Uniform Commercial Code

U.C.C. - ARTICLE 1- GENERAL PROVISIONS
..PART 2

§ 1-209. Subordinated Obligations.

An obligation may be issued as subordinated to payment of another obligation of the person obligated, or a creditor may subordinate his right to payment of an obligation by agreement with either the person obligated or another creditor of the person obligated. Such a subordination does not create a security interest as against either the common debtor or a subordinated creditor. This section shall be construed as declaring the law as it existed prior to the enactment of this section and not as modifying it.

[Note: Added 1966.]

[Note: This new section is proposed as an optional provision to make it clear that a subordination agreement does not create a security interest unless so intended.]