Applying UCC Art. 9, Types of Collateral

Question 1

A security interest arises when

Answer 1

a debtor uses collateral to secure payment of funds

Question 2

UCC Article 9 applies to

3

Answer 2

Any transaction that creates a security interest in personal property by contract (regardless of form)

Substance > form

• Leases (if for entire economic life of the item)
• sales of accounts receivable, chattel paper, negotiable instruments, and payment intangibles

Question 3

UCC Article 9 is not applicable to

3

Answer 3

1. landlord’s liens;
2. interest in or a lien on real property (≠ security interest in real property)
3. assignment of a claim for wages, salary, or other compensation of an employee.

Question 4

Goods as a type of collateral includes

Answer 4

all things that are physically movable at the time the security interest attaches

Also includes computer programs imbedded in computers

Question 5

Sub-categories of goods

4

Answer 5

1. consumer goods
2. inventory
3. farm products
4. equipment

Question 6

Consumer goods are?

Answer 6

goods bought or used primarily for household purposes

Question 7

Inventory is?

4

Answer 7

1. goods that are held by a person for sale;
2. lease;
3. Raw materials for manufacture;
4. materials used in a business

Question 8

Farm products are?

Answer 8

goods, other than standing timber, with respect to which the debtor is engaged in a farming operation.

Question 9

What is equipment?

Answer 9

goods “other than inventory, farm products, or consumer goods.”

Question 10

Fixtures are

Answer 10

Goods that get attached to real property

Example: HVAC attached to a building

Question 11

Accessions are

Answer 11

a good that is physically united with another good in such a manner that the identity of the original good is not lost.

original good is NOT lost

EXAMPLE:
An expensive custom bicycle seat would be an accession to the bicycle it is attached to.

Question 12

Commingled goods are

Answer 12

goods that are physically united with other goods in such a way that their identity is lost in a product or mass.
(flour used in a cake)

ORIGINAL GOOD IS LOST

Question 13

Types of Collateral in UCC Art 9

4

Answer 13

1. Goods
2. Tangible Intangibles
3. Intangible Intangibles
4. Investment Property

Question 14

Tangible intangibles are

3

Answer 14

Documents that evidence other rights

1. instruments
2. documents
3. chattel paper

Question 15

Instruments are?

Answer 15

Promise to pay/order to pay

E.g. Promissory Note

Question 16

Documents are?

Answer 16

Negotiable or non-negotiable document of title

• bills of lading
• warehouse receipts

Question 17

Chattel paper is?

2

Answer 17

1. a payment obligation
   +
2. a security interest in goods

(note + security agreement)

Question 18

Intangible intangibles are?

Answer 18

Intangible rights that have no writings

Question 19

Accounts/Accounts Receivable are

Answer 19

payment or rights of payment to a monetary obligation for property that has been transferred or services that have been rendered

Money owed

Question 20

General intangibles are?

Answer 20

If cannot be categorized elsewhere, a catch-all that includes any personal property that is not in any other Article 9 categories

-Right to use domain name

Question 21

Types of intangible intangibles?

2

Answer 21

1. Accounts

2. General Intangibles

Question 22

Investment property for UCC 9 is

3

Answer 22

1. stocks
2. bonds
3. commidities

Question 23

Proceeds of Collateral is?

Answer 23

Anything that is received from the sale, lease, or disposition of collateral