Answer 1

Article 9 governs any transaction regardless of its form if it effectively creates a security interest, that is if it gives the secured party a property interest to secure a debt.

Question 2

Account

Answer 2

An account is a right to payment of a monetary obligation (whether or not earned by performance)

Question 3

Deposit Account

Question 4

deposit accounts

Answer 4

can only be perfected by control

control:

1. be the bank that hosts the account
2. become the customer of the bank w respect to the deposit account
3. have an authenticated agreement among sp, debtor and bank allowing it to withdraw funds at will.

Question 5

inventory

Answer 5

goods that are leased by a person as lessor

held for sale or lease

raw materials regularly consumed in the operation of a business

Question 6

equipment

Answer 6

goods other than inventory, farm equipment or consumer goods

Question 7

consumer goods

Answer 7

those that are purchased primarily for personal, family or household purchases

Question 8

proceeds

Answer 8

anything acquired upon the sale, lease or other disposition of collateral

Question 9

chattel paper

Answer 9

chattel paper is a document that evidences a monetary obligation and a security interest in specific goods or a lease of specific goods.

Question 10

Attachment

Answer 10

secured party gives value

debtor has rights in the collateral

security agreement reasonably describing the collateral and authenticated by the debtor; or

collateral in sp’s possession; or

certificated security in registered form and the security certificat has been delivered to the sp pursuant to a security agreement; or

Question 11

requirements for effective financing statement

Answer 11

provides the name of the debtor and sp

indicates the collateral; and

filed by a person authorized by the debtor in an authenticated record, security agreement or upon acquisition of the collateral

Question 12

substantial compliance with financing statements requirements

Answer 12

A mistake on a financing statement does not render notice of the security interest ineffective unless the mistake is seriously misleading

Misstating the debtor’s name is seriously misleading unless a search of the name as stated and where the statement is kept would reveal the debtor’s name

Question 13

PMSI

Answer 13

when a creditor extends value to the debtor for the purpose of enabling the debtor to acquire rights in the collateral, a pmsi arises

PMSIs in consumer goods are automatically perfected.

Question 14

non consumer goods transaction pmsi perfection

Answer 14

In such a transaction, a financing statement filed within 20 days of the debtor receiving delivery of the collateral will ensure the sp’s interest takes priority over conflicting interests which arise between the time of attachment and filing.

Question 15

where financing statement should be filed

Answer 15

non-possessory (where debtor resides)

possessory (where collateral is located)

Question 16

si in sale of collateral and identifiable proceeds

Answer 16

Generally, an si will continue despite the sale or disposition of collateral unless the sp authorizes disposition free of the si.

A perfected si attaches to identifiable proceeds but will become unperfected on the 21st day unless the proceeds are cash or the equivalent to cash; the si in the proceeds are perfected; or

the original collateral was perfected under the general filing rule, the proceeds are collateral that may be perfected under the general rule