Problem 9'9 Security Agreement Drafting

1
Problem 9.9 Security Agreement Drafting

• You are the secured party I am the debtor.
• Assume the collateral I display in class is owned
  by me.
• Assume that I will sign the document on receipt
  (provided you are not trying to get more than I
  said I would give).
• The doc will secure 1,000 you will loan me after
  I sign.
• Omit all provisions not necessary to achieve
  validity.
• Do not make up any facts.
• Submit your document in pdf (preferred), Word
  Perfect or Microsoft Word by email to
  lopucki_at_law.ucla.edu
• The subject line must read 250 Security
  Agreement. If it does you will immediate get an
  email acknowledgment.
• This assignment is due by noon on Monday, Feb 9.
• Grading is pass/fail based on validity.

2
Secured TransactionsAssignment 10

• Proceeds, Products, and Value-Tracing State Law

3
The Big Picture

• Chapters 1and 2. Creditors Remedies
• Chapter 3. Creation of Security Interests
• Assignment 8 Formalities for Attachment
• Assignment 9 What Collateral and Obligations
  are Covered?
• Assignment 10 Proceeds (State Law)
• Assignment 11 Proceeds (Bankruptcy)

4
Basic Concepts

• 9-102(a)(64) Proceeds . . . means the
  following property
• whatever is acquired upon the 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 . . . of, . . . or . . .
  damage to, the collateral.
• to the extent of the value of collateral . . .
  insurance payable by reason of the loss . . . of
  . . . or damage to, the collateral.

Debtor
Proceeds
5
Basic Concepts

• 9-102(a)(64) Proceeds . . . means the
  following property
• whatever is acquired upon the 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 . . . of, . . . or . . .
  damage to, the collateral.
• to the extent of the value of collateral . . .
  insurance payable by reason of the loss . . . of
  . . . or damage to, the collateral.

Collateral
Buyer
Debtor
Proceeds
6
Basic Concepts

• 9-102(a)(64) Proceeds . . . means the
  following property
• whatever is acquired upon the 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 . . . of, . . . or . . .
  damage to, the collateral.
• to the extent of the value of collateral . . .
  insurance payable by reason of the loss . . . of
  . . . or damage to, the collateral.

Secured
Security interest in accounts
Account debtors
Debtor
Account
7
Basic Concepts

• 9-102(a)(64) Proceeds . . . means the
  following property
• whatever is acquired upon the 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 . . . of, . . . or . . .
  damage to, the collateral.
• to the extent of the value of collateral . . .
  insurance payable by reason of the loss . . . of
  . . . or damage to, the collateral.

Secured
Security interest in accounts
Account debtors
Debtor

Payment
8
Basic Concepts

• 9-102(a)(64) Proceeds . . . means the
  following property
• whatever is acquired upon the 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 . . . of, . . . or . . .
  damage to, the collateral.
• to the extent of the value of collateral . . .
  insurance payable by reason of the loss . . . of
  . . . or damage to, the collateral.

Collateral
Debtor
Proceeds
9
Basic Concepts

• 9-102(a)(64) Proceeds . . . means the
  following property
• whatever is acquired upon the 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 . . . of, . . . or damage
  to, the collateral.
• to the extent of the value of collateral . . .
  insurance payable by reason of the loss . . . of
  . . . or damage to, the collateral.

Collateral
Tortfeasor
Debtor
Proceeds
10
Basic Concepts

• 9-102(a)(64) Proceeds . . . means the
  following property
• whatever is acquired upon the 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 . . . of, . . . or damage
  to, the collateral.

Collateral 100 Claim arising from loss of
collateral 300 Recovery 100 Proceeds ?
Collateral
Tortfeasor
Debtor
Proceeds
11
Basic Concepts

• 9-102(a)(64) Proceeds . . . means the
  following property
• whatever is acquired upon the 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 . . . of, . . . or damage
  to, the collateral.

Collateral 100 Claim arising from loss of
collateral 300 Recovery 100 Proceeds 100, not
33
Collateral
Tortfeasor
Debtor
Proceeds
12
Basic Concepts

• 9-102(a)(64) Proceeds . . . means the
  following property
• whatever is acquired upon the 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 . . . of, . . . or damage
  to, the collateral.
• to the extent of the value of collateral . . .
  insurance payable by reason of the loss . . . of,
  . . . or damage to, the collateral.

Collateral
Insurance Company
Debtor
Proceeds
13
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral

14
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral

ZBank
Security Interest (Cow)
Debtor
15
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral

ZBank
Security Interest (Cow)
Cow
Debtor
Cow buyer
2K
16
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral

ZBank
Security Interest (Cow)
Cow
Debtor
Cow buyer
2K
17
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral

ZBank
Security Interest (Cow)
Cow
Debtor
Cow buyer
2K
18
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral

ZBank
Security Interest (Cow)
Cow
Beans
Debtor
Bean seller
Cow buyer
2K
19
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral

ZBank
Security Interest (Cow)
Cow
Beans
Debtor
Bean seller
Cow buyer
2K
20
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral

9-332(a). A transferee of money takes the
money free of a security interest . . . .
ZBank
Security Interest (Cow)
Cow
Beans
Debtor
Bean seller
Cow buyer
2K
But bean seller takes the 2K free of the SI.
21
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral

ZBank
Security Interest (Cow)
Cow
Beans
Debtor
Bean seller
Cow buyer
Cow buyer 2
2K
2.5K
22
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral

ZBank
Security Interest (Cow)
Cow
Beans
Debtor
Bean seller
Cow buyer
Cow buyer 2
2K
2.5K
23
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral

9-332(a). A transferee of money takes the
money free of a security interest . . . .
ZBank
Security Interest (Cow)
Cow
Beans
Debtor
Bean seller
Cow buyer
Cow buyer 2
2K
2.5K
24
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral
• (b) Proceeds that are commingled with other
  property are identifiable proceeds
• (1) if the proceeds are goods, to the extent
  provided by 9- 336
• 9-336. commingled goods means good that are
  physically united with other goods in such a
  manner that their identity is lost in a product
  or mass.
• Examples Grain in a grain silo. Steel in an
  automobile.

25
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral
• (b) Proceeds that are commingled with other
  property are identifiable proceeds
• (1) if the proceeds are goods, to the extent
  provided by 9- 336
• 9-336. commingled goods means good that are
  physically united with other goods in such a
  manner that their identity is lost in a product
  or mass.
• Examples Grain in a grain silo. Steel in an
  automobile.

26
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral
• (b) Proceeds that are commingled with other
  property are identifiable proceeds
• (1) if the proceeds are goods, to the extent
  provided by 9- 336
• 9-336. commingled goods means good that are
  physically united with other goods in such a
  manner that their identity is lost in a product
  or mass.
• Examples Grain in a grain silo. Steel in an
  automobile.

27
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral
• (b) Proceeds that are commingled with other
  property are identifiable proceeds
• (1) if the proceeds are goods, to the extent
  provided by 9- 336
• 9-336. commingled goods means good that are
  physically united with other goods in such a
  manner that their identity is lost in a product
  or mass.
• Examples Grain in a grain silo. Steel in an
  automobile.

28
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral
• (b) Proceeds that are commingled with other
  property are identifiable proceeds
• (1) if the proceeds are goods, to the extent
  provided by 9- 336 and
• (2) if the proceeds are not goods, to the
  extent that the secured party identifies the
  proceeds by a method of tracing . . . permitted
  under law other than this article
• Example Money commingled in a bank account

29
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral
• (b) Proceeds that are commingled with other
  property are identifiable proceeds
• (1) if the proceeds are goods, to the extent
  provided by 9- 336 and
• (2) if the proceeds are not goods, to the
  extent that the secured party identifies the
  proceeds by a method of tracing . . . permitted
  under law other than this article
• Example Money commingled in a bank account

30
Basic Concepts

• 9-315(a)(1) a security interest . . . continues
  in collateral not- withstanding . . . disposition
  thereof unless the secured party authorized the
  disposition free of the security interest . . .
  .
• (2) a security interest attaches to any
  identifiable proceeds of collateral
• (b) Proceeds that are commingled with other
  property are identifiable proceeds
• (1) if the proceeds are goods, to the extent
  provided by 9- 336 and
• (2) if the proceeds are not goods, to the
  extent that the secured party identifies the
  proceeds by a method of tracing . . . permitted
  under law other than this article
• Example Money commingled in a bank account

31
Basic Concepts

• The lowest intermediate balance rule

32
Basic Concepts

• The lowest intermediate balance rule
• The proceeds of the disposition of collateral
  remain in a commingled account as long as the
  account balance is equal to or exceeds the
  amounts of the proceeds.

33
Basic Concepts

• The lowest intermediate balance rule
• The proceeds of the disposition of collateral
  remain in a commingled account as long as the
  account balance is equal to or exceeds the
  amounts of the proceeds.

Non- proceeds
Proceeds
34
Basic Concepts

• The lowest intermediate balance rule
• The proceeds of the disposition of collateral
  remain in a commingled account as long as the
  account balance is equal to or exceeds the
  amounts of the proceeds.

Non- proceeds
Non-proceeds
Proceeds
Proceeds
35
Basic Concepts

• The lowest intermediate balance rule
• The proceeds of the disposition of collateral
  remain in a commingled account as long as the
  account balance is equal to or exceeds the
  amounts of the proceeds.

Non- proceeds
Non-proceeds
Non-proceeds
Proceeds
Proceeds
Proceeds
36
Basic Concepts

• Segregated bank account. A bank account
  containing only the proceeds of a security
  interest.

37
Basic Concepts

• Segregated bank account. A bank account
  containing only the proceeds of a security
  interest.
• Assume Bank takes a security interest in all
  inventory

38
Basic Concepts

• Segregated bank account. A bank account
  containing only the proceeds of a security
  interest.
• Assume Bank takes a security interest in all
  inventory

Proceeds of this loan
Segregated account
39
Basic Concepts

• Segregated bank account. A bank account
  containing only the proceeds of a security
  interest.
• Assume Bank takes a security interest in all
  inventory

Proceeds of this loan
Segregated account

Proceeds
Inventory
40
Basic Concepts

• Segregated bank account. A bank account
  containing only the proceeds of a security
  interest.
• Assume Bank takes a security interest in all
  inventory

Proceeds of this loan Sale of inventory
Segregated account

Proceeds
Inventory

41
Basic Concepts

• Segregated bank account. A bank account
  containing only the proceeds of a security
  interest.
• Assume Bank takes a security interest in all
  inventory

Proceeds of this loan Sale of inventory
Segregated account
Proceeds
Inventory

Owner investment Proceeds of other loans Tax
refunds Sale of non collateral

General account

All other expenditures


42
Problem 10.1, page 179

• Firstbanks description of collateral
  equipment, inventory, and accounts
• Does this description cover the proceeds of this
  collateral? Yes.
• Does this description cover the products of this
  collateral? Only if the products are proceeds or
  after acquired inventory or accounts.
• The offspring of this collateral?
• Substitutions for this collateral?
• Additions to this collateral?
• Replacements for this collateral?

43
Problem 10.1, page 179

• Firstbanks description of collateral
  equipment, inventory, and accounts
• Does this description cover the proceeds of this
  collateral?

44
Problem 10.1, page 179

• Firstbanks description of collateral
  equipment, inventory, and accounts
• Does this description cover the proceeds of this
  collateral? Yes. 9-203(f).

45
Problem 10.1, page 179

• Firstbanks description of collateral
  equipment, inventory, and accounts
• Does this description cover the proceeds of this
  collateral? Yes. 9-203(f).
• Does this description cover the products,
  offspring, substitutions, additions or
  replacements of this collateral?

46
Problem 10.1, page 179

• Firstbanks description of collateral
  equipment, inventory, and accounts
• Does this description cover the proceeds of this
  collateral? Yes. 9-203(f).
• Does this description cover the products,
  offspring, substitutions, additions or
  replacements of this collateral?
• Only if the products are (1) proceeds or (2)
  after acquired inventory or accounts.

47
Problem 10.2, page 180

• Firstbanks description of collateral
  equipment, inventory, and accounts
• a. Does this description cover the money now in
  Pollys bank account? Only if it is proceeds.
• A parrot that Polly took in payment of an overdue
  account? Yes. Proceeds includes whatever is
  collected on . . . Collateral.
  9-102(a)(64)(B).
• A new computer Polly bought to replace the one
  she owned at the time she granted the security
  interest? Not unless it is proceeds.
  After-acquired equipment is not included.
• Myna bird

48
Problem 10.2, page 180

• Firstbanks description of collateral
  equipment, inventory, and accounts
• a. Does this description cover the money now in
  Pollys bank account? Only if it is proceeds.
• A parrot that Polly took in payment of an overdue
  account? Yes. Proceeds includes whatever is
  collected on . . . Collateral.
  9-102(a)(64)(B).
• A new computer Polly bought to replace the one
  she owned at the time she granted the security
  interest? Not unless it is proceeds.
  After-acquired equipment is not included.
• Myna bird

49
Problem 10.2, page 180

• Firstbanks description of collateral
  equipment, inventory, and accounts
• a. Does this description cover the money now in
  Pollys bank account? Only if it is proceeds.
• A parrot that Polly took in payment of an overdue
  account? Yes. Proceeds includes whatever is
  collected on . . . Collateral.
  9-102(a)(64)(B).
• A new computer Polly bought to replace the one
  she owned at the time she granted the security
  interest? Not unless it is proceeds.
  After-acquired equipment is not included.
• Myna bird

50
Problem 10.2, page 180

• Firstbanks description of collateral
  equipment, inventory, and accounts
• a. Does this description cover the money now in
  Pollys bank account? Only if it is proceeds.
• A parrot that Polly took in payment of an overdue
  account? Yes. Proceeds includes whatever is
  collected on . . . Collateral.
  9-102(a)(64)(B).
• A new computer Polly bought to replace the one
  she owned at the time she granted the security
  interest? Not unless it is proceeds.
  After-acquired equipment is not included.
• Myna bird

51
Problem 10.2, page 180

• Firstbanks description of collateral
  equipment, inventory, and accounts
• a. Does this description cover the money now in
  Pollys bank account? Only if it is proceeds.
• A parrot that Polly took in payment of an overdue
  account? Yes. Proceeds includes whatever is
  collected on . . . collateral.
  9-102(a)(64)(B).
• A new computer Polly bought to replace the one
  she owned at the time she granted the security
  interest? Not unless it is proceeds.
  After-acquired equipment is not included.
• Myna bird

52
Problem 10.2, page 180

• Firstbanks description of collateral
  equipment, inventory, and accounts
• a. Does this description cover the money now in
  Pollys bank account? Only if it is proceeds.
• A parrot that Polly took in payment of an overdue
  account? Yes. Proceeds includes whatever is
  collected on . . . collateral.
  9-102(a)(64)(B).
• A new computer Polly bought to replace the one
  she owned at the time she granted the security
  interest? Not unless it is proceeds.
  After-acquired equipment is not included.
• Myna bird

53
Problem 10.2, page 180

• Firstbanks description of collateral
  equipment, inventory, and accounts
• a. Does this description cover the money now in
  Pollys bank account? Only if it is proceeds.
• A parrot that Polly took in payment of an overdue
  account? Yes. Proceeds includes whatever is
  collected on . . . collateral.
  9-102(a)(64)(B).
• A new computer Polly bought to replace the one
  she owned at the time she granted the security
  interest? Not unless it is proceeds.
  After-acquired equipment is not in this
  description.
• Myna bird

54
Problem 10.2, page 180
Firstbanks description of collateral
equipment, inventory, and accounts d. Myna bird
Polly bought and paid for with plumbing work?
55
Problem 10.2, page 180
Firstbanks description of collateral
equipment, inventory, and accounts d. Myna bird
Polly bought and paid for with plumbing work?
No. Distinguish two situations Plumbing work
account Myna bird Plumbing work
contract Myna bird
56
Problem 10.2, page 180
Firstbanks description of collateral
equipment, inventory, and accounts d. Myna bird
Polly bought and paid for with plumbing work?
No. Distinguish two situations Not collateral
Collateral Proceeds Plumbing work
account Myna bird Not collateral
Not collateral Not collateral Plumbing
work contract Myna bird
57
Problem 10.2, page 180
Firstbanks description of collateral
equipment, inventory, and accounts d. Myna bird
Polly bought and paid for with plumbing work?
No. Distinguish two situations Not collateral
Collateral Proceeds Plumbing work
account Myna bird Not collateral
Not collateral Not collateral Plumbing
work contract Myna
bird 9-102(a)(2) an account is a monetary
obligation
58
Problem 10.3, page 180
ELPs description of collateral Horace and all
proceeds, products, and profits therefrom.
Horace won a race. Does ELPs description cover
the purse? 9-102(a)(64) Proceeds . . . means
the following property (A) whatever is acquired
upon the sale, lease, license, exchange, or
other disposition of collateral (B) whatever is
collected on, or distributed on account of,
collateral (C) rights arising out of
collateral Products the result of fabrication or
processing (Blacks) Profits (1) excess of
revenues over expenses, (2) a right in the soil
of another
59
Problem 10.3, page 180
ELPs description of collateral Horace and all
proceeds, products, and profits therefrom.
Horace won a race. Does ELPs description cover
the purse? 9-102(a)(64) Proceeds . . . means
the following property (A) whatever is acquired
upon the sale, lease, license, exchange, or
other disposition of collateral Products the
result of fabrication or processing
(Blacks) Profits (1) excess of revenues over
expenses, (2) a right in the soil of another
60
Problem 10.3, page 180
ELPs description of collateral Horace and all
proceeds, products, and profits therefrom.
Horace won a race. Does ELPs description cover
the purse? 9-102(a)(64) Proceeds . . . means
the following property (A) whatever is acquired
upon the sale, lease, license, exchange, or
other disposition of collateral (B) whatever is
collected on, or distributed on account of,
collateral Products the result of fabrication or
processing (Blacks) Profits (1) excess of
revenues over expenses, (2) a right in the soil
of another
61
Problem 10.3, page 180
ELPs description of collateral Horace and all
proceeds, products, and profits therefrom.
Horace won a race. Does ELPs description cover
the purse? 9-102(a)(64) Proceeds . . . means
the following property (A) whatever is acquired
upon the sale, lease, license, exchange, or
other disposition of collateral (B) whatever is
collected on, or distributed on account of,
collateral (C) rights arising out of
collateral Products the result of fabrication or
processing (Blacks) Profits (1) excess of
revenues over expenses, (2) a right in the soil
of another
62
Problem 10.3, page 180
ELPs description of collateral Horace and all
proceeds, products, and profits therefrom.
Horace won a race. Does ELPs description cover
the purse? 9-102(a)(64) Proceeds . . . means
the following property (A) whatever is acquired
upon the sale, lease, license, exchange, or
other disposition of collateral (B) whatever is
collected on, or distributed on account of,
collateral (C) rights arising out of
collateral Products the result of fabrication or
processing (Blacks) Profits (1) excess of
revenues over expenses, (2) a right in the soil
of another
63
Problem 10.3, page 180
ELPs description of collateral Horace and all
proceeds, products, and profits therefrom.
Horace won a race. Does ELPs description cover
the purse? 9-102(a)(64) Proceeds . . . means
the following property (A) whatever is acquired
upon the sale, lease, license, exchange, or
other disposition of collateral (B) whatever is
collected on, or distributed on account of,
collateral (C) rights arising out of
collateral Products the result of fabrication or
processing (Blacks) Profits (1) excess of
revenues over expenses, (2) a right in the soil
of another
64
Problem 10.4, page 180
Billie gave a SI in inventory.
First- bank
Inventory
Billie
65
Problem 10.4, page 180
Billie gave a SI in inventory. Billie is
selling everything but the inventory to Joey.
First- bank
Leasehold Furniture Fixtures Equipment
Inventory
Billie
Joey
Goodwill Accounts Trademarks
66
Problem 10.4, page 180
Billie gave a SI in inventory. Billie is
selling everything but the inventory to Joey. We
represent Joey. Is the security interest in
inventory of concern?
First- bank
Leasehold Furniture Fixtures Equipment
Inventory
Billie
Joey
Goodwill Accounts Trademarks
67
Problem 10.4, page 180
Billie gave a SI in inventory. Billie is
selling everything but the inventory to Joey. We
represent Joey. Is the security interest in
inventory of concern?
Could Firstbank have a security interest in the
accounts?
First- bank
Leasehold Furniture Fixtures Equipment
Inventory
Billie
Joey
Goodwill Accounts Trademarks
68
Problem 10.4, page 180
Billie gave a SI in inventory. Billie is
selling everything but the inventory to Joey. We
represent Joey. Is the security interest in
inventory of concern?
Could Firstbank have a security interest in the
accounts? Other items?
First- bank
Leasehold Furniture Fixtures Equipment
Inventory
Billie
Joey
Goodwill Accounts Trademarks
69
Problem 10.4, page 180
Billie gave a SI in inventory. Billie is
selling everything but the inventory to Joey. We
represent Joey. Is the security interest in
inventory of concern?
Could Firstbank have a security interest in the
accounts? Other items?
First- bank
Leasehold Furniture Fixtures Equipment
Inventory
Billie
Joey
Goodwill Accounts Trademarks
In re Shirel, page 154. No reasonable third
party would understand that a security interest
was created in the refrigerator by merely looking
to the description itself.
70
Problem 10.5, page 180
XT-100 Copier XEX30
ELP lends Golan 35K secured by XT-100.
71
Problem 10.5, page 180
XT-100 Copier XEX30
Insurance payable

• ELP lends Golan 35K secured by XT-100.
• Fire destroys copier. Loss insured. What is
  ELPs collateral?

72
Problem 10.5, page 180
XT-100 Copier XEX30
Insurance payable
Bank account
Check

• ELP lends Golan 35K secured by XT-100.
• Fire destroys copier. Loss insured. What is
  ELPs collateral?
• Insuror pays. Golan deposits. What is ELPs
  collateral?

73
Problem 10.5, page 180
Check to rent
XT-100 Copier XEX30
Insurance payable
Bank account
Check

• ELP lends Golan 35K secured by XT-100.
• Fire destroys copier. Loss insured. What is
  ELPs collateral?
• Insuror pays. Golan deposits. What is ELPs
  collateral?
• Golan writes check for rental. What is ELPs
  collateral?

74
Problem 10.5, page 180
Check to rent
XT-100 Copier XEX30
Insurance payable
Bank account
Check
Check to IRS

• ELP lends Golan 35K secured by XT-100.
• Fire destroys copier. Loss insured. What is
  ELPs collateral?
• Insuror pays. Golan deposits. What is ELPs
  collateral?
• Golan writes check for rental. What is ELPs
  collateral?

d. Golan writes check to IRS. What is
ELPs collateral?
75
Problem 10.6, page 181
Check to rent
XT-100 Copier XEX30
Insurance payable
Bank account
Check
New copier
Golan writes check for new copier. What is ELPs
collateral?
9-332(b)
76
Problem 10.6, page 181
Check to rent
XT-100 Copier XEX30
Insurance payable
Bank account
Check
New copier
Golan writes check for new copier. What is ELPs
collateral? 6,000 and probably the new copier.