Legal Definitions - tangible chattel paper

Definition: Tangible chattel paper is a written document that shows both a monetary obligation and a security interest in or a lease of specific goods. It is used in consumer transactions when a consumer buys goods on credit and promises to pay for them by executing a promissory note, while the seller retains a security interest in the goods.

Examples: A common example of tangible chattel paper is a car loan agreement. When a person buys a car on credit, they sign a promissory note promising to pay back the loan, and the lender retains a security interest in the car until the loan is paid off. Another example is a lease agreement for equipment, where the lessee promises to pay rent for the use of the equipment and the lessor retains a security interest in the equipment.

Explanation: These examples illustrate tangible chattel paper because they both involve a written document that shows a monetary obligation (the loan or rent payments) and a security interest in specific goods (the car or equipment). The document serves as proof of the agreement between the parties and the rights and obligations of each party.