The new section 9, section 9-205, reflects the old section 9-205 by providing that a guarantee agreement that does not require a debtor to account for the insured business`s revenue (unless required in the guarantee agreement) is valid and is not fraudulent with respect to other creditors. However, a sound practice requires a creditor to “monitor” collateral, including the product, where possible. The new Article 9 concerns deposit accounts as products in the new section 9-315, point b) (2). Under the new section 9-315 (b) (2), non-product products that are removed from other goods are identifiable “to the extent that the insured party identifies revenues by means of a method of tracing, including the application of just principles, authorized by another section with respect to the degenerative ownership of the species concerned.” Subsection b) (2) does not include as many words as the LIB doctrine, but Official Comment 3 on the new section 9-315 indicates that it could be argued that it is not necessary to include a description of assets acquired in the event of security such as inventory and accounts that “turn around” by nature. However, this argument does not apply to guarantees that do not return and an introduced ownership clause is required for such guarantees. For example, a safety agreement for equipment should be called “equipment available, available and acquired at a later date.” In addition, adding a “purchased” or “later acquired” real estate clause to the collateral description is simple and painless and the most sensible way forward with respect to all guarantees, including inventory and accounts. It must be understood that the ownership clauses introduced only do what they do. They cannot be used to generate an enforceable security interest in what is not covered by the initial security description. If a creditor has an interest in the debtor`s “equipment, existing equipment and subsequently acquired,” the acquired clause does not give the creditor an enforceable interest in consumer goods or inventories purchased later.
Less apparently, the description of the security as “general intangible assets” of the part insured after the execution of the investment contract would not justify an enforceable security interest in lottery winnings, since, as mentioned in Chapter 5 (Security Classification), lottery winnings fall within the definition of the “account” in the new section 9-102 (2).