What is a secured transaction?
A transaction intended to create a security interest in personal property or fixtures.
What is a security agreement?
Agreement between the debtor and the secured party that creates the security interest.
What is a purchase money security interest?
A special type of security interest that is created when a creditor extends value to the debtor for the purpose of enabling the debtor to acquire rights in the collateral.
What is a seller-financed PMSI?
The secured party sells the goods to the debtor on credit and retains a security interest in the goods sold.
What is a financer-financed PMSI?
- The creditor loans the funds to the debtor to enable the debtor to buy specific collateral,
- Those funds are used by the debtor to acquire the specific collateral, and
- The creditor takes a security interest in that collateral.
What is an after-acquired property clause?
A clause that allows a secured party to obtain a security interest in property that the debtor will obtain in the future.
What is a future advance clause?
A clause that allows the secured party to make future loans to the debtor and secure them in the present security agreement.
What is attachment?
Gives the secured party a security interest in the collateral against the debtor.
A creditor is not secured until attachment.
What is perfection?
Grants a secured party rights against another claimant to a debtor’s collateral.
What is a financing statement?
Document used to give the public notice of the security interest.
What is the applicable law of secured transactions?
Article 9 of the Uniform Commercial Code.
What are the categories of tangible collateral?
- Consumer goods
- Equipment
- Farm products
- Inventory
How is the category of tangible collateral determined?
It depends on how the debtor is using the collateral.
Define consumer goods
Goods used or bought primarily for personal, family, or household purposes.
Define equipment
Goods that are used or bought for use in a business.
This is also the catch-all category for all goods that are not consumer goods/inventory/farm products.
Define farm products
Crops or livestock or supplies used or produced in farming operations or products of crops or livestock in their unmanufactured states if they are in the possession of a debtor engaged in farming operations.
Define inventory
- Goods held for sale or lease
- Goods that are to be furnished under service contracts, and
- Materials used or consumed in a business in a short period of time.
What are the categories of intangible collateral?
- Instruments
- Documents
- Chattel paper
- Investment property
- Accounts
- Deposit accounts
- Commercial tort claims
- General intangibles
How is the category of intangible collateral determined?
Depends on the nature of the collateral (not its use).
Define instruments
Pieces of paper representing the right to be paid (e.g., promissory notes, drafts, and certificates of deposit)
Define documents
Document that represents the right to receive goods.
Define chattel paper
A record which evidences both (1) a monetary obligation, and (2) a security interest in or a lease of specific goods (e.g., promissory note & security agreement together).
Define investment property
Items like stocks, bonds, mutual funds, and brokerage accounts containing such items.
Define accounts
A right to payment for property sold or services rendered (e.g., account receivable).
