How is the term "inventory" defined in secured transactions?

The definition of "inventory" in secured transactions specifically refers to goods that are held for sale or lease in the regular course of business. This encompasses products that a business actively sells or leases as part of its operations. Understanding this definition is crucial because it delineates which types of goods can be classified as inventory under Article 9 of the Uniform Commercial Code (UCC).

Inventory is characterized by its role in a business's operations, distinguishing it from other types of goods, such as equipment or personal items. For instance, goods used for personal enjoyment, outdated products, or office supplies do not fall under the definition of inventory as they do not represent items that a business intends to sell or lease in the ordinary course of its operations. Thus, the focus on the business aspect of how these goods are used is key in understanding why the identification of inventory is limited to goods held for that specific purpose.