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77 Yale L.J. 833 (1967-1968)
Suretyship under Article 3 of the Uniform Commerical Code

handle is hein.journals/ylr77 and id is 861 raw text is: The Yale Law Journal Volume 77, Number 5, April 1968 Suretyship Under Article 3 of the Uniform Commercial Code Ellen A. Peterst A borrower in search of credit may encounter resistance from the money market if all that he is prepared to offer is his own unsupported promise to repay. Today, one alternative for such a borrower is to tender a security interest in any or all of his property, present and future. The Uniform Commercial Code in Article 9 makes such a secured transaction easy to arrange,' but it does not necessarily make it advisable. A borrower may well have misgivings both about the notoriety and about the controls which a secured transaction is likely to entail. The Code minimizes these drawbacks, but it cannot eliminate them: a secured creditor must still perfect, in order to prevail over competing third parties,2 and perfection will ordinarily take the form of a financing statement placed on a public record;3 a secured creditor must still police, for maximum protection in the event of his debtor's bankruptcy, and policing must, despite the comforting repeal of Bene- Un Professor of Law, Yale Law School. B.A. 1951, Swarthmore College; LLB. 1954. Yale University. 1. Article 9 covers secured transactions in all kinds of personal property, including goods, documents, instruments, general intangibles, chattel paper, accounts or contract rights . Section 9-102(l)(a). The parties are free to structure their security agreement in any way they deem advisable, Section 9-201, as long as they' comply with the minimal formalities of Article 9's Statute of Frauds provision, Section 9-203. 2. Unperfected security interests are subordinated, by Section 9-301(l), to a variety of innocent competitors including a lien creditor; since a trustee in bankruptcy has the status of a lien creditor under Section 70(c) of the Bankruptcy Act, 11 U.S.C. § 110(c) (Supp. 11 1965-66), unperfected security interests automatically lose their lien status when it is most crucial to maintain it. 3. Perfection by filing is required unless the secured party takes possession of the secured collateral or is entitled to one of the special exemptions relating to temporary perfection or certain classes of collateral catalogued in Section 9-302. Part 4 of Article 9, especially Section 9-402, describes the Artides notice filing system. See Section 9-208. 833

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