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Secured Transactions
SUNY Buffalo Law School
Buckley, Elizabeth F.

Secured Transaction 2009
– (9-102(a)(12)): the property subject to a SI or agricultural lien: includes (a) Proceeds to which a SI attaches; (b) accounts, chattel paper, payment intangibles and promissory notes that have been sold; (c) goods that are subject to consignment.
9-102: Definition of some collateral
(2) Account: right to payment of a monetary obligation arising out of use of a credit card or charge card or information contained on for use with the card.
            (vii) Credit card charge        
(i)                exclude payment right arose from chattel paper or an instrument
(ii)              commercial tort claim
(iii)            deposit accounts
(iv)            investment property
(9) Cash proceeds: money, checks, deposit accounts or the like
(11) Chattel paper: records of monetary obligation & security interest
(29) Deposit accounts: demand, time, saving, passbooks or similar account maintained with a bank. It excludes investment property or accounts evidenced by an instrument.
(42) General Intangibles: Catch-all category for non-goods: excludes rights to payment: Ex., rights in copyright, trademark
(44) Goods: All things movable when SI attaches (consumer goods, inventory, equipment, farm products)-exclude accounts, chattel paper, commercial tort claims, deposit accounts, documents, general intangibles, instruments, investment property, letter of credit rights, letter of credit, money or oil, gas, or other minerals before extraction.
            (23) Consumer goods: goods that are used or bought for use primarily for personal. Family or household purpose.
            (33) Equipment: goods other than inventory, farm products or consumer goods
            (34) Farm products: goods other than standing timber, with respect to which the debtor is engaged in a farming operation.
            (48) Inventory: goods other than farm products, which
a)     are leased by a person as lessor
b)     are held by a person for sale or lease
c)      are furnished by a person under a K of service
d)     Consist of raw materials, work in process, or materials used or consumed in a business.
(47) Instrument: negotiable instrument or any other writing that evidences a right to payment of a monetary obligation, is not itself a SA or lease, and is of the type that in ordinary course of business is transferred by delivery with any necessary endorsement or assignment: Perfection of instrument is by filing FS or taking possession.
(49) Investment Property: A security, whether certificated or uncertificated, security entitlement, securities account, commodity contract, or commodity account.
(61) Payment intangibles: subset of general intangibles under which the account debtor’s principal obligation is a monetary obligation: ex., bank loan.
(64) Proceeds: property (d) to the extent of the value of collateral, claims arising out of the loss (e) insurance payable by reason of the loss or nonconformity
(65) Promissory note: instrument that evidences a promise to pay money; remember that a promise note is only collateral if used as collateral.
Bankruptcy Trustee: Unsecured Creditors
11 USC 544: Trustee is a lien creditor: No need to go get judgment
11 USC 541: all property is part of the estateà try to get as many of the asses in the estate as possible and get rid of any liens
9-102(a)(52): Lien creditor includes trustee in bankruptcy.
·         In article 9, unperfected SP is subordinate to a lien creditor whereas lien creditor is subordinate to Perfected Secured Party.
·         Trustee v. Unperfected SP: because trustee has a power of lien creditor, trustee has a priority before perfection.
o   9-317(a)(2): SI is subordinate to the rights of a person that becomes a lien creditor before the earlier of the time (a) SI is perfected (2) SI is attached and FS is filed.
9-203(a) Attachment: SI attaches to collateral when it becomes enforceable against the debtor.
9-308: Interest is perfected when it has attached and notice is given to the world.
Perfection Formulae: Attachment + Public Notice
            4 ways to give notice:
o   File FS (9-310)
o   Possession (9-313)
o   Automatic perfection (no need to file: 9-309 )e.g. PMSI in consumer goods
o   Control: 9-314 (e.g. deposit accounts0
9-203(b): 3 elements of attachment
a.      9-203(b) (1): Value has been given
                                                              i.      1-102(44)(b): value-covers pre-existing claims and future advances: any consideration sufficient to support a simple K: very broad definition for article 9 purpose.
b.      9-203(b)(2): debtor has rights in the collateral or the power to transfer rights.
                                                              i.      D may have rights in c

clude proceeds. Description of collateral in SA doesn’t have to mention proceeds separately because it’s automatically attached.
§ 9-102(a)(64): proceeds includes claim and insurance. This term includes not only first generation proceeds (cash D received when it sold inventory) and also later generation proceeds (proceeds of proceeds).
·         a) Whatever is acquired upon the sale, lease, license, exchange, or other disposition of collateral; b) whatever is collected or distributed on account of collateral; c) rights arising out of collateral; d) claims arising out of the loss of collateral.
§ 9-315©: SI in proceeds is perfected if the SI in the original collateral is perfected (automatic perfection)
·         9-204: After-acquired property: Future advances
o   9-204(a): no new SA is necessary when the collateral is acquired later if the SA provides that it applies to after acquired collateral
o   9-204©: if an agreement implies new loans, there is no need to file a new FS because the agreement includes subsequent loans.
o   Comment 5: collateral may secure future as well as past or present advances if the SA provides.
o   SI arising out of after acquired clause is no less valid than SI in collateral which D has rights in when value initially given: Attachment/Perfection occurs when D acquires rights but priority dates back to the initial filing.
* When the parties have left out after-acquired clause in SA, courts are divided on when to imply them.
·         If SA demonstrates intent to limit the collateral (intent not to extend collateral to AA)
o   Majority presumption: Absent evidence of intent to contrary, SA includes interest after-acquired property because of cyclical nature of the collateral.
9-504: for a FS, creditor may either describe its collateral by ‘type’ or ‘category’ as set forth in 9-108 or may simply indicate its lien on ‘all assets’ of the debtor-FS need merely notify subsequent