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| 2. Scope of This Section. Under Section 9-309(1) [Maine cite | | section 9-1309, subsection (1)], a purchase-money security interest | | in consumer goods is perfected when it attaches. Sections 9-317 | | and 9-324 [Maine cite sections 9-1317 and 9-1324] provide special | | priority rules for purchase-money security interests in a variety | | of contexts. This section explains when a security interest enjoys | | purchase-money status. |
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| | | 3. "Purchase-Money Collateral"; "Purchase-Money Obligation"; | | "Purchase-Money Security Interest." Subsection (a) [Maine cite | | subsection (1)] defines "purchase-money collateral" and | | "purchase-money obligation." These terms are essential to the | | description of what constitutes a purchase-money security | | interest under subsection (b) [Maine cite subsection (2)]. As | | used in subsection (a)(2) [Maine cite subsection (1), paragraph | | (b)], the definition of "purchase-money obligation," the "price" | | of collateral or the "value given to enable" includes obligations | | for expenses incurred in connection with acquiring rights in the | | collateral, sales taxes, duties, finance charges, interest, | | freight charges, costs of storage in transit, demurrage, | | administrative charges, expenses of collection and enforcement, | | attorney's fees, and other similar obligations. |
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| | | The concept of "purchase-money security interest" requires a | | close nexus between the acquisition of collateral and the secured | | obligation. Thus, a security interest does not qualify as a | | purchase-money security interest if a debtor acquires property on | | unsecured credit and subsequently creates the security interest | | to secure the purchase price. |
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| | | 4. Cross-Collateralization of Purchase-Money Security | | Interests in Inventory. Subsection (b)(2) [Maine cite subsection | | (2), paragraph (b)] deals with the problem of cross- | | collateralized purchase-money security interests in inventory. | | Consider a simple example: |
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| | | Example: Seller (S) sells an item of inventory (Item-1) to | | Debtor (D), retaining a security interest in Item-1 to secure | | Item-1's price and all other obligations, existing and future, of | | D to S. S then sells another item of inventory to D (Item-2), | | again retaining a security interest in Item-2 to secure Item-2's | | price as well as all other obligations of D to S. D then pays to | | S Item-1's price. D then sells Item-2 to a buyer in ordinary | | course of business, who takes Item-2 free of S's security | | interest. |
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| | | Under subsection (b)(2) [Maine cite subsection (2), paragraph | | (b)], S's security interest in Item-1 securing Item-2's unpaid | | price would be a purchase-money security interest. This is so |
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