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Answer Formula (Secured Transactions)
- For each piece of collateral:
- -secured parties (attachment, PMSI, security interest, perfection)
- -buyers' rights
Secured party gives value, debtor has rights in collateral, and debtor wither signs security agreement or gives possession of the collateral to secured party under oral agreement (pledge).
Written Security Agreement
- -grant security interest
- -identify collateral
- -be signed by debtor
Four categories of goods
Farm products, inventory, consumer goods, equipment. Must be defined by debtor's use at time of attachment.
After-acquired property clause
Valid and attachment occurs when debtor acquires rights in the collateral.
Purchase Money Security Interest (PMSI)
- -Seller: credit seller gets PMSI for unpaid purchase price.
- -Lender: lends debtor funds to purchase collateral, takes PMSI in collateral itself.
Attachment + Possession
Perfection by filing requires a financing statment that gives debtor's correct name, describes collateral, and authorized by debtor (by signing security agreement)
Financing Statement filing
Must be filed with Department of Licensing for everything except filings against fixtures (county real estate records).
Perfected has priority over unperfected; between 2 perfected interests, first to file has priority.
PMSI in inventory has superpriority if filed and signed, and written notice given to prior secured parties of record before debtor receives possession of collateral.
Good faith purchaser's taking
- -Subject to perfected security interest
- -Free from unperfected security interest
Perfected security interest remains effective when sold without secured party's permission and aslo attaches to proceeds of sale received by debtor.
Buyer in ordinary course of business
takes free when bought in good faith and debtor is dealer of those goods.
requires that debtor have defaulted and must not breach peace.
Creditor must give 10 days notice of public/private sale to debtor and other secured parties and all aspectrs of sale must be commercially reasonable.
Proceeds of Repo Sale
go to expenses and unpaid claims of repossessor, unpaid claims of secured parties with lower priority, and surplus (if any) to debtor.
Liability to debtor
Secured party is liable to debtor for any loss or damage caused by violation of Article 9, including claims for conversion.
Priority of PMSI in inventory
PMSI in inventory takes superpriority if secured party files and gives notice to other secured parties of record of the secured interest before debtor takes possession.
Priority of PMSI in noninventory collateral
PMSI in noninventory collateral has priority in same collateral if it is perfected within 20 days after debtor receives possession of the collateral.
Interest against Subsequent Transferees
SI is valid against subsequent transferees.
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