I. COLLECTING DEBTS NON-JUDICIALLY ....................................................................................................................................................

3
A. SET-OFF OF DEBTS .................................................................................................................................................................................................. 3
II. COLLECTING JUDICIALLY ............................................................................................................................................................................ 3
A. ATTACHMENT, GARNISHMENT, EXECUTION, RESTITUTION ....................................................................................................................................... 3
B. EXEMPTIONS ............................................................................................................................................................................................................ 3
III. SECURITY INTERESTS.................................................................................................................................................................................... 3
A. STATUTORY LIENS ................................................................................................................................................................................................... 3
B. CONSENSUAL LIENS ................................................................................................................................................................................................ 3
C. LIEN COLLECTION ................................................................................................................................................................................................... 3
IV. UCC ....................................................................................................................................................................................................................... 3
A. SECTIONS ................................................................................................................................................................................................................ 3
V. ATTACHMENT ................................................................................................................................................................................................... 3
A. BACKGROUND .......................................................................................................................................................................................................... 3
B. FOUR STEPS TO SEE WHETHER SECURITY INTEREST HAS ATTACHED ..................................................................................................................... 3
C. REQUIREMENTS ....................................................................................................................................................................................................... 3
D. THE SECURITY AGREEMENT REQUIREMENT ............................................................................................................................................................ 3
E. THE VALUE REQUIREMENT...................................................................................................................................................................................... 5
F. THE RIGHTS IN COLLATERAL REQUIREMENT ........................................................................................................................................................... 5
G. AUTOMATIC ATTACHMENT....................................................................................................................................................................................... 6
H. SCOPE OF ARTICLE 9 ............................................................................................................................................................................................... 6
I. INTERESTS CREATED UNDER LAW OTHER THAN ARTICLE 9 ..................................................................................................................................... 7
J. 9-109(D) – SCOPE OF ARTICLE 9 ............................................................................................................................................................................... 7
VI. BANKRUPTCY .................................................................................................................................................................................................... 7
A. BACKGROUND .......................................................................................................................................................................................................... 7
VII. ENFORCEMENT ................................................................................................................................................................................................ 8
A. BACKGROUND .......................................................................................................................................................................................................... 8
B. DEFAULT ................................................................................................................................................................................................................. 8
C. RIGHTS UPON DEFAULT .......................................................................................................................................................................................... 8
D. ENFORCEMENT AGAINST TANGIBLE COLLATERAL ................................................................................................................................................... 8
E. REPOSSESSION......................................................................................................................................................................................................... 9
F. DISPOSITION OF THE COLLATERAL........................................................................................................................................................................... 9
VIII. EFFECT OF OTHER LAW ON SECURED PARTY’S ENFORCEMENT EFFORTS ............................................................................... 11
A. WAIVER AND ESTOPPEL ......................................................................................................................................................................................... 11
B. LENDER LIABILITY................................................................................................................................................................................................. 11
C. MARSHALING ......................................................................................................................................................................................................... 11
IX. PERFECTION OF SECURITY INTERESTS ................................................................................................................................................ 11
A. OVERVIEW ............................................................................................................................................................................................................. 11
B. FILING A FINANCING STATEMENT .......................................................................................................................................................................... 12
C. INDICATING THE COLLATERAL ............................................................................................................................................................................... 12
D. MECHANICS OF FILING .......................................................................................................................................................................................... 12
E. ALTERNATIVE FILING SYSTEMS ............................................................................................................................................................................. 12
F. PERFECTION BY POSSESSION ................................................................................................................................................................................. 12
G. PERFECTION BY CONTROL (9-314) ......................................................................................................................................................................... 12
H. AUTOMATIC PERFECTION ...................................................................................................................................................................................... 13
I. CHOICE OF LAW ISSUES .......................................................................................................................................................................................... 13
J. CHANGES IN THE COLLATERAL OR PERFECTION METHOD ...................................................................................................................................... 13
K. PROCEEDS OF ORIGINAL COLLATERAL .................................................................................................................................................................. 13
L. CHANGE IN LOCATION OR CHARACTER OF THE COLLATERAL .................................................................................................................................. 14
M. CHANGES IN THE OBLIGATION .............................................................................................................................................................................. 14
N. CHANGES IN THE DEBTOR’S NAME ........................................................................................................................................................................ 14
O. ADDING/SUBTRACTING DEBTORS ON FS ................................................................................................................................................................ 14
P. CHANGE IN DEBTOR’S LOCATION ........................................................................................................................................................................... 14
Q. DISPOSITION OF THE COLLATERAL ........................................................................................................................................................................ 14
R. DEBTOR BANKRUPTCY ........................................................................................................................................................................................... 14
S. CHANGES IN SECURED PARTY ................................................................................................................................................................................ 14
T. SUMMARY .............................................................................................................................................................................................................. 15
U. REVIEW ................................................................................................................................................................................................................. 15
X. PRIORITY OF SECURITY INTERESTS ....................................................................................................................................................... 15
A. BASIC PRIORITY CONCEPTS ................................................................................................................................................................................... 15
B. SECURITY INTERESTS V. JUDICIAL LIENS .............................................................................................................................................................. 15
C. PMSI V. JUDICIAL LIENS ....................................................................................................................................................................................... 16
D. SECURITY INTEREST SECURING FUTURE ADVANCES V. JUDICIAL LIENS ............................................................................................................... 16
E. SI V. POSSESSORY LIENS ARISING BY OPERATION OF LAW .................................................................................................................................... 16
F. SECURITY INTEREST V. SECURITY INTEREST .......................................................................................................................................................... 16
G. PRIORITY OF PMSIS .............................................................................................................................................................................................. 16
H. PROCEEDS OF PMSI .............................................................................................................................................................................................. 16
I. PRIORITY IN TRANSFERRED COLLATERAL ............................................................................................................................................................... 16
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 J. PRIORITY IN FUTURE ADVANCES ............................................................................................................................................................................ 16
K. PRIORITY OF SI IN DEPOSIT ACCOUNTS ................................................................................................................................................................. 16
L. SALE WITH RETENTION OF TITLE ............................................................................................................................................................................ 16
M. SECURED PARTY V. SELLER OF GOODS.................................................................................................................................................................. 16
N. SECURED PARTY V. LESSOR OF GOODS .................................................................................................................................................................. 17
O. SECURED PARTY V. BUYER OF GOODS ................................................................................................................................................................... 17
P. SECURITY INTERESTS AGAINST RIGHTS OF PURCHASERS OF COLLATERAL OTHER THAN GOODS.............................................................................. 17
Q. PURCHASERS OF ACCOUNTS .................................................................................................................................................................................. 17
R. PURCHASERS OF CHATTEL PAPER.......................................................................................................................................................................... 18
S. PURCHASERS OF INSTRUMENTS ............................................................................................................................................................................. 18
T. TRANSFER OF MONEY ............................................................................................................................................................................................ 18
U. GENERAL INTANGIBLES ......................................................................................................................................................................................... 18
V. PROBLEM 5-51 ....................................................................................................................................................................................................... 18
XI. REVIEW ............................................................................................................................................................................................................. 18
A. TEST INFO ............................................................................................................................................................................................................. 18
B. CLASS NOTES ........................................................................................................................................................................................................ 18
C. FOUR MAIN ELEMENTS TO SECURED TRANSACTIONS .............................................................................................................................................. 18
D. HOW SHOULD I ANALYZE THE ISSUES? ................................................................................................................................................................... 18
E. ATTACHMENT ........................................................................................................................................................................................................ 18
F. ENFORCEMENT ...................................................................................................................................................................................................... 19
G. PERFECTION .......................................................................................................................................................................................................... 19
H. PERFECTION – FILING ........................................................................................................................................................................................... 19
I. PRIORITY ................................................................................................................................................................................................................ 20

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I. Collecting Debts Non-Judicially
A. Set-Off of Debts
1. Need maturity & mutuality: need to owe money to the same institution that owes me money (mutuality), and
II. Collecting Judicially
A. Attachment, garnishment, execution, restitution
B. Exemptions
1. Clothes, up to certain amount of “tools of the trade,” cars (capped at certain amount), homestead (up to 125k of value in
residence), etc
III. Security Interests
A. Statutory Liens
1. E.g. mechanics lien, subcontractors
B. Consensual Liens
1. E.g. mortgage on house, car loan
2. Two categories: real properly liens (mostly governed by state statutory framework) and personal property liens (A9 of UCC)
C. Lien Collection
1. Priority: order in which creditors are paid
2. Equity: whether there’s any money left in the “pot” by the time you get to the front of the line
IV. UCC
A. Sections
1. Article 1: general provisions
2. Article 2: sales (of goods)
3. Article 3: negotiable instruments (checks/promissory notes, etc)
4. Article 7: document of title (piece of paper that goes with goods that tells the world who the owner is)
5. Article 9: attachment (process by which security interest becomes enforceable against debtor (obligor is who owes money,
debtor is who owns the collateral)); enforcement (process by which force security interest against debtor (obtain
satisfaction of the obligation from the collateral)); perfection (process by which security interest becomes enforceable
against the rest of the world (i.e. way you get in line)); priority (rules that decide who gets paid in what order)
V. Attachment
A. Background
1. UCC § 9-203 tells how to create security interest so it is enforceable against the debtor. Called attachment
2. Security interest is a property interest in personal property created through an agreement of the parties
B. Four Steps to See Whether Security Interest Has Attached
1. Identify the collateral
2. Classify the collateral (9-102 definitions) (e.g. equipment, inventory, accounts, etc)
3. Ask whether Article 9 even applies (make sure secured transaction covered by A9, make sure not something like a lease)
4. Determine if and when attachment has occurred (when does security interest attach to collateral)
a) Standards are in 9-203
(1) Need: exchange of value; debtor has to have some rights in the collateral; has to be some expression of
intent to grant security interest
C. Requirements
1. Process comes from § 9-203(a) and (b)
2. Security interest attaches “when it becomes enforceable against the debtor with respect to the collateral” – enforceability
comes from three requirements:
a) Value must be given
b) The debtor must have rights in the collateral or the power to transfer such rights to the secured party
c) Must be a security agreement that meets certain criteria
3. Can be satisfied in any order, but attachment does not occur until all three are met
a) Upon attachment, consensual lien in the property (the in rem liability) arises
D. The Security Agreement Requirement
1. Four methods for satisfying the requirement of a security agreement: 203(b)(3)(A) – (D)
2. Authentication Requirement (A): the debtor has authenticated a security agreement that provides a description of the
collateral…
a) Security agreement: an agreement that creates or provides for a security interest - § 9-102(a)(74)
(1) Need not be memorialized in a writing or record, but in most circumstances, debtor must “authenticate”
a security agreement, implying that the agreement must be in writing, inscribed on something
tangible, or stored in an electronic format
b) “agreement”: the bargain of the parties in fact, found in their language or inferred from other circumstances
(1) flexible, and courts do not impose a specific language requirement
c) Possible to have an effective oral security agreement if the secured party has possession or control of the collateral
and the collateral consists of certain types of property
3. Adequate Description of the Collateral (A)
a) Functions of description: indication of property that serves as security for the obligation owed to the secured
party; evidentiary function, allowing secured party to enforce the security interest against the debtor and to make
the secured party’s property interest generally enforceable against a third party with an interest in the collateral
b) § 9-108(a) – description sufficient whether or not it is specific, if it reasonably identifies what is described.
Presumably means that at least sometimes, collateral may be described by genre or type, rather than through
detailed itemization or lengthy description. (a)(3) says may describe by type of collateral
c) Classifications, generally
(1) “goods” e.g. consumer goods, equipment, farm products, inventory (in addition, may be sub-classified
under, e.g., as-extracted collateral (oil/minerals), fixtures, manufactured homes)
(2) intangible/quasi-intangible, e.g. accounts, commercial tort claims, documents of title, instruments,
financial assets, general intangibles, letter-of-credit rights, money

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4. Composite Document Doctrine
a) Created to deal with the absence of a single writing that purports to create a security interest in described
collateral. Safety net to save transactions that otherwise might fail
b) Standard: must be evidence within the transaction documents themselves indicating the parties’ intent to create a
security interest. Two step process:
(1) Court must decide whether there is a written document or documents containing language that
objectively indicates that the parties intended to create a security interest (question of law)
(2) If such a document or documents exist, fact finder must determine whether the parties actually
intended to create a security interest (question of fact)
c) What to look for: timing (closer is better); cross-references to other documents; extrinsic evidence
d) In re Sabol
(1) Man needed business loan. Applied for a Small Business Administration guaranteed loan from bank.
Bank’s application for the guarantee contained section for collateral (completed only by bank officer).
Debtor (π) executed an SBA promissory note payable to bank. Also signed another document allowing
bank to record financing statements as to any security interest. Declared bankruptcy and bank said
they had a security interest in equipment. Court says no, composite document rule doesn’t apply in this
case because there was no intention to create a security interest on part of π
(a) The bank’s reliance on the listing of collateral under the description of the loan terms on its
application for the SBA guarantee reveals nothing about the Debtor’s intent to grant a
security interest. The listing of the collateral appears on the bank’s portion of the document,
completed a week after Debtor signed the application
(b) The promissory note does not identify the collateral, and actually itself contemplates a
separate security agreement
(c) The financing statement was not presented to the debtor at or prior to closing on the loan.
This court will not presume that a financing statement, not shown to be contemporaneous,
has any part to play in the composite document rule
(d) No language conveying a security interest to the bank is found in any of the documents.
There is no evidence that the Debtor read or reviewed, much less agreed to, the loan terms
contained in the bank’s application to the SBA. The financing statement, containing the only
description of the collateral, is not signed by the Debtor and, in all likelihood, was never seen
by him
(e) Had the bank’s application for SBA guarantee, which listed the collateral, been signed by the
Debtor, the minimal requirements of 9-203 may well have been satisfied. But without a
description of the collateral in a signed or authenticated document or in a separate document
incorporated by reference into a signed or authenticated document, no security interest can
be recognized
(f) The composite document rule is most appropriately used to allow the debtor’s intent to grant a
security interest to be demonstrated by reference to the various loan documents where the
debtor has signed or authenticated a document containing a description of the collateral that
does not contain words of grant
5. After-Acquired Property
a) Applies to property acquired after security agreement authenticated. Code allows parties in 9-204 to create a
security interest in after-acquired inventory. Has to be in the security agreement. (e.g. all existing and after-
acquired inventory, accounts, etc. whatever)
b) Example: company agrees to grant bank a security interest in all its earth-moving equipment for a loan. Security
agreement describes collateral as “all of the debtor’s bulldozers.” After signed, debtor acquired another.
(1) Some courts insist written agreement include some express reference to property debtor might acquire
in the future before concluding after-acquired property is in fact covered
(2) Other courts note that some types of collateral (e.g. inventory and accounts) constantly turn over. It
would be impossible to think that only those on hand on the date of authentication to serve as
collateral. Presumption that after-acquired inventory or accounts are within scope
6. Proceeds
a) Secured party need not worry about describing proceeds in security agreements because the security interest
automatically attaches to them (9-203(f) & 9-315(a)(2))
(1) Includes whatever is received upon the sale, lease, license, exchange, or other disposition of the
collateral. As collateral transmuted from one thing to another (e.g. inventory sold to create accounts,
which are then paid by check, which are in turn deposited into a bank), each change generates proceeds
(2) Also includes claims for liability arising from and insurance payable by reason of any damage to the
collateral
(3) Security interest automatically extends to whatever proceeds of the original collateral are identifiable,
and to each successive generation thereafter. Almost does not matter into what the value of the original
collateral is transferred – does so without regard to whether the security agreement references
“proceeds” or whether its description of the collateral is broad enough to cover the property constituting
proceeds
b) Two restrictions on the extent to which a security interest will automatically attach to proceeds:
(1) If proceeds are property outside the scope of Article 9, doubtful that rule of 9-315(a)(2) would apply
(2) A security interest extends only to identifiable proceeds of the collateral. Thus, if creditor cannot trace
what happened to the collateral as it was converted from one thing to another, the security interest will
be lost
(a) UCC authorizes application of common law rules and principles to trace property that gets
commingled, including the “lowest intermediate balance rule”: the lesser of (1) the amount of
the proceeds, or (2) the lowest daily balance in the account between the time the proceeds
were deposited and the time the creditor seeks to enforce its interest

4
 (i) Treat all withdrawals from bank as non-proceeds money as long as possible
(proceeds float to the top and come out last)
(b) FIFO: if my proceeds $ is first $ in bank account, it is also the first $ out when debtor makes a
withdrawal
(c) LIFO: if last thing in account is proceeds from my collateral, that’s the first $ out when debtor
makes withdrawal
c) Security interest does not go away because the collateral is disposed of. Lender has to consent to release a security
interest
7. Commingled Goods and Accessions
a) 9-336(a): goods that are physically united with other goods in such a manner that their identity is lost in a
product or mass
b) There can be no security interest in the original goods after they are commingled. However, any security interest
attached to goods before they are commingled with other goods automatically attaches to the product or mass that
results from the commingling (9-336(c)). Occurs regardless of whether the security agreement mentions
commingled goods or describes the product or mass
c) Commingling is cake example – couldn’t tease out original collateral – can’t extract it out. Another example if you
have security interest in hops or barley and that goes into beer (therefore, you have security interest in beer)
d) Accession: where parts are combined and it’s possible to take them apart again (e.g. car or tractor, if you have
security interest in an engine)
8. Other Ways of Satisfying 9-203(b)(3) – largely for stocks, securities, commercial paper
a) Can satisfy the security agreement requirement simply by possessing the collateral
b) Can do a security agreement, or get stock certificate and give it to bank as security. Version of concept of reliance
– some manifestation of intent. If you’re giving them your stock certificate, indicates intent
E. The Value Requirement
1. “Value” includes any extension of credit, a commitment to lend, and any consideration provided in exchange for the grant of
the security interest
2. Agreement must somewhere indicate what obligation is secured even if it does not specify the amount of the obligation
3. Basically amounts to consideration from contract law. Would be perfectly acceptable if deal was I (W) am going to loan
money to X, and to secure that debt, Y is going to grant a security interest in laptop to Z. Just has to be some giving of value
in connection with the transaction
4. Per 9-204(c), collateral can secure a future advance (i.e. value isn’t even limited to a contemporaneous exchange – e.g. line
of credit)
F. The Rights in Collateral Requirement
1. Concept is so basic that less careful drafters might neglect to include it. When issues arise about this requirements, usually
Article 9 will not tell us whether the debtor in fact has the rights or powers necessary to convey a security interest (perhaps
traditional property law will, or article 2/contract law)
2. Certain situations where debtor can give more than they own: “buyer in the ordinary course of business” and “good-faith
purchaser”
a) 1-201(b)(9): “buyer in the ordinary course of business”: somebody who purchases goods in good faith without
knowledge that the sale violates the rights of another person, the transaction is in the ordinary course of business
for the seller, and the seller is in the business of selling goods of that kind
(1) applies most commonly in consignment setting. If merchant has been entrusted with goods that would
classify as inventory, merchant can sell those goods entrusted to him/her in the ordinary course of
business even if the sale violates the terms of the entrustment
b) “good faith purchaser”: person who makes the purchase in good faith without knowledge that the sale violates the
rights of another
(1) 2-403: a person with voidable title can transfer goods to a good faith purchaser with good title
(2) voidable title: where seller has some basis to revoke the title
(3) a purchase can include the granting of a security interest (doesn’t necessarily mean buying something).
Even though debtor had only voidable title, security interest still attaches. Same is not true of buying.
Buying is taking title. Secured party cannot be a buyer in the ordinary course of business w/r/t a
secured transaction
3. Even if proffered collateral is property, might not be clear whether debtor owns it or debtor might have only limited rights
in it
a) Article 9 tells us that “title” to the property is not particularly relevant (9-202). Even if debtor contractually
promises to Secured Party 1 not to grant a security interest in the collateral to anyone else, debtor does have
sufficient rights to grant a security interest to Secured Part 2 (and 3 and 4 etc)
4. Ask: (1) is the collateral being offered actually property? (2) if it is property, what are the debtor’s rights in that property?
And (3) are there any restrictions on the debtor’s ability to transfer rights in that property?
5. Problem 2-14
a) 2-301: need to deliver the goods you said you would, and need to accept the goods you said you were going to
accept
b) Sam contracted to sell hay baler to Barbara for 10k. Agreement provides neither may assign his/her rights under
the agreement to any other person and that any attempted assignment of such rights is void
c) A: if Sam were to grant a security interest in his rights under the agreement with Barbara, what would be the
collateral classification? He has contracted to sell it, so he has only the right to get paid at this point. This would
be classified as an account
d) Same thing for Barbara: she has contractual right, but not the hay baler (yet) – 9-102(a)(42) general intangible
e) C: if, in return for a loan, Sam authenticated a security agreement purporting to grant Bank a security interest in
his rights under the agreement, would the grant be effective to create a security interest? 9-406(d)(1): an
assignment of accounts is ineffective, and (d)(2) says that a term in an agreement is ineffective if it provides that
the assignment of the security interest gives rise to a breach under the account
(1) 406(d) applies to accounts and 408(a) applies to general intangibles

5
 (2) 406(f) says any legal restriction is ineffective
6. Choice of law rules in Article 1 (1-301)
a) If you have a K and it has a choice of law provision, that governs
b) If there is no choice of law clause, follow choice of law rules of the state that you’re in
(1) WA: “most significant relationship test” 87 Wn.2d 577
7. Problem 2-15
a) Under 2-501, buyer has interest in goods when it’s out for delivery. Doesn’t mean they own the goods, but they
have rights. 2-401 says you have interest in goods when they are marked/identified. Could describe the collateral
as existing and after-acquired inventory and general intangibles in order to ensure that the security interest
attached to Driscoll’s rights in the dinnerware at earliest possible time
8. Problem 2-16 – who has rights?
a) Thief steals necklace from Owner, sells it to Friend who has no knowledge of the theft.
(1) Owner has legal title but no possession. Thief has possession when he has it, has nothing when sale
complete. Friend has possession and legally owns it assuming good faith purchase
b) Thief steals necklace from Owner, uses it as collateral for loan from Lender, who has no knowledge of theft
(1) Thief has voidable title. Lender is “purchaser” and their security interest is effective notwithstanding
the theft.
c) Buyer purchases goods from Seller after fraudulently representing that Buyer will resell them only in Poland.
Buyer then resells them to Customer in US. Customer has no knowledge of fraud
(1) Buyer has voidable title, customer takes good title
d) Owner delivers necklace to have clasp fixed. Merchant in business of repairing/selling jewelry. Merchant, with
intent to defraud, removes the stone and sells it to unsuspecting Customer
(1) Customer is a BIOCOB and takes good title even though necklace entrusted to Merchant
e) Same, but uses stone as collateral for a loan from Bank. Bank could be protected as a purchaser, but not a
BIOCOB. Tricky part is did the Merchant acquire even a voidable title (because good faith purchaser rule only
applies if merchant has voidable title). Bank not protected at all in this scenario because Merchant never even
had voidable title
f) Thief steals necklace, brings it to Merchant. Merchant sells necklace to Customer who has no knowledge.
Customer has to return necklace because thief took it with voidable title (never had title to give), didn’t convey
title to Merchant (not good faith purchaser, just took it in entrustment to fix it)
G. Automatic Attachment
1. For some types of collateral, no explicit statements in security agreement necessary for security interest to attach. Seen
already (automatic attachment to proceeds and automatic attachment to product or mass that results from commingling)
a) Additional rules, frequently because the undescribed property is so intricately associated with some other,
expressly covered property that such a security interest should naturally extend to the undescribed property
2. Certain Investment Property
a) If collateral is an account at a brokerage house, security interest automatically extends to the securities and
commodity contracts credited to that account. Particularly important in consumer transactions, where
identification merely by type is insufficient. Therefore, needs to say “all securities accounts at Brokerage House”
for the identification to be sufficient
b) 9-203(h), (i)
3. Rights in a Secured Obligation
a) 9-203(g). If you grant a security interest in your rights as a secured party (or more generally, in an obligation that
is secured), they have an interest in that obligation. E.g. Landowner borrows money from Lender, giving Lender a
promissory note and granting Lender a mortgage in the real estate. Later, Lender needs to borrow money from
Bank, and grants them a security interest in the promissory note. This automatically includes a security interest
in the mortgage as well.
(1) When a right to payment is offered as collateral, the security interest extends to any lien securing that
payment
4. Supporting Obligations
a) 9-203(f): if you grant a security interest in an obligation and there’s a supporting obligation out there, you have a
security interest in that supporting obligation. E.g. Debtor sells goods on credit to Purchaser. Debtor requires
Purchaser to obtain a guarantor for the obligation to pay. The guarantee agreement is a “supporting obligation.”
If Debtor later borrows money from Bank, granting a security interest in Debtor’s accounts, Bank’s security
interest attaches not only to the account but also to the supporting obligation, even without mention of the
guaranty or the use of the term “supporting obligation”
H. Scope of Article 9
1. Lease v. Secured Transaction
a) Parties can create a security interest that is enforceable under A9 even if they didn’t intend to do so. Most
common way people do so is in lease transactions
b) 1-203(a) whether a transaction in the form of a lease creates a lease or security interest is determined by the facts
of each case
c) 1-203(b): transaction in form of a lease creates a security interest if the consideration that the lessee is to pay the
lessor for the right to possession and use of the goods is an obligation for the term of the lease and is not subject to
termination by the lessee, and:
(1) (1) the original term of the lease is equal to or greater than the remaining economic life of the goods;
(2) (2) the lessee is bound to renew the lease for the remaining economic life of the goods or is bound to
become the owner of the goods;
(3) (3) the lessee has an option to renew the lease for the remaining economic life of the goods for no
additional consideration or for nominal additional consideration upon compliance with the lease
agreement; or
(4) (4) the lessee has an option to become the owner of the goods for no additional consideration or for
nominal additional consideration upon compliance with the lease of agreement

6
 d) 1-203(c) says if in form of a lease, even if it does these 6 things, doesn’t necessarily mean it’s a secured transaction
2. Consignment
a) Retention of title in a consignment might be a security device. A true consignment bears striking similarity to a
security agreement. Almost impossible to tell whether a transaction is really a consignment or a disguised
security interest. A9 deals with problem by bringing many true consignments within its scope
b) Sale or return transaction: consignee has a choice – can sell it or return it. If that’s arrangement, not a true
consignment. Governed by A2. If it’s a true consignment (owner gives possession to consignee (merchant) and
merchant required to give it back on demand)
c) Three categories:
(1) Consignments that are disguised security transactions and within the scope of A9 under 9-109(a)(1)
(2) True consignments that fall within the definition of “consignment” under 9-102(a)(20) and thus brought
into A9 under 9-109(a)(4), and
(3) Transactions that are properly regarded as true consignments but which nevertheless fall outside the
9-102(a)(20) definition of “consignment” (perhaps because they involve property worth less than 1000 or
were consumer goods in the hands of consignor), and thus are outside scope of A9
3. Transfers of Accounts and Chattel Paper
a) E.g. have accts receivable and want to assign them to collection agency, that transaction is going to be enforced
and treated as if it is an A9 transaction, even if it is a true sale.
I. Interests Created Under Law Other Than Article 9
1. Retention of Title
a) A seller of goods who delivers the goods to the buyer but who “retains title” to the goods until the buyer pays in
full has in effect created a security interest
2. Shipment Under Reservation
a) When a seller ships goods to buyer using a carrier. Obtains a document of title from carrier which covers goods
being shipped. Must comply with 2-505. If so, seller has security interest and carrier should not release the goods
to the buyer until buyer has paid in full
3. Buyer’s Security Interest upon rejection/revocation of acceptance
a) If buyer receives goods and they do not conform to K, can exercise rejection or revoke acceptance. Buyer in
possession has a security interest in the goods to cover any part of the price the buyer has paid and certain
incidental damages incurred in taking care of the goods. Do not need consent of seller
4. Agricultural Liens
a) Agricultural liens arise under law other than A9. That other law determines how and when the lien attaches and
to what assets the lien attaches. If characteristics of the lien fall within definition of agricultural lien in A9, the
lien is covered by A9.
(1) Agricultural lien is not a security interest as defined in 1-201(b)(35), but the lienholder is a secured
party (9-102(a)(73)(B)), the property subject to the lien is the collateral (9-102(a)(12)), and the person
whose property is subject to the lien is a debtor (9-102(a)(28))
J. 9-109(d) – Scope of Article 9
1. Article 9 does not apply to:
a) Landlord’s lien
b) Statutory liens
c) Assignment of a claim for wages, salary, or other compensation of an employee
d) A sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of
which they arose
e) An assignment of accounts, chattel paper, payment intangibles, or promissory notes which is for the purpose of
collection only
f) An assignment of a right to payment under a contract to an assignee that is also obligated to perform under the
contract
g) An assignment of a single account, payment intangible, or promissory note to an assignee in full or partial
satisfaction of a preexisting indebtedness
h) A transfer of an interest in or an assignment of a claim under a policy of insurance (other than healthcare)
i) Judgment liens
j) Right of set-off
k) Real property liens
l) Non-commercial tort claims
m) Assignment of a deposit account in a consumer transaction
VI. Bankruptcy
A. Background
1. Article 11 is the bankruptcy code
2. What happens in a bankruptcy?
a) Financial life is frozen in time at the moment they file
3. Process:
a) marshal the assets of the debtor, consolidate them, extract the value from them
b) adjust and settle the debts
c) prize at the end of the bankruptcy process is discharge (court order saying any debts that existed on the day this
person file are not collectible – bars anybody from collecting on pre-bankruptcy debts)
4. Only wipes out in personam debts. Does not wipe out in rem debts. Secured creditors have to actually be paid in full
5. 5 basic forms of bankruptcy
a) Chapter 7: liquidations – Trustee gathers all non-exempt assets of debtor, liquidate them and pay the creditors
according to a list of priorities set out in code
(1) Exempt: certain kinds of assets are protected by state law: $125k value in your home, clothes, tools of
your trade, etc
(2) Code has federal exemptions. Can make election between state and federal when file

7
 (3) Unless a secured debt is satisfied, property comes out of bankruptcy with the security interest (e.g.
car/house loans still have security interest after bankruptcy, can can force liquidation/execute)
b) Chapter 13: wage earner’s bankruptcy – available to individuals, not businesses. If you have regular income,
instead of having your assets gathered and sold, can get into payment plan. Trustee basically figures out what
value would have been extracted if you had filed chapter 7 and sets up a payment plan
(1) Get to keep your assets
(2) Disadvantage is that debtors usually end up paying more
c) Chapter 11: reorganization method. Available to anybody (businesses and individuals)
(1) Debtor usually makes some kind of payment over a fixed period of time. May or may not sell assets. If
corporation, no exemptions available (only available to individuals)
(2) Adjustment of debt/loan modification. While you may be a secured creditor, chapter 11 might cause
your loan terms to be modified (e.g. lower interest rate, maturity date moved out further)
d) Chapter 9: municipal reorganization. Same as 11 but debtor is municipality
e) Chapter 12: agricultural bankruptcy. Similar to 9 and 11 in terms of how it flows
6. In chapter 11, debtor gets to act as trustee
7. On day bankruptcy is filed, a fiction is created – the bankruptcy estate. Pre-petition obligations become claims against the
estate
8. Automatic stay imposed by code: injunction against the world from doing anything that could be viewed as a collection
action against the debtor. Have to bring those fights into the bankruptcy court
9. Creditors classified into groups: administrative claims paid first (lawyers, appraisers, anybody hired and approved by court
for the functioning of the case); unsecured creditor priorities (unpaid wages, farm debts, security deposits, taxes, personal
injury claims); unsecured creditors (credit cards, student loans); secured creditors (difference between amount owed and
value of collateral is unsecured, so is grouped in with unsecured creditors for that portion)
10. Secured Creditors notes
a) After-acquired clauses become unenforceable once petition filed – whatever is acquired after bankruptcy filed
belongs to the estate
b) Proceeds continue to operate in the same way as to pre-petition collateral (e.g. interest in inventory and a week
after filing, inventory sold, security interest automatically attaches to proceeds – but only operates as to inventory
that existed prior to filing)
c) If the collateral is worth more than what you’re owed, secured creditor can continue to charge interest until they
have eaten up all the equity
d) “adequate protection” exists for secured creditors: because there’s the automatic stay, have to jump through hoops
to get permission to foreclose and sell the collateral. Not a given that you can sell it in satisfaction of debt. Code
says if debtor is not going to allow you to sell the collateral, they have to give you adequate protection (make
payments to hedge against value diminishing) so that the value of your security isn’t diminishing
e) if debtor wants to use your cash collateral, have to get permission (or court order) to use it
VII. Enforcement
A. Background
1. Perfection and priority of a security interest are not necessary for the secured party to enforce the security interest against
the debtor. Only prerequisite to enforcement is that the security interest must attach to the collateral
2. Concept is simply to take the value of the collateral securing the obligation and apply that value toward all or part of the
obligation owed
3. Most security agreements condition the secured party’s ability to enforce the security interest against the collateral on the
debtor’s “default” – on debtor’s failure to satisfy one of its contractual obligations to the secured party
4. Perfection is not required to enforce the debt against the debtor – only required to enforce it against the rest of the world
B. Default
1. What constitutes default is governed by the parties’ security agreement or lending agreement
2. If debtor is obligated to pay principal and interest on a loan and fails to make a payment when due (and that constitutes
default), creditor may seek to collect only the missed payment because the rest is simply not yet due, unless there is an
acceleration clause
a) Acceleration clause typically provides that in the event of any default, the entire loan balance becomes due either
automatically or at the option of the lender
(1) Few limits on lender’s ability to accelerate a debt after default other than general obligation of good
faith that applies to enforcement of every contractual right (1-304)
(2) Article 9 does not require a creditor to notify the debtor that the right to accelerate has been or is about
to be exercised – may be required if agreement or law other than A9 so provides
b) Debtor usually has no right to “de-accelerate” the debt by curing default, at least not without creditor’s consent
C. Rights Upon Default
1. Several options: may follow processes in part 6 of A9; may go via remedies in security agreement; or may utilize processes
for collecting debt available under other law (9-601, 604)
a) Cumulative – can combine some of A9’s enforcement rules with the judicial processes for collecting debts
generally (e.g. can use judicial process to acquire possession and then follow A9 to sell it)
2. Secured party has duties to debtor and obligors – might be imposed by terms of security agreement or A9, or other sources
of law
D. Enforcement Against Tangible Collateral
1. Taking Possession
a) Secured party may require debtor to assemble the collateral and make it available to the secured party. If debtor
fails to comply, secured party may either use a judicial process to obtain possession or may proceed privately and
simply take whatever items of the collateral it is able to find (9-609)
b) Private action: so long as there is no “breach of the peace”
(1) Mere threat of violence of a substantial risk of injury to the debtor, secured party, or bystanders will
make a repossession effort improper
(2) Use of a uniformed police officer is not allowed, unless the officer is acting under a court order or writ

8
 c) No matter what security agreement provides, secured party has no authorization to trespass on a third party’s
property, but might be privileged to do so nonetheless (Restatement Torts 198 p. 149)
d) A secured party who breaches the peace is generally liable for conversion, trespass to chattels, or some similar
common-law tort, and use of an independent contractor will not insulate the secured party from liability
2. 9-609: can take possession or, if equipment, can render it unusable (i.e. shut it down/disable it) and dispose of it pursuant to
9-610 (liquidate somehow)
3. Problem 3-4 p. 146: first, need to determine whether this is a default at all
4. Giles v. First Virginia Credit Services
a) Failed to pay car payments. ∆ showed up at 4am and repossessed the car, waking up neighbor. Court holds this is
not a “breach of the peace,” adopting a balancing test of 5 factors
(1) Where repossession took place, (2) debtor’s express or constructive consent (usually something in
security agreement), (3) the reactions of third parties, (4) the type of premises entered, and (5) the
creditor’s use of deception
(2) Because they did not enter into π home or any enclosed area, consent was expressly given in the
contract, they did not hear it happening, and no confrontation occurred, no breach of the peace
(3) If repo actually incites or is likely to incite violence, breach of peace. If debtor or family protests, might
be breach of the peace. Breaking/entering is breach of the peace. Lots of states do not consider taking a
car from driveway to be B&E. In most places, mere noise is generally not breaching the peace
E. Repossession
1. The act of repossession does not change ownership rights (i.e. title) – when the secured party takes possession of the
collateral, it is still the debtor’s collateral, not the secured party’s. Step 1 is taking possession/disabling it. Step 2
(disposition) is what changes ownership rights. If party that repossessed it did not do something else (i.e. did not dispose of
it), the debtor still owns the thing and whatever happens to that thing after repossession, if it’s wrongful, makes the
secured party liable in tort
2. Because the collateral still belongs to the debtor, when secured party takes possession, they are the bailee and owes duties
to the bailor (duty of reasonable care)
3. Right of redemption can exist: a debtor or secondary obligor can obtain a release of the collateral by paying off the debt. Can
be exercised right up until the disposition is complete (i.e. as long as debtor still owns the thing, they can redeem)
a) That moment (disposition) can happen in 3 ways:
(1) Disposition sale (e.g. auction off repossessed care) – when sale is complete, there is disposition
(2) Acceptance in satisfaction of debt – could be acceptance in full or partial satisfaction. A9 has specific
rules for each one of those kinds of acceptances. Have to jump through the hoops to convert ownership
(3) For intangible collateral (accounts, chattel paper, instruments, etc), can collect or enforce the collateral
F. Disposition of the Collateral
1. Background
a) Have to give notice and has to be commercially reasonable
b) Can conduct a private sale
c) 610(a) says can dispose
(1) needs to be a default
(2) disposition: any way secured party can extract value out of the collateral
(3) 610(b) needs to be commercially reasonable
2. Notification of the Disposition
a) Notification rules in 9-611 through 9-614: rules are not waivable (unless agreed to by parties)
b) Purpose to give debtor opportunity to protect the debtor’s interest in the collateral by providing information to
enable the debtor to: (1) exercise the right of redemption; (2) bid at the sale, if disposition by public sale; (3)
challenge any aspect of the disposition before it is made; and (4) locate potential purchases, all to the end that the
collateral not be disposed of for significantly less than its fair market value
c) Need to give notice (reasonable = 10 days in non-consumer setting) to debtor, any secondary obligor (e.g.
guarantor), and if collateral not consumer goods, any other person from which secured party has received an
authenticated notification of a claim or an interest in the collateral, any other secured party or lienholder that
held a security interest in the collateral by filing a financing statement or other statutory lien.
(1) Whether notification is sent in reasonable period of time is question of fact
(2) If consumer transaction, 30 days is pretty safe, but depends on facts
d) Not necessary to give original obligor notice – debtor gets notice, but just by being the obligor doesn’t mean its
your property (debtor is not necessarily obligor). Also because obligor is on the hook for the whole debt anyway,
whereas others are presumably on the hook only for what obligor can’t pay
(1) Don’t need to give notice if the goods are perishable or if they can be sold on a regular market
e) Elements of sufficient notice (9-613):
(1) Description of debtor and secured party
(2) Description of collateral that is subject of the intended disposition
(3) Statement of the method of intended disposition
(4) Statement that the debtor is entitled to an accounting of the unpaid indebtedness and states the
charge, if any, for an accounting, and
(5) Statement of the time and place of public disposition or the time after which any other disposition is to
be made
f) Required elements of notice in consumer goods (9-614):
(1) Everything in 9-613
(2) A description of any liability for a deficiency of the person to which the notification is sent
(3) A phone number from which the amount that must be paid to the secured party to redeem the
collateral under 9-623 is available, and
(4) A phone number or mailing address from which additional information concerning the disposition and
the obligation secured is available
3. Commercial Reasonableness (9-610(b) & 9-627)

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 a) Every aspect of a disposition by a secured party must be commercially reasonable – question of fact. Some factors:
(1) Whether disposition should have been public or private
(2) The time and place of the disposition, and in particular the delay, if any, in conducting the disposition
(3) Whether the collateral should have been disposed of in bulk or in separate parcels
(4) Whether and how the secured party should have prepared the collateral prior to disposition (such as by
cleaning or repairing it)
(5) The method and amount of advertising or other efforts to locate potential buyers
(6) The actual terms of the disposition
b) Low price alone is not sufficient to conclude that the disposition was commercially unreasonable, although it is
grounds for closely scrutinizing the other aspects of the transaction (9-627(a))
c) 9-627: Dispositions that are commercially reasonable:
(1) In the usual manner on any recognized market
(2) At the price current in any recognized market at the time of the disposition, or
(3) Otherwise in conformity with reasonable commercial practices among dealers in the type of property
that was the subject of the disposition
d) Secured party has burden of proof on commercial reasonableness
4. Application of Proceeds of Disposition
a) Order of payment (9-615):
(1) Reasonable expenses of retaking, holding, preparing for disposition, processing, and disposing, and, to
the extend provided for by agreement and not prohibited by law, reasonable attorney’s fees and legal
expenses incurred by the secured party (i.e. administrative costs)
(2) The satisfaction of obligations secured by the security interest or agricultural lien under which the
disposition is made (party doing the sale and repossession, etc gets paid first – if you’re not
first and you’re doing the sale, you don’t have to pay the person who is in front of you)
(a) Buyer is buying the collateral subject to the senior lender’s security interest
(b) Junior secured party is unlikely to be the one to conduct the sale
(3) That satisfaction of obligations secured by any subordinate security interest in or other subordinate
lien on the collateral if:
(a) Secured party receives notice from the holder of the subordinate security interest or other lien
an authenticated demand for proceeds before distribution of the proceeds is completed, and
(b) In a case in which a consignor has an interest in the collateral, the subordinate security
interest or other lien is senior to the interest of the consignor, and
(4) A secured party that is a consignor of the collateral if the secured party receives from the consignor an
authenticated demand for proceeds before distribution of the proceeds is completed
(5) Then to debtor – obligor may still be on the hook if there’s still money owed
b) Effect of disposition (9-617)
(1) Transfers to transferee all of debtor’s rights in collateral, discharges the security interest under which
the disposition is made, and discharges any subordinate security interest or other subordinate lien
(a) The disposition itself is what discharges the junior security interests, doesn’t matter the
amount of payment or whether the junior lienholders got any money at all
(b) Senior secured interest stay intact (e.g. if 2nd lienholder does the sale, the collateral is sold
still subject to the 1st lienholder’s security interest)
5. Acceptance in Satisfaction of the Debt
a) Secured party permitted to do this only if disposition is by public sale or the collateral is either customarily sold
on a recognized market or otherwise subject to a widely distributed standard price quotations
b) Need to give notice to same parties as if you’re going to sell it
c) 9-620: acceptance allowed only if, after notice,
(1) debtor consents to the acceptance
(a) if acceptance in partial satisfaction, debtor’s consent has to be in an authenticated record and
can’t be prospective (i.e. can’t be in loan agreement – has to be prepared after the default)
(i) 9-620(g) – cannot do partial satisfaction with consumer goods
(b) if acceptance in full satisfaction, consent can be in authenticated record or considered
accepted (or deemed to have consented) if debtor says/does nothing within 20 days
(2) secured party does not receive, within the time set forth in section (d), a notification of objection to the
proposal authenticated by:
(a) a person to which the secured party was required to send a proposal under 9-621, or
(b) any other person, other than the debtor, holding an interest in the collateral subordinate to
the security interest that is subject of the proposal
(3) if the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor
consents to the acceptance, and
(4) disposition is not required
6. Intangible Collateral
a) Accounts, chattel paper, general intangibles, instruments (promissory notes, checks, etc), documents of title,
investment property (stocks, membership interests in company, etc), letter of credit rights, deposit accounts
b) Secured Party  ∆ (debtor)  Account debtor (general term for person that owes the intangible)
c) Arrow from account debtor to debtor is the asset. To the account debtor, that arrow is a liability. To the Debtor, it
is an asset. To the SP, it’s collateral
d) 9-607(a): if so agreed, and in any event after default, a secured party:
(1) may notify an account debtor or other person obligated on collateral to make payment or otherwise
render performance to or for the benefit of the secured party
(2) may take any proceeds to which the secured party is entitled under 9-315
(3) may enforce the obligations of an account debtor or other person obligated on collateral and exercise the
rights of the debtor with respect to the obligation of the account debtor or other person obligated on
10
 collateral to make payment or otherwise render performance to the debtor, and with respect to any
property that secures the obligations of the account debtor or other person obligated on the collateral
e) 9-4XX sections deal with rights of third parties
(1) 406(a): once account debtor is notified that they have to pay the secured party, that’s who they have to
pay. Notice needs to be signed by debtor or the secured party. If you get the letter that says to pay the
secured party and you pay the debtor instead, you still owe that payment to the secured party (and may
have to pay again)
(2) 406(b): notification ineffective if:
(a) doesn’t reasonably identify the rights assigned
(b) the obligation in question can be limited
(c) if notification instructs account debtor to pay less than the full amount (i.e. need to demand
full payment)
f) you step into the shoes of your debtor – so you’re subject to the terms and conditions of the agreement between
debtor and account debtor, and also subject to the defenses that have come up before account debtor gets the
notice. Includes the right of set-off
(1) once they’ve sent that notice, anything that comes up after that is between the account debtor and the
debtor, not the secured party
g) 404(c) and (d) are consumer protection provisions
h) 403: agreement not to assert defenses against assignee
(1) agreement between account debtor and debtor are enforceable against secured party if assignment is
made in good faith, for value, without notice of a defense or claim that may be asserted against a
person entitled to…
i) Even though contract between debtor and account debtor may have restriction on assignment, article 9 says in an
article 9 transaction, you can assign the rights of the debtor to the secured party
j) Payment in same order as for tangible collateral: costs, secured party, junior lienholders, debtor (9-608)
k) 9-617 if you have tangible collateral, senior liens stay attached. Not the case with intangible collateral
(1) Senior lien doesn’t stay attached to, say, an account, because after enforcement, the account doesn’t
exist anymore
l) 9-625: remedies against secured parties – not limited to just the debtor. Anybody harmed by actions of secured
party can assert a claim. Can get injunctive relief, damages, maybe penalties, and potentially elimination of the
right to a deficiency
VIII. Effect of Other Law on Secured Party’s Enforcement Efforts
A. Waiver and Estoppel
1. Debtor’s defense – might raise to avoid enforcement of the security interest. Basic idea is that secured party has waived a
particular right to call a default due to the course of dealing
a) E.g. debtor misses one payment, bank does nothing, misses second payment, bank does nothing, misses third,
then bank tries to call a default. Debtor says based on the course of dealing, you’ve waived this
b) Usually comes up when borrower has missed a lot of payments and there are conversations where bank says don’t
worry about it, make it up next month, or let’s come up with some side deal to get it paid. Where secured party is
doing something active, more likely to be applicable
2. Whether there’s been a waiver comes from principles of contract law
B. Lender Liability
1. Usually comes up when lender is trying to enforce security agreement.
2. Usually is a counterclaim (as opposed to an affirmative defense)
C. Marshaling
1. The idea that someone with authority is going to gather the debtor’s assets and is going to liquidate them and dispose of the
proceeds in a way that is most equitable to all of the creditors
2. Usually junior lienholder will ask for it – ask court to enter marshaling order (equitable remedy telling creditor to go after
X piece of collateral that is not encumbered by the junior lienholder asking for the order, and not Y piece of collateral that is
encumbered by both the senior and junior lienholder)
3. Applies only as to collateral – cannot use this to ask them to go after a guarantor
4. Very rarely used outside of bankruptcy or receivership
a) Not available against a homestead
5. Generally not used by one junior lienholder against another junior lienholder
IX. Perfection of Security Interests
A. Overview
1. Perfection: process the SP uses to protect and preserve its priority in the collateral, particularly from those who might later
acquire an interest in it
a) Priority depends on several things, two most important are the order in which the interests were attached, and
whether those interests are perfected
2. Perfection has no impact on the secured party’s rights against the debtor – failure to perfect does not prevent secured party
from determining that debtor is in default or from disposing of or collecting on collateral
3. Perfection requires just two things: attachment and satisfaction of other other applicable step
a) Appliucable step (perfection method) is in many instances, the provision of some sort of notice to the commercial
world of the secured party’s interest in the collateral (rough equivalent of recording a mortgage deed on real prop)
4. 5 different perfection methods – which one is appropriate depends on type of collateral:
a) filing a financing statement in the appropriate government office (most common) – in WA, it’s the DoL
b) taking possession of the collateral
c) acquiring control of the collateral
d) mere attachment of the security interest (security interest is automatically perfected upon attachment)
e) complying with some other law that determines how to perfect
5. Parts 3 and part 5 of the A9 are relevant – 3 for perfection, 5 for filing of FS
6. Have to maintain your perfection

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B. Filing a financing statement
1. 9-310(a): Unless an exception applies, filing a financing statement is the proper method for perfecting a security interest
and the only method for perfecting an agricultural lien
2. financing statement is a one-page document in which the secured party identifies itself, the debtor, and the collateral.
Purpose is to provide notice of the secured party’s interest in the collateral, so that people later wishing to acquire a
security interest in the same property or wishing to buy the property outright have a way of learning that someone other
than the debtor has property rights in it
a) Filed with government entity such as SecState, DoL, or County Recorder
b) 9-502(a) requires only that the financing statement contain 3 pieces of information:
(1) name of debtor
(2) name of secured party
(3) an indication of the collateral
c) if debtor is a registered organization, such as a corporation, LP, or LLC, correct name is the name that appears in
the public record of the debtor’s jurisdiction of organization (don’t need trade name)
d) Financing statement not rendered ineffective merely because it has a minor error that is not seriously misleading
(1) 9-506(b) & (c): if a search under debtor’s “correct” name yields a filing with an error in it, then the filing
is not seriously misleading and thus is effective. If a search under the debtor’s correct name does not
produce a previously filed financing statement, that statement is seriously misleading and is not
effective (e.g. if correct name is “Network Solutions” and the FS says Net work solutions and nothing
shows up, the SI is not perfected)
3. A9 provides states with two options for dealing with the above issues:
a) Alternative A: “only if” rule
(1) Requires filers to use the name of the debtor’s driver’s license, if the license has not on its face expired
and the license is issued by the state whose law governs perfection by filing. If debtor does not have
such a driver’s license, the filer must use either the “individual name of the debtor” or the “surname
and first personal name of the debtor”
b) Alternative B: “safe harbor” rule
(1) A financing statement will sufficiently identify the debtor if it uses one of these three alternatives:
(a) The debtor’s “individual name”
(b) The name on the debtor’s driver’s license (if the driver’s license is issued by the state whose
law governs perfection by filing), or
(c) The debtor’s surname and first personal name
C. Indicating the Collateral
1. 9-504: sufficient if it provides a description of the collateral pursuant to 9-108 or an indication that the FS covers all assets
or all personal property
2. should not use a description of the collateral that merely references the description in the security agreement (no
incorporation by reference when it comes to FS)
3. better to be overly general than overly specific, because if you misidentify the specific collateral, FS ineffective
D. Mechanics of Filing
1. For a FS to be effective to perfect a security interest, debtor must authorize its filing (9-509, 510)
a) Such authority is conclusively established by the debtor’s authentication of a security agreement (almost always
have a clause saying I agree you can file a FS, but it’s not technically necessary to have that clause)
(1) Typically, SA will authorize the filing of a FS with a more broad description of collateral than the SA
b) If SP wants to file the financing statement before the debtor authenticates the security agreement or wants to
have a collateral description that is different in some way from the description in the security agreement, SP
must obtain debtor’s permission in an authenticated record (9-509(a)(1))
2. In general, a financing statement is effective for 5 years from the date of filing (9-515(a)), at which point the effectiveness
lapses. To avoid lapse, SP must file a “continuation statement” before the end of the effectiveness period (must be filed no
sooner than 6 months prior to potential lapse) (9-515(d)). If filed, extended for another 5 years from lapse date
3. If you’ve prepared a proper FS, even if filing office rejects it for a reason not in 9-516(b), the FS is effective
4. For all personal property, file in jurisdiction of the debtor. For real property, file only in jurisdiction where the real property
is
E. Alternative Filing Systems
1. A9 does not apply to certain types of collateral (planes, ships, railroad cars, etc)
2. Federal filing necessary for, e.g. registered copyrights (but not trademarks, trade names, or patents)
3. Almost all states have certificate of title statutes for motor vehicles – need to follow this in order to perfect
4. 9-311 defers to state statutes for licensing/title of motor vehicles (46.12.675 in WA)
F. Perfection by Possession
1. Possession the only way to perfect a security interest in money as original collateral
2. Also permissible way to perfect SI in goods, instruments, tangible chattel paper, and tangible negotiable documents of title
a) While filing may also be used for these – possession frequently gives the SP a better priority
3. May possess collateral through an agent
a) But debtor can’t be your “agent”
G. Perfection by Control (9-314)
1. Applies to intangible collateral
2. Methods of control (9-104 through 9-107)
a) 9-104 (deposit accounts): perfected if (i) SP is the bank in which deposit account is maintained, (ii) a control
agreement between bank, account holder, and SP has been signed (gives SP right to make withdrawals), and (iii)
SP becomes bank’s customer with respect to the deposit account (name is on the account). Only way to perfect
b) 9-105 (electronic chattel paper): participating in a system employed for evidencing the transfer of interest in the
chattel paper reliably establishing the SP as the person to which the chattel paper was assigned; uniform
electronic transactions act §16 lays out framework for a system – 47/50 states have adopted (but not NY, IL or
WA). Can will perfect by filing

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 c) 9-106 (investment property (stocks, certificates, options, commodities, etc)): article 8 deals with investment
property. A9 says look to A8 and if you have control as defined in 8-106, then you have control for purposes of A9
and you’re perfected. Can still perfect by filing
d) 9-107 (letter-of-credit rights): have control to the extent the issuer of the letter has consented to the assignment of
proceeds of the letter of credit per 5-114(c)
(1) i.e. if you grant a SP the letter of credit right as collateral, then to perfect, SP needs to go to bank and
get consent
3. Method of perfection for investment property, deposit accounts, letter-of-credit rights, electronic chattel paper, and
electronic documents of title
4. For deposit accounts and letter-of-credit rights as original collateral, control is the exclusive method of perfection
5. Control defined differently for each type: investment property (9-106 & 8-106), deposit accounts (9-104), letter of credit
rights (9-107), electronic chattel paper (9-105), electronic documents of title (7-106)
6. SP can still have control even if debtor has access (9-104(b), 8-106(f))
H. Automatic Perfection
1. Purchase Money Security Interest in Consumer Goods
a) E.g. retailer sells new TV on credit to Customer for use in their home. The authenticated credit agreement
includes the grant of a security interest to retailer. Retailer needs not file a financing statement or possess the TV
in order to perfect
b) Two requirements: security interest must be a PMSI and the collateral must be consumer goods that are not
subject to a certificate of title law as described in 9-311
c) To be a PMSI, lender must be able to directly trace the loaned funds to the purchase of the collateral. If the loan is
first commingled in borrower’s checking account, resulting SI might not be a PMSI
2. 9-308(e): if you’re perfected in a right to payment or performance, you are also perfected in a security interest securing that
payment
a) e.g. if I have a SI in a bank’s home loan to somebody else and I’m perfected in that, then I’m also perfected in the
mortgage securing that loan
I. Choice of Law Issues
1. Freedom to choose state law governing transaction does not apply to law governing perfection because it is about providing
notice of SP’s interest in the collateral to the remainder of the commercial world
2. SP and debtor cannot alter the way in which SI is perfected – cannot alter applicable methods and, if perfection is to be
accomplished by filing, cannot alter the proper state in which to file
3. Provisions in A9 as enacted in State A will tell the court what state’s law to look at to determine whether SP has taken
proper perfection step as to the collateral at issue
a) First determine which state’s law applies generally, then look to that state’s version of A9 to determine which
state’s law governs perfection
4. 9-301(1): unless a specific exception applies, the law of the debtor’s location governs the perfection step for a security
interest
a) BUT, 301 also says: law of state where collateral is located will govern perfection step for SI in 3 circumstances:
(1) When secured party perfects its interest through possession (9-301(2))
(2) When collateral is fixtures and perfection is through a filing (9-301(3)(A))
(3) When collateral is timber to be cut (9-301(4))
b) And law of state where wellhead or minehead is located will govern perfection of SI in as-extracted collateral (9-
301(4))
c) 9-301 is subject to exceptions in 9-303 through 9-306, which are based on the type of collateral
d) 9-303: collateral covered by certificate of title
e) 9-304: collateral is deposit accounts
f) 9-305: collateral is investment property
g) 9-306: collateral is letter-of-credit rights
5. Location of registered organization (corporation, LLC, etc): state of incorporation/registration (9-307(e), (g))
6. Location of individual or organization other than a registered organization: 9-307(b), (c), (d)
a) Individual debtor is located at individual’s principal residence
b) If debtor is an unregistered organization and has only one place of business, location is located at its place of biz
c) If debtor is an unregistered organization and has more than one place of biz, it’s where its chief executive office is
J. Changes in the Collateral or Perfection Method
1. Assuming SI does attach to new items of property, next question is whether the SI is perfected in those new items without
SP having to take any additional steps – simply inquire whether the SP has complied with any of the applicable perfection
methods for the type of property involved
a) E.g. if SP has filed an authorized and otherwise appropriate financing statement, then it will be perfected in the
new property as long as the property is of a type which may be perfected by filing in the office where the FS has
already been filed and the description of the collateral in the FS is broad enough to cover the new collateral
(1) E.g. a SP with proper filing against “inventory” will be automatically perfected in whatever new
inventory the debtor acquires and to which its security interest attaches
b) If original FS described the collateral specifically by item, FS is not broad enough to cover new collateral, but SI
nevertheless attaches to those new items, SP may file an amendment to the original FS to add the new collateral
(9-509(a))
c) If SP has not filed a FS to perfect its SI, but is relying on perfection by possession, control, automatic perfection, or
perfection under other law pursuant to 9-311, then to perfect in the new items of collateral, SP will have to take
the appropriate step for that type of collateral
K. Proceeds of Original Collateral
1. If SI in original collateral was perfected in any manner, SI in proceeds will also be perfected, at least for a limited time (9-
315(c)), but becomes unperfected on the 21st day after the SI attaches to them unless SP perfects its interest in the proceeds
pursuant to 9-315(d)

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 2. 9-315(d) provides for 3 methods for perfection of a SI in proceeds to extend perfection beyond the 20-day period of temporary
perfection:
a) If whatever SP has already done to perfect a SI in the original collateral (or whatever it does in the 20-day period)
is sufficient to perfect a SI in the proceeds without respect to their status as proceeds, then the SI remains
perfected. 9-315(d)(3)
(1) E.g. if SP has SI in inventory (but not accounts) and files a FS covering inventory and accounts, and
debtor sells some inventory in a manner that generates accounts, then SI in accounts as identifiable
proceeds remains perfected for as long as the filing remains effective
b) If proceeds are identifiable “cash proceeds,” a SP perfected in the original collateral remains perfected beyond the
20 day period. 9-315(d)(2)
c) 9-315(d)(1) provides for automatic perfection beyond the initial 20-day period if all three of the following are
satisfied:
(1) SI in the original collateral is perfected by the filing of a FS
(2) Proceeds are collateral of a type that a FS filed in the same offices as the FS covering the original
collateral could be filed to perfect a SI in the proceeds, and
(3) The proceeds are not acquired with cash proceeds
L. Change in location or character of the collateral
1. For most part, change in location or character doesn’t really matter. Does matter where SP takes possession or where only
way to perfect is by possession
Location & Use Changes First-Gen non-cash Proceeds acquired with
proceeds (trades) cash proceeds
Change does not affect No new filing needed No new filing needed No new filing needed
the description of the
collateral or the
perfection method
Change affects the No new filing needed (9- No new filing needed (9- New filing needed within 20
description (i.e. 507(b)) 315(d)) days (9-315(d))
classification) of
collateral
Change affects method of New action needed New filing needed within 20 New filing needed within 20
perfection immediately (9-311) days (9-315(d)) days (9-315(d))

M. Changes in the Obligation

1. Generally, they are immaterial to perfection analysis – obligation runs between SP and debtor, so others don’t really care.
May be important to attachment analysis, but not very for perfection
a) Major exception for PMSI – if same lender refinances, PMSI ceases to exist and the SI becomes unperfected
N. Changes in the Debtor’s Name
1. Name change not relevant to SI perfected by possession, control, notation on a certificate of title, or automatically
2. Name changes are relevant to a SI perfected by filing a FS (9-507(b), (c)) – If a change in the debtor’s name renders a filed
FS seriously misleading under the test in 9-506, the filed FS will be rendered ineffective to perfect a security interest in
collateral acquired by the debtor more than four months after the name change
a) As to collateral that the debtor owned at the time of the name change or which debtor acquired within 4 months
after the name change, FS with old name remains effective
b) If SP amends FS after 4 month period expires, amended FS is effective to perfect, but only from the date of the
amendment (9-507 cmt 4)
O. Adding/Subtracting Debtors on FS
1. 9-512(d), (e): SP may file amendment to add/subtract debtors from a FS – effective as to added debtors only from time of
addition and debtor must authorize being added to FS. FS effectively terminated as to a debtor removed from FS
P. Change in Debtor’s Location
1. When debtor’s location governs choice of law for perfection (9-301(1), 305(c)), a change in debtor’s location will change
applicable state in which SP must perfect its SI. If debtor location changes so that choice of law rule points to law of
different jurisdiction, 9-316(a) & (b) govern whether SP must do anything to continue perfection after location change
2. Basic rule is that SP has four months to re-perfect in the new jxn, but if initial FS would expire before that four-month
period is up, need to re-perfect in new state before initial FS expires
3. If debtor relocates to new address but still in same jxn, don’t need to change – correct address for debtor not necessary for
sufficient perfection
Q. Disposition of the Collateral
1. Process: ask whether SI remains attached, then determine whether FS filed against original debtor remains effective
2. In general, SI does remain attached to collateral despite transfer to new owner, unless SP authorized the collateral
disposition free of the SI (9-315(a)(1))
3. FS that was filed and effective against original debtor remains effective to perfect even though debtor named in FS is no
longer the debtor that has an interest in the collateral – no new filing necessary, unless collateral transferred to a person
located in another jurisdiction. In that case, SP has 1 year to re-perfect in new jurisdiction
a) If SP does not re-perfect within 1 year, SI becomes unperfected and is deemed retroactively unperfected as
against purchasers for value (9-316(b))
R. Debtor Bankruptcy
1. Automatic stay prevents SP from taking any action to create, perfect, or enforce its SI in property of the estate or property
of the debtor. However, pursuant to 11 USC 362(a), SP can take whatever post-petition steps are necessary to maintain
perfection of its SI (e.g. file continuation statement or take steps necessary to prevent temporary automatic perfection
period from expiring)
S. Changes in Secured Party

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 1. Although valid FS must have the name of the SP, a subsequent change in the SP’s name is not relevant to the effectiveness
of the FS (9-507(b)). Change in location of SP cannot undermine perfection because jxn in which SP is located does not
govern perfection in the first instance. Perfection will continue even if no amendment stating that the SI has been assigned
T. Summary
Code Filing Rule
Provision
9-309(1) No filing needed for PMSI in consumer goods
9-507(a) No new filing needed on transfer of collateral to buyer located in same jxn
9-507(b) No new filing needed if classification of collateral changes in a way that does not alter the method of
perfection
9-315(d)(2) Continuously perfected in identifiable cash proceeds if perfected in original collateral
9-315(d)(1) Continuously perfected in identifiable first-generation proceeds if original filing is in right office as to
type of proceeds
9-507(c) Refile within 4 months of a seriously misleading debtor name change, but only as to after-acquired
collateral
9-316(a)(2) Refile in new state within 4 months after debtor moves to new state
9-312(g) Remain perfected for 20 days upon delivery of an instrument or certificated security to debtor for
reason stated in that section
9-312(e) Automatically perfected for 20 days in a certificated security, negotiable document or instrument
acquired for value
9-315(d)(1) Re-perfect within 20 days against proceeds acquired with cash proceeds if description in filing does not
cover them
9-309(1) Re-perfect immediately if financing destroys PMSI status
9-311 Re-perfect immediately if classification of collateral changes in a way that alters the method of
perfection to a non-Article 9 method
U. Review
1. Fundamental concept of perfection is to provide inquiry notice
2. Parts of code primarily relevant: part 3 and part 5
a) 301-306: law that will apply to a particular type of perfection – tell you where you have to perfect, tracking
different types of collateral
b) 307 tells you how to decide what is the location of the debtor because that tells you where to perfect
c) 308 enabling provision
d) 309: automatic perfection
e) 310: perfect for most part by filing
f) 311: exception from filing rule for property that is “regulated collateral” (e.g. cars, planes)
g) 312: perfection in intangible stuff like chattel paper – method here not exclusive, doesn’t preclude perfection by
filing
h) 313/314: things that can be perfected by possession/control – cumulative, not exclusive
i) 315/316: deal with changes
3. part 5: specifics of filing a financing statement (i.e. you fill out a form)
X. Priority of Security Interests
A. Basic Priority Concepts
1. SP’s priority depends largely on whether it is perfected and, if so, when and how it perfected
2. Main “trick” to resolving priority conflict is to ascertain which rule or rules apply, which depends on six factors:
a) Whether, when and how SP perfected
b) What type of interest in collateral competing claimant has
c) Whether any interest is a PMSI
d) Whether secured obligation includes future advances
e) The type of property involved (e.g. goods, chattel paper, etc), and
f) Whether property has been commingled or become an accession or fixture
3. Two most important are type of property involved (classification) and the type of interest the competing claimant has
4. Incorporates two fundamental property law principles:
a) “derivation principle”: person can transfer only those rights in property that the person has (transferee’s rights
are derived from, and limited to, the rights of the transferor)
b) sequence of transfer matters: person who acquires interest in property should prevail over anyone who later
acquires an interest in the same property from the same transferor
(1) “first in time, first in right” principle not absolute – priority based largely on when SI was perfected
rather than attached
5. Priority rules take reliance into consideration (relying on what is known about the title at the time you get involved with
the title) – judicial lienholder not relying on debtor at all in acquiring lien, but lender will be relying on debtor (same with
lessees and buyers)
6. determining the hierarchy of lien claims in property is an asset-specific exercise
7. can agree by K to set their own priority rules (subordination agreements)
B. Security Interests v. Judicial Liens
1. In most states, lien creditor’s lien requires obtaining judgment, procuring writ of execution, delivery to sheriff, and sheriff
levy upon the property – the levy creates the lien on behalf of the judgment creditor
2. When SP has a SI on the same personal property on which the lien creditor has a lien, 9-317(a)(2) governs priority between
the lien of the lien creditor and the SI of the SP
3. 9-317(a)(2): SI is subordinated if the lien creditor’s lien arises before the SP does either of two things:
a) perfects SI (9-308(a), (b))
b) files a FS and satisfies one of the requirements of 9-203(b)(3)
(1) this one means that SP will have priority if they file a FS and get a signed security agreement, even if
value has not been given (so attachment hasn’t really occurred yet)
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C. PMSI v. Judicial Liens
1. 9-317(e): SP has priority over judgment creditor’s lien even though SP took its perfection step subsequent to the levy, as
long as the SP files an effective financing statement within 20 days after debtor receives delivery of collateral
a) super priority – if John Deere sells farm equipment on credit to farmer under a PMSI, if John Deere files a FS
within 20 days after delivering equipment, gets to jump over any judicial lien that may have attached between
the day they got the SI and the day they files
D. Security Interest Securing Future Advances v. Judicial Liens
1. 9-323(b): if the advance is made within 45 days after lien creditor’s lien arises, or if the advance is made after 45 days and
without knowledge of the lien creditor’s lien, the lien creditor’s lien is subordinate to the SI securing that advance
2. if advance is made after 45 days and with knowledge of lien creditor’s lien, lien creditor’s lien is superior to the SI
E. SI v. Possessory Liens Arising by Operation of Law
1. 9-333 provides rule for determining priority of some nonagricultural, statutory and common-law liens against SIs – does not
apply to all statutory and common-law liens, only to possessory liens on goods that secure payment for services and
materials used to repair such goods. Nor does it govern all priority disputes involving such possessory liens, applies merely
to those against SIs
2. 9-333(b): a possessory, statutory lien has priority over a SI as long as the lienholder does not lose possession of the goods
and as long as the statute creating the lien does not provide otherwise (even if SI is attached and perfected before
possessory lien arises)
F. Security Interest v. Security Interest
1. 9-322(a) contains three priority rules:
a) (3): if the conflicting SIs are unperfected, priority goes to first to attach
b) (2): priority goes to a perfected SI over an unperfected SI
c) (1): SI first perfected or as to which a FS is first filed will have priority (“first to file or perfect” rule)
(1) sets priority for SI that attach after the FS is filed, and implicitly also sets priority for SI in after-
acquired property
(2) continuous perfection is required to maintain priority
2. 9-338: if junior SP is looking to make a loan and does a search and sees filing in name of First Bank and has incorrect info
in their FS and junior SP relies on that information and transaction happens and First Bank comes and says hey no I have
a SI on that, FB will be subordinated because junior SP reasonably relied on that info
a) Also, a purchaser of collateral takes free of the security interest if the purchaser for value reasonably relied on the
incorrect FS
G. Priority of PMSIs
1. PMSI in non-certificated consumer goods auto perfected. For others, have to do something to perfect
2. A perfected PMSI goes to front of line regardless of when attachment or perfection occurred
3. 9-324 creates exception to first to file or perfect rule. 4 types of collateral subject to PMSIs that have priority over a
conflicting perfected SI: inventory, livestock, software, and other goods
a) Process:
(1) Determine collateral type
(2) Determine whether one or more of the SPs with a security interest in the collateral has a PMSI
(3) Determine whether SP with PMSI has done what is required under 9-324 to take priority over another
SI in the collateral that would otherwise have priority under the first to file or perfect rule
4. To obtain PMSI priority in goods other than inventory or livestock, 9-324(a) requires merely that a SP perfect its interest
either before debtor receives possession of the collateral or within 20 days thereafter
5. 9-324(b): To obtain PMSI priority in inventory, must perfect by the time the debtor receives possession of the goods and
send a notification to specified holders of conflicting SIs that it intends to acquire a PMSI in described inventory of the
debtor (and those people have to receive the notice). Notice for inventory is good for five years
6. 9-324(d): if collateral is livestock, same basic rule as inventory but notice is good for only six months
7. software: gets priority in software if acquired to operate the collateral in which the SP also has a security interest
H. Proceeds of PMSI
1. PMSI priority in proceeds of inventory is much more limited than PMSI priority in proceeds of other goods. PMSI priority in
non-inventory goods, livestock, and software extends to all proceeds of the original collateral. PMSI priority in inventory
extends only to cash proceeds and only if such proceeds are received by the debtor prior to delivery of the inventory to the
buyer
I. Priority in Transferred Collateral
1. If FB has SI in debtor A’s equipment and then A sells it to B, who has granted SB an SI in all their equipment, SB will be
junior to FB
J. Priority in Future Advances
1. Priority tied up with original collateral
K. Priority of SI in Deposit Accounts
1. Determined by method of control
a) Highest priority is for one who’s a customer on the account
b) Next is having control of the account by virtue of being the depository bank (e.g. if BofA is the lender and the
debtor has an account with them, they are next)
c) Next is control via control agreement (3 party K between bank, SP and debtor under which SP has agreed rights
to withdraw from the account)
d) Lowest priority is for someone who has no control over the account, just have an SI attached to it
L. Sale with retention of title
1. 2-204 says treat this as an A9 transaction (assume it has created a security interest)
2. 9-110(4): the seller
M. Secured Party v. Seller of Goods
1. Generally, sellers of goods do not fare well against SPs of their buyers once the buyers receive the goods

16
 a) E.g. seller owns a good and sells it to debtor, who grants a SI to SP. Upon sale and delivery, seller has no further
property interest in the good – at this point, there is and can be no priority contest between the seller and SP,
even if debtor purchased the good on credit
2. If, however, seller sold good on credit and in purchase agreement, Seller retained title to the good until full payment,
treated as a secured party. Then, go to normal priority rules but seller has a PMSI, so if they’ve done what they need to
perfect, they have priority
3. If good is not identified and seller has not shipped the good or marked it for shipment, then the debtor does not have
property rights in the good and SP’s interest will not have attached. Also, even if good is identified, if debtor breaches the
sales contract prior to deliver, seller has a right to withhold or stop delivery. Thus, even if SP’s SI attaches to the good, as
long as debtor does not obtain possession of the good, seller’s rights will have priority
4. If seller retained title to the good, prior to delivery, seller will have priority under 9-110(4). Even without this rule, seller
would likely have priority because they have a PMSI and seller’s continued possession would be sufficient to perfect
5. Once goods are delivered and debtor has possession, rest of A9 comes into play
N. Secured Party v. Lessor of Goods
1. Creditors of the lessee take subject to the lease contract (9-203 cmt 6) – lessee’s SP can obtain SI in debtor’s leasehold
interest in the goods, but not in the remainder interest retained by the lessor
O. Secured Party v. Buyer of Goods
1. Start with general rule that a SP with a SI wins priority dispute between SP and lien creditors. Only if some other
provision of the Code expressly provides otherwise or the SP authorizes the sale free and clear of the SI will the buyer takes
free of the SI
a) Consent can be established expressly or impliedly (e.g. if SP knows of debtor’s practice of disposing of collateral
and does not protest or put a stop to that practice)
2. If SP authorizes, no priority contest because SP no longer has an interest in the goods after the sale
3. Exception 1: unperfected SIs (317(b))
a) If SP’s SI is unperfected, a buyer of goods that gives value and receives delivery of the goods without knowledge of
the SI and before the SI is perfected will take the goods free of the SI
b) 9-316(a)(3): SP has 1 year to file in jurisdiction of buyer if different than debtor. However, if SP fails to refile
within that period, not only does its interest become unperfected, but its unperfected status is retroactive to the
time of the sale (9-316(b)), so buyer who had no knowledge of the SI at the time of sale and who will have, at the
time of sale, taken subject to the SI, will later take the property free of the SI if SP does not file a FS in the new
jxn within 1 year of sale
c) Similar result if SP has perfected SI by notation on certificate of title and goods thereafter become covered by a
clean certificate of title issued by another state. Although SI might remain perfected and have priority over a lien
creditor (9-316(d)), a buyer that gives value and takes delivery without knowledge of the SI and before the lien is
noted on the new certificate takes free of the SI if the SP does not get its lien noted on the new certificate within 4
months of when the goods become covered by the new certificate (9-316(e) & cmt 5 ex 8)
4. Exception 2: Buyer in Ordinary Course of Biz (BIOCOB) (320(a))
a) If buyer qualifies as biocob, takes free of SI created by seller even if buyer knows of SI and SP is perfected
b) BOICOB (definition in 1-201):
(1) Buy goods
(2) In good faith
(3) Without knowledge that the sale violates the rights of another person in the goods
(4) In the ordinary course
(5) From a person in the business of selling goods of the kind, and
(6) Takes possession of the goods or have a right to take possession of the goods from the seller under A2
c) Effectively limited to buyers of seller’s inventory
d) Exceptions to when BIOCOB does not take free and clear of SI
(1) If goods are farm products and seller is a farmer
(2) SIs granted in a piece of collateral granted by someone other than your seller
(a) Make sure seller to BIOCOB is the one that granted the SI
5. Exception 3: “Garage sale transactions” (consumer to consumer sales) (9-320(b))
a) Applies when the goods in question is a consumer good both in the hands of the seller and the buyer
b) Buy free and clear of any SI even if perfected
c) Exception to this: 324(b)(4): if there is a FS covering the goods, the exception does not apply (if perfection is by
filing and you’ve filed before the sale, SI stays attached)
(1) Comes up most commonly with cars. Noting lien on title is same under 9-311(b) as filing a FS. This
provision says you can’t wipe bank out by selling car to friend
6. Exception 4: Future Advances
a) Party A grants SI to bank and then Party A sells collateral to Party B. Nothing about that sale causes bank’s SI to
go away, and now Party A makes another draw on secured line of credit. Does that apply to collateral now owned
by B?
(1) Answer in 9-323: puts cap on how much/how far future advances can go. Future advances do not attach
to collateral after sale if advance is made after the SP learns of the sale or 45 days, whichever is sooner
P. Security Interests against rights of purchasers of collateral other than goods
1. Debtor includes seller of accounts, chattel paper, payment intangibles – so person doing the selling is included in debtor
2. Secured party includes the buyer of those same things
3. Default is to treat these as SP v. SP priority disputes. Buyer treated as SP, seller who is the debtor may have a buyer who
is also considered a SP
a) First to file or perfect rule governs the default
b) If one is perfected and one isn’t, perfected party wins
c) If both unperfected, then first to attach wins
Q. Purchasers of Accounts
1. No special rule/exception for purchasers of plain accounts – go with default

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 R. Purchasers of Chattel Paper
1. 9-330: two scenarios in which you deviate from default
a) 330(a) if chattel paper is proceeds of debtor’s inventory, then the buyer wins if the buyer (1) is a good faith
purchaser (2) who gave new value, (3) took possession or control of the chattel paper, and (4) the chattel paper
does not itself say that it has been assigned
b) 330(b): If chattel paper is something else (not proceeds), then buyer wins if (1) good faith purchaser (2) has given
new value (3) has possession/control of the paper, and (4) buyer has no knowledge that this transaction will
violate the rights of another
2. If neither one of two scenarios applies, go back to default in 9-322
S. Purchasers of Instruments
1. Promissory notes, checks, etc (things governed by A3)
2. Rules are basically the same as for chattel paper (9-331)
a) Good faith purchaser who gives value without knowledge that the purchase does not violate the rights of another,
buyer wins if takes possession
(1) Does not require new value, just value
3. Deferring to transfer concepts in A3
4. 9-309(4) – sale of note carries automatic perfection
T. Transfer of Money
1. 9-332: unless there’s fraud, the transfer of money strips all liens off it
U. General Intangibles
1. No special exceptions – go with 9-322 general rule
V. Problem 5-51
1. Account: FB has SI in the account because of automatic perfection because it is proceeds of the inventory. They are not
perfected because they haven’t filed a FS and weren’t perfected in the original collateral
2. SB: account: SB is attached to the account because per 9-109(a)(3). They are perfected under 9-309(2) because they have
possession of the documents of the account – automatic perfection on July 1. SB is SP with perfected SI. Between SB and
FB, SB wins as to the account
3. Promissory Note (instrument)
a) FB is attached because the note is proceeds of the inventory. They were not perfected and so they are not
perfected as to the note
b) SB purchases the note, so it creates the SI. They were perfected and there is automatic perfection because they
took possession
4. PMSI (chattel paper)
a) FB not perfected in the collateral, so not perfected in the chattel paper
b) SB: 330(a) because it is proceeds of debtor’s inventory – so they win regardless of whether FB was perfected
XI. Review
A. Test Info
1. 10 MC questions
2. short answer section – 4 questions building on one another
3. can bring notes, textbooks, no commercially prepared outlines
B. Class Notes
C. Four main elements to secured transactions
1. Attachment
a) Making a security interest enforceable against the debtor
b) Part 2 of article 9
2. Enforcement
a) Parts 4 and 6
b) Enforcing the SI against the debtor
3. Perfection
a) Parts 3 and 5
b) Making a SI enforceable against the rest of the world
4. Priority
a) Parts 3 and 4
b) Enforcing SI against the rest of the world
D. How should I analyze the issues?
1. By collateral
a) What is the collateral? Is this thing collateral?
b) Think about the possible classifications
c) Possible for a particular thing to meet definition of more than one classification
(1) E.g. account is a broad term, could include instruments, which could include notes
2. Who has attached a security interest?
a) When did it attach?
3. Who has perfected their security interest?
a) When did they perfect?
b) How did they perfect?
4. Who has priority between competing interests?
a) Analyze “head to head”
b) Is anyone entitled to “super-priority”?
c) Has a transfer eliminated a security interest/lien?
E. Attachment
1. 9-203(b)
2. value has been given;

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 3. debtor has rights in the collateral (A2 might come in here because under A2, buyer’s rights come and go at different points
in the transaction);
4. manifestation of intent to create security interest
a) authenticated security agreement most common
(1) description of collateral (9-108) – cannot be overly generic
b) Stock certificates (have to have possession to attach)
(1) If registered security, methodology for possession in 8-301
(2) If unregistered security, use 9-313
c) Non-goods collateral
(1) 9-104 through 9-107 – methods of control
5. 9-204
a) after-acquired property (any assets debtor acquires after SA has been signed)
(1) if intent is to attach to things in future, needs to be stated in SA
b) future advances
(1) Presumption that SI only secures the obligation associated with that transaction, is not presumed to
secure all future obligations unless SA indicates that
F. Enforcement
1. Don’t need to perfect to make enforceable against debtor
2. Most common method is repossession and disposition
a) Repossession: 9-609
(1) What is appropriate is judge-made question: “don’t breach the peace”
b) Disposition
(1) 9-610 through 9-619
(2) Different process for public sale v. private sale
(a) More strict if private sale because trying to maximize value extracted from collateral
3. Acceptance
a) 9-620 through 9-622
b) different procedures for accepting collateral in full satisfaction v. accepting in partial satisfaction
(1) rules more strict if accepting in partial satisfaction
4. for intangibles, process for enforcement is different
5. Collection and Enforcement
a) 9-607 and 9-608
6. Remedies for Noncompliance (by SP in enforcement activities)
a) 9-625
7. Guideline for commercial reasonableness
a) 9-627
G. Perfection
1. Policy is to provide inquiry notice to third parties of the security interest in the collateral
2. General rule is perfection by filing (9-310)
3. Automatic perfection upon attachment (9-309)
a) There is no such thing as automatic attachment (except proceeds)
b) In order for this to apply, there must be attachment by some other method
4. Perfection under other statutory scheme (9-311)
a) e.g. motor vehicles, aircraft, seaworthy vessels
5. Perfection in non-goods collateral (9-312)
a) Certain types of intangible collateral you can perfect by some other method
b) For most part, these are cumulative rules (i.e. can perfect by listing in it FS)
(1) BUT cannot perfect by filing for _______
6. Perfection by possession (9-313)
a) Generally, cumulative. But, in some instances it is the only method of perfection
7. Perfection by control (9-314)
a) Cross-references the standards in 9-104 through 9-107
8. Rights of secured party upon disposition (9-315)
a) Default rule is SI stays attached and perfected
(1) But, instances where it is eliminated or becomes unperfected
b) Security interest attaches to identifiable proceeds
9. Perfection after change in governing law (9-316)
a) Basically, get 4 months to do something
H. Perfection – Filing
1. Law governing perfection (9-301)
a) Generally, location of debtor governs
b) If perfection by possession, location of collateral
2. Location of debtor (9-307)
a) If unregistered organization, PPB
b) If registered organization, state of incorporation
c) If person, place or residence
3. Contents of financing statement (9-502)
a) Name of debtor (9-503)
(1) Cannot be “seriously misleading”
(2) If search yields name, not seriously misleading
b) Indication of the collateral (9-504)
(1) More relaxed standard – “all assets” and “all property” are acceptable in FS (but not SA)
c) Errors and Omissions (9-506)

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 (1) Substantial compliance with rules is acceptable but name of debtor cannot be seriously misleading
4. Effect of changes in debtor (9-507)
a) FS stays good for 4 months after change, need to do something within those 4 months
5. New debtor (9-508)
a) have 4 months to update FS
6. Authority to file FS (9-509)
a) Signing SA is authorization to file, but could be other authorization
7. Amendments (9-512)
8. Termination (9-513)
9. Duration of effectiveness (9-515)
a) 5 years
I. Priority
1. Priority between security interests (9-322)
a) Perfected v. perfected – first to file or perfect wins
b) Perfected v. unperfected – perfected wins
c) Unperfected v. unperfected – first to attach wins
2. Lien creditor v. secured party (9-317(a)(2))
a) Lien creditor wins unless SP: (1) perfects before lien creditor gets the lien, or (2) SP files FS and some act
manifesting intent to create security interest (don’t need to meet all 3 elements of attachment)
3. Super-priority of PMSI
a) Definition of PMSI in 9-103
b) PMSI v. Liens (9-217(e))
(1) If SP files a FS within 20 days of delivery, SP wins
(2) Before delivery, lien couldn’t have attached – only attach when debtor gets possession
c) PMSI v. Other SI (9-324)
(1) PMSI wins if it is perfected within 20 days of delivery
(2) If collateral is inventory, rules are different
(a) PMSI wins if it is perfected before delivery and it notifies other SP of its conflicting SI (notice
good for 5 years)
(3) If collateral is livestock, rules are same for inventory except notice is good for 6 months
4. Transactions that eliminate security interests
a) BIOCOB (1-201 for elements and 9-320(a))
(1) Requires party to buy (not purchase) the goods in good faith, without knowledge that the sale violates
the rights of others, in the ordinary course (no disposition sale, no fire sale, etc.), seller has to be a
merchant with respect to the goods (i.e. need to be inventory in debtor’s hands)
(2) If elements met, buyer takes goods free of all liens and security interests
b) “garage sale” exception: consumer goods in the hands of both the buyer and the seller
(1) e.g. I sell my tv to someone else
(2) acquisition has to have been for value
(3) buyer has to acquire without knowledge of the SI, and there can be no FS on file
5. Priority in collateral transferred by the debtor (9-325)
a) New debtor’s SP is always junior to the original SP
6. Priority in non-goods collateral (9-327 through 9-331)
a) Transferee of money takes free and clear of all security interests

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