Secured

Once there has been a default, the secured party can repossess the collateral in what two ways?

(1) By use of judicial process (e.g., replevin action); or(2) Self-help repossession

whats a sec interest - 4 reqs

(1) a property interest (2) in personal property OR FIXTURES (3) that secures (4) payment or performance of an obligation

record definition

*Record (what it doesn't include not mentioned here): Info. inscribed on a tangible medium OR which is stored in an electronic or other medium and is retrievable in perceivable form

Definitions of purchase and purchaser 1-201(a)(29) and (30)

-person that takes by purchase; -includes taking by sale, security interest, gift, and any other voluntary transaction creating an interest in property

what is "inventory"

3) Inventory"Inventory" includes goods, other than farm products, that are held for sale or lease; are furnished under a service contract; or consist of raw materials, works in process, or materials used or consumed in a business. This term usually refers to goods that are consumed in a business (e.g., fuel used in operations) and includes items, even though not held for sale or lease, that are used up or consumed in a short period of time. UCC § 9-102(a)(48), inc. cmt. 4.a. HFRWM HRFWM

*All aspects of the disposition of collateral must be conducted in a commercially reasonable manner. When is a disposition considered commercially reasonable?

A disposition is commercially reasonable when the collateral is:(1) Sold in the usual manner in a recognized market that has standardized prices for fungible goods;(2) Sold at the price current in a recognized market; or(3) Disposed of in conformity with reasonable commercial practices among dealers in that type of collateral.

A statutory lien claimant has priority over a perfected secured creditor provided:

A statutory lien claimant has priority over a perfected secured creditor provided:(1) The lienholder has possession the goods; and(2) The lien secures payment or performance of an obligation for services or materials furnished in the ordinary course of the person's business (e.g., a mechanic's lien).

Definitions of installment loan, payable on demand, line of credit + what do these all relate to?

All relate to enforcement of si

validity of after acquired property clause in a sec agmt when the collateral is consumer goods:

An after-acquired clause is not effective if the collateral is consumer goods, unless the debtor acquires them within 10 days after the secured party gives value.

Article 9 does not apply to a deposit account that is pledged as collateral in a _____ transaction, but such an account that is received as proceeds is ______

Article 9 does not apply to a deposit account that is pledged as collateral in a consumer transaction, but such an account that is received as proceeds is subject to the rules regarding proceeds. UCC § 9-109(d)(13).

Article 9 of the UCC governs security interests in real estate?

Article 9 of the UCC generally doesn't governs security interests in real estate?

Contracting out of breach of peace prohibition reqs

CAN'T CONTRACT OUT OF BROP PROHIBITION 9-603(b)

cash proceeds of a disposition of collateral are distributed in what order:

Cash proceeds of a disposition are distributed in the following order:(1) Pay reasonable expenses for collection and enforcement (e.g., reasonable attorney's fees); then(2) Pay off the debt to the foreclosing secured party; then(3) Pay subordinate security interests, provided the subordinated party makes a formal demand prior to distribution of the proceeds; then(4) Any surplus or remainder will be returned to the debtor.

classifications of quasi-intangibles (aka types) (6)

Chattel Paper (Tangible) Certificated Security Document of Title Instrument Money CCDIM (cc from new girl is dim)

equip,emt :

Explain why the generator would meet the description of equipment here. Equipment is a default category for goods (movable objects) where they do not fit into any of the other categories (consumer goods, farm products, inventory).

Methods of perfection

Filing, Possession, Control, Automatic perfection (fpac)

option to accelerate at will 1-309

IF: agmt b/t debtor and sp says that sp may accelerate whenever sp deems itself insecure/at sp's will/words indicating sp may accelerate whenever it wants THEN: sp can only accelerate when in (1) good faith sp believes (2) that the prospect of payment/performance is impaired

If the proceeds are identifiable cash proceeds (which includes checks) and the security interest in the original collateral is perfected, then:

If the proceeds are identifiable cash proceeds (which includes checks) and the security interest in the original collateral is perfected, the perfected security interest in the proceeds continues indefinitely.

Requirement of notice to debtor that sp about to or has accelerated

NO NOTICE REQUIRED

Notice to debtor of default reqs:

NO NOTICE TO DEBTOR OF DEFAULT IS NECESSARY

proximate cause rule statem correct: Proximate cause requires the plaintiff's injuries to be a foreseeable consequence of the defendant's actions. good what i wrote: A defendant can be vicariously liable for torts committed by an independent contractor if the defendant hired the independent contractor to engage in an inherently dangerous activity. Here, the company was an independent contractor because they were contracted for a one-time job: to plan and manage the fireworks display as opposed to being hired for a salary. This was an inherently dangerous activity: managing a fireworks display. Therefore, the judge was wrong. Res ipsa loquitor is an argument used when:

Res ipsa loquitor is an argument used when the breaching activity cannot be identified

pmsi in seller rule statem (dpc)

PMSI exists when a creditor directly finances the purchase of the collateral they are taking an interest in. a creditor directly finances the purchase of the collateral they are taking an interest in dpc

What is included in cash proceeds? also define each term within the definition according to the ucc

Proceeds that are Money, checks, deposit accounts, and the like (cryptocurrency? - in class notes?); money = a medium of exchange currently adopted or authorized by a domestic or foreign government. ("includes...[really specific info]")

when is there a breach of the peace; when is it required

required for non-judicial repossession (self-help repo) factors: 1. where and when repo occurred (the less invasive the trespass (if any) such as repossessing on unsecured property, then less likely bop) 2. reactions of 3d parties (witness the repo and object to it-not ok) 3. reaction of debtor (consent ok either constructive or explicit; if objects then not ok) 4. use of deception by sp (generally not ok, mere trickery ok)

If have an authenticated security agmt, then in what form does the sa have to be in?

writing, inscribed in some other tangible medium, and stored in electronic format and retrievable in perceivable form

an art 9 consingment is treated as:

a pmsi in inventory

inventory (4)

all are goods; 1 of these: (1) held for sale/furnished under k of service if person sells them in person's ordinary course of business (2) raw materials, (3) goods used up quickly in the business in producing a product or providing a service (4) (work in process)

Collateral that can do possession to perfect

all tangible and quasi tangible col

obligation of good faith rule

every K or duty in the ucc requires good faith in its performance and enforcement good faith = honesty in fact or observance of reasonable commercial standards of fair dealing

types of personal property

goods and non-goods

reqs for att of si

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

A security interest in ________ can be perfected only by possession.

money

9-102 what are cash procs

money, check, depacct, and the like

when the question is just asking you whether the party has a n interest in proceeds, why do you have to establish whether that interest is perfected when there's no other party claiming an interest in them? - e.g. the issue was: Does Retailer have an interest in the $4000 check? the sample answer said: Proceeds include whatever is acquired upon the sale of collateral. A security interest in collateral automatically attaches to identifiable proceeds. If the proceeds are identifiable cash proceeds (which includes checks) and the security interest in the original collateral is perfected, the perfected security interest in the proceeds continues indefinitely. Here, the retailer had a perfected security interest in the entertainment system. The buyer acquired the $4,000 check from the friend in exchange for the system. Thus, the check is identifiable cash proceeds, and the retailer has a perfected security interest in the check. define sec agmt

"Security agreement" means an agreement that creates or provides for a security interest

reqs for consignment to be subj to art. 9? (4 overall)

(1) A consignor must deliver goods to a merchant (consignee) to sell;(2) The merchant (consignee) must deal in goods of that kind, not operate under the name of the consignor, not be generally known by its creditors to be substantially engaged in the business of selling goods of others, and not be an auctioneer;(3) The value of the goods must be at least $1,000 in each delivery; and(4) The goods must not be consumer goods immediately before delivery.

What happens to perfection when (1) a debtor moves to another state, or (2) the collateral is transferred to a person in another state who takes the collateral subject to the security interest?

(1) If a debtor moves to another state, a perfected security interest will remain perfected for four months after the move (unless the financing statement lapses earlier). This four month grace period also covers collateral the debtor acquires after the debtor moves. To remain continuously perfected, the secured party must re-file in the new state within the four-month window.(2) If the collateral is transferred to a new debtor out of state, the secured party has one year to file a new financing statement listing the new debtor. 14 of 59

Please classify the following collateral:(1) A check or a promissory note;(2) A check along with a security agreement;(3) The right to be paid for a service rendered;(4) A savings account at a bank

(1) Instrument;(2) Chattel paper;(3) Accounts;(4) Deposit Account

?*A PMSI in fixtures has priority over a prior interest in the real property with which they are associated when what two things occur? - (1) The debtor has an interest in the real property (owner) or is in possession (lessee); and(2) The security interest is perfected by a fixture filing before the goods become fixtures or within 20 days thereafter. (1) What is the general rule for a security interest in fixtures versus a real property interest to which it is associated?(2) In order for a security interest in a fixture to have priority over an interest in the real property, what must happen? *What is the rule regarding construction mortgages and subsequent security interests in fixtures?: A construction mortgage has priority over any subsequent security interest in fixtures, including PMSIs in fixtures, if it is recorded before the goods become fixtures, and it covers only those goods that become fixtures before completion of the construction.

(1) The general rule is that a security interest in fixtures is subordinate to a conflicting interest of an owner of the related real property (other than the debtor).(2) For a security interest in fixtures to have priority over an interest in real property, the secured party must file a fixture filing before the real property interest is recorded. (A fixture filing is a financing statement covering goods that are or are to become fixtures.) It must be filed in the office designated for the recording of a mortgage on the related real property (i.e., local real property records).

buyer in the ordinary couse of business - bigfwi consumer buyer exception - bcfwfp

(1) buyer - pays value (2) in good faith (3) of goods (not farm products) (4) from a merchant in the business of selling goods of the kind (5) without ACTUAL knowledge that the sale violates the rights of another in the property (6) in the ordinary course of business (1) buyer - pays value (2) of consumer goods (3) for her own personal, family, household use (4) without knowledge of the si (5) from a consumer seller (6) prior to the purchase, the secured party didnt file a fs covering the goods bcfwfp

requirements for a financing statement

(1) indication of the collateral (2) debtor's name (3) sp's name + (4) filed in the appropriate location, and (5) filing is authorized by the debtor (authentication of the sa is sufficient) - more?

Definition of debtor

(1) person having an interest in the col whether or not that person's an obligor (2) consignee (3) a seller of accounts, chattel paper, payment intangibles, or promissory notes; (need to know?)

chattel paper defined (4 parts and 2 types)

(1) record or writing that evidence (2) a right to payment [aka monet oblig] (3) security interest in specific goods, and (4) the monetary obligation is secured by those specific goods

proceeds definition (4 parts)

(A) whatever is acquired upon disposition of the col (relevant types of disp: sale or exchange) (B) whatever is collected on, or distributed on account of, collateral; (includes dividends distributed on account of investment property (C) rights arising out of collateral; (D) to the extent of the value of collateral, claims arising out of the loss, nonconformity, or interference with the use of, defects or infringement of rights in, or damage to, the collateral; or (E) to the extent of the value of collateraland to the extent payable to the debtor or the secured party, insurance payable by reason of the loss or nonconformity of, defects or infringement of rights in, or damage to, the collateral. (includes money paid by insurance for loss to debtor

definition of secondary obligor, secondary obligation (got definition from west law), obligor

*Secondary Obligor = An obligor whose obligation is secondary OR who has right of recourse w/ respect to a secured obligation against the debtor, obligor, or property of either; *secondary obligation = an obligation that arises, by operation of law, on the breach of a primary obligation (wl) *Obligor: (1) w/ respect to a secured obligation: (2) a person who owes payment/other performance of the ob (3) has provided property other than than the col as col, or (4) otherwise acctable in whole or in part for payment or other performance of the obligation

which ones are tangible/non-tangible/quasi-intangibles chattel paper (6) instrument - account - basically 3 parts

-(1) a record or writing (b/c either quasi-intangible or tangible); {(2) evidences both: a right to payment of a monetary obligation, AND (3) a security interest} (4) in specific goods, and (5) such monetary ob is secured by such (specific) goods (intang or quasi-intang) -(1) a writing (2) evidences a right to payment of a monetary obligation (3) isn't itself a sec agmt, (4) and in ordinary course of business is delivered w/ any necessary indorsement or assignment (tangible) -(1) right to payment of a monetary obligation (2) for services [to be] rendered or for property [to be] sold; or (3) for secondary obligation [to be] incurred WHETHER OR NOT EARNED BY PERFORMANCE (intangible) DEPOSIT ACCT = ACCT CAN STILL BE AN ACCOUNT EVEN IF IT'S IN A WRITING

debtor definition (3 parts) obligor definition (3 parts) secondary obligor definition (2 parts) secured party definition (3 parts) borrower def creditor def

-person who has an interest in the property (other than a si or other lien); consignee; seller of ch paper, promissory notes, account, or payment intangibles -person who w/ respect to a si owes performance or paym of the obligation; who provides property other than the col to secure paym/performance of the ob; or who is otherwise accountable in whole or in part for paym/performance of the ob (includes secondary obligor) -person who is an obligor to the extent that that person has a secondary obligation; or who has a right of recourse (legal right to demand payment or compensation) w/ respect to an obligation secured by against debtor, the obligor, or the property of either -person in whose favor a si is created or provided for under sagmt (whether or not the obligation is outstanding); consignor; or person to whom payment intangible, promissory note, account, or ch paper is sold -doesn't have to be the debtor -a person or co. to whom money is owed e.g. "barbara has worked out a deal to borrow $1000 from Chris" - we automatically know that b is a borrower and c is a creditor

An after-acquired clause is not effective if the collateral is _____ unless ____ when is a so called lease actually a sec trans covered by art 9?

1 req + any of the following: (1) The original lease term is equal to (or greater than) the good's remaining economic life;(2) The lessee is bound to renew the lease for the good's remaining economic life (or is bound to become the owner of the goods);(3) The lessee has the option to renew the lease for the good's remaining economic life for nominal or no additional consideration; or(4) The lessee has the option to become the owner of the goods upon completion of the lease for nominal or no additional consideration.(In essence, the economic reality in all of these situations is that there is a sale to the lessee with a security interest retained by the lessor. Thus, the lessor is a secured party and cannot avoid filing by labeling the transaction as a lease. The lessor would need to file or otherwise perfect his/her interest in the goods.)

scope of article 9 -4 cats

1) agricultural liens 2) sales of certain right of paym (buyer is treated as a sec party, seller is treated as debtor) - rights to paym here are: 3) certain consigments 4) (secured transactions?:) 1. transactions REGARDLESS OF FORM 2. that create a security interest (interest in personal property/fixtures that secs paym/perf of an obligation) 3. in personal property/fixtures 4. by contract (so therefore these agreements have to be consensual)

when are general insecurity clauses ok?

1-309: general insecurity clauses are permissible, but limited to those instances when the SP in "good faith believes that the prospect of payment of performance is impaired"

Chattel paper is:

1. a record (paper or electronic) that evidences both (1) a monetary obligation and (2) a security interest in specific goods (security agreement) or a lease of specific goods.

Automatic attachment occurs when? (6)

1. identifiable proceeds 2. security entitlements w/i sec acct if si att in securities acct 3. commodities contracts w/i commodity acct if si attaches to commodity acct 4. to the product or mass that results from the commingling of the col w/ other goods 5. when right to payment (of monet obligation) is given as col for a secured oblig, then si extends to any lien securing the right to payment; 6. supporting obligs

Distribution of proceeds

1st - cost of disposition 2nd- foreclosing creditor 3rd - any other lc that demanded a share (got notice and demanded a share) 4th-Leftover goes to debtor

2 main reqs for disposal of col

2 main requirements for disposal (1) Advance notice of the disposition and (2) Disposition is commercially reasonable

security interest in fixtures vs. real property interests - priority: what is a fixture filing: REMEMBER - in order to figure out priority and what priority rules apply: determine who the parties are that are fighting over the collateral, who is attached, and who is perfected what is a construction mortgage (lh simplified):

2. Fixtures v. Real Property Interest A. General rule: A security interest in fixtures has priority over an interest in real property if 1) the secured party files a fixture filing before the real property interest is recorded. B. PMSI Rule: A PMSI in fixtures has priority over a real property interest if: 1. The debtor has an interest of record in the real property or is in possession of the real property; and 2. The security interest is perfected by a fixture filing, either before the goods become fixtures or within 20 days after the goods become fixtures. C. construction mortgage exception: A construction mortgage has priority over any subsequent security interest in fixtures, including PMSIs in fixtures, if 1. it is recorded BEFORE the goods become fixtures and 2. the goods become fixtures BEFORE completion of the construction Fixture filing: A financing statement filed in the local real property records. construction mortgage = a mortgage satisfying construction payments

*A security interest in an accession is usually subject to general priority rules. However, a security interest in an accession is subordinate to a security interest in the whole collateral if that collateral was perfected under a certificate-of-title statute. Here, the radio was installed in a vehicle that was perfected under a certificate-of-title statute. Therefore, the security interest in the car radio is subordinate to the holder of the lien noted on the title certificate of the vehicle. 37 of 59 NEXT CARD *Upon default, what happens when a secured party has priority in an accession? The secured party with priority in the accession is allowed to remove the accession from the other goods (i.e., if the security interest in the accession has priority over the claims of every person having an interest in the whole). A secured party that removes an accession from other goods must reimburse the holder of a security interest or the owner of the whole for physical injury to the whole or other goods.Note: A security interest in a car radio is subordinate to a security interest in the car perfected by notation of the security interest on the title to the car. A PMSI in _____ except ____ automatically perfects upon attachment. What remedy is available to a secured party of large equipment that makes repossession difficult?

A PMSI in consumer goods automatically perfects upon attachment. (A PMSI in other types of goods (e.g., inventory, equipment) or automobiles does not automatically perfect.) Equipment that is hard to repossess can be rendered unusable in lieu of repossession. This is usually followed by disposal (e.g., sale) on the debtor's premises.

all buyers are purchasers; some buyers are sp's biocob exception; and do they have to give NEW value? garag sale exception true or false: If a buyer obtains goods under the BOCB exception free of the security interest in the goods created by the buyer's seller, the buyer may, in turn, sell the goods to a second buyer who also takes the goods free of that security interest. The second buyer is not required to qualify as a BOCB. Consequently, the friend takes the home entertainment system free of the finance company's security interest.

A buyer of collateral subject to a perfected security interest generally takes the collateral subject to that interest. However, a buyer in the ordinary course of business (BOCB) takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence. A BOCB is a person who: (i) buys goods; (ii) in the ordinary course of business; (iii) from a merchant who is in the business of selling goods of that kind; (iv) in good faith; and (v) without knowledge that the sale violates the rights of another in the same goods. In order to qualify as a buyer, the purchaser must give new value, which in addition to paying cash for the goods includes purchasing the goods on credit true: If a buyer obtains goods under the BOCB exception free of the security interest in the goods created by the buyer's seller, the buyer may, in turn, sell the goods to a second buyer who also takes the goods free of that security interest. The second buyer is not required to qualify as a BOCB. Consequently, the friend takes the home entertainment system free of the finance company's security interest. a consumer buyer of consumer goods takes free of a security interest, even if perfected, unless prior to the purchase the secured party filed a financing statement covering the goods. A consumer buyer is a person who: (i) buys consumer goods for value; (ii) for his own personal, family, or household use; (iii) from a consumer seller; and (iv) without knowledge of the security interest. This is often referred to as the "garage sale" rule. Unlike the BOCB exception, the "garage sale" exception merely requires a buyer to give value, rather than new value. e.g. Here, the friend gave value for the system in the form of a $4,000 check. (Note: Although the buyer agreed to hold the check for 90 days, a check is a negotiable instrument that is payable upon demand, and therefore constitutes value given.) In addition, the friend purchased the system for his own household use, the buyer was a consumer seller because she was not in the business of selling home electronic equipment, and the friend had no knowledge of the retailer's security interest. Thus, the friend is a consumer buyer of consumer goods. Because the retailer did not file its PMSI, the friend takes the system free of the retailer's security interest. e.g. Example 61: Retailer sells a piano to Andy on credit and retains a security interest in the piano to secure the purchase price. Andy intends to use the piano as a consumer good. Because Retailer has an automatically perfected PMSI in consumer goods, Retailer does not take any further steps to perfect. Three months later, Andy sells the piano to Erin for $500. Erin intends to use the piano as a consumer good, and has no actual knowledge of Retailer's security interest. Does Erin take free of Retailer's security interest?

after acquired property clause - reqs for att: and when does the si att:

A debtor may also give a security interest in future rights. Generally, this type of interest is created by including an "after-acquired property clause" in the security agreement. The security interest for after-acquired property attaches as soon as the debtor obtains an interest in the property.

At a minimum, what information must a financing statement contain?

A financing statement must contain the following information:i) The debtor's name;ii) The name of the secured party or a representative of the secured party; andiii) The collateral covered by the financing statement.

A negotiable instrument is : (google)- letter of credit - google : letter of credit right:

A negotiable instrument is a signed document that promises a sum of payment to a specified person or the assignee. Negotiable instruments are transferable in nature, allowing the holder to take the funds as cash or use them in a manner appropriate for the transaction or according to their preference. Common examples of negotiable instruments include checks, money orders, and promissory notes. A letter of credit, or "credit letter," is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase Letter of Credit Rights A right to payment or performance under a letter of credit

After acquired property - can security agmt grant a si in aap? future advance clause - can security agmt may provide that col secures future advances or other value?

A sa can create or provide for a si in after-acquired property (automatic accounts and inventory); aap clause won't allow a si to attach to (1) after-acquired (a) consumer goods (b) unless debtor acquires rights in the cg's within 10 days after the sp gives value (will attach to consumer goods that are accessions when they're given as add'l security) nor (2) commercial tort claims -Yes, and w/ no exceptions - whether or not the advances/value are given pursuant to commitment

Typically, a secured party must give authenticated notice of disposition to a variety of parties. When is notice not required? A security interest in a ________ can be perfected only by control. Under the same office rule, temporary perfection in proceeds may continue indefinitely if

A secured party is not required to send a notice of disposition when:(1) The collateral is perishable or threatens to decline speedily in value;(2) The collateral is customarily sold on a recognized market; or(3) Notice is waived by an authenticated agreement after default. deposit account Under the same office rule, temporary perfection in proceeds may continue indefinitely if:(1) A filed financing statement covers the original collateral;(2) The proceeds are collateral in which a security interest may be perfected by filing in the same office as the original financing statement; and(3) The proceeds are not acquired with cash proceeds.(E.g., Lender filed a financing statement covering candle inventory. The candles are sold on credit to Boutique generating an account (which is the proceeds of the inventory). Those proceeds and the original inventory would be perfected by filing in the same office, and the account was not acquired with cash proceeds. Lender is perfected in the account without having to file a new financing statement.)

perfection rule statement intro: Perfection of a security interest is generally necessary for the secured party to have rights in the collateral that are superior to any rights claimed by third parties. A security interest is perfected upon attachment of that interest and compliance with one of the methods of perfection. which interests can be filed in order to be perfectedd?

A security interest in any collateral, except a deposit account, money, or letter-of-credit rights that are not a supporting obligation, may be perfected by filing a financing statement. T

pmsi can exist as to which property: Under what circumstances does a buyer of goods take free of an unperfected security interest?

A security interest qualifies as a PMSI only if the collateral is goods (including fixtures) or software. A buyer, other than a secured party, of collateral that is goods, takes free of an unperfected security interest in the same collateral if the buyer:i) Gives value; andii) Receives delivery of the collateral;iii) Without knowledge of the existing security interest.

Self-help repossession cannot "breach the peace," which is not defined by Article 9 and is left up to the courts. What self-help measures are typically deemed acceptable by courts?

A trespass with respect to the collateral itself (e.g., entering a car or other vehicle), or the debtor's land (e.g., seizing a car from the debtor's driveway [but not the garage or residence]) are generally deemed acceptable means of self-help repossession that do not breach the peace.

true or false A Notice of disposition is required to be sent to the debtor, any secondary obligor, any other secured party, and any other party from whom the secured party has received notice of a claim or interest in the collateral. B The notification must be commercially reasonable as to its content, the manner in which it is sent, and its timeliness. C If notice is sent within 15 days of the disposition sale in a commercial transaction, it is presumed to be commercially reasonable. D The notice must include a statement that the debtor is entitled to an accounting for the unpaid indebtedness. In determining whether a disposition is commercially reasonable as a matter of law, what are the safe harbors? (3)

A, B, D - true C. false 1. The collateral was sold in conformity with the reasonable commercial practices of dealers of that type of collateral. 2. The collateral was sold at the price current in a recognized market at the time of the disposition. 3. The collateral was sold in the usual manner on a recognized market.

what are farm products (3 categs; requirement for the debtor, excluded (1): classification for software:

A. farm products = It is important to remember that for goods to be considered farm products, the debtor must be engaged in a farming operation. UCC § 9-102(a)(34). "Farm products" are goods that are (1)crops or (2)livestock and (3)include supplies that are used or produced in farming. (4)Excluded from farm products is standing timber for which there is not a contract to cut and remove. B. software = 1. if software embedded in goods --> then treated as part of the goods to which they attach 2. if software not embedded in goods --> then are a general intangible

account = deposit account =

Accounts include the right to payment for property sold, leased, licensed, or for services rendered. Also included are rights to payment under insurance policies, amounts owing on credit cards, as well as a company's accounts receivable. Deposit accounts include savings, passbook, time, or demand accounts maintained with a bank.

attachment reqs - rule statem:

Attachment requires that: (i) value has been given by the secured party, (ii) the debtor has rights in the collateral, and (iii) the debtor has authenticated a security agreement that describes the collateral, or the secured party has possession or control of the collateral pursuant to a security agreement.

Common abnormally dangerous activities include : do fireworks displays constitute an abnormally dangerous activity?. Damage or injury caused by flying aircraft is subject to strict liability?

Common abnormally dangerous activities include mining, blasting, using explosives, fumigating, crop dusting, excavating, disposing of hazardous waste, storing gasoline in residential areas, storing toxic chemicals and gases, and storing large quantities of water and other liquids. Jurisdictions are split as to whether fireworks displays constitute an abnormally dangerous activity. Some compare the activity to blasting, finding that fireworks displays are not commonly engaged in and present substantial risks that cannot be eliminated with the exercise of reasonable care. Other jurisdictions, relying on the Second Restatement of Torts, have found that their value to the community outweighs the risks, and do not find the activity abnormally dangerous. Damage or injury caused by flying aircraft is no longer subject to strict liability, though a few states still apply the doctrine to ground damage from an airplane crash.

consumer goods: Software—CLASSIF: Farm products— Commercial tort claims—excludes:

Consumer goods—goods acquired primarily for personal, family, or household purposes Software—software embedded in goods is treated as part of goods in which it is embedded; software not embedded in goods is treated as a general intangible Farm products—goods that are crops or livestock or products of crops or livestock, and supplies that are used or produced in farming Commercial tort claims—excludes tort claims by an individual for personal injury or death

if a buyer agrees to hold the check for a certain amount of days, then does it constitute value when the check is given?

Here, the friend gave value for the system in the form of a $4,000 check. (Note: Although the buyer agreed to hold the check for 90 days, a check is a negotiable instrument that is payable upon demand, and therefore constitutes value given.)

"Default" is not defined by Article 9. Typically, parties to a security agreement agree to what circumstances give rise to a default. In the absence of such an agreement, what event gives rise to a default?

In the absence of an agreement between the parties, the only event of default will be the failure of the obligor to make timely payments to the secured party.

Judicial lien creditor priority over sec interest

Judicial lien creditor—acquires a lien on the collateral by a judicial process • Result: a perfected SI has priority over a judicial lien; a judicial lien has priority over an unperfected SI unless the only reason the SI was unperfected was that the secured party had not yet given value o PMSI exception—if a PMSI is perfected before or within 20 days after the debtor receives possession of the collateral, the PMSI has priority over a creditor's rights that arose between the time of attachment of the SI and filing

composite document doctrine 1. occurs when? 2. purpose? 3. standard

Occurs when: No single document by itself has authentication and description under 9-203b3A Purpose: Allows creditor to use multiple documents to satisfy the authentication and description reqs under 9-203(b)(3)(A) Standard: Whether the parties intended to create security interest within the transaction documents 1st step -- Objective: Whether there is a written doc or document containing language that objectively indicates that the parties intended to create security interest 2nd step -- Whether the parties actually intended to create security interest (subjective, question of fact, determiend by jury)

If attachment is the process by which a security interest in a piece of collateral becomes enforceable against a debtor, then why is it important to perfect?

Perfection is generally necessary for the secured party to have rights in the collateral that are superior to any rights claimed by third parties. The focus is to protect the secured party from subsequent buyers of the collateral, lien creditors, etc. who may claim an interest in the same collateral. While perfection has no relevance to the secured party's rights against the debtor, it stakes the secured party's claim so that the secured party might have priority over a later party.

Proceeds are : If a security interest was attached to collateral, how does the security interest then attach to the proceeds of that original collateral upon its sale or disposition? "Goods" encompasses anything that is moveable at the time that a security interest attaches. Also included in "goods" that are technically not moveable. Give 5 examples of these non-moveable goods.

Proceeds are whatever results when collateral is sold, leased, licensed, exchanged or otherwise disposed of. A security interest in collateral attaches automatically to identifiable proceeds. (1) Fixtures(2) Standing timber(3) Unborn animals(4) Growing or unharvested crops (including crops grown on trees, vines, or bushes)(5) Manufactured homes

In order to avoid the "garage sale" exception, the holder of an automatically perfected security interest can take which of the following actions? A financing statement is required to mention proceeds? or after-acquired property?

Properly file a financing statement covering the goods before they are sold A financing statement is not required to mention proceeds or after-acquired property.

lowest intermediate balance test

Test used to find out what commingled funds are identifiable proceeds. The traceable proceeds will be the lesser of (1) the lowest daily balance between the date the proceeds were deposited and when sp seeks to enforce its si (2) the amount of proceeds

How must the collateral be described in a financing statement?

The financing statement must contain a description of the collateral that sufficiently indicates the collateral (such as one that meets the requirements for creation of an enforceable security agreement).When the security interest covers all of the debtor's assets or personal property, the description can contain a broad statement to that effect.

The general rule is that _____, then a buyer takes subject to a perfected security interest. This is not the case if biocob. what is a biocob: (bigsw)

The general rule is that unless the secured party authorizes the sale free and clear of its security interest, a buyer takes subject to a perfected security interest. This is not the case for a buyer in the ordinary course of business who can take free of the security interest, even if the buyer knows of its existence. A BOCB takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.A BOCB is a person who:i) Buys goods (other than farm products);ii) In the ordinary course;iii) From a seller who is in the business of selling goods of that kind;iv) In good faith; andv) Without knowledge (aka without actual notice) that the sale violates the rights of another in the same goods. Note: A buyer cannot receive BOCB status if the merchant is a pawnbroker. In order to qualify as a buyer, the purchaser must give new value, which in addition to paying cash for the goods includes purchasing the goods on credit

Upon default, what happens when a secured party has priority in a fixture?

The secured party may remove the fixture from the real estate but will be liable for the cost of repairing any physical damage to the real estate, but not for any reduction in the value of the real property due to the removal.

What is the priority rule for a PMSI in inventory

This PMSI will have priority over all other security interest in the same inventory or livestock if the secured party:(1) Perfects before the inventory or livestock is delivered to the debtor; and(2) Sends an authenticated notification of the PMSI to other secured parties.

pmsi in goods other than inventory or livestock - what is its priority ?

This PMSI will prevail over all other security interests in the same collateral, even if those other security interests were previously perfected (e.g., an existing after-acquired equipment clause by a lender), so long as the security interest is perfects before or within 20 days after the debtor receives possession of the collateral.

Timing financing statem - when will it be effective? effective for? how can be continued?

Timing—The financing statement will be effective on the date of filing. A financing statement is generally effective for five years and may be continued for another five years by filing a continuation statement within six months prior to the expiration of the statement.

Requirements for attachment of a security interest (3) What's a sec agmt

VRSA (violet roses smell amazing) (1) value must be given (2) the debtor must have rights in or power to transfer rights in the collateral, and (3) specific requirements such as: (1) debtor has authenticated a security agreement with a description of the collateral + more??? agmt that debtor's ppty will serve as collateral for a loan (lh) *e.g. : oral sec agmt - one party agrees that the other party can hold onto the property until the loan is repaid

Who can value go to?

Value doesn't need to go from the creditor to nec the debtor, can go to obligor if that's not the debtor

look up how to define a pmsi when is a consigment subj to art 9 -4 overall

When can a PMSI exist in goods? (1) The value given (e.g., a loan) allows the debtor to acquire the goods or software; or(2) The goods or software acquired is the collateral that secures the loan (e.g., goods bought on credit) (1) A consignor must deliver goods to a merchant (consignee) to sell;(2) The merchant (consignee) must deal in goods of that kind, not operate under the name of the consignor, not be generally known by its creditors to be substantially engaged in the business of selling goods of others, and not be an auctioneer;(3) The value of the goods must be at least $1,000 in each delivery; and(4) The goods must not be consumer goods immediately before delivery.

Can sp accelerate w/o an acceleration clause?

Yes loan agmt must have an acceleration clause for sp to accelerate payment

what's possessory security interest?

a si where the sp has possession of the collateral

what are goods

all things movable at the time the security interest attaches + things in action (what is this last one?)

true or false: An obligor is the party that must pay or perform the obligation that the collateral secures. B The secured party is a party who obtains a security interest in the debtor's property. D A debtor is the party who has an interest, other than a security interest, in the collateral.

all true: An obligor is the party that must pay or perform the obligation that the collateral secures. B The secured party is a party who obtains a security interest in the debtor's property. C The debtor and the obligor must be the same person. D A debtor is the party who has an interest, other than a security interest, in the collateral.

Collateral that can do filing to perfect

all types of personal property (types of collateral we've discussed) EXCEPT FOR: letter of credit rights, commercial tort claims, money, and deposit accounts. (lcmd - lucia claudia malaver diego)

when is a description by [classification aka type] of collateral insufficient? aap clause won't work for what?

commercial tort claim or in consumer transaction: a consumer good, security entitlement or security account (types of investment property), and commodity contract -commercial tort claims

what are types of tangible col? what types of quasi tangible col? types of intangible col?

consumer goods, inventory, equipment, farm products 5: MIC CD money, instruments, chattel paper if tangible, certificated security, document of title 8: Accounts, deposit accounts, commercial tort claim, document if intangible, chattel paper if electronic, letter of credit rights, general intangibles, uncertificated investment property acdc

which sec interests can't be perfected by filing? (3-lmd) which sec interests can be perfected by ctrl? (5-idlee) ways to perfect a deposit account and options w/i that:

deposit account (perfected only by ctrl), money (perfected only by possession), letter of credit rights that aren't a supporting obligation (generally, ctrl is the only method of perfection, unless such rights are a supporting obligation for other collateral) security interest in investment property (has to be uncertificated?), deposit acct, letter of credit rights, electronic chattel paper, or electronic documents (idlee) deposit account sec interest can only be perf by ctrl. 3 ways to perfect interest in deposit account by ctrl: A secured party has control of a deposit account if: . The secured party is the bank with which the deposit account is maintained; . The bank, secured party, and debtor agreed in writing to follow the instructions of the secured party; or . The secured party becomes the bank's customer with respect to the deposit account.

Decorator has rights in the collateral; and Decorator has signed the agreement. Since Vac is treated as having sold the vacuum to Decorator on credit and retained a security interest in the vacuum, Vac has a PMSI in the vacuum. Because Decorator used the vacuum in its business, and it is not inventory, it is equipment. PMSI = UCC Article 9 applies if the substance of a transaction creates a security interest. A transaction in the form of a lease is treated as a security interest if the lessee must pay consideration to the lessor for the right to possess and use the goods for the term of the lease, the payment obligation cannot be terminated by the lessee, and the lessee has an option to become the owner of the goods upon completion of the lease agreement. then you need to determine whether a security interest was created after determining whether its a disguised sale or not (attachment, value, etc.) reqs for super priority in inventory: reqs for super prority of pmsi in goods other than inventory or livestock : one way to determine whether it's equpment: Because Decorator used the vacuum in its business, and it is not inventory, it is equipment.

me- (1) collateral is goods (2) (the goods) are purchased w/ funds provided by the sp or purchased on credit for the sp ide-don: Remember, a PMSI gives lenders a special security interest in goods that have been purchased with funds borrowed from them or purchased on credit from them. purchase money security interest (PMSI) is a security interest in goods that has priority over other security interests in the same goods. It arises when a creditor sells goods to a debtor on credit and retains a security interest in those goods, or the creditor advances funds, which are then used to purchase the goods and the creditor reserves a security interest in those goods. Here, Clockwork sold 25 clocks as inventory to Decorator on credit (Decorator was not required to pay the full purchase price upon delivery) and retained a security interest (the agreement stated that Clockwork would retain title until Decorator paid the full purchase price) in the clocks. Thus, Clockwork has a PMSI in inventory as to the 25 clocks super priority of pmsi in inventory : [1.] purchase money security interest is perfected BY THE TIME debtor receives possession of the collateral and [2.] what, when, who: 1) purchase money secured party 2) sends authenticated notice of the pmsi to holder of any conflicting security interest 3) BEFORE debtor receives possession of the collateral super prority of pmsi in goods other than inventory or livestock : [1.] secured party perfects its interest [2] before or within 20 days of debtor receiving possession of the col

what's a good faith purchaser for value - when do they have bad faith?

purchaser definition (see other flashcard/1-203(a)(30)); not good faith when purchaser is buying it for an extremely small amount of $ as opposed to its fair market value

description options for sec agmt

see outline *follow this

reqs for perfection overall - 2: reqs for perfection by filing: - me

to see whether perfected: i) attachment + ii) appropriate perfection method perfection by filing reqs: 1. C - the collateral can be perfected by filing a fs, 2. F - fs filed, 3. N - fs contains necessary info., and 4. R - filed in the right location - either: 1. in the central filing office - often secretary of state's office and 2. of the appropriate state - in the state where debtor is located or exception for security interests in real=property related collateral (see lh)