Secured Transaction Outline (Hallinan Spring ’03)
3. American Card Rule (contradictory to security agreement)
ii. Financing Statement
1. Lists the collateral but not a dollar amount
2. Purpose is notice to other prospective creditors
3. Requirements §9-502
a. Name of debtor
i. Most problems arise here
ii. Problems
1. Spelling errors
2. Words errors (abbreviations, etc.)
iii. Trade names
1. Insufficient §9-503(c)
2. Suggestion that it is not sufficient to actually find the debtor or even having knowledge to search trade name/ Majority §9-506(c)
3. Court assumes commonly used trade name will be know to all potential creditors/Minority
b. Name of creditor
i. Usually not an issue since Secured Creditor knows their own name and interests are filed by debtor name
ii. Can be an issue when something shady is going on and both are same or similar company
c. Address
i. Not a requirement because it can be accepted without it. But can be rejected for not having it.
3. Whole different category (partnership, corporation, individual, etc.)
4. Misleading name §9-506
a. Even if name was actually discovered – if a logical search would not have found it, it is unperfected.
5. Filing office errors (assuming everything is done correctly by the parties) – Code puts the loss on the second secured creditor
a. Most likely would not be allowed to sue office
ii. Creditor or debtor address
d. Indicate the collateral
i. Statute requires ‘indication’only §9-502
1. Supergeneric are allowed for financing statement
ii. Once this statement is filed with the collateral description – any subsequent security agreements that cover collateral listed here – is instantly perfected and relates back to the financing statement’s filing date
Attachment
a. Idea of Secur
he debtor have sufficient rights in the collateral to permit a security interest
2. Does the debtor have sufficient rights in the collateral for a security interest to attach
3. What right does the secured creditor get?
e. Value §1-204
i. Determine when value is given and how much value is given
ii. Most popular provisions are
1. (2) Executing a security interest after the debt is incurred
2. (4) Consideration for a simple contract
iii. Provisions (1)&(3) are more rare.
f. Two Forms
i. Security Agreement
1. More specificity of the collateral then the financing statement
2. Property: Can create in now and forever owned – but intent to actually do this must be clear
4. Listed by debtor’s name
