Secured Transactions - Classification of Collateral Flashcards Quizlet PDF

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Barbri - Secured Transactions - Classification of Collateral Terms in this set (23) Why is classification of

B/c many provisions of Art 9 make legal distinctions

collateral important?

based on the type of collateral at issue

Define "Goods"

Tangible, Movable, Personal Property (not land or buildings) Also, fixtures

4 Categories of Goods

(1) Consumer Goods (2) Equipment (3) Farm Products (4) Inventory

When you are classifying

"In classifying the collateral, look to see how the

goods - what should be the

debtor is suing the collateral. What is the collateral

focus of your analysis?

in the hands of the debtor"

USE THIS SENTENCE

Debtor's use, basically, controls the classification

VERBATIM

Consumer Goods

A type of good Used or BOUGHT FOR USE primarily for personal, family, or household purposes

Equipment

A type of good Used or BOUGHT FOR USE primarily in business This is the catch-all, default category of goods

Farm Products

A type of good Crops/livestock/supp farming operations o livestock in their unm IF they are in the pos ENGAGED IN FARMI *should be fairly obv

Inventory

A type of good Held by a person who HOLDS THEM FOR SALE OR LEASE or, materials used or consumed in a business (this is narrow, a lot of things that fall in here could be equipment too - like office supplies) Usually, things that turn over fairly quickly

Classify the following items of collateral

(1) Consumer Goods (2) Equipment

(1) A guitar purchased by Harry Homebody as a present for his son Marvin

LOOK TO THE USE THE DEBTOR PUTS THE GOOD TO

(2) The same guitar purchased by Sterling Studly, a professional rock musician, to be used on tour

Classify the following items of

(1) Farm Good

collateral (2) Inventory (1) Milk in the hands of a farmer (who got it from his cows)

(3) Consumer Good

(2) Milk in the hands of a

LOOK TO THE USE THE DEBTOR PUTS THE GOOD

grocery store (or a restaurant)

TO

(3) Milk in the hands of grocery store's customer who is buying for his family's consumption

Classify the following items of

(1) Inventory ("goods held for sale or lease")

collateral (2) Inventory OR Equipment (1) Automobiles held by a local rental car agency (2) Pencils and other stationery supplies used by Sears or some other large retailer in its credit offices

8 Types of Semi-Intangible and Intangible Property

(1) Instruments (2) Documents (3) Chattel Paper (4) Investment Property (5) Accounts (6) Deposit Accounts (7) Commercial Tort Claims (8) General Intangibles

Instruments

Negotiable instruments and any other writing That evinces a right to the payment of a monetary obligation (does not include investment property)

Documents

A bill of lading or a warehouse receipt NOT JUST ANY OLD DOCUMENT! Has a special Art 9 meaning

Chattel Paper (and/or

A record or records which evidence BOTH

Electronic Chattel Paper) (1) A monetary obligation AND (2) A security interest in or a lease of specific goods

Investment Property

Stocks, bonds, mutual funds, and brokerage accounts containing such items

Accounts

A right to payment for goods sold or services rendered that is NOT EVIDENCED BY AN INSTRUMENT OR CHATTEL PAPER Basically is an account receivable

Deposit Accounts

An account maintained with a bank ONLY APPLIES TO NONCONSUMER DEPOSIT ACCOUNTS AND DEPOSIT ACCOUNTS THAT ARE CLAIMED AS PROCEEDS OF OTHER COLLATERAL

Commercial Tort Claims (2)

(1) A claim arising in tort with respect to which the claimant is an organization OR (2) Where the claimant is an individual and the claim arose in the claimant's business or profession AND does NOT INCLUDE damages for personal injury or the death of an individual

General Intangibles

Default, catch all category for intangibles Basically includes stuff that is or relates to IP Also includes Payment Intangibles

Classify the following items of collateral

(1) Instrument (2) Investment Property

(1) A promissory note (3) Document (2) A stock certificate (4) Chattel Paper (3) A receipt given to a farmer by a silo operator when the farmer stored her grain there (4) A written K in which a car buyer purchasing on credit promises to pay the car dealership for the car and grants the dealership a security interest in the car

Classify the following items of collateral

(1) Accounts (2) Yes, b/c Accounts (health care insurance

(1) Big T sells tires on credit.

receivables)

What are its customer's obligations? (2) A hospital has patients who come in for treatment sign paperwork authorizing the hospital to seek payment from their health insurance coverage provider. Can the hospital use the monies due from the various health plans as collateral? (3) Credit Card Company issues millions of credit cards to cardholder, who use them in transactions with merchants. Merchants send the resulting paperwork to Credit Card Company for reimbursement (minus certain fees). Can Credit Card Company use these credit card transactions as collateral?

(3) Yes , b/c Accounts

Classify the following items of collateral

(1) Deposit Account (2) General Intangible

(1) The checking account you have at your bank?

(3) General Intangible

(2) Patent and TM rights

(4) Commercial Tort Claim

(3) A liquor license

(5) General Intangible (Payment Intangible)

(4) A right to sue a corporation

(6) If sold separately = general intangible, if

for wooing away a trusted

embedded into a computer = follows the computer's

employee

classification

(5) A claim arising in tort that

(7) General Intangible

has been settled and reduced to a K obligation to pay (6) A Computer Program (2) (7) A right to the return of a Security Deposit Held by Landlord (8) A commercial clamming license

(8) General Intangible...