Article Nine of the Uniform Commercial Code generally facilitates individual autonomy in the creation of consensual security interests by imposing limited form and content requirements on security agreements. Private autonomy is subordinated, however, where the Article's draftsmen believed that certain other policies required a degree of regulation. Through the process of interpreting and applying a number of Code provisions which set forth the requirements for creating security interests, a court can effectuate what it considers to be the appropriate balance between facilitating the parties' intent to create a security interest and insuring that regulatory policies, such as protecting creditors and debtors from fraud and mistake, are enforced. A court may also effectuate its view of the appropriate balance through the manner in which it treats evidence which is offered by a litigant to demonstrate the parties' intent to create a security interest and to interpret the provisions of an alleged security agreement.
In the first section of this article it will be demonstrated that some courts have overregulated nonpossessory security agreements both through their interpretation of Article Nine and through their treatment of evidence of intent. The second part of this article will demonstrate that such overregulation is required neither to insure compliance with the language of Article Nine nor to achieve the general purposes of the Article Nine statute of frauds. This demonstration will reveal that both the provisions of Article Nine regulating the creation of nonpossessory security interests as well as the rules governing the interpretation of contracts should be construed and applied in such a manner as to permit maximum facilitation of private autonomy in the creation of security interests.