midterm 2 outline

midterm 2 outline - Chapter 16- Security Interests,...

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Chapter 16- Security Interests, Creditors’ Rights, Bankruptcy Secured transaction - when a payment of a debt is guaranteed or secured by personal property owned by the debtor or personal property in which the debtor has a legal interest Secured transactions considered personal property with accounts, agricultural liens, chattel papers, fixtures, instruments, and patents Security interests in personal property secured party- any creditor who has a security interest in the debtor’s collateral (ex. Seller, lender, cosigner, buyer of accounts) debtor- party who owes payment or other performance of secured obligation security interest- interest in the collateral (personal party or fixtures) that secures payment or performance of an obligation security agreement- agreement that creates or provides a security interest collateral- the subject of a security interest financing statement- instrument normally filed to give public notice to third parties of the secured party’s security interest Creating a Security Interest Creditor has concerns if debtor defaults (fails to pay promised debt) 3 requirements for creditor to have an enforceable security interest unless creditor has possession of the collateral, there must be a written or authorized security agreement describing the security interest and is signed by debtor secured party must give something of value to debtor debtor must has “rights” in the collateral once met, the creditors rights are said to attach to collateral which gives creditor enforceable security interest- attachment Written or authenticated security agreement When collateral is not in possession of secured party, the security agreement must be written or authenticized Authentication means to sign, execute or adopt that verifies
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Security agreement that contains description of collateral- “all of the debtor’s property” does not constitute Secured party must give value to the debtor Includes binding commitment to extend credit or consideration Given in the form of direct loan or commitment to sell on good credit Debtors must have rights in the collateral The debtor must have a current or future ownership interest in or right to obtain possession of the collateral Perfecting a security interest Perfection- legal process by which secured parties protect themselves against claims of 3 rd parties who may wish to have their debts satisfied out of the same collateral The creditor with a perfected security interest has rights to collateral if a debtor defaults in both loans on same property Perfection accomplished by filing a financing statement with gov official Tangible collateral- can be seen, felt, touched; intangible collateral- consists of or generates rights Perfection by filing Most common by filing a financing statement, a document that gives public notice to third parties of the secured party’s security interest Must provide names of debtor, secured party and the collateral covered by financing statement, indexed in name
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This note was uploaded on 01/17/2012 for the course ARE 18 taught by Professor Maxey during the Winter '08 term at UC Davis.

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midterm 2 outline - Chapter 16- Security Interests,...

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