Quiz 29: Creditors Rights and Remedies

Business

Priorities: Under the UCC 1-201(37) Mallon has a security interest in the generator it supplied to Redford as a secured party under UCC 9-102(a)(72). The generator is collateral under UCC 9-102(a)(12) and so long as Mallon files has filed its perfected security interest first under UCC 9-322(a)(1) , it will have priority in taking the collateral from Garfield. If Mallon's and Redford's liens were both perfected, then the first to file or take possession of the collateral has priority under UCC 9-322(a)(1). Under UCC 9-322(a)(3) , the first of unperfected security interests to attach has priority. An exception that Mallon needs to be aware of is under UCC 9-320(a) , wherein a buyer (Garfield) of goods in the ordinary course of the seller's (Redford) business, the buyer prevails over a secured party's (Mallon) interest, even if perfected and even if the buyer knows of the security interest.

Perfection of security interest UCC 9-503(A)(3) states that financing statement must disclose organization name or the individual name of the debtor. Thus organization name involves association such as churches, clubs, general partnership and joint ventures. However if there is no organization name available individual names must be listed. In this case, B purchased kayak, surround sound system, IMac computers and Toyota 4 runner in installment sales contract. However the creditor is not required to file financing statement pertaining to perfection by attachment. Thus it involves perfection of security interest as consumer goods pertaining to Purchase money security interest bought for family, personal and household purpose as security interest of the secured party is automatically perfected. Since IMac computer are being purchased for the office. Hence it is ascertained that for IMac computer the creditor is required to file financing statement as it does not comes under PMSI consumer goods.

Perfection of a Security Interest: Under the UCC 9-203 Mendez has both a security interest in Arabian Knight and is a perfected secured party. Even though Mendez did not sign a security agreement, he gave value ($50,000) and took possession of the collateral (Arabian Knight) that is owned by Marsh (who has rights to the collateral). Once a security interest attaches, a transfer of possession of the collateral to the secured party can perfect the party's security interest without a filing UCC 9-310(b)(6); 9-313. This occurred when Mendez took possession of Arabian Knight as security for the loan.

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