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Assignments and Security Interests Under UCC Article 9: A Worthy Decision
The March 2020 Commentary and its accompanying amendments to the Official Comments are critical steps in getting the commercial finance industry and, more importantly, courts aligned on how 9-406 and 9-607 work in concert.
December 16, 2022 at 10:30 AM
11 minute read
The basic definitions of Article 9 align with this approach of applying to both an assignment of payment rights and a security interest in such assets. "[S]ecurity interest" in UCC Article 1, §1-201(b)(35) (General Definitions), includes "any interest of a … buyer of accounts, chattel paper, a payment intangible or a promissory note in a transaction that is subject to Article 9." The definition of "secured party" in Article 9, §9-102(a)(73) (Definitions and Index of Definitions), includes a "person in whose favor a security interest is created or provided for under a security agreement," as well as a "person to which accounts, chattel paper, payment intangibles or promissory notes have been sold." Finally, the definition of "debtor" in Article 9, §9-102(a)(28), includes both a "person having an interest, other than a security interest or other lien, in the collateral" and a "seller of accounts, chattel paper, payment intangibles or promissory notes."
However, UCC Article 9 itself, unfortunately, is not always consistent in its use of terminology, often referring to assignments or security interests interchangeably. According to the Permanent Editorial Board for the Uniform Commercial Code (the PEB), a committee of members of the American Law Institute and the Uniform Law Commission charged with issuing official commentary on the UCC, this is largely historical in nature and (as per Comment 5 to UCC §9-109) more of a "drafting convention."
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Part 2. Effectiveness of Security Agreement; Attachment of Security Interest; Rights of Parties to Security Agreement
Primary tabs.
[Subpart 1. Effectiveness and Attachment] [Table of Contents]
- § 9-201. GENERAL EFFECTIVENESS OF SECURITY AGREEMENT.
- § 9-202. TITLE TO COLLATERAL IMMATERIAL.
- § 9-203. ATTACHMENT AND ENFORCEABILITY OF SECURITY INTEREST; PROCEEDS; SUPPORTING OBLIGATIONS; FORMAL REQUISITES.
- § 9-204. AFTER-ACQUIRED PROPERTY; FUTURE ADVANCES.
- § 9-205. USE OR DISPOSITION OF COLLATERAL PERMISSIBLE.
- § 9-206. SECURITY INTEREST ARISING IN PURCHASE OR DELIVERY OF FINANCIAL ASSET.
- § 9-207. RIGHTS AND DUTIES OF SECURED PARTY HAVING POSSESSION OR CONTROL OF COLLATERAL.
- § 9-208. ADDITIONAL DUTIES OF SECURED PARTY HAVING CONTROL OF COLLATERAL.
- § 9-209. DUTIES OF SECURED PARTY IF ACCOUNT DEBTOR HAS BEEN NOTIFIED OF ASSIGNMENT.
- § 9-210. REQUEST FOR ACCOUNTING; REQUEST REGARDING LIST OF COLLATERAL OR STATEMENT OF ACCOUNT.
Collateral Assignment of Acquisition Agreements | Practical Law
Collateral Assignment of Acquisition Agreements
Practical law standard document w-006-7145 (approx. 24 pages).
| Maintained • USA (National/Federal) |
IMAGES
VIDEO
COMMENTS
Learn how to strengthen your rights by attaching and perfecting your security interest in collateral under the UCC, including for purchase-money security interests.
UCC §9-607 (a) states that a secured party is entitled, if so agreed and in any event after default, to notify an account debtor obligated on collateral to make payment to the secured party...
The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by Section 9-315 and is also attachment of a security interest in a supporting obligation for the collateral.
TITLE TO COLLATERAL IMMATERIAL. § 9-203. ATTACHMENT AND ENFORCEABILITY OF SECURITY INTEREST; PROCEEDS; SUPPORTING OBLIGATIONS; FORMAL REQUISITES.
For attachment of a security interest to occur, the secured party must give value (§9-203(b)(1)); the debtor must have an interest in or the power to transfer an interest in the collateral to the secured party (§9-203(b)(3)(A)); and the debtor must authenticate a security agreement that
A security interest is said to attach to collateral when it becomes a right that is enforceable against the debtor’s property. Perfection places third parties, including the debtor’s other creditors, on notice of the existence of a security interest. There are four basic methods for perfecting a security interest under the UCC.
Assembly of Collateral. icable to tangible collateral that is not in the secured party’s possession. Subsection (c) of Section 9-609 authorizes a creditor, either pre-default (if the parties have so agreed) or after default, to require the debtor to assemble the collateral and make it available to the creditor at a .
Effectiveness of Security Agreement; Attachment of Security Interest; Rights of Parties to Security Agreement. [Subpart 1. Effectiveness and Attachment] [Table of Contents] § 9-201. GENERAL EFFECTIVENESS OF SECURITY AGREEMENT. § 9-202. TITLE TO COLLATERAL IMMATERIAL. § 9-203.
Grant of Security Interest. Debtor hereby grants to Secured Party, to secure the payment and performance in full of all of the Obligations, a security interest in the Collateral, and hereby mortgages, pledges and assigns the Collateral to Secured Party as collateral.
This is a standard form of Collateral Assignment of Acquisition Agreements between a grantor and a secured party. It is intended to create a security interest in the grantor's contracts rights under a specified acquisition agreement under UCC Article 9.