Reference no: EM132702210

A secured transaction is a contractual arrangement where a borrower or buyer pledges property as collateral for a loan or purchase. The general priority rule established by Uniform Commercial Code (UCC) state that security interest is enforceable between the security party and the debtor without consideration of the perfection. Priority rules is security of right to be paid by the customer if he she has other debts with other secured creditor or over the bankruptcy. (Steingold, D., 2013).

• When it comes to inventory, UCC Section 9-320 states that a buyer of goods who buys "in the ordinary course of business" will take the goods "free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence. (Steingold, D., 2013). Thus, a buyer of inventory collateral takes priority even though a secured party has already perfected a security interest and even if the buyer knows that the secured party has perfected a security interest.

• Security interest that has priority is one between the contesting secured parties and tax creditor or other purchaser from the debtor or between secured party and bankruptcy trustee

• In the above case the security priority that has priority are Mega Bank interest, it has the right to enforce acquisition of any property that Image has or shall purchase after the perfection of the secured security. (Sigman, H. C., n.d.).

• Uniform Commercial Code help or hurt business transactions such as the one presented here as follows, it secure the interest of the first creditor over the financial behavior of a purchaser or customer that can impose financial risk to creditors , in our case, it help Mega bank to have right to collect debts from Image despite of any secured party or bankruptcy. It also hurt that Image cannot have the benefit of filling a bankruptcy.

According to UCC section 5.2 and temporal priority rule; the first secured party to perfect will have priority over competing party in security interest, hence the Mega bank is deemed secured creditor. (Priority of Security Interests, 2010).

Problem 1: Are you stating that Mega Bank had priorty interest below?

In the above case the security priority that has priority are Mega Bank interest, it has the right to enforce acquisition of any property that Image has or shall purchase after the perfection of the secured security. (Sigman, H. C., n.d.).

Problem 2: What about your commnet below?

According to UCC section 5.2 and temporal priority rule; the first secured party to perfect will have priority over competing party in security interest, hence the Mega bank is deemed secured creditor. (Priority of Security Interests, 2010).

Problem 3: Did Mega Bank perfect the interest first?