Carter sold a $20,000 boat to Davis on credit for personal use.As part of the deal,Davis completed an installment note payable to Carter and a security agreement giving Carter a security interest in the boat,which was attached on July 1.Carter never filed a financing statement.On August 1,Davis borrowed $15,000 from Bank,by completing a security agreement giving the Bank a security interest in the boat.This interest attached on the same day and the Bank filed a financing statement on August 6.Davis defaulted on both his installment payments to Carter and his loan obligation to the Bank.Each of these parties wants to satisfy Davis's obligation by repossessing and selling the boat.Whose security interest in the boat has priority and why?

Question

Quizplus · Accepted Answer

The basic rule established by the Code is that when more than one security interest in the same collateral has been filed (or otherwise perfected),the first security interest to be filed (or perfected)has priority over any that is filed (or perfected)later [UCC 9-322(a) (1)].However,if none of the conflicting security interests has been perfected,then the first security interest to be attached to the collateral has priority [UCC 9-322(a) (3)].

Carter Sold a $20,000 Boat to Davis on Credit for Personal