Sometimes the parties agree on the details of a security agreement, but they do not include certain terms in the document resulting from their negotiations. Consider the following problem. Perhaps the most instructive part of the new section 9-108 (b) is subsection b) (6), which adds that any other method that is not excluded by the sub-part is appropriate when the identity of the security is objectively identifiable. “objectively identifiable” is the language of contract law. It goes to the point that security agreements are contracts and that objectively identifiable intent ultimately determines what the terms of an agreement mean. Real estate that can be declared as collateral under a security agreement includes inventory of products, furniture, equipment used by a company, home furnishings and real estate owned by the company. The borrower is responsible for maintaining security in good condition in the event of a default. The property classified as collateral should not be removed from the premises unless the property is required in the normal framework of operations. This article discusses errors that can often appear in security agreements and funding declarations and compromise the validity or priority of a secure party`s security interest for warranties.
An often confusing term “perfect” in a security agreement does not mean that the document is error-free. On the contrary, a “perfect” security contract ensures that an insured party can claim promised guarantees in the event that the debtor declares bankruptcy. The absence of a guarantee agreement also meant that the bank could not avail itself of the new section 9-203 (b) (3) (3) (D), under which a security interest is enforceable if the guarantee is a deposit account and if the insured party has control in accordance with the new section 9-104, “in accordance with the debtor`s securities contract. Control as part of applicability and perfection is discussed in more detail in Chapter 22 (perfection with respect to deposit accounts, letter of credit rights and electronic paper). Even under relatively acceptable standards for funding returns, an misguided model or serial number can lead a court to conclude that the funding statement is seriously misleading. For example, the court at In re Pickle Logging, Inc. found that a single-digit error in the transcribing of a model number and a single-digit error in the serial number seriously misled the funding statement.6