Commingled goods refer to goods so physically united with other goods such that the identity of the original goods is lost.
- For example, flour becomes a commingled good when it is used to bake bread.
The new good created from commingled goods is known as a product or mass. Whether a good is commingled is of particular importance when discussing secured transactions.
Independent security interests cannot exist in goods which are commingled. Security interests can, however, exist in the product or mass. Furthermore, if a good in which a security interest exists becomes commingled, a security interest is created in the new good.
Because new security interests are created in the product of commingled goods and multiple goods often become commingled at once (i.e., yeast, water, and flour all commingle to make bread), complications arise when security interests owned by separate people exist in multiple of those goods.
To resolve the issue of competing security interests in products or masses, UCC §9-336 creates a priority system of security interests. Under §9-336, perfected security interests take priority over unperfected security interests. In scenarios with multiple perfected security interests, the security interest with greater value before the goods were commingled takes priority.
Commingled goods are contrasted with accessions, which occur when goods unite but the original identity is not lost.
[Last updated in August of 2022 by the Wex Definitions Team]
