What does the term 'Instrument' refer to in secured transactions?

In secured transactions, the term 'Instrument' typically refers to a promise to pay that is memorialized in some form of written document, such as a note or a certificate of deposit. This definition aligns with UCC Article 9, which identifies instruments as negotiable instruments under UCC Articles 3 and 4. These instruments represent a right to payment and are often used in financial transactions as collateral for loans, which underscores their importance in secured transactions.

In contrast, physical assets are classified differently and do not fall under the definition of an instrument as outlined in the Uniform Commercial Code. Tangible security interests also have a separate legal classification, focusing more on the nature of the collateral rather than the documentation of the promise to pay. Similarly, real estate contracts pertain to the sale or lease of property and are not categorized as instruments in the context of secured transactions.

Thus, the correct understanding of 'Instrument' as a written promise to pay solidifies its role in providing security interests in various financing arrangements. This identification is crucial for parties to recognize their rights and obligations within the secured transactions framework.