ST: Intro/Definitions Flashcards
Secured Transaction
Transaction intended to create a SI IN PERSONAL PROPERTY OR FIXTURE. Involves a sale on credit or a loan in which the seller of the lender obtains a lien on some or all of the D’s property as security for payment.
ST–> Look for:
(1) credit transaction and (2) an agreement that creates a lien in factor of the C in the D’s personal property to secure debt.
Debtor
The person who owes payment or performance of the obligation secured
Secured Party (SP)
A lender, seller, or other person in whose favor there is a security interest
Security Agreement
The agreement between the D and the SP THAT CREATES THE SI
Security Interest (SI)
An interest in personal property or fixture which secures payment or performance of an obligation. It is a contingent property interest in D’s collateral that the D grants to the C. When the contingency, which is DEFAULT occurs the property interest springs to life and C has rights in the D’s collateral
Collateral
The property subject to a SI. Collateral is property that the SP can repossess upon default to insure that the debt is paid.
Purchase Money Security Interest (PMSI)
Two Kinds:
1. Seller financed PMSI: SP sells D collateral on credit and retains a SI in the item sold.
2. Financer Financed PMSI: An enabling loan; a loan to D that enabled the debtor to buy specific collateral and the C takes SI in the specific collateral
NOTE: the credit or loan proceed MUST ACTUALLY be used to acquire collateral
C loans D $1000 for TV and takes SI in the TV. D actually uses the $1000 from C to buy the TV. Is there a PMSI?
Yes.
What if D had used the $1000 from C to go to Vegas and the D had instead purhcased the TV with $1000 from D’s own savings account? Does C have a SI in the TV? Is it a purchase money security interest?
YES–SI
NO PMSI
After Acquired Property Clause:
SP often will want to obtain a SI not only in D’s present property but also in property that the D will obtain in the future. SAs typically contain A-AP clause
Future Advance Clause
SP often contemplates making future loans to the D and wants to secure these future advances in the present SA. SA typically contains a future advancement clause in which case a new SA is not needed when a future advance is made.
Attachment
Deals with those steps legally required to tie the SP a SI in the collateral that is EFFECTIVE AS AGAINST THE D.
*A C is not a SC until attachment
Perfection
Deal with those steps legally required to give the SP an interest in the collateral that is EFFECTIVE AGAINST OTHER CREDITORS.
*process of giving public notice of the SI to the world.
Financing statement
Document generally used to provides public notice of the SI, and so to perfect the SI.
Goods
All things which are movable at the time the SI attaches, and include the unborn young of animas and growing crops. Goods also include fixtures.
Classification
- Consumer Goods– used or bought (personal use)
- Equipment - primarily in business
- Farm products–crops, livestock, supplies
- Inventory– held by person who holds them for sale or lease
A guitar purchased by HH as a present for his son Marvin?
Consumer good because it is bought for use primarily for family purposes and HH bought it for his son.
Guitar bought by SS, a professional musician to be used on tour
Equipment because it is used or bought for use primarily in business and SS will use this on tour.
Milk in the hands of a farmer (who got it from his cows)
Farm products, because products of crops or livestock in their unmanufactured state and milk is unmanufactured state in the hands of the farm owner.
Milk in the hands of the grocery store’s customer who is buying for his family’s consumption
Consumer goods because it is a good being purchased for household use and customer is buying for his family.
Automobiles held by a local car rental agency
Inventory. It is inventory when it is held by a person who holds them for sale or lease and the cars are being held by a local car rental agency.
Pencils and other stationary supplies used by Sears or some other large retailer in its credit offices
Can be Equipment–goods used or bought for use primarily in business (stationary is used in business) OR Inventory –materials being used or consumed in a business in a short period of time because pencils and stationary are materials that can be used up in a short time.
Semi-intangible and Intangible Property *
- Instruments
- Documents
- Chattel Paper
- Investment Property
- Accounts
- Deposit Accounts
- Commercial Tort Claims
- General Intangibles
