Security Interest

Question 1

Security interest created by

Answer 1

(1) a security agreement or possession of the collateral by the SP; and
(2) attachment

Question 2

Security agreement requirements

Answer 2

(1) be in writing;
(2) be authenticated (i.e., signed) by Debtor;
(3) contain a granting clause; and
(4) contain a description of the collateral

Question 3

Sufficient description in security agreement

Answer 3

The description of collateral in security agreement is sufficient if it “reasonably identifies what is described”

Question 4

Possession rule

Answer 4

SP must possess the collateral with the INTENT to secure a debt

If SP has possession, the security agreement can be ORAL

Question 5

Purchase money security interest

Answer 5

SP has a PMSI if the obligation is incurred:

• as all or part of the price of the collateral (e.g., a direct-financing seller); or
• for value given to enable the debtor to acquire or use the collateral, if the value is in fact so used (e.g., a bank loans Debtor money to purchase the collateral)