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Bank had a perfected security interest in Debtor's inventory. On January 10, the inventory was worth $20,000. On April 10, when Debtor filed bankruptcy, the inventory was worth $25,000. The amount Debtor owed was constant throughout this period. Is there a preference?

$5,000 is the preference

Debtor buys a car from Seller for $12,000 that Debtor will use for personal purposes. Debtor promises to pay $300 per month for 60 months and grants Seller a security interest in the car. Debtor defaults. Seller repossesses the car and resells it, but in the process, Seller fails to comply completely with the requirements of Article 9. How much can Debtor recover from Seller under 9-625(c)(2)?

$7,200 6,000+ 10% of the purchase price

Purchaser defaults on her contract to purchase a stereo system, upon which Best Buy has a perfected security interest. Best Buy repossesses and conducts a public sale, but fails to notify Purchaser in writing of the time and place of sale. The original cost of the stereo was $5,000, and Purchaser had paid $2,000 as down payment and signed a contract to pay $3,800 over three years (the $800 reflecting interest on the balance). What is the minimum amount of damages to which Purchaser is entitled?

$800 + 10% of the purchase price =$1,300

The law of WV provides that a supplier of seeds has a lien on all crops grown from the seeds. Supplier sells seeds to farmer on credit and does not take an Article 9 security interest in them. Bank loans money to the farmer and takes a security interest in the crops. (1) Does Article 9 govern the creation of Supplier's lien? (2) Does Article 9 govern the perfection of Supplier's lien? (3) Does Article 9 govern the priority between Supplier and Bank?

(1) No (2) Yes (3) Yes

Mary, who sews quilts for a living, delivered $2000 worth of quilts to Joe's Consignment Shop with the understanding that Joe would try to sell the quilts for Mary and would return to her any unsold quilts. A creditor with a security interest in Joe's inventory repossessed Mary's quilts on Joe's default. (1) Was Mary's transaction a consignment for purposes of Article 9? (2) Would your answer change if Mary had delivered her quilts to Bed, Bath, and Beyond? (3) Would your answer to No 2 change if Mary delivered only $500 of quilts?

(1) No, Joe's Consignment Shop should be well known to sell on consignment, therefore it does not fall under Article 9. (2) Yes, BBB is not known to sell on consignment, so creditors have no way to know. (3) Yes, each delivery must be at least $1000.

For many years, Fidelity Finance has made secured loans only to businesses. But in an effort to expand its customer base, Fidelity has decided to make secured loans to consumers. Fidelity realistically expects some of its consumer debtors to default, after which Fidelity may sell, lease, or otherwise dispose of the collateral at a nonjudicial foreclosure. Fidelity knows that Article 9 normally requires the secured party to send notice of the disposition to the debtor and perhaps other parties. Fidelity intends to use its existing standard form of notice for businesses as a model for its "consumer goods" disposition notice. In doing so, Fidelity must amend its existing form to mention (A) the debtor's right to attend any public disposition and purchase the collateral. (B) the debtor's liability for any deficiency remaining after the foreclosure. (C) a description of the default. (D) the debtor's right to insist on a strict foreclosure.

Article 9 applies to consignments, but only if the transaction falls within the Article 9 definition of that term. Which of the following transactions could fall within the definition of consignment. (a) Annie, a professional musician, delivers one of her two pianos (with a fair market value of at least $7,800) to a piano dealer for resale. (b) Now that Maggie's quadruplets are ten years old, Maggie delivers four toddler bicycles (each with a fair market value of at least $300) to a bike dealer for resale. (c) BizCorp delivers twenty framed and matted vintage movie posters (with an aggregate estimated value of $22,000) to an auction house for resale to the public at an upcoming weekly auction. (d) ZinnCo delivers several used desktop photocopiers (with an aggregate estimated value of $1,300) to Joe's Consignment Shoppe for resale.

(a) Annie, a professional musician, delivers one of her two pianos (with a fair market value of at least $7,800) to a piano dealer for resale.

Which of the following is an example of a lien creditor? (a) a purchase money creditor that fails to take the steps necessary to achieve super-priority (b) a lender claiming an interest in the debtor's fixtures under a real estate mortgage (c) a tort victim that has obtained a property interest in the debtor's investment portfolio pursuant to a court issued writ. (d) A mechanic that holds a statutory lien on a vehicle in its possession until the owner pays for services rendered.

(c) a tort victim that has obtained a property interest in the debtor's investment portfolio pursuant to a court issued writ. [lien judgment = judgment]

Debtor is a consumer. A security agreement described Debtor's collateral as "all of Debtor's consumer goods." Is this sufficient? What if the description was: "The Debtor's Sony television."

1) not sufficient. In a consumer transaction, consumer goods and most forms of investment property - super generic 2) When described as "Debtor's Sony television," that is fine.

Bank loaned Debtor money to buy a new car and made sure its lien was noted on the certificate of title. Debtor moved to a new state a year later and on March 1 of that year managed to get a new certificate issued that showed no liens. Bank failed to take any action thereafter. 1. If Debtor sells the vehicle to a used car dealer on May 1, who has priority between the used car dealer and Bank? 2. If Debtor sells the vehicle to a used car dealer on August 1, who has priority between the used car dealer and Bank? 3. If Debtor sells the vehicle to a consumer (who gives value and has no knowledge of the lien) on May 1, who has priority between the consumer and Bank?

1)The bank; falls within the 4 month grace period 2) The car dealer, Bank's interest is no longer perfected. 3) Consumer; consumer is not a merchant, gave value for the car, and purchased in good faith

Foxx Furniture operates three furniture stores in Atlanta. Last year, it borrowed $5 million from Peachtree Bank. The loan is secured by an enforceable security interest in Foxx Furniture's current and after-acquired inventory and accounts. Peachtree Bank filed its financing statement with the appropriate filing office within days after funding the loan. Two months ago, Foxx Furniture sold two sofas and three bookcases to an entity in exchange for a new photocopier and $1,000 cash. Three days later, Foxx Furniture took the cash and bought a new refrigerator for the employee lounge. Assuming that Peachtree Bank can satisfy any tracing burden, it has (as of today) A. A perfected security interest in the photocopier and the refrigerator. B. A perfected security interest in the photocopier and an unperfected security interest in the refrigerator. C. An unperfected security interest in the photocopier and the refrigerator. D. An unperfected security interest in the photocopier and no security interest in the refrigerator.

On July 1, 2005, a secured creditor properly filed a financing statement against an individual debtor, Joseph Smith, in Ohio, the state in which Smith resided. On July 1, 2006, Smith moved to Utah. Which of the following statements is true? A. The creditor has until four months from July 1, 2006 to file in Utah or the creditor loses its security interest. B. The creditor has until four months from July 1, 2006 to file in Utah or the security interest becomes unperfected. C. The security interest in the existing collateral will remain perfected even if the creditor does not re-file in Utah. D. The creditor has five years from July 1, 2005 to re-file in Utah or the security interest becomes unperfected.

Secured Party Finance Company's security interest in Debtor's car was perfected by notation on a certificate of title issued by State A. Debtor moved from State A to State B. No new certificate of title has been issued. More than four months have elapsed since Debtor moved to State B. The certificate of title is still effective under the law of State A. Which of the following statements is most accurate? A. The security interest has become unperfected. B. The law governing perfection is the law of State A. C. The law governing perfection is the law of State B. D. The security interest is deemed unperfected as against a bona fide purchaser for value.

Vann's TV and Appliance wants to buy 100 big-screen TVs from Mitsubishi for $100,000. First Bank agrees to finance Vann's purchases of the TVs, and Vann's agrees to make payments over time that include interest. Vann's grants First Bank a security interest in its entire inventory. First Bank gives Vann's a check for $100,000 payable to Vann's and Mitsubishi, and Vann's uses that check to purchase the TVs. Does First Bank have a PMSI in the inventory of Vann's? A. Yes, in the entire inventory. B. Yes, but only in the 100 big-screen TVs. C. No, because First Bank did not sell the TVs to Vann's D. No, because the loan from First Bank was not used to acquire the TVs.

Wallace & Bradford, a general partnership, is a law firm located in New York City. Meredith, a Connecticut resident, is one of the firm's partners. She wants to use her partnership interest as collateral for a $500,000 loan from Gotham Bank. Her other partners have consented. Gotham Bank has reviewed the partnership agreement, which does not prohibit the transaction and nowhere mentions the Uniform Commercial Code generally, or any UCC Article specifically. Using Article 9 terminology, the collateral is (A) an account. (B) a general intangible. (C) investment property. (D) a contract right.

Which of the following examples of collateral is most likely to merit a fixture filing? A. Coal in the ground. B. A large video screen that drops down from the ceiling of a church. C. A grand piano that cannot be removed from its location without removing one or more doors and related door frames or, alternatively, disassembling the piano. D. Daily revenues earned by a hotel for making its rooms available to travelers.

ABC Auto Dealership went to Secured Creditor National Bank to obtain a loan. On June 1, Secured Creditor made an irrevocable commitment to extend credit to ABC on June 20. On June 3, ABC and Secured Creditor signed a security agreement that granted Secured Creditor a security interest in ABC's presently existing and after-acquired inventory. On that date, ABC had an inventory of 500 cars. On June 10, ABC received a shipment of 50 cars for sale. On June 20, Secured Creditor gave ABC a cashier's check for $10,000 pursuant to the loan agreement. On which date was a security interest first created in favor of Secured Creditor? [a] June 1 [b] June 3 [c] June 10 [d] June 20 On what date was a security interest created in favor of Secured Creditor in the 50 cars ABC received on June 10? [a] June 1 [b] June 3 [c] June 10 [d] June 30

B C

On June 1, Bank took and perfected a security interest in Borrower's current and future equipment. Bank advanced $35,000 on the same day. The security agreement included a future advance clause but did not obligate Bank to fund any additional advances. On June 15, BAM Corporation became a "lien creditor." Its lien (for $90,000) encumbered Borrower's equipment. Later, Bank funded the following advances to Borrower: $15,000 (June 20); $20,000 (July 8); $35,000 (July 25); and $10,000 (August 5). Bank discovered BAM's lien on July 15, and a priority dispute arose soon thereafter. With everyone's consent, the sheriff sold Borrower's equipment for $130,000 on August 10. Borrower still owes $115,000 to Bank and $90,000 to BAM. The sheriff should distribute (A) $115,000 to Bank and $15,000 to BAM. (B) $105,000 to Bank and $25,000 to BAM. (C) $70,000 to Bank and $60,000 to BAM. (D) $50,000 to Bank and $80,000 to BAM.

B; secured party vs. Judgment lien creditor secured party has priority 45 days after after person became jlc and after 45 days if no knowledge

Sally gives her daughter a birthday gift of a new car on her daughter's sixteenth birthday. Two weeks later, when one of Sally's judgment creditors seeks to levy execution on the car to satisfy that creditor's judgment, A. Sally's daughter will retain possession of the car so long as it is titled in her name. B. The judgment creditor will prevail if it can show that Sally is not generally paying her debts as they become due, and Sally does not offer any additional evidence at trial. C. Sally's daughter will retain possession of the car if she (the daughter) can prove that she is solvent. D. The judgment creditor will prevail only if Sally did not file a financing statement against her daughter describing the car as collateral.

B; two different tests for insolvency: 1) liability exceeds assets 2) You've got assets but you don't have cash to pay debts. She did this 2 weeks before filing bankruptcy= constructive fraud.

Assume the same facts as the prior slide. Now that GC is in default, BAMCO wants to enforce its rights and remedies. Which statement is true? A. Because the tanks are fixtures, BAMCO's rights and remedies are provided by real estate law, rather than Article 9. B. Because the tanks are fixtures, BAMCO cannot remove the tanks (absent GC's consent). C. BAMCO can remove the tanks, but only if its security interest in the tanks enjoys priority over the claim asserted by Bay Area Bank. D. BAMCO cannot remove the tanks if GC has paid off more than 60% of the purchase-money debt associated with the tanks.

Dealer sold a car on credit to Tim last year. To secure repayment of the purchase price, Dealer timely perfected a security interest in the car. Tim recently failed to make his monthly car payment to Dealer, triggering a default. Dealer wants to repossess the car without judicial process. In other words, Dealer wants to engage in a "self-help" repossession. Which statement is true? A. Dealer cannot engage in self-help repossession if the car is a consumer good. B. Dealer cannot engage in self-help repossession unless Tim's past-due payments, and any accrued and unpaid interest thereon, exceed $2,000. C. Dealer can engage in self-help repossession, but it must avoid breaching the peace while doing so. D. Dealer can engage in self-help repossession, but it must timely send an authenticated notice to Tim of Dealer's intent to do so.

Debtor grants Creditor a security interest in Debtor's shares in Cisco Systems. Debtor does not have the certificates, but Debtor's ownership is recorded with its broker. What is the best way for Creditor to perfect its security interest? A. File a financing statement. B. Take possession of the shares. C. Make an agreement among the debtor, the secured party, and the broker regarding the secured party's control of the shares. D. Make an agreement among the debtor, the secured party, and Cisco Systems regarding the secured party's control of the shares.

Debtor was in default under a security agreement, and the agreement listed a small tractor as the collateral. At night, the tractor was kept on an open lot surrounded by a chain-link fence on debtor's property. The fence had a gate secured by a chain with a lock on it. The Repo Man went to the property in the middle of the night, when no one was present, cut the chain with the bolt cutters, opened the gate, and removed the tractor without incident. Is a court likely to consider this repossession to involve a "breach of the peace"? A. Yes, because Repo Man had to enter debtor's property. B. Yes, because Repo Man had to open a closed gate. C. Yes, because Repo Man had to cut through a chain to open the gate. D. No, because there was no potential for violence since no one was present.

Devine runs a local dairy. He is a supporter of local business and understands that his customers cannot always provide money for purchases "up front"; as such, he commonly allows an extended period for his various customers to pay for the milk, cream, butter, etc. that they require. He does not require that they sign a security agreement when taking the products. Instead, he insists that his customers are loyal and honest will indeed pay. Recently though, Devine has gained knowledge that a few of the customers that had large outstanding debts declared bankruptcy. The news struck Devine to the core and he now feels personally hurt. He wants to take every action that he can to actually collect the debts from the now bankrupt clientele (and to set an example for his other customers). What is Devine able to do? a) Devine can use his automated monthly bill generator to continue sending his bankrupt customers bills. b) Devine can personally go to the bankrupt customers and demand all of the unused dairy products back; after which he will discount the debt by the amount of repossessed product that is still usable. c) Devine can file a proof of claim with the bankruptcy court, in turn putting Devine "in line" with all of the other bankrupt party's unsecured creditors. d) Devine can file suit against each of the bankrupt parties.

First Bank filed a financing statement in the appropriate place under the debtor name "James Bond Stirred Martinis Inc." The legal name of the debtor is "James Bond Shaken Martinis Inc." When the debtor declared bankruptcy, the trustee claimed that the security interest of First Bank is unperfected. This issue would be resolved by determining which of the following? A. Whether the trustee actually found the filing. B. Whether a reasonable searcher would have found the filing. C. Whether the filing office's standard search logic would have found the filing. D. Whether First Bank used the debtor's exact full legal name on the filing.

First Bank has a mortgage on the real property of Debtor Law Firm. Second Bank took a security interest in the built-in bookcases on Debtor's premises. Assume that the bookcases are fixtures and that Second Bank has priority in the bookcases over First Bank and all other creditors. On Debtor's default, can Second Bank repossess the bookcases? A. Yes, but only if it can do so without damaging property in which First Bank has an interest. B. Yes, but it must pay Debtor and First Bank for any damage caused. C. Yes, but it must pay First Bank for any damage caused. D. No, under Article 9, but it may proceed pursuant to the real estate law of the jurisdiction.

Holland, a resident of Florida, purchased a mechanical harvester. The purchase was financed by Exchange Bank, which took a security interest in the harvester and properly filed. Two weeks later, Holland, without the permission of the bank and in violation of the security agreement, sold the harvester to CB&O Equipment in Iowa, which is in the business of selling farm equipment. One day later, Jarrett purchased the harvester from CB&O and took it to Montana. The bank discovered these facts. Can the bank repossess the harvester from Jarrett? (A) No, because Jarrett is a BIOC. (B) No, because the bank's security interest was not perfected, since it did not file in Iowa. (C) Yes, because the security interest was not created by Jarrett's seller. (D) No, because a reasonable buyer could not have checked the filings and found the security interest.

Mary resides in a state that has a statute that grants an auto repair shop a lien on an automobile that it has repaired as long as it retains possession of the automobile. The statute is silent on the priority of this lien. Mary bought a car from Nickel Cars on credit. Nickel took a security interest in the car and properly perfected. When the car broke down, Mary took it to Joe's Repair Shop. When Joe finished the repairs, he presented Mary with a bill for $400. Mary said she didn't have the money, so Joe said he would hold the car until she paid him. Meanwhile, Mary has defaulted on her obligation to Nickel. Who has priority in the car as between Joe and Nickel? A. Joe, because Article 9 says a lien arising by operation of law has priority over a security interest. B. Joe, because perfection by possession trumps other forms of perfection. C. Nickel, because Article 9 says a security interest has priority over a lien arising by operation of law. D. Nickel, because Joe did not give notice to Nickel of its claim.

Able, a real estate broker from Rhode Island, bought a new lawn tractor from Sears on May 2, 2009 for a price of $2,000 for use at his vacation home in Booneville, Missouri. Able granted Sears a purchase money security interest in the lawn tractor to secure his payment of the lawn tractor. Sears did not file a financing statement. At the end of summer, Able sold the lawn tractor to Cain, the manager of The Links Golf Course for use on the course, for a price of $1,000. Cain had no idea that the sale of the lawn tractor violated Sears' security interest. Does Cain take subject to Sears' security interest? (a) No, because Cain is a buyer in ordinary course of business. (b) Yes, because Sears' security interest was perfected and Cain purchased the lawn tractor for use on his golf course. (c) Yes, because Cain bought a farm product. (d) No, because Cain did not know the sale of the lawn tractor would violate the rights of Sears.

Assume that BAMCO (from the prior two slides) exercises due care in removing the tanks under applicable law, but still causes damage of $6,000. In addition, the absence of the three tanks has caused GC's property to decrease in value by $36,000. Bay Area Bank and GC each contend that BAMCO owes $42,000 to it. Which statement is true? A. BAMCO owes $42,000 to Bay Area Bank, and nothing to GC. B. BAMCO owes $6,000 to Bay Area Bank, and nothing to GC. C. BAMCO owes $36,000 to Bay Area Bank, and $6,000 to GC. D. BAMCO owes nothing to Bay Area Bank, and $6,000 to GC.

Assume the same facts as the prior slide. To minimize the risk of incurring liability arising from the repossession of Tim's car, Dealer should A. include a provision in the security agreement that defines the behavior that will not trigger a breach of the peace. B. immediately cease any repossession in progress if Tim verbally objects. C. include a provision in the security agreement that waives any statutory duty imposed on Dealer to avoid breaching the peace. D. hire a third-party independent contractor (e.g. Repo Company) to perform the actual repossession.

Carla took her television set to Honest John's Repair Shop to be repaired. A repair price of $100 was quoted, which was a reasonable price. No written contract was executed and there was no verbal agreement that the television set could be retained to secure payment of the repair bill. When the television set was repaired, Carla refused to pay. Which of the following statements is most accurate? A. Honest John's has a right under Article 9 to retain the television set pending payment. B. Any right that Honest John has to retain the television set arises outside of Article 9. C. No Article 9 interest can exist because there is no written agreement. D. A lien granted by statute to Honest John falls within the definition of an Article 9 security interest.

Dealer has repossessed Tim's car, which Tim had always driven primarily for personal use. The default that prompted Dealer's repossession was Tim's failure to make a $400 monthly payment. The loan papers included an acceleration clause. Dealer has taken all steps necessary to trigger the acceleration clause. As a result, Tim now owes $11,400. Tim's father, Robert, guaranteed repayment of the debt. Robert has contacted Dealer to discuss the possibility of redeeming the car. Which statement is true? A. Article 9 permits Tim, but not Robert, to redeem the car. B. Article 9 permits Robert to redeem the car, but the redemption price will be $11,400 (rather than $400) C. Article 9 usually permits Robert to redeem the car, but an exception bars Robert from exercising his redemption rights because the accelerated debt exceeds the statutory cap of $10,000. D. Article 9 usually permits Robert to redeem the car, but Robert will be contractually barred from exercising his redemption rights if he waived those rights in the security agreement or other loan paper.

Farmer Brown buys a "Model A irrigation system" and finances $100,000 of the purchase price with First Bank, giving the bank a security interest in the irrigation system. The bank does not file a financing statement. Two years later, Brown trades his Model A system to Farmer Smith for a cheaper Model B system plus $10,000 in cash. During the negotiations for the sale, Smith asked Brown if the system had any liens on it. Brown replied, "yes, the bank took a security interest in it, but those fools were asleep in their Secured Transactions class, and they neglected to file a financing statement to perfect it." After the sale, Farmer Brown stops making his payments to First Bank. Can the bank repossess the Model A system, which is now owned by Farmer Smith? (A) Yes, because a security interest is always effective as against purchasers. (B) Yes, because the purchaser had knowledge of the security interest. (C) No, because the bank did not perfect the security interest. (D) No, because Smith is not the debtor.

First Bank has a perfected security interest in the inventory of Bitterroot Motors. Mary purchases a car for her personal use from Bitterroot Motors on credit, and Bitterroot Motors takes a security interest in the car. Which of the following statements is true? (A) First Bank is a BIOC because it has a security interest in inventory. (B) Mary is a BIOC because she is buying from inventory. (C) Mary is a BIOC because she is buying for personal use. (D) Bitterroot Motors is a BIOC because it has a security interest in consumer goods.

On October 1, 2009, A loaned B $5,000 to start up a business. To secure repayment of the loan, B signs a security agreement purporting to grant A a security interest in "all of B's consumer goods, including after-acquired." Because B was a recent law school graduate at the time, B owned one refrigerator, a washing machine, and a very small black and white television. On October 8, B acquired a dryer to go with his washing machine. On October 12, he acquired a microwave and a very nice 42-inch television set. Unfortunately, B spent too much money on those items and ultimately defaulted on his loan repayments to A. Which answer is correct? a. A has no security interest in any of B's consumer goods. b. A has a valid security interest in only the washer, refrigerator, and black and white television. c. A has a valid security interest in B's washer, refrigerator, black and white television, and dryer. d. A has a valid security interest in B's washer, refrigerator, black and white television, dryer, microwave, and 42-inch television.

On September 1, Freyermuth bought a gas-powered golf cart from Devine's Club Car, LLC and financed it by granting a security interest. Devine's Club Car did not file a financing statement. On October 1, Royce loaned Freyermuth $500 and Freyermuth granted Royce a security interest in his golf cart. Royce properly filed a financing statement immediately. Falling on hard times, Freyermuth declared bankruptcy in December. The Bankruptcy trustee claims that Freyermuth used the golf cart to sell his textbooks around campus and that Devine's Club Car does not have a perfected security interest. Assume there are no certificates of titles for golf carts. Under which of the following circumstances would Devine have the best argument for an automatically perfected security interest and priority over Royce? A. If Freyermuth told Devine he was going use the cart to sell books. B. If Freyermuth asked Devine to install bookshelves and a public address system on the cart. C. If Freyermuth told Devine the car was for personal use and played golf with it. D. Either A or B.

Same facts as prior slides. On June 25, which of the following is true with respect to the note and accompanying security agreement executed by Customer? A. Finance Company has no security interest in the note and security agreement. B. Finance Company has a security interest in the note and security agreement, but it is not perfected. C. Finance Company has a perfected security interest in the note and accompanying security agreement. D. The note is "cash proceeds."

Dealer sends its agent (Repo Company) to Tim's house in the early morning hours to seize the car. Repo Company finds the car locked, and parked on Tim's driveway. Repo Company notices a set of golf clubs in the back seat and correctly assumes that the clubs are not part of Dealer's collateral. Which statement is true? A. Repo Company cannot repossess Tim's car while it is parked on private property. B. Repo Company cannot repossess Tim's car because its contents include personal items that are not part of Dealer's collateral. C. Repo Company can repossess the car and can refuse to return the golf clubs until Tim pays all past-due amounts on the car note. D. Repo Company can repossess the car but must make the golf clubs available to Tim as soon as reasonably possible following the completion of the repossession.

Al, who owned and operated a women's shoe store, needed funds to pay his employees' salaries. In addition to shoes, the store sold belts and purses. First National Bank agreed to loan the necessary funds provided that Al gave sufficient security for the loan. Al agreed and signed a security agreement granting Bank a security interest in his computer (which he used to keep track of purchase orders, sales, and inventory) and in all of his existing and after-acquired women's shoes. The financing statement listed the collateral as "existing and after-acquired inventory and accounts." Assuming First National files the financing statement in the proper place, First National will have a perfected security interest in: A. Nothing, since the descriptions in the security agreement and financing statement do not match. B. Inventory and accounts (existing and after-acquired). C. Inventory (existing and after-acquired). D. Women's shoes (existing and after-acquired).

Assume that the collateral for a loan is chattel paper. The secured party may notify the account debtors to make payment directly to the secured party: A. Only if the security agreement so provides. B. Only if the borrower is in default. C. Only if the security agreement so provides and the borrower is in default. D. Either if the security agreement so provides or the borrower is in default.

Debtor is in default under its security agreement. Creditor hired a Repo Man to repossess the collateral, a car. The Repo Man saw the car parked in Debtor's driveway at 4 a.m.; no lights were on in the house. Using a key obtained by Creditor, the Repo Man entered the car, backed it out of the driveway, and was driving down the street when Debtor came running out of the house waving his arms. The Repo Man sped away leaving behind Debtor, who thought his car had been stolen. However, when he called the police, Debtor was told that the Repo Man had notified them that a repossession was in progress. Would a judge likely conclude there was a breach of the peace? A. Yes, because the Repo Man had to walk onto Debtor's property to get the car. B. Yes, because Debtor appeared on the scene during the repossession. C. Yes, because both A and B are breaches of the peace. D. No, because neither A nor B are breaches of the peace.

East Publishing Company gave Professor an advance against expected royalties from the book that Professor was writing. Professor failed to complete the book on time, and East is now entitled to recover the advanced royalties from Professor. Big National Bank is making a loan to East and wants to take a security interest in East's right to recover this money. Under Article 9, this asset would be classified as: A. An account. B. An instrument. C. Chattel paper. D. A general intangible.

Farmer Brown buys a "Model A irrigation system" and finances $100,000 of the purchase price with First Bank, giving the bank a security interest in the irrigation system. Two years later, Brown trades his Model A system to Farmer Smith for a cheaper Model B system and $10,000 in cash. Brown buys a used Toyota with $5,000 of the cash and puts the rest into his bank account, which had no other money in it. Farmer Brown defaults on his payments to First Bank. Which of the following property secures the debt? I. The Model A system. II. The Model B system. III. The Toyota. IV. The cash in the bank. A. I only. B. I and II only. C. I, II, and IV only. D. I, II, III, and IV.

First Bank takes a security interest in a Picasso painting owned by Gonzalez that Gonzalez intends to have displayed at the Museum of the Arts. Which of the following would not constitute perfection by possession once the painting is hung in the museum? [a] After the painting is hung in the museum, the museum sends First Bank a letter acknowledging that it holds possession of the painting for First Bank's benefit. [b] Before the painting is hung in the museum, the museum sends First Bank an email stating that it will hold possession of the painting for First Bank's benefit. [c] First Bank hires a guard to stand near the painting during the hours the museum is open and to patrol the museum when it is closed. [d] First Bank puts a conspicuous sign next to the painting stating: "Notice. First Bank has a possessory interest in his painting."

In anticipation of an agreement with a debtor, a creditor prepares a security agreement a financing statement. What authentications are required on these documents? [a] Both parties must authenticate both documents. [b] Both parties must authenticate the security agreement, but only the creditor must authenticate the financing statement. [c] Only the debtor must authenticate the security agreement, and only the creditor must authenticate the financing statement. [d] Only the debtor must authenticate the security agreement , and no one must authenticate the financing statement.

M is a farmer. There is a propane tank on his farm. M evenly splits the use of the propane tank between his farming operations and heating his house. How should M's propane tank be classified? a) Consumer Good b) Farm Products c) Inventory d) Equipment

Royce defaults on a loan from Freyer National Bank, which holds a security interest in his 1994 Geo Metro. Freyer National Bank hires Lambert to repossess the Geo. Royce sees Lambert coming and protests "Please. Stop. Don't take my baby." Under what circumstance may Lambert take the car? A. Lambert waits until Royce falls asleep and takes the Geo from Royce's locked garage. B. Lambert puts his hand on his holstered .44 magnum, and Royce stops protesting once he notices Lambert's "Guns don't kill people, I kill people" T-Shirt. Lambert then takes the Geo. C. Lambert calls the house and pretends to be an emergency room doctor at a local hospital and tells Royce his sister is a patient receiving emergency care. When Royce leaves for the hospital, Lambert takes the Geo. D. The next day when Royce takes the car to work, Lambert takes the Geo from the parking garage without Royce knowing.

Sally bought a car for her personal use. She financed it with Drive Bank, giving it a valid and perfected security interest in the car to secure the deferred portion of the purchase price. Sally signed the note for the car, and the car is titled in Sally's name only. Sally then files a bankruptcy petition. Drive Bank may A. Repossess the car so long as it complies with Article 9. B. Telephone Sally to demand payment. C. Commence a state court action for replevin on the car. D. Take none of these actions.

Springfield Imports sells a new car on credit to a consumer buyer and takes a security interest in the car. How does Springfield Imports perfect its security interest? [a] The security interest is automatically perfected. [b] It files a financing statement with the Sec of State [c] It files a financing statement with the country in which the debtor resides. [d] It sends a statement to the Dept of Motor Vehicles.

The financing statements described below need to be filed in Tennessee. In Tennessee, the brackets in § 9-501(a)(2) are filled in with "Secretary of State." Below is the description of collateral in four financing statements. Which one of these financing statements would not be filed in the office of the Secretary of State? A. The furniture of John, whose principal residence is in Nashville, but who keeps the furniture at his summer residence in Virginia. B. The inventory of Tennessee Farm Machinery Sales and Services, Inc., a Tennessee corporation with its principal place of business in Knoxville. C. The crops and farm equipment of James, who lives in Williamson County. D. Timber to be cut from property in Franklin, Tennessee, belonging to Oak Creek Inc., a Tennessee Corporation.

Trump, Osborne and Michaels, a Chicago law firm, had two creditors before its permanent move to D.C., both of which had perfected security interests in the firm's accounts receivable— Octopus National Bank, which had filed its financing statement first, and Last National Bank, which had filed second, both creditors filing in Chicago early in the year 2012. When the move occurred on January 1, 2013, Last National promptly refiled in D.C. before the end of March of that year, but Octopus National was careless and didn't realize that the firm had moved until that September. If it files in D.C. in September, will it retain its priority over Last National? A. Yes, because the filing was within one year of the move. B. No, because the filing was not within 20 days of the move. C. Yes, because no new filing was actually necessary. D. No, because the filing was not within four months of the move.

Unless there are special circumstances, when the secured creditor sells the collateral under Article 9, the debtor is entitled to: A. Notice of the time and place of a public sale or a private sale. B. Notice of the time and place of a public sale but no notice of a private sale. C. Notice of the time and place of a private sale but no notice of a public sale. D. Notice of the time and place of a public sale and notice of the time after which a private sale is to be made.

Van, a world renowned professional piano player, wanted to buy a new piano but did not have the $10,000 purchase price. He borrowed the money from his neighbor, Rocky, granting Rocky a security interest in the new piano. Rocky did not take any additional steps to perfect his security interest. Which of the following statements is most accurate? A. Rocky has a purchase money security interest only if Fingers bought the piano for use as a consumer good. B. Rocky is perfected. C. Rocky is perfected only if the loaned funds were actually used to buy the new piano. D. Rocky is perfected only if Fingers bought the piano for use as a consumer good and the loaned funds were actually used to buy the new piano.

While the parties were negotiating the loan documents, First Bank asked Austin Furniture Company to grant the bank a security interest in its inventory. Before any security interest was granted, Austin, in an authenticated record, authorized First Bank to file a financing statement, which the bank filed on March 2. At this point, what does First Bank have? A. An attached security interest. B. A perfected security interest. C. Both A and B. D. Neither A nor B.

Debtor, a business, grants Creditor a security interest in Debtor's checking account. What is the best way for Creditor to perfect its security interest? [a] File a financing statement [b] Take possession of the bank account [c] Make an agreement among the debtor, the secured party, and the bank that the bank will comply with the secured party's directions. [d] Become the bank's customer with respect to the bank account.

D. This takes care of parties with super priority.

Joe is in need of none. He asks First National Bank to loan him $10K. Bank is concerned about Joe's ability to repay the loan. Bank refuses to make an unsecured loan, and Joe has no valuable assets. Joe convinces his friend, Jane, to allow Bank to use Jane's car as security for the loan. Bank has Jane sign a security agreement and Joe sign a promissory note. Who is the secured party?

First National Bank

First Bank loans Debtor $10,000 and takes a security interest in Debtor's machinery. The security agreement contains a "future advance" clause. First Bank files a financing statement in the proper place on January 1. On February 1, Debtor borrows money from Second Bank, which takes a non-PMSI security interest in the same machinery and files a financing statement on that day. On March 1, First Bank makes another loan to Debtor under the original security agreement. 1. Does First Bank have priority and, if so, does its priority extend to the March 1 loan? 2. Would your answer to No. 1 change if First Bank learned of the Second Bank loan on February 25? 3. If First Bank makes another advance of July 1, would its priority extend to this new advance?

First bank has priority on the march 1st loan because first bank was first to file. No, answer would not change knowledge never matters when you have two secured parties its always first to file or perfect Yes, as long as they don't hit the 5 year mark for financing statements.

Debtor bought $100 worth of groceries one day before filing bankruptcy. Is this a preference? Two weeks before filing bankruptcy, Debtor paid her regular monthly phone and electric bills. Are these preferences? Bank had a perfected security interest in Debtor's car. Debtor owed Bank $1,500 and the car is now worth $3,000. On day before filing bankruptcy, Debtor paid Bank $500 (reducing the loan amount to $1,000), which covered past-due payments. Is this a preference?

No No not preferences, regular bills not preferences. Huge payments would be considered preferences No fails 5 element

On Monday, Pat and Mike were having a few drinks at the local tavern, when Pat asked Mike if he could borrow $500. mike responded, "It's not that I don't trust you, but I'd feel a lot better about it if I could hold on to your Ted Williams rookie baseball card until you pay it back." "It's a deal," Pat said, and they shook hands on it. On Tuesday, Pat gave the baseball card to Mike and Mike gave $500 to Pat. When, if ever, did a security interest attach to the baseball card?

On Tuesday, when Pat gave Mike the baseball card. It's an oral agreement with possession.

Creditor loans Debtor $20,000 to remodel her kitchen and takes a security interest in Debtor's personal baseball card collection. Debtor defaults, and Creditor repossesses the baseball card collection. Creditor believes that the collection is worth $15,000 and wishes to keep the collection and reduce the debt owed by Debtor to $5,000. What must Creditor do to accomplish this?

Partial strict foreclosure isn't allowed in consumer goods.

Perfect by making a notation on the certificate of title.

Lumber Company sells lumber to Contractor on open account, resulting in an account of $700. Lumber Company sells the account to Friendly Finance Company for $600. Friendly Finance frequently purchases accounts from Lumber Company which in total amount to a significant number of Lumber Company's accounts. Which party to this transaction needs to file a financing statement to be fully protected against creditors of the other parties? A. Contractor. B. Lumber Company. C. Friendly Finance. D. Nobody. If a financing statement is filed, which party should be listed as the debtor? A. Contractor. B. Lumber Company. C. Friendly Finance. D. Both Contractor and Lumber Company.

Sale of accounts C B

To raise money, Farmer Brown's Fresh Vegetables Roadside Stand sold all of its accounts receivable to Nightflyer Finance Company, which notified the customers that henceforth all payments should be made directly to Nightflyer. (Note that this is not a loan from the finance company to the farmer with the accounts put up as collateral; it is an outright sale. If it were a loan, and if the collectable accounts exceeded the amount of the loan, the excess would be returned to Farmer Brown; in an actual sale, Nightflyer can keep the surplus). Is this sale nonetheless an Article 9 security interest?

Sale of accounts are still under Article 9 because they can still easily be sold or used as collateral in another subsequent transaction. Creditor should perfect by filing a financing statement.

First Bank entered into a transaction in which it agreed to loan AB Inc. $100,000 and took a security interest in the equipment of AB Inc. A and B are the sole shareholders and directors of AB Inc. As part of the transaction, A agreed to pay First Bank if AB Inc. did not, and B agreed to grant First Bank a security interest in his baseball-card collection as additional collateral. Under Article 9, who is a secondary obligor? A. A. B. B. C. A and B. D. Neither A nor B. Who is (are) the debtors?

Secondary obligor: A, secondary obligor is a cosigner. Debtor: AB Inc. and B debtor is "The person who puts up the callateral"

10) Pollution Solutions borrows one googol dollars from Octopus National Bank, putting up as collateral its copyright, patents, and trademarks. Where should ONB file to be sure it has a perfected security interest?

Should file everywhere; both state and federal - when in doubt, file. No one know where you must file.

To buy a new $10,000 sign for its company headquarters, Business Company borrowed the $5,000 down payment from Lending Company, giving it a PMSI in the sign for this amount, which Lending Company promptly perfected by filing. Business Company paid the $5,000 to Sign Seller, Inc., which then sold the sign to Business Company, agreeing to finance the remaining $5,000 and take a PMSI in the sign it sold. Sign Seller, Inc. perfected its PMSI by filing in the proper place one day after Lending Company filed. Between Lending Company and Sign Seller, who has priority?

Sign Seller. Seller of PMSI has priority over lender PMSI regardless of timing

On February 1, Bank loans D $10,000 and takes a security interest in D's equipment. On March 1, the IRS files a tax lien against D's business property in the proper place. On April 1, Bank files a financing statement in the proper place. 1. Who has priority? 2. Would your answer to No. 1 change if Bank filed the financing statement on February 15? 3. Would your answer to No. 1 change if Bank took possession of D's equipment prior to March 1?

The IRS; the secuirty interest must be perfected first. Yes then the bank would have priority. If you file before tax lien is filed you have priority Yes because to beat a tax lien you have to perfect first.

Store borrowed money from Bank, giving Bank a security interest in Store's existing and after-acquired inventory. Bank filed a financing statement in the proper place. One year later, on June 15, the IRS filed a tax lien against Store in the proper place. Thereafter, Store received two shipments of new shoes: one on June 20 and one on September 25. Who has priority in these shipments?

The bank has priority on June 20 (45 days from the date of the tax lien). The IRS has priority on Sept 25

Bob purchases a car on credit from Ford Motor Credit for personal use. FMB has Bob sign a security agreement and a promissory note. How is the collateral for Bob's loan classified?

The car - consumer goods (personal use is assumed)

Seller gave a perfected security interest in all its accounts receivable to First Bank (which perfected First Bank automatically in any supporting obligations, such as a letter of credit backing up the accounts receivable). When Buyer ordered $10,000 worth of goods from Seller, Seller demanded that Buyer get a letter naming Seller as the beneficiary of the letter of credit (so that Seller could get payment directly from the bank issuing the letter of credit). Second Bank issued such a letter of credit to Seller. Seller, needing to borrow money to run its operation, went to Third Bank and asked to borrow the needed sum, using the letter of credit rights as collateral. Third Bank achieved control over the letter of credit rights by getting Second Bank to agree to pay the letter of credit's proceeds directly to Third Bank. Between First Bank and Third Bank, who has priority over the proceeds of the letter of credit?

Third Bank because it has control.

On November 1, Bank loaned Debtor $5,000 to buy an office computer, making Debtor sign a security agreement. On December 15, Debtor bought the computer with the loan funds. Bank files a financing statement on January 10. Debtor files bankruptcy on January 20. Is this a preference? Would your answer change if the computer was purchased for use in the home?

This is PMSI. Delivery took place dec 15. This is not a preference No. PMSI in consumer goods is automatically perfected and beats a bankruptcy trustee.

On January 1, First Bank took a security interest in the equipment and after-acquired equipment of "James Bond Stirred Martinis Inc." and properly filed. On February 1, the debtor changed its name to "James Bond Shaken Martinis Inc." On March 1, Second Bank conducted a proper search under the name of "James Bond Shaken Martinis Inc." and found no filings. Second Bank took a security interest in the equipment and after-acquired equipment of the debtor and properly filed. On April 1, First Bank properly filed an amendment under the name of "James Bond Shaken Martinis Inc." In August, the debtor declared bankruptcy. Who has priority as between First Bank and Second Bank? A. First Bank has priority in all the equipment. B. Second Bank has priority in all the equipment. C. First Bank has priority in all equipment acquired by the debtor until March 1, and Second Bank has priority in all equipment acquired by the debtor after March 1. D. First Bank has priority in all equipment acquired by the debtor until June 1, and Second Bank has priority in all equipment acquired by the debtor after June 1.

This is a name change question you have 4 months Ans: A

Buyer sees a TV for sale at Sears. The TV has a retail market value of $4000 and an economic life of two years. Sears says, "Instead of selling this TV to you, we will lease it to you for a year. You must make lease payments of $400 per month. At the end of 12 months, it is yours." Is this a true lease or a security?

This is a security interest - can't walk away, and can keep it for nominal amount or nothing at the end.

Jane enters into a lease with Rent-A-Center for a TV at $100 per month. Jane can return the TV to the lessor at any time and have no further liability. At the time of the lease, the TV is worth $800 and has a useful life of one year. Jane leases it for 12 months at a total price of $1200. The terms of the lease provide that if a lessee rents an item for 12 months or more, the lessee may purchase it for $1. Is this a true lease or a disguised security interest?

This is a true lease because Jane can walk way from the lease at any time.

12) Carl was an independent insurance agent who sold policies for many companies, though his primary sales were the life and automobile policies of MIA. In order to float a loan to buy a car, Carl gave the lending bank a security interest in all present and future commissions earned or to be earned from the MIA. Does Article 9 cover the assignment?

This is an Article 9 security interest because while it appears to be a wage assignment, Carl is an independent contractor, not an employee. Real estate commissions have been defined as accounts because they are payments for services rendered, and real estate agents are typically independent contractors.

14) LLC needed to borrow money, and ONB agreed to loan it the requisite amount, taking into ONB's possession as collateral the real property mortgages and accompanying promissory notes given to LLC by its borrowers. Need ONB do anything either in the real property recording office or under the UCC to protect its interest in this collateral?

This is an Article 9 transaction because they are not transferring real property, only the security interest in the property with the promissory note.

Assume that a state statute gives someone doing repairs a possessory artisan's lien on the property repaired. Mr. Baker took his car into Mack's Garage for repair but, being strapped for funds, couldn't pay the full bill, and Mack wouldn't let him have the car back. Is Mack's artisan's lien an Article 9 security interest? If, prior to the repair work, Mr. Baker signed a statement giving Mack's Garage a right to repossess the car if the bill wasn't paid, does this agreement create a security interest under the Code?

This is not a security interest. He did not agree to give them a security interest - not consensual here. The lien is created by other statute. Article 9 would still apply in priority issues. If prior to repair work - sign an agreement, there would be a security interest in the car. Must be consensual under Article 9.

13) When Vargo sold his lucrative art business to Flowers, he sold not only all his tangible assets but his outstanding accounts receivables as well. Must the buyer take the steps required by Article 9 of a secured party? If Vargo received a commission to paint the portrait of the city's mayor but decided he was too busy to perform the task and transferred the job to another artist, must the new artist take Article 9 steps? When one of Vargo's clients refused to pay for a delivered painting, Malone sold the account to Trash Collection Agency. Must Trash comply with Article 9? Finally, pressed by his art supplies store for payment of his outstanding tab, Vargo transferred to the store the money due him from a client whose portrait he had painted a month before. Must the art supplies store take Article 9 steps?

This is not an Article 9 transaction because it covers the sale of the entire business that generated the accounts. This is not a financing transaction. This is not an Article 9 transaction because in addition to transferring the interest to payment, the duty was transferred as well. Assignment for collection are also not Article 9 transactions. The last is a single account for a pre-existing debt.

16) Debtors assign to ONB all sums recovered by Debtors, directly or indirectly, from their lawsuit against Meep Corp for breach of sales contract. Meep Corp settles the lawsuit , and agrees to pay Debtors the claimed amount. Is the assignment subject to Article 9?

This is not the assignment of a judgment, but the assignment of proceeds from a judgment.

Farmer stored 100,000 bushels of corn in Co-op Grain Elevator and received a receipt for the corn. Bank then loaned Farmer $20,000 and took a security interest in the receipt. How would you characterize the collateral?

Title Document/Document of Title

Able, who lives in Massachusetts, and Baker, who lives in New York, form a general partnership, called AB Services, that has its only office in Vermont. First Bank takes a security interest in assets of AB Services. Where should First Bank file the financing statement? What name should be on the financing statement?

Vermont; AB Services because the general partnership has a name here, it's best to use the name of the general partnership.

A creditor makes a loan to a business debtor secured by equipment. The debtor defaults, and the creditor repossesses the collateral and sells it for $6,000. Because the debt and expenses came to $10,000, the creditor seeks a deficiency of $4,000. The court finds that the sale was not commercially reasonable. At trial, the creditor proves by a preponderance of the evidence that in a commercially reasonable sale, the collateral would have sold for $8,000. How much is the creditor entitled to as a deficiency judgment against the debtor?

We presume nothing but there is enough here to prove that he overcome that presumption in part. $2,000 is probably the answer because he has overcome the rebuttable presumption of no default.

On September 30, Jones sold a grandfather clock (worth $30,000) from his business office to Buyer. He failed to mentioned that all of his equipment (worth a total of $50,000) was subject to a perfected security interest in favor of Bank, which had loaned Jones $25,000. On October 10, Bank loaned Jones an additional $26,000 in accordance with the future advance clause of their security agreement. At that time, Bank was unaware of the sale to Buyer. 1. Does Bank's security interest continue in the clock after the sale? 2. If so, in what amount? 3. Would your answer to No. 2 change if Bank made the $26,000 advance on December 10? 4. Would your answer to No. 2 change if Bank was aware of the sale to Buyer at the time it made the October 10 advance?

Yes because buyer was not BIOC rather it was equipment. Secuirty interest will follow the Clock. $51,000 because it was in 45 days and bank did not have knowledge Yes, now when you sell everything you'll only have priority in the first $25K

As security for a loan, Debtor delivers to Lender several bags of old silver coins. No financing statement is filed, but Lender signs a receipt for the coins, stating that they will be returned on repayment of the loan. 1. Does Lender have a perfected security interest in the coins? 2. Is Lender entitled to add insurance and storage costs to the amount of the loan and retain the coins until these are paid? 3. If the coins are stolen from Lender and insurance does not cover the full loss, who bears the loss? 4. If Lender fails to exercise reasonable care for the coins, does Lender lose the security interest?

Yes perfection by possession Yes but must be reasonable costs. Debtor should have to pick up this cost. To extent debtor doesn't pay coins would pick them up. The debtor No, we don't take away someones security interest because they abuse the collateral.

Lawyer learned that one of her former clients was planning to file bankruptcy. Before filing, the client paid Lawyer $1,000 for past services rendered. The client files the petition 60 days later. Is this a preference? On January 1, Lender loaned money to Debtor and took a security interest in Debtor's equipment. Due to carelessness, Lender did not file a financing statement until April 1. On June 1, Debtor filed bankruptcy. Is this a preference? Would your answer change if Lender filed its financing statement on January 25?

Yes this is a preference, within 90 days. Lawyer should have asked client to wait 91 days. Yes. Yes.

When Luke Skywalker, an artisan who handcrafted his wares, finished creating a large jeweled sword, he took it down to WOW, a large gun and weapon dealer, which mostly sold items that it either manufactured itself or brought from other dealers around the globe. The sword was appraised as being worth over $25K. Luke asked WOW to sell the sword for him. Is this an Article 9 consignment so that Luke needs to take Article 9 steps to protect himself from WOW's other creditors who have an interest in the store's inventory?

Yes, Luke is asking the merchant to sell the sword for him. The business is WOW, the deliverer is Luke - WOW is not an auctioneer. WOW typically manufactures or buys its inventory. The sword is worth more than $1K and the goods were part of inventory, not consumer goods (Because Luke made the sword, there is an assumption that he made it to sell, not to use)

A creditor entered into a security agreement with a consumer that described the collateral as "all personal property of debtor." What is the consequence of this description?

It's invalid. The collateral doesn't attach, you're an unsecured creditor. But this is probably ok in the financing statement.

Jane

Jane's car

Joe

Joe wants to buy a new boat but does not have enough money to pay cash. He asks First National Bank to loan him $20,000 to buy the boat. Bank is concerned about Joe's ability to repay the loan. What advice do you have for Bank to increase its chances of recovering the loan?

Joe should have surety, cosigner, or collateral. Loan in writing - only required on loans lasting beyond 6 months for Statute of Frauds.

On July 1, 2005, a secured creditor properly filed a financing statement against an individual debtor, Joseph Smith, in Ohio, the state in which Smith resided. On May 1, 2010, Smith moved to Utah. For how long is perfection in Utah effective under § 9-316?

July 1, 2005. No four month grace period because it was already going to expire 2 months after relocating.

Bob the Builder is a sole proprietor that lives in Iowa. He granted a security interest in his Ford F150 to Bank of Nebraska on January 1, 2009, in return for a $5,000 small business loan. Bob had purchased the truck in Missouri; the truck was titled in Kansas. On January 1, 2013, Bob moves to Illinois. He has not gotten around to having the car retitled in Illinois (although, under Illinois law, he was supposed to have done that within 60 days). Assume it is May 2, 2013. Which state's law governs whether Bank of Nebraska's security interest is perfected? 1. Iowa (where Bob resided at the time of the loan) 2. Nebraska (where Bank of Nebraska is located) 3. Missouri (where the truck was purchased) 4. Kansas (where the truck is titled) 5. Illinois (where Bob currently resides and where Bob is supposed to have titled the truck)

Kansas because that's where the truck is titled.

In exchange for a loan, ABC grants a security interest in all of the copiers it holds in inventory to Bank. ABC leases a copier to L in the ordinary course of ABC's business. ABC then defaults on its loan to Bank. Between Bank and L, who has priority in the copier?

L because L leased in the ordinary course of business.

Donald R. Willett lives in Williamstown, Massachusetts. Willett operates an accounting business called DRW Accounting as a sole proprietorship across the state line in Vermont. Willett bought a new computer system for his business on credit from Purple Cow Computer Co. of Troy, New York, and granted Purple Cow a security interest in the computer system. To perfect its security interest, where should Purple Cow file its financing statement?

Massachusetts

Honest John sold Nancy Debts a used car for $900, to be paid off in three payments of $300 each. The contract was oral. Nancy missed the second payment, and one of Honest John's employees repossessed the car and returned it to the seller. Nancy sued Honest John for conversion. Who should win?

Nancy wins because the agreement does not indicate any grant of a security interest. Honest John is an unsecured creditor. They stole the car from her when they went to repossess it. Mistake is not a defense.

Tom, a resident of Oklahoma, entered into a security agreement by pledging his wedding ring at a pawnshop in Las Vegas, Nevada, that is owned by a California corporation. Which state's laws govern whether the security interest is perfected?

Nevada, because it is the state in which the collateral is located.

What if, before ABC can repossess the piano, a judicial lien creditor sends the sheriff to Debtor's home to seize the piano. ABC then sues the judicial lien creditor, claiming that title to the piano still belongs to ABC and thus it is not an asset of Debtor's. Is ABC correct? Could ABC have a secret lien?

Yes, but it will be treated as a security interest. They will be enforceable as against debtors, but in bankruptcy or against other creditors, the creditor will be considered a general creditor, not a secured creditor.

On June 1, Lawyer borrows money from Bank to buy a copy machine for her office. Bank has Lawyer sign a security agreement granting Bank a security interest in the copy machine. Bank disburses the loan money to Lawyer, who uses it to purchase the copy machine. [Does Bank have a PMSI? Is it automatically perfected?] Two months later, Lawyer is in need of money. Lawyer asks Bank for a loan. Bank agrees to refinance the June 1 loan and, in doing so, loans $5,000 to Lawyer. Did Bank lose its PMSI status with regard to the copy Machine? Would your answer change if the copy machine were consumer goods?

Yes, but not automatically perfected since it is not a consumer good. Only consumer goods are automatically perfected. Did not lose status due to dual status rule

Motor Inc goes to Midtown Factors to obtain financing. Midtown says, "What do you have to sell?" Motor says, "Accounts and chattel paper." Midtown says, "We will buy your accounts and chattel paper for 10 percent less than the face value." Motor agrees and sells Midtown $100K of accounts and chattel papers for $90K. Is this transaction governed by Article 9? If so, why? If Midtown purchases a car for cash from Motor, would that transaction be governed by Article 9?

Yes, even sales of accounts and chattel paper are under Article 9 because it's too easy to disguise these. Most sales are not covered by Article 9.

B perfects a security interest in $1,000 of raw cotton that it sells to Debtor. W perfects a security interest in $2,000 of raw wool that it sells to Debtor. Debtor spins the wool and cotton into a bolt of cloth worth $2,400. Do B and D have security interests in the cloth and, if so, in what amounts?

Yes, out of the 2400, B would get 800 and W would get 1600

Dentist is in need of cash. In exchange for a loan from Bank, Dentist agrees to give Bank a security interest in Dentist's accounts receivable. Does Article 9 apply to this transaction? Who is the secured party? Who is the debtor? What does Article 9 call Dentist's customers (who owe on the accounts receivable)? Must notice of this arrangement be made public?

Yes, the collateral is the Dentist's accounts. Secured Party - Bank Debtor/Obligor - Dentist Dentist's Customers - Account Debtors To perfect and protect against other creditor, yes.

H contracts to buy a couch for $600 on credit from Fast Freddie's. The contract states that Fast Freddie's will keep the title to the couch until H pays all amounts due. H defaults on his payments, and Fast Freddie's attempts to repossess. Can Fast Freddie's repossess the couch?

Yes, while the interest is not perfected, the security interest is valid as enforceable against H. It would only be an issue against another creditor.

Painter, a professional artist, took two of her paintings (each valued at $1,500) down to the art department of Big Department Store and asked the manager if the store was interested in selling the paintings, taking a commission for doing so and remitting the excess to Painter. The store agreed, but shortly after receiving the paintings and before they were sold, Big Department Store defaulted on a loan to a creditor who had a security interest in the store's inventory. The secured creditor repossessed all of the inventory, including Painter's paintings. 1. Is Painter's consignment covered by Article 9? 2. Between Painter and the secured creditor, who has priority in the two paintings? 3. What advice would you have for Painter if she attempts such a consignment in the future?

Yes. Secured Creditor File a financing statement and give notice before giving possession. OR you can make sure each delivery is less than 1,000, and article 9 wouldn't apply.

Bank loaned Company $20,000, taking a security interest in all of Company's equipment. The security agreement contains a future advance clause. Bank filed a financing statement in the proper place. One year later, on May 2, the IRS filed a tax lien against Company. On May 10, Bank loaned Company another $20,000; Bank was unaware of the tax lien. 1. Does Bank have priority and, if so, in what amount? 2. Would your answer change if Bank learned of the tax lien on May 5?

Yes. Bank has priority in the first 20K and the May 10th 20K because it came within 45 and bank did not have knowledge. Yes, bank's priority would only be in the first 20K.

BizCorp wants to borrow $10 million from Midbank for general corporate purposes. The parties agree that the loan will be secured by all of BizCorp's assets. BizCorp's assets include (i) a claim against a competitor for patent infringement that will go to trial next month and (ii) rights as a beneficiary on a life insurance policy covering BizCorp's founder and CEO. Article 9 will cover MidBank's property interest in [a] only the patent infringement claim [b] only the rights under the life insurance policy [c] both assets [d] neither asset

[a] this is a commercial tort claim; not a personal injury claim - Article 9 applies to healthcare not life insurance

For BigBank to create an enforceable security interest in ZinnCorp's property, the written security agreement must be authenticated: [a] By both BigBank and ZinnCorp [b] By only ZinnCorp [c] Bi ZinnCorp and, if BigBank is chartered under federal (rather than state) law, BigBank [d] By ZinnCorp and, if BigBank anticipates exercising statutory (rather than merely contractual) rights and remedies following any default by ZinnCorp, BigBank

[b] By only ZinnCorp

BizCorp sells various musical instruments. BizCorp's customers include symphonies, house of worship, schools and colleges, professional musicians, and many customers. Friendly Finance has agreed to make a $5 million loan to BizCorp that will be secured by the musical instruments.If the parties desire to use Article 9 terminology when describing the musical instruments, the security agreement should describe the collateral as: [a] instruments [b] inventory [c] inventory, equipment, and consumer goods [d] goods

[b] inventory

Bank loans debtor money and takes a security interest in certain property of a debtor, describing the collateral in the security agreement as "all of the debtor's equipment." Bank's financing statement describes the collateral as "all of the debtor's equipment and inventory." Has a security interest attached to debtor's inventory? [a] Yes, because that collateral is described in the security agreement. [b] Yes, because that collateral is described in the financing statement. [c] No, because that collateral is not collateral is not described in the security agreement. [d] No, because that collateral is not described in the financing statement

[c] Because the debtor never granted the creditor an interest in the inventory.

Which of the following assets offered by John is not a general intangible? [a] a claim against his brother, who orally agreed to repay a $2500 loan from John [b] John's domain name [c] a registered copyright held by John on a photography book that he wrote [d] john's right to receive $150 each month for the next ten years, arising from a winning lottery ticket that he purchased.

[d] accounts

Yesterday, BizCorp sold a unit of inventory to Grace, who used her credit card to pay for the purchase. After swiping her card through the machine, Grace signed a piece of paper, acknowledging her payment obligations under the credit card agreement. This payment receivable now held by BizCorp is: [a] chattel paper [b] an instrument [c] a payment intangible [d] an account

[d] accounts; even if there is a signed writing

15) ONB issued CC a credit card. As collateral for the credit card debts, ONB took a security interest in all items she purchased using the card, as well as in her personal checking account with the bank. Does Article 9 apply to the bank's rights in this account? Would Article 9 apply if she used her consumer bank account as collateral for a business loan?

Article 9 would cover the interest in the items purchased; would not cover the deposit account in the consumer transaction, but could cover the bank account in a business transaction

On January 1, O, the owner of a farm, gave a mortgage in the land to M, which M immediately recorded. On June 1, O gave a security interest in all crops growing on the farm to S. As between M and S, who has priority with regard to the crops?

Assuming perfection, S, crops have nothing to do with real estate. Crops are real goods, they do not become fixtures.

Alternatively, assume Joe is willing to use the boat as collateral for the loan. Also, assume that Bank properly "attaches" and "perfects" its security interest in the boat. Joe fails to make the first three payments. (1)What actions may Bank take against Joe? (2) How would Bank fare if Joe files a petition for bankruptcy? (3) Joe, who is concerned about his public image, asks the Bank to keep the security interest in the boat secret. Boats are not titled in Tennessee. Should Bank agree to this condition?

(1) Sue him on the note or repossess the boat. Lawsuit for replevin - court orders him to turn boat over to you. Only if you can't repossess the boat voluntarily. (2) Better, the boat goes to the bank because they have a property interest in it above other creditors; they are general creditors as to any additional value they are owed (owed 20K, boat worth 15K, general creditors to 5K) (3) No, without notice, without perfecting, their security interest is only good between Joe and the bank; in bankruptcy, the bank becomes a general creditor. This can void the security interest. Perfected buyers usually prevail over buyers. Should not agree to this condition. Anyone else could show up and take a secured interest in this boat.

Assume the Bank loans Joe $20,000, which Joe uses to buy a new boat. The loan is an unsecured "signature loan" with monthly payments. Joe fails to make the first three payments (1) What actions may Bank take against Joe? (2) How would Bank fare if Joe files a petition for bankruptcy? (3) Would Bank have additional options if Joe's mother co-signed the loan as a surety?

(1) Sue him, but likely judgment proof, and suits are long and complicated; Judgment has to be executed before you can take any of the defendant's property, nit guarantee which property you'd get, and other creditors may be looking - generally just unlikely to get paid. (2) Very poorly, as a general creditor, they have lowest priority, and the money is usually gone by then. (3) They could sue her, but she may be judgment proof.

Following a corporate debtor's default, Article 9 permits the secured party to A. Dispose of collateral, whether or not the secured party has possession of it. B. Dispose of collateral, but only if the secured party has a perfected security interest in it. C. Sue the debtor for breach of contract, but only if the secured party first exhausts its rights and remedies in the collateral. D. Propose keeping the collateral in exchange for forgiving all (but not less than all) of the unpaid secured debt.

Lender has an enforceable security interest in Debtor's current and future accounts. Last week, Debtor triggered a default. Lender wants to contact the account debtors and direct them to make payments to Lender (rather than Debtor) for application against the unpaid secured debt. Lender can do so A. but must proceed in a commercially reasonable manner. B. but must wait until Debtor has been in default for thirty consecutive calendar days. C. but only if its security interest is perfected. D. but only it its security interest is senior to all other security interests.

The following are examples of "accessions," except A. The addition of two rear tires to a farm tractor that is subject to a pre-existing perfected security interest. B. The mixing of flour, water, eggs, and other ingredients to create a chocolate cake. C. The matting and framing of a law license that will be displayed on the wall of a lawyer's office. D. The sewing of decorative buttons onto a woman's jacket.

B; mixing things together where they lose their identity is commingling.

Bank loans Abbie $10,000 to buy more pets for her pet shop. The security agreement between Bank and Abbie covers "all of Abbie's pets as well as the products and offspring therefrom." The security agreement does not mention anything regarding proceeds. One night, somebody broke into Abbie's pet shop and stole several of her pets. Abbie's insurance company wrote her a $10,000 check for the lost pets, the broken window, and lock replacements. Which statement is correct regarding whether Bank has a security interest in any of the $10,000 paid to Abbie by her insurance company? 1) Bank does not have a security interest in any of the money, because the security agreement did not expressly grant the Bank any security interest in proceeds of the collateral. 2) Bank does not have a security interest in any of the money, because the check is an "instrument" and the security agreement does not grant a security interest in instruments. 3) Bank has a security interest in the portion of the $10,000 that reflects the value of the pets taken by the thief. 4) Bank has a security interest in the entire $10,000, which is proceeds of the collateral.

Assume the same facts as the previous slide. In a priority dispute concerning a shipment of dresses and shoes acquired by ZinnMark Fashions on September 7, A. Bank's security interest enjoys priority. B. The tax lien enjoys priority because the items are not "commercial financing security." C. The tax lien enjoys priority because ZinnMark Fashions acquired the items after Bank discovered the tax lien notice. D. The tax lien enjoys priority because ZinnMark Fashions acquired the items more than forty-five days after the IRS assessed the tax lien.

Austin Furniture Co, Inc sells home furniture at retail outlets. On February 1, Austin asked First Bank to loan it $100,000, to be distributed on March 1 and payable on February 1 two years later, and First Bank agreed. First Bank prepared the loan documents, which provided that Austin granted First Bank a security interest in its "inventory of furniture now owned or hereafter acquired," both parties signed them. At this point, do the parties have a security agreement? [a] Yes, because all the elements have been satisfied [b] No, because value has not yet been given [c] No, because Austin does not yet have rights in the collateral that will be hereafter acquired [d] No, because there is not a sufficient description of the collateral.

Bruce buys a wall tapestry on credit from Gilmore Artworks for $8,000 on April 20. Gilmore Artworks retains an enforceable security interest in the tapestry and perfects its interest by filing a financing statement within two weeks after the sale. A few days later, Bruce contracts with Framed Again to make a frame, at a cost of $2,000, for the tapestry. Framed Again makes the frame, affixes it to the tapestry, and returns the finished product to Bruce on May 23. Framed Again retains a security interest in the frame and perfects its interest by filing a financing statement on June 15. Last week, Bruce filed a Bankruptcy petition, still owing $7,500 to Gilmore Artworks and $1,500 to Framed Again. The trustee has sold the framed tapestry (which had been hanging in Bruce's office) for $6,500. The trustee should distribute A. Nothing to Framed Again and $6,500 to Gilmore Artworks. B. $1,000 to Framed Again and $5,500 to Gilmore Artworks. C. $1,100 to Framed Again and $5,400 to Gilmore Artworks. D. $1,500 to Framed Again and $5,000 to Gilmore Artworks.

D is seeking a $40,000 loan from Creditor 1. In the course of the negotiations, with D's consent, Creditor 1 files a financing statement on January 4, 2003, indicating D's accounts as collateral. Creditor 1 and D are unable to agree on terms, so no loan is made. On February 2, 2006, Creditor 2 lends D $50,000 and obtains and perfects a security interest in D's account. On March 1, 2006, Creditor 1 lends D $40,000 and obtains a security interest in D's accounts. Which claim has priority? A. Creditor 1, because it was first to file or perfect. B. Creditor 2, because it was first to file or perfect. C. Creditor 2, because there was no other creditor with a security interest in D's accounts at the time of its transaction with D. D. Creditor 2, because Creditor 1 failed to file after the March 1, 2006, transaction.

Farmer Brown buys a "Model A irrigation system" and finances $100,000 of the purchase price with First Bank, giving the bank a security interest in the irrigation system. First Bank files a financing statement. Two years later, Brown trades his Model A system to Farmer Smith for a cheaper Model B system plus $10,000 in cash. After the sale, Farmer Brown stops making his payments to First Bank. Can the bank repossess the Model A system, which is now owned by Farmer Smith? (A) Yes, because a security is effective as against purchasers. (B) Yes, because the purchaser had actual knowledge of the security interest. (C) No, because the bank did not perfect the security interest. (D) No, because Smith is not the debtor.

First Bank takes a security interest in the crops of a farmer and files an Article 9 financing statement in the office of the Secretary of State. A representative from General Mills buys 50,000 bushels of wheat from the farmer. Based on the language of UCC § 9-320(a) and 7 U.S.C. § 1631(d), does General Mills take free of First Bank's security interest? (A) Yes, because the Food Security Act so provides, and in a conflict between the Food Security Act and the UCC, the Food Security Act governs. (B) Yes, because the UCC so provides, and in a conflict between the Food Security Act and the UCC, the UCC governs. (C) No, because the UCC so provides, and in a conflict between the Food Security Act and the UCC, the UCC governs. (D) No, because the Food Security Act so provides, and in a conflict between the Food Security Act and the UCC, the Food Security Act governs.

First Bank took a security interest in the inventory of Sound City and perfected the security interest by filing. Tony is a lawyer who has been representing Sound City for several years. Sound City owed Tony $16,000 for legal services rendered in two employment discrimination suits. Tony agreed to accept a $14,000 sound system as partial payment, and Sound City installed the sound system in his home. On Sound City's default, is First Bank entitled to repossess the sound system for Tony? (A) Yes, because Tony is not a buyer in ordinary course. (B) Yes, because Tony did not act in good faith. (C) No, because the goods are consumer goods in the hands of Tony. (D) No, because Tony is a buyer from inventory.

On February 1, BAMCO sold a lawn tractor on credit to Joe Smith, an Atlanta resident, for use in Joe's lawn care business (a sole proprietorship). BAMCO retained a security interest in the tractor to secure payment of the unpaid purchase price and filed a financing statement in Georgia on February 4. The tractor is not subject to any certificate-of-title law. In April, Joe moved his family and lawn care business (including the tractor) to Birmingham, Alabama. In May, Joe sold the tractor to his neighbor, Billy, for personal use. Billy is unaware of the transaction between BAMCO and Joe. BAMCO soon discovers Joe's relocation and sale; both actions violated the terms of Joe's security agreement. BAMCO then brings a conversion action against Billy for the tractor. BAMCO has never filed any papers in Alabama. If the lawsuit is resolved as of July 15, then A. BAMCO will win the dispute, because Joe's sale violated the terms of BAMCO's security agreement. B. Billy will win the dispute, because he is a buyer in the ordinary course of business. C. Billy will win the dispute, because he is using the tractor as a consumer good. D. Billy will win the dispute, because BAMCO's security interest was unperfected when Billy bought the tractor.

On January 1, Creditor 1 sells Consumer a car. Consumer promises to pay Creditor 1 installments of $300 per month for five years. Creditor 1 takes a security interest in the car but does not perfect. On February 1, Creditor 2 loans Consumer $10,000 and takes a security interest in the car. Creditor 2 does not perfect. On March 1, Consumer defaults as to both creditors. Whose claim to the car has priority? A. Creditor 1, because its security interest was first to attach. B. Creditor 2, because Creditor 1's failure to file misled Creditor 2 into thinking there were no security interests in the car. C. Both have a claim that is prorated according to the amount of the debt. D. Neither has an enforceable security interest because they both failed to perfect.

On January 10, S lends D $10,000 and obtains a security interest in all of D's inventory. As of January 10, D's bank account has a $3,000 balance (not from proceeds). D then makes the following deposits and withdrawals: On January 13, D deposits $4,000 it received from the sale of inventory. On January 16, D withdraws $6,000 from the account for payroll, rent, and other expenses. On January 30, D deposits $9,000 from the sale of a vacant lot it owned. What is the extent of S's security interest in D's bank account under § 9-315(b)? A. $1,000. B. $3,000. C. $4,000. D. $7,000.

On January 15, Creditor 1 loans money to D and takes a security interest in all of D's inventory, now owned and after acquired. Creditor 1 immediately files. On February 1, Creditor 2 sells D on credit an item that D puts in its inventory and takes a security interest in the item. After delivery of the item to D, Creditor 2 checks the filing system, finds the filing by Creditor 1, and immediately files. Which secured party has priority in the item? A. Creditor 1, because it was first to file or perfect. B. Creditor 1, because Creditor 2 had knowledge of its security interest in equipment. C. Creditor 2, because it was first to file or perfect. D. Creditor 2, because it has a PMSI that has obtained a super-priority.

R has a mortgage on D's office building that is properly recorded. S loans D money, takes a non-PMSI security interest in the central air conditioning for the office, and immediately makes a fixture filing. Who has priority? A. R, because the general rule is that a mortgage interest has priority over a security interest in fixtures. B. R, because in order to obtain priority, S must file before loaning the money and must notify R. C. S, because the general rule is that a security interest in fixtures has priority over a mortgage interest. D. S, because there is an exception for PMSIs in fixtures that are timely filed.

Which of the following assets offered by John is "investment property"? A. A $10,000 certificate of deposit issued to John by MegaBank, bearing an annual interest rate of 4% and a five-year maturity date. B. A rare comic book that he purchased solely for investment purposes (i.e., appreciation in market value over time). C. Five hundred shares of BizCorp capital stock (not evidenced by a tangible certificate, and having a market value less than 20% of what John paid for it). D. His condominium in Vail, Colorado (which generates annual rental income to him in an amount greater than what he earns annually as a photographer).

A - either instrument or despot account B - consumer goods/inventory/equipment C-uncertifcated securities- investment property D-real property

Which of the following transactions are covered by Article 9? [a] Ron, the owner of Ron's Retail, sells his business to Paula. Included in the sale is an assignment of all of the business's accounts, chattel paper, promissory notes, and payment intangibles. [b] Doris, a dentist, is owed money by a number of her patients. After trying to collect the debts herself, Doris assigns them to ABC for collection. [c] Andy, a builder, contracts with Patrick to build a garage next to Patrick's home. Andy discovers that he has more work than he can do, so he agrees to delegate the work and the payment therefore Betty. [d] George owes Ellen $100, and Carlton owes George $100. To satisfy the debt that he owes to Ellen, George assigns to her the right he has against Carlton. [e] none of the above

A - no, sale of entire business B - no, assignment for collection only C - no, duty delegated as well as rights to payment D - no, one account for pre-existing debt E

A creditor and debtor state in the security agreement, "On default, the secured party shall have the right to take possession of the collateral, even if such repossession involves a breach of the peace." Does this agreement violate Article 9? A. No, § 1-302 provides that the Code rules are default rules that the parties are free to vary by agreement. B. No, it does not expressly violate Article 9, but a jurisdiction would likely determine that the agreement was contrary to public policy. C. Yes, the parties may not waive or vary the rule on breach of the peace. D. Yes, and the creditor is subject to a $500 liability for including this language in the agreement.

Debtor contracted to buy a couch for $600 on credit from Freddie's. The contract granted Freddie's a security interest in the couch. Debtor defaulted on his payments, and Freddie's wants to know if it can repossess the couch. The state statute on exempt property provides that "[a] judgment debtor is entitled to exemption from execution on the following property: (1) the judgment debtor's interest, to the extent of a value not exceeding $600 in any item of property, in household furnishings and goods." Would you advise Freddie's that it can repossess the couch? A. Yes, because repossession by a secured party is not execution against a judgment debtor. B. Yes, because the couch is not exempt property under the statute. C. No, because the statute specifically prohibits execution on household furnishings of that value. D. No, because Freddie's did not perfect its security interest.

A because exemption statutes are designed for judgment lien holders. Article 9 exemptions do not apply to secured parties.

Article 9 applies to consignments, but only if the transaction falls within the Article 9 definition of that term. Which of the following transactions could fall within the definition of "consignment"? [a]Annie, a professional musician, delivers one of her two pianos (with a fair market value of at least $7,800) to a piano dealer for resale. [b]Now that Maggie's quadruplets are ten years old, Maggie delivers four toddler bicycles (each with a fair market value of at least $300) to a bike dealer for resale. [c]BizCorp delivers twenty framed and matted vintage movie posters (with an aggregate estimated value of $22,000) to an auction house for resale to the public at an upcoming weekly auction. [d]ZinnCo delivers several used desktop photocopiers (with an aggregate estimated value of $1,300) to Joe's Consignment Shoppe for resale.

A is an Article 9 consignment. B is not an Article 9 consignment because the items were consumer goods in the hands of the consignor. C is not an Article 9 consignment because the consignee is an auctioneer. D is not an Article 9 consignment because the consignee should be clearly known to sell on consignment.

An automobile dealership in this state has a Quonset hut-type building that it uses to store vehicles. The building is made of corrugated metal pieces bolted to a wooden framework. Is this building a fixture? A. Yes, under the Article 9 definition. B. No, under the Article 9 definition. C. It depends on the property law of the state. D. It depends on whether the automobile dealership considers it to be a fixture.

American Bank, Customer (the debtor), and Creditor agree that American Bank will follow the instructions of Creditor (as well as those of Customer) as to the disposition of the contents of Customer's bank account. A. If Customer deposits cash proceeds belonging to some other secured party with an interest in the account, would Creditor have priority over these cash proceeds? B. If Customer takes out a loan from American Bank and fails to pay it, is American Bank's right of setoff against the account superior to the rights of Creditor? C. Would your answer to (B) change if Creditor achieved control by having the account placed only in Creditor's name?

A) Creditor would win B) American bank would Win, Bank's right of setoff has priority over control agreement C) Yes, having the account placed in debtors name is the only way to beat the bank's right of setoff.

Assume the same facts as the last slide. To perfect its security interest in Meredith's partnership interest in the law firm, Gotham Bank should (A) file a financing statement, naming the law firm as the debtor, in New York. (B) file a financing statement, naming Meredith as the debtor, in New York. (C) file a financing statement, naming Meredith as the debtor, in Connecticut. (D) take possession of the law firm's partnership agreement.

A local attorney who collects sport memorabilia as a hobby bought a Ted Williams autographed baseball on credit from the Sports Memorabilia Store. The store took a security interest in the ball but did not file. After the ball sat in his home for the weekend, the attorney took it to his law office where he displayed it to clients. Six months later, the attorney was negotiating with a bank for a loan. The bank searched the filings and found no filed financing statements naming the attorney as debtor. The bank then took a security interest in the attorney's office equipment and filed. The attorney then defaulted on his security agreement with the bank. Assuming that priority goes to the first secured creditor to file or perfect, which creditor has priority in the baseball? [a] The store, because it was first to file or perfect. [b] The bank, because it was first to file or perfect. [c] The bank, because it relied on the absence of filings before it entered into a security agreement with the attorney. [d] The bank, because even though the store was first to file or perfect, the store failed to timely file when the collateral changed its characterization

A. the hobby suggests this is consumer goods at the time of attachment.

Consumer financed the purchase of a car through Credit Union, which held a perfected PMSI therein. The car broke down, and Consumer took it to Al's Repair Shop. Consumer failed to pay the repair bill, leaving the car at Al's. By state law, Al's has an "artisan's lien" in the car. Consumer then missed two payments to the Credit Union, which tried to repossess the car. Between Al's and Credit Union, who has priority?

Al's

Debtor owns a landscaping business. A security agreement described Debtor's collateral as "Debtor's John Deere tractor, serial number 111006." Is this sufficient? - Debtor's John Deere tractor" -"Debtor's tractor" -"Debtor's farm equipment" -Debtor's equipment" -"All of the Debtor's personal property"

All are fine except "all personal property"

1. Deborah bought furniture for her home on credit from Friendly Furniture and granted Friendly a security interest in the furniture. Friendly did not file a financing statement, but its security agreement expressly prohibited Deborah from disposing of the furniture while it was subject to the security interest. Several months later, without Friendly's permission, Deborah sold the furniture at a yard sale to Brenda, who planned to use the furniture in her home. Friendly discovered these facts and insisted that Brenda surrender the furniture. Brenda refused. In a dispute between Friendly and Brenda, does Brenda take free of Friendly's security interest? (A) Yes, because Friendly's security interest was not perfected. (B) Yes, even though Friendly's security interest was perfected. (C) No, because Friendly's security interest was automatically perfected. (D) No, because Deborah's sale violated the terms of her security agreement with Friendly. 2. Would your answer to No. 1 change if Friendly had filed a financing statement? 3. Would your answer to No. 1 change if, at the time of the sale, Deborah said to Brenda, "Friendly Furniture took a security interest in this furniture, but I checked, and they never filed it"

B If there was a financing statement Brenda would not take free of friendly's security interest Yes because in this case deborah knew. Having knowledge and filing financing statement are the two ways to lose BOIC

In which one of the following transactions is the security interest most likely to have attached to the collateral identified? [a] In return for a person loan, Child authenticated an agreement purporting to grant Bank security interest in Child's right to inherit under the will of Parent, who is still alive. [b] Taxpayer authenticated an agreement purporting to grant Bank a security interest in Taxpayer's right to a refund of federal income taxes paid in the previous calendar year and for which no tax return has yet been filed. [c] To obtain a loan to pay a long outstanding bar tab, Homer authenticated an agreement purporting to grant Bank a security interest in a gas grill that Homer had borrowed from his neighbor, Ned.

B. The child's interest in A is an expectancy and that is not a property interest.

On October 19, 2004, the Qwik-E-Mart took out a loan from Springfield National Bank to purchase a new refrigerator. Springfield National Bank properly filed a financing statement covering Qwik-E-Mart's equipment on October 19, 2004, and Qwik-E-Mart granted Springfield National Bank a security interest in the new refrigerator, which attached on October 19, 2004. Springfield National Bank filed a continuation statement (with the appropriate filing fee) on April 17, 2009. The continuation statement properly identified the initial financing statement by its filing number and indicated that it was filed as a continuation statement. On July 27, 2009, Qwik-E-Mart took out a loan from Fat Tony. Qwik-E-Mart granted Fat Tony a security interest in all of the Qwik-E-Mart's equipment. Fat Tony filed a financing statement covering Qwik-E-Mart's equipment on July 27, 2009. On October 20, 2009, Qwik-E-Mart declares bankruptcy. Which party would have first priority as to the refrigerator?A. Springfield National BankB. Fat TonyC. Bankruptcy TrusteeD. None of the above.

B; continuation statement was not filed within the 6 month window. Two days too early

MediCorp is a Delaware corporation that owns and operates hospitals and clinics in San Francisco, Los Angeles, and San Diego. A few months ago, BAM Technologies sold three pieces of medical equipment to MediCorp on credit, retaining an enforceable security interest in the equipment to secure the aggregate purchase price. BAM Technologies filed its financing statement with California's central filing office. Yesterday, without the knowledge or consent of BAM Technologies, MediCorp sold one of the three pieces of equipment to HealthNet for $1.5 million. HealthNet paid $500,000 in cash and executed and delivered a short-term $1 million negotiable promissory note for the balance. Assuming that BAM Technologies can satisfy its tracing burden, BAM Technologies has (A) no security interest in either the cash or the note. (B) an unperfected security interest in both the cash and the note. (C) a perfected security interest in both the cash and the note, but only if BAM Technologies filed its financing statement within twenty days after MediCorp took possession of the equipment. (D) a perfected security interest in both the cash and the note.

B; you only get automatic perfection in proceeds if the original collateral was properly perfected. Here the original collateral was not properly perfected because they should have filed in Delaware.

Bank held a perfected security interest in all of Clothing Store's inventory "now owned or after-acquired." Clothing Store, while insolvent, ordered new inventory from Seller, who failed to take a security interest in the merchandise it shipped to Clothing Store. The day the goods arrived, Seller learned of Clothing Store's insolvency and demanded return of the goods. Between Seller and Bank, who has priority in the new inventory? How could Seller have avoided this situation?

Bank Purchase money security interest in inventory

Bank One files and perfects a security interest in Debtor's inventory on June 1. Debtor sells a portion of its inventory in the ordinary course of business to Purchaser (such sale cutting off the security interest in the goods) on open account payable within 30 days. Debtor's accounts are subject to a security interest held by Bank Two, which had filed a financing statement with regard thereto on May 1. Who has priority in Purchaser's account? What if Bank One had filed on April 1?

Bank 2 is first to file or perfect. Then it would be bank one

Bank must notify the patients and say now payment comes directly to bank.

Seller's "equipment" was subject to a perfected security interest in favor of Bank. Without the permission of Bank, Seller sold one of its computers to Buyer on credit. When the computer proved defective, Buyer used section 2-608 of the UCC to revoke its acceptance of the computer and then used section 2-711(3) to claim a security interest in the computer. Between Buyer and Bank, who has priority in the computer? Would your answer change if Buyer purchased the computer from Seller's inventory and Bank's security interest was in Seller's "inventory"?

Buyer because it has possession and its an article 2 claim, but only to get return of the amount buyer paid. If this was an inventory; buyer would be a buyer in the ordinary course.

Jim's Friendly Car Dealership, Inc. ("Dealer") executed a security agreement granting Finance Company a security interest in "all of Dealer's present and after-acquired inventory." A proper financing statement evidencing this security interest was filed in the proper place. The financing statement listed the collateral as "all of Dealer's present and after-acquired inventory, accounts, instruments, and general intangibles." On June 1, Dealer sold a car to Joe Customer and Customer gave Dealer a check for the down-payment, a tangible note for the balance of the purchase price, and a tangible security agreement granting a security interest in the car to secure payment of the indebtedness evidenced by the note. At all relevant times Dealer retained possession of the check, the note and the security agreement, all of which are identifiable. On June 5, which of the following is true regarding the check? A. Finance Company has no security interest in the check. B. Finance Company has a security interest in the check, but the security interest is not perfected. C. Finance Company has a perfected security interest in the check. D. The check is not "cash proceeds."

John's Art Gallery sold a Renoir painting for $2 million to Winston, a local art collector, on credit and retained a security interest in the painting. Winston stated he was buying the Renior for his living room. A year later, a museum is considering buying the painting from Winston. If the museum asked you to determine whether there are any security interests in the painting, what would you advise? [a] check the filings against John's Art Gallery, and if there are none, then the painting is free of security interests. [b] Check the filings against Winston, and if there are none, then the painting is free of security interests. [c] There may be an unrecorded security interest, which could only be determined by obtaining the documentation of the previous sales of the painting. [d] There may be an unrecorded security interest, but the general rule is that transferees take free of security interests.

Meredith, an astronaut, borrowed $8,000 from Knight Finance and used the funds to purchase a chess set for personal use and display in her home. Meredith authenticated a security agreement, granting to Knight Finance an enforceable security interest in the chess set. Knight Finance did not file any financing statement. Two weeks later (and without the knowledge or consent of Knight Finance), Meredith sold the chess set to a merchant (for its inventory) for $10,000. Meredith promptly deposited the $10,000 into her checking account at Bishop Bank. Three days later, Meredith drew a check on this account for $12,000 to purchase a rare comic book. Six weeks have passed since Meredith sold the chess set to the collector. Knight Finance has discovered the unauthorized sale. Evidence reveals that Meredith's checking account had a $5,000 balance immediately before she deposited the $10,000. Following the deposit, the account balance has been as low as $0 and as high as $18,000. The current balance is $13,000. The merchant still holds the chess set, and Meredith still owns the rare comic book. And Meredith filed a bankruptcy petition this morning. In a priority dispute with the bankruptcy trustee (who will stipulate that the facts raise no voidable preferences), Knight Finance can assert a superior interest in A. The chess set, the comic book, and up to $10,000 in Meredith's checking account. B. The chess set and the comic book, but not any part of Meredith's checking account. C. The chess set, but not the comic book or any part of Meredith's checking account. D. Neither the chess set, the comic book, nor any part of Meredith's checking account.

On February 2, Creditor 1 lends D $2,000 and obtains a security interest in D's existing equipment. On March 2, D seeks a loan from Creditor 2. Creditor 2 asks D if he has granted anyone a security interest, and D responds, "Yes. I granted Creditor 1 a security interest in equipment." Creditor 2 nevertheless lends D $2,000 and obtains a security interest in the same equipment. Creditor 2 files a financing statement on March 3. Creditor 1 files its financing statement on April 2. Whose claim has priority? A. Creditor 1, because its security interest was first to attach. B. Creditor 1, because Creditor 2 had actual knowledge of the security interest of Creditor 1. C. Creditor 2, because it was first to file or perfect. D. Both have a claim that is prorated according to the amount of the debt.

On January 10, S lends D $10,000 and obtains a security interest in all of D's inventory. As of January 10, D's bank account has a $3,000 balance (not from proceeds). D then makes the following deposits and withdrawals: On January 13, D deposits $9,000 from the sale of a vacant lot. On January 16, D deposits $4,000 from the sale of the inventory. On January 18, D withdraws $6,000 from the bank account for rent, payroll, and other expenses. What is the extent of S's security interest in D's bank account under § 9-315(b)? A. $1,000. B. $3,000. C. $4,000. D. $7,000.

On January 15, D buys an item of equipment from Creditor 1 on credit and grants Creditor 1 a security interest in his equipment. Creditor 1 delivers the equipment on January 18. Creditor 1, however, delays filing a financing statement until January 27. Meanwhile on January 22, D borrows from Creditor 2, which obtains a security interest in the same equipment. Creditor 2 perfects by filing a financing statement on January 22. Which security interest has priority in this item of equipment? A. Creditor 1, because it was first to file or perfect. B. Creditor 2, because it was first to file or perfect. C. Creditor 1, because it has a PMSI that has obtained a super-priority. D. Creditor 2, because Creditor 1 did not timely file to obtain a super-priority.

On January 2, 2009, a consumer debtor bought a home computer on credit from Sears and granted Sears a security interest in it. On January 5, 2009, the sheriff levied on the computer to satisfy a judgment creditor's judgment against the debtor. On January 25, 2009, Sears filed a financing statement. Who has priority in the computer as between Sears and the judgment creditor? A. The judgment creditor, because judgment liens always have priority over security interests. B. The judgment creditor, because Sears did not timely file its financing statement. C. Sears, because it was perfected at the time the judgment creditor levied. D. Sears, because it filed in time to obtain priority over the judgment creditor.

Susan borrows $5,000 from Friendly Bank on January 1. She also signs a valid security agreement granting Friendly a security interest in her existing television set. She uses the loan funds to take a trip to Bermuda. Friendly Bank does not file a financing statement. Susan defaults on her loan on May 1, and Friendly accelerates the debt. Friendly sends one of its collection agents to Susan's house on May 15 to repossess the television set. Susan allows the person to come into her home to take the set. She does not object to the repossession in any way. The next day, on May 16, Friendly sells the television to one of its tellers for $2,500, which is the fair market value of the used set. On May 17, Susan files a Chapter 7 bankruptcy petition. Susan's trustee in bankruptcy demands the Friendly Bank give the trustee the $2,500 proceeds of the sale. Friendly Bank A. can keep the $2.500. B. must pay the trustee the $2,500 because the trustee has the status of a lien creditor under state law. C. must pay the trustee the $2,500 because Friendly's repossession of the television set was a preference. D. must pay the trustee the $2,500 because it breached the peace by entering Susan's house to repossess the set.

Wholesaler Dealers, Inc. ("Wholesaler") sells merchandise to Retailer Department Store ("Retailer") on open account, resulting in an account of $1,500 due January 15. Wholesaler sells the account to Factor Finance Co. ("Factor") for $1,350. The account is a significant part of the outstanding accounts of Wholesaler and Factor frequently purchases accounts from Wholesaler. No financing statement is filed. If Wholesaler goes bankrupt on January 10, the account will belong to: A. Retailer. B. Wholesaler. C. The bankruptcy trustee. D. Factor.

ZinnMark Fashions operates several retail clothing stores. On May 1, Bank entered into a binding commitment to make advances to ZinnMark Fashions in an aggregate amount not to exceed $2 million. On that date, ZinnMark Fashions executed a security agreement in which it granted to Bank a security interest in all of its inventory, accounts receivable, and equipment. The security agreement included an after-acquired property clause and a future advance clause. Bank filed a proper financing statement with the appropriate official on May 8. Pursuant to its binding commitment, Bank made the following advances to ZinnMark Fashions (none of which have been repaid): DATE AMOUNT 5/8 $300,000 7/12 $200,000 8/3 $400,000 8/22 $100,000 9/9 $300,000 On July 1, the IRS assessed a $700,000 tax lien against ZinnMark Fashions. The IRS filed a tax lien notice with the appropriate officials on August 1. Bank discovered the tax lien notice on August 21. Assuming that the type and value of collateral are adequate, the IRS lien will be subject to Bank's security interest that secures debt of A. $1,300,000. B. $1,000,000. C. $900,000. D. $500,000.

Two years ago, Omega Bank loaned $1 million to Allegro Music Company ("AMC"), a Texas corporation that operates two retail stores in Dallas, from which it sells musical instruments, songbooks, and related items. The loan was secured by an enforceable security interest in AMC's inventory, equipment, and accounts. The security agreement included an after-acquired property clause and prohibited AMC from selling any unit of collateral, except for inventory sales to customers who paid with cash, a check, or a debit card. Omega Bank perfected its security interest by filing a financing statement within days after funding the loan. Six months ago, AMC sold a $35,000 harp to Ima (a Dallas resident). Ima executed a promissory note (an industry practice for such an expensive purchase), agreeing to make equal monthly payments for five years. Ima is a professional musician and will use the harp in a studio where she earns her livelihood by giving private lessons. Ima has no knowledge of the business relationship between Omega Bank and AMC. Two months ago, AMC sold some in-house computer equipment to Hewey Dell, an employee (and Dallas resident), for his personal use. Hewey was not aware of the business relationship between Omega Bank and AMC. In a priority dispute between Omega Bank and Ima over the harp, A. Omega Bank wins, because its security interest in the harp survived AMC's disposition of it. B. Omega Bank wins, because Ima is not using the harp as a consumer good. C. Ima wins, because she can invoke the protections afforded to a buyer in the ordinary course of business. D. Ima wins, because Omega Bank filed a new financing statement against her. In a priority dispute between Omega Bank and Hewey over the computer equipment, A. Hewey wins, because he is using the computer equipment as a consumer good. B. Hewey wins, because he is a buyer in the ordinary course of business. C. Omega Bank wins, because AMC's sale of the computer equipment violated the terms of its security agreement. D. Omega Bank wins, because Hewey is AMC's employee.

C Ans C, He bought equipment, he didn't buy their inventory so he's not a BIOC.

Same facts as prior slide. On June 25, which of the following is true with respect to the check? A. Finance Company has no security interest in the check. B. Finance Company has a security interest in the check, but the security interest is not perfected. C. Finance Company has a perfected security interest in the check. D. Whether Finance Company has a perfected security interest in the check depends on whether it is a holder in due course.

C under the same office rule.

On October 1, Beth's Shoe Store applied for a loan at State Bank, which on that date filed a properly completed financing statement in the proper place. The financing statement described the collateral as "inventory of shoes, presently existing and after-acquired." On October 5, Beth's Shoe Store borrowed $500 from Loan Shark Finance Company, giving it possession of 20 pairs of expensive basketball shoes from its inventory as collateral for the debt. The transaction between Beth's and Loan Shark was not evidenced by a writing. On October 10, State Bank irrevocably committed to a $15,000 line of credit for Beth's. On October 12, Beth's executed a security agreement, granting State Bank a security interest in the inventory mentioned above. The security agreement covered the shoes delivered to Loan Shark. When was State Bank's security interest perfected? A. October 1. B. October 10. C. October 12. D. It never became perfected. After State Bank's security interest was perfected, which party had priority as to the basketball shoes delivered to Loan Shark? A. State Bank. B. Loan Shark. C. Their security interests have equal priority. D. Neither party had a valid security interest.

C, value October 10th when it committed. A

A department store sells a customer a pair of socks for $8.99 for the customer's personal use. The customer uses his store credit card, and the receipt signed by the customer states that the store takes a security interest in the socks. Which of the following suggestions would you give the department store? [a] To perfect the security interest, it must file int he central filing office. [b] To perfect the security interest, it must file the country in which the customer resides. [c] The security interest is automatically perfected because it is a PMSI. [d] The security interest is automatically perfected because the value of the goods is less than $10.

Joe borrows Bob's tractor for the weekend. Without Bob's knowledge or approval, Joe obtains a loan from Bank using the tractor as security for the loan. Bank disburses the loan funds to Joe on the same day that Joe signed the security agreement. Does Bank have a security interest in the tractor? Would your answer change if Joe stole the tractor from Bob?

Not an enforceable security interest because Joe had no rights in the collateral. He only had mere possession. No power to transfer these rights. Still not enforceable so no.

Earlier this year, Farmer Smith sold garlic, rosemary, and other spices on credit to Pasta Company. The spices had a value of $1,000. Farmer Smith took and perfected a security interest in the spices by filing his financing statement before delivering the spices to Pasta Company. During the same month, Farmer Jones sold tomatoes on credit to Pasta Company. The tomatoes had a value of $2,000. Farmer Jones took a security interest in the tomatoes and perfected it by filing a financing statement after delivering the tomatoes to Pasta Company, but before the tomatoes became subject to any processing. Pasta Company used the spices and tomatoes to create several bottles of a popular pasta sauce used at several restaurants. Later, Pasta Company defaulted on its obligations to Farmer Smith and Farmer Jones when Smith's unpaid debt was $800 and Jones's unpaid debt was $1,200. A liquidator sold the bottles of pasta sauce for $1,500. The liquidator should distribute A. $800 to Farmer Smith if he filed first, and the remaining $700 to Farmer Jones. B. $1,200 to Farmer Jones if he filed first, and the remaining $300 to Farmer Smith. C. $500 to Farmer Smith and $1,000 to Farmer Jones. D. $600 to Farmer Smith and $900 to Farmer Jones. How would your analysis change if the liquidator sold the bottles of pasta sauce for $2,100?

C; 2) You have enough money to pay both in full, the $100 left over would go back to pasta co

On June 1, Dealer sold a freezer on credit to Restaurant Corp. Under terms of the contract executed by both parties on that date, Dealer retained an enforceable security interest in the freezer to secure repayment of the purchase price. Dealer delivered the freezer to Restaurant on June 10. Dealer filed a proper financing statement with the appropriate official on June 18. Unbeknownst to Dealer, Restaurant had filed a Chapter 7 bankruptcy petition on June 12. Which statement is true? A. Dealer's interest in the freezer was automatically perfected as a purchase-money security interest. B. The freezer may be "exempt property" in the bankruptcy and thus is not subject to Dealer's security interest. C. Dealer did not violate the automatic stay by filing a post-petition financing statement. D. By filing its petition under Chapter 7, Restaurant is seeking reorganization.

C; This is a PMSI and within 30 days from date of delivery which is June 10th. Kinsler said that even if this was a fixture didn't have to do a fixture filing to beat the bankruptcy trustee.

Eight months ago, Sandra bought a dining room suite on credit from Friendly Furniture for everyday use in her home. To secure repayment of the purchase price, Friendly Furniture retained a security interest in the furniture. Friendly Furniture never filed a financing statement, but its security agreement expressly prohibited Sandra from disposing of the furniture or using it as collateral to secure any other debt. Two months ago, and without the permission of Friendly Furniture, Sandra sold the dining room suite. Friendly Furniture discovered the sale and has sued the buyer for conversion of its collateral. Friendly Furniture will A. Lose the lawsuit because its security interest in the furniture was never perfected. B. Lose the lawsuit if the sale generated cash proceeds that remain identifiable. C. Lose the lawsuit if the buyer was a good faith purchaser, with no knowledge of Friendly Furniture's interest, who is using the dining room suite as a consumer good. D. Win the lawsuit. Assume that Friendly Furniture timely filed a financing statement against Sandra and the dining room suite at the time of her purchase. How would your analysis change under these revised facts?

C; friendly furniture would probably win. This is the garage sale exception (anytime a consumer buys from a consumer). Yes, if a financing statement is filed the consumer to consumer exception would not apply.

On July 1, Bank executed a binding commitment to lend up to $750,000 to Clinic in one or more advances. On July 6, Bank (with Clinic's permission) filed its financing statement against Clinic's equipment. On July 8, Clinic requested the initial advance of $200,000. On July 11, Clinic executed a written security agreement granting to Bank a security interest in Clinic's existing and after-acquired equipment to secure repayment of the loan. Bank funded the $200,000 advance on July 14. Bank's security interest will attach to an X-Ray machine, acquired by Clinic on July 9, on (A) July 8. (B) July 9. (C) July 11. (D) July 14. Bank's security interest will attach to an MRI machine, acquired by Clinic on July 12, on (A) July 6. (B) July 11. (C) July 12. (D) July 14.

C; value was given 1st; debtor had rights the 9th and 11th was the agreement C **Promissory notes are considered instruments**

Devine yearns for a purple crushed velvet swimming suit. He needs to borrow $5,000 to acquire it from Bingham's. On January 10, 2009, he bought the suit, signing a document that purported to grant Bingham's a security interest in "all of debtor's consumer goods, including after-acquired," which was intended to secure the full purchase price of the velvet suit. On November 22, 2009, Devine realized that he was nuts to pay for such a ridiculous suit because the purple crushed velvet clashed with the color of his pool. The true problem, though, is that Devine was no longer able to make payments on the suit and he defaulted. Under the provisions of Article 9, which of the following items could Bingham's NOT rightfully repossess? a) A washing machine that Devine bought in the summer of 2008 and installed in his home. b) A TV set purchased on January 19, 2009 and used in Devine's living room. c) A dishwasher that Devine bought on October 12, 2009 and installed in his home. d) Bingham's could repossess all three items.

C; you can only take after acquired interest in consumer goods for 10 days.

H bought a table for his dining room on credit from FSC, signing a contract in which H promised to pay FSC $100 a month for 12 months and granted FSC a security interest in the table. If FSC granted Bank a security interest in the collateral, how would you described the collateral in the FSC-Bank transaction?

Chattel Paper

Assume FMC borrows money from Bank using Bob's security agreement and promissory note as collateral for the loan. How is Bank's collateral classified? Would your answer change if Bob had leased the car from FMC?

Chattel paper. Instrument + security agreement in a particular piece of property. Still would be chattel paper.

Meredith bought her first home in March of this year. Fidelity Finance financed the purchase and holds the mortgage on the home, "all fixtures now or hereafter affixed thereto," and the underlying real estate. The mortgage (which is not a construction mortgage) was filed in the appropriate real property records in March. On October 1, Meredith purchased a chandelier for her home on credit from ZinnCo Lighting, which retained an enforceable security interest in the chandelier as of that date. ZinnCo installed the chandelier (a "fixture" under applicable law, and not readily removable) at Meredith's home on October 18. ZinnCo's security interest in the chandelier (A) is not automatically perfected. (B) is automatically perfected, but only until the chandelier becomes a fixture, at which time automatic perfection ceases. (C) enjoys priority over the competing claim asserted by Fidelity Finance in December, but only if ZinnCo filed a proper fixture filing no later than twenty days after ZinnCo acquired rights in the chandelier. (D) enjoys priority over the competing claim asserted by Fidelity Finance in December if ZinnCo filed a proper fixture filing on November 5.

Molly, a resident of Minneapolis, has hired Quality Contractors to install granite countertops and new cabinets and lighting in the kitchen of her vacation home in Phoenix. Quality Contractors is financing the remodeling on a secured basis. The countertops, cabinets, and lights will serve as collateral. Once installed, all of these items will be "fixtures" under local law. Quality Contractors A. Has no reason to file a fixture filing because a PMSI is automatically perfected in the consumer goods. B. Has no reason to file a fixture filing because Article 9 excludes from its scope a security interest in residential fixtures. C. Should file a fixture filing in the appropriate Minnesota county. D. Should file a fixture filing in the appropriate Arizona county.

On April 20, Needless Markup Department Store obtained a judgment against Danny Debtor on the overdue, unsecured charge account that he maintained with the store. Debtor was a sole proprietor. On May 1, Debtor borrowed $2,000 from Friendly Finance Company with a computer he used in his business to serve as collateral for the loan. Friendly insisted on taking possession of the computer to secure payment of the loan, and Debtor agreed (he had another computer he could use). On that same day, Debtor delivered the computer to Friendly and Friendly gave Debtor $2,000. On May 3, the levying officer demanded that Friendly Finance turn over Debtor's computer pursuant to a writ of execution that was issued on May 3 to enforce Needless Markup's judgment. In a contest between Needless Markup and Friendly Finance, who has priority over the computer? A. Needless Markup, provided that it lacked notice of Friendly Finance's security interest at the time of the levy. B. Needless Markup, regardless of notice of Friendly Finance's security interest. C. Friendly Finance, provided it lacked notice of Needless Markup's judgment against Debtor. D. Friendly Finance, regardless of notice of Needless Markup's judgment against Debtor.

On February 1, without authorization from the debtor, a bank filed a financing statement covering the debtor's inventory and accounts. On March 1, the debtor signed a security agreement granting a bank security interest in inventory. To what extent is the financing statement effective? [a] It was an effective filing in inventory and accounts when made on February 1. [b] On March 1, it became an effective filing in inventory and accounts as of February 1. [c] It was an effective filing in inventory when made on February 1. [d] On March 1, it became an effective filing in inventory as of February 1.

On January 15, Creditor 1 loans money to D and takes a security interest in all of D's equipment, now owned and after acquired. Creditor 1 immediately files. On February 1, Creditor 2 sells D on credit an X1 copier that D will use in its office and takes a security interest in the X1. Creditor 2 checks the filing system, finds the filing by Creditor 1, and immediately files. Which secured party has priority in the X1 copier? A. Creditor 1, because it was first to file or prefect. B. Creditor 1, because Creditor 2 had knowledge of its security interest in equipment. C. Creditor 2, because it was first to file or perfect. D. Creditor 2, because it has a PMSI that has obtained a super-priority.

On March 1, a debtor signed a security agreement granting bank a security interest in inventory. On March 3, the bank filed a financing statement covering debtor's inventory and accounts. To what extent is the filing statement effective? [a] It is an effective filing in inventory and accounts as of March 1. [b] It is an effective filing in inventory and accounts as of March 3. [c] It is an effective filing in inventory as of March 1. [d] It is an effective filing in inventory as of March 3.

On September 8, 2006, Holland gave Bank a security interest in his tractor, and Bank properly perfected. The security agreement provided that Holland would keep the tractor in Florida. Nevertheless, on February 1, 2007, Holland took the tractor to Iowa and sold it to CB&O, a tractor dealer. On June 21, 2007, Jarrett bought the tractor from the inventory of CB&O. Who has priority as between Bank and Jarrett? A. Jarrett, because Bank had four months from the time the tractor was taken to Iowa to refile in Iowa, and it did not refile. B. Jarrett, because he bought from CB&O as a buyer in ordinary course of business. C. Bank, because Holland breached the security agreement when he took the tractor to Iowa. D. Bank, because Article 9 provides that a security interest is good against purchasers unless an exception applies, and no exception applies.

Redbird Bank has a perfected security interest in the current and after-acquired inventory of Dealer, a merchant that sells baseball cards, autographed sporting goods, and other sports memorabilia. The security agreement permits Dealer to sell its goods to customers who pay with cash, a debit card, a credit card, or a check. Credit sales (excluding credit card transactions) are prohibited. Last week, Mickey bought two autographed baseballs from Dealer (which he intends to add to his collection that he displays at his law office). At Mickey's request, Dealer allowed him to pay by executing a negotiable, unsecured promissory note for the purchase price, payable in ninety days. After Redbird Bank discovered the transactions and its terms, it sued Mickey for conversion. Mickey responded by invoking the protection afforded by section 9-320(a) to buyers in the ordinary course of business. Mickey cannot be a buyer in the ordinary course of business A. Because the sale violated Redbird Bank's security agreement. B. Because the baseballs are not inventory in Mickey's hands. C. If Mickey had actual knowledge of Redbird Bank's filing. D. If negotiable, unsecured promissory notes are not typical forms of payment for Dealer or the sports Memorabilia industry.

Zeina borrows $10,000 from Alaska Federal Credit Union (AFCU) to purchase a used car. Zeina granted AFCU a security interest in the car and used the $10,000 loan to purchase the car. Later, when Zeina left the U.S. for a 2-year teaching position in Saudi Arabia, she put the car into storage with JKL Wholesale & Storage (JKL). After one year in Saudi Arabia, Zeina stopped paying her storage rental fee and defaulted on the loan with AFCU. Assume that under state law, a common law possessory lien arises in favor of someone who provides storage services for which it is not paid. Which of the following is most likely to be true?A) AFCU's purchase-money security interest in the car is automatically perfected and thus has priority over JKL's lien. B) If Zeina also granted JKL a security interest in any personal property stored on the premises to secure unpaid storage fees, this security interest would displace JKL's possessory lien and JKL could no longer assert that possessory lien. C) If AFCU has the sheriff levy on the car before JKL obtains a judgment for the unpaid storage fees, AFCU will have first priority over JKL as to proceeds from the sale of the car, as the "first in time" lien creditor. D) If AFCU demands that JKL turn over possession of the car, JKL can properly refuse because JKL's lien has priority over AFCU's security interest.

ZinnMark is a Delaware corporation that operates three retail stores in Seattle, from which it sells and leases computers, photocopiers, and other office equipment to commercial and consumer customers. ZinnMark's current and after-acquired inventory is subject to a perfected security interest held by MegaBank. The security agreement prohibits asset dispositions, other than those in the ordinary course of ZinnMark's business. Two months ago, ZinnMark engaged in a routine cash sale of three photocopiers to a Seattle law firm (structured as a limited liability company organized under Washington law) for an aggregate sales price of $30,000. In a priority dispute between MegaBank and the law firm over the three photocopiers, A. MegaBank will lose because it never filed a financing statement in Washington, the state in which the law firm is located. B. MegaBank will win if the law firm had knowledge, before it purchased the photocopiers, of MegaBank's security interest. C. MegaBank will win if the law firm had knowledge, before it took possession of the photocopiers, of MegaBank's filing in Delaware. D. MegaBank will lose.

On February 1, John Brown granted a security interest in all of his presently existing and after-acquired equipment to Secured Party National Bank. The security interest attached on that date. On March 1, Secured Party filed a properly completed financing statement in the proper place, properly naming the debtor as John Brown (with the last name (Brown) properly being listed first). The collateral was described in the financing statement as "debtor's presently-owned and after-acquired equipment." On June 1, John Brown legally changed his name to John Clinton. It is now December 1. As to the equipment acquired by Brown (Clinton) before June 1: A. Secured Party has no security interest. B. Secured Party has a security interest, but it became unperfected on June 1. C. Secured Party has a security interest but it became unperfected on October 1. D. Secured Party has a perfected security interest at this time. As to the equipment acquired by Brown (Clinton) during August: A. Secured Party has no security interest. B. Secured Party has a security interest, which has been unperfected since it attached. C. Secured Party has a security interest, which became unperfected on October 1. D. Secured Party has a perfected security interest at this time. As to the equipment acquired by Brown (Clinton) during November: A. Secured Party has no security interest. B. Secured Party has a security interest, which has been unperfected since it attached. C. Secured Party has a security interest, which became unperfected on December 1. D. Secured Party has a perfected security interest at this time.

D D"4 months after the financing statement becomes misleading" B; it was bought after the 4 month period

R has a non-construction mortgage on D's office building that is properly recorded. S sells D a central air conditioning unit for the office building on credit, takes a security interest in the air conditioning equipment, and immediately makes a fixture filing. Does S's security interest have priority over R's mortgage? A. No, because the general rule is that a mortgage interest has priority over a security interest in fixtures. B. No, because in order to obtain priority, S must file before loaning the money and must notify R. C. Yes, because the general rule is that a security interest in fixtures has priority over a mortgage interest. D. Yes, because the general rule that a mortgage interest has priority over a security interest in fixtures has an exception for a PMSI in fixtures that is timely filed. Would your answer change if R has a construction mortgage and the air conditioning unit was installed prior to completion of the construction project?

D - needs to be installed before end of construction Yes, but after completion answer would not change.

Debtor financed his purchase of a truck with Bank. Debtor signed a security agreement granting Bank a security interest in the truck. Debtor also signed an installment note providing for 48 monthly payments, with each payment due on the first of the month. The security agreement expressly states that failure to make a payment on time is an event of default. Debtor almost never made a payment on time. Bank sent Debtor letters complaining about the late payments, but it accepted them. Debtor is now late again in making a payment, and Bank has had enough. Can Bank treat Debtor as being in default and repossess Debtor's truck? A. Yes, because Article 9 provides that failure to pay on time is an event of default. B. Yes, because the agreement provides that failure to pay on time is an event of default. C. No, because it is unconscionable to repossess property merely because of late payment. D. No, because Bank has waived its right to insist on strict performance of the contract.

D; bank has to give notice saying that from now on strict compliance.

Bank has loaned a widget seller money secured by seller's inventory of widgets. Bank has read credible reports of a serious downturn in the widget business, and it wants to demand additional security under the following clause in the security agreement: Bank may accelerate payment or require additional collateral when it deems itself insecure. If the issue goes to court, what standard would a court apply in determining whether Bank was entitled to demand additional security? A. Whether the term in the security agreement was fairly negotiated. B. Whether a reasonable bank would have made the demand. C. Whether Bank honestly believed that the prospect of payment was impaired. D. Whether Bank honestly believed that the prospect of payment was impaired and a reasonable bank would have made the demand.

D; both must act in objective and subjective good faith.

On January 15, L obtains a $40,000 judgment against D Co. On February 2, S lends D Co. $20,000 and obtains a non-purchase money security interest in D Co.'s office equipment. On February 5, L tries to collect her $40,000 judgment against D Co. by having the sheriff levy on D Co.'s office equipment. S perfects its security interest by filing on February 7. Which party has priority? A. S, because a security interest always has priority over an execution lien. B. S, because a secured creditor with a PMSI has 20 days after the debtor receives delivery of the collateral to file. C. L, because an execution lien always has priority over a security interest. D. L, because S's security interest was unperfected at the time of execution. Would your answer change if S had a PMSI in the office equipment, which was delivered to D Co. on February 2?

D; but answer would change if it was a PMSI because of the 20 day grace period.

Part Six of Article 9 provides the secured party with specific rights and remedies following "default." For a definition of that term, the debtor and secured party should consult A. § 1-201. B. § 9-102. C. § 9-601. D. the security agreement.

D; if its not in the security agreement the meaning is ordinary meaning failure to pay.

On June 1, Cheesehead Farms, Inc. which does business in both Illinois and Wisconsin, borrowed $10,000 from First Security National Bank and gave First Security a security interest in its 30 cow-milking machines. At that time the machines were located in Illinois and the parties expected that they would remain there. After receiving the cash but before First Security filed, Cheesehead changed its corporate mind in good faith and, on June 10, moved the machines to Wisconsin. On June 15, First Security filed a properly completed financing statement in Illinois. At all relevant times, Cheesehead had its chief executive office in Wisconsin, but was incorporated in Delaware. A filing in Wisconsin: A. Is effective, because the goods are located there. B. Is effective, because the debtor's chief executive office is there. C. Is effective, because the goods are located there. D. Is ineffective. If a lien creditor levies on the cow-milking machines while they are still in Wisconsin, which state's law governs priority? A. Illinois B. Delaware C. Wisconsin D. Wisconsin, provided that the security agreement selects Wisconsin law.

D; remember you fie where the debtor is located. C; priority and the effect of perfection is where the collateral is located.

John loaned Mary $1,000 payable on October 1 and took a security interest in Mary's tickets to Red Sox games at Fenway Park. On October 2, Mary had not paid John, so he visited her office. She was not there, but she was expected back momentarily, so the receptionist, who knew John, allowed him to wait in Mary's office. On her desk, John spotted tickets to the World Series games at Fenway Park. He grabbed the tickets and left a note for Mary that said, "Ha Ha! I took the tickets. John." What is Mary's best claim against John? A. Mary was not in default. B. John did not give Mary notice before he took the tickets. C. John's taking of the tickets from Mary's office was a breach of the peace. D. None of the above is a good defense.

D; would be a breach of the peace if assistance of law enforcement officer was used.

How would you characterize a horse as collateral?

Depends on the use intended: consumer goods, farm product, inventory, equipment

11) When Chris Morley opened his bookshop, the landlord wanted security for the rent. They signed a lease agreement providing that all of the inventory would be subject to a lien in the landlord's favor and could be seized and sold if Chris defaulted in the rent payments. Is the landlord's lien required to be perfected under Article 9?

Dispute between landlord/tenant would not require perfection. Landlord liens are not covered because they are statutory or common law, but in this case, the security interest was consensual and the collateral is personal property, so it does fall under Article 9; it is not a landlord's lien as defined in the exceptions to Article 9.

Creditor loans Debtor $20,000 secured by Debtor's inventory. Debtor defaults, and Creditor repossesses the inventory. Creditor believes that the inventory is worth $15,000 and wishes to keep the inventory and reduce the debt owed by Debtor to $5,000. What must creditor do to accomplish this?

He must send notice to debtor and debtor has to send a signed written consent that this is ok because this is partial foreclosure.

BIG Machines leased a duplicating machine to Connie's Print Shop. The lease was for five years, and the rental payments over this period exactly equaled the current market price of the machine. The lease contract further provided that at the end of the five years Connie's Print Shop might purchase the machine outright by paying BIG Machines $5. BIG Machines did not file an Article 9 financing statement. Thereafter Connie's Print Shop borrowed money from the Octopus National Bank and signed a security agreement with the bank granting it an interest in all of the print shop's equipment. Octopus National duly perfected its security interest by filing a financing statement in the appropriate place. When Connie's Print Shop failed to repay the loan , Octopus National seized all of shop's equipment, including the duplicating machine. In the lawsuit, who gets the machine?

If this were really a lease, BIG Machines could take the copier back. However, Connie's Print Shop cannot leave the lease, and can purchase the goods for a nominal amount at the end of the lease, making this effectively a sale with BIG Machines trying to retain a security interest without filing a financing statement.

To create an enforceable security interest in ZinnCorp's assets that fall within the following defined terms, the parties cannot rely solely on the term. [a] commercial tort claims [b] inventory property [c] deposit accounts [d] payment intangibles

[a] commercial tort claims

In exchange for a loan, ABC Co. granted Bank a security interest in its inventory and equipment. ABC is incorporated in Indiana and has its principal office in Kentucky. Most of its inventory is located in Tennessee and most of its equipment is located in Kentucky. Bank is located in Illinois and has its principal office in New York. In which state should Bank file the financing statement? Where should Bank file if ABC is a general partnership?

Indiana because this is an incorporated debtor If ABC is a general partnership: You file where they're doing business, and if they're doing business in more than one place where their chief exec office is, Kentucky.

Debtor defaulted on his secured auto loan, so Bank plans to repossess his car. Before Bank can repossess the car, Bank is notified that Debtor has filed bankruptcy. May Bank repossess the car without approval of the bankruptcy court? Debtor defaulted on his secured auto loan, so Bank repossessed his car and is preparing to sell it. While the car is still in Bank's possession, Bank is notified that Debtor has filed bankruptcy. May Bank sell the car? Bank loaned money to Debtor on February 1, secured by Debtor's computer. Bank did not file a financing statement. Debtor files a bankruptcy petition on March 7. May Debtor now file a financing statement? A. Would your answer change if the loan was a PMSI and the computer—which was delivered to Debtor on March 1—is consumer goods? B. Would your answer change if the loan was a PMSI and the computer—which was delivered to Debtor on March 1—is business equipment?

No, if you do this it's contempt of court. No. No filing a financing statement would be considered a violation of the automatic stay. A) PMSI in consumer goods is automatically perfected. B) No it's not automatically perfected but you'd have 30 days from the date of delivery to file a financing statement. Because automatic stay does not cut off PMSI

Jane purchases a car on credit from ABC Motors. ABC has Jane sign a security agreement under which Jane grants ABC a security interest in the car. Jane takes possession of the car, and ABC files a financing statement in the Secretary of State's office. Is ABC's security interest perfected? ABC Motors is in need of cash, so it asks Bank for a loan. Bank agrees to loan money to ABC, but only if ABC will grant Bank a security interest in ABC's inventory of new and used cars. Bank and ABC execute a security agreement memorializing this understanding, and Bank disburses the loan funds to ABC. On the same day, Bank files a financing statement in the Secretary of State's office indicating its security interest in ABC's "inventory." Is Banks' security interest perfected?

No, it needs to be noted on the title. Yes, still inventory

Pursuant to a state statute permitting it to do so, an auto repair shop retains possession of a car when the owner fails to pay for the repairs. Is this an Article 9 secured transaction? If not, does Article 9 play any role with such liens?

No, it's not consensual, but it does play a role in priority.

Antiques R Us was the largest antiques store in the city, well known as a place where antique dealers could hire out space and exhibit their wares, with the store handling the sales and taking a commission on each one and returning to the dealers that remain unsold. When the store takes out a loan from Octopus National Bank and uses as collateral all its property, will the bank's security interest reach the items in the store that belongs to the dealers if the dealers have never taken the steps required of consignors under Article 9?

No, the business is well known to be a consignment store, so these consignments do not fall under Article 9 because they are not secret loans.

The loan agreement between Dickens Publishing and Octopus National Bank contains a negative pledge clause. Dickens agrees not to use any of its property as collateral for debt to other creditors. Is the transaction governed by Article 9?

No, the interest is not in a particular piece of property.

Suppose Dickens had agreed as follows: "Dickens agrees to repay Lender the entire principal of $18K on or before April 1, 2015. If Dickens cannot refinance its current debt to cover this amount or if another source of funds is unavailable, Dickens agrees to sell its inventory and equipment in order to repay lender." Is the transaction governed by Article 9?

No. The interest is not in a particular and currently identifiable piece of property. Also, an agreement to sell an asset to repay is still not a security interest.

Dealer borrowed money from Bank to finance the purchase of a stock of new cars and gave Bank a security interest in the new cars, which Bank perfected. Dealer then sold a car to Buyer for cash and chattel paper. Dealer then sold the chattel paper to Discount, who took possession of the chattel paper. Discount routinely buys chattel paper from Dealer and other car sellers. 1. Does Bank have a security interest in the car sold to Buyer? 2. Who has priority in the chattel paper? 3. Does Bank have a security interest in the cash received from Buyer? How long will that security continue to be perfected if Bank takes no action?

No. This almost certainly a buyer in the ordinary course of business. Discount under the 2nd exception to the general priority rules for the proceeds. Yes (proceeds)- perfection is automatic, but the cash must be traceable.

Last year, Norman lost his high-paying management position when his corporate employer merged with a competitor. Unable to find a similar position, Norman has suffered significant financial hardships and his creditors have turned aggressive. The county assessor has placed a statutory lien on his boat for unpaid property taxes. A neighbor who won a dog bite lawsuit against Norman in recent months has received a judgment lien on some of Norman's non-exempt investment property. Two nights ago his car was seized from the street in front of his home by an agent of the dealer exercising its rights as a creditor under the only contract signed by Norman (a "Promissory Note" under which the dealer retained title to the car until the purchase price was paid in full). And just this morning, the bank posted a foreclosure notice on his residence under a mortgage document executed by Norman at the time of purchase. Article 9 governs the property interest claimed by:

The car dealer, even though Normal did not execute a formal security agreement contract. Article 9 liens cannot be real property and they must be consensual.

Bank lends Debtor money and properly perfects a security interest in Debtor's inventory on March 1. On July 1, Seller sells Debtor new inventory and perfects and gives notice to Bank before Debtor receives the inventory. Debtor later sells on credit some of the inventory it purchased from Seller to Buyer. Buyer signs a promissory note to pay for the inventory. Who has priority in the promissory note? What if Debtor sold the inventory for cash? What if Debtor sold the inventory to Buyer upon Buyer's oral promise to pay within 30 days?

The seller has priority because the promissory note is an instrument Seller still has priority for cash Bank would have priority

Business Corporation leased a massive copier from Copies Inc for a five year period. At the outset of the lease the copier had a fir market value of $300K and a predicated ten year useful life. Over the course of the five year lease the rental payments would total to $330K. The lease provides that Business Corporation has the option to become the owner of the copier at the end of the five year period by paying Cope Inc the amount of $10K. Is this a true lease or a secured sale? Would we reach a different result if the copier's useful life were only 5 years?

There is no evidence Business Corp can walk way from the lease without liability (i.e is $10K a nominal amount?). The transaction is possibly a lease because the option to buy at the end of the lease is not an obvious business decision, but it may be when you compare $10K to $300K.

Big Sky Baking, Inc., is a Wyoming corporation with its only place of business in Fort Mercy, Colorado. Jane Smith is the majority shareholder of Big Sky. First Bank of New York, a Delaware corporation that has its principal office in New York, and Big Sky enter into a security agreement that has a choice of law provision that states, "This agreement shall be governed by the law of New York." In which state should First Bank file the financing statement?

Wyoming

ABC, Inc. pledged all of its promissory notes to Bank. When one of the notes came due, ABC asked for it back from Bank so that ABC could present it to the maker for payment. Bank released the note to ABC, relying on the 20-day period of automatic perfection. Instead of presenting the promissory note for payment, ABC sold it to X, who qualifies as a holder in due course. As to that promissory note, who prevails between Bank and X?

X prevails. X is a holder in due course and that will prevail over a perfected security interest

Yes

John is a professional photographer who lives in Chicago. He wants to borrow $2000 from his mother, who insist on collateral. Which of the following assets offered by John is a consumer good? [a] his wedding album [b] a certificate of deposit [c] a photocopier that he uses half the time for personal reasons and half the time for professional purposes [d] a claim against the State of Illinois for an income tax refund

[a] consumer good [b] either instrument or deposit account [c] when in doubt, equipment (consumer good is primarily for personal use) [d] general intangible

ABC Motors is in need of cash, so it asks First National Bank for a loan. ABC offers to grant a security interest in its checking account at First National Bank as collateral for the loan. - Is this transaction covered by Article 9? - Does FNB need to do anything to perfect its security interest in ABC's checking account? - Would your answer to No 2 change if ABC's checking account was with Second National Bank?

Yes. No. Yes.

Assume instead that FMC sells all of its security agreements/ promissory notes to Capital Finance for 90% of face value. Is this sale covered by Article 9?

Yes. Outright sale of chattel paper.

LC secures a judgment against Debtor and has the sheriff seize the Debtor's property that is subject to Bank's security interest. 1. Ten days later, Bank loans Debtor more money, not knowing of the judicial lien. Does Bank have priority as to this future advance? 2. Same as No. 1, but Bank was aware of the judgment lien at the time it made the future advance. 3. Sixty days later, Bank loans Debtor more money, not knowing of the judicial lien. Does Bank have priority as to this future advance?

Yes. Withing 45 days Doesn't matter lien creditor within 45 days Yes because no knowledge.

A little more than five years ago, Len completed construction of a single-family home located on Homeacre, a lot that Len owned. Five years ago, Len and Tina entered into a valid five-year written lease of Homeacre that included the following language: "This house is rented as is, without certain necessary or useful items. The parties agree that Tina may acquire and install such items as she wishes at her expense, and that she may remove them if she wishes at the termination of this lease." Tina decided that the house needed, and she paid cash to have installed, standard-sized combination screen/storm windows, a freestanding refrigerator to fit a kitchen alcove built for that purpose, a built-in electric stove and oven to fit a kitchen counter opening left for that purpose, and carpeting to cover the plywood living room floor. Last month, by legal description of the land, Len conveyed Homeacre to Pete for $100,000. Pete knew of Tina's soon-expiring tenancy, but did not examine the written lease. As the lease expiration date approached, Pete learned that Tina planned to vacate on schedule, and learned for the first time that Tina claimed and planned to remove all of the above-listed items that she had installed. Pete promptly brought an appropriate action to enjoin Tina from removing those items. The court should decide that Tina may remove A. None of the items. B. Only the refrigerator. C. All items except the carpet. D. All of the items.

You look at the intent of the annexor to determine who has priority in fixtures. D

Brown & Williamson Tobacco Co has a claim against CBS Inc for tortious interference with a contract between B&W and one of its employees, Jeff. To finance the lawsuit, B&W borrows money from First Bank and grants First Bank a security interest in the tort claim. In the security agreement, First Bank should describe the collateral as: [a] Intangible property [b] General intangibles [c] Commerical tort claims. [d] A claim against CBS Inc for tortious interference with a contract between B&W and one of its employees, Jeff.

[D] Not sufficient to list as commercial tort claim. Must list the specific tort claim.

Creditor wishes to take a security interest in all of the assets of a business debtor. The security agreement between Creditor and debtor describes the collateral as "all the debtor's personal property, including accounts, chattel paper, inventory, equipment, instruments including promissory notes, investment property documents, deposits accounts, letter go credit right, general intangibles, and supporting obligations." Is this description of the collateral sufficient under Article 9? [a] Yes, because it is a description by type of collateral defined in the UCC. [b] Yes, because it puts third parties on inquiry notice [c] No, because it is super generic. [d] No, because public policy does not allow a creditor to take a security interest

[a] Yes, because it is a description by type of collateral defined in the UCC

On March 1, Debtor purchases some expensive machinery on credit from Seller. No security interest is retained or otherwise created. On April 1, when the debt remains unpaid, Debtor delivers a written and signed security agreement to Seller, purporting to grant Seller a security interest in certain specified goods to secure payment of the outstanding obligation. Which one of the following statements is true? [a] The security interest has attached [b] The security interest has not attached because the antecedent debt is not consideration under traditional contract law, and thus Seller has not given value. [c] The security interest has attached only if Seller extended the payment schedule or otherwise relinquished some rights to enforce the debt, so that Seller will be deemed to have given value. [d] The security interest has attached only if it is in the machinery purchased from Seller.

[a] You can use a preexisting debt.

Grace wants to borrow $15,000 from her parents to upgrade the bathroom in her residence. Her parents insist on collateral. Grace offers her AKC-regstered and prize-winning Dalmatian, her automobile (which is already securing repayment of its purchase price), and her right to a federal income tax refund. Article 9 will cover the parents' property interest in: [a] all three items of collateral [b] only the dalmatian and the federal income tax [c] only the dalmatian and the automobile [d] only the automobile

[a] all three Dalmatian - consumer goods Automobile - consumer goods Tax refund - general intangible

Dr. L bills his patients for the services he renders. L then grants State Street Bank a security interest in these accounts as collateral for a $10,000 loan from the bank. L defaults on his loan to the bank, and the bank notifies the account debtors, instructing them to pay the bank. After receiving notice, patient Jim Rice refused to pay the bank because the contract between Rice and L says, "Rights under this contract may not be assigned." Can the bank recover payment from Rice?

for article 9 type assignments these clauses have no relevance for the purposes of art. 9

Super Fun Secured Transaction Times

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