Types of Collateral

Question 1

Tangibles

Answer 1

1. Farm products
2. Consumer goods
3. Inventory
4. Equipment

Question 2

Intangibles

Answer 2

1. Instruments
2. Documents
3. Chattel paper
4. Investment property
5. Accounts
6. Deposit accounts
7. Commercial tort claims
8. General intangibles

Question 3

Consumer goods

Answer 3

Goods purchased primarily for personal, family, or household purposes

Question 4

“Goods”

Answer 4

Tangible, movable personal property

Question 5

Inventory

Answer 5

Goods that are:

1. leased,
2. Held for sale for lease,
3. Given under contract of service, or
4. Consisting of raw materials, work in process, or materials used/consumed in a business in a short period of time

Question 6

Equipment

Answer 6

1. Goods that are used or bought for use in a business
2. Goods other than farm products, consumer goods, or inventory

** Catchall for tangible items that do not fit in any other tangibles category
** this is the default category for goods—if the collateral is a good and it doesn’t fit the definition of consumer goods, inventory, or farm products, it gets classified as equipment.

Question 7

Instruments

Answer 7

Pieces of paper representing the right to be paid money, e.g., promissory notes, drafts/checks, certificates of deposit

Question 8

Documents

Answer 8

A document that represents the right to receive goods, e.g., a bill of lading, a warehouse receipt

Question 9

Chattel paper

Answer 9

Record evidencing both a monetary obligation and a security interest in goods or a lease of goods, e.g., promissory note or security agreement

Question 10

“Record”

Answer 10

A “record” is information that is stored in either a tangible medium, e.g., written on paper, or intangible medium, e.g., electronically stored

**chattel paper that is stored in an electronic medium is also called an “electronic chattel paper”

Question 11

Investment property

Answer 11

Includes items such as stocks, bonds, mutual funds, and brokerage accounts containing such items

Question 12

Accounts

Answer 12

Includes a right to payment (that is not evidenced by an instrument or chattel paper) for property sold or services rendered

• e.g., money owed to a dentist after seeing a patient
• does not include deposit accounts, investment property, or commercial tort claims

Question 13

Accounts include:

Answer 13

1. Property that has been sold/leased/disposed of
2. services rendered
3. insurance policy
4. secondary obligation incurred
5. energy provided
6. Use or hire of a vessel under a charter/contract
7. credit card debt
8. lottery winnings

Question 14

Deposit accounts

Answer 14

An account maintained with a bank

**in general, UCC Article 9 only applies to security interests in nonconsumer deposit accounts and account monies that are claimed as proceeds of other collateral

Question 15

Commercial tort claims

Answer 15

A tort claim where

1. The claimant is an organization, e.g., a partnership or corporation, or
2. The claimant is an individual, the claim arose out of the claimant’s business or profession, and the claim does not include damages for personal injury or the death of an individual

**Article 9 also applies to noncommercial tort claims that are claimed as proceeds of other collateral

Question 16

General intangibles

Answer 16

Any personal property not coming within the scope of the other definitions

• e.g., patent and trademark rights, copyrights, and goodwill
• a general intangible under which the account debtor’s principal obligation is a monetary obligation is a payment intangible