Secured Transactions

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Secured Transactions
2011-07-21 15:01:33
Washington Bar Exam Secured Transactions

Secured Transactions
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  1. Answer Formula (Secured Transactions)
    • For each piece of collateral:
    • -secured parties (attachment, PMSI, security interest, perfection)
    • -priorities
    • -buyers' rights
    • -remedies
  2. Attachment
    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).
  3. Written Security Agreement
    • Must:
    • -grant security interest
    • -identify collateral
    • -be signed by debtor
  4. Four categories of goods
    Farm products, inventory, consumer goods, equipment. Must be defined by debtor's use at time of attachment.
  5. After-acquired property clause
    Valid and attachment occurs when debtor acquires rights in the collateral.
  6. 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.
  7. Perfection
    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)
  8. Financing Statement filing
    Must be filed with Department of Licensing for everything except filings against fixtures (county real estate records).
  9. Basic Priority
    Perfected has priority over unperfected; between 2 perfected interests, first to file has priority.
  10. Superpriority
    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.
  11. Good faith purchaser's taking
    • -Subject to perfected security interest
    • -Free from unperfected security interest
  12. Sold collateral
    Perfected security interest remains effective when sold without secured party's permission and aslo attaches to proceeds of sale received by debtor.
  13. Buyer in ordinary course of business
    takes free when bought in good faith and debtor is dealer of those goods.
  14. Repossession
    requires that debtor have defaulted and must not breach peace.
  15. Repossession notice
    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.
  16. 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.
  17. Liability to debtor
    Secured party is liable to debtor for any loss or damage caused by violation of Article 9, including claims for conversion.
  18. 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.
  19. 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.
  20. Interest against Subsequent Transferees
    SI is valid against subsequent transferees.