Proceeds
This page includes a writing template for analyzing this topic and usage notes to guide its application. In general, the template is designed to serve as a starting point for your analysis. It should be adapted to fit the specific facts of your case and your professor’s preferences.
On this page:
Writing Template
Issue
I: The issue is whether the security interest of [the initial collateral] attached to the [proceeds of the collateral].
Analysis
R: Under UCC Article 9, a security interest automatically attaches to identifiable proceeds of the collateral. Proceeds include anything that is received in exchange for the collateral, which may consist of money, goods, accounts, chattel paper, or insurance claims. A security interest in proceeds continues even after the collateral is sold, leased, licensed, or otherwise disposed of, provided the proceeds remain identifiable.
A: Here, [apply rule to facts].
Commingling Limitation
R: The interest may be lost if the proceeds become commingled with other property and can no longer be separated or identified. However, the secured party may have a tort or contract claim against the debtor to recover the value of the lost proceeds.
A: Here, the proceeds [were/were not] commingled when and [remain/do not remain] identifiable.
Identifiable Expansion
R: The secured party may still attempt to find the commingled proceeds identifiable using one of the following methods. Proceeds that (1) are not goods may be traced under (a) the lowest intermediate balance rule or (b) the equitable tracing principle. If the proceeds (2) are goods, the secured party may try to obtain a security interest in the resulting (c) product or mass.
A: Here, the proceeds are [goods/not goods].
a. Lowest Intermediate Balance Rule (LIBR)
R: This rule applies when proceeds are deposited into a commingled account. Under LIBR, the secured party can claim the lowest balance in the account between the time the proceeds were deposited and the time of enforcement, but only up to the amount of the proceeds originally deposited.
A: Here, [apply rule to facts].
b. Equitable Tracing Principle
R: Equitable tracing principles allow secured parties to trace proceeds into commingled property by identifying the value of their proceeds within a larger pool of assets, though this depends on the complexity of the commingling and the jurisdiction.
A: Here, [apply rule to facts].
c. Product or Mass
R: If the proceeds become commingled with other property to create a new product or mass, the secured party may have a security interest in the resulting product or mass. The secured party’s interest continues in the proportionate value of the collateral or proceeds that contributed to the final product or mass.
A: Here, [apply rule to facts].
Conclusion
C: Therefore, the security interest of [the initial collateral] [attached/did not attach] to [the proceeds].
Usage Notes
JurisJotter templates synthesize legal principles into a practical format that supports the development of well-structured, point-rich analyses in a timed exam.
The template features (1) headers identifying the overall issue, analysis, and conclusion. If the analysis begins with an umbrella rule that identifies elements, factors, or steps of the analysis, it will be followed by subheaders that signpost the analysis of each component.
The template also features (2) IRAC labels at the beginning of each paragraph. These headers and labels are included for educational purposes, offering guidance on structuring your analysis. Your usage of the headers is optional but can be helpful to readers. We advise against including the IRAC labels in submitted work.
The templates serve as a general guide for writing and should be adapted to align with (1) your specific factual circumstances and (2) your professor’s preferences, particularly if your professor provides explicit formulations of rules or analyses. For example, you may add or subtract an element or modify its language. Regardless of whether your professor provides explicit formulations, (3) this template will assist you in crafting point-rich analyses.
Please note that these templates are writing aids and not finished products. They are efficiently designed for exam essays to demonstrate conceptual understanding; thus, they are not comprehensive outlines with historical context or dicta.
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