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 Secured Transactions Law School Legends Professor Michael I. Spak Introduction  What Article 9 is  NOT: 99.99% of all sales. E.g., I sell you my tie for $1 down and $1 a month for 9 months. You stop making payments. I have no rights in the tie. If I take it, I’m a tortfeasor and a criminal. Except: Sales of: (i) accounts, (ii) chattel paper, (iii) payment intangibles, and (iv) promissory notes. A debtor who sells these four does no t retain a legal or equitable interest in the collateral sold. However, these sales are treated as security interests and are c overed by Article 9. [§9-109(a)(3)] Article 9 also covers commercial consignments. [§9-102(a)(20)] E.g., West “sells” (actually “on consignment”) 1,000 casebooks to your law school bookstore. The school is going to sell them to enrollees. The law school will ha ve the right to return perfect unsol d books. Article 9 treats the consignment a s a PMSI.  What Article 9 IS: Security for performa nce of an obligation. It is a consensual, contractual, second remedy. It covers all three types of finan cing: (i) consumer, (ii) business, and (iii) agricultural. Except: i. Real estate liens (except for fixtures). These are governed by real estate law. ii. Non-consensual liens. These a re for services or materials, e.g., mechanics’ liens, wa rehousemen’s liens, etc. They are dependent upon possession. In general, th ey take priority over security interests. [§9-333] Overview of Problems: I. Mechanics II. Priorities III. Rights Upon Default

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