Scope of Article 9

Question 1

Generally, what does Article 9 of the UCC apply to?

Answer 1

Article 9 of the UCC applies to ANY transaction intended to create a security interest in personal property or fixtures.

Question 2

What is a security interest?

Answer 2

A security interest gives a creditor the right to sell a debtor’s property in order to satisfy a debt.

Question 3

What type of property can be subjected to a security interest?

Answer 3

Generally, in an Article 9 transaction, personal property or fixtures secure the payment of a debt or insure performance of a contract obligation with the property serving as collateral.

Question 4

What are the three main parties to an Article 9 transaction?

Answer 4

There are three main parties to an Article 9 transaction:

1. Secured party: The secured party is the creditor who possesses the benefit of the security interest.
2. Debtor: the debtor is the party who has an ownership interest or other sufficient interest in the personal property securing the obligation.
3. Obligor: The obligor is the party held responsible for the underlying obligation (usually also the debtor, but could be a type of guarantor).