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Three old ladies are going to a baseball game. They've never been and are very excited because of the way their team is playing. But just to make the game a little more interesting, they bring along a bottle of Jack Daniel,. It is a really good game and the crowd's into it and everybody is having a good time. The little old ladies keep adding a little Jack Daniel's to their colas and are having a wonderful time. So there's still a lot of game left when they notice that they are out of Jack Daniel's. Did you pay attention? Do you know what inning the game is in?

You may recall, Paul Levine wrote last year extensively about new Federal interpretations relative to credit reports on individuals even when the transaction was either commercial in nature or the individual guaranteed the transaction. The final word from the FTC was that credit reports could not be obtained on individuals without their prior written consent. In a recent reversal, the FTC has relaxed their rules and in situations when an individual has guaranteed commercial loans and credit, a credit report may be obtained. The FTC took the personal guarantee interpretation one step further and concluded that the individual who has personal liability on the commercial debt would fall under this relaxed state. This is an informal ruling and could change again. In the meantime, we will consider sole proprietors, partners of businesses and personal guarantors of corporations chargeable under this new ruling.

If Jack gave Jill one cent less than half of what Jill would have if Jill gave Jack one cent less than half of what Jack would have if Jack gave Jill one cent less than half of what Jill would have if Jill gave Jack one cent, he would then have just one cent more than Jill would have.

It seems a lot of fuss over very little, as they have only about fifty cents between the two of them. Can you figure out the exact amounts? ANSWER TO JULY/AUGUST BERNIE'S BRAINERS
13 Yellow Marbles
15 Green Marbles

If you haven't seen ten of those privacy notices on the new law, you've been out the country since 6/1/01. The Gramm Leach-Bliley Act is the first volley toward privacy issues that have dominated congress for some time. This first piece of legislation established a method to allow you to opt out of name sharing. Every insurance company and bank has flooded all of us with this legalese. The questions have come up for both commercial credit grantors and commercial collection agencies, what do we do under the new law. Many of us report to Experian, D & B or some other credit reporting group. The simple answer is nothing. The law was meant to protect consumers not commercial transactions. Some aggressive state regulators have decided to become involved but the bottom line is this bill isn't meant to stifle commercial credit business.

Reprinted with permission, "Legal Notes" August, 2001, Kohn Law Firm S.C. - This Represents Wisconsin but states across the country have adopted this change.

The Wisconsin Legislature has passed a revised Article 9 (Secured Transaction Bill) which became effective on July 1, 2001. Revised Article 9 provides the statutory framework within and across states that govern secure transactions, transactions which involve the granting of credit secured by personal property. This legislation made numerous changes in the law, such as the following:

• It expands the scope of the previous Article 9;
• A security interest can be taken in more kinds of collateral;
• It provides for a national uniform financing statement; and
• It modifies the place for filing financing statements.

The most important documents that come under the aegis of Article 9 are the security agreement and the financing statements in the sale of personal property. Although Article 9 retains the basic framework for the security agreement and financing statement, it significantly relaxes the minimum standards that those documents must meet. Throughout the revision of Article 9, there was an attempt to make the statute more neutral, so that the law would work regardless of whether the parties used proper documents, computerized records, or some other type of method not contemplated by the drafters at the time the revisions were made.

Under the revised Act, neither the security agreement nor the financing statement needs to be reduced to a tangible written form. All that is required is some sort of a record, which is a defined term that includes both paper documents and information which can be stored electronically, or through some other medium that is retrievable in some format. While oral statements cannot by themselves constitute a record, an audiotape recording or an oral message left in some sort of digital voice messaging system would qualify. Consistent with the concept of a paperless transaction, the revised Act eliminates the requirement of a debtor's signature for both the security agreement and the financing statement. In the security agreement, the signature requirement has been replaced with a requirement that the debtor authenticate the record of the agreement. Authenticating includes all permissible methods of signing a document: a signature, or the execution, or the use of some sort of symbol.

With respect to financing statements, there is a total elimination of the requirement of the debtor's signature. The only thing the debtor needs to do is authorize the filing of an authenticated record. The debtor's authentication of such a security agreement constitutes an authorization to file a financing statement covering the collateral described in the security agreement. If the creditor wishes to file a financing statement worded more broadly than the security agreement, or wishes to file a financing statement under the revised Act, explicit authenticated authorization should be obtained from the debtor.

Under the revised Act, the minimum requirements for effectiveness are very similar to those under the current law. Again, as noted above, the writing and signature requirements have been replaced with an authentication requirement. A security agreement must create or provide for a security interest, and the security agreement must provide a description of the collateral.

One of the most significant changes in the amended Article 9 is the new law governing perfection by filing. Article 9 will change both the State and the places within a State where financing statements must be filed. These changes will centralize all financing statements relating to a particular debtor and will be filed in a single office in each state. One should check one's own state to determine which office has been designated for the filing. As a result of the change in the filing place, local filing has been eliminated to file financing statements, where previously the financing statements had to be filed in a local county office. Most states previously had required county-based filing, where it was necessary to file not only in a county office, but also with the Secretary of State. Under the revised Article 9, the local filing requirement is eliminated and instead, most filing statements will be filed in a single statewide office, such as the Secretary of State Office.

Although this article only touches briefly on the more important revisions of the Act, it is important that each creditor and/or attorney review their state's revised legislation to make sure that all of the particulars have been investigated.

By: Attorney Robert W. Kohn
Kohn Law Firm S.C.
Milwaukee WI