Secured Transactions -- Classifying The Collateral

Front 1

What is the definition of a good?

Back 1

Goods includes all things which are moveable at the time the security interest attaches, and include the unborn young of animals and growing crops. Goods also include fixtures.

Front 2

What is a consumer good?

Back 2

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

Front 3

What is equipment?

Back 3

Used or bought for use primarily in business.

Front 4

What are farm products?

Back 4

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

Front 5

What is inventory?

Back 5

Held by a person who holds them for sale or lease or to be furnished under service contracts; materials used or consumed in business.

Front 6

What is the default "catch-all" category?

Back 6

Equipment

Front 7

How would you classify a guitar purchased by Harry as a present for his son Marvin?

Back 7

Consumer good

Front 8

How would you classify the same guitar purchased by Sterling, a professional rock musician, to be used on tour?

Back 8

Equipment

Front 9

How would you classify milk in the hands of a farmer who got it from his cows?

Back 9

Farm Product

Front 10

How would you classify milk in the hands of a grocery store or a restaurant?

Back 10

Inventory

Front 11

How would you classify milk in the hands of the grocery store's customer who is buying for his family's consumption?

Back 11

Consumer good

Front 12

How would you classify automobiles held by a local car rental agency?

Back 12

Inventory

Front 13

How would you classify pencils and other stationary supplies used by Sears or some other large retailer in its credit offices?

Back 13

Could be either equipment or inventory. Argue both.

Front 14

What is an instrument?

Back 14

Negotiable instruments and any other writing which evidences a right to the payment of a monetary obligation, and which are in the ordinary course of business transferred by delivery with any necessary endorsement or assignment (does not include investment property).

Front 15

What is a document?

Back 15

A document which in the regular course of business intreated 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).

Front 16

What is chattel paper?

Back 16

A record or records which evidence both a monetary obligation and a security interest in or lease of specific goods. A "record" is information that is stored in either a tangible medium (e.g. written on paper), or an intangible medium (e.g. electronically stored).

Front 17

What is investment property?

Back 17

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

Front 18

What are accounts?

Back 18

A right to payment (not evidenced by an instrument or chattel paper) for (1) goods, (2) services, (3) real property, (4) a policy of insurance issued or to be issued, (5) a secondary obligation incurred or to be incurred, (6) energy provided or to be provided, (7) use or hire of a vessel, (8) arising out of the use of a credit card, or (9) as lottery winnings. Health care insurance receivables are not included.

Front 19

What are deposit accounts?

Back 19

An account maintained with a bank. Note: Article 9 only applies to non consumer deposit accounts and deposit accounts that are claimed as proceeds of other collateral.

Front 20

What are commercial tort claims?

Back 20

(1) A claim arising in tort with respect to which the claimant is an organization (e.g. partnership or corporation), or (2) where the 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.

Front 21

What are general intangibles?

Back 21

Any personal property not coming within the stope of the other definitions (e.g. software, patent and trademark rights, copyrights, goodwill). A general intangible under which the account debtor's principal obligation is a monetary obligation is a payment intangible.

Front 22

What is the catch-all category for semi-intangible and intangible property?

Back 22

General intangibles

Front 23

How would you classify a promissory note?

Back 23

Instrument

Front 24

How would you classify a stock certificate?

Back 24

Investment property

Front 25

How would you classify a receipt given to a farmer by a silo operator when the farmer stored her grain there?

Back 25

Document

Front 26

How would you classify a written contract in which a car buyer purchasing on credit promises to pay the car dealership for the car and grants the dealership a security interest in the car?

Back 26

Chattel paper

Front 27

How would you classify: Big T sells tires on credit. What are its customer's obligations?

Back 27

Accounts

Front 28

How would you classify: A hospital has patients who come in for treatment sign paperwork authorizing the hospital to seek patent from their health insurance coverage provider.

Back 28

Accounts

Front 29

How would you classify: Credit card company issues millions of credit cards to cardholders, who use them in transactions with merchants. Merchants send the resulting paperwork to credit card company for reimbursement (minus certain fees).

Back 29

Accounts

Front 30

How would you classify the checking account that you have at your bank?

Back 30

Deposit account, however, because it is a consumer account, you cannot take an Article 9 security interest in it.

Front 31

How would you classify patent and trademark rights, copyrights, goodwill, a tax refund claim, a liquor license, a commercial clamming license, a right to the return of a security deposit held by a landlord, etc?

Back 31

General intangibles

Front 32

How would you classify a right to sue a corporation for wooing away a trusted employee?

Back 32

Commercial tort claim

Front 33

How would you classify a claim arising in tort that has been settled and reduced to a contractual obligation to pay?

Back 33

Payment intangible

Front 34

How would you classify a computer program?

Back 34

Depends...
If it is embedded in a computer, it is part of the computer.
If it is not embedded and sold separately, then it is a general intangible.