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“Agreements or commitments to lend, renew or repay a debt, including commitments to renew or renew that debt, are not applicable, regardless of the legal theory on which it is based and which is somehow related to the credit contract. In order to protect you (borrowers) and us (creditors) from misunderstandings or disappointments, all agreements we enter into on such matters are included in this letter, which is the full and exclusive declaration of the agreement between us, unless we can later agree in writing to amend it. A security contract is a contract between the creditor and the debtor in a secure transaction that governs each party`s rights to secure real estate (security). To establish a valid security interest, certain specific requirements are necessary: 1) it must be signed; 2) it must make it clear that a security interest is being considered and 3) it must contain a sufficient description of persons who are deprived of security. As mentioned above, certain requirements are necessary for a good security agreement. The security agreement is a document that serves as the basis for an interest in the security of the property and must be accepted by the parties. For this reason, it seems clear that the parties to the document intend to provide a security interest. This statement should be as concrete as possible. While it is not necessarily correct that specific wording is necessary, the simplest is to meet this requirement by adding the language that the debtor “grants a security interest” to the property described in the agreement.

This text is so clear that it confirms the intention to grant an interest in the security of the property. We recently published a few articles on security interests, and how they can be used to reduce or eliminate a company`s credit risk. I published a brief overview of safety interests last week, and Seth followed with an article outlining ucC`s instructions and how they create safety interests for parties in cases where a mechanical pawning permit is not available. To enjoy the benefits of a UCC pledge and the benefits of being a secured creditor, it is essential to conclude a valid, binding and appropriate security agreement. 2. Notwithstanding any other contrary provision in this chapter, the provisions of this section apply only to commercial credit contracts and not to credit contracts for personal, family or domestic purposes. A signature of the debtor and the owner of the guarantee, if the owner is another party, must sign the security agreement for the security contract to be effective. This is obviously important and it is a strict rule.

Particular attention should be paid to the fact that the name of the debtor (and, if necessary, the owner) is correct – it is not scandalous that security agreements are cancelled if the debtor`s name is not correct. While this seems obvious, and difficult to obtain wrongly, since the debtor must sign the document, it can be difficult. If the debtor is a capital company or other entity, the actual name may be different from the name under which he trades. Since a security agreement is a contract between the parties that regulates the rights and obligations of guarantees, any rules relating to guarantees should be included in the agreement.