Types of Collateral

Question 1

What are the 5 main types of collateral?

Answer 1

Goods
Tangible Intangibles
Intangible Intangibles
Investment Property
Proceeds

Question 2

What are the subsets of Goods?

Answer 2

Consumer Goods =goods used or bought primarily for personal, family, or household purposes.

Inventory = goods held for lease or sale, or furnished under a K for service

Farm Product = Goods used in a farming operation (not trees)

Equipment= Goods other than consumer goods, inventory, or farm products

Question 3

Define Tangible Intangibles

Answer 3

Certain intangibles reduced to writing that can be transferred by the writing (e.g., contractual obligations)

Question 4

What are the types of Tangible Intangibles?

Answer 4

Instruments = Negotiable instruments (e.g., drafts or notes) that show a right to payment of money **(writing must be of the type used in the ordinary course of business with the necessary endorsement or assignment)

Documents of Title = Any document used in the regular course of business or financing that evidences the person in possession is entitled to the goods covered by the document (e.g., delivery orders)

Chattel Paper = A record evidencing both a monetary obligation and an SI in, or a lease of, specific goods **(two for one combo package of paper; (1) a note that promises to pay the money and (2) a grant of a security interest = chattel paper)

Question 5

What are the types of Intangible Intangibles

Answer 5

Accounts = Right of payment of a monetary obligation

General Intangibles = Intangible collateral that doesn’t fit in any other category

Question 6

Define Investment Property

Answer 6

Certificated and uncertificated securities, securities accounts, and entitlements, as defined in UCC Art. 8

***i.e., property bought for investment purposes- stocks, bonds

Question 7

Define Proceeds as a type of collateral

Answer 7

Collateral in the form of proceeds obtained from the disposition of other collateral

Can be cash or non-cash (e.g., account receivable)