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1To determine the governing law for perfection, the effect of perfection or nonperfection, and priority of a security interest, which two primary ju...
To determine the governing law for perfection, the effect of perfection or nonperfection, and priority of a security interest, which two primary jurisdictions should a creditor consult first?2Under Article 9 of the UCC, what is the location of an individual debtor?
Under Article 9 of the UCC, what is the location of an individual debtor?3Under Article 9 of the UCC, what is the location of a debtor that is a registered organization with the state?
Under Article 9 of the UCC, what is the location of a debtor that is a registered organization with the state?4Under Article 9 of the UCC, what is the location of a debtor that is an unregistered organization and has more than one place of business?
Under Article 9 of the UCC, what is the location of a debtor that is an unregistered organization and has more than one place of business?5If the debtor and the collateral consisting of goods are located in different states, will the jurisdiction of the debtor’s location provide the la...
If the debtor and the collateral consisting of goods are located in different states, will the jurisdiction of the debtor’s location provide the law for perfecting a security interest?6Does a secured creditor generally have priority over an unsecured creditor?
Does a secured creditor generally have priority over an unsecured creditor?7How does the UCC determine a secured party’s priority date?
How does the UCC determine a secured party’s priority date?8Under Article 9 of the UCC, does a lien creditor generally have priority over unperfected secured creditors and general unsecured creditors?
Under Article 9 of the UCC, does a lien creditor generally have priority over unperfected secured creditors and general unsecured creditors?9How is priority determined between a lien creditor and a perfected secured creditor with competing interests in the same collateral?
How is priority determined between a lien creditor and a perfected secured creditor with competing interests in the same collateral?10A secured creditor perfected its security interest by filing an appropriate financing statement on March 1. A general unsecured creditor became a l...
A secured creditor perfected its security interest by filing an appropriate financing statement on March 1. A general unsecured creditor became a lien creditor on April 1 of the same year. Both the security interest and the lien concerned the same collateral. Does the secured creditor have priority over the lien creditor?11On January 1, a bank extended a debtor a $50,000 loan, taking a security interest in the debtor’s equipment, inventory, and accounts pursuant to an...
On January 1, a bank extended a debtor a $50,000 loan, taking a security interest in the debtor’s equipment, inventory, and accounts pursuant to an authenticated security agreement. On February 1, a general unsecured creditor went through the appropriate judicial process and became a lien creditor of the debtor. On March 1, the bank filed an appropriate financing statement, thus perfecting its security interest. Does the bank have priority as against the debtor’s equipment, inventory, and accounts?12On January 1, a bank filed an appropriate financing statement and entered an authenticated security agreement with a debtor, granting a security in...
On January 1, a bank filed an appropriate financing statement and entered an authenticated security agreement with a debtor, granting a security interest in all of the debtor’s inventory and equipment. The bank had not yet extended money to the debtor, as the parties were still working out the details of the repayment plan. On February 1, a general unsecured creditor went through the appropriate judicial process and became a lien creditor. On March 1, the bank loaned the debtor $50,000, at which point the bank’s security interest attached and became perfected due to the earlier financing statement.Does the bank have priority?13On January 1, a debtor borrowed $100,000 from a bank pursuant to a security agreement granting the bank an enforceable security interest in the deb...
On January 1, a debtor borrowed $100,000 from a bank pursuant to a security agreement granting the bank an enforceable security interest in the debtor’s equipment. The bank did not perfect its security interest at that time. On February 1, a company loaned the debtor $10,000 on an unsecured basis. On April 1, the company went through the state process to obtain a lien on the debtor’s equipment.Assuming the company meets the definition of a lien creditor, does the company have priority to the debtor’s equipment?14What does the term perfected mean in Article 9 of the UCC?
What does the term perfected mean in Article 9 of the UCC?15In general, what are the five main ways for a secured party to perfect a security interest in collateral?
In general, what are the five main ways for a secured party to perfect a security interest in collateral?16What is the most common method of perfecting a security interest?
What is the most common method of perfecting a security interest?17How does the UCC determine the priority date for a secured party who has filed a financing statement?
How does the UCC determine the priority date for a secured party who has filed a financing statement?18What three main pieces of information must a financing statement set forth to be properly completed?
What three main pieces of information must a financing statement set forth to be properly completed?19A fishing company borrowed money from two secured creditors. Both received a security interest in the company’s personal property and perfected the...
A fishing company borrowed money from two secured creditors. Both received a security interest in the company’s personal property and perfected their security interests by filing financing statements. Both creditors also executed an intercreditor agreement appointing a third party as their representative. Each financing statement listed the company’s (now, the debtor’s) legally correct name and address, the secured creditor’s name as that of the third party, and the third party’s correct address. It also listed the collateral as “all assets.” Do these financing statements list all required information?20What is the proper name of a debtor who is an individual?
What is the proper name of a debtor who is an individual?21What is the proper, legal name of a debtor that is a registered organization?
What is the proper, legal name of a debtor that is a registered organization?22If a debtor is an unregistered organization, how must the financing statement identify the debtor?
If a debtor is an unregistered organization, how must the financing statement identify the debtor?23Under Article 9 of the UCC, what is a seriously misleading financing statement?
Under Article 9 of the UCC, what is a seriously misleading financing statement?24A clothing store filed paperwork with the state to change its name to add the letters “LLP.” This reflected that the store had recently registered ...
A clothing store filed paperwork with the state to change its name to add the letters “LLP.” This reflected that the store had recently registered its business with the state to enjoy limited liability. The store’s primary creditor had a security interest in all its “inventory, whether now owned or later acquired.” The creditor filed a financing statement listing both the name of the store and the name of the store’s sole equity owner. The creditor did not discover the addition of LLP to the business name for six months. During this time, all the collateral was sold and replaced. The security interest was perfected when the creditor first filed the financing statement.Is the financing statement seriously misleading in light of the debtor’s name change?25What information must a financing statement provide about a creditor?
What information must a financing statement provide about a creditor?26Does a financing statement need to describe the collateral it covers as specifically as the security agreement?
Does a financing statement need to describe the collateral it covers as specifically as the security agreement?27On January 1, a debtor received a $10,000 loan from a lender. The lender took a security interest in the debtor’s equipment pursuant to a security ...
On January 1, a debtor received a $10,000 loan from a lender. The lender took a security interest in the debtor’s equipment pursuant to a security agreement. The lender then filed an appropriate financing statement listing equipment as the covered collateral. A few months later, the lender loaned the debtor an additional $5,000 and took a security interest in the debtor’s accounts pursuant to another security agreement. The lender did not file another financing statement. The lender has an enforceable security interest in the debtor’s equipment and another enforceable security interest in the debtor’s accounts. Does the lender have a perfected security interest in both the equipment and the accounts?28On January 1, a debtor received a $10,000 loan from a lender. The lender took an enforceable security interest in the debtor’s equipment pursuant t...
On January 1, a debtor received a $10,000 loan from a lender. The lender took an enforceable security interest in the debtor’s equipment pursuant to a security agreement. The lender then filed an appropriate financing statement listing equipment as the covered collateral. A few months later, the lender loaned the debtor an additional $5,000, again taking an enforceable security interest in the debtor’s equipment pursuant to a security agreement. The lender did not file another financing statement. Does the lender have a perfected security interest in all the debtor’s equipment for $15,000?29For purposes of perfecting a security interest, where must a financing statement be filed?
For purposes of perfecting a security interest, where must a financing statement be filed?30What are the four main duties of a UCC filing office with regard to all financing statements and other records filed in the filing office?
What are the four main duties of a UCC filing office with regard to all financing statements and other records filed in the filing office?31For how long is a properly filed and completed financing statement effective to perfect a security interest?
For how long is a properly filed and completed financing statement effective to perfect a security interest?32When must a continuation statement be filed for a financing statement to remain effective for more than five years after filing?
When must a continuation statement be filed for a financing statement to remain effective for more than five years after filing?33How long does a secured creditor have to amend its financing statement if a debtor changes its name or a new debtor takes collateral subject to a s...
How long does a secured creditor have to amend its financing statement if a debtor changes its name or a new debtor takes collateral subject to a security interest?34Two corporations in the same state merged. The surviving entity acquired all of the acquired entity’s assets. By contract and under state law, the ...
Two corporations in the same state merged. The surviving entity acquired all of the acquired entity’s assets. By contract and under state law, the surviving entity became a new debtor under the acquired entity’s prior security agreements and took its assets subject to any prior security interests in them. Because of the transfer of assets, any financing statements filed to perfect security interests in the acquired entity’s assets became seriously misleading. What must the affected secured creditors do to maintain perfection of their security interests?35If a security interest is perfected by filing under one state’s laws, and a debtor that is not a registered organization later changes its location...
If a security interest is perfected by filing under one state’s laws, and a debtor that is not a registered organization later changes its location to a different state, how long does the security interest remain perfected?36A debtor was a general partnership with its place of business in State A. The debtor granted a security interest in its equipment to a lender. The ...
A debtor was a general partnership with its place of business in State A. The debtor granted a security interest in its equipment to a lender. The lender perfected this interest by filing a financing statement in State A. Two years later, the debtor moved its place of business to State B. Assuming the lender’s interest would have remained perfected in State A for three more years, how long after the debtor’s relocation does the lender have to perfect its interest in State B?37If a security interest is perfected by filing under one state’s laws, and a debtor that is a registered organization later changes its location to ...
If a security interest is perfected by filing under one state’s laws, and a debtor that is a registered organization later changes its location to a different state, how long does the security interest remain perfected?38A debtor was a registered organization in State A. After a significant change in the board of directors, the debtor was reincorporated in State B. ...
A debtor was a registered organization in State A. After a significant change in the board of directors, the debtor was reincorporated in State B. Several of the debtor’s secured creditors have perfected their security interests by filing proper financing statements in State A. At most, how long do the secured creditors have to take any needed action to continue their perfection now that the debtor has reincorporated in State B?39What are the two primary types of assignments for financing statements?
What are the two primary types of assignments for financing statements?40What happens to a financing statement once a debtor has fulfilled its obligations to the secured party?
What happens to a financing statement once a debtor has fulfilled its obligations to the secured party?41How does a creditor perfect a security interest in a fixture?
How does a creditor perfect a security interest in a fixture?42What information must a fixture filing contain?
What information must a fixture filing contain?43In general, to perfect a security interest in a vehicle, must a secured creditor work through the relevant state’s certificate-of-title system?
In general, to perfect a security interest in a vehicle, must a secured creditor work through the relevant state’s certificate-of-title system?44What is the one type of collateral in which a security interest can be perfected only by possession?
What is the one type of collateral in which a security interest can be perfected only by possession?45Does Article 9 define possession?
Does Article 9 define possession?46May a secured party designate another party to take possession of collateral on the secured party’s behalf?
May a secured party designate another party to take possession of collateral on the secured party’s behalf?47How long is possession of collateral effective to perfect a security interest?
How long is possession of collateral effective to perfect a security interest?48A debtor approached a friend to borrow money. As collateral for a small loan, the debtor offered the friend a ring. The friend agreed, taking posse...
A debtor approached a friend to borrow money. As collateral for a small loan, the debtor offered the friend a ring. The friend agreed, taking possession of the ring to inspect its quality and determine the appropriate terms for the loan. The next day, the friend returned the ring to the debtor, along with a proper security agreement, which the debtor signed. The security agreement detailed the loan’s terms and stated that the ring was to serve as collateral. The friend then gave the debtor the loan. The friend had an enforceable security interest in the ring the moment the loan was disbursed. Is the friend’s security interest perfected?49A debtor approached a friend to borrow money. As collateral for a small loan, the debtor offered the friend a ring. The friend agreed and took poss...
A debtor approached a friend to borrow money. As collateral for a small loan, the debtor offered the friend a ring. The friend agreed and took possession of the ring. The friend then drafted a simple security agreement stating that the friend would retain possession of the ring as collateral until the debtor repaid the loan in full. The friend then gave the debtor the requested loan. At that moment, the friend acquired an enforceable security interest in the ring. The next day, the friend placed the ring in a safety deposit box at a bank. The friend signed an agreement with the bank stating that the bank was holding the ring as bailee for the friend’s benefit.Does the friend have a perfected security interest in the ring?50What are the two types of collateral in which a security interest can be perfected only through control?
What are the two types of collateral in which a security interest can be perfected only through control?51What are the three ways for a secured party to establish control of a deposit account, for purposes of perfecting a security interest in the deposi...
What are the three ways for a secured party to establish control of a deposit account, for purposes of perfecting a security interest in the deposit account?52A debtor maintained a deposit account with a bank. To secure a loan from a credit company (the company), the debtor entered a security agreement gr...
A debtor maintained a deposit account with a bank. To secure a loan from a credit company (the company), the debtor entered a security agreement granting the company a security interest in the debtor’s deposit account with the bank. The debtor then entered an agreement with both the bank and the company. The agreement stated that the bank would comply with the company’s instructions regarding the debtor’s deposit account, without further consent by the debtor. However, the agreement also stated that the debtor retained the right to direct disposition of the funds in the deposit account, without further consent by the company. Assuming the company has an enforceable (attached) security interest in the deposit account, is that security interest perfected?53A man wanted to start a food-delivery service. The man maintained a deposit account at a bank, and he approached the bank for a start-up loan. The ...
A man wanted to start a food-delivery service. The man maintained a deposit account at a bank, and he approached the bank for a start-up loan. The bank agreed to extend a small loan in exchange for a security interest in the man’s deposit account maintained at the bank and the man’s delivery vehicles. Accordingly, the parties entered a security agreement providing for all this, and the bank extended the loan. At that point, the bank’s security interest attached to all the collateral. The bank then promptly filed a proper financing statement listing the deposit account and the man’s delivery vehicles as the collateral. The bank took no additional actions.Has the bank perfected its security interest in both the deposit account and delivery vehicles?54Can a secured party establish control of a letter-of-credit right if the issuer consents to an assignment of the letter’s proceeds?
Can a secured party establish control of a letter-of-credit right if the issuer consents to an assignment of the letter’s proceeds?55What types of security interests perfect automatically upon attachment to the collateral?
What types of security interests perfect automatically upon attachment to the collateral?56Under what circumstances does a security interest in an assignment of accounts or payment intangibles perfect automatically upon attachment?
Under what circumstances does a security interest in an assignment of accounts or payment intangibles perfect automatically upon attachment?57A man suffered a health crisis that generated thousands of dollars in medical bills. Fortunately for the man, his health insurance would cover most...
A man suffered a health crisis that generated thousands of dollars in medical bills. Fortunately for the man, his health insurance would cover most of these bills. The man authenticated a written agreement assigning his right to payment under the health-insurance policy to the medical provider. This ensured that the medical provider would receive payment and that the man was not billed directly for any expenses the insurer might pay. In the assignment agreement, the man accepted responsibility for the total final bill, which granted the medical provider a security interest in the health care insurance receivables.At this point, has the medical provider properly attached and perfected a security interest in the man’s health care insurance receivables?58Whenever a debtor acquires identifiable proceeds from the disposition of collateral, does the underlying security interest automatically attach to ...
Whenever a debtor acquires identifiable proceeds from the disposition of collateral, does the underlying security interest automatically attach to the proceeds?59If a debtor sells, licenses, leases, exchanges, or otherwise disposes of collateral that is subject to a perfected security interest, for how long ...
If a debtor sells, licenses, leases, exchanges, or otherwise disposes of collateral that is subject to a perfected security interest, for how long will a secured creditor enjoy an automatically perfected security interest in the proceeds of that disposition?60A lender perfected a security interest in a debtor’s inventory by filing a financing statement. Later, on March 1, the debtor sold five pieces of i...
A lender perfected a security interest in a debtor’s inventory by filing a financing statement. Later, on March 1, the debtor sold five pieces of inventory to one customer, who paid cash. The debtor deposited the cash into its deposit account that evening. On March 3, the debtor withdrew that cash from its deposit account to purchase new equipment. Assuming the lender takes no additional actions, what is the lender’s status as to this piece of equipment on April 1?61If a secured creditor receives an automatic, perfected security interest in the proceeds of collateral, under what circumstances may the automatic ...
If a secured creditor receives an automatic, perfected security interest in the proceeds of collateral, under what circumstances may the automatic perfection last for longer than 20 days after the disposition yielding the proceeds?62If a security interest was already perfected by one method, may the secured creditor later perfect the same security interest by a different method...
If a security interest was already perfected by one method, may the secured creditor later perfect the same security interest by a different method without losing its original priority date?63What is a buyer in the ordinary course of business?
What is a buyer in the ordinary course of business?64A debtor was in the timber business and often sold its timber to various lumber mills as gatewood (i.e., severed timber that the debtor brought to ...
A debtor was in the timber business and often sold its timber to various lumber mills as gatewood (i.e., severed timber that the debtor brought to a mill’s front gate and offered for sale to the mill). If the gatewood met the mill’s specifications, the mill would buy it. At trial on some issue, numerous timber-industry experts accurately testified that purchases of gatewood are common in the debtor’s jurisdiction. Under the UCC, would these transactions qualify as purchases in the ordinary course of business?65If a buyer in the ordinary course of business buys any goods, other than farm products from a person engaging in farming operations, does the buyer...
If a buyer in the ordinary course of business buys any goods, other than farm products from a person engaging in farming operations, does the buyer take free of any prior existing security interest created by the buyer’s seller in those goods?66A parent company had two wholly owned subsidiaries. A bank had a perfected security interest in the first subsidiary’s equipment, and a credit unio...
A parent company had two wholly owned subsidiaries. A bank had a perfected security interest in the first subsidiary’s equipment, and a credit union had a perfected security interest in the second subsidiary’s equipment. The parent decided to restructure its enterprise, so it transferred all of the first subsidiary’s equipment to the second subsidiary. Later, a priority dispute arose between the bank and the credit union. The credit union argued that it had a security interest in the transferred equipment that trumped the bank’s security interest in that equipment. The credit union claimed the second subsidiary took all of the first subsidiary’s equipment free of the bank’s security interest, because the second subsidiary was a buyer in the ordinary course of business. Was the transfer of equipment to the second subsidiary a sale in the ordinary course of business under the UCC?67How, if at all, could a close relationship between a buyer and a seller affect whether the buyer is considered a buyer in the ordinary course of bu...
How, if at all, could a close relationship between a buyer and a seller affect whether the buyer is considered a buyer in the ordinary course of business?68Under what circumstances will a buyer of consumer goods take free of any prior security interest?
Under what circumstances will a buyer of consumer goods take free of any prior security interest?69Do buyers of goods in the ordinary course or buyers of consumer goods take free and clear of possessory security interests?
Do buyers of goods in the ordinary course or buyers of consumer goods take free and clear of possessory security interests?70Which articles of the UCC generally govern whether buyers of intangibles and semi-tangibles (i.e., chattel paper and instruments) are eligible to t...
Which articles of the UCC generally govern whether buyers of intangibles and semi-tangibles (i.e., chattel paper and instruments) are eligible to take free of a conflicting prior security interest?71What must a purchaser of chattel paper do to have priority over a conflicting security interest in chattel paper that is claimed as proceeds of inv...
What must a purchaser of chattel paper do to have priority over a conflicting security interest in chattel paper that is claimed as proceeds of inventory collateral?72What must a purchaser of chattel paper do to have priority over a conflicting security interest in chattel paper that is not claimed as proceeds of...
What must a purchaser of chattel paper do to have priority over a conflicting security interest in chattel paper that is not claimed as proceeds of inventory collateral?73Does a buyer of chattel paper who knows that the sale violates the rights of a secured party have priority over the secured party’s interest in the...
Does a buyer of chattel paper who knows that the sale violates the rights of a secured party have priority over the secured party’s interest in the chattel paper itself?74If a purchaser of chattel paper sees the chattel paper listed on a financing statement, does the purchaser have knowledge that the sale violates th...
If a purchaser of chattel paper sees the chattel paper listed on a financing statement, does the purchaser have knowledge that the sale violates the rights of a secured party?75What are the requirements for a purchaser of instruments to have priority over an existing security interest in the instruments?
What are the requirements for a purchaser of instruments to have priority over an existing security interest in the instruments?76What is a possessory lien?
What is a possessory lien?77On January 1, a debtor granted a creditor a security interest in the debtor’s car to secure a loan. The creditor promptly and properly perfected th...
On January 1, a debtor granted a creditor a security interest in the debtor’s car to secure a loan. The creditor promptly and properly perfected this security interest. On March 1, the debtor took the car to a mechanic for repairs. Once the repairs were finished, the debtor could not pay the mechanic’s bill. The mechanic refused to relinquish the car. Under the state’s lien statute, the mechanic had a possessory lien in the car at that point. Later, the debtor defaulted on her obligations to the creditor. The car is a good.Does the mechanic have priority to the car?78In general, does Article 9 govern whether a debtor’s rights in collateral may be transferred?
In general, does Article 9 govern whether a debtor’s rights in collateral may be transferred?79Will an agreement between a debtor and a creditor prohibiting the debtor’s transfer of his rights in collateral prevent such a transfer from occurr...
Will an agreement between a debtor and a creditor prohibiting the debtor’s transfer of his rights in collateral prevent such a transfer from occurring?80A debtor authenticated a valid security agreement granting a security interest in its equipment to a bank. The security agreement provided that the...
A debtor authenticated a valid security agreement granting a security interest in its equipment to a bank. The security agreement provided that the debtor would not create a subsequent security interest in the equipment, and the agreement stated that any later security interest the debtor might try to create would be void. Subsequently, in violation of the security agreement with the bank, the debtor purported to grant a security interest in its equipment to another creditor.Is this second security interest in the equipment valid and enforceable, despite the security agreement between the debtor and the bank?81In secured-transactions law, what is priority?
In secured-transactions law, what is priority?82A debtor borrowed $100,000 from a bank pursuant to a security agreement granting the bank an enforceable security interest in the debtor’s equipmen...
A debtor borrowed $100,000 from a bank pursuant to a security agreement granting the bank an enforceable security interest in the debtor’s equipment. The bank promptly perfected this security interest by filing a financing statement. One month later, the debtor borrowed $25,000 from a lender pursuant to a security agreement granting the lender an enforceable security interest in the debtor’s inventory. The lender also perfected its security interest by filing a proper financing statement. Later that year, the debtor could not meet its financial obligations, so the bank and the lender moved to realize upon their collateral. Is a priority dispute likely to arise between the bank and the lender?83What is the general rule of priority for conflicting perfected security interests?
What is the general rule of priority for conflicting perfected security interests?84On January 1, a debtor borrowed $100,000 from a bank pursuant to a security agreement granting the bank an enforceable security interest in the deb...
On January 1, a debtor borrowed $100,000 from a bank pursuant to a security agreement granting the bank an enforceable security interest in the debtor’s equipment. The bank did not file a financing statement at that time. On February 1, the debtor borrowed $25,000 from a lender pursuant to a security agreement granting the lender an enforceable security interest in the debtor’s equipment. On that same day, the lender perfected its security interest by filing a proper financing statement. On March 1, the bank perfected its security interest by filing a proper financing statement. On June 1, the debtor was unable to meet its financial obligations. Does the lender have priority to the debtor’s equipment?85On January 1, a debtor approached a bank to borrow $100,000, secured by the debtor’s equipment. While the parties negotiated, the debtor permitted ...
On January 1, a debtor approached a bank to borrow $100,000, secured by the debtor’s equipment. While the parties negotiated, the debtor permitted the bank to file a proper financing statement covering the debtor’s equipment. The bank filed such a statement on January 1. On February 1, the debtor borrowed $25,000 from a lender pursuant to a security agreement granting the lender an enforceable security interest in the debtor’s equipment. That day, the lender perfected by filing a proper financing statement covering the equipment. On February 15, the bank and the debtor finalized the $100,000 loan and executed a security agreement granting the bank an enforceable security interest in the debtor’s equipment. The bank’s security interest was perfected at that point. Later, the debtor was unable to meet its financial obligations. Does the lender have priority to the debtor’s equipment?86If a secured party perfects a security interest but later suffers a lapse in perfection, may it reinstate perfection at the original priority date?
If a secured party perfects a security interest but later suffers a lapse in perfection, may it reinstate perfection at the original priority date?87Does a perfected security interest have priority over a conflicting unperfected security interest?
Does a perfected security interest have priority over a conflicting unperfected security interest?88What is the general rule of priority for conflicting unperfected security interests?
What is the general rule of priority for conflicting unperfected security interests?89On January 1, a debtor bought a car from a dealer on credit. The debtor promised to pay the dealer $250 per month for five years. The dealer took a...
On January 1, a debtor bought a car from a dealer on credit. The debtor promised to pay the dealer $250 per month for five years. The dealer took an enforceable security interest in the car but did not perfect the security interest. On March 1, a bank loaned the debtor $10,000 and took an enforceable security interest in the car. The bank did not perfect its security interest in the car. Later, the debtor was unable to meet her financial obligations. Does the dealer have the superior priority claim to the car?90How does the UCC determine the priority of a security interest in collateral securing future advances of funds to the debtor?
How does the UCC determine the priority of a security interest in collateral securing future advances of funds to the debtor?91On January 1, a bank made a loan to a debtor, taking a security interest in the debtor’s equipment. The security agreement included a future-advanc...
On January 1, a bank made a loan to a debtor, taking a security interest in the debtor’s equipment. The security agreement included a future-advances clause. That same day, the bank perfected its security interest by filing a financing statement. By April, the debtor completely repaid this loan to the bank. On June 1, a lender made a loan to the debtor, taking a security interest in the debtor’s equipment. The lender perfected by filing a financing statement. On July 1, the bank made another loan to the debtor, but the parties did not execute a security agreement to secure the loan because of the future-advances clause in their January 1 security agreement. By September, the debtor was unable to meet its financial obligations. Does the bank have priority to the debtor’s equipment?92What is the one circumstance in which a lien creditor may gain priority over an earlier perfected secured creditor?
What is the one circumstance in which a lien creditor may gain priority over an earlier perfected secured creditor?93Under what circumstances does a buyer or lessor of goods take priority over an earlier perfected interest in collateral securing a future advance o...
Under what circumstances does a buyer or lessor of goods take priority over an earlier perfected interest in collateral securing a future advance of credit?94In secured-transactions law, what does the term superpriority mean?
In secured-transactions law, what does the term superpriority mean?95For a purchase-money security interest (PMSI) in goods other than inventory or livestock to have superpriority, when must it be perfected?
For a purchase-money security interest (PMSI) in goods other than inventory or livestock to have superpriority, when must it be perfected?96An equipment company agreed to lend money to a buyer for the express purpose of enabling the buyer to purchase a particular copier. On January 1, t...
An equipment company agreed to lend money to a buyer for the express purpose of enabling the buyer to purchase a particular copier. On January 1, the company gave the buyer a check to purchase the particular copier, and the buyer authenticated a security agreement that read: “Security interest: that particular copier.” On January 5, the buyer purchased and received possession of the copier. On February 1, the company perfected its security interest by filing an appropriate financing statement, listing the collateral as “the copier.” The copier is equipment.At this point, did the company enjoy superpriority in the copier?97On January 1, a bank made a loan to a debtor and took a security interest in all of the debtor’s software, whether owned at the time or later acqui...
On January 1, a bank made a loan to a debtor and took a security interest in all of the debtor’s software, whether owned at the time or later acquired. That day, the bank perfected this security interest by filing an appropriate financing statement. On February 1, a seller sold the debtor, on credit, new software that the debtor planned to use in its office. That same day, the seller took a security interest in the software and perfected this interest by filing a financing statement. When the seller filed, it noticed the bank’s financing statement. Does the bank have priority to the debtor’s new software?98For a PMSI in inventory to have superpriority, when must the security interest be perfected?
For a PMSI in inventory to have superpriority, when must the security interest be perfected?99What are the four requirements that must be met for a perfected PMSI in inventory to have superpriority?
What are the four requirements that must be met for a perfected PMSI in inventory to have superpriority?100On January 1, a bank made a loan to a debtor and took a security interest in all the debtor’s inventory, whether owned at the time or later acquire...
On January 1, a bank made a loan to a debtor and took a security interest in all the debtor’s inventory, whether owned at the time or later acquired. The bank immediately perfected this security interest by filing a financing statement. On February 1, a seller sold the debtor, on credit, a good that the debtor immediately put in its inventory. The seller took a security interest in this good. The morning after the sale, the seller checked the state’s filing system and found the bank’s filing. Accordingly, the seller immediately filed its own financing statement and thus perfected its security interest.Does the bank have priority to the debtor’s new inventory?101What must a creditor with a PMSI in livestock do to achieve superpriority?
What must a creditor with a PMSI in livestock do to achieve superpriority?102How does the UCC determine priority among multiple conflicting security interests having superpriority?
How does the UCC determine priority among multiple conflicting security interests having superpriority?103What is the policy rationale behind extending superpriority to certain holders of perfected PMSIs?
What is the policy rationale behind extending superpriority to certain holders of perfected PMSIs?104What is the double-debtor problem in Article 9 of the UCC?
What is the double-debtor problem in Article 9 of the UCC?105Under what circumstances will a debtor-created security interest in acquired collateral be subordinate to a security interest created by another pe...
Under what circumstances will a debtor-created security interest in acquired collateral be subordinate to a security interest created by another person in the same collateral?106A farmer owned a tractor, which he used as equipment. The tractor was subject to a perfected security interest in favor of a bank. The farmer sold ...
A farmer owned a tractor, which he used as equipment. The tractor was subject to a perfected security interest in favor of a bank. The farmer sold the tractor to a relative, who did not pay fair-market value for the tractor. Thus, under state law, the relative took the tractor subject to the bank’s security interest, becoming a debtor in secured-transactions law. Later, the relative created an enforceable security interest in this tractor in favor of a lender. The lender perfected the interest. The bank timely took all steps necessary to continue perfection of its own security interest. Does the lender have priority to the tractor?107A bank had a perfected security interest in a company’s general intangibles, whether owned at the time or later acquired. A lender had a perfected ...
A bank had a perfected security interest in a company’s general intangibles, whether owned at the time or later acquired. A lender had a perfected security interest in a partnership’s general intangibles, whether owned at the time or later acquired. The partnership acquired the company. Under state law, the partnership assumed all the company’s obligations and took its assets subject to all prior security interests. The bank took all steps needed to continue perfection of its security interest after the acquisition.As to the general intangibles that already existed at the time of acquisition, does the bank have priority?108If a new debtor becomes bound under a security agreement, how does the UCC determine priority between conflicting security interests in after-acqui...
If a new debtor becomes bound under a security agreement, how does the UCC determine priority between conflicting security interests in after-acquired collateral perfected with a financing statement listing the new debtor and those perfected with a financing statement listing the original debtor, if the absence of the new debtor’s name makes the financing statement seriously misleading?109If a new debtor becomes bound under security agreements in which a single original debtor created multiple conflicting security interests in the sa...
If a new debtor becomes bound under security agreements in which a single original debtor created multiple conflicting security interests in the same collateral, how does the UCC determine priority?110When a new debtor becomes bound under security agreements that originated with different original debtors, how does the UCC determine priority?
When a new debtor becomes bound under security agreements that originated with different original debtors, how does the UCC determine priority?111Does a secured party with control over a deposit account generally have priority over a secured party who claims a conflicting interest but does no...
Does a secured party with control over a deposit account generally have priority over a secured party who claims a conflicting interest but does not have control?112How does the UCC determine priority among conflicting security interests in a deposit account held by secured parties with control?
How does the UCC determine priority among conflicting security interests in a deposit account held by secured parties with control?113Two competing creditors each perfected a security interest in the same deposit account by establishing control over it. One established control thr...
Two competing creditors each perfected a security interest in the same deposit account by establishing control over it. One established control through a control agreement with the debtor and the bank where the deposit account was maintained. The control agreement provided that the secured creditor could direct disposition of funds in the deposit account without further consent by the debtor. The other secured creditor was the bank where the deposit account was maintained.Which secured creditor had superior priority to the deposit account?114Two competing secured creditors each perfected a security interest in a deposit account through control. One established control by being the bank ...
Two competing secured creditors each perfected a security interest in a deposit account through control. One established control by being the bank where the deposit account was maintained. The other established control by becoming that bank’s customer with respect to the deposit account. Which secured creditor had superior priority to the deposit account?115Does a secured party with an interest perfected by control in investment property have control over a secured party with a conflicting interest per...
Does a secured party with an interest perfected by control in investment property have control over a secured party with a conflicting interest perfected by filing?116Each of two secured creditors had a security interest in the same investment property. On January 1, one creditor perfected its security interest b...
Each of two secured creditors had a security interest in the same investment property. On January 1, one creditor perfected its security interest by properly filing a financing statement. On February 1 of the same year, the other creditor perfected its security interest through control. Does the secured creditor that perfected through control have priority in the investment property?117How is priority determined between conflicting, perfected security interests in the same letter-of-credit right?
How is priority determined between conflicting, perfected security interests in the same letter-of-credit right?118What is the general rule of priority regarding security interests in fixtures?
What is the general rule of priority regarding security interests in fixtures?119A bank held a properly recorded mortgage on a debtor’s office building. During the first year that the debtor occupied the building, the debtor ins...
A bank held a properly recorded mortgage on a debtor’s office building. During the first year that the debtor occupied the building, the debtor installed a new central air-conditioning system. The system became a fixture upon installation. Subsequently, a lender took an enforceable security interest in all of the debtor’s fixtures to secure an extension of credit. The lender perfected this security interest by timely making a fixture filing.Assuming the general rule of priority in fixtures applies, does the lender have priority to the debtor’s air-conditioning system?120What are the four requirements for a proper fixture filing?
What are the four requirements for a proper fixture filing?121What are the requirements for PMSI in a fixture to confer superpriority as against a party with an interest in the underlying real property?
What are the requirements for PMSI in a fixture to confer superpriority as against a party with an interest in the underlying real property?122A bank held a properly recorded mortgage on a debtor’s office building. The debtor needed a central air-conditioning system but lacked the capital ...
A bank held a properly recorded mortgage on a debtor’s office building. The debtor needed a central air-conditioning system but lacked the capital to purchase it outright. Accordingly, the debtor approached a retailer, and the retailer sold the air-conditioning system to the debtor on credit. In return, the debtor gave the retailer a security interest in the system to secure payment of the purchase price. The parties executed a proper security agreement. The next day, the retailer installed the air-conditioning system and filed an appropriate fixture filing to perfect its security interest, which was a PMSI. The air-conditioning system became a fixture upon installation.Does the retailer have priority to the air-conditioning system?123What is the first-in-time exception to the general rule of priority regarding security interests in fixtures?
What is the first-in-time exception to the general rule of priority regarding security interests in fixtures?124In what two ways may a person with an interest in real property consensually subordinate that interest to a security interest in a fixture annexed ...
In what two ways may a person with an interest in real property consensually subordinate that interest to a security interest in a fixture annexed to the realty?125May a security interest exist in ordinary building materials incorporated into an improvement on land?
May a security interest exist in ordinary building materials incorporated into an improvement on land?126May a secured party make a fixture filing as a mere precaution?
May a secured party make a fixture filing as a mere precaution?127In secured-transactions law, what is an accession?
In secured-transactions law, what is an accession?128If a good that is collateral becomes an accession, what is the effect on the security interest?
If a good that is collateral becomes an accession, what is the effect on the security interest?129A debtor used computers to provide educational-technology services. A bank had an attached, perfected security interest in certain hardware that th...
A debtor used computers to provide educational-technology services. A bank had an attached, perfected security interest in certain hardware that the debtor added aftermarket to its computers. The hardware remained identifiable after it was added to the computers. The computers and the hardware are goods. Does the bank have an attached perfected security interest in the aftermarket hardware once it is added to the computers?130How does the UCC determine priority between a security interest in an accession and a security interest in the whole perfected through a certificat...
How does the UCC determine priority between a security interest in an accession and a security interest in the whole perfected through a certificate-of-title system?131A debtor granted a bank an enforceable security interest in its equipment (i.e., goods), including the vehicles that the debtor’s employees used to...
A debtor granted a bank an enforceable security interest in its equipment (i.e., goods), including the vehicles that the debtor’s employees used to travel to trainings throughout the state. The bank’s security interest was perfected, because it was properly noted on the title certificate of each vehicle. This complied with the state’s certificate-of-title system. Later, a tire depot sold the debtor new tires (also goods) on credit, and the debtor granted a security interest in the tires to the tire depot. The tire depot installed the tires on the vehicles and immediately perfected its security interest in the tires.Does the tire depot have priority in the tires?132In secured-transactions law, what are commingled goods?
In secured-transactions law, what are commingled goods?133If a good that is collateral becomes a commingled good, what is the effect on the security interest?
If a good that is collateral becomes a commingled good, what is the effect on the security interest?134How does the UCC determine priority if more than one security interest attaches to a product or mass of commingled goods that previously existed as...
How does the UCC determine priority if more than one security interest attaches to a product or mass of commingled goods that previously existed as noncommingled goods?135A debtor was a cake shop. A bank had a security interest in the debtor’s eggs and flour, which was perfected on January 15. The eggs and flour had ...
A debtor was a cake shop. A bank had a security interest in the debtor’s eggs and flour, which was perfected on January 15. The eggs and flour had a value of $1,000 and secured a debt of $1,000. On January 16, the debtor used the flour and eggs to make multiple cakes, which together had a value of $2,000. The eggs and flour became commingled goods. A finance company (the company) obtained a security interest in the debtor’s cakes, perfected on February 1. The company was owed $2,000. How much value is subject to each security interest?136A farmer installed a new engine in his truck. The next day, the farmer used this truck to move wheat to the base of a community grain elevator and ...
A farmer installed a new engine in his truck. The next day, the farmer used this truck to move wheat to the base of a community grain elevator and promptly unloaded the wheat into the grain elevator. The wheat was no longer separately identifiable, because it was combined with large quantities of grain from other farmers.How are the farmer’s truck engine and the wheat classified under Article 9 of the UCC?137What is a subordination agreement?
What is a subordination agreement?138On January 1, a debtor borrowed $100,000 from a bank. The bank took an enforceable security interest in the debtor’s accounts and immediately perfe...
On January 1, a debtor borrowed $100,000 from a bank. The bank took an enforceable security interest in the debtor’s accounts and immediately perfected. On February 1, the debtor borrowed $50,000 from a credit company (the company), which perfected a security interest in the debtor’s accounts. Later, the bank agreed to subordinate its security interest to the company’s. On March 1, the debtor borrowed $25,000 from a lender, which immediately attached and perfected a security interest in the debtor’s accounts. The debtor defaulted on all three loans having paid no principal. The debtor’s accounts were valued at $125,000.How much will each creditor receive from the accounts?139Under Article 9 of the UCC, may anyone besides the person entitled to priority effectively agree to subordinate the person’s claim?
Under Article 9 of the UCC, may anyone besides the person entitled to priority effectively agree to subordinate the person’s claim?140Does an assignee of an account generally take the assignment subject to the defenses and claims of an account debtor?
Does an assignee of an account generally take the assignment subject to the defenses and claims of an account debtor?141A bank perfected a security interest in equipment by filing a financing statement listing two debtors, an individual and a small business. Two year...
A bank perfected a security interest in equipment by filing a financing statement listing two debtors, an individual and a small business. Two years later, the bank decided to remove the individual from the financing statement. The bank had its agent file a proper, authorized termination statement that identified the filing number of the first financing statement. The bank then perfected again by filing a new financing statement listing only the small business as a debtor. What is the bank’s priority date with respect to the equipment?142Under what circumstances is an assignee bound to contract modifications made by the account debtor and assignor?
Under what circumstances is an assignee bound to contract modifications made by the account debtor and assignor?143If an account debtor receives authenticated notice of an assignment, whom should the account debtor pay to fulfill his obligations?
If an account debtor receives authenticated notice of an assignment, whom should the account debtor pay to fulfill his obligations?144Under what circumstances is authenticated notice of an assignment to an account debtor ineffective?
Under what circumstances is authenticated notice of an assignment to an account debtor ineffective?145May an account debtor ever continue to pay the assignor after receiving notification of an assignment?
May an account debtor ever continue to pay the assignor after receiving notification of an assignment?146Are provisions restricting the assignment of accounts, chattel paper, payment intangibles, and promissory notes effective?
Are provisions restricting the assignment of accounts, chattel paper, payment intangibles, and promissory notes effective?147May a secured party amend a financing statement without losing its priority date?
May a secured party amend a financing statement without losing its priority date?148Once a financing statement is filed, may a person release a portion of the collateral that is covered by the financing statement by filing an amend...
Once a financing statement is filed, may a person release a portion of the collateral that is covered by the financing statement by filing an amendment?149Once a debtor satisfies its secured obligations toward a party whose security interest is perfected by filing, how can the debtor ensure that the r...
Once a debtor satisfies its secured obligations toward a party whose security interest is perfected by filing, how can the debtor ensure that the relevant financing statement is terminated?150Does a secured party generally have a duty to provide a termination statement absent a demand from a debtor?
Does a secured party generally have a duty to provide a termination statement absent a demand from a debtor?151In what circumstances must a secured party file a termination statement even absent an authenticated demand from the debtor?
In what circumstances must a secured party file a termination statement even absent an authenticated demand from the debtor? To flip this card, please start your free trial or log in.