Secured Transactions
Assignment 8
Formalities for Attachment
1
The Big Picture
Chapter 1. Creditors’ Remedies Under State Law
Chapter 2. Creditors’ Remedies in Bankruptcy
Chapter 3. Creation of Security Interests
Assignment 8: Formalities for Attachment
Assignment 9: What Collateral and Obligations are
Covered?
Assignment 10: Proceeds (State Law)
Assignment 11: Proceeds (Bankruptcy)
Assignment 12: Skip
2
The Big Picture
Chapter 1. Creditors’ Remedies Under State Law
Chapter 2. Creditors’ Remedies in Bankruptcy
Chapter 3. Creation of Security Interests
Assignment 8: Formalities for Attachment
Assignment 9: What Collateral and Obligations are
Covered?
Assignment 10: Proceeds (State Law)
Assignment 11: Proceeds (Bankruptcy)
Assignment 12: Skip
3
The Big Picture
Chapter 1. Creditors’ Remedies Under State Law
Chapter 2. Creditors’ Remedies in Bankruptcy
Chapter 3. Creation of Security Interests
Assignment 8: Formalities for Attachment
Assignment 9: What Collateral and Obligations are
Covered?
Assignment 10: Proceeds (State Law)
Assignment 11: Proceeds (Bankruptcy)
4
UCC Article 1
1.
Definitions and provisions applicable in all other Articles
2.
“Current” Article 1, “Revised” Article 1
3.
A majority of states have adopted Revised Article 1.
4.
Revised Article 1 is the “law of the course.”
5
Basic Concepts
Attachment: creation of a security interest
Asset
“Collateral”
Lien
Security interest
Debt
“Obligation”
§9-203(a) A security interest attaches to collateral when it
becomes enforceable . . .
(b) [A] security interest is enforceable . . . only if:
(1) value has been given (§1-201(44))
(2) the debtor has rights in the collateral (§2-501(1)(a));
and
(3)(A) the debtor has authenticated a security agreement
that provides a description of the collateral . . .
6
Basic Concepts
Attachment: creation of a security interest
Asset
“Collateral”
Lien
Security interest
Debt
“Obligation”
§9-203(a) A security interest attaches to collateral when it
becomes enforceable . . .
(b) [A] security interest is enforceable . . . only if:
(1) value has been given (§1-201(44))
(2) the debtor has rights in the collateral (§2-501(1)(a));
and
(3)(A) the debtor has authenticated a security agreement
that provides a description of the collateral . . .
7
Basic Concepts
Attachment: creation of a security interest
Asset
“Collateral”
Lien
Security interest
Debt
“Obligation”
§9-203(a) A security interest attaches to collateral when it
becomes enforceable . . .
(b) [A] security interest is enforceable . . . only if:
(1) value has been given (§1-204)
(2) the debtor has rights in the collateral (§2-501(1)(a));
and
(3)(A) the debtor has authenticated a security agreement
that provides a description of the collateral . . .
8
Basic Concepts
Attachment: creation of a security interest
Asset
“Collateral”
Lien
Security interest
Debt
“Obligation”
§9-203(a) A security interest attaches to collateral when it
becomes enforceable . . .
(b) [A] security interest is enforceable . . . only if:
(1) value has been given (§1-204)
(2) the debtor has rights in the collateral (§2-501(1)(a));
and
(3)(A) the debtor has authenticated a security agreement
that provides a description of the collateral . . .
9
Basic Concepts
Value has been given [by the secured party]
10
Basic Concepts
Value has been given [by the secured party]
?
Secured
party
Debtor
Security interest
11
Basic Concepts
Value has been given [by the secured party]
Loan
or loan commitment
Secured
party
Debtor
Security interest
12
Basic Concepts
Value has been given [by the secured party]
Previously
unsecured loan
Secured
party
Debtor
Security interest
A loan made unsecured (“past consideration”) is value
with respect to a later-granted security interest
13
Basic Concepts
Value has been given [by the secured party]
§1-204. [A] person gives “value” for rights if the person
acquires them . . . (2) as security for . . . a pre-existing claim .
. . or (4) in return for any consideration sufficient to support a
simple contract.
Previously
unsecured loan
Secured
party
Debtor
Security interest
A loan made unsecured (“past consideration”) is value
with respect to a later-granted security interest
14
Basic Concepts
Debtor has rights in the collateral [ownership, lease, etc.]
15
Basic Concepts
Debtor has rights in the collateral [ownership, lease, etc.]
Secured
party
License
Trademark
owner
Security interest
In “trademark”
Debtorlicensee
16
Basic Concepts
Debtor has rights in the collateral [ownership, lease, etc.]
Secured
party
Title to goods
Seller
Security
interest
Debtor
Bad check
17
Basic Concepts
Debtor has rights in the collateral [ownership, lease, etc.]
Secured
party
Rights in goods
not yet delivered
Seller
Security
interest
Debtor
No consideration yet paid
18
Basic Concepts
Debtor has rights in the collateral [ownership, lease, etc.]
§2-501(1)(a) The buyer obtains a special property . . .
interest in goods by identification of existing goods as goods
to which the contract refers . . . . In the absence of explicit
agreement identification occurs when the contract is made if
it is for the sale of goods already existing and identified.
Secured
party
“Identification”
Seller
Security
interest
Debtor
No consideration paid
19
Basic Concepts
Debtor has authenticated a security agreement . . .
§9-102(a)(7). Authenticate means:
(A) to sign; or
(B) to execute or otherwise adopt a symbol, or encrypt or
similarly process a record in whole or in part, with the
present intent of the authenticating person to identify the
person and adopt or accept a record.
Record . . . means information that is inscribed on a tangible
medium or which is stored in an electronic or other
medium and is retrievable in perceivable form. §9102(a)(69)
Is something in my memory a record?
20
Basic Concepts
Debtor has authenticated a security agreement . . .
§9-102(a)(7). Authenticate means:
(A) to sign; or
(B) to execute or otherwise adopt a symbol, or encrypt or
similarly process a record in whole or in part, with the
present intent of the authenticating person to identify the
person and adopt or accept a record.
Record . . . means information that is inscribed on a tangible
medium or which is stored in an electronic or other
medium and is retrievable in perceivable form. §9102(a)(69)
Is something in my memory a record?
21
Basic Concepts
Debtor has authenticated a security agreement . . .
§9-102(a)(7). Authenticate means:
(A) to sign; or
(B) to execute or otherwise adopt a symbol, or encrypt or
similarly process a record in whole or in part, with the
present intent of the authenticating person to identify the
person and adopt or accept a record.
Record . . . means information that is inscribed on a tangible
medium or which is stored in an electronic or other
medium and is retrievable in perceivable form. §9102(a)(69)
Is something in my memory a record?
22
Basic Concepts
Debtor has authenticated a security agreement . . .
§9-102(a)(7). Authenticate means:
(A) to sign; or
(B) to execute or otherwise adopt a symbol, or encrypt or
similarly process a record in whole or in part, with the
present intent of the authenticating person to identify the
person and adopt or accept a record.
Record . . . means information that is inscribed on a tangible
medium or which is stored in an electronic or other
medium and is retrievable in perceivable form. §9102(a)(69)
Is something in my memory a record?
23
Basic Concepts
Debtor has authenticated a security agreement . . .
§9-102(a)(7). Authenticate means:
(A) to sign; or
(B) to execute or otherwise adopt a symbol, or encrypt or
similarly process a record in whole or in part, with the
present intent of the authenticating person to identify the
person and adopt or accept a record.
Example: I sent you an email stating “I grant you a security
interest in my car. B.M.Mc.” tronic or other medium and is
retrievable in perceivable form. §9-102(a)(69)
Is something in my memory a record?
24
Basic Concepts
Debtor has authenticated a security agreement . . .
§9-102(a)(7). Authenticate means:
(A) to sign; or
(B) to execute or otherwise adopt a symbol, or encrypt or
similarly process a record in whole or in part, with the
present intent of the authenticating person to identify the
person and adopt or accept a record.
Record . . . means information that is inscribed on a tangible
medium or which is stored in an electronic or other
medium and is retrievable in perceivable form. §9102(a)(69)
Is something in my memory a record?
25
Basic Concepts
Debtor has authenticated a security agreement . . .
§9-102(a)(7). Authenticate means:
(A) to sign; or
(B) to execute or otherwise adopt a symbol, or encrypt or
similarly process a record in whole or in part, with the
present intent of the authenticating person to identify the
person and adopt or accept a record.
Record . . . means information that is inscribed on a tangible
medium or which is stored in an electronic or other
medium and is retrievable in perceivable form. §9102(a)(69)
Is an oral security agreement a record?
26
Basic Concepts
Debtor has authenticated a security agreement . . .
§9-102(a)(7). Authenticate means:
(A) to sign; or
(B) to execute or otherwise adopt a symbol, or encrypt or
similarly process a record in whole or in part, with the
present intent of the authenticating person to identify the
person and adopt or accept a record.
Record . . . means information that is inscribed on a tangible
medium or which is stored in an electronic or other
medium and is retrievable in perceivable form. §9102(a)(69)
Is an oral security agreement a record? Is my recollection of
it a record?
27
Basic Concepts
Security agreement . . .
§9-102(a)(73). Security agreement means an agreement that creates or provides
for a security interest.
That provides a description of the collateral
§9-108(a) [A] description of personal or real property is
sufficient, whether or not it is specific, if it reasonably
identifies what is described.
(b) [A] description of collateral reasonably identifies the
collateral if . . . the identity of the collateral is “objectively
determinable.
28
Basic Concepts
Security agreement . . .
§9-102(a)(73). Security agreement means an agreement
that creates or provides for a security interest.
That provides a description of the collateral
§9-108(a) [A] description of personal or real property is
sufficient, whether or not it is specific, if it reasonably
identifies what is described.
(b) [A] description of collateral reasonably identifies the
collateral if . . . the identity of the collateral is “objectively
determinable.
29
Basic Concepts
Security agreement . . .
§9-102(a)(73). Security agreement means an agreement
that creates or provides for a security interest.
. . . that provides a description of the collateral
§9-108(a) [A] description of personal or real property is
sufficient, whether or not it is specific, if it reasonably
identifies what is described.
(b) [A] description of collateral reasonably identifies the
collateral if . . . the identity of the collateral is “objectively
determinable.
30
Basic Concepts
Security agreement . . .
§9-102(a)(73). Security agreement means an agreement
that creates or provides for a security interest.
. . . that provides a description of the collateral
§9-108(a) [A] description of personal or real property is
sufficient, whether or not it is specific, if it reasonably
identifies what is described.
(b) [A] description of collateral reasonably identifies the
collateral if . . . the identity of the collateral is “objectively
determinable.
31
Basic Concepts
Security agreement . . .
§9-102(a)(73). Security agreement means an agreement
that creates or provides for a security interest.
. . . that provides a description of the collateral
§9-108(a) [A] description of personal or real property is
sufficient, whether or not it is specific, if it reasonably
identifies what is described.
(b) [A] description of collateral reasonably identifies the
collateral if . . . the identity of the collateral is “objectively
determinable.”
32
33
34
35
36
Problem 8.1, page 145
Promissory Note
“secured by collateral described
in a security
agreement this
date.” Signed by
debtor
Are any of these an authenticated security agreement?
Do they meet the requirements of the composite document rule?
“Objectively indicate parties may have intended a SA?”
“Parties actually intended a SA” page 144
Can we answer from the documents alone?
37
Problem 8.1, page 145
Promissory Note
“secured by collateral described
in a security
agreement this
date.” Signed by
debtor
Financing Statement “all
inventory and
equipment of the
debtor’s business”
Not signed, but
debtor signed
authorization to
file it
Are any of these an authenticated security agreement?
Do they meet the requirements of the composite document rule?
“Objectively indicate parties may have intended a SA?”
“Parties actually intended a SA” page 144
Can we answer from the documents alone?
38
Problem 8.1, page 145
Promissory Note
“secured by collateral described
in a security
agreement this
date.” Signed by
debtor
Financing Statement “all
inventory and
equipment of the
debtor’s business”
Not signed, but
debtor signed
authorization to
file it
Cover Letter.
“Enclosed are
documents that
give you a
security interest in
inventory and
equipment,”
signed by debtor’s
lawyer
Are any of these an authenticated security agreement?
Do they meet the requirements of the composite document rule?
“Objectively indicate parties may have intended a SA?”
“Parties actually intended a SA” page 144
Can we answer from the documents alone?
39
Problem 8.1, page 145
Promissory Note
“secured by collateral described
in a security
agreement this
date.” Signed by
debtor
Financing Statement “all
inventory and
equipment of the
debtor’s business”
Not signed, but
debtor signed
authorization to
file it
Cover Letter.
“Enclosed are
documents that
give you a
security interest in
inventory and
equipment,”
signed by debtor’s
lawyer
Are any of these an authenticated security agreement?
Do they meet the requirements of the composite document rule?
“Objectively indicate parties may have intended a SA?”
“Parties actually intended a SA” page 144
40
Can we answer from the documents alone?
Problem 8.1, page 145
Promissory Note
“secured by collateral described
in a security
agreement this
date.” Signed by
debtor
Financing Statement “all
inventory and
equipment of the
debtor’s business”
Not signed, but
debtor signed
authorization to
file it
Cover Letter.
“Enclosed are
documents that
give you a
security interest in
inventory and
equipment,”
signed by debtor’s
lawyer
Are any of these an authenticated security agreement?
Do they meet the requirements of the composite document rule?
“Objectively indicate parties may have intended a SA”
“Parties actually intended a SA” page 141
41
Can we answer from the documents alone?
Problem 8.1, page 145
Promissory Note
“secured by collateral described
in a security
agreement this
date.” Signed by
debtor
Financing Statement “all
inventory and
equipment of the
debtor’s business”
Not signed, but
debtor signed
authorization to
file it
Cover Letter.
“Enclosed are
documents that
give you a
security interest in
inventory and
equipment,”
signed by debtor’s
lawyer
Are any of these an authenticated security agreement?
Do they meet the requirements of the composite document rule?
“Objectively indicate parties may have intended a SA”
“Parties actually intended a SA” page 141
42
Can we answer from the documents alone?
Problem 8.1, page 145
Promissory Note
“secured by collateral described
in a security
agreement this
date.” Signed by
debtor
Financing Statement “all
inventory and
equipment of the
debtor’s business”
Not signed, but
debtor signed
authorization to
file it
Cover Letter.
“Enclosed are
documents that
give you a
security interest in
inventory and
equipment,”
signed by debtor’s
lawyer
Are any of these an authenticated security agreement?
Do they meet the requirements of the composite document rule?
“Objectively indicate parties may have intended a SA”
“Parties actually intended a SA” page 141
43
Can we answer from the documents alone? Not second question
Problem 8.2, page 146
Fisherman’s Pier hypothetical. At what point in time did First
National’s security interest attach?
§9-203(a) A security interest attaches to collateral when it
becomes enforceable . . .
(b) [A] security interest is enforceable . . . only if:
(1) value has been given (§1-201(44))
(2) the debtor has rights in the collateral (§2-501(1)(a));
and
(3)(A) the debtor has authenticated a security agreement
that provides a description of the collateral . . .
44
Problem 8.2, page 146
Fisherman’s Pier hypothetical. At what point in time did First
National’s security interest attach?
§9-203(a) A security interest attaches to collateral when it
becomes enforceable . . .
(b) [A] security interest is enforceable . . . only if:
(1) value has been given (§1-201(44))
(2) the debtor has rights in the collateral (§2-501(1)(a));
and
(3)(A) the debtor has authenticated a security agreement
that provides a description of the collateral . . .
45
Problem 8.2, page 146
Fisherman’s Pier hypothetical. At what point in time did First
National’s security interest attach?
§9-203(a) A security interest attaches to collateral when it
becomes enforceable . . .
(b) [A] security interest is enforceable . . . only if:
(1) value has been given (§1-204)
(2) the debtor has rights in the collateral (§2-501(1)(a));
and
(3)(A) the debtor has authenticated a security agreement
that provides a description of the collateral . . .
46
Problem 8.2, page 146
Fisherman’s Pier hypothetical. At what point in time did First
National’s security interest attach?
§9-203(a) A security interest attaches to collateral when it
becomes enforceable . . .
(b) [A] security interest is enforceable . . . only if:
(1) value has been given (§1-204)
(2) the debtor has rights in the collateral (§2-501(1)(a));
and
(3)(A) the debtor has authenticated a security agreement
that provides a description of the collateral . . .
First National’s security interest became enforceable when
the last of these three requirements was satisfied.
47
Problem 8.3, page 146
The parties signed a security agreement that described the
collateral as “The restaurant equipment described on the
attached list.” No list is attached.
a. Does the bank have an enforceable security interest?
b. Two weeks later, the debtor’s lawyer mails the list to the
secured party’s lawyer, and the secured party’s lawyer
staples it to the security agreement. Is the agreement
enforceable?
c. What if those events happened two years later?
d. What if those events happened after the debtor filed
bankruptcy, 362(a)(4) and (5)
48
Problem 8.3, page 146
The parties signed a security agreement that described the
collateral as “The restaurant equipment described on the
attached list.” No list is attached.
a. Does the bank have an enforceable security interest?
b. Two weeks later, the debtor’s lawyer mails the list to the
secured party’s lawyer, and the secured party’s lawyer
staples it to the security agreement. Is the agreement
enforceable?
c. What if those events happened two years later?
d. What if those events happened after the debtor filed
bankruptcy, 362(a)(4) and (5)
49
Problem 8.3, page 146
The parties signed a security agreement that described the
collateral as “The restaurant equipment described on the
attached list.” No list is attached.
a. Does the bank have an enforceable security interest? No
unless composite document available.
b. Two weeks later, the debtor’s lawyer mails the list to the
secured party’s lawyer, and the secured party’s lawyer
staples it to the security agreement. Is the agreement
enforceable?
c. What if those events happened two years later?
d. What if those events happened after the debtor filed
bankruptcy, 362(a)(4) and (5)
50
Problem 8.3, page 146
The parties signed a security agreement that described the
collateral as “The restaurant equipment described on the
attached list.” No list is attached.
a. Does the bank have an enforceable security interest?
b. Two weeks later, the debtor’s lawyer mails the list to the
secured party’s lawyer, and the secured party’s lawyer
staples it to the security agreement. Is the agreement
enforceable? Split of authority.
c. What if those events happened two years later?
d. What if those events happened after the debtor filed
bankruptcy, 362(a)(4) and (5)
51
Problem 8.3, page 146
The parties signed a security agreement that described the
collateral as “The restaurant equipment described on the
attached list.” No list is attached.
a. Does the bank have an enforceable security interest?
b. Two weeks later, the debtor’s lawyer mails the list to the
secured party’s lawyer, and the secured party’s lawyer
staples it to the security agreement. Is the agreement
enforceable? Split of authority.
9-203(b)(3)(A) “. . . the debtor has authenticated a security
agreement that provides a description of the collateral . . . ”
a. What if those events happened after the debtor filed ban
52
Problem 8.3, page 146
The parties signed a security agreement that described the
collateral as “The restaurant equipment described on the
attached list.” No list is attached.
a. Does the bank have an enforceable security interest?
b. Two weeks later, the debtor’s lawyer mails the list to the
secured party’s lawyer, and the secured party’s lawyer
staples it to the security agreement. Is the agreement
enforceable? Split of authority.
c. What if those events happened two years after closing?
d. What if those events happened after the debtor filed
bankruptcy, 362(a)(4) and (5)
53
Problem 8.3, page 146
The parties signed a security agreement that described the
collateral as “The restaurant equipment described on the
attached list.” No list is attached.
a. Does the bank have an enforceable security interest?
b. Two weeks later, the debtor’s lawyer mails the list to the
secured party’s lawyer, and the secured party’s lawyer
staples it to the security agreement. Is the agreement
enforceable? Split of authority.
c. What if those events happened two years after closing?
d. What if those events happened after the debtor filed
bankruptcy, 362(a)(4) and (5)
54
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security
agreement
If we send it as is, what will happen? Staple description?
Whose decision is this? What are the options?
Whose bulldozer is this?
55
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security
agreement
If we send it as is, what will happen? Staple description?
Whose decision is this? What are the options?
Whose bulldozer is this?
56
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security
agreement
If we send it as is, what will happen? Staple description?
Whose decision is this? What are the options?
Whose bulldozer is this?
57
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security
agreement
If we send it as is, what will happen? Staple description?
Whose decision is this? What are the options?
Whose bulldozer is this?
58
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security
agreement
If we send it as is, what will happen? Staple description?
Whose decision is this? What are the options?
Whose bulldozer is this?
59
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security
agreement
If we send it as is, what will happen? Staple description?
Whose decision is this? What are the options?
Whose bulldozer is this?
60
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security
agreement
If we send it as is, what will happen? Staple description?
Whose decision is this? What are the options?
Whose bulldozer is this?
61
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security
agreement
If we send it as is, what will happen? Staple description?
Whose decision is this? What are the options?
Whose bulldozer is this?
62
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security
agreement
If we send it as is, what will happen? Staple description?
Whose decision is this? What are the options?
Whose bulldozer is this?
63
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security
agreement
If we send it as is, what will happen? Staple description?
Whose decision is this? Client: “You fill in the blank.”
What are the options? Whose bulldozer is this?
64
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security
agreement
If we send it as is, what will happen? Staple description?
Whose decision is this? Client: “You fill in the blank.” “No.”
What are the options? Whose bulldozer is this?
65
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security
agreement
If we send it as is, what will happen? Staple description?
Whose decision is this? Client: “You fill in the blank.” “No.”
66
Client: I will fill in the blank. Will you maintain confidentiality?
Rule 1.6: Confidentiality of Information
(a) A lawyer shall not reveal information relating to the
representation . . . unless the client gives informed consent,
the disclosure is impliedly authorized in order to carry out the
representation or the disclosure is permitted by paragraph (b).
(b) A lawyer may reveal [such] information . . . to the extent
the lawyer reasonably believes necessary:
(1) to prevent reasonably certain death or substantial bodily
harm;
(2) to prevent the client from committing a crime or fraud that is
reasonably certain to result in substantial injury to the financial
interests . . . of another and in furtherance of which the client
has used or is using the lawyer's services;
(3) to prevent, mitigate or rectify [such an injury] . . .
(6) to comply with other law or a court order.
67
Rule 3.3 Candor Toward the Tribunal
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal. . .
(3) If a . . . lawyer's client . . . has offered material evidence
and the lawyer comes to know of its falsity, the lawyer shall
take reasonable remedial measures, including, if necessary,
disclosure to the tribunal . . . .
(b) A lawyer who represents a client in an adjudicative
proceeding and who knows that a person intends to
engage, is engaging or has engaged in criminal or
fraudulent conduct related to the proceeding shall take
reasonable remedial measures, including, if necessary,
disclosure to the tribunal.
(c) Paragraphs (a) and (b) . . . apply even if compliance
requires disclosure of information otherwise protected by
68
Rule 1.6.
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security agreement
Right now, what are the options?
69
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security agreement
Right now, what are the options?
Morally and ethically, whose bulldozer is this?
70
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security agreement
Right now, what are the options?
Morally and ethically, whose bulldozer is this?
Who will be hurt by filling in the blank?
71
Problem 8.4, page 146
[Read from facts]
1. The debtor signed a security agreement that contained no
description of collateral.
2. The debtor authorized us (the secured party’s lawyer) to fill
in the description
3. We did not fill it in
4. The debtor filed bankruptcy
5. The trustee has requested a copy of the security agreement
Right now, what are the options?
Morally and ethically, whose bulldozer is this?
Who will be hurt by filling in the blank?
Vote
72
Problem 8.5, page 148
1. You withdrew from representation of Mestre
2. By accident, you are present when Mestre testifies:
a. Signature on the security agreement is his own.
b. The agreement was “genuine”
c. The document expressed the agreement between the
parties
3. Mestre’s new lawyer offered the agreement in evidence
and the court accepted it
What should you do now?
73
Problem 8.5, page 148
1. You withdrew from representation of Mestre
2. By accident, you are present when Mestre testifies:
a. Signature on the security agreement is his own.
b. The agreement was “genuine”
c. The document expressed the agreement between the
parties
3. Mestre’s new lawyer offered the agreement in evidence
and the court accepted it
What should you do now?
74
Problem 8.5, page 148
1. You withdrew from representation of Mestre
2. By accident, you are present when Mestre testifies:
a. Signature on the security agreement is his own.
b. The agreement was “genuine”
c. The document expressed the agreement between the
parties
3. Mestre’s new lawyer offered the agreement in evidence
and the court accepted it
What should you do now?
75
Problem 8.5, page 148
1. You withdrew from representation of Mestre
2. By accident, you are present when Mestre testifies:
a. Signature on the security agreement is his own.
b. The agreement was “genuine”
c. The document expressed the agreement between the
parties
3. Mestre’s new lawyer offered the agreement in evidence
and the court accepted it
What should you do now?
76
Problem 8.5, page 148
1. You withdrew from representation of Mestre
2. By accident, you are present when Mestre testifies:
a. Signature on the security agreement is his own.
b. The agreement was “genuine”
c. The document expressed the agreement between the
parties
3. Mestre’s new lawyer offered the agreement in evidence
and the court accepted it
What should you do now?
77
Problem 8.5, page 148
1. You withdrew from representation of Mestre
2. By accident, you are present when Mestre testifies:
a. Signature on the security agreement is his own.
b. The agreement was “genuine”
c. The document expressed the agreement between the
parties
3. Mestre’s new lawyer offered the agreement in evidence
and the court accepted it
What should you do now?
78
Problem 8.5, page 148
1. You withdrew from representation of Mestre
2. By accident, you are present when Mestre testifies:
a. Signature on the security agreement is his own.
b. The agreement was “genuine”
c. The document expressed the agreement between the
parties
3. Mestre’s new lawyer offered the agreement in evidence
and the court accepted it
What should you do now?
79
Rule 1.6: Confidentiality of Information
(a) A lawyer shall not reveal information relating to the
representation . . . unless the client gives informed consent,
the disclosure is impliedly authorized in order to carry out the
representation or the disclosure is permitted by paragraph (b).
(b) A lawyer may reveal [such] information . . . to the extent
the lawyer reasonably believes necessary:
(2) to prevent the client from committing a crime or fraud that is
reasonably certain to result in substantial injury to the financial
interests . . . of another and in furtherance of which the client
has used or is using the lawyer's services;
80
Rule 3.3 Candor Toward the Tribunal
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal. . .
(3) If a . . . lawyer's client . . . has offered material evidence
and the lawyer comes to know of its falsity, the lawyer shall
take reasonable remedial measures, including, if necessary,
disclosure to the tribunal . . . .
(b) A lawyer who represents a client in an adjudicative
proceeding and who knows that a person . . . has engaged
in criminal or fraudulent conduct related to the proceeding
shall take reasonable remedial measures, including, if
necessary, disclosure to the tribunal.
(c) Paragraphs (a) and (b) . . . apply even if compliance
requires disclosure of information otherwise protected by
Rule 1.6.
81
Rule 3.3 Candor Toward the Tribunal
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal. . .
(3) If a . . . lawyer's client . . . has offered material evidence
and the lawyer comes to know of its falsity, the lawyer shall
take reasonable remedial measures, including, if necessary,
disclosure to the tribunal . . . .
In re Ward, 894 F2d 771 (5th Cir. 1990): A lawyer has no duty
in tort to bankruptcy court before which it has not appeared
to inform court of an asset it "had reason to suspect" was
not scheduled. "We can see situations in which some
professional duty to the court may arise when a firm, even
though not before the court, has actual knowledge that an
outstanding asset of a bankrupt is being concealed." At
776.
82
Rule 3.3 Candor Toward the Tribunal
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal. . .
(3) If a . . . lawyer's client . . . has offered material evidence
and the lawyer comes to know of its falsity, the lawyer shall
take reasonable remedial measures, including, if necessary,
disclosure to the tribunal . . . .
Rule 1.9(c). A lawyer who has formerly represented a client .
. . shall not . . . reveal information relating to the
representation except as these Rules would permit or
require with respect to a client.
83
Rule 3.3 Candor Toward the Tribunal
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal. . .
(3) If a . . . lawyer's client . . . has offered material evidence
and the lawyer comes to know of its falsity, the lawyer shall
take reasonable remedial measures, including, if necessary,
disclosure to the tribunal . . . .
"We can see situations in which some professional duty to the
court may arise when a firm, even though not before the
court, has actual knowledge that an outstanding asset of a
bankrupt is being concealed." At 776.
84
Rule 3.3 Candor Toward the Tribunal
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal. . .
(3) If a . . . lawyer's client . . . has offered material evidence
and the lawyer comes to know of its falsity, the lawyer shall
take reasonable remedial measures, including, if necessary,
disclosure to the tribunal . . . .
In re Ward, 894 F2d 771 (5th Cir. 1990): A [law firm] has no
duty in tort to bankruptcy court before which it has not
appeared to inform court of an asset it "had reason to
suspect" was not scheduled. "We can see situations in
which some professional duty to the court may arise when
a firm, even though not before the court, has actual
knowledge that an outstanding asset of a bankrupt is being
concealed." At 776.
85
Rule 3.3 Candor Toward the Tribunal
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal. . .
(3) If a . . . lawyer's client . . . has offered material evidence
and the lawyer comes to know of its falsity, the lawyer shall
take reasonable remedial measures, including, if necessary,
disclosure to the tribunal . . . .
In re Ward, 894 F2d 771 (5th Cir. 1990): A [law firm] has no
duty in tort to bankruptcy court before which it has not
appeared to inform court of an asset it "had reason to
suspect" was not scheduled. "We can see situations in
which some professional duty to the court may arise when
a firm, even though not before the court, has actual
knowledge that an outstanding asset of a bankrupt is being
concealed." At 776.
86
Rule 3.3 Candor Toward the Tribunal
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal. . .
(3) If a . . . lawyer's client . . . has offered material evidence
and the lawyer comes to know of its falsity, the lawyer shall
take reasonable remedial measures, including, if necessary,
disclosure to the tribunal . . . .
In re Ward, 894 F2d 771 (5th Cir. 1990): A [law firm] has no
duty in tort to bankruptcy court before which it has not
appeared to inform court of an asset it "had reason to
suspect" was not scheduled. "We can see situations in
which some professional duty to the court may arise when
a firm, even though not before the court, has actual
knowledge that an outstanding asset of a bankrupt is being
concealed." At 776.
Solution: control your own knowledge.
87
Rule 3.3 Candor Toward the Tribunal
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal. . .
(3) If a . . . lawyer's client . . . has offered material evidence
and the lawyer comes to know of its falsity, the lawyer shall
take reasonable remedial measures, including, if necessary,
disclosure to the tribunal . . . .
In re Ward, 894 F2d 771 (5th Cir. 1990): A [law firm] has no
duty in tort to bankruptcy court before which it has not
appeared to inform court of an asset it "had reason to
suspect" was not scheduled. "We can see situations in
which some professional duty to the court may arise when
a firm, even though not before the court, has actual
knowledge that an outstanding asset of a bankrupt is being
concealed." At 776.
Solution: control your own knowledge. Is this ethics?
88
Systems observations
§9-203(b)(3)(A) requires an authenticated security agreement
to prevent fraud by the secured creditor.
Article 9 does not require the secured creditor to publicly file
the security agreement; the secured creditor can keep it in
a private file
Article 9 requires the secured creditor to file a financing
statement. A financing statement rarely qualifies as a
security agreement.
Fraud is easy.
How does the real estate system deal with this problem?
89
Systems observations
§9-203(b)(3)(A) requires an authenticated security agreement
to prevent fraud by the secured creditor.
Article 9 lets the secured creditor keep it in a private file
Article 9 requires the secured creditor to file a financing
statement. A financing statement rarely qualifies as a
security agreement.
Fraud is easy.
How does the real estate system deal with this problem?
90
Systems observations
§9-203(b)(3)(A) requires an authenticated security agreement
to prevent fraud by the secured creditor.
Article 9 lets the secured creditor keep it in a private file
Article 9 requires a public filing, but not of the security
agreement.
Fraud is easy.
How does the real estate system deal with this problem?
91
Systems observations
§9-203(b)(3)(A) requires an authenticated security agreement
to prevent fraud by the secured creditor.
Article 9 lets the secured creditor keep it in a private file
Article 9 requires a public filing, but not of the security
agreement.
Security agreement fraud is easy. Common problem.
How does the real estate system deal with this problem?
92
Systems observations
§9-203(b)(3)(A) requires an authenticated security agreement
to prevent fraud by the secured creditor.
Article 9 lets the secured creditor keep it in a private file
Article 9 requires a public filing, but not of the security
agreement.
Security agreement fraud is easy. Common problem.
How does the real estate system deal with this problem?
93
Systems observations
§9-203(b)(3)(A) requires an authenticated security agreement
to prevent fraud by the secured creditor.
Article 9 lets the secured creditor keep it in a private file
Article 9 requires a public filing, but not of the security
agreement.
Security agreement fraud is easy. Common problem.
How does the real estate system deal with this problem?
Can mortgagees “fix” their mortgages when trouble arises?
94