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What is Chattel Paper? A Comprehensive Legal Overview
Definition & Meaning
Chattel paper is a type of legal document that represents both a monetary obligation and a security interest in specific goods. This can include various forms of agreements such as:
A security interest in specific goods and associated software
A lease of specific goods
A lease of specific goods along with a license for the software used with those goods
The essential aspect of chattel paper is that it involves a security interest linked to a financial obligation. This means that if the monetary obligation is not fulfilled, the holder of the chattel paper has rights to the specified goods.
Table of content
Legal Use & context
Chattel paper is commonly used in commercial transactions, particularly in financing and leasing arrangements. It is relevant in areas such as:
Commercial law
Bankruptcy proceedings
Secured transactions
Users can often manage chattel paper-related issues through legal forms, which can be accessed via resources like US Legal Forms, allowing individuals to create or modify documents in compliance with applicable laws.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Here are a couple of examples of chattel paper:
A lease agreement for a vehicle that includes a financing component, where the lessor retains a security interest in the vehicle until all payments are made.
A retail installment contract for a piece of machinery, where the buyer agrees to pay over time while the seller retains a security interest in the machinery (hypothetical example).
Relevant laws & statutes
Chattel paper is governed by the Uniform Commercial Code (UCC), particularly Article 9, which deals with secured transactions. Specific state laws may also apply, depending on the jurisdiction.
State-by-state differences
Examples of state differences (not exhaustive):
State
Chattel Paper Definition
California
Includes specific provisions for electronic chattel paper.
New York
Defines chattel paper in relation to secured transactions under the UCC.
Texas
Excludes certain types of contracts, such as those related to vessels.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Difference
Security Interest
A legal claim on collateral that has been pledged, usually to secure a loan.
Chattel paper specifically involves both a monetary obligation and a security interest.
Lease Agreement
A contract outlining the terms under which one party agrees to rent property from another.
Chattel paper may include lease agreements but also encompasses security interests.
Common misunderstandings
What to do if this term applies to you
If you are dealing with chattel paper, consider the following steps:
Review the terms of the chattel paper to understand your rights and obligations.
Consult with a legal professional if you have questions or if the situation is complex.
Explore US Legal Forms for templates that can assist you in creating or managing chattel paper.
Find the legal form that fits your case
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