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What Is UCC Article 9?

Under the Constitution, the UCC is a suggestion, not a law.
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  • Written By: Emma G.
  • Edited By: Melissa Wiley
  • Last Modified Date: 07 September 2014
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The Uniform Commercial Code (UCC) is a document that suggests sales and commerce laws for adoption by individual states. The constitution allows states the right to govern themselves in the areas of sales and commerce, so the UCC is a suggestion, not a law. UCC article 9 is the section of the Uniform Commercial Code that deals with loans or the creation of monetary obligations. It defines the circumstances under which a loan can be collected upon, what can be used as security for a loan, and what happens if the person who has taken out the loan goes bankrupt before the loan has been paid.

UCC article 9 puts forth suggestions of laws that apply to specific kinds of transactions. These include any transaction created by contract that give one party a security interest over a piece of property. A security interest gives the party known as the obligator partial rights over a piece of property if a debt is not paid. These usually include the right to take and subsequently sell the property. Property in this case applies to anything that can be owned without a property title.

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The sale of accounts or chattel paper is also covered by UCC article 9. Chattel paper is any writings that prove one person has a monetary obligation to another and that the obligator has a security interest in specific goods. The jurisdiction of UCC article 9 excludes any transaction that is already covered by federal law. It also excludes certain types of liens, legal claims that put a hold on the sale of property.

In order for the obligator to enforce his or her security interest, three circumstances must be met according to UCC article 9. First, the obligator must have given the debtor something of value. Second, the debtor must have rights to collateral, which is the property given to ensure payment of the loan. Finally, the obligator must have the collateral in hand or possess a document outlining the circumstances and value of the collateral. A section of UCC article 9 defines types of collateral, including goods, investment property, and accounts or documents.

UCC article 9 and the rest of the Uniform Commercial Code are important because interstate commerce is common in the United States. It allows each state to know that the laws that apply in one state are the same as those in another state. States have the right to revise any part of the UCC as they see fit. The UCC has been adopted, with some revisions, in all 50 states and all U.S. territories.

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