Understanding Personal Property Types and Instruments

Personal Property Classification

Personal Property

1. Goods. Are moveable, tangible property whose value depends upon its physical characteristics.
2. Intangibles. Are comprised of choses in action, like accounts and other contract rights, and certain miscellaneous rights such as informational rights and those protected by a patent, trademark, or copyright law.
3. Indispensable Paper.
   • The right itself, such as an obligation to pay money, is intangible, but with these types of property, the right is embodied in the writing, and the writing is tangible.
   • Its value does not lie in its physical characteristics but in the rights embodied in the paper.
   • The mechanism used to transfer the rights is physical delivery to the transferee of the paper itself, because the transferee needs the paper to enforce the rights; the paper is referred to as “indispensable.”

Negotiable Documents, Instruments, and Chattel Paper

1. Negotiable Documents of Title.
   • They include the bill of lading issued by a carrier upon shipment of goods and warehouse receipts issued by a warehouseman upon storage of goods.
   • All documents of title, whether negotiable or not, represent the right to possession of the covered goods. The issuer will not release the goods to anyone without surrender of the document, so a person wanting to take delivery of the goods will need to be in possession of the document.
   • Negotiable documents of title are sometimes referred to as “good paper” because they represent title to the goods that have been shipped or stored; this means that the owner of the goods can sell them and transfer title by transferring the document.
   • They also include the certificated securities, which can be called “investment paper,” and they are an interest in property commonly dealt in as a medium for investment. Paper constituting stock or a bond is valuable because the investment share that it represents can be traded or redeemed. Similarly, the owner of a bond can sell the right to enforce the bond by delivery.
2. Negotiable Instruments. Are called commercial paper because this form of indispensable paper derives its value from obligations to pay money that are indicated on the paper. The basic forms are notes and drafts.
3. Chattel Paper. Is a form of personal property created when a debtor signs in writing that evidences an obligation to pay money along with a security interest in or lease of specific goods. The monetary obligation is represented in the document.