The Uniform Commercial Code (UCC) is a comprehensive set of laws governing all commercial transactions in the United States. It is not a federal law, but a uniformly adopted state law. The UCC aims to harmonize the law of sales and other commercial transactions across the United States through UCC adoption by all 50 states, the District of Columbia, and the U.S. territories.

Under the UCC, "equipment" is defined in Article 9, which deals with secured transactions. Specifically, UCC Section 9-102(a)(33) defines equipment as:

"Goods that are used or bought for use primarily in business (including farming or a profession) or by a debtor who is a non-profit organization or a governmental subdivision or agency or if the goods are not included in the definitions of inventory, farm products, or consumer goods."

This definition is crucial because it helps determine how certain goods are treated under the UCC, particularly in the context of secured transactions. Equipment is one of the categories of collateral under the UCC, and its classification affects the rights and obligations of the parties involved in a secured transaction.

To further break down the definition:

1. Goods: Equipment is a type of good. Under the UCC, goods are defined as all things that are movable at the time of identification to the contract for sale. This includes manufactured items, growing crops, and the unborn young of animals.

2. Used or bought for use primarily in business: Equipment is typically used in the operation of a business. This can include machinery, vehicles, tools, and other tangible assets that are used to produce goods or services. The key point is that the primary use of the equipment is for business purposes, not for personal, family, or household use.

3. Not included in the definitions of inventory, farm products, or consumer goods: The UCC distinguishes between different types of goods, and equipment is specifically defined to exclude inventory, farm products, and consumer goods.

   • Inventory: Goods held for sale or lease in the ordinary course of business, or raw materials and work in progress.
   • Farm Products: Crops, livestock, or supplies used or produced in farming operations.
   • Consumer Goods: Goods used or bought for use primarily for personal, family, or household purposes.

4. Non-profit organizations and governmental subdivisions or agencies: The definition also includes goods used by non-profit organizations or governmental entities, provided they are not classified as inventory, farm products, or consumer goods.

Understanding the classification of equipment under the UCC is essential for several reasons:

• Perfection of Security Interests: The classification of collateral as equipment affects how a security interest is perfected. For example, filing a financing statement with the appropriate state office is typically required to perfect a security interest in equipment.

• Priority of Claims: The classification can also affect the priority of claims in the event of a debtor's default. Different rules may apply depending on whether the collateral is classified as equipment, inventory, or another type of good.

• Default and Repossession: The rights and remedies available to a secured party in the event of default may vary based on the classification of the collateral. For instance, the process for repossessing equipment may differ from that for repossessing consumer goods.

In summary, under the UCC, equipment is defined as goods used or bought for use primarily in business, excluding inventory, farm products, and consumer goods. This classification is vital for determining the legal treatment of such goods in secured transactions, affecting everything from the perfection of security interests to the rights and remedies available to secured parties. Understanding this definition helps businesses and legal professionals navigate the complexities of commercial transactions under the UCC.