Nonliability and Limitation on Liability of Secured Party — Liability of Secondary Obligor

  1. Law
  2. Tennessee Code
  3. Commercial Instruments and Transactions
  4. Secured Transactions
  5. Default
  6. Nonliability and Limitation on Liability of Secured Party — Liability of Secondary Obligor

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  1. Limitation of liability of secured party for noncompliance with chapter.  Unless a secured party knows that a person is a debtor or obligor, knows the identity of the person, and knows how to communicate with the person:
    1. the secured party is not liable to the person, or to a secured party or lienholder that has filed a financing statement against the person, for failure to comply with this chapter; and
    2. the secured party's failure to comply with this chapter does not affect the liability of the person for a deficiency.
  2. Limitation of liability based on status as secured party.  A secured party is not liable because of its status as secured party:
    1. to a person that is a debtor or obligor, unless the secured party knows:
      1. that the person is a debtor or obligor;
      2. the identity of the person; and
      3. how to communicate with the person; or
    2. to a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows:
      1. that the person is a debtor; and
      2. the identity of the person.
  3. Limitation of liability if reasonable belief that transaction not a consumer-goods transaction or consumer transaction.  A secured party is not liable to any person, and a person's liability for a deficiency is not affected, because of any act or omission arising out of the secured party's reasonable belief that a transaction is not a consumer-goods transaction or a consumer transaction or that goods are not consumer goods, if the secured party's belief is based on its reasonable reliance on:
    1. a debtor's representation concerning the purpose for which collateral was to be used, acquired, or held; or
    2. an obligor's representation concerning the purpose for which a secured obligation was incurred.
  4. Limitation of liability for statutory damages.  A secured party is not liable to any person under § 47-9-625(c)(2) for its failure to comply with § 47-9-616.
  5. Limitation of multiple liability for statutory damages.  A secured party is not liable under § 47-9-625(c)(2) more than once with respect to any one (1) secured obligation.


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