Ask Joey ™ a Question

How can an agreement be evidenced under UCC?

In order for collateral to attach to a security interest, there are three requirements that must be made under the Uniform Commercial Code. One of the requirements is that an agreement must be made (#1 in the visual below):

This criteria basically says that there either needs to be a written contract that the creditor has control of the collateral, or they need to actually take control/possession of the collateral. If one of those scenarios doesn’t exist, then there is no evidence that an agreement was made and attachment would not occur.

You might also be interested in...

  • What is a security interest?

    A security interest is when the creditor has legal claim or a lien on collateral that has been pledged by the debtor to obtain a loan. This provides tangible value that the creditor can seize and sell to pay off the loan if the debtor defaults. In order for a security interest to be legally […]

  • What is measurable value under the UCC?

    Measurable value is one of the key criteria that must exist for collateral to be attached to a security interest under the UCC. Measurable value is captured in item #2 in the visual below: Basically, this requirement relates to the fact that the collateral must have tangible value, which means it would have value to […]