Tangible Collateral: Goods

Goods

• Goods are defined as anything that is "moveable at the time that a security interest attaches"
• Examples of goods include fixtures, standing timber to be cut and removed, unborn animals, growing or unharvested crops, and manufactured homes

Classification of Goods

• There are four classes of goods: consumer goods, farm products, inventory, and equipment
• Classification of goods depends on the principal use of the goods by the debtor
• The same property can fall into different classes with respect to different debtors

Consumer Goods

• Consumer goods are goods acquired primarily for personal, family, or household purposes
• Examples: furniture, appliances, and clothing

Farm Products

• Farm products are goods that are crops grown, growing, or to be grown, livestock born or unborn, supplies used or produced in farming, and products of crops or livestock in their unmanufactured state
• Examples: crops, livestock, and farming supplies
• Does not include standing timber unless there is a contract to cut and remove

Inventory

• Inventory includes goods, other than farm products, that are held for sale or lease; furnished under a service contract; or consist of raw materials, works in process, or materials used or consumed in a business in a short period of time
• Examples: goods held for sale, goods furnished under a service contract, and raw materials used in a business

Equipment

• Equipment is a catch-all class that consists of goods that are not consumer goods, farm products, or inventory
• Examples: employees' desks, machinery used in manufacturing

Software

• Software embedded in goods is treated as part of the goods in which it is embedded
• Software not embedded in goods is treated as a "general intangible"

Other Collateral

• There are nine other classes of personal property: chattel paper, documents, instruments, investment property, accounts, commercial tort claims, deposit accounts, letter-of-credit rights, and general intangibles
• These classes are not dependent on the debtor's use of the property

Chattel Paper

• Chattel paper consists of one or more records that evidence both a monetary obligation and a security interest in specific goods or a lease of specific goods
• Examples: a negotiable note and a security agreement

Document

• A document refers to a document of title, which confers on the holder ownership rights in goods held by a bailee
• Examples: a bill of lading, a transport document, a dock warrant, a dock receipt, and a warehouse receipt

Instruments

• Instruments include negotiable instruments, such as promissory notes and checks, and non-negotiable instruments that evidence a right to the payment of a monetary obligation
• Examples: certificates of deposit from a bank

Investment Property

• Investment property includes certificated and uncertificated securities, securities accounts, security entitlements, commodity accounts, and commodity contracts
• Examples: stock, bonds, and securities accounts

Accounts

• Accounts include the right to payment for property sold, leased, licensed, or otherwise disposed of, or services rendered or to be rendered
• Examples: rights to payment for goods or services sold

Commercial Tort Claims

• Commercial tort claims include tort claims possessed by an organization, or by an individual that arose in the course of the individual's business
• Examples: tort claims arising from business activities

Deposit Accounts

• A deposit account includes a savings, passbook, time, or demand account maintained with a bank
• Examples: savings accounts and checking accounts

Letter-of-Credit Rights

• A letter-of-credit right is a right to payment or performance under a letter of credit
• Examples: rights to payment under a letter of credit

General Intangibles

• General intangibles are the residual category of personal property that is not included in other types of collateral
• Examples: copyrights, things in action, payment intangibles, and software-not-part-of-goods

Goods

• Goods are defined as anything that is "moveable at the time that a security interest attaches"
• Examples of goods include fixtures, standing timber to be cut and removed, unborn animals, growing or unharvested crops, and manufactured homes

Classification of Goods

• There are four classes of goods: consumer goods, farm products, inventory, and equipment
• Classification of goods depends on the principal use of the goods by the debtor
• The same property can fall into different classes with respect to different debtors

Consumer Goods

• Consumer goods are goods acquired primarily for personal, family, or household purposes
• Examples: furniture, appliances, and clothing

Farm Products

• Farm products are goods that are crops grown, growing, or to be grown, livestock born or unborn, supplies used or produced in farming, and products of crops or livestock in their unmanufactured state
• Examples: crops, livestock, and farming supplies
• Does not include standing timber unless there is a contract to cut and remove

Inventory

• Inventory includes goods, other than farm products, that are held for sale or lease; furnished under a service contract; or consist of raw materials, works in process, or materials used or consumed in a business in a short period of time
• Examples: goods held for sale, goods furnished under a service contract, and raw materials used in a business

Equipment

• Equipment is a catch-all class that consists of goods that are not consumer goods, farm products, or inventory
• Examples: employees' desks, machinery used in manufacturing

Software

• Software embedded in goods is treated as part of the goods in which it is embedded
• Software not embedded in goods is treated as a "general intangible"

Other Collateral

• There are nine other classes of personal property: chattel paper, documents, instruments, investment property, accounts, commercial tort claims, deposit accounts, letter-of-credit rights, and general intangibles
• These classes are not dependent on the debtor's use of the property

Chattel Paper

• Chattel paper consists of one or more records that evidence both a monetary obligation and a security interest in specific goods or a lease of specific goods
• Examples: a negotiable note and a security agreement

Document

• A document refers to a document of title, which confers on the holder ownership rights in goods held by a bailee
• Examples: a bill of lading, a transport document, a dock warrant, a dock receipt, and a warehouse receipt

Instruments

• Instruments include negotiable instruments, such as promissory notes and checks, and non-negotiable instruments that evidence a right to the payment of a monetary obligation
• Examples: certificates of deposit from a bank

Investment Property

• Investment property includes certificated and uncertificated securities, securities accounts, security entitlements, commodity accounts, and commodity contracts
• Examples: stock, bonds, and securities accounts

Accounts

• Accounts include the right to payment for property sold, leased, licensed, or otherwise disposed of, or services rendered or to be rendered
• Examples: rights to payment for goods or services sold

Commercial Tort Claims

• Commercial tort claims include tort claims possessed by an organization, or by an individual that arose in the course of the individual's business
• Examples: tort claims arising from business activities

Deposit Accounts

• A deposit account includes a savings, passbook, time, or demand account maintained with a bank
• Examples: savings accounts and checking accounts

Letter-of-Credit Rights

• A letter-of-credit right is a right to payment or performance under a letter of credit
• Examples: rights to payment under a letter of credit

General Intangibles

• General intangibles are the residual category of personal property that is not included in other types of collateral
• Examples: copyrights, things in action, payment intangibles, and software-not-part-of-goods