UCC vs general contract law - confused about scope when filing security interests
I'm working on a complex financing deal that involves both equipment purchases and service agreements, and I'm getting conflicting advice about whether I need UCC-1 filings for everything or if some parts fall under general contract law governs all contracts outside the scope of the UCC. The equipment portion clearly needs UCC-1 filing since we're taking security interests in tangible personal property, but there's also a 3-year maintenance service contract bundled in. My attorney says the service portion might not require UCC filing since services aren't goods under Article 9, but I want to make sure I'm not missing something critical. The total deal is $850K with about $200K being the service component. Has anyone dealt with mixed transactions like this? I'm worried about filing the wrong documents or missing required filings that could put our security interest at risk.
38 comments
Join the conversation
GalacticGuru
You're right to be cautious about this. The key distinction is that UCC Article 9 covers security interests in personal property (goods, equipment, accounts, etc.) while general contract law handles everything else. For your mixed transaction, you'll definitely need UCC-1 filing for the equipment portion since that's tangible personal property. The service contract part typically doesn't create a security interest that requires UCC filing - it's just a contractual obligation governed by general contract principles.
0 coins
Freya Pedersen
•This makes sense but what if the service contract has some kind of prepayment or deposit component? Would that change anything?
0 coins
GalacticGuru
•Good question! If there are prepaid service deposits, those might be classified as accounts receivable or general intangibles, which could potentially fall under UCC Article 9. You'd want to look at whether you're taking a security interest in those prepayments specifically.
0 coins
Omar Fawaz
I ran into something similar last month with a manufacturing equipment deal that included software licensing and training services. What helped me was creating separate security agreements - one for the equipment under UCC Article 9, and keeping the service components as regular contract terms. The lender was satisfied with UCC-1 filing only covering the tangible assets.
0 coins
Ravi Gupta
•That's actually a really practical approach. Did you run into any issues with the state filing office when you kept the collateral description focused just on the equipment?
0 coins
Omar Fawaz
•No issues at all. I kept the collateral description specific to 'equipment and fixtures' and left the service contracts as separate contractual obligations. Much cleaner that way.
0 coins
Chloe Anderson
•Smart move separating them. I've seen deals get messy when people try to cram everything into one UCC filing when it doesn't all belong there.
0 coins
Diego Vargas
Wait, I'm confused about the scope here. If general contract law governs all contracts outside the scope of the UCC, does that mean ANY contract that's not specifically about goods falls under contract law? What about intellectual property licensing or software agreements?
0 coins
GalacticGuru
•It's more nuanced than that. While general contract law does govern contracts outside UCC scope, some IP licenses and software can still fall under UCC Article 9 if you're taking security interests in them as collateral. The key is whether you're creating a security interest, not just having a contract.
0 coins
Diego Vargas
•Ah ok that helps clarify it. So it's really about whether there's a security interest involved, not just the type of property or service.
0 coins
Anastasia Fedorov
I actually discovered a tool that helped me sort through exactly this kind of mixed transaction confusion. Certana.ai has a document verification system where you can upload your contracts and security agreements, and it'll flag potential issues with scope and filing requirements. I uploaded my purchase agreement and service contract, and it identified which portions needed UCC-1 filing versus which were just contractual obligations. Saved me from potentially missing a required filing.
0 coins
Ravi Gupta
•That sounds incredibly useful for complex deals like this. Did it give specific guidance about collateral descriptions for the UCC-1?
0 coins
Anastasia Fedorov
•Yes, it actually suggested keeping the UCC-1 collateral description focused on the tangible equipment and flagged that the service agreements should remain as separate contract terms. Really helped me avoid overcomplicating the filing.
0 coins
StarStrider
•I might need to check that out. I've been manually trying to figure out these scope issues and it's been a headache.
0 coins
Sean Doyle
This is exactly why I hate mixed transactions! The boundaries between UCC and general contract law can be so unclear, especially when you're dealing with hybrid deals. I spent hours going through Article 9 trying to figure out what needed filing for a similar equipment/service package last year.
0 coins
Zara Rashid
•I feel your pain. These hybrid deals are becoming more common too, especially with equipment that comes bundled with software and service packages.
0 coins
Sean Doyle
•Exactly! And then you have to worry about whether you've properly secured everything that needs securing without over-filing on stuff that doesn't need UCC treatment.
0 coins
Luca Romano
From a practical standpoint, I always err on the side of being more specific rather than less in these situations. If you're unsure about the service portion, you could consider whether any part of those services creates ongoing obligations that might be considered 'accounts' or 'payment intangibles' under the UCC. Sometimes service contracts do create security interests if structured a certain way.
0 coins
Ravi Gupta
•That's a good point about payment intangibles. The service contract does involve monthly payments over 3 years, so there might be some account receivable aspects to consider.
0 coins
Luca Romano
•Right, if you're taking a security interest in the right to receive those service payments, that could fall under UCC Article 9 as accounts or payment intangibles.
0 coins
Freya Pedersen
•This is getting complicated fast. How do you even determine if you're taking a security interest in payment streams versus just having a regular service contract?
0 coins
Nia Jackson
Just to add another perspective - I've found that sometimes the determining factor is how the lender structures the deal. If they're requiring personal guarantees or taking security interests in business assets to secure the service contract payments, that might bring more of the transaction under UCC scope than you'd initially think.
0 coins
Ravi Gupta
•Interesting point. Our lender is taking a blanket lien on business assets, so maybe that does affect how we should approach the service contract portion.
0 coins
Nia Jackson
•Exactly. If there's a blanket UCC-1 filing anyway, the service contract might get swept into the collateral description even if it wouldn't standalone require UCC filing.
0 coins
Mateo Hernandez
Been lurking on this thread and wanted to mention that I had a similar issue resolved when I used Certana.ai's document checker. You can upload multiple contracts and it'll cross-reference them to identify potential filing gaps or overlaps. It caught that my service agreement actually did create some payment obligations that needed to be reflected in my UCC-1 collateral description.
0 coins
CosmicCruiser
•How detailed does it get with the analysis? Does it actually suggest specific language for collateral descriptions?
0 coins
Mateo Hernandez
•It gives pretty specific feedback about what should and shouldn't be included in UCC filings based on the documents you upload. Really helpful for avoiding both under-filing and over-filing.
0 coins
Aisha Khan
I think the key takeaway here is that while general contract law governs all contracts outside the scope of the UCC, the scope of the UCC is broader than just 'sales of goods.' Article 9 covers any transaction that creates a security interest in personal property, regardless of whether the underlying contract is for goods, services, or something else.
0 coins
Ravi Gupta
•That's a really helpful way to think about it. So it's not about the contract type, it's about whether a security interest is created.
0 coins
Aisha Khan
•Exactly. You could have a pure service contract that creates security interests in equipment or accounts, making parts of it subject to UCC Article 9 filing requirements.
0 coins
StarStrider
•This whole thread has been educational. I was thinking too narrowly about UCC scope before.
0 coins
Ethan Taylor
One more thing to consider - make sure your UCC-1 filing covers all the collateral adequately but doesn't inadvertently include contractual obligations that don't create security interests. I've seen deals where over-broad collateral descriptions created confusion later during audits or when trying to release specific assets.
0 coins
Ravi Gupta
•Great point about avoiding over-broad descriptions. I'll make sure to be specific about what actually requires UCC treatment versus what's just contractual.
0 coins
Ethan Taylor
•Right, precision in collateral descriptions saves headaches down the road, especially if you need to do partial releases or amendments later.
0 coins
Yuki Ito
•I learned this the hard way when I had to file multiple UCC-3 amendments to clarify what was actually secured versus what was just referenced in the original filing.
0 coins
Carmen Lopez
Thanks everyone for all the insights! This has really helped clarify the distinction between what needs UCC filing versus what stays under general contract law. I think I'll separate the equipment security agreement from the service contracts and focus my UCC-1 filing on the tangible assets while keeping the service obligations as standard contractual terms.
0 coins
GalacticGuru
•That sounds like a solid approach. Just make sure your attorney reviews the final structure to confirm everything is properly covered.
0 coins
Omar Fawaz
•Good plan. The separation approach has worked well for me in similar situations.
0 coins