Black Letter Outline on Secured Transactions
Author:
Rusch, Linda J.
Edition:
2nd
Copyright Date:
2012
17 chapters
have results for secured transactions
Chapter V. Priority of Security Interests and Agricultural Liens 148 results (showing 5 best matches)
- In a transaction other than a consumer-goods transaction, the secured party has the burden to demonstrate the extent of the purchase money status of the security interest. UCC § 9–103(g). In such a transaction, a purchase money security interest remains a purchase money security interest even though it is refinanced, the goods or software secures nonpurchase money debt, or the purchase money debt is secured by collateral other than what was purchased. UCC § 9–103(f). In such a transaction, if payments are made on the debt, the payments are applied in accordance with the following hierarchy of preference: (i) any reasonable method to which the parties have agreed; (ii) in accord with the payor’s direction at the time of payment; (iii) to obligations that are not secured; or (iv) to obligations secured by purchase money security interests in the order those obligations were secured. UCC § 9–103(e). In a consumer-goods transaction, courts are directed to apply their own established...
- If a secured party has priority in chattel paper under the rule of UCC § 9–330, then the secured party has priority in the proceeds of the chattel paper that consist of the specific goods covered by the chattel paper if those goods are returned to the debtor in a transaction in which the debtor acquires rights in the goods even if the secured party’s security interest in those returned goods is unperfected. UCC § 9–330(c). Review Section D.10
- A security interest in goods is a purchase money security interest if one or more of three situations is present: (i) the security interest in goods secures the value given to enable the debtor to acquire rights in the goods; (ii) the security interest in goods secures value given to enable the debtor to acquire rights in software in the same transaction in which it acquired rights in the goods and for software that is for use in the goods; or (iii) the security interest is in inventory and secures value given to enable the debtor to acquire other items of inventory that the secured party also has a purchase money security interest in. UCC § 9–103(b). In each situation, the value given must actually be used by the debtor to acquire rights in the goods or software that is for use in the goods.
- A security interest in software is a purchase money security interest if the secured party has given value to enable the debtor to acquire goods, the secured party has a purchase money security interest in those goods, the software was acquired in the same transaction in which the debtor acquired the goods, and the software was acquired for the principal purpose of using it in the goods. UCC § 9–103(c).
- A secured party may make additional extensions of value under a future advances clause after the lien creditor’s lien arises. If the secured party does so and the secured party’s security interest is otherwise superior to the lien creditor’s lien, the lien creditor’s lien will be subordinate to the security interest that secures those advances unless the advance is made more than 45 days after the date of the lien creditor’s obtaining of the lien. Even if the advance is made more than 45 days after the lien creditor’s lien arose, the security interest securing the advance may still have priority over the lien creditor’s lien if the advance is made without knowledge of the lien creditor’s lien or made pursuant to a commitment entered into without knowledge of the lien creditor’s lien. UCC § 9–323(b). This rule subordinating some security interests securing future advances does not apply to secured parties that are buyers of accounts, chattel paper, payment intangibles, or promissory...
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Capsule Summary Part 2 177 results (showing 5 best matches)
- In a transaction other than a consumer-goods transaction, the secured party has the burden to demonstrate the extent of the purchase money status of the security interest. UCC § 9–103(g). In such a transaction, a purchase money security interest remains a purchase money security interest even though it is refinanced, the goods or software secures nonpurchase money debt, or the purchase money debt is secured by collateral other than what was purchased. UCC § 9–103(f). In such a transaction, if payments are made on the debt, the payments are applied in accordance with the following hierarchy of preference: (i) any reasonable method to which the parties have agreed; (ii) in accord with the payor’s direction at the time of payment; (iii) to obligations that are not secured; or (iv) to obligations secured by purchase money security interests in the order those obligations were secured. UCC § 9–103(e). In a consumer-goods transaction, courts are directed to apply their own established...
- A secured party may not be liable for violations of the provisions of Article 9 unless the secured party knows that the person is a debtor or obligor, knows the identity of that person, and knows how to communicate with that person. UCC § 9–628(a), (b). If the secured party has a reasonable belief that a transaction is not a consumer transaction or a consumer-goods transaction or a reasonable belief that the collateral is not consumer goods, the secured party will not be liable for violations of the requirements of Article 9 that are directed toward those types of transactions or consumer goods. UCC § 9–628(c).
- If the transaction is not a sale of accounts, chattel paper, promissory notes, or payment intangibles, the obligor is liable to the secured party for any deficiency and the secured party is liable to the debtor for any surplus. UCC §§ 9–608(a)(4), (b), 9–615(d), (e). If the transaction is a sale of accounts, chattel paper, promissory notes, or payment intangibles, the obligor is not liable for any deficiency and the secured party is not liable for the surplus. UCC §§ 9–608(b), 9–615(e).
- Article 9 limits the ability of a secured party to retain the collateral in partial or full satisfaction of the obligation owed in three situations. If the collateral is consumer goods, the collateral may not be in the possession of the debtor when the debtor consents to the retention of collateral in partial or full satisfaction of the debt. UCC § 9–620(a)(3). If a secured party has a purchase money security interest in consumer goods and more than 60% of the price or the debt has been paid, the secured party may not retain the consumer goods in full or partial satisfaction of the debt. UCC § 9–620(e). The secured party must dispose of the consumer goods pursuant to the disposition process described above within 90 days of the secured party taking possession or within a longer period that the debtor and any secondary obligor have agreed to in an authenticated agreement entered into after default. UCC § 9–620(f). The debtor may enter into an authenticated agreement after default...
- If a secured party has priority in chattel paper under the rule of UCC § 9–330, then the secured party has priority in the proceeds of the chattel paper that consist of the specific goods covered by the chattel paper if those goods are returned to the debtor in a transaction in which the debtor acquires rights in the goods even if the secured party’s security interest in those returned goods is unperfected. UCC § 9–330(c).
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Chapter VII. Liability for Violation of Article 9 23 results (showing 5 best matches)
- If the secured party has a reasonable belief that a transaction is not a consumer transaction or a consumer-goods transaction, or a reasonable belief that the collateral is not consumer goods, the secured party will not be liable for violations of the requirements of Article 9 that are directed toward those two types of transactions or consumer goods. The secured party’s reasonable belief must be based upon the debtor’s representation of what the collateral was going to be used for or the obligor’s representation of the purpose of the obligation. UCC § 9–628(c).
- 5. The secured party fail to send the calculation of surplus and deficiency notice after a disposition in a consumer-goods transaction when required to do so under UCC § 9–616(b)(1). What is the secured party’s liability for that failure?
- If the collateral is consumer goods, a debtor or secondary obligor may recover, in addition to actual damages caused by the secured party’s failure to comply with Article 9, additional damages for noncompliance with the enforcement rules of Part 6 of Article 9. Those additional damages are twofold: a return of the interest charges (credit service charge or time-price differential) and 10% of either the principal amount of the debt or the cash price of the consumer goods. UCC § 9–625(c)(2). Although the comment states that this remedy is available only in a consumer-good transaction, the statute provides it is available whenever the collateral is consumer goods. UCC § 9–625, cmt. 4. A secured party is not liable for this penalty more than once with respect to any secured obligation. UCC § 9–628(e). This remedy is not available for the secured party’s failure to comply with the requirement to send the calculation of the surplus or deficiency in a consumer-goods transaction under UCC §...
- The rebuttable presumption rule as stated above does not apply to consumer transactions. The courts are free to apply court-developed rules, including the rebuttable presumption rule or the rule that if there is a violation of the Article 9 enforcement rules, the secured party is absolutely barred from collection of any deficiency. UCC § 9–626(b), cmt. 4.
- Secured Party failed to conduct a commercially reasonable disposition of an item of collateral. The debt owed to Secured Party and the costs of the disposition total $15,000, and the collateral was sold for $5,000. Secured Party demonstrates that the value of the collateral that would be realized in a complying disposition was $8,000. Secured Party may seek a deficiency of $7,000 from the obligor.
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Chapter VI. Enforcement of a Security Interest or Agricultural Lien 158 results (showing 5 best matches)
- If the transaction was a consumer transaction, the secured party may not accept the collateral in partial satisfaction of the obligation secured. UCC § 9–620(g).
- If an account debtor has received notification of to pay the secured party instead of the debtor, the secured party has a duty to notify the account debtor that it is not obligated to pay the secured party if: (i) the secured party no longer has a right to that payment because there is no outstanding secured obligation or commitment to give value to the obligor on the secured obligation, (ii) the debtor makes an authenticated demand on the secured party to notify the account debtor. UCC § 9–209. If the debtor makes that authenticated demand, then the secured party has 10 days to send the account debtor an authenticated notice that the account debtor no longer has an obligation to pay the secured party. UCC § 9–209(b). The secured party does not have a duty to send notice to the account debtor if the transaction between the debtor and secured party was a sale of accounts, chattel paper or payment intangibles. UCC § 9–209(c).
- Once the funds are collected from the obligors on the collateral, after deduction of the expenses of collection against the obligors on the collateral, the proceeds are applied in the following order: (i) to the expenses of collection from the debtor or obligor on the secured debt, and if provided in the security agreement or contract with the debtor or obligor on the secured debt, reasonable attorney’s fees and legal expenses incurred in taking action against the debtor or obligor on the secured transaction; (ii) to the satisfaction of the secured obligation and owed to the secured party doing the collection; and (iii) the satisfaction of liens or security interests subordinate to the security interest or lien being enforced if the secured party doing the collection has received an authenticated demand for payment before the proceeds are completely distributed. UCC § 9–608(a)(1). The debtor and any obligors on the secured obligation may not waive the duty of the secured party to...
- After the value of the collateral is realized and applied to the obligation owed to the secured party, one of three situations will exist. First, the obligation will be fully satisfied and there will be value left over, called a surplus. Second, the obligation will not be fully satisfied and the obligor will owe the remaining amount of the obligation, called the deficiency. Third, the obligation will be fully satisfied and there will be neither a surplus or a deficiency. If the transaction is not a sale of accounts, chattel paper, promissory notes, or payment intangibles, the obligor is liable to the secured party for any deficiency and the secured party is liable to the debtor for any surplus. UCC §§ 9–608(a)(4), (b), 9–615(d), (e). If the transaction is a sale of accounts, chattel paper, promissory notes, or payment intangibles, the obligor is not liable for any deficiency and the secured party is not liable for the surplus. UCC §§ 9–608(b), 9–615(e).
- This right to redeem may not be varied by an agreement between the secured party and debtor or obligor, with one exception. UCC § 9–602(11). A debtor or secondary obligor, in a transaction other than a consumer-goods transaction, may waive their right to redeem in an agreement that is entered into and authenticated after default. UCC § 9–624(c).
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Chapter II. The Scope of UCC Article 9 135 results (showing 5 best matches)
- A consumer transaction is a transaction where an individual incurs an obligation primarily for personal, family or household purposes, the secured party has a security interest in the collateral, and the collateral that secures that obligation is held or acquired for primarily personal, family or household purposes. UCC § 9–102(a)(26).
- Sales of these types of assets are included within the scope of Article 9 because it is difficult to distinguish sales of these types of assets from transactions that create a lien interest to secure an obligation. UCC § 9–109, cmt. 4. Nothing in Article 9 helps determine whether the transaction creates a sale of these types of assets or a lien interest to secure an obligation. The ultimate characterization of the transaction is based upon all the facts and circumstances of the case. UCC § 9–109, cmt. 4.
- The rule of UCC § 9–109(a)(1) is very broad. The variety of transaction forms that may exist or are yet to be invented by commercial parties is almost infinite. This provision allows the court to examine the substance of the transaction to determine whether the transaction in fact creates an interest in personal property to secure payment or performance of an obligation.
- A sells a good to B. As part of the transaction, B agrees that if A pays B a specified sum of money by a certain time that B will reconvey the good to A. This transaction that is structured as an outright sale with an option to repurchase is in fact a transaction that creates an interest in the good to secure an obligation to pay.
- Article 9 has two subsections, UCC § 9–109(c) and (d), that specify a range of exclusions of certain transactions from the scope of Article 9. The mode of analysis is to first determine if the transaction would be included under the scope provisions discussed earlier in this Chapter. Then work through the exclusions to see if any of the exclusions apply to the particular transaction at issue. If a transaction is excluded from the scope of Article 9, that does not mean an interest in the type of asset to secure a debt is not allowed. The only effect of excluding the particular transaction from Article 9’s scope is that other law will control creating an interest in that type of asset to secure a debt.
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Chapter III. Attachment of a Security Interest or Agricultural Lien 175 results (showing 5 best matches)
- A, an individual, borrows funds from B to secure a loan that funds A’s business. A authenticates a security agreement that grants B a security interest in all of A’s “consumer goods” to secure that loan. The collateral description is sufficient as the transaction is not a consumer transaction.
- If a transaction is not a sale of an account, chattel paper or payment intangible, there is no outstanding secured obligation or any commitment to give value, and the secured party has notified an account debtor of the assignment to the secured party of the account, chattel paper, or payment intangible, the secured party has an obligation to send an authenticated notice to the account debtor that it has no obligation to the secured party. That notice must be sent within 10 days after the debtor makes an authenticated demand on the secured party to release the account debtor. UCC § 9–209.
- A secured party in possession of collateral has several rights and obligations specified in UCC § 9–207. The secured party has the obligation to take reasonable care of the collateral. UCC § 9–207(a). This obligation does not apply to a secured party who is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor unless the secured party is entitled to recourse against the debtor or a secondary obligor on account of uncollected collateral. UCC § 9–207(d). The remaining provisions of UCC § 9–207 do not apply if the secured party is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or if the secured party is a consignor. UCC § 9–207(d). In these circumstances, other law will control this issue. UCC § 9–207, cmt. 7. The secured party may charge the reasonable expenses of taking care of the collateral to the debtor and secure those expenses with the collateral. UCC § 9–207(b)(1). If the insurance coverage for the collateral...
- In transactions other than consignments and other than sales of accounts, chattel paper, payment intangibles, or promissory notes, the secured party has an obligation to respond to the debtor’s requests for an accounting of the obligations remaining unpaid and a list of collateral subject to the security interest. The secured party must respond within 14 days after receiving the debtor’s authenticated request. UCC § 9–210(a), (b).
- The effect of a well-drafted after-acquired property clause and a well-drafted future advances clause in the same security agreement is to provide for cross collateralization of all of the debtor’s obligations owed to the same secured party. Such cross collateralization is not considered an unusual or unconscionable practice in commercial transactions. The best way to explain cross collateralization is with an example.
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Chapter IV. Perfection of a Security Interest or Agricultural Lien 132 results (showing 5 best matches)
- If an initial financing statement is filed with respect to a manufactured-home transaction, the financing statement is effective for a period of 30 years from the date of filing if the financing statement indicates it is filed in connection with a manufactured-home transaction. UCC § 9–515(b). A manufactured-home transaction is defined as a secured transaction that creates a purchase money security interest in the manufactured home in which the manufactured home is the primary collateral. A manufactured-home transaction does not include a secured transaction where the manufactured home is the debtor’s inventory. UCC § 9–102(a)(54).
- If an initial financing statement is filed with respect to a public-finance transaction, the financing statement is effective for a period of 30 years from the date of filing if the financing statement indicates it is filed in connection with a public-finance transaction. UCC § 9–515(b). A public-finance transaction is defined as a secured transaction in which debt securities are issued, the securities have an initial stated maturity of 20 years or more, and any of the parties (debtor, obligor, secured party, or a person obligated on collateral) are a state or governmental unit of a state. UCC § 9–102(a)(67).
- Litigation concerning a secured transaction is brought in State A. The court in State A will decide whether State A’s Article 9 or another state’s Article 9 provides the governing law. That decision will be made using choice of law principles such as whether the transaction and the parties bear a reasonable relationship to State A or another state.
- A purchase money security interest in consumer goods is automatically perfected, unless the consumer goods are covered by a certificate of title. Subsequent to the initial transaction, the loan may be refinanced, additional nonpurchase money collateral could be used to secure the original purchase money debt, or additional nonpurchase money obligations could be secured by the purchase money collateral. In a consumer goods transaction, a court may find that these types of events destroy the purchase money status of the original transaction, rendering the original automatic perfection no longer effective. In a nonconsumer goods transaction, Article 9 provides that these types of events do not destroy purchase money status of the original security interest. UCC § 9–103(f).
- A security interest created by a sale of a payment intangible or a sale of a promissory note, UCC § 9–109(a)(3), and which is not excluded from the scope of Article 9, UCC § 9–109(d)(4)–(8), is automatically perfected upon attachment of the security interest. UCC §§ 9–310(b)(2), 9–309(3), (4). The security interest created by an assignment of a payment intangible or a promissory note that is not a sale, that is, the assignment is a transfer of the payment intangible or promissory note to secure an obligation, is not automatically perfected. The secured party will have to file an effective financing statement as to the payment intangible or promissory note or take possession of the promissory note in order to perfect its security interest in the non-sale situation. Article 9 provides no guidance on distinguishing between transactions that create a security interest to secure an obligation and transactions that are sales.
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Capsule Summary 159 results (showing 5 best matches)
- If a transaction is not a sale of an account, chattel paper or payment intangible, there is no outstanding secured obligation or any commitment to give value and the secured party has notified an account debtor of the assignment of the account, chattel paper, or payment intangible to the secured party, the secured party has an obligation to send an authenticated notice to the account debtor that it has no obligation to the secured party. That notice must be sent within 10 days after the debtor makes an authenticated demand on the secured party to release the account debtor. UCC § 9–209.
- Article 9 will apply to contractually created interests in personal property or fixtures to secure payment or performance of an obligation regardless of the form of the transaction. Thus, the parties may not by agreement dictate that Article 9 does not apply to a transaction. The court will examine the substance of the transaction to make that determination.
- In transactions other than consignments, and sales of accounts, chattel paper, payment intangibles, or promissory notes, the secured party has an obligation to respond to the debtor’s requests for an accounting of the obligations remaining unpaid and a list of collateral subject to the security interest. The secured party must respond within 14 days after receiving the debtor’s authenticated request. UCC § 9–210(a), (b).
- The Uniform Commercial Code (UCC) is enacted by the states and contains 11 substantive articles governing various types of transactions such as sales and leases of goods, negotiable instruments, bank deposits and collections, commercial funds transfers, letters of credit, bulk transfers, documents of title, investment securities, and secured transactions.
- The rule of UCC § 9–109(a)(1) is very broad. This provision allows the court to examine the substance of the transaction to determine whether the transaction in fact creates an interest in personal property to secure payment or performance of an obligation.
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Perspective 6 results (showing 5 best matches)
- Secured Transactions is a difficult subject to learn. For many students, this will be the first time studying an intensive scrutiny of statutory provisions. Even if a student has had experience learning another statutory scheme, Secured Transactions, as embodied in Uniform Commercial Code Article 9, has its own vocabulary that must be understood, digested, and mastered. Article 9 is also a complex statute where there are many cross-references to other sections, or informed by an understanding of rules from another section. Part of the challenge of learning the law of secured transactions is understanding the interrelationship of all of the sections of Article 9.
- So how should a student go about using these materials to learn the law of secured transactions? These materials are intended to provide a guide for reading and studying the statutory text and comments of Article 9. This outline is substitute for actually reading and studying the statutory text and comments of Article 9. One should not, however, try and read Article 9 from cover to cover like a good novel. It is too complex to be digested in that manner. The most effective way to use these materials to learn secured transactions is to read a discrete section of the full outline in conjunction with the assigned readings from your secured transactions course. Use the table of contents and table of statutes cited to help you correlate the material from this book to your assigned course materials.
- The law of secured transactions is but one piece of commercial and business law. In addition to the first year courses in property and contracts, a student seeking a well-rounded knowledge of this area of law should also study debtor and creditor law, sales and leases of goods, payments, tax, business associations, products liability, bankruptcy, real estate transactions, and international business transactions.
- Thus, for every assignment in your secured transactions course, follow this methodology. Read the assigned materials from your course book and all the statutory sections and comments that the course book references. Then read the material from this book that correlates to that assigned material. Then reread the assigned course book material and referenced statutory sections and comments. Read each sentence slowly, carefully, and word by word.
- As you progress through the course, relate each new principle to the material that you have studied previously. As you approach each new segment of material, think about how it is related to what you have already studied. Constant review and integration of new material with the old material is necessary to arrive at a complete understanding of the law of secured transactions.
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Chapter I. Introduction to Secured Transactions 16 results (showing 5 best matches)
- A secured transaction is the creation of an interest in personal property to secure an obligation, usually a debt. To begin to understand the area of secured transactions in personal property, it is necessary to start with the concept of debt. In this Chapter, we will consider the definition of debt, the creation of debt, the process for collection of debt, and the risk of nonpayment of debt given that process. We will then consider how the risk of nonpayment may be reduced through certain mechanisms including the granting of consensual liens in property. Finally, we will consider the history and structure of the Uniform Commercial Code, and its role as a set of legal rules that govern the creation and collection of debt.
- A debt may also be secured or unsecured. A secured debt is where the obligation to pay the debt is secured on a consensual or nonconsensual basis by an interest in specific property. This interest in specific property allows the creditor to obtain that property to satisfy the debt. An unsecured debt is one in which the obligation to pay is not secured by an interest in specific property.
- A has agreed to pay B $500 in one year. A, by contract, grants B an interest in A’s car to secure the obligation to pay. This is a grant of a consensual interest in A’s property to secure A’s obligation to pay B the $500. The debt is a “secured debt.” If A fails to pay B the $500 in one year, B will have a right to obtain the car and sell it to satisfy the debt.
- Under state law, the state assesses taxes due on real estate that are due each year. If the tax is not paid when due, by operation of law, a tax lien is created on the real estate in order to secure the obligation to pay the tax debt. Once the tax lien arises, the debt for taxes is a secured debt. The state taxing authority has the right to sell the real estate to satisfy the amount of the tax debt.
- Another type of regulation of the debt creation process is the regulation of the permissible basis for declining to enter into a transaction. The Equal Credit Opportunity Act, 15 U.S.C. §§ 1691–1691f, and its implementing regulation, Regulation B, 12 C.F.R. Part 202, Part 1002, prohibit a creditor from discrimination against an applicant in a credit transaction on the basis of prohibited grounds, such as “race, color, religion, national origin, sex or marital status, or age,”, the applicant derives its income from public assistance, or the applicant has exercised a right under the federal Consumer Protection Act. This Act applies to all transactions in which a person in the business of extending credit is the creditor, not just consumer transactions. Again, a thorough review of relevant state and federal law is required to determine whether there is regulation of factors that may be taken into account in determining whether to enter into the transaction.
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Chapter V. Priority of Security Interests and Agricultural Liens Part 2 111 results (showing 5 best matches)
- A buyer of collateral, other than tangible chattel paper, tangible documents, goods, instruments, or a certificated security, takes the collateral free of a security interest in the collateral if the buyer gives value without knowledge of the security interest and while it is unperfected. The buyer must not be a secured party. UCC § 9–317(d). As to a buyer of accounts, electronic chattel paper, and payment intangibles, if the transaction is within the scope of Article 9, the buyer will be a secured party as the transaction creates a security interest. UCC § 9–109(a). Thus a buyer of accounts, electronic chattel paper, and payment intangibles will be able to use this priority rule only if the sale of that collateral is excluded from Article 9 under UCC § 9–109(d). UCC § 9–317, cmt. 6. Presumably if a buyer of this type of collateral takes free of a security interest under this priority rule, it would also take free of any security interest in that collateral that might otherwise
- To become a holder of a security interest as defined in the federal tax lien statute, the secured party has a security interest only to the extent it has parted with money or money’s worth at the time of the tax lien filing. That means that even if the security agreement specifies that future advances are secured by a security interest in the described collateral, the secured party’s security interest that secures the future advance is not effective as against a federal tax lien if the advance is given subsequent to the filing of the tax lien notice with the exception noted under 26 U.S.C. § 6323(d) explained ...defined in the federal tax lien statute, the secured party has a security interest only to the extent the debtor had rights in the collateral as of the time of the tax lien filing. That means that generally security interests that arise in collateral the debtor acquires after the tax lien filing will be subordinate in priority to the federal tax lien. 26 U.S.C. § 6323(h)(...
- A buyer of tangible chattel paper, tangible documents of title, goods, instruments, or a certificated security takes those items free of a security interest if the buyer gives value (UCC § 1–204) for the item and takes delivery of the item without knowledge (UCC § 1–202) of the security interest or agricultural lien and at a time when the security interest or agricultural lien is unperfected. UCC § 9–317(b). A buyer that is a secured party may not use this rule to take the collateral free of the security interest. UCC § 9–317(b). As to a buyer of tangible chattel paper and promissory notes (a type of instrument), if the transaction is within the scope of Article 9, the buyer will be a secured party as the transaction creates a security interest. UCC § 9–109(a). Thus a buyer of tangible chattel paper and promissory notes will be able to use this priority rule only if the sale of chattel paper and promissory notes are excluded from Article 9 under UCC § 9–109(d). UCC § 9–317, cmt. 6.
- Even if all of the requirements for preference liability are met, a creditor may attempt to prevent the bankruptcy trustee from avoiding the transfer of the debtor’s property to or for the benefit of the creditor by attempting to bring the transaction within one of the exceptions to preference liability found in 11 U.S.C. § 547(c). The exceptions most relevant to an Article 9 secured party are detailed below.
- If the buyer received a notice from the seller or secured party within one year prior to the buyer’s purchase of the farm products that contained notice of the security interest, the secured party’s name and address, the debtor’s name and address, the debtor’s tax identification number or other unique identifier, a description of the farm products, the name of the county or parish where the farm products are produced or located, and a description of the payment obligation owed to the secured party, the buyer will take the farm products covered by the notice subject to the secured party’s security interest unless the buyer satisfies the payment obligation owed to the secured party. 7 U.S.C. § 1631(e)(1).
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Appendix A. Answers to Review Questions 59 results (showing 5 best matches)
- A. As in Question 1, first verify that there is indeed a default that has not been waived or that the secured party is not estopped from asserting. Second, obtain possession of the collateral without a breach of the peace or pursuant to a court order. Third, send the required notices within a reasonable time before the disposition and hold a commercially reasonable disposition of the collateral. Because this appears to be consumer goods in a consumer-goods transaction, the secured party is not able to take advantage of the safe harbor time period in UCC § 9–612 and the secured party must send the more extensive notice specified in UCC § 9–614. If the collateral is consumer goods, the secured party need not send
- F. Securities entitlements. Perfect by filing, UCC § 9–310, or by control, UCC § 9–314. If a consumer transaction, secured party cannot merely use UCC collateral descriptor to describe “securities entitlements.” UCC § 9–108(e).
- G. Goods, could be consumer goods, farm products (if Albert is a farmer engaged in farming operations) or inventory, depending upon its use. Perfect by filing or possession. UCC § 9–310, 9–313. If a consumer transaction, secured party cannot merely use UCC collateral descriptor to describe “consumer goods.” UCC § 9–108(e).
- B. Goods, could be consumer goods, equipment, or inventory depending upon its use. If not inventory, it will likely be governed by a certificate of title law and perfection must be by compliance with that law. UCC § 9–311. If inventory, then perfection must be by filing a financing statement, UCC §§ 9–310, 9–311. If a consumer transaction, secured party cannot merely use UCC collateral descriptor to describe “consumer goods.” UCC § 9–108(e).
- If another person has a recorded interest in the real estate so that the Secured Party’s fixture financing statement is not first filed, the Secured Party should obtain the consent to the Secured Party’s interest in the fixture from the person with the previously recorded interest in the real estate. UCC § 9–334(f).
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Summary of Contents 28 results (showing 5 best matches)
Title Page 1 result
Table of Contents 83 results (showing 5 best matches)
Half Title 1 result
Appendix B. Practice Exam 13 results (showing 5 best matches)
- Under UCC § 9–203, and pursuant to the security agreement, National Bank’s security interest attached to all inventory then owned or thereafter acquired to secure the loan then outstanding and all future advances ($50,000 on Dec. 30, 2017 and $25,000 on Sept. 30, 2018). The fact that the loan was paid off for a period of 15 days (Dec. 15, 2017 to Dec. 30, 2017) does not affect the ability of National Bank to attach its security interest to secure those subsequent advances. National Bank’s security interest in the tools attached when the debtor obtained rights in the tools, no later than November 7, 2107, when the tools were delivered to Ace. The security interest could have attached earlier, when the tools were identified to the contract between Ace and Hammer Supply. The security interest was perfected by the properly filed financing statement (correct debtor’s name, secured party’s name, collateral indication, and filing location). However, the effectiveness of that financing...
- Although State Bank has an unperfected security interest in $5,000 check that was deposited in the deposit account under a proceeds analysis, UCC § 9–315(a)–(d), it has a security interest in the deposit account’s entire balance, $10,000, to secure the initial advance of $50,000, based upon its deposit agreement with Ace. That security interest is perfected by control. UCC § 9–104. That security interest does not secure the future advance of $5,000 because the deposit account security agreement did not contain a future advances clause.
- National Bank’s security interest attached to the cash registers as after-acquired equipment pursuant to the after-acquired property clause in the security agreement to secure the entire obligation owed to National Bank (pursuant to future advances clauses). Given the lapse in National Bank’s financing statement effectiveness, National Bank’s security interest is unperfected, and deemed retroactively unperfected as of the time Ace purchased the cash registers as against all “purchasers for value,” including secured parties. UCC § 9–515.
- “all inventory and equipment now owned or hereafter acquired to secure all obligations that debtor now or hereafter owes to National Bank.”
- On November 1, 2017, Hammer Supply Inc. sold tools to Ace with a purchase price of $50,000. Ace borrowed the entire purchase price from State Bank, signing a security agreement granting State Bank a security interest in “tools” to secure the purchase price. That same day, State Bank filed a financing statement in the Washington Department of Licensing office naming “Ace Hardware, Inc.” as the debtor, “tools” as the collateral, and State Bank as the secured party. Also on November 1, 2017, State Bank sent a notice to National Bank that it was supplying tools on credit to Ace Hardware and that State Bank had a security interest in the tools. National Bank received that notice on November 4, 2017. Ace paid Hammer Supply with the funds from State Bank and Hammer Supply delivered the tools to the Spokane store on November 7, 2017.
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- Publication Date: July 1st, 2012
- ISBN: 9780314275752
- Subject: Commercial Law
- Series: Black Letter Outlines
- Type: Outlines
- Description: This text places the law of secured transactions within the context of debt collection. The book:Comprehensively explains the scope of UCC Article 9 including its exclusionsProvides an in-depth description of the Article 9 rules regarding attachment, perfection, and enforcement of security interests and agricultural liensContains many examples
