Collateral

Question 1

What are tangible collateral?

Answer 1

Goods and software embedded in goods

Question 2

What qualify as goods?

Answer 2

1. Consumer goods
2. Farm products
3. Inventory
4. Equipment
5. Software embedded in goods

Question 3

What are intangible collateral?

Answer 3

1. Chattel paper
2. Documents
3. Instruments
4. Investment property
5. Accounts
6. Commercial tort claims
7. Deposit accounts
8. Letter of credit right|
9. General intangibles

Question 4

What is equipment?

Answer 4

A catch-all category for anything that doesn’t fit in consumer goods, farm products or inventory

Question 5

What is a general intangible?

Answer 5

A residual category including copyrights

Question 6

When do leases fall under Article 9?

Answer 6

When the economic reality is a security interest

Question 7

For a lease, what is the bright-line test?

Answer 7

1. Lessee must pay the full obligation, regardless of early termination, AND
2. One of the following:
   a. term of lease is equal to or greater than the life of goods
   b. Must renew lease
   c. Option to renew for no or nominal CX
   d. Option to become owner for no or nominal CX

Question 8

When does Article 9 of the UCC apply?

Answer 8

For transactions that create an SI in personal property or a fixture

Question 9

When is a consignment covered by Article 9?

Answer 9

1. Consignor delivers to merchant for selling
2. Merchant is not generally known by creditors to be substantially engaged in the business of selling these goods
3. The value is at least $1,000
4. Not consumer goods

Question 10

What kind of liens are security interests?

Answer 10

Agricultural liens only

Question 11

Are sales of a business covered by Article 9?

Answer 11

Typically not

Question 12

When is needed for an enforceable security interest?

Answer 12

1. Secured party gives value
2. Debtor gets rights
3. Authenticated (signed)