Secured Transactions

Question 1

Attachment Requirements

Answer 1

1. Value has been given by the secured party
2. The debtor has rights in the collateral.
3. The debtor has authenticated a security agreement that describes the collateral, or the security party has possession or control of the collateral pursuant to a security agreement.

Question 2

Accessions

Answer 2

Goods that are physically united with other goods in such a manner that the identity of the original goods is not lost.

Question 3

Security Agreement requirements

Answer 3

Must be in a record, such as a written or typed document
Contains a description of the collateral; and
Be authenticated by the debtor.

Question 4

PMSI in goods exists when:

Answer 4

A secured party gave value to the debtor and the debtor uses the loan to acquire rights in or use the collateral; or
A secured party sells the collateral the debtor, and the debtor enters an agreement requiring it to pay the secured party all or part of the purchase price.

Question 5

Methods of perfection

Answer 5

Filing of a financing statement
Possession of the collateral
Control over the collateral
Automatic perfection
Statute

Question 6

Filing statement requirement:

Answer 6

1. Debtor’s name
2. Name of the secured party; and
   The collateral covered by the financing statement

Question 7

Consumer goods and PMSI

Answer 7

PMSI in consumer goods is automatically perfected.

Question 8

General creditor

Answer 8

One who hasa claim including a judgment but who has no lien or security interest with respect to the property in question.

Question 9

Judicial lien creditor

Answer 9

Creditor who acquires a lien on the collateral by a judicial process.

Question 10

Perfected security interest vs. judicial lien creditor

Answer 10

The perfected security interest has priority.

Question 11

Buyer versus secured party with an UNPERFECTED security interest

Answer 11

Buyer other than a secured party, takes free of an unperfected security interest if the buyer 1. gives value; and

2. receives delivery of the collateral; and
3. Without knowledge

Question 12

Buyer in the ordinary course of business

Answer 12

BUYER CAN KNOW OF ITS EXISTENCE IF:

1. Buys goods
2. In the OCOB
3. From a merchant who is in the business of selling goods of that kind;
4. In good faith; and
5. Without knowledge that the sale violates the rights of another in the same goods. (Mere notice is insufficient)

Question 13

Consumer buyer vs. perfects security interest

Answer 13

Consumer buyer of goods take free if:
1. Buys consumer goods for value;
2. For his own personal, family, or household use;
From a consumer seller; and
3. Without knowledge of the security interest

Question 14

PMSI and priorities

Answer 14

Automatically perfected, but if the consumer buyer does not know of the PMSI, he will take free of the security interest

Question 15

Perfected security interest vs. perfected security interest

Answer 15

First to file or perfect