Docstoc

Secured Transactions - Download as DOC

Document Sample
Secured Transactions - Download as DOC Powered By Docstoc
					                                      Secured Transactions
                                        Fall 2012 Syllabus
                                     Professor Michael Briley

I am pleased to welcome each of you to Secured Transactions.

This course will cover Article 9 of the Uniform Commercial Code (“UCC”), which governs
security interests in personal property and fixtures. We will deal with the sections of Article 9 that
are important to your development as a lawyer and to your understanding of how credit markets
operate and are regulated in private transactions. We will also spend some time on specific
preparation for answering the secured transaction questions on the Ohio Bar Examination.

Essentially, an Article 9 secured transaction is a transaction whereby a vendor (which can be a
seller or lessor) (or a lender who is not a vendor) loans money to a borrower and the borrower
gives the lender a security interest, or “lien”, in some item(s) of collateral in order to secure
repayment of the loan. The loan can be for the purpose of purchasing the collateral itself, or, for
some other purpose secured by the collateral. If the debtor fails to repay the debt, then the lender
(secured party) may proceed to capture (possess) and/or sell the collateral in order to satisfy the
debt. There are very specific rules, however, on how this “security interest” is to be properly
created, maintained, and enforced in our complex and rapidly changing economy and times.
Article 9 is designed to codify these rules and to provide for the prioritization of competing secured
interests and their enforcement and effectiveness. Secured transactions can occur in the simplest of
consumer transactions (like the purchase of a TV on credit) to the most complex varieties of
corporate financings. As you will see, there can be multiple conflicting claims to a debtor’s
collateral.

Class Time: Tuesday and Thursday every week from 6:00 p.m. until 7:30 p.m. in room 1002.
There will be no class on November 1 or November 22 (Thanksgiving).

Office Hours: I do not hold formal office hours, however, I am available to meet with students
outside of class hours by appointment only.

Contact Information: (419) 321-1325 office
                     mbriley@slk-law.com

I prefer email to telephone calls. If you email me, please put “Secured Transactions Class” in the
subject line in the heading of your message. This way I will know that the communication is
from one of my students.

Course Materials:
Website: Hosted by Lexis
   This is a Web Course hosted by Lexis/Nexis. To access the Web Course, sign in at
   www.lawschool.lexis.com or www.lexisnexis.com/lawschool. Click on the Web Course
   button on the right side of the page. On the next page, there will be a section that says
   “Course where you are: Student.” Under that heading, click on the link for “Secured
   Transactions – Briley.” Then you will be in the course and can access all posted
   material, including all PowerPoint slides for the entire course, this Syllabus and other
   necessary materials. I frequently communicate with students through the Lexis Course
   Website. You MUST register on Lexis using an email address that will reach you. If
SLK_TOL: #1962242v1                                                                    Secured Transactions
                                                                                                  Fall 2012
    you have any problems with the course website, please contact our Lexis Account
    Executive, Kristen Wineck: Kristen.winek@lexsinexis.com


Required Texts
- RUSCH & SEPINUCK, SECURED TRANSACTIONS IN PERSONAL PROPERTY (2nd Ed. 2010).
- MANN, WARREN, & WESTBROOK, COMPREHENSIVE COMMERCIAL LAW 2011 STATUTORY
   SUPPLEMENT (Aspen, 2011). You may use another statutory supplement containing the UCC
   so long as it was published in 2010 or later. Article 9 was amended in 2010 and the amendment
   is scheduled to be effective in 2013.
In addition, you may find it helpful to consult the following supplemental materials:
- JAMES BROOK, SECURED TRANSACTIONS, EXAMPLES AND EXPLANATIONS (Aspen 4th Ed. 2008)
    (Highly recommended. Practice makes perfect.)
- LAURA B. BARTELL, VISUALIZING SECURED TRANSACTIONS (LexisNexis 2007) (An excellent
    resource if you are having trouble deciphering Code provisions.)
- WILLIAM H. LAWRENCE, WILLIAM H. HENNING, R. WILSON FREYERMUTH, UNDERSTANDING
    SECURED TRANSACTIONS (LexisNexis 2077) (A good general reference, but complex).

A note on Article 9 Revisions: You should be aware that Article 9 of the UCC was revised in
1998, and the revised version of the Code was adopted by all states by mid-2001. We will study
Revised Article 9 almost exclusively in this course. In the summer of 2010, new revisions to the
Code were proposed that become effective in 2013 in most states. In order for those to become
effective, state legislatures must adopt them. Neither Ohio nor Michigan has yet taken this step
but both are likely to do so. We will discuss provisions of “Revised Revised” Article 9 at some
points during the semester, but will maintain a focus on the Article 9 that currently applies.

Attendance: I expect you to attend all classes. Article 9 is learned in a cumulative fashion and
even one missed class can lead to confusion thereafter. I will distribute an attendance sheet for
you to sign at the beginning of class. It is your responsibility to sign this sheet even if you are
late. THE COLLEGE REQUIRES ME TO WITHDRAW YOU FROM THE COURSE IF
YOU ARE ABSENT MORE THAN 4 TIMES DURING THE SEMESTER. Please remember
that it is an Honor Code violation for a student to misrepresent his or her attendance of the
attendance of another student.

Preparation: I expect you to be prepared for class. To prepare adequately, you should:
1. Read the assigned pages.
2. Take notes while you read, including briefing the few cases that appear.
3. If the assignment refers to a section of the UCC, the Bankruptcy Code or any other rule or statute,
   you should locate the cited language and study it and the accompanying official comments1
   carefully. Remember to re-visit the definition sections of the UCC (1-201 and 9-102) to inform
   your reading of a code provision.



1
  A note on the official comments: You might be tempted to overlook these in your review of a statute, as they
appear to be “supplementary” material. Don’t do it. The official comments are included to help you decipher the
difficult to understand statutory text. They often provide hypotheticals or explanations that may appear in problems
sets or on the exam. Also, courts relay on the official comments. For these reasons, it is certainly worth your time to
review the comments as you read.
SLK_TOL: #1962242v1                                                                                  Secured Transactions
                                                                                                                Fall 2012
4. Work your way through each problem in the assignment and prepare a written answer to the
    questions posed. I will not normally collect written answers (although I reserve the right to do so),
    but the process will help you understand – especially the more complex sections.
5. As you answer the problems, re-read any relevant portions of the text or statutory language.
    Be sure to note which provisions of the UCC or other statute support your answer, as these will be
    raised in our class discussions.
Philosophy and Suggestions: Article 9 is very complex and somewhat confusing in certain
sections (particularly the section on Priorities). Do not become discouraged or panic! We will
review continually throughout the course and, at the end of each chapter, I will provide to you in
lecture form a summary of the entire chapter that should “tie it together” for you. Do not,
however, rely upon these summaries to learn the course! You must work through each page of
the textbook assignments and problems in order to understand the concepts.
I recommend these important strategies that, if you employ them, should get you through this
course in good stead:
1.    Make an outline of each section of the UCC that we study (as we study it) by putting it
      in your own, paraphrased, words. In all their wisdom and good intent, the Commissioners
      who drafted Article 9 did not make its language crystal clear in many cases. They refer
      (cross reference) to other sections of Article 9 frequently and the unfortunate use of double
      negatives is not uncommon. By “re-writing” the sections in your own words, you will not
      only learn them better, but you will have a better understanding of their content.
2.    Review your notes on a regular basis going back to the first day. You will see that the
      logic of Article 9 is cumulative. If you conscientiously review this way weekly, you will
      have little to do to prepare for the exam.
Examination and Grading: Your grade for this course will be determined primarily based
upon your performance on a comprehensive final examination. I reserve the right to increase
your grade slightly (e.g., from a B+ to an A-) for consistent preparation and participation or to
decrease your grade in the same manner for a persistent failure to prepare or to participate.
“Participation” does not mean repetitively offering incorrect and/or irrelevant answers.
The exam will be 3 hours long.
-    First Half:
     • One “bar” – style essay question.
     • 30 multiple choice questions.
     • Closed Book.
-    Second Half
     • Likely several “bar”-style essay questions. I will let you know of any changes closer to the exam.
     • Open Book.
     • You will be permitted to bring with you and use your textbook, statutory supplement, and
        any notes or outlines you have personally made. Copies of other materials are not permitted.




SLK_TOL: #1962242v1                                                                      Secured Transactions
                                                                                                    Fall 2012
  Bar Exam Preparation: We will spend a portion of one class on preparation for the Article 9
  question on the Ohio Bar Examination, with practice questions and answers. As the Ohio Bar
  Examiner responsible for the Articles 3 and 9 questions for the last fifteen years, I have been told
  repeatedly by applicants that the UCC questions on the bar examination were the most difficult
  for them. This need not be the case, and after this course you should feel absolutely confident
  about this matter.
  Technology Use Policy: You certainly may bring a laptop computer to class, but I request that it
  only be used for classroom-related activities (note taking, viewing of my PowerPoint slides, etc.).
  Instant messaging your classmates, even on class-related topics, is not permitted. Also, please turn
  off all cell phones during class; no one appreciates being disrupted by those cute little ring tones!
                                         COURSE OVERVIEW

  Chapter 1: Collecting Debts Generally

          In Chapter 1, we will discuss general theories of debt collection. We will discuss benefits
  of collecting debt secured by collateral, a major reason why people engage in secured lending.

             Topic                     Casebook               Code Provisions       Problems            Slides
Definition of Terms                        1-30              UCC 9-102(A)(1)-(79)      1-1               1-22
Secured Transactions Defined          The Ohio Retail                                  1-2
Creating Debt                      Installment Sales Act
                                  (ORC § 1317) (this is on
Collecting Debts Non-Judicially     the course website)
Collecting Debts Judicially

Collecting Debts Secured by                33-41                                       1-3               23-30
Consensual and Statutory Liens                                                         1-4
The Creditor/Debtor Struggle

Review Lecture                             N/A                        All              N/A           to be given


  Chapter 2: Attachment of a Security Interest or Agricultural Lien

          After our introduction to debt collection and secured lending, we will focus on attachment,
  the process by which a security interest becomes enforceable against the debtor.

            Topic                      Casebook               Code Provisions       Problems            Slides
Introduction to the Uniform               43-62              UCC 9-203(a)-(b)         2-1                31-68
Commercial Code                                              9-109(a)                 2-2
Creating a Security Interest:                                9-201(b)                 2-3
The Basics                                                                            2-4
                                                                                      2-5
Description of Collateral                                                             2-6
Investment Property




  SLK_TOL: #1962242v1                                                                        Secured Transactions
                                                                                                        Fall 2012
            Topic                      Casebook           Code Provisions                Problems                Slides
The Security Agreement                      62-83         9-203(a)-(b)                          2-7               69-81
Requirement ((1) of (3))                                  9-108                                 2-8
The Composite Document                                    9-102(a)(2), (7), (11),               2-9
Doctrine                                                  (12) (23), (28), (29),               2-10
                                                          (30), (31), (33), (34),              2-11
Additional Collateral                                     (35), (41), (42), (44),
Description Issues                                                                     Skip 2-12(B)(c)
                                                          (47), (48), (57), (59),       and electronic
Possession or Control of                                  (61), (64), (65), (71),       Exercise 2-C
Collateral Pursuant to an Oral                            (73)
or Unauthenticated Security                               9-315                        Skip pgs. 83, 84
Agreement                                                                                up to Sec. 4
Commingled Goods

The Value Requirement                       85-92         9-203(a)                             2-13                 82
((2) of (3))                                              1-204                                2-14
                                                          9-102(a)(1)
                                                          9-336(a)-(c)

The Rights in Collateral                    92-97         2-403                          2-15 - 2-16                83
Requirement ((3) of (3))                                  2-501                        skip 2-17 - 2-21
                                                                                      and pages 98-102

Special Attachment Rules:               102-104                                                2-22               84-85
Automatic Attachment                  skip 105-132
Review Lecture                              N/A                     all                        N/A             to be given


                            (Note that Chapter 3 is deferred until after Chapter 5)

  Chapter 4, Perfection of Security Interests and Agricultural Liens

          So far, we have studied simple transactions between two parties: debtor and secured
  creditor. In the real world, however, a number of other parties may have or wish to take an interest
  in the debtor’s personal property. Perfection is the process by which a creditor’s security interest
  becomes enforceable (in most cases) against competing creditors or a trustee in bankruptcy. As you
  will learn, perfection is primarily about putting the world on notice of the secured party’s interest in
  the debtor’s property. The timing and nature of perfection, however, has a major impact (as you will
  see in Chapter 5) on the priority of claims between competing secured parties.

             Topic                   Casebook          Code Provisions                 Problems                 Slides
Overview of Perfection            217-240            9-502 through 9-504            4-1                      86-114
Filing a Financing Statement                         9-506                          4-2
                                                     9-509 through 9-517            4-3
                                                     9-519 through 9-522            4-4
                                                     9-338                          4-5
                                                                                    4-6
                                                                                    skip 4-7




  SLK_TOL: #1962242v1                                                                                 Secured Transactions
                                                                                                                 Fall 2012
            Topic                      Casebook         Code Provisions         Problems                Slides
Other Methods of Perfection         241-262           9-104                 4-8                      115-142
                                                      9-308(a) – (c)        4-9
                                                      9-310                 4-10
                                                      9-311                 4-11
                                                      9-312(a)-(d)          4-12
                                                      9-313                 4-13
                                                      9-314                 skip 4-14, 4-15

Choice of Law Issues                263-267           9-103                 4-17                     143-151
                                                      9-301                 4-18
                                                      9-307                 4-19
                                                      9-308(d)-(g)          skip 4-16
                                                      9-309
                                                      9-312(e)-(h)
                                                      9-336(d).
Post-Closing Changes                268-292           9-315                 4-20 through 4-32        152-184
                                    skip 293-302      9-316
                                                      9-507

Review Lecture                      N/A               All                   N/A                      185-191


  Chapter 5, Priority of Security Interests and Agricultural Liens

         When the debtor cannot pay the bills and comes into default under the security
  agreements or files for bankruptcy, often the “battle” starts for the collateral as the debtor is
  normally insolvent. The debtor’s assets, in many cases, will be insufficient to meet all debts.
  Thus, some creditors will win and some will lose. Of all of the competing parties (which may
  include creditors, buyers of collateral, lien creditors, or a bankruptcy trustee, among others),
  who gets the collateral is determined by the priority rules explained in this Chapter.
  Unfortunately, the priority rules are very complex and I anticipate that this will be the most
  difficult portion of the course for most of you. As indicated above, do not despair. We will go
  over this carefully and I will completely review and summarize these rules for you at the end in
  an understandable fashion. As you get into the priority rules, keep in mind that some of them are
  organized based on the identity of the claimant and some by the type of collateral. In this
  chapter, we will review the general rules of priority, as well as numerous exceptions thereto.

                 Topic                    Casebook    Code Provisions       Problems              Slides
    Basic Priority Concepts           303-310         9-317(a)(3)               none              192-195
                                                      9-323(b)
                                                      9-333.

    Security Interests v.             310-322                                5-1 – 5-12           196-206
    Non-Consensual Liens

    Security Interest v. Security     323-349         9-322(a), (e)         5-13 – 5-32           207-233
    Interest                          skip 329-333,   9-323(a), (d)       skip 5-18, 5-19,
                                      346-349         9-324               5-20, 5-21, 5-27,
                                                      9-325                5-28, 5-29(c),
                                                      9-327               5-30, 5-31, 5-32

    Rights of Sellers and Lessors     350-353         1-201(b)(9)                                 234-235
    of Goods Against Security                         9-317(b)-(d)
  SLK_TOL: #1962242v1                                                                         Secured Transactions
                                                                                                         Fall 2012
  Interests Granted by Buyer or               9-320
  Lessee

  Rights of Buyers and Lessees      354-378   9-316(b), (e)     5-35 - 5-48          236-254
  of Goods Against Security                   9-321           skip 5-36, 5-37,
  Interests Granted by the Seller             9-323(d)-(g)      5-40, 5-43,
  or Lessor                                                       5-46(B)

  Security Interests Against the    379-393   9-318             5-50 – 5-56          255-269
  Rights of Purchasers of                     9-330
  Collateral Other than Goods                 9-331

  Conclusion                        394                                              269-275

  Review Lecture                    N/A                            N/A             to be given




SLK_TOL: #1962242v1                                                              Secured Transactions
                                                                                            Fall 2012
Chapter 3, Enforcement of Security Interests and Agricultural Liens

        We will deal with this Chapter last (and out of order) quite deliberately, because
 it is much more understandable and meaningful after you have mastered priorities. Also,
 in the natural timeline of things, enforcement and collection is the last thing to occur.

             Topic                Casebook       Code Provisions        Problems          Slides
Introduction                        133-141      1-201(b)(20)            3-1 – 3-4        276-283
Default                                          1-304
                                                 1-309
                                                 |9-601
                                                 9-602
                                                 9-603
                                                 9-624

Enforcement Against                 142-175      9-609 through 9-619     3-5 – 3-14       284-326
Tangible Collateral                              9-623                  skip 3-6, 3-9

Enforcement Against               175-180 184-   9-404(a)                   3-15          327-336
Intangible Collateral                 185        9-406(a)-(c)               3-19
                                                 9-607                      3-20
                                                 9-608
                                                 9-620
                                                 9-621
                                                 9-622

Remedies for the Secured            186-193      9-625 through 9-628     3-21 – 3-23      337-339
Party’s Violation of its Duties                                             3-22
                                                                       skip 3-21, 3-23

Effect of Other Law                 194-205      11 U.S.C. § 362(a)-    3-24 – 3-27       340-343
Conclusion                        214 (Sec. 7)   (b)
                                     and 215
                                  skip 206-214

Review Lecture                        N/A                                   N/A          to be given


To the extent that time permits, we may get into some of the advanced issues treated in
Chapter 6. As we move towards the end of the semester, I will let you know if that is the
case.

Comment on the Slides: The slides referenced above are all on the website. These have
been carefully prepared to help you understand the material and they are central to your
success in achieving that understanding. Particularly the charts are extremely helpful in
summarizing and simplify the sets of complex rules that make up Article 9. I may also
make available to you some additional “summary slides” during my chapter-end review
lectures.




SLK_TOL: #1962242v1                                                                          Secured Transactions
                                                                                                        Fall 2012
                            ASSIGNMENTS FOR WEEK 1

Class #1
Introduction
This material is mostly for context, and the reading is longer than I typically will assign.
Please read over pages 1-41. You may skip the problems.

Class #2
Introduction and Attachment
Please complete problems 1-2 through 1-4
Please read pages 42-53. Focus on Section 2, “Creating a Security Interest,” which will
give you the framework for the rest of the chapter. Read 9-203(a) and (b).

Subsequent Classes
I will explain in class and post and email assignments for upcoming classes the week
before they are due. You are responsible for checking the course webpage or your email
to obtain this information. If you would like to read ahead, come talk to me and I will
give you an idea of where we are going.

My experience has been that the beginning of the Secured Transactions course is
daunting for most students due to the introduction of new terms, financing concepts and
complex code language. Fear, confusion and trepidation are very normal the first few
weeks. Sometime after that, however, everything starts to “fall into place” and make
sense for most students. Consequently, you are encouraged to not get discouraged and to
“hang in there” – it will come together!




SLK_TOL: #1962242v1                                                                  Secured Transactions
                                                                                                Fall 2012

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:39
posted:8/29/2012
language:English
pages:9