Gabriel
Secured Transactions
Fall 2010
Creation of SI/Attachment…………………………………………..2-4, 21
9-322 – a(1), first to file or perfect wins, pre-filing, attachment……..4
9-108 – Sufficiency of Description of Collateral, 9-204a – After-acquired Property……..5
9-308, 9-317 a 1&2– Perfection, priority between SC and LC……………….6 – 7 (exam)
9-103 – Purchase Money Security Interest……………………7
After Acquired Property Clause, names on FS…………………..8
SC as representative of other SC’s, Requirements for FS….9
9-322 – Priorities among conflicting security interest, filing termination statement, debtor changes name………………………………………………….10
9-310c – If secured party assigns a perfected SI, amendment……..11
Consumer Goods……………………………………………………………….11 – 12
Certificate of Title Covering Automobiles…………………………..12
9-313, Perfection by Possession………………………………………….12
Perfection of Accounts, Chattel, Paper, etc………………………….13 – 14 (exam)
9-301 – Perfection and Priority, 9-307 – Location of Debtor..15 (Kinsler Crop Dusting, exam?)
9-316 – Debtor changes location( 4 month window)…………..16
9-315d – Proceeds, 9-315d, Continuation of perfection………17 – 20
9-332 – Transfer of funds from deposit account, Traceable Proceeds……….20
9-322 – first to file or perfect wins……………………………………………………….21 (exam??)
Circular Priority (exam)……………………………………………………..22 (exam)
9-324 – Priority of Purchase Money Security Interests………….23-24
Refinancing a PMSI………………………………………………………………….24
Cross Collateralization………………………………………………………..25 – 26
Collateral when we convert lease to a sale (exam)………………….26
Accounts, 320 – Buyer of Goods (BIOCOB), 9-323d –advances….27 – 30 (exam p. 29)
9-317b – conflict between SC and buyer , 9-317a – conflict between SC and lien creditor….31
9-323d – Future advances & buyers, 9-317e – relation back period of 20 days for PMSI………..32
9-323b. Future Advances Against a Lien Creditor…………………………………………………33
1-203 – Lease vs. SI (Sale) ………………………………………………………………………………..33 – 36
Consignments…………………………………………………………………….36 – 37
SI vs. Bailment……………………………………………………………………………37
Sale of Accounts, Chattel Paper, Payment Intangible, no assignment clause (9-406)…………37 – 39
Bankruptcy………………………………………………………………………..39 – 43
Class 1
UCC made by NCCUSL (drafts uniform laws) and ALI (not a govt org, self-appointed law experts. They draft restatements). They got together and drafted the UCC.
UCC isn’t the law until states adopt it. We discuss article 9, banking law.
Statute = binding legislative law. Code = deals with rules.
Article 1 – General Provisions, governs everything in the code, unless something in a different section conflicts with it. Article 2 – Sale of goods. 2a – contracts for the leasing of goods. Article 3 – negotiable instruments, checks, promissory notes. 4 – collection systems for negotiable instruments. 5 – letters of credit. 6 – bulk transfers (sell an ongoing business, what debts travel with it, abolished in all but 2 states). 7 – Documents of Title – representation of ownership with they are being shipped. 8 – deals with investment securities, it is corporate law, not commercial. Article 9 – Secured transactions, contracts for sales and leases. Borrow money.
Security instrument Is a property right you have in someone’s property which makes them pay you back.
Secured Transaction – take property as collateral/security, when they pay you give it back. The transaction is called a pledge. Collateral insures they pay back the debt. This deals with personal property. More likely to loan money if you have security because you have something of value you can sell if they don’t pay you back. Secured transactions creates credit. The pledge give you security. It tells the world she owns it but that you have a right/security instrument in it. Gives notice to the world there is some restriction on her ownership rights. Ex. Buy car, they take a security instrument. Come up with a public filing where the creditor makes the filing, and says that they have a security interest in the car and will reposes if she doesn’t make payments. Creditors have claim against debtor. Car dealer takes the collateral free and clear of the other creditors. Filing tells the world they have a security interest and by default they take ahead of and full. The secured creditor is a bank. Article 9 is written by banks for banks. It favors secured creditors. Only going to loan money for the assets if they have priority over other creditors.
Ex. Debtor does not have a car and has lots of creditors (credit card companies). Those creditors don’t have any right to go after a car bc there is no car. We let the debtor have a car. She goes to the secured creditor to get the money. Bank takes a security interest. If she doesn’t make payments, the bank takes the car. That creditor takes priority over other creditors to get the car. If she owned the car outright, all the creditors would split it in bankruptcy. Bankruptcy is federal law, article 9 is state law. Fed law rules.
Section 9-102 (28)– debtor is a person having a security interest other than a security interest or other lein, in the collateral, whether or not the person is an obligor. 1-201 (13) – creditor includes a general creditor, a secured creditor, a lien creditor, and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in BOOK….9-102 (72) – a secured party is a person in whose favor a security interest is created or provided for under a security agreement. 9-102 (12) – Collateral is property subject to a security interest. It also means proceeds. 1-201 (35) – security interest means an interest in personal property or fixtures and not real estate, which secures payment or performance of an obligation. 9-109 – Scope – Article 9 applies to a transaction that creates a security interest in personal property. Includes thins such as promissory notes and assignments.
1. Creation of a Security Interest
2. Giving notice to the word is called “perfection”
3. Priorities (figure out who wins in case of a screw up)
4. Scope (figure out if you are in it or out of it)
5. Remedies (if you are in it, what are your remedies)
Book page 98. Financing Statement is filed in the public office to notify the world that you have a security interest. It’s also known as a UCC 1. Don’t confuse this with a written agreement between a debtor and creditor that creates the security interest. That is called the security agreement, on p. 99-104.
p. 132, problem 3.2.1. – Car dealer owns his own inventory. They didn’t pay for them. Ba
ed and unperfected secured creditors. Difference is you don’t really have rights against all the rest of the world and other creditors unless you are a perfected secured creditor. Have to do something other than created security agreement. Take financing statement and file it. That perfects the security interest. Cant perfect a security interest unless it exists. You have to do the 3 steps to have a security agreement. Sign financing statement in initial stages of loan.
9-322 – a(1) –based on the time you either file or perfect. You can file prior to time security interest is created. If you pre-file, the perfection occurs simultaneous when it attaches. If you find a prior secured creditor you (the bank) deny the loan. When you file financing statement right then, that locks you in priority first when the loan is approved. Priority can run early.
Is the financing statement the same as a security agreement? No. That doesn’t prove existence of SA. Because if loan is not approved, then no SA. As soon as loan approves, perfection occurs simultaneously.
Hypo – Creditor 1 files financing statement, creditor 2 comes along and perfects on collateral, creditor 1 then perfects later. 1 wins. Priority comes from first to file or perfect. Creditor 2 is screwed because he was on notice.
Problem 3.2.4 – Assume a new car was omitted from loan request form. 2 pieces of paper would work as a SA (p. 99, Dealer Inventory SA, 108, loan request form). Loan request form says I grant to you this as a security interest. Can act as a limited SA. What if it includes a car not listed in the SA. Don’t have a SA for a car not mentioned in the list. Have to specify what you are granting a security interest in. You don’t always have to have an updated SA for new cars coming in the lot. Have a mechanism that says you take a security interest in a pot of goods. Floating lien – take a security interest in a mass of items that are fluctuating. Attaches to specific types of items. Collateral is broadly divided into 2 categories, tangibles and intangibles. A subset of tangibles are goods. 4 types of goods: farm products, equipment, inventory and consumer goods (9-102). 9-108 – defines sufficiency of a description.
Class 3
p. 133 –9-108 – Listing Collateral – provide something that covers the general category of collateral but allows it to shift and move. You can have a specific listing OR list by category (inventory). 9-102(48) – Inventory means goods other than farm products (not including standing timber) that you can sell. 9-102(44) – Goods means all things that are moveable when everything else attaches. It is tangible. Its not realty. In 9-102a, farm goods can go from one category to the other. 9-102(23) – Consumer Goods – how the goods are normally used. How you intend to use them. 33 – Equipment – all other things.
