810 ILCS 5/9-103
2021 Illinois Compiled Statutes|Chapter 810 - COMMERCIAL CODE|810 ILCS 5/ - Uniform Commercial Code.|Article 9 - Secured Transactions

 (from Ch. 26, par. 9-103)Sec. 9-103.         Purchase-money security interest; application of payments;  burden of establishing.(a) Definitions.  In this Section:(1) "purchase-money collateral" means goods or     software that secures a purchase-money obligation incurred with respect to that collateral; and(2) "purchase-money obligation" means an obligation     of an obligor incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used.(b) Purchase-money security interest in goods.  A security interest in  goods is a purchase-money security interest:(1) to the extent that the goods are purchase-money     collateral with respect to that security interest;(2) if the security interest is in inventory that is     or was purchase-money collateral, also to the extent that the security interest secures a purchase-money obligation incurred with respect to other inventory in which the secured party holds or held a purchase-money security interest; and(3) also to the extent that the security interest     secures a purchase-money obligation incurred with respect to software in which the secured party holds or held a purchase-money security interest.(c) Purchase-money security interest in software.  A security interest in  software is a purchase-money security interest to the extent that the security  interest  also secures a purchase-money obligation incurred with respect to goods in  which  the secured party holds or held a purchase-money security interest if:(1) the debtor acquired its interest in the software     in an integrated transaction in which it acquired an interest in the goods; and(2) the debtor acquired its interest in the software     for the principal purpose of using the software in the goods.(d) Consignor's inventory purchase-money security interest.  The  security interest of a consignor in goods that are the subject of a consignment  is a  purchase-money security interest in inventory.(e) Application of payment in non-consumer-goods transaction.  In a  transaction other than a consumer-goods transaction, if the extent to which a  security interest is a purchase-money security interest depends on the  application of  a payment to a particular obligation, the payment must be applied:(1) in accordance with any reasonable method of     application to which the parties agree;(2) in the absence of the parties' agreement to a     reasonable method, in accordance with any intention of the obligor manifested at or before the time of payment; or(3) in the absence of an agreement to a reasonable     method and a timely manifestation of the obligor's intention, in the following order:(A) to obligations that are not secured; and(B) if more than one obligation is secured, to         obligations secured by purchase-money security interests in the order in which those obligations were incurred.(f) No loss of status of purchase-money security interest in  non-consumer-goods transaction.  In a transaction other than a consumer-goods  transaction, a purchase-money security interest does not lose its status as  such, even  if:(1) the purchase-money collateral also secures an     obligation that is not a purchase-money obligation;(2) collateral that is not purchase-money collateral     also secures the purchase-money obligation; or(3) the purchase-money obligation has been renewed,     refinanced, consolidated, or restructured.(g) Burden of proof in non-consumer-goods transaction.  In a  transaction other than a consumer-goods transaction, a secured party claiming a  purchase-money security interest has the burden of establishing the extent to  which  the security interest is a purchase-money security interest.(h) Non-consumer-goods transactions; no inference.  The limitation of  the rules in subsections (e), (f), and (g) to transactions other than  consumer-goods  transactions is intended to leave to the court the determination of the proper  rules in  consumer-goods transactions.  The court may not infer from that limitation the  nature of the proper rule in consumer-goods transactions and may continue to  apply  established approaches.    (Source: P.A. 91-893, eff. 7-1-01.)