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Unformatted text preview: Introduction I. EFFECT. Article 9 of the UCC has radically changed the rules on priority between competing assignees of contract rights subject to the Code. Most assignements are protected in order of their filing 9-312 . To achieve that result, Article 9 employs two basic concepts: attachment and perfection. A. Transactions covered: The UCC provisions apply both to outright sales of accounts of contract rights and to assignments for security purposes. However, recall that Article 9 does not apply to certain types of claims and certain types of transactions. In addition, under Article 9 a financing statement does not have to be filed to perfect certain security interests, such as an assignment of accounts that do not, alone or in conjunction with other assignments to the same assignee, transfer a significant part of the assignors outstanding accounts B. Attachment. Creditor must have possession of the collateral under an agreement with the debtor, or the debtor has executed a security agreement 1. Historically. In the old days no written security agreements were allowed only possession would attach an interest. Now security agreements act as a proxy to possession. II. PROPERTY RIGHTS - the secured creditor receives property rights against the debtor to short-circuit the collection process faced by an unsecured creditor. A. If the debtor defaults, the secured creditor can repossess the property without going to court first. Property rights exist as soon as the debtor grants a security itnerest to the creditor, even if the creditor never gives notice of that itnerest to the public. B. If notice is given, the security interest is perfected and the secured creditor receives priority rights. III. PRIORITY RIGHTS - if the secured creditor gives notice to the public of its security interest, the secured creditor reserves a place in line for its collateral it creates a priority to those assets. Collateral Classification Collateral Types Tangible Quasi-Tangible Intangible Consumer goods Inventory Equipment Farm products Instruments Documents of title Chattel paper Stocks and bonds Accounts General intangibles (e.g., copyrights, trademarks..) I. GENERALLY . There are 9 types of collateral divided into 2 broad classifications: tangible and intangible property, and 4 special classes known as proceeds, products, fixtures, and accessions. The classification of collateral determines the other rules that will be followed for attachment and perfection, and also determine priority among multiple secured parties. II. TANGIBLE PROPERTY . Includes all things movable at the time the security interest attaches. 9-105(h) Tangible property can become a fixture or an accession as defined in 9-313, 9-314....
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This note was uploaded on 04/17/2008 for the course LAW ? taught by Professor Harmon during the Spring '08 term at Touro NY.
- Spring '08