Definitions – found in Article 9, §9-102(a)
The Nature of a Security Agreement
§9-201(a) It is a contract and is generally effective according to its terms between the parties.
§9-201(b) Any statute that establishes a different rule for consumers controls.
§9-201(c) In case of conflict between this article and a rule of law, statute, or regulation described in (b), that rule controls.
Debtor – owes repayment (§ 9-102(a)(28))
Collateral – personal property used as security including: proceeds, accounts, chattel paper, payment intangibles, promissory notes, or consignment goods (§ 9-102(a)(12))
SecuredParty – the creditor payment is owed to (§ 9-102(a)(72))
Account Debtor – the person who is obligated on an account, chattel paper, or general intangible but does not include a person obligated to pay a negotiable instrument (even if the instrument constitutes part of chattel paper) (§ 9-102(a)(3))
Lien Creditor – a creditor that has acquired a lien on property by attachment, levy or the like, an assignee for benefit of creditors, a trustee in bankruptcy, or a receiver in equity (§9-102(a)(56))
A secured transaction within the scope of Article 9 is any transaction which is intended to create in favor of one person a security interest in the personal property of someone else.
§1-201(b)(35) post revision page 28-29 or § 1-201(b)(37) pre-revision on pages : definition of Security interest
A secured transaction produces a lien in the personal property of the debtor for the benefit of the secured creditor. The lien is the relationship between certain personal property and certain debt. A lien “secures” the debt in two ways:
1. If the debtor defaults, the secured creditor may take possession of the personal property and use it to satisfy the debt. (This is called foreclosure.)
2. If other creditors of or buyers from the debtor, or the trustee in bankruptcy, assert a claim to that property, the secured creditor may have priority over their claims.
Note: THE MOST COMMON KIND OF LIEN IS A SECURITY INTEREST.
Article 9 covers:
w only liens on personal property or fixtures by contract §9-109(a)(1)
¨§9-109(a)(2) agricultural liens (an interest in “farm products” – see §9-102(a)(5))
w § 9-109(a)(3): also applies to sales of accounts, chattel paper, payment intangibles, and promissory notes
w § 9-109(a)(1) says that even if both parties are attempting to circumvent the creation of a “security interest,” article 9 applies to any transaction regardless of form that creates anything remotely like a security interest. Courts will look beyond the terms of the instrument to the real transaction.
ertificates of deposit, or notes
Chattel paper (§ 9-102(a)(11))
Writing which evidences a monetary obligation and creates a security interest in specific goods. Typical conditional sales contract is in this category.
Documents of title (§ 9-102(a)(30)
Examples are bills of lading or warehouse receipts
Intangibles that don’t require a writing
Accounts § 9-102(a)(2)
Any right to payment for goods/services sold or leased which is not evidenced by an instrument or chattel paper.
E.g. department store credit accounts
Health care receivables (§ 9-102(a)(46)
General Intangibles § 9-102(a)(42)
Catch-all category for intangibles; e.g. purely intangible collateral that is not an account and is not evidenced by a writing
E.g. copyrights, patents, trademarks, literary rights, rights to performance
Payment intangible (§ 9-102(a)(61)
General intangible under which the principal obligation is a monetary one.
Proceeds § 9-102(a)(64)
Whatever is received upon sale, exchange, or disposition of collateral.
Money, checks, deposit accounts are cash proceeds