Types of Collateral
Common Categories
Business law recognizes different forms of collateral. The classification affects perfection, priority, and enforcement rules.
- Goods: equipment, inventory, consumer goods, farm products.
- Accounts receivable: money owed by customers.
- Instruments: negotiable notes and checks.
- Investment property: stocks, bonds, and securities accounts.
- Documents of title: warehouse receipts and bills of lading.
- Intellectual property and certain intangible assets, depending on applicable law.
Note
Inventory and equipment are treated differently because inventory is intended for sale, while equipment supports business operations.
Summary
Correctly identifying the collateral type is essential because different legal rules may apply.