Written by attorneys · grounded in primary & secondary sources — see below
2 senses
An activity undertaken to prepare collateral for disposition after default. The secured party may dispose of collateral following any commercially reasonable preparation or processing. Reasonable expenses of processing are recoverable from proceeds before satisfying the secured obligation.
An activity undertaken to prepare collateral for disposition after default. The secured party may dispose of collateral following any commercially reasonable preparation or processing. Reasonable expenses of processing are recoverable from proceeds before satisfying the secured obligation.
Select any source to read its text and confirm it supports the definition.
The handling of instruments by a bank for collection or payment by automated means. Reasonable commercial standards do not require examination of the instrument if the bank's procedures are followed and do not vary unreasonably from general banking usage.
Select any source to read its text and confirm it supports the definition.
The handling of instruments by a bank for collection or payment by automated means. Reasonable commercial standards do not require examination of the instrument if the bank's procedures are followed and do not vary unreasonably from general banking usage.
Each sense below has its own examples, sources, and questions.
After Platinum Partners defaulted on its loan, Pacific Bank took possession of the debtor's inventory of unfinished furniture. The bank hired a contractor to sand and stain the pieces so they could be sold at auction in finished condition. The expenses of that work counted as recoverable processing costs when the bank applied the sale proceeds.
Patriot Insurance repossessed a fleet of delivery vans from Paragon Construction after default. The bank paid a detailer to clean and repair the vans before a private sale. Those preparation costs were deducted from the sale proceeds before applying any amount to the outstanding loan balance.
Yes. Reasonable expenses of retaking, holding, preparing for disposition, processing, and disposing of collateral are deducted first from cash proceeds under the priority scheme of UCC § 9-615(a)(1).
Supporting sources
No. After default the secured party may dispose of collateral following any commercially reasonable preparation or processing without further consent from the debtor.
Supporting sources
Preston Pratt deposited a check at Pacific Bank drawn on a distant drawee. The bank processed the item through its automated sorting system without visual examination. Because the bank's procedures conformed to general banking usage, the absence of manual review did not violate the duty of ordinary care.
A bank breaches ordinary care only when its automated processing procedures vary unreasonably from general banking usage or when the bank violates its own prescribed procedures.
Supporting sources
…the lessees argue that the gas is directly usable at the well both commercially and domestically, and does not require any processing in order to be used. Finally, the lessees emphasize that the gas has been used in its natural state from the well for many years, both by local consumers and by the lessors in lieu of…