Exam 38: Secured Transactions and Suretyship

Attachment must occur in order to make a security interest enforceable against the debtor and against third parties.

A security interest in consumer goods is always automatically perfected upon attachment.

A PMSI is created in goods when a seller retains a security interest in the goods sold on credit by a security agreement.

If there are two unperfected security interests in the same goods, the first to attach has priority.

Every consensual secured transaction involves:

The right of the surety against the principal debtor, enforceable at equity, to require the principal debtor pay the creditor when the obligation is due is the right of:

With the exception of pledges, a security agreement must:

Diane, who is seventeen years old, purchased an auto from Elvira on credit.Florence agreed to act as surety and signed a written surety agreement.At the time of purchase, Diane specifically asked Elvira about the condition of the car's motor and was told that it had just been replaced with a new one and was in fine condition.This was blatantly untrue, because Elvira knew it was in terrible shape and would only last a short time.The auto has now stopped running and Diane refuses to make any more payments.Elvira is now proceeding against Diane and Florence.What defenses, if any, are available to (a) Diane and (b) Florence?

"Attachment" occurs when a secured party gives value, the debtor has acquired rights in the collateral, and:

A buyer in the ordinary course of business takes collateral (other than farm products) free of any security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.

Article 9 of the UCC is flexible, simple, and it allows a variety of forms of secured financing.

Temporary 20-day automatic perfection of a negotiable instrument would prevent any future holder of the instrument from taking priority.

Payment of the debt or performance of the obligation discharges both the principal debtor and the surety.

Under Article 9 of the UCC, a pledge is:

If the debtor is in default and the secured party wants to repossess the collateral in order to sell it, he must get a court order to do so.

Article 9 of the UCC applies to a security interest without consent that arises by operation of law, such as a mechanic's lien.

Under the Revised Act, a debtor need not sign the financing statement.

The Code's classifications of collateral according to nature are: (a) goods; (b) intangibles; and (c) dispensable paper.

The creditor's rights against the principal debtor are determined by the contract between them.

A tangible or electronic record that evidences both a monetary obligation and a security interest in or a lease of specific goods is known as: