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

1     AN ACT concerning business.
 
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 Section 9-103 as follows:
 
6     (810 ILCS 5/9-103)  (from Ch. 26, par. 9-103)
7     Sec. 9-103. Purchase-money security interest; application
8 of payments; burden of establishing.
9     (a) Definitions. In this Section:
10         (1) "purchase-money collateral" means goods or
11     software that secures a purchase-money obligation incurred
12     with respect to that collateral; and
13         (2) "purchase-money obligation" means an obligation of
14     an obligor incurred as all or part of the price of the
15     collateral or for value given to enable the debtor to
16     acquire rights in or the use of the collateral if the value
17     is in fact so used.
18     (b) Purchase-money security interest in goods. A security
19 interest in goods is a purchase-money security interest:
20         (1) to the extent that the goods are purchase-money
21     collateral with respect to that security interest;
22         (2) if the security interest is in inventory that is or
23     was purchase-money collateral, also to the extent that the
24     security interest secures a purchase-money obligation
25     incurred with respect to other inventory in which the
26     secured party holds or held a purchase-money security
27     interest; and
28         (3) also to the extent that the security interest
29     secures a purchase-money obligation incurred with respect
30     to software in which the secured party holds or held a
31     purchase-money security interest.
32     (c) Purchase-money security interest in software. A

 

 

SB2835 - 2 - LRB094 17964 LCT 53267 b

1 security interest in software is a purchase-money security
2 interest to the extent that the security interest also secures
3 a purchase-money obligation incurred with respect to goods in
4 which the secured party holds or held a purchase-money security
5 interest if:
6         (1) the debtor acquired its interest in the software in
7     an integrated transaction in which it acquired an interest
8     in the goods; and
9         (2) the debtor acquired its interest in the software
10     for the principal purpose of using the software in the
11     goods.
12     (d) Consignor's inventory purchase-money security
13 interest. The security interest of a consignor in goods that
14 are the subject of a consignment is a purchase-money security
15 interest in inventory.
16     (e) Application of payment in a non-consumer-goods
17 transaction. If In a transaction other than a consumer-goods
18 transaction, if the extent to which a security interest is a
19 purchase-money security interest depends on the application of
20 a payment to a particular obligation, the payment must be
21 applied:
22         (1) in accordance with any reasonable method of
23     application to which the parties agree;
24         (2) in the absence of the parties' agreement to a
25     reasonable method, in accordance with any intention of the
26     obligor manifested at or before the time of payment; or
27         (3) in the absence of an agreement to a reasonable
28     method and a timely manifestation of the obligor's
29     intention, in the following order:
30             (A) to obligations that are not secured; and
31             (B) if more than one obligation is secured, to
32         obligations secured by purchase-money security
33         interests in the order in which those obligations were
34         incurred.
35     (f) No loss of status of purchase-money security interest
36 in non-consumer-goods transaction. A In a transaction other

 

 

SB2835 - 3 - LRB094 17964 LCT 53267 b

1 than a consumer-goods transaction, a purchase-money security
2 interest does not lose its status as such, even if:
3         (1) the purchase-money collateral also secures an
4     obligation that is not a purchase-money obligation;
5         (2) collateral that is not purchase-money collateral
6     also secures the purchase-money obligation; or
7         (3) the purchase-money obligation has been renewed,
8     refinanced, consolidated, or restructured.
9     (g) Burden of proof in a non-consumer-goods transaction. A
10 In a transaction other than a consumer-goods transaction, a
11 secured party claiming a purchase-money security interest has
12 the burden of establishing the extent to which the security
13 interest is a purchase-money security interest.
14     (h) (Blank). Non-consumer-goods transactions; no
15 inference. The limitation of the rules in subsections (e), (f),
16 and (g) to transactions other than consumer-goods transactions
17 is intended to leave to the court the determination of the
18 proper rules in consumer-goods transactions. The court may not
19 infer from that limitation the nature of the proper rule in
20 consumer-goods transactions and may continue to apply
21 established approaches.
22 (Source: P.A. 91-893, eff. 7-1-01.)
 
23     Section 99. Effective date. This Act takes effect upon
24 becoming law.