A. Definitions & Eligible Transactions

What transactions are governed by Art. 9 of the UCC?

(i) any transaction
(ii) that creates a security interest
(iii) by agreement

SECURITY INTEREST

(i) interest in personal property or fixtures
(ii) that secures payment or performance of an obligation
(iii) w/ the purpose of protecting the creditor against DOT
a) debtors who may refuse or not be able to pay
b) other creditors who may try to obtain the same collateral to secure their debts
c) transfer of the collateral to a 3P

SECURED PARTY

the person in whose favor the security is created under a security agreement

OBLIGOR

a person who must pay or otherwise perform w/r/t the obligation that is secured by a security interest in the collateral

DEBTOR

a person who has an interest in the collateral, other than a security interest or other lien

COLLATERAL

property subject to a security interest

GOODS

anything that is moveable at the time that a security interest attaches

CONSUMER GOODS

goods that are acquired for personal, family, or household purposes

FARM PRODUCTS

only if the debtor is engaged in a farming operation, crops, livestock, or supplies that are used or produced in farming

INVENTORY

goods, other than farm products, that are owned and held for sale or lease

EQUIPMENT

any goods other than consumer goods, farm products, or inventory

When can a lease be a deemed a security interest?

(i) lessee must make payments to lessor to possess and use goods for the term of the lease
(ii) lessee cannot terminate the payment obligation
(iii) lessee has an option to become the owner of the goods for no additional consideration*

PURCHASE MONEY SECURITY INTEREST

a security interest created when money given to the debtor is used to acquire the collateral; gives priority over competing and perfected interests in the collateral