94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB2835


 
Introduced 1/20/2006, by Sen. Kirk W. Dillard
 
SYNOPSIS AS INTRODUCED:
 		














810 ILCS 5/9-103
  from Ch. 26, par. 9-103







    Amends the Uniform Commercial Code. With respect to purchase money security interests, makes the exceptions and limitations for non-consumer goods transactions apply to consumer goods also. Effective immediately.
















LRB094 17964 LCT 53267 b

















 


 


A BILL FOR









 











SB2835

LRB094 17964 LCT 53267 b






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    AN ACT concerning business.

 
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    Be it enacted by the People of the State of Illinois,
 
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represented in the General Assembly:


 
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    Section 5. The Uniform Commercial Code is amended  by 
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changing Section 9-103 as follows:
 



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    (810 ILCS 5/9-103)  (from Ch. 26, par. 9-103)



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    Sec. 9-103. Purchase-money security interest; application 
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of payments;
burden of establishing.

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    (a) Definitions.  In this Section:


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        (1) "purchase-money collateral" means goods or 
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    software that secures a
purchase-money obligation incurred 
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    with respect to that collateral; and


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        (2) "purchase-money obligation" means an obligation of 
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    an obligor
incurred as all or part of the price of the 
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    collateral or for value given to
enable the
debtor to 
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    acquire rights in or the use of the collateral if the value 
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    is in
fact so used.

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    (b) Purchase-money security interest in goods.  A security 
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interest in
goods is a purchase-money security interest:


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        (1) to the extent that the goods are purchase-money 
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    collateral with
respect to that security interest;


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        (2) if the security interest is in inventory that is or 
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    was purchase-money
collateral, also to the extent that the 
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    security interest secures a
purchase-money
obligation 
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    incurred with respect to other inventory in which the 
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    secured party
holds
or held a purchase-money security 
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    interest; and


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        (3) also to the extent that the security interest 
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    secures a purchase-money
obligation incurred with respect 
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    to software in which the secured party holds
or
held a 
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    purchase-money security interest.

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    (c) Purchase-money security interest in software.  A 
 


 






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LRB094 17964 LCT 53267 b




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security interest in
software is a purchase-money security 
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interest to the extent that the security
interest
also secures 
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a purchase-money obligation incurred with respect to goods in

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which
the secured party holds or held a purchase-money security 
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interest if:


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        (1) the debtor acquired its interest in the software in 
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    an integrated
transaction in which it acquired an interest 
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    in the goods; and


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        (2) the debtor acquired its interest in the software 
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    for the principal
purpose of using the software in the 
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    goods.

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    (d) Consignor's inventory purchase-money security 
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interest.  The
security interest of a consignor in goods that 
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are the subject of a consignment
is a
purchase-money security 
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interest in inventory.

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    (e) Application of payment in a
non-consumer-goods

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transaction.  If
In a
transaction other than a consumer-goods 
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transaction, if the extent to which a
security interest is a 
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purchase-money security interest depends on the
application of

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a payment to a particular obligation, the payment must be 
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applied:


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        (1) in accordance with any reasonable method of 
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    application to which
the parties agree;


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        (2) in the absence of the parties' agreement to a 
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    reasonable method, in
accordance with any intention of the 
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    obligor manifested at or before the time of
payment; or


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        (3) in the absence of an agreement to a reasonable 
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    method and a timely
manifestation of the obligor's 
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    intention, in the following order:


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            (A) to obligations that are not secured; and


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            (B) if more than one obligation is secured, to 
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        obligations secured by
purchase-money security 
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        interests in the order in which those obligations were

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        incurred.

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    (f) No loss of status of purchase-money security interest 
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in
non-consumer-goods transaction.  A
In a transaction other 
 


 






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than a consumer-goods
transaction, a purchase-money security 
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interest does not lose its status as
such, even
if:


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        (1) the purchase-money collateral also secures an 
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    obligation that is not a
purchase-money obligation;


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        (2) collateral that is not purchase-money collateral 
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    also secures the
purchase-money obligation; or


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        (3) the purchase-money obligation has been renewed, 
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    refinanced,
consolidated, or restructured.

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    (g) Burden of proof in a
non-consumer-goods transaction.  A

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In a
transaction other than a consumer-goods transaction, a

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secured party claiming a
purchase-money security interest has 
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the burden of establishing the extent to
which
the security 
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interest is a purchase-money security interest.

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    (h) (Blank).
Non-consumer-goods transactions; no 
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inference.  The limitation of
the rules in subsections (e), (f), 
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and (g) to transactions other than
consumer-goods
transactions 
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is intended to leave to the court the determination of the 
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proper
rules in
consumer-goods transactions.  The court may not 
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infer from that limitation the
nature of the proper rule in 
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consumer-goods transactions and may continue to
apply

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established approaches.

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(Source: P.A. 91-893, eff. 7-1-01.)

 

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    Section 99. Effective date. This Act takes effect upon 
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becoming law.