All flashcards
151 cards
81In 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 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?
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 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 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?
87Does a perfected security interest have priority over a conflicting unperfected security interest?
88What 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 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?
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-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?
93Under 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?
95For 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, 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 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?
99What 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 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?
102How 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?
104What 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 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 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 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-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 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?
111Does 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?
113Two 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 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 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 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?
118What 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 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?