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224 MODULE 26 SECURED TRANSACTIONS

EXAMPLE: An appliance dealer sells a freezer to lackfor family use. Assume attachment has
occurred. lack then sells it to Cindy who is aware of the security interest that the dealer still has in
the freezer. Even if Cindy is buying this for household use, she takes subject to the security interest.

(2) Sale of promissory notes

(3) Assignment of health care insurance to health care provider
(4) Temporary automatic perfection for twenty days for instruments, certificated securities, nego-
tiable documents, and proceeds of sale of perfected security interest
D. Other Issues under Secured Transactions
 as well
1. as all office furniture subsequently acquired. The security interest in the new furniture cannot attach until the debtor
acquires rights in the other office furniture.
Af
ter a. Typically used for inventory and accounts receivable when debtor also has rights to sell inventory
and collect accounts (e.g., a floating lien)
-
ac (1) Sometimes used for equipment
qu EXAMPLE: A, an automobile dealer, to obtain a loan, grants a bank a security interest covering "all automobiles
-now possessed and hereafter acquired." As the dealer obtains rights in the new inventory of automobiles, the
ire security intere.st attaches as to those newly acquired automobiles.

d b. Certain restrictions exist if debtor buys consumer goods

pr 2. Computer software embedded in goods is treated as part of those goods and not as software
op 3. Field warehousing is used to perfect security interest (analogous to possession or control)
a. Debtor keeps inventory on his/her premises under control of third party such as bonded ware-
ert
houseman or secured party's employee ,
y b. Secured party keeps control over inventory such as use of separate room or fenced-off portion
an with sign showing secured party's control
4. Co~signments
d
a. . Consignment of security interest
fut
(1) If it is a "true consignment," consignee is simply a sales agent who does not own the goods
ur but sells them for consignor
e
(a) "True consignment" exists when
go
1] Consignor retains title to goods
od 2] Consignee has no obligation to buy goods
s 3] Consignor has right to all proceeds (pays consignee commission)
EXAMPLE: Manufacturer (consignor) gives possession of goods to a marketing representative
ar (consignee) to sell those goods on commission.
e
(b) To perfect hislher interest, a consignor must
co
1] File a financing statement under secured transactions law and give notice to the con-
ve signee's creditors who have perfected security interests in the same type of goods
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a] Notice must contain description of the goods to .bedelivered and be given before
d the consignee receives possession of goods
w EXAMPLE: P delivers goods to A on consignment. The consignment is a "true consignment"
in that P has title to the goods and pays A a commission for selling the goods. Any goods that
he are unsold are returned by A to P. A does not pay for any unsold goods. Creditors of A can
assert claims against the goods that A possesses unless P has given notice to the creditors. The
n general way to accomplish this is by filing under the secured transactions law.
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(2) If it is not a true consignment because it is actually a sale from creditor to debtor in which
rti debtor then owns the goods, look for a security agreement
es
(a) Attachment and perfection occur as in typical secured transaction
ag
re
e
to
thi
s
EXAMPLE
An
agreement
states that
the collateral
consists of
all of
debtor's
furniture
now located
in his office