The SCOPE of Article 9 of the UCC Flashcards
What is the scope of article 9?
Article 9 applies to consensual security interests in personalty and fixtures.
[when you consensually use your possessions as collateral]
NOTE: when the collateral is real estate, apply the law of mortgages
Personalty =
generally, goods
Does article 9 apply to statutory liens or mechanics liends?
NO. Applies only to voluntary or consensual collateralizations.
Def: Debtor
the entity who owes the money
Def: Secured party/Secured Creditor
the entity who lends the money
Def: security agreement
the contract or record; the writing that authenticates the deal between the debtor and the secured party/creditor
Def: security interests
the right the creditor has in debtors personalty or fixtures
Def: collateral
the personalty or fixtures that creditor can look to for satisfaction; the things that creditor can proceed against to be made whole if debtor defaults
Tangible Collateral: Consumer Goods
those items used for personal or familial purposes
ex- home dining room set, blender, oven, refrigerator, car
Tangible Collateral: Equipment
items used in business
Ex- Macy’s cash registers, Mrs. Field’s cookie ovens, Le Cirque restaurant’s china, Dr. Dentist’s dental chair, Armani’s sewing machines
Tangible Collateral: Inventory
goods held for sale or lease, such as Circuit City’s stock of stereos, Nordstrom’s spring clothing line or Ethan Allen’s furniture line
Tangible Collateral: Farm Products
crops, livestock and supplies used in farming operations, such as eggs, corn and cows in possession of a farmer
Tangible Collateral: Fixtures
items annexed to realty, such as lighting fixtures, sprinkler systems, furnaces.
REMEMBER: The key for purposes of classifying tangible collateral is to ask:
What is the debtor’s primary use of this item? [Subjective test]
What are examples of intangible or semi-intangible collateral?
- IP: patents, trademarks, copyrights
- stocks, bonds, mutual funds
- proceeds from the sale of collateral
- accounts receivable (right to payment for goods or services)
- promissory notes and drafts [pieces of commercial paper]
