In the case of two unsecured parties, how is priority determined?

In the context of secured transactions under UCC Article 9, priority between two unsecured parties is primarily determined by the timing of when each party attached its security interest. Attachment occurs when a creditor has taken the necessary steps to enforce their rights against the debtor's property, typically including a signed security agreement and the debtor's rights in the collateral.

In the scenario presented, since both parties lack a secured interest and are classified as unsecured, the priority hinges on who established their claim first. If one party attached before the other, that party has a superior claim, even if neither has filed a financing statement or secured their interests. Thus, the concept of attachment plays a crucial role in determining priority between the two.

The other options do not align with UCC principles that govern priority among unsecured creditors. For instance, merely filing a UCC-1 statement (as referenced in one of the other options) does not apply here since neither party is secured. Legal judgments, while they can establish a lien, do not enter into consideration when comparing the priority of two unsecured claims. Similarly, notification does not create priority under these circumstances; it is the act of attachment that grants a party the right to priority based on timing.