Secured Transactions - Scope of Article 9

Question 1

What does Article 9 apply to?

Answer 1

Consensual (voluntary) security interest in personalty or fixtures.

Personalty = goods

Does not apply to statutory of mechanics liens.

Question 2

What can collateral be?

Answer 2

(1) Tangible collateral or goods
(2) Intangible or semi-intangibles
* Stocks bonds, mutual funds
* Patents, trademarks, copyrights
* Proceeds from sale of collaterals
* Promissory notes, drafts, accounts

Question 3

What are the five types of tangible collateral and how do you determine the classification?

Answer 3

(a) Consumer Goods - used for personal or familal purposes
(b) Equipment - items used in business
(c) Inventory - goods held for sale or lease
(d) Farm Products - crops, livestock, supplies for farming
(e) Fixtures - items annexed to realty

Determine purpose by looking at the primary use in the hands of your debtor.