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Secured Transactions Bar Exam Outline

Law Outlines > Oklahoma Bar Bundle Outlines

This is an extract of our Secured Transactions Bar Exam document, which we sell as part of our Oklahoma Bar Bundle Outlines collection written by the top tier of Oklahoma City University School Of Law students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Oklahoma Bar Bundle Outlines. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Secured Transactions BASIC APPROACH

* Classify the collateral

* Determine if a security interest has been created, ie. Attachment

* Determine if the security interest has been properly Perfected

* Determine the persons who are making claims to the collateral

* Apply proper Priority rules and rules regarding Repossession SCOPE OF ARTICLE 9

* Subject Matter of Article 9 o Is the transaction within the scope of Article 9

*
Collateralized Transaction Any transaction (regardless of its form) which is intended to createa security interest in PERSONAL PROPERTY or FIXTURES Property Types:*
Already owned by debtor

*
To be acquired with loan= Purchase Money Security Interest (PMSI)

*
After Acquired

*

Sales of Receivables Outright sale of accounts, chattel paper, payment intangibles, andpromissory notes are covered by Article 9

*

Consignments Consignments which must comply w/ Article 9* Consigned goods are worth a total of $1000 or more, AND

* The consignor did not use the goods for personal, family, or household purposes, AND

* Potentially Deceptive Consignee (not pawn shop)

* Consignee deals w/ goods of that kind under a name other than the consignor's name

* Consignee is not an auctioneer, and

* Consignee is not generally known by consignee's creditors to be substantially engaged in selling consigned goods

*

Agricultural Liens Created by Statute

*

Lease-Purchase Agreements Does not govern true leases of personal propertyBUT, a lease which is actually an installment sale is covered* Ex. Lessee cannot terminate lease AND:

* Lease term is equal to or greater than remaining economic life of goods, or

* Lessee owns property at end of lease term, or

* Lessee has option to buy for nominal consideration at end of lease term

* Exclusions from Article 9 o Rights Governed by Federal Law prevail

*
Ie. ships, planes, railroad engines o Real Property (except Fixtures) o Tort Claims

*
BUT, commercial tort claims, business claims not involving personal injury o o

are covered (unfair competition) Statutory Lien

*
Landlord lien, mechanics liens Wage Assignments

CLASSIFICATION OF COLLATERAL

* Overview o Mutually Exclusive

*
Any particular item can only be one type of collateral o Debtor's Use Determinative

*
Classify collateral from Debtor's perspective

* Goods o In General

*
Moveable Items & Fixtures

*
Specific Inclusions= goods Standing timberGrowing CropsUnborn young of Animals*
Specific Exclusions= Not Goods MoneyMinerals In Place Before ExtractionCollateral that Fits Other Categories (8 other)o

Classification of Goods (4 Types)

*

Consumer Goods Personal, family, or household purposes*

Equipment Goods used or bought for use primarily in business (includingfarming or a profession) Equipment= DEFAULT CATEGORY: if good doesn't fit othercategory then deemed equipment

*

Inventory Goods held for sale or lease in the ordinary course of businessRaw material & work in progressConsumed materials* At law firm your papers, pencils, pens, yellow pads, ink cartridges, etc.

*

Farm Products

Ex. Cows, corn, turkey, pigs, wheat, eggs even in carton (until atstore)*

To be a farm product, 2 Elements

* In possession of farmer engaged in farming operations, AND

* In an UN-MANUFACTURED condition

Multiple Uses Principal use determinative* Semi-Tangible & Intangible Collateral o Instruments

*
Instruments represent MONEY Ex. Commercial paper, check, notes, drafts, certificate of deposito Documents

*
Writing that represents goods Warehouse Receipt- goods in storageBill or Lading- goods in transito

o

Chattel Paper

*
Single writing or group of writings evidences 2 Things
? Monetary Obligation (eg. Promisorry note), PLUS
? Security interest in or Lease of Goods Account

*
Any right to payment of money for goods sold or leased or for services rendered NOT evidenced by an instrument or chattel paper

*
Typical ACCOUNTS RECEIVABLE of a business- what clients owe you

*
Includes contract rights which have not yet been earned by performance

*
Includes computer software license fees and credit card receivables

o

Deposit Accounts

*
Checking & Saving Account

o

Investment Property

*
Wall Street Stuff
? Stocks, bonds, mutual funds

o

Commercial Tort Claims

*
Business tort claims that don't involve personal injury
? Ex. Unfair competition claim

o

General Intangibles

*
Any other type of personal property except money
? Ex. Patents, copyrights, trade name, liquor license

* Proceeds o Proceeds are whatever is received upon the sale, exchange, collection or

other disposition of collateral or proceeds

*
Proceeds may include collateral a creditor could not have a security interest in if originally used as collateral, such as cash

ATTACHMENT

* Three Elements (VCR) o Creditor Gave Value o Contract- The Security Agreement o Debtor has Rights in collateral NO Attachment till have ALL elements satisfied

* Creditor Gives Value o Money, goods on credit, etc.

* Contract- The Security Agreement o Contract between the debtor and creditor in which debtor gives creditor a security

interest in the collateral o Methods of Proving Security Agreement

*
Oral ONLY if collateral is in creditor's possession*
Ex. Pledge (pawn shop)

*
Creditor must take reasonable care of collateral

*

*

Authenticated Record (Most Common) Evidence of Record* Written or electronic

* Signed or marked w/ present intent to identify the DEBTOR and adopt the agreement Description of Collateral* Must reasonably identify the property, to make it clear what can be repossessed if default

* Consumer goods & tort claims may not be described by type alone

* Super-generic descriptions not allowed: ie. "all my personal property" Control Security agreement may be demonstrated by control if thecollateral is deposit accounts, electronic documents or chattel paper, or investment property

* Control basically means creditor has right to sell or cash in the collateral w/o further action from debtor

* NOTE:

* Blank endorsement, special endorsement on check

* Debtor Has Rights in The Collateral o Rights like ownership or identification to a contract o Cant use other person's property as collateral w/o their permission

* After-Acquired Property o Using New Property As Collateral For Old Loan

*

Debtor can agree that new acquisitions or property will serve as additional collateral for an old loan Referred to as Floating Loan and very common with INVENTORYo

Consumer Goods Exception- 10 day limitation from creditor giving value

*
An after-acquired property clause will work only for consumer goods acquired w/in 10 DAYS of creditor giving value

o

Commercial Tort Claim Exception

*
After-acquired property clauses wont work w/ commercial tort claims

* Future Advances o Debtor can agree that the collateral will serve as collateral for new loans, as well

as the current loan

*
Line of Credit

*
Looks for words "serve as collateral for current debt/obligation to creditor and any new or hereafter accruing debt/obligation to creditor" PERFECTION

* Elements of Perfection o Attachment

*
Value

*
Contract

*
Rights o Act of Perfection

*
Appropriate act depends on type of collateral.

* Perfection by Possession o Almost all collateral may be Perfected by Possession

*
Puts world on notice o Exceptions (nothing to possess)

*
Accounts

*
Deposit accounts

*
Nonnegotiable documents

*
Electronic chattel paper

*
General intangibles o Loss of Possession

*
General Rule Perfection is lost when possession by creditor is lost*
20 day exception for Instrument, Negotiable Documents, & Certified

Securities

* Filing of Financing Statement- UCC-1 o Almost all collateral may be Perfected By Filing o Exceptions

*
Deposit accounts

*
Money o Requirements of Financing Statement (puts on inquiry notice)

*
Names of Debtor & Creditor

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