Purposes:

The terms defined in this Section round out the classification of intangibles: see the definitions of "document of title" (Section 1-201), "chattel paper" (Section 9-105) and "instrument" (Section 9-105). Those three terms cover the various categories of commercial paper which are either negotiable or to a greater or less extent dealt with as if negotiable the closely related terms "account" and "contract right" cover those choses in action which may be the subject of commercial financing transactions but which are not evidenced by an indispensable writing. The term "general intangibles" brings under this Art icle miscellaneous types of contractual rights and other personal property which are used or may become customarily used as commercial security. Examples are goodwill, literary rights and rights to performance. Other examples are copyrights, trade-marks and patents, except to the extent that they may be excluded by Section 9-104(a). This Article solves the problems of filing of security interests in these types of intangibles (Sections 9-103(2) and 9-401). Note that this catch-all definition does not apply to types of intangibles which are specifically excluded from the coverage of the Article (Section 9-104) and note also that under Section 9-302(2)(a) filing under a federal statute may satisfy the filing requirements of this Article.

"Account" as defined is a right to payment for goods sold or leased or services rendered that is to say, a right earned by performance, whether or not due and payable, the ordinary commercial account receivable. "Contract right" is a right to be earned by future performance under an existing contract for example, rights to arise when deliveries are made under an installment contract or as work is completed under a building contract. Contract rights may be regarded as potential accounts they become accounts as performance is made under the contract.

It has been found advisable to distinguish rights earned from rights not yet earned for several reasons. The recognition of the "contract right" as collateral in a security transaction makes clear that this Article rejects any lingering common law notion that only rights already earned can be assigned. Furthermore in the triangular arrangement following assignment, there is reason to allow the original parties - assignor and account debtor - more flexibility in modifying the underlying contract before performance than after performance (see Section 9-318). It will, however, be found that in most situations the same rules apply to both accounts and contract rights.

Cross References:

Sections 9-103(2), 9-104, 9-302(2)(a), 9-318 and 9-401.

Definitional Cross References:

"Chattel paper". Section 9-105.

"Contract". Section 1-201.

"Document". Section 9-105.

"Goods". Section 9-105.

"Instrument". Section 9-105.