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Secured Transactions
University of Toledo School of Law
Campbell, Bruce A.

I.                    Terms
a.      Security Interest: an interest in personal property or fixtures that secures payment or performance of an obligation {1-201(b)(35)}
b.      Security Agreement: an agreement that creates or provides for a security interest {9-102(a)(73)}
c.      Collateral: property subject to a security interest {9-102(a)(12)}
d.      Secured Obligation: obligation whose payment or performance is secured by collateral {not specifically defined}
e.      Debtor: person who has an interest, other than a lien, in collateral – or seller of certain financial services
f.        Secured Party/Creditor: holder of a security interest {9-102(a)(72)}
g.      Collateral: whatever is identified as collateral in the security agreement
                                                             a.      Types
a.       a single, specific item (i.e. a single car)
b.      all of a category (i.e. all furniture)
c.       all of an Article 9 type (i.e. all inventory)
                                                            b.      can be existing in the hands of the debtor at the time the original security agreement is entered into, or ‘after-acquired’ – property acquired by the debtor after the security agreement is entered into
h.      Obligation Secured: can be a single, one-time obligation (i.e. lump sum) or an installment obligation, a series of separate obligations, or a present and/or future obligation(s)
i.        Priority: characterization of interest in property (usually collateral_ that is superior to one or more other interest in same property
j.        Subordination: characterization of interest in property (usually collateral) that is inferior to one or more other interests in the same property
II.                  Creation of A Security Interest
a.      Intro
                                                             a.      attachment v. perfection
a.       attachment
a.       purpose: creates a security interest in collateral as against the debtor
b.      perfection
a.       purpose: establishes security interest in collateral against third parties (rest of world)
b.      requirements: attachment AND a successful method of perfection
c.       note: security interest cannot be perfected until it has attached
                                                            b.      security agreement v. financing statement
a.       security agreement
a.       contract b/t debtor and creditor that spells out rights/duties of parties regarding collateral and is required for attachment of the security interest
b.      FS
a.       document containing certain information about creditor’s security interest and is typically used to achieve perfection (note: there are other ways to perfect); it is filed in public records to give notice to others of the creditor’s interest in the debtor’s property
b.      Requirements for Attachment
                                                             a.      parties must have an agreement (i.e. security agreement)
a.       oral agreement sufficient if
a.       agreement + collateral in possession of secured party
b.      agreement + collateral under control of secured party
1.       bank accounts, investment property etc. cannot be possessed, but as long as secured party has control, then security interest can attach and be enforced
b.      need authenticated record (if collateral is not in secured party’s possession or contr

     d.      equipment {9-102(a)(33)}
a.       catchall category – goods that don’t fit in above category
b.      i.e. long-lasting goods used in a business
b.      Commercial Receivables
                                                             a.      Paperized Rights to Payments
a.       chattel paper
a.       written instruments (monetary obligation) + security interest in specific goods
b.      instruments
a.       negotiable and non-negotiable
b.      i.e. promissory notes, checks, drafts, certificates of deposit
c.       letter of credit
a.       payment device used to finance various transactions (Art. 5)
b.      seller doesn’t trust buyer to pay, so requires buyer to get a letter of credit from bank in favor of the seller (i.e. beneficiary), so bank makes payments to seller
                                                            b.      Intangible Rights to Payment
a.       accounts
a.       right to be paid for goods/services not evidenced by an instrument or chattel paper (i.e. oral promise)
b.      general intangibles
a.       vague category to include any personal property that doesn’t fit into other category
b.      catchall to allow for commercial usage to make use of new forms of personal property as collateral
c.       i.e. goodwill, literary rights, rights of performance
c.       electronic chattel paper
deposit accounts