Problem 5.

2
A) Alexandra’s security interest has attached to the watch.
Generally, in determining whether Alexandra has a security interest attached to the watch, as set
out in UCC 9-203(b) and held in In Re Yantz, three criteria must be met for an attachment to
have occurred.
1. Value has been given [§ 9-203(b)(1)]; and
2. the debtor had rights in the collateral or power to transfer rights in the collateral [§ 9-
203(b)(2)]; and
3. the debtor has authenticated a security agreement that provides a description of the
collateral [§ 9-203(b)(3)].

Once all three criteria have been established, a security interest attaches.

As to UCC provision § 9-203(b)(1), a value has been given. More specifically, the antique watch
is a moveable good and is being offered as collateral in the security agreement to secure a
$20,000 loan.

As to UCC provision § 9-203(b)(2), it is likely assumed for the purpose of this exercise that
Edwin has rights to the collateral and the power to transfer rights in the collateral. Accordingly,
in the case that Edwin does not have the rights to the collateral, this UCC provision is not
satisfied and no attachment occurs as set out by the aforementioned UCC code.

As to UCC provision § 9-203(b)(3), it is important to identify that the debtor has authenticated a
security agreement. As held in In Re Yantz, the court found that authenticating implied that some
sort of writing with a signature or symbol is required in order to enforce a security interest. Thus,
it is also important to identify that the medium in which information is transmitted falls under the
category of a “writing” to determine whether a security interest attaches to the watch. Ed’s e-
mail falls under the definition of a Record pursuant to UCC § 9-102 (a)(70). In accordance to the
aforementioned UCC provision, the information in the e-mail is stored on an electronic medium
and is in a perceivable form on Alexandra’s computer even if it is not printed onto a tangible
medium. In addition, Official Comment 9 of UCC § 9-102 states that the term “record” replaces
the term “writing” in many instances. The comment also points out that magnetic media (such as
a hard drive) and electronic mail both qualify as a medium to store information. Ed authenticates
the e-mail by sending it through his e-mail account to Alexandra.

Under the third element, the debtor must also provide a description of the collateral. The fact
pattern points out that Ed had sent an e-mail that described the watch in detail as to its maker, the
approximate year of its creation and so on. The description is sufficient under UCC § 9-108 as it
reasonably identifies the personal property described when it comes to the item (a watch), the
maker, the year and other identifiable criteria.

B) The answer does not change. Under UCC § 9-102(7), authentication can by executing, or
adopting a symbol, or encrypting or similarly processing a record in whole or part, with the
present intent of the authenticating person to the identify the person and adopt or accept a record.
Under Official Comment 9b of UCC § 9-102, authenticate replaces and broadens the term
“sign”. Here, when Edwin signs the e-mail with “Ed”, Edwin is intending to authenticate himself
as to his identity when accepting the record.

Edwin Owens’ signing of his name under “Ed” still purports as a signature under a separate UCC
provision. Under UCC provision § 3-401, when Edwin Owens signs the e-mail with “Ed”, the
security interest attached still becomes enforceable. Official Comment 2, of UCC § 3-401, while
not law, provides an invaluable guideline, stating that the signature may be typed, printed, or
made in any manner. In addition, the Official Comment sets out that a signature which is adopted
for the purpose, may be made in any name, including an assumed name even if it is false or
fictitious. Furthermore, the comment sets out that even if Edwin Owens denies that “Ed” was his
signature, Alexandra can introduce parol evidence to decisively identify Edwin Owens as the
signer, thereby making the signature effective.

C) The answer does not change if Ed had simply sent an e-mail from his e-mail address
“crazylegs789@hypocharacters.net”. Again, Edwin must authenticate the agreement for
attachment to occur under UCC § 9-203(b)(3). The provision that governs this issue is UCC § 9-
102 and UCC § 1-201. Official Comment 9b of UCC § 9-102, states that authenticate replaces
and broadens the term “sign” and includes any identifiable portion located on any part of the
document. The question is whether the symbol was executed or adopted by the party with the
present intention to authenticate a writing. Here the question is simply whether the e-mail
address, a symbol, was used or adopted by Edwin with the present intention to authenticate the
security agreement.