2014 Delaware Code
Title 6 - Commerce and Trade
ARTICLE 9. SECURED TRANSACTIONS
PART 1
§ 9-104. Control of deposit account

(a) Requirements for control. — A secured party has control of a deposit account if:

(1) the secured party is the bank with which the deposit account is maintained;

(2) the debtor, secured party, and bank have agreed in an authenticated record that the bank will comply with instructions originated by the secured party directing disposition of the funds in the account without further consent by the debtor;

(3) the secured party becomes the bank's customer with respect to the deposit account;

(4) the debtor, secured party, and bank have authenticated a record that (i) is conspicuously denominated a control agreement, (ii) identifies the specific deposit account in which the secured party claims a security interest, and (iii) contains one or more provisions addressing the disposition of funds in the deposit account or the right to direct the disposition of funds in the deposit account; or

(5) the name on the deposit account is the name of the secured party or indicates that the secured party has a security interest in the deposit account.

(b) Debtor's right to direct disposition. — A secured party that has satisfied subsection (a) has control, even if the debtor retains the right to direct the disposition of funds from the deposit account.

(c) No implied duties of bank. — The authentication of a record by the bank under subsection (a)(2) or (a)(4) does not impose upon the bank any duty not expressly agreed to by the bank in the record. The naming of the deposit account in the name of the secured party or with an indication that the secured party has a security interest in the deposit account under subsection (a)(5) does not impose upon the bank any duty not expressly agreed to by the bank.

(d) Conditions not relevant. — A secured party has control under subsection (a)(2) even if any duty of the bank to comply with instructions originated by the secured party directing disposition of the funds in the deposit account is subject to any condition or conditions (other than further consent by the debtor). A secured party has control under subsection (a)(4) even if the provision or provisions addressing the disposition of funds in the deposit account or the right to direct the disposition of funds in the deposit account are subject to any condition or conditions (other than further consent by the debtor).

(e) No inferences. — The procedures and requirements of subsections (a)(4) and (a)(5) available to obtain control shall not be used in interpreting the sufficiency of a secured party's compliance with the procedures and requirements of subsections (a)(1), (a)(2) or (a)(3) to obtain control. The provisions of subsections (a)(4) and (a)(5) shall create no inference regarding the requirements for compliance with subsection (a)(1), (a)(2) or (a)(3).

72 Del. Laws, c. 401, § 1; 76 Del. Laws, c. 92, §§ 1, 2.;

§ 9-105 Control of electronic chattel paper.

(a) General rule: control of electronic chattel paper. — A secured party has control of electronic chattel paper if a system employed for evidencing the transfer of interests in the chattel paper reliably establishes the secured party as the person to which the chattel paper was assigned.

(b) Specific facts giving control. — A system satisfies subsection (a) if the record or records comprising the chattel paper are created, stored, and assigned in such a manner that:

(1) a single authoritative copy of the record or records exists which is unique, identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable;

(2) the authoritative copy identifies the secured party as the assignee of the record or records;

(3) the authoritative copy is communicated to and maintained by the secured party or its designated custodian;

(4) copies or amendments that add or change an identified assignee of the authoritative copy can be made only with the consent of the secured party;

(5) each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and

(6) any amendment of the authoritative copy is readily identifiable as authorized or unauthorized.

72 Del. Laws, c. 401, § 1; 79 Del. Laws, c. 15, § 5.;

§ 9-106 Control of investment property.

(a) Control under Section 8-106. — A person has control of a certificated security, uncertificated security, or security entitlement as provided in Section 8-106.

(b) Control of commodity contract. — A secured party has control of a commodity contract if:

(1) the secured party is the commodity intermediary with which the commodity contract is carried; or

(2) the commodity customer, secured party, and commodity intermediary have agreed that the commodity intermediary will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer.

(c) Effect of control of securities account or commodity account. — A secured party having control of all security entitlements or commodity contracts carried in a securities account or commodity account has control over the securities account or commodity account.

(d) Control of securities account. — A secured party has control of a securities account if the name on the securities account is the name of the secured party or indicates that the secured party has a security interest in the securities account.

(e) No implied duties of securities intermediary. — The naming of the securities account in the name of the secured party or with an indication that the secured party has a security interest in the securities account under subsection (d) does not impose upon the securities intermediary any duty not expressly agreed to by the securities intermediary.

72 Del. Laws, c. 401, § 1; 76 Del. Laws, c. 92, § 3.;

§ 9-107 Control of letter-of-credit right.

A secured party has control of a letter-of-credit right to the extent of any right to payment or performance by the issuer or any nominated person if the issuer or nominated person has consented to an assignment of proceeds of the letter of credit under Section 5-114(c) or otherwise applicable law or practice.

72 Del. Laws, c. 401, § 1.;

§ 9-108 Sufficiency of description.

(a) Sufficiency of description. — Except as otherwise provided in subsections (c), (d), and (e), a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described.

(b) Examples of reasonable identification. — Except as otherwise provided in subsection (d), a description of collateral reasonably identifies the collateral if it identifies the collateral by:

(1) specific listing;

(2) category;

(3) except as otherwise provided in subsection (e), a type of collateral defined in the Uniform Commercial Code;

(4) quantity;

(5) computational or allocational formula or procedure; or

(6) except as otherwise provided in subsection (c), any other method, if the identity of the collateral is objectively determinable.

(c) Supergeneric description not sufficient. — A description of collateral as "all the debtor's assets'' or "all the debtor's personal property'' or using words of similar import does not reasonably identify the collateral.

(d) Investment property. — Except as otherwise provided in subsection (e), a description of a security entitlement, securities account, or commodity account is sufficient if it describes:

(1) the collateral by those terms or as investment property; or

(2) the underlying financial asset or commodity contract.

(e) When description by type insufficient. — A description only by type of collateral defined in the Uniform Commercial Code is an insufficient description of:

(1) a commercial tort claim; or

(2) in a consumer transaction, consumer goods, a security entitlement, a securities account, or a commodity account.

72 Del. Laws, c. 401, § 1.;

§ 9-109 Scope.

(a) General scope of Article. — Except as otherwise provided in subsections (c) and (d), this Article applies to:

(1) a transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract;

(2) an agricultural lien;

(3) a sale of accounts, chattel paper, payment intangibles, or promissory notes;

(4) a consignment;

(5) a security interest arising under Section 2-401, 2-505, 2-711(3), or 2A-508(5), as provided in Section 9-110; and

(6) a security interest arising under Section 4-210 or 5-118.

(b) Security interest in secured obligation. — The application of this Article to a security interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this Article does not apply.

(c) Extent to which Article does not apply. — This Article does not apply to the extent that:

(1) a statute, regulation, or treaty of the United States preempts this Article;

(2) another statute of this State expressly governs the creation, perfection, priority, or enforcement of a security interest created by this State or a governmental unit of this State;

(3) a statute of another State, a foreign country, or a governmental unit of another State or a foreign country, other than a statute generally applicable to security interests, expressly governs creation, perfection, priority, or enforcement of a security interest created by the State, country, or governmental unit; or

(4) the rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under Section 5-114.

(d) Inapplicability of Article. — This Article does not apply to:

(1) a landlord's lien, other than an agricultural lien;

(2) a lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but Section 9-333 applies with respect to priority of the lien;

(3) an assignment of a claim for wages, salary, or other compensation of an employee;

(4) a sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of which they arose;

(5) an assignment of accounts, chattel paper, payment intangibles, or promissory notes which is for the purpose of collection only;

(6) an assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract;

(7) an assignment of a single account, payment intangible, or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness;

(8) a transfer of an interest in or an assignment of a claim under a policy of insurance, other than an assignment by or to a health-care provider of a health-care-insurance receivable and any subsequent assignment of the right to payment, but Sections 9-315 and 9-322 apply with respect to proceeds and priorities in proceeds;

(9) an assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral;

(10) a right of recoupment or set-off, but:

(A) Section 9-340 applies with respect to the effectiveness of rights of recoupment or set-off against deposit accounts; and

(B) Section 9-404 applies with respect to defenses or claims of an account debtor;

(11) the creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for:

(A) liens on real property in Sections 9-203 and 9-308;

(B) fixtures in Section 9-334;

(C) fixture filings in Sections 9-501, 9-502, 9-512, 9-516, and 9-519; and

(D) security agreements covering personal and real property in Section 9-604;

(12) an assignment of a claim arising in tort, other than a commercial tort claim, but Sections 9-315 and 9-322 apply with respect to proceeds and priorities in proceeds; or

(13) an assignment of a deposit account in a consumer transaction, but Sections 9-315 and 9-322 apply with respect to proceeds and priorities in proceeds.

72 Del. Laws, c. 401, § 1.;

§ 9-110 Security interests arising under Article 2 or 2A.

A security interest arising under Section 2-401, 2-505, 2-711(3), or 2A-508(5) is subject to this Article. However, until the debtor obtains possession of the goods:

(1) the security interest is enforceable, even if Section 9-203(b)(3) has not been satisfied;

(2) filing is not required to perfect the security interest;

(3) the rights of the secured party after default by the debtor are governed by Article 2 or 2A; and

(4) the security interest has priority over a conflicting security interest created by the debtor.

72 Del. Laws, c. 401, § 1.;

§ 9-111 Law governing creation, attachment and enforcement of security interests; characterizations; and certain other rights.

(a) Law governing classification of collateral and creation, attachment and enforcement of security interests. — If a security agreement is governed by the Laws of the State of Delaware, then those Laws shall govern, among other things:

(1) The classification of the collateral subject to that agreement; and

(2) The creation, attachment, validity and enforcement of the security interest.

(b) Law governing characterization of certain transactions. — If an agreement is governed by the Laws of the State of Delaware, then those Laws shall govern, among other things:

(1) The characterization of a transaction subject to that agreement as (A) an interest in personal property or fixtures that secures payment or performance of an obligation, or (B) a sale, lease, bailment or consignment; and

(2) The characterization of a transaction subject to that agreement as a securitization transaction for purposes of Chapter 27A of this title.

75 Del. Laws, c. 66, § 1.;