Perfection by Control

This page includes a writing template for analyzing this topic and usage notes to guide its application. In general, the template is designed to serve as a starting point for your analysis. It should be adapted to fit the specific facts of your case and your professor’s preferences.

Writing Template

Issue

I: The issue is whether the security interest was perfected by control of the collateral.

Analysis

R: Perfection by control is allowed for (1) deposit accounts and (2) letters of credit rights. A secured party has control over (1) a deposit account if (a) the secured party is the bank where the deposit account is maintained, or (b) the secured party, the debtor, and the bank enter into an agreement whereby the bank agrees to follow the secured party’s instructions without further consent from the debtor. In the case of (2) a letter of credit right, control is obtained when the secured party has the right to payment or performance from the issuer or a nominated person.

A: Here, [apply rule to facts].

Conclusion

C: Therefore, the security interest was perfected by control of the collateral.

(Example: A bank (the secured party) lends $500,000 to a business (the debtor) to fund its operations. As part of the loan agreement, the bank requires a security interest in the business’s primary operating account—a deposit account that holds the business’s revenue and cash flow. Control provides the secured party with the highest level of priority over other creditors for these types of collateral.)

Usage Notes

JurisJotter templates synthesize legal principles into a practical format that supports the development of well-structured, point-rich analyses in a timed exam.

The template features (1) headers identifying the overall issue, analysis, and conclusion. If the analysis begins with an umbrella rule that identifies elements, factors, or steps of the analysis, it will be followed by subheaders that signpost the analysis of each component.

The template also features (2) IRAC labels at the beginning of each paragraph. These headers and labels are included for educational purposes, offering guidance on structuring your analysis. Your usage of the headers is optional but can be helpful to readers. We advise against including the IRAC labels in submitted work.

The templates serve as a general guide for writing and should be adapted to align with (1) your specific factual circumstances and (2) your professor’s preferences, particularly if your professor provides explicit formulations of rules or analyses. For example, you may add or subtract an element or modify its language. Regardless of whether your professor provides explicit formulations, (3) this template will assist you in crafting point-rich analyses.

Please note that these templates are writing aids and not finished products. They are efficiently designed for exam essays to demonstrate conceptual understanding; thus, they are not comprehensive outlines with historical context or dicta.

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