Also known as: new values
Written by attorneys · grounded in primary & secondary sources — see below
Consideration consisting of money, money's worth in property, services, or new credit, or the release by a transferee of an interest in property previously transferred to the transferee. It excludes an obligation substituted for another obligation.
Neptune Energy buys chattel paper from a dealer who owes money to a secured creditor claiming the paper as inventory proceeds. Neptune advances cash as new value, takes possession of the tangible records, and obtains control of the electronic copies while acting in good faith and in the ordinary course of its financing business. Because the paper contains no legend assigning it to another party, Neptune obtains priority over the prior security interest.
Nobel Dynamics purchases chattel paper from a seller whose secured creditor claims an interest other than merely as proceeds of inventory. Nobel gives new value by extending fresh credit, takes possession of the authoritative tangible copies, and obtains control of the electronic copies in good faith and without knowledge that the purchase violates the secured party's rights. Nobel thereby gains priority over the competing security interest.
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Nadia Novak agrees to redesign products for New Horizon Media under an existing contract. New Horizon Media extends additional credit as new value in exchange for Novak's promise to accelerate delivery and accept a reduced fee on a separate project. The extension of new credit supplies the consideration that makes the modification binding.
New value includes money, money's worth in property, services, or new credit, and the release of a prior interest in property. It does not include an obligation substituted for another obligation.
Supporting sources
A purchaser who gives new value, takes possession or control of the chattel paper, and acts in good faith and in the ordinary course of business obtains priority over a security interest claimed merely as proceeds of inventory or claimed on other grounds.
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Extending the maturity date on past-due obligations does not constitute new value because it is an obligation substituted for another obligation.
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A purchase-money security interest arises when a secured party advances new value that enables the debtor to acquire rights in the collateral and the debtor uses that value for that purpose.
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…articles are glad to pay for a certificate of her approval. The things which she designs, fabrics, parasols and what not, have a new value in the public mind when issued in her name. She employed the plaintiff to help her to turn this vogue into money. He was to have the exclusive right, subject always to her approval, to…