UCC Article 9 secured transactions concepts tested on the bar exam.
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- What is a secured transaction?
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A transaction in which a creditor obtains a security interest in the debtor's personal property to secure payment or performance of an obligation.- What is a security interest?
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An interest in personal property or fixtures that secures payment or performance of an obligation.- Who is the debtor in a secured transaction?
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The person who owes payment or other performance of the obligation secured by the security interest.- Who is the secured party?
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The lender or other person in whose favor a security interest is created.- What is collateral?
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The personal property or fixtures in which a security interest is created.- What are the three requirements for attachment of a security interest?
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The secured party must give value, the debtor must have rights in the collateral, and there must be an authenticated security agreement.- Must a security agreement be in writing?
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Generally yes, the security agreement must be authenticated (a record that is signed or otherwise authenticated), except when the secured party has possession of the collateral.- What does 'authenticated' mean under UCC Article 9?
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The security agreement must be in a record and signed, or the parties must intend it to be bound and the record must be stored in a manner permitting retrieval.- What is perfection of a security interest?
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Steps taken by the secured party to give public notice of its security interest so that it has priority over certain other creditors.- What are the main methods of perfection?
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Filing a UCC-1 financing statement, taking possession of the collateral, or control in certain cases (securities, deposit accounts, electronic chattel paper).- What is a UCC-1 financing statement?
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A form filed to give public notice of a security interest in personal property, typically containing the debtor's name, secured party's name, and description of collateral.- What is the search logic rule?
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A UCC-1 is found if a search on the debtor's name, using the filing office's standard search logic, would reveal the filing.- What is priority between a perfected secured party and an unperfected secured party?
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The perfected secured party has priority over the unperfected secured party and the debtor's general creditors.- What is a purchase money security interest (PMSI)?
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A security interest in goods taken or retained by a seller or a security interest in goods taken by a lender to acquire or use those goods.- What is the PMSI super-priority rule?
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A properly perfected PMSI in inventory or equipment takes priority over a prior perfected nonpurchase money security interest, if the PMSI holder gives notification to the holder of the conflicting security interest.
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