Classifying Collateral Flashcards
Goods: Definition
Anything moveable at the time a security interest attaches
Class of good is determined by debtor’s principal use of the good at time interest attaches
Four Sub-Categories of Goods
(1) Consumer Goods
(2) Farm Products
(3) Inventory
(4) Equipment
Goods: Consumer Goods
Goods acquired primarily for PERSONAL, FAMILY, or HOUSEHOLD purposes
Goods: Farm Products
Crops, livestock, supplies used or produced in farming operations
DOES NOT INCLUDE FARMING EQUIPMENT
Goods: Inventory
Goods, other than farm products, HELD FOR SALE OR LEASE
Includes goods furnished under a service contract, raw materials, works in progress, or materials used/consumed in business
Goods: Equipment
Goods that don’t fit into any of the other definitions (consumer goods, farm products, or inventory)
Ex: Machinery, delivery vans, office equipment, farm equipment
Rights to Payment: Definition
Right to be repaid money by a third party that the debtor then uses as collateral for a loan
Four Types of Rights to Payment
(1) Instrument
(2) Chattel Paper
(3) Accounts
(4) Payment Intangible
Rights to Payment: Instrument
Ex: Promissory notes, check, and drafts governed by UCC Article 3
Rights to Payment: Chattel Paper
A record with:
(1) A monetary obligation; and
(2) Security interest or a lease
Other Types of Collateral: Documents
Documents of title that generally give the holder ownership rights in goods held by a bailee
Other Types of Collateral: Investment Property
Includes certified and uncertified securities
Stocks and bonds
Other Types of Collateral: Deposit Accounts
Bank accounts
Other Types of Collateral: Letter of Credit Rights
A right to payment or performance under a letter of credit
Other Types of Collateral: General Intangibles
Blueprints, copyrights, trademarks, software, etc.
