§ 25-9-103. Purchase-money security interest; application of payments; burden of establishing.
§25‑9‑103. Purchase‑money security interest; application ofpayments; burden of establishing.
(a) Definitions. Inthis section:
(1) "Purchase‑moneycollateral" means goods or software that secures a purchase‑moneyobligation incurred with respect to that collateral; and
(2) "Purchase‑moneyobligation" means an obligation of an obligor incurred as all or part ofthe price of the collateral or for value given to enable the debtor to acquirerights in or the use of the collateral if the value is in fact so used.
(b) Purchase‑moneysecurity interest in goods. A security interest in goods is a purchase‑moneysecurity interest:
(1) To the extent thatthe goods are purchase‑money collateral with respect to that securityinterest;
(2) If the securityinterest is in inventory that is or was purchase‑money collateral, alsoto the extent that the security interest secures a purchase‑moneyobligation incurred with respect to other inventory in which the secured partyholds or held a purchase‑money security interest; and
(3) Also to the extentthat the security interest secures a purchase‑money obligation incurredwith respect to software in which the secured party holds or held a purchase‑moneysecurity interest.
(c) Purchase‑moneysecurity interest in software. A security interest in software is a purchase‑moneysecurity interest to the extent that the security interest also secures apurchase‑money obligation incurred with respect to goods in which thesecured party holds or held a purchase‑money security interest if:
(1) The debtor acquiredits interest in the software in an integrated transaction in which it acquiredan interest in the goods; and
(2) The debtor acquiredits interest in the software for the principal purpose of using the software inthe goods.
(d) Consignor'sinventory purchase‑money security interest. The security interest of aconsignor in goods that are the subject of a consignment is a purchase‑moneysecurity interest in inventory.
(e) Application ofpayment in non‑consumer‑goods transaction. In a transaction otherthan a consumer‑goods transaction, if the extent to which a securityinterest is a purchase‑money security interest depends on the applicationof a payment to a particular obligation, the payment must be applied:
(1) In accordance withany reasonable method of application to which the parties agree;
(2) In the absence ofthe parties' agreement to a reasonable method, in accordance with any intentionof the obligor manifested at or before the time of payment; or
(3) In the absence of anagreement to a reasonable method and a timely manifestation of the obligor'sintention, in the following order:
a. To obligations thatare not secured; and
b. If more than oneobligation is secured, to obligations secured by purchase‑money securityinterests in the order in which those obligations were incurred.
(f) No loss of statusof purchase‑money security interest in non‑consumer‑goodstransaction. In a transaction other than a consumer‑goods transaction,a purchase‑money security interest does not lose its status as such, evenif:
(1) The purchase‑moneycollateral also secures an obligation that is not a purchase‑moneyobligation;
(2) Collateral that isnot purchase‑money collateral also secures the purchase‑moneyobligation; or
(3) The purchase‑moneyobligation has been renewed, refinanced, consolidated, or restructured.
(g) Burden of proof innon‑consumer‑goods transaction. In a transaction other than aconsumer‑goods transaction, a secured party claiming a purchase‑moneysecurity interest has the burden of establishing the extent to which thesecurity interest is a purchase‑money security interest.
(h) Non‑consumer‑goodstransactions; no inference. The limitation of the rules in subsections (e),(f), and (g) of this section to transactions other than consumer‑goodstransactions is intended to leave to the court the determination of the properrules in consumer‑goods transactions. The court may not infer from thatlimitation the nature of the proper rule in consumer‑goods transactionsand may continue to apply established approaches. (1965, c. 700, s. 1; 1975, c.862, s. 7; 1993, c. 370, s. 1; 2000‑169, s. 1.)