Secured Transactions Outline

OUTLINE

Secured Transactions: Contract where the debt of the debtor is secured by some of the debtor’s property

Definitions from Article 1 Section 201(b)
1. Agreement: Bargain of the parties, in fact, as found in their language or inferred from other circumstances, including course of performance, course of dealing, or usage of trade as provided in 1-303. (1-201(b)(3)).

2. Good Faith: means honesty in fact in the contract or transaction concerned (1-201(b)(19))

3. Organization: A person other than an individual (1-201(b)(25)).

4. Security Interest: An interest in personal property or fixtures which secures payment or performance of an obligation. It includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction that is subject to Article 9. It DOESN’T include the special property interest of a buyer of goods on identification of those goods to a contract for sale under Section 2-401, but a buyer may also acquire a “security interest” by complying with Article 9. Except as otherwise provided in Section 2-505, the right a seller or lessor of goods under Article 2 or 2A to retain or acquire possession of the goods is not a “security interest”, but a seller or lessor may also acquire a “security interest” by complying w/ Article 9. The retention or reservation of title by the seller of goods notwithstanding shipment or delivery to the buyer under Section 401 is limited to a reservation of a “security interest.” Whether a transaction in the form of a lease creates a security interest is determined pursuant to Section 1-203. (1-201(b)(35)). Consensual lien taken in personal property

5. Signed: Any symbol executed or adopted with present intention to adopt or accept writing. (1-201(b)(37)).

6. Surety: A guarantor or other secondary obligor. (1-201(b)(38)).

7. Writing: Printing, typewriting, or any other intentional reduction to tangible form. “Written” has a corresponding meaning. (1-201(b)(43)).

Definitions from Article 9 Section 102(a)
1. Account: A right to payment of a monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, *** arising out of the use of a credit or charge card or information contained on or for use with the card, ***. This includes health care insurance receivables. It DOESN’T include: (i) payment evidenced by chattel paper or an instrument, (ii) commercial tort claim, (iii) deposit accounts, (iv) investment property, (v) letter of credit rights, (vi) rights to payment for money or funds advanced or sold, other than rights arising out of the use of credit or charge cards or information contained on or for use with the card. (9-102(a)(2)).

2. Account Debtor: means a person obligated on an account, chattel paper, or general intangible. The term doesn’t include persons obligated to pay a negotiable instrument, even if the instrument constitutes part of chattel paper. (9-102(a)(3))

3. Agricultural Lien: means an interest in farm products:
a. Which secures payment or performance of an obligation for:
i. Goods or services furnished in connection w/a debtor’s farming operation; OR

ii. Rent on real property leased by a debtor in connection w/ its farming operation

b. Which is created by statute in favor of a person that:
i. In ordinary course of its business furnished goods or services to a debtor in connection w/ a debtor’s farming operation; OR

ii. Leased real property to a debtor in connection w/the debtor’s farming operation; AND

c. Whose effectiveness doesn’t depend on the person’s possession of the personal property (9-102(a)5))

4. Authenticate: Means (1) to sign; or (2) To execute or otherwise adopt a symbol, or encrypt or similarly process a record in whole or in part, with the present intent of the authenticating person to identify the person and adopt a record. (9-102(a)(7)).

5. Certificate of Title: Certificate of Title with respect to which a statute provides for the security interest in question to be indicated on the certificate as a condition or result of the security interest’s obtaining priority over the rights of a lien creditor with respect to the collateral. (9-102(a)(10)).

6. Chattel Paper: A record or records that evidence both a monetary obligation an a security interest in specific goods, a security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods, or a lease of specific goods and license of software used in the goods. “Monetary obligation” means a monetary obligation secured by the goods or owed under a lease of goods and includes a monetary obligation with respect to software used in the goods. It DOESN’T include (i) charters or other contracts involving the use or hire of a vessel or (ii) records that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for the use with the card. If the transaction is evidence by records that include an instrument or series of instruments, the group of records taken together constitutes chattel paper. (Ex: Lien or Note) (9-102(a)(11)).

7. Collateral: The property subject to a security interest or agricultural lien. This term includes: (A) Proceeds to which a security interest attaches; (B) Accounts, chattel paper, payment intangibles, and promissory notes that have been sold; AND (C) Goods that are the subject to consignment. (9-102(a)(12)).

8. Consignee means a merchant to which goods are delivered in a consignment. (9-102(a)(19))

9. Consignment means a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale and:
a. The merchant:
i. Deals in goods of that kind under a name other than the name of the person making delivery;

ii. Is not an auctioneer; AND

iii. Is not generally known by its creditors to be substantially engaged in selling the goods of others;

b. W/ respect to each delivery, the aggregate value of the goods is $1000 or more at the time of delivery;

c. The goods are not consumer goods immediately before delivery; AND

d. The transaction doesn’t create a security interest that secures an obligation. (9-102(a)(20))

10. Consignor means a person that delivers goods to a consignee in a consignment. (9-102(a)(21))

11. Consumer Goods: Goods that are used or bought for use primarily for personal, family, or household purposes. (9-102(a)(23)).

12. Debtor: Means: (A) A person having an interest, or other than a securityinterest or other lien, in the collateral, whether or not the person is an obligor; (B) A seller of accounts, chattel paper, payment intangibles, or promissory notes; or (C) A consignee. (9-102(a)(28)).

13. Deposit Accounts: A demand, time, savings, passbook, or similar account maintained with a bank. The term DOESN’T include investment property or accounts evidenced by an instrument. (Ex: Savings or Checking Account) (9-102(a)(29)).

14. Document: A document of title or a receipt of the type described in Section 7-201(b). (Ex: Shipping & Storage Receipts)(9-102(a)(30)).

15. Equipment: Goods other than inventory, farm products, or consumer goods. (Ex: Shipping & Storage Receipts)(9-102(a)(33)).

16. Farm Products: Goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and which are: (A) crops grown, growing, or to be grown including: (i) crops produced on trees, vines, and bushes, and (ii) aquatic goods produced in aquacultural operations; (B) Livestock, born or unborn, including aquatic goods produced in a