11: Secured Transactions and Suretyship
- Page ID
- 11153
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\(\newcommand{\avec}{\mathbf a}\) \(\newcommand{\bvec}{\mathbf b}\) \(\newcommand{\cvec}{\mathbf c}\) \(\newcommand{\dvec}{\mathbf d}\) \(\newcommand{\dtil}{\widetilde{\mathbf d}}\) \(\newcommand{\evec}{\mathbf e}\) \(\newcommand{\fvec}{\mathbf f}\) \(\newcommand{\nvec}{\mathbf n}\) \(\newcommand{\pvec}{\mathbf p}\) \(\newcommand{\qvec}{\mathbf q}\) \(\newcommand{\svec}{\mathbf s}\) \(\newcommand{\tvec}{\mathbf t}\) \(\newcommand{\uvec}{\mathbf u}\) \(\newcommand{\vvec}{\mathbf v}\) \(\newcommand{\wvec}{\mathbf w}\) \(\newcommand{\xvec}{\mathbf x}\) \(\newcommand{\yvec}{\mathbf y}\) \(\newcommand{\zvec}{\mathbf z}\) \(\newcommand{\rvec}{\mathbf r}\) \(\newcommand{\mvec}{\mathbf m}\) \(\newcommand{\zerovec}{\mathbf 0}\) \(\newcommand{\onevec}{\mathbf 1}\) \(\newcommand{\real}{\mathbb R}\) \(\newcommand{\twovec}[2]{\left[\begin{array}{r}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\ctwovec}[2]{\left[\begin{array}{c}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\threevec}[3]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\cthreevec}[3]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\fourvec}[4]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\cfourvec}[4]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\fivevec}[5]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\cfivevec}[5]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\mattwo}[4]{\left[\begin{array}{rr}#1 \amp #2 \\ #3 \amp #4 \\ \end{array}\right]}\) \(\newcommand{\laspan}[1]{\text{Span}\{#1\}}\) \(\newcommand{\bcal}{\cal B}\) \(\newcommand{\ccal}{\cal C}\) \(\newcommand{\scal}{\cal S}\) \(\newcommand{\wcal}{\cal W}\) \(\newcommand{\ecal}{\cal E}\) \(\newcommand{\coords}[2]{\left\{#1\right\}_{#2}}\) \(\newcommand{\gray}[1]{\color{gray}{#1}}\) \(\newcommand{\lgray}[1]{\color{lightgray}{#1}}\) \(\newcommand{\rank}{\operatorname{rank}}\) \(\newcommand{\row}{\text{Row}}\) \(\newcommand{\col}{\text{Col}}\) \(\renewcommand{\row}{\text{Row}}\) \(\newcommand{\nul}{\text{Nul}}\) \(\newcommand{\var}{\text{Var}}\) \(\newcommand{\corr}{\text{corr}}\) \(\newcommand{\len}[1]{\left|#1\right|}\) \(\newcommand{\bbar}{\overline{\bvec}}\) \(\newcommand{\bhat}{\widehat{\bvec}}\) \(\newcommand{\bperp}{\bvec^\perp}\) \(\newcommand{\xhat}{\widehat{\xvec}}\) \(\newcommand{\vhat}{\widehat{\vvec}}\) \(\newcommand{\uhat}{\widehat{\uvec}}\) \(\newcommand{\what}{\widehat{\wvec}}\) \(\newcommand{\Sighat}{\widehat{\Sigma}}\) \(\newcommand{\lt}{<}\) \(\newcommand{\gt}{>}\) \(\newcommand{\amp}{&}\) \(\definecolor{fillinmathshade}{gray}{0.9}\)After reading this chapter, you should understand the following:
- The basic concepts of secured transactions
- The property subject to the security interest
- Creation and perfection of the security interest
- Priorities for claims on the security interest
- Rights of creditors on default
- The basic concepts of suretyship
- The relationship between surety and principal
- Rights among cosureties
- 11.1: Introduction to Secured Transactions
- This page outlines the legal framework of secured transactions, detailing methods for obtaining security through agreements and operations of law. It covers key concepts like security interests, collateral types, and the complexities of leases. The text explains the attachment and perfection of security interests per the UCC, emphasizing requirements for creditors to secure their interests and protect them from other claims.
- 11.2: Priorities
- This page outlines priority among secured parties under the UCC, emphasizing that the first creditor to perfect their interest generally takes precedence. It addresses scenarios where no perfection occurs, highlighting exceptions for purchase-money security interests (PMSIs) and specific buyer protections.
- 11.3: Rights of Creditor on Default and Disposition after Repossession
- This page outlines creditor rights in the event of a debtor's default, highlighting options to sue or repossess collateral under UCC Section 9-609. Creditors generally favor repossession, which can occur peacefully. Post-repossession, they may sell the collateral or accept it as partial/full debt satisfaction, adhering to strict guidelines, particularly for consumer debts. Key principles include acting in good faith and informing the debtor of any surplus or deficiency.
- 11.4: Suretyship
- This page explains suretyship as a security arrangement where a surety guarantees a debtor's performance or payment. It highlights the roles and rights of sureties, including obligations to the creditor and defenses available to both principals and sureties. Cosureties share risks, while principals have defenses like fraud and bankruptcy. Sureties can assert defenses related to contract modifications, impacting reimbursement and liability.
- 11.5: Cases
- This page summarizes three legal cases. The first involves a bankruptcy trustee's successful petition to sell a diamond ring due to a perfected security interest under UCC, despite the debtor not filing a financing statement. The second case addresses a wrongful vehicle repossession by Ford, where the court ruled no breach of peace occurred without physical barriers breached, while also reversing certain rulings on unconscionability claims.
- 11.6: Summary and Exercises
- This page outlines Article 9 of the UCC, which regulates security interests in both tangible and intangible personal property used as collateral for payment obligations. It requires an agreement to establish a security interest, which must attach and be perfected via methods like financing statements. Priority is determined by the "first in time, first in right" principle, and creditors can reclaim collateral upon default.
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