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![handle is hein.nccusl/nccpubtsta3954 and id is 1 raw text is:
GONZAGA
SCHOOL OF LAW
MEMORANDUM
To: Drafting Committee for Amendments to the Model Tribal Secured Transactions Act
From: Stephen L. Sepinuck
Date: August 25, 2015
Re: Power to Transfer Previously Sold Receivables
The Official Text of UCC section 9-318 contains two principal rules. First, subsection (a)
contains the rather unremarkable statement that a seller of accounts, chattel paper, payment
intangibles or promissory notes retains no interest in the property sold. Second, subsection (b)
provides that such a seller retains the power to transfer rights in that property to a purchaser for value
of the initial buyer did not perfect. Because attachment requires that the debtor have either rights in
the collateral or the power to convey rights in the collateral, see § 9-203(b)(2), the rule of subsection
(b) effectively allows the seller or accounts, chattel paper, payment intangibles or promissory notes
to resell or pledge them as collateral for a secured obligation if the initial buyer did not perfect.
The MTSTA omits section 9-318, even though the MTSTA, like UCC Article 9, applies to
most sales of accounts, chattel paper, payment intangibles, or promissory notes. See MTSTA
§§ 9-1 10(a)(2), 9-11 1(e)-(h). The reason for this omission is not clear and the Drafting Committee
might wish to consider adding to the MTSTA the rules of UCC § 9-318. Because these rules relate
principally to attachment, they could be inserted as section 9-207 (which is currently reserved):
§ 9-207. NO INTEREST RETAINED IN RIGHT TO PAYMENT THAT IS SOLD; RIGHTS AND
TITLE OF SELLER OF ACCOUNT OR CHATTEL PAPER WITH RESPECT TO CREDITORS
AND PURCHASERS.
(a) [Seller retains no interest.] A debtor that has sold an account, chattel paper, payment
intangible, or promissory note does not retain a legal or equitable interest in the collateral sold.
(b) [Deemed rights of debtor if buyer's security interest unperfected.] For purposes of
determining the rights of creditors of, and purchasers for value of an account or chattel paper from, a
debtor that has sold an account or chattel paper, while the buyer's security interest is unperfected, the
debtor is deemed to have rights and title to the account or chattel paper identical to those the debtor
sold.](ViewImageLocal?handle=hein.nccusl/nccpubtsta3954&div=1&collection=&method=preview&ext=.png&size=3)