Lesson 4: Uniform Commercial Code (UCC) Article 9

Welcome to Lesson 4 of our instructable on Exploring Secured Transactions Law Fundamentals. In this lesson, we dive into the Uniform Commercial Code (UCC) Article 9, which governs secured transactions in personal property.

Overview of UCC Article 9

UCC Article 9 provides a comprehensive framework for the creation and enforcement of security interests in personal property. It is essential for anyone involved in secured transactions to understand its provisions and implications.

Key Concepts in UCC Article 9

  • Security Interest: An interest in personal property or fixtures which secures payment or performance of an obligation.
  • Debtor: The person who owes payment or performance of the secured obligation.
  • Secured Party: The person in whose favor a security interest is created.
  • Collateral: The property subject to a security interest.

Attachment of Security Interest

For a security interest to be enforceable against the debtor and third parties, it must "attach". The following conditions must be met:

  1. Value has been given by the secured party.
  2. The debtor has rights in the collateral.
  3. The debtor has authenticated a security agreement that provides a description of the collateral.

    
      For more details on the attachment process, see our lesson on Attachment of Security Interest.

Perfection of Security Interest

Perfection is necessary to give the secured party priority over other creditors. The most common method is filing a financing statement. Additional methods include possession and control. 


    
      Learn more about filing financing statements in our lesson on Filing a Financing Statement.

Priority Rules

UCC Article 9 sets forth rules for determining the priority of conflicting claims to the same collateral. Generally, perfected security interests have priority over unperfected ones. 


    
      Priority rules can be complex. For a detailed discussion, check out our lesson on General Priority Rules under UCC Article 9.

Default and Remedies

In the event of default, the secured party has several remedies under UCC Article 9, including the right to repossess and dispose of the collateral. 


    
      Learn about default and remedies in our lessons on Rights upon Default and Rights to Repossess and Dispose of Collateral.

Diagram: Basic Flow of Secured Transaction under UCC Article 9

graph TD A["Debtor"] -->|"Grants Security Interest"| B["Secured Party"] B -->|"Provides Value"| A A -->|"Rights in Collateral"| C["Collateral"] C -->|"Described in Security Agreement"| A B -->|"Perfects Interest"| C

Conclusion

Understanding UCC Article 9 is crucial for navigating secured transactions. By mastering its concepts, you can better ensure that your security interests are properly created, perfected, and enforced.

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