After-Acquired Property: Secured Trans. Q:

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A'nold
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After-Acquired Property: Secured Trans. Q:

Postby A'nold » Thu Dec 09, 2010 11:27 pm

Do after-acquired property clauses need to be put into security agreements for the after-acquired property to attach? 9-108, Comment 2 seems to suggest that that is a contract interpretation thing and that the issue will need to be resolved by the court. 9-502, Comment 2 says that after-acquired property clauses do not need to appear in financing statements.

Thanks.

nifer327
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Re: After-Acquired Property: Secured Trans. Q:

Postby nifer327 » Fri Dec 10, 2010 1:21 am

Attachment: States take different approaches. Some states require explicit provisions in the security agreement for after-acquired property clauses to attach. Other states will imply such provisions, but only where the circumstances warrant it (i.e. - inventory or accounts, where there is obvious turnover).

Perfection: Does not have to be in the filing statement in any state.

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A'nold
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Re: After-Acquired Property: Secured Trans. Q:

Postby A'nold » Fri Dec 10, 2010 2:15 am

nifer327 wrote:Attachment: States take different approaches. Some states require explicit provisions in the security agreement for after-acquired property clauses to attach. Other states will imply such provisions, but only where the circumstances warrant it (i.e. - inventory or accounts, where there is obvious turnover).

Perfection: Does not have to be in the filing statement in any state.


Great, that's basically what I was thinking but I wasn't sure. I'm glad you mentioned that usually only inventory and the like are implied, I had forgotten about that from class a few months ago. :)

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joobacca
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Re: After-Acquired Property: Secured Trans. Q:

Postby joobacca » Fri Dec 10, 2010 2:16 am

A'nold wrote:Do after-acquired property clauses need to be put into security agreements for the after-acquired property to attach? 9-108, Comment 2 seems to suggest that that is a contract interpretation thing and that the issue will need to be resolved by the court. 9-502, Comment 2 says that after-acquired property clauses do not need to appear in financing statements.

Thanks.

i think the interpretation thing kicks in (especially) when the nature of the transaction would strongly suggest that the parties intended an ongoing relationship. the most obvious one is PMSI in inventory, or many (most?) financing arrangements where the financiers provides capital on a continued basis (the financiers will likely want to secure their loans with then-existing and after-acquired collateral). and A9 is okay with this type of cross collateralization.

and yes, you do not need the after acquired clause in the FS. the FS just needs to do enough to provide sufficient notice to future reasonable/prudent searchers to investigate a bit further.




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