Chapter 9. Default and Enforcement of Security Interest 135 results (showing 5 best matches)
- The 1999 Code does provide some secured parties with protection from liability described above in this section of the Nutshell. 1999 § 9-628 is an exculpatory provision designed to protect secured parties from liability that would otherwise result to unknown persons and under circumstances that would not allow a secured party to protect itself. See Comment 2 to 1999 § 9-628 and 1999 § 9-605. Additionally, if a secured party acts under the reasonable belief that the transaction is not a consumer transaction, the transaction will be treated as a non-consumer transaction for most purposes associated with liability of the secured party. However, the basis for the reasonable belief must involve a debtor’s or obligor’s representation. 1999 § 9-628(c). See also, Comment 2 to 1999 § 9-628.
- (2) The 1999 Code limits use of strict foreclosure in consumer transactions, that is, when the collateral is consumer goods. Where 60 percent of the cash price has been paid in the case of a purchase money security interest or 60 percent of the principal amount of the secured obligation has been paid, the secured party must sell the collateral within 90 days unless the secured party and the debtor otherwise agree. Additionally, in a consumer transaction, a secured party may not accept collateral in partial satisfaction of the debt it secures.
- When the debtor is in default, the rights and obligations of the secured party and the rights of the debtor are set forth in Part 6 of 1999 Article 9, §§ 9-601 through 9-628. The rights of the secured party in the collateral after the debtor’s default are of the essence of a secured transaction. They are the rights which distinguish the secured from the unsecured lender.
- This provision is intended to preserve the common-law right of subrogation of a surety or guarantor in a secured transaction. If such a surety or guarantor has to pay the debt and acquires the collateral, they become the secured party and the security interest against the original debtor remains. Moreover, such a payment by the surety or guarantor is not a sale or disposition of the collateral following default.
- The 1999 Code devotes 1999 § 9-626 to rules applicable to an action in which deficiency or surplus is an issue. In non-consumer transactions, the secured party need not prove compliance with the default provisions of the 1999 Code unless their compliance is placed in issue, in which case, the secured party does have the burden of proving their compliance. If the secured party fails to prove compliance, their recovery of a deficiency judgment is limited to an amount by which the sum of the secured obligation, expenses and attorneys’ fees exceed the greater of the proceeds of collection (including disposition of the collateral) or the amount of proceeds that would have been realized had the secured party complied with the default provisions of the 1999 Code which amount is presumed to be equal to the secured obligation and related expenses unless the secured party proves otherwise. 1999 § 9-626(a)(3). If the commercial reasonableness of the conduct of the secured party is at issue,...
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Chapter 1. Introduction 171 results (showing 5 best matches)
- Under the Article, distinctions based on form or the label given a transaction are not controlling, unless the transaction takes the form of a “pledge” where the secured creditor is in possession of the collateral, or where the secured party takes “control” of some forms of collateral, or where the transaction produces a “purchase-money security interest” (all of which are discussed and defined elsewhere in this Nutshell), in which case the Article in some instances treats the transaction differently from other secured transactions. For some purposes there are distinctions based on the kind of property which constitutes the collateral – industrial and commercial equipment, business inventory, farm products, consumer goods, accounts receivable, documents of title and other intangibles. 1999 Article 9 also covers some additional kinds of property not covered in the 1972 version. Where appropriate, the Article states special rules applicable to financing transactions involving a... ...a...
- The term “secured transaction” is not expressly defined in the Code, although there is a definition of the term “security interest” in pre-revision § 1-201(37) and revised § 1-201(b)(35), which basically defines that term as “an interest in personal property or fixtures which secures payment or performance of an obligation.” The definition of “security interest” in pre-revision § 1-201(37) continues by considering whether certain transactions (such as a sale of goods with reservation of title in the seller, a lease of goods, or a consignment) may create a security interest. Similarly, see revised §§ 1-201(b)(35) and 1-203. Further discussion of “leases” and “consignments” occurs later in this Nutshell. See Chapter 2, § 6d, e.
- This Nutshell discusses
- Secured Transactions under Article 9 of the Uniform Commercial Code is the subject of discussion in a large number of law review articles and published books. A Hornbook that deals extensively with Article 9 is White and Summers, Uniform Commercial Code, 5 ed., Student Edition, West Publishing Co., 2000. Article 9 (as well as other Articles of the Code) also is discussed in Stone, Uniform Commercial Code in a Nutshell, 6 ed., West Publishing Co., 2005. An exhaustive discussion of the background of secured transactions under the Code and under prior law is the early two-volume set, Gilmore, Security Interests in Personal Property, Little, Brown & Co., 1965, reprinted, Lawbook Exchange, 1999.
- While this Nutshell discusses secured transactions under Article 9, reference will be made where appropriate to provisions in other Articles of the Code, and particularly to various General Provisions and definitions in pre-revision and revised Article 1.
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Chapter 8. Bankruptcy or Insolvency of Debtor 101 results (showing 5 best matches)
- One of the reasons a creditor obtains a security interest in the debtor’s property is to better the creditor’s prospects of collection if the debtor ends up in bankruptcy. However, it may be said that the lot of the secured party in an Article 9 transaction is not always a particularly happy one, where the debtor files bankruptcy or an involuntary bankruptcy proceeding is filed by creditors against a debtor under the Bankruptcy Code. Bankruptcy has far-reaching effects on an Article 9 security interest. At the worst, the security interest may be set aside or rendered ineffective, with the secured party relegated to the position of an unsecured general creditor of the insolvent debtor. Even at best, as where the security interest is “impregnably” perfected, the secured party is usually subject to the jurisdiction of the bankruptcy court and sometimes to the whims of the debtor’s trustee in bankruptcy in dealing with the collateral. In short, the remedies of the secured party under...
- of secured status. The court may allow a claim “secured by a lien on property in which the estate has an interest.” Where the secured party is unable to obtain relief from an automatic stay (see § 3a of this chapter of the Nutshell) or obtain abandonment of the collateral (see § 3c of this chapter of the Nutshell), it is often necessary for the secured party to participate in the bankruptcy case.
- In certain instances, a trustee may borrow on the collateral on behalf of the debtor’s estate. Although a lender to the trustee will generally occupy a status inferior to that of a secured party with a perfected interest in the collateral, Bankruptcy Code § 364(d) permits borrowing by the trustee and the granting to the new lender of superpriority over the secured party with respect to the collateral. However, where such superpriority is allowed, there must be “adequate protection” to the secured party. (See discussion of “adequate protection” in § 3a of this chapter of the Nutshell.)
- Note: The same result obtains in Example 2 if Secured Party, instead of filing, had taken possession of the collateral on October 31. Repossession of the collateral perfects an otherwise unperfected security interest as it operates like a pledge. See Chapter 4, § 4a of this Nutshell.
- Bankruptcy Code § 363 provides for sale of the collateral by the trustee. In most instances, the sale must either be authorized by the secured party or authorized by the bankruptcy court. Provision is made for “adequate protection” of the interest of the secured party when the trustee sells the collateral (see discussion of “adequate protection” in § 3a of this chapter of the Nutshell). In most instances, the sale is free and clear of the security interest or any other interest; but the “adequate protection” given the secured party substitutes for the collateral now sold. Bankruptcy Code § 363 also authorizes use or lease of the collateral by the estate.
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Preface 4 results
- The discussion is comprehensive in scope, but necessarily limited in coverage of particular features of the law of secured transactions as embodied in Article 9 because this Nutshell is presented for use by students who seek a discussion of the basic elements of secured transactions law under the Code. The book should also be of aid to practicing attorneys who face problems in this area but lack experience in handling this particular area of law.
- The purpose of this Nutshell is to discuss the law embodied in Article 9 of the Uniform Commercial Code on Secured Transactions, primarily as set forth in the 1999 version. Since the fourth edition of this Nutshell, all states have enacted the 1999 version. That version of Article 9 was actually approved in 1998 by the co-sponsoring bodies of the Uniform Commercial Code, the American Law Institute and the National Conference of Commissioners on Uniform State Laws. However, it is known as the 1999 version and shall be referred to as such throughout this Nutshell.
- Perhaps a fitting student reaction to a course in Secured Transactions may be found in the following, which was supplied by an anonymous (presumed) student:
- The author gratefully acknowledges the countless hours spent by Kathleen E. Marbut in preparing the text.
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Chapter 7. Priorities of Secured parties and Others 207 results (showing 5 best matches)
- Third persons, such as other secured parties or creditors of the consignee are in much the same position, whether a consignment is intended as a secured transaction or not. Accordingly, 1999 §§ 9-103(d) and 9-324(b) set forth additional steps to be taken by a consignor in a true consignment transaction in order to obtain priority over a secured party who has filed with respect to inventory, including the consigned goods. The steps to be taken are the same as those required of a secured party with a purchase-money security interest in inventory under 1999 § 9-324(b). In other words, the consignor must file before the consignee receives possession of the goods, and must give written notification to any other secured party who has filed. The notification must state that the consignor expects to deliver goods on consignment to the consignee, and describe the goods by item or type. The notification must be given within five years before the consignee receives the goods.
- The interests of third persons which compete with the interests of the secured party in the collateral fall into two basic classes: purchasers of the collateral and other creditors of the debtor. Note that if the debtor files bankruptcy, the trustee, as a representative of the debtor’s creditors, also can become a competitor. Bankruptcy is considered in Chapter 8 of this Nutshell.
- In some instances, a consignment may be a secured transaction in the form of inventory financing and thus subject to Article 9 generally. Filing by such a consignor gives them a perfected security interest. Since the consignor has a purchase-money security interest in the consigned goods as inventory in the hands of the consignee, they may protect against claims of other secured parties with perfected security interests in the consignee’s inventory by taking the steps outlined in 1999 § 9-324(b), that is, by filing before the consignee receives the consigned goods and by giving appropriate notice to other inventory secured parties who have filed. See § 4b(2) of this chapter.
- In some other instances, a “true consignment” is not intended as a secured transaction, although the consignor may still file under Article 9 in order to protect their interest against creditors of the consignee. What are the rights of such a consignor who files, as against another person who has a perfected security interest in the inventory of the consignee, which inventory includes the consigned goods?
- “Under [1972 § 9-312(3)] the same rule of priority, but without the ten-day grace period for filing, applies to a purchase-money security interest in inventory, with the additional requirement that the purchase-money secured party give notification, as stated in subsection (3), to any other secured party who filed earlier for the same item or type of inventory. The reason for the additional requirement of notification is that typically the arrangement between an inventory secured party and his debtor will require the secured party to make periodic advances against incoming inventory or periodic releases of old inventory as new inventory is received. A fraudulent debtor may apply to the secured party for advances even though he has already given a security interest in the inventory to another secured party. The notification requirement protects the inventory financer in such a situation: if he has received notification, he will presumably not make an advance; if he has not received...
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Chapter 2. The Security Agreement 92 results (showing 5 best matches)
- This Code provision is based on the assumption that parties to a secured transaction intend to cover proceeds, unless otherwise agreed. There appears to be no purpose in requiring a specific reference to proceeds in a security agreement, and such a requirement would likely be a trap for a secured party who was careless in drafting a security agreement.
- A secured transaction may arise under 1999 Article 9 where personal property is leased and the lease is intended as security. See 1999 § 9-109(a)(1). Some difficulty has arisen in cases where a lease is regarded as a secured transaction and where the lessor (secured party) failed to file under Article 9 and thus had an unperfected security interest. Leases of personal property often closely resemble installment purchases of goods with retention of title in the seller-“lessor” until payment is made in full.
- Although a security agreement must meet the basic requirements described in § 2 of this chapter, certain kinds of transactions covered by written agreements or other records of agreements and purportedly not labeled as secured transactions may nonetheless be so regarded. In other words, some transactions may be cast in other forms in writings or other records but still fall within the category of secured transactions and thus within the scope of UCC Article 9.
- The transactions purportedly agreed upon may so closely resemble secured transactions as to be considered secured transactions, no matter how “disguised” in terminology. Examples such as sales reserving title in the seller, bills of sale, leases and consignments are discussed below.
- While it is necessary under the 1999 Code that a written security agreement be signed by the debtor or a record of security agreement be authenticated by the debtor, describe the collateral (and in one instance describe real estate) and perhaps have language that can be taken as evidencing an intent to grant a security interest, writings and other records purporting to evidence other kinds of transactions may nonetheless be considered as evidencing secured transactions. Such “disguised” secured transactions are discussed in § 5a of this chapter.
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Chapter 5. Perfection of Security Interest by Filing 96 results (showing 5 best matches)
- The debtor in secured transactions in which the collateral is not consumer goods may demand a termination statement when the debtor believes the secured debt is paid and the secured transaction is at an end. Within twenty days after a secured party receives an authenticated demand from the debtor, the secured party must send to the debtor a termination statement or file the termination statement. 1999 § 9-513(c). That duty of the secured party arises upon such demand from the debtor if there is no obligation remaining and no commitment to make an advance in the future. 1999 § 9-513(c)(1). The obligation to provide or file the termination statement also arises after debtor demand if accounts or chattel paper were sold but as to which the account debtor or obligor has discharged their obligation; or when the goods were subject to a consignment to the debtor but are not in the debtor’s possession; or the debtor did not authorize the filing of the initial financing statement. 1999 § 9-...
- This sets forth a special method of filing where a consignor or lessor desires to file without such a filing itself indicating an intent that the transaction be a secured transaction. In other words, a consignor or lessor may make a precautionary filing, although they may have good reason (such as a “tax” reason) to desire the transaction not be a secured transaction within Article 9. See Comment 2 to 1999 § 9-505. It should be noted that 1999 § 9-505 is an expanded version of former 1972 § 9-408. The 1999 Code provision “embrace[s] more generally other bailments and transactions” than just consignments and leases.
- When the period of a filing is about to expire, the secured party may extend the time of perfection by filing a continuation statement. The continuation statement may be filed within six months prior to the expiration of the five-year period of the original filing. 1999 § 9-515(d). A special provision is added by the 1999 Code that applies to financing statements filed in connection with public-finance transactions or manufactured-home transactions which indicates that a continuation statement may be filed only within six months before the expiration of the 30-year effective period specified in 1999 § 9-515(b).
- Notice filing has proved to be of great use in financing transactions involving inventory, accounts, and chattel paper, because it obviates the necessity of refiling on each of a series of transactions in a continuing arrangement under which the collateral changes from day to day. However, even in the case of filings that do not necessarily involve a series of transactions (e.g., a loan secured by a single item of equipment), a financing statement is effective to encompass transactions under a security agreement not in existence and not contemplated at the time the notice was filed, if the indication of collateral in the financing statement is sufficient to cover the collateral concerned. Similarly, a financing statement is effective to cover after-acquired property of the type indicated and to perfect with respect to future advances under security agreements, regardless of whether after-acquired property or future advances are mentioned in the ...if not in the contemplation of...
- In certain instances, it may be desirable to file under Article 9 with respect to a lease or consignment of personal property, even where the lease or consignment is not intended to confer a security interest. For discussion of leases or consignments as secured transactions, see Chapter 2, § 5d and e.
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Chapter 3. Relationship of the Parties Prior to Default 92 results (showing 5 best matches)
- Instead, Article 9 declares in 1999 § 9-202 that rights, obligations and remedies under Article 9 do not depend on the location of title in the debtor or in the secured party. In other words,
- A procedure is set forth in 1999 § 9-210 whereby a debtor may obtain from a secured party a statement of the amount due on the obligation and a statement of the collateral. Under 1999 § 9-210, the debtor can submit an authenticated record and request thereby a list of the collateral, a statement of account, or an accounting. The secured party has 14 days after receipt in which to respond. If the secured party fails to comply with the request for information, the secured party is liable to the debtor for $500 and for any damages caused by its failure. 1999 § 9-625(f). Additionally, to the extent a party is misled by the secured party’s failure to respond to a request for a list of collateral, the secured party may claim an interest only as shown on the debtor’s list. 1999 § 9-625(g).
- The location of title may be relevant under other law for certain other purposes outside the scope of Article 9, as for example determining the owner of goods under a tax law. Where title is relevant, the use of a form traditionally regarded as determinative of title might be considered as evidencing the intention of the parties. Moreover, where a secured transaction arises in connection with a sale of goods, the location of title to the extent that it is relevant may be determined by resorting to § 2-401.
- The financing statement filed may disclose only that a secured party may have a security interest in specified types of collateral. Third parties are normally told neither the amount of the obligation secured nor which particular assets are covered. Since subsequent creditors and purchasers may legitimately need more detailed information, it is necessary to provide a procedure under which the secured party will be required to make disclosure. On the other hand, the secured party should not be required to disclose details to any casual inquirer or competitor who asks for them. Thus, the right to demand disclosure is given only to the debtor, who will typically request a statement in connection with negotiations with subsequent creditors and purchasers or for the purpose of establishing their credit standing and proving which of their assets are free of the security interest.
- The owner of some pottery gives possession of the pottery to an art gallery and authorizes the gallery to sell the pottery for the owner, the gallery to receive a commission upon making a sale. If the art gallery cannot sell the pottery within six months, the pottery must be returned to the owner. This transaction is a “consignment.” Assume that Big Bank has previously made a loan to the gallery and the gallery granted Big Bank a security interest in all of its inventory of art presently owned and after acquired. Under the Code, the consigned pottery is subject to the claims of the gallery’s creditors. In other words, Big Bank’s security interest will attach to the consigned pottery because the debtor-gallery has the power to transfer rights to the secured party. If the security interest has priority over the owner-consignor’s interest under an applicable priority rule, Big Bank will be able to enforce the security interest in the consigned pottery even though the gallery held only
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Chapter 4. Perfection of Security Interest 87 results (showing 5 best matches)
- There are essentially two methods of structuring a secured transaction in investment property. One method does not involve taking possession or control of the investment property by the secured party; rather the secured party, after attaching the security interest, will file a financing statement. See 1999 § 9-312(a). Under the second method, the secured party takes “control” of the investment property. See 1999 § 9-314(a). There are different ways to take control of the investment property. For example, a secured party has control over a certificated security by taking possession of it, along with any necessary indorsements. See §§ 8-106(a), (b) and 8-301(a). As to uncertificated securities, the secured party takes control by being registered as the owner of the stock in the records of the issuing corporation or takes other steps to make certain that it can reach the rights of the debtor in the event it needs to enforce the security interest. The other steps include, for example,...
- A significant change regarding consignment transactions was made under the 1999 version of Article 9. The 1999 Article flatly states that the Article applies to consignments. See 1999 § 9-109(a)(4). The 1999 Article § 9-102(a)(20) defines “consignment” as a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale. The merchant must deal in goods of this kind under a name other than the name of the person making delivery and must not be an auctioneer and the merchant must not generally be known by its creditors to be substantially engaged in selling goods of others. See 1999 § 9-102(a)(20)(A). The aggregate value of the goods must be $1,000 or more at the time of delivery. See 1999 § 9-102(a) (20)(B). The goods must not be consumer goods immediately before delivery [1999 § 9-102(a)(20) (C)] and the transaction must not create a security interest that secures an obligation [1999 § 9-102(a)(20)(D)].
- Various methods exist for the perfection of a security interest. In all cases, perfection cannot take place before the security interest has attached under 1999 § 9-308(a), and additional steps often must be taken to perfect before or after the security interest has attached. The particular method which is effective to perfect a security interest depends on the kind of personal property serving as collateral in the secured transaction, and sometimes on the nature of the transaction itself. The various methods of perfection under the 1999 version of Article 9 (discussed in detail in this chapter) are as follows:
- Although a secured transaction perfected against the original debtor by filing need not be further filed by an assignee of the security interest, it should be noted that 1999 § 9-514 provides for the disclosing of an assignment in a financing statement and also provide for the filing of a separate written statement of assignment. Such filings as to an assignment are generally permitted on an optional basis, but are necessary when a continuation statement, statement of release, or termination statement is presented for filing signed by one other than the secured party of record. For discussion of filing when there is an assignment, see Chapter 5, § 9.
- Control of deposit accounts is acquired if the secured party is the bank with which the deposit is maintained or if the debtor, secured party and bank have agreed in an authenticated record that the bank will comply with the secured party’s instructions regarding disposition of the account funds, or if the secured party becomes the account holder, that is, the secured party becomes the bank’s customer with respect to the account. 1999 § 9-104. Control of electronic chattel paper is acquired essentially by the secured party being identified as the assignee of the chattel paper on the record of the secured party. 1999 § 9-105. As to a letter-of-credit right, the 1999 Code indicates that the secured party has control essentially if the issuer has consented to an assignment of the letter-of-credit proceeds. 1999 § 9-107; see also UCC § 5-114(c). The 1999 Code emphasizes that a security interest perfected by control in these collateral types remains perfected only while the secured party...
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Chapter 6. Choice of Law and Perfection in Multiple State Transactions 39 results (showing 5 best matches)
- Although general choice-of-law principles in commercial transactions are governed by pre-revision § 1-105 and revised § 1-301, those provisions have but limited application with respect to secured transactions. The reason is that most secured transactions questions do not settle rights as between the debtor and the secured party, but instead litigate claims to the collateral as between the secured party and third persons. Choice-of-law problems where the rights of third persons are at issue frequently involve the perfection of the security interest in multiple state transactions, or what law governs the effect of perfection or non-perfection. See pre-revision § 1-105(2) and revised § 1-301(g)(8).
- In pre-revision Article 1, the general choice-of-law rule is pre-revision § 1-105, which is applicable to various commercial relationships arising under different Articles of the Uniform Commercial Code. That general rule applies to secured transactions, at least as between the debtor and the secured party. See Comment 2 to 1999 § 9-301. Under pre-revision § 1-105(1), the parties may by agreement determine the law that governs their relationship, so long as the transaction “bears a reasonable relation” to the jurisdiction the law of which is selected. Failing such specification of the law of a particular state by agreement, a court in a Code state may apply its own law (the Code) to transactions “bearing an appropriate relation” to the state. This suggests the likelihood that, in the absence of an ...specifying the state whose law shall govern, a court will follow general conflict-of-laws principles and apply the law of the state having the most significant relationship with...
- Under revised § 1-301, the general choice-of-law rules set forth therein also apply to secured transactions, at least as between the debtor and the secured party. See again, Comment 2 to 1999 § 1-301. Under revised § 1-301, the parties also may by agreement determine the law that governs their relationship. Such an agreement is generally effective whether or not the transaction bears a relation to the law of the state selected by the parties’ agreement. See revised § 1-301(c). However, if one of the parties is a consumer, such an agreement is effective only if the transaction has a reasonable relationship to the state whose law is selected, and the agreement may not deprive the consumer of the protection of consumer protection law. See revised § 1-301(e). In the absence of an agreement specifying the law of a particular state, the rights and obligations of the parties are determined by the law that would be selected by the application of the forum state’s conflict-of-law principles....
- For most secured transactions under the 1999 Code, the law governing perfection and priority issues will be the law of the location of the debtor. Specifically, in most transactions in which the secured creditor is not in possession of the collateral, a so-called “nonpossessory” security interest, the law of the jurisdiction in which the debtor is located governs. 1999 § 9-301(1). The exceptions to the debtor-location rule for nonpossessory security interests include fixture filings, timber to be cut, and as-extracted collateral. 1999 § 9-301(3), (4). See discussion at § 5 of this chapter. Additionally,
- The 1999 Code brings within its scope collateral in the form of some deposit accounts and letter-of-credit rights. 1999 §§ 9-109(a)(1), 9-102(a)(29), (51). See also discussion of these collateral types as falling within UCC Article 9’s scope at Chapter 1, § 7e and Chapter 7, §§ 12 and 13. Secured transactions involving such collateral fell outside the scope of the 1972 Code. The inclusion of these types of collateral necessitated some new provisions applicable to multistate transactions in which deposit accounts and letter-of-credit rights serve as the collateral.
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Copyright Page 4 results
- Nutshell Series, In a Nutshell
- Thomson/West have created this publication to provide you with accurate and authoritative information concerning the subject matter covered. However, this publication was not necessarily prepared by persons licensed to practice law in a particular jurisdiction. Thomson/West are not engaged in rendering legal or other professional advice, and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional.
- Printed in the United States of America
- © West, a Thomson business, 2000
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Outline 74 results (showing 5 best matches)
- Publication Date: August 6th, 2007
- ISBN: 9780314172518
- Subject: Commercial Law
- Series: Nutshells
- Type: Overviews
- Description: Hagedorn’s Secured Transactions in a Nutshell provides extensive coverage of the 1999 version of UCC Article 9, now enacted by all states. Coverage of the 1972 version of Article 9 and pre-code law is included to provide historical perspective. The text covers: The scope of Article 9 The security agreement and attachment of the security interest Relationship of the debtor and secured party prior to default Perfection of the security interest by filing and other means Multistate choice of law and perfection issues Priority of the secured party and others in and out of bankruptcy Default and enforcement of the security interest