General Principles

Question 1

When does a security interest arise?

Answer 1

A security interest arises when a DEBTOR uses property as COLLATERAL to secure repayment of funds to a SECURED PARTY.

Question 2

What does UCC Article 9 apply to?

Answer 2

+ any transaction that creates a security interest in personal property or fixtures by CONTRACT;

+ leases that are for the entire economic life of the item; AND

+ sales of account receivable, chattel paper, and negotiable instrument.