Assignment 19

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Secured Transactions
Assignment 19
Exceptions to the Filing
Requirement
1
The Big Picture
Part Two: The Creditor Third Party Relationship
Chapter 6-7: Perfection
Assignment 16-18: Perfection by filing
Assignment 19: Perfection by other means
Chapters 8-9: Priority
2
Basic Concepts: Possession
Possession: (1) Physical control of property or (2) the right
to physically control property.
Possession-gives-notice theory.
1. Searcher will look at the collateral
2. Possession will be visible (requirement in real property)
Two invisible means of possession:
Agent: One who acts on behalf of another, and subject to
the other’s control
§9-313(c)(1). “[A] secured party takes possession of
collateral . . . when the person in possession authenticates
a record acknowledging that it holds possession . . . for the
secured party’s benefit.” (This may not be an agency
3
relationship.)
Basic Concepts: Possession
1-201(24). “Money” is a government medium of exchange.
Cash, but not cash in a bank account.
4
Basic Concepts: Possession
1-201(24). “Money” is a government medium of exchange.
Cash, but not cash in a bank account.
9-102(a)(47). “Instrument” means a negotiable instrument
5
UCC §3-104. Negotiable Instrument
(a) “[N]egotiable instrument" means an unconditional promise or
order to pay a fixed amount of money, with or without interest or
other charges described in the promise or order, if it:
(1) is payable to bearer or to order at the time it is issued or
first comes into possession of a holder;
(2) is payable on demand or at a definite time; and
(3) does not state any other undertaking or instruction by the
person promising or ordering payment to do any act in
addition to the payment of money, but the promise or order
may contain (i) an undertaking or power to give, maintain, or
protect collateral to secure payment, (ii) an authorization or
power to the holder to confess judgment or realize on or
dispose of collateral, or (iii) a waiver of the benefit of any law
intended for the advantage or protection of an obligor.
6
Basic Concepts: Possession
1-201(24). “Money” is a government medium of exchange.
Cash, but not cash in a bank account.
9-102(a)(47). “Instrument” means a negotiable instrument
Promissory note:
I promise to pay $2
million to the order of
Lynn LoPucki
Jon Doe
Check:
Bank -Pay $2 million to the
order of Lynn LoPucki
Jon Doe
7
Basic Concepts: Possession
1-201(24). “Money” is a government medium of exchange.
Cash, but not cash in a bank account.
9-102(a)(47). “Instrument” means a negotiable instrument
or any other writing that (1) evidences a right to payment
of a monetary obligation,
8
Basic Concepts: Possession
1-201(24). “Money” is a government medium of exchange.
Cash, but not cash in a bank account.
9-102(a)(47). “Instrument” means a negotiable instrument
or any other writing that (1) evidences a right to payment
of a monetary obligation, (2) is not itself a security
agreement or lease,
9
Basic Concepts: Possession
1-201(24). “Money” is a government medium of exchange.
Cash, but not cash in a bank account.
9-102(a)(47). “Instrument” means a negotiable instrument
or any other writing that (1) evidences a right to payment
of a monetary obligation, (2) is not itself a security
agreement or lease, and (3) is of a type that in the ordinary
course of business is transferred by delivery with any
necessary indorsement or assignment.
10
Basic Concepts: Possession
1-201(24). “Money” is a government medium of exchange.
Cash, but not cash in a bank account.
9-102(a)(47). “Instrument” means a negotiable instrument
or any other writing that (1) evidences a right to payment
of a monetary obligation, (2) is not itself a security
agreement or lease, and (3) is of a type that in the ordinary
course of business is transferred by delivery with any
necessary indorsement or assignment.
9-102(a)(11). “Chattel Paper” means a record or records
that evidence both a monetary obligation and a security
interest in specific goods . . .
11
Basic Concepts: Possession
1-201(24). “Money” is a government medium of exchange.
Cash, but not cash in a bank account.
9-102(a)(47). “Instrument” means a negotiable instrument
or any other writing that (1) evidences a right to payment
of a monetary obligation, (2) is not itself a security
agreement or lease, and (3) is of a type that in the ordinary
course of business is transferred by delivery with any
necessary indorsement or assignment.
9-102(a)(11). “Chattel Paper” means a record or records
that evidence both a monetary obligation and a security
interest in specific goods . . .
12
Basic Concepts: Possession
1-201(24). “Money” is a government medium of exchange.
Cash, but not cash in a bank account.
9-102(a)(47). “Instrument” means a negotiable instrument
or any other writing that (1) evidences a right to payment
of a monetary obligation, (2) is not itself a security
agreement or lease, and (3) is of a type that in the ordinary
course of business is transferred by delivery with any
necessary indorsement or assignment.
9-102(a)(11). “Chattel Paper” means a record or records
that evidence both a monetary obligation and a security
interest in specific goods . . .
13
Basic Concepts: Possession
1-201(24). “Money” is a government medium of exchange.
Cash, but not cash in a bank account.
9-102(a)(47). “Instrument” means a negotiable instrument
or any other writing that (1) evidences a right to payment
of a monetary obligation, (2) is not itself a security
agreement or lease, and (3) is of a type that in the ordinary
course of business is transferred by delivery with any
necessary indorsement or assignment.
9-102(a)(11). “Chattel Paper” means a record or records
that evidence both a monetary obligation and a security
interest in specific goods . . . or a lease of specific goods.
14
Basic Concepts: Possession
1-201(24). “Money” is a government medium of exchange.
Cash, but not cash in a bank account.
9-102(a)(47). “Instrument” means a negotiable instrument
or any other writing that (1) evidences a right to payment
of a monetary obligation, (2) is not itself a security
agreement or lease, and (3) is of a type that in the ordinary
course of business is transferred by delivery with any
necessary indorsement or assignment.
9-102(a)(11). “Chattel Paper” means a record or records
that evidence both a monetary obligation and a security
interest in specific goods . . . or a lease of specific goods.
. . . Monetary obligation means a monetary obligation
secured by the goods or owed under a lease . . . .
15
Characterizing Monetary Obligations
§9-102(a)(11). “Chattel paper” means . . . records that
evidence both a monetary obligation and a security
interest in specific goods . . . .”
Chattel
Paper
Chattel paper is chattel paper
16
Characterizing Monetary Obligations
§9-102(a)(47). “Instrument” means a . . . writing that [1]
evidences a right to the payment of a monetary obligation, [2]
is not itself a security agreement or lease and [3] is of a type
that in ordinary course of business is transferred by delivery
with any necessary indorsement . . .”
Chattel
Paper
Chattel paper is chattel paper
17
Characterizing Monetary Obligations
§9-102(a)(47). “Instrument” means a . . . writing that [1]
evidences a right to the payment of a monetary obligation, [2]
is not itself a security agreement or lease and [3] is of a type
that in ordinary course of business is transferred by delivery
with any necessary indorsement . . .”
Instruments
An instrument is an instrument if
it is not chattel paper
Chattel
Paper
Chattel paper is chattel paper
18
Characterizing Monetary Obligations
§9-102(a)(2). “Account” means a right to payment of a
monetary obligation . . . (i) for property that has been . .
.sold, (ii) for services rendered . . .
Instruments
An instrument is an instrument if
it is not chattel paper
Chattel
Paper
Chattel paper is chattel paper
19
Characterizing Monetary Obligations
§9-102(a)(2). “Account” means a right to payment of a
monetary obligation . . . (i) for property that has been . .
.sold, (ii) for services rendered . . . The term does not
include (i) rights . . . evidenced by chattel paper or an
instrument.
Instruments
An instrument is an instrument if
it is not chattel paper
Chattel
Paper
Chattel paper is chattel paper
20
Characterizing Monetary Obligations
§9-102(a)(2). “Account” means a right to payment of a
monetary obligation . . . (i) for property that has been . .
.sold, (ii) for services rendered . . . The term does not
include (i) rights . . . evidenced by chattel paper or an
instrument.
An account is an account if it
Accounts
is not an instrument or chattel
paper
Instruments
An instrument is an instrument if
it is not chattel paper
Chattel
Paper
Chattel paper is chattel paper
21
Characterizing Monetary Obligations
§9-102(a)(61). “Payment intangible” means a general intangible
[that is] a monetary obligation.
An account is an account if it
is not an instrument or chattel
paper
An instrument is an instrument if
it is not chattel paper
Accounts
Instruments
Chattel
Paper
Chattel paper is chattel paper
22
Characterizing Monetary Obligations
§9-102(a)(61). “Payment intangible” means a general intangible
[that is] a monetary obligation.
An account is an account if it
is not an instrument or chattel
paper
An instrument is an instrument if
it is not chattel paper
Accounts
Instruments
Chattel
Paper
Chattel paper is chattel paper
§9-102(a)(42). “General intangible” means personal property
23
other than accounts, chattel paper . . . instruments . . .
Characterizing Monetary Obligations
A payment intangible is a
payment intangible if it is
not an account, instrument,
or chattel paper
§9-102(a)(61). “Payment intangible” means a general intangible
[that is] a monetary obligation.
An account is an account if it
is not an instrument or chattel
paper
An instrument is an instrument if
it is not chattel paper
Payment intangibles
Accounts
Instruments
Chattel
Paper
Chattel paper is chattel paper
§9-102(a)(42). “General intangible” means personal property
24
other than accounts, chattel paper . . . instruments . . .
Basic Concepts: Control
§9-102(a)(29). “Deposit account” means [an] account
maintained with a bank. The term does not include . . .
accounts evidenced by an instrument. (Certificate of
deposit).
§9-312(b)(1). A security interest in . . . a deposit account
may be perfected only by control under Section 9-314
(§9-104).
25
Basic Concepts: Control
§9-104. A secured party has control of a deposit account if:
26
Basic Concepts: Control
§9-104. A secured party has control of a deposit account if:
(1) The secured party is the bank
with which the deposit is
maintained;
SI
Secured
party
Customer
Account
27
Basic Concepts: Control
§9-104. A secured party has control of a deposit account if:
(1) The secured party is the bank
with which the deposit is
maintained;
Secured
party
SI
Customer
Account
28
Basic Concepts: Control
§9-104. A secured party has control of a deposit account if:
(1) The secured party is the bank
with which the deposit is
maintained;
Secured
party
(2) The debtor, secured party, and
Agreement
SI
the bank have agreed in an
authenticated record that the
Customer
bank will comply with
Account
instructions originated by the
secured party (even if the
debtor retains the right to direct
the disposition of funds)
29
Basic Concepts: Control
§9-104. A secured party has control of a deposit account if:
(1) The secured party is the bank
with which the deposit is
maintained;
Secured
party
(2) The debtor, secured party, and
Agreement
SI
the bank have agreed in an
authenticated record that the
Customer
bank will comply with
Account
instructions originated by the
§9-342. A bank that has
secured party (even if the
entered into such an
debtor retains the right to direct agreement is not required
the disposition of funds)
to confirm the existence of
the agreement . . . unless
requested to do so by its
30
customer
Basic Concepts: Control
§9-104. A secured party has control of a deposit account if:
(1) The secured party is the bank
with which the deposit is
maintained;
(2) The debtor, secured party, and
the bank have agreed in an
authenticated record that the
bank will comply with
instructions originated by the
secured party (even if the
debtor retains the right to direct
the disposition of funds)
(3) The secured party becomes the
bank’s customer (4-104(a)(5))
Secured
party
SI
Account
Debtor
31
Securities Holding System
Stockholder
Share
certificate
Microsoft (“Issuer”)
Stock
Registry
32
Securities Holding System
Stockholder
Goldman
Share
certificate
Microsoft sells
10 million shares
to Goldman Sachs
Uncertificated
securities
Microsoft (“Issuer”)
Stock
Registry
33
Securities Holding System
Stockholder
Goldman
Share
certificate
Uncertificated
securities
Microsoft (“Issuer”)
Stock
Registry
Microsoft sells
10 million shares
to Goldman Sachs
Goldman sells
1 million shares to
Merrill Lynch
34
Securities Holding System
Stockholder
Merrill Lynch
Securities
entitlements /
Securities
accounts
Goldman
Share
certificate
Uncertificated
securities
Microsoft (“Issuer”)
Stock
Registry
Goldman sells
1 million shares to
Merrill Lynch
35
Securities Holding System
Stockholder
Entitlement
holders
Merrill Lynch
Securities
intermediaries
Securities
entitlements /
Securities
accounts
Goldman
Share
certificate
Uncertificated
securities
Microsoft (“Issuer”)
Stock
Registry
Goldman sells
1 million shares to
Merrill Lynch
36
Securities Holding System
Stockholder
Entitlement
holders
Merrill Lynch
Securities
intermediaries
Goldman
Share
certificate
Uncertificated
securities
Microsoft (“Issuer”)
Stock
Registry
Securities
entitlements /
Securities
accounts
Merrill owns the
shares; Goldman
holds them in trust;
SIPC insures their
existence
37
Securities Holding System
Stockholder
Stockholder
Entitlement
holders
Merrill Lynch
Securities
intermediaries
Goldman
Share
certificate
Securities
entitlements /
Securities
accounts
Stockholder
buys 100 shares
Uncertificated
securities
Microsoft (“Issuer”)
Stock
Registry
38
Securities Holding System
Stockholder
Stockholder
Entitlement
holders
Merrill Lynch
Securities
intermediaries
Securities
entitlements /
Securities
accounts
Goldman
Share
certificate
Uncertificated
securities
Microsoft (“Issuer”)
Stock
Registry
Certificated
securities
Depository
Trust
Share
39
Company
certificates
Securities Holding System
Stockholder
Stockholder
Entitlement
holders
Merrill Lynch
Securities
intermediaries
1million
Goldman
Certificated
Share
10 million
securities
certificate
Depository
Trust
Share
Microsoft (“Issuer”) Stock
40
Company
Registry certificates
Securities Holding System
Stockholder
Stockholder
Entitlement
holders
Merrill Lynch
Securities
intermediaries
Goldman transfers
the Merrill shares
to Merrill
1million
Goldman
Certificated
Share
10 million
securities
certificate
Depository
Trust
Share
Microsoft (“Issuer”) Stock
41
Company
Registry certificates
Securities Holding System
Stockholder
Stockholder
Entitlement
holders
Merrill Lynch
Securities
intermediaries
1million
Goldman
Share
certificate
Microsoft (“Issuer”)
Goldman transfers
the Merrill shares
to Merrill
Securities
entitlement
9 million
Stock
Registry
Depository
Trust
Share
42
Company
certificates
Securities Holding System
Stockholder
Stockholder
Entitlement
holders
Merrill Lynch
Securities
intermediaries
1million
Goldman
Share
certificate
Microsoft (“Issuer”)
DTC settled $1.88
quadrillion of
shares in 2008.
Securities
entitlement
9 million
Stock
Registry
Depository
Trust
Share
43
Company
certificates
Perfection of Security Interests in Securities
Stockholder
Stockholder
Entitlement
holders
Security
interest
Merrill Lynch
Securities
intermediaries
1million
Goldman
Share
certificate
Uncertificated
securities
Microsoft (“Issuer”)
Bank
Stock
Registry
Securities
entitlement
9 million
Depository
Trust
Share
44
Company
certificates
Perfection of Security Interests in Securities
Stockholder
Stockholder
Entitlement
holders
Security
interest
Merrill: “I will comply with
your orders re these
securities.”
Merrill Lynch
Bank
Securities
intermediaries
1million
Goldman
Share
certificate
Uncertificated
securities
Microsoft (“Issuer”)
Stock
Registry
Securities
entitlement
9 million
Depository
Trust
Share
45
Company
certificates
Perfection of Security Interests in Securities
Stockholder
Stockholder
Entitlement
holders
Bank is perfected
against Stockholder’s
entitlement by control
Merrill: “I will comply with
your orders re these
securities.”
Merrill Lynch
Bank
Securities
intermediaries
1million
Goldman
Share
certificate
Uncertificated
securities
Microsoft (“Issuer”)
Stock
Registry
Securities
entitlement
9 million
Depository
Trust
Share
46
Company
certificates
Perfection Methods
Filing
§9-312
Possession
§9-313
Goods
Optional
Optional
Chattel paper, tangible
Optional
Preferred
Instruments
Deposit accounts
Optional
Preferred
Exclusive
Electronic chattel paper Optional
Money
Certificated security
Uncertificated security
Control
§9-314
Optional
Exclusive
Optional
Optional
Optional
Neg. bill of lading
Optional
Neg. warehouse receipt Optional
Optional
Optional
Preferred
Preferred
54
Perfection Methods
Goods
Filing
§9-312
Possession
§9-313
Optional
Optional
Chattel paper, tangible
Optional
Preferred
Instruments
Deposit accounts
Optional
Preferred
Exclusive
Electronic chattel paper Optional
Money
Certificated security
Uncertificated security
Control
§9-314
Optional
Exclusive
Optional
Optional
Optional
Neg. bill of lading
Optional
Neg. warehouse receipt Optional
Optional
Optional
Preferred
Preferred
55
Perfection Methods
Filing
§9-312
Possession
§9-313
Goods
Optional
Optional
Chattel paper, tangible
Optional
Preferred
Instruments
Deposit accounts
Optional
Preferred
Exclusive
Electronic chattel paper Optional
Money
Certificated security
Uncertificated security
Control
§9-314
Optional
Exclusive
Optional
Optional
Optional
Neg. bill of lading
Optional
Neg. warehouse receipt Optional
Optional
Optional
Preferred
Preferred
56
Perfection Methods
Filing
§9-312
Possession
§9-313
Goods
Optional
Optional
Chattel paper, tangible
Optional
Preferred
Instruments
Deposit accounts
Optional
Preferred
Exclusive
Electronic chattel paper Optional
Money
Certificated security
Uncertificated security
Control
§9-314
Optional
Exclusive
Optional
Optional
Optional
Neg. bill of lading
Optional
Neg. warehouse receipt Optional
Optional
Optional
Preferred
Preferred
57
Perfection Methods
Filing
§9-312
Possession
§9-313
Goods
Optional
Optional
Chattel paper, tangible
Optional
Preferred
Instruments
Deposit accounts
Optional
Preferred
Exclusive
Electronic chattel paper Optional
Money
Certificated security
Uncertificated security
Control
§9-314
Optional
Exclusive
Optional
Optional
Optional
Neg. bill of lading
Optional
Neg. warehouse receipt Optional
Optional
Optional
Preferred
Preferred
58
Perfection Methods
Filing
§9-312
Possession
§9-313
Goods
Optional
Optional
Chattel paper, tangible
Optional
Preferred
Instruments
Deposit accounts
Optional
Preferred
Electronic chattel paper
Money
Optional
Certificated security
Uncertificated security
Control
§9-314
Exclusive
Optional
Exclusive
Optional
Optional
Optional
Neg. bill of lading
Optional
Neg. warehouse receipt Optional
Optional
Optional
Preferred
Preferred
59
Perfection Methods
Filing
§9-312
Possession
§9-313
Goods
Optional
Optional
Chattel paper, tangible
Optional
Preferred
Instruments
Deposit accounts
Optional
Preferred
Electronic chattel paper
Money
Optional
Certificated security
Uncertificated security
Control
§9-314
Exclusive
Optional
Exclusive
Optional
Optional
Optional
Neg. bill of lading
Optional
Neg. warehouse receipt Optional
Optional
Optional
Preferred
Preferred
60
Perfection Methods
Filing
§9-312
Possession
§9-313
Goods
Optional
Optional
Chattel paper, tangible
Optional
Preferred
Instruments
Deposit accounts
Optional
Preferred
Electronic chattel paper
Money
Optional
Certificated security
Uncertificated security
Control
§9-314
Exclusive
Optional
Exclusive
Optional
Optional
Neg. bill of lading
Optional
Neg. warehouse receipt Optional
Optional
Preferred
Preferred
Optional
Optional
61
Perfection Methods
Filing
§9-312
Possession
§9-313
Goods
Optional
Optional
Chattel paper, tangible
Optional
Preferred
Instruments
Deposit accounts
Optional
Preferred
Electronic chattel paper
Money
Optional
Certificated security
Uncertificated security
Optional
Optional
Control
§9-314
Exclusive
Optional
Exclusive
Neg. bill of lading
Optional
Neg. warehouse receipt Optional
Optional
Preferred
Preferred
Optional
Optional
62
Perfection Methods
Filing
§9-312
Possession
§9-313
Goods
Optional
Optional
Chattel paper, tangible
Optional
Preferred
Instruments
Deposit accounts
Optional
Preferred
Electronic chattel paper
Money
Optional
Certificated security
Uncertificated security
Optional
Optional
Control
§9-314
Exclusive
Optional
Exclusive
Optional
Preferred
Preferred
Neg. bill of lading
Optional
Optional
Neg. warehouse receipt Optional
Optional
63
Perfection Methods
Filing
§9-312
Possession
§9-313
Goods
Optional
Optional
Chattel paper, tangible
Optional
Preferred
Instruments
Deposit accounts
Optional
Preferred
Electronic chattel paper
Money
Optional
Certificated security
Uncertificated security
Optional
Optional
Optional
Neg. bill of lading
Neg. warehouse receipt
Optional
Optional
Optional
Optional
Control
§9-314
Exclusive
Optional
Exclusive
Preferred
Preferred
64
Perfection Methods
Filing
§9-312
Possession
§9-313
Goods
9-310(a)
9-313(a)
Chattel paper, tangible
9-312(a)
9-330
Instruments
Deposit accounts
9-312(a)
9-330
Electronic chattel paper
Money
9-312(a)
Certificated security
Uncertificated security
9-312(a)
9-312(a)
9-313(a)
Neg. bill of lading
Neg. warehouse receipt
9-312(a)
9-312(a)
9-313(a)
9-313(a)
Control
§9-314
9-312(b)(1)
9-314(a)
9-312(b)(3)
9-328(1)
9-328(1)
65
Problem 19.1, page 342
How does a secured creditor perfect in:
a.
Cash that comes into the cash register? 9-312(b)(3).
Inventory  Money  Deposit account  Inventory
Possession by an agent who is not the debtor
b.
Negotiable promissory note? 9-312(a), 9-313(a), 9-330(d)
Instrument. Possession is preferred
c.
Money in a bank account? 9-312(b)(1), 9-314(a), 9-104
Authenticated agreement with the bank or put secured’s
name on the account.
d.
General Motors share certificates? 9-312(a), 9-313(a), 9314(a), 9-328(1), 9-106, 8-106(b). Controlling secured
party is first.
Keep the indorsed certificate or register the transfer with66
General Motors (preferred over a party without control)
Problem 19.1, page 342
How does a secured creditor perfect in:
e.
Promissory notes and security interests in cars?
67
Problem 19.1, page 342
How does a secured creditor perfect in:
e.
Promissory notes and security interests in cars?
Chattel paper. 9-312(a), 9-313(a), or 9-314(a) and 9-105 if
we required the dealer to make the paper electronic.
68
Problem 19.1, page 342
How does a secured creditor perfect in:
e.
Promissory notes and security interests in cars?
Chattel paper. 9-312(a), 9-313(a), or 9-314(a) and 9-105 if
we required the dealer to make the paper electronic.
Take possession
69
Problem 19.2, page 342
Watson Family
Canards $500K contract
Restaurants
Franchise
70
Problem 19.2, page 342
Casa
Grande
$300K $500K
loan contract
Watson Family
Canards $500K contract
Restaurants
Franchise
71
Problem 19.2, page 342
Casa
Grande
$300K $500K
loan contract
Watson Family
Canards $500K contract
Restaurants
Franchise
a.
How should Casa Grande perfect? What is the nature of
the collateral?
72
Problem 19.2, page 342
Casa
Grande
$300K $500K
loan contract
Watson Family
Canards $500K contract
Restaurants
Franchise
a.
How should Casa Grande perfect? What is the nature of
the collateral?
Instrument? §9-102(a)(47).
73
Problem 19.2, page 342
Casa
Grande
$300K $500K
loan contract
Watson Family
Canards $500K contract
Restaurants
Franchise
a.
How should Casa Grande perfect? What is the nature of
the collateral?
Instrument? §9-102(a)(47). Take possession.
74
Problem 19.2, page 342
Casa
Grande
$300K $500K
loan contract
Watson Family
Canards $500K contract
Restaurants
Franchise
a.
How should Casa Grande perfect? What is the nature of
the collateral?
Instrument? §9-102(a)(47). Take possession.
Account? §9-102(a)(2).
75
Problem 19.2, page 342
Casa
Grande
$300K $500K
loan contract
Watson Family
Canards $500K contract
Restaurants
Franchise
a.
How should Casa Grande perfect? What is the nature of
the collateral?
Instrument? §9-102(a)(47). Take possession.
Account? §9-102(a)(2). File financing statement.
76
Problem 19.2, page 342
Casa
Grande
$300K $500K
loan contract
Watson Family
Canards $500K secured
Restaurants
Franchise
a.
How should Casa Grande perfect? What is the nature of
the collateral?
Instrument? §9-102(a)(47). Take possession.
Account? §9-102(a)(2). File financing statement.
b.
Assume the Canards have a security interest in the
franchise. How does Casa Grande perfect in what the
Canards have?
77
Problem 19.2, page 342
Casa
Grande
$300K $500K
loan contract
Watson Family
Canards $500K secured
Restaurants
Franchise
a.
How should Casa Grande perfect? What is the nature of
the collateral?
Instrument? §9-102(a)(47). Take possession.
Account? §9-102(a)(2). File financing statement.
b.
Assume the Canards have a security interest in the
franchise. How does Casa Grande perfect in what the
Canards have? Chattel paper? (If the franchise is
“goods.”) Take possession and file.
78
Problem 19.3, page 343
Garp
Associates
$60K
Instrument loan
Canards
Instrument
Franchise
Watson Family
Restaurants
79
Problem 19.3, page 343
Garp
Casa
Associates
Grande
$60K $300K
Instrument loan loan
Canards
Instrument
Franchise
Watson Family
Restaurants
80
Problem 19.3, page 343
Garp
Casa
Associates
Grande
$60K $300K
Instrument loan loan
Canards
Instrument
Franchise
Watson Family
Restaurants
Can Casa Grande perfect in this instrument by filing?
81
Problem 19.3, page 343
Garp
Casa
Associates
Grande
$60K $300K
Instrument loan loan
Canards
Instrument
Franchise
Watson Family
Restaurants
Can Casa Grande perfect in this instrument by filing?
Yes, but loses to a later SI perfect by possession
82
Problem 19.3, page 343
Garp
Casa
Associates
Grande
$60K $300K
Instrument loan loan
Canards
Instrument
Franchise
Watson Family
Restaurants
Can Casa Grande perfect in this instrument by filing?
Yes, but loses to a later SI perfect by possession
Can Casa Grande perfect in this instrument by possession?
83
Problem 19.3, page 343
Garp
Casa
Associates
Grande
$60K $300K
Instrument loan loan
Canards
Instrument
Franchise
Watson Family
Restaurants
Can Casa Grande perfect in this instrument by filing?
Yes, but loses to a later SI perfect by possession
Can Casa Grande perfect in this instrument by possession?
Garp becomes an agent of Casa Grande (agrees to act on
Casa Grande’s behalf). §9-313 Comment 3
Garp authenticates a record acknowledging that it holds on
Casa Grande’s behalf. §9-313(c)
84
Problem 19.4, page 343
Savings is lending to Kettering against this collateral. How
could the collateral still be encumbered, despite clean
searches and viewings?
85
Problem 19.4, page 343
Savings is lending to Kettering against this collateral. How
could the collateral still be encumbered, despite clean
searches and viewings?
a. $40,000 mobile home? §9-309(1)?
86
Problem 19.4, page 343
Savings is lending to Kettering against this collateral. How
could the collateral still be encumbered, despite clean
searches and viewings?
a. $40,000 mobile home? §9-309(1)?
87
Problem 19.4, page 343
Savings is lending to Kettering against this collateral. How
could the collateral still be encumbered, despite clean
searches and viewings?
a. $40,000 mobile home? §9-309(1)? How do we check
that?
88
Problem 19.4, page 343
Savings is lending to Kettering against this collateral. How
could the collateral still be encumbered, despite clean
searches and viewings?
a. $40,000 mobile home? §9-309(1)? How do we check
that?
b. $2.5 million rare book collection on display in library of
Congress? §9-309(1)?
89
Problem 19.4, page 343
Savings is lending to Kettering against this collateral. How
could the collateral still be encumbered, despite clean
searches and viewings?
a. $40,000 mobile home? §9-309(1)? How do we check
that?
b. $2.5 million rare book collection on display in library of
Congress? §9-309(1)? Possession?
90
Problem 19.4, page 343
Savings is lending to Kettering against this collateral. How
could the collateral still be encumbered, despite clean
searches and viewings?
a. $40,000 mobile home? §9-309(1)? How do we check
that?
b. $2.5 million rare book collection on display in library of
Congress? §9-309(1)? Possession? How do we check
for possession? §9-313(g)? §9-210?
91
Problem 19.4, page 343
Savings is lending to Kettering against this collateral. How
could the collateral still be encumbered, despite clean
searches and viewings?
a. $40,000 mobile home? §9-309(1)? How do we check
that?
b. $2.5 million rare book collection on display in library of
Congress? §9-309(1)? Possession? How do we check
for possession? §9-313(g)? §9-210? Neither works.
92
Problem 19.4, page 343
Savings is lending to Kettering against this collateral. How
could the collateral still be encumbered, despite clean
searches and viewings?
a. $40,000 mobile home? §9-309(1)? How do we check
that?
b. $2.5 million rare book collection on display in library of
Congress? §9-309(1)? Possession? How do we check
for possession? §9-313(g)? §9-210? Neither works.
c. Mercedes-Benz? §9-309(1)?
93
Problem 19.4, page 343
Savings is lending to Kettering against this collateral. How
could the collateral still be encumbered, despite clean
searches and viewings?
a. $40,000 mobile home? §9-309(1)? How do we check
that?
b. $2.5 million rare book collection on display in library of
Congress? §9-309(1)? Possession? How do we check
for possession? §9-313(g)? §9-210? Neither works.
c. Mercedes-Benz? §9-309(1)? Possession?
94
Problem 19.4, page 343
Savings is lending to Kettering against this collateral. How
could the collateral still be encumbered, despite clean
searches and viewings?
a. $40,000 mobile home? §9-309(1)? How do we check
that?
b. $2.5 million rare book collection on display in library of
Congress? §9-309(1)? Possession? How do we check
for possession? §9-313(g)? §9-210? Neither works.
c. Mercedes-Benz? §9-309(1)? Possession? No, §9313(b)
95
Problem 19.4, page 343
Savings is lending to Kettering against this collateral. How
could the collateral still be encumbered, despite clean
searches and viewings?
a. $40,000 mobile home? §9-309(1)? How do we check
that?
b. $2.5 million rare book collection on display in library of
Congress? §9-309(1)? Possession? How do we check
for possession? §9-313(g)? §9-210? Neither works.
c. Mercedes-Benz? §9-309(1)? Possession? No, §9313(b)
d. Solid gold ingot and 20 unset diamonds worth $20 million?
§9-309(1)?
96
Problem 19.4, page 343
Savings is lending to Kettering against this collateral. How
could the collateral still be encumbered, despite clean
searches and viewings?
a. $40,000 mobile home? §9-309(1)? How do we check
that?
b. $2.5 million rare book collection on display in library of
Congress? §9-309(1)? Possession? How do we check
for possession? §9-313(g)? §9-210? Neither works.
c. Mercedes-Benz? §9-309(1)? Possession? No, §9313(b)
d. Solid gold ingot and 20 unset diamonds worth $20 million?
§9-309(1)?
e. Computer equipment used to review stock quotations?
§9-309(1)?
97
Problem 19.4, page 343
Savings is lending to Kettering against this collateral. How
could the collateral still be encumbered, despite clean
searches and viewings?
a. $40,000 mobile home? §9-309(1)? How do we check
that?
b. $2.5 million rare book collection on display in library of
Congress? §9-309(1)? Possession? How do we check
for possession? §9-313(g)? §9-210? Neither works.
c. Mercedes-Benz? §9-309(1)? Possession? No, §9313(b)
d. Solid gold ingot and 20 unset diamonds worth $20 million?
§9-309(1)?
e. Computer equipment used to review stock quotations?
§9-309(1)? How do we check what it was bought for? 98
Problem 19.5, page 344
Sally and Joe enter into an
oral security agreement.
Sally takes possession of
the collateral.
Sally
$5K
loan
Security
interest
Joe
99
Problem 19.5, page 344
Sally and Joe enter into an
oral security agreement.
Sally takes possession of
the collateral.
Can Sally be perfected with
nothing in writing? §9310(b), §9-203(b)(3)(B).
Sally
$5K
loan
Security
interest
Joe
100
Problem 19.5, page 344
Sally and Joe enter into an
oral security agreement.
Sally takes possession of
the collateral.
Can Sally be perfected with
nothing in writing? §9310(b), §9-203(b)(3)(B). Yes
Sally
$5K
loan
Security
interest
Joe
101
Problem 19.5, page 344
Sally and Joe enter into an
oral security agreement.
Sally takes possession of
the collateral.
Can Sally be perfected with
nothing in writing? §9310(b), §9-203(b)(3)(B). Yes
Sally
$5K
loan
Joe
Security
interest
Trustee
a. Is Sally in possession if the collateral is in her apartment and
Sally is a thousand miles away?
102
Problem 19.5, page 344
Sally and Joe enter into an
oral security agreement.
Sally takes possession of
the collateral.
Can Sally be perfected with
nothing in writing? §9310(b), §9-203(b)(3)(B). Yes
Sally
$5K
loan
Security
interest
Joe
Trustee
a. Is Sally in possession if the collateral is in her apartment and
Sally is a thousand miles away?
If Joe’s mother is staying in the apartment?
103
Problem 19.5, page 344
Sally and Joe enter into an
oral security agreement.
Sally takes possession of
the collateral.
Can Sally be perfected with
nothing in writing? §9310(b), §9-203(b)(3)(B). Yes
Sally
$5K
loan
Security
interest
Joe
Trustee
a. Is Sally in possession if the collateral is in her apartment and
Sally is a thousand miles away?
If Joe’s mother is staying in the apartment?
b. Sally and Joe want to claim perfection by possession in the
bankruptcy you are about to file. What’s your advice? See
Rules accompanying problems 3.3 and 8.4.
104
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