Arizona Laws 47-9103. Purchase money security interest; application of payments; burden of establishing
A. In this section:
Terms Used In Arizona Laws 47-9103
- Collateral: means the property subject to a security interest or agricultural lien. See Arizona Laws 47-9102
- Consignment: means a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale and:
(a) The merchant:
(i) Deals in goods of that kind under a name other than the name of the person making delivery;
(ii) Is not an auctioneer; and
(iii) Is not generally known by its creditors to be substantially engaged in selling the goods of others;
(b) With respect to each delivery, the aggregate value of the goods is one thousand dollars or more at the time of delivery;
(c) The goods are not consumer goods immediately before delivery; and
(d) The transaction does not create a security interest that secures an obligation. See Arizona Laws 47-9102
- Consignor: means a person that delivers goods to a consignee in a consignment. See Arizona Laws 47-9102
- Consumer goods: means goods that are used or bought for use primarily for personal, family or household purposes. See Arizona Laws 47-9102
- Consumer goods transaction: means a consumer transaction in which:
(a) An individual incurs an obligation primarily for personal, family or household purposes; and
(b) A security interest in consumer goods secures the obligation. See Arizona Laws 47-9102
- Debtor: means :
(a) A person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor;
(b) A seller of accounts, chattel paper, payment intangibles or promissory notes; or
(c) A consignee. See Arizona Laws 47-9102
- Goods: means all things that are movable when a security interest attaches. See Arizona Laws 47-9102
- Inventory: means goods, other than farm products, that:
(a) Are leased by a person as lessor;
(b) Are held by a person for sale or lease or to be furnished under a contract of service;
(c) Are furnished by a person under a contract of service; or
(d) Consist of raw materials, work in process or materials used or consumed in a business. See Arizona Laws 47-9102
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Obligor: means a person that, with respect to an obligation secured by a security interest in or an agricultural lien on the collateral, owes payment or other performance of the obligation, has provided property other than the collateral to secure payment or other performance of the obligation or is otherwise accountable in whole or in part for payment or other performance of the obligation. See Arizona Laws 47-9102
- Secured party: means :
(a) A person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;
(b) A person that holds an agricultural lien;
(c) A consignor;
(d) A person to which accounts, chattel paper, payment intangibles or promissory notes have been sold;
(e) A trustee, indenture trustee, agent, collateral agent or other representative in whose favor a security interest or agricultural lien is created or provided for; or
(f) A person that holds a security interest arising under section 47-2401, 47-2505, 47-2711, 47-2A508, 47-4210 or 47-5118. See Arizona Laws 47-9102
- Software: means a computer program and any supporting information provided in connection with a transaction relating to the program. See Arizona Laws 47-9102
1. "Purchase money collateral" means goods or software that secures a purchase money obligation incurred with respect to that collateral.
2. "Purchase money obligation" means an obligation of an obligor incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used.
B. A security interest in goods is a purchase money security interest:
1. To the extent that the goods are purchase money collateral with respect to that security interest;
2. If the security interest is in inventory that is or was purchase money collateral, also to the extent that the security interest secures a purchase money obligation incurred with respect to other inventory in which the secured party holds or held a purchase money security interest; and
3. Also to the extent that the security interest secures a purchase money obligation incurred with respect to software in which the secured party holds or held a purchase money security interest.
C. A security interest in software is a purchase money security interest to the extent that the security interest also secures a purchase money obligation incurred with respect to goods in which the secured party holds or held a purchase money security interest if:
1. The debtor acquired its interest in the software in an integrated transaction in which it acquired an interest in the goods; and
2. The debtor acquired its interest in the software for the principal purpose of using the software in the goods.
D. The security interest of a consignor in goods that are the subject of a consignment is a purchase money security interest in inventory.
E. In a transaction other than a consumer goods transaction, if the extent to which a security interest is a purchase money security interest depends on the application of a payment to a particular obligation, the payment must be applied:
1. In accordance with any reasonable method of application to which the parties agree;
2. In the absence of the parties’ agreement to a reasonable method, in accordance with any intention of the obligor manifested at or before the time of payment; or
3. In the absence of an agreement to a reasonable method and a timely manifestation of the obligor’s intention, in the following order:
(a) To obligations that are not secured; and
(b) If more than one obligation is secured, to obligations secured by purchase money security interests in the order in which those obligations were incurred.
F. In a transaction other than a consumer goods transaction, a purchase money security interest does not lose its status as such, even if:
1. The purchase money collateral also secures an obligation that is not a purchase money obligation;
2. Collateral that is not purchase money collateral also secures the purchase money obligation; or
3. The purchase money obligation has been renewed, refinanced, consolidated or restructured.
G. In a transaction other than a consumer goods transaction, a secured party claiming a purchase money security interest has the burden of establishing the extent to which the security interest is a purchase money security interest.
H. The limitation of the rules in subsections E, F and G to transactions other than consumer goods transactions is intended to leave to the court the determination of the proper rules in consumer goods transactions. The court may not infer from that limitation the nature of the proper rule in consumer goods transactions and may continue to apply established approaches.