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Uniform Commercial Code Revised Article 9 Secured Transactions; Sales of Accounts and Chattel Paper

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Uniform Commercial Code Revised Article 9 Secured Transactions; Sales of Accounts and Chattel Paper UNIFORM COMMERCIAL CODE REVISED ARTICLE 9 SECURED TRANSACTIONS; SALES OF ACCOUNTS AND CHATTEL PAPER [PROPOSED REVISED TITLE: UNIFORM COMMERCIAL CODE REVISED ARTICLE 9 SECURED TRANSACTIONS; SALES OF ACCOUNTS, CHATTEL PAPER, AND PAYMENT INTANGIBLES; CONSIGNMENTS] Reporters’ Prefatory Comments and Statement of Policy Issues ix PART 1. SHORT TITLE AND GENERAL MATTERS Section 9-101. Short Title. [Minor Style Changes Only] 1 Section 9-102. Policy and Scope of Article. 1 Section 9-103. Perfection and Priority of Security Interest and Agricultural Lien in Multiple State Transactions. 3 Section 9-104. Transactions Excluded From Article. 22 Section 9-105. Definitions and Index of Definitions. 26 Section 9-106. Definitions: “Account”; “General Intangibles”; “Payment Intangible.” 40 Section 9-107. Definitions: “Purchase Money Security Interest”; “Purchase Money Collateral”; Purchase Money Obligation”; Application of Payments; Burden of Establishing Purchase Money Security Interest. 42 Section 9-107A. Definitions: “Production Money Security Interest”; “Production Money Crops”; “Production Money Obligation”; [“Production of Crops”;] Burden of Establishing Production Money Security Interest. 46 Section 9-108. When After-Acquired Collateral Not Security for Antecedent Debt. [Deleted] 49 Section 9-109. Classification of Goods: “Consumer Goods”; “Equipment”; “Farm Products”; “Inventory.” 49 Section 9-110. Sufficiency of Description. 50 Section 9-111. Applicability of Article on Bulk Sales. [Minor Style Changes Only] 51 Section 9-112. Where Collateral Is Not Owned by Debtor. [Deleted] 51 Section 9-113. Security Interests Arising Under Article on Sales or Under Article on Leases. [Minor Style Changes Only] 51 [Section 9-114. Rights and Title of Consignee and Seller of Account or Chattel Paper with Respect to Creditors and Purchasers.] 52 Section 9-115. Investment Property. 54 Section 9-116. Security Interest Arising in Purchase or Delivery of Financial Asset. [Minor Style Changes Only] 58 Section 9-117. “Control” Over Deposit Account. 59 Section 9-118. “Control” Over Investment Property. 62 -ii- Section 9-119. “Control” Over Letter of Credit and Proceeds of Letter of Credit. 63 PART 2. VALIDITY OF SECURITY AGREEMENT AND RIGHTS OF PARTIES TO SECURITY AGREEMENT Section 9-201. General Validity of Security Agreement. [Minor Style Changes Only] 64 Section 9-202. Title to Collateral Immaterial. 64 Section 9-203. Attachment and Enforceability of Security Interest; Proceeds; Support Obligations; Formal Requisites. 65 Section 9-204. After-Acquired Property; Future Advances. 69 Section 9-205. Use or Disposition of Collateral Without Accounting Permissible. 70 Section 9-206. Agreement Not to Assert Defenses Against Assignee. 70 Section 9-207. Rights and Duties if Collateral Is in Secured Party's Possession. 72 Section 9-208. Request for Statement of Account or List of Collateral. 76 Section 9-209. Effect of Security Interest on Depositary Institution's Right of Set-Off. 77 -iii- PART 3. RIGHTS OF THIRD PARTIES; PERFECTED AND UNPERFECTED SECURITY INTERESTS; RULES OF PRIORITY Section 9-301. Persons That Take Priority Over Unperfected Security Interest or Agricultural Lien; Rights of Lien Creditor. 78 Section 9-302. When Filing Required to Perfect Security Interest or Agricultural Lien; Security Interests and Agricultural Liens to Which Filing Provisions Do Not Apply. 80 Section 9-303. When Security Interest or Agricultural Lien Is Perfected; Continuity of Perfection. 87 Section 9-304. Perfection of Security Interest in Instruments, Chattel Paper, Documents, Money, Deposit Accounts, Letters of Credit, and Goods Covered by Documents; Perfection by Permissive Filing; Temporary Perfection Without Filing or Transfer of Possession. 88 Section 9-305. When Possession by Secured Party Perfects Security Interest Without Filing. 92 Section 9-305A. Perfection by Control. 95 Section 9-306. “Proceeds”; Secured Party's Rights on Disposition of Collateral; Secured Party's Rights in Proceeds. 96 Section 9-307. Protection of Buyers of Goods. 101 Section 9-308. Purchase of Chattel Paper and Instruments. 102 -iv- Section 9-308A. Transfer of Money; Transfer of Funds From Deposit Account. 108 Section 9-309. Protection of Purchasers of Instruments, Documents, and Securities. [Minor Style Changes Only] 109 Section 9-310. Priority of Certain Liens Arising by Operation by Law. [Minor Style Changes Only] 110 Section 9-311. Alienability of Debtor's Rights. 110 Section 9-312. Priorities Among Conflicting Security Interests and Agricultural Liens in the Same Collateral. 111 Section 9-312A. Effectiveness of Right of Recoupment or Set-Off Against Deposit Account. 124 Section 9-313. Priority of Security Interests in Fixtures. [Minor Style Changes Only] 126 Section 9-314. Accessions. [Minor Style Changes Only] 129 Section 9-315. Priority If Goods Are Commingled or Processed. [Minor Style Changes Only] 130 Section 9-316. Priority Subject to Subordination. [Minor Style Changes Only] 131 Section 9-317. Secured Party Not Obligated on Contract of Debtor. [Minor Style Changes Only] 131 -v- Section 9-318. Rights Acquired by Assignee; Defenses Against Assignee; Modification of Contract; Discharge of Account Debtor; Notification of Assignment; Identification and Proof of Assignment; Term Prohibiting Assignment Ineffective. 131 Section 9-318A. Depositary Institution's Right to Dispose of Funds in Deposit Account. 136 Section 9-318B. Restrictions on Assignment of Certain General Intangibles Ineffective. 138 PART 4. FILING Section 9-401. Place of Filing. 141 Section 9-402. Contents of Financing Statement; Mortgage as Financing Statement; Effectiveness of Financing Statement After Certain Changes; Amendments; When Authorization Required; Liability for Unauthorized Filing. 143 Section 9-402A. Effectiveness of Financing Statement If New Debtor Becomes Bound by Security Agreement. 152 Section 9-403. What Constitutes Filing a Record; Refusal to Accept Record; Duration of Financing Statement; Effect of Lapsed Financing Statement; Duties of Filing Office. 155 Section 9-404. Termination Statement. 168 -vi- Section 9-405. Assignment of Rights Under Financing Statement; Duties of Filing Office. 170 Section 9-406. Multiple Secured Parties of Record. 172 Section 9-406A. Successor of Secured Party. 173 Section 9-407. Information From Filing Office; Sale or License of Records. 174 Section 9-408. Filing and Compliance with Other Statutes and Treaties for Consignments, Leases, Bailments, and Other Transactions. 176 Section 9-409. Registered Agent. 178 Section 9-410. Assignment of Functions to Private Contractor. 178 Section 9-411. Delay by Filing Office. 178 Section 9-412. Fees. 179 Section 9-413. Administrative Rules. 180 Section 9-414. Duty to Report. 181 Section 9-415. Claim Concerning Inaccurate or Wrongfully Filed Record; Failure to Send or File Termination Statement. 182 PART 5. DEFAULT Section 9-501. Default; Judicial Enforcement; Waiver and Variance of Rights and Duties; Procedure If Security Agreement Covers Both Real and Personal Property. 185 Section 9-502. Collection and Enforcement by Secured Party. 191 -vii- Section 9-503. Secured Party's Right to Take Possession After Default. [Minor Style Changes Only] 198 Section 9-504. Disposition of Collateral After Default. 199 [Section 9-504A. Limitation on Deficiency Claims in Consumer Goods Transaction.] 221 Section 9-505. Acceptance of Collateral in Full or Partial Satisfaction of Obligation; Compulsory Disposition of Collateral. 222 Section 9-506. Right to Redeem Collateral; Reinstatement of Obligation Secured Without Acceleration. 230 Section 9-507. Secured Party's Failure to Comply With This Part. 232 APPENDIX Section 1-201(9). Definition of “buyer in ordinary course of business.” 241 Section 1-201(32). Definition of “purchase.” 242 Section 1-201(37). Definition of “security interest.” 242 Section [2-102]. Definitions of “consignee,” “consignment, and “consignor.” 243 Section [2-406]. Sale on Approval and Sale or Return; Special Incidents. 244 Section 5-118. Security Interest in Documents, Instruments, and Certificated Securities Accompanying Presentation and Proceeds. 245 -viii- UNIFORM COMMERCIAL CODE REVISED ARTICLE 9 SECURED TRANSACTIONS; SALES OF ACCOUNTS AND CHATTEL PAPER [PROPOSED REVISED TITLE: UNIFORM COMMERCIAL CODE REVISED ARTICLE 9 SECURED TRANSACTIONS; SALES OF ACCOUNTS, CHATTEL PAPER, AND PAYMENT INTANGIBLES; CONSIGNMENTS] Reporters' Prefatory Comments and Statement of Policy Issues Annual Meeting Draft (May, 1996) 1. Background and History of Article 9 Revisions. In 1990, the Permanent Editorial Board for the Uniform Commercial Code (“PEB”), with the support of its sponsors, the American Law Institute (“ALI”) and the National Conference of Commissioners on Uniform State Laws (“Conference”), established a committee (“Study Committee”) to study Article 9 of the Uniform Commercial Code (“UCC”). The PEB charged the Study Committee to consider whether Article 9 and related provisions of the UCC are in need of revision. The PEB also requested the Study Committee to recommend the nature and the substance of any revisions that it thought desirable. The Study Committee issued its report as of December 1, 1992 (“Report”). The principal recommendation of the Report called for the creation of a drafting committee (“Drafting Committee”) for the revision of Article 9. The Report also recommended numerous specific changes to Article 9. The ALI and the Conference acted favorably upon the Report's principal recommendation. The Drafting Committee was organized
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