1 Secured Transactions Assignment 19 Exceptions to the Filing Requirement

2 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

3 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 relationship.) Basic Concepts: Possession

(24). “Money” is a government medium of exchange. Cash, but not cash in a bank account. Basic Concepts: Possession

(24). “Money” is a government medium of exchange. Cash, but not cash in a bank account (a)(47). “Instrument” means a negotiable instrument Basic Concepts: Possession

UCC § 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

(24). “Money” is a government medium of exchange. Cash, but not cash in a bank account (a)(47). “Instrument” means a negotiable instrument Basic Concepts: Possession I promise to pay $2 million to the order of Lynn LoPucki Jon Doe Bank -- Pay $2 million to the order of Lynn LoPucki Jon Doe Promissory note: Check:

(24). “Money” is a government medium of exchange. Cash, but not cash in a bank account (a)(47). “Instrument” means a negotiable instrument or any other writing that (1) evidences a right to payment of a monetary obligation, Basic Concepts: Possession

(24). “Money” is a government medium of exchange. Cash, but not cash in a bank account (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, Basic Concepts: Possession

(24). “Money” is a government medium of exchange. Cash, but not cash in a bank account (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. Basic Concepts: Possession

(24). “Money” is a government medium of exchange. Cash, but not cash in a bank account (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 (a)(11). “Chattel Paper” means a record or records that evidence both a monetary obligation and a security interest in specific goods... Basic Concepts: Possession

(24). “Money” is a government medium of exchange. Cash, but not cash in a bank account (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 (a)(11). “Chattel Paper” means a record or records that evidence both a monetary obligation and a security interest in specific goods... Basic Concepts: Possession

(24). “Money” is a government medium of exchange. Cash, but not cash in a bank account (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 (a)(11). “Chattel Paper” means a record or records that evidence both a monetary obligation and a security interest in specific goods... Basic Concepts: Possession

(24). “Money” is a government medium of exchange. Cash, but not cash in a bank account (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 (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. Basic Concepts: Possession

(24). “Money” is a government medium of exchange. Cash, but not cash in a bank account (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 (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.... Basic Concepts: Possession

16 Characterizing Monetary Obligations Chattel Paper Chattel paper is chattel paper §9-102(a)(11). “Chattel paper” means... records that evidence both a monetary obligation and a security interest in specific goods....”

17 Characterizing Monetary Obligations Chattel Paper Chattel paper is chattel paper §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...”

18 Characterizing Monetary Obligations Instruments Chattel Paper An instrument is an instrument if it is not chattel paper Chattel paper is chattel paper §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...”

19 Characterizing Monetary Obligations Instruments Chattel Paper An instrument is an instrument if it is not chattel paper Chattel paper is chattel paper §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...

20 Characterizing Monetary Obligations Instruments Chattel Paper An instrument is an instrument if it is not chattel paper Chattel paper is chattel paper §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.

21 Accounts Characterizing Monetary Obligations Instruments Chattel Paper An instrument is an instrument if it is not chattel paper An account is an account if it is not an instrument or chattel paper Chattel paper is chattel paper §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.

22 Accounts Characterizing Monetary Obligations Instruments Chattel Paper An instrument is an instrument if it is not chattel paper An account is an account if it is not an instrument or chattel paper Chattel paper is chattel paper §9-102(a)(61). “Payment intan- gible” means a general intangible [that is] a monetary obligation.

23 Accounts Characterizing Monetary Obligations Instruments Chattel Paper An instrument is an instrument if it is not chattel paper An account is an account if it is not an instrument or chattel paper Chattel paper is chattel paper §9-102(a)(42). “General intangible” means personal property other than accounts, chattel paper... instruments... §9-102(a)(61). “Payment intan- gible” means a general intangible [that is] a monetary obligation.

24 Payment intangibles Accounts Characterizing Monetary Obligations Instruments Chattel Paper An instrument is an instrument if it is not chattel paper An account is an account if it is not an instrument or chattel paper A payment intangible is a payment intangible if it is not an account, instrument, or chattel paper Chattel paper is chattel paper §9-102(a)(42). “General intangible” means personal property other than accounts, chattel paper... instruments... §9-102(a)(61). “Payment intan- gible” means a general intangible [that is] a monetary obligation.

25 §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 (§9-104). Basic Concepts: Control

26 § A secured party has control of a deposit account if: Basic Concepts: Control

27 (1)The secured party is the bank with which the deposit is maintained; § A secured party has control of a deposit account if: Customer Account Secured party SI Basic Concepts: Control

28 (1)The secured party is the bank with which the deposit is maintained; § A secured party has control of a deposit account if: Customer Secured party SI Basic Concepts: Control Account

29 (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) § A secured party has control of a deposit account if: Customer Secured party SI Agreement Basic Concepts: Control Account

30 (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) § A secured party has control of a deposit account if: Customer Secured party SI Agreement § A bank that has entered into such an agreement is not required to confirm the existence of the agreement... unless requested to do so by its customer Basic Concepts: Control Account

31 (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)) § A secured party has control of a deposit account if: Basic Concepts: Control Debtor Secured party SI Account

32 Securities Holding System Microsoft (“Issuer”) Stockholder Share certificate Stock Registry

33 Securities Holding System Microsoft (“Issuer”) Goldman Stockholder Share certificate Uncertificated securities Microsoft sells 10 million shares to Goldman Sachs Stock Registry

34 Securities Holding System Goldman Stockholder Share certificate Uncertificated securities Microsoft sells 10 million shares to Goldman Sachs Goldman sells 1 million shares to Merrill Lynch Microsoft (“Issuer”) Stock Registry

35 Securities Holding System Goldman Merrill Lynch Stockholder Share certificate Uncertificated securities Securities entitlements / Securities accounts Goldman sells 1 million shares to Merrill Lynch Microsoft (“Issuer”) Stock Registry

36 Securities Holding System Goldman Merrill Lynch Stockholder Share certificate Securities intermediaries Uncertificated securities Entitlement holders Securities entitlements / Securities accounts Goldman sells 1 million shares to Merrill Lynch Microsoft (“Issuer”) Stock Registry

37 Securities Holding System Goldman Merrill Lynch Stockholder Share certificate Securities intermediaries Uncertificated securities Entitlement holders Securities entitlements / Securities accounts Merrill owns the shares; Goldman holds them in trust; SIPC insures their existence Microsoft (“Issuer”) Stock Registry

38 Securities Holding System Goldman Merrill Lynch Stockholder Share certificate Securities intermediaries Securities entitlements / Securities accounts Uncertificated securities Entitlement holders Stockholder buys 100 shares Microsoft (“Issuer”) Stock Registry

39 Share certificates Securities Holding System Goldman Merrill Lynch Stockholder Share certificate Securities intermediaries Securities entitlements / Securities accounts Depository Trust Company Uncertificated securities Certificated securities Entitlement holders Microsoft (“Issuer”) Stock Registry

40 Share certificates Securities Holding System Goldman Merrill Lynch Stockholder Share certificate Securities intermediaries Depository Trust Company Certificated securities Entitlement holders 10 million 1million Microsoft (“Issuer”) Stock Registry

41 Share certificates Securities Holding System Goldman Merrill Lynch Stockholder Share certificate Securities intermediaries Depository Trust Company Certificated securities Entitlement holders Goldman transfers the Merrill shares to Merrill 10 million 1million Microsoft (“Issuer”) Stock Registry

42 Share certificates Securities Holding System Goldman Merrill Lynch Stockholder Share certificate Securities intermediaries Depository Trust Company Entitlement holders Securities entitlement Goldman transfers the Merrill shares to Merrill 9 million 1million Microsoft (“Issuer”) Stock Registry

43 Share certificates Securities Holding System Goldman Merrill Lynch Stockholder Share certificate Securities intermediaries Depository Trust Company Entitlement holders Securities entitlement DTC settled $1.88 quadrillion of shares in million 1million Microsoft (“Issuer”) Stock Registry

44 Share certificates Perfection of Security Interests in Securities Goldman Merrill Lynch Stockholder Share certificate Securities intermediaries Depository Trust Company Uncertificated securities Entitlement holders Securities entitlement 9 million 1million Bank Security interest Microsoft (“Issuer”) Stock Registry

Security interest Merrill: “I will comply with your orders re these securities.” 45 Share certificates Perfection of Security Interests in Securities Goldman Merrill Lynch Stockholder Share certificate Securities intermediaries Depository Trust Company Uncertificated securities Entitlement holders Securities entitlement 9 million 1million Bank Microsoft (“Issuer”) Stock Registry

46 Share certificates Perfection of Security Interests in Securities Goldman Merrill Lynch Stockholder Share certificate Securities intermediaries Depository Trust Company Uncertificated securities Entitlement holders Securities entitlement 9 million 1million Bank Merrill: “I will comply with your orders re these securities.” Bank is perfected against Stockholder’s entitlement by control Microsoft (“Issuer”) Stock Registry

47 Customer (2) Secured is third party SI Agreement Account Priority in Deposit Accounts, §9-327 Assume three security interests in the same deposit account

48 (1) Secured is bank Customer (2) Secured is third party SI Agreement Account Priority in Deposit Accounts, §9-327 Assume three security interests in the same deposit account

49 Account (1) Secured is bank (3) Secured is customer Debtor (2) Secured is third party SI Agreement Priority in Deposit Accounts, §9-327 Assume three security interests in the same deposit account

50 Account (1) Secured is bank (3) Secured is customer Debtor (2) Secured is third party SI Agreement Priority in Deposit Accounts, §9-327 Secured (3) beats Secured (1). Bank transferred the account to (3) Secured. Assume three security interests in the same deposit account

51 Account (1) Secured is bank (3) Secured is customer Debtor (2) Secured is third party SI Agreement Priority in Deposit Accounts, §9-327 Secured (3) beats Secured (1) Secured (1) beats Secured (2). Bank shouldn’t have to check its records. Assume three security interests in the same deposit account

52 Account (1) Secured is bank (3) Secured is customer Debtor (2) Secured is third party SI Agreement Priority in Deposit Accounts, §9-327 Secured (3) beats Secured (1) Secured (1) beats Secured (2) Otherwise all controlling secured parties rank by time Assume three security interests in the same deposit account

53 Account (1) Secured is bank (3) Secured is customer Debtor (2) Secured is third party SI Agreement Priority in Deposit Accounts, §9-327 Secured (3) beats Secured (1) Secured (1) beats Secured (2) Otherwise all controlling secured parties rank by time All controlling secured parties beat secured parties claiming merely as proceeds Assume three security interests in the same deposit account

54 Perfection Methods Filing §9-312 Possession §9-313 Control §9-314 GoodsOptional Chattel paper, tangibleOptionalPreferred InstrumentsOptionalPreferred Deposit accountsExclusive Electronic chattel paperOptional MoneyExclusive Certificated securityOptional Preferred Uncertificated securityOptionalPreferred Neg. bill of ladingOptional Neg. warehouse receiptOptional

55 Perfection Methods Filing §9-312 Possession §9-313 Control §9-314 Goods Optional Chattel paper, tangibleOptionalPreferred InstrumentsOptionalPreferred Deposit accountsExclusive Electronic chattel paperOptional MoneyExclusive Certificated securityOptional Preferred Uncertificated securityOptionalPreferred Neg. bill of ladingOptional Neg. warehouse receiptOptional

56 Perfection Methods Filing §9-312 Possession §9-313 Control §9-314 Goods Optional Chattel paper, tangible Optional Preferred InstrumentsOptionalPreferred Deposit accountsExclusive Electronic chattel paperOptional MoneyExclusive Certificated securityOptional Preferred Uncertificated securityOptionalPreferred Neg. bill of ladingOptional Neg. warehouse receiptOptional

57 Perfection Methods Filing §9-312 Possession §9-313 Control §9-314 Goods Optional Chattel paper, tangible Optional Preferred Instruments Optional Preferred Deposit accountsExclusive Electronic chattel paperOptional MoneyExclusive Certificated securityOptional Preferred Uncertificated securityOptionalPreferred Neg. bill of ladingOptional Neg. warehouse receiptOptional

58 Perfection Methods Filing §9-312 Possession §9-313 Control §9-314 Goods Optional Chattel paper, tangible Optional Preferred Instruments Optional Preferred Deposit accounts Exclusive Electronic chattel paperOptional MoneyExclusive Certificated securityOptional Preferred Uncertificated securityOptionalPreferred Neg. bill of ladingOptional Neg. warehouse receiptOptional

59 Perfection Methods Filing §9-312 Possession §9-313 Control §9-314 Goods Optional Chattel paper, tangible Optional Preferred Instruments Optional Preferred Deposit accounts Exclusive Electronic chattel paper Optional MoneyExclusive Certificated securityOptional Preferred Uncertificated securityOptionalPreferred Neg. bill of ladingOptional Neg. warehouse receiptOptional

60 Perfection Methods Filing §9-312 Possession §9-313 Control §9-314 Goods Optional Chattel paper, tangible Optional Preferred Instruments Optional Preferred Deposit accounts Exclusive Electronic chattel paper Optional Money Exclusive Certificated securityOptional Preferred Uncertificated securityOptionalPreferred Neg. bill of ladingOptional Neg. warehouse receiptOptional

61 Perfection Methods Filing §9-312 Possession §9-313 Control §9-314 Goods Optional Chattel paper, tangible Optional Preferred Instruments Optional Preferred Deposit accounts Exclusive Electronic chattel paper Optional Money Exclusive Certificated security Optional Preferred Uncertificated securityOptionalPreferred Neg. bill of ladingOptional Neg. warehouse receiptOptional

62 Perfection Methods Filing §9-312 Possession §9-313 Control §9-314 Goods Optional Chattel paper, tangible Optional Preferred Instruments Optional Preferred Deposit accounts Exclusive Electronic chattel paper Optional Money Exclusive Certificated security Optional Preferred Uncertificated security Optional Preferred Neg. bill of ladingOptional Neg. warehouse receiptOptional

63 Perfection Methods Filing §9-312 Possession §9-313 Control §9-314 Goods Optional Chattel paper, tangible Optional Preferred Instruments Optional Preferred Deposit accounts Exclusive Electronic chattel paper Optional Money Exclusive Certificated security Optional Preferred Uncertificated security Optional Preferred Neg. bill of lading Optional Neg. warehouse receiptOptional

64 Perfection Methods Filing §9-312 Possession §9-313 Control §9-314 Goods Optional Chattel paper, tangible Optional Preferred Instruments Optional Preferred Deposit accounts Exclusive Electronic chattel paper Optional Money Exclusive Certificated security Optional Preferred Uncertificated security Optional Preferred Neg. bill of lading Optional Neg. warehouse receipt Optional

65 Perfection Methods Filing §9-312 Possession §9-313 Control §9-314 Goods 9-310(a) 9-313(a) Chattel paper, tangible 9-312(a) Instruments 9-312(a) Deposit accounts 9-312(b)(1) Electronic chattel paper 9-312(a) 9-314(a) Money 9-312(b)(3) Certificated security 9-312(a) 9-313(a) 9-328(1) Uncertificated security 9-312(a) 9-328(1) Neg. bill of lading 9-312(a) 9-313(a) Neg. warehouse receipt 9-312(a) 9-313(a)

66 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), Authenticated agreement with the bank or put secured’s name on the account. d.General Motors share certificates? 9-312(a), 9-313(a), (a), 9-328(1), 9-106, 8-106(b). Controlling secured party is first. Keep the indorsed certificate or register the transfer with General Motors (preferred over a party without control)

67 Problem 19.1, page 342 How does a secured creditor perfect in: e.Promissory notes and security interests in cars?

68 Problem 19.1, page 342 How does a secured creditor perfect in: e.Promissory notes and security interests in cars? Chattel paper (a), 9-313(a), or 9-314(a) and if we required the dealer to make the paper electronic.

69 Problem 19.1, page 342 How does a secured creditor perfect in: e.Promissory notes and security interests in cars? Chattel paper (a), 9-313(a), or 9-314(a) and if we required the dealer to make the paper electronic. Take possession

70 Problem 19.2, page 342 Watson Family Restaurants Canards Franchise $500K contract

71 Problem 19.2, page 342 Watson Family Restaurants Canards Casa Grande Franchise $500K contract $500K contract $300K loan

72 Problem 19.2, page 342 Watson Family Restaurants Canards Casa Grande Franchise $500K contract $500K contract $300K loan a.How should Casa Grande perfect? What is the nature of the collateral?

73 Problem 19.2, page 342 Watson Family Restaurants Canards Casa Grande Franchise $500K contract $500K contract $300K loan a.How should Casa Grande perfect? What is the nature of the collateral? Instrument? §9-102(a)(47).

74 Problem 19.2, page 342 Watson Family Restaurants Canards Casa Grande Franchise $500K contract $500K contract $300K loan a.How should Casa Grande perfect? What is the nature of the collateral? Instrument? §9-102(a)(47). Take possession.

75 Problem 19.2, page 342 Watson Family Restaurants Canards Casa Grande Franchise $500K contract $500K contract $300K loan 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).

76 Problem 19.2, page 342 Watson Family Restaurants Canards Casa Grande Franchise $500K contract $500K contract $300K loan 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.

77 Problem 19.2, page 342 Watson Family Restaurants Canards Casa Grande Franchise $500K secured $500K contract $300K loan 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?

78 Problem 19.2, page 342 Watson Family Restaurants Canards Casa Grande Franchise $500K secured $500K contract $300K loan 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.

79 Problem 19.3, page 343 Watson Family Restaurants Canards Garp Associates Franchise Instrument $60K loan

80 Problem 19.3, page 343 Watson Family Restaurants Canards Garp Associates Franchise Instrument $60K loan Casa Grande $300K loan

81 Problem 19.3, page 343 Watson Family Restaurants Canards Garp Associates Franchise Instrument $60K loan Can Casa Grande perfect in this instrument by filing? Casa Grande $300K loan

82 Problem 19.3, page 343 Watson Family Restaurants Canards Garp Associates Franchise Instrument $60K loan Can Casa Grande perfect in this instrument by filing? Yes, but loses to a later SI perfect by possession Casa Grande $300K loan

83 Problem 19.3, page 343 Watson Family Restaurants Canards Garp Associates Franchise Instrument $60K loan 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? Casa Grande $300K loan

84 Problem 19.3, page 343 Watson Family Restaurants Canards Garp Associates Franchise Instrument $60K loan 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) Casa Grande $300K loan

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?

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)?

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?

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)?

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?

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?

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.

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)?

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?

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, §9- 313(b)

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, §9- 313(b) d.Solid gold ingot and 20 unset diamonds worth $20 million? §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, §9- 313(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)?

98 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, §9- 313(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?

99 Problem 19.5, page 344 Joe Sally $5K loan Security interest Sally and Joe enter into an oral security agreement. Sally takes possession of the collateral.

100 Problem 19.5, page 344 Joe Sally $5K loan Security interest Sally and Joe enter into an oral security agreement. Sally takes possession of the collateral. Can Sally be perfected with nothing in writing? §9- 310(b), §9-203(b)(3)(B).

101 Problem 19.5, page 344 Joe Sally $5K loan Security interest Sally and Joe enter into an oral security agreement. Sally takes possession of the collateral. Can Sally be perfected with nothing in writing? §9- 310(b), §9-203(b)(3)(B). Yes

102 Problem 19.5, page 344 TrusteeJoe Sally $5K loan Security interest Sally and Joe enter into an oral security agreement. Sally takes possession of the collateral. Can Sally be perfected with nothing in writing? §9- 310(b), §9-203(b)(3)(B). Yes a. Is Sally in possession if the collateral is in her apartment and Sally is a thousand miles away?

103 Problem 19.5, page 344 TrusteeJoe Sally $5K loan Security interest Sally and Joe enter into an oral security agreement. Sally takes possession of the collateral. Can Sally be perfected with nothing in writing? §9- 310(b), §9-203(b)(3)(B). Yes 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?

104 Problem 19.5, page 344 TrusteeJoe Sally $5K loan Security interest Sally and Joe enter into an oral security agreement. Sally takes possession of the collateral. Can Sally be perfected with nothing in writing? §9- 310(b), §9-203(b)(3)(B). Yes 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.

105 Problem 19.6, page 343 AdamJanet Lawsuit

106 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan Security interest

107 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? Security interest

108 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? Security interest §9-102(a)(13). “Commercial tort claim” means a claim arising in tort with respect to which: (A)The claimant is an organization;

109 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? Security interest §9-102(a)(13). “Commercial tort claim” means a claim arising in tort with respect to which: (A)The claimant is an organization;

110 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? Security interest §9-102(a)(13). “Commercial tort claim” means a claim arising in tort with respect to which: (A)The claimant is an organization; or [§1-201(25), no] (B)

111 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? Security interest §9-102(a)(13). “Commercial tort claim” means a claim arising in tort with respect to which: (A)The claimant is an organization; or [§1-201(25), no] (B)The claimant is an individual and the claim: (i) arose in the course of the claimant’s business or profession;

112 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? Security interest §9-102(a)(13). “Commercial tort claim” means a claim arising in tort with respect to which: (A)The claimant is an organization; or [§1-201(25), no] (B)The claimant is an individual and the claim: (i) arose in the course of the claimant’s business or profession; and [no]

113 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? Security interest §9-102(a)(13). “Commercial tort claim” means a claim arising in tort with respect to which: (A)The claimant is an organization; or [§1-201(25), no] (B)The claimant is an individual and the claim: (i) arose in the course of the claimant’s business or profession; and [no] (ii) does not include damages arising out of personal injury to or the death of an individual.

114 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? Security interest §9-102(a)(13). “Commercial tort claim” means a claim arising in tort with respect to which: (A)The claimant is an organization; or [§1-201(25), no] (B)The claimant is an individual and the claim: (i) arose in the course of the claimant’s business or profession; and [no] (ii) does not include damages arising out of personal injury to or the death of an individual. [yes?]

115 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? [No] Security interest §9-102(a)(13). “Commercial tort claim” means a claim arising in tort with respect to which: (A)The claimant is an organization; or [§1-201(25), no] (B)The claimant is an individual and the claim: (i) arose in the course of the claimant’s business or profession; and [no] (ii) does not include damages arising out of personal injury to or the death of an individual. [yes?]

116 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? [No] Security interest What kind of collateral is the lawsuit? Non-commercial tort claim? §9-109(d)(12).

117 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? [No] Security interest What kind of collateral is the lawsuit? Non-commercial tort claim? §9-109(d)(12).

118 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? [No] Security interest What kind of collateral is the lawsuit? Non-commercial tort claim? §9-109(d)(12). If yes, how do we perfect?

119 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? [No] Security interest What kind of collateral is the lawsuit? Non-commercial tort claim? §9-109(d)(12). If yes, how do we perfect? Bluxome Street case?

120 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? [No] Security interest What kind of collateral is the lawsuit? Non-commercial tort claim? §9-109(d)(12). If yes, how do we perfect? Bluxome Street case? Notice in court file

121 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? [No] Security interest What kind of collateral is the lawsuit? Non-commercial tort claim? §9-109(d)(12). If yes, how do we perfect? Bluxome Street case? Notice in court file Account? §9-102(a)(2).

122 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? [No] Security interest What kind of collateral is the lawsuit? Non-commercial tort claim? §9-109(d)(12). If yes, how do we perfect? Bluxome Street case? Notice in court file Account? §9-102(a)(2). No? “For property disposed of?”

123 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? [No] Security interest What kind of collateral is the lawsuit? Non-commercial tort claim? §9-109(d)(12). If yes, how do we perfect? Bluxome Street case? Notice in court file Account? §9-102(a)(2). No? “For property disposed of?” General intangible? §9-102(a)(42).

124 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? [No] Security interest What kind of collateral is the lawsuit? Non-commercial tort claim? §9-109(d)(12). If yes, how do we perfect? Bluxome Street case? Notice in court file Account? §9-102(a)(2). No? “For property disposed of?” General intangible? §9-102(a)(42). Yes (contract claim).

125 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? [No] Security interest What kind of collateral is the lawsuit? Non-commercial tort claim? §9-109(d)(12). If yes, how do we perfect? Bluxome Street case? Notice in court file Account? §9-102(a)(2). No? “For property disposed of?” General intangible? §9-102(a)(42). Yes (contract claim). Payment intangible? §9-102(a)(61).

126 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? [No] Security interest What kind of collateral is the lawsuit? Non-commercial tort claim? §9-109(d)(12). If yes, how do we perfect? Bluxome Street case? Notice in court file Account? §9-102(a)(2). No? “For property disposed of?” General intangible? §9-102(a)(42). Yes (contract claim). Payment intangible? §9-102(a)(61). §9-309(2).

127 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? [No] Security interest What kind of collateral is the lawsuit? Non-commercial tort claim? §9-109(d)(12). If yes, how do we perfect? Bluxome Street case? Notice in court file Account? §9-102(a)(2). No? “For property disposed of?” General intangible? §9-102(a)(42). Yes (contract claim). Payment intangible? §9-102(a)(61). §9-309(2). What should we do?

128 Problem 19.6, page 343 AdamJanet Will Lawsuit $100K loan What should Will do to perfect his security interest in this lawsuit? Is this a commercial tort claim? [No] Security interest What kind of collateral is the lawsuit? Non-commercial tort claim? §9-109(d)(12). If yes, how do we perfect? Bluxome Street case? Notice in court file Account? §9-102(a)(2). No? “For property disposed of?” General intangible? §9-102(a)(42). Yes (contract claim). Payment intangible? §9-102(a)(61). §9-309(2). What should we do? UCC filing, notice in court file