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Secured Transactions Assignment 36

Secured Transactions Assignment 36. Buyers against Secured Creditors. Secured Party. Security Interest. Debtor. Seller. Buyer. Item. Item. Secured Party. Security Interest. Debtor. Seller. Buyer. Item. Item. Assignment 35. Assignment 36.

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Secured Transactions Assignment 36

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  1. Secured TransactionsAssignment 36 Buyers against Secured Creditors

  2. Secured Party Security Interest Debtor Seller Buyer Item Item

  3. Secured Party Security Interest Debtor Seller Buyer Item Item Assignment 35 Assignment 36

  4. Main Rule:Security Interests SurviveSale of Collateral

  5. Main Rule:Security Interests SurviveSale of Collateral §9-201. A security agreement is effective according to its terms . . . against purchasers of the collateral . . . .

  6. Main Rule:Security Interests SurviveSale of Collateral §9-201. A security agreement is effective according to its terms . . . against purchasers of the collateral . . . . §9-315(a)(1). A security interest . . . continues in collateral notwithstanding sale . . .

  7. Main Rule:Security Interests SurviveSale of Collateral §9-201. A security agreement is effective according to its terms . . . against purchasers of the collateral . . . . §9-315(a)(1). A security interest . . . continues in collateral notwithstanding sale . . . unless the secured party authorizes the disposition free of the security interest . . . . Exception 1

  8. Exception 2: Buyer in Ordinary Course §9-320(a). A buyer in ordinary course of business . . . Secured Party Security Interest Debtor Buyer Collateral

  9. Exception 2: Buyer in Ordinary Course §9-320(a). A buyer in ordinary course of business . . . Secured Party Security Interest Debtor Buyer Collateral

  10. Exception 2: Buyer in Ordinary Course §9-320(a). A buyer in ordinary course of business . . . takes free of a security interest . . . Secured Party Security Interest Debtor Buyer Collateral

  11. Exception 2: Buyer in Ordinary Course §9-320(a). A buyer in ordinary course of business . . . takes free of a security interest created by the buyer’s seller . . . Secured Party Security Interest Debtor Buyer Collateral

  12. Exception 2: Buyer in Ordinary Course §9-320(a). A buyer in ordinary course of business . . . takes free of a security interest created by the buyer’s seller . . . Secured Party Security Interest Debtor Buyer Collateral

  13. Exception 2: Buyer in Ordinary Course §9-320(a). A buyer in ordinary course of business . . . takes free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence. Secured Party Security Interest Debtor Buyer Collateral

  14. Exception 2: Buyer in Ordinary Course §9-320(a). A buyer in ordinary course of business . . . takes free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence. Secured Party But not if the buyer “has knowledge that the sale violates the rights of another person in the goods.” §1-201(b)(9) Security Interest Debtor Buyer Collateral

  15. Exception to 9-320(a) exception: Possession

  16. Exception to 9-320(a) exception: Possession §9-320(e). Subsections (a) and (b) do not affect a security interest in goods in the possession of the secured party under Section 9-313.

  17. Exception to 9-320(a) exception: Possession §9-320(e). Subsections (a) and (b) do not affect a security interest in goods in the possession of the secured party under Section 9-313. Deering Possession Tanbro case, 1976 Security Interest Mill Fabrics

  18. Exception to 9-320(a) exception: Possession §9-320(e). Subsections (a) and (b) do not affect a security interest in goods in the possession of the secured party under Section 9-313. Deering Possession Tanbro case, 1976 Security Interest Tanbro BIOC Mill Fabrics Sale

  19. Exception to 9-320(a) exception: Possession §9-320(e). Subsections (a) and (b) do not affect a security interest in goods in the possession of the secured party under Section 9-313. Deering Possession Tanbro case, 1976 Security Interest Tanbro BIOC Mill Fabrics Sale

  20. Exception to 9-320(a) exception: Possession §9-320(e). Subsections (a) and (b) do not affect a security interest in goods in the possession of the secured party under Section 9-313. Deering Possession Tanbro case, 1976 Revised Article 9, 2001 Security Interest Tanbro BIOC Mill Fabrics Sale

  21. Exception to 9-320(a) exception: Possession §9-320(e). Subsections (a) and (b) do not affect a security interest in goods in the possession of the secured party under Section 9-313. Deering Possession Tanbro case, 1976 Revised Article 9, 2001 Security Interest Tanbro BIOC Mill Fabrics Sale Would you buy and pay for something that seller doesn’t have in its possession?

  22. Exception to 9-320(a) exception: Possession §9-320(e). Subsections (a) and (b) do not affect a security interest in goods in the possession of the secured party under Section 9-313. Deering Possession Tanbro case, 1976 Revised Article 9, 2001 Security Interest Tanbro BIOC Mill Fabrics Sale Would you buy and pay for something that seller doesn’t have in its possession? Ebay

  23. Exception 3: Consumer to Consumer §9-320(b). A buyer of goods Secured Security Interest Debtor Collateral Buyer

  24. Exception 3: Consumer to Consumer §9-320(b). A buyer of goods Secured Security Interest Debtor Collateral Buyer

  25. Exception 3: Consumer to Consumer §9-320(b). A buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes . . . Secured Security Interest Debtor Collateral Buyer

  26. Exception 3: Consumer to Consumer §9-320(b). A buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes . . . Secured Security Interest Consumer Collateral Buyer

  27. Exception 3: Consumer to Consumer §9-320(b). A buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, Secured Security Interest Consumer Collateral Buyer

  28. Exception 3: Consumer to Consumer §9-320(b). A buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if the buyer buys: (1) without knowledge of the security interest; Secured Security Interest Consumer Collateral Buyer

  29. Exception 3: Consumer to Consumer §9-320(b). A buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if the buyer buys: (1) without knowledge of the security interest; (2) for value; Secured Security Interest Consumer Collateral Buyer

  30. Exception 3: Consumer to Consumer §9-320(b). A buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if the buyer buys: (1) without knowledge of the security interest; (2) for value; (3) primarily for the buyer’s personal, family, or household purposes Secured Security Interest Consumer Collateral Consumer

  31. Exception 3: Consumer to Consumer §9-320(b). A buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if the buyer buys: (1) without knowledge of the security interest; (2) for value; (3) primarily for the buyer’s personal, family, or household purposes; and (4) before the filing of a financing statement covering the goods. Secured Security Interest Consumer Collateral Consumer

  32. Exception 4: Unperfected Security Interest §9-317(b). A buyer . . . takes free of a security interest . . . ifthe buyer gives value and receives delivery of the collateral without knowledge of the security interest . . . and before it is perfected.

  33. Exception 4: Unperfected Security Interest §9-317(b). A buyer . . . takes free of a security interest . . . if the buyer gives value and receives delivery of the collateral without knowledge of the security interest . . . and before it is perfected.

  34. Exception 4: Unperfected Security Interest §9-317(b). A buyer . . . takes free of a security interest . . . if the buyer gives value and receives delivery of the collateral without knowledge of the security interest . . . and before it is perfected. Notice: A secured creditor with knowledge has priority over an unperfected secured creditor Secured §9-322(a) Unperfected SI Secured with knowledge Debtor SI

  35. Exception 4: Unperfected Security Interest §9-317(b). A buyer . . . takes free of a security interest . . . if the buyer gives value and receives delivery of the collateral without knowledge of the security interest . . . and before it is perfected. Notice: A secured creditor with knowledge has priority over an unperfected secured creditor But a buyer with knowledge doesn’t have priority over an unperfected secured creditor Secured §9-322(a) Secured §9-317(b) Unperfected SI Unperfected SI Secured with knowledge Buyer with knowledge Debtor SI Debtor Sale

  36. Exception 5: Future Advances §9-323(d). A buyer of goods other than a buyer in the ordinary course of business . . .

  37. Exception 5: Future Advances §9-323(d). A buyer of goods other than a buyer in the ordinary course of business takes free of a security interest to the extent that it secures [future] advances . . . .

  38. Exception 5: Future Advances §9-323(d). A buyer of goods other than a buyer in the ordinary course of business takes free of a security interest to the extent that it secures [future] advances made after the earlier of (1) the secured party acquires knowledge of the buyer’s purchase; or (2) 45 days after the purchase.

  39. Exception 5: Future Advances §9-323(d). A buyer of goods other than a buyer in the ordinary course of business takes free of a security interest to the extent that it secures [future] advances made after the earlier of (1) the secured party acquires knowledge of the buyer’s purchase; or (2) 45 days after the purchase. Sale 45 days Subject to these advances Subject to if S without knowledge

  40. Exception 5: Future Advances §9-323(d). A buyer of goods other than a buyer in the ordinary course of business takes free of a security interest to the extent that it secures [future] advances made after the earlier of (1) the secured party acquires knowledge of the buyer’s purchase; or (2) 45 days after the purchase. (e) Subsection (d) does not apply if the advance is made pursuant to a commitment entered into without knowledge of the buyer’s purchase and before the expiration of the 45-day period. Sale 45 days Subject to these advances Subject to if S without knowledge

  41. Exception 5: Future Advances §9-323(d). A buyer of goods other than a buyer in the ordinary course of business takes free of a security interest to the extent that it secures [future] advances made after the earlier of (1) the secured party acquires knowledge of the buyer’s purchase; or (2) 45 days after the purchase. (e) Subsection (d) does not apply if the advance is made pursuant to a commitment entered into without knowledge of the buyer’s purchase and before the expiration of the 45-day period. Sale 45 days Subject to if S committed without knowledge before 46th day Subject to these advances Subject to if S without knowledge

  42. Exception 5: Future Advances §9-323(d). A buyer of goods other than a buyer in the ordinary course of business takes free of a security interest to the extent that it secures [future] advances made after the earlier of (1) the secured party acquires knowledge of the buyer’s purchase; or (2) 45 days after the purchase. (e) Subsection (d) does not apply if the advance is made pursuant to a commitment entered into without knowledge of the buyer’s purchase and before the expiration of the 45-day period. Example: Buyer at an execution sale Sale 45 days Subject to if S committed without knowledge before 46th day Subject to these advances Subject to if S without knowledge

  43. Problem 36.1.a, page 613 Eddy gives SI to All Seasons, sale prohibited All Sea- sons RV Security Interest $17K Eddy

  44. Problem 36.1.a, page 613 Eddy gives SI to All Seasons, sale prohibited Eddy sells to Sunrise in violation of SA All Sea- sons RV Security Interest $17K Lindy Eddy Sunrise RV RV

  45. Problem 36.1.a, page 613 Eddy gives SI to All Seasons, sale prohibited Eddy sells to Sunrise in violation of SA Sunrise sells to Card in ordinary course All Sea- sons RV Security Interest $17K Lindy Lindy Eddy Sunrise RV Card RV $23K

  46. Problem 36.1.a, page 613 Eddy gives SI to All Seasons, sale prohibited Eddy sells to Sunrise in violation of SA Sunrise sells to Card in ordinary course All Sea- sons RV • Card sues All Seasons to remove lien.How good is her case? Card loses. In re Sunrise RV, 105 B.R. 587 (1989) §9-320(a). A buyer in ordinary course of business . . . takes free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence. Security Interest $17K Lindy Lindy Eddy Sunrise RV Card RV $23K

  47. Problem 36.1.a, page 613 Eddy gives SI to All Seasons, sale prohibited Eddy sells to Sunrise in violation of SA Sunrise sells to Card in ordinary course All Sea- sons RV • Card sues All Seasons to remove lien. How good is her case?Card loses. In re Sunrise RV, 105 B.R. 587 (1989) §9-320(a). A buyer in ordinary course of business . . . takes free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence. Security Interest $17K Lindy Lindy Eddy Sunrise RV Card RV $23K

  48. Problem 36.1.a, page 613 Eddy gives SI to All Seasons, sale prohibited Eddy sells to Sunrise in violation of SA Sunrise sells to Card in ordinary course All Sea- sons RV • Card sues All Seasons to remove lien. How good is her case? Card loses. In re Sunrise RV, 105 B.R. 587 (1989) §9-320(a). A buyer in ordinary course of business . . . takes free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence. Security Interest $17K Lindy Lindy Eddy Sunrise RV Card RV $23K

  49. Problem 36.1.b, page 613 Eddy gives SI to All Seasons, sale prohibited Eddy sells to Sunrise in violation of SA Sunrise sells to Card in ordinary course All Sea- sons RV b. What if Card had demanded certificate of title? Sunrise has certificate showing Eddy as owner, All Seasons as secured. Back shows signature from Eddy; no place for All Seasons to sign. Sunrise: “We discharge the lien, you get clear title by mail in two weeks.” Security Interest $17K Lindy Lindy Eddy Sunrise RV Card RV $23K

  50. Problem 36.1.b, page 613 Eddy gives SI to All Seasons, sale prohibited Eddy sells to Sunrise in violation of SA Sunrise sells to Card in ordinary course All Sea- sons RV b. What if Card had demanded certificate of title? Who has it? Sunrise: “We discharge the lien, you get clear title by mail in two weeks.” Security Interest $17K Lindy Lindy Eddy Sunrise RV Card RV $23K

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