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Electronic Chattel Paper
Traditional or tangible chattel paper has long been used to finance equipment purchases. One of the significant benefits bestowed upon chattel paper financers is the ability to perfect a security interest via possession, and in so doing potentially achieve priority over pre-existing secured lenders who perfected by filing a UCC Financing Statement. This system generally worked well, and trillions of dollars have been financed in this manner.
In 1999, provisions of Article 9 of the UCC relating to secured lending were updated to permit the creation of “electronic chattel paper.” Electronic chattel paper is essentially chattel paper evidenced by records existing electronically (i.e., a file on a computer). It is distinguished from tangible chattel paper in that electronic chattel paper is not actually paper at all. Electronic chattel paper also is not tangible chattel paper merely executed via electronic signatures or tangible chattel paper converted to electronic form via a facsimile machine or scanner. Instead, and as explained in more detail below, electronic chattel paper is data that memorializes the original record of a financing transaction and that exists and is stored in a secure electronic medium.
Due to the inherent difficulties in “possessing” electronic data, the UCC revisions, in part, defined a new form of control over electronic chattel paper that would be treated as equivalent to possession of tangible chattel paper. In concept, this would permit chattel paper financiers to retain their priority with electronic documents.
Major Differences In UK, U.S. Copyright Laws
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The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Anti-Assignment Override Provisions
UCC Sections 9406(d) and 9408(a) are one of the most powerful, yet least understood, sections of the Uniform Commercial Code. On their face, they appear to override anti-assignment provisions in agreements that would limit the grant of a security interest. But do these sections really work?