Term
| Types of Collateral: Goods |
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Definition
| "Tangible, movable, personal property." Consumer goods; equipment; farm products; inventory |
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Term
| Types of Collateral: Semi intangible and intangible property |
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Definition
| Instruments (negotiable instrument evidencing right to payment); documents (bill of lading or warehouse receipt); chattel paper (record evidencing monetary obligation and security interest or lease of specific goods); investment property (stocks, bonds); accounts (right to payment not evidenced by instrument or chattel paper); deposit accounts (bank account); commercial tort claims; general intangibles (software, patents) |
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Term
| When is there attachment? |
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Definition
| As soon as 3 things come together: 1) security agreement; 2) value given; 3) debtor has rights in the collateral |
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Term
| Attachment: 1) Security Agreement requirements: |
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Definition
| Written or electronically stored if debtor has possession of the collateral. (otherwise, oral is a pledge). Must show intent to create a security interest; be authenticated by the debtor by ANY symbol; must contain description that "reasonably identifies" collateral |
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Term
| Attachment: 2) The secured party must give value |
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Definition
| Broader than contract ksn. Past consideration is enough. Inquiry focuses on value given by secured party. |
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Term
| Attachment: 3) The debtor must have rights in the collateral |
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Definition
| Debtor must own the property that he is giving a contingent property interest in |
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Term
| Scope of Security Interest: Proceeds |
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Definition
| Unless otherwise agreed, a security agreement automatically gives the secured party a right to IDENTIFIABLE proceeds |
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Term
| Scope of Security Interest: After-acquired Property |
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Definition
| without an explicit after acquired property clause, the security interest only reaches collateral that debtor had rights in at the time the security interest was signed. EXCEPTIONS: rapidly depleted inventory; consumer goods acquired more than 10 days after value given; commercial tort claims |
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Term
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Definition
| deals primarily with rights as between the secured party and third parties. NOT necessary to create a valid, enforceable security interest as between the debtor and secured party. |
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Term
| Perfection methods: Automatic |
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Definition
| PMSI in consumer goods, no filing needed |
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Term
| Perfection methods: possession of collateral by secured party |
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Definition
| perfected as of moment of possession and continues as long as possession is maintained. |
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Term
| Perfection methods: control |
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Definition
| nonconsumer accounts and investment property and electronic chattel paper. |
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Term
| Perfection methods: notation of lien on certificate of title |
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Definition
| mainly used for cars, except when car is held in inventory at dealership, then secured party must file a financing statement |
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Term
| Perfection methods: financing statement |
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Definition
| "Form UCC 1." Premised on concept of notice filing. |
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Term
| Financing Statement: Contents |
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Definition
| 1) Debtor's name (corporate name or individual's name, must not be seriously misleading 2) Description of collateral (reasonably identifies, HERE SUPERGENERICS ARE OK!) 3) Secured party's name 4) debtor must authorize filing, ANY SIGNED WRITING OK 5) File statement with Sec of State |
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Term
| Financing statements: Debtor moves? |
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Definition
| Must file a financing statement in new state within 4 months or secured party becomes unperfected |
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Term
| Financing Statements: Collateral moves? |
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Definition
| Must file a financing statement in new state within 1 year or secured party becomes unperfected. |
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Term
| Financing Statements/Continuation Statements |
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Definition
| Financing statement effective for 5 years from filing. Can be extended by continuation statement filed in the last 6 months of the 5 year life of the financing statement |
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Term
| Perfection as to proceeds |
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Definition
| Secured party automatically has a perfected security interest in whatever proceeds the debtor receives in exchange for that collateral for 20 days. New action required to remain perfected after 20 days UNLESS: 1) proceeds are identifiable cash proceeds; or 2) "same office" rule: proceeds not cash and a security interest in the type of collateral consituting proceeds would be filed in the same place as the financing statement for the original collateral (trade inventory for equipment) |
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Term
| Priority: Perfected Secured v Perfected Secured |
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Definition
| The first to file or perfect has priority. "Filing" holds spot in line and can occur prior to perfection or attachment |
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Term
| Priority: Unperfected Secured v Unperfected Secured |
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Definition
| The first to attach has priority |
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Term
| Priority: PMSI in goods other than inventory or livestock |
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Definition
| A PMSI in goods (other than inventory or livestock) has priority over a conflicting security interest in the same goods or its proceeds if the PMSI is perfected at the time the debtor received possession of the collateral or within 20 days thereafter |
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Term
| Priority: PMSI in inventory or livestock |
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Definition
| Priority over conflicting security interest in same inventory or livestock if, before the debtor receives possession of the inventory or livestock, the secured party: 1) perfects, and 2) sends an authenticated notification to holders of previously filed conflicting security interests in the collateral (notification effective for deliveries of the same type of collateral for 5 years) |
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Term
| Priority: Conflicting PMSIs |
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Definition
| A seller PMSI has priority over a financer PMSI |
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Term
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Definition
| a security interest perfected by control has priority over a security interest perfected otherwise |
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Term
| Priority: Deposit accounts (popular) |
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Definition
| a security interest perfected by control has priority over a security interest perfected via proceeds. If both perfected by control, they rank according to time of obtaining control. Deposit count put in name of secured party gives priority to that party. A bank that has control because it maintains the deposit account has priority over all other parties EXCEPT one who obtained control by putting the deposit account in his name. |
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Term
| Priority: Secured party v. buyer of collateral |
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Definition
| if the sale is authorized by the secured party (either explicitly or implied) the buyer takes free of the security interest). Sale of inventory is implied when sold in ordinary course of biz. Can also arise from acquiesence. If |
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Term
| Priority: Secured v. buyer of collateral (buyers in ordinary course) |
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Definition
| Buyers in ordinary course (those taking in good faith without knowledge that rights of secured party are being violated) buying from a person in the biz of selling goods of that kind. Takes collateral NOT subject to security interest. |
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Term
| Priority: Secured v Buyer of collateral (buyers not in ordinary course) |
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Definition
| Takes subject to perfected security interests, but not unperfected security interests UNLESS they know of the security interest. |
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Term
| Priority: consumer to consumer sales |
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Definition
| Consumer goods, buyer takes free of a security interest EVEN THOUGH PERFECTED if he buys without knowledge of the security interest, for value, for his consumer purposes, UNLESS the secured party has filed a financing statement. MUST BE CONSUMER GOODS IN HANDS OF BOTH BUYER AND SELLER |
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Term
| Priority: Perfected Secured v Perfected Secured |
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Definition
| The first to file or perfect has priority. "Filing" holds spot in line and can occur prior to perfection or attachment |
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Term
| Priority: Unperfected Secured v Unperfected Secured |
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Definition
| The first to attach has priority |
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Term
| Priority: PMSI in goods other than inventory or livestock |
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Definition
| A PMSI in goods (other than inventory or livestock) has priority over a conflicting security interest in the same goods or its proceeds if the PMSI is perfected at the time the debtor received possession of the collateral or within 20 days thereafter |
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Term
| Priority: PMSI in inventory or livestock |
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Definition
| Priority over conflicting security interest in same inventory or livestock if, before the debtor receives possession of the inventory or livestock, the secured party: 1) perfects, and 2) sends an authenticated notification to holders of previously filed conflicting security interests in the collateral (notification effective for deliveries of the same type of collateral for 5 years) |
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Term
| Priority: Conflicting PMSIs |
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Definition
| A seller PMSI has priority over a financer PMSI |
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Term
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Definition
| a security interest perfected by control has priority over a security interest perfected otherwise |
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Term
| Priority: Deposit accounts (popular) |
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Definition
| a security interest perfected by control has priority over a security interest perfected via proceeds. If both perfected by control, they rank according to time of obtaining control. Deposit count put in name of secured party gives priority to that party. A bank that has control because it maintains the deposit account has priority over all other parties EXCEPT one who obtained control by putting the deposit account in his name. |
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Term
| Priority: Secured party v. buyer of collateral |
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Definition
| if the sale is authorized by the secured party (either explicitly or implied) the buyer takes free of the security interest). Sale of inventory is implied when sold in ordinary course of biz. Can also arise from acquiesence. If |
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Term
| Priority: Secured v. buyer of collateral (buyers in ordinary course) |
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Definition
| Buyers in ordinary course (those taking in good faith without knowledge that rights of secured party are being violated) buying from a person in the biz of selling goods of that kind. Takes collateral NOT subject to security interest. |
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Term
| Priority: Secured v Buyer of collateral (buyers not in ordinary course) |
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Definition
| Takes subject to perfected security interests, but not unperfected security interests UNLESS they know of the security interest. |
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Term
| Priority: consumer to consumer sales |
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Definition
| Consumer goods, buyer takes free of a security interest EVEN THOUGH PERFECTED if he buys without knowledge of the security interest, for value, for his consumer purposes, UNLESS the secured party has filed a financing statement. MUST BE CONSUMER GOODS IN HANDS OF BOTH BUYER AND SELLER |
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Term
| Priority: secured party v judgment lien holder |
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Definition
| Unperfected security interest subordinate to the rights of a person who becomes a lien creditor before the security interest is perfected. (lien occurs when sheriff levies) If perfected, perfected security interest has priority. (PMSI will have priority if filed within 20 days of debtor receiving collateral) |
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