§ 9-103 — Purchase-money Security Interest; Application of Payments; Burden of Establishing

Section 9--103. Purchase-money Security Interest; Application of\n Payments; Burden of Establishing.\n (a) Definitions. In this section:\n (1) "purchase-money collateral" means goods or software that\n secures a purchase-money obligation incurred with respect to\n that collateral; and\n (2) "purchase-money obligation" means an obligation of an obligor\n incurred as all or part of the price of the collateral or for\n value given to enable the debtor to acquire rights in or the\n use of the collateral if the value is in fact so used.\n (b) Purchase-money security interest in goods. A security interest in\ngoods is a purchase-money security interest:\n (1) to the extent that the goods are purchase-money collateral\n with respect to that security interest;\n (2) if the security interest is in inventory that is or was\n purchase-money collateral, also to the extent that the\n security interest secures a purchase-money obligation\n incurred with respect to other inventory in which the secured\n party holds or held a purchase-money security interest; and\n (3) also to the extent that the security interest secures a\n purchase-money obligation incurred with respect to software\n in which the secured party holds or held a purchase-money\n security interest.\n (c) Purchase-money security interest in software. A security interest\nin software is a purchase-money security interest to the extent that the\nsecurity interest also secures a purchase-money obligation incurred with\nrespect to goods in which the secured party holds or held a\npurchase-money security interest if:\n (1) the debtor acquired its interest in the software in an\n integrated transaction in which it acquired an interest in\n the goods; and\n (2) the debtor acquired its interest in the software for the\n principal purpose of using the software in the goods.\n (d) Consignor's inventory purchase-money security interest. The\nsecurity interest of a consignor in goods that are the subject of a\nconsignment is a purchase-money security interest in inventory.\n (e) Application of payment in non-consumer-goods transaction. In a\ntransaction other than a consumer-goods transaction, if the extent to\nwhich a security interest is a purchase-money security interest depends\non the application of a payment to a particular obligation, the payment\nmust be applied:\n (1) in accordance with any reasonable method of application to\n which the parties agree;\n (2) in the absence of the parties' agreement to a reasonable\n method, in accordance with any intention of the obligor\n manifested at or before the time of payment; or\n (3) in the absence of an agreement to a reasonable method and a\n timely manifestation of the obligor's intention, in the\n following order:\n (A) to obligations that are not secured; and\n (B) if more than one obligation is secured, to obligations\n secured by purchase-money security interests in the order\n in which those obligations were incurred.\n (f) No loss of status of purchase-money security interest in\nnon-consumer-goods transaction. In a transaction other than a\nconsumer-goods transaction, a purchase-money security interest does not\nlose its status as such, even if:\n (1) the purchase-money collateral also secures an obligation that\n is not a purchase-money obligation;\n (2) collateral that is not purchase-money collateral also secures\n the purchase-money obligation; or\n (3) the purchase-money obligation has been renewed, refinanced,\n consolidated, or restructured.\n (g) Burden of proof in non-consumer-goods transaction. In a\ntransaction other than a consumer-goods transaction, a secured party\nclaiming a purchase-money security interest has the burden of\nestablishing the extent to which the security interest is a\npurchase-money security interest.\n (h) Non-consumer-goods transactions; no inference. The limitation of\nthe rules in subsections (e), (f), and (g) to transactions other than\nconsumer-goods transactions is intended to leave to the court the\ndetermination of the proper rules in consumer-goods transactions. The\ncourt may not infer from that limitation the nature of the proper rule\nin consumer-goods transactions and may continue to apply established\napproaches.\n