Exam 33: Secured Transactions in Personal Property

Because the financing statement is intended as notice to third parties, it must be filed in a public place.

Morris made two purchases. He purchased his neighbor Cordelia's typewriter and a computer from Crazy Computers. Regarding the typewriter, Cordelia had bought it on credit from Jack's Typewriters. Cordelia had financed the purchase with Jack's and signed a promissory note and a security agreement covering the purchase. The creditor, Jack's, did not file a financing statement, relying on the concept of automatic perfection for purchase money security interests in consumer goods. Morris was unaware of the history of the typewriter. The computer was subject to a security interest in favor of Country Bank, which had perfected its security interest by filing. Morris, by coincidence, knew of this security interest when Morris purchased the computer. Unfortunately, neither Cordelia nor Crazy Computers paid the secured creditors who now seek to repossess the collateral from Morris. What will be the likely outcome of this case?

Creditors cannot legally request collateral on a previously unsecured loan.

Electronic chattel paper is a record of a right to payment or property that is stored in an electronic medium.

Creditors receive an automatic 30-day temporary perfection in negotiable instruments taken as collateral.

A creditor must file a financing statement for a security interest to attach.

Upon a default by a buyer, the secured seller may resell the collateral:

Mark purchased a very expensive automobile on credit. Within a week, Mark discovered that a tune-up was necessary, for he was in the habit of driving at an excessive rate of speed. When the car was repaired, the bill was more than $1,000. Mark does not have the money to pay for the car repairs or the monthly car payments. The credit company as well as the repair shop are concerned over who has priority of repayment. Who has priority and why?

A purchase money security interest in consumer goods is automatically perfected without a creditor's filing or possession of the collateral.

Under Revised UCC Article 9, a financing statement must be signed by the debtor.

Consumer goods are classified into different categories based on the physical characteristics of the goods.

In a secured transaction, the person to whom the money is owed is secured party and the buyer is the debtor.

When a consumer gives a creditor a security interest in forthcoming health insurance proceeds, the creditor must file a statement with the insurance company in order to have a perfected security interest.

Collateral may change its form and character during the course of a security agreement.

Field warehousing is an example of perfection by the mere by possession of the collateral.

If a breach of the peace might occur:

_______, a form of possession under Article 9, occurs when a bank is able to require the debtor account holder to clear all transactions in that account.

The perfection obtained by filing a financing statement lasts for __________.

The concept of perfection: ______.:

A debtor may redeem collateral from the secured party at any time prior to sale or disposal by paying all legal costs and expenses incurred by the secured party.