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The UCC, also known as the Uniform Commercial Code, is a valuable set of laws meant to assist with commercial transactions across state lines in the United States of America. There are several articles to consider, and one section in Article 9 is UCC 9-312. What will you find in this portion of the system?
UCC 9-312 deals with the Perfection Of Security Interests In Chattel Paper, Deposit Accounts, Documents, Goods Covered By Documents, Instruments, Investment Property, Letter-Of-Credit Rights, And Money; Perfection By Permissive Filing; Temporary Perfection Wit. It’s one of many laws in Article 9 of the Uniform Commercial Code.
Whether you’re interested in law or searching to learn more about the Uniform Commercial Code, it’s never bad to understand the individual components involved in this grouping of regulations. Read on to learn more about Uniform Commercial Code 9-312, what it means, and other valuable information about this section.
What is UCC 9-312?
UCC 9-312 is one of the final portions of this section of Article 9 in the Uniform Commercial Code. It speaks on the Perfection Of Security Interests In Chattel Paper, Deposit Accounts, Documents, Goods Covered By Documents, Instruments, Investment Property, Letter-Of-Credit Rights, And Money; Perfection By Permissive Filing; Temporary Perfection Wit.
According to Cornell Law School Legal Information Institute, here are the contents of Uniform Commercial Code 9-312:
(a) .Perfection by filing permitted..
A security interest in chattel paper, negotiable documents, instruments, or investment property may be perfected by filing.
(b) .Control or possession of certain collateral..
Except as otherwise provided in Section 9-315(c) and (d) for proceeds:
(1) a security interest in a deposit account may be perfected only by control under Section 9-314;
(2) and except as otherwise provided in Section 9-308(d), a security interest in a letter-of-credit right may be perfected only by control under Section 9-314; and
(3) a security interest in money may be perfected only by the secured party's taking possession under Section 9-313.
(c) .Goods covered by negotiable document..
While goods are in the possession of a bailee that has issued a negotiable document covering the goods:
(1) a security interest in the goods may be perfected by perfecting a security interest in the document; and
(2) a security interest perfected in the document has priority over any security interest that becomes perfected in the goods by another method during that time.
(d) .Goods covered by nonnegotiable document..
While goods are in the possession of a bailee that has issued a nonnegotiable document covering the goods, a security interest in the goods may be perfected by:
(1) issuance of a document in the name of the secured party;
(2) the bailee's receipt of notification of the secured party's interest; or
(3) filing as to the goods.
(e) .Temporary perfection: new value..
A security interest in certificated securities, negotiable documents, or instruments is perfected without filing or the taking of possession or control for a period of 20 days from the time it attaches to the extent that it arises for new value given under an authenticated security agreement.
(f) .Temporary perfection: goods or documents made available to debtor..
A perfected security interest in a negotiable document or goods in possession of a bailee, other than one that has issued a negotiable document for the goods, remains perfected for 20 days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of:
(1) ultimate sale or exchange; or
(2) loading, unloading, storing, shipping, transshipping, manufacturing, processing, or otherwise dealing with them in a manner preliminary to their sale or exchange.
(g) .Temporary perfection: delivery of security certificate or instrument to debtor..
A perfected security interest in a certificated security or instrument remains perfected for 20 days without filing if the secured party delivers the security certificate or instrument to the debtor for the purpose of:
(1) ultimate sale or exchange; or
(2) presentation, collection, enforcement, renewal, or registration of transfer.
(h) .Expiration of temporary perfection..
After the 20-day period specified in subsection (e), (f), or (g) expires, perfection depends upon compliance with this article.
What is UCC 9-312 Simplified?
In simple terms, UCC 9-312 deals with the various forms of perfected security interest, whether working with goods covered by a negotiable document or through possession of specific collateral. It covers multiple sections for the participant’s consideration, determining what occurs in each example.
UCC 9-312 defines steps that must happen for perfection or temporary perfection and covers everything parties need to know. It’s a critical portion of Article 9 for a reason.
Why Is UCC 9-312 In The UCC?
UCC 9-312 is in the Uniform Commercial Code to cover securing goods, sometimes temporarily. It’s valuable for determining information in various situations, as every circumstance differs.
This section works in tandem with multiple portions of Article 9. It provides further clarity in secured transactions.
Critical Terms To Know In UCC 9-312
As with any section of the UCC, there are various terms and phrases used in UCC 9-312. Some appear more often than others and are vital to understand the Uniform Commercial Code. Some come to life across all articles, and laws within those articles, for full coverage.
There are many critical terms in UCC 9-312. Let’s talk about three valuable ones that appear most often. If you stumble across an unfamiliar word, it’s always best to perform research to ensure the meaning of the law is as clear and concise as possible.
Security Interest Perfection
Security interest perfection occurs when a secure interest in an asset appears that cannot be claimed by anyone else. It may occur after the interested lender registers with the right location, confirming their security interest and taking the first position in line if the borrower happens to fall through on their loans.
Essentially, when a security interest is perfected, the lender will stake their claim on the collateral from the borrower. It can typically be perfected for up to eight months, allowing access if something were to happen with the repayment process.
Goods have different meanings in various articles and laws. It means one thing in the UCC. In the Uniform Commercial Code, goods refer to movable things other than money, investment security, and items in action.
Examples of goods include animals, growing crops, equipment, and more. It’s up to the parties involved to determine what is to go up as collateral, and the UCC 9-312 helps decide the process of perfecting these interests.
Under UCC law, a secured party is an individual who has first dibs on the interest. They are the person who gets the first claim in the items provided for within the agreement.
The secured party always has the favor of the interest. It doesn’t matter if there is an outstanding obligation to be secured.
What Else Is Covered In UCC Article 9?
Article 9 of the Uniform Commercial Code is a critical section of these governing laws. It deals with secured transactions, determining the creation and enforcement of various debts between the debtor and the borrower. It sets forth the interests that come to be when there is a credit-debt relationship.
This article also documents the proper procedure for settling various kinds of debts. It covers collateralized bonds and loans. UCC 9-312 fits right in with this category, ensuring parties are aware of stages of perfection.
Reference Legal Explanations
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"What is UCC 9-312". Legal Explanations. Accessed on December 10, 2023. https://legal-explanations.com/blog/what-is-ucc-9-312/.
"What is UCC 9-312". Legal Explanations, https://legal-explanations.com/blog/what-is-ucc-9-312/. Accessed 10 December, 2023
What is UCC 9-312. Legal Explanations. Retrieved from https://legal-explanations.com/blog/what-is-ucc-9-312/.