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Hastings Law Journal

Abstract

Security agreements under Article Nine of the Uniform Commercial Code which contain a clause providing that all the debtor's obligations to the creditor are secured reate interpretive difficulties when a creditor claims that the clause secures an obligation other than one incurred at the time the agreement was entered. Some courts and commentators influenced by Professor Grant Gilmore have applied a "same class-relatedness" test in interpreting such clauses to preclude a creditor's secured-status with regard to obligations of a different kind than that contemplated in the original agreement, while others interpret such clauses literally. This Article discusses the systemic assumptions and goals of Article Nine and, drawing on principles of contract law, proposes a framework consistent with these assumptions and goals for resolving interpretive and policing issues raised by broad future advance and all obligations clauses. In doing so, the Article demonstrates the deficiencies of the "same class-relatedness" rule.

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