Secured Transactions

Question 1

What does Article 9 govern?

Answer 1

Any transaction creating a security interest in personal property or fixtures (16.4%)

Question 2

What is a security interest?

Answer 2

Interest in personal property securing payment or performance of obligation (16.4%)

Question 3

What is attachment?

Answer 3

Moment security interest becomes enforceable against debtor (16.4%)

Question 4

What are the requirements for attachment?

Answer 4

(1) Value given (2) Debtor has rights in collateral (3) Authenticated security agreement describing collateral OR possession/control (16.4%)

Question 5

What qualifies as value?

Answer 5

Binding commitment, loan, or antecedent debt (16.4%)

Question 6

What must a security agreement contain?

Answer 6

Debtor authentication + description of collateral (16.4%)

Question 7

How specific must collateral description be?

Answer 7

Reasonably identifies collateral; “all assets” allowed (16.4%)

Question 8

What are the main collateral types?

Answer 8

Consumer goods, equipment, inventory, farm products (13.9%)

Question 9

What are consumer goods?

Answer 9

Used primarily for personal, family, or household purposes (13.9%)

Question 10

What is equipment?

Answer 10

Goods used in business not inventory or farm products (13.9%)

Question 11

What is inventory?

Answer 11

Goods held for sale or lease; raw materials; work in progress (13.9%)

Question 12

What are farm products?

Answer 12

Crops, livestock, supplies in farming operation (13.9%)

Question 13

What is chattel paper?

Answer 13

Record evidencing monetary obligation + security interest or lease (13.9%)

Question 14

What are accounts?

Answer 14

Right to payment for goods/services not evidenced by chattel paper (13.9%)

Question 15

What are deposit accounts?

Answer 15

Bank accounts (excluding consumer deposit accounts) (13.9%)

Question 16

What is perfection?

Answer 16

Steps required to protect security interest against third parties (16.4%)

Question 17

How is a security interest perfected?

Answer 17

Filing, possession, control, or automatic perfection (16.4%)

Question 18

When is filing sufficient?

Answer 18

Most collateral types (16.4%)

Question 19

Where is a financing statement (UCC-1) filed?

Answer 19

Debtor’s location (state of incorporation or residence) (16.4%)

Question 20

What must a financing statement include?

Answer 20

Debtor name, secured party name, collateral indication (16.4%)

Question 21

When does automatic perfection apply?

Answer 21

PMSI in consumer goods (16.4%)

Question 22

When is possession required for perfection?

Answer 22

Instruments, negotiable documents, tangible chattel paper (16.4%)

Question 23

When is control required for perfection?

Answer 23

Deposit accounts; investment property (16.4%)

Question 24

General priority rule among secured creditors?

Answer 24

First to file or perfect wins (16.4%)

Question 25

Who wins: perfected vs unperfected SI?

Answer 25

Perfected security interest (16.4%)

Question 26

Who wins: secured party vs lien creditor?

Answer 26

Perfected SI beats later lien creditor (16.4%)

Question 27

What is a PMSI?

Answer 27

Purchase-money security interest (16.4%)

Question 28

PMSI priority in consumer goods?

Answer 28

Automatically perfected; super-priority (16.4%)

Question 29

PMSI priority in inventory?

Answer 29

Requires filing + notice to prior secured creditors (16.4%)

Question 30

How to create a PMSI priority in equipment?

Answer 30

File within 20 days of debtor receiving possession (16.4%)

Question 31

Buyer in ordinary course vs SI?

Answer 31

Buyer takes free of SI created by seller (16.4%)

Question 32

What is an after-acquired property clause?

Answer 32

SI attaches to property debtor acquires later (8.2%)

Question 33

When is after-acquired property not allowed?

Answer 33

Consumer goods (except accessions) & commercial tort claims (8.2%)

Question 34

What are proceeds?

Answer 34

Whatever is received upon sale, exchange, or disposition of collateral (8.2%)

Question 35

Is a SI in proceeds automatically perfected?

Answer 35

Yes, temporarily (20 days) (8.2%)

Question 36

When does perfection in proceeds continue?

Answer 36

If same office filing or identifiable cash proceeds (8.2%)

Question 37

When does default occur?

Answer 37

As defined by security agreement (13.9%)

Question 38

Secured party rights after default?

Answer 38

Take possession; render equipment unusable; dispose of collateral (13.9%)

Question 39

Can a secured party repossess without court order?

Answer 39

Yes, if no breach of peace (13.9%)

Question 40

What constitutes breach of the peace?

Answer 40

Violence, threats, or entry over objection (13.9%)

Question 41

How must collateral be disposed of?

Answer 41

Commercially reasonable manner (13.9%)

Question 42

What notice is required before disposition?

Answer 42

Reasonable authenticated notice to debtor & secured parties (13.9%)

Question 43

What is a deficiency?

Answer 43

Debt remaining after collateral disposition (8.2%)

Question 44

Effect of commercially unreasonable sale?

Answer 44

Deficiency may be reduced or barred (8.2%)

Question 45

What is redemption?

Answer 45

Debtor’s right to reclaim collateral before disposition (8.2%)

Question 46

What must debtor pay to redeem?

Answer 46

Full obligation + reasonable expenses (8.2%)

Question 47

What are fixtures?

Answer 47

Goods so related to real property they become part of it (4.9%)

Question 48

How is a SI in fixtures perfected?

Answer 48

Fixture filing in real estate records (4.9%)

Question 49

What are accessions?

Answer 49

Goods physically united with other goods (4.9%)

Question 50

Priority rule for accessions?

Answer 50

First to file or perfect (4.9%)