Chattel Paper under UCC Article 9.

Under the Uniform Commercial Code (UCC) Article 9, the chattel paper refers to a specific type of document that evidences both a monetary obligation and a security interest in or lease of specific goods. It is an important concept in secured transactions law.

Chattel paper typically consists of two components:

1. Writing: This can be a record or records that evidence both a monetary obligation (such as a promissory note or loan agreement) and a security interest or lease of specific goods (such as a security agreement or lease agreement). The writing can be in any form, including electronic or digital records.

2. Collateral: The chattel paper must relate to specific goods. These goods can be consumer goods, equipment, inventory, or other types of tangible personal property.

To qualify as chattel paper, the document must meet the following requirements:

1. Tangible or electronic: The writing must either be a tangible document or an electronic record.

2. Two-party relationship: There must be a debtor-creditor relationship, represented by the monetary obligation, and a security interest or lease of specific goods.

3. Identification: The document must identify the collateral or provide a description that reasonably identifies the collateral.

Chattel paper is important in secured transactions because it allows a creditor or lessor to obtain a security interest in the goods described in the document. This security interest provides the creditor with rights in the collateral and establishes priority over other creditors in case of default or bankruptcy.

For example, a financing arrangement where a lender provides a loan to a borrower and takes a security interest in the borrower's inventory would typically involve chattel paper. The written loan agreement and security agreement together constitute the chattel paper, with the inventory serving as the collateral.

It's important to note that specific rules and requirements regarding chattel paper may vary from state to state, as the UCC is a model law that has been adopted with some variations in each U.S. state. Therefore, it's always advisable to consult the UCC provisions in your relevant jurisdiction for accurate and up-to-date information.