Top 5 Areas

Question 1

Types of Collateral

Answer 1

Goods (tangible collateral); Intangible or semi-intangible collateral

Question 2

Types of goods

Answer 2

Consumer goods; equipment; farm products; inventory

Question 3

Default category for goods

Answer 3

Equipment

Question 4

Types of semi/intangible collateral

Answer 4

Instruments; documents; chattel paper; investment property; accounts; deposit accounts; commercial tort claims; general intangibles

Question 5

Instruments

Answer 5

Pieces of paper representing the right to be paid money (promissory notes, checks, certificates of deposit)

Question 6

Documents

Answer 6

A document that represents the right to reive goods

Question 7

Chattel paper

Answer 7

A record which evidences both a monetary obligation and a security interest in or a lease of specific goods

Question 8

Investment property

Answer 8

Stocks, bonds, mutual funds, and brokerage accounts

Question 9

Accounts

Answer 9

Includes a right to payment for property sold or services rendered

Question 10

Deposit accounts

Answer 10

An account maintained with a bank. Article 9 only applies to security interests in nonconsumer deposit accounts

Question 11

Commercial tort claims

Answer 11

A tort claim where (1) the claimant is an organization or (2) the claimant is an individual, the claim arose out of the the claimant’s business or profession, and the claim does not include damages for perso injury or the death of an individual

Question 12

General intangibles

Answer 12

Any personal property not coming within the scope of the other definitions, such as patent and trademark rights, copyrights, and goodwil

Question 13

Three requirements for attachment

Answer 13

Parties must agree to create the security interest; Value given by the secured party; and Debtor has rights in the collateral

Question 14

Form of the Security Agreement

Answer 14

Evidenced by a record; authenticated agreement; description of collateral

Question 15

What evidence of a record is sufficient?

Answer 15

The creditor taking possession of the collateral; an authenticated security agreement; or the creditor taking control of nonconsumer deposit accounts, electronic chattel paper, and investment property

Question 16

Description of collateral in security agreement

Answer 16

Must reasonably identify the collateral. No supergeneric descriptions

Question 17

Methods of perfection

Answer 17

Attachment and one of the following:

Filing of a financing statement;
taking possession of the collateral;
taking control of the collateral;
auutomatic perfection (e.g., PMSI in consumer goods)
Temporary perfection (e.g., of a secutity interest in proceeds received from the sale of collateral)

Question 18

Collateral filing is effective to perfect

Answer 18

All classes of collateral except deposit accounts and money

Question 19

Collateral possession is effective for perfection

Answer 19

All classes of collateral except general intangibles, accounts, nonconsumer deposit accounts, nonnegotiable documents, and electronic chattel paper

Question 20

Collateral that automatically perfects

Answer 20

PMSIs in consumer goods

Question 21

Temporary perfection

Answer 21

Effective for 20 days for proceeds, when a secured party gives new value under a security agreement where collateral is a negotiable instrument, or certificated security, and where a SP makes available a negotiable document, instrument, certificated security, or goods in possession of a bailee on a temporary basis. Four moths where debtor moves from one state to another if debtor’s location governs perfection

Question 22

Control effective for perfection

Answer 22

Only for nonconsumer deposit accounts, electronic chattel paper, and investment property

Question 23

General rule for priority b/w SPs

Answer 23

First to either file or perfect, whichever is earlier

Question 24

Priority b/w unperfected SPs

Answer 24

First to attach

Question 25

Priority b/w unperfected and perfected SPs

Answer 25

Perfected interest generally prevails

Question 26

PMSI superpriority in goods other than inventory and livestock

Answer 26

PMSI has priority over conflicting SI in the same goods or their proceeds if the interest is perfected before or w/in 20 days after debtor receives possession of the goods

Question 27

PMSI in inventory and livestock

Answer 27

Only has priority if: perfected at the time the debtor gets possession; and any SP who has filed their SI receives authenticated notification of the PMSI before debtor receives possession

Question 28

Conflicting PMSIs

Answer 28

SP who has PMSI as a seller prevails over a SP who has a PMSI as a lender. Otherwise first SP to file or perfect prevails

Question 29

Priority rules for conflicting SI in investment property

Answer 29

A SI perfected by control has priority over a SI perfected by any other method

Question 31

Priority in proceeds

Answer 31

A perfected SI in proceeds will have the same date of priority as the perfected SI in the original collateral

Question 32

Special rule for certain proceeds of non-filing collateral

Answer 32

A SP has priority in the proceeds on non-filing collateral if (1) the SP has priority in the original collateral; (2) their SI in the proceeds is perfected and (3) the proceeds are cash proceeds or proceeds of the same type as the original collateral

Question 33

BIOC Sales

Answer 33

Takes free of a nonpossessory SI in the goods created by the buyer's seller

Question 34

BIOC

Answer 34

Buys in good faith, w/o knowledge that the sale violates the rights of another person, and from a seller in the business of selling goods of the kind purchased

Question 35

Buyers not in OCB

Answer 35

Take subject to perfected SI, and take free from unperfecteed SI

Question 36

Priority for SP vs. judicial lien creditor

Answer 36

JLC prevails over SI if becomes creditor before SI is perfected. Prior perfected SI has priority

Question 37

Priority for SP v. possessory lien holder

Answer 37

PLH has priority if the goods or services were provided in the ordinary course of business and the collateral remains in the lien holder's possession

Question 38

Priority for SP v. Article 2 claimant

Answer 38

A2 claimant has priority over A9 SP as long as A2 retains possession