Welcome back! Let’s do some questions on secured
transactions. Number one, “Under the revised UCC secured transactions article, which of
the following events will always prevent a security interest from attaching?”
How do you attach? PIG, property owned, interest rated, get value. “Failure to have a written
security agreement,” do you have to have an agreement or take in possession? “Failure
of the creditor to have possession, or agreement. Failure of the debtor to have rights.” Now,
remember we said, property owned by the debtor. They have rights to it, yeah, they have to
own it, or so they have to own it, and take possession or agreement, and they have to
give value. �D, Failure of the creditor to give present consideration, present, past,
all of that is valid.� Best answer, C. Number two, “Under the secured transactions
article of the UCC, which of the following statements is correct regarding the filing
of a financing statement? One, a financing statement must be filed before attachment
of the security interest can occur.” Hmm, a financing statement must… Well, a financing
statement has to be… In order before attachment? No, because a financing statement has nothing
to do with attachment. You attach, then… “Once filed, a financing
statement is effective for an indefinite period of time provided continuation statements are
filed, are timely filed”, yeah. What is it? Every five years, you can continue. So, you
can renew it every five years. So, two only, B.
Number three, “Grey sells computers to the public. Grey sold and delivered a computer
to West on credit. West executed and delivered to Grey a promissory note for the purchase
price and a security agreement covering the computer. West purchased the computer for
personal use.” What does that make it? Consumer goods. “Grey did not file a financing statement.
Is Grey’s security interest perfected?” All right, so we have, Grey sells computers
to the public. Grey sold one to West. All right, so let’s see what’s going on here.
Grey sold it to West. All right, so Grey sold it to West. Grey is in the business of selling
computers, its inventory. West, it’s a consumer good. He gave him the purchase money to buy
it. He’s taking the computer as collateral. What is that called? PMSI, PMSI in what? In
consumer goods in the hands of the consumer. Therefore, when you attach, he attaches. Does
he perfect? Automatically. Is there a loophole? Yeah, if he sells it to another person, they
can’t get it back, unless they close the loophole. How do you close the loophole? File before
he gets it or within 20 days of attachment. If this were equipment, is it automatic? No,
but could he still file? Sure, do we still have 20 days? Yes. If this is inventory, automatic?
No, 20 days? No. Okay, so would he perfect? Yes, A, “yes because Grey retained ownership
of the computer.” Grey doesn’t own it; West owns the computer. B, “yes because it was
perfected at the time of attachment.” Automatically, maybe. C, “no, because the computer was a
consumer good.” Yeah, that’s why it was automatic. D, “no, because they failed to file a statement.”
That would be true, a financing statement, if it were equipment but not for consumer
goods. Best answer, B. Number four, “Mars Inc. manufactures and sells
DVRs on credit directly to wholesaler, retailers, and consumers. Mars can perfect its security
interest in the DVRs without filing or without taking possession if the DVRs are sold to
whom?” So, they’re saying they can perfect. Now, remember, how do you perfect? Either
filing, taking possession, or automatic. So, he’s saying, we can perfect without doing
this or this. What’s left, automatic, if it’s what? Consumer goods.
So, let’s come back over here. It’s this example. With respect to whom could this person automatically
perfect? Here, no, here, yes. Here, no, 20 day window. Here, no, because it’s inventory.
Here, yes, here, yes. You have a 20 day window, it’s just not automatic. So, with respect
to whom? The consumers, they could automatically perfect. Retailers, no, wholesalers, no, consumers,
yes, wholesalers, no, best answer, C.