Gilbert Law Summaries on Secured Transactions
Author:
Whaley, Douglas J.
Edition:
13th
Copyright Date:
2013
14 chapters
have results for secured transactions
Chapter Two: Coverage of Article 9 40 results (showing 5 best matches)
- Under pre-Code law, different types of financing arrangements had their own terminology, procedures, and substantive law, although the essence of the underlying transactions—an advance of credit secured by collateral—was often identical. The Code’s efforts at simplifying the preexisting maze begin with the introduction of a set of standard terms to describe the parties in secured transactions, their agreement, and their rights.
- A consignor who is unsure whether Article 9 applies to the transaction or whether the transaction is a true consignment may make a protective filing of a financing statement, calling itself a “consignor” without this in any way being an admission that Article 9 does apply. The same thing may be done by a lessor who worries that his so-called lease is really a disguised secured transaction. [U.C.C. § 9–505]
- If a piano company borrows money from Bank A, giving the bank a security interest in the pianos (its inventory) as collateral, the piano company is both the “debtor” and the “obligor,” and the bank is the “secured party.” If the piano company sells a piano on credit to a musician, reserving a security interest in the piano until it is paid for, the piano company is now the “secured party” and the musician is the “debtor” and “obligor.” If the piano company then the musician’s promise to pay the debt (an “account,” commonly called an “account receivable”) to Bank A, the piano company is, as to this transaction, the “debtor” and Bank A would be the “secured party.”
- Whether a transaction is a true lease or a sale on credit a secured transaction) disguised as a lease depends on the but section 1–203 does provide a test to help answer the question: A transaction is a sale on credit rather than a lease if: (i) the lessee has
- to the determination of whether a true lease or a secured transaction is intended, even though prior case law found these things important:
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Chapter Five: Filing 35 results (showing 5 best matches)
- method whereby a secured party can have an assignment noted “of record” (so that inquiries regarding the transaction will be addressed to the assignee). A secured party who assigns (“sells”) the security interest of another
- The debtor has the power to force the secured party to provide information under the Code. [U.C.C. § 9–210] The debtor may send the secured party a statement indicating the aggregate amount of the unpaid debt as of a specified date, and may request that the secured party approve or correct the statement and return it to the debtor. The debtor may also request an of the amount still due. If the security agreement or some other record kept by the secured party identifies the collateral, the debtor may request that the secured party approve or correct a list of the collateral.
- If the secured party fails to comply without a reasonable excuse, the secured party is caused to the debtor and a penalty of $500. [U.C.C. § 9–625(b), (f)] If the debtor included a good faith statement of the total obligation or a list of collateral, or both, in the statement, and the secured party failed to comply without a reasonable excuse, the secured party is barred from claiming a security interest in anything not shown in the statement against any person who has been misled by the failure to comply. This penalty provides a secured party with a strong incentive to reply in order to avoid losing part of the collateral. [U.C.C. § 9–625(g)]
- A secured party is often unwilling to disclose to third parties detailed information about the secured party’s security interest, either because it is costly or because the interests of the inquirer conflict with those of the secured party. Third parties compel the secured party to provide such information; they are limited to the information on file—and usually, only the
- The secured party has 14 days in which to comply by sending (in an authenticated record) an accounting, a correction, or an approval. If the secured party claims a security interest in all of a particular type of collateral owned by the debtor ( all inventory), the secured party may state that in the reply and does not have to approve or correct an
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Chapter Eight: Default Proceedings 86 results (showing 5 best matches)
- If the secured party fails to conduct a commercially reasonable resale or send out the required notices, Article 9 specifies the penalty in nonconsumer transactions: It adopts the “
- consumer transactions
- If the financing transaction involves accounts or chattel paper—either through the sale of such rights or through their use as collateral—the secured party may wish to collect directly from the underlying obligors, rather than by taking payment through the debtor or seller of the rights. Where the debtorseller’s financing arrangements are kept concealed from the debtor’s customers, the customers may not know that the right to their payments has been assigned; they will continue to pay the debtor, who then remits to the secured party. This is known as
- In nonconsumer transactions, if the secured party sends the notice at least 10 days before the earliest possible disposition of the collateral, the notice is timely sent and cannot later be attacked on this basis—creating a “
- secured party,
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Chapter Four: Perfection 63 results (showing 5 best matches)
- On June 1, Debtor pledges his crop of corn, placing the entire harvest in a silo in Secured Party’s name in return for an advance of $1,000. (Secured Party’s interest is therefore perfected by possession under section 9–310(b)(6).) On July 1, Debtor needs to regain possession of the corn, so Secured Party files a financing statement covering the transaction and then allows Debtor
- A purchase money secured party may be either the in the transaction by the debtor. [U.C.C. § 9–103(a)(2)]
- Debtor borrowed money from Lender A and gave Lender A a security interest in her accounts receivable, which Lender A perfected by filing a financing statement in the appropriate place. Lender A then assigned this debt to Lender B, so that the debtor would have to make the payments directly to Lender B. There is no legal duty to change the name of the secured parties on the financing statement, and whether or not this is done, Lender B will be protected against those trying to seize the accounts receivable from the original debtor. However, the transaction between Lender A and Lender B is itself a secured transaction (the sale of an account), and for Lender B to have priority over the creditors of Lender A, Lender B will have to file a financing statement showing that Lender A has granted it a security interest in these accounts.
- If goods are being held by a bailee, a secured party cannot directly take possession of them. The secured party can file a financing statement to perfect a security interest in the goods, but is not limited to this method of perfection. Instead, the secured party may work with the bailee to indirectly perfect a security interest by possession through the bailee using the methods described below:
- later directs. Therefore, the secured party’s possession of the nonnegotiable document does not result in perfection. However, the secured party can perfect a security interest in the
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Approach to Exams 7 results (showing 5 best matches)
- Common to all transactions under Article 9 of the U.C.C. is that fact that there is an advance of value---whether by loan or by outright sale of accounts or other rights---made against some future performance that is guaranteed or
- Check for one of the four types of perfection: filing a financing statement, the secured party’s taking possession of the collateral, the secured paty getting “control” over the collateral or automatic perfection (
- 4. Against Whom Will the Secured Party Prevail?
- 5. Is the Secured Party’s Interest Valid in Bankruptcy?
- 6. What Are the Rights of the Secured Party Upon Default?
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Chapter Three: Creation of a Security Interes 23 results (showing 5 best matches)
- investment property, letter of credit rights, deposit accounts, electronic chattel paper) the secured party need only obtain “ ), but when the secured party has control pursuant to any kind of agreement, no authenticated record of the transaction is required for attachment. [U.C.C. § 9–203(b)(3)(D)]
- In this chapter you are introduced to the first substantive area of the law of secured transactions—the basic steps necessary before the creditor’s security interest
- If the secured party has of the collateral to which the security agreement attaches (a “pledge” transaction), an authenticated record of a security agreement is
- This greatly simplifies the problems in secured financing and is quite a departure from earlier systems of secured financing, where statutes or case law sometimes left “implied” or unstated exceptions to trip an unwary lender.
- 2. Did the secured party
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Title Page 1 result
Index 79 results (showing 5 best matches)
Chapter One: Introduction 15 results (showing 5 best matches)
- In this chapter, you are introduced to the basic concepts underlying the law of secured transactions, which is codified in Article 9 of the Uniform Commercial Code (“U.C.C.”). The rules of Article 9 do not float in a vacuum, and are best understood against a background of the commercial pressures that led to the adoption of legislation and an explanation of the historical solutions that preceded the Code.
- of secured transactions in personal property. Thus, as stated above, the Code has eliminated most of the pre-Code security devices and swept away the unnecessary distinctions in form and effect of those remaining viable.
- The very fact that the original Article 9 was the first basic statute in this complex field led to some imperfections and uncertainties and an unexpected number of variations from state to state in enacting it. This prompted a new in-depth study of the field of secured transactions, and certain revisions to Article 9 were approved by the Permanent Editorial Board in 1972 and, most recently, in 1999 (effective July 1, 2001, in most states), with minor changes being added in 2010. This Summary, and the citations therein, refers to the rules of th latest version.
- The creditor extends credit and wants repayment plus a profit on the transaction. A surety and collateral are back-up devices to insure collection of at least some of the debt if the debtor fails to repay as promised. If the debtor goes bankrupt, the right to go against the surety or the collateral ahead of other creditors is a must, because in bankruptcy proceedings there are rarely enough assets to satisfy debts owed to the unsecured creditors after the
- Also important to an appreciation of the law of secured lending is mastery of the strange language used in Article 9; some of the key words are introduced in this chapter.
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Chapter Seven: Bankruptcy Proceedings and Article 9 14 results (showing 5 best matches)
- takes place on December 15 (when attachment occurred because Debtor then acquired rights in the collateral) and, measured at that moment, it secures a loan made (and hence is a preference), because this is a purchase money transaction, no preference occurs.
- The above discussion makes it clear why it is important for a creditor to have a secured interest in the debtor’s property. Even if the secured interest is fully perfected, however, the debtor’s bankruptcy may interfere with the secured party’s right to enforce the security interest according to the terms of the contract. The reason is that once a petition in bankruptcy has been filed and the property of the debtor passes into the possession and control of the trustee, a secured creditor
- 3. Effect of Bankruptcy on Secured Party’s Rights—the Automatic Stay
- The trustee in bankruptcy not only succeeds to all of the debtor’s rights and interests, but in addition is given various statutory powers under the Bankruptcy Code that enable the trustee to invalidate security interests that would be completely secure outside of bankruptcy.
- fully secured creditor
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Chapter Six: Priorities 64 results (showing 5 best matches)
- of the parties was to have the dragnet clause operate only to secure transactions of the as the first transaction (
- Security agreements often provide that the debtor may not sell the collateral without the written consent of the secured party. Just as frequently, the debtor continues to sell the collateral on a regular basis anyway. If the secured party finds out about the sales but says nothing and the debtor later defaults on the loan, the question arises as to whether the secured party may follow the collateral into the hands of the debtor’s buyer and repossess it, or whether the silence of the secured party constitutes a waiver of the security interest.
- A secured creditor who has also taken the steps necessary to protect the security interest from other claimants is both
- The purchase money secured party who perfects within 20 days prevails against all conflicting security interests—even interests that were at the time of sale and of which the purchase money secured party actually
- It should be emphasized that in many cases the secured party is not limited to asserting an interest in the “proceeds.” If the security interest continues in the original collateral notwithstanding transfer thereof to a third person ( ), the secured party may claim both the proceeds the original collateral—although the secured party is entitled to but
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Exam Questions and Answers 10 results (showing 5 best matches)
- Music, Music, Music Co. (“MMMC”) sold musical instruments. Its inventory was subject to a security interest in favor of Local Bank, which had filed a financing statement in the proper place on April 1. When MMMC sold a piano on credit, it made the buyer sign a promissory note payable to MMMC, plus an agreement giving MMMC a security interest in the piano. MMMC never filed financing statements for these transactions. The resulting notes and security agreements were sold to Merchants Finance Company with an agreement to buy them back should they prove uncollectable. In January of the next year, MMMC contracted to buy 50 fancy black walnut pianos from Black Walnut Piano Company. Black Walnut agreed to sell them to MMMC on credit, reserving (pursuant to agreement) a security interest in the pianos to secure their purchase price. Prior to delivering the pianos to MMMC, Black Walnut filed a financing statement in the appropriate place and sent a letter to Local Bank (but not to Merchants...
- ] However, Uniform Commercial Code section 9–337 protects some parties whose interests arise within the four-month grace period after the debtor obtains a clean certificate in a new state. One party so protected is a later secured party who is listed on the new certificate and who becomes a secured party without knowledge of the rights of the holder of the prior certificate. [U.C.C. § 9–337(2);
- Which of these transactions is valid against Mary’s bankruptcy trustee? Explain.
- This transaction is likely to qualify as a ] If the Article 9 definition of “consignment” does not cover the transaction (because, for example, the Arabian Rug Company is generally known by its creditors to be substantially engaged in the sale of goods belonging to another), Ornate Rugs of Persia will prevail over Retailer Bank since Article 9 no longer governs the transaction, and the common law of most jurisdictions allows a consignor to reclaim its goods over the rights of the consignee’s creditors. [
- Unless the secured party authorizes the sale or waives its security interest, the collateral is not freed from the security interest by the debtor’s sale. [U.C.C. § 9-315(a)] The buyer in the ordinary course of business exception does not apply because the sale of equipment is never in the ordinary course. Thus, Tenacles National Bank can repossess the truck from Blue Truck Ice Cream Company. (Blue Truck would, however, have an Article 2 breach of warranty of good title action against its seller, White Truck. [U.C.C. § 2–312])
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Capsule Summary 32 results (showing 5 best matches)
- 4. “Secured Party”
- a. Collateral in possession of secured party—oral agreement sufficient
- b. Collateral under “control” of secured party—oral agreement sufficient
- c. Collateral not in secured party’s possession or control—authenticated record of security agreement required
- e. Rights and duties of secured party in possession
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- Publication Date: September 6th, 2013
- ISBN: 9780314282682
- Subject: Commercial Law
- Series: Gilbert Law Summaries
- Type: Outlines
- Description: The secured transactions outline discusses coverage of Uniform Commercial Code (UCC) Article 9 and the creation of a security interest, including attachment, security agreements, value, and the debtor's rights in the collateral. Also included are perfection, filing, priorities, bankruptcy proceedings and Article 9, default proceedings, and bulk transfers.
