Court Opinions

State Laws

US Code

US Constitution

Texas Business & Commerce Code - Section 9.103. Purchase-Money Security Interest; Application Of Payments; Burden Of Establishing

Legal Research Home > Texas Lawyer > Business & Commerce Code > Texas Business & Commerce Code - Section 9.103. Purchase-Money Security Interest; Application Of Payments; Burden Of Establishing

§ 9.103. PURCHASE-MONEY SECURITY INTEREST;  APPLICATION 
OF PAYMENTS;  BURDEN OF ESTABLISHING.  (a) In this section:
		(1)  "Purchase-money collateral" means goods or 
software that secures a purchase-money obligation incurred with 
respect to that collateral.
		(2)  "Purchase-money obligation" means 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)  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 that 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)  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)  The security interest of a consignor in goods that are 
the subject of a consignment is a purchase-money security interest 
in inventory.
	(e)  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:
			(A)  to obligations that are not secured;  and                               
			(B)  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)  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 that is not a purchase-money obligation;
		(2)  collateral that 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)  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)  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.

Amended by Acts 1999, 76th Leg., ch. 414, § 1.01, eff. July 1, 
2001.     

Last modified: August 10, 2007