Types of Collateral

Question 1

Goods

Answer 1

• tangible, movable, personal property
• Classified as either 1) consumer goods, 2) equipment, 3) farm products, or 4) inventory

Question 2

Consumer Goods

Answer 2

Used or bought for use primarily for personal, family, or household purposes.

Question 3

Equipment Goods

Answer 3

Used or bought for use primarily in business (the catch all category of goods).

Question 4

Farm Products

Answer 4

Farm Product Goods are:

1. Crops, livestock, suplies used or produced in farming operations, or products of crops/livestock
2. in unmanufactured state
3. that are in the possession of a debtor engaged in farming operations

e.g. milk in hands of farmer-debtor; but NOT milk in hands of grocery store customer (consumer goods) or grocery store (inventory)

Question 5

Inventory Goods

Answer 5

• Held for sale or lease or to be furnished under service contracts
  
  • e.g. cars held by car rental company
• materials used or consumed in a business in a short period of time (might cross over with “equipment”)
  
  • e.g. pencils used by Sears in credit offices

Question 6

Semi-intangible and Intangible Property

(8 kinds)

Answer 6

1. Instruments
2. Documents
3. Chattel Paper
4. Investment Property
5. Accounts
6. Deposit accounts
7. Commercial tort claims
8. General Intangibles

Question 7

Instruments

Answer 7

Negotiable instruments/writing which evidences a right to payment of a monetary obligation

e.g. promissory notes, checks, drafts

Note, does NOT include investment property (such as stock certificate).

Question 8

Documents

Answer 8

a document which in the regular course of business is treated as evidencing that the person in possession of it is entitled to receive, hold, and dispose of the document and the goods it covers

e.g. bill of lading, warehouse receipt

Question 9

Chattel Paper

Answer 9

• Promissory note + Security agreement
• In other words, record which evidences both monetary obligation AND security interest in or lease of specific goods.
  
  • record may be information stored on either tangible (writing) or intangible (electronic) medium - when electronic medium, “electronic chattel paper”

Question 10

Investment Property

Answer 10

includes items such as stocks (including stock certificate), bonds, mutual funds, and brokerage accounts conatining such items.

Question 11

Accounts

Answer 11

A right to payment (NOT evidenced by an instrument or chattel paper) for

1. goods
2. services
3. real property
4. an insurance policy
5. secondary obligation
6. energy provided or to be provided
7. for the use of hire of a vessel
8. arising out of the use of a credit card
9. as lottery winnings
10. Includes HEALTH CARE insurance receivables.

BUT NOTE: K obligation arising from loan of money is NOT an acct, it’s a general intangible

Includes credit card accounts

Question 12

Deposit Accounts

Answer 12

• Basically, bank accounts
• Art. 9 applies ONLY TO NONCONSUMER deposit accounts and deposit accounts that are claimed as proceeds of other collateral
  
  • can’t take security interest in personal savings account

Question 13

Commercial Tort Claims

Answer 13

Intangible collateral

A claim arising:

• in tort with respect to which claimant is an organization (corp, partnership)

OR

• where the claimant is an individual and the claim arose in claimant’s business AND does not include dmgs for personal injury or death

Question 14

General Intangibles

Answer 14

any personal property not within the scope of another category

most often: software, patent and trademark rights, goodwill, etc.