Secured Transactions (Essay Only)

Question 1

what is attachment

Answer 1

how security interests are created
provides enforcement rights
focus on relationship between debtor and creditor

Question 2

what is perfection

Answer 2

provides notice of a security interest to establish a claim superior to other parties who may wish to claim an interest in the same collateral
attachment + perfection = good standing in a priority dispute
perfection is about getting priority over a later party
focus on relationship between creditor and anyone else

Question 3

tip

how to approach priority question

Answer 3

1. is this a secured transaction problem (“security agreement” “security interest”)
2. ID and classify the property at issue (look at call of the question)
3. which parties have or claim an interest in the collateral (at least one will be a secured party with a security interest)
4. for each security interest, look at attachment - has the security interest attached? to which collateral? when?
5. for each security interest, look at perfection - has the secured party perfected its security interest? when? how? has anything happened for it to lose perfection?
6. determine the appropriate priority rule
7. apply the priority rule and resolve the dispute

Question 4

security interest

Answer 4

interest in personal property or fixtures that secures payment or performance of an obligation

Question 5

security agreement

Answer 5

contract that creates a security interest

Question 6

secured party

Answer 6

creditor who obtains a security interest in the debtor’s property

Question 7

obligor

Answer 7

party that must pay or perform the obligation that the collateral secures

Question 8

debtor

Answer 8

has an interest, other than a security interest, in the collateral (e.g., owner)

Question 9

scope of Article 9

Answer 9

• transactions, regardless of form, that creates a security interest in personal property or fixtures by contract
• must be consensual
• not real estate
• agricultural liens

sales of certain types of collateral

• chattel paper
• promissory notes
• accounts
• payment intangibles

Question 10

step 2 - classify collateral

list the types of collateral

Answer 10

1. goods
2. rights to payment
3. documents - bills of lading, warehouse receipts, held by bailee
4. investment property - stocks and bonds
5. deposit accounts - bank accounts
6. commercial tort claims
7. letter of credit rights
8. payment intangibles - catch all, includes IP

remember classification can change depending on which party holds the collateral

Question 11

step 2 - classify collateral

what is included in goods?

Answer 11

anything movable at time a SI attaches

1. fixtures (if the goods attach to real property where you won’t take it when you move)
2. standing timber
3. unborn animals
4. growing or unharvested crops
5. manufactured homes
6. consumer goods
7. farm products
8. inventory - held for sale or lease
9. equipment - catch-all

Question 12

step 2 - classify collateral

what is included in rights to payment?

Answer 12

right to be repaid money by a 3p that the debtor then uses as collateral for a loan

1. instrument - promissory notes, checks
2. chattel paper - record with (a) monetary obligation and (b) security interest or lease
3. accounts - right to payment of a monetary obligation for property that is sold, leased, or licensed, OR for services rendered
4. payment intangible - catch-all

look for situation where 3p owes money to your debtor and your debtor uses that money as collateral for the loan

Question 13

step 4 - attachment

what are the basic requirements for attachment?

Answer 13

1. value given by the secured party (no new value needs to be given, binding commitment is value)
2. debtor must have rights in the collateral
3. there must be a security agreement - (a) authenticated SA that describe the collateral OR (b) secured party has possession or control pursuant to oral or unauthenticated SA

(a) security agreements are RAD
1. record - doesn’t need to be written on paper, but must be stored
2. authenticated by the debtor - signature/symbol of debtor
3. describe the collateral - reasonably ID the collateral, no super generic description, consumer goods and commercial tort claims need more particularity

(b1) attachment by possession pursuant to SA (like you can hold it)
consumer goods, equipment, farm products, chattel paper, tangible docs, certificated securities, instruments, money
(b2) attachment by control pursuant to SA
electronic chattel paper, investment property, LOC rights, deposit accounts

attachment links debt to a particular piece of collateral
SI becomes enforceable against debtor’s collateral upon attachment

Question 14

when can you use a super generic description of collateral?

“all of CK’s assets”

Answer 14

okay for financing statement
security agreement needs to be more specific

Question 15

step 4 - attachment

rights and duties of secured party in possession

Answer 15

• must act with reasonable care with the collateral
• must keep the collateral identifiable
• must relinquish the collateral once obligation has been satisfied
• may charge debtor for reasonable expenses for storing and maintaining the collateral

Question 16

step 4 - attachment

after-acquired property

Answer 16

SI only attaches to collateral described in SA, so need to include an after acquired property clause to include that

carve-out in most states: if SA describes inventory or accounts, rebuttable presumption that description includes after-acquired inventory or accounts

Question 17

accessions vs. commingled goods (definitions)

Answer 17

• accessions - goods that are physically united with other goods, but can still ID the original goods
• commingled goods - ID of original goods is lost

Question 18

step 4 - attachment

accessions - rule for attachment

Answer 18

if collateral becomes an accession, SI is not lost, continues

look at terms of SA to determine whether a lender with a SI in property with which the accession is united obtains a SI

Question 19

step 4 - attachment

commingled goods - rule for attachment

Answer 19

SI does NOT continue in original goods, but will attach to the larger product or mass that results

Question 20

step 4 - attachment

proceeds - rule for attachment

Answer 20

if SI attaches to the original collateral, it automatically attaches to the identifiable proceeds whether or not SI states that it covers proceeds

Question 21

Purchase Money Security Interests (PMSI) - definition

Answer 21

• type of SI
• only applies if collateral is goods or software
• lender PMSI - lender loans money to debtor so debtor can acquire goods; value is actually used to acquire the goods and lender takes SI in those same goods
• seller PMSI - goods bought on credit
• partial PMSI is allowed for non-consumer goods transactions –> Dual Status Rule
• consumer goods transactions: court can apply Dual Status Rule or say there is no PMSI
• PMSI in consumer goods are automatically perfected

1. value given allows the debtor to acquire the goods or software AND
2. goods or software acquired secure the loan

Article 9 consignment is treated as PMSI in inventory
Dual Status Rule = a SI may be part PMSI and part non-PMSI; party claiming PSMI has burden of establishing that

Question 22

step 5 - perfection

methods of perfection

Answer 22

1. Filing (most common)
2. Possession
3. Control
4. Automatic
5. Alternate Perfection System - like state legislation for cars/motorcycles

Question 23

step 5 - perfection

perfection by filing

Answer 23

• file financing statement in central filing office of appropriate state
• applies to all collateral except deposit accounts, money, LOC, collateral subject to other perfection methods (cars)
• puts others on notice

can’t file for cars or deposit accounts

Question 24

step 5 - perfection

perfection by filing - requirements for Financing Statement

where should you file?

Answer 24

• central filing office where debtor is located
• debtor is corporation = state of incorporation
• business not registered = state where it operates, chief executive office if multiple states
• individuals = principal residence
• real property-related (incl. fixtures) = county where property is located

Question 25

# step 5 - perfection perfection by filing - requirements for Financing Statement what info is required and preferred?

Answer 25

_required info_ * name of debtor * name of secured party * description of collateral --> can be super generic, doesn't need to mention proceeds or after-acquired property * if real property --> SA must indicate that it covers this type of collateral, note that it is to be filed in local real property records, describe real property, name the record owner _additional info (effective without this but won't be accepted)_ * addresses for debtor and secured party * indication whether debtor is individual or organization

Question 26

# step 5 - perfection perfection by filing - requirements for Financing Statement what is needed for authorization?

Answer 26

* debtor must authorize a FS in authenticated record * debtor doesn't have to sign

Question 27

# step 5 - perfection perfection by filing - what happens if the debtor's name is wrong

Answer 27

* important b/c parties seek UCC filings for the debtor's name * financing statement must have debtor's correct legal name * name or articles of incorporation or name on driver's license (non-expired) * if minor error on financing statement, doesn't affect perfection UNLESS the errors make financing statement seriously misleading * debtor's name is almost always seriously misleading EXCEPT if search would uncover the financing statement with error

Question 28

where is the collateral described? what is the result with attachment and perfection?

Answer 28

* described in SA NOT FS --> attached but not perfected * described in FS NOT SA --> not attached, not perfected (no enforceable interest in collateral) * described in SA + FS --> attached + perfected

Question 29

# step 5 - perfection perfection by filing - issues with filing office

Answer 29

* filing office should refuse a FS that lacks required info or creditor doesn't pay the fee * if filing office refuses FS and was not justified, then FS is treated as having been filed * if filing office indexes incorrectly, no effect on perfection

Question 30

# step 5 - perfection perfection by filing - how long does FS last?

Answer 30

lapse 5 years after date of filing unless continued file a continuation statement w/in 6 months before FS lapses if it lapses, secured party loses perfection (unless perfected by other means) when the obligation is paid back, a termination statement voids the FS

Question 31

# step 5 - perfection perfection by possession

Answer 31

* **tangible collateral** - money, goods, instruments, negotiable docs, tangible chattel paper * as soon as secured party has possession, the interest is perfected * stays perfected as long as they have possession | possession is only way to perfect SI in **money**

Question 32

# step 5 - perfection perfection by control

Answer 32

* specific intangible collateral - deposit accounts, investment property, electronic docs, electronic chattel paper, LOC rights * control is **exclusive** method for perfecting SI in deposit accounts and LOC rights (filing a FS is ineffective) _control of deposit accounts_ * secured party is the same bank as the bank with the despot account (lender = bank) * deposit account control agreement: secured party, bank, and debtor agree in authenticated record * secured party can become bank's customer for the deposit account

Question 33

# step 5 - perfection alternate perfection systems (especially state certificate of title statute)

Answer 33

* cars, motorcycles, other vehicles with title * can't perfect by filing, possession of the car, or possession of the title * have to perfect by **noting a security interest on that certificate of title** | if car is inventory, can perfect by other means

Question 34

# step 5 - perfection automatic perfection

Answer 34

* some collateral automatically perfect when a SI attaches without filing, possession, or control * PMSI in consumer goods * casual or isolated assignments of accounts that don't transfer a significant part of outstanding accounts receivable * sales of payment intangibles or promissory notes | if certificate of title statute covers, no auto perfection

Question 35

# step 5 - perfection / post-perfection what happens if debtor changes their name? | this section is about when something happens to the collateral or debtor after perfection has occurred

Answer 35

* if the name change causes the filed FS to become **seriously misleading**, secured party has **4 months** to discover the change and file an amendment with the new name * if secured party fails to amend, collateral acquired after 4 month period is not covered * everything before name change + w/in 4 months remains perfected

Question 36

# step 5 - perfection / post-perfection what happens if debtor moves out of state?

Answer 36

* SI remains perfected for 4 months after debtor moves out of state UNLESS FS lapses earlier * filed FS must cover collateral purchased w/in 4 mo window after the move * must re-file in new state within that 4 mo period

Question 37

# step 5 - perfection / post-perfection what happens if the collateral moves out of state?

Answer 37

* if debtor still owns the collateral, no re-filing is necessary * if collateral is transferred to new debtor who is out of state, secured party has 1 year to file FS listing new debtor if fails to re-file (for any of these scenarios) * SI ceases to be perfected * perfection is loss prospectively and against another secured party or purchaser for value, deemed never to have been perfected

Question 38

# step 5 - perfection / post-perfection what happens if secured party is perfected by possession and gives the collateral back to the debtor?

Answer 38

* secured party is only perfected so long as it has **actual physical possession** of the property * use the date of the secured party regaining possession for first in time calc EXCEPTION for temporary automatic perfection - secured party can give collateral back to debtor for limited purposes * sell it, exchange it * secured party is temp perfected for 20 days * secured party needs to file a FS OR re-possess the collateral w/in 20 days to remain continuously perfected

Question 39

# step 5 - perfection / proceeds what are proceeds? are they attached?

Answer 39

* proceeds arise when collateral is sold, leased, licensed, or disposed of * SI attaches to proceeds automatically * initially perfected for 20 days * priority dates from time of perfection in OG collateral IF secured party has remained continuously perfected

Question 40

# step 5 - perfection / proceeds general rule for perfection of proceeds

Answer 40

_initially_ temporary automatic perfection for 20 days after collateral is sold _beyond 20 days_ perfection will lapse UNLESS 1. amend the FS or the OG FS is broad enough to encompass the proceeds 2. cash proceeds rule: perfection continues indefinitely in identifiable cash proceeds 3. same office rule: FS covers the original collateral + proceeds are collateral in which it may be perfected by filing in the same office as OG FS + proceeds are NOT acquired with cash proceeds

Question 41

# tip FS that covers inventory is sufficient to perfect a SI in accounts

Answer 41

:)

Question 42

# step 6 - priority rules general rule for priority of proceeds

Answer 42

* follows basic priority rules * if SI is perfected in proceeds and has been continuously perfected, then measure secured party's status based on time of filing or perfection as to OG collateral EXCEPTIONS * proceeds of PMSI in inventory * proceeds of non-filing collateral --> priority continues in proceeds provided that SI In proceeds is perfected + proceeds are either cash proceeds or same type of collateral as OG collateral

Question 43

# step 6 - priority rules / potential claimants secured creditors

Answer 43

* always 1+ of these * need to know whether and when their interests have attached to the collateral * whether and when their interests are perfected * whether they hold a PMSI

Question 44

# step 6 - priority rules / potential claimants unsecured creditors

Answer 44

* creditors w/o SI in debtor's collateral * no rights against the property * contractual rights against the debtor * can obtain rights in property from a SI by agreement OR lien in collateral (would become a lien creditor)

Question 45

# step 6 - priority rules / potential claimants lien creditor

Answer 45

* judicial or statutory

Question 46

# step 6 - priority rules / potential claimants purchasers of chattel paper, promissory notes, accounts, or payment intangibles

Answer 46

* treat as secured transactions * treat teh purchaser as a secured party with attached SI * check if they have been perfected * if buyer/secured party is not perfected, seller/debtor has sufficient rights in the collateral to grant a SI to another party

Question 47

# step 6 - priority rules / potential claimants buyers or transferees of other collateral (not chattel paper, promissory notes, accounts, payment intangibles)

Answer 47

may take free of secured party's SI

Question 48

# tip how to IRAC priority question

Answer 48

I: the priority issue at dispute (Perfected Security Interest vs. Perfected Security Interest over Equipment) R: ex. first in time to file or perfect takes priority A: use the facts

Question 49

# step 6 - priority rules perfected security interest vs. perfected security interest (not PMSI)

Answer 49

first in time to file or perfect takes priority

Question 50

# step 6 - priority rules perfected SI vs. unperfected SI

Answer 50

perfected SI > unperfected SI

Question 51

# step 6 - priority rules unperfected SI vs. unperfected SI

Answer 51

first to attach or become effective takes priority

Question 52

# step 6 - priority rules perfected SI vs. lien creditor

Answer 52

perfected SI > lien creditor

Question 53

# step 6 - priority rules unperfected SI vs. lien creditor

Answer 53

lien creditor > unperfected SI EXCEPT if filed but unattached security interest if debtor has authenticated SA listing collateral + FS on file, but secured party has not yet given value --> secured party > lien creditor

Question 54

# step 6 - priority rules security interest vs. statutory lien

Answer 54

statutory lien has priority as long as 1. effectiveness of lien depends on lien holder's possession of the goods 2. lien secured payment or performance of an obligation for services or materials furnished in ordinary course of person's business (mechanic's lien) AND 3. statute doesn't provide otherwise

Question 55

# step 6 - priority rules secured party vs. secured party over future advances | remember security agreement can provide that future advances are secured by collateral

Answer 55

Article 9 gives priority to first party to file or perfect to the future advances even if they had knowledge of the competing security interest

Question 56

# step 6 - priority rules secured party vs. lien creditor over future advances

Answer 56

* if secured party's advance is made within 45 days of lien creditor's lien, secured party wins * advances over 45 days lose to lien creditor UNLESS advance is made w/o knowledge of lien OR advance is made pursuant to a commitment entered into without knowledge of the lien

Question 57

# step 6 - priority rules secured party vs. buyer

Answer 57

* phrase the question as "did the buyer take the collateral free of a security interest or subject to a security interest" * unless secured party authorizes the sale free and clear of its security interest, buyer takes **subject to** a perfected security interest _exception 1: buyer in the ordinary course of business_ takes free of SI created by buyer's seller IF * buyer buys good from a merchant * ordinary course of merchant's biz * buyer acts in good faith and without knowledge that sale violates the rights of others in teh same goods * seller is engaged in business of selling goods of this kind, not pawn broker _exception 2: garage sale exception_ consumer buyer will take free of SI even if it's perfected IF * buyer buys consumer goods for value * for their own person, family, or household use * from a consumer seller * without knowledge of the SI * unless secured party has filed a FS covering the goods before the purchase occurs

Question 58

# step 6 - priority rules buyer vs. unperfected SI

Answer 58

buyer takes subject to a SI EXCEPTION: user will take free of an unperfected SI if buyer * gives value * receives delivery of the collateral AND * w/o knowledge of preexisting interest

Question 59

# step 6 - priority rules buyer vs. future advances

Answer 59

* if buyer takes subject to SI + after the sale, secured party makes a future advance to seller/debtor buyer will take free of that future advance IF * secured party had knowledge of buyer's purchase when it made the advance OR * future advance is made 45+ days after purchase

Question 60

# step 6 - priority rules purchasers of chattel paper and instruments

Answer 60

if purchaser/secured party doesn't have knowledge of competing SI --> probs have priority over competing secured parties

Question 61

# step 6 - priority rules transferees of money or funds from deposit account

Answer 61

takes free of SI UNLESS transferee acts in collusion with debtor to violate rights of a secured party

Question 62

# step 6 - priority rules SI vs. buyer's and seller's Article 2 SI

Answer 62

Article 2 SI > Article 9 SI as long as buyer or seller retains possession | UCC Article 2 is the UCC from Contracts basically

Question 63

# step 6 - priority rules PMSI vs. lien creditor

Answer 63

follow rule for lien creditor vs. SI BUT PMSI have 20 day grace period starting when debtor receives possession to perfect IF PSMI perfects within 20 days, PSMI > lien creditor

Question 64

# step 6 - priority rules PMSI vs. SI - goods that aren't inventory

Answer 64

PMSI > all other security interests, no matter when they are perfected IF secured party perfects within 20 days of debtor receiving the goods if don't perfect within 20 days, apply secured party vs. secured party rule (first in time to file or perfect) | PMSI in consumer goods is auto perfected so 20 day rule will always be met

Question 65

# step 6 - priority rules PSMI vs. SI - inventory

Answer 65

PMSI > all other secured interests in that same inventory IF PMSI * perfects before inventory is delivered to debtor AND * sends an authenticated notification of PMSI to other secured parties (notification is effective for 5 years) | if fail this super priority rule, then apply secured party vs. secured party

Question 66

# step 6 - priority rules PMSI vs. PMSI

Answer 66

seller PMSI > lender PMSI otherwise, apply first to file or perfect

Question 67

# step 6 - priority rules fixtures vs. real property interests

Answer 67

SI in fixtures > interest in real property IF secured party files a fixture filing (type of FS) before real property interest is recorded PMSI in fixtures > real property interest IF debtor has interest of record in real property or is in possession of real property AND secured interest is perfected by a fixture filing before goods become fixtures or within 20 days after goods become fixtures

Question 68

# step 6 - priority rules fixture vs. fixture

Answer 68

if both Article 9 interests in fixtures, apply general priority rules

Question 69

# step 6 - priority rules construction mortgage vs. PMSI

Answer 69

construction mortgage > any subsequent SI in fixtures, including PMSI in fixtures) IF recorded before goods become fixtures + goods become fixtures before construction is complete

Question 70

lease vs. secured transaction

Answer 70

* Article 9 does NOT apply to a true lease bright line test 1. lessee of property is obligated to pay the FULL obligation under the lease (whether or not its terminated early) AND 2. one of the following outcomes * OG term of lease >= remaining economic life of goods * lessee is bound to renew the lease for the remaining economic life of teh goods * lessee has option to renew the lease for no additional consideration or nominal additional consideration * lessee has option to become owner or goods for no or nominal additional consideration if pass test, it is a secured transaction (Article 9 governs), need to perfect SI | factors are showing what a secured transaction is

Question 71

consignments - definition

Answer 71

party (consignor) has ownership of goods BUT gives possession of the goods to another party (consignee) for the purpose of allowing the consignee to sell the goods consignments are like big ticket consignments of inventory where consignee could be easily mistaken as owning the collateral

Question 72

consignments - rules

Answer 72

* risk that consignee's lenders may be misled into thinking that consigned inventory is actually owned by consignee not consignor * consignments that carry this risk are Article 9 secured transactions * consignor is a secured party + must perfect * apply rules of PMSI in inventory

Question 73

consignments - when do consignors have to file a FS to protect their interests

Answer 73

* consignor must deliver goods to a merchant who deals in goods of the kind for the merchant to sell * merchant is not generally known by its creditors to be substantially engaged in the biz of selling goods of others * value of goods must be at least $1k in each delivery AND * good must not be consumer goods immediately before delivery

Question 74

# tip default and enforcement

Answer 74

may come up after a priority dispute has been resolved attachment is the pre-req to repossession rights or rights to enforce a security interest

Question 75

# default and enforcement what is default?

Answer 75

not defined in Article 9 refer to security agreement + applicable contract law

Question 76

# default and enforcement enforcement right in general

Answer 76

* triggered by default * enforcement rights are cumulative and may be exercised simulateolus * can seek possession of tangible collateral and sell or retain it in satisfaction of the obligation owed * abandon its Article 9 rights and obtain a judgment against debtor or obligor on the obligation * use other courses of action agreed on by debtor and secured party

Question 77

# default and enforcement repossession of goods and other tangible collateral

Answer 77

once there has been a default, secured party can repossess the collateral 1. by using the judicial process 2. by using self-help repossesion (secured party cannot **breach the peace**) large equipment can be rendered unusable in lieu of repossession after repossession, secured party can dispose of the collateral in Article 9 disposition sale or can accept the collateral in satisfaction of all or part of the obligation

Question 78

# default and enforcement disposition of collateral - what it the standard

Answer 78

**commercially reasonable standard** secured party may sell, lease, license, or dispose of the collateral so long as the everything about disposition is commercially reasonable commercially reasonable IF * sold in usual manner in a recognized market * sold at the price current in that market or * otherwise in conformity with the reasonable commercial practices among deals in that type of collateral price alone is not determinative of whether a sale is commercially reasonable

Question 79

# default and enforcement disposition of collateral - details of the disposition

Answer 79

disposition sale can be public or private secured party can buy the collateral at public sale (but not private sale) UNLESS price of collateral is fixed (e.g., NYSE) or subject to widely distributed standard price quotes sale must still be commercially reasonable

Question 80

# default and enforcement disposition of collateral - what notice is required

Answer 80

* secured party has to send authenticated notice of dipsotiion to a variety of parties * parties who need notice: debtor, secondary obligors, other secured party, anyone else who has a claim or interest * safe harbor of timing for non-commercial transactions: reasonable if sent at least 10 days before sale notice must include (1) secured party + debtor's name, (2) description, (3) how, when, where collateral is disposed of, (4) statement that debtor is entitled to accounting for unpaid indebtedness * notice not required if collateral is perishable, sold on recognized market, or notice is waived by default

Question 81

# default and enforcement disposition of collateral - what happens to the proceeds of a disposition

Answer 81

cash proceeds in this order 1. reasonable expenses for collection and enforcement 2. pay the debt to foreclosing secured party 3. pay subordinate security interests 4. surplus goes to the debtor senior security interests survive the sale if not enough money to satisfy the debt, secured party can seek deficiency judgment against obligator for remaining amount

Question 82

acceptance of collateral in full satisfaction of debt

Answer 82

debtor must consent after default to acceptance in an authenticated record acceptance by silence is allowed if debtor doesn't object within 20 days consumer good transactions --> secured party can only accept the collateral in full satisfaction of the obligation if consumer goods and debtor has paid back more than 60% of the value, goods must be sold

Question 83

acceptance of collateral in partial satisfaction of debt

Answer 83

debtor must consent after default in an authenticated record consent by silence is NOT permitted not allowed in consumer transactions

Question 84

remedies for secured party's failure to comply

Answer 84

* injunctive relief - if failure is ongoing * actual damages - loss resulting from secured party's violations * statutory damages - minimum damages in consumer goods * can prevent secure party from claiming a deficiency * secured party that improperly responses collateral may be liable for conversion (tort)

Question 85

future acquired goods, when does attachment occur? | Essay 5386

Answer 85

if secured party has perfected SI in all future inventory, etc. (this is first), then the SI attaches to those items when it is delivered so it's possible that a PMSI seller will get a SI in the item first if delivery occurs a few days later (this is when secured party SI attaches)

Question 86

what is the only way to perfect a security interest in money?

Answer 86

possession!

Question 87

what is the only way to perfect a security interest in deposit accounts and LOC rights?

Answer 87

control!

Question 88

what category are raw materials included in? | Essay 3466

Answer 88

they are inventory

Question 89

rule for security interest in collateral when there are proceeds | Essay 2454

Answer 89

security interest in collateral automatically attaches to identifiable proceeds Proceeds = that which is acquired upon the sale, exchange, or other disposition of collateral

Question 90

# rule statement queen! priority rule for PMSI vs. SI not in inventory

Answer 90

A perfected purchase-money security interest in goods other than inventory has priority over a conflicting security interest in the same goods so long as the interest was perfected when the debtor received possession of the collateral or within 20 days thereafter.