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91_SB1531
LRB9112852JSpc
1 AN ACT in relation to secured transactions.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Uniform Commercial Code is amended by
5 changing Sections 9-101, 9-102, 9-103, 9-104, 9-105, 9-106,
6 9-107, 9-108, 9-109, 9-110, 9-112, 9-113, 9-114, 9-115,
7 9-116, 9-150, 9-201, 9-202, 9-203, 9-204, 9-205, 9-205.1,
8 9-206, 9-207, 9-208, 9-301, 9-302, 9-303, 9-304, 9-305,
9 9-306, 9-306.01, 9-306.02, 9-307, 9-307.1, 9-307.2, 9-308,
10 9-309, 9-310, 9-311, 9-312, 9-313, 9-314, 9-315, 9-316,
11 9-317, 9-318, 9-401, 9-401A, 9-402, 9-403, 9-404, 9-405,
12 9-406, 9-407, 9-408, 9-410, 9-501, 9-502, 9-503, 9-504,
13 9-505, 9-506, 9-507, 9-9901, and 9-9902, adding Sections
14 9-209, 9-210, 9-315.01, 9-315.02, 9-319, 9-320, 9-320.1,
15 9-320.2, 9-320.3, 9-321, 9-322, 9-323, 9-324, 9-325, 9-326,
16 9-327, 9-328, 9-329, 9-330, 9-331, 9-332, 9-333, 9-334,
17 9-335, 9-336, 9-337, 9-338, 9-339, 9-340, 9-341, 9-342,
18 9-409, 9-501.5, 9-508, 9-509, 9-510, 9-511, 9-512, 9-513,
19 9-514, 9-515, 9-516, 9-517, 9-518, 9-519, 9-520, 9-521,
20 9-522, 9-523, 9-524, 9-525, 9-526, 9-527, 9-601, 9-602,
21 9-603, 9-604, 9-605, 9-606, 9-607, 9-608, 9-609, 9-610,
22 9-611, 9-612, 9-613, 9-614, 9-615, 9-616, 9-617, 9-618,
23 9-619, 9-620, 9-621, 9-622, 9-623, 9-624, 9-625, 9-626,
24 9-627, 9-628, 9-701, 9-702, 9-703, 9-704, 9-705, 9-706,
25 9-707, and 9-708, changing the headings of Article 9 and
26 Parts 1, 2, 3, 4, 5, and 99 of Article 9, and adding headings
27 of Parts 6 and 7 of Article 9, Subparts 1 and 2 of Part 1 of
28 Article 9, Subparts 1 and 2 of Part 2 of Article 9, Subparts
29 1, 2, 3, and 4 of Part 3 of Article 9, Subparts 1 and 2 of
30 Part 5 of Article 9, and Subparts 1 and 2 of Part 6 of
31 Article 9 as follows:
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1 (810 ILCS 5/Art. 9 heading)
2 ARTICLE 9
3 SECURED TRANSACTIONS: SALES OF ACCOUNTS,
4 CONTRACT RIGHTS AND CHATTEL PAPER
5 (810 ILCS 5/Art. 9, Part 1 heading)
6 PART 1. GENERAL PROVISIONS
7 SHORT TITLE, APPLICABILITY AND DEFINITIONS
8 (810 ILCS 5/Art. 9, Part 1, Subpart 1 heading new)
9 SUBPART 1. SHORT TITLE, DEFINITIONS, AND GENERAL CONCEPTS
10 (810 ILCS 5/9-101) (from Ch. 26, par. 9-101)
11 Sec. 9-101. Short title. This Article may be cited as
12 Uniform Commercial Code - Secured Transactions. Short title.
13 This Article shall be known and may be cited as Uniform
14 Commercial Code--Secured Transactions.
15 (Source: Laws 1961, p. 2101.)
16 (810 ILCS 5/9-102) (from Ch. 26, par. 9-102)
17 Sec. 9-102. Definitions and index of definitions.
18 (a) Article 9 definitions. In this Article:
19 (1) "Accession" means goods that are physically
20 united with other goods in such a manner that the
21 identity of the original goods is not lost.
22 (2) "Account", except as used in "account for",
23 means a right to payment of a monetary obligation,
24 whether or not earned by performance, (i) for property
25 that has been or is to be sold, leased, licensed,
26 assigned, or otherwise disposed of, (ii) for services
27 rendered or to be rendered, (iii) for a policy of
28 insurance issued or to be issued, (iv) for a secondary
29 obligation incurred or to be incurred, (v) for energy
30 provided or to be provided, (vi) for the use or hire of a
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1 vessel under a charter or other contract, (vii) arising
2 out of the use of a credit or charge card or information
3 contained on or for use with the card, or (viii) as
4 winnings in a lottery or other game of chance operated or
5 sponsored by a State, governmental unit of a State, or
6 person licensed or authorized to operate the game by a
7 State or governmental unit of a State. The term includes
8 health-care-insurance receivables. The term does not
9 include (i) rights to payment evidenced by chattel paper
10 or an instrument, (ii) commercial tort claims, (iii)
11 deposit accounts, (iv) investment property, (v)
12 letter-of-credit rights or letters of credit, or (vi)
13 rights to payment for money or funds advanced or sold,
14 other than rights arising out of the use of a credit or
15 charge card or information contained on or for use with
16 the card.
17 (3) "Account debtor" means a person obligated on an
18 account, chattel paper, or general intangible. The term
19 does not include persons obligated to pay a negotiable
20 instrument, even if the instrument constitutes part of
21 chattel paper.
22 (4) "Accounting", except as used in "accounting
23 for", means a record:
24 (A) authenticated by a secured party;
25 (B) indicating the aggregate unpaid secured
26 obligations as of a date not more than 35 days
27 earlier or 35 days later than the date of the
28 record; and
29 (C) identifying the components of the
30 obligations in reasonable detail.
31 (5) "Agricultural lien" means an interest, other
32 than a security interest, in farm products:
33 (A) which secures payment or performance of an
34 obligation for:
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1 (i) goods or services furnished in
2 connection with a debtor's farming operation;
3 or
4 (ii) rent on real property leased by a
5 debtor in connection with its farming
6 operation;
7 (B) which is created by statute in favor of a
8 person that:
9 (i) in the ordinary course of its
10 business furnished goods or services to a
11 debtor in connection with a debtor's farming
12 operation; or
13 (ii) leased real property to a debtor in
14 connection with the debtor's farming operation;
15 and
16 (C) whose effectiveness does not depend on the
17 person's possession of the personal property.
18 (6) "As-extracted collateral" means:
19 (A) oil, gas, or other minerals that are
20 subject to a security interest that:
21 (i) is created by a debtor having an
22 interest in the minerals before extraction; and
23 (ii) attaches to the minerals as
24 extracted; or
25 (B) accounts arising out of the sale at the
26 wellhead or minehead of oil, gas, or other minerals
27 in which the debtor had an interest before
28 extraction.
29 (7) "Authenticate" means:
30 (A) to sign; or
31 (B) to execute or otherwise adopt a symbol, or
32 encrypt or similarly process a record in whole or in
33 part, with the present intent of the authenticating
34 person to identify the person and adopt or accept a
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1 record.
2 (8) "Bank" means an organization that is engaged in
3 the business of banking. The term includes savings
4 banks, savings and loan associations, credit unions, and
5 trust companies.
6 (9) "Cash proceeds" means proceeds that are money,
7 checks, deposit accounts, or the like.
8 (10) "Certificate of title" means a certificate of
9 title with respect to which a statute provides for the
10 security interest in question to be indicated on the
11 certificate as a condition or result of the security
12 interest's obtaining priority over the rights of a lien
13 creditor with respect to the collateral.
14 (11) "Chattel paper" means a record or records that
15 evidence both a monetary obligation and a security
16 interest in specific goods, a security interest in
17 specific goods and software used in the goods, a security
18 interest in specific goods and license of software used
19 in the goods, a lease of specific goods, or a lease of
20 specific goods and license of software used in the goods.
21 In this paragraph, "monetary obligation" means a monetary
22 obligation secured by the goods or owed under a lease of
23 the goods and includes a monetary obligation with respect
24 to software used in the goods. The term does not include
25 charters or other contracts involving the use or hire of
26 a vessel. If a transaction is evidenced by records that
27 include an instrument or series of instruments, the group
28 of records taken together constitutes chattel paper.
29 (12) "Collateral" means the property subject to a
30 security interest or agricultural lien. The term
31 includes:
32 (A) proceeds to which a security interest
33 attaches;
34 (B) accounts, chattel paper, payment
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1 intangibles, and promissory notes that have been
2 sold; and
3 (C) goods that are the subject of a
4 consignment.
5 (13) "Commercial tort claim" means a claim arising
6 in tort with respect to which:
7 (A) the claimant is an organization; or
8 (B) the claimant is an individual and the
9 claim:
10 (i) arose in the course of the claimant's
11 business or profession; and
12 (ii) does not include damages arising out
13 of personal injury to or the death of an
14 individual.
15 (14) "Commodity account" means an account
16 maintained by a commodity intermediary in which a
17 commodity contract is carried for a commodity customer.
18 (15) "Commodity contract" means a commodity futures
19 contract, an option on a commodity futures contract, a
20 commodity option, or another contract if the contract or
21 option is:
22 (A) traded on or subject to the rules of a
23 board of trade that has been designated as a
24 contract market for such a contract pursuant to
25 federal commodities laws; or
26 (B) traded on a foreign commodity board of
27 trade, exchange, or market, and is carried on the
28 books of a commodity intermediary for a commodity
29 customer.
30 (16) "Commodity customer" means a person for which
31 a commodity intermediary carries a commodity contract on
32 its books.
33 (17) "Commodity intermediary" means a person that:
34 (A) is registered as a futures commission
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1 merchant under federal commodities law; or
2 (B) in the ordinary course of its business
3 provides clearance or settlement services for a
4 board of trade that has been designated as a
5 contract market pursuant to federal commodities law.
6 (18) "Communicate" means:
7 (A) to send a written or other tangible
8 record;
9 (B) to transmit a record by any means agreed
10 upon by the persons sending and receiving the
11 record; or
12 (C) in the case of transmission of a record to
13 or by a filing office, to transmit a record by any
14 means prescribed by filing-office rule.
15 (19) "Consignee" means a merchant to which goods
16 are delivered in a consignment.
17 (20) "Consignment" means a transaction, regardless
18 of its form, in which a person delivers goods to a
19 merchant for the purpose of sale and:
20 (A) the merchant:
21 (i) deals in goods of that kind under a
22 name other than the name of the person making
23 delivery;
24 (ii) is not an auctioneer; and
25 (iii) is not generally known by its
26 creditors to be substantially engaged in
27 selling the goods of others;
28 (B) with respect to each delivery, the
29 aggregate value of the goods is $1,000 or more at
30 the time of delivery;
31 (C) the goods are not consumer goods
32 immediately before delivery; and
33 (D) the transaction does not create a security
34 interest that secures an obligation.
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1 (21) "Consignor" means a person that delivers goods
2 to a consignee in a consignment.
3 (22) "Consumer debtor" means a debtor in a consumer
4 transaction.
5 (23) "Consumer goods" means goods that are used or
6 bought for use primarily for personal, family, or
7 household purposes.
8 (24) "Consumer-goods transaction" means a consumer
9 transaction in which:
10 (A) an individual incurs an obligation
11 primarily for personal, family, or household
12 purposes; and
13 (B) a security interest in consumer goods
14 secures the obligation.
15 (25) "Consumer obligor" means an obligor who is an
16 individual and who incurred the obligation as part of a
17 transaction entered into primarily for personal, family,
18 or household purposes.
19 (26) "Consumer transaction" means a transaction in
20 which (i) an individual incurs an obligation primarily
21 for personal, family, or household purposes, (ii) a
22 security interest secures the obligation, and (iii) the
23 collateral is held or acquired primarily for personal,
24 family, or household purposes. The term includes
25 consumer-goods transactions.
26 (27) "Continuation statement" means an amendment of
27 a financing statement which:
28 (A) identifies, by its file number, the
29 initial financing statement to which it relates; and
30 (B) indicates that it is a continuation
31 statement for, or that it is filed to continue the
32 effectiveness of, the identified financing
33 statement.
34 (28) "Debtor" means:
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1 (A) a person having an interest, other than a
2 security interest or other lien, in the collateral,
3 whether or not the person is an obligor;
4 (B) a seller of accounts, chattel paper,
5 payment intangibles, or promissory notes; or
6 (C) a consignee.
7 (29) "Deposit account" means a demand, time,
8 savings, passbook, or similar account maintained with a
9 bank, including without limitation, non-negotiable
10 certificates of deposit, uncertificated certificates of
11 deposit, and non-transferable certificates of deposit.
12 The term does not include investment property or accounts
13 evidenced by an instrument.
14 (30) "Document" means a document of title or a
15 receipt of the type described in Section 7-201(2).
16 (31) "Electronic chattel paper" means chattel paper
17 evidenced by a record or records consisting of
18 information stored in an electronic medium.
19 (32) "Encumbrance" means a right, other than an
20 ownership interest, in real property. The term includes
21 mortgages and other liens on real property.
22 (33) "Equipment" means goods other than inventory,
23 farm products, or consumer goods.
24 (34) "Farm products" means goods, other than
25 standing timber, with respect to which the debtor is
26 engaged in a farming operation and which are:
27 (A) crops grown, growing, or to be grown,
28 including:
29 (i) crops produced on trees, vines, and
30 bushes; and
31 (ii) aquatic goods produced in
32 aquacultural operations;
33 (B) livestock, born or unborn, including
34 aquatic goods produced in aquacultural operations;
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1 (C) supplies used or produced in a farming
2 operation; or
3 (D) products of crops or livestock in their
4 unmanufactured states.
5 (35) "Farming operation" means raising,
6 cultivating, propagating, fattening, grazing, or any
7 other farming, livestock, or aquacultural operation.
8 (36) "File number" means the number assigned to an
9 initial financing statement pursuant to Section 9-519(a).
10 (37) "Filing office" means an office designated in
11 Section 9-501 as the place to file a financing statement.
12 (38) "Filing-office rule" means a rule adopted
13 pursuant to Section 9-526.
14 (39) "Financing statement" means a record or
15 records composed of an initial financing statement and
16 any filed record relating to the initial financing
17 statement.
18 (40) "Fixture filing" means the filing of a
19 financing statement covering goods that are or are to
20 become fixtures and satisfying Section 9-502(a) and (b).
21 The term includes the filing of a financing statement
22 covering goods of a transmitting utility which are or are
23 to become fixtures.
24 (41) "Fixtures" means goods that have become so
25 related to particular real property that an interest in
26 them arises under real property law.
27 (42) "General intangible" means any personal
28 property, including things in action, other than
29 accounts, chattel paper, commercial tort claims, deposit
30 accounts, documents, goods, instruments, investment
31 property, letter-of-credit rights, letters of credit,
32 money, and oil, gas, or other minerals before extraction.
33 The term includes payment intangibles and software.
34 (43) "Good faith" means honesty in fact and the
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1 observance of reasonable commercial standards of fair
2 dealing.
3 (44) "Goods" means all things that are movable when
4 a security interest attaches. The term includes (i)
5 fixtures, (ii) standing timber that is to be cut and
6 removed under a conveyance or contract for sale, (iii)
7 the unborn young of animals, (iv) crops grown, growing,
8 or to be grown, even if the crops are produced on trees,
9 vines, or bushes, and (v) manufactured homes. The term
10 also includes a computer program embedded in goods and
11 any supporting information provided in connection with a
12 transaction relating to the program if (i) the program is
13 associated with the goods in such a manner that it
14 customarily is considered part of the goods, or (ii) by
15 becoming the owner of the goods, a person acquires a
16 right to use the program in connection with the goods.
17 The term does not include a computer program embedded in
18 goods that consist solely of the medium in which the
19 program is embedded. The term also does not include
20 accounts, chattel paper, commercial tort claims, deposit
21 accounts, documents, general intangibles, instruments,
22 investment property, letter-of-credit rights, letters of
23 credit, money, or oil, gas, or other minerals before
24 extraction.
25 (45) "Governmental unit" means a subdivision,
26 agency, department, county, parish, municipality, or
27 other unit of the government of the United States, a
28 State, or a foreign country. The term includes an
29 organization having a separate corporate existence if the
30 organization is eligible to issue debt on which interest
31 is exempt from income taxation under the laws of the
32 United States.
33 (46) "Health-care-insurance receivable" means an
34 interest in or claim under a policy of insurance which is
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1 a right to payment of a monetary obligation for
2 health-care goods or services provided.
3 (47) "Instrument" means a negotiable instrument or
4 any other writing that evidences a right to the payment
5 of a monetary obligation, is not itself a security
6 agreement or lease, and is of a type that in ordinary
7 course of business is transferred by delivery with any
8 necessary indorsement or assignment. The term does not
9 include (i) investment property, (ii) letters of credit,
10 (iii) non-negotiable certificates of deposit, (iv)
11 uncertificated certificates of deposit, (v)
12 non-transferable certificates of deposit, or (vi)
13 writings that evidence a right to payment arising out of
14 the use of a credit or charge card or information
15 contained on or for use with the card.
16 (48) "Inventory" means goods, other than farm
17 products, which:
18 (A) are leased by a person as lessor;
19 (B) are held by a person for sale or lease or
20 to be furnished under a contract of service;
21 (C) are furnished by a person under a contract
22 of service; or
23 (D) consist of raw materials, work in process,
24 or materials used or consumed in a business.
25 (49) "Investment property" means a security,
26 whether certificated or uncertificated, security
27 entitlement, securities account, commodity contract, or
28 commodity account.
29 (50) "Jurisdiction of organization", with respect
30 to a registered organization, means the jurisdiction
31 under whose law the organization is organized.
32 (51) "Letter-of-credit right" means a right to
33 payment or performance under a letter of credit, whether
34 or not the beneficiary has demanded or is at the time
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1 entitled to demand payment or performance. The term does
2 not include the right of a beneficiary to demand payment
3 or performance under a letter of credit.
4 (52) "Lien creditor" means:
5 (A) a creditor that has acquired a lien on the
6 property involved by attachment, levy, or the like;
7 (B) an assignee for benefit of creditors from
8 the time of assignment;
9 (C) a trustee in bankruptcy from the date of
10 the filing of the petition; or
11 (D) a receiver in equity from the time of
12 appointment.
13 (53) "Manufactured home" means a structure,
14 transportable in one or more sections, which, in the
15 traveling mode, is eight body feet or more in width or 40
16 body feet or more in length, or, when erected on site, is
17 320 or more square feet, and which is built on a
18 permanent chassis and designed to be used as a dwelling
19 with or without a permanent foundation when connected to
20 the required utilities, and includes the plumbing,
21 heating, air-conditioning, and electrical systems
22 contained therein. The term includes any structure that
23 meets all of the requirements of this paragraph except
24 the size requirements and with respect to which the
25 manufacturer voluntarily files a certification required
26 by the United States Secretary of Housing and Urban
27 Development and complies with the standards established
28 under Title 42 of the United States Code.
29 (54) "Manufactured-home transaction" means a
30 secured transaction:
31 (A) that creates a purchase-money security
32 interest in a manufactured home, other than a
33 manufactured home held as inventory; or
34 (B) in which a manufactured home, other than a
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1 manufactured home held as inventory, is the primary
2 collateral.
3 (55) "Mortgage" means a consensual interest in real
4 property, including fixtures, which secures payment or
5 performance of an obligation.
6 (56) "New debtor" means a person that becomes bound
7 as debtor under Section 9-203(d) by a security agreement
8 previously entered into by another person.
9 (57) "New value" means (i) money, (ii) money's
10 worth in property, services, or new credit, or (iii)
11 release by a transferee of an interest in property
12 previously transferred to the transferee. The term does
13 not include an obligation substituted for another
14 obligation.
15 (58) "Noncash proceeds" means proceeds other than
16 cash proceeds.
17 (59) "Obligor" means a person that, with respect to
18 an obligation secured by a security interest in or an
19 agricultural lien on the collateral, (i) owes payment or
20 other performance of the obligation, (ii) has provided
21 property other than the collateral to secure payment or
22 other performance of the obligation, or (iii) is
23 otherwise accountable in whole or in part for payment or
24 other performance of the obligation. The term does not
25 include issuers or nominated persons under a letter of
26 credit.
27 (60) "Original debtor" means a person that, as
28 debtor, entered into a security agreement to which a new
29 debtor has become bound under Section 9-203(d).
30 (61) "Payment intangible" means a general
31 intangible under which the account debtor's principal
32 obligation is a monetary obligation.
33 (62) "Person related to", with respect to an
34 individual, means:
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1 (A) the spouse of the individual;
2 (B) a brother, brother-in-law, sister, or
3 sister-in-law of the individual;
4 (C) an ancestor or lineal descendant of the
5 individual or the individual's spouse; or
6 (D) any other relative, by blood or marriage,
7 of the individual or the individual's spouse who
8 shares the same home with the individual.
9 (63) "Person related to", with respect to an
10 organization, means:
11 (A) a person directly or indirectly
12 controlling, controlled by, or under common control
13 with the organization;
14 (B) an officer or director of, or a person
15 performing similar functions with respect to, the
16 organization;
17 (C) an officer or director of, or a person
18 performing similar functions with respect to, a
19 person described in subparagraph (A);
20 (D) the spouse of an individual described in
21 subparagraph (A), (B), or (C); or
22 (E) an individual who is related by blood or
23 marriage to an individual described in subparagraph
24 (A), (B), (C), or (D) and shares the same home with
25 the individual.
26 (64) "Proceeds" means the following property:
27 (A) whatever is acquired upon the sale, lease,
28 license, exchange, or other disposition of
29 collateral;
30 (B) whatever is collected on, or distributed
31 on account of, collateral;
32 (C) rights arising out of collateral;
33 (D) to the extent of the value of collateral,
34 claims arising out of the loss, nonconformity, or
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1 interference with the use of, defects or
2 infringement of rights in, or damage to, the
3 collateral; or
4 (E) to the extent of the value of collateral
5 and to the extent payable to the debtor or the
6 secured party, insurance payable by reason of the
7 loss or nonconformity of, defects or infringement of
8 rights in, or damage to, the collateral.
9 (65) "Promissory note" means an instrument that
10 evidences a promise to pay a monetary obligation, does
11 not evidence an order to pay, and does not contain an
12 acknowledgment by a bank that the bank has received for
13 deposit a sum of money or funds.
14 (66) "Proposal" means a record authenticated by a
15 secured party which includes the terms on which the
16 secured party is willing to accept collateral in full or
17 partial satisfaction of the obligation it secures
18 pursuant to Sections 9-620, 9-621, and 9-622.
19 (67) "Public-finance transaction" means a secured
20 transaction in connection with which:
21 (A) debt securities are issued;
22 (B) all or a portion of the securities issued
23 have an initial stated maturity of at least 20
24 years; and
25 (C) the debtor, obligor, secured party,
26 account debtor or other person obligated on
27 collateral, assignor or assignee of a secured
28 obligation, or assignor or assignee of a security
29 interest is a State or a governmental unit of a
30 State.
31 (68) "Pursuant to commitment", with respect to an
32 advance made or other value given by a secured party,
33 means pursuant to the secured party's obligation, whether
34 or not a subsequent event of default or other event not
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1 within the secured party's control has relieved or may
2 relieve the secured party from its obligation.
3 (69) "Record", except as used in "for record", "of
4 record", "record or legal title", and "record owner",
5 means information that is inscribed on a tangible medium
6 or which is stored in an electronic or other medium and
7 is retrievable in perceivable form.
8 (70) "Registered organization" means an
9 organization organized solely under the law of a single
10 State or the United States and as to which the State or
11 the United States must maintain a public record showing
12 the organization to have been organized.
13 (71) "Secondary obligor" means an obligor to the
14 extent that:
15 (A) the obligor's obligation is secondary; or
16 (B) the obligor has a right of recourse with
17 respect to an obligation secured by collateral
18 against the debtor, another obligor, or property of
19 either.
20 (72) "Secured party" means:
21 (A) a person in whose favor a security
22 interest is created or provided for under a security
23 agreement, whether or not any obligation to be
24 secured is outstanding;
25 (B) a person that holds an agricultural lien;
26 (C) a consignor;
27 (D) a person to which accounts, chattel paper,
28 payment intangibles, or promissory notes have been
29 sold;
30 (E) a trustee, indenture trustee, agent,
31 collateral agent, or other representative in whose
32 favor a security interest or agricultural lien is
33 created or provided for; or
34 (F) a person that holds a security interest
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1 arising under Section 2-401, 2-505, 2-711(3),
2 2A-508(5), 4-210, or 5-118.
3 (73) "Security agreement" means an agreement that
4 creates or provides for a security interest.
5 (74) "Send", in connection with a record or
6 notification, means:
7 (A) to deposit in the mail, deliver for
8 transmission, or transmit by any other usual means
9 of communication, with postage or cost of
10 transmission provided for, addressed to any address
11 reasonable under the circumstances; or
12 (B) to cause the record or notification to be
13 received within the time that it would have been
14 received if properly sent under subparagraph (A).
15 (75) "Software" means a computer program and any
16 supporting information provided in connection with a
17 transaction relating to the program. The term does not
18 include a computer program that is included in the
19 definition of goods.
20 (76) "State" means a State of the United States,
21 the District of Columbia, Puerto Rico, the United States
22 Virgin Islands, or any territory or insular possession
23 subject to the jurisdiction of the United States.
24 (77) "Supporting obligation" means a
25 letter-of-credit right or secondary obligation that
26 supports the payment or performance of an account,
27 chattel paper, a document, a general intangible, an
28 instrument, or investment property.
29 (78) "Tangible chattel paper" means chattel paper
30 evidenced by a record or records consisting of
31 information that is inscribed on a tangible medium.
32 (79) "Termination statement" means an amendment of
33 a financing statement which:
34 (A) identifies, by its file number, the
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1 initial financing statement to which it relates; and
2 (B) indicates either that it is a termination
3 statement or that the identified financing statement
4 is no longer effective.
5 (80) "Transmitting utility" means a person
6 primarily engaged in the business of:
7 (A) operating a railroad, subway, street
8 railway, or trolley bus;
9 (B) transmitting communications electrically,
10 electromagnetically, or by light;
11 (C) transmitting goods by pipeline or sewer;
12 or
13 (D) transmitting or producing and transmitting
14 electricity, steam, gas, or water.
15 (b) Definitions in other Articles. The following
16 definitions in other Articles apply to this Article:
17 "Applicant". Section 5-102.
18 "Beneficiary". Section 5-102.
19 "Broker". Section 8-102.
20 "Certificated security". Section 8-102.
21 "Check". Section 3-104.
22 "Clearing corporation". Section 8-102.
23 "Contract for sale". Section 2-106.
24 "Customer". Section 4-104.
25 "Entitlement holder". Section 8-102.
26 "Financial asset". Section 8-102.
27 "Holder in due course". Section 3-302.
28 "Issuer" (with respect to a letter of Credit or
29 letter-of-credit right). Section 5-102.
30 "Issuer" (with respect to a security). Section 8-201.
31 "Lease". Section 2A-103.
32 "Lease agreement". Section 2A-103.
33 "Lease contract". Section 2A-103.
34 "Leasehold interest". Section 2A-103.
-20- LRB9112852JSpc
1 "Lessee". Section 2A-103.
2 "Lessee in ordinary course of business". Section 2A-103.
3 "Lessor". Section 2A-103.
4 "Lessor's residual interest". Section 2A-103.
5 "Letter of credit". Section 5-102.
6 "Merchant". Section 2-104.
7 "Negotiable instrument". Section 3-104.
8 "Nominated person". Section 5-102.
9 "Note". Section 3-104.
10 "Proceeds of a letter of credit". Section 5-114.
11 "Prove". Section 3-103.
12 "Sale". Section 2-106.
13 "Securities account". Section 8-501.
14 "Securities intermediary". Section 8-102.
15 "Security". Section 8-102.
16 "Security certificate". Section 8-102.
17 "Security entitlement". Section 8-102.
18 "Uncertificated security". Section 8-102.
19 (c) Article 1 definitions and principles. Article 1
20 contains general definitions and principles of construction
21 and interpretation applicable throughout this Article. Policy
22 and Subject Matter of Article.
23 (1) Except as otherwise provided in Section 9--104 on
24 excluded transactions, this Article applies
25 (a) to any transaction (regardless of its form)
26 which is intended to create a security interest in personal
27 property or fixtures including goods, documents, instruments,
28 general intangibles, chattel paper or accounts; and also
29 (b) to any sale of accounts or chattel paper.
30 (2) This Article applies to security interests created
31 by contract including pledge, assignment, chattel mortgage,
32 chattel trust, trust deed, factor's lien, equipment trust,
33 conditional sale, trust receipt, other lien or title
34 retention contract and lease or consignment intended as
-21- LRB9112852JSpc
1 security. This Article does not apply to statutory liens
2 except as provided in Section 9--310.
3 (3) The application of this Article to a security
4 interest in a secured obligation is not affected by the fact
5 that the obligation is itself secured by a transaction or
6 interest to which this Article does not apply.
7 (4) The application of this Article to a security
8 interest in a deposit account shall not displace a common law
9 right of set-off of the secured party as to a deposit account
10 maintained with the secured party.
11 (Source: P.A. 87-1037.)
12 (810 ILCS 5/9-103) (from Ch. 26, par. 9-103)
13 Sec. 9-103. Purchase-money security interest; application
14 of payments; burden of establishing.
15 (a) Definitions. In this Section:
16 (1) "purchase-money collateral" means goods or
17 software that secures a purchase-money obligation
18 incurred with respect to that collateral; and
19 (2) "purchase-money obligation" means an obligation
20 of an obligor incurred as all or part of the price of the
21 collateral or for value given to enable the debtor to
22 acquire rights in or the use of the collateral if the
23 value is in fact so used.
24 (b) Purchase-money security interest in goods. A
25 security interest in goods is a purchase-money security
26 interest:
27 (1) to the extent that the goods are purchase-money
28 collateral with respect to that security interest;
29 (2) if the security interest is in inventory that
30 is or was purchase-money collateral, also to the extent
31 that the security interest secures a purchase-money
32 obligation incurred with respect to other inventory in
33 which the secured party holds or held a purchase-money
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1 security interest; and
2 (3) also to the extent that the security interest
3 secures a purchase-money obligation incurred with respect
4 to software in which the secured party holds or held a
5 purchase-money security interest.
6 (c) Purchase-money security interest in software. A
7 security interest in software is a purchase-money security
8 interest to the extent that the security interest also
9 secures a purchase-money obligation incurred with respect to
10 goods in which the secured party holds or held a
11 purchase-money security interest if:
12 (1) the debtor acquired its interest in the
13 software in an integrated transaction in which it
14 acquired an interest in the goods; and
15 (2) the debtor acquired its interest in the
16 software for the principal purpose of using the software
17 in the goods.
18 (d) Consignor's inventory purchase-money security
19 interest. The security interest of a consignor in goods that
20 are the subject of a consignment is a purchase-money security
21 interest in inventory.
22 (e) Application of payment. If the extent to which a
23 security interest is a purchase-money security interest
24 depends on the application of a payment to a particular
25 obligation, the payment must be applied:
26 (1) in accordance with any reasonable method of
27 application to which the parties agree;
28 (2) in the absence of the parties' agreement to a
29 reasonable method, in accordance with any intention of
30 the obligor manifested at or before the time of payment;
31 or
32 (3) in the absence of an agreement to a reasonable
33 method and a timely manifestation of the obligor's
34 intention, in the following order:
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1 (A) to obligations that are not secured; and
2 (B) if more than one obligation is secured, to
3 obligations secured by purchase-money security
4 interests in the order in which those obligations
5 were incurred.
6 (f) No loss of status of purchase-money security. A
7 purchase-money security interest does not lose its status as
8 such, even if:
9 (1) the purchase-money collateral also secures an
10 obligation that is not a purchase-money obligation;
11 (2) collateral that is not purchase-money
12 collateral also secures the purchase-money obligation; or
13 (3) the purchase-money obligation has been renewed,
14 refinanced, consolidated, or restructured.
15 (g) Burden of proof. A secured party claiming a
16 purchase-money security interest has the burden of
17 establishing the extent to which the security interest is a
18 purchase-money security interest. Perfection of Security
19 Interests in Multiple State Transactions.
20 (1) Documents, instruments, letters of credit, and
21 ordinary goods.
22 (a) This subsection applies to documents,
23 instruments, rights to proceeds of written letters of
24 credit, and goods other than those covered by a
25 certificate of title described in subsection (2), mobile
26 goods described in subsection (3), and minerals described
27 in subsection (5).
28 (b) Except as otherwise provided in this
29 subsection, perfection and the effect of perfection or
30 non-perfection of a security interest in collateral are
31 governed by the law of the jurisdiction where the
32 collateral is when the last event occurs on which is
33 based the assertion that the security interest is
34 perfected or unperfected.
-24- LRB9112852JSpc
1 (c) If the parties to a transaction creating a
2 purchase money security interest in goods in one
3 jurisdiction understand at the time that the security
4 interest attaches that the goods will be kept in another
5 jurisdiction, then the law of the other jurisdiction
6 governs the perfection and the effect of perfection or
7 non-perfection of the security interest from the time it
8 attaches until 30 days after the debtor receives
9 possession of the goods and thereafter if the goods are
10 taken to the other jurisdiction before the end of the
11 30-day period.
12 (d) When collateral is brought into and kept in
13 this State while subject to a security interest perfected
14 under the law of the jurisdiction from which the
15 collateral was removed, the security interest remains
16 perfected, but if action is required by Part 3 of this
17 Article to perfect the security interest,
18 (i) if the action is not taken before the
19 expiration of the period of perfection in the other
20 jurisdiction or the end of 4 months after the
21 collateral is brought into this State, whichever
22 period first expires, the security interest becomes
23 unperfected at the end of that period and is
24 thereafter deemed to have been unperfected as
25 against a person who became a purchaser after
26 removal;
27 (ii) if the action is taken before the
28 expiration of the period specified in subparagraph
29 (i), the security interest continues perfected
30 thereafter;
31 (iii) for the purpose of priority over a buyer
32 of consumer goods (subsection (2) of Section 9-307),
33 the period of the effectiveness of a filing in the
34 jurisdiction from which the collateral is removed is
-25- LRB9112852JSpc
1 governed by the rules with respect to perfection in
2 subparagraphs (i) and (ii).
3 (2) Certificate of title.
4 (a) This subsection applies to goods covered by a
5 certificate of title issued under a statute of this State
6 or of another jurisdiction under the law of which
7 indication of a security interest on the certificate is
8 required as a condition of perfection.
9 (b) Except as otherwise provided in this
10 subsection, perfection and the effect of perfection or
11 non-perfection of the security interest are governed by
12 the law (including the conflict of laws rules) of the
13 jurisdiction issuing the certificate until 4 months after
14 the goods are removed from that jurisdiction and
15 thereafter until the goods are registered in another
16 jurisdiction, but in any event not beyond surrender of
17 the certificate. After the expiration of that period,
18 the goods are not covered by the certificate of title
19 within the meaning of this Section.
20 (c) Except with respect to the rights of a buyer
21 described in the next paragraph, a security interest,
22 perfected in another jurisdiction otherwise than by
23 notation on a certificate of title, in goods brought into
24 this State and thereafter covered by a certificate of
25 title issued by this State is subject to the rules stated
26 in paragraph (d) of subsection (1).
27 (d) If goods are brought into this State while a
28 security interest therein is perfected in any manner
29 under the law of the jurisdiction from which the goods
30 are removed and a certificate of title is issued by this
31 State and the certificate does not show that the goods
32 are subject to the security interest or that they may be
33 subject to security interests not shown on the
34 certificate, the security interest is subordinate to the
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1 rights of a buyer of the goods to the extent that he
2 gives value and receives delivery of the goods after
3 issuance of the certificate and without knowledge of the
4 security interest.
5 (3) Accounts, general intangibles and mobile goods.
6 (a) This subsection applies to accounts (other than
7 an account described in subsection (5) on minerals) and
8 general intangibles (other than uncertificated
9 securities) and to goods which are mobile and which are
10 of a type normally used in more than one jurisdiction,
11 such as motor vehicles, trailers, rolling stock,
12 airplanes, shipping containers, road building and
13 construction machinery and commercial harvesting
14 machinery and the like, if the goods are equipment or are
15 inventory leased or held for lease by the debtor to
16 others, and are not covered by a certificate of title
17 described in subsection (2).
18 (b) The law (including the conflict of laws rules)
19 of the jurisdiction in which the debtor is located
20 governs the perfection and the effect of perfection or
21 non-perfection of the security interest.
22 (c) If, however, the debtor is located in a
23 jurisdiction which is not a part of the United States,
24 and which does not provide for perfection of the security
25 interest by filing or recording in that jurisdiction, the
26 law of the jurisdiction in the United States in which the
27 debtor has its major executive office in the United
28 States governs the perfection and the effect of
29 perfection or non-perfection of the security interest
30 through filing. In the alternative, if the debtor is
31 located in a jurisdiction which is not a part of the
32 United States or Canada and the collateral is accounts or
33 general intangibles for money due or to become due, the
34 security interest may be perfected by notification to the
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1 account debtor. As used in this paragraph, "United
2 States" includes its territories and possessions and the
3 Commonwealth of Puerto Rico.
4 (d) A debtor shall be deemed located at his place
5 of business if he has one, at his chief executive office
6 if he has more than one place of business, otherwise at
7 his residence. If, however, the debtor is a foreign air
8 carrier under the Federal Aviation Act of 1958, as
9 amended, it shall be deemed located at the designated
10 office of the agent upon whom service of process may be
11 made on behalf of the foreign air carrier.
12 (e) A security interest perfected under the law of
13 the jurisdiction of the location of the debtor is
14 perfected until the expiration of 4 months after a change
15 of the debtor's location to another jurisdiction, or
16 until perfection would have ceased by the law of the
17 first jurisdiction, whichever period first expires.
18 Unless perfected in the new jurisdiction before the end
19 of that period, it becomes unperfected thereafter and is
20 deemed to have been unperfected as against a person who
21 became a purchaser after the change.
22 (4) Chattel paper. The rules stated for goods in
23 subsection (1) apply to a possessory security interest in
24 chattel paper. The rules stated for accounts in subsection
25 (3) apply to a non-possessory security interest in chattel
26 paper, but the security interest may not be perfected by
27 notification to the account debtor.
28 (5) Minerals. Perfection and the effect of perfection
29 or non-perfection of a security interest which is created by
30 a debtor who has an interest in minerals or the like
31 (including oil and gas) before extraction and which attaches
32 thereto as extracted, or which attaches to an account
33 resulting from the sale thereof at the wellhead or minehead
34 are governed by the law (including the conflict of laws
-28- LRB9112852JSpc
1 rules) of the jurisdiction wherein the wellhead or minehead
2 is located.
3 (6) Investment property.
4 (a) This subsection applies to investment property.
5 (b) Except as otherwise provided in paragraph (f),
6 during the time that a security certificate is located in
7 a jurisdiction, perfection of a security interest, the
8 effect of perfection or non-perfection, and the priority
9 of a security interest in the certificated security
10 represented thereby are governed by the local law of that
11 jurisdiction.
12 (c) Except as otherwise provided in paragraph (f),
13 perfection of a security interest, the effect of
14 perfection or non-perfection, and the priority of a
15 security interest in an uncertificated security are
16 governed by the local law of the issuer's jurisdiction as
17 specified in Section 8-110(d).
18 (d) Except as otherwise provided in paragraph (f),
19 perfection of a security interest, the effect of
20 perfection or non-perfection, and the priority of a
21 security interest in a security entitlement or securities
22 account are governed by the local law of the securities
23 intermediary's jurisdiction as specified in Section
24 8-110(e).
25 (e) Except as otherwise provided in paragraph (f),
26 perfection of a security interest, the effect of
27 perfection or non-perfection, and the priority of a
28 security interest in a commodity contract or commodity
29 account are governed by the local law of the commodity
30 intermediary's jurisdiction. The following rules
31 determine a "commodity intermediary's jurisdiction" for
32 purposes of this paragraph:
33 (i) If an agreement between the commodity
34 intermediary and commodity customer specifies that
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1 it is governed by the law of a particular
2 jurisdiction, that jurisdiction is the commodity
3 intermediary's jurisdiction.
4 (ii) If an agreement between the commodity
5 intermediary and commodity customer does not specify
6 the governing law as provided in subparagraph (i),
7 but expressly specifies that the commodity account
8 is maintained at an office in a particular
9 jurisdiction, that jurisdiction is the commodity
10 intermediary's jurisdiction.
11 (iii) If an agreement between the commodity
12 intermediary and commodity customer does not specify
13 a jurisdiction as provided in subparagraphs (i) or
14 (ii), the commodity intermediary's jurisdiction is
15 the jurisdiction in which is located the office
16 identified in an account statement as the office
17 serving the commodity customer's account.
18 (iv) If an agreement between the commodity
19 intermediary and commodity customer does not specify
20 a jurisdiction as provided in subparagraphs (i) or
21 (ii) and an account statement does not identify an
22 office serving the commodity customer's account as
23 provided in subparagraph (iii), the commodity
24 intermediary's jurisdiction is the jurisdiction in
25 which is located the chief executive office of the
26 commodity intermediary.
27 (f) Perfection of a security interest by filing,
28 automatic perfection of a security interest in investment
29 property granted by a broker or securities intermediary,
30 and automatic perfection of a security interest in a
31 commodity contract or commodity account granted by a
32 commodity intermediary are governed by the local law of
33 the jurisdiction in which the debtor is located.
34 (Source: P.A. 89-364, eff. 1-1-96; 89-534, eff. 1-1-97;
-30- LRB9112852JSpc
1 89-626, eff. 8-9-96.)
2 (810 ILCS 5/9-104) (from Ch. 26, par. 9-104)
3 Sec. 9-104. Control of deposit account.
4 (a) Requirements for control. A secured party has
5 control of a deposit account if:
6 (1) the secured party is the bank with which the
7 deposit account is maintained;
8 (2) the debtor, secured party, and bank have agreed
9 in an authenticated record that the bank will comply with
10 instructions originated by the secured party directing
11 disposition of the funds in the deposit account without
12 further consent by the debtor; or
13 (3) the secured party becomes the bank's customer
14 with respect to the deposit account.
15 (b) Debtor's right to direct disposition. A secured
16 party that has satisfied subsection (a) has control, even if
17 the debtor retains the right to direct the disposition of
18 funds from the deposit account. Transactions excluded from
19 Article.
20 This Article does not apply
21 (a) to a security interest subject to any statute
22 of the United States to the extent that such statute
23 governs the rights of parties to and third parties
24 affected by transactions in particular types of property;
25 or
26 (b) to a landlord's lien; or
27 (c) to a lien given by statute or other rule of law
28 for services or materials except as provided in Section
29 9-310 on priority of such liens; or
30 (d) to a transfer of a claim for wages, salary or
31 other compensation of an employee; or
32 (e) to a transfer by a government or governmental
33 subdivision or agency; or
-31- LRB9112852JSpc
1 (f) to a sale of accounts or chattel paper as part
2 of a sale of the business out of which they arose, or an
3 assignment of accounts or chattel paper which is for the
4 purpose of collection only, or a transfer of a right to
5 payment under a contract to an assignee who is also to do
6 the performance under the contract or a transfer of a
7 single account to an assignee in whole or partial
8 satisfaction of a preexisting indebtedness; or
9 (g) to a transfer of an interest or claim in or
10 under any policy of insurance, except as provided with
11 respect to proceeds (Section 9-306) and priorities in
12 proceeds (Section 9-312); or
13 (h) to a right represented by a judgment (other
14 than a judgment taken on a right to payment which was
15 collateral); or
16 (i) to any right of set-off; or
17 (j) except to the extent that provision is made for
18 fixtures in Section 9-313, to the creation or transfer of
19 an interest in or lien on real estate, including a lease
20 or rents thereunder; or
21 (k) to a transfer in whole or in part of any claim
22 arising out of tort; or
23 (l) to a transfer of an interest in a letter of
24 credit other than the rights to proceeds of a written
25 letter of credit.
26 (Source: P.A. 89-534, eff. 1-1-97.)
27 (810 ILCS 5/9-105) (from Ch. 26, par. 9-105)
28 Sec. 9-105. Control of electronic chattel paper. A
29 secured party has control of electronic chattel paper if the
30 record or records comprising the chattel paper are created,
31 stored, and assigned in such a manner that:
32 (1) a single authoritative copy of the record or
33 records exists which is unique, identifiable and, except
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1 as otherwise provided in paragraphs (4), (5), and (6),
2 unalterable;
3 (2) the authoritative copy identifies the secured
4 party as the assignee of the record or records;
5 (3) the authoritative copy is communicated to and
6 maintained by the secured party or its designated
7 custodian;
8 (4) copies or revisions that add or change an
9 identified assignee of the authoritative copy can be made
10 only with the participation of the secured party;
11 (5) each copy of the authoritative copy and any
12 copy of a copy is readily identifiable as a copy that is
13 not the authoritative copy; and
14 (6) any revision of the authoritative copy is
15 readily identifiable as an authorized or unauthorized
16 revision. Definitions and index of definitions.
17 (1) In this Article unless the context otherwise
18 requires:
19 (a) "Account debtor" means the person who is
20 obligated on an account, chattel paper or general
21 intangible;
22 (b) "Chattel paper" means a writing or writings
23 which evidence both a monetary obligation and a security
24 interest in or a lease of specific goods, but a charter
25 or other contract involving the use or hire of a vessel
26 is not chattel paper. When a transaction is evidenced
27 both by such a security agreement or a lease and by an
28 instrument or a series of instruments, the group of
29 writings taken together constitutes chattel paper;
30 (c) "Collateral" means the property subject to a
31 security interest, and includes accounts and chattel
32 paper which have been sold;
33 (d) "Debtor" means the person who owes payment or
34 other performance of the obligation secured, whether or
-33- LRB9112852JSpc
1 not he owns or has rights in the collateral, and includes
2 the seller of accounts or chattel paper. Where the debtor
3 and the owner of the collateral are not the same person,
4 the term "debtor" means the owner of the collateral in
5 any provision of the Article dealing with the collateral,
6 the obligor in any provision dealing with the obligation,
7 and may include both where the context so requires;
8 (e) "Deposit account" means a demand, time,
9 savings, passbook or like account maintained with a bank,
10 as defined in subsection (1) of Section 4-105, other than
11 an account evidenced by a certificate of deposit;
12 (f) "Document" means document of title as defined
13 in the general definitions of Article 1 (Section 1-201),
14 and a receipt of the kind described in subsection (2) of
15 Section 7-201;
16 (g) "Encumbrance" includes real estate mortgages
17 and other liens on real estate and all other rights in
18 real estate that are not ownership interests;
19 (h) "Goods" includes all things which are movable
20 at the time the security interest attaches or which are
21 fixtures (Section 9-313), but does not include money,
22 documents, instruments, investment property, commodity
23 contracts, accounts, chattel paper, general intangibles,
24 or minerals or the like (including oil and gas) before
25 extraction. "Goods" also includes standing timber which
26 is to be cut and removed under a conveyance or contract
27 for sale, the unborn young of animals, and growing crops;
28 (i) "Instrument" means a negotiable instrument
29 (defined in Section 3-104), a non-transferable
30 certificate of deposit, a non-negotiable certificate of
31 deposit, or any other writing which evidences a right to
32 the payment of money and is not itself a security
33 agreement or lease and is of a type which is in ordinary
34 course of business transferred by delivery with any
-34- LRB9112852JSpc
1 necessary indorsement or assignment. The term does not
2 include investment property;
3 (j) "Mortgage" means a consensual interest created
4 by a real estate mortgage, a trust deed on real estate,
5 or the like;
6 (j-5) "Non-negotiable certificate of deposit" means
7 a written document issued by a bank, as defined in
8 subsection (1) of Section 4-105, that contains an
9 acknowledgement that a sum of money has been received by
10 the issuer and a promise by the issuer to repay the sum
11 of money, and is not a negotiable instrument as defined
12 in Section 3-104;
13 (j-7) "Non-transferable certificate of deposit"
14 means a non-negotiable certificate of deposit which may
15 not be transferred except on the books of the issuer,
16 with the consent of the issuer, or is subject to other
17 restrictions or conditions of the issuer on transfer;
18 (k) An advance is made "pursuant to commitment" if
19 the secured party has bound himself to make it, whether
20 or not a subsequent event of default or other event not
21 within his control has relieved or may relieve him from
22 his obligation;
23 (l) "Security agreement" means an agreement which
24 creates or provides for a security interest;
25 (m) "Secured party" means a lender, seller or other
26 person in whose favor there is a security interest,
27 including a person to whom accounts or chattel paper have
28 been sold. When the holders of obligations issued under
29 an indenture of trust, equipment trust agreement or the
30 like are represented by a trustee or other person, the
31 representative is the secured party;
32 (n) "Transmitting utility" means any person
33 primarily engaged in the railroad, street railway or
34 trolley bus business, the electric or electronics
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1 communications transmission business, the transmission of
2 goods by pipeline, or the distribution, transmission, or
3 the production and transmission of electricity, steam,
4 gas or water, or the provision of sewer service.
5 (o) "Uncertificated certificate of deposit" means an
6 obligation of a bank, as defined in subsection (1) of Section
7 4-105, to repay a sum of money it has received, that is not a
8 deposit account and is not represented by a writing, but only
9 by an entry on the books of the bank and any documentation
10 given to the customer by the bank.
11 (2) Other definitions applying to this Article and the
12 Sections in which they appear are:
13 "Account". Section 9-106.
14 "Attach". Section 9-203.
15 "Commodity contract". Section 9-115.
16 "Commodity customer". Section 9-115.
17 "Commodity intermediary". Section 9-115.
18 "Construction mortgage". Section 9-313 (1).
19 "Consumer goods". Section 9-109 (1).
20 "Control". Section 9-115.
21 "Equipment". Section 9-109 (2).
22 "Farm products". Section 9-109 (3).
23 "Fixture". Section 9-313 (1).
24 "Fixture filing". Section 9-313 (1).
25 "General intangibles". Section 9-106.
26 "Inventory". Section 9-109 (4).
27 "Investment property". Section 9-115.
28 "Lien creditor". Section 9-301 (3).
29 "Proceeds". Section 9-306 (1).
30 "Purchase money security interest". Section 9-107.
31 "United States". Section 9-103.
32 (3) The following definitions in other Articles apply to
33 this Article:
34 "Bank". Section 4-105.
-36- LRB9112852JSpc
1 "Broker". Section 8-102.
2 "Certificated security". Section 8-102.
3 "Check". Section 3-104.
4 "Clearing corporation". Section 8-102.
5 "Contract for sale". Section 2-106.
6 "Control". Section 8-106.
7 "Delivery". Section 8-301.
8 "Entitlement holder". Section 8-102.
9 "Financial asset". Section 8-102.
10 "Holder in due course". Section 3-302.
11 "Letter of credit". Section 5-102.
12 "Note". Section 3-104.
13 "Proceeds of a letter of credit". Section 5-114(a).
14 "Sale". Section 2-106.
15 "Securities intermediary". Section 8-102.
16 "Security". Section 8-102.
17 "Security certificate". Section 8-102.
18 "Security entitlement". Section 8-102.
19 "Uncertificated security". Section 8-102.
20 (4) In addition Article 1 contains general definitions
21 and principles of construction and interpretation applicable
22 throughout this Article.
23 (Source: P.A. 89-364, eff. 1-1-96; 89-534, eff. 1-1-97;
24 90-665, eff. 7-30-98.)
25 (810 ILCS 5/9-106) (from Ch. 26, par. 9-106)
26 Sec. 9-106. Control of investment property.
27 (a) Control under Section 8-106. A person has control
28 of a certificated security, uncertificated security, or
29 security entitlement as provided in Section 8-106.
30 (b) Control of commodity contract. A secured party has
31 control of a commodity contract if:
32 (1) the secured party is the commodity intermediary
33 with which the commodity contract is carried; or
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1 (2) the commodity customer, secured party, and
2 commodity intermediary have agreed that the commodity
3 intermediary will apply any value distributed on account
4 of the commodity contract as directed by the secured
5 party without further consent by the commodity customer.
6 (c) Effect of control of securities account or commodity
7 account. A secured party having control of all security
8 entitlements or commodity contracts carried in a securities
9 account or commodity account has control over the securities
10 account or commodity account. Definitions: "account";
11 "general intangibles". "Account" means any right to payment
12 for goods sold or leased or for services rendered which is
13 not evidenced by an instrument or chattel paper, whether or
14 not it has been earned by performance. "General intangibles"
15 means any personal property (including things in action)
16 other than goods, accounts, chattel paper, documents,
17 instruments, investment property, rights to proceeds of
18 written letters of credit, deposit accounts, uncertificated
19 certificates of deposit, and money. All rights to payment
20 earned or unearned under a charter or other contract
21 involving the use or hire of a vessel and all rights incident
22 to the charter or contract are accounts.
23 (Source: P.A. 89-364, eff. 1-1-96; 89-534, eff. 1-1-97;
24 90-665, eff. 7-30-98.)
25 (810 ILCS 5/9-107) (from Ch. 26, par. 9-107)
26 Sec. 9-107. Control of letter-of-credit right. A
27 secured party has control of a letter-of-credit right to the
28 extent of any right to payment or performance by the issuer
29 or any nominated person if the issuer or nominated person has
30 consented to an assignment of proceeds of the letter of
31 credit under Section 5-114(c) or otherwise applicable law or
32 practice. Definitions: "purchase money security interest".
33 A security interest is a "purchase money security
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1 interest" to the extent that it is
2 (a) taken or retained by the seller of the
3 collateral to secure all or part of its price; or
4 (b) taken by a person who by making advances or
5 incurring an obligation gives value to enable the debtor to
6 acquire rights in or the use of collateral if such value is
7 in fact so used.
8 (Source: Laws 1961, p. 2101.)
9 (810 ILCS 5/9-108) (from Ch. 26, par. 9-108)
10 Sec. 9-108. Sufficiency of description.
11 (a) Sufficiency of description. Except as otherwise
12 provided in subsections (c), (d), and (e), a description of
13 personal or real property is sufficient, whether or not it is
14 specific, if it reasonably identifies what is described. A
15 description of goods may be sufficient even though it omits
16 the make, model, or serial number of the goods.
17 (b) Examples of reasonable identification. Except as
18 otherwise provided in subsection (d), a description of
19 collateral reasonably identifies the collateral if it
20 identifies the collateral by:
21 (1) specific listing;
22 (2) category;
23 (3) except as otherwise provided in subsection (e),
24 a type of collateral defined in the Uniform Commercial
25 Code;
26 (4) quantity;
27 (5) computational or allocational formula or
28 procedure;
29 (6) if a description of the real estate related to
30 crops growing or to be grown is included, the
31 quarter-section, section, township, and range of the real
32 estate concerned and the name of the record owner if
33 other than the debtor; or
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1 (7) except as otherwise provided in subsection (c),
2 any other method, if the identity of the collateral is
3 objectively determinable.
4 (c) Supergeneric description not sufficient. A
5 description of collateral as "all the debtor's assets" or
6 "all the debtor's personal property" or using words of
7 similar import does not reasonably identify the collateral.
8 (d) Investment property. Except as otherwise provided
9 in subsection (e), a description of a security entitlement,
10 securities account, or commodity account is sufficient if it
11 describes:
12 (1) the collateral by those terms or as investment
13 property; or
14 (2) the underlying financial asset or commodity
15 contract.
16 (e) When description by type insufficient. A
17 description only by type of collateral defined in the Uniform
18 Commercial Code is an insufficient description of:
19 (1) a commercial tort claim; or
20 (2) in a consumer transaction, consumer goods, a
21 security entitlement, a securities account, or a
22 commodity account. When after-acquired collateral not
23 security for antecedent debt.
24 Where a secured party makes an advance, incurs an
25 obligation, releases a perfected security interest, or
26 otherwise gives new value which is to be secured in whole or
27 in part by after-acquired property his security interest in
28 the after-acquired collateral shall be deemed to be taken for
29 new value and not as security for an antecedent debt if the
30 debtor acquires his rights in such collateral either in the
31 ordinary course of his business or under a contract of
32 purchase made pursuant to the security agreement within a
33 reasonable time after new value is given.
34 (Source: Laws 1961, p. 2101.)
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1 (810 ILCS 5/Art. 9, Part 1, Subpart 2 heading new)
2 SUBPART 2. APPLICABILITY OF ARTICLE
3 (810 ILCS 5/9-109) (from Ch. 26, par. 9-109)
4 Sec. 9-109. Scope.
5 (a) General scope of Article. Except as otherwise
6 provided in subsections (c) and (d), this Article applies to:
7 (1) a transaction, regardless of its form, that
8 creates a security interest in personal property or
9 fixtures by contract;
10 (2) an agricultural lien;
11 (3) a sale of accounts, chattel paper, payment
12 intangibles, or promissory notes;
13 (4) a consignment;
14 (5) a security interest arising under Section
15 2-401, 2-505, 2-711(3), or 2A-508(5), as provided in
16 Section 9-110; and
17 (6) a security interest arising under Section 4-210
18 or 5-118.
19 (b) Security interest in secured obligation. The
20 application of this Article to a security interest in a
21 secured obligation is not affected by the fact that the
22 obligation is itself secured by a transaction or interest to
23 which this Article does not apply.
24 (c) Extent to which Article does not apply. This
25 Article does not apply to the extent that:
26 (1) a statute, regulation, or treaty of the United
27 States preempts this Article;
28 (2) another statute of this State expressly governs
29 the creation, perfection, priority, or enforcement of a
30 security interest created by this State or a governmental
31 unit of this State;
32 (3) a statute of another State, a foreign country,
33 or a governmental unit of another State or a foreign
-41- LRB9112852JSpc
1 country, other than a statute generally applicable to
2 security interests, expressly governs creation,
3 perfection, priority, or enforcement of a security
4 interest created by the State, country, or governmental
5 unit;
6 (4) the rights of a transferee beneficiary or
7 nominated person under a letter of credit are independent
8 and superior under Section 5-114; or
9 (5) this Article is in conflict with Section
10 205-410 of the Department of Agriculture Law of the Civil
11 Administrative Code of Illinois or the Grain Code.
12 (d) Inapplicability of Article. This Article does not
13 apply to:
14 (1) a landlord's lien, other than an agricultural
15 lien;
16 (2) a lien, other than an agricultural lien, given
17 by statute or other rule of law for services or
18 materials, but Section 9-333 applies with respect to
19 priority of the lien;
20 (3) an assignment of a claim for wages, salary, or
21 other compensation of an employee;
22 (4) a sale of accounts, chattel paper, payment
23 intangibles, or promissory notes as part of a sale of the
24 business out of which they arose;
25 (5) an assignment of accounts, chattel paper,
26 payment intangibles, or promissory notes which is for the
27 purpose of collection only;
28 (6) an assignment of a right to payment under a
29 contract to an assignee that is also obligated to perform
30 under the contract;
31 (7) an assignment of a single account, payment
32 intangible, or promissory note to an assignee in full or
33 partial satisfaction of a preexisting indebtedness;
34 (8) a transfer of an interest in or an assignment
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1 of a claim under a policy of insurance, other than an
2 assignment by or to a health-care provider of a
3 health-care-insurance receivable and any subsequent
4 assignment of the right to payment, but Sections 9-315
5 and 9-322 apply with respect to proceeds and priorities
6 in proceeds;
7 (9) an assignment of a right represented by a
8 judgment, other than a judgment taken on a right to
9 payment that was collateral;
10 (10) a right of recoupment or set-off, but:
11 (A) Section 9-340 applies with respect to the
12 effectiveness of rights of recoupment or set-off
13 against deposit accounts; and
14 (B) Section 9-404 applies with respect to
15 defenses or claims of an account debtor;
16 (11) the creation or transfer of an interest in or
17 lien on real property, including a lease or rents
18 thereunder, except to the extent that provision is made
19 for:
20 (A) liens on real property in Sections 9-203
21 and 9-308;
22 (B) fixtures in Section 9-334;
23 (C) fixture filings in Sections 9-501, 9-502,
24 9-512, 9-516, and 9-519; and
25 (D) security agreements covering personal and
26 real property in Section 9-604; or
27 (12) an assignment of a claim arising in tort,
28 other than a commercial tort claim, but Sections 9-315
29 and 9-322 apply with respect to proceeds and priorities
30 in proceeds. Classification of goods; "consumer goods";
31 "equipment"; "farm products"; "inventory". Goods are
32 (1) "consumer goods" if they are used or bought for use
33 primarily for personal, family or household purposes;
34 (2) "equipment" if they are used or bought for use
-43- LRB9112852JSpc
1 primarily in business (including farming or a profession) or
2 by a debtor who is a non-profit organization or a
3 governmental subdivision or agency or if the goods are not
4 included in the definitions of inventory, farm products or
5 consumer goods;
6 (3) "farm products" if they are crops or livestock or
7 supplies used or produced in farming operations or if they
8 are products of crops or livestock in their unmanufactured
9 states (such as ginned cotton, wool-clip, maple syrup, milk
10 and eggs) or if they are aquatic products as defined in the
11 Aquaculture Development Act, and if they are in the
12 possession of a debtor engaged in raising, fattening, grazing
13 or other farming or aquacultural operations. If goods are
14 farm products they are neither equipment nor inventory;
15 (4) "inventory" if they are held by a person who holds
16 them for sale or lease or to be furnished under contracts of
17 service or if he has so furnished them, or if they are raw
18 materials, work in process or materials used or consumed in a
19 business. Inventory of a person is not to be classified as
20 his equipment.
21 (Source: P.A. 85-856.)
22 (810 ILCS 5/9-110) (from Ch. 26, par. 9-110)
23 Sec. 9-110. Security interests arising under Article 2
24 or 2A. A security interest arising under Section 2-401,
25 2-505, 2-711(3), or 2A-508(5) is subject to this Article.
26 However, until the debtor obtains possession of the goods:
27 (1) the security interest is enforceable, even if
28 Section 9-203(b)(3) has not been satisfied;
29 (2) filing is not required to perfect the security
30 interest;
31 (3) the rights of the secured party after default
32 by the debtor are governed by Article 2 or 2A; and
33 (4) the security interest has priority over a
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1 conflicting security interest created by the debtor.
2 Sufficiency of description.
3 For the purposes of this Article any description of
4 personal property or real estate is sufficient whether or not
5 it is specific if it reasonably identifies what is described.
6 (Source: Laws 1961, p. 2101.)
7 (810 ILCS 5/9-112) (from Ch. 26, par. 9-112)
8 Sec. 9-112. (Blank). Where collateral is not owned by
9 debtor.
10 Unless otherwise agreed, when a secured party knows that
11 collateral is owned by a person who is not the debtor, the
12 owner of the collateral is entitled to receive from the
13 secured party any surplus under Section 9-- 502(2) or under
14 Section 9--504(1), and is not liable for the debt or for any
15 deficiency after resale, and he has the same right as the
16 debtor
17 (a) to receive statements under Section 9--208;
18 (b) to receive notice of and to object to a secured
19 party's proposal to retain the collateral in satisfaction of
20 the indebtedness under Section 9--505;
21 (c) to redeem the collateral under Section 9--506;
22 (d) to obtain injunctive or other relief under
23 Section 9--507(1); and
24 (e) to recover losses caused to him under Section
25 9--208(2).
26 (Source: Laws 1961, 1st S.S., p. 7.)
27 (810 ILCS 5/9-113) (from Ch. 26, par. 9-113)
28 Sec. 9-113. (Blank). Security interests arising under
29 Article on Sales or under Article on Leases.
30 A security interest arising solely under the Article on
31 Sales (Article 2) or the Article on Leases (Article 2A) is
32 subject to the provisions of this Article except that to the
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1 extent that and so long as the debtor does not have or does
2 not lawfully obtain possession of the goods
3 (a) no security agreement is necessary to make the
4 security interest enforceable; and
5 (b) no filing is required to perfect the security
6 interest; and
7 (c) the rights of the secured party on default by
8 the debtor are governed (i) by the Article on Sales
9 (Article 2) in the case of a security interest arising
10 solely under such Article or (ii) by the Article on
11 Leases (Article 2A) in the case of a security interest
12 arising solely under such Article.
13 (Source: P.A. 87-493.)
14 (810 ILCS 5/9-114) (from Ch. 26, par. 9-114)
15 Sec. 9-114. (Blank). Consignment.
16 (1) A person who delivers goods under a consignment
17 which is not a security interest and who would be required to
18 file under this Article by paragraph (3) (c) of Section 2-326
19 has priority over a secured party who is or becomes a
20 creditor of the consignee and who would have a perfected
21 security interest in the goods if they were the property of
22 the consignee, and also has priority with respect to
23 identifiable cash proceeds received on or before delivery of
24 the goods to a buyer, if
25 (a) the consignor complies with the filing provision of
26 the Article on Sales with respect to consignments (paragraph
27 (3) (c) of Section 2-326 before the consignee receives
28 possession of the goods; and
29 (b) the consignor gives notification in writing to the
30 holder of the security interest if the holder has filed a
31 financing statement covering the same types of goods before
32 the date of the filing made by the consignor; and
33 (c) the holder of the security interest receives the
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1 notification within 5 years before the consignee receives
2 possession of the goods; and
3 (d) the notification states that the consignor expects
4 to deliver goods on consignment to the consignee, describing
5 the goods by item or type.
6 (2) In the case of a consignment which is not a security
7 interest and in which the requirements of the preceding
8 subsection have not been met, a person who delivers goods to
9 another is subordinate to a person who would have a perfected
10 security interest in the goods if they were the property of
11 the debtor.
12 (Source: P.A. 78-238.)
13 (810 ILCS 5/9-115) (from Ch. 26, par. 9-115)
14 Sec. 9-115. (Blank). Investment property.
15 (1) In this Article:
16 (a) "Commodity account" means an account maintained
17 by a commodity intermediary in which a commodity contract
18 is carried for a commodity customer.
19 (b) "Commodity contract" means a commodity futures
20 contract, an option on a commodity futures contract, a
21 commodity option, or other contract that, in each case,
22 is:
23 (i) traded on or subject to the rules of a
24 board of trade that has been designated as a
25 contract market for such a contract pursuant to the
26 federal commodities laws; or
27 (ii) traded on a foreign commodity board of
28 trade, exchange, or market, and is carried on the
29 books of a commodity intermediary for a commodity
30 customer.
31 (c) "Commodity customer" means a person for whom a
32 commodity intermediary carries a commodity contract on
33 its books.
-47- LRB9112852JSpc
1 (d) "Commodity intermediary" means:
2 (i) a person who is registered as a futures
3 commission merchant under the federal commodities
4 laws; or
5 (ii) a person who in the ordinary course of
6 its business provides clearance or settlement
7 services for a board of trade that has been
8 designated as a contract market pursuant to the
9 federal commodities laws.
10 (e) "Control" with respect to a certificated
11 security, uncertificated security, or security
12 entitlement has the meaning specified in Section 8-106.
13 A secured party has control over a commodity contract if
14 by agreement among the commodity customer, the commodity
15 intermediary, and the secured party, the commodity
16 intermediary has agreed that it will apply any value
17 distributed on account of the commodity contract as
18 directed by the secured party without further consent by
19 the commodity customer. If a commodity customer grants a
20 security interest in a commodity contract to its own
21 commodity intermediary, the commodity intermediary as
22 secured party has control. A secured party has control
23 over a securities account or commodity account if the
24 secured party has control over all security entitlements
25 or commodity contracts carried in the securities account
26 or commodity account.
27 (f) "Investment property" means:
28 (i) a security, whether certificated or
29 uncertificated;
30 (ii) a security entitlement;
31 (iii) a securities account;
32 (iv) a commodity contract; or
33 (v) a commodity account.
34 (2) Attachment or perfection of a security interest in a
-48- LRB9112852JSpc
1 securities account is also attachment or perfection of a
2 security interest in all security entitlements carried in the
3 securities account. Attachment or perfection of a security
4 interest in a commodity account is also attachment or
5 perfection of a security interest in all commodity contracts
6 carried in the commodity account.
7 (3) A description of collateral in a security agreement
8 or financing statement is sufficient to create or perfect a
9 security interest in a certificated security, uncertificated
10 security, security entitlement, securities account, commodity
11 contract, or commodity account whether it describes the
12 collateral by those terms, or as investment property, or by
13 description of the underlying security, financial asset, or
14 commodity contract. A description of investment property
15 collateral in a security agreement or financing statement is
16 sufficient if it identifies the collateral by specific
17 listing, by category, by quantity, by a computational or
18 allocational formula or procedure, or by any other method, if
19 the identity of the collateral is objectively determinable.
20 (4) Perfection of a security interest in investment
21 property is governed by the following rules:
22 (a) A security interest in investment property may
23 be perfected by control.
24 (b) Except as otherwise provided in paragraphs (c)
25 and (d), a security interest in investment property may
26 be perfected by filing.
27 (c) If the debtor is a broker or securities
28 intermediary a security interest in investment property
29 is perfected when it attaches. The filing of a financing
30 statement with respect to a security interest in
31 investment property granted by a broker or securities
32 intermediary has no effect for purposes of perfection or
33 priority with respect to that security interest.
34 (d) If a debtor is a commodity intermediary, a
-49- LRB9112852JSpc
1 security interest in a commodity contract or a commodity
2 account is perfected when it attaches. The filing of a
3 financing statement with respect to a security interest
4 in a commodity contract or a commodity account granted by
5 a commodity intermediary has no effect for purposes of
6 perfection or priority with respect to that security
7 interest.
8 (5) Priority between conflicting security interests in
9 the same investment property is governed by the following
10 rules:
11 (a) A security interest of a secured party who has
12 control over investment property has priority over a
13 security interest of a secured party who does not have
14 control over the investment property.
15 (b) Except as otherwise provided in paragraphs (c)
16 and (d), conflicting security interests of secured
17 parties each of whom has control rank equally.
18 (c) Except as otherwise agreed by the securities
19 intermediary, a security interest in a security
20 entitlement or a securities account granted to the
21 debtor's own securities intermediary has priority over
22 any security interest granted by the debtor to another
23 secured party.
24 (d) Except as otherwise agreed by the commodity
25 intermediary, a security interest in a commodity contract
26 or a commodity account granted to the debtor's own
27 commodity intermediary has priority over any security
28 interest granted by the debtor to another secured party.
29 (e) Conflicting security interests granted by a
30 broker, a securities intermediary, or a commodity
31 intermediary which are perfected without control rank
32 equally.
33 (f) In all other cases, priority between
34 conflicting security interests in investment property is
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1 governed by Section 9-312(5), (6), and (7). Section
2 9-312(4) does not apply to investment property.
3 (6) If a security certificate in registered form is
4 delivered to a secured party pursuant to agreement, a written
5 security agreement is not required for attachment or
6 enforceability of the security interest, delivery suffices
7 for perfection of the security interest, and the security
8 interest has priority over a conflicting security interest
9 perfected by means other than control, even if a necessary
10 indorsement is lacking.
11 (Source: P.A. 89-364, eff. 1-1-96.)
12 (810 ILCS 5/9-116)
13 Sec. 9-116. (Blank). Security interest arising in
14 purchase or delivery of financial asset.
15 (1) If a person buys a financial asset through a
16 securities intermediary in a transaction in which the buyer
17 is obligated to pay the purchase price to the securities
18 intermediary at the time of the purchase, and the securities
19 intermediary credits the financial asset to the buyer's
20 securities account before the buyer pays the securities
21 intermediary, the securities intermediary has a security
22 interest in the buyer's security entitlement securing the
23 buyer's obligation to pay. A security agreement is not
24 required for attachment or enforceability of the security
25 interest, and the security interest is automatically
26 perfected.
27 (2) If a certificated security, or other financial asset
28 represented by a writing which in the ordinary course of
29 business is transferred by delivery with any necessary
30 indorsement or assignment is delivered pursuant to an
31 agreement between persons in the business of dealing with
32 such securities or financial assets and the agreement calls
33 for delivery versus payment, the person delivering the
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1 certificate or other financial asset has a security interest
2 in the certificated security or other financial asset
3 securing the seller's right to receive payment. A security
4 agreement is not required for attachment or enforceability of
5 the security interest, and the security interest is
6 automatically perfected.
7 (Source: P.A. 89-364, eff. 1-1-96.)
8 (810 ILCS 5/9-150)
9 Sec. 9-150. (Blank). Secretary of State; rules. The
10 Secretary of State, under the Illinois Administrative
11 Procedure Act, may adopt rules necessary to administer the
12 Secretary of State's responsibilities under this Article.
13 (Source: P.A. 89-364, eff. 1-1-96.)
14 (810 ILCS 5/Art. 9, Part 2 heading)
15 PART 2. EFFECTIVENESS OF SECURITY AGREEMENT;
16 ATTACHMENT OF SECURITY INTEREST;
17 RIGHTS OF PARTIES TO SECURITY AGREEMENT
18 VALIDITY OF SECURITY AGREEMENT
19 AND RIGHTS OF PARTIES THERETO
20 (810 ILCS 5/Art. 9, Part 2, Subpart 1 heading new)
21 SUBPART 1. EFFECTIVENESS AND ATTACHMENT
22 (810 ILCS 5/9-201) (from Ch. 26, par. 9-201)
23 Sec. 9-201. General effectiveness of security agreement.
24 (a) General effectiveness. Except as otherwise provided
25 in the Uniform Commercial Code, a security agreement is
26 effective according to its terms between the parties, against
27 purchasers of the collateral, and against creditors.
28 (b) Applicable consumer laws and other law. A
29 transaction subject to this Article is subject to any
30 applicable rule of law which establishes a different rule for
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1 consumers and:
2 (1) the Retail Installment Sales Act;
3 (2) the Motor Vehicle Retail Installment Sales Act;
4 (3) Article II of Chapter 3 of the Illinois Vehicle
5 Code;
6 (4) Article IIIB of the Boat Registration and
7 Safety Act;
8 (5) the Pawnbroker Regulation Act;
9 (6) the Motor Vehicle Leasing Act;
10 (7) the Consumer Installment Loan Act; and
11 (8) the Consumer Deposit Security Act of 1987.
12 (c) Other applicable law controls. In case of conflict
13 between this Article and a rule of law, statute, or
14 regulation described in subsection (b), the rule of law,
15 statute, or regulation controls. Failure to comply with any
16 other statute, rule of law, or regulation, including, without
17 limitation, those described in subsection (b), has only the
18 effect such other rule of law, statute, or regulation
19 specifies.
20 (d) Further deference to other applicable law. This
21 Article does not:
22 (1) validate any rate, charge, agreement, or
23 practice that violates a rule of law, statute, or
24 regulation described in subsection (b); or
25 (2) extend the application of the rule of law,
26 statute, or regulation to a transaction not otherwise
27 subject to it. General validity of security agreement.
28 Except as otherwise provided by this Act a security
29 agreement is effective according to its terms between the
30 parties, against purchasers of the collateral and against
31 creditors. Nothing in this Article validates any charge or
32 practice illegal under any statute or regulation thereunder
33 governing usury, small loans, retail installment sales, or
34 the like, or extends the application of any such statute or
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1 regulation to any transaction not otherwise subject thereto.
2 (Source: Laws 1961, p. 2101.)
3 (810 ILCS 5/9-202) (from Ch. 26, par. 9-202)
4 Sec. 9-202. Title to collateral immaterial. Except as
5 otherwise provided with respect to consignments or sales of
6 accounts, chattel paper, payment intangibles, or promissory
7 notes, the provisions of this Article with regard to rights
8 and obligations apply whether title to collateral is in the
9 secured party or the debtor.
10 Each provision of this Article with regard to rights,
11 obligations and remedies applies whether title to collateral
12 is in the secured party or in the debtor.
13 (Source: Laws 1961, p. 2101.)
14 (810 ILCS 5/9-203) (from Ch. 26, par. 9-203)
15 Sec. 9-203. Attachment and enforceability of security
16 interest; proceeds; supporting obligations; formal
17 requisites.
18 (a) Attachment. A security interest attaches to
19 collateral when it becomes enforceable against the debtor
20 with respect to the collateral, unless an agreement expressly
21 postpones the time of attachment.
22 (b) Enforceability. Except as otherwise provided in
23 subsections (c) through (i), a security interest is
24 enforceable against the debtor and third parties with respect
25 to the collateral only if :
26 (1) value has been given;
27 (2) the debtor has rights in the collateral or the
28 power to transfer rights in the collateral to a secured
29 party; and
30 (3) one of the following conditions is met:
31 (A) the debtor has authenticated a security
32 agreement that provides a description of the
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1 collateral and, if the security interest covers
2 timber to be cut, a description of the land
3 concerned;
4 (B) the collateral is not a certificated
5 security and is in the possession of the secured
6 party under Section 9-313 pursuant to the debtor's
7 security agreement;
8 (C) the collateral is a certificated security
9 in registered form and the security certificate has
10 been delivered to the secured party under Section
11 8-301 pursuant to the debtor's security agreement;
12 or
13 (D) the collateral is deposit accounts,
14 electronic chattel paper, investment property, or
15 letter-of-credit rights, and the secured party has
16 control under Section 9-104, 9-105, 9-106, or 9-107
17 pursuant to the debtor's security agreement.
18 (c) Other UCC provisions. Subsection (b) is subject to
19 Section 4-210 on the security interest of a collecting bank,
20 Section 5-118 on the security interest of a letter-of-credit
21 issuer or nominated person, Section 9-110 on a security
22 interest arising under Article 2 or 2A, and Section 9-206 on
23 security interests in investment property.
24 (d) When person becomes bound by another person's
25 security agreement. A person becomes bound as debtor by a
26 security agreement entered into by another person if, by
27 operation of law other than this Article or by contract:
28 (1) the security agreement becomes effective to
29 create a security interest in the person's property; or
30 (2) the person becomes generally obligated for the
31 obligations of the other person, including the obligation
32 secured under the security agreement, and acquires or
33 succeeds to all or substantially all of the assets of the
34 other person.
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1 (e) Effect of new debtor becoming bound. If a new
2 debtor becomes bound as debtor by a security agreement
3 entered into by another person:
4 (1) the agreement satisfies subsection (b)(3) with
5 respect to existing or after-acquired property of the new
6 debtor to the extent the property is described in the
7 agreement; and
8 (2) another agreement is not necessary to make a
9 security interest in the property enforceable.
10 (f) Proceeds and supporting obligations. The attachment
11 of a security interest in collateral gives the secured party
12 the rights to proceeds provided by Section 9-315 and is also
13 attachment of a security interest in a supporting obligation
14 for the collateral.
15 (g) Lien securing right to payment. The attachment of a
16 security interest in a right to payment or performance
17 secured by a security interest or other lien on personal or
18 real property is also attachment of a security interest in
19 the security interest, mortgage, or other lien.
20 (h) Security entitlement carried in securities account.
21 The attachment of a security interest in a securities account
22 is also attachment of a security interest in the security
23 entitlements carried in the securities account.
24 (i) Commodity contracts carried in commodity account.
25 The attachment of a security interest in a commodity account
26 is also attachment of a security interest in the commodity
27 contracts carried in the commodity account. Attachment and
28 Enforceability of Security Interest; Proceeds; Requisites.
29 (1) Subject to the provisions of Section 4-208 on the
30 security interest of a collecting bank, Sections 9-115 and
31 9-116 on security interests in investment property, and
32 Section 9-113 on a security interest arising under the
33 Article on Sales, a security interest is not enforceable
34 against the debtor or third parties with respect to the
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1 collateral and does not attach unless:
2 (a) the collateral is in the possession of the
3 secured party pursuant to agreement, the collateral is
4 investment property and the secured party has control
5 pursuant to agreement, or the debtor has signed a
6 security agreement which contains a description of the
7 collateral and, in addition, a description of the land
8 when the security agreement covers (i) crops growing or
9 to be grown and is signed by the debtor prior to January
10 1, 1996, or (ii) timber to be cut;
11 (b) value has been given; and
12 (c) the debtor has rights in the collateral.
13 (2) A security interest attaches when it becomes
14 enforceable against the debtor with respect to the
15 collateral. Attachment occurs as soon as all of the events
16 specified in subsection (1) have taken place unless explicit
17 agreement postpones the time of attaching.
18 (3) Unless otherwise agreed a security agreement gives
19 the secured party the rights to proceeds provided by Section
20 9-306.
21 (4) A transaction, although subject to this Article, is
22 also subject