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The sufficiency of descriptions of collateral is addressed by K.S.A. 84-9-108 (2012 Supp.), which provides in part: (a) Sufficiency of description. Except as otherwise provided in subsections (c), (d), and (e), a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described. (b) Examples of reasonable identification. Except as otherwise provided in subsection (d), a description of collateral reasonably identifies the collateral if it identifies the collateral by: (1) Specific listing; (2) category; (3) except as otherwise provided in subsection (e), a type of collateral defined in the uniform commercial code; (4) quantity; (5) computational or allocational formula or procedure; or (6) except as otherwise provided in subsection (c), any other method, if the identity of the collateral is objectively determinable. (e) When description by type insufficient. A description only by type of collateral defined in the uniform commercial code is an insufficient description of: (1) A commercial tort claim; or (2) in a consumer transaction, consumer goods, a security entitlement, a securities account, or a commodity account.
A creditor submitted a claim allegedly secured by personal property which the debtor purchased with a credit card under a security agreement which provided that the creditor had a security interest in all goods purchased with the card. The debtor contended that the property purchased with the credit card was not subject to a purchase money security interest because the description of the collateral in the security agreement as all goods purchased with the card did not specifically describe the purchased items as required by Kan. Stat. Ann. § 84-9-108 (2012 Supp.).
Was the description of the collateral as all goods purchased with the credit card sufficiently specific to create a security interest in the items purchased by the debtor with the card?
The bankruptcy court held that the description of the collateral as all goods purchased with the credit card was sufficiently specific to create a security interest in the items purchased by the debtor with the card. The description of the collateral was not intended to provide notice to third parties, but only to define the security interest between the creditor and the debtor, and the property subject to the security interest was easily determined by reference to the credit card receipts.