Title 11, Chapter 9, Section 103
( 11-9-103)
Purchase money security interest; application of payments; burden of establishing. (a) Definitions. As used in this Code section, the term: (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) Purchase money security interest in goods. 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) Purchase money security interest in software. 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) Consignor's inventory purchase money security interest. The
security interest of a consignor in goods that are the subject of a
consignment is a purchase money security interest in inventory. (e) Application of payment in nonconsumer goods transaction. 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) No loss of status of purchase money security interest in
nonconsumer goods transaction. 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) Burden of proof in nonconsumer goods transaction. 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) Nonconsumer goods transactions; no inference. The limitation of
the rules in subsections (e), (f), and (g) of this Code section to
transactions other than consumer goods transactions is intended to
leave to the court the determination of the applicable rules in
consumer goods transactions. The court may not infer from that
limitation the nature of the applicable rule in consumer goods
transactions and may continue to apply established approaches. |