What must a security agreement describe?

A security agreement must describe the collateral being secured and the debtor's intent to create a security interest in that collateral. This is fundamental to establishing the rights of the secured party in the event of default. The description of the collateral gives a precise identification of the property that serves as security for the loan or obligation, while the debtor's intent is crucial to affirm that they agree to the security interest being granted.

The attachment of the security interest, which is necessary for it to be effective against third parties, relies on these components being clearly stated in the security agreement. Therefore, ensuring that both the collateral details and the debtor's intention to grant the security interest are documented supports the enforceability of the security interest.

Contextually, options that suggest describing profits from the collateral, historical value of the collateral, or the rights of the account debtor do not meet the legal requirements of a security agreement. These aspects may be relevant in different contexts but do not constitute the essential elements that must be stated within a security agreement itself.