Types of collateral

Question 1

4 types of Goods

Answer 1

1) consumer goods
2) equipment
3) farm products
4) inventory

Question 2

in classifying collateral, look to see how…

Answer 2

DEBTOR uses the collateral

Question 3

Goods: Consumer goods

Answer 3

used or bought for use primarily for PERSONAL, FAMILY or HOUSEHOLD purposes

Question 4

Goods: Equipment (default)

Answer 4

used or bought for use primarily in BUSINESS

Question 5

Goods: Farm products

Answer 5

crops, livestock, supplies used or produced in farming operations, products of crops, livestock in their unmanufactured states (ginned cotton, wool-clip, maple syrup, milk and eggs) if they are in the possession of a FARMER debtor

Question 6

Goods: Inventory

Answer 6

held by person who holds them FOR SALE or LEASE or to be furnished under SERVICE Ks

material USED OR CONSUMED IN BUSINESS in short period of time

Question 7

Semi-intangible and intangible property (8 kinds)

Answer 7

1) instruments
2) documents
3) chattel paper
4) investment property
5) accounts
6) deposit accounts
7) commercial tort claims
8) general intangibles

Question 8

Semi/intangible: instruments

Answer 8

negotiable instruments (e.g. promissory notes, checks) and any other writing which evidences a RIGHT TO THE PAYMENT OF A MONETARY OBLIGATION (e.g. certificates of deposit)

and which are in the ordinary course of business transferred by DELIVERY with any necessary INDORSEMENT or assignment

(does not include investment property)

Question 9

Semi/intangible: documents

Answer 9

bill of lading, warehouse receipt

Question 10

Semi/intangible: chattel paper

Answer 10

a record or records which evidence both a MONETARY OBLIGATION and a SECURITY INTEREST in or a LEASE OF SPECIFIC GOODS

“record” = info in tangible medium (written / “tangible chattel paper”) or intangible medium (electronically stored / “electronic chattel paper”)

e.g. promissory note + written security agreements

Question 11

Semi/intangible: investment property

Answer 11

stocks, bonds, mutual funds, brokerage accounts

Question 12

Semi/intangible: accounts

Answer 12

a right to PAYMENT

NOT EVIDENCED BY AN INSTRUMENT

1) for goods
2) for services
3) for real property
4) for a policy of insurance issued or to be issued
5) for a secondary obligation incurred or to be incurred
6) for energy provided or to be provided
7) for the use or hire of a vessel
8) arising out of the use of a credit card
9) as lottery winnings

health care insurance receivables are included

accounts receivable included

a contractual obligation arising from a LOAN OF MONEY is NOT an account (it’s a general intangible)

Question 13

Semi/intangible: deposit accounts

Answer 13

an account maintained with a bank (nonconsumer deposit account aka used for business)

Question 14

Semi/intangible: commercial tort claims

Answer 14

a claim arising in tort with respect to which the claimant is an org (partnership or corporation)

OR where claimant is an individual and the claim arose in the claimant’s business or profession AND does not include damages for PERSONAL INJURY or the DEATH of an individual

Question 15

Semi/intangible: general intangibles (default)

Answer 15

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

e.g. software, patent and trademark rights, copyrights, goodwill

right to return of a security deposit held by landlord

liquor license

tax refund claim

a general intangible under which the account debtor’s principal obligation is a monetary obligation is a PAYMENT INTANGIBLE

a contractual obligation arising from a LOAN OF MONEY

Question 16

Semi/intangible: proceeds

Answer 16

whatever is received upon sale, exchange, collection, disposition of collateral or proceeds