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Purchase-money security interest; application of payments; burden of establishing - 13 Pa. Cons. Stat. § 9103

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     § 9103.  Purchase-money security interest; application of
                payments; burden of establishing.
        (a)  Definitions.--As used in this section, the following
     words and phrases shall have the meanings given to them in this
     subsection:
        "Purchase-money collateral."  Goods or software which secures
     a purchase-money obligation incurred with respect to that
     collateral.
        "Purchase-money obligation."  An obligation of an obligor
     incurred as all or part of the price of the collateral or for
     value given to enable the debtor to acquire rights in or the use
     of the collateral if the value is in fact so used.
        (b)  Purchase-money security interest in goods.--A security
     interest in goods is a purchase-money security interest:
            (1)  to the extent that the goods are purchase-money
        collateral with respect to that security interest;
            (2)  if the security interest is in inventory which is or
        was purchase-money collateral, also to the extent that the
        security interest secures a purchase-money obligation
        incurred with respect to other inventory in which the secured
        party holds or held a purchase-money security interest; and
            (3)  also to the extent that the security interest
        secures a purchase-money obligation incurred with respect to
        software in which the secured party holds or held a purchase-
        money security interest.
        (c)  Purchase-money security interest in software.--A
     security interest in software is a purchase-money security
     interest to the extent that the security interest also secures a
     purchase-money obligation incurred with respect to goods in
     which the secured party holds or held a purchase-money security
     interest if:
            (1)  the debtor acquired its interest in the software in
        an integrated transaction in which it acquired an interest in
        the goods; and
            (2)  the debtor acquired its interest in the software for
        the principal purpose of using the software in the goods.
        (d)  Consignor's inventory purchase-money security
     interest.--The security interest of a consignor in goods which
     are the subject of a consignment is a purchase-money security
     interest in inventory.
        (e)  Application of payment in nonconsumer-goods
     transaction.--In a transaction other than a consumer-goods
     transaction, if the extent to which a security interest is a
     purchase-money security interest depends on the application of a
     payment to a particular obligation, the payment must be applied:
            (1)  in accordance with any reasonable method of
        application to which the parties agree;
            (2)  in the absence of the parties' agreement to a
        reasonable method, in accordance with any intention of the
        obligor manifested at or before the time of payment; or
            (3)  in the absence of an agreement to a reasonable
        method and a timely manifestation of the obligor's intention,
        in the following order:
                (i)  to obligations which are not secured; and
                (ii)  if more than one obligation is secured, to
            obligations secured by purchase-money security interests
            in the order in which those obligations were incurred.
        (f)  No loss of status of purchase-money security interest in
     nonconsumer-goods transaction.--In a transaction other than a
     consumer-goods transaction, a purchase-money security interest
     does not lose its status as such even if:
            (1)  the purchase-money collateral also secures an
        obligation which is not a purchase-money obligation;
            (2)  collateral which is not purchase-money collateral
        also secures the purchase-money obligation; or
            (3)  the purchase-money obligation has been renewed,
        refinanced, consolidated or restructured.
        (g)  Burden of proof in nonconsumer-goods transaction.--In a
     transaction other than a consumer-goods transaction, a secured
     party claiming a purchase-money security interest has the burden
     of establishing the extent to which the security interest is a
     purchase-money security interest.
        (h)  Nonconsumer-goods transactions; no inference.--The
     limitation of the rules in subsections (e), (f) and (g) to
     transactions other than consumer-goods transactions is intended
     to leave to the court the determination of the proper rules in
     consumer-goods transactions. The court may not infer from that
     limitation the nature of the proper rule in consumer-goods
     transactions and may continue to apply established approaches.

Last modified: November 27, 2007