Business Law: Sales & Secured Transactions

In the United States, the law of secured transactions covers the creation and enforcement of a security interest. In most cases, a secured transaction occurs when a person or business borrows money in exchange for collateral for the purpose of acquiring property, including real estate, vehicles or business equipment. A security interest exists when the borrower enters into a contract that allows the lender-creditor, also known as the secured party, to take the collateral the borrower owns in the event that the borrower cannot pay back the loan.  Article 9 of the Uniform Commercial Code governs security interests in personal property; it has been adopted, with some modifications, by every state.

The law of sales is primarily governed by Article 2 of the Uniform Commercial Code; every state except Louisiana has adopted it.  In cooperation with each state's sales laws, Article 2 regulates every phase of a transaction for the sale of goods and provides remedies when problems arise (e.g., implied warranty of merchantability, implied warranty of fitness).