Jentz 11e-IM-Ch29 - Chapter29 Title BusLawSeal.eps Creator...

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Chapter 29 Secured Transactions See Separate Lecture Outline System I NTRODUCTION To study this chapter, students should understand two major concepts. First, they should understand why secured transactions are necessary in business. Nearly every time a retailer makes a significant purchase, a wholesaler buys a large quantity of stock, or a manufacturer buys raw materials necessary for production, secured credit is involved. Second, students should understand what a security interest is—that it is not a retention of title to goods, but a lien on them.  A secured transaction is a borrowing of money for a security interest in goods (the debtor’s property). Thus, a key to understanding a secured transaction is viewing it from a creditor’s perspective. From this perspective, basic questions are: (1) If a debtor defaults, does the creditor have an enforceable security interest in the debtor’s property? (2) If an enforceable security interest in a debtor’s property exists, will the creditor’s security interest take priority over other security interests and creditors’ claims? The answers to these ques- tions form the basis for the law of secured transactions. 55
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56           INSTRUCTOR’S MANUAL TO ACCOMPANY  BUSINESS LAW , ELEVENTH EDITION A DDITIONAL  R ESOURCES A UDIO  & V IDEO  S UPPLEMENTS The following audio and video supplements relate to topics discussed in this chapter— PowerPoint Slides To highlight some of this chapter’s key points, you might use the Lecture Review PowerPoint slides compiled for Chapter 29. C HAPTER  O UTLINE I. The Terminology of Secured Transactions UCC terminology is used in all documents in secured transactions. A number of these terms are defined in the text. E NHANCING  Y OUR  L ECTURE A RTICLE  S ECURITY  I NTEREST Prior to the drafting of Article 9 of the Uniform Commercial Code and its adoption by the states, secured transactions were governed by a patchwork of security devices.  The following summary of these devices will help you to understand the significance and landmark status of Article 9. S ECURITY  D EVICES   PRIOR   TO  A RTICLE  9 The security devices in use prior to the adoption of Article 9 were replete with variations that, according to many, made no logical sense.   These devices included chattel mortgages, trust receipts, conditional sales contracts, assignments of accounts, and pledges.  Additionally, each device had its own jargon.   Depending on the device used, for example, a debtor could be called variously a pledgor, a mortgagor, a conditional vendee, an assignor, or a borrower.
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