Types of Collateral

Question 1

Goods (Definition)

Answer 1

Goods are moveable, tangible, personal property.

Question 2

Goods (4 Types)

Answer 2

There are 4 types of goods:

1. Consumer Goods;
2. Equipment;
3. Farm Products;
4. Inventory.

Goods are classified based on the debtor’s use of that good.

Question 3

Consumer Goods

Answer 3

Consumer goods are goods used or bought for personal, household, or family purposes.

Question 4

Equipment

Answer 4

Equipment are goods bought for use in business. This is UCC Article 9’s default category for goods.

Question 5

Farm Products

Answer 5

Farm Products are crops, livestock, or supplies used or produced in farming and in the possession of a debtor engaged in farming.

Question 6

Inventory

Answer 6

Inventory are goods held for sale or lease OR goods consumed by a business over a short period of time.

Question 7

Semi-intangible and Intangible Property (8 Types)

Answer 7

There are 8 types of semi-intangible and intangible property:

1. Instruments;
2. Documents;
3. Chattel Paper;
4. Investment Property;
5. Accounts;
6. Deposit Accounts;
7. Commercial Tort Claims;
8. General Intangibles.

Property is classified based on the debtor’s use of that good.

Question 8

Instrument

Answer 8

Instruments are pieces of paper that represent the right to be paid money. Examples include promissory notes and checks.

Question 9

Documents

Answer 9

Documents represent the right to recieve goods.

Question 10

Chattel Paper

Answer 10

Chattel paper is a record is a record that evidences both (1) a monetary obligation and (2) a security interest in a specific good or a lease of a specific good.

Question 11

Investment Property

Answer 11

Investment property includes stocks, bonds, mutual funds, and brokerage accounts.

Question 12

Accounts

Answer 12

An account is the right to be paid for property sold or services rendered.

⇒ Accounts do not include instruments or chattel papers. Nor do they include obligations that arise from the loan of money.

Question 13

Deposit Accounts

Answer 13

A deposit account is an account maintained at a bank.

Question 14

Commercial Tort Claims

Answer 14

A tort claim that arises in the claimant’s profession or business that does not include damages for personal injury or death.

Question 15

General Intangibles

Answer 15

Everything else. This is the default category for semi-intangible and intangible property. It includes things like software, patent and trademark rights, copyrights, and good will.

Question 16

Original Use Test

Answer 16

Under the original use test, a debtor’s original intended use of collateral governs the collateral’s classification.