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Under Section 9-309(3) of the Uniform Commercial Code, sales of "payment intangibles" are automatically perfected without the requirement of filing financing statements. Originally intended as a concession to the banking industry (to perfect sales of loan participations without filing), this provision has become a trap for the unwary-including unwary banks. It misleads those who think they're buying payment intangibles (and thus need not file to perfect) only to find out, too late, that a court has construed that arcane definition too narrowly. It also undermines the ability to know one's priority in purchased or pledged payment intangibles. This essay analyses these problems, examines their historical origins, and suggests potential solutions.

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