which statement is true regarding materials that are considered goods under the ucc - collateral classification help

So if my client buys steel sheets to manufacture brackets, those steel sheets are goods when they purchase them? Even though they're going to transform them?

Exactly. The steel sheets are goods when purchased. They remain goods during storage. The question becomes more complex once manufacturing begins and you have work-in-process, but for UCC-1 purposes you're typically covering all stages.

That's a good point about the different articles. So I should describe the collateral broadly to catch materials whether they're raw, in-process, or finished?

Yes, something like 'all inventory, raw materials, work-in-process, and finished goods' covers your bases. Just make sure it matches your security agreement language exactly.

Be careful with overly broad descriptions though. Some states reject filings that are too generic. Better to be specific about the types of materials if you know them.

That sounds helpful. I'm always worried about mismatches between the security agreement and filing. Does it handle complex manufacturing scenarios?

Yeah it caught issues in my manufacturing deal where I had 'materials' in one doc and 'raw materials' in another. Apparently that kind of inconsistency can create gaps in perfection.

Good point. They have materials at their main plant plus a separate warehouse. Does that complicate the filing?

Not necessarily, but if any materials are stored outside your filing state, you might need additional filings. Also worth checking if any materials qualify as fixtures.

Wait, when would raw materials be fixtures? I thought fixtures were permanently attached items.

You're right, raw materials wouldn't typically be fixtures. I was thinking of installed processing equipment. Materials stay as goods.

Yes, steel counts as goods under the UCC. Simple answer to your question.

thank you!! finally a straight answer

So I don't need separate collateral descriptions for each stage of the manufacturing process?

Correct. A well-drafted collateral description covers materials in all forms. The security interest travels with the materials as they transform.

This is really helpful. I've been overthinking the manufacturing angle on my filings.

The attorney is supposedly experienced but they gave me conflicting information which is why I'm here asking. Maybe I should get a second opinion.

For that size deal, definitely worth a second set of eyes. Materials are goods, but the specific language matters for enforcement.

No software involved here, just basic manufacturing materials. Sounds like I was overcomplicating it.

Exactly. Keep it simple - materials are goods, describe them appropriately in your collateral description, and you're fine.

What about materials that are consigned? Still goods but different perfection rules right?

Consigned goods have special rules under 9-319, but they're still goods. Just different priority and notice requirements.

That's reassuring. I was heading down that same rabbit hole of over-categorizing everything.

Yeah don't overthink it. The UCC is pretty clear that materials qualify as goods regardless of processing stage.

That's exactly the kind of mistake I'm worried about making. I'll definitely check that our language matches across docs.

Yeah it's an easy fix if you catch it early, but could be expensive to fix later if there are problems.

Perfect summary. I feel much more confident about moving forward with the filing now. Thanks everyone for the clarification.

Glad to help. Manufacturing deals can seem complex but the UCC classification is actually pretty straightforward once you understand the basics.