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SECURED TRANSACTIONS OUTLINE I. The Creditor-Debtor Relationship a. 4 main questions for one creditor-one debtor situations: i.

(1) Formation 1. Do you have a security agreement? Is it enforceable? ii.(2) Terms 1. What are the controlling terms and what is the scope of the agreement? a. 1-302(a) allows for varying effect of UCC Provisions by agreement i. Exception? 1. May NOT disclaim by agreement obligations of good faith, diligence, reasonableness, and care; HOWEVER, the standards by which such obligations are measured may be determined by agreement so long as not manifestly unreasonable. 1-302(b) b. Even if a statute doesnt include the words unless otherwise agreed, doesnt mean it cant be changed by agreement 1-302(c) 2. Can law other than Art. 9 apply? a. Yes; 1-103 provides that unless displaced by other provisions, principles of law and equity, including the law merchant and the law relative to capacity to K, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, Bankruptcy, or other validating or invalidating cause shall supplement its provisions iii.(3) Performance 1. When does the duty to perform arise and how to perform? iv.(4) Remedies 1. If breach, what remedies are available? b. Analysis Framework i. Remedies? 1. Remedies of Unsecured Creditors under State Law (Against Debtors) a. Involuntary Liens i. Judicial Liens 1. Execution Lien 2. Garnishment Lien 3. Execution Lien by Recordation ii.Statutory Liens b. Judicial Foreclosure i. See Judicial Liens 2. Remedies of Debtor (Against Creditor) a. Civil Actions i. 1-103(b) ii.Conversion iii.Trespass iv.Larceny b. UCC Art. 9

i. 9-625: Damages ii.9-626: S/P Loses Deficiency for Failure to Comply w/ Collection, Enforcement, Disposition, or Acceptance iii.9-623: Redemption iv.1-304 + 9-???: Failure to Exercise Right/Perform/Enforce in Good Faith 3. Remedies of Creditor (Against Debtor) a. 9-609: S/Ps Right to Take Possession Post-Default i. 9-604: When Security Agreement Covers Land AND Personal Property b. 9-607: S/Ps Right to Collect and Enforce (for Account Debtors that have been assigned) i. 9-406: Account Debtors Notification and Discharge c. 9-610: Dispose of Collateral i. 9-615: Apply Proceeds to Obligation ii.9-611: Notification 1. 9-612: Timeliness 2. 9-613: Contents (Non-Consumer Transaction) 3. 9-614: Contents (Consumer Transaction d. 9-620: Acceptance of Collateral in Full/Partial Satisfaction i. 9-621: Notification ii.9-622: Effect of Acceptance e. 1-309: Acceleration At Will i. Acceleration After Default (Contractual Remedy) f. Demand (if Kd for) ii.Formation? 1. Debtors Attacks Against Creditor a. Theres no S/I i. 9-203 1. No value given, or 2. No debtors rights in collateral, or 3. No authenticated security agreement, or 4. Description in security agreement is insufficient a. 9-108 i. 9-204: After-Acquired Property ii.Creditors rebuttal: Composite document rule; post-authentication description sufficient; limited property rights in collateral of debtor is sufficient for 9-203(b)(2); past consideration is sufficient for value given b. S/I is Not Perfected i. File a financing Statement? 1. 9-310: When its Required a. Exceptions? i. 9-308 ii.9-309 iii.9-311 ii.Financing Statement is Ineffective 1. Debtors Name? 9-502; 9-503

a. Errors/Omissions? 9-506 2. Filing Rejected? 9-520; 516(b) 3. Not authorized? 9-509 4. Insufficient Indication of Collateral as Required under 9-502(b)(3)? a. 9-504 and 9-108 iii.Perfection Lapsed 1. 9-515: Lapsed Financing Statement 2. 9-308(c): Continuous Perfection iv.Change in Circumstances Renders Financing Statement Ineffective 1. Change in Name a. 9-507(c) 2. Change in Use a. Creditors Rebuttal: 9-507 [Financing Statement Still Effective Despite Change in Info] 3. Change of Identity a. 9-315 2. Creditors Defenses a. Filing Wrongfully Rejected; Still Effective 9-520(c); 516(d) b. Exceptions to Filing Requirement to Perfect? i. Possession 1. 9-313(a): Taking Possession of Certain Collateral Perfects ii.Control 1. 9-314 iii.Perfection at Attachment 1. 9-309 iii.Terms? 1. What collateral is covered? a. 9-108 i. 9-102 b. 9-203(f) and 9-315(a)(2): Proceeds i. 9-336 c. 9-332: Transferee of Money/Deposit Account Funds Takes Free of S/I iv.Performance? 1. What constitutes default? c. Creditors Remedies Under State Law i. Remedies of Unsecured Creditors Under State Law 1. Whos an unsecured creditor? elp otherwise you may be liable for conversion [tort] or larceny [crime]! a. Creditor? i. 1-201(b)(13): a general creditor, a secured creditor, a lien creditor, and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity, and an executor or administrator of an insolvent debtors or assignors estate b. Unsecured? i. When a creditor doesnt have a consensual security interest or statutorily-granted S/I

2. State Law Remedies a. Involuntary liens i. Judicial liens 1. Execution lien a. Generally, unsecured creditor gets judgment against debtor then gets a writ of execution from court delivers writ to sheriff with specific instructions to levy on specific property sheriff goes to property and levies upon property, either taking actual possession or gives notice or symbolic possession i. Sheriff touching property and announcing levy was sufficient to constitute seizure (minority view) [majority view: need physical seizure] ii.If the property is LAND, then sheriff posts notice of seizure or notice of sale to levy b. sheriff then liquidates seized property and pays the creditor i. If theres $ left, it goes back to debtor ii.If theres not enough $ for judgment creditor, creditor must go through the whole process again c. Use post-judgment discovery to find out what property to levy upon d. Must watch out for trespassing and conversion when levying, if levying on improper property 2. Garnishment lien a. Wages b. Bank accounts 3. Execution lien by recordation a. Limited to lien on real property b. Generally, file copy of judgment with County recording office and this will suffice for ALL debtors property w/in the county i. The problem would be that debtor has property in other counties, so you have to go do the same thing there too; time and cost prohibitive ii.Statutory liens 1. Lien by force of law 2. E.g., Landlords lien on tenants property, employees lien on employers personal property for wages, tax lien on debtors property to secure repayment of back taxes b. Voluntary Consensual liens i. UCC Art. 9 security interests 1. For secured creditors ii.Mortgage 1. For secured creditors 3. State law remedies for unsecured creditors are unattractive, yea; what else can you do? a. Cross-Collateralization i. Lend more money to the debtor and get a S/I on present and past loans ii.Security and Foreclosure 1. Security a. 9-109 sets out the scope of Art. 9 applicability; largely only applies to transactions of personal propertyNOT REAL property

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i. a transaction, regardless of its form, that creates a security interest in personal property or fixtures by contracts. 9-109(a)(1) 1. Security Interest? a. 1-201(b)(35): an interest in personal property or fixtures which secures payment or performance of an obligation 2. Security Agreement? a. 9-102(a)(74): an agreement that creates or provides for a S/I HOWEVER, if a security interest covers both land and personal property, a secured party can move against the land just fine. 9-604(a)(1) i. Note! Comment 2 to 9-604 provides that some states have anti-deficiency laws where a creditor may lose their rights against personal property collateral if they err in moving against real property, and some states have the oneform-of-action rule which provides that a creditor who judicially moves against a real property mortgage and does NOT proceed in the SAME ACTION to enforce a security interest in personal property MAY lose the right to proceed against personal property POLICY behind Art. 9? i. (1) reduces drafting costs (b/c default rules fill in gaps), but default rules only benefit the majority preference ii.(2) Helps dispute resolution 1. Knowing UCC helps to enter into commercial transactions clearly iii.(3) Reduces information asymmetry 1. Seeks to force parties w/ superior info to disclose it Role of Common Law? i. 1-103(b): UNLESS displaced by UCC, principles of law and equity, including law merchant and law relative to capacity to K, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement its provisions Lease intended as Security Interests? i. 1-203 outlines when a lease transaction creates a security interest 1. Its a fact-intensive inquiry 1-203(a) 2. Lease = S/I if: a. Consideration is an obligation for term of lease 1-203(b), and b. It is NOT subject to termination by lessee 1-203(b), and c. Either: i. (1) the original lease term the remaining economic life of the goods 1-203(b)(1), or ii.(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 1-203(b)(2), or iii.(3) the lessee has an option to renew the lease for the remaining economic life of the goods for no addtl consideration or for NOMINAL addtl consideration upon compliance w/ the lease agreement, 1-203(b)(3) or iv.(4) the lessee has an option to become the owner of the goods for no addtl consideration or for NOMINAL addtl consideration upon compliance w/ the lease agreement 1-203(b)(4) 3. When is consideration nominal? a. 1-203(d): consideration = nominal if:

i. Consideration < the lessees reasonably predictable cost of performing under the lease agreement if the option is NOT exercised 4. What is reasonably predictable? a. 1-203(e): must be determined with reference to the facts and circumstances at the time of transaction 5. When is consideration NOT nominal? a. If, when option to renew lease is granted to lessee the rent = FMR (Fair Market Rent) for use of goods for term of renewal determined at the time the option is to be performed 1-203(d)(1), OR b. When option to become owner is granted, price = FMV of goods at time of option performance 1203(d)(2) 2. Foreclosure a. Has 2 discrete effects: i. (1) transfers ownership of collateral to purchaser from debtor ii.(2) extinguishes debtors right to redeem b. Art. 9 does NOT apply to real property c. Mortgage? i. 9-102(a)(55): a consensual interest in real property, including fixtures, which secures payment or performance of an obligation d. Exemption laws do not apply to consensual loans/ S/I e. Judicial Foreclosure i. Creditor files claim against debtor, w/ terms of loan and nature of default in complaint, seeks foreclosure of redemption ii.Complaint is served on debtor and any subordinate lien holders iii.Creditor then gets final judgment of foreclosure 1. Court sets date for foreclosure sale a. Sheriff sells collateral, collects proceeds of sale, and then applies them to payment of secured debt iv.Debtor remains in possession until sold 1. If debtor wont give it up? a. Creditor gets writ of assistance directing sheriff to put buyer in possession v.Some states have statutory bars on holding immediate foreclosure sales, so it can be a LENGTHY process f. Can creditor avoid judicial foreclosure? i. Yea, get a deed in lieu of foreclosure! 1. Debtor transfers deed to creditor that essentially gives the house to the creditor a. Extinguishes ALL DEBT! g. Power of Sale Foreclosure? i. 25 states allow mortgage lender and borrower to OPT IN for a quicker method of foreclosure against real property 1. Power of sale/deed of trust a. Trustee sells the collateral held in trust in the event of default (its a form of a security interest); b. Foreclosure still happens but not the lawsuit part h. UCC Foreclosure by Sale? i. See Art. 9 Sale and Deficiency section iii.Repossession of Collateral

1. Why repossess? a. Preserve property/collateral b. Capture value from economic use of collateral c. Expose collateral to a market and/or future buyers d. Get leverage over debtor 2. DEFAULT is the GATEWAY TO REMEDIES 3. 9-609 a. 9-609 provides that only AFTER DEFAULT can a secured party: i. Take possession of collateral 9-609(a)(1), and ii.W/o removing it, render EQUIPMENT unusable and dispose of collateral on debtors premises under 9-610; 9609(a)(2) 1. Equipment? a. 9-102(a)(33): goods OTHER THAN inventory, farm products, or consumer goods b. In doing either of the above things, the secured party must either proceed WITH judicial process, OR, WITHOUT judicial process, but ensuring it does NOT breach the peace 9-609(b)(1), (2) i. Judicial process? 1. Get a writ of replevin ii.Breach of the peace? 1. UCC doesnt define what this means or what constitutes a breach of the peace; its left up to state courts; Comment 3 to 9-609 a. Trespass might be breach (Salisbury) i. Depends on the potential for immediate violence and the nature of the premises b. Cannot use law enforcement to assist you (outside the scope of judicial process) In re Walker i. Comment 3, 9-609 c. Even debtors polite request to leave the collateral alone is sufficient resistance to constitute breach of the peace Marcus v. McCollum iii.Can you waive breach of the peace? 1. No you cannot 9-602(6) a. Why? i. Comment 2, 9-602: law has traditionally been wary of agreements that limit a debtors postdefault rights and let S/P run wild iv.Can you, by agreement, set what constitutes a breach of the peace? 1. No you cannot 9-603(b) a. Though, 9-603(a) is the exception to 9-602 i. I.e., any rule in 9-602 that cannot be waived CAN BE determined by pre-agreed upon standards in 9-603(a) [doesnt apply to 9-609(b)(2) though] so long as not manifestly unreasonable c. If agreed upon, after default, a S/P can require the debtor to assemble the collateral make it available to S/P at a place of S/Ps choice that is reasonably convenient for BOTH PARTIES 9-609(c) 4. What is the debtors remedy against S/P if they dont comply w/ Art. 9? a. 9-625(b) states that you can recover damages in the amount of ANY LOSS CAUSED by a failure to comply w/ Art. 9 i. What loss?

1. Loss caused by failure to comply a. E.g., loss resulting from the debtors inability to obtain, or increased costs of, alternative financing ii.Who can recover? 1. A person that, at the time of the failure, was a debtor, obligor, or held a security interest in or other lien on the collateral 69-609(c)(1) b. 9-625(b) supports recovery of actual damages for committing a 9-609(b) breach of the peace. Comment 3 to 9-625 5. Repossession of Accounts Receivable a. 9-607 i. After default, S/P can notify account debtor obligated on collateral to make payment or otherwise perform to or for benefit of S/P 9-607(a)(1) 1. Account debtor? a. 9-102(a)(3): a person obligated on an account, chattel paper, or general intangible; does NOT include persons obligated to pay a negotiable instrument, even if the instrument constitutes part of chattel paper 2. When might notification be ineffective? a. 9-406(b) ii.AND, after default, a S/P can enforce the obligations of an account debtor and exercise the rights of the debtor (person who assigned A/R to S/P) w/ respect to the account debtors obligation 9-607(a)(3) 1. Rights Acquired by Assignee (S/P)? a. 9-404(a): Assignees rights are subject to all the terms of the agreement between the account debtor and the assignor and any other defense/claim of the account debtor against the assignor which accrues BEFORE account debtor receives notification of the assignment authenticated by the assignor/assignee i. Limitation? A claim by account debtor against an assignor may be asserted against an assignee ONLY to reduce the amount owed 9-404(b) b. Once notified, in the case where the S/P has been assigned A/R from S/Ps debtor, the account debtor may discharge its obligation by paying the assignor (original debtor) until account debtor receives 9-607 notification from S/P, authenticated by S/P or original debtor, that the amount due has been assigned to S/P and payment is to be made to S/P (i.e., assignee) 9406(a) i. Then, discharge = when account debtor pays the assignee ONLY ii.Authenticated? 1. 9-102(a)(7): signed, or w/ present intent to adopt or accept a record, to attach to or logically associate w/ the record an electronic sound, symbol, or process c. Account debtor can request proof of assignment from the assignee. Must be reasonable proof. If assignee doesnt comply, account debtor can just pay the assignor and discharge its obligation, despite receiving notification. 9-406(c) iv.Sale and Deficiency 1. Sale: After default, S/P may sell, lease, license, or otherwise dispose of any or all of the collateral in its present condition or following any commercially reasonable preparation or processing. 9-610(a) a. The disposition must be commercially reasonable in its method, manner, time, place, and other terms. If it is, then S/P may dispose of collateral by PUBLIC or PRIVATE proceedings at any time and place and on any terms. 9-610(b) i. When is a disposition commercially reasonable? 1. If its made in the usual manner on any recognized market 9-627(b)(1)

a. Recognized Market? i. Applies only to markets in which there are standardized price quotations for property that is essentially fungible, such as stock exchanges Comment 4, 9-627 2. At the price current in any recognized market at the time of disposition 9-627(b)(2), OR 3. Otherwise conforms to reasonable commercial practices among dealers of the type of property that is the collateral 9-627(b)(3) 4. Just b/c S/P could have gotten more for the collateral, alone, is not sufficient to be commercially unreasonable. 9-627(a) a. Though, a low price will give a court pause to really scrutinize the disposition. Comment 2, 9-627 b. What about notification? i. 9-611 provides that S/P disposing of collateral under 9-610 must send a reasonable authenticated notification of disposition 9-611(b) 1. Send? a. 9-102(a)(75)(A): to deposit in the mail i. Comment 5, 9-516: a person required to send a notification to the secured party may satisfy the requirement by sending a notification to a financing statement address even if the address is or becomes incorrect. 2. Notice? a. 1-202: when someone gives someone notice, it means they take the steps reasonably calculated to give them notice 3. Reasonable? a. Comment 2, 9-611: As to the manner in which it is sent, its timeliness, and its content 4. Timeliness? a. Its a question of fact 9-612(a) i. BUT, if it is NOT a consumer goods transaction, then a notification of disposition sent AFTER default and 10+days BEFORE the earliest time of disposition set forth in the notification = reasonable 5. Content? a. Non-consumer transaction i. 9-613(1) lays out what should be in it b. Consumer transaction i. 9-614(1) (includes everything in 9-613(1) + description of any liability for a deficiency of the notification recipient, and some phone #s 9-614(1)(B)-(D) ii.To Whom? 1. To debtor, any secondary obligor, and, if the collateral is NOT consumer goods, anyone from whom S/P received, before notification date, an authenticated notification of a claim of an interest in the collateral, any other properly perfected S/P or lienholder that, 10 days before notification date, held S/I or lien in collateral 9-611(c)(1)-(3)(A), (B) a. Notification Date? i. The earlier of the date on which a S/P sends to debtor and secondary obligor an authenticated notification of disposition, or the debtor and any secondary obligor waive the right to notification 9-611(a)(1), (2)

iii.Exceptions? 1. 9-611(d) gives 3 situations where notification is NOT required: a. (1) if collateral is perishable b. (2) if collateral threatens to decline speedily in value c. (3) if collateral is of a type customarily sold on a recognized market iv.Can it be waived? 1. NO 9-602(7) a. Exception? i. 9-624(a): debtor/secondary obligor may waive right to notification ONLY by a post-default authenticated agreement c. What if S/P disposes of collateral in a NOT commercially reasonable way? i. APPLIES ONLY TO NON-CONSUMER TRANSACTIONS: First, the debtor must object to put S/Ps compliance w/ collection, enforcement, disposition, or acceptance at issue; otherwise, S/P gets away with it. 9626(a)(1); Comment 2, 9-626 (applies ONLY to issues of collection, enforcement, disposition, or acceptance) 1. So, if debtor objects, then S/P has burden of proving it was all copasetic 9-626(a)(2) a. If S/P fails, then debtors deficiency liability is limited to the amount by which [secured obligation + expenses + attys fees] exceeds the greater of the collection/enforcement/disposition/acceptance proceeds, OR the amount of proceeds that would have been realized had S/P complied 9-626(a)(3) (A), (B) i. For (3)(B), amount of proceeds = secured obligation + expenses + attys fees UNLESS S/P proves that the amount is less than that sum 9-626(a)(4) (so, basically, if S/P failed to comply, and (3)(B) applied, then 9-626(a)(4) would effectively eliminate any deficiency S/P would have been entitled to) ii.WHAT ABOUT CONSUMER TRANSACTIONS? 1. 9-626(b) states that UCC leaves those situations to the courts, and courts may continue to apply traditional approaches. a. Comment 4 to 9-626 provides that courts have generally adopted one of 3 approaches: i. Absolute Bar Rule => a noncomplying S/P may NOT recover a deficiency ii.Offset Rule => debtor can offset against a claim to a deficiency all damages recoverable resulting from a partys noncompliance iii.Plurality Rule => noncomplying S/P is barred from recovering a deficiency UNLESS it overcomes a rebuttable presumption that compliance would have yielded an amount sufficient to satisfy the secured debt 2. Deficiency: a. After S/P disposes of the collateral under 9-610, then itll pay the proceeds out in the following order: i. Reasonable expenses of taking, holding, preparing, processing, and disposing of the collateral to the extent provided by the AGREEMENT and not prohibited by law, and S/Ps reasonable attys fees and legal expenses 9-615(a)(1) ii.Satisfy the obligations secured by the S/I under which the disposition is made 9-615(a)(2) iii.Satisfy any subordinate S/I on the collateral if: 1. S/P receives from the holder of a subordinate S/I an AUTHENTICATED demand for proceeds before proceeds distribution is completed 9-615(a)(3)(A), AND 2. If theres a consignor, the subordinate S/I must be senior to the consignor 9-615(a)(3)(B)

b. S/P can request the subordinate S/I holder show reasonable proof of its interest w/in a reasonable time. Unless the holder does so, S/P doesnt have to give it any proceeds. 9-615(b) c. If, after all those payments, S/P still has some money left, then it gives it to the debtor/obligor as surplus 9-615(d)(1) i. HOWEVER, if theres not enough money, the OBLIGOR is liable for any deficiency 9-615(d)(2) 1. Obligor? a. 9-102(a)(59): a person that, w/ respect to an obligation secured by a security interest on the collateral, owes payment or other performance of the obligation, has provided property other than the collateral to secure payment or other performance of the obligation, or is otherwise accountable in whole or in part for payment or other performance of the obligation. 3. Redemption a. 9-623 i. Who may redeem? 1. A debtor, secondary obligor, or any other S/P or lienholder ii.How? 1. Pay all obligations secured by the collateral 9-623(b)(1), and 2. Pay the reasonable expenses and attys fees from 9-615(a)(1); 9-623(b)(2) a. Must be provided for in the agreement and not prohibited by law; see 9-615(a)(1) iii.When? 1. Before a S/P has collected collateral under 9-607; 9-623(c)(1) 2. Before a S/P has disposed of collateral or entered into a K for its disposition under 9-610; 9-623(c)(2), OR 3. Before a S/P has accepted collateral in full or partial satisfaction of the obligation it secures under 9-622 4. Acceptance a. 9-620 i. S/P may accept collateral in FULL or PARTIAL satisfaction of the obligation it secures ONLY IF: 1. The debtor consents to the acceptance 9-620(a)(1) a. Consents to Acceptance? i. If partial satisfaction, debtor must consent in post-default authenticated agreement 9-620(c) (1) ii.If full satisfaction, debtor must consent in post-default authenticated agreement 9-620(c)(2), or S/P sends debtor post-default unconditional proposal (actually, only one permissible conditionthat debtor maintain/preserve collateral) which proposes to accept collateral for full satisfaction of obligation, and S/P doesnt receive authenticated notification of objection by debtor w/in 20 days after proposal is sent 9-620(c)(2)(A)-(C) II. Creation of Security Interests a. Formalities for Attachment i. A S/I attaches to collateral when it becomes enforceable against the debtor w/ respect to the collateral 9-203(a) 1. S/I is enforceable only if: tually IS a contemporaneous requirement a. authentication and collateral description. for Value has been given 9-203(b)(1) i. Value? 1. 1-204 defines value as existing:

a. In return for a binding commitment to extend credit or for extension of immediately available credit, whether or not drawn upon and whether or not a charge-back is provided for in the event of difficulties in collection, b. As security for, or in total or partial satisfaction of, a preexisting claim i. Past consideration c. By accepting delivery under a preexisting K for purchase, or d. In return for any consideration sufficient to support a simple K b. Debtor has rights in the collateral or the power to transfer rights in the collateral to a S/P 9-203(b)(2), and c. Either: i. Debtor has authenticated a security agreement that provides a description of the collateral [contemporaneous requirementagreement have description of collateral when authenticated] 9-203(b)(3)(A), or ii.The collateral is not a certificated security and is in the S/Ps possession under 9-313 pursuant to debtors security agreement 9-203(b)(3)(B), or iii.The collateral IS a certificated security in registered form and the security certificate has been delivered to the S/P 9-203(b)(3)(C), or iv.The collateral is deposit accounts, electronic chattel paper, investment property, letter of credit rights, or electronic documents, and the S/P has control under 9-104, 105, 106, 107 pursuant to debtors security agreement 9-203(b) (3)(D) ii.What if these requirements are scattered throughout multiple documents? 1. If the jurisdiction allows it, use the composite document rule: a. 2-step test: i. (1) Does the writing in the documents objectively evidence an intent to create a security agreement? 1. No parol evidence allowed here; objective prong ii.(2) Did the parties actually intend to create a S/I? 1. Subjective prong; parol evidence b. The documents must express some internal connection (majority view) i. Documents need to expressly refer to each other (minority view) 2. Note! This issue NEVER comes up unless the debtor challenges the S/I iii.What if the description in the security agreement was included post-authentication? 1. Courts vary; some will allow it, others will find it unenforceable if there was no description at the time debtor signed b. What Collateral and Obligations are Covered? i. When is a Description of Collateral sufficient? 1. If it reasonably identifies what is described, whether specific or not. 9-108(a) a. Ex: i. Specific listing 9-108(b)(1) ii.Category 9-108(b)(2) iii.A type of collateral defined in the UCC (e.g., equipment, inventory, accounts, instruments, consumer goods, general intangibles) 9-108(b)(3) iv.Quantity 9-108(b)(4) v.Computational or Allocational Formula or procedure 9-108(b)(5), or vi.Any other method, if identity of the collateral is objectively determinable 9-108(b)(6) ii.What is insufficient?

1. A supergeneric description of collateral, like all the debtors assets or all the debtors personal property or similar words of import do NOT reasonably identify the collateral 9-108(c) a. Why? i. Cautionary purposes 1. Paternalism; debtor may not intend to give ii.Channeling purposes 1. If theres a dispute about S/I scope, broad language doesn't help 2. Note! For consumer transactions or commercial tort claim, a description ONLY BY TYPE OF COLLATERAL DEFINED IN UCC is INSUFFICIENT 9-108(e) iii.After-Acquired Property? 1. Security Agreement may create or provide for a S/I in after-acquired collateral 9-204(a) a. But it wont work for consumer goods or commercial tort claim 9-204(b)(1), (2) 2. Security agreement may provide that collateral secures future advances, whether or not the advances or value are given pursuant to commitment 9-204(c) 3. What description is sufficient to include after-acquired property? a. Of course, explicit language would be nice b. But, Stoumbos tells us that the majority view is that inventory implicitly requires after-acquired inventory due to high turnover rate; HOWEVER, in regards to equipment, the same logic doesnt apply due to the lack of a high turnover rate for equipment i. So, all inventory = present + after-acquired property ii.All equipment = ONLY present equipment, unless EXPRESSLY stated otherwise c. Proceeds, Products, and Other Value-Tracing Concepts i. 9-203(f) provides that an attached S/I in collateral gives the S/P rights to proceeds provided under 9-315 1. the S/I attaches to any identifiable proceeds of collateral 9-315(a)(2) a. Proceeds? i. 9-102(a)(64): whatever is acquired upon sale, lease, license, exchange, or other disposition of collateral; whatever is collected on, or distributed on account of, collateral; rights arising out of collateral; to the extent of the value of collateral, claims arising out of the loss, nonconformity, or interference w/ the use of, defects or infringement of rights in, or damage to, the collateral, or; to the extent of the value of the collateral and to the extent payable to the debtor or the S/P, insurance payable by reason of the loss, or nonconformity of, defects or infringement of rights in, or damage to, the collateral [VERY BROAD DEFINITION] b. Proceeds of Proceeds? i. Well, 9-315(a)(2) says proceeds of collateral 1. BUT, 9-102(a)(12)(A) says the term collateral includes proceeds to which a S/I attaches a. So, if collateral is sold for proceeds, by virtue of 9-203(f) and 9-315(a)(2) S/I attaches, and those proceeds can be deemed collateral; thus, if theyre sold, whatever comes from that sale will be deemed proceeds of the collateral (proceeds of proceeds), and so on c. What if proceeds are commingled? i. Commingled proceeds that are goods are identifiable to extent provided by 9-336; 9-315(b)(1) 1. What are commingled goods? a. 9-336(a): goods that are physically united w/ other goods in such a manner that their identity is lost in a product or mass

III.

i. S/I doesnt attach to this; BUT, it may attach to a product/mass that results when goods become commingled goods 9-336(b) b. If collateral becomes commingled goods, S/I attaches to the product/mass 9-336(c) 2. Perfection? a. If S/I in collateral is perfected BEFORE collateral = commingled goods, S/I attaches to the product/mass and is perfected 9-336(d) ii.If commingled proceeds are non-goods then theyre identifiable to the extent the S/P identifies the proceeds by a method of tracing permitted under non-UCC law 9-315(b)(2) 1. Method of tracing? a. S/P has burden b. Lowest Intermediate Balance Rule i. Presumption that the if the account balance of the account containing the commingled proceeds is equal to or greater than the proceeds amounts, then theyre okay; its assumed that a debtor who spends from a commingled account spends first from his own funds ii.HOWEVER, if the balance dips below the proceeds amount, then that abates the proceeds accordingly Default: The Gateway to Remedies a. Default, Acceleration, And Cure Under State Law i. After default, S/P has the rights provided in 9-601 and those provided by the parties agreement (except if waived under 9-602) 9601(a) 1. What rights? a. S/P may reduce a claim to judgment, foreclose, or otherwise enforce the claim, S/I by any available judicial procedure 9601(a)(1), and b. If the collateral is documents, S/P may proceed either as to the documents or as to the goods the documents cover 9-601(a) (2) 2. What is default? a. Not statutorily defined; Art. 9 leaves to the parties agreement to determine what constitutes default Comment 3 to 9-601 ii.Acceleration 1. Common law rule: after default, creditor can only sue for the amount that should have been paidnot for FUTURE payments 2. Acceleration clauses: opts OUT of common law rule; after default, the creditor may at its option declare all of the payments immediately due and payable a. 1-309 provides that if the parties agreement chose to, they can agree that one party can accelerate payment/performance or require addtl collateral at will or when the party deems itself unsecure etc. BUT they must do so ONLY in the GOOD FAITH belief that the prospect of payment or performance is IMPAIRED i. Debtor has burden of showing lack of good faith b. Note! Acceleration effectively cuts off debtors right to CURE default (see Old Republic) 3. Notice of Acceleration? a. If the agreement doesnt require notice of acceleration, some courts will still require it i. 9th Cir.: Creditor MUST take affirmative action to put the debtor on notice that it intends to exercise its option to accelerate (Crystal Properties) 4. Waiver of Acceleration Clause? a. Some courts will find that S/P actually waived or waived by estoppel their right to accelerate.

IV.

i. Actual Waiver 1. Party must intentionally abandon or relinquish a known right ii.Waiver by Estoppel 1. If party reasonably relied on S/Ps conduct to his detriment that waiver was intentional a. E.g., if by past dealings, commercial relationship history, etc. (JR Hale) 5. Obligation of Good Faith? a. Even if 1-309 doesnt apply b/c acceleration wasnt exercised at will, 1-304 may apply generally i. 1-304 provides that every K or duty w/I UCC imposes an obligation of good faith in its PERFORMANCE and ENFORCEMENT 1. Performance and Enforcement include the exercise of rights created by the UCC Comment 2 to 1-304 2. Good Faith? a. 1-201(b)(20): honesty in fact and the observance of reasonable commercial standards of fair dealing 3. BUT 1-304 doesnt constitute its own independent cause of action; it only means that a failure to perform or enforce in good faith, a specific duty or obligation under K, = breach of that K or makes a remedial right/power unavailable Comment 1 to 1-304 iii.Demand 1. If parties agreed to before hand, in the agreement, S/P can demand payment at any time (and this isnt subject to 1-309) a. Good faith obligation has very little applicability The Creditor-3rd Party Relationship a. Perfection i. The Personal Property Filing System 1. A financing statement MUST be filed to perfect ALL S/I 9-310(a) a. Exceptions? i. See 9-308/309/310(b)/311 2. But States may designate their own ways to perfect. 9-109(c)(2) a. so make sure that youre using the state-required way or the Art. 9 way 3. Always check the UCC filing system b/c.. a. A buyer takes free of a S/I if the buyer gives value and receives delivery of the collateral w/o knowledge of the S/I and BEFORE its perfected 9-317(b) i. But, if it IS perfected, youre SOL and take subject to the S/I 9-315(a)(1) 4. Who can file a financing statement? a. 9-509(a)(1): whomever debtor authorizes to do so i. When a debtor enters into a security agreement, that is authorization for the filing of a financing statement and an amendment covering the collateral in the agreement and property that becomes collateral under 9-315(a)(2), whether or not the agreement provides for proceeds 9-509(b)(1), (2) 5. What has to be in the financing statement? a. 9-502: to be sufficient, the financing statement must: i. Provide the debtors name 9-502(a)(1) ii.Provide the S/P (or S/Ps rep) name 9-502(a)(2) iii.Indicate the collateral covered by the financing statement 9-502(a)(3) 6. How soon does the filing office have to process?

a. 9-519 states that the filing office has to do certain things NO LATER THAN 2 business days after the office receives the record in question 9-519(h) ii.Art. 9 Financing Statements: The Debtors Name 1. 9-502(a)(1) requires the financing statement provide the debtors name a. What does that mean? i. If debtor is a registered organization or collateral is held in trust by registered org.: 1. The name must be the registered orgs name on the public organic record most recently filed w/ or issued or enacted by the registered orgs jurisdiction of organization (basically the name on the charter) 9-503(a)(1) a. Registered organization? i. 9-102(a)(71): an organization formed or organized solely under the law of a single State or the US by filing of a public organic record the State or US b. Public organic record? i. 9-102(a)(68): a record consisting of the record initially filed w/ or issued by a State or the US to form or organize an org. and any record filed w/ or issued by the State or the US which amends or restates the initial record ii.If debtor is an individual: 1. The name must be the individual name of the debtor 9-503(a)(4)(A) a. The surname and first personal name 9-503(a)(4)(B) 2. What does this mean? a. Kinderknecht: debtors legal name 3. A debtors TRADE NAME = insufficient 9-503(c) b. Who is a debtor? i. A person having an interest, other than a S/I or other lien, in the collateral, whether or not the person is an obligor 1. Person? a. 1-201(b)(27): an individual, corporation, business trust, estate, trust, partnership, LLC, Association, joint venture, govt., govt. subdivision, agency, or instrumentality, public corp., or any other legal or commercial entity 2. What if theres an error in the name? a. 9-506(a): errors or omissions dont render a financing statement ineffective so long as theyre just MINOR; HOWEVER, if the errors or omissions make the financing statement seriously misleading there may be problems i. What is seriously misleading? 1. Failing to provide sufficiently the debtors name under 9-503 = seriously misleading 9-506(b) a. SAFE HARBOR! i. If a search of the records of the filing office under debtors CORRECT NAME, using offices search logic would disclose a financing statement that otherwise fails to sufficiently provide the debtors name, then that failure does NOT make the financing statement ineffective 9506(c) b. Search logic? i. 9-526: IACA standard search logic may apply ii.It doesnt distinguish upper/lower case, punctuation marks, accents, ignores words like corporation, corp., incorporated, LLC or a Georgia corporation indicating existence or

nature of organization, treats an initial as the same as a first or middle name beginning w/ that letter, and treats no middle name the same as ALL middle names, and ignores spaces iii.Art. 9 Financing Statements: Other Information 1. When can a filing office reject a financing statement? a. 9-520(a): filing office SHALL refuse to accept a record for a 9-516(b) reason and MAY refuse to accept a record for filing ONLY for a 9-516(b) reason 2. Notification of refusal? a. Office MUST notify the person who sent the record the fact of and reason for refusal and the date/time the record WOULD HAVE BEEN filed had it been accepted; has to be done no more than 2 business days after receipt of record 9-520(b) 3. APPLIES ONLY TO OMISSIONS: Filing does NOT occur when an office refuses to accept b/c: a. The record is not sent in an office-recognized format 9-516(b)(1) b. The filing fee wasnt paid 9-516(b)(2) c. The office wasnt able to index it b/c: i. It didnt provide name of the debtor 9-516(b)(3)(A) ii.For an amendment: 1. It didnt identify the initial financing statement 9-516(b)(3)(B)(i), OR 2. It identifies an initial financing statement, but that statements effectiveness lapsed 9-516(b)(3)(B)(ii) iii.It doesnt provide debtors surname 9-516(b)(3)(C) iv.It doesnt provide a sufficient description of the real property to which it relates 9-516(b)(3)(D) d. The initial financing statement/amendment that adds a S/P of record doesnt provide the name/mailing address for the S/P of record 9-516(b)(4) e. An initial financing statement/amendment: i. Doesnt provide debtors mailing address 9-516(b)(5)(A) ii.OR indicate whether the debtors name is the name of an individual or organization 9-516(b)(5)(B) iii.Omits the organizations ID #, the type of organization, or the organizations jurisdiction 9-516(b)(5)(C)(i)-(iii) 4. ERRORS? a. Use 9-506(a) seriously misleading analysis 5. What if a financing statement was rejected for a reason not under 9-516(b) [wrongful rejection]? a. Its still effective EXCEPT against a purchaser of the collateral which gives value in reasonable reliance upon the absence of the record from the files 9-516(d) i. Purchaser? 1. 1-201(b)(30): a person that takes by purchase a. Purchase? i. 1-201(b)(29): taking by sale, lease, discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift, or any other voluntary transaction creating an interest in property 6. What if financing statement was rejected for a 9-516(b) reason, but still complies w/ 9-502(a)? a. Its EFFECTIVE, but watch out for 9-338 subordination for any incorrect info under 9-516(b)(5) 7. Indication of Collateral? a. 9-502(a)(3) requires that the financing statement indicate the collateral covered i. What is a sufficient indication? 1. 9-504(1) states that a sufficient indication is what would be a sufficient description under 9-108 or

2. An indication that the financing statement covers ALL assets or ALL personal property 9-504(2) iv.Exceptions to the Art. 9 Filing Requirement 1. When S/P Has Collateral in Its Possession a. 9-310(b)(6) states that filing is not required to perfect when S/P is in possession of collateral i. What can you perfect by possessing? 1. Tangible negotiable documents, goods, instruments, money, or tangible chattel paper 9-313(a) a. Goods? i. 9-102(a)(44) b. Instruments? i. 9-102(a)(47): a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease, and is of a type that in ordinary course of business is transferred by delivery w/ any necessary indorsement or assignment ii.DOES NOT INCLUDE: investment property, letters of credit, writings that evidence a right to payment arising out of the use of a credit or charge card or info contained on or for use w/ the card c. Tangible Chattel Paper? i. 9-102(a)(79): chattel paper evidenced by a record or records consisting of info that is inscribed on a tangible medium d. Chattel Paper? i. 9-102(a)(11): a record or records that evidence both a monetary obligation and a security interest in specific goods, a S/I in specific goods and license of software used in the goods, a lease of specific goods, or a lease of a specific goods and license of software used in the goods 2. When is it perfected? a. No earlier than the time the S/P takes possession and continues only while the S/P retains possession 9-313(d) 2. When S/P Has Control Over Collateral a. 9-310(d)(8) states that control will perfect deposit accounts, electronic chattel paper, electronic documents, investment property, or letter of credit rights i. 9-314(a): all the above can be perfected by control 1. How to get control? a. 9-104: Control of Deposit Account i. If S/P is the bank with the deposit account = control 9-104(a)(1) ii.S/P, debtor, and bank have agreed in an authenticated record that bank will dispose of deposit account funds in a certain fashion 9-104(a)(2) iii.S/P becomes banks customer w/ respect to the deposit account 9-104(a)(3) iv.S/P that satisfies (a) still has control even if debtor retains right to direct disposition of deposit account funds b. 9-105: Control of Electronic Chattel Paper c. 9-106: Control of Investment Property d. 9-107: Control of Letter of Credit Right

2. Deposit Account? a. 9-102(a)(29): a demand, time, savings, passbook, or similar account maintained w/ a bank; does NOT include investment property or accounts evidenced by an instrument 3. Perfect Upon Attachment a. 9-309 i. PMSI in consumer goods perfects upon attachment 9-109(1) b. Maintaining Perfection i. Maintaining Perfection Through Lapse and Bankruptcy 1. A filed financing statement is effective for FIVE YEARS after filing date 9-515(a) 2. Effectiveness of filed financing statement lapses on expiration of the period of its effectiveness UNLESS before lapse a continuation statement is filed; once lapsed, S/I is unperfected 9-515(c) a. Continuation Statement? i. 9-102(a)(27): a financing statement amendment that identifies the initial financing statement by file # and indicates ain perfection despite debtor entering bankruptcy and the automatic stay. it's a continuation statement for the identified financing statement b. When to file the continuation statement? i. ONLY within SIX MONTHS BEFORE expiration of the 5 year period 9-515(d) c. Who can file continuation statement? i. ONLY someone authorized to do so under 9-509; 9-510(a) d. How much longer does continuation statement filing on time get you? i. Once continuation statement is properly filed, on the date the initial financing statement otherwise would have lapsed, you get FIVE MORE YEARS of effectiveness 9-515(e) e. If you DO NOT file a continuation statement w/in those SIX MONTHS, but at any time before or after that period, it is INEFFECTIVE 9-510(c) 3. 9-308(c) provides that a S/I is perfected continuously if its originally perfected by one method and later perfected by another method, WITHOUT AN INTERMEDIATE PERIOD OF UNPERFECTION a. Comment 4 to 9-308: without an intervening gap ii.Maintaining Perfection Through Changes of Name, Identity, and Use 1. Change of Use a. UCC classes of goods (e.g., inventory, equipment, etc.) are mutually exclusive; the principal use to which the property is put is determinative Comment 4a to 9-102 b. 9-507(b) provides that a financing statement is not rendered ineffective if, after its filed, the info provided becomes seriously misleading under 9-506 i. E.g., collateral that was inventory now being used as equipment doesnt render it ineffective c. What if collateral is transferred to someone else? i. We know by 9-315(a)(1) that a third party takes subject to the S/I despite the disposition, and under 9-507(a) the financing statement remains effective despite the disposition. 1. So, even if the collateral changes use (inventoryconsumer good) 9-507(b) keeps the financing statement effective and NOT seriously misleading 2. Change of Identity a. Collateral Proceeds i. 9-315(c) says that if the S/I in the original collateral was perfected, then its perfected in the proceeds of that collateral too

1. Limitation? a. A perfected S/I in proceeds will become UNPERFECTED on the 21st day AFTER the S/I attaches to the proceeds UNLESS: i. A filed financing statement covers the original collateral, the proceeds are collateral in which a S/I may be perfected by filing in the office in which the financing statement has been filed, and the proceeds are NOT acquired w/ CASH PROCEEDS 9-315(d)(1)(A)-(C); OR ii.The proceeds are identifiable cash proceeds 9-315(d)(2), OR iii.The S/I in the proceeds is perfected other than in 9-315(c) when the S/I attaches to the proceeds or w/in 20 days after 9-315(d)(3) 3. Change of Name a. 9-507(c) ONLY APPLIES WHEN THE NAME BECOMES SERIOUSLY MISLEADING UNDER 9-506 i. If the name is seriously misleading: 1. The financing statement is still effective to perfect a S/I in collateral acquired by the debtor BEFORE, or WITHIN 4 months AFTER, the filed financing statement becomes seriously misleading 9-507(c)(1), and 2. It is INEFFECTIVE to perfect a S/I in collateral acquired 4+ months after the filed financing statement becomes seriously misleading a. UNLESS an amendment to the financing statement which renders it not seriously misleading is filed w/in the 4 months after it did become so seriously misleading 9-507(c)(2) c. Competitions for Collateral i. Lien Creditors vs. Secured Creditors: The Basics 1. Lien Creditor? a. 9-102(a)(52): a creditor that has acquired a lien on the property involved by attachment, levy, or the like; an assignee for benefit of creditors from the time of assignment; a trustee in bankruptcy from the date of the filing of the petition; or a receiver in equity from the time of appointment 2. S/I is SUBORDINATE to the rights of a person entitled to priority under 9-322 and a person that becomes a lien creditor before the earlier of the time: a. The S/I is perfected 9-317(a)(2)(A), OR b. One of the conditions specified in 9-203(b)(3) is met and a financing statement cover the collateral is filed 9-317(a)(2) (B) 3. A S/I can perfect through either: a. Attachment then perfection, or b. Both at the same time 9-308(a) 4. Even w/ a filed financing statement, w/o an attached S/I, theres no priority contest. Comment 4 to 9-317 5. Purchase-Money Security Interest? a. 9-103 i. Defined b. 9-317(e): if a person files a financing statement w/ respect to PMSI BEFORE or WITHIN 20 days AFTER debtor receives delivery of collateral, the S/I has priority over rights of a BUYER, LESSEE, or LIEN CREDITOR which arise between the time the S/I attaches and the filing 6. What if junior creditor has collateral? a. Comment 5 to 9-609: junior party must always relinquish to a senior party i. Senior S/P has superior rights to the collateral than a judgment creditor Grocers Supply

ii.Lien Creditors vs. Secured Creditors: Future Advances 1. Analysis a. (1) Do all competing parties have enforceable claims on the property? i. If lien creditor vs. secured creditor, go to 9-317(a)(2) (or sometimes 9-317(e)) 1. If S/P loses under 9-317, then thats itthey lose. Future advances are subordinate to lien creditor b. (2) If S/P has priority, what of future advances? i. 9-204(c): A security agreement may provide that collateral secures future advances or other value, whether or not the advances or value are given pursuant to commitment 1. Pursuant to commitment? a. 9-102(a)(69): means that w/ respect to an advance made or other value given by a S/P, pursuant to the S/Ps obligation, whether or not a subsequent event of default or other event not w/in the S/Ps control has relieved or may relieve the S/P from its obligation ii.By 9-323(b) a priority S/P ALWAYS has priority for future advances made within 45 days of when lien creditor becomes a lien creditorNEVER subject to subordination 1. Then, 2 SAFE HARBORS! a. S/P will have priority on advances made more than 45 days after the lien creditor becomes so if theyre advanced WITHOUT knowledge of the lien 9-323(b)(1) OR pursuant to a commitment ENTERED INTO without knowledge of the lien 9-323(b)(2) iii.Are interest and atty fees future advances? 1. NOtheyre nonadvances (Uni Import) a. Nonadvances? i. Interest, attorneys fees, collection expenses accruing on the debt owing to the S/P b. But what priority do they get then? i. Must impute to the nonadvance the priority entitled to the advance c. This usually means pro rataso whatever portion of the nonadvance is related to the initial advance has priority and whatever relates to future subordinated advance would be subordinated iii.Secured Creditor vs. Secured Creditor 1. Perfected S/P vs. Perfected S/P a. Whoever filed or perfected first blems where no one really winsits just a constant i. Priority dates from the EARLIER of the time a filing cover the collateral is first made OR the S/I is first perfected loop of priority 9-322(a)(1) 2. Perfected S/P vs. Unperfected S/P a. Perfected S/P always has priority over a conflicting unperfected S/P 9-322(a)(2) 3. Analysis a. (1) Does everyone have an enforceable interest? b. (2) If yes, who wins under 9-322(a)? c. (3) Are there any 9-322(f) exceptions? 4. 9-322(f) Exceptions a. 9-322(f)(1) states that 9-322(a)-(e) are subject to other provisions of this part i. This part? 1. 9-3?? ii.Possible Applicable Sections

1. 9-325 Double Debtor Problem a. S/I created by debtor is subordinate to a S/I in the same collateral created by ANOTHER person if: i. The debtor acquired the collateral subject to the S/I created by the other person 9-325(a)(1), and ii.The S/I created by the other person was perfected when the debtor acquired the collateral 9325(a)(2), and iii.There is no period thereafter when the S/I is unperfected 9-325(a)(3) b. Limitation? i. 9-325(a) subordinates a S/I only if the S/I would have otherwise had priority solely under 9-322(a) or 9-324 2. 9-327 S/I in Deposit Accounts a. S/I held by a S/P having control of the deposit account under 9-104 has priority over a conflicting S/I held by a S/P that does NOT have control i. How can a S/P protect itself under this? ii.Comment 4 to 9-327: (1) it can take control of the deposit account by becoming the banks customer, or (2) it can obtain a subordination agreement from the bank (via 9-339) 3. 9-324 PMSI a. 9-324(a) [PMSI of non-inventory goods/proceeds] [nontemporal] i. Perfected PMSI has priority over a conflicting S/I in same goods, and same goes for identifiable proceeds except for 9-327, IF the PMSI is perfected when debtor receives possession of collateral or w/in 20 days after b. 9-324(b) [PMSI of inventory and certain cash proceeds] Must satisfy 4 requirements: i. PMSI must be perfected when debtor receives possession of inventory 9-324(b)(1) ii.PMSI S/P must send authenticated notification to conflicting S/I holder 9-324(b)(2) (this probably entails a UCC search) iii.Holder of Conflicting S/I must receive the notification w/in 5 YEARS BEFORE debtor receives possession of collateral 9-324(b)(3), and iv.That notification must state PMSI S/Ps intention to acquire a PMSI in inventory of debtor and DESCRIBE the inventory 9-324(b)(4); c. 9-324(g): ef distinction between non-seller PMSI and seller-PMSI, see Comment 13 to 9-324 Competing PMSI S/P i. As between a seller PMSI and a non-seller PMSI, seller PMSI wins 9-324(g)(1) ii.When its non-seller PMSI vs. non-seller PMSI, 9-322(a) applies d. Problems? i. Many non-PMSI lenders to a debtor are NOT going to be happy when they get notification of an impending PMSI; this may even constitute default so theyll move against the inventory, and even if the PMSI S/P has priority it wont matterdebtor hasnt defaulted against them so they cant exercise their Art. 9 remedies