Ch. 21: Secured Transactions – No. 9
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
Perfected vs. Unperfected Security Interests: A perfected
security interest in collateral has priority over an unperfected
security interest in the same collateral.
Ch. 21: Secured Transactions – No. 10
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
BUYERS VS. SECURED CREDITORS
(1) the security interest is perfected, and
(2) the buyer knows of its existence.
Buyer Not in the Ordinary Course: A person who buys
goods other than in the ordinary course of the seller’s
who held the goods for personal, family, or household use,
takes free of any unfiled security interest – including any
automatically perfected PMSI.
Ch. 21: Secured Transactions – No. 11
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
DEBTORS’ AND CREDITORS’ RIGHTS
Information Requests: A party who is considering taking a
security interest is entitled by the UCC to obtain a certificate
from the relevant filing office identifying all perfected
financing statements on file for that debtor.
Assignment: A secured party may, at its discretion, assign
part or all of a security interest to another party.
to and signed by both the debtor and the secured party.
Accounting: A debtor may request that the secured creditor
confirm the debt remaining or the collateral covering the
remainder of the debt.
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
DEFAULT AND REPOSSESSION
Default: A debtor’s failure to pay a debt when due or to
debt.
A secured creditor wishing to exercise its right to self–
help repossession must be able to do so without a breach
of the peace.
Ch. 21: Secured Transactions – No. 13
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
STRICT FORECLOSURE
creditors that the secured party intends to retain the
collateral, subject to the debtor’s (or other interested
party’s) right to object in writing and demand that the
secured party sell the collateral.
purchase price or the loan principal before defaulting.
Ch. 21: Secured Transactions – No. 14
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
FORECLOSURE BY SALE
If a secured creditor elects to sell its collateral following the
debtor’s default, the creditor must, in order:
(1) pay all reasonable expenses stemming from retaking,
holding, or preparing for sale (which may include
If the debt remains unsatisfied after the collateral has been
sold, the secured party may obtain a deficiency judgment
against the debtor.
Ch. 21: Secured Transactions – No. 15
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
REDEMPTION
At any time before the secured party disposes of the
collateral, enters into a contract for its disposition, or
discharges the debtor’s obligation by retaining the collateral
after notice and consent, the debtor or any other secured
creditor of the debtor may redeem the collateral by
(1) tendering performance of all obligations secured by the
collateral, and
(2) paying any expenses reasonably incurred by the secured
party in retaking and maintaining the collateral.
Ch. 21: Secured Transactions – No. 10
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
BUYERS VS. SECURED CREDITORS
(1) the security interest is perfected, and
(2) the buyer knows of its existence.
Buyer Not in the Ordinary Course: A person who buys
goods other than in the ordinary course of the seller’s
who held the goods for personal, family, or household use,
takes free of any unfiled security interest – including any
automatically perfected PMSI.
Ch. 21: Secured Transactions – No. 11
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
DEBTORS’ AND CREDITORS’ RIGHTS
Information Requests: A party who is considering taking a
security interest is entitled by the UCC to obtain a certificate
from the relevant filing office identifying all perfected
financing statements on file for that debtor.
Assignment: A secured party may, at its discretion, assign
part or all of a security interest to another party.
to and signed by both the debtor and the secured party.
Accounting: A debtor may request that the secured creditor
confirm the debt remaining or the collateral covering the
remainder of the debt.
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
DEFAULT AND REPOSSESSION
Default: A debtor’s failure to pay a debt when due or to
debt.
A secured creditor wishing to exercise its right to self–
help repossession must be able to do so without a breach
of the peace.
Ch. 21: Secured Transactions – No. 13
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
STRICT FORECLOSURE
creditors that the secured party intends to retain the
collateral, subject to the debtor’s (or other interested
party’s) right to object in writing and demand that the
secured party sell the collateral.
purchase price or the loan principal before defaulting.
Ch. 21: Secured Transactions – No. 14
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
FORECLOSURE BY SALE
If a secured creditor elects to sell its collateral following the
debtor’s default, the creditor must, in order:
(1) pay all reasonable expenses stemming from retaking,
holding, or preparing for sale (which may include
If the debt remains unsatisfied after the collateral has been
sold, the secured party may obtain a deficiency judgment
against the debtor.
Ch. 21: Secured Transactions – No. 15
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
REDEMPTION
At any time before the secured party disposes of the
collateral, enters into a contract for its disposition, or
discharges the debtor’s obligation by retaining the collateral
after notice and consent, the debtor or any other secured
creditor of the debtor may redeem the collateral by
(1) tendering performance of all obligations secured by the
collateral, and
(2) paying any expenses reasonably incurred by the secured
party in retaking and maintaining the collateral.