Also known as: UCC Article 9 · Article 9 · U.C.C. Art. 9 · UCC Art. 9 · secured transactions · UCC 9
Written by attorneys — see sources below.
A statutory framework that governs the creation, attachment, perfection, priority, and enforcement of security interests in personal property and fixtures. The framework applies to transactions that create security interests by contract and to certain sales of accounts and consignments. It excludes landlord liens, wage assignments, and other enumerated interests.
Union Steel holds a note secured by a mortgage on Umar Usmani's commercial building. Union Steel sells the note to Ultimate Solutions as collateral for a separate loan. Ultimate Solutions files a financing statement describing its interest in the note. Because the transfer of the obligation as collateral triggers Article 9, Ultimate Solutions perfects its security interest in both the note and the mortgage.
Ulysses Usher buys equipment from Upstream Petroleum on credit and grants a security interest. When Ulysses defaults, Upstream seizes the equipment without prior notice or hearing under a contractual self-help clause. The seizure occurs under state procedures that mirror those invalidated for lack of predeprivation process. Article 9 enforcement rights therefore yield to constitutional constraints on pre-judgment deprivation of property.
Margarita Fuentes, a Florida resident, purchased a gas stove and a stereophonic phonograph from the Firestone Tire and Rubber Company under conditional sales contracts calling for monthly payments over time, with Firestone retaining title until full payment. After making payments for more than a year, about two hundred dollars remained due. A dispute developed between Fuentes and Firestone over servicing of the stove. Firestone then instituted an action in small claims court for repossession. It obtained a writ of replevin from the court clerk by submitting form documents and posting a bond in double the value of the property. A deputy sheriff and Firestone agent seized the stove and stereo from Fuentes's home the same day. Fuentes subsequently brought an action in federal district court challenging the constitutionality of the Florida prejudgment replevin procedures. A three-judge district court was convened and upheld the statute. In the consolidated Pennsylvania case, several residents purchased household goods such as beds, tables, and other items under similar installment contracts. After claimed defaults, sellers obtained writs of replevin from a prothonotary upon ex parte applications and posting of bonds. County sheriffs seized the goods from the buyers' homes without prior notice. This included one instance where a former deputy sheriff obtained a writ for his son's clothes, furniture, and toys. The Pennsylvania appellants filed suit in federal district court, where a three-judge court upheld the statute. The Supreme Court noted probable jurisdiction of the appeals from both district court decisions.
View caseArticle 9 applies if the transaction creates a security interest in personal property by contract. A court examines whether the secured-financing aspects predominate over other elements such as franchise licensing. When the grant of an interest in equipment and receivables to secure an advance is explicit, the financing provisions control and bring the deal within Article 9.
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No. Article 9 expressly excludes a landlord's lien other than an agricultural lien. The exclusion applies even when the lease grants the lien to secure unpaid rent. A perfected Article 9 security interest in the same inventory therefore prevails over the excluded landlord lien under general priority principles.
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No. Article 9 excludes an assignment of a claim for wages, salary, or other compensation of an employee. The exclusion covers direct payroll deductions used to repay a personal loan. The assignee therefore acquires no Article 9 security interest in the wages.
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A right to payment for services to be rendered qualifies as an account even if performance has not yet occurred. Estimate line items on invoices that reflect scheduled maintenance under a multi-year contract therefore constitute accounts. A security interest can attach to those rights.
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A person obligated on a negotiable instrument is not an account debtor. The statutory definition expressly excludes persons obligated to pay a negotiable instrument even when the instrument evidences chattel paper. The obligor on the note therefore falls outside the account-debtor category.
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