Trust Receipt

Updated About encyclopedia.com content Print Article Share Article
views updated

TRUST RECEIPT

A document by which one individual lends money to purchase something and the borrower promises to hold the item for the benefit of the lender until such time as the debt is paid.

A trust receipt was a device used before the adoption of the uniform commercial code (UCC); it is now governed by Article 9 of the UCC, which concerns secured transactions. A trust receipt stated that the buyer had possession of the goods for the benefit of the financier. Currently there ordinarily must be a security agreement, together with the filing of a financing statement, to protect a lender's interest in goods purchased on credit by a buyer.