Neil B. Cohen Jeffrey D. Forchelli Professor of Law Brooklyn Law School

 Not a restatement of current law, but a guide to reform  Goals are economic in nature – facilitate use of movable property, both tangible and intangible, as collateral so as to facilitate increased access to credit at lower cost

 Security rights in all types of movable property, both tangible and intangible  Limited exclusions  Recommendation 4(b)  Also governs sales of receivables

 Functional approach – substance over form  General rules applying to all types of transactions creating security rights in all types of assets  Adjustments for particular types of asset and for particular types of transactions such as acquisition finance (e.g., purchase-money security rights/r.o.t.)

 Created by agreement  Writing required unless security right is possessory (actual physical possession only, no constructive possession)  Security right may secure future obligations  Security right may encumber after-acquired assets  Limited effectiveness of certain anti- assignment clauses in receivables  Automatic security right in proceeds

 Several methods available  Registration of notice (not recordation of security agreement)  Actual possession of tangible assets  “Control” of bank account  Notation on certificate of title or registration in specialized registry

 Primary method of third-party effectiveness  Minimal information required ◦ Identifier (name) of grantor and secured creditor ◦ Description of encumbered assets ◦ Duration and maximum amount secured, if applicable  Indexed by grantor identifier  Minimal fees – only enough to recover costs of operation

 Other secured parties ◦ General rule: first to register or become effective against third parties ◦ Special “superpriority” rule for acquisition finance  Judgment creditors  Transferees of the collateral

 Distinguish from enforcement of underlying rights, such as enforcement of an intellectual property right against an infringer or enforcement of receivable against debtor on the receivable  Judicial and non-judicial enforcement allowed  Basic concept of commercial reasonableness for non-judicial disposition

 For tangible assets, most issues governed by law of the State in which asset is located  For intangible assets, most issues governed by law of the State in which grantor is located  Adjustments for security rights in intellectual property?