Understanding Secured Transactions

by Lawrence, William H.; Henning, William H.; Freyermuth, R. Wilson

• ISBN13: 9780820561226
• ISBN10: 0820561223
• Edition: 3rd
• Format: Paperback
• Copyright: 2004-08-01
• Publisher: Lexis Nexis Matthew Bender

Table of Contents

Part I: SCOPE
The Security Concept	3	(1)
An Organizational Overview of Article 9	4	(2)
The Revised Uniform Commercial Code	6	(3)
Transactions Within Article 9	9	(58)
The Pre-Code Disarray of Secured Transactions Law	10	(1)
The Unitary Approach of Article 9; Terminology Describing Parties	11	(3)
General Applicability of Article 9	14	(6)
Consensual Security Interests --- § 9-109(a)(1)	14	(1)
Leases and Consignments	14	(1)
Disguised Leases	14	(3)
Disguised Consignments	17	(1)
True Consignments	18	(2)
Classifications of Collateral	20	(23)
Goods --- § 9-102(a)(44)	22	(1)
Consumer Goods and Manufactured Homes --- § 9-102(a)(23), (24), (53), (54)	23	(2)
Farm Products --- § 9-102(a)(34)	25	(2)
Inventory --- § 9-102(a)(48)	27	(1)
Equipment --- § 9-102(a)(33)	27	(1)
Indispensable Records	28	(1)
Documents --- § 9-102(a)(30)	28	(2)
Instruments --- § 9-102(a)(47), (65)	30	(1)
Chattel Paper --- § 9-102(a)(11), (31), (78)	31	(3)
Intangibles	34	(1)
Accounts --- § 9-102(a)(2), (46)	34	(1)
General Intangibles --- § 9-102(a)(42), (61)	35	(2)
A Comparison of Accounts, Instruments, and Chattel Paper	37	(3)
Investment Property --- § 9-102(a)(49)	40	(3)
Purchase-Money Security Interests --- § 9-103	43	(5)
General	43	(2)
Adoption of ``Dual-Status'' Rule	45	(3)
Sales of Accounts, Chattel Paper, Payment Intangibles and Promissory Notes --- § 9-109(a)(3)	48	(4)
Exclusions From Article 9 --- § 9-109(c), (d)	52	(9)
Federal Statutes	52	(1)
Landlord and Statutory Liens	53	(2)
Real Estate Interests	55	(1)
Wage Claim Assignments	56	(1)
Government Transfers	57	(1)
Transfers Irrelevant to Commercial Finance	57	(1)
Specified Transfers of Rights to Payment	58	(1)
Judgment Rights and Tort Claims	58	(1)
Rights of Set-off	59	(1)
Insurance Assignments	60	(1)
Deposit Accounts	60	(1)
Relationship Between Article 9 and Other Articles	61	(3)
Nonuniform Adoptions	64	(3)
Part II: ATTACHMENT OF SECURITY INTERESTS
Creation and Enforceability of Security Interests	67	(26)
Overview: The Concept of Attachment	67	(1)
Creation of an Enforceable Security Interest --- § 9-203	68	(17)
Security Agreement --- § 9-203(b)(3)	70	(2)
Authenticated by the Debtor	72	(1)
Description of the Collateral --- § 9-108	73	(5)
Value --- §§ 9-203(b)(1), 1-204	78	(2)
Rights or the Power to Transfer Rights in the Collateral --- § 9-203(b)(2)	80	(5)
Proceeds	85	(6)
Defined --- § 9-102(a)(64)	85	(3)
Attachment --- §§ 9-203(f), 9-315(a)(2), (b)	88	(3)
Attachment to Underlying Obligations --- § 9-203(f), (g)	91	(2)
Ongoing Financing Relationships	93	(18)
Facilitating Clauses Generally	93	(2)
After-Acquired Property --- § 9-204(a), (b)	95	(4)
General Applicability	95	(3)
Exceptions	98	(1)
Future Advances --- § 9-204(c)	99	(2)
Financing Inventory and Accounts	101	(10)
Factoring of Accounts	102	(1)
Financing Against Inventory and Accounts	103	(3)
Floor Planning Inventory	106	(5)
Part III: PERFECTION OF SECURITY INTERESTS
Perfection in General	111	(8)
Purpose	111	(1)
The Alternative Methods of Perfection --- § 9-310	112	(3)
Filing a Financing Statement	113	(1)
Possession	113	(1)
Automatic Perfection	113	(1)
Temporary Perfection	113	(1)
Filing Under Federal Law	114	(1)
State Certificate-of-Title Statute	114	(1)
Control	115	(1)
Delivery	115	(1)
When Perfection Occurs --- § 9-308(a)	115	(1)
Continuity of Perfection --- § 9-308(c)	116	(3)
Perfection by Filing	119	(30)
General Method --- § 9-310(a)	119	(1)
What Constitutes Filing --- § 9-516	120	(3)
What to File	123	(17)
Requirements --- §§ 9-502, 9-516(b)	123	(2)
Names --- § 9-503(a)-(c)	125	(2)
Authorization --- §§ 9-509, 9-510	127	(1)
Addresses	128	(1)
Indication of Collateral	129	(3)
Notice Filing	132	(1)
The Function of Notice	132	(1)
Requests for Information --- §§ 9-210, 9-625(f), (g)	133	(1)
Effect of Errors and Changes	133	(1)
Errors --- § 9-506(a)	133	(1)
Information Required for Sufficiency	133	(2)
Other Required Information	135	(1)
Changes --- §§ 9-507, 9-508	135	(4)
May Financing Statement Function as Security Agreement?	139	(1)
When to File --- § 9-502(d)	140	(1)
Where to File --- § 9-501	141	(1)
Lapse and Termination of Filing	142	(7)
Lapse of Initial Financing Statement --- § 9-515(a)	142	(1)
Continuation Statements --- § 9-515(c)-(e)	143	(2)
Termination Statements and Releases of Collateral --- §§ 9-513, 9-509	145	(4)
Perfection by Possession and Control	149	(24)
Possession Generally	149	(3)
History	149	(2)
Possession Under Article 9 --- § 9-313	151	(1)
Possessory Security Arrangements in Specific Types of Personal Property	152	(11)
Pledges of Valuables and Indispensable Paper	153	(2)
Goods in Storage or Manufacture	155	(1)
Terminal Warehousing --- § 9-312(c)	155	(2)
Field Warehousing --- § 9-312(d)	157	(4)
Goods in Transit	161	(2)
The Concept of Possession --- § 9-313	163	(4)
Possession by the Secured Party	163	(1)
Possession by Agents and Bailees	164	(2)
Symbolic or Constructive Delivery	166	(1)
Perfection by Control	167	(6)
Investment Property --- §§ 9-314(a), 9-106	167	(4)
Deposit Accounts, Electronic Chattel Paper, Electronic Documents, and Letter-of-Credit Rights --- §§ 9-314(a), 9-104, 9-105, 9-107	171	(2)
Automatic Perfection	173	(12)
Purchase-Money Security Interests in Consumer Goods --- § 9-309(1)	174	(3)
Application of the Provision	174	(1)
Policy	175	(1)
Exceptions	176	(1)
Certain Types of Assignments	177	(8)
Isolated Assignment of Account or Payment Intangible --- § 9-309(2)	178	(2)
Sales of Payment Intangibles and Promissory Notes --- § 9-309(3), (4)	180	(1)
Assignment of Health-Care-Insurance Receivables to a Provider --- § 9-309(5)	180	(1)
Investment Property --- § 9-309(9), (10), (11)	181	(1)
Assignment for the Benefit of All Creditors --- § 9-309(12)	182	(1)
Assignment of a Beneficial Interest in a Decedent's Estate --- § 9-309(13)	182	(1)
Sales of Lottery Winnings --- § 9-309(13)	182	(3)
Temporary Perfection and Perfection of Proceeds	185	(12)
Instruments, Certificated Securities, Documents and Bailed Goods --- § 9-312(e)-(h)	185	(4)
Initial Perfection	185	(3)
Continuing Perfection for Collateral Made Available to Debtor	188	(1)
Proceeds --- § 9-315(c)-(e)	189	(8)
The Grace Period of Temporary Perfection	189	(1)
Continuous Perfection	190	(1)
Identifiable Cash Proceeds	191	(1)
Same Filing Office: The Basic Rule	192	(2)
Same Filing Office: The ``Cash-Phase'' Rule	194	(1)
Timely General Perfection	195	(2)
Multistate Transactions	197	(26)
The Code's Basic Choice-Of-Law Provision	197	(4)
The Reasonable Relationship Test	198	(2)
The Appropriate Relationship Test	200	(1)
The Article 9 Choice-Of-Law Rules	201	(7)
General Rule: Location of the Debtor --- § 9-301(1)	201	(3)
Possessory Security Interest Exception --- § 9-301(2)	204	(1)
Tangible Property Partial Exception --- § 9-301(3)(c)	204	(2)
Additional Exceptions	206	(1)
Land-Related Collateral --- § 9-301(3), (4)	206	(1)
Agricultural Liens --- § 9-302	207	(1)
Deposit Accounts --- § 9-304	207	(1)
Investment Property --- § 9-305	207	(1)
Letter-of-Credit Rights --- § 9-306	208	(1)
Certificate of Title Laws --- §§ 9-303, 9-337	208	(3)
Perfection Following Change in Governing Law --- § 9-316	211	(8)
Part IV: PRIORITIES
The Priority Concept	219	(1)
Understanding Priorities	220	(3)
Among Secured Parties	223	(22)
First-to-File-Or-Perfect --- § 9-322(a)	223	(4)
Future Advances --- §§ 9-323, 9-322	227	(4)
Exceptions for Non-Filing Collateral	231	(3)
Deposit Accounts --- § 9-327	231	(1)
Investment Property --- § 9-328	232	(1)
Letter-of-Credit Rights --- § 9-329	233	(1)
Chattel Paper, Instruments, Negotiable Documents, and Securities --- §§ 9-330, 9-331	233	(1)
Purchase-Money Security Interests	234	(5)
Collateral Other Than Inventory --- § 9-324(a)	235	(2)
Inventory --- § 9-324(b), (c)	237	(2)
Proceeds	239	(6)
Nonpurchase-Money Security Interests	239	(1)
General Rule --- § 9-322(b)(1)	240	(1)
Special Rules	240	(1)
Special Rule on Non-Temporal Priority --- § 9-322(c)(2)	240	(2)
Special Rule on Temporal Priority --- § 9-322(d), (e)	242	(1)
Purchase-Money Security Interests --- § 9-324(a), (b)	242	(3)
Purchasers (Other Than Secured Parties) Versus Perfected Secured Parties	245	(24)
General Rule on Disposition --- § 9-315(a)	245	(3)
Authorized Disposition --- § 9-315(a)(1)	248	(5)
Express Authorization	248	(3)
Implied Authorization	251	(2)
Priorities	253	(16)
Goods	253	(1)
Buyers and Lessees of Goods in Ordinary Course of Business --- § 9-320(a), 9-321(c)	253	(1)
Defining the Buyer or Lessee --- §§ 1-201(b)(9), 2A-103(o)	254	(3)
Created by Its Seller or Lessor	257	(2)
Consumer Buyers of Consumer Goods --- § 9-320(b)	259	(1)
Future Advances --- § 9-323(d)--(g)	260	(2)
Licensees of General Intangibles in Ordinary Course of Business --- §§ 9-321(a), (b)	262	(1)
Chattel Paper and Instruments --- § 9-330	262	(1)
Chattel Paper	262	(3)
Instruments	265	(1)
Negotiable Instruments, Negotiable Documents, and Securities --- § 9-331	265	(2)
Funds in Deposit Accounts and Money --- §§ 9-332, 9-340	267	(2)
The Farm Products Rule	269	(6)
The Article 9 Rule	269	(1)
The Federal Food Security Act	270	(3)
Advance-Notice Approach	271	(1)
State Central-Registry Approach	272	(1)
A Critique	273	(2)
Creditors with Liens Arising by Operation of Law	275	(10)
Possessory Liens That Arise by Operation of Law --- § 9-333	275	(3)
Agricultural Liens --- §§ 9-317, 9-322(a)(1)	278	(1)
Federal Tax Liens	279	(6)
Purchasers (Other Than Secured Parties) and Lien Creditors Versus Unperfected Secured Parties	285	(10)
Article 9's Residual Priority Rule --- § 9-201(a)	285	(1)
Lien Creditors	286	(4)
General Rule --- § 9-317(a)(2)	286	(2)
Purchase-Money Security Interest --- § 9-317(e)	288	(1)
Future Advances --- § 9-323(b)	289	(1)
Other Purchasers	290	(2)
General Rules --- § 9-317(b)--(d)	290	(2)
Purchase Money Security Interest --- § 9-317(e)	292	(1)
Future Advances --- § 9-323(d)--(g)	292	(1)
Claimants Not Expressly Governed by Article 9	292	(3)
Fixtures, Accessions and Commingled Goods	295	(20)
Fixtures Defined --- § 9-102(a)(41)	295	(2)
Fixture Filings --- § 9-102(a)(40)	297	(2)
Priorities in Fixtures	299	(9)
The Code's Residual Rule --- § 9-334(c)	299	(1)
The Purchase-Money Priority Exception --- § 9-334(d)	299	(2)
The ``First-to-File-or-Record'' Exception --- § 9-334(e)(1)	301	(1)
The Nonreliance-Creditor Exception --- § 9-334(e)(3)	302	(2)
The Exception for ``Readily Removable Collateral'' --- § 9-334(e)(2)	304	(1)
Special Rules for Construction Mortgages --- § 9-334(h)	305	(1)
Exception for Manufactured Homes --- § 9-335(e)(4)	306	(1)
Exception Based on Consent or Right of Removal --- § 9-334(f)	307	(1)
Secured Party's Right to Remove Fixtures After Default --- § 9-604(c), (d)	308	(2)
Accessions --- § 9-335	310	(1)
Nature of the Interest	310	(1)
Priorities	310	(1)
Commingled Goods --- § 9-336	311	(4)
Rights	311	(1)
Priorities	312	(3)
Bankruptcy	315	(74)
Background	316	(4)
Introduction	316	(2)
The Bankruptcy Estate	318	(1)
The Bankruptcy Trustee	319	(1)
Contrasting Secured and Unsecured Claims	320	(3)
What is a Claim?	320	(1)
The Allowance of Claims	320	(1)
Secured Claims, Unsecured Claims, and Valuation	321	(2)
The Automatic Stay	323	(13)
Nature and Scope	323	(2)
Relief from Stay	325	(1)
Relief for ``Cause'' --- 11 U.S.C. § 362(d)(1)	326	(1)
Lack of adequate protection	326	(1)
Preserving the value of the secured party's encumbrance	326	(2)
The problem of lost opportunity costs	328	(2)
Other cause for relief	330	(1)
Relief Under 11 U.S.C. § 362(d)(2)	331	(1)
Does debtor have equity in the collateral?	331	(3)
Is the collateral necessary for debtor's reorganization?	334	(1)
Procedural Issues and Burden of Proof	335	(1)
The Trustee's Avoidance Powers	336	(31)
Background	336	(2)
Strong-Arm Power --- 11 U.S.C. § 544(a)	338	(1)
The Trustee as Hypothetical Lien Creditor Versus the Unperfected Secured Party	338	(3)
Relation-Back Priority --- 11 U.S.C. § 546(b)	341	(2)
Subrogation to State-Law Avoidance Powers of an Unsecured Creditor --- 11 U.S.C. § 544(b)	343	(1)
Power to Avoid Statutory Liens	343	(1)
Power to Avoid Preferential Transfers --- 11 U.S.C. § 547	344	(1)
Background	344	(1)
Proving the Elements of a Preference	345	(4)
Determining When the Transfer Occurred	349	(3)
Exceptions to the Trustee's Preference Avoidance Power	352	(1)
Substantially contemporaneous exchanges for new value	352	(3)
``Ordinary-course'' transfers	355	(1)
Security interests granted in conjunction with enabling loans	356	(1)
Transfers ameliorating an earlier preference	357	(1)
Floating liens in inventory and accounts receivable	358	(3)
Statutory liens	361	(1)
Consumer transfers	361	(1)
Power to Avoid Fraudulent Transfers	361	(1)
Intentionally Fraudulent Transfers --- 11 U.S.C. § 548(a)(1)	361	(1)
Constructively Fraudulent Transfers --- 11 U.S.C. § 548(a)(2)	362	(2)
Pre-bankruptcy Foreclosure Sales as Fraudulent Transfers	364	(2)
Avoiding Fraudulent Transfers Under State Law --- 11 U.S.C. § 544(b)	366	(1)
The Trustee's Right to Assert the Debtor's Defenses --- 11 U.S.C. § 558	367	(1)
Security Interests in After-Acquired Property --- 11 U.S.C. § 552	368	(3)
The General Rule Cutting Off Liens Against After-Acquired Property --- 11 U.S.C. § 552(a)	368	(1)
Proceeds of Prepetition Collateral --- 11 U.S.C. § 552(b)	369	(2)
The Debtor's Right to Claim Exempt Property	371	(6)
Generally	371	(1)
The Debtor's Power to Avoid Liens Against Exempt Property	372	(5)
The Chapter 7 Debtor's Right of Redemption --- 11 U.S.C. § 722	377	(3)
Reaffirmation by the Debtor --- 11 U.S.C. § 524(c)	380	(9)
Part V: DEFAULT
Default and Its Consequences	389	(14)
Importance of the Concept of Default	389	(7)
Waiver of Default	391	(3)
Insecurity and Acceleration Clauses --- § 1-309	394	(2)
Remedies Available Upon Default	396	(7)
Types of Remedies	396	(3)
Cumulation of Remedies	399	(4)
The Foreclosure Process	403	(42)
Repossession --- § 9-609	403	(8)
Self-Help	405	(1)
``Breach of the Peace''	405	(4)
Disabling the Collateral	409	(1)
Judicial Action	410	(1)
Disposition of Collateral --- §§ 9-610 to 9-615	411	(26)
The Standard of Commercial Reasonableness	412	(1)
Duty to Publicize	413	(1)
Disposition Within a Reasonable Time	414	(1)
The Method of Disposition: Public Versus Private	415	(3)
Is There a Duty to ``Fix Up'' the Collateral?	418	(1)
Price as an Indicator of Commercial Unreasonableness	418	(2)
Notice of Disposition	420	(1)
Persons Entitled to Notice	420	(4)
Amount of Notice Necessary	424	(1)
Form and Content of Notice	425	(3)
When Notice is Excused	428	(2)
Whether Secured Party Can Purchase at Disposition	430	(1)
Application of Proceeds of Disposition	431	(3)
Property Rights of Transferee at Disposition	434	(3)
Foreclosure on Intangible Assets --- § 9-607	437	(1)
Strict Foreclosure --- §§ 9-620 to 9-622	438	(3)
Redemption --- § 9-623	441	(4)
The Consequences of Creditor Misbehavior	445
Overview	445	(8)
Pre-Disposition Remedies	446	(1)
Monetary Damages	447	(1)
Wrongful Repossession	447	(3)
Wrongful Disposition of the Collateral	450	(2)
Failure to Use Reasonable Care Regarding Collateral in Secured Party's Possession	452	(1)
Failure to File or Send Termination Statement	452	(1)
Failure to Provide Statement of Account or List of Collateral	452	(1)
Secured Party's Right to Deficiency Judgment	453	(4)
The Consumer Penalty --- § 9-625(c)	457
Table of Cases	1	(1)
Table of Statutes	1	(1)
Index	1