Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
20 Cards in this Set
- Front
- Back
Classification of goods as collateral
|
When a debtor uses goods as collateral in a secured transaction, then the particular use of those goods in the hands of the debtor determines the mutually exclusive category (consumer goods, inventory, equipment, or farm products) to which the goods belong.
|
|
Creation of a Security Interest
|
When a party gives personal property or fixtures as collateral to ensure payment of an obligation and: (i) there is an intent to create a security interest in that collateral; (ii) the collateral is covered by Article 9; and (iii) the transaction is covered by Article 9, then we have a secured transaction and will apply the rules in Article 9.
|
|
Determination of Attachment
|
When a creditor gives value for collateral, and a debtor obtains rights in that collateral, and a security agreement is created concerning the collateral, then a security interest attaches to the collateral at the moment all three conditions are met regardless of the order in which the conditions are met.
|
|
Determination of Perfection
|
When a creditor has a security interest in collateral, then, unless perfection of that interest occurred automatically upon attachment, the creditor may, depending on the type of collateral, perfect that interest by filing a financing statement or obtaining possession or control of the collateral.
|
|
Determination of Proper Filing
|
When a creditor files a financing statement for the purpose of perfecting a security interest in collateral, then the financing statement must: (i) give the name, which cannot be seriously misleading, and address of the debtor; (ii) give the name and reasonable location of the creditor; (iii) provide an indication of the collateral covered and use of a super-generic description is permitted; and (iv) be authorized by the debtor in an authenticated record, which is assumed if the debtor signed a security agreement covering the collateral indicated in the financing statement.
|
|
Secured Creditor vs. Secured Creditor
|
As between two secured creditors the first to attach has priority. §9-322(a)(3)
|
|
Perfected Creditor vs. Secured Creditor
|
As between a perfected creditor and a secured creditor the perfected creditor has priority. §9-322(a)(2)
|
|
Judicial Lien Creditor vs. Secured Creditor
|
As between a judicial lien creditor and a secured creditor the judicial lien creditor has priority. §9-317(a)(2).
|
|
Statutory Lien Creditor vs. Secured Creditor
|
As between a statutory lien creditor and a secured creditor the statutory lien creditor has priority (§9-333(a)) unless the statute provides otherwise §9-333(b).
|
|
Buyer Giving Value and Taking Delivery vs. Secured Creditor
|
As between a buyer who gives value and takes delivery of collateral and a secured creditor the buyer takes free of the security interest. §9-317(b).
|
|
BIOC vs. Secured or Perfected Creditors
|
As between a buyer in the ordinary course of business (BIOC), regardless of whether they have knowledge of the security interest, and a secured creditor or perfected creditor the buyer takes free of the security interest. §9-320(a).
|
|
Perfected Creditor vs. Perfected Creditor
|
As between two perfected creditors the first to file or perfect has priority.§9-322(a)(1).
|
|
The Non-inventory exception to the PMSI rule
|
As between a creditor with a PMSI, who is perfected when the debtor takes possession or within 20 days thereafter, in collateral other than inventory or livestock, and any other creditor, the PMSI takes priority up the amount of purchase money. § 9-324(a)
|
|
The Inventory exception to PMSI rule
|
As between a creditor with a PMSI, who is perfected when the debtor takes possession, in collateral that is inventory or livestock, who gives notice via an unauthenticated record to other parties who filed a financing statement in the same type of goods covered by the PMSI, and the notice is received before the debtor takes possession of the collateral, and any other creditor, the PMSI takes priority up to the amount of purchase money. § 9-324(b)(1) and (2). The notice must describe the collateral, indicate the creditor either has or expects to have a PMSI in the debtor’s inventory, and is good for five years. § 9-324(b)(3) and (4).
|
|
BIOC for Inventory
|
As between a buyer in ordinary course of business who purchases inventory from a seller, gives new value, in good faith without knowledge the seller is violating his security agreement, and the security interest was created by the buyer’s seller, then the buyer takes free of the security interest. § 9-320.
|
|
Buyer of Non-Inventory (Without Knowledge) vs. Secured Creditor
|
As between a buyer of non-inventory (e.g., the buyer is not in the ordinary course of business), without knowledge of a security interest and a secured creditor, the buyer will take free of the secured creditor’s security interest unless during the 45 days after the buyer’s purchase the secured creditor: (i) makes a future advance without knowledge of the buyer’s purchase; or (ii) makes a future advance with knowledge of the buyer’s purchase but pursuant to a binding commitment entered into without knowledge of the buyer’s purchase. § 9-323.
|
|
Garage Sale Rule
|
As between a consumer buyer who purchases goods from another consumer without knowledge of a security interest in those goods or when financing statement has not been filed covering those goods, then the buyer takes free of the security interest. § 9-320.
|
|
Bona Fide Buyer of Documents or Investment Property (with Control)
|
A buyer of negotiable instruments, documents of title, or a buyer of investment property who takes control of that property, who qualifies as a holder in due course takes free of all Article 9 security interests. § 9-331.
|
|
Statutory Lien Creditor in Possession vs. Prior Perfected Creditor
|
As between a statutory lien creditor with possession and a prior perfected creditor, the statutory lien creditor takes priority unless the statute holds otherwise. § 9-333.
|
|
Judicial Lien Creditor vs. Prior Perfected Creditor
|
As between a judicial lien creditor and a prior perfected creditor the perfected creditor has priority. § 3-317.
|