Primary Issues WA

UCC SEC TRANS OPENER
WA version of UCC, article 9 relating to Secured Transactions protects creditors whose interests in a debtor’s have attached or perfected
Security Interest (SI)
SI is obtained by cosession/control of the collateral or is contained in a Security Agreement (SA). An SA is a written contract between a creditor and a debtor authenticated by the latter, identifying the collateral in reasonable detail, its primary use, andits county location.
types of goods that can be collateral
inventory, equipment, consumer goods and farm products. If collateral is used for mixed purposes, its primary use will control
SA
SA is a K between debtor and creditor identfying the collateral. Colateral identification such as “all assets” or “all collateral” are too vague and will invalidate the SI.
ATTACHMENT
is necessary to establish the creditor’s rights (TO GAIN POSSION) in the collateral AND REQUIRES: 1. a SA giving rights to posess on default; 2. a default; 3. creditor to have given value to debtor; Attachment alone may not protect the creditor in some situations.
PERFECTION
NECESSARY TO PROTECT CR AGAINST 3RD PARTIES. REQUIRES: 1. POSSESSION; 2 CONTROL; 3. FILING; 4. MERE ATTACHMENT; 5. NAME ON TITLE CERTIFICATE. PROPER FILING GIVES NOTICE TO ALL OF CR RIGHTS AND IS EFFECTIVE AT TIME OF FILING.
PURCHASE MONEY SECURITY INTEREST (PMSI)
SPECIAL RIGHTS, GET MERE ATTACHMENT AND 20 DAY GRACE PERIOD TO FILE FS AND ATTACHMENT RELATES BACK TO ATTACHMENT DATE.
DEBTORS DEFAULT
CR MAY REPOSESS COLLATERAL, RETAIN IT OR DISPOSE OF IT AT A COMMERCIALLY REASONABLE SALE AND OFFSET THE PROCEEDS AGAINST THE DEBT. NOTICE TO ALL KNOWN CREDITORS MUST BE GIVEN OF SALE; CR HAS LIMITED RIGHT TO TRESPASS TO RETRIEVE COLLATERAL, BUT MAY NOT BREACH PEACE.
PRIORITY RULES
1. PERFECTED CREDITORS, FIRST TO PERFECT PREVAILS; A PERFECTED PMSI HAS PRIORITY OVER ALL OTHER SECURED CREDITORS.
UCC SALES OPENER
WA version of UCC article 2 controls because the contract involves the sale of moveable goods.
Parties duties
All UCC contracting parties must perform in good faith, Merchants are held to a higher stadard-honesty in fact and reasonable commercial standards of fair dealing
MERCHANTS
Deal with goods of the kind or hold temselves out to have special knowledge or expertiese in the goods
VALID CONTRACT REQUIREMENTS
OFFER, ACCEPTANCE (MUTUAL ASSENT) CONSIDERATION, LEGAL CAPACITY, LEGAL SUBJECT MATTER; SOF IF FOR $500+ GOODS, EXCEPTIONS: ADMISSION OF PARTY, SPECIALLY MANUFACTURED GOODS, MERCHANTS CONFIRMING MEMO, OR PART PERFORMANCE
MISSING TERM
UNDER UCC DOES NOT INVALIDATE K AS LONG AS THERE IS REASONABLE BASIS TO PROVIDE A REMEDY AND THE K CONTAINS THE QUANTITY. THE COURT WILL PROVIDE MISSING TERMS WITH THE UCC DEFAULT RULE OR IN PREFERENCTIAL ORDER, COURSE OF PERFORMANCE, PAST COURSE OF DEALINGS, AND USEAGE OF TRADE.
VARIANCE IN ACCEPTANCE
OK IF MINOR ADDITIONAL TERMS IF DO NOT MATERIALLY ALTER THE BARGAIN, THE OFFEROR OBJECTS WITHIN A REASONABLE TIME, OR PRECLUDED IN OFFER
CONDITION OF GOODS SOLD
MUST BE MERCHANTABLE, PASS WITHOUT OBJECTION IN THE TRADE, BE OF FAIR AVERAGE QUALITY AND FIT FOR THE PURPOSE THEY ARE INTENDED TO BE USED.
FIT FOR PURPOSE
IMPLIED WARRANTY WHERE SELLER KNOWS BUYER IS RELYING ON SELLER’S ADVICE IN SELECTION OF PRODUCT
SELLER LIMITS WARRANTY
OK IF K NOT FAIL IN ESSENTIAL PURPOSE OR DEPRIVE BUYER OF SUBSTANTIAL VALUE OF THE BARGAIN
WARRANTY EXCLUSIONS
CLEARLY WRITTEN, CONSPICUOUS TO BUYER, CONCIONALBE AND CONSISTENT WITH ANY EXPRESS WARRANTIES
SHIPPING NON CONFORMING GOODS
MUST NOTIFY B THAT IT IS AN “ACCOMODATION SALE”
BUYER’S BREACH — SELLER REMEDIES
RECISSION, SELL GOODS, INCIDENTAL DAMS, LOST PROFIT IF “LOST VOLUME” SELLER
TENDER OF SELLER OF GOODS
MUST BE PERFECT OR B MAY ACCEPT SOME, ALL OR NONE OF A NON CONFORMING SHIPMENT.
SELLER’S WARRANTY
EXPRESS OR IMPLIED MERCHANTABILITY AND SUITABLE FOR B’S PURPOSE
BUYER’S REMEDIES
“COVER PURCHASE”; SUE FOR INCIDENTAL AND CONSEQUENTIAL DAMS AND DIFFERENCE IN PRICE
SPECIFIC PERFORMANCE SUIT BY BUYER
ONLY IF COVER NOT POSSIBLE, GOODS HAVE BEEN IDENTIFIED AND GOODS HAVE NOT BEEN TRANSFERRED TO BFP
MITIGATION OF DAMAGES
ALL PARTIES HAVE DUTY, ESPECIALLY A MERCHANT BUYER IN POSSESSION OF A SELLER’S GOODS FOLLOWING A NON-CONFORMING TENDER.
UCC PAPER OPENER
TO FACILITATE COMMERCE A HDC OF A NI TAKES FREE AND CLEAR OF PERSONAL DEFENSES THAT WOULD RESTRICT A MERE ASSIGNEE.
CHECKS
DRAWER/PAYOR;DRAWEE BANK;PAYEE
NOTES
MAKER/PAYOR AND PAYEE
NEGOTIALBLE INSTRUMENT (NI)
NEGOTIALBLE WORDS SUCH AS PAY TO THE ORDER OF; AN UNCONDITIONAL PROMIST TO PAY WITH NO OTHER UNDERTAKING; A TIME CERTIN FOR PAYMENT; A SUM CERTAIN IN MONEY, AND SIGNED BY THE MAKER
PERSONAL DEFENSES
NOT AVAILABLE AGAINST HDC. TO BE AN HDC A PERSON MUST TAKE THE INSTRUMENT: FOR VALUE; IN GOOD FAITH; WITH NO NOTICE OF INPERFECTIONS AND THE NI MUST BE PROPERLY NEGOTIATED–INDORSED AND DELIVERED FOR ORDER PAPER AND JUST DELIVERED FOR BEARER PAPER.
GIFTS
AN ASSIGNEE WHO RECEIVES THE ITEM AS A GIFT MAY STILL QUALIFY FOR HDC STATUS UNDER THE SHELTER RULE, IF THERE IS AN HDC UP THE CHAN HDC STATUS BY ASSIGNMENT
REAL DEFENSES
GOOD AGAINST HDC, INCLUDE FRAUNDE IN THE EXECUTION/FACTUM, ILLEGALITY, DISCARGE IN BKY, DURESS, LACK OF CAPACITY, SOL, FORGERY, UNAUTHORIZED SIGNATURE AND MATERIAL ALTERATION.
MAKER NEGLIGENCE
IF CONTRIBUTED TO THE DEFENSE, OBVIATES FORGERY, UNAUTHORIZED SIGNATURE AND MATERIAL ALTERATIONS ARE THEN CHARACTERIZED AS PERSONAL DEFENSES
PERSONAL DEFENSES
NOT GOOD AGAINST HDC, BUT GOOD AGAINST PAYEE: MUTUAL MISTAKE; UNAUTHORIZED COMPLETION; UNFULFILLED CONDITION PRECEDENT, FRAUD IN THE INDCEMENT, FAILURE OF CONSIDERATION AND OTHER CLAIMS
PRIMARY LIABILITY
IS WITH MAKER OF NOTE OR DRAWER OF CHECK. SECONDARY LIABILITY OF ENDORSERS DEPENDS ON THE CHARACTER, EXTENT, AND CONDITIONS ASSOCIATED WITH THE INDORSEMENT

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