BLAW 3310 Chapter 13 Exam 3 Study Materials

how to perfect a security interest

1. take the title 2. take personal property 3. register it with secretary of state

orders to pay

drafts and checks

what option does someone who receives a promissory note have?

to sell it to another party; known as a negotiable instrument

requirements to be a holder in due course

transferee must 1. give value for the negotiable instrument; 2. take the instrument without knowledge that it is overdue or defective; and 3. take the instrument in good faith

mortgage

agreement providing security in real property

promises to pay

notes and certificates of deposit

UCC definition of a draft

a binding order to pay a fixed sum of money that involves three parties. created by the drawer who orders the drawee—usually a bank— to pay a certain sum to the payee.

mechanic's lien

a claim under state law to secure priority of payments for the value of work performed and materials supplied in buildings on or improving land and buildings

UCC definition of a note

a written promise by one party (the maker) to pay money to another party (the payee) or to bearer; a two-party negotiable instrument: borrower and a lender

surety or guaranty

act of business owners pledging personal assets as security for the debts of the business.

promissory notes

an unconditional promise, in writing, to pay a certain sum at a specific time, or on demand, to a person named on the instrument or to the bearer of the instrument; such notes are negotiable

what the court held in the matter of kmart corp. court held regarding paying some critical-vendor creditors in full while not paying other creditors

appellate court ruled that kmart could not do this because it didn't meet the required bankruptcy payment schedule.

what part of the UCC regulates credit and financing for personal property?

article 9

holding of fordyce bank and trust v. bean timberland about buyers in the ordinary course of business

because the course of business and the lumber charge was not identified as what is was in the agreement, the bank gets nothing from the timber company as they were not responsible for the security interest and breach no duty to the bank

what is not considered a negotiable instrument?

cash is not a negotiable instrument.

people with higher average income have to file what

chapter 13 instead of chapter 7 because people with higher incomes are less likely to have debts liquidated

what the court in cit bank, n.a. v. heirs said about priority of liens based on perfection

cit won because they gave notice to the rest of the world that they perfected the mortgage, the falcon head lien was older but perfected later so CIT lien had priority

if an instrument turns out to be a nonnegotiable, what law applies to disputes regarding the instrument?

common law of contracts

four types of negotiable instruments

drafts, checks, notes, and certificates of deposit

what the general electric business financial services v. silverman court said about asserting defenses based on oral agreements that modified the written guaranty contract

oral agreements don't change what's in the written contract

result when a negotiable instrument is transferred by negotiation

the buyer takes it free and clear of all of the seller's legal problems

if surety pays the principal's debt, what rights does the surety have against the principal?

the principal is obligated to repay the surety, the surety is also entitled to exoneration

exoneration

the right to be reimbursed by reason of having paid money that another person should have paid. also, the right of a surety to compel the principal debtor to satisfy the obligation when possible

what perfection means under UCC art. 9

the validation of a security interest as against other creditors; normally accomplished by filing a statement with some public office or possibly by taking possession of the collateral

how many parties are involved in an order to pay?

three parties; drawer, drawee, and payee

how many parties are involved in promises to pay?

two parties; maker and the payee

what the whitaker v. wedbush securities, inc. court said regarding the defendant brokerage firm was a bank under the UCC

wedbush was effectively a bank and was responsible for the loss because as a banm, if you don't have security in place then you are responsible for any losses