Michigan Laws 440.9103 – Purchase-money security interest; application of payments; burden of establishing
Current as of: 2024 | Check for updates
|
Other versions
(1) As used in this section:
(a) “Purchase-money collateral” means goods or software that secures a purchase-money obligation incurred with respect to that collateral.
Terms Used In Michigan Laws 440.9103
- Collateral: means the property subject to a security interest or agricultural lien. See Michigan Laws 440.9102
- Consignment: means a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale and that meets all of the following:
(i) The merchant deals in goods of that kind under a name other than the name of the person making delivery, is not an auctioneer, and is not generally known by its creditors to be substantially engaged in selling the goods of others. See Michigan Laws 440.9102Consignor: means a person that delivers goods to a consignee in a consignment. See Michigan Laws 440.9102 Consumer-goods transaction: means a consumer transaction in which an individual incurs an obligation primarily for personal, family, or household purposes and a security interest in consumer goods secures the obligation. See Michigan Laws 440.9102 Debtor: means 1 of the following:
(i) A person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor. See Michigan Laws 440.9102Goods: means all things that are movable when a security interest attaches. See Michigan Laws 440.9102 Inventory: means goods, other than farm products, that meet 1 of the following:
(i) Are leased by a person as lessor. See Michigan Laws 440.9102Obligation: 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 Michigan Laws 440.9102 Secured party: means 1 or more of the following:
(i) 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. See Michigan Laws 440.9102Security interest: means an interest in personal property or fixtures which secures payment or performance of an obligation. See Michigan Laws 440.1201 Software: means a computer program and any supporting information provided in connection with a transaction relating to the program. See Michigan Laws 440.9102
(b) “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.
(2) A security interest in goods is a purchase-money security interest to the following extent, as applicable:
(a) To the extent that the goods are purchase-money collateral with respect to that security interest.
(b) 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.
(c) 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.
(3) 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 the debtor acquired its interest in the software in an integrated transaction in which it acquired an interest in the goods, and the debtor acquired its interest in the software for the principal purpose of using the software in the goods.
(4) The security interest of a consignor in goods that are the subject of a consignment is a purchase-money security interest in inventory.
(5) 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 in 1 of the following, as applicable:
(a) In accordance with any reasonable method of application to which the parties agree.
(b) 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.
(c) In the absence of an agreement to a reasonable method and a timely manifestation of the obligor’s intention, in the following order:
(i) To obligations that are not secured.
(ii) If more than 1 obligation is secured, to obligations secured by purchase-money security interests in the order in which those obligations were incurred.
(6) In a transaction other than a consumer-goods transaction, a purchase-money security interest does not lose its status as such, even if the purchase-money collateral also secures an obligation that is not a purchase-money obligation, collateral that is not purchase-money collateral also secures the purchase-money obligation, or the purchase-money obligation has been renewed, refinanced, consolidated, or restructured.
(7) 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.
(8) The limitation of the rules in subsections (5), (6), and (7) 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.