All flashcards
151 cards
41How does a creditor perfect a security interest in a fixture?
42What 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?
44What is the one type of collateral in which a security interest can be perfected only by possession?
45Does Article 9 define possession?
46May 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?
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 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 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?
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 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 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 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?
55What 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?
57A 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 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 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 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 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 without losing its original priority date?
63What 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 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 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 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 business?
68Under 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?
70Which 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 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 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 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 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?
76What 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 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?
79Will 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 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?