Classification of Collateral

Question 1

What are common examples of Collateral?

Answer 1

Consumer Goods
Equipment
Inventory
Intangibles

Question 2

What is a “good” under article 9?

Answer 2

An umbrella concept that includes:
Consumer goods
Equipment
Inventory

Question 3

What are examples of Intangible Collateral

Answer 3

Documents (bill of lading, warehouse reciept, airbill)
Investment Properties
Instruments (promissory notes)
Chattel Paper

Question 4

What is Chattel Paper?

Answer 4

A record that evidences both a monetary obligation and a security interest in specific goods.

Example: Suppose you run an automobile dealership and your business successfully sells a lot of cars each month on credit.

The purchasers sign promissory notes (instrument = monetary obligation) in your favor AND also sign a security agreement giving your dealership a security interest in the sold vehicles (security interest in goods).