United States of America

Article 9 of the Uniform Commercial Code (UCC) governs security interests in personal property in the United States of America (USA).

Differences from English law

The UCC regime differs from English law’s treatment of security interests in at least three key ways.

First, the UCC adopts a functional instead of formal definition of security. It provides that a security interest is an interest in personal property that secures payment or performance of an obligation. The Act applies to every transaction that in substance creates a security interest, without regard to its form and without regard to the person who has title to the collateral. This differs from English law, which requires that an interest fall within an established category in order to constitute a security interest.

Second, the UCC operates a notice-filing system. Notice filing schemes derive their name from allowing registration prior to the trasnsaction being made. Registration of a single ‘financing statement’ can also cover any number of transactions provided they fall within the scope of the particulars registered. Registration is not necessarily of an actual transaction. It is a notice that a security interest may have been taken by the party shown as the secured party over the collateral shown, or may be taken in future. Instead of operating a notice-filing regime, tegistration in the UK focuses on individual transactions.

Third, the UCC further introduced a ‘unitary’ security device incorporating all security interests that previously had been dealt with separately. English law instead distinguishes sharply between charges, morgages, pledges, and liens as the main forms of personal property security, assigning each category distinct juridical consequences.

The UCC’s impact

The UCC has been the basis for many secured transactions law reforms throughout the world. Canada’s Personal Property Security Act (PPSA) was based substantially on the concepts contained within the UCC. Many other jurisdictions—e.g. New Zealand and Australia—have adopted PPSAs resembling the Canadian regime. The UCC’s influence has thus touched many jurisdictions.

Additional resources

Click here to view the provisions of UCC, Art 9.

For an account of the history of UCC, Art 9, the following text may be of assistance:

P. Winship, ‘An Historical Overview of UCC Article 9’ in Secured Transactions Law Reform: Principles, Policies and Practice (ed. O. Akseli and L. Gullifer)