1 / 20

Chapter 34 Secured Transactions In Personal Property

Twomey  Jennings Anderson’s Business Law and the Legal Environment , Comprehensive 20e Anderson’s Business Law and the Legal Environment , Standard 20e Business Law: Principles for Today’s Commercial Environment 2e. Chapter 34 Secured Transactions In Personal Property. Definitions.

eadoin
Télécharger la présentation

Chapter 34 Secured Transactions In Personal Property

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Twomey  JenningsAnderson’s Business Law and the Legal Environment, Comprehensive 20eAnderson’s Business Law and the Legal Environment, Standard 20eBusiness Law: Principles for Today’s Commercial Environment 2e Chapter 34 Secured Transactions In Personal Property

  2. Definitions • A security interest is an interest in personal property or fixtures that secures payment or performance of an obligation. • The property that is subject to the interest is called the collateral, and the party holding the interest is called the secured party.

  3. Definitions • Attachment is the creation of a security interest. • To secure protection against third parties’ claims to the collateral, the secured party must perfect the security interest.

  4. Creation of a Security Interest • The agreement between the creditor and the debtor that the creditor will have a security interest. • The agreement must identify the parties, describe the collateral and the debt that is secured by the agreement. • Purchase Money Security Interest: good sold on credit by seller is collateral.

  5. Creation of a Security Interest Signed by Debtor Intent to Create Security Interest Writing Description of Collateral (Oral OK if Creditor is in Possession of Collateral) Contemporaneous Exchange Value Creditor Previously Gave Loan Debtor’s Interest in Collateral

  6. Classification of Collateral • Tangible collateral is divided into classes (based on the debtor’s intended use, not on physical characteristics): • consumer goods, • equipment, • inventory, • general intangibles, • farm products, and • fixtures. • After-Acquired Collateral. • Proceeds.

  7. Tangible Collateral Equipment Consumer Goods Used or bought primarily for personal, family, or household use Used or bought primarily for business use Inventory Farm Products Held by debtor primarily for sale on lease to others; or raw materials, work in progress, or materials consumed in a business Crops or livestock or supplies used or produced in farming

  8. Perfection of Secured Transactions • Creditor who obtains a perfected security interest has priority over unsecured creditors. • Perfection can be obtained : • By Possession; • By Filing; • Automatically, as in the case of a PMSI in consumer goods; or • Temporarily, when statutory protections are provided for creditors for limited periods of time.

  9. Perfection by Filing • Financing Statement is an authenticated record. • Content of the financing statement: • Name of the Debtor. • Name of the Secured Party. • Description of Collateral. • Must be filed in a public place to give notice to 3rd parties. • Defective Filings?

  10. Perfection of Secured Transactions Writing Signed by Debtor File Financing Statement Description of Collateral Address of Debtor Address of Creditor Where Depends on Type of Collateral Local Central Fixtures Equipment Inventory Farm Consumers Possession -- Creditor Retains Possession of Collateral PMSI in Consumer Goods -- Automatic Perfection Motor Vehicles -- Notation in Title Registration

  11. Secured Party vs. Buyer of Collateral • A buyer in the ordinary course of business always takes priority even over perfected secured creditors. • A buyer not in the ordinary course of business will lose out to a perfected secured creditor but will extinguish the rights of an unperfected secured creditor (unless the buyer had knowledge of the security interest).

  12. Loss of Perfection • Possession of Collateral. • Consumer Goods. • Lapse of Time. • Removal from State. • Motor Vehicles.

  13. Debtor’s Rights Buyer not in Ordinary Course Buyer in Ordinary Course Does NOT have priority over: Has priority over: Has priority over: Perfected secured creditor (except consumer PMSI –Then, buyer has priority) Unperfected secured creditor (Assuming buyer had no knowledge of security interest) Perfected secured creditor Unperfected secured creditor When a debtor sells the collateral securing a debt, who has priority in the collateral: the debtor or the creditor? What kind of buyer?

  14. Rights of Parties Before Default • Status of Creditor Before Default. • Determined by contract law/UCC 2. • Status of Debtor Before Default. • Statement of Account. • Termination Statements. • Correction Statements.

  15. Priorities Priority goes to: Unsecured vs. Unsecured Priority goes to: Unsecured vs. Secured Priority goes to: Secured vs. Secured Priority goes to: Perfected Secured vs. Secured Priority goes to: Perfected Secured vs. Perfected Secured Neither -- equal Secured One whose interestattached first Perfected Secured One who perfected first

  16. Priorities • Unperfected, unsecured creditors have the lowest priority and are paid only if sufficient assets remain after priority creditors are paid. • Secured creditors have the right to take the collateral on a priority basis, based on whose interest was the first to attach.

  17. Priorities • PMSI in inventory collateral. • To prevail, the secured creditor must perfect before before the debtor receives possession, and give notice to other secured parties. • PMSI in non-inventory collateral. • Secured creditor prevails if she files a financing statement within 20 days of possession.

  18. Priorities • A perfected secured creditor takes priority over an unperfected secured creditor. • Multiple perfected secured creditors with interests in the same collateral take priority generally on a first-to-perfect basis. • Exceptions include PMSI inventory creditors who file a financing statement before delivery and notify all existing creditors, and equipment creditors who perfect within ten days of attachment of their interests.

  19. Rights of Parties After Default • Self Help: Upon default, a secured party may repossess the collateral from the buyer if this can be done without a breach of the peace. • If a breach of the peace might occur, the secured party must use court action to regain the collateral.

  20. Disposition of Collateral • Creditor: If the buyer has paid 60 percent or more of the cash price of the consumer goods, the seller must resell them within 90 days after repossession unless the buyer, after default, has waived this right in writing. • Notice to the debtor of the sale of the collateral is usually required. • Debtor: A debtor may redeem the collateral prior to the time the secured party disposes of it or contracts to resell it.

More Related