Tangible Collateral: Goods

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Questions and Answers

Standing timber that is to be cut and removed pursuant to a contract is not considered as goods.

False

Consumer goods are goods acquired primarily for business purposes.

False

Livestock born or unborn are considered as farm products.

True

Equipment is a catchall class that includes goods that are used or bought for use primarily in a business.

True Signup and view all the answers

Raw materials are not considered as inventory.

False Signup and view all the answers

Unborn animals are not considered as goods.

False Signup and view all the answers

Goods that are used or bought for use primarily in a business are considered as consumer goods.

False Signup and view all the answers

Manufactured homes are not considered as goods.

False Signup and view all the answers

Goods that are held for sale or lease are considered as equipment.

False Signup and view all the answers

Fuel used in operations is not considered as inventory.

False Signup and view all the answers

Commercial tort claims include tort claims possessed by an individual for personal injury or death.

False Signup and view all the answers

A deposit account includes an investment property or an account evidenced by an instrument, such as a certificate of deposit.

False Signup and view all the answers

Article 9 of the UCC applies to a deposit account that is pledged as collateral in a consumer transaction.

False Signup and view all the answers

A letter-of-credit right is only considered a right to payment or performance if the beneficiary has demanded payment or performance.

False Signup and view all the answers

General intangibles include goods and inventory.

False Signup and view all the answers

Commercial tort claims can only be possessed by organizations.

False Signup and view all the answers

A demand account is a type of deposit account.

True Signup and view all the answers

A letter-of-credit right is a type of deposit account.

False Signup and view all the answers

General intangibles include accounts receivable.

False Signup and view all the answers

A deposit account can be received as proceeds under the UCC.

True Signup and view all the answers

The principal use to which the debtor puts the property determines the class of the goods when the debtor uses the property for multiple purposes.

True Signup and view all the answers

The same property always falls into the same class with respect to different debtors.

False Signup and view all the answers

Goods are classified when the security interest is perfected.

False Signup and view all the answers

Software embedded in goods is treated as a general intangible.

False Signup and view all the answers

Chattel paper consists of a record that evidences a security interest in specific goods or a lease of specific goods.

True Signup and view all the answers

A document refers to a document of title, which confers on the holder ownership rights in goods held by a bailee.

True Signup and view all the answers

Instruments encompass only negotiable instruments, such as promissory notes and checks.

False Signup and view all the answers

Investment property includes only certificated securities, such as stock and bonds.

False Signup and view all the answers

Accounts include the right to payment for a loan transaction.

False Signup and view all the answers

There are eight other classes of personal property besides goods.

False Signup and view all the answers

What is the definition of 'goods' under UCC § 9-102(a)(44)?

Anything that is 'moveable at the time that a security interest attaches.' Signup and view all the answers

What are the four classes of goods under UCC § 9-102?

Consumer goods, farm products, inventory, and equipment. Signup and view all the answers

What are 'consumer goods' under UCC § 9-102(a)(23)?

Goods acquired primarily for personal, family, or household purposes. Signup and view all the answers

What are 'farm products' under UCC § 9-102(a)(34)?

Crops grown, growing, or to be grown, livestock born or unborn, and supplies used in farming. Signup and view all the answers

What is included in 'inventory' under UCC § 9-102(a)(48)?

Goods held for sale or lease, furnished under a service contract, or consisting of raw materials or works in process. Signup and view all the answers

What is the catchall class of goods under UCC § 9-102(a)(33)?

Equipment Signup and view all the answers

Why is standing timber considered goods, despite being immovable?

Because there is a contract to cut and remove it. Signup and view all the answers

What determines the class of goods when a debtor uses property for multiple purposes?

The principal use to which the debtor puts the property. Signup and view all the answers

When are goods classified under UCC § 9-102?

At any particular moment in time, not just when the security interest is perfected. Signup and view all the answers

Are manufactured homes considered goods under UCC § 9-102?

Yes Signup and view all the answers

What type of tort claims are included in commercial tort claims?

Tort claims possessed by an organization or by an individual that arose in the course of the individual’s business. Signup and view all the answers

What type of account is excluded from the definition of a deposit account?

Investment property and accounts evidenced by instruments, such as certificates of deposit. Signup and view all the answers

Under what circumstances is a deposit account subject to the rules regarding proceeds?

When it is received as proceeds. Signup and view all the answers

What is a letter-of-credit right?

A right to payment or performance under a letter of credit, even though the beneficiary has not demanded—nor is the time ripe for —payment or performance. Signup and view all the answers

What type of personal property is included in the category of general intangibles?

Copyrights, things in action (e.g., legal claims), payment intangibles, and software-not-part-of-goods. Signup and view all the answers

What is the purpose of general intangibles under the UCC?

To provide a residual category for personal property that is not included in other types of collateral. Signup and view all the answers

Can a letter-of-credit right be a type of general intangible?

No Signup and view all the answers

Is a deposit account considered a type of general intangible?

No Signup and view all the answers

What is the significance of Article 9 of the UCC?

It governs secured transactions in personal property. Signup and view all the answers

Why is it important to classify personal property under the UCC?

To determine the applicable rules for secured transactions. Signup and view all the answers

When a debtor uses property for multiple purposes, what determines the class of the goods?

The principal use to which the debtor puts the property. Signup and view all the answers

Can the same property fall into different classes with respect to different debtors?

Yes. Signup and view all the answers

When is the classification of goods generally determined?

When the security interest attaches. Signup and view all the answers

How is software embedded in goods treated?

As part of the goods. Signup and view all the answers

What is chattel paper?

A record that evidences both a monetary obligation and a security interest in specific goods or a lease of specific goods. Signup and view all the answers

What is a document under the UCC?

A document of title, which confers on the holder ownership rights in goods held by a bailee. Signup and view all the answers

What is included in the classification of investment property?

Certificated and uncertificated securities, securities accounts, security entitlements, commodity accounts, and commodity contracts. Signup and view all the answers

What is an account under the UCC?

A right to payment for property sold, leased, licensed, or otherwise disposed of, or services rendered or to be rendered. Signup and view all the answers

How many other classes of personal property are there besides goods?

<ol start="9"> <li></li> </ol> Signup and view all the answers

What is the classification of goods that are used or bought for use primarily in a business?

Equipment. Signup and view all the answers

Study Notes

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

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Description

This quiz covers the definition and scope of 'goods' as tangible collateral, including fixtures, standing timber, unborn animals, and growing crops.