Note:
M. Stuart Sutherland, Circular Priority Systems Within the Uniform Commercial Code, 61 TEXAS L. REV. 517 (1982).
 

Abstract:
The general priority rule in Article 9 of the UCC is that, if a financing statement is filed in the proper office, the perfected security interest has priority over subsequently perfected security interests in the same collateral. There are many exceptions to this rule. If the exception is partial (i.e., a certain type of security interest has priority over most subsequent interests), then the potential for circular priority arises. To illustrate, suppose that there are three creditors, A, B, and C. If A has priority over B but not C, and B has priority over C (but not A), then circular priority exists, and no creditor has absolute priority. Courts have grappled with how to resolve circular priority disputes, with little success. Mr. Sutherland argues that a statutory revision of Article 9 is the only way to eliminate the circular priority difficulties inherent in Article 9.