John E. Heath, Jr., Remedies and Collateral Liquidation Under Uniform Commercial Code Article 9, 4 Gonz. L. Rev. 217 (1969)[PDF] [Westlaw] [LexisNexis]
Almost two years have elapsed since the enactment of the Uniform Commercial Code in Washington, with its complex and disconcerting Article 9. During that time, the Code’s advocates have been attempting to explain to their shaken and insecure brethren that Article 9 is not really so difficult and that things have not changed as much as it is presumed. The practice forms are similar and, supposedly, once one becomes accustomed to classifying types of collateral rather than security’ and realizes that notice filing has replaced instrument filing, his bedevilment will be exorcised. By now, most Washington practitioners have suffered through the agony of drafting their first security agreements and (hopefully) perfecting a security interest under Article 9. Some undoubtedly have seen the debtor renege and have faced the problems relating to remedies and liquidation of collateral. It is this area of problems with which the present commentary is concerned.
The provisions relating to the remedies of the secured party on default are set forth in Part 5 and Section 207 of Article 9. The Code specifies that its basic remedies on default cannot be varied by agreement. Consequently, most security agreements merely will provide that, upon default, the secured party is entitled to “remedies provided by law.” Under Part 5, the secured party may elect to enforce his security interest judicially3 or he may, after obtaining possession of the collateral, choose one or more alternative avenues to liquidate or realize on it under the Code’s principle of self-help. He is granted broad discretion in the sale or other disposition of the collateral; but in so dealing with the collateral, no matter what his choice of remedies, the secured party must at all times act in a “commercially reasonable” manner.’ The other major limitation on the secured party’s right to dispose of collateral is that he must exercise that right in good faith. . . .