SECURED TRANSACTIONS OUTLINE
Ch. 1–4: vocab
Ch. 5–8: how security interests are created/attached
Ch. 9–16: method of perfection
Ch. 18–21: priority
Ch. 24–26: what happens when debtor sells collateral
Ch. 28–30: other transactions governed by Art. 9
Ch. 31–34: enforcement of security interest against defaulting debtor
Part 1: Intro to Art. 9 & Classification of Collateral
I. TYPICAL ECURED RANSACTION S T
Ch. 1
§ 9-109(a)(1); § 1-201(b)(35)
§ 9-109(a)(1): SCOPE
This article applies to a transaction regardless of its form, that creates a security interest in personal property or fixtures by contract
§ 1-201(b)(35): SECURITY INTEREST
An interest in personal property or fixtures that which secures payment or performance of an obligation
The retention or reservation of title by a seller of goods. . . is limited in effect to a reservation of a security interest
Scope of UCC Art. 9:
—Art. 9 provides inform rules governing security interests in personal property; real property law governs
interests in property (i.e. mortgages)
Governs secured transactions
Balances society’s demand for secured credit with problem of broken promises
Provides a legal structure that enables parties to agree in advance on allocation & priority rules for
debtor’s assets
Secured v. Unsecured Credit:
Unsecured: In bkr, unsecured parties generally share an insolvent debtor’s available assets on a pro rata
basis
oEX. You go to a bank and ask for a $100k loan; the bank grants it
Would the bank have a legal right to repayment? yes
Under the bkr code, unsecured parties generally share an insolvent’s debtor’s
assets on a pro-rata basis
BUT they have no particular rights in any of the debtor’s assets
Secured: Creditors who negotiate for special collateral rights in the assets of the debtor are secured
parties : secured parties beat unsecured parties § 9-201(a)
oEX. You ask for a $100k loan; the lender lends and takes an interest in your property
Allows the creditor to get special rights in certain collateral in bkr
the reason it matters b/c in bkr secured parties are going to get preferential treatment and get more back
Whose Who in a Secured Transaction? — : Definitions § 9-102(a)
Debtor § 9-102(a)(28) A person having an interest, other than a SI, in the collateral,
whether or not the person is the obligor (i.e. whose property is being
used as collateral?)
Obligor § 9-102(a)(59) A person that owes payment or other performance of the obligation
Secured Party § 9-102(a)(73) A person in whose favor the SI is created or provided for under a
security agreement
Collateral § 9-102(a)(12) Property subject to a security interest or ag lien
Security Agreement § 9-102(a)(74) An agreement that creates or provides for a SI
Problem 1.1: Ed asks Alex for a $20,000 loan to be paid off at 7% interest within 1 year; Alex is a little unwilling
to give Ed the $$$ but Ed has an antique gold watch worth well over $20k; he offers to give her the watch until he
pays off the loan; Alex agrees; they draw up an agreement, sign it, and exchange the check for the watch
A. Is this an Art. 9 transaction? yes
oEd: debtor / obligor
oAlex: secured party
oWatch: collateral
B. what if instead of physically giving Alex the watch, the agreement just gives her the right to the watch if
Ed defaults no change in analysis
C. what if instead it is Ed’s cousin C’s watch and C lets Ed use it as collateral? no change, other than
that now C is the debtor
Problem 1.2: to create a security interest in collateral, requires that it be done “by contract” § 9-109(a)
does
