In a security agreement, how should after-acquired collateral be typically described?

Study for the Secured Transactions Bar Exam. Master secured transactions concepts with flashcards and multiple-choice questions, each with hints and explanations. Get exam-ready!

In a security agreement, after-acquired collateral is typically described by specific identifiers or categories to ensure clarity and enforceability. This approach allows the secured party to capture all assets that the debtor may acquire in the future that fall within the defined categories. By using specific terms, the parties can better understand which collateral is being secured, reducing ambiguity and potential disputes.

Describing after-acquired collateral in broad or inclusive terms can lead to uncertainty regarding what assets are covered and may complicate enforcement. Undefined language might seem flexible, but it could create difficulties in establishing what collateral actually falls under the security interest, undermining its effectiveness. Simply listing current assets fails to address future acquisitions, which is the fundamental purpose of including after-acquired collateral in the agreement. Thus, clearly outlining these elements is essential in securing the lender's interests effectively.

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