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
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.


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