Alabama 2023 Regular Session

Alabama Senate Bill SB231 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	SB231INTRODUCED
2	2	Page 0
3	3	0ZXNCC-1
4	4	By Senator Smitherman
5	5	RFD: Judiciary
6	6	First Read: 20-Apr-23
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11	11	5 0ZXNCC-1 04/19/2023 CMH (L) bm 2023-1649
12	12	Page 1
13	13	SYNOPSIS:
14	14	This bill would provide a substantial revision
15	15	to the Uniform Commercial Code (UCC) by adopting the
16	16	Uniform Commercial Code Amendments (2022), which
17	17	includes a new UCC article that governs the transfer of
18	18	property rights in certain intangible digital assets
19	19	(controllable electronic records), including electronic
20	20	rights to payment, and would provide for a manner to
21	21	establish control of those assets, provide a mechanism
22	22	for evidencing certain rights of payment, and adopt
23	23	special rules with regard to the payment obligations
24	24	and conditions of discharge of account debtors on
25	25	controllable accounts and controllable payment
26	26	obligations.
27	27	This bill would provide extensive amendments to
28	28	Article 9 of the UCC to address security interests in
29	29	controllable electronic records and the rights to
30	30	payment for those records, including controllable
31	31	accounts and controllable payment intangibles, and that
32	32	a security interest in these assets may be perfected by
33	33	a secured party obtaining control of the asset or by
34	34	filing a financing statement.
35	35	This bill would also provide transitional
36	36	provisions for the Uniform Commercial Code Amendments
37	37	(2022).
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65	65	28 SB231 INTRODUCEDSB231 INTRODUCED
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67	67	A BILL
68	68	TO BE ENACTED
69	69	AN ACT
70	70	Relating to the Uniform Commercial Code; to add
71	71	Article 12 to the Uniform Commercial Code to govern the
72	72	property rights of certain intangible digital assets
73	73	(controllable electronic records), including electronic rights
74	74	to payment, to provide for a manner to establish the transfer
75	75	and control of those assets, to provide a mechanism for
76	76	evidencing certain rights of payment, and to adopt special
77	77	rules with regard to the payment obligations and conditions of
78	78	discharge of account debtors on controllable accounts and
79	79	controllable payment intangibles; to amend Sections 7-1-201,
80	80	7-1-204, 7-1-301, 7-1-306, 7-2-102, 7-2-106, 7-2-201, 7-2-202,
81	81	7-2-203, 7-2-205, 7-2-209, 7-2A-102, 7-2A-103, 7-2A-107,
82	82	7-2A-201, 7-2A-202, 7-2A-203, 7-2A-205, 7-2A-208, 7-3-104,
83	83	7-3-105, 7-3-401, 7-3-604, 7-4A-103, 7-4A-201, 7-4A-202,
84	84	7-4A-203, 7-4A-207, 7-4A-208, 7-4A-210, 7-4A-211, 7-4A-305,
85	85	7-5-104, 7-5-116, 7-7-102, 7-7-106, 7-8-102, 7-8-103, 7-8-106,
86	86	7-8-110, 7-8-303, 7-9A-102, 7-9A-104, 7-9A-105, 7-9A-203,
87	87	7-9A-204, 7-9A-207, 7-9A-208, 7-9A-209, 7-9A-210, 7-9A-301,
88	88	7-9A-304, 7-9A-305, 7-9A-310, 7-9A-312, 7-9A-313, 7-9A-314,
89	89	7-9A-316, 7-9A-317, 7-9A-323, 7-9A-324, 7-9A-330, 7-9A-331,
90	90	7-9A-332, 7-9A-334, 7-9A-341, 7-9A-404, 7-9A-406, 7-9A-408,
91	91	7-9A-509, 7-9A-513, 7-9A-601, 7-9A-605, 7-9A-608, 7-9A-611,
92	92	7-9A-613, 7-9A-614, 7-9A-615, 7-9A-616, 7-9A-619, 7-9A-620,
93	93	7-9A-621, 7-9A-624, and 7-9A-628, Code of Alabama 1975, and to
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121	121	56 SB231 INTRODUCEDSB231 INTRODUCED
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123	123	add Sections 7-9A-107A, 7-9A-107B, 7-9A-306A, 7-9A-306B,
124	124	7-9A-314A, and 7-9A-326A to the Code of Alabama 1975, to
125	125	provide a substantial revision to the Uniform Commercial Code
126	126	in conformity with a substantial portion of the Uniform
127	127	Commercial Code Amendments (2022), to clarify the meaning of
128	128	the term chattel paper and other definitions, to define and
129	129	provide for hybrid transactions, and to provide extensive
130	130	amendments to the Uniform Commercial Code providing for the
131	131	perfection of security interests in controllable electronic
132	132	records, documents of title, chattel paper, and other assets;
133	133	and to add Article 12A to the Uniform Commercial Code to
134	134	provide transitional provisions for the Uniform Commercial
135	135	Code Amendments (2022).Relating to the Uniform Commercial
136	136	Code; to add Article 12 to the Uniform Commercial Code to
137	137	govern the property rights of certain intangible digital
138	138	assets (controllable electronic records), including electronic
139	139	rights to payment, to provide for a manner to establish the
140	140	transfer and control of those assets, to provide a mechanism
141	141	for evidencing certain rights of payment, and to adopt special
142	142	rules with regard to the payment obligations and conditions of
143	143	discharge of account debtors on controllable accounts and
144	144	controllable payment intangibles; to amend Sections 7-1-201,
145	145	7-1-204, 7-1-301, 7-1-306, 7-2-102, 7-2-106, 7-2-201, 7-2-202,
146	146	7-2-203, 7-2-205, 7-2-209, 7-2A-102, 7-2A-103, 7-2A-107,
147	147	7-2A-201, 7-2A-202, 7-2A-203, 7-2A-205, 7-2A-208, 7-3-104,
148	148	7-3-105, 7-3-401, 7-3-604, 7-4A-103, 7-4A-201, 7-4A-202,
149	149	7-4A-203, 7-4A-207, 7-4A-208, 7-4A-210, 7-4A-211, 7-4A-305,
150	150	7-5-104, 7-5-116, 7-7-102, 7-7-106, 7-8-102, 7-8-103, 7-8-106,
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180	180	7-8-110, 7-8-303, 7-9A-102, 7-9A-104, 7-9A-105, 7-9A-203,
181	181	7-9A-204, 7-9A-207, 7-9A-208, 7-9A-209, 7-9A-210, 7-9A-301,
182	182	7-9A-304, 7-9A-305, 7-9A-310, 7-9A-312, 7-9A-313, 7-9A-314,
183	183	7-9A-316, 7-9A-317, 7-9A-323, 7-9A-324, 7-9A-330, 7-9A-331,
184	184	7-9A-332, 7-9A-334, 7-9A-341, 7-9A-404, 7-9A-406, 7-9A-408,
185	185	7-9A-509, 7-9A-513, 7-9A-601, 7-9A-605, 7-9A-608, 7-9A-611,
186	186	7-9A-613, 7-9A-614, 7-9A-615, 7-9A-616, 7-9A-619, 7-9A-620,
187	187	7-9A-621, 7-9A-624, and 7-9A-628, Code of Alabama 1975, and to
188	188	add Sections 7-9A-107A, 7-9A-107B, 7-9A-306A, 7-9A-306B,
189	189	7-9A-314A, and 7-9A-326A to the Code of Alabama 1975, to
190	190	provide a substantial revision to the Uniform Commercial Code
191	191	in conformity with a substantial portion of the Uniform
192	192	Commercial Code Amendments (2022), to clarify the meaning of
193	193	the term chattel paper and other definitions, to define and
194	194	provide for hybrid transactions, and to provide extensive
195	195	amendments to the Uniform Commercial Code providing for the
196	196	perfection of security interests in controllable electronic
197	197	records, documents of title, chattel paper, and other assets;
198	198	and to add Article 12A to the Uniform Commercial Code to
199	199	provide transitional provisions for the Uniform Commercial
200	200	Code Amendments (2022).
201	201	BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
202	202	Section 1. Sections 7-1-201, 7-1-204, 7-1-301,
203	203	7-1-306, 7-2-102, 7-2-106, 7-2-201, 7-2-202, 7-2-203, 7-2-205,
204	204	7-2-209, 7-2A-102, 7-2A-103, 7-2A-107, 7-2A-201, 7-2A-202,
205	205	7-2A-203, 7-2A-205, 7-2A-208, 7-3-104, 7-3-105, 7-3-401,
206	206	7-3-604, 7-4A-103, 7-4A-201, 7-4A-202, 7-4A-203, 7-4A-207,
207	207	7-4A-208, 7-4A-210, 7-4A-211, 7-4A-305, 7-5-104, 7-5-116,
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237	237	7-7-102, 7-7-106, 7-8-102, 7-8-103, 7-8-106, 7-8-110, 7-8-303,
238	238	7-9A-102, 7-9A-104, 7-9A-105, 7-9A-203, 7-9A-204, 7-9A-207,
239	239	7-9A-208, 7-9A-209, 7-9A-210, 7-9A-301, 7-9A-304, 7-9A-305,
240	240	7-9A-310, 7-9A-312, 7-9A-313, 7-9A-314, 7-9A-316, 7-9A-317,
241	241	7-9A-323, 7-9A-324, 7-9A-330, 7-9A-331, 7-9A-332, 7-9A-334,
242	242	7-9A-341, 7-9A-404, 7-9A-406, 7-9A-408, 7-9A-509, 7-9A-513,
243	243	7-9A-601, 7-9A-605, 7-9A-608, 7-9A-611, 7-9A-613, 7-9A-614,
244	244	7-9A-615, 7-9A-616, 7-9A-619, 7-9A-620, 7-9A-621, 7-9A-624,
245	245	and 7-9A-628, Code of Alabama 1975, are amended to read as
246	246	follows:
247	247	"§7-1-201.General definitions.
248	248	(a) [Reserved].
249	249	(b) Subject to additional definitions contained in the
250	250	subsequent other articles of this title the Uniform Commercial
251	251	Codewhich are applicable that apply to specific particular
252	252	articles or parts thereof , and unless the context otherwise
253	253	requires, in this title :
254	254	(1) "Action," in the sense of a judicial proceeding,
255	255	includes recoupment, counterclaim, set-off, suit in equity,
256	256	and any other proceeding in which rights are determined.
257	257	(2) "Aggrieved party" means a party entitled to pursue
258	258	a remedy.
259	259	(3) "Agreement," as distinguished from "contract,"
260	260	means the bargain of the parties in fact, as found in their
261	261	language or inferred from other circumstances, including
262	262	course of performance, course of dealing, or usage of trade as
263	263	provided in Section 7-1-303.
264	264	(4) "Bank" means a person engaged in the business of
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294	294	banking and includes a savings bank, savings and loan
295	295	association, credit union, and trust company.
296	296	(5) "Bearer" means a person in control of a negotiable
297	297	electronic document of title or a person in possession of a
298	298	negotiable instrument, negotiable tangible document of title,
299	299	or certificated security that is payable to bearer or indorsed
300	300	in blank.
301	301	(6) "Bill of lading" means a document of title
302	302	evidencing the receipt of goods for shipment issued by a
303	303	person engaged in the business of transporting or forwarding
304	304	goods. The term does not include a warehouse receipt.
305	305	(7) "Branch" includes a separately incorporated foreign
306	306	branch of a bank.
307	307	(8) "Burden of establishing" a fact means the burden of
308	308	persuading the trier of fact that the existence of the fact is
309	309	more probable than its nonexistence.
310	310	(9) "Buyer in ordinary course of business" means a
311	311	person that buys goods in good faith, without knowledge that
312	312	the sale violates the rights of another person in the goods,
313	313	and in the ordinary course from a person, other than a
314	314	pawnbroker, in the business of selling goods of that kind. A
315	315	person buys goods in the ordinary course if the sale to the
316	316	person comports with the usual or customary practices in the
317	317	kind of business in which the seller is engaged or with the
318	318	seller's own usual or customary practices. A person that sells
319	319	oil, gas, or other minerals at the wellhead or mine is a
320	320	person in the business of selling goods of that kind. A buyer
321	321	in ordinary course of business may buy for cash, by exchange
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351	351	of other property, or on secured or unsecured credit, and may
352	352	acquire goods or documents of title under a preexisting
353	353	contract for sale. Only a buyer that takes possession of the
354	354	goods or has a right to recover the goods from the seller
355	355	under Article 2 may be a buyer in ordinary course of business.
356	356	"Buyer in ordinary course of business" does not include a
357	357	person that acquires goods in a transfer in bulk or as
358	358	security for or in total or partial satisfaction of a money
359	359	debt.
360	360	(10) "Conspicuous," with reference to a term, means so
361	361	written, displayed, or presented that , based on the totality
362	362	of the circumstances, a reasonable person against which it is
363	363	to operate ought to have noticed it. Whether a term is
364	364	"conspicuous" or not is a decision for the court as a matter
365	365	of law. Conspicuous terms include the following:
366	366	(A) A heading in capitals equal to or greater in size
367	367	than the surrounding text, or in contrasting type, font, or
368	368	color to the surrounding text of the same or lesser size; and
369	369	(B) Language in the body of a record or display in
370	370	larger type than the surrounding text, or in contrasting type,
371	371	font, or color to the surrounding text of the same size, or
372	372	set off from surrounding text of the same size by symbols or
373	373	other marks that call attention to the language.
374	374	(11) "Consumer" means an individual who enters into a
375	375	transaction primarily for personal, family, or household
376	376	purposes.
377	377	(12) "Contract," as distinguished from "agreement,"
378	378	means the total legal obligation that results from the
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408	408	parties' agreement as determined by this title as supplemented
409	409	by any other applicable laws.
410	410	(13) "Creditor" includes a general creditor, a secured
411	411	creditor, a lien creditor, and any representative of
412	412	creditors, including an assignee for the benefit of creditors,
413	413	a trustee in bankruptcy, a receiver in equity, and an executor
414	414	or administrator of an insolvent debtor's or assignor's
415	415	estate.
416	416	(14) "Defendant" includes a person in the position of
417	417	defendant in a counterclaim, cross-claim, or third-party
418	418	claim.
419	419	(15) "Delivery," with respect to an instrument,
420	420	electronic document of title, or chattel paper, means
421	421	voluntary transfer of possession control and, with respect to
422	422	an instrument, a tangible document of title, or an
423	423	authoritative tangible copy of record evidencing chattel
424	424	paper, means voluntary transfer of possession .
425	425	(16) "Document of title" means a record (i) that in the
426	426	regular course of business or financing is treated as
427	427	adequately evidencing that the person in possession or control
428	428	of the record is entitled to receive, control, hold, and
429	429	dispose of the record and the goods the record covers and (ii)
430	430	that purports to be issued by or addressed to a bailee and to
431	431	cover goods in the bailee's possession which are either
432	432	identified or are fungible portions of an identifiable mass.
433	433	The term includes bill of lading, transport documents, dock
434	434	warrant, dock receipt, warehouse receipt or, and order for the
435	435	delivery of goods ., and also any other document which in the
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465	465	regular course of business or financing is treated as
466	466	adequately evidencing that the person in possession of it is
467	467	entitled to receive, hold, and dispose of the document and the
468	468	goods it covers. To be a document of title, a document must
469	469	purport to be issued by or addressed to a bailee and purport
470	470	to cover goods in the bailee's possession which are either
471	471	identified or are fungible portions of an identified mass. An
472	472	electronic document of title means a document of title
473	473	evidenced by a record consisting of information stored in an
474	474	electronic medium. A tangible document of title means a
475	475	document of title evidenced by a record consisting of
476	476	information that is inscribed on a tangible medium.
477	477	(16A) "Electronic" means relating to technology having
478	478	electrical, digital, magnetic, wireless, optical,
479	479	electromagnetic, or similar capabilities.
480	480	(17) "Fault" means a default, breach, or wrongful act
481	481	or omission.
482	482	(18) "Fungible goods" means:
483	483	(A) Goods of which any unit, by nature or usage of
484	484	trade, is the equivalent of any other like unit; or
485	485	(B) Goods that by agreement are treated as equivalent.
486	486	(19) "Genuine" means free of forgery or counterfeiting.
487	487	(20) "Good faith" means honesty in fact in the conduct
488	488	or transaction concerned.
489	489	(21) "Holder" means:
490	490	(A) Thethe person in possession of a negotiable
491	491	instrument that is payable either to bearer or to an
492	492	identified person that is the person in possession; or
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522	522	(B) Thethe person in possession of a negotiable
523	523	tangible document of title if the goods are deliverable either
524	524	to bearer or to the order of the person in possession .; or
525	525	(C) the person in control, other than pursuant to
526	526	Section 7-7-106(g), of a negotiable electronic document of
527	527	title.
528	528	(22) "Insolvency proceeding" includes an assignment for
529	529	the benefit of creditors or other proceeding intended to
530	530	liquidate or rehabilitate the estate of the person involved.
531	531	(23) "Insolvent" means:
532	532	(A) Having generally ceased to pay debts in the
533	533	ordinary course of business other than as a result of bona
534	534	fide dispute;
535	535	(B) Being unable to pay debts as they become due; or
536	536	(C) Being insolvent within the meaning of federal
537	537	bankruptcy law.
538	538	(24) "Money" means a medium of exchange that is
539	539	currently authorized or adopted by a domestic or foreign
540	540	government and is not in an electronic form . The term includes
541	541	a monetary unit of account established by an intergovernmental
542	542	organization or by pursuant to an agreement between two or
543	543	more countries.
544	544	(25) "Organization" means a person other than an
545	545	individual.
546	546	(26) "Party," as distinguished from "third party,"
547	547	means a person that has engaged in a transaction or made an
548	548	agreement subject to this title.
549	549	(27) "Person" means an individual, corporation,
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564	564	267
565	565	268
566	566	269
567	567	270
568	568	271
569	569	272
570	570	273
571	571	274
572	572	275
573	573	276
574	574	277
575	575	278
576	576	279
577	577	280 SB231 INTRODUCEDSB231 INTRODUCED
578	578	Page 11
579	579	business trust, estate, trust, partnership, limited liability
580	580	company, association, joint venture, public corporation,
581	581	government, governmental subdivision, agency, or
582	582	instrumentality, or any other legal or commercial entity. The
583	583	term includes a series or a protected series, however
584	584	denominated, of any entity if the series or protected series
585	585	is established under law other than the Uniform Commercial
586	586	Code that limits, or limits if conditions specified under the
587	587	law are satisfied, the ability of a creditor of the entity or
588	588	of any other series or protected series of the entity to
589	589	satisfy a claim from assets of the series or protected series.
590	590	(28) "Present value" means the amount as of a date
591	591	certain of one or more sums payable in the future, discounted
592	592	to the date certain by use of either an interest rate
593	593	specified by the parties if that rate is not manifestly
594	594	unreasonable at the time the transaction is entered into or,
595	595	if an interest rate is not so specified, a commercially
596	596	reasonable rate that takes into account the facts and
597	597	circumstances at the time the transaction is entered into.
598	598	(29) "Purchase" means taking by sale, lease, discount,
599	599	negotiation, mortgage, pledge, lien, security interest, issue
600	600	or reissue, gift, or any other voluntary transaction creating
601	601	an interest in property.
602	602	(30) "Purchaser" means a person that takes by purchase.
603	603	(31) "Record" means information that is inscribed on a
604	604	tangible medium or that is stored in an electronic or other
605	605	medium and is retrievable in perceivable form.
606	606	(32) "Remedy" means any remedial right to which an
607	607	281
608	608	282
609	609	283
610	610	284
611	611	285
612	612	286
613	613	287
614	614	288
615	615	289
616	616	290
617	617	291
618	618	292
619	619	293
620	620	294
621	621	295
622	622	296
623	623	297
624	624	298
625	625	299
626	626	300
627	627	301
628	628	302
629	629	303
630	630	304
631	631	305
632	632	306
633	633	307
634	634	308 SB231 INTRODUCEDSB231 INTRODUCED
635	635	Page 12
636	636	aggrieved party is entitled with or without resort to a
637	637	tribunal.
638	638	(33) "Representative" means a person empowered to act
639	639	for another, including an agent, an officer of a corporation
640	640	or association, and a trustee, executor, or administrator of
641	641	an estate.
642	642	(34) "Right" includes remedy.
643	643	(35) "Security interest" means an interest in personal
644	644	property or fixtures which secures payment or performance of
645	645	an obligation. "Security interest" includes any interest of a
646	646	consignor and a buyer of accounts, chattel paper, a payment
647	647	intangible, or a promissory note in a transaction that is
648	648	subject to Article 9A. "Security interest" does not include
649	649	the special property interest of a buyer of goods on
650	650	identification of those goods to a contract for sale under
651	651	Section 7-2-401, but a buyer may also acquire a "security
652	652	interest" by complying with Article 9A. Except as otherwise
653	653	provided in Section 7-2-505, the right of a seller or lessor
654	654	of goods under Article 2 or 2A to retain or acquire possession
655	655	of the goods is not a "security interest," but a seller or
656	656	lessor may also acquire a "security interest" by complying
657	657	with Article 9A. The retention or reservation of title by a
658	658	seller of goods notwithstanding shipment or delivery to the
659	659	buyer under Section 7-2-401 is limited in effect to a
660	660	reservation of a "security interest." Whether a transaction in
661	661	the form of a lease creates a "security interest" is
662	662	determined pursuant to Section 7-1-203.
663	663	(36) "Send," in connection with a writing, record, or
664	664	309
665	665	310
666	666	311
667	667	312
668	668	313
669	669	314
670	670	315
671	671	316
672	672	317
673	673	318
674	674	319
675	675	320
676	676	321
677	677	322
678	678	323
679	679	324
680	680	325
681	681	326
682	682	327
683	683	328
684	684	329
685	685	330
686	686	331
687	687	332
688	688	333
689	689	334
690	690	335
691	691	336 SB231 INTRODUCEDSB231 INTRODUCED
692	692	Page 13
693	693	notice notification, means:
694	694	(A) Toto deposit in the mail , or deliver for
695	695	transmission, or transmit by any other usual means of
696	696	communication, with postage or cost of transmission provided
697	697	for, and properly addressed and, in the case of an instrument,
698	698	to an address specified thereon or otherwise agreed, or if
699	699	there be none addressed to any address reasonable under the
700	700	circumstances; or
701	701	(B) In any other way to cause to be received any record
702	702	or notice within the time it would have arrived if properly
703	703	sent. to cause the record or notification to be received
704	704	within the time it would have been received if properly sent
705	705	under subparagraph (A).
706	706	(37) "Signed" includes using any symbol executed or
707	707	adopted with present intention to adopt or accept a writing.
708	708	"Sign" means, with present intent to authenticate or adopt a
709	709	record, to:
710	710	(A) execute or adopt a tangible symbol; or
711	711	(B) attach to or logically associate with the record an
712	712	electronic symbol, sound, or process.
713	713	"Signed," "signing," and "signature" have corresponding
714	714	meanings.
715	715	(38) "State" means a State of the United States, the
716	716	District of Columbia, Puerto Rico, the United States Virgin
717	717	Islands, or any territory or insular possession subject to the
718	718	jurisdiction of the United States.
719	719	(39) "Surety" includes a guarantor or other secondary
720	720	obligor.
721	721	337
722	722	338
723	723	339
724	724	340
725	725	341
726	726	342
727	727	343
728	728	344
729	729	345
730	730	346
731	731	347
732	732	348
733	733	349
734	734	350
735	735	351
736	736	352
737	737	353
738	738	354
739	739	355
740	740	356
741	741	357
742	742	358
743	743	359
744	744	360
745	745	361
746	746	362
747	747	363
748	748	364 SB231 INTRODUCEDSB231 INTRODUCED
749	749	Page 14
750	750	(40) "Term" means a portion of an agreement that
751	751	relates to a particular matter.
752	752	(41) "Unauthorized signature" means a signature made
753	753	without actual, implied, or apparent authority. The term
754	754	includes a forgery.
755	755	(42) "Warehouse receipt" means a receipt issued by a
756	756	person engaged in the business of storing goods for hire.
757	757	(43) "Writing" includes printing, typewriting, or any
758	758	other intentional reduction to tangible form. "Written" has a
759	759	corresponding meaning."
760	760	"§7-1-204. Value.
761	761	Except as otherwise provided in Articles 3, 4, and 5,
762	762	and 12, a person gives value for rights if the person acquires
763	763	them:
764	764	(1) In return for a binding commitment to extend credit
765	765	or for the extension of immediately available credit, whether
766	766	or not drawn upon and whether or not a charge-back is provided
767	767	for in the event of difficulties in collection;
768	768	(2) As security for, or in total or partial
769	769	satisfaction of, a preexisting claim;
770	770	(3) By accepting delivery under a preexisting contract
771	771	for purchase; or
772	772	(4) In return for any consideration sufficient to
773	773	support a simple contract."
774	774	"§7-1-301. Territorial applicability; parties' power to
775	775	choose applicable law.
776	776	(a) Except as otherwise provided in this section, when
777	777	a transaction bears a reasonable relation to this state and
778	778	365
779	779	366
780	780	367
781	781	368
782	782	369
783	783	370
784	784	371
785	785	372
786	786	373
787	787	374
788	788	375
789	789	376
790	790	377
791	791	378
792	792	379
793	793	380
794	794	381
795	795	382
796	796	383
797	797	384
798	798	385
799	799	386
800	800	387
801	801	388
802	802	389
803	803	390
804	804	391
805	805	392 SB231 INTRODUCEDSB231 INTRODUCED
806	806	Page 15
807	807	also to another state or nation , the parties may agree that
808	808	the law either of this state or of such other state or nation
809	809	shall govern their rights and duties.
810	810	(b) In the absence of an agreement effective under
811	811	subsection (a), and except as provided in subsection (c), this
812	812	title the Uniform Commercial Code applies to transactions
813	813	bearing an appropriate relation to this state.
814	814	(c) If one of the following provisions of this title
815	815	the Uniform Commercial Code specifies the applicable law, that
816	816	provision governs and a contrary agreement is effective only
817	817	to the extent permitted by the law so specified:
818	818	(1) Section 7-2-402;
819	819	(2) Sections 7-2A-105 and 7-2A-106;
820	820	(3) Section 7-4-102;
821	821	(4) Section 7-4A-507;
822	822	(5) Section 7-5-116;
823	823	(6) [Reserved.]
824	824	(6)(7) Section 7-8-110;
825	825	(7)(8) Sections 7-9A-301 through 7-9A-307 ;
826	826	(9) Section 7-12-107 .
827	827	"§7-1-306. Waiver or renunciation of claim or right
828	828	after breach.
829	829	A claim or right arising out of an alleged breach may
830	830	be discharged in whole or in part without consideration by
831	831	agreement of the aggrieved party in an authenticated a signed
832	832	record.
833	833	"§7-2-102. Scope; certain security and other
834	834	transactions excluded from this article.
835	835	393
836	836	394
837	837	395
838	838	396
839	839	397
840	840	398
841	841	399
842	842	400
843	843	401
844	844	402
845	845	403
846	846	404
847	847	405
848	848	406
849	849	407
850	850	408
851	851	409
852	852	410
853	853	411
854	854	412
855	855	413
856	856	414
857	857	415
858	858	416
859	859	417
860	860	418
861	861	419
862	862	420 SB231 INTRODUCEDSB231 INTRODUCED
863	863	Page 16
864	864	Unless the context otherwise requires, this article
865	865	applies to transactions in goods; it does not apply to any
866	866	transaction which although in the form of an unconditional
867	867	contract to sell or present sale is intended to operate only
868	868	as a security transaction nor does this article impair or
869	869	repeal any statute regulating sales to consumers, farmers or
870	870	other specified classes of buyers.
871	871	(1) Unless the context otherwise requires, and except
872	872	as provided in subsection (3), this article applies to
873	873	transactions in goods and, in the case of a hybrid
874	874	transaction, it applies to the extent provided in subsection
875	875	(2).
876	876	(2) In a hybrid transaction:
877	877	(a) If the sale-of-goods aspects do not predominate,
878	878	only the provisions of this article which relate primarily to
879	879	the sale-of-goods aspects of the transaction apply, and the
880	880	provisions that relate primarily to the transaction as a whole
881	881	do not apply.
882	882	(b) If the sale-of-goods aspects predominate, this
883	883	article applies to the transaction but does not preclude
884	884	application in appropriate circumstances of other law to
885	885	aspects of the transaction which do not relate to the sale of
886	886	goods.
887	887	(3) This article does not:
888	888	(a) apply to a transaction that, even though in the
889	889	form of an unconditional contract to sell or present sale,
890	890	operates only to create a security interest; or
891	891	(b) impair or repeal any statute regulating sales to
892	892	421
893	893	422
894	894	423
895	895	424
896	896	425
897	897	426
898	898	427
899	899	428
900	900	429
901	901	430
902	902	431
903	903	432
904	904	433
905	905	434
906	906	435
907	907	436
908	908	437
909	909	438
910	910	439
911	911	440
912	912	441
913	913	442
914	914	443
915	915	444
916	916	445
917	917	446
918	918	447
919	919	448 SB231 INTRODUCEDSB231 INTRODUCED
920	920	Page 17
921	921	consumers, farmers, or other specified classes of buyers.
922	922	"§7-2-106. Definitions: "Contract"; "agreement";
923	923	"contract for sale"; "sale"; "present sale"; "conforming" to
924	924	contract; "termination"; "cancellation "; "hybrid
925	925	transaction"."
926	926	(1) In this article unless the context otherwise
927	927	requires "contract" and "agreement" are limited to those
928	928	relating to the present or future sale of goods. "Contract for
929	929	sale" includes both a present sale of goods and a contract to
930	930	sell goods at a future time. A "sale" consists in the passing
931	931	of title from the seller to the buyer for a price (Section
932	932	7-2-401). A "present sale" means a sale which is accomplished
933	933	by the making of the contract.
934	934	(2) Goods or conduct including any part of a
935	935	performance are "conforming" or "conform to the contract" when
936	936	they are in accordance with the obligations under the
937	937	contract.
938	938	(3) "Termination" occurs when either party pursuant to
939	939	a power created by agreement or law puts an end to the
940	940	contract otherwise than for its breach. On "termination" all
941	941	obligations which are still executory on both sides are
942	942	discharged but any right based on prior breach of performance
943	943	survives.
944	944	(4) "Cancellation" occurs when either party puts an end
945	945	to the contract for breach by the other, and its effect is the
946	946	same as that of "termination" except that the cancelling party
947	947	also retains any remedy for breach of the whole contract or
948	948	any unperformed balance.
949	949	449
950	950	450
951	951	451
952	952	452
953	953	453
954	954	454
955	955	455
956	956	456
957	957	457
958	958	458
959	959	459
960	960	460
961	961	461
962	962	462
963	963	463
964	964	464
965	965	465
966	966	466
967	967	467
968	968	468
969	969	469
970	970	470
971	971	471
972	972	472
973	973	473
974	974	474
975	975	475
976	976	476 SB231 INTRODUCEDSB231 INTRODUCED
977	977	Page 18
978	978	(5) "Hybrid transaction" means a single transaction
979	979	involving a sale of goods and:
980	980	(a) the provision of services;
981	981	(b) a lease of other goods; or
982	982	(c) a sale, lease, or license of property other than
983	983	goods.
984	984	"§7-2-201. Formal requirements; statute of frauds.
985	985	(1) Except as otherwise provided in this section , a
986	986	contract for the sale of goods for the price of $500five
987	987	hundred dollars ($500) or more is not enforceable by way of
988	988	action or defense unless there is some writinga record
989	989	sufficient to indicate that a contract for sale has been made
990	990	between the parties and signed by the party against whom
991	991	enforcement is sought or by his the party's authorized agent
992	992	or broker. A writing record is not insufficient because it
993	993	omits or incorrectly states a term agreed upon, but the
994	994	contract is not enforceable under this paragraphsubsection
995	995	beyond the quantity of goods shown in such writingthe record.
996	996	(2) Between merchants if within a reasonable time a
997	997	writingrecord in confirmation of the contract and sufficient
998	998	against the sender is received and the party receiving it has
999	999	reason to know its contents, it satisfies the requirements of
1000	1000	subsection (1) against such the party unless notice in a
1001	1001	recordwritten notice of objection to its contents is given
1002	1002	within 10 days after it is received.
1003	1003	(3) A contract which does not satisfy the requirements
1004	1004	of subsection (1) but which is valid in other respects is
1005	1005	enforceable:
1006	1006	477
1007	1007	478
1008	1008	479
1009	1009	480
1010	1010	481
1011	1011	482
1012	1012	483
1013	1013	484
1014	1014	485
1015	1015	486
1016	1016	487
1017	1017	488
1018	1018	489
1019	1019	490
1020	1020	491
1021	1021	492
1022	1022	493
1023	1023	494
1024	1024	495
1025	1025	496
1026	1026	497
1027	1027	498
1028	1028	499
1029	1029	500
1030	1030	501
1031	1031	502
1032	1032	503
1033	1033	504 SB231 INTRODUCEDSB231 INTRODUCED
1034	1034	Page 19
1035	1035	(a) If the goods are to be specially manufactured for
1036	1036	the buyer and are not suitable for sale to others in the
1037	1037	ordinary course of the seller's business and the seller,
1038	1038	before notice of repudiation is received and under
1039	1039	circumstances which reasonably indicate that the goods are for
1040	1040	the buyer, has made either a substantial beginning of their
1041	1041	manufacture or commitments for their procurement; or
1042	1042	(b) If the party against whom enforcement is sought
1043	1043	admits in histhe party's pleading, testimony , or otherwise in
1044	1044	court that a contract for sale was made, but the contract is
1045	1045	not enforceable under this provision beyond the quantity of
1046	1046	goods admitted; or
1047	1047	(c) With respect to goods for which payment has been
1048	1048	made and accepted or which have been received and accepted
1049	1049	(Section 7-2-606)."
1050	1050	"§7-2-202. Final written expression: Parol or extrinsic
1051	1051	evidence.
1052	1052	Terms with respect to which the confirmatory memoranda
1053	1053	of the parties agree or which are otherwise set forth in a
1054	1054	writing record intended by the parties as a final expression
1055	1055	of their agreement with respect to such terms as are included
1056	1056	therein may not be contradicted by evidence of any prior
1057	1057	agreement or of a contemporaneous oral agreement but may be
1058	1058	explained or supplemented:
1059	1059	(a) Bybycourse of performance, course of dealing , or
1060	1060	usage of trade (Section 7-1-303); and
1061	1061	(b) Byby evidence of consistent additional terms unless
1062	1062	the court finds the writing record to have been intended also
1063	1063	505
1064	1064	506
1065	1065	507
1066	1066	508
1067	1067	509
1068	1068	510
1069	1069	511
1070	1070	512
1071	1071	513
1072	1072	514
1073	1073	515
1074	1074	516
1075	1075	517
1076	1076	518
1077	1077	519
1078	1078	520
1079	1079	521
1080	1080	522
1081	1081	523
1082	1082	524
1083	1083	525
1084	1084	526
1085	1085	527
1086	1086	528
1087	1087	529
1088	1088	530
1089	1089	531
1090	1090	532 SB231 INTRODUCEDSB231 INTRODUCED
1091	1091	Page 20
1092	1092	as a complete and exclusive statement of the terms of the
1093	1093	agreement."
1094	1094	"§7-2-203. Seals inoperative.
1095	1095	The affixing of a seal to a writing record evidencing a
1096	1096	contract for sale or an offer to buy or sell goods does not
1097	1097	constitute the writing record a sealed instrument, and the law
1098	1098	with respect to sealed instruments does not apply to such a
1099	1099	contract or offer."
1100	1100	"§7-2-205. Firm offers.
1101	1101	An offer by a merchant to buy or sell goods in a signed
1102	1102	writing record which by its terms gives assurance that it will
1103	1103	be held open is not revocable, for lack of consideration,
1104	1104	during the time stated or if no time is stated for a
1105	1105	reasonable time, but in no event may such period of
1106	1106	irrevocability exceed three months; but any such term of
1107	1107	assurance on a form supplied by the offeree must be separately
1108	1108	signed by the offeror."
1109	1109	"§7-2-209. Modification, rescission and waiver.
1110	1110	(1) An agreement modifying a contract within this
1111	1111	article needs no consideration to be binding.
1112	1112	(2) A signed agreement which excludes modification or
1113	1113	rescission except by a signed writing or other signed record
1114	1114	cannot be otherwise modified or rescinded, but except as
1115	1115	between merchants such a requirement on a form supplied by the
1116	1116	merchant must be separately signed by the other party.
1117	1117	(3) The requirements of the statute of frauds section
1118	1118	of this article (Section 7-2-201) must be satisfied if the
1119	1119	contract as modified is within its provisions.
1120	1120	533
1121	1121	534
1122	1122	535
1123	1123	536
1124	1124	537
1125	1125	538
1126	1126	539
1127	1127	540
1128	1128	541
1129	1129	542
1130	1130	543
1131	1131	544
1132	1132	545
1133	1133	546
1134	1134	547
1135	1135	548
1136	1136	549
1137	1137	550
1138	1138	551
1139	1139	552
1140	1140	553
1141	1141	554
1142	1142	555
1143	1143	556
1144	1144	557
1145	1145	558
1146	1146	559
1147	1147	560 SB231 INTRODUCEDSB231 INTRODUCED
1148	1148	Page 21
1149	1149	(4) Although an attempt at modification or rescission
1150	1150	does not satisfy the requirements of subsection (2) or (3) it
1151	1151	can operate as a waiver.
1152	1152	(5) A party who has made a waiver affecting an
1153	1153	executory portion of the contract may retract the waiver by
1154	1154	reasonable notification received by the other party that
1155	1155	strict performance will be required of any term waived, unless
1156	1156	the retraction would be unjust in view of a material change of
1157	1157	position in reliance on the waiver.
1158	1158	"§7-2A-102. Scope.
1159	1159	This article applies to any transaction, regardless of
1160	1160	form, that creates a lease, as defined in Section
1161	1161	7-2A-103(1)(j).
1162	1162	(1) This article applies to any transaction, regardless
1163	1163	of form, that creates a lease and, in the case of a hybrid
1164	1164	lease, it applies to the extent provided in subsection (2).
1165	1165	(2) In a hybrid lease:
1166	1166	(a) if the lease-of-goods aspects do not predominate:
1167	1167	(i) only the provisions of this article which relate
1168	1168	primarily to the lease-of-goods aspect of the transaction
1169	1169	apply, and the provisions that relate primarily to the
1170	1170	transaction as a whole do not apply;
1171	1171	(ii) Section 7-2A-209 applies if the lease is a finance
1172	1172	lease; and
1173	1173	(iii) Section 7-2A-407 applies to the promise of the
1174	1174	lessee in a finance lease to the extent the promises are
1175	1175	consideration for the right to possession and use of the
1176	1176	leased goods; and
1177	1177	561
1178	1178	562
1179	1179	563
1180	1180	564
1181	1181	565
1182	1182	566
1183	1183	567
1184	1184	568
1185	1185	569
1186	1186	570
1187	1187	571
1188	1188	572
1189	1189	573
1190	1190	574
1191	1191	575
1192	1192	576
1193	1193	577
1194	1194	578
1195	1195	579
1196	1196	580
1197	1197	581
1198	1198	582
1199	1199	583
1200	1200	584
1201	1201	585
1202	1202	586
1203	1203	587
1204	1204	588 SB231 INTRODUCEDSB231 INTRODUCED
1205	1205	Page 22
1206	1206	(b) if the lease-of-goods aspects predominate, this
1207	1207	article applies to the transaction, but does not preclude
1208	1208	application in appropriate circumstances of other law to
1209	1209	aspects of the lease which do not relate to the lease of
1210	1210	goods.
1211	1211	"§7-2A-103. Definitions and index of definitions.
1212	1212	(1) In this article unless the context otherwise
1213	1213	requires:
1214	1214	(a) "Buyer in ordinary course of business" means a
1215	1215	person who in good faith and without knowledge that the sale
1216	1216	to him or her is in violation of the ownership rights or
1217	1217	security interest or leasehold interest of a third party in
1218	1218	the goods, buys in ordinary course from a person in the
1219	1219	business of selling goods of that kind but does not include a
1220	1220	pawnbroker. "Buying" may be for cash or by exchange of other
1221	1221	property or on secured or unsecured credit and includes
1222	1222	receiving goods or documents of title under a pre-existing
1223	1223	contract for sale but does not include a transfer in bulk or
1224	1224	as security for or in total or partial satisfaction of a money
1225	1225	debt.
1226	1226	(b) "Cancellation" occurs when either party puts an end
1227	1227	to the lease contract for default by the other party.
1228	1228	(c) "Commercial unit" means such a unit of goods as by
1229	1229	commercial usage is a single whole for purposes of lease and
1230	1230	division of which materially impairs its character or value on
1231	1231	the market or in use. A commercial unit may be a single
1232	1232	article, as a machine, or a set of articles, as a suite of
1233	1233	furniture or a line of machinery, or a quantity, as a gross or
1234	1234	589
1235	1235	590
1236	1236	591
1237	1237	592
1238	1238	593
1239	1239	594
1240	1240	595
1241	1241	596
1242	1242	597
1243	1243	598
1244	1244	599
1245	1245	600
1246	1246	601
1247	1247	602
1248	1248	603
1249	1249	604
1250	1250	605
1251	1251	606
1252	1252	607
1253	1253	608
1254	1254	609
1255	1255	610
1256	1256	611
1257	1257	612
1258	1258	613
1259	1259	614
1260	1260	615
1261	1261	616 SB231 INTRODUCEDSB231 INTRODUCED
1262	1262	Page 23
1263	1263	carload, or any other unit treated in use or in the relevant
1264	1264	market as a single whole.
1265	1265	(d) "Conforming" goods or performance under a lease
1266	1266	contract means goods or performance that are in accordance
1267	1267	with the obligations under the lease contract.
1268	1268	(e) "Consumer lease" means a lease that a lessor
1269	1269	regularly engaged in the business of leasing or selling makes
1270	1270	to a lessee who is an individual and who takes under the lease
1271	1271	primarily for a personal, family, or household purpose, if the
1272	1272	total payments to be made under the lease contract, excluding
1273	1273	payments for options to renew or buy, do not exceed
1274	1274	$100,000one hundred thousand dollars ($100,000) .
1275	1275	(f) "Fault" means wrongful act, omission, breach, or
1276	1276	default.
1277	1277	(g) "Finance lease" means a lease with respect to
1278	1278	which:
1279	1279	(i) the lessor does not select, manufacture, or supply
1280	1280	the goods;
1281	1281	(ii) the lessor acquires the goods or the right to
1282	1282	possession and use of the goods in connection with the lease;
1283	1283	and
1284	1284	(iii) one of the following occurs:
1285	1285	(A) the lessee receives a copy of the contract by which
1286	1286	the lessor acquired the goods or the right to possession and
1287	1287	use of the goods before signing the lease contract;
1288	1288	(B) the lessee's approval of the contract by which the
1289	1289	lessor acquired the goods or the right to possession and use
1290	1290	of the goods is a condition to effectiveness of the lease
1291	1291	617
1292	1292	618
1293	1293	619
1294	1294	620
1295	1295	621
1296	1296	622
1297	1297	623
1298	1298	624
1299	1299	625
1300	1300	626
1301	1301	627
1302	1302	628
1303	1303	629
1304	1304	630
1305	1305	631
1306	1306	632
1307	1307	633
1308	1308	634
1309	1309	635
1310	1310	636
1311	1311	637
1312	1312	638
1313	1313	639
1314	1314	640
1315	1315	641
1316	1316	642
1317	1317	643
1318	1318	644 SB231 INTRODUCEDSB231 INTRODUCED
1319	1319	Page 24
1320	1320	contract;
1321	1321	(C) the lease contract or a separate accurate and
1322	1322	complete statement delivered to the lessee discloses in
1323	1323	writing (a) all express warranties and other rights provided
1324	1324	to the lessee by the lessor and the supplier in connection
1325	1325	with the lease contract (b) that there are no other express
1326	1326	warranties or rights provided to the lessee by the lessor or
1327	1327	the supplier in connection with the lease contract, and (c) in
1328	1328	a consumer lease, any waiver, disclaimer, or other negation of
1329	1329	express or implied warranties and any limitation or
1330	1330	modification of remedy or liquidation of damages for breach of
1331	1331	those warranties or other rights of the lessee in a manner as
1332	1332	provided in this article or in Article 2, as applicable; or
1333	1333	(D) the lessor, before the lessee signs the lease
1334	1334	contract, informs the lessee in writing (a) of the identity of
1335	1335	the supplier, unless the lessee has selected the supplier and
1336	1336	directed the lessor to purchase the goods from the supplier,
1337	1337	(b) that the lessee is entitled under this article to all
1338	1338	warranties and other rights provided to the lessee by the
1339	1339	supplier in connection with the lease contract, and (c) to
1340	1340	contact the supplier to receive an accurate and complete
1341	1341	statement from the supplier of any such express warranties and
1342	1342	other rights and any disclaimers or limitations of them or of
1343	1343	remedies.
1344	1344	(h) "Goods" means all things that are movable at the
1345	1345	time of identification to the lease contract, or are fixtures
1346	1346	(Section 7-2A-309), but the term does not include money,
1347	1347	documents, instruments, accounts, chattel paper, general
1348	1348	645
1349	1349	646
1350	1350	647
1351	1351	648
1352	1352	649
1353	1353	650
1354	1354	651
1355	1355	652
1356	1356	653
1357	1357	654
1358	1358	655
1359	1359	656
1360	1360	657
1361	1361	658
1362	1362	659
1363	1363	660
1364	1364	661
1365	1365	662
1366	1366	663
1367	1367	664
1368	1368	665
1369	1369	666
1370	1370	667
1371	1371	668
1372	1372	669
1373	1373	670
1374	1374	671
1375	1375	672 SB231 INTRODUCEDSB231 INTRODUCED
1376	1376	Page 25
1377	1377	intangibles, or minerals or the like, including oil and gas,
1378	1378	before extraction. The term also includes the unborn young of
1379	1379	animals.
1380	1380	(h.1) "Hybrid lease" means a single transaction
1381	1381	involving a lease of goods and:
1382	1382	(i) the provision of services;
1383	1383	(ii) a sale of other goods; or
1384	1384	(iii) a sale, lease, or license of property other than
1385	1385	goods.
1386	1386	(i) "Installment lease contract" means a lease contract
1387	1387	that authorizes or requires the delivery of goods in separate
1388	1388	lots to be separately accepted, even though the lease contract
1389	1389	contains a clause "each delivery is a separate lease" or its
1390	1390	equivalent.
1391	1391	(j) "Lease" means a transfer of the right to possession
1392	1392	and use of goods for a term in return for consideration, but a
1393	1393	sale, including a sale on approval or a sale or return, or
1394	1394	retention or creation of a security interest is not a lease.
1395	1395	Unless the context clearly indicates otherwise, the term
1396	1396	includes a sublease.
1397	1397	(k) "Lease agreement" means the bargain, with respect
1398	1398	to the lease, of the lessor and the lessee in fact as found in
1399	1399	their language or by implication from other circumstances
1400	1400	including course of dealing or usage of trade or course of
1401	1401	performance as provided in this article. Unless the context
1402	1402	clearly indicates otherwise, the term includes a sublease
1403	1403	agreement.
1404	1404	(l) "Lease contract" means the total legal obligation
1405	1405	673
1406	1406	674
1407	1407	675
1408	1408	676
1409	1409	677
1410	1410	678
1411	1411	679
1412	1412	680
1413	1413	681
1414	1414	682
1415	1415	683
1416	1416	684
1417	1417	685
1418	1418	686
1419	1419	687
1420	1420	688
1421	1421	689
1422	1422	690
1423	1423	691
1424	1424	692
1425	1425	693
1426	1426	694
1427	1427	695
1428	1428	696
1429	1429	697
1430	1430	698
1431	1431	699
1432	1432	700 SB231 INTRODUCEDSB231 INTRODUCED
1433	1433	Page 26
1434	1434	that results from the lease agreement as affected by this
1435	1435	article and any other applicable rules of law. Unless the
1436	1436	context clearly indicates otherwise, the term includes a
1437	1437	sublease contract.
1438	1438	(m) "Leasehold interest" means the interest of the
1439	1439	lessor or the lessee under a lease contract.
1440	1440	(n) "Lessee" means a person who acquires the right to
1441	1441	possession and use of goods under a lease. Unless the context
1442	1442	clearly indicates otherwise, the term includes a sublessee.
1443	1443	(o) "Lessee in ordinary course of business" means a
1444	1444	person who in good faith and without knowledge that the lease
1445	1445	to him or her is in violation of the ownership rights or
1446	1446	security interest or leasehold interest of a third party in
1447	1447	the goods leases in ordinary course from a person in the
1448	1448	business of selling or leasing goods of that kind but does not
1449	1449	include a pawnbroker. "Leasing" may be for cash or by exchange
1450	1450	of other property or on secured or unsecured credit and
1451	1451	includes acquiring goods or documents of title under a
1452	1452	preexisting lease contract but does not include a transfer in
1453	1453	bulk or as security for or in total or partial satisfaction of
1454	1454	a money debt.
1455	1455	(p) "Lessor" means a person who transfers the right to
1456	1456	possession and use of goods under a lease. Unless the context
1457	1457	clearly indicates otherwise, the term includes a sublessor.
1458	1458	(q) "Lessor's residual interest" means the lessor's
1459	1459	interest in the goods after expiration, termination, or
1460	1460	cancellation of the lease contract.
1461	1461	(r) "Lien" means a charge against or interest in goods
1462	1462	701
1463	1463	702
1464	1464	703
1465	1465	704
1466	1466	705
1467	1467	706
1468	1468	707
1469	1469	708
1470	1470	709
1471	1471	710
1472	1472	711
1473	1473	712
1474	1474	713
1475	1475	714
1476	1476	715
1477	1477	716
1478	1478	717
1479	1479	718
1480	1480	719
1481	1481	720
1482	1482	721
1483	1483	722
1484	1484	723
1485	1485	724
1486	1486	725
1487	1487	726
1488	1488	727
1489	1489	728 SB231 INTRODUCEDSB231 INTRODUCED
1490	1490	Page 27
1491	1491	to secure payment of a debt or performance of an obligation,
1492	1492	but the term does not include a security interest.
1493	1493	(s) "Lot" means a parcel or a single article that is
1494	1494	the subject matter of a separate lease or delivery, whether or
1495	1495	not it is sufficient to perform the lease contract.
1496	1496	(t) "Merchant lessee" means a lessee that is a merchant
1497	1497	with respect to goods of the kind subject to the lease.
1498	1498	(u) "Present value" means the amount as of a date
1499	1499	certain of one or more sums payable in the future, discounted
1500	1500	to the date certain. The discount is determined by the
1501	1501	interest rate specified by the parties if the rate was not
1502	1502	manifestly unreasonable at the time the transaction was
1503	1503	entered into; otherwise, the discount is determined by the
1504	1504	court as a matter of law as a commercially reasonable rate
1505	1505	that takes into account the facts and circumstances of each
1506	1506	case at the time the transaction was entered into.
1507	1507	(v) "Purchase" includes taking by sale, lease,
1508	1508	mortgage, security interest, pledge, gift, or any other
1509	1509	voluntary transaction creating an interest in goods.
1510	1510	(w) "Sublease" means a lease of goods the right to
1511	1511	possession and use of which was acquired by the lessor as a
1512	1512	lessee under an existing lease.
1513	1513	(x) "Supplier" means a person from whom a lessor buys
1514	1514	or leases goods to be leased under a finance lease.
1515	1515	(y) "Supply contract" means a contract under which a
1516	1516	lessor buys or leases goods to be leased.
1517	1517	(z) "Termination" occurs when either party pursuant to
1518	1518	a power created by agreement or law puts an end to the lease
1519	1519	729
1520	1520	730
1521	1521	731
1522	1522	732
1523	1523	733
1524	1524	734
1525	1525	735
1526	1526	736
1527	1527	737
1528	1528	738
1529	1529	739
1530	1530	740
1531	1531	741
1532	1532	742
1533	1533	743
1534	1534	744
1535	1535	745
1536	1536	746
1537	1537	747
1538	1538	748
1539	1539	749
1540	1540	750
1541	1541	751
1542	1542	752
1543	1543	753
1544	1544	754
1545	1545	755
1546	1546	756 SB231 INTRODUCEDSB231 INTRODUCED
1547	1547	Page 28
1548	1548	contract otherwise than for default.
1549	1549	(2) Other definitions applying to this article and the
1550	1550	sections in which they appear are:
1551	1551	"Accessions." Section 7-2A-310(1).
1552	1552	"Construction mortgage." Section 7-2A-309(1)(d).
1553	1553	"Encumbrance." Section 7-2A-309(1)(e).
1554	1554	"Fixtures." Section 7-2A-309(1)(a).
1555	1555	"Fixture filing." Section 7-2A-309(1)(b).
1556	1556	"Purchase money lease." Section 7-2A-309(1)(c).
1557	1557	(3) The following definitions in sections of the Code
1558	1558	of Alabama 1975, apply to this article:
1559	1559	"Account." Section 7-9A-102(a)(2).
1560	1560	"Between merchants." Section 7-2-104(3).
1561	1561	"Buyer." Section 7-2-103(1)(a).
1562	1562	"Chattel paper." Section 7-9A-102(a)(11).
1563	1563	"Consumer goods." Section 7-9A-102(a)(23).
1564	1564	"Document." Section 7-9A-102(a)(30).
1565	1565	"Entrusting." Section 7-2-403(3).
1566	1566	"General intangible." Section 7-9A-102(a)(42).
1567	1567	"Good faith." Section 7-2-103(1)(b).
1568	1568	"Instrument." Section 7-9A-102(a)(47).
1569	1569	"Merchant." Section 7-2-104(1).
1570	1570	"Mortgage." Section 7-9A-102(a)(55).
1571	1571	"Pursuant to commitment." Section 7-9A-102(a)(68).
1572	1572	"Receipt." Section 7-2-103(1)(c).
1573	1573	"Sale." Section 7-2-106(1).
1574	1574	"Sale on approval." Section 7-2-326.
1575	1575	"Sale or return." Section 7-2-326.
1576	1576	757
1577	1577	758
1578	1578	759
1579	1579	760
1580	1580	761
1581	1581	762
1582	1582	763
1583	1583	764
1584	1584	765
1585	1585	766
1586	1586	767
1587	1587	768
1588	1588	769
1589	1589	770
1590	1590	771
1591	1591	772
1592	1592	773
1593	1593	774
1594	1594	775
1595	1595	776
1596	1596	777
1597	1597	778
1598	1598	779
1599	1599	780
1600	1600	781
1601	1601	782
1602	1602	783
1603	1603	784 SB231 INTRODUCEDSB231 INTRODUCED
1604	1604	Page 29
1605	1605	"Seller." Section 7-2-103(1)(d).
1606	1606	(4) In addition, Section 7-1-201 contains general
1607	1607	definitions and principles of construction and interpretation
1608	1608	applicable throughout this article."
1609	1609	"§7-2A-107. Waiver or renunciation of claim or right
1610	1610	after default.
1611	1611	Any claim or right arising out of an alleged default or
1612	1612	breach of warranty may be discharged in whole or in part
1613	1613	without consideration by a written waiver or renunciation in a
1614	1614	signed and record delivered by the aggrieved party."
1615	1615	"§7-2A-201. Statute of frauds.
1616	1616	(1) A lease contract is not enforceable by way of
1617	1617	action or defense unless:
1618	1618	(a) the total payments to be made under the lease
1619	1619	contract, excluding payments for options to renew or buy, are
1620	1620	less than $1,000;one thousand dollars ($1,000)tangible or
1621	1621	(b) there is a writing record, signed by the party
1622	1622	against whom enforcement is sought or by that party's
1623	1623	authorized agent, sufficient to indicate that a lease contract
1624	1624	has been made between the parties and to describe the goods
1625	1625	leased and the lease term.
1626	1626	(2) Any description of leased goods or of the lease
1627	1627	term is sufficient and satisfies subsection (1)(b), whether or
1628	1628	not it is specific, if it reasonably identifies what is
1629	1629	described.
1630	1630	(3) A writing record is not insufficient because it
1631	1631	omits or incorrectly states a term agreed upon, but the lease
1632	1632	contract is not enforceable under subsection (1)(b) beyond the
1633	1633	785
1634	1634	786
1635	1635	787
1636	1636	788
1637	1637	789
1638	1638	790
1639	1639	791
1640	1640	792
1641	1641	793
1642	1642	794
1643	1643	795
1644	1644	796
1645	1645	797
1646	1646	798
1647	1647	799
1648	1648	800
1649	1649	801
1650	1650	802
1651	1651	803
1652	1652	804
1653	1653	805
1654	1654	806
1655	1655	807
1656	1656	808
1657	1657	809
1658	1658	810
1659	1659	811
1660	1660	812 SB231 INTRODUCEDSB231 INTRODUCED
1661	1661	Page 30
1662	1662	lease term and the quantity of goods shown in the writing
1663	1663	record.
1664	1664	(4) A lease contract that does not satisfy the
1665	1665	requirements of subsection (1), but which is valid in other
1666	1666	respects, is enforceable:
1667	1667	(a) if the goods are to be specially manufactured or
1668	1668	obtained for the lessee and are not suitable for lease or sale
1669	1669	to others in the ordinary course of the lessor's business, and
1670	1670	the lessor, before notice of repudiation is received and under
1671	1671	circumstances that reasonably indicate that the goods are for
1672	1672	the lessee, has made either a substantial beginning of their
1673	1673	manufacture or commitments for their procurement;
1674	1674	(b) if the party against whom enforcement is sought
1675	1675	admits in that party's pleading, testimony, or otherwise in
1676	1676	court that a lease contract was made, but the lease contract
1677	1677	is not enforceable under this provision beyond the quantity of
1678	1678	goods admitted; or
1679	1679	(c) with respect to goods that have been received and
1680	1680	accepted by the lessee.
1681	1681	(5) The lease term under a lease contract referred to
1682	1682	in subsection (4) is:
1683	1683	(a) if there is a writing record signed by the party
1684	1684	against whom enforcement is sought or by that party's
1685	1685	authorized agent specifying the lease term, the term so
1686	1686	specified;
1687	1687	(b) if the party against whom enforcement is sought
1688	1688	admits in that party's pleading, testimony, or otherwise in
1689	1689	court a lease term, the term so admitted; or
1690	1690	813
1691	1691	814
1692	1692	815
1693	1693	816
1694	1694	817
1695	1695	818
1696	1696	819
1697	1697	820
1698	1698	821
1699	1699	822
1700	1700	823
1701	1701	824
1702	1702	825
1703	1703	826
1704	1704	827
1705	1705	828
1706	1706	829
1707	1707	830
1708	1708	831
1709	1709	832
1710	1710	833
1711	1711	834
1712	1712	835
1713	1713	836
1714	1714	837
1715	1715	838
1716	1716	839
1717	1717	840 SB231 INTRODUCEDSB231 INTRODUCED
1718	1718	Page 31
1719	1719	(c) a reasonable lease term."
1720	1720	"§7-2A-202. Final written expression: Parol or
1721	1721	extrinsic evidence.
1722	1722	Terms with respect to which the confirmatory memoranda
1723	1723	of the parties agree or which are otherwise set forth in a
1724	1724	writing record intended by the parties as a final expression
1725	1725	of their agreement with respect to such terms as are included
1726	1726	therein may not be contradicted by evidence of any prior
1727	1727	agreement or of a contemporaneous oral agreement but may be
1728	1728	explained or supplemented:
1729	1729	(a) by course of dealing or usage of trade or by course
1730	1730	of performance; and
1731	1731	(b) by evidence of consistent additional terms unless
1732	1732	the court finds the writingrecord to have been intended also
1733	1733	as a complete and exclusive statement of the terms of the
1734	1734	agreement."
1735	1735	"§7-2A-203. Seals inoperative.
1736	1736	The affixing of a seal to a writing record evidencing a
1737	1737	lease contract or an offer to enter into a lease contract does
1738	1738	not render the writing record a sealed instrument and the law
1739	1739	with respect to sealed instruments does not apply to the lease
1740	1740	contract or offer."
1741	1741	"§7-2A-205. Firm offers.
1742	1742	An offer by a merchant to lease goods to or from
1743	1743	another person in a signed writing record that by its terms
1744	1744	gives assurance it will be held open is not revocable, for
1745	1745	lack of consideration, during the time stated or, if no time
1746	1746	is stated, for a reasonable time, but in no event may the
1747	1747	841
1748	1748	842
1749	1749	843
1750	1750	844
1751	1751	845
1752	1752	846
1753	1753	847
1754	1754	848
1755	1755	849
1756	1756	850
1757	1757	851
1758	1758	852
1759	1759	853
1760	1760	854
1761	1761	855
1762	1762	856
1763	1763	857
1764	1764	858
1765	1765	859
1766	1766	860
1767	1767	861
1768	1768	862
1769	1769	863
1770	1770	864
1771	1771	865
1772	1772	866
1773	1773	867
1774	1774	868 SB231 INTRODUCEDSB231 INTRODUCED
1775	1775	Page 32
1776	1776	period of irrevocability exceed 3 three months. Any such term
1777	1777	of assurance on a form supplied by the offeree must be
1778	1778	separately signed by the offeror."
1779	1779	"§7-2A-208. Modification, rescission and waiver.
1780	1780	(1) An agreement modifying a lease contract needs no
1781	1781	consideration to be binding.
1782	1782	(2) A signed lease agreement that excludes modification
1783	1783	or rescission except by a signed writing record may not be
1784	1784	otherwise modified or rescinded, but, except as between
1785	1785	merchants, such a requirement on a form supplied by a merchant
1786	1786	must be separately signed by the other party.
1787	1787	(3) The requirements of the statute of frauds section
1788	1788	of this article (Section 7-2A-201) must be satisfied if the
1789	1789	contract as modified is within its provisions.
1790	1790	(4) Although an attempt at modification or rescission
1791	1791	does not satisfy the requirements of subsection (2), it may
1792	1792	operate as a waiver.
1793	1793	(5) A party who has made a waiver affecting an
1794	1794	executory portion of a lease contract may retract the waiver
1795	1795	by reasonable notification received by the other party that
1796	1796	strict performance will be required of any term waived, unless
1797	1797	the retraction would be unjust in view of a material change of
1798	1798	position in reliance on the waiver.
1799	1799	"§7-3-104. Negotiable instrument.
1800	1800	(a) Except as provided in subsections (c) and (d),
1801	1801	"negotiable instrument" means an unconditional promise or
1802	1802	order to pay a fixed amount of money, with or without interest
1803	1803	or other charges described in the promise or order, if it:
1804	1804	869
1805	1805	870
1806	1806	871
1807	1807	872
1808	1808	873
1809	1809	874
1810	1810	875
1811	1811	876
1812	1812	877
1813	1813	878
1814	1814	879
1815	1815	880
1816	1816	881
1817	1817	882
1818	1818	883
1819	1819	884
1820	1820	885
1821	1821	886
1822	1822	887
1823	1823	888
1824	1824	889
1825	1825	890
1826	1826	891
1827	1827	892
1828	1828	893
1829	1829	894
1830	1830	895
1831	1831	896 SB231 INTRODUCEDSB231 INTRODUCED
1832	1832	Page 33
1833	1833	(1) Isis payable to bearer or to order at the time it
1834	1834	is issued or first comes into possession of a holder;
1835	1835	(2) Isis payable on demand or at a definite time; and
1836	1836	(3) Doesdoes not state any other undertaking or
1837	1837	instruction by the person promising or ordering payment to do
1838	1838	any act in addition to the payment of money, but the promise
1839	1839	or order may contain (i) an undertaking or power to give,
1840	1840	maintain, or protect collateral to secure payment, (ii) an
1841	1841	authorization or power to the holder to confess judgment or
1842	1842	realize on or dispose of collateral, or (iii) a waiver of the
1843	1843	benefit of any law intended for the advantage or protection of
1844	1844	an obligor, (iv) a term that specifies the law that governs
1845	1845	the promise or order, or (v) an undertaking to resolve in a
1846	1846	specified forum a dispute concerning the promise or order .
1847	1847	(b) "Instrument" means a negotiable instrument.
1848	1848	(c) An order that meets all of the requirements of
1849	1849	subsection (a), except subdivision (1), and otherwise falls
1850	1850	within the definition of "check" in subsection (f) is a
1851	1851	negotiable instrument and a check.
1852	1852	(d) A promise or order other than a check is not an
1853	1853	instrument if, at the time it is issued or first comes into
1854	1854	possession of a holder, it contains a conspicuous statement,
1855	1855	however expressed, to the effect that the promise or order is
1856	1856	not negotiable or is not an instrument governed by this
1857	1857	article.
1858	1858	(e) An instrument is a "note" if it is a promise and is
1859	1859	a "draft" if it is an order. If an instrument falls within the
1860	1860	definition of both "note" and "draft," a person entitled to
1861	1861	897
1862	1862	898
1863	1863	899
1864	1864	900
1865	1865	901
1866	1866	902
1867	1867	903
1868	1868	904
1869	1869	905
1870	1870	906
1871	1871	907
1872	1872	908
1873	1873	909
1874	1874	910
1875	1875	911
1876	1876	912
1877	1877	913
1878	1878	914
1879	1879	915
1880	1880	916
1881	1881	917
1882	1882	918
1883	1883	919
1884	1884	920
1885	1885	921
1886	1886	922
1887	1887	923
1888	1888	924 SB231 INTRODUCEDSB231 INTRODUCED
1889	1889	Page 34
1890	1890	enforce the instrument may treat it as either.
1891	1891	(f) "Check" means (i) a draft, other than a documentary
1892	1892	draft, payable on demand and drawn on a bank or (ii) a
1893	1893	cashier's check or teller's check. An instrument may be a
1894	1894	check even though it is described on its face by another term,
1895	1895	such as "money order."
1896	1896	(g) "Cashier's check" means a draft with respect to
1897	1897	which the drawer and drawee are the same bank or branches of
1898	1898	the same bank.
1899	1899	(h) "Teller's check" means a draft drawn by a bank (i)
1900	1900	on another bank, or (ii) payable at or through a bank.
1901	1901	(i) "Traveler's check" means an instrument that (i) is
1902	1902	payable on demand, (ii) is drawn on or payable at or through a
1903	1903	bank, (iii) is designated by the term "traveler's check" or by
1904	1904	a substantially similar term, and (iv) requires, as a
1905	1905	condition to payment, a countersignature by a person whose
1906	1906	specimen signature appears on the instrument.
1907	1907	(j) "Certificate of deposit" means an instrument
1908	1908	containing an acknowledgment by a bank that a sum of money has
1909	1909	been received by the bank and a promise by the bank to repay
1910	1910	the sum of money. A certificate of deposit is a note of the
1911	1911	bank."
1912	1912	"§7-3-105. Issue of instrument.
1913	1913	(a) "Issue" means :
1914	1914	(1) the first delivery of an instrument by the maker or
1915	1915	drawer, whether to a holder or nonholder, for the purpose of
1916	1916	giving rights on the instrument to any person .; or
1917	1917	(2) if agreed by the payee, the first transmission by
1918	1918	925
1919	1919	926
1920	1920	927
1921	1921	928
1922	1922	929
1923	1923	930
1924	1924	931
1925	1925	932
1926	1926	933
1927	1927	934
1928	1928	935
1929	1929	936
1930	1930	937
1931	1931	938
1932	1932	939
1933	1933	940
1934	1934	941
1935	1935	942
1936	1936	943
1937	1937	944
1938	1938	945
1939	1939	946
1940	1940	947
1941	1941	948
1942	1942	949
1943	1943	950
1944	1944	951
1945	1945	952 SB231 INTRODUCEDSB231 INTRODUCED
1946	1946	Page 35
1947	1947	the drawer to the payee of an image of an item and information
1948	1948	derived from the item that enables the depository bank to
1949	1949	collect the item by transferring or presenting under federal
1950	1950	law an electronic check.
1951	1951	(b) An unissued instrument, or an unissued incomplete
1952	1952	instrument that is completed, is binding on the maker or
1953	1953	drawer, but nonissuance is a defense. An instrument that is
1954	1954	conditionally issued or is issued for a special purpose is
1955	1955	binding on the maker or drawer, but failure of the condition
1956	1956	or special purpose to be fulfilled is a defense.
1957	1957	(c) "Issuer" applies to issued and unissued instruments
1958	1958	and means a maker or drawer of an instrument."
1959	1959	"§7-3-401. Signature necessary for liability on
1960	1960	instrument.
1961	1961	(a) A person is not liable on an instrument unless (i)
1962	1962	the person signed the instrument, or (ii) the person is
1963	1963	represented by an agent or representative who signed the
1964	1964	instrument and the signature is binding on the represented
1965	1965	person under Section 7-3-402.
1966	1966	(b) A signature may be made (i) manually or by means of
1967	1967	a device or machine, and (ii) by the use of any name,
1968	1968	including a trade or assumed name, or by a word, mark, or
1969	1969	symbol executed or adopted by a person with present intention
1970	1970	to authenticate a writing. "
1971	1971	"§7-3-604. Discharge by cancellation or renunciation.
1972	1972	(a) A person entitled to enforce an instrument, with or
1973	1973	without consideration, may discharge the obligation of a party
1974	1974	to pay the instrument (i) by an intentional voluntary act,
1975	1975	953
1976	1976	954
1977	1977	955
1978	1978	956
1979	1979	957
1980	1980	958
1981	1981	959
1982	1982	960
1983	1983	961
1984	1984	962
1985	1985	963
1986	1986	964
1987	1987	965
1988	1988	966
1989	1989	967
1990	1990	968
1991	1991	969
1992	1992	970
1993	1993	971
1994	1994	972
1995	1995	973
1996	1996	974
1997	1997	975
1998	1998	976
1999	1999	977
2000	2000	978
2001	2001	979
2002	2002	980 SB231 INTRODUCEDSB231 INTRODUCED
2003	2003	Page 36
2004	2004	such as surrender of the instrument to the party, destruction,
2005	2005	mutilation, or cancellation of the instrument, cancellation or
2006	2006	striking out of the party's signature, or the addition of
2007	2007	words to the instrument indicating discharge, or (ii) by
2008	2008	agreeing not to sue or otherwise renouncing rights against the
2009	2009	party by a signed writing record. The obligation of a party to
2010	2010	pay a check is not discharged solely by destruction of the
2011	2011	check in connection with a process in which information is
2012	2012	extracted from the check and an image of the check is made
2013	2013	and, subsequently, the information and image are transmitted
2014	2014	for payment.
2015	2015	(b) Cancellation or striking out of an indorsement
2016	2016	pursuant to subsection (a) does not affect the status and
2017	2017	rights of a party derived from the indorsement."
2018	2018	"§7-4A-103. Payment order - Definitions.
2019	2019	(a) In this article:
2020	2020	(1) "Payment order" means an instruction of a sender to
2021	2021	a receiving bank, transmitted orally , electronically, or in
2022	2022	writing or in a record, to pay, or to cause another bank to
2023	2023	pay, a fixed or determinable amount of money to a beneficiary
2024	2024	if:
2025	2025	(i) the instruction does not state a condition to
2026	2026	payment to the beneficiary other than time of payment,
2027	2027	(ii) the receiving bank is to be reimbursed by debiting
2028	2028	an account of, or otherwise receiving payment from, the
2029	2029	sender, and
2030	2030	(iii) the instruction is transmitted by the sender
2031	2031	directly to the receiving bank or to an agent, funds-transfer
2032	2032	981
2033	2033	982
2034	2034	983
2035	2035	984
2036	2036	985
2037	2037	986
2038	2038	987
2039	2039	988
2040	2040	989
2041	2041	990
2042	2042	991
2043	2043	992
2044	2044	993
2045	2045	994
2046	2046	995
2047	2047	996
2048	2048	997
2049	2049	998
2050	2050	999
2051	2051	1000
2052	2052	1001
2053	2053	1002
2054	2054	1003
2055	2055	1004
2056	2056	1005
2057	2057	1006
2058	2058	1007
2059	2059	1008 SB231 INTRODUCEDSB231 INTRODUCED
2060	2060	Page 37
2061	2061	system, or communication system for transmittal to the
2062	2062	receiving bank.
2063	2063	(2) "Beneficiary" means the person to be paid by the
2064	2064	beneficiary's bank.
2065	2065	(3) "Beneficiary's bank" means the bank identified in a
2066	2066	payment order in which an account of the beneficiary is to be
2067	2067	credited pursuant to the order or which otherwise is to make
2068	2068	payment to the beneficiary if the order does not provide for
2069	2069	payment to an account.
2070	2070	(4) "Receiving bank" means the bank to which the
2071	2071	sender's instruction is addressed.
2072	2072	(5) "Sender" means the person giving the instruction to
2073	2073	the receiving bank.
2074	2074	(b) If an instruction complying with subsection (a)(1)
2075	2075	is to make more than one payment to a beneficiary, the
2076	2076	instruction is a separate payment order with respect to each
2077	2077	payment.
2078	2078	(c) A payment order is issued when it is sent to the
2079	2079	receiving bank."
2080	2080	"§7-4A-201. Security procedure.
2081	2081	"Security procedure" means a procedure established by
2082	2082	agreement of a customer and a receiving bank for the purpose
2083	2083	of (i) verifying that a payment order or communication
2084	2084	amending or cancelling a payment order is that of the
2085	2085	customer, or (ii) detecting error in the transmission or the
2086	2086	content of the payment order or communication. A security
2087	2087	procedure may impose an obligation on the receiving bank or
2088	2088	the customer and may require the use of algorithms or other
2089	2089	1009
2090	2090	1010
2091	2091	1011
2092	2092	1012
2093	2093	1013
2094	2094	1014
2095	2095	1015
2096	2096	1016
2097	2097	1017
2098	2098	1018
2099	2099	1019
2100	2100	1020
2101	2101	1021
2102	2102	1022
2103	2103	1023
2104	2104	1024
2105	2105	1025
2106	2106	1026
2107	2107	1027
2108	2108	1028
2109	2109	1029
2110	2110	1030
2111	2111	1031
2112	2112	1032
2113	2113	1033
2114	2114	1034
2115	2115	1035
2116	2116	1036 SB231 INTRODUCEDSB231 INTRODUCED
2117	2117	Page 38
2118	2118	codes, identifying words , or numbers, symbols, sounds,
2119	2119	biometrics, encryption, callback procedures, or similar
2120	2120	security devices. Comparison of a signature on a payment order
2121	2121	or communication with an authorized specimen signature of the
2122	2122	customer or requiring a payment order to be sent from a known
2123	2123	email address, IP address, or telephone number is not by
2124	2124	itself a security procedure."
2125	2125	"§7-4A-202. Authorized and verified payment orders.
2126	2126	(a) A payment order received by the receiving bank is
2127	2127	the authorized order of the person identified as sender if
2128	2128	that person authorized the order or is otherwise bound by it
2129	2129	under the law of agency.
2130	2130	(b) If a bank and its customer have agreed that the
2131	2131	authenticity of payment orders issued to the bank in the name
2132	2132	of the customer as sender will be verified pursuant to a
2133	2133	security procedure, a payment order received by the receiving
2134	2134	bank is effective as the order of the customer, whether or not
2135	2135	authorized, if (i) the security procedure is a commercially
2136	2136	reasonable method of providing security against unauthorized
2137	2137	payment orders, and (ii) the bank proves that it accepted the
2138	2138	payment order in good faith and in compliance with the bank's
2139	2139	obligations under the security procedure and any written
2140	2140	agreement or instruction of the customer , evidenced by a
2141	2141	record, restricting acceptance of payment orders issued in the
2142	2142	name of the customer. The bank is not required to follow an
2143	2143	instruction that violates a written an agreement with the
2144	2144	customer, evidenced by a record, with the customer or notice
2145	2145	of which is not received at a time and in a manner affording
2146	2146	1037
2147	2147	1038
2148	2148	1039
2149	2149	1040
2150	2150	1041
2151	2151	1042
2152	2152	1043
2153	2153	1044
2154	2154	1045
2155	2155	1046
2156	2156	1047
2157	2157	1048
2158	2158	1049
2159	2159	1050
2160	2160	1051
2161	2161	1052
2162	2162	1053
2163	2163	1054
2164	2164	1055
2165	2165	1056
2166	2166	1057
2167	2167	1058
2168	2168	1059
2169	2169	1060
2170	2170	1061
2171	2171	1062
2172	2172	1063
2173	2173	1064 SB231 INTRODUCEDSB231 INTRODUCED
2174	2174	Page 39
2175	2175	the bank a reasonable opportunity to act on it before the
2176	2176	payment order is accepted.
2177	2177	(c) Commercial reasonableness of a security procedure
2178	2178	is a question of law to be determined by considering the
2179	2179	wishes of the customer expressed to the bank, the
2180	2180	circumstances of the customer known to the bank, including the
2181	2181	size, type, and frequency of payment orders normally issued by
2182	2182	the customer to the bank, alternative security procedures
2183	2183	offered to the customer, and security procedures in general
2184	2184	use by customers and receiving banks similarly situated. A
2185	2185	security procedure is deemed to be commercially reasonable if
2186	2186	(i) the security procedure was chosen by the customer after
2187	2187	the bank offered, and the customer refused, a security
2188	2188	procedure that was commercially reasonable for that customer,
2189	2189	and (ii) the customer expressly agreed in writing a record to
2190	2190	be bound by any payment order, whether or not authorized,
2191	2191	issued in its name, and accepted by the bank in compliance
2192	2192	with the bank's obligations under the security procedure
2193	2193	chosen by the customer.
2194	2194	(d) The term "sender" in this article includes the
2195	2195	customer in whose name a payment order is issued if the order
2196	2196	is the authorized order of the customer under subsection (a),
2197	2197	or it is effective as the order of the customer under
2198	2198	subsection (b).
2199	2199	(e) This section applies to amendments and
2200	2200	cancellations of payment orders to the same extent it applies
2201	2201	to payment orders.
2202	2202	(f) Except as provided in this section and in Section
2203	2203	1065
2204	2204	1066
2205	2205	1067
2206	2206	1068
2207	2207	1069
2208	2208	1070
2209	2209	1071
2210	2210	1072
2211	2211	1073
2212	2212	1074
2213	2213	1075
2214	2214	1076
2215	2215	1077
2216	2216	1078
2217	2217	1079
2218	2218	1080
2219	2219	1081
2220	2220	1082
2221	2221	1083
2222	2222	1084
2223	2223	1085
2224	2224	1086
2225	2225	1087
2226	2226	1088
2227	2227	1089
2228	2228	1090
2229	2229	1091
2230	2230	1092 SB231 INTRODUCEDSB231 INTRODUCED
2231	2231	Page 40
2232	2232	7-4A-203(a)(1), rights and obligations arising under this
2233	2233	section or Section 7-4A-203 may not be varied by agreement."
2234	2234	"§7-4A-203. Unenforceability of certain verified
2235	2235	payment orders.
2236	2236	(a) If an accepted payment order is not, under Section
2237	2237	7-4A-202(a), an authorized order of a customer identified as
2238	2238	sender, but is effective as an order of the customer pursuant
2239	2239	to Section 7-4A-202(b), the following rules apply:
2240	2240	(1) By express written agreement evidenced by a record ,
2241	2241	the receiving bank may limit the extent to which it is
2242	2242	entitled to enforce or retain payment of the payment order.
2243	2243	(2) The receiving bank is not entitled to enforce or
2244	2244	retain payment of the payment order if the customer proves
2245	2245	that the order was not caused, directly or indirectly, by a
2246	2246	person (i) entrusted at any time with duties to act for the
2247	2247	customer with respect to payment orders or the security
2248	2248	procedure, or (ii) who obtained access to transmitting
2249	2249	facilities of the customer or who obtained, from a source
2250	2250	controlled by the customer and without authority of the
2251	2251	receiving bank, information facilitating breach of the
2252	2252	security procedure, regardless of how the information was
2253	2253	obtained or whether the customer was at fault. Information
2254	2254	includes any access device, computer software, or the like.
2255	2255	(b) This section applies to amendments of payment
2256	2256	orders to the same extent it applies to payment orders."
2257	2257	"§7-4A-207. Misdescription of beneficiary.
2258	2258	(a) Subject to subsection (b), if, in a payment order
2259	2259	received by the beneficiary's bank, the name, bank account
2260	2260	1093
2261	2261	1094
2262	2262	1095
2263	2263	1096
2264	2264	1097
2265	2265	1098
2266	2266	1099
2267	2267	1100
2268	2268	1101
2269	2269	1102
2270	2270	1103
2271	2271	1104
2272	2272	1105
2273	2273	1106
2274	2274	1107
2275	2275	1108
2276	2276	1109
2277	2277	1110
2278	2278	1111
2279	2279	1112
2280	2280	1113
2281	2281	1114
2282	2282	1115
2283	2283	1116
2284	2284	1117
2285	2285	1118
2286	2286	1119
2287	2287	1120 SB231 INTRODUCEDSB231 INTRODUCED
2288	2288	Page 41
2289	2289	number, or other identification of the beneficiary refers to a
2290	2290	nonexistent or unidentifiable person or account, no person has
2291	2291	rights as a beneficiary of the order and acceptance of the
2292	2292	order cannot occur.
2293	2293	(b) If a payment order received by the beneficiary's
2294	2294	bank identifies the beneficiary both by name and by an
2295	2295	identifying or bank account number and the name and number
2296	2296	identify different persons, the following rules apply:
2297	2297	(1) Except as otherwise provided in subsection (c), if
2298	2298	the beneficiary's bank does not know that the name and number
2299	2299	refer to different persons, it may rely on the number as the
2300	2300	proper identification of the beneficiary of the order. The
2301	2301	beneficiary's bank need not determine whether the name and
2302	2302	number refer to the same person.
2303	2303	(2) If the beneficiary's bank pays the person
2304	2304	identified by name or knows that the name and number identify
2305	2305	different persons, no person has rights as beneficiary except
2306	2306	the person paid by the beneficiary's bank if that person was
2307	2307	entitled to receive payment from the originator of the funds
2308	2308	transfer. If no person has rights as beneficiary, acceptance
2309	2309	of the order cannot occur.
2310	2310	(c) If (i) a payment order described in subsection (b)
2311	2311	is accepted, (ii) the originator's payment order described the
2312	2312	beneficiary inconsistently by name and number, and (iii) the
2313	2313	beneficiary's bank pays the person identified by number as
2314	2314	permitted by subsection (b)(1), the following rules apply:
2315	2315	(1) If the originator is a bank, the originator is
2316	2316	obliged to pay its order.
2317	2317	1121
2318	2318	1122
2319	2319	1123
2320	2320	1124
2321	2321	1125
2322	2322	1126
2323	2323	1127
2324	2324	1128
2325	2325	1129
2326	2326	1130
2327	2327	1131
2328	2328	1132
2329	2329	1133
2330	2330	1134
2331	2331	1135
2332	2332	1136
2333	2333	1137
2334	2334	1138
2335	2335	1139
2336	2336	1140
2337	2337	1141
2338	2338	1142
2339	2339	1143
2340	2340	1144
2341	2341	1145
2342	2342	1146
2343	2343	1147
2344	2344	1148 SB231 INTRODUCEDSB231 INTRODUCED
2345	2345	Page 42
2346	2346	(2) If the originator is not a bank and proves that the
2347	2347	person identified by number was not entitled to receive
2348	2348	payment from the originator, the originator is not obliged to
2349	2349	pay its order unless the originator's bank proves that the
2350	2350	originator, before acceptance of the originator's order, had
2351	2351	notice that payment of a payment order issued by the
2352	2352	originator might be made by the beneficiary's bank on the
2353	2353	basis of an identifying or bank account number even if it
2354	2354	identifies a person different from the named beneficiary.
2355	2355	Proof of notice may be made by any admissible evidence. The
2356	2356	originator's bank satisfies the burden of proof if it proves
2357	2357	that the originator, before the payment order was accepted,
2358	2358	signed a writing record stating the information to which the
2359	2359	notice relates.
2360	2360	(d) In a case governed by subsection (b)(1), if the
2361	2361	beneficiary's bank rightfully pays the person identified by
2362	2362	number and that person was not entitled to receive payment
2363	2363	from the originator, the amount paid may be recovered from
2364	2364	that person to the extent allowed by the law governing mistake
2365	2365	and restitution as follows:
2366	2366	(1) If the originator is obliged to pay its payment
2367	2367	order as stated in subsection (c), the originator has the
2368	2368	right to recover.
2369	2369	(2) If the originator is not a bank and is not obliged
2370	2370	to pay its payment order, the originator's bank has the right
2371	2371	to recover."
2372	2372	"§7-4A-208. Misdescription of intermediary bank or
2373	2373	beneficiary's bank.
2374	2374	1149
2375	2375	1150
2376	2376	1151
2377	2377	1152
2378	2378	1153
2379	2379	1154
2380	2380	1155
2381	2381	1156
2382	2382	1157
2383	2383	1158
2384	2384	1159
2385	2385	1160
2386	2386	1161
2387	2387	1162
2388	2388	1163
2389	2389	1164
2390	2390	1165
2391	2391	1166
2392	2392	1167
2393	2393	1168
2394	2394	1169
2395	2395	1170
2396	2396	1171
2397	2397	1172
2398	2398	1173
2399	2399	1174
2400	2400	1175
2401	2401	1176 SB231 INTRODUCEDSB231 INTRODUCED
2402	2402	Page 43
2403	2403	(a) This subsection applies to a payment order
2404	2404	identifying an intermediary bank or the beneficiary's bank
2405	2405	only by an identifying number.
2406	2406	(1) The receiving bank may rely on the number as the
2407	2407	proper identification of the intermediary or beneficiary's
2408	2408	bank and need not determine whether the number identifies a
2409	2409	bank.
2410	2410	(2) The sender is obliged to compensate the receiving
2411	2411	bank for any loss and expenses incurred by the receiving bank
2412	2412	as a result of its reliance on the number in executing or
2413	2413	attempting to execute the order.
2414	2414	(b) This subsection applies to a payment order
2415	2415	identifying an intermediary bank or the beneficiary's bank
2416	2416	both by name and an identifying number if the name and number
2417	2417	identify different persons.
2418	2418	(1) If the sender is a bank, the receiving bank may
2419	2419	rely on the number as the proper identification of the
2420	2420	intermediary or beneficiary's bank if the receiving bank, when
2421	2421	it executes the sender's order, does not know that the name
2422	2422	and number identify different persons. The receiving bank need
2423	2423	not determine whether the name and number refer to the same
2424	2424	person or whether the number refers to a bank. The sender is
2425	2425	obliged to compensate the receiving bank for any loss and
2426	2426	expenses incurred by the receiving bank as a result of its
2427	2427	reliance on the number in executing or attempting to execute
2428	2428	the order.
2429	2429	(2) If the sender is not a bank and the receiving bank
2430	2430	proves that the sender, before the payment order was accepted,
2431	2431	1177
2432	2432	1178
2433	2433	1179
2434	2434	1180
2435	2435	1181
2436	2436	1182
2437	2437	1183
2438	2438	1184
2439	2439	1185
2440	2440	1186
2441	2441	1187
2442	2442	1188
2443	2443	1189
2444	2444	1190
2445	2445	1191
2446	2446	1192
2447	2447	1193
2448	2448	1194
2449	2449	1195
2450	2450	1196
2451	2451	1197
2452	2452	1198
2453	2453	1199
2454	2454	1200
2455	2455	1201
2456	2456	1202
2457	2457	1203
2458	2458	1204 SB231 INTRODUCEDSB231 INTRODUCED
2459	2459	Page 44
2460	2460	had notice that the receiving bank might rely on the number as
2461	2461	the proper identification of the intermediary or beneficiary's
2462	2462	bank even if it identifies a person different from the bank
2463	2463	identified by name, the rights and obligations of the sender
2464	2464	and the receiving bank are governed by subsection (b)(1), as
2465	2465	though the sender were a bank. Proof of notice may be made by
2466	2466	any admissible evidence. The receiving bank satisfies the
2467	2467	burden of proof if it proves that the sender, before the
2468	2468	payment order was accepted, signed a writing record stating
2469	2469	the information to which the notice relates.
2470	2470	(3) Regardless of whether the sender is a bank, the
2471	2471	receiving bank may rely on the name as the proper
2472	2472	identification of the intermediary or beneficiary's bank if
2473	2473	the receiving bank, at the time it executes the sender's
2474	2474	order, does not know that the name and number identify
2475	2475	different persons. The receiving bank need not determine
2476	2476	whether the name and number refer to the same person.
2477	2477	(4) If the receiving bank knows that the name and
2478	2478	number identify different persons, reliance on either the name
2479	2479	or the number in executing the sender's payment order is a
2480	2480	breach of the obligation stated in Section 7-4A-302(a)(1)."
2481	2481	"§7-4A-210. Rejection of payment order.
2482	2482	(a) A payment order is rejected by the receiving bank
2483	2483	by a notice of rejection transmitted to the sender orally ,
2484	2484	electronically, or in writing a record. A notice of rejection
2485	2485	need not use any particular words and is sufficient if it
2486	2486	indicates that the receiving bank is rejecting the order or
2487	2487	will not execute or pay the order. Rejection is effective when
2488	2488	1205
2489	2489	1206
2490	2490	1207
2491	2491	1208
2492	2492	1209
2493	2493	1210
2494	2494	1211
2495	2495	1212
2496	2496	1213
2497	2497	1214
2498	2498	1215
2499	2499	1216
2500	2500	1217
2501	2501	1218
2502	2502	1219
2503	2503	1220
2504	2504	1221
2505	2505	1222
2506	2506	1223
2507	2507	1224
2508	2508	1225
2509	2509	1226
2510	2510	1227
2511	2511	1228
2512	2512	1229
2513	2513	1230
2514	2514	1231
2515	2515	1232 SB231 INTRODUCEDSB231 INTRODUCED
2516	2516	Page 45
2517	2517	the notice is given if transmission is by a means that is
2518	2518	reasonable in the circumstances. If notice of rejection is
2519	2519	given by a means that is not reasonable, rejection is
2520	2520	effective when the notice is received. If an agreement of the
2521	2521	sender and receiving bank establishes the means to be used to
2522	2522	reject a payment order, (i) any means complying with the
2523	2523	agreement is reasonable, and (ii) any means not complying is
2524	2524	not reasonable unless no significant delay in receipt of the
2525	2525	notice resulted from the use of the noncomplying means.
2526	2526	(b) This subsection applies if a receiving bank other
2527	2527	than the beneficiary's bank fails to execute a payment order
2528	2528	despite the existence on the execution date of a withdrawable
2529	2529	credit balance in an authorized account of the sender
2530	2530	sufficient to cover the order. If the sender does not receive
2531	2531	notice of rejection of the order on the execution date and the
2532	2532	authorized account of the sender does not bear interest, the
2533	2533	bank is obliged to pay interest to the sender on the amount of
2534	2534	the order for the number of days elapsing after the execution
2535	2535	date to the earlier of the day the order is canceled pursuant
2536	2536	to Section 7-4A-211(d) or the day the sender receives notice
2537	2537	or learns that the order was not executed, counting the final
2538	2538	day of the period as an elapsed day. If the withdrawable
2539	2539	credit balance during that period falls below the amount of
2540	2540	the order, the amount of interest is reduced accordingly.
2541	2541	(c) If a receiving bank suspends payments, all
2542	2542	unaccepted payment orders issued to it are deemed rejected at
2543	2543	the time the bank suspends payments.
2544	2544	(d) Acceptance of a payment order precludes a later
2545	2545	1233
2546	2546	1234
2547	2547	1235
2548	2548	1236
2549	2549	1237
2550	2550	1238
2551	2551	1239
2552	2552	1240
2553	2553	1241
2554	2554	1242
2555	2555	1243
2556	2556	1244
2557	2557	1245
2558	2558	1246
2559	2559	1247
2560	2560	1248
2561	2561	1249
2562	2562	1250
2563	2563	1251
2564	2564	1252
2565	2565	1253
2566	2566	1254
2567	2567	1255
2568	2568	1256
2569	2569	1257
2570	2570	1258
2571	2571	1259
2572	2572	1260 SB231 INTRODUCEDSB231 INTRODUCED
2573	2573	Page 46
2574	2574	rejection of the order. Rejection of a payment order precludes
2575	2575	a later acceptance of the order."
2576	2576	"§7-4A-211. Cancellation and amendment of payment
2577	2577	order.
2578	2578	(a) A communication of the sender of a payment order
2579	2579	cancelling or amending the order may be transmitted to the
2580	2580	receiving bank orally , electronically, or in writing a record.
2581	2581	If a security procedure is in effect between the sender and
2582	2582	the receiving bank, the communication is not effective to
2583	2583	cancel or amend the order unless the communication is verified
2584	2584	pursuant to the security procedure or the bank agrees to the
2585	2585	cancellation or amendment.
2586	2586	(b) Subject to subsection (a), a communication by the
2587	2587	sender cancelling or amending a payment order is effective to
2588	2588	cancel or amend the order if notice of the communication is
2589	2589	received at a time and in a manner affording the receiving
2590	2590	bank a reasonable opportunity to act on the communication
2591	2591	before the bank accepts the payment order.
2592	2592	(c) After a payment order has been accepted,
2593	2593	cancellation or amendment of the order is not effective unless
2594	2594	the receiving bank agrees or a funds-transfer system rule
2595	2595	allows cancellation or amendment without agreement of the
2596	2596	bank.
2597	2597	(1) With respect to a payment order accepted by a
2598	2598	receiving bank other than the beneficiary's bank, cancellation
2599	2599	or amendment is not effective unless a conforming cancellation
2600	2600	or amendment of the payment order issued by the receiving bank
2601	2601	is also made.
2602	2602	1261
2603	2603	1262
2604	2604	1263
2605	2605	1264
2606	2606	1265
2607	2607	1266
2608	2608	1267
2609	2609	1268
2610	2610	1269
2611	2611	1270
2612	2612	1271
2613	2613	1272
2614	2614	1273
2615	2615	1274
2616	2616	1275
2617	2617	1276
2618	2618	1277
2619	2619	1278
2620	2620	1279
2621	2621	1280
2622	2622	1281
2623	2623	1282
2624	2624	1283
2625	2625	1284
2626	2626	1285
2627	2627	1286
2628	2628	1287
2629	2629	1288 SB231 INTRODUCEDSB231 INTRODUCED
2630	2630	Page 47
2631	2631	(2) With respect to a payment order accepted by the
2632	2632	beneficiary's bank, cancellation or amendment is not effective
2633	2633	unless the order was issued in execution of an unauthorized
2634	2634	payment order, or because of a mistake by a sender in the
2635	2635	funds transfer which resulted in the issuance of a payment
2636	2636	order (i) that is a duplicate of a payment order previously
2637	2637	issued by the sender, (ii) that orders payment to a
2638	2638	beneficiary not entitled to receive payment from the
2639	2639	originator, or (iii) that orders payment in an amount greater
2640	2640	than the amount the beneficiary was entitled to receive from
2641	2641	the originator. If the payment order is canceled or amended,
2642	2642	the beneficiary's bank is entitled to recover from the
2643	2643	beneficiary any amount paid to the beneficiary to the extent
2644	2644	allowed by the law governing mistake and restitution.
2645	2645	(d) An unaccepted payment order is canceled by
2646	2646	operation of law at the close of the fifth funds-transfer
2647	2647	business day of the receiving bank after the execution date or
2648	2648	payment date of the order.
2649	2649	(e) A canceled payment order cannot be accepted. If an
2650	2650	accepted payment order is canceled, the acceptance is
2651	2651	nullified and no person has any right or obligation based on
2652	2652	the acceptance. Amendment of a payment order is deemed to be
2653	2653	cancellation of the original order at the time of amendment
2654	2654	and issue of a new payment order in the amended form at the
2655	2655	same time.
2656	2656	(f) Unless otherwise provided in an agreement of the
2657	2657	parties or in a funds-transfer system rule, if the receiving
2658	2658	bank, after accepting a payment order agrees to cancellation
2659	2659	1289
2660	2660	1290
2661	2661	1291
2662	2662	1292
2663	2663	1293
2664	2664	1294
2665	2665	1295
2666	2666	1296
2667	2667	1297
2668	2668	1298
2669	2669	1299
2670	2670	1300
2671	2671	1301
2672	2672	1302
2673	2673	1303
2674	2674	1304
2675	2675	1305
2676	2676	1306
2677	2677	1307
2678	2678	1308
2679	2679	1309
2680	2680	1310
2681	2681	1311
2682	2682	1312
2683	2683	1313
2684	2684	1314
2685	2685	1315
2686	2686	1316 SB231 INTRODUCEDSB231 INTRODUCED
2687	2687	Page 48
2688	2688	or amendment of the order by the sender or is bound by a
2689	2689	funds-transfer system rule allowing cancellation or amendment
2690	2690	without the bank's agreement, the sender, whether or not
2691	2691	cancellation or amendment is effective, is liable to the bank
2692	2692	for any loss and expenses, including reasonable attorney's
2693	2693	fees, incurred by the bank as a result of the cancellation or
2694	2694	amendment or attempted cancellation or amendment.
2695	2695	(g) A payment order is not revoked by the death or
2696	2696	legal incapacity of the sender unless the receiving bank knows
2697	2697	of the death or of an adjudication of incapacity by a court of
2698	2698	competent jurisdiction and has reasonable opportunity to act
2699	2699	before acceptance of the order.
2700	2700	(h) A funds-transfer system rule is not effective to
2701	2701	the extent it conflicts with subsection (c)(2)."
2702	2702	"§7-4A-305. Liability for late or improper execution or
2703	2703	failure to execute payment order.
2704	2704	(a) If a funds transfer is completed but execution of a
2705	2705	payment order by the receiving bank in breach of Section
2706	2706	7-4A-302 results in delay in payment to the beneficiary, the
2707	2707	bank is obliged to pay interest to either the originator or
2708	2708	the beneficiary of the funds transfer for the period of delay
2709	2709	caused by the improper execution. Except as provided in
2710	2710	subsection (c), additional damages are not recoverable.
2711	2711	(b) If execution of a payment order by a receiving bank
2712	2712	in breach of Section 7-4A-302 results in (i) noncompletion of
2713	2713	the funds transfer, (ii) failure to use an intermediary bank
2714	2714	designated by the originator, or (iii) issuance of a payment
2715	2715	order that does not comply with the terms of the payment order
2716	2716	1317
2717	2717	1318
2718	2718	1319
2719	2719	1320
2720	2720	1321
2721	2721	1322
2722	2722	1323
2723	2723	1324
2724	2724	1325
2725	2725	1326
2726	2726	1327
2727	2727	1328
2728	2728	1329
2729	2729	1330
2730	2730	1331
2731	2731	1332
2732	2732	1333
2733	2733	1334
2734	2734	1335
2735	2735	1336
2736	2736	1337
2737	2737	1338
2738	2738	1339
2739	2739	1340
2740	2740	1341
2741	2741	1342
2742	2742	1343
2743	2743	1344 SB231 INTRODUCEDSB231 INTRODUCED
2744	2744	Page 49
2745	2745	of the originator, the bank is liable to the originator for
2746	2746	its expenses in the funds transfer and for incidental expenses
2747	2747	and interest losses, to the extent not covered by subsection
2748	2748	(a), resulting from the improper execution. Except as provided
2749	2749	in subsection (c), additional damages are not recoverable.
2750	2750	(c) In addition to the amounts payable under
2751	2751	subsections (a) and (b), damages, including consequential
2752	2752	damages, are recoverable to the extent provided in an express
2753	2753	written agreement of the receiving bank , evidenced by a
2754	2754	record.
2755	2755	(d) If a receiving bank fails to execute a payment
2756	2756	order it was obliged by express agreement to execute, the
2757	2757	receiving bank is liable to the sender for its expenses in the
2758	2758	transaction and for incidental expenses and interest losses
2759	2759	resulting from the failure to execute. Additional damages,
2760	2760	including consequential damages, are recoverable to the extent
2761	2761	provided in an express written agreement of the receiving
2762	2762	bank, evidenced by a record, but are not otherwise
2763	2763	recoverable.
2764	2764	(e) Reasonable attorney's fees are recoverable if
2765	2765	demand for compensation under subsection (a) or (b) is made
2766	2766	and refused before an action is brought on the claim. If a
2767	2767	claim is made for breach of an agreement under subsection (d)
2768	2768	and the agreement does not provide for damages, reasonable
2769	2769	attorney's fees are recoverable if demand for compensation
2770	2770	under subsection (d) is made and refused before an action is
2771	2771	brought on the claim.
2772	2772	(f) Except as stated in this section, the liability of a
2773	2773	1345
2774	2774	1346
2775	2775	1347
2776	2776	1348
2777	2777	1349
2778	2778	1350
2779	2779	1351
2780	2780	1352
2781	2781	1353
2782	2782	1354
2783	2783	1355
2784	2784	1356
2785	2785	1357
2786	2786	1358
2787	2787	1359
2788	2788	1360
2789	2789	1361
2790	2790	1362
2791	2791	1363
2792	2792	1364
2793	2793	1365
2794	2794	1366
2795	2795	1367
2796	2796	1368
2797	2797	1369
2798	2798	1370
2799	2799	1371
2800	2800	1372 SB231 INTRODUCEDSB231 INTRODUCED
2801	2801	Page 50
2802	2802	receiving bank under subsections (a) and (b) may not be varied
2803	2803	by agreement."
2804	2804	"§7-5-104. Formal requirements.
2805	2805	A letter of credit, confirmation, advice, transfer,
2806	2806	amendment, or cancellation may be issued in any form that is a
2807	2807	signed record and is authenticated (i) by a signature or (ii)
2808	2808	in accordance with the agreement of the parties or the
2809	2809	standard practice referred to in Section 7-5-108(e) ."
2810	2810	"§7-5-116. Choice of law and forum.
2811	2811	(a) The liability of an issuer, nominated person, or
2812	2812	adviser for action or omission is governed by the law of the
2813	2813	jurisdiction chosen by an agreement in the form of a record
2814	2814	signed or otherwise authenticated by the affected parties in
2815	2815	the manner provided in Section 7-5-104 or by a provision in
2816	2816	the person's letter of credit, confirmation, or other
2817	2817	undertaking. The jurisdiction whose law is chosen need not
2818	2818	bear any relation to the transaction.
2819	2819	(b) Unless subsection (a) applies, the liability of an
2820	2820	issuer, nominated person, or adviser for action or omission is
2821	2821	governed by the law of the jurisdiction in which the person is
2822	2822	located. The person is considered to be located at the address
2823	2823	indicated in the person's undertaking. If more than one
2824	2824	address is indicated, the person is considered to be located
2825	2825	at the address from which the person's undertaking was issued.
2826	2826	(c) For the purpose of jurisdiction, choice of law, and
2827	2827	recognition of interbranch letters of credit, but not
2828	2828	enforcement of a judgment, all branches of a bank are
2829	2829	considered separate juridical entities and a bank is
2830	2830	1373
2831	2831	1374
2832	2832	1375
2833	2833	1376
2834	2834	1377
2835	2835	1378
2836	2836	1379
2837	2837	1380
2838	2838	1381
2839	2839	1382
2840	2840	1383
2841	2841	1384
2842	2842	1385
2843	2843	1386
2844	2844	1387
2845	2845	1388
2846	2846	1389
2847	2847	1390
2848	2848	1391
2849	2849	1392
2850	2850	1393
2851	2851	1394
2852	2852	1395
2853	2853	1396
2854	2854	1397
2855	2855	1398
2856	2856	1399
2857	2857	1400 SB231 INTRODUCEDSB231 INTRODUCED
2858	2858	Page 51
2859	2859	considered to be located at the place where its relevant
2860	2860	branch is considered to be located under this subsection (d).
2861	2861	(d) A branch of a bank is considered to be located at
2862	2862	the address indicated in the branch's undertaking. If more
2863	2863	than one address is indicated, the branch is considered to be
2864	2864	located at the address from which the undertaking was issued.
2865	2865	(c)(e) Except as otherwise provided in this subsection,
2866	2866	the liability of an issuer, nominated person, or adviser is
2867	2867	governed by any rules of custom or practice, such as the
2868	2868	Uniform Customs and Practice for Documentary Credits, to which
2869	2869	the letter of credit, confirmation, or other undertaking is
2870	2870	expressly made subject. If (i) this article would govern the
2871	2871	liability of an issuer, nominated person, or adviser under
2872	2872	subsection (a) or (b), (ii) the relevant undertaking
2873	2873	incorporates rules of custom or practice, and (iii) there is
2874	2874	conflict between this article and those rules as applied to
2875	2875	that undertaking, those rules govern except to the extent of
2876	2876	any conflict with the nonvariable provisions specified in
2877	2877	Section 7-5-103(c).
2878	2878	(d)(f) If there is conflict between this article and
2879	2879	Article 3, 4, 4A, or 9, this article governs.
2880	2880	(e)(g) The forum for settling disputes arising out of
2881	2881	an undertaking within this article may be chosen in the manner
2882	2882	and with the binding effect that governing law may be chosen
2883	2883	in accordance with subsection (a)."
2884	2884	"§7-7-102. Definitions and index of definitions.
2885	2885	(a) In this article, unless the context otherwise
2886	2886	requires:
2887	2887	1401
2888	2888	1402
2889	2889	1403
2890	2890	1404
2891	2891	1405
2892	2892	1406
2893	2893	1407
2894	2894	1408
2895	2895	1409
2896	2896	1410
2897	2897	1411
2898	2898	1412
2899	2899	1413
2900	2900	1414
2901	2901	1415
2902	2902	1416
2903	2903	1417
2904	2904	1418
2905	2905	1419
2906	2906	1420
2907	2907	1421
2908	2908	1422
2909	2909	1423
2910	2910	1424
2911	2911	1425
2912	2912	1426
2913	2913	1427
2914	2914	1428 SB231 INTRODUCEDSB231 INTRODUCED
2915	2915	Page 52
2916	2916	(1) "Bailee" means a person that by a warehouse
2917	2917	receipt, bill of lading, or other document of title
2918	2918	acknowledges possession of goods and contracts to deliver
2919	2919	them.
2920	2920	(2) A "carrier" means a person that issues a bill of
2921	2921	lading.
2922	2922	(3) "Consignee" means a person named in a bill of
2923	2923	lading to which or to whose order the bill promises delivery.
2924	2924	(4) "Consignor" means a person named in a bill of
2925	2925	lading as the person from which the goods have been received
2926	2926	for shipment.
2927	2927	(5) "Delivery order" means a record that contains an
2928	2928	order to deliver goods directed to a warehouse, carrier, or
2929	2929	other person that in the ordinary course of business issues
2930	2930	warehouse receipts or bills of lading.
2931	2931	(6) "Good faith" means honesty in fact in the conduct
2932	2932	or transaction concerned.
2933	2933	(7) "Goods" means all things that are treated as
2934	2934	movable for the purposes of a contract for storage or
2935	2935	transportation.
2936	2936	(8) "Issuer" means a bailee that issues a document of
2937	2937	title or, in the case of an unaccepted delivery order, the
2938	2938	person that orders the possessor of goods to deliver. The term
2939	2939	includes a person for which an agent or employee purports to
2940	2940	act in issuing a document if the agent or employee has real or
2941	2941	apparent authority to issue documents, even if the issuer did
2942	2942	not receive any goods, the goods were misdescribed, or in any
2943	2943	other respect the agent or employee violated the issuer's
2944	2944	1429
2945	2945	1430
2946	2946	1431
2947	2947	1432
2948	2948	1433
2949	2949	1434
2950	2950	1435
2951	2951	1436
2952	2952	1437
2953	2953	1438
2954	2954	1439
2955	2955	1440
2956	2956	1441
2957	2957	1442
2958	2958	1443
2959	2959	1444
2960	2960	1445
2961	2961	1446
2962	2962	1447
2963	2963	1448
2964	2964	1449
2965	2965	1450
2966	2966	1451
2967	2967	1452
2968	2968	1453
2969	2969	1454
2970	2970	1455
2971	2971	1456 SB231 INTRODUCEDSB231 INTRODUCED
2972	2972	Page 53
2973	2973	instructions.
2974	2974	(9) "Person entitled under the document" means the
2975	2975	holder, in the case of a negotiable document of title, or the
2976	2976	person to which delivery of the goods is to be made by the
2977	2977	terms of, or pursuant to instructions in a record under, a
2978	2978	nonnegotiable document of title.
2979	2979	(10) "Record" means information that is inscribed on a
2980	2980	tangible medium or that is stored in an electronic or other
2981	2981	medium and is retrievable in perceivable form. [Reserved].
2982	2982	(11) "Sign" means, with present intent to authenticate
2983	2983	or adopt a record:
2984	2984	(A) To execute or adopt a tangible symbol; or
2985	2985	(B) To attach to or logically associate with the record
2986	2986	an electronic sound, symbol, or process. [Reserved].
2987	2987	(12) "Shipper" means a person that enters into a
2988	2988	contract of transportation with a carrier.
2989	2989	(13) "Warehouse" means a person engaged in the business
2990	2990	of storing goods for hire.
2991	2991	(b) Definitions in other articles applying to this
2992	2992	article and the sections in which they appear are:
2993	2993	(1) "Contract for sale," Section 7-2-106.
2994	2994	(2) "Lessee in ordinary course," Section 7-2A-103.
2995	2995	(3) "Receipt" of goods, Section 7-2-103.
2996	2996	(c) In addition, Article 1 contains general definitions
2997	2997	and principles of construction and interpretation applicable
2998	2998	throughout this article."
2999	2999	"§7-7-106. Control of electronic document of title.
3000	3000	(a) A person has control of an electronic document of
3001	3001	1457
3002	3002	1458
3003	3003	1459
3004	3004	1460
3005	3005	1461
3006	3006	1462
3007	3007	1463
3008	3008	1464
3009	3009	1465
3010	3010	1466
3011	3011	1467
3012	3012	1468
3013	3013	1469
3014	3014	1470
3015	3015	1471
3016	3016	1472
3017	3017	1473
3018	3018	1474
3019	3019	1475
3020	3020	1476
3021	3021	1477
3022	3022	1478
3023	3023	1479
3024	3024	1480
3025	3025	1481
3026	3026	1482
3027	3027	1483
3028	3028	1484 SB231 INTRODUCEDSB231 INTRODUCED
3029	3029	Page 54
3030	3030	title if a system employed for evidencing the transfer of
3031	3031	interests in the electronic document reliably establishes that
3032	3032	person as the person to which the electronic document was
3033	3033	issued or transferred.
3034	3034	(b) A system satisfies subsection (a), and a person is
3035	3035	deemed to have has control of an electronic document of title,
3036	3036	if the document is created, stored, and assigned transferred
3037	3037	in such a manner that:
3038	3038	(1) Aa single authoritative copy of the document exists
3039	3039	which is unique, identifiable, and, except as otherwise
3040	3040	provided in subdivisions (4), (5), and (6), unalterable;
3041	3041	(2) Thethe authoritative copy identifies the person
3042	3042	asserting control as:
3043	3043	a. Thethe person to which the document was issued; or
3044	3044	b. Ifif the authoritative copy indicates that the
3045	3045	document has been transferred, the person to which the
3046	3046	document was most recently transferred;
3047	3047	(3) Thethe authoritative copy is communicated to and
3048	3048	maintained by the person asserting control or its designated
3049	3049	custodian;
3050	3050	(4) Copiescopies or amendments that add or change an
3051	3051	identified assigneetransferee of the authoritative copy can be
3052	3052	made only with the consent of the person asserting control;
3053	3053	(5) Eacheach copy of the authoritative copy and any
3054	3054	copy of a copy is readily identifiable as a copy that is not
3055	3055	the authoritative copy; and
3056	3056	(6) Anyany amendment of the authoritative copy is
3057	3057	readily identifiable as authorized or unauthorized.
3058	3058	1485
3059	3059	1486
3060	3060	1487
3061	3061	1488
3062	3062	1489
3063	3063	1490
3064	3064	1491
3065	3065	1492
3066	3066	1493
3067	3067	1494
3068	3068	1495
3069	3069	1496
3070	3070	1497
3071	3071	1498
3072	3072	1499
3073	3073	1500
3074	3074	1501
3075	3075	1502
3076	3076	1503
3077	3077	1504
3078	3078	1505
3079	3079	1506
3080	3080	1507
3081	3081	1508
3082	3082	1509
3083	3083	1510
3084	3084	1511
3085	3085	1512 SB231 INTRODUCEDSB231 INTRODUCED
3086	3086	Page 55
3087	3087	(c) A system satisfies subsection (a) and a person has
3088	3088	control of an electronic document of title, if an
3089	3089	authoritative electronic copy of the document, a record
3090	3090	attached to or logically associated with the electronic copy,
3091	3091	or a system in which the electronic copy is recorded:
3092	3092	(1) enables the person readily to identify each
3093	3093	electronic copy as either an authoritative copy or a
3094	3094	nonauthoritative copy;
3095	3095	(2) enables the person readily to identify itself in
3096	3096	any way, including by name, identifying number, cryptographic
3097	3097	key, office, or account number, as the person to which each
3098	3098	authoritative electronic copy was issued or transferred; and
3099	3099	(3) gives the person exclusive power, subject to
3100	3100	subsection (d), to:
3101	3101	(A) prevent others from adding or changing the person
3102	3102	to which each authoritative electronic copy has been issued or
3103	3103	transferred; and
3104	3104	(B) transfer control of each authoritative electronic
3105	3105	copy.
3106	3106	(d) Subject to subsection (e), a power is exclusive
3107	3107	under subsection (c)(3)(A) and (B), even if:
3108	3108	(1) the authoritative electronic copy, a record
3109	3109	attached to or logically associated with the authoritative
3110	3110	electronic copy, or a system in which the authoritative
3111	3111	electronic copy is recorded limits the use of the document of
3112	3112	title or has a protocol that is programmed to cause a change,
3113	3113	including a transfer or loss of control; or
3114	3114	(2) the power is shared with another person.
3115	3115	1513
3116	3116	1514
3117	3117	1515
3118	3118	1516
3119	3119	1517
3120	3120	1518
3121	3121	1519
3122	3122	1520
3123	3123	1521
3124	3124	1522
3125	3125	1523
3126	3126	1524
3127	3127	1525
3128	3128	1526
3129	3129	1527
3130	3130	1528
3131	3131	1529
3132	3132	1530
3133	3133	1531
3134	3134	1532
3135	3135	1533
3136	3136	1534
3137	3137	1535
3138	3138	1536
3139	3139	1537
3140	3140	1538
3141	3141	1539
3142	3142	1540 SB231 INTRODUCEDSB231 INTRODUCED
3143	3143	Page 56
3144	3144	(e) A power of a person is not shared with another
3145	3145	person under subsection (d)(2) and the person's power is not
3146	3146	exclusive if:
3147	3147	(1) the person can exercise the power only if the power
3148	3148	also is exercised by the other person; and
3149	3149	(2) the other person:
3150	3150	(A) can exercise the power without exercise of the
3151	3151	power by the person; or
3152	3152	(B) is the transferor to the person of an interest in
3153	3153	the document of title.
3154	3154	(f) If a person has the powers specified in subsection
3155	3155	(c)(3)(A) and (B), the powers are presumed to be exclusive.
3156	3156	(g) A person has control of an electronic document of
3157	3157	title if another person, other than the transferor to the
3158	3158	person of an interest in the document:
3159	3159	(1) has control of the document and acknowledges that
3160	3160	it has control on behalf of the person; or
3161	3161	(2) obtains control of the document after having
3162	3162	acknowledged that it will obtain control of the document on
3163	3163	behalf of the person.
3164	3164	(h) A person that has control under this section is not
3165	3165	required to acknowledge that it has control on behalf of
3166	3166	another person.
3167	3167	(i) If a person acknowledges that it has or will obtain
3168	3168	control on behalf of another person, unless the person
3169	3169	otherwise agrees or law other than this article or Article 9A
3170	3170	otherwise provides, the person does not owe any duty to the
3171	3171	other person and is not required to confirm the acknowledgment
3172	3172	1541
3173	3173	1542
3174	3174	1543
3175	3175	1544
3176	3176	1545
3177	3177	1546
3178	3178	1547
3179	3179	1548
3180	3180	1549
3181	3181	1550
3182	3182	1551
3183	3183	1552
3184	3184	1553
3185	3185	1554
3186	3186	1555
3187	3187	1556
3188	3188	1557
3189	3189	1558
3190	3190	1559
3191	3191	1560
3192	3192	1561
3193	3193	1562
3194	3194	1563
3195	3195	1564
3196	3196	1565
3197	3197	1566
3198	3198	1567
3199	3199	1568 SB231 INTRODUCEDSB231 INTRODUCED
3200	3200	Page 57
3201	3201	to any other person. "
3202	3202	"§7-8-102. Definitions and index of definitions .
3203	3203	(a) In this article:
3204	3204	(1) "Adverse claim" means a claim that a claimant has a
3205	3205	property interest in a financial asset and that it is a
3206	3206	violation of the rights of the claimant for another person to
3207	3207	hold, transfer, or deal with the financial asset.
3208	3208	(2) "Bearer form," as applied to a certificated
3209	3209	security, means a form in which the security is payable to the
3210	3210	bearer of the security certificate according to its terms but
3211	3211	not by reason of an indorsement.
3212	3212	(3) "Broker" means a person defined as a broker or
3213	3213	dealer under the federal securities laws, but without
3214	3214	excluding a bank acting in that capacity.
3215	3215	(4) "Certificated security" means a security that is
3216	3216	represented by a certificate.
3217	3217	(5) "Clearing corporation" means:
3218	3218	(i) a person that is registered as a "clearing agency"
3219	3219	under the federal securities laws;
3220	3220	(ii) a federal reserve bank; or
3221	3221	(iii) any other person that provides clearance or
3222	3222	settlement services with respect to financial assets that
3223	3223	would require it to register as a clearing agency under the
3224	3224	federal securities laws but for an exclusion or exemption from
3225	3225	the registration requirement, if its activities as a clearing
3226	3226	corporation, including promulgationadoption of rules, are
3227	3227	subject to regulation by a federal or state governmental
3228	3228	authority.
3229	3229	1569
3230	3230	1570
3231	3231	1571
3232	3232	1572
3233	3233	1573
3234	3234	1574
3235	3235	1575
3236	3236	1576
3237	3237	1577
3238	3238	1578
3239	3239	1579
3240	3240	1580
3241	3241	1581
3242	3242	1582
3243	3243	1583
3244	3244	1584
3245	3245	1585
3246	3246	1586
3247	3247	1587
3248	3248	1588
3249	3249	1589
3250	3250	1590
3251	3251	1591
3252	3252	1592
3253	3253	1593
3254	3254	1594
3255	3255	1595
3256	3256	1596 SB231 INTRODUCEDSB231 INTRODUCED
3257	3257	Page 58
3258	3258	(6) "Communicate" means to:
3259	3259	(i) send a signed writing record; or
3260	3260	(ii) transmit information by any mechanism agreed upon
3261	3261	by the persons transmitting and receiving the information.
3262	3262	(7) "Entitlement holder" means a person identified in
3263	3263	the records of a securities intermediary as the person having
3264	3264	a security entitlement against the securities intermediary. If
3265	3265	a person acquires a security entitlement by virtue of Section
3266	3266	7-8-501(b)(2) or (3), that person is the entitlement holder.
3267	3267	(8) "Entitlement order" means a notification
3268	3268	communicated to a securities intermediary directing transfer
3269	3269	or redemption of a financial asset to which the entitlement
3270	3270	holder has a security entitlement.
3271	3271	(9) "Financial asset," except as otherwise provided in
3272	3272	Section 7-8-103, means:
3273	3273	(i) a security;
3274	3274	(ii) an obligation of a person or a share,
3275	3275	participation, or other interest in a person or in property or
3276	3276	an enterprise of a person, which is, or is of a type, dealt in
3277	3277	or traded on financial markets, or which is recognized in any
3278	3278	area in which it is issued or dealt in as a medium for
3279	3279	investment; or
3280	3280	(iii) any property that is held by a securities
3281	3281	intermediary for another person in a securities account if the
3282	3282	securities intermediary has expressly agreed with the other
3283	3283	person that the property is to be treated as a financial asset
3284	3284	under this article. As the context requires, the term means
3285	3285	either the interest itself or the means by which a person's
3286	3286	1597
3287	3287	1598
3288	3288	1599
3289	3289	1600
3290	3290	1601
3291	3291	1602
3292	3292	1603
3293	3293	1604
3294	3294	1605
3295	3295	1606
3296	3296	1607
3297	3297	1608
3298	3298	1609
3299	3299	1610
3300	3300	1611
3301	3301	1612
3302	3302	1613
3303	3303	1614
3304	3304	1615
3305	3305	1616
3306	3306	1617
3307	3307	1618
3308	3308	1619
3309	3309	1620
3310	3310	1621
3311	3311	1622
3312	3312	1623
3313	3313	1624 SB231 INTRODUCEDSB231 INTRODUCED
3314	3314	Page 59
3315	3315	claim to it is evidenced, including a certificated or
3316	3316	uncertificated security, a security certificate, or a security
3317	3317	entitlement.
3318	3318	(10) "Good faith," for purposes of the obligation of
3319	3319	good faith in the performance or enforcement of contracts or
3320	3320	duties within this article, means honesty in fact and the
3321	3321	observance of reasonable commercial standards of fair dealing.
3322	3322	(11) "Indorsement" means a signature that alone or
3323	3323	accompanied by other words is made on a security certificate
3324	3324	in registered form or on a separate document for the purpose
3325	3325	of assigning, transferring, or redeeming the security or
3326	3326	granting a power to assign, transfer, or redeem it.
3327	3327	(12) "Instruction" means a notification communicated to
3328	3328	the issuer of an uncertificated security which directs that
3329	3329	the transfer of the security be registered or that the
3330	3330	security be redeemed.
3331	3331	(13) "Registered form," as applied to a certificated
3332	3332	security, means a form in which:
3333	3333	(i) the security certificate specifies a person
3334	3334	entitled to the security; and
3335	3335	(ii) a transfer of the security may be registered upon
3336	3336	books maintained for that purpose by or on behalf of the
3337	3337	issuer, or the security certificate so states.
3338	3338	(14) "Securities intermediary" means:
3339	3339	(i) a clearing corporation; or
3340	3340	(ii) a person, including a bank or broker, that in the
3341	3341	ordinary course of its business maintains securities accounts
3342	3342	for others and is acting in that capacity.
3343	3343	1625
3344	3344	1626
3345	3345	1627
3346	3346	1628
3347	3347	1629
3348	3348	1630
3349	3349	1631
3350	3350	1632
3351	3351	1633
3352	3352	1634
3353	3353	1635
3354	3354	1636
3355	3355	1637
3356	3356	1638
3357	3357	1639
3358	3358	1640
3359	3359	1641
3360	3360	1642
3361	3361	1643
3362	3362	1644
3363	3363	1645
3364	3364	1646
3365	3365	1647
3366	3366	1648
3367	3367	1649
3368	3368	1650
3369	3369	1651
3370	3370	1652 SB231 INTRODUCEDSB231 INTRODUCED
3371	3371	Page 60
3372	3372	(15) "Security," except as otherwise provided in
3373	3373	Section 7-8-103, means an obligation of an issuer or a share,
3374	3374	participation, or other interest in an issuer or in property
3375	3375	or an enterprise of an issuer:
3376	3376	(i) which is represented by a security certificate in
3377	3377	bearer or registered form, or the transfer of which may be
3378	3378	registered upon books maintained for that purpose by or on
3379	3379	behalf of the issuer;
3380	3380	(ii) which is one of a class or series or by its terms
3381	3381	is divisible into a class or series of shares, participations,
3382	3382	interests, or obligations; and
3383	3383	(iii) which:
3384	3384	(A) is, or is of a type, dealt in or traded on
3385	3385	securities exchanges or securities markets; or
3386	3386	(B) is a medium for investment and by its terms
3387	3387	expressly provides that it is a security governed by this
3388	3388	article.
3389	3389	(16) "Security certificate" means a certificate
3390	3390	representing a security.
3391	3391	(17) "Security entitlement" means the rights and
3392	3392	property interest of an entitlement holder with respect to a
3393	3393	financial asset specified in Part 5.
3394	3394	(18) "Uncertificated security" means a security that is
3395	3395	not represented by a certificate.
3396	3396	(b) Other definitions applying to this article and the
3397	3397	sections in which they appear are:
3398	3398	"Appropriate person." Section 7-8-107 .
3399	3399	"Control." Section 7-8-106 .
3400	3400	1653
3401	3401	1654
3402	3402	1655
3403	3403	1656
3404	3404	1657
3405	3405	1658
3406	3406	1659
3407	3407	1660
3408	3408	1661
3409	3409	1662
3410	3410	1663
3411	3411	1664
3412	3412	1665
3413	3413	1666
3414	3414	1667
3415	3415	1668
3416	3416	1669
3417	3417	1670
3418	3418	1671
3419	3419	1672
3420	3420	1673
3421	3421	1674
3422	3422	1675
3423	3423	1676
3424	3424	1677
3425	3425	1678
3426	3426	1679
3427	3427	1680 SB231 INTRODUCEDSB231 INTRODUCED
3428	3428	Page 61
3429	3429	"Delivery." Section 7-8-301 .
3430	3430	"Investment company security." Section 7-8-103 .
3431	3431	"Issuer." Section 7-8-201 .
3432	3432	"Overissue." Section 7-8-210 .
3433	3433	"Protected purchaser." Section 7-8-303 .
3434	3434	"Securities account." Section 7-8-501 .
3435	3435	(b.1) The following definitions in this article and
3436	3436	other articles apply to this article:
3437	3437	"Controllable account." Section 7-9A-102.
3438	3438	"Controllable electronic record." Section 7-12-102.
3439	3439	"Controllable payment intangible." Section 7-9A-102.
3440	3440	(c) In addition, Article 1 contains general definitions
3441	3441	and principles of construction and interpretation applicable
3442	3442	throughout this article.
3443	3443	(d) The characterization of a person, business, or
3444	3444	transaction for purposes of this article does not determine
3445	3445	the characterization of the person, business, or transaction
3446	3446	for purposes of any other law, regulation, or rule."
3447	3447	"§7-8-103. Rules for determining whether certain
3448	3448	obligations and interests are securities or financial assets.
3449	3449	(a) A share or similar equity interest issued by a
3450	3450	corporation, business trust, joint stock company, or similar
3451	3451	entity is a security.
3452	3452	(b) An "investment company security" is a security.
3453	3453	"Investment company security" means a share or similar equity
3454	3454	interest issued by an entity that is registered as an
3455	3455	investment company under the federal investment company laws,
3456	3456	an interest in a unit investment trust that is so registered,
3457	3457	1681
3458	3458	1682
3459	3459	1683
3460	3460	1684
3461	3461	1685
3462	3462	1686
3463	3463	1687
3464	3464	1688
3465	3465	1689
3466	3466	1690
3467	3467	1691
3468	3468	1692
3469	3469	1693
3470	3470	1694
3471	3471	1695
3472	3472	1696
3473	3473	1697
3474	3474	1698
3475	3475	1699
3476	3476	1700
3477	3477	1701
3478	3478	1702
3479	3479	1703
3480	3480	1704
3481	3481	1705
3482	3482	1706
3483	3483	1707
3484	3484	1708 SB231 INTRODUCEDSB231 INTRODUCED
3485	3485	Page 62
3486	3486	or a face-amount certificate issued by a face-amount
3487	3487	certificate company that is so registered. Investment company
3488	3488	security does not include an insurance policy or endowment
3489	3489	policy or annuity contract issued by an insurance company.
3490	3490	(c) An interest in a partnership or limited liability
3491	3491	company is not a security unless it is dealt in or traded on
3492	3492	securities exchanges or in securities markets, its terms
3493	3493	expressly provide that it is a security governed by this
3494	3494	article, or it is an investment company security. However, an
3495	3495	interest in a partnership or limited liability company is a
3496	3496	financial asset if it is held in a securities account.
3497	3497	(d) A writing that is a security certificate is
3498	3498	governed by this article and not by Article 3, even though it
3499	3499	also meets the requirements of that article. However, a
3500	3500	negotiable instrument governed by Article 3 is a financial
3501	3501	asset if it is held in a securities account.
3502	3502	(e) An option or similar obligation issued by a
3503	3503	clearing corporation to its participants is not a security,
3504	3504	but is a financial asset.
3505	3505	(f) A commodity contract, as defined in Section
3506	3506	7-9A-102(a)(15), is not a security or a financial asset.
3507	3507	(g) A document of title is not a financial asset unless
3508	3508	Section 7-8-102(a)(9)(iii) applies.
3509	3509	(h) A controllable account, controllable electronic
3510	3510	record, or controllable payment intangible is not a financial
3511	3511	asset unless Section 7-8-102(a)(9)(iii) applies. "
3512	3512	"§7-8-106. Control.
3513	3513	(a) A purchaser has "control" of a certificated
3514	3514	1709
3515	3515	1710
3516	3516	1711
3517	3517	1712
3518	3518	1713
3519	3519	1714
3520	3520	1715
3521	3521	1716
3522	3522	1717
3523	3523	1718
3524	3524	1719
3525	3525	1720
3526	3526	1721
3527	3527	1722
3528	3528	1723
3529	3529	1724
3530	3530	1725
3531	3531	1726
3532	3532	1727
3533	3533	1728
3534	3534	1729
3535	3535	1730
3536	3536	1731
3537	3537	1732
3538	3538	1733
3539	3539	1734
3540	3540	1735
3541	3541	1736 SB231 INTRODUCEDSB231 INTRODUCED
3542	3542	Page 63
3543	3543	security in bearer form if the certificated security is
3544	3544	delivered to the purchaser.
3545	3545	(b) A purchaser has "control" of a certificated
3546	3546	security in registered form if the certificated security is
3547	3547	delivered to the purchaser, and:
3548	3548	(1) the certificate is indorsed to the purchaser or in
3549	3549	blank by an effective indorsement; or
3550	3550	(2) the certificate is registered in the name of the
3551	3551	purchaser, upon original issue or registration of transfer by
3552	3552	the issuer.
3553	3553	(c) A purchaser has "control" of an uncertificated
3554	3554	security if:
3555	3555	(1) the uncertificated security is delivered to the
3556	3556	purchaser; or
3557	3557	(2) the issuer has agreed that it will comply with
3558	3558	instructions originated by the purchaser without further
3559	3559	consent by the registered owner.
3560	3560	(d) A purchaser has "control" of a security entitlement
3561	3561	if:
3562	3562	(1) the purchaser becomes the entitlement holder;
3563	3563	(2) the securities intermediary has agreed that it will
3564	3564	comply with entitlement orders originated by the purchaser
3565	3565	without further consent by the entitlement holder; or
3566	3566	(3) another person has control of the security
3567	3567	entitlement on behalf of the purchaser or, having previously
3568	3568	acquired control of the security entitlement, acknowledges
3569	3569	that it has control on behalf of the purchaser. person, other
3570	3570	than the transferor to the purchaser of an interest in the
3571	3571	1737
3572	3572	1738
3573	3573	1739
3574	3574	1740
3575	3575	1741
3576	3576	1742
3577	3577	1743
3578	3578	1744
3579	3579	1745
3580	3580	1746
3581	3581	1747
3582	3582	1748
3583	3583	1749
3584	3584	1750
3585	3585	1751
3586	3586	1752
3587	3587	1753
3588	3588	1754
3589	3589	1755
3590	3590	1756
3591	3591	1757
3592	3592	1758
3593	3593	1759
3594	3594	1760
3595	3595	1761
3596	3596	1762
3597	3597	1763
3598	3598	1764 SB231 INTRODUCEDSB231 INTRODUCED
3599	3599	Page 64
3600	3600	security entitlement:
3601	3601	(A) has control of the security entitlement and
3602	3602	acknowledges that it has control on behalf of the purchaser;
3603	3603	or
3604	3604	(B) obtains control of the security entitlement after
3605	3605	having acknowledged that it will obtain control of the
3606	3606	security entitlement on behalf of the purchaser.
3607	3607	(e) If an interest in a security entitlement is granted
3608	3608	by the entitlement holder to the entitlement holder's own
3609	3609	securities intermediary, the securities intermediary has
3610	3610	control.
3611	3611	(f) A purchaser who has satisfied the requirements of
3612	3612	subsection (c) or (d) has control, even if the registered
3613	3613	owner in the case of subsection (c) or the entitlement holder
3614	3614	in the case of subsection (d) retains the right to make
3615	3615	substitutions for the uncertificated security or security
3616	3616	entitlement, to originate instructions or entitlement orders
3617	3617	to the issuer or securities intermediary, or otherwise to deal
3618	3618	with the uncertificated security or security entitlement.
3619	3619	(g) An issuer or a securities intermediary may not
3620	3620	enter into an agreement of the kind described in subsection
3621	3621	(c)(2) or (d)(2) without the consent of the registered owner
3622	3622	or entitlement holder, but an issuer or a securities
3623	3623	intermediary is not required to enter into such an agreement
3624	3624	even though the registered owner or entitlement holder so
3625	3625	directs. An issuer or securities intermediary that has entered
3626	3626	into such an agreement is not required to confirm the
3627	3627	existence of the agreement to another party unless requested
3628	3628	1765
3629	3629	1766
3630	3630	1767
3631	3631	1768
3632	3632	1769
3633	3633	1770
3634	3634	1771
3635	3635	1772
3636	3636	1773
3637	3637	1774
3638	3638	1775
3639	3639	1776
3640	3640	1777
3641	3641	1778
3642	3642	1779
3643	3643	1780
3644	3644	1781
3645	3645	1782
3646	3646	1783
3647	3647	1784
3648	3648	1785
3649	3649	1786
3650	3650	1787
3651	3651	1788
3652	3652	1789
3653	3653	1790
3654	3654	1791
3655	3655	1792 SB231 INTRODUCEDSB231 INTRODUCED
3656	3656	Page 65
3657	3657	to do so by the registered owner or entitlement holder.
3658	3658	(h) A person that has control under this section is not
3659	3659	required to acknowledge that it has control on behalf of a
3660	3660	purchaser.
3661	3661	(i) If a person acknowledges that it has or will obtain
3662	3662	control on behalf of a purchaser, unless the person otherwise
3663	3663	agrees or law other than this article or Article 9A otherwise
3664	3664	provides, the person does not owe any duty to the purchaser
3665	3665	and is not required to confirm the acknowledgement to any
3666	3666	other person."
3667	3667	"§7-8-110. Applicability; choice of law.
3668	3668	(a) The local law of the issuer's jurisdiction, as
3669	3669	specified in subsection (d), governs:
3670	3670	(1) the validity of a security;
3671	3671	(2) the rights and duties of the issuer with respect to
3672	3672	registration of transfer;
3673	3673	(3) the effectiveness of registration of transfer by
3674	3674	the issuer;
3675	3675	(4) whether the issuer owes any duties to an adverse
3676	3676	claimant to a security; and
3677	3677	(5) whether an adverse claim can be asserted against a
3678	3678	person to whom transfer of a certificated or uncertificated
3679	3679	security is registered or a person who obtains control of an
3680	3680	uncertificated security.
3681	3681	(b) The local law of the securities intermediary's
3682	3682	jurisdiction, as specified in subsection (e), governs:
3683	3683	(1) acquisition of a security entitlement from the
3684	3684	securities intermediary;
3685	3685	1793
3686	3686	1794
3687	3687	1795
3688	3688	1796
3689	3689	1797
3690	3690	1798
3691	3691	1799
3692	3692	1800
3693	3693	1801
3694	3694	1802
3695	3695	1803
3696	3696	1804
3697	3697	1805
3698	3698	1806
3699	3699	1807
3700	3700	1808
3701	3701	1809
3702	3702	1810
3703	3703	1811
3704	3704	1812
3705	3705	1813
3706	3706	1814
3707	3707	1815
3708	3708	1816
3709	3709	1817
3710	3710	1818
3711	3711	1819
3712	3712	1820 SB231 INTRODUCEDSB231 INTRODUCED
3713	3713	Page 66
3714	3714	(2) the rights and duties of the securities
3715	3715	intermediary and entitlement holder arising out of a security
3716	3716	entitlement;
3717	3717	(3) whether the securities intermediary owes any duties
3718	3718	to an adverse claimant to a security entitlement; and
3719	3719	(4) whether an adverse claim can be asserted against a
3720	3720	person who acquires a security entitlement from the securities
3721	3721	intermediary or a person who purchases a security entitlement
3722	3722	or interest therein from an entitlement holder.
3723	3723	(c) The local law of the jurisdiction in which a
3724	3724	security certificate is located at the time of delivery
3725	3725	governs whether an adverse claim can be asserted against a
3726	3726	person to whom the security certificate is delivered.
3727	3727	(d) "Issuer's jurisdiction" means the jurisdiction
3728	3728	under which the issuer of the security is organized or, if
3729	3729	permitted by the law of that jurisdiction, the law of another
3730	3730	jurisdiction specified by the issuer. An issuer organized
3731	3731	under the law of this state may specify the law of another
3732	3732	jurisdiction as the law governing the matters specified in
3733	3733	subsection (a)(2) through (5).
3734	3734	(e) The following rules determine a "securities
3735	3735	intermediary's jurisdiction" for purposes of this section:
3736	3736	(1) If an agreement between the securities intermediary
3737	3737	and its entitlement holder governing the securities account
3738	3738	expressly provides that a particular jurisdiction is the
3739	3739	securities intermediary's jurisdiction for purposes of this
3740	3740	part, this article, or this title, that jurisdiction is the
3741	3741	securities intermediary's jurisdiction.
3742	3742	1821
3743	3743	1822
3744	3744	1823
3745	3745	1824
3746	3746	1825
3747	3747	1826
3748	3748	1827
3749	3749	1828
3750	3750	1829
3751	3751	1830
3752	3752	1831
3753	3753	1832
3754	3754	1833
3755	3755	1834
3756	3756	1835
3757	3757	1836
3758	3758	1837
3759	3759	1838
3760	3760	1839
3761	3761	1840
3762	3762	1841
3763	3763	1842
3764	3764	1843
3765	3765	1844
3766	3766	1845
3767	3767	1846
3768	3768	1847
3769	3769	1848 SB231 INTRODUCEDSB231 INTRODUCED
3770	3770	Page 67
3771	3771	(2) If paragraph (1) does not apply and an agreement
3772	3772	between the securities intermediary and its entitlement holder
3773	3773	governing the securities account expressly provides that the
3774	3774	agreement is governed by the law of a particular jurisdiction,
3775	3775	that jurisdiction is the securities intermediary's
3776	3776	jurisdiction.
3777	3777	(3) If neither paragraph (1) nor paragraph (2) applies
3778	3778	and an agreement between the securities intermediary and its
3779	3779	entitlement holder governing the securities account expressly
3780	3780	provides that the securities account is maintained at an
3781	3781	office in a particular jurisdiction, that jurisdiction is the
3782	3782	securities intermediary's jurisdiction.
3783	3783	(4) If none of the preceding paragraphs applies, the
3784	3784	securities intermediary's jurisdiction is the jurisdiction in
3785	3785	which the office identified in an account statement as the
3786	3786	office serving the entitlement holder's account is located.
3787	3787	(5) If none of the preceding paragraphs applies, the
3788	3788	securities intermediary's jurisdiction is the jurisdiction in
3789	3789	which the chief executive office of the securities
3790	3790	intermediary is located.
3791	3791	(f) A securities intermediary's jurisdiction is not
3792	3792	determined by the physical location of certificates
3793	3793	representing financial assets, or by the jurisdiction in which
3794	3794	is organized the issuer of the financial asset with respect to
3795	3795	which an entitlement holder has a security entitlement, or by
3796	3796	the location of facilities for data processing or other record
3797	3797	keeping concerning the account.
3798	3798	(g) The local law of the issuer's jurisdiction or the
3799	3799	1849
3800	3800	1850
3801	3801	1851
3802	3802	1852
3803	3803	1853
3804	3804	1854
3805	3805	1855
3806	3806	1856
3807	3807	1857
3808	3808	1858
3809	3809	1859
3810	3810	1860
3811	3811	1861
3812	3812	1862
3813	3813	1863
3814	3814	1864
3815	3815	1865
3816	3816	1866
3817	3817	1867
3818	3818	1868
3819	3819	1869
3820	3820	1870
3821	3821	1871
3822	3822	1872
3823	3823	1873
3824	3824	1874
3825	3825	1875
3826	3826	1876 SB231 INTRODUCEDSB231 INTRODUCED
3827	3827	Page 68
3828	3828	securities intermediary's jurisdiction governs a matter or
3829	3829	transaction specified in subsection (a) or (b) even if the
3830	3830	matter or transaction does not bear any relation to that
3831	3831	jurisdiction."
3832	3832	"§7-8-303. Protected purchaser.
3833	3833	(a) "Protected purchaser" means a purchaser of a
3834	3834	certificated or uncertificated security, or of an interest
3835	3835	therein, who:
3836	3836	(1) gives value;
3837	3837	(2) does not have notice of any adverse claim to the
3838	3838	security; and
3839	3839	(3) obtains control of the certificated or
3840	3840	uncertificated security.
3841	3841	(b) In addition to acquiring the rights of a purchaser,
3842	3842	a A protected purchaser also acquires its interest in the
3843	3843	security free of any adverse claim.
3844	3844	"§7-9A-102. Definitions and index of definitions.
3845	3845	(a) Article 9A definitions. In this article:
3846	3846	(1) "Accession" means goods that are physically united
3847	3847	with other goods in such a manner that the identity of the
3848	3848	original goods is not lost.
3849	3849	(2) "Account," except as used in "account for,"
3850	3850	"account statement," "account to," "commodity account" in
3851	3851	paragraph (14), "customer's account," "deposit account" in
3852	3852	paragraph (29), "on account of," and "statement of account,"
3853	3853	means a right to payment of a monetary obligation, whether or
3854	3854	not earned by performance, (i) for property that has been or
3855	3855	is to be sold, leased, licensed, assigned, or otherwise
3856	3856	1877
3857	3857	1878
3858	3858	1879
3859	3859	1880
3860	3860	1881
3861	3861	1882
3862	3862	1883
3863	3863	1884
3864	3864	1885
3865	3865	1886
3866	3866	1887
3867	3867	1888
3868	3868	1889
3869	3869	1890
3870	3870	1891
3871	3871	1892
3872	3872	1893
3873	3873	1894
3874	3874	1895
3875	3875	1896
3876	3876	1897
3877	3877	1898
3878	3878	1899
3879	3879	1900
3880	3880	1901
3881	3881	1902
3882	3882	1903
3883	3883	1904 SB231 INTRODUCEDSB231 INTRODUCED
3884	3884	Page 69
3885	3885	disposed of, (ii) for services rendered or to be rendered,
3886	3886	(iii) for a policy of insurance issued or to be issued, (iv)
3887	3887	for a secondary obligation incurred or to be incurred, (v) for
3888	3888	energy provided or to be provided, (vi) for the use or hire of
3889	3889	a vessel under a charter or other contract, (vii) arising out
3890	3890	of the use of a credit or charge card or information contained
3891	3891	on or for use with the card, or (viii) as winnings in a
3892	3892	lottery or other game of chance operated or sponsored by a
3893	3893	State, governmental unit of a State, or person licensed or
3894	3894	authorized to operate the game by a State or governmental unit
3895	3895	of a State. The term includes controllable accounts and
3896	3896	health-care-insurance receivables. The term does not include
3897	3897	(i) rights to payment evidenced by chattel paper or an
3898	3898	instrumentchattel paper, (ii) commercial tort claims, (iii)
3899	3899	deposit accounts, (iv) investment property, (v)
3900	3900	letter-of-credit rights or letters of credit, or (vi) rights
3901	3901	to payment for money or funds advanced or sold, other than
3902	3902	rights arising out of the use of a credit or charge card or
3903	3903	information contained on or for use with the card , or (vii)
3904	3904	rights to payment evidenced by an instrument .
3905	3905	(3) "Account debtor" means a person obligated on an
3906	3906	account, chattel paper, or general intangible. The term does
3907	3907	not include persons obligated to pay a negotiable instrument,
3908	3908	even if the negotiable instrument constitutes part of
3909	3909	evidences chattel paper.
3910	3910	(4) "Accounting," except as used in "accounting for,"
3911	3911	means a record:
3912	3912	(A) authenticated signed by a secured party;
3913	3913	1905
3914	3914	1906
3915	3915	1907
3916	3916	1908
3917	3917	1909
3918	3918	1910
3919	3919	1911
3920	3920	1912
3921	3921	1913
3922	3922	1914
3923	3923	1915
3924	3924	1916
3925	3925	1917
3926	3926	1918
3927	3927	1919
3928	3928	1920
3929	3929	1921
3930	3930	1922
3931	3931	1923
3932	3932	1924
3933	3933	1925
3934	3934	1926
3935	3935	1927
3936	3936	1928
3937	3937	1929
3938	3938	1930
3939	3939	1931
3940	3940	1932 SB231 INTRODUCEDSB231 INTRODUCED
3941	3941	Page 70
3942	3942	(B) indicating the aggregate unpaid secured obligations
3943	3943	as of a date not more than 35 days earlier or 35 days later
3944	3944	than the date of the record; and
3945	3945	(C) identifying the components of the obligations in
3946	3946	reasonable detail.
3947	3947	(5) "Agricultural lien" means an interest, other than a
3948	3948	security interest, in farm products:
3949	3949	(A) which secures payment or performance of an
3950	3950	obligation for:
3951	3951	(i) goods or services furnished in connection with a
3952	3952	debtor's farming operation; or
3953	3953	(ii) rent on real property leased by a debtor in
3954	3954	connection with its farming operation;
3955	3955	(B) which is created by statute in favor of a person
3956	3956	that:
3957	3957	(i) in the ordinary course of its business furnished
3958	3958	goods or services to a debtor in connection with a debtor's
3959	3959	farming operation; or
3960	3960	(ii) leased real property to a debtor in connection
3961	3961	with the debtor's farming operation; and
3962	3962	(C) whose effectiveness does not depend on the person's
3963	3963	possession of the personal property.
3964	3964	(6) "As-extracted collateral" means:
3965	3965	(A) oil, gas, or other minerals that are subject to a
3966	3966	security interest that:
3967	3967	(i) is created by a debtor having an interest in the
3968	3968	minerals before extraction; and
3969	3969	(ii) attaches to the minerals as extracted; or
3970	3970	1933
3971	3971	1934
3972	3972	1935
3973	3973	1936
3974	3974	1937
3975	3975	1938
3976	3976	1939
3977	3977	1940
3978	3978	1941
3979	3979	1942
3980	3980	1943
3981	3981	1944
3982	3982	1945
3983	3983	1946
3984	3984	1947
3985	3985	1948
3986	3986	1949
3987	3987	1950
3988	3988	1951
3989	3989	1952
3990	3990	1953
3991	3991	1954
3992	3992	1955
3993	3993	1956
3994	3994	1957
3995	3995	1958
3996	3996	1959
3997	3997	1960 SB231 INTRODUCEDSB231 INTRODUCED
3998	3998	Page 71
3999	3999	(B) accounts arising out of the sale at the wellhead or
4000	4000	mine of oil, gas, or other minerals in which the debtor had an
4001	4001	interest before extraction.
4002	4002	(7) [Reserved]."Authenticate" means:
4003	4003	(A) to sign; or
4004	4004	(B) with present intent to adopt or accept a record, to
4005	4005	attach to or logically associate with the record an electronic
4006	4006	sound, symbol, or process.
4007	4007	(7A) "Assignee," except as used in "assignee for
4008	4008	benefit of creditors," means a person (i) in whose favor a
4009	4009	security interest that secures an obligation is created or
4010	4010	provided for under a security agreement, whether or not the
4011	4011	obligation is outstanding or (ii) to which an account, chattel
4012	4012	paper, payment intangible, or promissory note has been sold.
4013	4013	The term includes a person to which a security interest has
4014	4014	been transferred by a secured party.
4015	4015	(7B) "Assignor" means a person that (i) under a
4016	4016	security agreement creates or provides for a security interest
4017	4017	that secures an obligation or (ii) sells an account, chattel
4018	4018	paper, payment intangible, or promissory note. The term
4019	4019	includes a secured party that has transferred a security
4020	4020	interest to another person.
4021	4021	(8) "Bank" means an organization that is engaged in the
4022	4022	business of banking. The term includes savings banks, savings
4023	4023	and loan associations, credit unions, and trust companies.
4024	4024	(9) "Cash proceeds" means proceeds that are money,
4025	4025	checks, deposit accounts, or the like.
4026	4026	(10) "Certificate of title" means a certificate of
4027	4027	1961
4028	4028	1962
4029	4029	1963
4030	4030	1964
4031	4031	1965
4032	4032	1966
4033	4033	1967
4034	4034	1968
4035	4035	1969
4036	4036	1970
4037	4037	1971
4038	4038	1972
4039	4039	1973
4040	4040	1974
4041	4041	1975
4042	4042	1976
4043	4043	1977
4044	4044	1978
4045	4045	1979
4046	4046	1980
4047	4047	1981
4048	4048	1982
4049	4049	1983
4050	4050	1984
4051	4051	1985
4052	4052	1986
4053	4053	1987
4054	4054	1988 SB231 INTRODUCEDSB231 INTRODUCED
4055	4055	Page 72
4056	4056	title with respect to which a statute provides for the
4057	4057	security interest in question to be indicated on the
4058	4058	certificate as a condition or result of the security
4059	4059	interest's obtaining priority over the rights of a lien
4060	4060	creditor with respect to the collateral. The term includes
4061	4061	another record maintained as an alternative to a certificate
4062	4062	of title by the governmental unit that issues certificates of
4063	4063	title if a statute permits the security interest in question
4064	4064	to be indicated on the record as a condition or result of the
4065	4065	security interest's obtaining priority over the rights of a
4066	4066	lien creditor with respect to the collateral.
4067	4067	(11) "Chattel paper" means a record or records that
4068	4068	evidence both a monetary obligation and a security interest in
4069	4069	specific goods, a security interest in specific goods and
4070	4070	software used in the goods, a security interest in specific
4071	4071	goods and license of software used in the goods, a lease of
4072	4072	specific goods, or a lease of specific goods and license of
4073	4073	software used in the goods. In this paragraph, "monetary
4074	4074	obligation" means a monetary obligation secured by the goods
4075	4075	or owed under a lease of the goods and includes a monetary
4076	4076	obligation with respect to software used in the goods. The
4077	4077	term does not include (i) charters or other contracts
4078	4078	involving the use or hire of a vessel or (ii) records that
4079	4079	evidence a right to payment arising out of the use of a credit
4080	4080	or charge card or information contained on or for use with the
4081	4081	card. If a transaction is evidenced by records that include an
4082	4082	instrument or series of instruments, the group of records
4083	4083	taken together constitutes chattel paper.
4084	4084	1989
4085	4085	1990
4086	4086	1991
4087	4087	1992
4088	4088	1993
4089	4089	1994
4090	4090	1995
4091	4091	1996
4092	4092	1997
4093	4093	1998
4094	4094	1999
4095	4095	2000
4096	4096	2001
4097	4097	2002
4098	4098	2003
4099	4099	2004
4100	4100	2005
4101	4101	2006
4102	4102	2007
4103	4103	2008
4104	4104	2009
4105	4105	2010
4106	4106	2011
4107	4107	2012
4108	4108	2013
4109	4109	2014
4110	4110	2015
4111	4111	2016 SB231 INTRODUCEDSB231 INTRODUCED
4112	4112	Page 73
4113	4113	(11) "Chattel paper" means:
4114	4114	(A) a right to payment of a monetary obligation secured
4115	4115	by specific goods, if the right to payment and security
4116	4116	agreement are evidenced by a record; or
4117	4117	(B) a right to payment of a monetary obligation owed by
4118	4118	a lessee under a lease agreement with respect to specific
4119	4119	goods and a monetary obligation owed by the lessee in
4120	4120	connection with the transaction giving rise to the lease, if:
4121	4121	(i) the right to payment and lease agreement are
4122	4122	evidenced by a record; and
4123	4123	(ii) the predominant purpose of the transaction giving
4124	4124	rise to the lease was to give the lessee the right to
4125	4125	possession and use of the goods.
4126	4126	The term does not include a right to payment arising
4127	4127	out of a charter or other contract involving the use or hire
4128	4128	of a vessel or a right to payment arising out of the use of a
4129	4129	credit or charge card or information contained on or for use
4130	4130	with the card.
4131	4131	(12) "Collateral" means the property subject to a
4132	4132	security interest or agricultural lien. The term includes:
4133	4133	(A) proceeds to which a security interest attaches;
4134	4134	(B) accounts, chattel paper, payment intangibles, and
4135	4135	promissory notes that have been sold; and
4136	4136	(C) goods that are the subject of a consignment.
4137	4137	(13) "Commercial tort claim" means a claim arising in
4138	4138	tort with respect to which:
4139	4139	(A) the claimant is an organization; or
4140	4140	(B) the claimant is an individual and the claim:
4141	4141	2017
4142	4142	2018
4143	4143	2019
4144	4144	2020
4145	4145	2021
4146	4146	2022
4147	4147	2023
4148	4148	2024
4149	4149	2025
4150	4150	2026
4151	4151	2027
4152	4152	2028
4153	4153	2029
4154	4154	2030
4155	4155	2031
4156	4156	2032
4157	4157	2033
4158	4158	2034
4159	4159	2035
4160	4160	2036
4161	4161	2037
4162	4162	2038
4163	4163	2039
4164	4164	2040
4165	4165	2041
4166	4166	2042
4167	4167	2043
4168	4168	2044 SB231 INTRODUCEDSB231 INTRODUCED
4169	4169	Page 74
4170	4170	(i) arose in the course of the claimant's business or
4171	4171	profession; and
4172	4172	(ii) does not include damages arising out of personal
4173	4173	injury to or the death of an individual.
4174	4174	(14) "Commodity account" means an account maintained by
4175	4175	a commodity intermediary in which a commodity contract is
4176	4176	carried for a commodity customer.
4177	4177	(15) "Commodity contract" means a commodity futures
4178	4178	contract, an option on a commodity futures contract, a
4179	4179	commodity option, or another contract if the contract or
4180	4180	option is:
4181	4181	(A) traded on or subject to the rules of a board of
4182	4182	trade that has been designated as a contract market for such a
4183	4183	contract pursuant to federal commodities laws; or
4184	4184	(B) traded on a foreign commodity board of trade,
4185	4185	exchange, or market, and is carried on the books of a
4186	4186	commodity intermediary for a commodity customer.
4187	4187	(16) "Commodity customer" means a person for which a
4188	4188	commodity intermediary carries a commodity contract on its
4189	4189	books.
4190	4190	(17) "Commodity intermediary" means a person that:
4191	4191	(A) is registered as a futures commission merchant
4192	4192	under federal commodities law; or
4193	4193	(B) in the ordinary course of its business provides
4194	4194	clearance or settlement services for a board of trade that has
4195	4195	been designated as a contract market pursuant to federal
4196	4196	commodities law.
4197	4197	(18) "Communicate" means:
4198	4198	2045
4199	4199	2046
4200	4200	2047
4201	4201	2048
4202	4202	2049
4203	4203	2050
4204	4204	2051
4205	4205	2052
4206	4206	2053
4207	4207	2054
4208	4208	2055
4209	4209	2056
4210	4210	2057
4211	4211	2058
4212	4212	2059
4213	4213	2060
4214	4214	2061
4215	4215	2062
4216	4216	2063
4217	4217	2064
4218	4218	2065
4219	4219	2066
4220	4220	2067
4221	4221	2068
4222	4222	2069
4223	4223	2070
4224	4224	2071
4225	4225	2072 SB231 INTRODUCEDSB231 INTRODUCED
4226	4226	Page 75
4227	4227	(A) to send a written or other tangible record;
4228	4228	(B) to transmit a record by any means agreed upon by
4229	4229	the persons sending and receiving the record; or
4230	4230	(C) in the case of transmission of a record to or by a
4231	4231	filing office, to transmit a record by any means prescribed by
4232	4232	filing-office rule.
4233	4233	(19) "Consignee" means a merchant to which goods are
4234	4234	delivered in a consignment.
4235	4235	(20) "Consignment" means a transaction, regardless of
4236	4236	its form, in which a person delivers goods to a merchant for
4237	4237	the purpose of sale and:
4238	4238	(A) the merchant:
4239	4239	(i) deals in goods of that kind under a name other than
4240	4240	the name of the person making delivery;
4241	4241	(ii) is not an auctioneer; and
4242	4242	(iii) is not generally known by its creditors to be
4243	4243	substantially engaged in selling the goods of others;
4244	4244	(B) with respect to each delivery, the aggregate value
4245	4245	of the goods is $1,000one thousand dollars ($1,000) or more at
4246	4246	the time of delivery;
4247	4247	(C) the goods are not consumer goods immediately before
4248	4248	delivery; and
4249	4249	(D) the transaction does not create a security interest
4250	4250	that secures an obligation.
4251	4251	(21) "Consignor" means a person that delivers goods to
4252	4252	a consignee in a consignment.
4253	4253	(22) "Consumer debtor" means a debtor in a consumer
4254	4254	transaction.
4255	4255	2073
4256	4256	2074
4257	4257	2075
4258	4258	2076
4259	4259	2077
4260	4260	2078
4261	4261	2079
4262	4262	2080
4263	4263	2081
4264	4264	2082
4265	4265	2083
4266	4266	2084
4267	4267	2085
4268	4268	2086
4269	4269	2087
4270	4270	2088
4271	4271	2089
4272	4272	2090
4273	4273	2091
4274	4274	2092
4275	4275	2093
4276	4276	2094
4277	4277	2095
4278	4278	2096
4279	4279	2097
4280	4280	2098
4281	4281	2099
4282	4282	2100 SB231 INTRODUCEDSB231 INTRODUCED
4283	4283	Page 76
4284	4284	(23) "Consumer goods" means goods that are used or
4285	4285	bought for use primarily for personal, family, or household
4286	4286	purposes.
4287	4287	(24) "Consumer-goods transaction" means a consumer
4288	4288	transaction in which:
4289	4289	(A) an individual incurs an obligation primarily for
4290	4290	personal, family, or household purposes; and
4291	4291	(B) a security interest in consumer goods secures the
4292	4292	obligation.
4293	4293	(25) "Consumer obligor" means an obligor who is an
4294	4294	individual and who incurred the obligation as part of a
4295	4295	transaction entered into primarily for personal, family, or
4296	4296	household purposes.
4297	4297	(26) "Consumer transaction" means a transaction in
4298	4298	which (i) an individual incurs an obligation primarily for
4299	4299	personal, family, or household purposes, (ii) a security
4300	4300	interest secures the obligation, and (iii) the collateral is
4301	4301	held or acquired primarily for personal, family, or household
4302	4302	purposes. The term includes consumer-goods transactions.
4303	4303	(27) "Continuation statement" means an amendment of a
4304	4304	financing statement which:
4305	4305	(A) identifies, by its file number, the initial
4306	4306	financing statement to which it relates; and
4307	4307	(B) indicates that it is a continuation statement for,
4308	4308	or that it is filed to continue the effectiveness of, the
4309	4309	identified financing statement.
4310	4310	(27A) "Controllable account" means an account evidenced
4311	4311	by a controllable electronic record that provides that the
4312	4312	2101
4313	4313	2102
4314	4314	2103
4315	4315	2104
4316	4316	2105
4317	4317	2106
4318	4318	2107
4319	4319	2108
4320	4320	2109
4321	4321	2110
4322	4322	2111
4323	4323	2112
4324	4324	2113
4325	4325	2114
4326	4326	2115
4327	4327	2116
4328	4328	2117
4329	4329	2118
4330	4330	2119
4331	4331	2120
4332	4332	2121
4333	4333	2122
4334	4334	2123
4335	4335	2124
4336	4336	2125
4337	4337	2126
4338	4338	2127
4339	4339	2128 SB231 INTRODUCEDSB231 INTRODUCED
4340	4340	Page 77
4341	4341	account debtor undertakes to pay the person that has control
4342	4342	under Section 7-12-105 of the controllable electronic record.
4343	4343	(27B) "Controllable payment intangible" means a payment
4344	4344	intangible evidenced by a controllable electronic record that
4345	4345	provides that the account debtor undertakes to pay the person
4346	4346	that has control under Section 7-12-105 of the controllable
4347	4347	electronic record.
4348	4348	(28) "Debtor" means:
4349	4349	(A) a person having an interest, other than a security
4350	4350	interest or other lien, in the collateral, whether or not the
4351	4351	person is an obligor;
4352	4352	(B) a seller of accounts, chattel paper, payment
4353	4353	intangibles, or promissory notes; or
4354	4354	(C) a consignee.
4355	4355	(29) "Deposit account" means a demand, time, savings,
4356	4356	passbook, or similar account maintained with a bank. The term
4357	4357	does not include investment property or accounts evidenced by
4358	4358	an instrument.
4359	4359	(30) "Document" means a document of title or a receipt
4360	4360	of the type described in Section 7-7-201(b).
4361	4361	(31) "Electronic chattel paper" means chattel paper
4362	4362	evidenced by a record or records consisting of information
4363	4363	stored in an electronic medium. [Reserved].
4364	4364	(32) "Encumbrance" means a right, other than an
4365	4365	ownership interest, in real property. The term includes
4366	4366	mortgages and other liens on real property.
4367	4367	(33) "Equipment" means goods other than inventory, farm
4368	4368	products, or consumer goods.
4369	4369	2129
4370	4370	2130
4371	4371	2131
4372	4372	2132
4373	4373	2133
4374	4374	2134
4375	4375	2135
4376	4376	2136
4377	4377	2137
4378	4378	2138
4379	4379	2139
4380	4380	2140
4381	4381	2141
4382	4382	2142
4383	4383	2143
4384	4384	2144
4385	4385	2145
4386	4386	2146
4387	4387	2147
4388	4388	2148
4389	4389	2149
4390	4390	2150
4391	4391	2151
4392	4392	2152
4393	4393	2153
4394	4394	2154
4395	4395	2155
4396	4396	2156 SB231 INTRODUCEDSB231 INTRODUCED
4397	4397	Page 78
4398	4398	(34) "Farm products" means goods, other than standing
4399	4399	timber, with respect to which the debtor is engaged in a
4400	4400	farming operation and which are:
4401	4401	(A) crops grown, growing, or to be grown, including:
4402	4402	(i) crops produced on trees, vines, and bushes; and
4403	4403	(ii) aquatic goods produced in aquacultural operations;
4404	4404	(B) livestock, born or unborn, including aquatic goods
4405	4405	produced in aquacultural operations;
4406	4406	(C) supplies used or produced in a farming operation;
4407	4407	or
4408	4408	(D) products of crops or livestock in their
4409	4409	unmanufactured states.
4410	4410	(35) "Farming operation" means raising, cultivating,
4411	4411	propagating, fattening, grazing, or any other farming,
4412	4412	livestock, or aquacultural operation.
4413	4413	(36) "File number" means the number assigned to an
4414	4414	initial financing statement pursuant to Section 7-9A-519(a).
4415	4415	(37) "Filing office" means an office designated in
4416	4416	Section 7-9A-501 as the place to file a financing statement.
4417	4417	(38) "Filing-office rule" means a rule adopted pursuant
4418	4418	to Section 7-9A-526.
4419	4419	(39) "Financing statement" means a record or records
4420	4420	composed of an initial financing statement and any filed
4421	4421	record relating to the initial financing statement.
4422	4422	(40) "Fixture filing" means the filing of a financing
4423	4423	statement covering goods that are or are to become fixtures
4424	4424	and satisfying Section 7-9A-502(a) and (b). The term includes
4425	4425	the filing of a financing statement covering goods of a
4426	4426	2157
4427	4427	2158
4428	4428	2159
4429	4429	2160
4430	4430	2161
4431	4431	2162
4432	4432	2163
4433	4433	2164
4434	4434	2165
4435	4435	2166
4436	4436	2167
4437	4437	2168
4438	4438	2169
4439	4439	2170
4440	4440	2171
4441	4441	2172
4442	4442	2173
4443	4443	2174
4444	4444	2175
4445	4445	2176
4446	4446	2177
4447	4447	2178
4448	4448	2179
4449	4449	2180
4450	4450	2181
4451	4451	2182
4452	4452	2183
4453	4453	2184 SB231 INTRODUCEDSB231 INTRODUCED
4454	4454	Page 79
4455	4455	transmitting utility which are or are to become fixtures.
4456	4456	(41) "Fixtures" means goods that have become so related
4457	4457	to particular real property that an interest in them arises
4458	4458	under real property law.
4459	4459	(42) "General intangible" means any personal property,
4460	4460	including things in action, other than accounts, chattel
4461	4461	paper, commercial tort claims, deposit accounts, documents,
4462	4462	goods, instruments, investment property, letter-of-credit
4463	4463	rights, letters of credit, money, and oil, gas, or other
4464	4464	minerals before extraction. The term includes controllable
4465	4465	electronic records, payment intangibles , and software.
4466	4466	(43) "Good faith" means honesty in fact in the conduct
4467	4467	or transaction concerned.
4468	4468	(44) "Goods" means all things that are movable when a
4469	4469	security interest attaches. The term includes (i) fixtures,
4470	4470	(ii) standing timber that is to be cut and removed under a
4471	4471	conveyance or contract for sale, to the extent such standing
4472	4472	timber and cutting rights with respect thereto are considered
4473	4473	as chattels under Section 35-4-363, (iii) the unborn young of
4474	4474	animals, (iv) crops grown, growing, or to be grown, even if
4475	4475	the crops are produced on trees, vines, or bushes, and (v)
4476	4476	manufactured homes. The term also includes a computer program
4477	4477	embedded in goods and any supporting information provided in
4478	4478	connection with a transaction relating to the program if (i)
4479	4479	the program is associated with the goods in such a manner that
4480	4480	it customarily is considered part of the goods, or (ii) by
4481	4481	becoming the owner of the goods, a person acquires a right to
4482	4482	use the program in connection with the goods. The term does
4483	4483	2185
4484	4484	2186
4485	4485	2187
4486	4486	2188
4487	4487	2189
4488	4488	2190
4489	4489	2191
4490	4490	2192
4491	4491	2193
4492	4492	2194
4493	4493	2195
4494	4494	2196
4495	4495	2197
4496	4496	2198
4497	4497	2199
4498	4498	2200
4499	4499	2201
4500	4500	2202
4501	4501	2203
4502	4502	2204
4503	4503	2205
4504	4504	2206
4505	4505	2207
4506	4506	2208
4507	4507	2209
4508	4508	2210
4509	4509	2211
4510	4510	2212 SB231 INTRODUCEDSB231 INTRODUCED
4511	4511	Page 80
4512	4512	not include a computer program embedded in goods that consist
4513	4513	solely of the medium in which the program is embedded. The
4514	4514	term also does not include accounts, chattel paper, commercial
4515	4515	tort claims, deposit accounts, documents, general intangibles,
4516	4516	instruments, investment property, letter-of-credit rights,
4517	4517	letters of credit, money, or oil, gas, or other minerals
4518	4518	before extraction.
4519	4519	(45) "Governmental unit" means a subdivision, agency,
4520	4520	department, county, parish, municipality, or other unit of the
4521	4521	government of the United States, a state, or a foreign
4522	4522	country. The term includes an organization having a separate
4523	4523	corporate existence if the organization is eligible to issue
4524	4524	debt on which interest is exempt from income taxation under
4525	4525	the laws of the United States.
4526	4526	(46) "Health-care-insurance receivable" means an
4527	4527	interest in or claim under a policy of insurance which is a
4528	4528	right to payment of a monetary obligation for health-care
4529	4529	goods or services provided.
4530	4530	(47) "Instrument" means a negotiable instrument or any
4531	4531	other writing that evidences a right to the payment of a
4532	4532	monetary obligation, is not itself a security agreement or
4533	4533	lease, and is of a type that in ordinary course of business is
4534	4534	transferred by delivery with any necessary indorsement or
4535	4535	assignment. The term does not include (i) investment property,
4536	4536	(ii) letters of credit, or (iii) writings that evidence a
4537	4537	right to payment arising out of the use of a credit or charge
4538	4538	card or information contained on or for use with the card , or
4539	4539	(iv) writings that evidence chattel paper .
4540	4540	2213
4541	4541	2214
4542	4542	2215
4543	4543	2216
4544	4544	2217
4545	4545	2218
4546	4546	2219
4547	4547	2220
4548	4548	2221
4549	4549	2222
4550	4550	2223
4551	4551	2224
4552	4552	2225
4553	4553	2226
4554	4554	2227
4555	4555	2228
4556	4556	2229
4557	4557	2230
4558	4558	2231
4559	4559	2232
4560	4560	2233
4561	4561	2234
4562	4562	2235
4563	4563	2236
4564	4564	2237
4565	4565	2238
4566	4566	2239
4567	4567	2240 SB231 INTRODUCEDSB231 INTRODUCED
4568	4568	Page 81
4569	4569	(48) "Inventory" means goods, other than farm products,
4570	4570	which:
4571	4571	(A) are leased by a person as lessor;
4572	4572	(B) are held by a person for sale or lease or to be
4573	4573	furnished under a contract of service;
4574	4574	(C) are furnished by a person under a contract of
4575	4575	service; or
4576	4576	(D) consist of raw materials, work in process, or
4577	4577	materials used or consumed in a business.
4578	4578	(49) "Investment property" means a security, whether
4579	4579	certificated or uncertificated, security entitlement,
4580	4580	securities account, commodity contract, or commodity account.
4581	4581	(50) "Jurisdiction of organization," with respect to a
4582	4582	registered organization, means the jurisdiction under whose
4583	4583	law the organization is formed or organized.
4584	4584	(51) "Letter-of-credit right" means a right to payment
4585	4585	or performance under a letter of credit, whether or not the
4586	4586	beneficiary has demanded or is at the time entitled to demand
4587	4587	payment or performance. The term does not include the right of
4588	4588	a beneficiary to demand payment or performance under a letter
4589	4589	of credit.
4590	4590	(52) "Lien creditor" means:
4591	4591	(A) a creditor that has acquired a lien on the property
4592	4592	involved by attachment, levy, or the like;
4593	4593	(B) an assignee for benefit of creditors from the time
4594	4594	of assignment;
4595	4595	(C) a trustee in bankruptcy from the date of the filing
4596	4596	of the petition; or
4597	4597	2241
4598	4598	2242
4599	4599	2243
4600	4600	2244
4601	4601	2245
4602	4602	2246
4603	4603	2247
4604	4604	2248
4605	4605	2249
4606	4606	2250
4607	4607	2251
4608	4608	2252
4609	4609	2253
4610	4610	2254
4611	4611	2255
4612	4612	2256
4613	4613	2257
4614	4614	2258
4615	4615	2259
4616	4616	2260
4617	4617	2261
4618	4618	2262
4619	4619	2263
4620	4620	2264
4621	4621	2265
4622	4622	2266
4623	4623	2267
4624	4624	2268 SB231 INTRODUCEDSB231 INTRODUCED
4625	4625	Page 82
4626	4626	(D) a receiver in equity from the time of appointment.
4627	4627	(53) "Manufactured home" means a structure defined as a
4628	4628	"manufactured home" in Section 32-8-2.
4629	4629	(54) "Manufactured-home transaction" means a secured
4630	4630	transaction:
4631	4631	(A) that creates a purchase-money security interest in
4632	4632	a manufactured home, other than a manufactured home held as
4633	4633	inventory; or
4634	4634	(B) in which a manufactured home, other than a
4635	4635	manufactured home held as inventory, is the primary
4636	4636	collateral.
4637	4637	(54A) "Money" has the meaning as in Section
4638	4638	7-1-201(b)(24), but does not include a deposit account.
4639	4639	(55) "Mortgage" means a consensual interest in real
4640	4640	property, including fixtures, which secures payment or
4641	4641	performance of an obligation.
4642	4642	(56) "New debtor" means a person that becomes bound as
4643	4643	debtor under Section 7-9A-203(d) by a security agreement
4644	4644	previously entered into by another person.
4645	4645	(57) "New value" means (i) money, (ii) money's worth in
4646	4646	property, services, or new credit, or (iii) release by a
4647	4647	transferee of an interest in property previously transferred
4648	4648	to the transferee. The term does not include an obligation
4649	4649	substituted for another obligation.
4650	4650	(58) "Noncash proceeds" means proceeds other than cash
4651	4651	proceeds.
4652	4652	(59) "Obligor" means a person that, with respect to an
4653	4653	obligation secured by a security interest in or an
4654	4654	2269
4655	4655	2270
4656	4656	2271
4657	4657	2272
4658	4658	2273
4659	4659	2274
4660	4660	2275
4661	4661	2276
4662	4662	2277
4663	4663	2278
4664	4664	2279
4665	4665	2280
4666	4666	2281
4667	4667	2282
4668	4668	2283
4669	4669	2284
4670	4670	2285
4671	4671	2286
4672	4672	2287
4673	4673	2288
4674	4674	2289
4675	4675	2290
4676	4676	2291
4677	4677	2292
4678	4678	2293
4679	4679	2294
4680	4680	2295
4681	4681	2296 SB231 INTRODUCEDSB231 INTRODUCED
4682	4682	Page 83
4683	4683	agricultural lien on the collateral, (i) owes payment or other
4684	4684	performance of the obligation, (ii) has provided property
4685	4685	other than the collateral to secure payment or other
4686	4686	performance of the obligation, or (iii) is otherwise
4687	4687	accountable in whole or in part for payment or other
4688	4688	performance of the obligation. The term does not include
4689	4689	issuers or nominated persons under a letter of credit.
4690	4690	(60) "Original debtor," except as used in Section
4691	4691	7-9A-310(c), means a person that, as debtor, entered into a
4692	4692	security agreement to which a new debtor has become bound
4693	4693	under Section 7-9A-203(d).
4694	4694	(61) "Payment intangible" means a general intangible
4695	4695	under which the account debtor's principal obligation is a
4696	4696	monetary obligation. The term includes a controllable payment
4697	4697	intangible.
4698	4698	(62) "Person related to," with respect to an
4699	4699	individual, means:
4700	4700	(A) the spouse of the individual;
4701	4701	(B) a brother, brother-in-law, sister, or sister-in-law
4702	4702	of the individual;
4703	4703	(C) an ancestor or lineal descendant of the individual
4704	4704	or the individual's spouse; or
4705	4705	(D) any other relative, by blood or marriage, of the
4706	4706	individual or the individual's spouse who shares the same home
4707	4707	with the individual.
4708	4708	(63) "Person related to," with respect to an
4709	4709	organization, means:
4710	4710	(A) a person directly or indirectly controlling,
4711	4711	2297
4712	4712	2298
4713	4713	2299
4714	4714	2300
4715	4715	2301
4716	4716	2302
4717	4717	2303
4718	4718	2304
4719	4719	2305
4720	4720	2306
4721	4721	2307
4722	4722	2308
4723	4723	2309
4724	4724	2310
4725	4725	2311
4726	4726	2312
4727	4727	2313
4728	4728	2314
4729	4729	2315
4730	4730	2316
4731	4731	2317
4732	4732	2318
4733	4733	2319
4734	4734	2320
4735	4735	2321
4736	4736	2322
4737	4737	2323
4738	4738	2324 SB231 INTRODUCEDSB231 INTRODUCED
4739	4739	Page 84
4740	4740	controlled by, or under common control with the organization;
4741	4741	(B) an officer or director of, or a person performing
4742	4742	similar functions with respect to, the organization;
4743	4743	(C) an officer or director of, or a person performing
4744	4744	similar functions with respect to, a person described in
4745	4745	subparagraph (A);
4746	4746	(D) the spouse of an individual described in
4747	4747	subparagraph (A), (B), or (C); or
4748	4748	(E) an individual who is related by blood or marriage
4749	4749	to an individual described in subparagraph (A), (B), (C), or
4750	4750	(D) and shares the same home with the individual.
4751	4751	(64) "Proceeds," except as used in Section 7-9A-609(b),
4752	4752	means the following property:
4753	4753	(A) whatever is acquired upon the sale, lease, license,
4754	4754	exchange, or other disposition of collateral;
4755	4755	(B) whatever is collected on, or distributed on account
4756	4756	of, collateral;
4757	4757	(C) rights arising out of collateral;
4758	4758	(D) to the extent of the value of collateral, claims
4759	4759	arising out of the loss, nonconformity, or interference with
4760	4760	the use of, defects or infringement of rights in, or damage
4761	4761	to, the collateral; or
4762	4762	(E) to the extent of the value of collateral and to the
4763	4763	extent payable to the debtor or the secured party, insurance
4764	4764	payable by reason of the loss or nonconformity of, defects or
4765	4765	infringement of rights in, or damage to, the collateral.
4766	4766	(65) "Promissory note" means an instrument that
4767	4767	evidences a promise to pay a monetary obligation, does not
4768	4768	2325
4769	4769	2326
4770	4770	2327
4771	4771	2328
4772	4772	2329
4773	4773	2330
4774	4774	2331
4775	4775	2332
4776	4776	2333
4777	4777	2334
4778	4778	2335
4779	4779	2336
4780	4780	2337
4781	4781	2338
4782	4782	2339
4783	4783	2340
4784	4784	2341
4785	4785	2342
4786	4786	2343
4787	4787	2344
4788	4788	2345
4789	4789	2346
4790	4790	2347
4791	4791	2348
4792	4792	2349
4793	4793	2350
4794	4794	2351
4795	4795	2352 SB231 INTRODUCEDSB231 INTRODUCED
4796	4796	Page 85
4797	4797	evidence an order to pay, and does not contain an
4798	4798	acknowledgment by a bank that the bank has received for
4799	4799	deposit a sum of money or funds.
4800	4800	(66) "Proposal" means a record authenticated signed by
4801	4801	a secured party which includes the terms on which the secured
4802	4802	party is willing to accept collateral in full or partial
4803	4803	satisfaction of the obligation it secures pursuant to Sections
4804	4804	7-9A-620, 7-9A-621, and 7-9A-622.
4805	4805	(67) Omitted.
4806	4806	(68) "Public organic record" means a record that is
4807	4807	available to the public for inspection and that is:
4808	4808	(A) a record consisting of the record initially filed
4809	4809	with or issued by a state or the United States to form or
4810	4810	organize an organization and any record filed with or issued
4811	4811	by the state or the United States which amends or restates the
4812	4812	initial record;
4813	4813	(B) an organic record of a business trust consisting of
4814	4814	the record initially filed with a state and any record filed
4815	4815	with the state which amends or restates the initial record, if
4816	4816	a statute of the state governing business trusts requires that
4817	4817	the record be filed with the state; or
4818	4818	(C) a record consisting of legislation enacted by the
4819	4819	legislature of a state or the Congress of the United States
4820	4820	which forms or organizes an organization, any record amending
4821	4821	the legislation, and any record filed with or issued by the
4822	4822	state or United States which amends or restates the name of
4823	4823	the organization.
4824	4824	For purposes of this definition and the definition of
4825	4825	2353
4826	4826	2354
4827	4827	2355
4828	4828	2356
4829	4829	2357
4830	4830	2358
4831	4831	2359
4832	4832	2360
4833	4833	2361
4834	4834	2362
4835	4835	2363
4836	4836	2364
4837	4837	2365
4838	4838	2366
4839	4839	2367
4840	4840	2368
4841	4841	2369
4842	4842	2370
4843	4843	2371
4844	4844	2372
4845	4845	2373
4846	4846	2374
4847	4847	2375
4848	4848	2376
4849	4849	2377
4850	4850	2378
4851	4851	2379
4852	4852	2380 SB231 INTRODUCEDSB231 INTRODUCED
4853	4853	Page 86
4854	4854	registered organization, a certificate of formation filed with
4855	4855	a judge of probate pursuant to Section 10A-1-4.02(a) is filed
4856	4856	with the state.
4857	4857	(69) "Pursuant to commitment," with respect to an
4858	4858	advance made or other value given by a secured party, means
4859	4859	pursuant to the secured party's obligation, whether or not a
4860	4860	subsequent event of default or other event not within the
4861	4861	secured party's control has relieved or may relieve the
4862	4862	secured party from its obligation.
4863	4863	(70) "Record," except as used in "for record," "of
4864	4864	record," "record or legal title," and "record owner," means
4865	4865	information that is inscribed on a tangible medium or which is
4866	4866	stored in an electronic or other medium and is retrievable in
4867	4867	perceivable form.
4868	4868	(71) "Registered organization" means an organization
4869	4869	formed or organized solely under the law of a single State or
4870	4870	the United States by the filing of a public organic record
4871	4871	with, the issuance of a public organic record by, or the
4872	4872	enactment of legislation by the state or the United States.
4873	4873	The term incudes includes a business trust that is formed or
4874	4874	organized under the law of a single state if a statute of the
4875	4875	state governing business trusts requires that the business
4876	4876	trust's organic record be filed with the state.
4877	4877	(72) "Secondary obligor" means an obligor to the extent
4878	4878	that:
4879	4879	(A) the obligor's obligation is secondary; or
4880	4880	(B) the obligor has a right of recourse with respect to
4881	4881	an obligation secured by collateral against the debtor,
4882	4882	2381
4883	4883	2382
4884	4884	2383
4885	4885	2384
4886	4886	2385
4887	4887	2386
4888	4888	2387
4889	4889	2388
4890	4890	2389
4891	4891	2390
4892	4892	2391
4893	4893	2392
4894	4894	2393
4895	4895	2394
4896	4896	2395
4897	4897	2396
4898	4898	2397
4899	4899	2398
4900	4900	2399
4901	4901	2400
4902	4902	2401
4903	4903	2402
4904	4904	2403
4905	4905	2404
4906	4906	2405
4907	4907	2406
4908	4908	2407
4909	4909	2408 SB231 INTRODUCEDSB231 INTRODUCED
4910	4910	Page 87
4911	4911	another obligor, or property of either.
4912	4912	(73) "Secured party" means:
4913	4913	(A) a person in whose favor a security interest is
4914	4914	created or provided for under a security agreement, whether or
4915	4915	not any obligation to be secured is outstanding;
4916	4916	(B) a person that holds an agricultural lien;
4917	4917	(C) a consignor;
4918	4918	(D) a person to which accounts, chattel paper, payment
4919	4919	intangibles, or promissory notes have been sold;
4920	4920	(E) a trustee, indenture trustee, agent, collateral
4921	4921	agent, or other representative in whose favor a security
4922	4922	interest or agricultural lien is created or provided for; or
4923	4923	(F) a person that holds a security interest arising
4924	4924	under Section 7-2-401, 7-2-505, 7-2-711(3), 7-2A-508(5),
4925	4925	7-4-210, or 7-5-118.
4926	4926	(74) "Security agreement" means an agreement that
4927	4927	creates or provides for a security interest.
4928	4928	(75) "Send," in connection with a record or
4929	4929	notification, means:
4930	4930	(A) to deposit in the mail, deliver for transmission,
4931	4931	or transmit by any other usual means of communication, with
4932	4932	postage or cost of transmission provided for, addressed to any
4933	4933	address reasonable under the circumstances; or
4934	4934	(B) to cause the record or notification to be received
4935	4935	within the time that it would have been received if properly
4936	4936	sent under subparagraph (A). [Reserved.]
4937	4937	(76) "Software" means a computer program and any
4938	4938	supporting information provided in connection with a
4939	4939	2409
4940	4940	2410
4941	4941	2411
4942	4942	2412
4943	4943	2413
4944	4944	2414
4945	4945	2415
4946	4946	2416
4947	4947	2417
4948	4948	2418
4949	4949	2419
4950	4950	2420
4951	4951	2421
4952	4952	2422
4953	4953	2423
4954	4954	2424
4955	4955	2425
4956	4956	2426
4957	4957	2427
4958	4958	2428
4959	4959	2429
4960	4960	2430
4961	4961	2431
4962	4962	2432
4963	4963	2433
4964	4964	2434
4965	4965	2435
4966	4966	2436 SB231 INTRODUCEDSB231 INTRODUCED
4967	4967	Page 88
4968	4968	transaction relating to the program. The term does not include
4969	4969	a computer program that is included in the definition of
4970	4970	goods.
4971	4971	(77) "State" means a state of the United States, the
4972	4972	District of Columbia, Puerto Rico, the United States Virgin
4973	4973	Islands, or any territory or insular possession subject to the
4974	4974	jurisdiction of the United States.
4975	4975	(78) "Supporting obligation" means a letter-of-credit
4976	4976	right or secondary obligation that supports the payment or
4977	4977	performance of an account, chattel paper, a document, a
4978	4978	general intangible, an instrument, or investment property.
4979	4979	(79) "Tangible chattel paper" means chattel paper
4980	4980	evidenced by a record or records consisting of information
4981	4981	that is inscribed on a tangible medium. [Reserved.]
4982	4982	(80) "Termination statement" means an amendment of a
4983	4983	financing statement which:
4984	4984	(A) identifies, by its file number, the initial
4985	4985	financing statement to which it relates; and
4986	4986	(B) indicates either that it is a termination statement
4987	4987	or that the identified financing statement is no longer
4988	4988	effective.
4989	4989	(81) "Transmitting utility" means a person primarily
4990	4990	engaged in the business of:
4991	4991	(A) operating a railroad, subway, street railway, or
4992	4992	trolley bus;
4993	4993	(B) transmitting communications electrically,
4994	4994	electromagnetically, or by light;
4995	4995	(C) transmitting goods by pipeline or sewer;
4996	4996	2437
4997	4997	2438
4998	4998	2439
4999	4999	2440
5000	5000	2441
5001	5001	2442
5002	5002	2443
5003	5003	2444
5004	5004	2445
5005	5005	2446
5006	5006	2447
5007	5007	2448
5008	5008	2449
5009	5009	2450
5010	5010	2451
5011	5011	2452
5012	5012	2453
5013	5013	2454
5014	5014	2455
5015	5015	2456
5016	5016	2457
5017	5017	2458
5018	5018	2459
5019	5019	2460
5020	5020	2461
5021	5021	2462
5022	5022	2463
5023	5023	2464 SB231 INTRODUCEDSB231 INTRODUCED
5024	5024	Page 89
5025	5025	(D) transmitting or producing or distributing
5026	5026	electricity, steam, gas, or water; or
5027	5027	(E) owning, operating, leasing or controlling a
5028	5028	"utility" as defined in Section 37-1-30.
5029	5029	(b) Definitions in other articles. "Control" as
5030	5030	provided in Section 7-7-106 and the following definitions in
5031	5031	other articles of this title apply to this article:
5032	5032	"Applicant." Section 7-5-102.
5033	5033	"Beneficiary." Section 7-5-102.
5034	5034	"Broker." Section 7-8-102.
5035	5035	"Certificated security ." Section 7-8-102.
5036	5036	"Check." Section 7-3-104.
5037	5037	"Clearing corporation ." Section 7-8-102.
5038	5038	"Contract for sale ." Section 7-2-106.
5039	5039	"Controllable electronic record." Section 7-12-102.
5040	5040	"Customer." Section 7-4-104.
5041	5041	"Entitlement holder ." Section 7-8-102.
5042	5042	"Financial asset ." Section 7-8-102.
5043	5043	"Holder in due course ." Section 7-3-302.
5044	5044	"Issuer" (with respect to a letter of credit or
5045	5045	letter-of-credit right) . Section 7-5-102.
5046	5046	"Issuer" (with respect to a security) . Section 7-8-201.
5047	5047	"Issuer" (with respect to documents of title) . Section
5048	5048	7-7-102.
5049	5049	"Lease." Section 7-2A-103.
5050	5050	"Lease agreement ." Section 7-2A-103.
5051	5051	"Lease contract." Section 7-2A-103.
5052	5052	"Leasehold interest ." Section 7-2A-103.
5053	5053	2465
5054	5054	2466
5055	5055	2467
5056	5056	2468
5057	5057	2469
5058	5058	2470
5059	5059	2471
5060	5060	2472
5061	5061	2473
5062	5062	2474
5063	5063	2475
5064	5064	2476
5065	5065	2477
5066	5066	2478
5067	5067	2479
5068	5068	2480
5069	5069	2481
5070	5070	2482
5071	5071	2483
5072	5072	2484
5073	5073	2485
5074	5074	2486
5075	5075	2487
5076	5076	2488
5077	5077	2489
5078	5078	2490
5079	5079	2491
5080	5080	2492 SB231 INTRODUCEDSB231 INTRODUCED
5081	5081	Page 90
5082	5082	"Lessee." Section 7-2A-103.
5083	5083	"Lessee in ordinary course of business ." Section
5084	5084	7-2A-103.
5085	5085	"Lessor." Section 7-2A-103.
5086	5086	"Lessor's residual interest ." Section 7-2A-103.
5087	5087	"Letter of credit ." Section 7-5-102.
5088	5088	"Merchant." Section 7-2-104.
5089	5089	"Negotiable instrument ." Section 7-3-104.
5090	5090	"Nominated person ." Section 7-5-102.
5091	5091	"Note." Section 7-3-104.
5092	5092	"Proceeds of a letter of credit ." Section 7-5-114.
5093	5093	"Protected purchaser." Section 7-8-303.
5094	5094	"Prove." Section 7-3-103.
5095	5095	"Qualifying purchaser." Section 7-12-102.
5096	5096	"Sale." Section 7-2-106.
5097	5097	"Securities account ." Section 7-8-501.
5098	5098	"Securities intermediary ." Section 7-8-102.
5099	5099	"Security." Section 7-8-102.
5100	5100	"Security certificate ." Section 7-8-102.
5101	5101	"Security entitlement ." Section 7-8-102.
5102	5102	"Uncertificated security ." Section 7-8-102.
5103	5103	(c) Article 1 definitions and principles. Article 1
5104	5104	contains general definitions and principles of construction
5105	5105	and interpretation applicable throughout this article."
5106	5106	"§7-9A-104. Control of deposit account.
5107	5107	(a) Requirements for control. A secured party has
5108	5108	control of a deposit account if:
5109	5109	(1) the secured party is the bank with which the
5110	5110	2493
5111	5111	2494
5112	5112	2495
5113	5113	2496
5114	5114	2497
5115	5115	2498
5116	5116	2499
5117	5117	2500
5118	5118	2501
5119	5119	2502
5120	5120	2503
5121	5121	2504
5122	5122	2505
5123	5123	2506
5124	5124	2507
5125	5125	2508
5126	5126	2509
5127	5127	2510
5128	5128	2511
5129	5129	2512
5130	5130	2513
5131	5131	2514
5132	5132	2515
5133	5133	2516
5134	5134	2517
5135	5135	2518
5136	5136	2519
5137	5137	2520 SB231 INTRODUCEDSB231 INTRODUCED
5138	5138	Page 91
5139	5139	deposit account is maintained;
5140	5140	(2) the debtor, secured party, and bank have agreed in
5141	5141	an authenticated a signed record that the bank will comply
5142	5142	with instructions originated by the secured party directing
5143	5143	disposition of the funds in the deposit account without
5144	5144	further consent by the debtor; or
5145	5145	(3) the secured party becomes the bank's customer with
5146	5146	respect to the deposit account .; or
5147	5147	(4) another person, other than the debtor:
5148	5148	(A) has control of the deposit account and acknowledges
5149	5149	that it has control on behalf of the secured party; or
5150	5150	(B) obtains control of the deposit account after having
5151	5151	acknowledged that it will obtain control of the deposit
5152	5152	account on behalf of the secured party.
5153	5153	(b) Debtor's right to direct disposition. A secured
5154	5154	party that has satisfied subsection (a) has control, even if
5155	5155	the debtor retains the right to direct the disposition of
5156	5156	funds from the deposit account."
5157	5157	"§7-9A-105. Control of electronic copy of record
5158	5158	evidencing chattel paper.
5159	5159	(a) General rule: control of electronic chattel paper.
5160	5160	A secured party has control of electronic chattel paper if a
5161	5161	system employed for evidencing the transfer of interests in
5162	5162	the chattel paper reliably establishes the secured party as
5163	5163	the person to which the chattel paper was assigned.
5164	5164	(b) Specific facts giving control. A system satisfies
5165	5165	subsection (a) and a secured party has control of electronic
5166	5166	chattel paper if the record or records comprising the chattel
5167	5167	2521
5168	5168	2522
5169	5169	2523
5170	5170	2524
5171	5171	2525
5172	5172	2526
5173	5173	2527
5174	5174	2528
5175	5175	2529
5176	5176	2530
5177	5177	2531
5178	5178	2532
5179	5179	2533
5180	5180	2534
5181	5181	2535
5182	5182	2536
5183	5183	2537
5184	5184	2538
5185	5185	2539
5186	5186	2540
5187	5187	2541
5188	5188	2542
5189	5189	2543
5190	5190	2544
5191	5191	2545
5192	5192	2546
5193	5193	2547
5194	5194	2548 SB231 INTRODUCEDSB231 INTRODUCED
5195	5195	Page 92
5196	5196	paper are created, stored, and assigned in such a manner that:
5197	5197	(1) a single authoritative copy of the record or
5198	5198	records exists which is unique, identifiable and, except as
5199	5199	otherwise provided in paragraphs (4), (5), and (6),
5200	5200	unalterable;
5201	5201	(2) the authoritative copy identifies the secured party
5202	5202	as the assignee of the record or records;
5203	5203	(3) the authoritative copy is communicated to and
5204	5204	maintained by the secured party or its designated custodian;
5205	5205	(4) copies or amendments that add or change an
5206	5206	identified assignee of the authoritative copy can be made only
5207	5207	with the consent of the secured party;
5208	5208	(5) each copy of the authoritative copy and any copy of
5209	5209	a copy is readily identifiable as a copy that is not the
5210	5210	authoritative copy; and
5211	5211	(6) any amendment of the authoritative copy is readily
5212	5212	identifiable as authorized or unauthorized.
5213	5213	(a) General Rule: control of electronic copy of record
5214	5214	evidencing chattel paper. A purchaser has control of an
5215	5215	authoritative electronic copy of a record evidencing chattel
5216	5216	paper if a system employed for evidencing the assignment of
5217	5217	interests in the chattel paper reliably establishes the
5218	5218	purchaser as the person to which the authoritative electronic
5219	5219	copy was assigned.
5220	5220	(b) Single authoritative copy. A system satisfies
5221	5221	subsection (a) if the record or records evidencing chattel
5222	5222	paper are created, stored, and assigned in a manner that:
5223	5223	(1) a single authoritative copy of the record or
5224	5224	2549
5225	5225	2550
5226	5226	2551
5227	5227	2552
5228	5228	2553
5229	5229	2554
5230	5230	2555
5231	5231	2556
5232	5232	2557
5233	5233	2558
5234	5234	2559
5235	5235	2560
5236	5236	2561
5237	5237	2562
5238	5238	2563
5239	5239	2564
5240	5240	2565
5241	5241	2566
5242	5242	2567
5243	5243	2568
5244	5244	2569
5245	5245	2570
5246	5246	2571
5247	5247	2572
5248	5248	2573
5249	5249	2574
5250	5250	2575
5251	5251	2576 SB231 INTRODUCEDSB231 INTRODUCED
5252	5252	Page 93
5253	5253	records exists which is unique, identifiable, and, except as
5254	5254	otherwise provided in paragraphs (4), (5), and (6),
5255	5255	unalterable;
5256	5256	(2) the authoritative copy identifies the purchaser as
5257	5257	the assignee of the record or records;
5258	5258	(3) the authoritative copy is communicated to and
5259	5259	maintained by the purchaser or its designated custodian;
5260	5260	(4) copies or amendments that add or change an
5261	5261	identified assignee of the authoritative copy can be made only
5262	5262	with the consent of the purchaser;
5263	5263	(5) each copy of the authoritative copy and any copy of
5264	5264	a copy is readily identifiable as a copy that is not the
5265	5265	authoritative copy; and
5266	5266	(6) any amendment of the authoritative copy is readily
5267	5267	identifiable as authorized or unauthorized.
5268	5268	(c) One or more authoritative copies. A system
5269	5269	satisfies subsection (a), and a purchaser has control of an
5270	5270	authoritative electronic copy of a record evidencing chattel
5271	5271	paper, if the electronic copy, a record attached to or
5272	5272	logically associated with the electronic copy, or a system in
5273	5273	which the electronic copy is recorded:
5274	5274	(1) enables the purchaser readily to identify each
5275	5275	electronic copy as either an authoritative copy or a
5276	5276	nonauthoritative copy;
5277	5277	(2) enables the purchaser readily to identify itself in
5278	5278	any way, including by name, identifying number, cryptographic
5279	5279	key, office, or account number, as the assignee of the
5280	5280	authoritative electronic copy; and
5281	5281	2577
5282	5282	2578
5283	5283	2579
5284	5284	2580
5285	5285	2581
5286	5286	2582
5287	5287	2583
5288	5288	2584
5289	5289	2585
5290	5290	2586
5291	5291	2587
5292	5292	2588
5293	5293	2589
5294	5294	2590
5295	5295	2591
5296	5296	2592
5297	5297	2593
5298	5298	2594
5299	5299	2595
5300	5300	2596
5301	5301	2597
5302	5302	2598
5303	5303	2599
5304	5304	2600
5305	5305	2601
5306	5306	2602
5307	5307	2603
5308	5308	2604 SB231 INTRODUCEDSB231 INTRODUCED
5309	5309	Page 94
5310	5310	(3) gives the purchaser exclusive power, subject to
5311	5311	subsection (d), to:
5312	5312	(A) prevent others from adding or changing an
5313	5313	identified assignee of the authoritative electronic copy; and
5314	5314	(B) transfer control of the authoritative electronic
5315	5315	copy.
5316	5316	(d) Meaning of exclusive. Subject to subsection (e), a
5317	5317	power is exclusive under subsection (c)(3)(A) and (B) even if:
5318	5318	(1) the authoritative electronic copy, a record
5319	5319	attached to or logically associated with the authoritative
5320	5320	electronic copy, or a system in which the authoritative
5321	5321	electronic copy is recorded limits the use of the
5322	5322	authoritative electronic copy or has a protocol programmed to
5323	5323	cause a change, including a transfer or loss of control; or
5324	5324	(2) the power is shared with another person.
5325	5325	(e) When power not shared with another person. A power
5326	5326	of a purchaser is not shared with another person under
5327	5327	subsection (d)(2) and the purchaser's power is not exclusive
5328	5328	if:
5329	5329	(1) the purchaser can exercise the power only if the
5330	5330	power also is exercised by the other person; and
5331	5331	(2) the other person:
5332	5332	(A) can exercise the power without exercise of the
5333	5333	power by the purchaser; or
5334	5334	(B) is the transferor to the purchaser of an interest
5335	5335	in the chattel paper.
5336	5336	(f) Presumption of exclusivity of certain powers. If a
5337	5337	purchaser has the powers specified in subsection (c)(3)(A) and
5338	5338	2605
5339	5339	2606
5340	5340	2607
5341	5341	2608
5342	5342	2609
5343	5343	2610
5344	5344	2611
5345	5345	2612
5346	5346	2613
5347	5347	2614
5348	5348	2615
5349	5349	2616
5350	5350	2617
5351	5351	2618
5352	5352	2619
5353	5353	2620
5354	5354	2621
5355	5355	2622
5356	5356	2623
5357	5357	2624
5358	5358	2625
5359	5359	2626
5360	5360	2627
5361	5361	2628
5362	5362	2629
5363	5363	2630
5364	5364	2631
5365	5365	2632 SB231 INTRODUCEDSB231 INTRODUCED
5366	5366	Page 95
5367	5367	(B), the powers are presumed to be exclusive.
5368	5368	(g) Obtaining control through another person. A
5369	5369	purchaser has control of an authoritative electronic copy of a
5370	5370	record evidencing chattel paper if another person, other than
5371	5371	the transferor to the purchaser of an interest in the chattel
5372	5372	paper:
5373	5373	(1) has control of the authoritative electronic copy
5374	5374	and acknowledges that it has control on behalf of the
5375	5375	purchaser; or
5376	5376	(2) obtains control of the authoritative electronic
5377	5377	copy after having acknowledged that it will obtain control of
5378	5378	the electronic copy on behalf of the purchaser. "
5379	5379	"§7-9A-203. Attachment and enforceability of security
5380	5380	interest; proceeds; supporting obligations; formal requisites.
5381	5381	(a) Attachment. A security interest attaches to
5382	5382	collateral when it becomes enforceable against the debtor with
5383	5383	respect to the collateral, unless an agreement expressly
5384	5384	postpones the time of attachment.
5385	5385	(b) Enforceability. Except as otherwise provided in
5386	5386	subsections (c) through (i), a security interest is
5387	5387	enforceable against the debtor and third parties with respect
5388	5388	to the collateral only if:
5389	5389	(1) value has been given;
5390	5390	(2) the debtor has rights in the collateral or the
5391	5391	power to transfer rights in the collateral to a secured party;
5392	5392	and
5393	5393	(3) one of the following conditions is met:
5394	5394	(A) the debtor has authenticatedsigned a security
5395	5395	2633
5396	5396	2634
5397	5397	2635
5398	5398	2636
5399	5399	2637
5400	5400	2638
5401	5401	2639
5402	5402	2640
5403	5403	2641
5404	5404	2642
5405	5405	2643
5406	5406	2644
5407	5407	2645
5408	5408	2646
5409	5409	2647
5410	5410	2648
5411	5411	2649
5412	5412	2650
5413	5413	2651
5414	5414	2652
5415	5415	2653
5416	5416	2654
5417	5417	2655
5418	5418	2656
5419	5419	2657
5420	5420	2658
5421	5421	2659
5422	5422	2660 SB231 INTRODUCEDSB231 INTRODUCED
5423	5423	Page 96
5424	5424	agreement that provides a description of the collateral and,
5425	5425	if the security interest covers timber to be cut, a
5426	5426	description of the land concerned;
5427	5427	(B) the collateral is not a certificated security and
5428	5428	is in the possession of the secured party under Section
5429	5429	7-9A-313 pursuant to the debtor's security agreement;
5430	5430	(C) the collateral is a certificated security in
5431	5431	registered form and the security certificate has been
5432	5432	delivered to the secured party under Section 7-8-301 pursuant
5433	5433	to the debtor's security agreement; or
5434	5434	(D) the collateral is controllable accounts,
5435	5435	controllable electronic records, controllable payment
5436	5436	intangibles, deposit accounts, electronic chattel paper,
5437	5437	electronic documents, investment property, or letter-of-credit
5438	5438	rights, and the secured party has control under Section
5439	5439	7-7-106, 7-9A-104, 7-9A-105, 7-9A-106, or 7-9A-107, or
5440	5440	7-9A-107A, pursuant to the debtor's security agreement .; or
5441	5441	(E) the collateral is chattel paper and the secured
5442	5442	party has possession and control under Section 7-9A-314A
5443	5443	pursuant to the debtor's security agreement.
5444	5444	(c) Other UCC provisions. Subsection (b) is subject to
5445	5445	Section 7-4-210 on the security interest of a collecting bank,
5446	5446	Section 7-5-118 on the security interest of a letter-of-credit
5447	5447	issuer or nominated person, Section 7-9A-110 on a security
5448	5448	interest arising under Article 2 or 2A, and Section 7-9A-206
5449	5449	on security interests in investment property.
5450	5450	(d) When person becomes bound by another person's
5451	5451	security agreement. A person becomes bound as debtor by a
5452	5452	2661
5453	5453	2662
5454	5454	2663
5455	5455	2664
5456	5456	2665
5457	5457	2666
5458	5458	2667
5459	5459	2668
5460	5460	2669
5461	5461	2670
5462	5462	2671
5463	5463	2672
5464	5464	2673
5465	5465	2674
5466	5466	2675
5467	5467	2676
5468	5468	2677
5469	5469	2678
5470	5470	2679
5471	5471	2680
5472	5472	2681
5473	5473	2682
5474	5474	2683
5475	5475	2684
5476	5476	2685
5477	5477	2686
5478	5478	2687
5479	5479	2688 SB231 INTRODUCEDSB231 INTRODUCED
5480	5480	Page 97
5481	5481	security agreement entered into by another person if, by
5482	5482	operation of law other than this article or by contract:
5483	5483	(1) the security agreement becomes effective to create
5484	5484	a security interest in the person's property; or
5485	5485	(2) the person becomes generally obligated for the
5486	5486	obligations of the other person, including the obligation
5487	5487	secured under the security agreement, and acquires or succeeds
5488	5488	to all or substantially all of the assets of the other person.
5489	5489	(e) Effect of new debtor becoming bound. If a new
5490	5490	debtor becomes bound as debtor by a security agreement entered
5491	5491	into by another person:
5492	5492	(1) the agreement satisfies subsection (b)(3) with
5493	5493	respect to existing or after-acquired property of the new
5494	5494	debtor to the extent the property is described in the
5495	5495	agreement; and
5496	5496	(2) another agreement is not necessary to make a
5497	5497	security interest in the property enforceable.
5498	5498	(f) Proceeds and supporting obligations. The attachment
5499	5499	of a security interest in collateral gives the secured party
5500	5500	the rights to proceeds provided by Section 7-9A-315 and is
5501	5501	also attachment of a security interest in a supporting
5502	5502	obligation for the collateral.
5503	5503	(g) Lien securing right to payment. The attachment of a
5504	5504	security interest in a right to payment or performance secured
5505	5505	by a security interest or other lien on personal or real
5506	5506	property is also attachment of a security interest in the
5507	5507	security interest, mortgage, or other lien.
5508	5508	(h) Security entitlement carried in securities account.
5509	5509	2689
5510	5510	2690
5511	5511	2691
5512	5512	2692
5513	5513	2693
5514	5514	2694
5515	5515	2695
5516	5516	2696
5517	5517	2697
5518	5518	2698
5519	5519	2699
5520	5520	2700
5521	5521	2701
5522	5522	2702
5523	5523	2703
5524	5524	2704
5525	5525	2705
5526	5526	2706
5527	5527	2707
5528	5528	2708
5529	5529	2709
5530	5530	2710
5531	5531	2711
5532	5532	2712
5533	5533	2713
5534	5534	2714
5535	5535	2715
5536	5536	2716 SB231 INTRODUCEDSB231 INTRODUCED
5537	5537	Page 98
5538	5538	The attachment of a security interest in a securities account
5539	5539	is also attachment of a security interest in the security
5540	5540	entitlements carried in the securities account.
5541	5541	(i) Commodity contracts carried in commodity account.
5542	5542	The attachment of a security interest in a commodity account
5543	5543	is also attachment of a security interest in the commodity
5544	5544	contracts carried in the commodity account."
5545	5545	"§7-9A-204. After-acquired property; future advances.
5546	5546	(a) After-acquired collateral. Except as otherwise
5547	5547	provided in subsection (b), a security agreement may create or
5548	5548	provide for a security interest in after-acquired collateral.
5549	5549	(b) When after-acquired property clause not effective.
5550	5550	A Subject to subsection (b.1), a security interest does not
5551	5551	attach under a term constituting an after-acquired property
5552	5552	clause to:
5553	5553	(1) consumer goods, other than an accession when given
5554	5554	as additional security, unless the debtor acquires rights in
5555	5555	them within 10 days after the secured party gives value; or
5556	5556	(2) a commercial tort claim.
5557	5557	(b.1) Limitation on subsection (b). Subsection (b) does
5558	5558	not prevent a security interest from attaching:
5559	5559	(1) to consumer goods as proceeds under Section
5560	5560	7-9A-315(a) or commingled goods under Section 7-9A-336(c);
5561	5561	(2) to a commercial tort claim as proceeds under
5562	5562	Section 7-9A-315(a); or
5563	5563	(3) under an after-acquired property clause to property
5564	5564	that is proceeds of consumer goods or a commercial tort claim.
5565	5565	(c) Future advances and other value. A security
5566	5566	2717
5567	5567	2718
5568	5568	2719
5569	5569	2720
5570	5570	2721
5571	5571	2722
5572	5572	2723
5573	5573	2724
5574	5574	2725
5575	5575	2726
5576	5576	2727
5577	5577	2728
5578	5578	2729
5579	5579	2730
5580	5580	2731
5581	5581	2732
5582	5582	2733
5583	5583	2734
5584	5584	2735
5585	5585	2736
5586	5586	2737
5587	5587	2738
5588	5588	2739
5589	5589	2740
5590	5590	2741
5591	5591	2742
5592	5592	2743
5593	5593	2744 SB231 INTRODUCEDSB231 INTRODUCED
5594	5594	Page 99
5595	5595	agreement may provide that collateral secures, or that
5596	5596	accounts, chattel paper, payment intangibles, or promissory
5597	5597	notes are sold in connection with, future advances or other
5598	5598	value, whether or not the advances or value are given pursuant
5599	5599	to commitment."
5600	5600	"§7-9A-207. Rights and duties of secured party having
5601	5601	possession or control of collateral.
5602	5602	(a) Duty of care when secured party in possession.
5603	5603	Except as otherwise provided in subsection (d), a secured
5604	5604	party shall use reasonable care in the custody and
5605	5605	preservation of collateral in the secured party's possession.
5606	5606	In the case of chattel paper or an instrument, reasonable care
5607	5607	includes taking necessary steps to preserve rights against
5608	5608	prior parties unless otherwise agreed.
5609	5609	(b) Expenses, risks, duties, and rights when secured
5610	5610	party in possession. Except as otherwise provided in
5611	5611	subsection (d), if a secured party has possession of
5612	5612	collateral:
5613	5613	(1) reasonable expenses, including the cost of
5614	5614	insurance and payment of taxes or other charges, incurred in
5615	5615	the custody, preservation, use, or operation of the collateral
5616	5616	are chargeable to the debtor and are secured by the
5617	5617	collateral;
5618	5618	(2) the risk of accidental loss or damage is on the
5619	5619	debtor to the extent of a deficiency in any effective
5620	5620	insurance coverage;
5621	5621	(3) the secured party shall keep the collateral
5622	5622	identifiable, but fungible collateral may be commingled; and
5623	5623	2745
5624	5624	2746
5625	5625	2747
5626	5626	2748
5627	5627	2749
5628	5628	2750
5629	5629	2751
5630	5630	2752
5631	5631	2753
5632	5632	2754
5633	5633	2755
5634	5634	2756
5635	5635	2757
5636	5636	2758
5637	5637	2759
5638	5638	2760
5639	5639	2761
5640	5640	2762
5641	5641	2763
5642	5642	2764
5643	5643	2765
5644	5644	2766
5645	5645	2767
5646	5646	2768
5647	5647	2769
5648	5648	2770
5649	5649	2771
5650	5650	2772 SB231 INTRODUCEDSB231 INTRODUCED
5651	5651	Page 100
5652	5652	(4) the secured party may use or operate the
5653	5653	collateral:
5654	5654	(A) for the purpose of preserving the collateral or its
5655	5655	value;
5656	5656	(B) as permitted by an order of a court having
5657	5657	competent jurisdiction; or
5658	5658	(C) except in the case of consumer goods, in the manner
5659	5659	and to the extent agreed by the debtor.
5660	5660	(c) Duties and rights when secured party in possession
5661	5661	or control. Except as otherwise provided in subsection (d), a
5662	5662	secured party having possession of collateral or control of
5663	5663	collateral under Section 7-7-106, 7-9A-104, 7-9A-105,
5664	5664	7-9A-106, or 7-9A-107, or 7-9A-107A:
5665	5665	(1) may hold as additional security any proceeds,
5666	5666	except money or funds, received from the collateral;
5667	5667	(2) shall apply money or funds received from the
5668	5668	collateral to reduce the secured obligation, unless remitted
5669	5669	to the debtor; and
5670	5670	(3) may create a security interest in the collateral.
5671	5671	(d) Buyer of certain rights to payment. If the secured
5672	5672	party is a buyer of accounts, chattel paper, payment
5673	5673	intangibles, or promissory notes or a consignor:
5674	5674	(1) subsection (a) does not apply unless the secured
5675	5675	party is entitled under an agreement:
5676	5676	(A) to charge back uncollected collateral; or
5677	5677	(B) otherwise to full or limited recourse against the
5678	5678	debtor or a secondary obligor based on the nonpayment or other
5679	5679	default of an account debtor or other obligor on the
5680	5680	2773
5681	5681	2774
5682	5682	2775
5683	5683	2776
5684	5684	2777
5685	5685	2778
5686	5686	2779
5687	5687	2780
5688	5688	2781
5689	5689	2782
5690	5690	2783
5691	5691	2784
5692	5692	2785
5693	5693	2786
5694	5694	2787
5695	5695	2788
5696	5696	2789
5697	5697	2790
5698	5698	2791
5699	5699	2792
5700	5700	2793
5701	5701	2794
5702	5702	2795
5703	5703	2796
5704	5704	2797
5705	5705	2798
5706	5706	2799
5707	5707	2800 SB231 INTRODUCEDSB231 INTRODUCED
5708	5708	Page 101
5709	5709	collateral; and
5710	5710	(2) subsections (b) and (c) do not apply."
5711	5711	"§7-9A-208. Additional duties of secured party having
5712	5712	control of collateral.
5713	5713	(a) Applicability of section. This section applies to
5714	5714	cases in which there is no outstanding secured obligation and
5715	5715	the secured party is not committed to make advances, incur
5716	5716	obligations, or otherwise give value.
5717	5717	(b) Duties of secured party after receiving demand from
5718	5718	debtor. Within 10 days after receiving an authenticated a
5719	5719	signed demand by the debtor:
5720	5720	(1) a secured party having control of a deposit account
5721	5721	under Section 7-9A-104(a)(2) shall send to the bank with which
5722	5722	the deposit account is maintained an authenticated a signed
5723	5723	record statement that releases the bank from any further
5724	5724	obligation to comply with instructions originated by the
5725	5725	secured party;
5726	5726	(2) a secured party having control of a deposit account
5727	5727	under Section 7-9A-104(a)(3) shall:
5728	5728	(A) pay the debtor the balance on deposit in the
5729	5729	deposit account; or
5730	5730	(B) transfer the balance on deposit into a deposit
5731	5731	account in the debtor's name;
5732	5732	(3) a secured party, other than a buyer, having control
5733	5733	of electronic chattel paper under Section 7-9A-105 of an
5734	5734	authoritative electronic copy of a record evidencing chattel
5735	5735	paper shall transfer control of the electronic copy to the
5736	5736	debtor or a person designated by the debtor; shall:
5737	5737	2801
5738	5738	2802
5739	5739	2803
5740	5740	2804
5741	5741	2805
5742	5742	2806
5743	5743	2807
5744	5744	2808
5745	5745	2809
5746	5746	2810
5747	5747	2811
5748	5748	2812
5749	5749	2813
5750	5750	2814
5751	5751	2815
5752	5752	2816
5753	5753	2817
5754	5754	2818
5755	5755	2819
5756	5756	2820
5757	5757	2821
5758	5758	2822
5759	5759	2823
5760	5760	2824
5761	5761	2825
5762	5762	2826
5763	5763	2827
5764	5764	2828 SB231 INTRODUCEDSB231 INTRODUCED
5765	5765	Page 102
5766	5766	(A) communicate the authoritative copy of the
5767	5767	electronic chattel paper to the debtor or its designated
5768	5768	custodian;
5769	5769	(B) if the debtor designates a custodian that is the
5770	5770	designated custodian with which the authoritative copy of the
5771	5771	electronic chattel paper is maintained for the secured party,
5772	5772	communicate to the custodian an authenticated record releasing
5773	5773	the designated custodian from any further obligation to comply
5774	5774	with instructions originated by the secured party and
5775	5775	instructing the custodian to comply with instructions
5776	5776	originated by the debtor; and
5777	5777	(C) take appropriate action to enable the debtor or its
5778	5778	designated custodian to make copies of or revisions to the
5779	5779	authoritative copy which add or change an identified assignee
5780	5780	of the authoritative copy without the consent of the secured
5781	5781	party;
5782	5782	(4) a secured party having control of investment
5783	5783	property under Section 7-8-106(d)(2) or 7-9A-106(b) shall send
5784	5784	to the securities intermediary or commodity intermediary with
5785	5785	which the security entitlement or commodity contract is
5786	5786	maintained an authenticated a signed record that releases the
5787	5787	securities intermediary or commodity intermediary from any
5788	5788	further obligation to comply with entitlement orders or
5789	5789	directions originated by the secured party;
5790	5790	(5) a secured party having control of a
5791	5791	letter-of-credit right under Section 7-9A-107 shall send to
5792	5792	each person having an unfulfilled obligation to pay or deliver
5793	5793	proceeds of the letter of credit to the secured party an
5794	5794	2829
5795	5795	2830
5796	5796	2831
5797	5797	2832
5798	5798	2833
5799	5799	2834
5800	5800	2835
5801	5801	2836
5802	5802	2837
5803	5803	2838
5804	5804	2839
5805	5805	2840
5806	5806	2841
5807	5807	2842
5808	5808	2843
5809	5809	2844
5810	5810	2845
5811	5811	2846
5812	5812	2847
5813	5813	2848
5814	5814	2849
5815	5815	2850
5816	5816	2851
5817	5817	2852
5818	5818	2853
5819	5819	2854
5820	5820	2855
5821	5821	2856 SB231 INTRODUCEDSB231 INTRODUCED
5822	5822	Page 103
5823	5823	authenticated a signed release from any further obligation to
5824	5824	pay or deliver proceeds of the letter of credit to the secured
5825	5825	party.;
5826	5826	(6) a secured party having control of an electronic
5827	5827	document shall:
5828	5828	a. Give control of the electronic document to the
5829	5829	debtor or its designated custodian;
5830	5830	b. If the debtor designates a custodian that is the
5831	5831	designated custodian with which the authoritative copy of the
5832	5832	electronic document is maintained for the secured party,
5833	5833	communicate to the custodian an authenticated record releasing
5834	5834	the designated custodian from any further obligation to comply
5835	5835	with instructions originated by the secured party and
5836	5836	instructing the custodian to comply with instructions
5837	5837	originated by the debtor; and
5838	5838	c. Take appropriate action to enable the debtor or its
5839	5839	designated custodian to make copies of or revisions to the
5840	5840	authoritative copy which add or change an identified assignee
5841	5841	of the authoritative copy without the consent of the secured
5842	5842	party.
5843	5843	(6) a secured party having control under Section
5844	5844	7-7-106 of an authoritative electronic copy of an electronic
5845	5845	document shall transfer control of the electronic copy to the
5846	5846	debtor or a person designated by the debtor; and
5847	5847	(7) a secured party having control under Section
5848	5848	7-12-105 of a controllable electronic record, other than a
5849	5849	buyer of a controllable account or controllable payment
5850	5850	intangible evidenced by the controllable electronic record,
5851	5851	2857
5852	5852	2858
5853	5853	2859
5854	5854	2860
5855	5855	2861
5856	5856	2862
5857	5857	2863
5858	5858	2864
5859	5859	2865
5860	5860	2866
5861	5861	2867
5862	5862	2868
5863	5863	2869
5864	5864	2870
5865	5865	2871
5866	5866	2872
5867	5867	2873
5868	5868	2874
5869	5869	2875
5870	5870	2876
5871	5871	2877
5872	5872	2878
5873	5873	2879
5874	5874	2880
5875	5875	2881
5876	5876	2882
5877	5877	2883
5878	5878	2884 SB231 INTRODUCEDSB231 INTRODUCED
5879	5879	Page 104
5880	5880	shall transfer control of the controllable electronic record
5881	5881	to the debtor or a person designated by the debtor.
5882	5882	(c) Authenticated Signed demand. In this section,
5883	5883	"authenticated signed demand" means a record authenticated
5884	5884	signed by the debtor demanding that the secured party take one
5885	5885	or more of the specific actions described in subsection (b)
5886	5886	and reasonably identifying the collateral that is the subject
5887	5887	of the demand. The secured party may designate in a record
5888	5888	sent to the debtor or as to which the debtor has notice an
5889	5889	address to which such demands must be sent. A demand sent to
5890	5890	another address of the secured party will be effective, but
5891	5891	the 10-day period for action by the secured party does not
5892	5892	begin until the person or department at the address specified
5893	5893	by the secured party has notice of the demand."
5894	5894	"§7-9A-209. Duties of secured party if account debtor
5895	5895	has been notified of assignment.
5896	5896	(a) Applicability of section. Except as otherwise
5897	5897	provided in subsection (c), this section applies if:
5898	5898	(1) there is no outstanding secured obligation; and
5899	5899	(2) the secured party is not committed to make
5900	5900	advances, incur obligations, or otherwise give value.
5901	5901	(b) Duties of secured party after receiving demand from
5902	5902	debtor. Within 10 days after receiving an authenticated a
5903	5903	signed demand by the debtor, a secured party shall send to an
5904	5904	account debtor that has received notification , under Section
5905	5905	7-9A-406(a) or 7-12-106(b), of an assignment to the secured
5906	5906	party as assignee under Section 7-9A-406(a) an authenticated a
5907	5907	signed record that releases the account debtor from any
5908	5908	2885
5909	5909	2886
5910	5910	2887
5911	5911	2888
5912	5912	2889
5913	5913	2890
5914	5914	2891
5915	5915	2892
5916	5916	2893
5917	5917	2894
5918	5918	2895
5919	5919	2896
5920	5920	2897
5921	5921	2898
5922	5922	2899
5923	5923	2900
5924	5924	2901
5925	5925	2902
5926	5926	2903
5927	5927	2904
5928	5928	2905
5929	5929	2906
5930	5930	2907
5931	5931	2908
5932	5932	2909
5933	5933	2910
5934	5934	2911
5935	5935	2912 SB231 INTRODUCEDSB231 INTRODUCED
5936	5936	Page 105
5937	5937	further obligation to the secured party.
5938	5938	(c) Inapplicability to sales. This section does not
5939	5939	apply to an assignment constituting the sale of an account,
5940	5940	chattel paper, or payment intangible.
5941	5941	(d) Authenticated Signed demand. In this section,
5942	5942	"authenticated signed demand" means a record signed
5943	5943	authenticated by the debtor demanding that the secured party
5944	5944	take the action described in subsection (b). The secured party
5945	5945	may designate in a record sent to the debtor or as to which
5946	5946	the debtor has notice an address to which such demand must be
5947	5947	sent. A demand sent to another address of the secured party
5948	5948	will be effective, but the 10-day period for action by the
5949	5949	secured party does not begin until the person or department at
5950	5950	the address specified by the secured party has notice of the
5951	5951	demand."
5952	5952	"§7-9A-210. Request for accounting; request regarding
5953	5953	list of collateral or statement of account.
5954	5954	(a) Definitions. In this section:
5955	5955	(1) "Request" means a record of a type described in
5956	5956	paragraph (2), (3), or (4).
5957	5957	(2) "Request for an accounting" means a record
5958	5958	authenticated signed by a debtor requesting that the recipient
5959	5959	provide an accounting of the unpaid obligations secured by
5960	5960	collateral and reasonably identifying the transaction or
5961	5961	relationship that is the subject of the request.
5962	5962	(3) "Request regarding a list of collateral" means a
5963	5963	record authenticated signed by a debtor requesting that the
5964	5964	recipient approve or correct a list of what the debtor
5965	5965	2913
5966	5966	2914
5967	5967	2915
5968	5968	2916
5969	5969	2917
5970	5970	2918
5971	5971	2919
5972	5972	2920
5973	5973	2921
5974	5974	2922
5975	5975	2923
5976	5976	2924
5977	5977	2925
5978	5978	2926
5979	5979	2927
5980	5980	2928
5981	5981	2929
5982	5982	2930
5983	5983	2931
5984	5984	2932
5985	5985	2933
5986	5986	2934
5987	5987	2935
5988	5988	2936
5989	5989	2937
5990	5990	2938
5991	5991	2939
5992	5992	2940 SB231 INTRODUCEDSB231 INTRODUCED
5993	5993	Page 106
5994	5994	believes to be the collateral securing an obligation and
5995	5995	reasonably identifying the transaction or relationship that is
5996	5996	the subject of the request.
5997	5997	(4) "Request regarding a statement of account" means a
5998	5998	record authenticated signed by a debtor requesting that the
5999	5999	recipient approve or correct a statement indicating what the
6000	6000	debtor believes to be the aggregate amount of unpaid
6001	6001	obligations secured by collateral as of a specified date and
6002	6002	reasonably identifying the transaction or relationship that is
6003	6003	the subject of the request.
6004	6004	(b) Duty to respond to requests. Subject to subsections
6005	6005	(c), (d), (e), and (f), a secured party, other than a buyer of
6006	6006	accounts, chattel paper, payment intangibles, or promissory
6007	6007	notes or a consignor, shall comply with a request within 14
6008	6008	days after receipt:
6009	6009	(1) in the case of a request for an accounting, by
6010	6010	authenticating signing and sending to the debtor an
6011	6011	accounting; and
6012	6012	(2) in the case of a request regarding a list of
6013	6013	collateral or a request regarding a statement of account, by
6014	6014	authenticating signing and sending to the debtor an approval
6015	6015	or correction.
6016	6016	(c) Request regarding list of collateral; statement
6017	6017	concerning type of collateral. A secured party that claims a
6018	6018	security interest in all of a particular type of collateral
6019	6019	owned by the debtor may comply with a request regarding a list
6020	6020	of collateral by sending to the debtor an authenticated a
6021	6021	signed record including a statement to that effect within 14
6022	6022	2941
6023	6023	2942
6024	6024	2943
6025	6025	2944
6026	6026	2945
6027	6027	2946
6028	6028	2947
6029	6029	2948
6030	6030	2949
6031	6031	2950
6032	6032	2951
6033	6033	2952
6034	6034	2953
6035	6035	2954
6036	6036	2955
6037	6037	2956
6038	6038	2957
6039	6039	2958
6040	6040	2959
6041	6041	2960
6042	6042	2961
6043	6043	2962
6044	6044	2963
6045	6045	2964
6046	6046	2965
6047	6047	2966
6048	6048	2967
6049	6049	2968 SB231 INTRODUCEDSB231 INTRODUCED
6050	6050	Page 107
6051	6051	days after receipt.
6052	6052	(d) Request regarding list of collateral; no interest
6053	6053	claimed. A person that receives a request regarding a list of
6054	6054	collateral, claims no interest in the collateral when it
6055	6055	receives the request, and claimed an interest in the
6056	6056	collateral at an earlier time shall comply with the request
6057	6057	within 14 days after receipt by sending to the debtor an
6058	6058	authenticated a signed record:
6059	6059	(1) disclaiming any interest in the collateral; and
6060	6060	(2) if known to the recipient, providing the name and
6061	6061	mailing address of any assignee of or successor to the
6062	6062	recipient's interest in the collateral.
6063	6063	(e) Request for accounting or regarding statement of
6064	6064	account; no interest in obligation claimed. A person that
6065	6065	receives a request for an accounting or a request regarding a
6066	6066	statement of account, claims no interest in the obligations
6067	6067	when it receives the request, and claimed an interest in the
6068	6068	obligations at an earlier time shall comply with the request
6069	6069	within 14 days after receipt by sending to the debtor an
6070	6070	authenticated a signed record:
6071	6071	(1) disclaiming any interest in the obligations; and
6072	6072	(2) if known to the recipient, providing the name and
6073	6073	mailing address of any assignee of or successor to the
6074	6074	recipient's interest in the obligations.
6075	6075	(f) Charges for responses. A debtor is entitled without
6076	6076	charge to one response to a request under this section during
6077	6077	any six-month period. The secured party may require payment of
6078	6078	a charge not exceeding $25twenty-five dollars ($25) for each
6079	6079	2969
6080	6080	2970
6081	6081	2971
6082	6082	2972
6083	6083	2973
6084	6084	2974
6085	6085	2975
6086	6086	2976
6087	6087	2977
6088	6088	2978
6089	6089	2979
6090	6090	2980
6091	6091	2981
6092	6092	2982
6093	6093	2983
6094	6094	2984
6095	6095	2985
6096	6096	2986
6097	6097	2987
6098	6098	2988
6099	6099	2989
6100	6100	2990
6101	6101	2991
6102	6102	2992
6103	6103	2993
6104	6104	2994
6105	6105	2995
6106	6106	2996 SB231 INTRODUCEDSB231 INTRODUCED
6107	6107	Page 108
6108	6108	additional response.
6109	6109	(g) Designation of address for request. The secured
6110	6110	party may designate in a record sent to the debtor,
6111	6111	authenticated signed by the debtor, or, as to which the debtor
6112	6112	has notice, an address to which a request under this section
6113	6113	must be sent. A request sent to another address of the secured
6114	6114	party will be effective, but the 14-day period for action by
6115	6115	the secured party does not begin until the person or
6116	6116	department at the address specified by the secured party has
6117	6117	notice of the request."
6118	6118	"§7-9A-301. Law governing perfection and priority of
6119	6119	security interests.
6120	6120	Except as otherwise provided in Sections 7-9A-303
6121	6121	through 7-9A-306 7-9A-306B, the following rules determine the
6122	6122	law governing perfection, the effect of perfection or
6123	6123	nonperfection, and the priority of a security interest in
6124	6124	collateral:
6125	6125	(1) Except as otherwise provided in this section, while
6126	6126	a debtor is located in a jurisdiction, the local law of that
6127	6127	jurisdiction governs perfection, the effect of perfection or
6128	6128	nonperfection, and the priority of a security interest in
6129	6129	collateral.
6130	6130	(2) While collateral is located in a jurisdiction, the
6131	6131	local law of that jurisdiction governs perfection, the effect
6132	6132	of perfection or nonperfection, and the priority of a
6133	6133	possessory security interest in that collateral.
6134	6134	(3) Except as otherwise provided in paragraph (4),
6135	6135	while tangible negotiable tangible documents, goods,
6136	6136	2997
6137	6137	2998
6138	6138	2999
6139	6139	3000
6140	6140	3001
6141	6141	3002
6142	6142	3003
6143	6143	3004
6144	6144	3005
6145	6145	3006
6146	6146	3007
6147	6147	3008
6148	6148	3009
6149	6149	3010
6150	6150	3011
6151	6151	3012
6152	6152	3013
6153	6153	3014
6154	6154	3015
6155	6155	3016
6156	6156	3017
6157	6157	3018
6158	6158	3019
6159	6159	3020
6160	6160	3021
6161	6161	3022
6162	6162	3023
6163	6163	3024 SB231 INTRODUCEDSB231 INTRODUCED
6164	6164	Page 109
6165	6165	instruments, or money, or tangible chattel paper is located in
6166	6166	a jurisdiction, the local law of that jurisdiction governs:
6167	6167	(A) perfection of a security interest in the goods by
6168	6168	filing a fixture filing;
6169	6169	(B) perfection of a security interest in timber to be
6170	6170	cut; and
6171	6171	(C) the effect of perfection or nonperfection and the
6172	6172	priority of a nonpossessory security interest in the
6173	6173	collateral.
6174	6174	(4) The local law of the jurisdiction in which the
6175	6175	wellhead or mine is located governs perfection, the effect of
6176	6176	perfection or nonperfection, and the priority of a security
6177	6177	interest in as-extracted collateral."
6178	6178	"§7-9A-304. Law governing perfection and priority of
6179	6179	security interests in deposit accounts.
6180	6180	(a) Law of bank's jurisdiction governs. The local law
6181	6181	of a bank's jurisdiction governs perfection, the effect of
6182	6182	perfection or nonperfection, and the priority of a security
6183	6183	interest in a deposit account maintained with that bank even
6184	6184	if the transaction does not bear any relation to the bank's
6185	6185	jurisdiction.
6186	6186	(b) Bank's jurisdiction. The following rules determine
6187	6187	a bank's jurisdiction for purposes of this part:
6188	6188	(1) If an agreement between the bank and the debtor
6189	6189	governing the deposit account expressly provides that a
6190	6190	particular jurisdiction is the bank's jurisdiction for
6191	6191	purposes of this part, this article, or the Uniform Commercial
6192	6192	Code, that jurisdiction is the bank's jurisdiction.
6193	6193	3025
6194	6194	3026
6195	6195	3027
6196	6196	3028
6197	6197	3029
6198	6198	3030
6199	6199	3031
6200	6200	3032
6201	6201	3033
6202	6202	3034
6203	6203	3035
6204	6204	3036
6205	6205	3037
6206	6206	3038
6207	6207	3039
6208	6208	3040
6209	6209	3041
6210	6210	3042
6211	6211	3043
6212	6212	3044
6213	6213	3045
6214	6214	3046
6215	6215	3047
6216	6216	3048
6217	6217	3049
6218	6218	3050
6219	6219	3051
6220	6220	3052 SB231 INTRODUCEDSB231 INTRODUCED
6221	6221	Page 110
6222	6222	(2) If paragraph (1) does not apply and an agreement
6223	6223	between the bank and its customer governing the deposit
6224	6224	account expressly provides that the agreement is governed by
6225	6225	the law of a particular jurisdiction, that jurisdiction is the
6226	6226	bank's jurisdiction.
6227	6227	(3) If neither paragraph (1) nor paragraph (2) applies
6228	6228	and an agreement between the bank and its customer governing
6229	6229	the deposit account expressly provides that the deposit
6230	6230	account is maintained at an office in a particular
6231	6231	jurisdiction, that jurisdiction is the bank's jurisdiction.
6232	6232	(4) If none of the preceding paragraphs applies, the
6233	6233	bank's jurisdiction is the jurisdiction in which the office
6234	6234	identified in an account statement as the office serving the
6235	6235	customer's account is located.
6236	6236	(5) If none of the preceding paragraphs applies, the
6237	6237	bank's jurisdiction is the jurisdiction in which the chief
6238	6238	executive office of the bank is located."
6239	6239	"§7-9A-305. Law governing perfection and priority of
6240	6240	security interests in investment property.
6241	6241	(a) Governing law: General rules. Except as otherwise
6242	6242	provided in subsection (c), the following rules apply:
6243	6243	(1) While a security certificate is located in a
6244	6244	jurisdiction, the local law of that jurisdiction governs
6245	6245	perfection, the effect of perfection or nonperfection, and the
6246	6246	priority of a security interest in the certificated security
6247	6247	represented thereby.
6248	6248	(2) The local law of the issuer's jurisdiction as
6249	6249	specified in Section 7-8-110(d) governs perfection, the effect
6250	6250	3053
6251	6251	3054
6252	6252	3055
6253	6253	3056
6254	6254	3057
6255	6255	3058
6256	6256	3059
6257	6257	3060
6258	6258	3061
6259	6259	3062
6260	6260	3063
6261	6261	3064
6262	6262	3065
6263	6263	3066
6264	6264	3067
6265	6265	3068
6266	6266	3069
6267	6267	3070
6268	6268	3071
6269	6269	3072
6270	6270	3073
6271	6271	3074
6272	6272	3075
6273	6273	3076
6274	6274	3077
6275	6275	3078
6276	6276	3079
6277	6277	3080 SB231 INTRODUCEDSB231 INTRODUCED
6278	6278	Page 111
6279	6279	of perfection or nonperfection, and the priority of a security
6280	6280	interest in an uncertificated security.
6281	6281	(3) The local law of the securities intermediary's
6282	6282	jurisdiction as specified in Section 7-8-110(e) governs
6283	6283	perfection, the effect of perfection or nonperfection, and the
6284	6284	priority of a security interest in a security entitlement or
6285	6285	securities account.
6286	6286	(4) The local law of the commodity intermediary's
6287	6287	jurisdiction governs perfection, the effect of perfection or
6288	6288	nonperfection, and the priority of a security interest in a
6289	6289	commodity contract or commodity account.
6290	6290	(5) Paragraphs (2), (3), and (4) apply even if the
6291	6291	transaction does not bear any relation to the jurisdiction.
6292	6292	(b) Commodity intermediary's jurisdiction. The
6293	6293	following rules determine a commodity intermediary's
6294	6294	jurisdiction for purposes of this part:
6295	6295	(1) If an agreement between the commodity intermediary
6296	6296	and commodity customer governing the commodity account
6297	6297	expressly provides that a particular jurisdiction is the
6298	6298	commodity intermediary's jurisdiction for purposes of this
6299	6299	part, this article, or the Uniform Commercial Code, that
6300	6300	jurisdiction is the commodity intermediary's jurisdiction.
6301	6301	(2) If paragraph (1) does not apply and an agreement
6302	6302	between the commodity intermediary and commodity customer
6303	6303	governing the commodity account expressly provides that the
6304	6304	agreement is governed by the law of a particular jurisdiction,
6305	6305	that jurisdiction is the commodity intermediary's
6306	6306	jurisdiction.
6307	6307	3081
6308	6308	3082
6309	6309	3083
6310	6310	3084
6311	6311	3085
6312	6312	3086
6313	6313	3087
6314	6314	3088
6315	6315	3089
6316	6316	3090
6317	6317	3091
6318	6318	3092
6319	6319	3093
6320	6320	3094
6321	6321	3095
6322	6322	3096
6323	6323	3097
6324	6324	3098
6325	6325	3099
6326	6326	3100
6327	6327	3101
6328	6328	3102
6329	6329	3103
6330	6330	3104
6331	6331	3105
6332	6332	3106
6333	6333	3107
6334	6334	3108 SB231 INTRODUCEDSB231 INTRODUCED
6335	6335	Page 112
6336	6336	(3) If neither paragraph (1) nor paragraph (2) applies
6337	6337	and an agreement between the commodity intermediary and
6338	6338	commodity customer governing the commodity account expressly
6339	6339	provides that the commodity account is maintained at an office
6340	6340	in a particular jurisdiction, that jurisdiction is the
6341	6341	commodity intermediary's jurisdiction.
6342	6342	(4) If none of the preceding paragraphs applies, the
6343	6343	commodity intermediary's jurisdiction is the jurisdiction in
6344	6344	which the office identified in an account statement as the
6345	6345	office serving the commodity customer's account is located.
6346	6346	(5) If none of the preceding paragraphs applies, the
6347	6347	commodity intermediary's jurisdiction is the jurisdiction in
6348	6348	which the chief executive office of the commodity intermediary
6349	6349	is located.
6350	6350	(c) When perfection governed by law of jurisdiction
6351	6351	where debtor located. The local law of the jurisdiction in
6352	6352	which the debtor is located governs:
6353	6353	(1) perfection of a security interest in investment
6354	6354	property by filing;
6355	6355	(2) automatic perfection of a security interest in
6356	6356	investment property created by a broker or securities
6357	6357	intermediary; and
6358	6358	(3) automatic perfection of a security interest in a
6359	6359	commodity contract or commodity account created by a commodity
6360	6360	intermediary."
6361	6361	"§7-9A-310. When filing required to perfect security
6362	6362	interest or agricultural lien; security interests and
6363	6363	agricultural liens to which filing provisions do not apply.
6364	6364	3109
6365	6365	3110
6366	6366	3111
6367	6367	3112
6368	6368	3113
6369	6369	3114
6370	6370	3115
6371	6371	3116
6372	6372	3117
6373	6373	3118
6374	6374	3119
6375	6375	3120
6376	6376	3121
6377	6377	3122
6378	6378	3123
6379	6379	3124
6380	6380	3125
6381	6381	3126
6382	6382	3127
6383	6383	3128
6384	6384	3129
6385	6385	3130
6386	6386	3131
6387	6387	3132
6388	6388	3133
6389	6389	3134
6390	6390	3135
6391	6391	3136 SB231 INTRODUCEDSB231 INTRODUCED
6392	6392	Page 113
6393	6393	(a) General rule: Perfection by filing. Except as
6394	6394	otherwise provided in subsection (b) and Section 7-9A-312(b),
6395	6395	a financing statement must be filed to perfect all security
6396	6396	interests and agricultural liens.
6397	6397	(b) Exceptions: Filing not necessary. The filing of a
6398	6398	financing statement is not necessary to perfect a security
6399	6399	interest:
6400	6400	(1) that is perfected under Section 7-9A-308(d), (e),
6401	6401	(f), or (g);
6402	6402	(2) that is perfected under Section 7-9A-309 when it
6403	6403	attaches;
6404	6404	(3) in property subject to a statute, regulation, or
6405	6405	treaty described in Section 7-9A-311(a);
6406	6406	(4) in goods in possession of a bailee which is
6407	6407	perfected under Section 7-9A-312(d)(1) or (2);
6408	6408	(5) in certificated securities, documents, goods, or
6409	6409	instruments which is perfected without filing, control, or
6410	6410	possession under Section 7-9A-312(e), (f), or (g);
6411	6411	(6) in collateral in the secured party's possession
6412	6412	under Section 7-9A-313;
6413	6413	(7) in a certificated security which is perfected by
6414	6414	delivery of the security certificate to the secured party
6415	6415	under Section 7-9A-313;
6416	6416	(8) in controllable accounts, controllable electronic
6417	6417	records, controllable payment intangibles, deposit accounts,
6418	6418	electronic documents, electronic chattel paper, investment
6419	6419	property, or letter-of-credit rights which is perfected by
6420	6420	control under Section 7-9A-314;
6421	6421	3137
6422	6422	3138
6423	6423	3139
6424	6424	3140
6425	6425	3141
6426	6426	3142
6427	6427	3143
6428	6428	3144
6429	6429	3145
6430	6430	3146
6431	6431	3147
6432	6432	3148
6433	6433	3149
6434	6434	3150
6435	6435	3151
6436	6436	3152
6437	6437	3153
6438	6438	3154
6439	6439	3155
6440	6440	3156
6441	6441	3157
6442	6442	3158
6443	6443	3159
6444	6444	3160
6445	6445	3161
6446	6446	3162
6447	6447	3163
6448	6448	3164 SB231 INTRODUCEDSB231 INTRODUCED
6449	6449	Page 114
6450	6450	(8A) in chattel paper which is perfected by possession
6451	6451	and control under Section 7-9A-314A;
6452	6452	(9) in proceeds which is perfected under Section
6453	6453	7-9A-315; or
6454	6454	(10) that is perfected under Section 7-9A-316.
6455	6455	(c) Assignment of perfected security interest. If a
6456	6456	secured party assigns a perfected security interest or
6457	6457	agricultural lien, a filing under this article is not required
6458	6458	to continue the perfected status of the security interest
6459	6459	against creditors of and transferees from the original debtor.
6460	6460	"§7-9A-312. Perfection of certain security interests by
6461	6461	filing; temporary perfection Perfection of security interests
6462	6462	in chattel paper, controllable accounts, controllable
6463	6463	electronic records, controllable payment intangibles, deposit
6464	6464	accounts, negotiable documents, goods covered by documents,
6465	6465	instruments, investment property, letter-of-credit rights, and
6466	6466	money; perfection by permissive filing; temporary without
6467	6467	filing or transfer of possession .
6468	6468	(a) Perfection by filing permitted. A security interest
6469	6469	in chattel paper, controllable accounts, controllable
6470	6470	electronic records, controllable payment intangibles,
6471	6471	negotiable documents, instruments, or investment property , or
6472	6472	negotiable documents may be perfected by filing.
6473	6473	(b) Control or possession of certain collateral. Except
6474	6474	as otherwise provided in Section 7-9A-315(c) and (d) for
6475	6475	proceeds:
6476	6476	(1) a security interest in a deposit account may be
6477	6477	perfected only by control under Section 7-9A-314;
6478	6478	3165
6479	6479	3166
6480	6480	3167
6481	6481	3168
6482	6482	3169
6483	6483	3170
6484	6484	3171
6485	6485	3172
6486	6486	3173
6487	6487	3174
6488	6488	3175
6489	6489	3176
6490	6490	3177
6491	6491	3178
6492	6492	3179
6493	6493	3180
6494	6494	3181
6495	6495	3182
6496	6496	3183
6497	6497	3184
6498	6498	3185
6499	6499	3186
6500	6500	3187
6501	6501	3188
6502	6502	3189
6503	6503	3190
6504	6504	3191
6505	6505	3192 SB231 INTRODUCEDSB231 INTRODUCED
6506	6506	Page 115
6507	6507	(2) and except as otherwise provided in Section
6508	6508	7-9A-308(d), a security interest in a letter-of-credit right
6509	6509	may be perfected only by control under Section 7-9A-314; and
6510	6510	(3) a security interest in money may be perfected only
6511	6511	by the secured party's taking possession under Section
6512	6512	7-9A-313.
6513	6513	(c) Goods covered by negotiable document. While goods
6514	6514	are in the possession of a bailee that has issued a negotiable
6515	6515	document covering the goods:
6516	6516	(1) a security interest in the goods may be perfected
6517	6517	by perfecting a security interest in the document; and
6518	6518	(2) a security interest perfected in the document has
6519	6519	priority over any security interest that becomes perfected in
6520	6520	the goods by another method during that time.
6521	6521	(d) Goods covered by nonnegotiable document. While
6522	6522	goods are in the possession of a bailee that has issued a
6523	6523	nonnegotiable document covering the goods, a security interest
6524	6524	in the goods may be perfected by:
6525	6525	(1) issuance of a document in the name of the secured
6526	6526	party;
6527	6527	(2) the bailee's receipt of notification of the secured
6528	6528	party's interest; or
6529	6529	(3) filing as to the goods.
6530	6530	(e) Temporary perfection: New value. A security
6531	6531	interest in certificated securities, negotiable documents, or
6532	6532	instruments is perfected without filing or the taking of
6533	6533	possession or control for a period of 20 days from the time it
6534	6534	attaches to the extent that it arises for new value given
6535	6535	3193
6536	6536	3194
6537	6537	3195
6538	6538	3196
6539	6539	3197
6540	6540	3198
6541	6541	3199
6542	6542	3200
6543	6543	3201
6544	6544	3202
6545	6545	3203
6546	6546	3204
6547	6547	3205
6548	6548	3206
6549	6549	3207
6550	6550	3208
6551	6551	3209
6552	6552	3210
6553	6553	3211
6554	6554	3212
6555	6555	3213
6556	6556	3214
6557	6557	3215
6558	6558	3216
6559	6559	3217
6560	6560	3218
6561	6561	3219
6562	6562	3220 SB231 INTRODUCEDSB231 INTRODUCED
6563	6563	Page 116
6564	6564	under an authenticated a signed security agreement.
6565	6565	(f) Temporary perfection: Goods or documents made
6566	6566	available to debtor. A perfected security interest in a
6567	6567	negotiable document or goods in possession of a bailee, other
6568	6568	than one that has issued a negotiable document for the goods,
6569	6569	remains perfected for 20 days without filing if the secured
6570	6570	party makes available to the debtor the goods or documents
6571	6571	representing the goods for the purpose of:
6572	6572	(1) ultimate sale or exchange; or
6573	6573	(2) loading, unloading, storing, shipping,
6574	6574	transshipping, manufacturing, processing, or otherwise dealing
6575	6575	with them in a manner preliminary to their sale or exchange.
6576	6576	(g) Temporary perfection: Delivery of security
6577	6577	certificate or instrument to debtor. A perfected security
6578	6578	interest in a certificated security or instrument remains
6579	6579	perfected for 20 days without filing if the secured party
6580	6580	delivers the security certificate or instrument to the debtor
6581	6581	for the purpose of:
6582	6582	(1) ultimate sale or exchange; or
6583	6583	(2) presentation, collection, enforcement, renewal, or
6584	6584	registration of transfer.
6585	6585	(h) Expiration of temporary perfection. After the
6586	6586	20-day period specified in subsection (e), (f), or (g)
6587	6587	expires, perfection depends upon compliance with this
6588	6588	article."
6589	6589	"§7-9A-313. When possession by or delivery to secured
6590	6590	party perfects security interest without filing.
6591	6591	(a) Perfection by possession or delivery. Except as
6592	6592	3221
6593	6593	3222
6594	6594	3223
6595	6595	3224
6596	6596	3225
6597	6597	3226
6598	6598	3227
6599	6599	3228
6600	6600	3229
6601	6601	3230
6602	6602	3231
6603	6603	3232
6604	6604	3233
6605	6605	3234
6606	6606	3235
6607	6607	3236
6608	6608	3237
6609	6609	3238
6610	6610	3239
6611	6611	3240
6612	6612	3241
6613	6613	3242
6614	6614	3243
6615	6615	3244
6616	6616	3245
6617	6617	3246
6618	6618	3247
6619	6619	3248 SB231 INTRODUCEDSB231 INTRODUCED
6620	6620	Page 117
6621	6621	otherwise provided in subsection (b), a secured party may
6622	6622	perfect a security interest in tangible negotiable documents,
6623	6623	goods, instruments, negotiable tangible documents, or money,
6624	6624	or tangible chattel paper by taking possession of the
6625	6625	collateral. A secured party may perfect a security interest in
6626	6626	certificated securities by taking delivery of the certificated
6627	6627	securities under Section 7-8-301.
6628	6628	(b) Goods covered by certificate of title. With respect
6629	6629	to goods covered by a certificate of title issued by this
6630	6630	State, a secured party may perfect a security interest in the
6631	6631	goods by taking possession of the goods only in the
6632	6632	circumstances described in Section 7-9A-316(d).
6633	6633	(c) Collateral in possession of person other than
6634	6634	debtor. With respect to collateral other than certificated
6635	6635	securities and goods covered by a document, a secured party
6636	6636	takes possession of collateral in the possession of a person
6637	6637	other than the debtor, the secured party, or a lessee of the
6638	6638	collateral from the debtor in the ordinary course of the
6639	6639	debtor's business, when:
6640	6640	(1) the person in possession authenticates signs a
6641	6641	record acknowledging that it holds possession of the
6642	6642	collateral for the secured party's benefit; or
6643	6643	(2) the person takes possession of the collateral after
6644	6644	having authenticated signed a record acknowledging that it
6645	6645	will hold possession of the collateral for the secured party's
6646	6646	benefit.
6647	6647	(d) Time of perfection by possession; continuation of
6648	6648	perfection. If perfection of a security interest depends upon
6649	6649	3249
6650	6650	3250
6651	6651	3251
6652	6652	3252
6653	6653	3253
6654	6654	3254
6655	6655	3255
6656	6656	3256
6657	6657	3257
6658	6658	3258
6659	6659	3259
6660	6660	3260
6661	6661	3261
6662	6662	3262
6663	6663	3263
6664	6664	3264
6665	6665	3265
6666	6666	3266
6667	6667	3267
6668	6668	3268
6669	6669	3269
6670	6670	3270
6671	6671	3271
6672	6672	3272
6673	6673	3273
6674	6674	3274
6675	6675	3275
6676	6676	3276 SB231 INTRODUCEDSB231 INTRODUCED
6677	6677	Page 118
6678	6678	possession of the collateral by a secured party, perfection
6679	6679	occurs no not earlier than the time the secured party takes
6680	6680	possession and continues only while the secured party retains
6681	6681	possession.
6682	6682	(e) Time of perfection by delivery; continuation of
6683	6683	perfection. A security interest in a certificated security in
6684	6684	registered form is perfected by delivery when delivery of the
6685	6685	certificated security occurs under Section 7-8-301 and remains
6686	6686	perfected by delivery until the debtor obtains possession of
6687	6687	the security certificate.
6688	6688	(f) Acknowledgment not required. A person in possession
6689	6689	of collateral is not required to acknowledge that it holds
6690	6690	possession for a secured party's benefit.
6691	6691	(g) Effectiveness of acknowledgment; no duties or
6692	6692	confirmation. If a person acknowledges that it holds
6693	6693	possession for the secured party's benefit:
6694	6694	(1) the acknowledgment is effective under subsection
6695	6695	(c) or Section 7-8-301(a), even if the acknowledgment violates
6696	6696	the rights of a debtor; and
6697	6697	(2) unless the person otherwise agrees or law other
6698	6698	than this article otherwise provides, the person does not owe
6699	6699	any duty to the secured party and is not required to confirm
6700	6700	the acknowledgment to another person.
6701	6701	(h) Secured party's delivery to person other than
6702	6702	debtor. A secured party having possession of collateral does
6703	6703	not relinquish possession by delivering the collateral to a
6704	6704	person other than the debtor or a lessee of the collateral
6705	6705	from the debtor in the ordinary course of the debtor's
6706	6706	3277
6707	6707	3278
6708	6708	3279
6709	6709	3280
6710	6710	3281
6711	6711	3282
6712	6712	3283
6713	6713	3284
6714	6714	3285
6715	6715	3286
6716	6716	3287
6717	6717	3288
6718	6718	3289
6719	6719	3290
6720	6720	3291
6721	6721	3292
6722	6722	3293
6723	6723	3294
6724	6724	3295
6725	6725	3296
6726	6726	3297
6727	6727	3298
6728	6728	3299
6729	6729	3300
6730	6730	3301
6731	6731	3302
6732	6732	3303
6733	6733	3304 SB231 INTRODUCEDSB231 INTRODUCED
6734	6734	Page 119
6735	6735	business if the person was instructed before the delivery or
6736	6736	is instructed contemporaneously with the delivery:
6737	6737	(1) to hold possession of the collateral for the
6738	6738	secured party's benefit; or
6739	6739	(2) to redeliver the collateral to the secured party.
6740	6740	(i) Effect of delivery under subsection (h); no duties
6741	6741	or confirmation. A secured party does not relinquish
6742	6742	possession, even if a delivery under subsection (h) violates
6743	6743	the rights of a debtor. A person to which collateral is
6744	6744	delivered under subsection (h) does not owe any duty to the
6745	6745	secured party and is not required to confirm the delivery to
6746	6746	another person unless the person otherwise agrees or law other
6747	6747	than this article otherwise provides."
6748	6748	"§7-9A-314. Perfection by control.
6749	6749	(a) Perfection by control. A security interest in
6750	6750	investment property, deposit accounts, letter-of-credit
6751	6751	rights, electronic chattel paper, or electronic documents
6752	6752	controllable accounts, controllable electronic records,
6753	6753	controllable payment intangibles, deposit accounts, electronic
6754	6754	documents, investment property, or letter-of-credit rights may
6755	6755	be perfected by control of the collateral under Section
6756	6756	7-7-106, 7-9A-104, 7-9A-105, 7-9A-106, or 7-9A-107, or
6757	6757	7-9A-107A.
6758	6758	(b) Specified collateral: Time of perfection by
6759	6759	control; continuation of perfection. A security interest in
6760	6760	deposit accounts, electronic chattel paper, letter-of-credit
6761	6761	rights, or electronic documents controllable accounts,
6762	6762	controllable electronic records, controllable payment
6763	6763	3305
6764	6764	3306
6765	6765	3307
6766	6766	3308
6767	6767	3309
6768	6768	3310
6769	6769	3311
6770	6770	3312
6771	6771	3313
6772	6772	3314
6773	6773	3315
6774	6774	3316
6775	6775	3317
6776	6776	3318
6777	6777	3319
6778	6778	3320
6779	6779	3321
6780	6780	3322
6781	6781	3323
6782	6782	3324
6783	6783	3325
6784	6784	3326
6785	6785	3327
6786	6786	3328
6787	6787	3329
6788	6788	3330
6789	6789	3331
6790	6790	3332 SB231 INTRODUCEDSB231 INTRODUCED
6791	6791	Page 120
6792	6792	intangibles, deposit accounts, electronic documents, or
6793	6793	letter-of-credit rights is perfected by control under Section
6794	6794	7-7-106, 7-9A-104, 7-9A-105, or 7-9A-107, or 7-9A-107A when
6795	6795	not earlier than the time the secured party obtains control
6796	6796	and remains perfected by control only while the secured party
6797	6797	retains control.
6798	6798	(c) Investment property: Time of perfection by control;
6799	6799	continuation of perfection. A security interest in investment
6800	6800	property is perfected by control under Section 7-9A-106 from
6801	6801	not earlier than the time the secured party obtains control
6802	6802	and remains perfected by control until:
6803	6803	(1) the secured party does not have control; and
6804	6804	(2) one of the following occurs:
6805	6805	(A) if the collateral is a certificated security, the
6806	6806	debtor has or acquires possession of the security certificate;
6807	6807	(B) if the collateral is an uncertificated security,
6808	6808	the issuer has registered or registers the debtor as the
6809	6809	registered owner; or
6810	6810	(C) if the collateral is a security entitlement, the
6811	6811	debtor is or becomes the entitlement holder.
6812	6812	"§7-9A-316. Effect of Continued perfection of security
6813	6813	interest following change in governing law.
6814	6814	(a) General rule: Effect on change in governing law
6815	6815	existing.perfection of change in governing law. A security
6816	6816	interest perfected pursuant to the law of the jurisdiction
6817	6817	designated in Section 7-9A-301(1) ,or 7-9A-305(c),
6818	6818	7-9A-306A(d), or 7-9A-306B(b) remains perfected until the
6819	6819	earliest of:
6820	6820	3333
6821	6821	3334
6822	6822	3335
6823	6823	3336
6824	6824	3337
6825	6825	3338
6826	6826	3339
6827	6827	3340
6828	6828	3341
6829	6829	3342
6830	6830	3343
6831	6831	3344
6832	6832	3345
6833	6833	3346
6834	6834	3347
6835	6835	3348
6836	6836	3349
6837	6837	3350
6838	6838	3351
6839	6839	3352
6840	6840	3353
6841	6841	3354
6842	6842	3355
6843	6843	3356
6844	6844	3357
6845	6845	3358
6846	6846	3359
6847	6847	3360 SB231 INTRODUCEDSB231 INTRODUCED
6848	6848	Page 121
6849	6849	(1) the time perfection would have ceased under the law
6850	6850	of that jurisdiction;
6851	6851	(2) the expiration of four months after a change of the
6852	6852	debtor's location to another jurisdiction; or
6853	6853	(3) the expiration of one year after a transfer of
6854	6854	collateral to a person that thereby becomes a debtor and is
6855	6855	located in another jurisdiction.
6856	6856	(b) Security interest perfected or unperfected under
6857	6857	law of new jurisdiction. If a security interest described in
6858	6858	subsection (a) becomes perfected under the law of the other
6859	6859	jurisdiction before the earliest time or event described in
6860	6860	that subsection, it remains perfected thereafter. If the
6861	6861	security interest does not become perfected under the law of
6862	6862	the other jurisdiction before the earliest time or event, it
6863	6863	becomes unperfected and is deemed never to have been perfected
6864	6864	as against a purchaser of the collateral for value.
6865	6865	(c) Possessory security interest in collateral moved to
6866	6866	new jurisdiction. A possessory security interest in
6867	6867	collateral, other than goods covered by a certificate of title
6868	6868	and as-extracted collateral consisting of goods, remains
6869	6869	continuously perfected if:
6870	6870	(1) the collateral is located in one jurisdiction and
6871	6871	subject to a security interest perfected under the law of that
6872	6872	jurisdiction;
6873	6873	(2) thereafter the collateral is brought into another
6874	6874	jurisdiction; and
6875	6875	(3) upon entry into the other jurisdiction, the
6876	6876	security interest is perfected under the law of the other
6877	6877	3361
6878	6878	3362
6879	6879	3363
6880	6880	3364
6881	6881	3365
6882	6882	3366
6883	6883	3367
6884	6884	3368
6885	6885	3369
6886	6886	3370
6887	6887	3371
6888	6888	3372
6889	6889	3373
6890	6890	3374
6891	6891	3375
6892	6892	3376
6893	6893	3377
6894	6894	3378
6895	6895	3379
6896	6896	3380
6897	6897	3381
6898	6898	3382
6899	6899	3383
6900	6900	3384
6901	6901	3385
6902	6902	3386
6903	6903	3387
6904	6904	3388 SB231 INTRODUCEDSB231 INTRODUCED
6905	6905	Page 122
6906	6906	jurisdiction.
6907	6907	(d) Goods covered by certificate of title from this
6908	6908	State. Except as otherwise provided in subsection (e), a
6909	6909	security interest in goods covered by a certificate of title
6910	6910	which is perfected by any method under the law of another
6911	6911	jurisdiction when the goods become covered by a certificate of
6912	6912	title from this State remains perfected until the security
6913	6913	interest would have become unperfected under the law of the
6914	6914	other jurisdiction had the goods not become so covered.
6915	6915	(e) When subsection (d) security interest becomes
6916	6916	unperfected against purchasers. A security interest described
6917	6917	in subsection (d) becomes unperfected as against a purchaser
6918	6918	of the goods for value and is deemed never to have been
6919	6919	perfected as against a purchaser of the goods for value if the
6920	6920	applicable requirements for perfection under Section
6921	6921	7-9A-311(b) or 7-9A-313 are not satisfied before the earlier
6922	6922	of:
6923	6923	(1) the time the security interest would have become
6924	6924	unperfected under the law of the other jurisdiction had the
6925	6925	goods not become covered by a certificate of title from this
6926	6926	State; or
6927	6927	(2) the expiration of four months after the goods had
6928	6928	become so covered.
6929	6929	(f) Change in jurisdiction of bank, issuer, nominated
6930	6930	person, securities intermediary, or commodity
6931	6931	intermediary.Change in jurisdiction of chattel paper,
6932	6932	controllable electronic record, bank, issuer, nominated
6933	6933	person, securities intermediary, or commodity intermediary. A
6934	6934	3389
6935	6935	3390
6936	6936	3391
6937	6937	3392
6938	6938	3393
6939	6939	3394
6940	6940	3395
6941	6941	3396
6942	6942	3397
6943	6943	3398
6944	6944	3399
6945	6945	3400
6946	6946	3401
6947	6947	3402
6948	6948	3403
6949	6949	3404
6950	6950	3405
6951	6951	3406
6952	6952	3407
6953	6953	3408
6954	6954	3409
6955	6955	3410
6956	6956	3411
6957	6957	3412
6958	6958	3413
6959	6959	3414
6960	6960	3415
6961	6961	3416 SB231 INTRODUCEDSB231 INTRODUCED
6962	6962	Page 123
6963	6963	security interest in chattel paper, controllable accounts,
6964	6964	controllable electronic accounts, controllable payment
6965	6965	intangibles, deposit accounts, letter-of-credit rights, or
6966	6966	investment property which is perfected under the law of the
6967	6967	chattel paper's jurisdiction, the controllable electronic
6968	6968	record's jurisdiction, the bank's jurisdiction, the issuer's
6969	6969	jurisdiction, a nominated person's jurisdiction, the
6970	6970	securities intermediary's jurisdiction, or the commodity
6971	6971	intermediary's jurisdiction, as applicable, remains perfected
6972	6972	until the earlier of:
6973	6973	(1) the time the security interest would have become
6974	6974	unperfected under the law of that jurisdiction; or
6975	6975	(2) the expiration of four months after a change of the
6976	6976	applicable jurisdiction to another jurisdiction.
6977	6977	(g) Subsection (f) security interest perfected or
6978	6978	unperfected under law of new jurisdiction. If a security
6979	6979	interest described in subsection (f) becomes perfected under
6980	6980	the law of the other jurisdiction before the earlier of the
6981	6981	time or the end of the period described in that subsection, it
6982	6982	remains perfected thereafter. If the security interest does
6983	6983	not become perfected under the law of the other jurisdiction
6984	6984	before the earlier of that time or the end of that period, it
6985	6985	becomes unperfected and is deemed never to have been perfected
6986	6986	as against a purchaser of the collateral for value.
6987	6987	(h) Effect on filed financing statement of change in
6988	6988	governing law. The following rules apply to collateral to
6989	6989	which a security interest attaches within four months after
6990	6990	the debtor changes its location to another jurisdiction:
6991	6991	3417
6992	6992	3418
6993	6993	3419
6994	6994	3420
6995	6995	3421
6996	6996	3422
6997	6997	3423
6998	6998	3424
6999	6999	3425
7000	7000	3426
7001	7001	3427
7002	7002	3428
7003	7003	3429
7004	7004	3430
7005	7005	3431
7006	7006	3432
7007	7007	3433
7008	7008	3434
7009	7009	3435
7010	7010	3436
7011	7011	3437
7012	7012	3438
7013	7013	3439
7014	7014	3440
7015	7015	3441
7016	7016	3442
7017	7017	3443
7018	7018	3444 SB231 INTRODUCEDSB231 INTRODUCED
7019	7019	Page 124
7020	7020	(1) A financing statement filed before the change
7021	7021	pursuant to the law of the jurisdiction designated in Section
7022	7022	7-9A-301(1) or 7-9A-305(c) is effective to perfect a security
7023	7023	interest in the collateral if the financing statement would
7024	7024	have been effective to perfect a security interest in the
7025	7025	collateral if the debtor had not changed its location.
7026	7026	(2) If a security interest that is perfected by a
7027	7027	financing statement that is effective under paragraph (1)
7028	7028	becomes perfected under the law of the other jurisdiction
7029	7029	before the earlier of the time the financing statement would
7030	7030	have become ineffective under the law of the jurisdiction
7031	7031	designated in Section 7-9A-301(1) or 7-9A-305(c) or the
7032	7032	expiration of the four-month period, it remains perfected
7033	7033	thereafter. If the security interest does not become perfected
7034	7034	under the law of the other jurisdiction before the earlier
7035	7035	time or event, it becomes unperfected and is deemed never to
7036	7036	have been perfected as against a purchaser of the collateral
7037	7037	for value.
7038	7038	(i) Effect of change in governing law on financing
7039	7039	statement filed against original debtor. If a financing
7040	7040	statement naming an original debtor is filed pursuant to the
7041	7041	law of the jurisdiction designated in Section 7-9A-301(1) or
7042	7042	7-9A-305(c) and the new debtor is located in another
7043	7043	jurisdiction, the following rules apply:
7044	7044	(1) The financing statement is effective to perfect a
7045	7045	security interest in collateral acquired by the new debtor
7046	7046	before, and within four months after, the new debtor becomes
7047	7047	bound under Section 7-9A-203(d), if the financing statement
7048	7048	3445
7049	7049	3446
7050	7050	3447
7051	7051	3448
7052	7052	3449
7053	7053	3450
7054	7054	3451
7055	7055	3452
7056	7056	3453
7057	7057	3454
7058	7058	3455
7059	7059	3456
7060	7060	3457
7061	7061	3458
7062	7062	3459
7063	7063	3460
7064	7064	3461
7065	7065	3462
7066	7066	3463
7067	7067	3464
7068	7068	3465
7069	7069	3466
7070	7070	3467
7071	7071	3468
7072	7072	3469
7073	7073	3470
7074	7074	3471
7075	7075	3472 SB231 INTRODUCEDSB231 INTRODUCED
7076	7076	Page 125
7077	7077	would have been effective to perfect a security interest in
7078	7078	the collateral if the collateral had been acquired by the
7079	7079	original debtor.
7080	7080	(2) A security interest that is perfected by the
7081	7081	financing statement and which becomes perfected under the law
7082	7082	of the other jurisdiction before the earlier of the expiration
7083	7083	of the four-month period or the time the financing statement
7084	7084	would have become ineffective under the law of the
7085	7085	jurisdiction designated in Section 7-9A-301(1) or 7-9A-305(c)
7086	7086	remains perfected thereafter. A security interest that is
7087	7087	perfected by the financing statement but which does not become
7088	7088	perfected under the law of the other jurisdiction before the
7089	7089	earlier time or event becomes unperfected and is deemed never
7090	7090	to have been perfected as against a purchaser of the
7091	7091	collateral for value."
7092	7092	"§7-9A-317. Interests that take priority over or take
7093	7093	free of security interest or agricultural lien.
7094	7094	(a) Conflicting security interests and rights of lien
7095	7095	creditors. A security interest or agricultural lien is
7096	7096	subordinate to the rights of:
7097	7097	(1) a person entitled to priority under Section
7098	7098	7-9A-322; and
7099	7099	(2) except as otherwise provided in subsection (e), a
7100	7100	person that becomes a lien creditor before the earlier of the
7101	7101	time:
7102	7102	(A) the security interest or agricultural lien is
7103	7103	perfected; or
7104	7104	(B) one of the conditions specified in Section
7105	7105	3473
7106	7106	3474
7107	7107	3475
7108	7108	3476
7109	7109	3477
7110	7110	3478
7111	7111	3479
7112	7112	3480
7113	7113	3481
7114	7114	3482
7115	7115	3483
7116	7116	3484
7117	7117	3485
7118	7118	3486
7119	7119	3487
7120	7120	3488
7121	7121	3489
7122	7122	3490
7123	7123	3491
7124	7124	3492
7125	7125	3493
7126	7126	3494
7127	7127	3495
7128	7128	3496
7129	7129	3497
7130	7130	3498
7131	7131	3499
7132	7132	3500 SB231 INTRODUCEDSB231 INTRODUCED
7133	7133	Page 126
7134	7134	7-9A-203(b)(3) is met and a financing statement covering the
7135	7135	collateral is filed.
7136	7136	(b) Buyers that receive delivery. Except as otherwise
7137	7137	provided in subsection (e), a buyer, other than a secured
7138	7138	party, of tangible chattel paper, tangible documents, of
7139	7139	goods, instruments, tangible documents, or a certificated
7140	7140	security takes free of a security interest or agricultural
7141	7141	lien if the buyer gives value and receives delivery of the
7142	7142	collateral without knowledge of the security interest or
7143	7143	agricultural lien and before it is perfected.
7144	7144	(c) Lessees that receive delivery. Except as otherwise
7145	7145	provided in subsection (e), a lessee of goods takes free of a
7146	7146	security interest or agricultural lien if the lessee gives
7147	7147	value and receives delivery of the collateral without
7148	7148	knowledge of the security interest or agricultural lien and
7149	7149	before it is perfected.
7150	7150	(d) Licensees and buyers of certain collateral. A
7151	7151	Subject to subsections (f) through (i), a licensee of a
7152	7152	general intangible or a buyer, other than a secured party, of
7153	7153	collateral other than tangible chattel paper , tangible
7154	7154	documents, goods, instruments, tangible documents, or a
7155	7155	certificated security takes free of a security interest if the
7156	7156	licensee or buyer gives value without knowledge of the
7157	7157	security interest and before it is perfected.
7158	7158	(e) Purchase-money security interest. Except as
7159	7159	otherwise provided in Sections 7-9A-320 and 7-9A-321, if a
7160	7160	person files a financing statement with respect to a
7161	7161	purchase-money security interest before or within 20 days
7162	7162	3501
7163	7163	3502
7164	7164	3503
7165	7165	3504
7166	7166	3505
7167	7167	3506
7168	7168	3507
7169	7169	3508
7170	7170	3509
7171	7171	3510
7172	7172	3511
7173	7173	3512
7174	7174	3513
7175	7175	3514
7176	7176	3515
7177	7177	3516
7178	7178	3517
7179	7179	3518
7180	7180	3519
7181	7181	3520
7182	7182	3521
7183	7183	3522
7184	7184	3523
7185	7185	3524
7186	7186	3525
7187	7187	3526
7188	7188	3527
7189	7189	3528 SB231 INTRODUCEDSB231 INTRODUCED
7190	7190	Page 127
7191	7191	after the debtor receives delivery of the collateral, the
7192	7192	security interest takes priority over the rights of a buyer,
7193	7193	lessee, or lien creditor which arise between the time the
7194	7194	security interest attaches and the time of filing.
7195	7195	(f) Buyers of chattel paper. A buyer, other than a
7196	7196	secured party, of chattel paper takes free of a security
7197	7197	interest if, without knowledge of the security interest and
7198	7198	before it is perfected, the buyer gives value and:
7199	7199	(1) receives delivery of each authoritative tangible
7200	7200	copy of the record evidencing the chattel paper; and
7201	7201	(2) if each authoritative electronic copy of the record
7202	7202	evidencing the chattel paper can be subjected to control under
7203	7203	Section 7-9A-105, obtains control of each authoritative
7204	7204	electronic copy.
7205	7205	(g) Buyers of electronic documents. A buyer of an
7206	7206	electronic document takes free of a security interest if,
7207	7207	without knowledge of the security interest and before it is
7208	7208	perfected, the buyer gives value and, if each authoritative
7209	7209	electronic copy of the document can be subjected to control
7210	7210	under Section 7-7-106, obtains control of each authoritative
7211	7211	electronic copy.
7212	7212	(h) Buyers of controllable electronic records. A buyer
7213	7213	of a controllable electronic record takes free of a security
7214	7214	interest if, without knowledge of the security interest and
7215	7215	before it is perfected, the buyer gives value and obtains
7216	7216	control of the controllable electronic record.
7217	7217	(i) Buyers of controllable accounts and controllable
7218	7218	payment intangibles. A buyer, other than a secured party, of a
7219	7219	3529
7220	7220	3530
7221	7221	3531
7222	7222	3532
7223	7223	3533
7224	7224	3534
7225	7225	3535
7226	7226	3536
7227	7227	3537
7228	7228	3538
7229	7229	3539
7230	7230	3540
7231	7231	3541
7232	7232	3542
7233	7233	3543
7234	7234	3544
7235	7235	3545
7236	7236	3546
7237	7237	3547
7238	7238	3548
7239	7239	3549
7240	7240	3550
7241	7241	3551
7242	7242	3552
7243	7243	3553
7244	7244	3554
7245	7245	3555
7246	7246	3556 SB231 INTRODUCEDSB231 INTRODUCED
7247	7247	Page 128
7248	7248	controllable account or a controllable payment intangible
7249	7249	takes free of a security interest if, without knowledge of the
7250	7250	security interest and before it is perfected, the buyer gives
7251	7251	value and obtains control of the controllable account or
7252	7252	controllable payment intangible. "
7253	7253	"§7-9A-323. Future advances.
7254	7254	(a) When priority based on time of advance. Except as
7255	7255	otherwise provided in subsection (c), for purposes of
7256	7256	determining the priority of a perfected security interest
7257	7257	under Section 7-9A-322(a)(1), perfection of the security
7258	7258	interest dates from the time an advance is made to the extent
7259	7259	that the security interest secures an advance that:
7260	7260	(1) is made while the security interest is perfected
7261	7261	only:
7262	7262	(A) under Section 7-9A-309 when it attaches; or
7263	7263	(B) temporarily under Section 7-9A-312(e), (f), or (g);
7264	7264	and
7265	7265	(2) is not made pursuant to a commitment entered into
7266	7266	before or while the security interest is perfected by a method
7267	7267	other than under Section 7-9A-309 or 7-9A-312(e), (f), or (g).
7268	7268	(b) Lien creditor. Except as otherwise provided in
7269	7269	subsection (c), a security interest is subordinate to the
7270	7270	rights of a person that becomes a lien creditor to the extent
7271	7271	that the security interest secures an advance made more than
7272	7272	45 days after the person becomes a lien creditor unless the
7273	7273	advance is made:
7274	7274	(1) without knowledge of the lien; or
7275	7275	(2) pursuant to a commitment entered into without
7276	7276	3557
7277	7277	3558
7278	7278	3559
7279	7279	3560
7280	7280	3561
7281	7281	3562
7282	7282	3563
7283	7283	3564
7284	7284	3565
7285	7285	3566
7286	7286	3567
7287	7287	3568
7288	7288	3569
7289	7289	3570
7290	7290	3571
7291	7291	3572
7292	7292	3573
7293	7293	3574
7294	7294	3575
7295	7295	3576
7296	7296	3577
7297	7297	3578
7298	7298	3579
7299	7299	3580
7300	7300	3581
7301	7301	3582
7302	7302	3583
7303	7303	3584 SB231 INTRODUCEDSB231 INTRODUCED
7304	7304	Page 129
7305	7305	knowledge of the lien.
7306	7306	(c) Buyer of receivables. Subsections (a) and (b) do
7307	7307	not apply to a security interest held by a secured party that
7308	7308	is a buyer of accounts, chattel paper, payment intangibles, or
7309	7309	promissory notes or a consignor.
7310	7310	(d) Buyer of goods. Except as otherwise provided in
7311	7311	subsection (e), a buyer of goods other than a buyer in
7312	7312	ordinary course of business takes free of a security interest
7313	7313	to the extent that it secures advances made after the earlier
7314	7314	of:
7315	7315	(1) the time the secured party acquires knowledge of
7316	7316	the buyer's purchase; or
7317	7317	(2) 45 days after the purchase.
7318	7318	(e) Advances made pursuant to commitment: Priority of
7319	7319	buyer of goods. Subsection (d) does not apply if the advance
7320	7320	is made pursuant to a commitment entered into without
7321	7321	knowledge of the buyer's purchase and before the expiration of
7322	7322	the 45-day period.
7323	7323	(f) Lessee of goods. Except as otherwise provided in
7324	7324	subsection (g), a lessee of goods , other than a lessee in
7325	7325	ordinary course of business, takes the leasehold interest free
7326	7326	of a security interest to the extent that it secures advances
7327	7327	made after the earlier of:
7328	7328	(1) the time the secured party acquires knowledge of
7329	7329	the lease; or
7330	7330	(2) 45 days after the lease contract becomes
7331	7331	enforceable.
7332	7332	(g) Advances made pursuant to commitment: Priority of
7333	7333	3585
7334	7334	3586
7335	7335	3587
7336	7336	3588
7337	7337	3589
7338	7338	3590
7339	7339	3591
7340	7340	3592
7341	7341	3593
7342	7342	3594
7343	7343	3595
7344	7344	3596
7345	7345	3597
7346	7346	3598
7347	7347	3599
7348	7348	3600
7349	7349	3601
7350	7350	3602
7351	7351	3603
7352	7352	3604
7353	7353	3605
7354	7354	3606
7355	7355	3607
7356	7356	3608
7357	7357	3609
7358	7358	3610
7359	7359	3611
7360	7360	3612 SB231 INTRODUCEDSB231 INTRODUCED
7361	7361	Page 130
7362	7362	lessee of goods. Subsection (f) does not apply if the advance
7363	7363	is made pursuant to a commitment entered into without
7364	7364	knowledge of the lease and before the expiration of the 45-day
7365	7365	period."
7366	7366	"§7-9A-324. Priority of purchase-money security
7367	7367	interests.
7368	7368	(a) General rule: Purchase-money priority. Except as
7369	7369	otherwise provided in subsection (g), a perfected
7370	7370	purchase-money security interest in goods other than inventory
7371	7371	or livestock has priority over a conflicting security interest
7372	7372	in the same goods, and, except as otherwise provided in
7373	7373	Section 7-9A-327, a perfected security interest in its
7374	7374	identifiable proceeds also has priority, if the purchase-money
7375	7375	security interest is perfected when the debtor receives
7376	7376	possession of the collateral or within 20 days thereafter.
7377	7377	(b) Inventory purchase-money priority. Subject to
7378	7378	subsection (c) and except as otherwise provided in subsection
7379	7379	(g), a perfected purchase-money security interest in inventory
7380	7380	has priority over a conflicting security interest in the same
7381	7381	inventory, has priority over a conflicting security interest
7382	7382	in chattel paper or an instrument constituting proceeds of the
7383	7383	inventory and in proceeds of the chattel paper, if so provided
7384	7384	in Section 7-9A-330, and, except as otherwise provided in
7385	7385	Section 7-9A-327, also has priority in identifiable cash
7386	7386	proceeds of the inventory to the extent the identifiable cash
7387	7387	proceeds are received on or before the delivery of the
7388	7388	inventory to a buyer, if:
7389	7389	(1) the purchase-money security interest is perfected
7390	7390	3613
7391	7391	3614
7392	7392	3615
7393	7393	3616
7394	7394	3617
7395	7395	3618
7396	7396	3619
7397	7397	3620
7398	7398	3621
7399	7399	3622
7400	7400	3623
7401	7401	3624
7402	7402	3625
7403	7403	3626
7404	7404	3627
7405	7405	3628
7406	7406	3629
7407	7407	3630
7408	7408	3631
7409	7409	3632
7410	7410	3633
7411	7411	3634
7412	7412	3635
7413	7413	3636
7414	7414	3637
7415	7415	3638
7416	7416	3639
7417	7417	3640 SB231 INTRODUCEDSB231 INTRODUCED
7418	7418	Page 131
7419	7419	when the debtor receives possession of the inventory;
7420	7420	(2) the purchase-money secured party sends an
7421	7421	authenticated a signed notification to the holder of the
7422	7422	conflicting security interest;
7423	7423	(3) the holder of the conflicting security interest
7424	7424	receives the notification within five years before the debtor
7425	7425	receives possession of the inventory; and
7426	7426	(4) the notification states that the person sending the
7427	7427	notification has or expects to acquire a purchase-money
7428	7428	security interest in inventory of the debtor and describes the
7429	7429	inventory.
7430	7430	(c) Holders of conflicting inventory security interests
7431	7431	to be notified. Subsections (b)(2) through (4) apply only if
7432	7432	the holder of the conflicting security interest had filed a
7433	7433	financing statement covering the same types of inventory:
7434	7434	(1) if the purchase-money security interest is
7435	7435	perfected by filing, before the date of the filing; or
7436	7436	(2) if the purchase-money security interest is
7437	7437	temporarily perfected without filing or possession under
7438	7438	Section 7-9A-312(f), before the beginning of the 20-day period
7439	7439	thereunder.
7440	7440	(d) Livestock purchase-money priority. Subject to
7441	7441	subsection (e) and except as otherwise provided in subsection
7442	7442	(g), a perfected purchase-money security interest in livestock
7443	7443	that are farm products has priority over a conflicting
7444	7444	security interest in the same livestock, and, except as
7445	7445	otherwise provided in Section 7-9A-327, a perfected security
7446	7446	interest in their identifiable proceeds and identifiable
7447	7447	3641
7448	7448	3642
7449	7449	3643
7450	7450	3644
7451	7451	3645
7452	7452	3646
7453	7453	3647
7454	7454	3648
7455	7455	3649
7456	7456	3650
7457	7457	3651
7458	7458	3652
7459	7459	3653
7460	7460	3654
7461	7461	3655
7462	7462	3656
7463	7463	3657
7464	7464	3658
7465	7465	3659
7466	7466	3660
7467	7467	3661
7468	7468	3662
7469	7469	3663
7470	7470	3664
7471	7471	3665
7472	7472	3666
7473	7473	3667
7474	7474	3668 SB231 INTRODUCEDSB231 INTRODUCED
7475	7475	Page 132
7476	7476	products in their unmanufactured states also has priority, if:
7477	7477	(1) the purchase-money security interest is perfected
7478	7478	when the debtor receives possession of the livestock;
7479	7479	(2) the purchase-money secured party sends an
7480	7480	authenticated a signed notification to the holder of the
7481	7481	conflicting security interest;
7482	7482	(3) the holder of the conflicting security interest
7483	7483	receives the notification within six months before the debtor
7484	7484	receives possession of the livestock; and
7485	7485	(4) the notification states that the person sending the
7486	7486	notification has or expects to acquire a purchase-money
7487	7487	security interest in livestock of the debtor and describes the
7488	7488	livestock.
7489	7489	(e) Holders of conflicting livestock security interests
7490	7490	to be notified. Subsections (d)(2) through (4) apply only if
7491	7491	the holder of the conflicting security interest had filed a
7492	7492	financing statement covering the same types of livestock:
7493	7493	(1) if the purchase-money security interest is
7494	7494	perfected by filing, before the date of the filing; or
7495	7495	(2) if the purchase-money security interest is
7496	7496	temporarily perfected without filing or possession under
7497	7497	Section 7-9A-312(f), before the beginning of the 20-day period
7498	7498	thereunder.
7499	7499	(f) Software purchase-money priority. Except as
7500	7500	otherwise provided in subsection (g), a perfected
7501	7501	purchase-money security interest in software has priority over
7502	7502	a conflicting security interest in the same collateral, and,
7503	7503	except as otherwise provided in Section 7-9A-327, a perfected
7504	7504	3669
7505	7505	3670
7506	7506	3671
7507	7507	3672
7508	7508	3673
7509	7509	3674
7510	7510	3675
7511	7511	3676
7512	7512	3677
7513	7513	3678
7514	7514	3679
7515	7515	3680
7516	7516	3681
7517	7517	3682
7518	7518	3683
7519	7519	3684
7520	7520	3685
7521	7521	3686
7522	7522	3687
7523	7523	3688
7524	7524	3689
7525	7525	3690
7526	7526	3691
7527	7527	3692
7528	7528	3693
7529	7529	3694
7530	7530	3695
7531	7531	3696 SB231 INTRODUCEDSB231 INTRODUCED
7532	7532	Page 133
7533	7533	security interest in its identifiable proceeds also has
7534	7534	priority, to the extent that the purchase-money security
7535	7535	interest in the goods in which the software was acquired for
7536	7536	use has priority in the goods and proceeds of the goods under
7537	7537	this section.
7538	7538	(g) Conflicting purchase-money security interests. If
7539	7539	more than one security interest qualifies for priority in the
7540	7540	same collateral under subsection (a), (b), (d), or (f):
7541	7541	(1) a security interest securing an obligation incurred
7542	7542	as all or part of the price of the collateral has priority
7543	7543	over a security interest securing an obligation incurred for
7544	7544	value given to enable the debtor to acquire rights in or the
7545	7545	use of collateral; and
7546	7546	(2) in all other cases, Section 7-9A-322(a) applies to
7547	7547	the qualifying security interests.
7548	7548	"§7-9A-330. Priority of purchaser of chattel paper or
7549	7549	instrument.
7550	7550	(a) Purchaser's priority: Security interest claimed
7551	7551	merely as proceeds. A purchaser of chattel paper has priority
7552	7552	over a security interest in the chattel paper which is claimed
7553	7553	merely as proceeds of inventory subject to a security interest
7554	7554	if:
7555	7555	(1) in good faith and in the ordinary course of the
7556	7556	purchaser's business, the purchaser gives new value and takes
7557	7557	possession of each authoritative tangible copy of the record
7558	7558	evidencing the chattel paper , or and obtains control under
7559	7559	Section 7-9A-105 of each authoritative electronic copy of the
7560	7560	record evidencing of the chattel paper under Section 7-9A-105 ;
7561	7561	3697
7562	7562	3698
7563	7563	3699
7564	7564	3700
7565	7565	3701
7566	7566	3702
7567	7567	3703
7568	7568	3704
7569	7569	3705
7570	7570	3706
7571	7571	3707
7572	7572	3708
7573	7573	3709
7574	7574	3710
7575	7575	3711
7576	7576	3712
7577	7577	3713
7578	7578	3714
7579	7579	3715
7580	7580	3716
7581	7581	3717
7582	7582	3718
7583	7583	3719
7584	7584	3720
7585	7585	3721
7586	7586	3722
7587	7587	3723
7588	7588	3724 SB231 INTRODUCEDSB231 INTRODUCED
7589	7589	Page 134
7590	7590	and
7591	7591	(2) the chattel paper does authoritative copies of the
7592	7592	record evidencing the chattel paper do not indicate that it
7593	7593	the chattel paper has been assigned to an identified assignee
7594	7594	other than the purchaser.
7595	7595	(b) Purchaser's priority: Other security interests. A
7596	7596	purchaser of chattel paper has priority over a security
7597	7597	interest in the chattel paper which is claimed other than
7598	7598	merely as proceeds of inventory subject to a security interest
7599	7599	if the purchaser gives new value and takes possession of each
7600	7600	authoritative tangible copy of the record evidencing the
7601	7601	chattel paper or and obtains control of under Section 7-9A-105
7602	7602	of each authoritative electronic copy of the record evidencing
7603	7603	the chattel paper under Section 7-9A-105 in good faith, in the
7604	7604	ordinary course of the purchaser's business, and without
7605	7605	knowledge that the purchase violates the rights of the secured
7606	7606	party.
7607	7607	(c) Chattel paper purchaser's priority in proceeds.
7608	7608	Except as otherwise provided in Section 7-9A-327, a purchaser
7609	7609	having priority in chattel paper under subsection (a) or (b)
7610	7610	also has priority in proceeds of the chattel paper to the
7611	7611	extent that:
7612	7612	(1) Section 7-9A-322 provides for priority in the
7613	7613	proceeds; or
7614	7614	(2) the proceeds consist of the specific goods covered
7615	7615	by the chattel paper or cash proceeds of the specific goods,
7616	7616	even if the purchaser's security interest in the proceeds is
7617	7617	unperfected.
7618	7618	3725
7619	7619	3726
7620	7620	3727
7621	7621	3728
7622	7622	3729
7623	7623	3730
7624	7624	3731
7625	7625	3732
7626	7626	3733
7627	7627	3734
7628	7628	3735
7629	7629	3736
7630	7630	3737
7631	7631	3738
7632	7632	3739
7633	7633	3740
7634	7634	3741
7635	7635	3742
7636	7636	3743
7637	7637	3744
7638	7638	3745
7639	7639	3746
7640	7640	3747
7641	7641	3748
7642	7642	3749
7643	7643	3750
7644	7644	3751
7645	7645	3752 SB231 INTRODUCEDSB231 INTRODUCED
7646	7646	Page 135
7647	7647	(d) Instrument purchaser's priority. Except as
7648	7648	otherwise provided in Section 7-9A-331(a), a purchaser of an
7649	7649	instrument has priority over a security interest in the
7650	7650	instrument perfected by a method other than possession if the
7651	7651	purchaser gives value and takes possession of the instrument
7652	7652	in good faith and without knowledge that the purchase violates
7653	7653	the rights of the secured party.
7654	7654	(e) Holder of purchase-money security interest gives
7655	7655	new value. For purposes of subsections (a) and (b), the holder
7656	7656	of a purchase-money security interest in inventory gives new
7657	7657	value for chattel paper constituting proceeds of the
7658	7658	inventory.
7659	7659	(f) Indication of assignment gives knowledge. For
7660	7660	purposes of subsections (b) and (d), if the authoritative
7661	7661	copies of the record evidencing chattel paper or an instrument
7662	7662	indicates indicate that it the chattel paper or instrument
7663	7663	has been assigned to an identified secured party other than
7664	7664	the purchaser, a purchaser of the chattel paper or instrument
7665	7665	has knowledge that the purchase violates the rights of the
7666	7666	secured party."
7667	7667	"§7-9A-331. Priority of rights of purchasers of
7668	7668	controllable accounts, controllable electronic records,
7669	7669	controllable payments intangibles, instruments, documents, and
7670	7670	securities under other articles; priority of interests in
7671	7671	financial assets and security entitlements and protection
7672	7672	against assertion of claim under Articles 8 and 12.
7673	7673	(a) Rights under Articles 3, 7, and 8, and 12 not
7674	7674	limited. This article does not limit the rights of a holder in
7675	7675	3753
7676	7676	3754
7677	7677	3755
7678	7678	3756
7679	7679	3757
7680	7680	3758
7681	7681	3759
7682	7682	3760
7683	7683	3761
7684	7684	3762
7685	7685	3763
7686	7686	3764
7687	7687	3765
7688	7688	3766
7689	7689	3767
7690	7690	3768
7691	7691	3769
7692	7692	3770
7693	7693	3771
7694	7694	3772
7695	7695	3773
7696	7696	3774
7697	7697	3775
7698	7698	3776
7699	7699	3777
7700	7700	3778
7701	7701	3779
7702	7702	3780 SB231 INTRODUCEDSB231 INTRODUCED
7703	7703	Page 136
7704	7704	due course of a negotiable instrument, a holder to which a
7705	7705	negotiable document of title has been duly negotiated, or a
7706	7706	protected purchaser of a security ., or a qualifying purchaser
7707	7707	of a controllable account, controllable electronic record, or
7708	7708	controllable payment intangible. These holders or purchasers
7709	7709	take priority over an earlier security interest, even if
7710	7710	perfected, to the extent provided in Articles 3, 7, and 8, and
7711	7711	12.
7712	7712	(b) Protection under ArticleArticles 8 and 12. This
7713	7713	article does not limit the rights of or impose liability on a
7714	7714	person to the extent that the person is protected against the
7715	7715	assertion of a claim under ArticleArticles 8 or 12.
7716	7716	(c) Filing not notice. Filing under this article does
7717	7717	not constitute notice of a claim or defense to the holders, or
7718	7718	purchasers, or persons described in subsections (a) and (b)."
7719	7719	"§7-9A-332. Transfer of money; transfer of funds from
7720	7720	deposit account.
7721	7721	(a) Transferee of money. A transferee of money takes
7722	7722	the money free of a security interest unless the transferee
7723	7723	acts if the transferee receives possession of the money
7724	7724	without acting in collusion with the debtor in violating the
7725	7725	rights of the secured party.
7726	7726	(b) Transferee of funds from deposit account. A
7727	7727	transferee of funds from a deposit account takes the funds
7728	7728	free of a security interest in the deposit account unless the
7729	7729	transferee acts if the transferee receives possession of the
7730	7730	money without acting in collusion with the debtor in violating
7731	7731	the rights of the secured party."
7732	7732	3781
7733	7733	3782
7734	7734	3783
7735	7735	3784
7736	7736	3785
7737	7737	3786
7738	7738	3787
7739	7739	3788
7740	7740	3789
7741	7741	3790
7742	7742	3791
7743	7743	3792
7744	7744	3793
7745	7745	3794
7746	7746	3795
7747	7747	3796
7748	7748	3797
7749	7749	3798
7750	7750	3799
7751	7751	3800
7752	7752	3801
7753	7753	3802
7754	7754	3803
7755	7755	3804
7756	7756	3805
7757	7757	3806
7758	7758	3807
7759	7759	3808 SB231 INTRODUCEDSB231 INTRODUCED
7760	7760	Page 137
7761	7761	"§7-9A-334. Priority of security interests in fixtures
7762	7762	and crops.
7763	7763	(a) Security interest in fixtures under this article. A
7764	7764	security interest under this article may be created in goods
7765	7765	that are fixtures or may continue in goods that become
7766	7766	fixtures. A security interest does not exist under this
7767	7767	article in ordinary building materials incorporated into an
7768	7768	improvement on land.
7769	7769	(b) Security interest in fixtures under real-property
7770	7770	law. This article does not prevent creation of an encumbrance
7771	7771	upon fixtures under real property law.
7772	7772	(c) General rule: Subordination of security interest in
7773	7773	fixtures. In cases not governed by subsections (d) through
7774	7774	(h), a security interest in fixtures is subordinate to a
7775	7775	conflicting interest of an encumbrancer or owner of the
7776	7776	related real property other than the debtor.
7777	7777	(d) Fixtures purchase-money priority. Except as
7778	7778	otherwise provided in subsection (h), a perfected security
7779	7779	interest in fixtures has priority over a conflicting interest
7780	7780	of an encumbrancer or owner of the real property if the debtor
7781	7781	has an interest of record in or is in possession of the real
7782	7782	property and:
7783	7783	(1) the security interest is a purchase-money security
7784	7784	interest;
7785	7785	(2) the interest of the encumbrancer or owner arises
7786	7786	before the goods become fixtures; and
7787	7787	(3) the security interest is perfected by a fixture
7788	7788	filing before the goods become fixtures or within 20 days
7789	7789	3809
7790	7790	3810
7791	7791	3811
7792	7792	3812
7793	7793	3813
7794	7794	3814
7795	7795	3815
7796	7796	3816
7797	7797	3817
7798	7798	3818
7799	7799	3819
7800	7800	3820
7801	7801	3821
7802	7802	3822
7803	7803	3823
7804	7804	3824
7805	7805	3825
7806	7806	3826
7807	7807	3827
7808	7808	3828
7809	7809	3829
7810	7810	3830
7811	7811	3831
7812	7812	3832
7813	7813	3833
7814	7814	3834
7815	7815	3835
7816	7816	3836 SB231 INTRODUCEDSB231 INTRODUCED
7817	7817	Page 138
7818	7818	thereafter.
7819	7819	(e) Priority of security interest in fixtures over
7820	7820	interests in real property. A perfected security interest in
7821	7821	fixtures has priority over a conflicting interest of an
7822	7822	encumbrancer or owner of the real property if:
7823	7823	(1) the debtor has an interest of record in the real
7824	7824	property or is in possession of the real property and the
7825	7825	security interest:
7826	7826	(A) is perfected by a fixture filing before the
7827	7827	interest of the encumbrancer or owner is of record; and
7828	7828	(B) has priority over any conflicting interest of a
7829	7829	predecessor in title of the encumbrancer or owner;
7830	7830	(2) before the goods become fixtures, the security
7831	7831	interest is perfected by any method permitted by this article
7832	7832	and the fixtures are readily removable:
7833	7833	(A) factory or office machines;
7834	7834	(B) equipment that is not primarily used or leased for
7835	7835	use in the operation of the real property; or
7836	7836	(C) replacements of domestic appliances that are
7837	7837	consumer goods;
7838	7838	(3) the conflicting interest is a lien on the real
7839	7839	property obtained by legal or equitable proceedings after the
7840	7840	security interest was perfected by any method permitted by
7841	7841	this article; or
7842	7842	(4) the security interest is:
7843	7843	(A) created in a manufactured home in a
7844	7844	manufactured-home transaction; and
7845	7845	(B) perfected pursuant to a statute described in
7846	7846	3837
7847	7847	3838
7848	7848	3839
7849	7849	3840
7850	7850	3841
7851	7851	3842
7852	7852	3843
7853	7853	3844
7854	7854	3845
7855	7855	3846
7856	7856	3847
7857	7857	3848
7858	7858	3849
7859	7859	3850
7860	7860	3851
7861	7861	3852
7862	7862	3853
7863	7863	3854
7864	7864	3855
7865	7865	3856
7866	7866	3857
7867	7867	3858
7868	7868	3859
7869	7869	3860
7870	7870	3861
7871	7871	3862
7872	7872	3863
7873	7873	3864 SB231 INTRODUCEDSB231 INTRODUCED
7874	7874	Page 139
7875	7875	Section 7-9A-311(a)(2).
7876	7876	(f) Priority based on consent, disclaimer, or right to
7877	7877	remove. A security interest in fixtures, whether or not
7878	7878	perfected, has priority over a conflicting interest of an
7879	7879	encumbrancer or owner of the real property if:
7880	7880	(1) the encumbrancer or owner has, in an authenticated
7881	7881	a signed record, consented to the security interest or
7882	7882	disclaimed an interest in the goods as fixtures; or
7883	7883	(2) the debtor has a right to remove the goods as
7884	7884	against the encumbrancer or owner.
7885	7885	(g) Continuation of paragraph (f)(2) priority. The
7886	7886	priority of the security interest under paragraph (f)(2)
7887	7887	continues for a reasonable time if the debtor's right to
7888	7888	remove the goods as against the encumbrancer or owner
7889	7889	terminates.
7890	7890	(h) Priority of construction mortgage. A mortgage is a
7891	7891	construction mortgage to the extent that it secures an
7892	7892	obligation incurred for the construction of an improvement on
7893	7893	land, including the acquisition cost of the land, if a
7894	7894	recorded record of the mortgage so indicates. Except as
7895	7895	otherwise provided in subsections (e) and (f), a security
7896	7896	interest in fixtures is subordinate to a construction mortgage
7897	7897	if a record of the mortgage is recorded before the goods
7898	7898	become fixtures and the goods become fixtures before the
7899	7899	completion of the construction. A mortgage has this priority
7900	7900	to the same extent as a construction mortgage to the extent
7901	7901	that it is given to refinance a construction mortgage.
7902	7902	(i) Priority of security interest in crops. A perfected
7903	7903	3865
7904	7904	3866
7905	7905	3867
7906	7906	3868
7907	7907	3869
7908	7908	3870
7909	7909	3871
7910	7910	3872
7911	7911	3873
7912	7912	3874
7913	7913	3875
7914	7914	3876
7915	7915	3877
7916	7916	3878
7917	7917	3879
7918	7918	3880
7919	7919	3881
7920	7920	3882
7921	7921	3883
7922	7922	3884
7923	7923	3885
7924	7924	3886
7925	7925	3887
7926	7926	3888
7927	7927	3889
7928	7928	3890
7929	7929	3891
7930	7930	3892 SB231 INTRODUCEDSB231 INTRODUCED
7931	7931	Page 140
7932	7932	security interest in crops growing on real property has
7933	7933	priority over a conflicting interest of an encumbrancer or
7934	7934	owner of the real property if the debtor has an interest of
7935	7935	record in or is in possession of the real property.
7936	7936	(j) Subsection (i) prevails over inconsistent law.
7937	7937	Subsection (i) prevails over any inconsistent provision of an
7938	7938	existing or future statute, rule, or regulation of this State
7939	7939	unless the provision is contained in a statute of this State,
7940	7940	refers expressly to subsection (i), and states that the
7941	7941	provision prevails over subsection (i)."
7942	7942	"§7-9A-341. Bank's rights and duties with respect to
7943	7943	deposit account.
7944	7944	Except as otherwise provided in Section 7-9A-340(c),
7945	7945	and unless the bank otherwise agrees in an authenticated a
7946	7946	signed record, a bank's rights and duties with respect to a
7947	7947	deposit account maintained with the bank are not terminated,
7948	7948	suspended, or modified by:
7949	7949	(1) the creation, attachment, or perfection of a
7950	7950	security interest in the deposit account;
7951	7951	(2) the bank's knowledge of the security interest; or
7952	7952	(3) the bank's receipt of instructions from the secured
7953	7953	party."
7954	7954	"§7-9A-404. Rights acquired by assignee; claims and
7955	7955	defenses against assignee.
7956	7956	(a) Assignee's rights subject to terms, claims, and
7957	7957	defenses; exceptions. Unless an account debtor has made an
7958	7958	enforceable agreement not to assert defenses or claims, and
7959	7959	subject to subsections (b) through (e), the rights of an
7960	7960	3893
7961	7961	3894
7962	7962	3895
7963	7963	3896
7964	7964	3897
7965	7965	3898
7966	7966	3899
7967	7967	3900
7968	7968	3901
7969	7969	3902
7970	7970	3903
7971	7971	3904
7972	7972	3905
7973	7973	3906
7974	7974	3907
7975	7975	3908
7976	7976	3909
7977	7977	3910
7978	7978	3911
7979	7979	3912
7980	7980	3913
7981	7981	3914
7982	7982	3915
7983	7983	3916
7984	7984	3917
7985	7985	3918
7986	7986	3919
7987	7987	3920 SB231 INTRODUCEDSB231 INTRODUCED
7988	7988	Page 141
7989	7989	assignee are subject to:
7990	7990	(1) all terms of the agreement between the account
7991	7991	debtor and assignor and any defense or claim in recoupment
7992	7992	arising from the transaction that gave rise to the contract;
7993	7993	and
7994	7994	(2) any other defense or claim of the account debtor
7995	7995	against the assignor which accrues before the account debtor
7996	7996	receives a notification of the assignment authenticated signed
7997	7997	by the assignor or the assignee.
7998	7998	(b) Account debtor's claim reduces amount owed to
7999	7999	assignee. Subject to subsection (c) and except as otherwise
8000	8000	provided in subsection (d), the claim of an account debtor
8001	8001	against an assignor may be asserted against an assignee under
8002	8002	subsection (a) only to reduce the amount the account debtor
8003	8003	owes.
8004	8004	(c) Rule for individual under other law. This section
8005	8005	is subject to law other than this article which establishes a
8006	8006	different rule for an account debtor who is an individual and
8007	8007	who incurred the obligation primarily for personal, family, or
8008	8008	household purposes.
8009	8009	(d) Omission of required statement in consumer
8010	8010	transaction. In a consumer transaction, if a record evidences
8011	8011	the account debtor's obligation, if law other than this
8012	8012	article requires that the record include a statement to the
8013	8013	effect that the account debtor's recovery against an assignee
8014	8014	with respect to claims and defenses against the assignor may
8015	8015	not exceed amounts paid by the account debtor under the
8016	8016	record, and if the record does not include such a statement,
8017	8017	3921
8018	8018	3922
8019	8019	3923
8020	8020	3924
8021	8021	3925
8022	8022	3926
8023	8023	3927
8024	8024	3928
8025	8025	3929
8026	8026	3930
8027	8027	3931
8028	8028	3932
8029	8029	3933
8030	8030	3934
8031	8031	3935
8032	8032	3936
8033	8033	3937
8034	8034	3938
8035	8035	3939
8036	8036	3940
8037	8037	3941
8038	8038	3942
8039	8039	3943
8040	8040	3944
8041	8041	3945
8042	8042	3946
8043	8043	3947
8044	8044	3948 SB231 INTRODUCEDSB231 INTRODUCED
8045	8045	Page 142
8046	8046	the extent to which a claim of an account debtor against the
8047	8047	assignor may be asserted against an assignee is determined as
8048	8048	if the record included such a statement.
8049	8049	(e) Inapplicability to health-care-insurance
8050	8050	receivable. This section does not apply to an assignment of a
8051	8051	health-care-insurance receivable."
8052	8052	"§7-9A-406. Discharge of account debtor; notification
8053	8053	of assignment; identification and proof of assignment;
8054	8054	restrictions on assignment of accounts, chattel paper, payment
8055	8055	intangibles, and promissory notes ineffective.
8056	8056	(a) Discharge of account debtor; effect of
8057	8057	notification. Subject to subsections (b) through (i) and
8058	8058	subsection (l), an account debtor on an account, chattel
8059	8059	paper, or a payment intangible may discharge its obligation by
8060	8060	paying the assignor until, but not after, the account debtor
8061	8061	receives a notification, authenticated signed by the assignor
8062	8062	or the assignee, that the amount due or to become due has been
8063	8063	assigned and that payment is to be made to the assignee. After
8064	8064	receipt of the notification, the account debtor may discharge
8065	8065	its obligation by paying the assignee and may not discharge
8066	8066	the obligation by paying the assignor.
8067	8067	(b) When notification ineffective. Subject to
8068	8068	subsection subsections (h) and (l), notification is
8069	8069	ineffective under subsection (a):
8070	8070	(1) if it does not reasonably identify the rights
8071	8071	assigned;
8072	8072	(2) to the extent that an agreement between an account
8073	8073	debtor and a seller of a payment intangible limits the account
8074	8074	3949
8075	8075	3950
8076	8076	3951
8077	8077	3952
8078	8078	3953
8079	8079	3954
8080	8080	3955
8081	8081	3956
8082	8082	3957
8083	8083	3958
8084	8084	3959
8085	8085	3960
8086	8086	3961
8087	8087	3962
8088	8088	3963
8089	8089	3964
8090	8090	3965
8091	8091	3966
8092	8092	3967
8093	8093	3968
8094	8094	3969
8095	8095	3970
8096	8096	3971
8097	8097	3972
8098	8098	3973
8099	8099	3974
8100	8100	3975
8101	8101	3976 SB231 INTRODUCEDSB231 INTRODUCED
8102	8102	Page 143
8103	8103	debtor's duty to pay a person other than the seller and the
8104	8104	limitation is effective under law other than this article; or
8105	8105	(3) at the option of an account debtor, if the
8106	8106	notification notifies the account debtor to make less than the
8107	8107	full amount of any installment or other periodic payment to
8108	8108	the assignee, even if:
8109	8109	(A) only a portion of the account, chattel paper, or
8110	8110	payment intangible has been assigned to that assignee;
8111	8111	(B) a portion has been assigned to another assignee; or
8112	8112	(C) the account debtor knows that the assignment to
8113	8113	that assignee is limited.
8114	8114	(c) Proof of assignment. Subject to subsection
8115	8115	subsections (h) and (l), if requested by the account debtor,
8116	8116	an assignee shall seasonably furnish reasonable proof that the
8117	8117	assignment has been made. Unless the assignee complies, the
8118	8118	account debtor may discharge its obligation by paying the
8119	8119	assignor, even if the account debtor has received a
8120	8120	notification under subsection (a).
8121	8121	(d) Term restricting assignment generally ineffective.
8122	8122	In this subsection, "promissory note" includes a negotiable
8123	8123	instrument that evidences chattel paper. Except as otherwise
8124	8124	provided in subsection (e) and Sections 7-2A-303 and 7-9A-407,
8125	8125	and subject to subsection (h), a term in an agreement between
8126	8126	an account debtor and an assignor or in a promissory note is
8127	8127	ineffective to the extent that it:
8128	8128	(1) prohibits, restricts, or requires the consent of
8129	8129	the account debtor or person obligated on the promissory note
8130	8130	to the assignment or transfer of, or the creation, attachment,
8131	8131	3977
8132	8132	3978
8133	8133	3979
8134	8134	3980
8135	8135	3981
8136	8136	3982
8137	8137	3983
8138	8138	3984
8139	8139	3985
8140	8140	3986
8141	8141	3987
8142	8142	3988
8143	8143	3989
8144	8144	3990
8145	8145	3991
8146	8146	3992
8147	8147	3993
8148	8148	3994
8149	8149	3995
8150	8150	3996
8151	8151	3997
8152	8152	3998
8153	8153	3999
8154	8154	4000
8155	8155	4001
8156	8156	4002
8157	8157	4003
8158	8158	4004 SB231 INTRODUCEDSB231 INTRODUCED
8159	8159	Page 144
8160	8160	perfection, or enforcement of a security interest in, the
8161	8161	account, chattel paper, payment intangible, or promissory
8162	8162	note; or
8163	8163	(2) provides that the assignment or transfer or the
8164	8164	creation, attachment, perfection, or enforcement of the
8165	8165	security interest may give rise to a default, breach, right of
8166	8166	recoupment, claim, defense, termination, right of termination,
8167	8167	or remedy under the account, chattel paper, payment
8168	8168	intangible, or promissory note.
8169	8169	(e) Inapplicability of subsection (d) to certain sales.
8170	8170	Subsection (d) does not apply to the sale of a payment
8171	8171	intangible or promissory note, other than a sale pursuant to a
8172	8172	disposition under Section 7-9A-610 or an acceptance of
8173	8173	collateral under Section 7-9A-620.
8174	8174	(f) Legal restrictions on assignment generally
8175	8175	ineffective. Except as otherwise provided in Sections 7-2A-303
8176	8176	and 7-9A-407 and subject to subsections (h) and (i), a rule of
8177	8177	law, statute, or regulation that prohibits, restricts, or
8178	8178	requires the consent of a government, governmental body or
8179	8179	official, or account debtor to the assignment or transfer of,
8180	8180	or creation of a security interest in, an account or chattel
8181	8181	paper is ineffective to the extent that the rule of law,
8182	8182	statute, or regulation:
8183	8183	(1) prohibits, restricts, or requires the consent of
8184	8184	the government, governmental body or official, or account
8185	8185	debtor to the assignment or transfer of, or the creation,
8186	8186	attachment, perfection, or enforcement of a security interest
8187	8187	in the account or chattel paper; or
8188	8188	4005
8189	8189	4006
8190	8190	4007
8191	8191	4008
8192	8192	4009
8193	8193	4010
8194	8194	4011
8195	8195	4012
8196	8196	4013
8197	8197	4014
8198	8198	4015
8199	8199	4016
8200	8200	4017
8201	8201	4018
8202	8202	4019
8203	8203	4020
8204	8204	4021
8205	8205	4022
8206	8206	4023
8207	8207	4024
8208	8208	4025
8209	8209	4026
8210	8210	4027
8211	8211	4028
8212	8212	4029
8213	8213	4030
8214	8214	4031
8215	8215	4032 SB231 INTRODUCEDSB231 INTRODUCED
8216	8216	Page 145
8217	8217	(2) provides that the assignment or transfer or the
8218	8218	creation, attachment, perfection, or enforcement of the
8219	8219	security interest may give rise to a default, breach, right of
8220	8220	recoupment, claim, defense, termination, right of termination,
8221	8221	or remedy under the account or chattel paper.
8222	8222	(g) Subsection (b)(3) not waivable. Subject to
8223	8223	subsection subsections (h) and (l), an account debtor may not
8224	8224	waive or vary its option under subsection (b)(3).
8225	8225	(h) Rule for individual under other law. This section
8226	8226	is subject to law other than this article which establishes a
8227	8227	different rule for an account debtor who is an individual and
8228	8228	who incurred the obligation primarily for personal, family, or
8229	8229	household purposes.
8230	8230	(i) Inapplicability to health-care-insurance
8231	8231	receivable. This section does not apply to an assignment of a
8232	8232	health-care-insurance receivable.
8233	8233	(j) Section prevails over inconsistent law. This
8234	8234	section prevails over any inconsistent provision of an
8235	8235	existing or future statute, rule, or regulation of this State
8236	8236	unless the provision is contained in a statute of this State,
8237	8237	refers expressly to this section, and states that the
8238	8238	provision prevails over this section.
8239	8239	(k) [Reserved].
8240	8240	(l) Inapplicability of certain subsections. Subsections
8241	8241	(a), (b), (c), and (g) do not apply to a controllable account
8242	8242	or controllable payment intangible.
8243	8243	"§7-9A-408. Restrictions on assignment of promissory
8244	8244	notes, health-care-insurance receivables, and certain general
8245	8245	4033
8246	8246	4034
8247	8247	4035
8248	8248	4036
8249	8249	4037
8250	8250	4038
8251	8251	4039
8252	8252	4040
8253	8253	4041
8254	8254	4042
8255	8255	4043
8256	8256	4044
8257	8257	4045
8258	8258	4046
8259	8259	4047
8260	8260	4048
8261	8261	4049
8262	8262	4050
8263	8263	4051
8264	8264	4052
8265	8265	4053
8266	8266	4054
8267	8267	4055
8268	8268	4056
8269	8269	4057
8270	8270	4058
8271	8271	4059
8272	8272	4060 SB231 INTRODUCEDSB231 INTRODUCED
8273	8273	Page 146
8274	8274	intangibles ineffective.
8275	8275	(a) Term restricting assignment generally ineffective.
8276	8276	Except as otherwise provided in subsection (b), a term in a
8277	8277	promissory note or in an agreement between an account debtor
8278	8278	and a debtor which relates to a health-care-insurance
8279	8279	receivable or a general intangible, including a contract,
8280	8280	permit, license, or franchise, and which term prohibits,
8281	8281	restricts, or requires the consent of the person obligated on
8282	8282	the promissory note or the account debtor to, the assignment
8283	8283	or transfer of, or creation, attachment, or perfection of a
8284	8284	security interest in, the promissory note,
8285	8285	health-care-insurance receivable, or general intangible, is
8286	8286	ineffective to the extent that the term:
8287	8287	(1) would impair the creation, attachment, or
8288	8288	perfection of a security interest; or
8289	8289	(2) provides that the assignment or transfer or the
8290	8290	creation, attachment, or perfection of the security interest
8291	8291	may give rise to a default, breach, right of recoupment,
8292	8292	claim, defense, termination, right of termination, or remedy
8293	8293	under the promissory note, health-care-insurance receivable,
8294	8294	or general intangible.
8295	8295	(b) Applicability of subsection (a) to sales of certain
8296	8296	rights to payment. Subsection (a) applies to a security
8297	8297	interest in a payment intangible or promissory note only if
8298	8298	the security interest arises out of a sale of the payment
8299	8299	intangible or promissory note, other than a sale pursuant to a
8300	8300	disposition under Section 7-9A-610 or an acceptance of
8301	8301	collateral under Section 7-9A-620.
8302	8302	4061
8303	8303	4062
8304	8304	4063
8305	8305	4064
8306	8306	4065
8307	8307	4066
8308	8308	4067
8309	8309	4068
8310	8310	4069
8311	8311	4070
8312	8312	4071
8313	8313	4072
8314	8314	4073
8315	8315	4074
8316	8316	4075
8317	8317	4076
8318	8318	4077
8319	8319	4078
8320	8320	4079
8321	8321	4080
8322	8322	4081
8323	8323	4082
8324	8324	4083
8325	8325	4084
8326	8326	4085
8327	8327	4086
8328	8328	4087
8329	8329	4088 SB231 INTRODUCEDSB231 INTRODUCED
8330	8330	Page 147
8331	8331	(c) Legal restrictions on assignment generally
8332	8332	ineffective. A rule of law, statute, or regulation that
8333	8333	prohibits, restricts, or requires the consent of a government,
8334	8334	governmental body or official, person obligated on a
8335	8335	promissory note, or account debtor to the assignment or
8336	8336	transfer of, or creation of a security interest in, a
8337	8337	promissory note, health-care-insurance receivable, or general
8338	8338	intangible, including a contract, permit, license, or
8339	8339	franchise between an account debtor and a debtor, is
8340	8340	ineffective to the extent that the rule of law, statute, or
8341	8341	regulation:
8342	8342	(1) would impair the creation, attachment, or
8343	8343	perfection of a security interest; or
8344	8344	(2) provides that the assignment or transfer or the
8345	8345	creation, attachment, or perfection of the security interest
8346	8346	may give rise to a default, breach, right of recoupment,
8347	8347	claim, defense, termination, right of termination, or remedy
8348	8348	under the promissory note, health-care-insurance receivable,
8349	8349	or general intangible.
8350	8350	(d) Limitation on ineffectiveness under subsections (a)
8351	8351	and (c). To the extent that a term in a promissory note or in
8352	8352	an agreement between an account debtor and a debtor which
8353	8353	relates to a health-care-insurance receivable or general
8354	8354	intangible or a rule of law, statute, or regulation described
8355	8355	in subsection (c) would be effective under law other than this
8356	8356	article but is ineffective under subsection (a) or (c), the
8357	8357	creation, attachment, or perfection of a security interest in
8358	8358	the promissory note, health-care-insurance receivable, or
8359	8359	4089
8360	8360	4090
8361	8361	4091
8362	8362	4092
8363	8363	4093
8364	8364	4094
8365	8365	4095
8366	8366	4096
8367	8367	4097
8368	8368	4098
8369	8369	4099
8370	8370	4100
8371	8371	4101
8372	8372	4102
8373	8373	4103
8374	8374	4104
8375	8375	4105
8376	8376	4106
8377	8377	4107
8378	8378	4108
8379	8379	4109
8380	8380	4110
8381	8381	4111
8382	8382	4112
8383	8383	4113
8384	8384	4114
8385	8385	4115
8386	8386	4116 SB231 INTRODUCEDSB231 INTRODUCED
8387	8387	Page 148
8388	8388	general intangible:
8389	8389	(1) is not enforceable against the person obligated on
8390	8390	the promissory note or the account debtor;
8391	8391	(2) does not impose a duty or obligation on the person
8392	8392	obligated on the promissory note or the account debtor;
8393	8393	(3) does not require the person obligated on the
8394	8394	promissory note or the account debtor to recognize the
8395	8395	security interest, pay or render performance to the secured
8396	8396	party, or accept payment or performance from the secured
8397	8397	party;
8398	8398	(4) does not entitle the secured party to use or assign
8399	8399	the debtor's rights under the promissory note,
8400	8400	health-care-insurance receivable, or general intangible,
8401	8401	including any related information or materials furnished to
8402	8402	the debtor in the transaction giving rise to the promissory
8403	8403	note, health-care-insurance receivable, or general intangible;
8404	8404	(5) does not entitle the secured party to use, assign,
8405	8405	possess, or have access to any trade secrets or confidential
8406	8406	information of the person obligated on the promissory note or
8407	8407	the account debtor; and
8408	8408	(6) does not entitle the secured party to enforce the
8409	8409	security interest in the promissory note,
8410	8410	health-care-insurance receivable, or general intangible.
8411	8411	(e) Section prevails over inconsistent law. This
8412	8412	section prevails over any inconsistent provision of an
8413	8413	existing or future statute, rule, or regulation of this State
8414	8414	unless the provision is contained in a statute of this State,
8415	8415	refers expressly to this section, and states that the
8416	8416	4117
8417	8417	4118
8418	8418	4119
8419	8419	4120
8420	8420	4121
8421	8421	4122
8422	8422	4123
8423	8423	4124
8424	8424	4125
8425	8425	4126
8426	8426	4127
8427	8427	4128
8428	8428	4129
8429	8429	4130
8430	8430	4131
8431	8431	4132
8432	8432	4133
8433	8433	4134
8434	8434	4135
8435	8435	4136
8436	8436	4137
8437	8437	4138
8438	8438	4139
8439	8439	4140
8440	8440	4141
8441	8441	4142
8442	8442	4143
8443	8443	4144 SB231 INTRODUCEDSB231 INTRODUCED
8444	8444	Page 149
8445	8445	provision prevails over this section.
8446	8446	(f) [Reserved.]
8447	8447	(g) "Promissory note." In this section, "promissory
8448	8448	note" includes a negotiable instrument that evidences chattel
8449	8449	paper.
8450	8450	"§7-9A-509. Persons entitled to file a record.
8451	8451	(a) Person entitled to file record. A person may file
8452	8452	an initial financing statement, amendment that adds collateral
8453	8453	covered by a financing statement, or amendment that adds a
8454	8454	debtor to a financing statement only if:
8455	8455	(1) the debtor authorizes the filing in an
8456	8456	authenticated a signed record or pursuant to subsection (b) or
8457	8457	(c); or
8458	8458	(2) the person holds an agricultural lien that has
8459	8459	become effective at the time of filing and the financing
8460	8460	statement covers only collateral in which the person holds an
8461	8461	agricultural lien.
8462	8462	(b) Security agreement as authorization. By
8463	8463	authenticating signing or becoming bound as debtor by a
8464	8464	security agreement, a debtor or new debtor authorizes the
8465	8465	filing of an initial financing statement, and an amendment,
8466	8466	covering:
8467	8467	(1) the collateral described in the security agreement;
8468	8468	and
8469	8469	(2) property that becomes collateral under Section
8470	8470	7-9A-315(a)(2), whether or not the security agreement
8471	8471	expressly covers proceeds.
8472	8472	(c) Acquisition of collateral as authorization. By
8473	8473	4145
8474	8474	4146
8475	8475	4147
8476	8476	4148
8477	8477	4149
8478	8478	4150
8479	8479	4151
8480	8480	4152
8481	8481	4153
8482	8482	4154
8483	8483	4155
8484	8484	4156
8485	8485	4157
8486	8486	4158
8487	8487	4159
8488	8488	4160
8489	8489	4161
8490	8490	4162
8491	8491	4163
8492	8492	4164
8493	8493	4165
8494	8494	4166
8495	8495	4167
8496	8496	4168
8497	8497	4169
8498	8498	4170
8499	8499	4171
8500	8500	4172 SB231 INTRODUCEDSB231 INTRODUCED
8501	8501	Page 150
8502	8502	acquiring collateral in which a security interest or
8503	8503	agricultural lien continues under Section 7-9A-315(a)(1), a
8504	8504	debtor authorizes the filing of an initial financing
8505	8505	statement, and an amendment, covering the collateral and
8506	8506	property that becomes collateral under Section 7-9A-315(a)(2).
8507	8507	(d) Person entitled to file certain amendments. A
8508	8508	person may file an amendment other than an amendment that adds
8509	8509	collateral covered by a financing statement or an amendment
8510	8510	that adds a debtor to a financing statement only if:
8511	8511	(1) the secured party of record authorizes the filing;
8512	8512	or
8513	8513	(2) the amendment is a termination statement for a
8514	8514	financing statement as to which the secured party of record
8515	8515	has failed to file or send a termination statement as required
8516	8516	by Section 7-9A-513(a) or (c), the debtor authorizes the
8517	8517	filing, and the termination statement indicates that the
8518	8518	debtor authorized it to be filed.
8519	8519	(e) Multiple secured parties of record. If there is
8520	8520	more than one secured party of record for a financing
8521	8521	statement, each secured party of record may authorize the
8522	8522	filing of an amendment under subsection (d)."
8523	8523	"§7-9A-513. Termination statement.
8524	8524	(a) Consumer goods. A secured party shall cause the
8525	8525	secured party of record for a financing statement to file a
8526	8526	termination statement for the financing statement if the
8527	8527	financing statement covers consumer goods and:
8528	8528	(1) there is no obligation secured by the collateral
8529	8529	covered by the financing statement and no commitment to make
8530	8530	4173
8531	8531	4174
8532	8532	4175
8533	8533	4176
8534	8534	4177
8535	8535	4178
8536	8536	4179
8537	8537	4180
8538	8538	4181
8539	8539	4182
8540	8540	4183
8541	8541	4184
8542	8542	4185
8543	8543	4186
8544	8544	4187
8545	8545	4188
8546	8546	4189
8547	8547	4190
8548	8548	4191
8549	8549	4192
8550	8550	4193
8551	8551	4194
8552	8552	4195
8553	8553	4196
8554	8554	4197
8555	8555	4198
8556	8556	4199
8557	8557	4200 SB231 INTRODUCEDSB231 INTRODUCED
8558	8558	Page 151
8559	8559	an advance, incur an obligation, or otherwise give value; or
8560	8560	(2) the debtor did not authorize the filing of the
8561	8561	initial financing statement.
8562	8562	(b) Time for compliance with subsection (a). To comply
8563	8563	with subsection (a), a secured party shall cause the secured
8564	8564	party of record to file the termination statement:
8565	8565	(1) within one month after there is no obligation
8566	8566	secured by the collateral covered by the financing statement
8567	8567	and no commitment to make an advance, incur an obligation, or
8568	8568	otherwise give value; or
8569	8569	(2) if earlier, within 20 days after the secured party
8570	8570	receives an authenticated a signed demand from a debtor.
8571	8571	(c) Other collateral. In cases not governed by
8572	8572	subsection (a), within 20 days after a secured party receives
8573	8573	an authenticated a signed demand from a debtor, the secured
8574	8574	party shall cause the secured party of record for a financing
8575	8575	statement to send to the debtor a termination statement for
8576	8576	the financing statement or file the termination statement in
8577	8577	the filing office if:
8578	8578	(1) except in the case of a financing statement
8579	8579	covering accounts or chattel paper that has been sold or goods
8580	8580	that are the subject of a consignment, there is no obligation
8581	8581	secured by the collateral covered by the financing statement
8582	8582	and no commitment to make an advance, incur an obligation, or
8583	8583	otherwise give value;
8584	8584	(2) the financing statement covers accounts or chattel
8585	8585	paper that has been sold but as to which the account debtor or
8586	8586	other person obligated has discharged its obligation;
8587	8587	4201
8588	8588	4202
8589	8589	4203
8590	8590	4204
8591	8591	4205
8592	8592	4206
8593	8593	4207
8594	8594	4208
8595	8595	4209
8596	8596	4210
8597	8597	4211
8598	8598	4212
8599	8599	4213
8600	8600	4214
8601	8601	4215
8602	8602	4216
8603	8603	4217
8604	8604	4218
8605	8605	4219
8606	8606	4220
8607	8607	4221
8608	8608	4222
8609	8609	4223
8610	8610	4224
8611	8611	4225
8612	8612	4226
8613	8613	4227
8614	8614	4228 SB231 INTRODUCEDSB231 INTRODUCED
8615	8615	Page 152
8616	8616	(3) the financing statement covers goods that were the
8617	8617	subject of a consignment to the debtor but are not in the
8618	8618	debtor's possession; or
8619	8619	(4) the debtor did not authorize the filing of the
8620	8620	initial financing statement.
8621	8621	(d) Effect of filing termination statement. Except as
8622	8622	otherwise provided in Section 7-9A-510, upon the filing of a
8623	8623	termination statement with the filing office, the financing
8624	8624	statement to which the termination statement relates ceases to
8625	8625	be effective. Except as otherwise provided in Section
8626	8626	7-9A-510, for purposes of Sections 7-9A-519(g), 7-9A-522(a),
8627	8627	and 7-9A-523(c), the filing with the filing office of a
8628	8628	termination statement relating to a financing statement that
8629	8629	indicates that the debtor is a transmitting utility also
8630	8630	causes the effectiveness of the financing statement to lapse."
8631	8631	"§7-9A-601. Rights after default; judicial enforcement;
8632	8632	consignor or buyer of accounts, chattel paper, payment
8633	8633	intangibles, or promissory notes.
8634	8634	(a) Rights of secured party after default. After
8635	8635	default, a secured party has the rights provided in this part
8636	8636	and, except as otherwise provided in Section 7-9A-602, those
8637	8637	provided by agreement of the parties. A secured party:
8638	8638	(1) may reduce a claim to judgment, foreclose, or
8639	8639	otherwise enforce the claim, security interest, or
8640	8640	agricultural lien by any available judicial procedure; and
8641	8641	(2) if the collateral is documents, may proceed either
8642	8642	as to the documents or as to the goods they cover.
8643	8643	(b) Rights and duties of secured party in possession or
8644	8644	4229
8645	8645	4230
8646	8646	4231
8647	8647	4232
8648	8648	4233
8649	8649	4234
8650	8650	4235
8651	8651	4236
8652	8652	4237
8653	8653	4238
8654	8654	4239
8655	8655	4240
8656	8656	4241
8657	8657	4242
8658	8658	4243
8659	8659	4244
8660	8660	4245
8661	8661	4246
8662	8662	4247
8663	8663	4248
8664	8664	4249
8665	8665	4250
8666	8666	4251
8667	8667	4252
8668	8668	4253
8669	8669	4254
8670	8670	4255
8671	8671	4256 SB231 INTRODUCEDSB231 INTRODUCED
8672	8672	Page 153
8673	8673	control. A secured party in possession of collateral or
8674	8674	control of collateral under Section 7-7-106, 7-9A-104,
8675	8675	7-9A-105, 7-9A-106, or 7-9A-107, or 7-9A-107A has the rights
8676	8676	and duties provided in Section 7-9A-207.
8677	8677	(c) Rights cumulative; simultaneous exercise. The
8678	8678	rights under subsections (a) and (b) are cumulative and may be
8679	8679	exercised simultaneously.
8680	8680	(d) Rights of debtor and obligor. Except as otherwise
8681	8681	provided in subsection (g) and Section 7-9A-605, after
8682	8682	default, a debtor and an obligor have the rights provided in
8683	8683	this part and by agreement of the parties.
8684	8684	(e) Lien of levy after judgment. If a secured party has
8685	8685	reduced its claim to judgment, the lien of any levy that may
8686	8686	be made upon the collateral by virtue of an execution based
8687	8687	upon the judgment relates back to the earliest of:
8688	8688	(1) the date of perfection of the security interest or
8689	8689	agricultural lien in the collateral;
8690	8690	(2) the date of filing a financing statement covering
8691	8691	the collateral; or
8692	8692	(3) any date specified in a statute under which the
8693	8693	agricultural lien was created.
8694	8694	(f) Execution sale. A sale pursuant to an execution is
8695	8695	a foreclosure of the security interest or agricultural lien by
8696	8696	judicial procedure within the meaning of this section. A
8697	8697	secured party may purchase at the sale and thereafter hold the
8698	8698	collateral free of any other requirements of this article.
8699	8699	(g) Consignor or buyer of certain rights to payment.
8700	8700	Except as otherwise provided in Section 7-9A-607(c), this part
8701	8701	4257
8702	8702	4258
8703	8703	4259
8704	8704	4260
8705	8705	4261
8706	8706	4262
8707	8707	4263
8708	8708	4264
8709	8709	4265
8710	8710	4266
8711	8711	4267
8712	8712	4268
8713	8713	4269
8714	8714	4270
8715	8715	4271
8716	8716	4272
8717	8717	4273
8718	8718	4274
8719	8719	4275
8720	8720	4276
8721	8721	4277
8722	8722	4278
8723	8723	4279
8724	8724	4280
8725	8725	4281
8726	8726	4282
8727	8727	4283
8728	8728	4284 SB231 INTRODUCEDSB231 INTRODUCED
8729	8729	Page 154
8730	8730	imposes no duties upon a secured party that is a consignor or
8731	8731	is a buyer of accounts, chattel paper, payment intangibles, or
8732	8732	promissory notes."
8733	8733	"§7-9A-605. Unknown debtor or secondary obligor.
8734	8734	A(a) In general: No duty owed by secured party. Except
8735	8735	as provided in subsection (b), a secured party does not owe a
8736	8736	duty based on its status as secured party:
8737	8737	(1) to a person that is a debtor or obligor, unless the
8738	8738	secured party knows:
8739	8739	(A) that the person is a debtor or obligor;
8740	8740	(B) the identity of the person; and
8741	8741	(C) how to communicate with the person; or
8742	8742	(2) to a secured party or lienholder that has filed a
8743	8743	financing statement against a person, unless the secured party
8744	8744	knows:
8745	8745	(A) that the person is a debtor; and
8746	8746	(B) the identity of the person.
8747	8747	(b) Exception: Secured party owes duty to debtor or
8748	8748	obligor. A secured party owes a duty based on its status as a
8749	8749	secured party to a person if, at the time the secured party
8750	8750	obtains control of collateral that is a controllable account,
8751	8751	controllable electronic record, or controllable payment
8752	8752	intangible or at the time the security interest attaches to
8753	8753	the collateral, whichever is later:
8754	8754	(1) the person is a debtor or obligor; and
8755	8755	(2) the secured party knows that the information in
8756	8756	subsection (a)(1)(A), (B), or (C) relating to the person is
8757	8757	not provided by the collateral, a record attached to or
8758	8758	4285
8759	8759	4286
8760	8760	4287
8761	8761	4288
8762	8762	4289
8763	8763	4290
8764	8764	4291
8765	8765	4292
8766	8766	4293
8767	8767	4294
8768	8768	4295
8769	8769	4296
8770	8770	4297
8771	8771	4298
8772	8772	4299
8773	8773	4300
8774	8774	4301
8775	8775	4302
8776	8776	4303
8777	8777	4304
8778	8778	4305
8779	8779	4306
8780	8780	4307
8781	8781	4308
8782	8782	4309
8783	8783	4310
8784	8784	4311
8785	8785	4312 SB231 INTRODUCEDSB231 INTRODUCED
8786	8786	Page 155
8787	8787	logically associated with the collateral, or the system in
8788	8788	which the collateral is recorded. "
8789	8789	"§7-9A-608. Application of proceeds of collection or
8790	8790	enforcement; liability for deficiency and right to surplus.
8791	8791	(a) Application of proceeds, surplus, and deficiency if
8792	8792	obligation secured. If a security interest or agricultural
8793	8793	lien secures payment or performance of an obligation, the
8794	8794	following rules apply:
8795	8795	(1) A secured party shall apply or pay over for
8796	8796	application the cash proceeds of collection or enforcement
8797	8797	under Section 7-9A-607 in the following order to:
8798	8798	(A) the reasonable expenses of collection and
8799	8799	enforcement and, to the extent provided for by agreement and
8800	8800	not prohibited by law, reasonable attorney's fees and legal
8801	8801	expenses incurred by the secured party;
8802	8802	(B) the satisfaction of obligations secured by the
8803	8803	security interest or agricultural lien under which the
8804	8804	collection or enforcement is made; and
8805	8805	(C) the satisfaction of obligations secured by any
8806	8806	subordinate security interest in or other lien on the
8807	8807	collateral subject to the security interest or agricultural
8808	8808	lien under which the collection or enforcement is made if the
8809	8809	secured party receives an authenticated a signed demand for
8810	8810	proceeds before distribution of the proceeds is completed.
8811	8811	(2) If requested by a secured party, a holder of a
8812	8812	subordinate security interest or other lien shall furnish
8813	8813	reasonable proof of the interest or lien within a reasonable
8814	8814	time. Unless the holder complies, the secured party need not
8815	8815	4313
8816	8816	4314
8817	8817	4315
8818	8818	4316
8819	8819	4317
8820	8820	4318
8821	8821	4319
8822	8822	4320
8823	8823	4321
8824	8824	4322
8825	8825	4323
8826	8826	4324
8827	8827	4325
8828	8828	4326
8829	8829	4327
8830	8830	4328
8831	8831	4329
8832	8832	4330
8833	8833	4331
8834	8834	4332
8835	8835	4333
8836	8836	4334
8837	8837	4335
8838	8838	4336
8839	8839	4337
8840	8840	4338
8841	8841	4339
8842	8842	4340 SB231 INTRODUCEDSB231 INTRODUCED
8843	8843	Page 156
8844	8844	comply with the holder's demand under paragraph (1)(C).
8845	8845	(3) A secured party need not apply or pay over for
8846	8846	application noncash proceeds of collection and enforcement
8847	8847	under Section 7-9A-607 unless the failure to do so would be
8848	8848	commercially unreasonable. A secured party that applies or
8849	8849	pays over for application noncash proceeds shall do so in a
8850	8850	commercially reasonable manner.
8851	8851	(4) A secured party shall account to and pay a debtor
8852	8852	for any surplus, and the obligor is liable for any deficiency.
8853	8853	(b) No surplus or deficiency in sales of certain rights
8854	8854	to payment. If the underlying transaction is a sale of
8855	8855	accounts, chattel paper, payment intangibles, or promissory
8856	8856	notes, the debtor is not entitled to any surplus, and the
8857	8857	obligor is not liable for any deficiency."
8858	8858	"§7-9A-611. Notification before disposition of
8859	8859	collateral.
8860	8860	(a) "Notification date." In this section, "notification
8861	8861	date" means the earlier of the date on which:
8862	8862	(1) a secured party sends to the debtor and any
8863	8863	secondary obligor an authenticated a signed notification of
8864	8864	disposition; or
8865	8865	(2) the debtor and any secondary obligor waive the
8866	8866	right to notification.
8867	8867	(b) Notification of disposition required. Except as
8868	8868	otherwise provided in subsection (d), a secured party that
8869	8869	disposes of collateral under Section 7-9A-610 shall send to
8870	8870	the persons specified in subsection (c) a reasonable
8871	8871	authenticated signed notification of disposition.
8872	8872	4341
8873	8873	4342
8874	8874	4343
8875	8875	4344
8876	8876	4345
8877	8877	4346
8878	8878	4347
8879	8879	4348
8880	8880	4349
8881	8881	4350
8882	8882	4351
8883	8883	4352
8884	8884	4353
8885	8885	4354
8886	8886	4355
8887	8887	4356
8888	8888	4357
8889	8889	4358
8890	8890	4359
8891	8891	4360
8892	8892	4361
8893	8893	4362
8894	8894	4363
8895	8895	4364
8896	8896	4365
8897	8897	4366
8898	8898	4367
8899	8899	4368 SB231 INTRODUCEDSB231 INTRODUCED
8900	8900	Page 157
8901	8901	(c) Persons to be notified. To comply with subsection
8902	8902	(b), the secured party shall send an authenticated a signed
8903	8903	notification of disposition to:
8904	8904	(1) the debtor;
8905	8905	(2) any secondary obligor; and
8906	8906	(3) if the collateral is other than consumer goods:
8907	8907	(A) any other person from which the secured party has
8908	8908	received, before the notification date, an authenticated a
8909	8909	signed notification of a claim of an interest in the
8910	8910	collateral;
8911	8911	(B) any other secured party or lienholder that, 10 days
8912	8912	before the notification date, held a security interest in or
8913	8913	other lien on the collateral perfected by the filing of a
8914	8914	financing statement that:
8915	8915	(i) identified the collateral;
8916	8916	(ii) was indexed under the debtor's name as of that
8917	8917	date; and
8918	8918	(iii) was filed in the office in which to file a
8919	8919	financing statement against the debtor covering the collateral
8920	8920	as of that date; and
8921	8921	(C) any other secured party that, 10 days before the
8922	8922	notification date, held a security interest in the collateral
8923	8923	perfected by compliance with a statute, regulation, or treaty
8924	8924	described in Section 7-9A-311(a).
8925	8925	(d) Subsection (b) inapplicable: Perishable collateral;
8926	8926	recognized market. Subsection (b) does not apply if the
8927	8927	collateral is perishable or threatens to decline speedily in
8928	8928	value or is of a type customarily sold on a recognized market.
8929	8929	4369
8930	8930	4370
8931	8931	4371
8932	8932	4372
8933	8933	4373
8934	8934	4374
8935	8935	4375
8936	8936	4376
8937	8937	4377
8938	8938	4378
8939	8939	4379
8940	8940	4380
8941	8941	4381
8942	8942	4382
8943	8943	4383
8944	8944	4384
8945	8945	4385
8946	8946	4386
8947	8947	4387
8948	8948	4388
8949	8949	4389
8950	8950	4390
8951	8951	4391
8952	8952	4392
8953	8953	4393
8954	8954	4394
8955	8955	4395
8956	8956	4396 SB231 INTRODUCEDSB231 INTRODUCED
8957	8957	Page 158
8958	8958	(e) Compliance with subsection (c)(3)(B). A secured
8959	8959	party complies with the requirement for notification
8960	8960	prescribed by subsection (c)(3)(B) if:
8961	8961	(1) not later than 20 days or earlier than 30 days
8962	8962	before the notification date, the secured party requests, in a
8963	8963	commercially reasonable manner, information concerning
8964	8964	financing statements indexed under the debtor's name in the
8965	8965	office indicated in subsection (c)(3)(B); and
8966	8966	(2) before the notification date, the secured party:
8967	8967	(A) did not receive a response to the request for
8968	8968	information; or
8969	8969	(B) received a response to the request for information
8970	8970	and sent an authenticated a signed notification of disposition
8971	8971	to each secured party or other lienholder named in that
8972	8972	response whose financing statement covered the collateral."
8973	8973	"§7-9A-613. Contents and form of notification before
8974	8974	disposition of collateral: general.
8975	8975	(a) Content and form of notification. Except in a
8976	8976	consumer-goods transaction, the following rules apply:
8977	8977	(1) The contents of a notification of disposition are
8978	8978	sufficient if the notification:
8979	8979	(A) describes the debtor and the secured party;
8980	8980	(B) describes the collateral that is the subject of the
8981	8981	intended disposition;
8982	8982	(C) states the method of intended disposition;
8983	8983	(D) states that the debtor is entitled to an accounting
8984	8984	of the unpaid indebtedness and states the charge, if any, for
8985	8985	an accounting; and
8986	8986	4397
8987	8987	4398
8988	8988	4399
8989	8989	4400
8990	8990	4401
8991	8991	4402
8992	8992	4403
8993	8993	4404
8994	8994	4405
8995	8995	4406
8996	8996	4407
8997	8997	4408
8998	8998	4409
8999	8999	4410
9000	9000	4411
9001	9001	4412
9002	9002	4413
9003	9003	4414
9004	9004	4415
9005	9005	4416
9006	9006	4417
9007	9007	4418
9008	9008	4419
9009	9009	4420
9010	9010	4421
9011	9011	4422
9012	9012	4423
9013	9013	4424 SB231 INTRODUCEDSB231 INTRODUCED
9014	9014	Page 159
9015	9015	(E) states the time and place of a public disposition
9016	9016	or the time after which any other disposition is to be made.
9017	9017	(2) Whether the contents of a notification that lacks
9018	9018	any of the information specified in paragraph (1) are
9019	9019	nevertheless sufficient is a question of fact.
9020	9020	(3) The contents of a notification providing
9021	9021	substantially the information specified in paragraph (1) are
9022	9022	sufficient, even if the notification includes:
9023	9023	(A) information not specified by that paragraph; or
9024	9024	(B) minor errors that are not seriously misleading.
9025	9025	(4) A particular phrasing of the notification is not
9026	9026	required.
9027	9027	(5) The following form of notification and the form
9028	9028	appearing in Section 7-9A-614 (a)(3), when completed in
9029	9029	accordance with the instructions in subsection (b) and Section
9030	9030	7-9A-614(b), each provides sufficient information:
9031	9031	NOTIFICATION OF DISPOSITION OF COLLATERAL
9032	9032	To: _______________ (Name of debtor, obligor, or other
9033	9033	person to which the notification is sent)
9034	9034	From: __________ (Name, address, and telephone number
9035	9035	of secured party)
9036	9036	Name of Debtor(s): _________ (Include only if debtor(s)
9037	9037	are not an addressee)
9038	9038	For a public disposition:
9039	9039	We will sell or lease or license, as applicable, the
9040	9040	________ (describe collateral) to the highest qualified bidder
9041	9041	in public as follows:
9042	9042	Day and Date:
9043	9043	4425
9044	9044	4426
9045	9045	4427
9046	9046	4428
9047	9047	4429
9048	9048	4430
9049	9049	4431
9050	9050	4432
9051	9051	4433
9052	9052	4434
9053	9053	4435
9054	9054	4436
9055	9055	4437
9056	9056	4438
9057	9057	4439
9058	9058	4440
9059	9059	4441
9060	9060	4442
9061	9061	4443
9062	9062	4444
9063	9063	4445
9064	9064	4446
9065	9065	4447
9066	9066	4448
9067	9067	4449
9068	9068	4450
9069	9069	4451
9070	9070	4452 SB231 INTRODUCEDSB231 INTRODUCED
9071	9071	Page 160
9072	9072	Time:
9073	9073	Place:
9074	9074	For a private disposition:
9075	9075	We will sell or lease or license, as applicable, the
9076	9076	________ (describe collateral) privately some time after
9077	9077	________ (day and date).
9078	9078	You are entitled to an accounting of the unpaid
9079	9079	indebtedness secured by the property that we intend to sell or
9080	9080	lease or license, as applicable, for a charge of $____. You
9081	9081	may request an accounting by calling us at _______ (telephone
9082	9082	number).
9083	9083	[End of Form]
9084	9084	NOTIFICATION OF DISPOSITION OF COLLATERAL
9085	9085	To: (Name of debtor, obligor, or other person to which
9086	9086	the notification is sent)
9087	9087	From: (Name, address, and telephone number of secured
9088	9088	party)
9089	9089	{1} Name of any debtor that is not an addressee: (name
9090	9090	of each debtor)
9091	9091	{2} We will sell (describe collateral) (to the highest
9092	9092	qualified bidder) at public sale. A sale could include a lease
9093	9093	or license. The sale will be held as follows:
9094	9094	(Date)
9095	9095	(Time)
9096	9096	(Place)
9097	9097	{3} We will sell (describe collateral) at private sale
9098	9098	sometime after (date). A sale could include a lease or
9099	9099	license.
9100	9100	4453
9101	9101	4454
9102	9102	4455
9103	9103	4456
9104	9104	4457
9105	9105	4458
9106	9106	4459
9107	9107	4460
9108	9108	4461
9109	9109	4462
9110	9110	4463
9111	9111	4464
9112	9112	4465
9113	9113	4466
9114	9114	4467
9115	9115	4468
9116	9116	4469
9117	9117	4470
9118	9118	4471
9119	9119	4472
9120	9120	4473
9121	9121	4474
9122	9122	4475
9123	9123	4476
9124	9124	4477
9125	9125	4478
9126	9126	4479
9127	9127	4480 SB231 INTRODUCEDSB231 INTRODUCED
9128	9128	Page 161
9129	9129	{4} You are entitled to an accounting of the unpaid
9130	9130	indebtedness secured by the property that we intend to sell
9131	9131	or, as applicable, lease or license.
9132	9132	{5} If you request an accounting you must pay a charge
9133	9133	of $ (amount).
9134	9134	{6} You may request an accounting by calling us at
9135	9135	(telephone number).
9136	9136	[End of Form]
9137	9137	(b) Instructions for form of notification. The
9138	9138	following instructions apply to the form of notification in
9139	9139	subsection (a)(5):
9140	9140	(1) The instructions in this subsection refer to the
9141	9141	numbers in braces before items in the form of notification in
9142	9142	subsection (a)(5). Do not include the numbers or braces in the
9143	9143	notification. The numbers and braces are used only for the
9144	9144	purpose of these instructions.
9145	9145	(2) Include and complete item {1} only if there is a
9146	9146	debtor that is not an addressee of the notification and list
9147	9147	the name or names.
9148	9148	(3) Include and complete either item {2}, if the
9149	9149	notification relates to a public disposition of the
9150	9150	collateral, or item {3}, if the notification relates to a
9151	9151	private disposition of the collateral. If item {2} is
9152	9152	included, include the words "to the highest qualified bidder"
9153	9153	only if applicable.
9154	9154	(4) Include and complete items {4} and {6}.
9155	9155	(5) Include and complete item {5} only if the sender
9156	9156	will charge the recipient for an accounting. "
9157	9157	4481
9158	9158	4482
9159	9159	4483
9160	9160	4484
9161	9161	4485
9162	9162	4486
9163	9163	4487
9164	9164	4488
9165	9165	4489
9166	9166	4490
9167	9167	4491
9168	9168	4492
9169	9169	4493
9170	9170	4494
9171	9171	4495
9172	9172	4496
9173	9173	4497
9174	9174	4498
9175	9175	4499
9176	9176	4500
9177	9177	4501
9178	9178	4502
9179	9179	4503
9180	9180	4504
9181	9181	4505
9182	9182	4506
9183	9183	4507
9184	9184	4508 SB231 INTRODUCEDSB231 INTRODUCED
9185	9185	Page 162
9186	9186	"§7-9A-614. Contents and form of notification before
9187	9187	disposition of collateral: consumer-goods transaction.
9188	9188	(a) Content and form of notification. In a
9189	9189	consumer-goods transaction, the following rules apply:
9190	9190	(1) A notification of disposition must provide the
9191	9191	following information:
9192	9192	(A) the information specified in Section
9193	9193	7-9A-613(a)(1);
9194	9194	(B) a description of any liability for a deficiency of
9195	9195	the person to which the notification is sent;
9196	9196	(C) a telephone number from which the amount that must
9197	9197	be paid to the secured party to redeem the collateral under
9198	9198	Section 7-9A-623 is available; and
9199	9199	(D) a telephone number or mailing address from which
9200	9200	additional information concerning the disposition and the
9201	9201	obligation secured is available.
9202	9202	(2) A particular phrasing of the notification is not
9203	9203	required.
9204	9204	(3) The following form of notification, when completed
9205	9205	in accordance with instructions in subsection (b) , provides
9206	9206	sufficient information:
9207	9207	Name and address of secured party
9208	9208	Date
9209	9209	NOTICE OF OUR PLAN TO SELL PROPERTY
9210	9210	Name and address of any obligor who is also a debtor
9211	9211	Subject: __________ (Identification of Transaction)
9212	9212	We have your ___________ (describe collateral), because
9213	9213	you broke promises in our agreement.
9214	9214	4509
9215	9215	4510
9216	9216	4511
9217	9217	4512
9218	9218	4513
9219	9219	4514
9220	9220	4515
9221	9221	4516
9222	9222	4517
9223	9223	4518
9224	9224	4519
9225	9225	4520
9226	9226	4521
9227	9227	4522
9228	9228	4523
9229	9229	4524
9230	9230	4525
9231	9231	4526
9232	9232	4527
9233	9233	4528
9234	9234	4529
9235	9235	4530
9236	9236	4531
9237	9237	4532
9238	9238	4533
9239	9239	4534
9240	9240	4535
9241	9241	4536 SB231 INTRODUCEDSB231 INTRODUCED
9242	9242	Page 163
9243	9243	For a public disposition:
9244	9244	We will sell _____________ (describe collateral) at
9245	9245	public sale. A sale could include a lease or license. The sale
9246	9246	will be held as follows:
9247	9247	Date:
9248	9248	Time:
9249	9249	Place:
9250	9250	You may attend the sale and bring bidders if you want.
9251	9251	For a private disposition:
9252	9252	We will sell _________ (describe collateral) at private
9253	9253	sale some time after ______ (date). A sale could include a
9254	9254	lease or license.
9255	9255	The money that we get from the sale (after paying our
9256	9256	costs) will reduce the amount you owe. If we get less money
9257	9257	than you owe, you ________________ (will or will not, as
9258	9258	applicable) still owe us the difference. If we get more money
9259	9259	than you owe, you will get the extra money, unless we must pay
9260	9260	it to someone else.
9261	9261	You can get the property back at any time before we
9262	9262	sell it by paying us the full amount you owe (not just the
9263	9263	past due payments), including our expenses. To learn the exact
9264	9264	amount you must pay, call us at _________ (telephone number).
9265	9265	If you want us to explain to you in writing how we have
9266	9266	figured the amount that you owe us, you may call us at
9267	9267	_________ (telephone number) or write us at ___________
9268	9268	(secured party's address) and request a written explanation.
9269	9269	We will charge you $ ____ for the explanation if we sent you
9270	9270	another written explanation of the amount you owe us within
9271	9271	4537
9272	9272	4538
9273	9273	4539
9274	9274	4540
9275	9275	4541
9276	9276	4542
9277	9277	4543
9278	9278	4544
9279	9279	4545
9280	9280	4546
9281	9281	4547
9282	9282	4548
9283	9283	4549
9284	9284	4550
9285	9285	4551
9286	9286	4552
9287	9287	4553
9288	9288	4554
9289	9289	4555
9290	9290	4556
9291	9291	4557
9292	9292	4558
9293	9293	4559
9294	9294	4560
9295	9295	4561
9296	9296	4562
9297	9297	4563
9298	9298	4564 SB231 INTRODUCEDSB231 INTRODUCED
9299	9299	Page 164
9300	9300	the last six months.
9301	9301	If you need more information about the sale call us at
9302	9302	________ (telephone number) or write us at _____________
9303	9303	(secured party's address).
9304	9304	We are sending this notice to the following other
9305	9305	people who have an interest in _________ (describe collateral)
9306	9306	or who owe money under your agreement:
9307	9307	______________ (Names of all other debtors and
9308	9308	obligors, if any)
9309	9309	[End of Form]
9310	9310	(Name and address of secured party)
9311	9311	(Date)
9312	9312	NOTICE OF OUR PLAN TO SELL PROPERTY
9313	9313	(Name and address of any obligor who is also a debtor)
9314	9314	Subject: (Identify transaction)
9315	9315	We have your (describe collateral) because you broke
9316	9316	promises in our agreement.
9317	9317	{1} We will sell (describe collateral) at public sale.
9318	9318	A sale could include a lease or license. The sale will be held
9319	9319	as follows:
9320	9320	(Date)
9321	9321	(Time)
9322	9322	(Place)
9323	9323	You may attend the sale and bring bidders if you want.
9324	9324	{2} We will sell (describe collateral) at private sale
9325	9325	sometime after (date). A sale could include a lease or
9326	9326	license.
9327	9327	{3} The money that we get from the sale, after paying
9328	9328	4565
9329	9329	4566
9330	9330	4567
9331	9331	4568
9332	9332	4569
9333	9333	4570
9334	9334	4571
9335	9335	4572
9336	9336	4573
9337	9337	4574
9338	9338	4575
9339	9339	4576
9340	9340	4577
9341	9341	4578
9342	9342	4579
9343	9343	4580
9344	9344	4581
9345	9345	4582
9346	9346	4583
9347	9347	4584
9348	9348	4585
9349	9349	4586
9350	9350	4587
9351	9351	4588
9352	9352	4589
9353	9353	4590
9354	9354	4591
9355	9355	4592 SB231 INTRODUCEDSB231 INTRODUCED
9356	9356	Page 165
9357	9357	our costs, will reduce the amount you owe. If we get less
9358	9358	money than you owe, you (will or will not, as applicable) owe
9359	9359	us the difference. If we get more money than you owe, you will
9360	9360	get the extra money, unless we must pay it to someone else.
9361	9361	{4} You can get the property back at any time before we
9362	9362	sell it by paying us the full amount you owe, not just the
9363	9363	past due payments, including our expenses. To learn the exact
9364	9364	amount you must pay, call us at (telephone number).
9365	9365	{5} If you want us to explain to you in (writing)
9366	9366	(writing or in (description of electronic record))
9367	9367	(description of electronic record) how we have figured the
9368	9368	amount that you owe us, {6} call us at (telephone number) (or)
9369	9369	(write us at (secured party's address)) (or contact us by
9370	9370	(description of electronic communication method)) {7} and
9371	9371	request (a written explanation) (a written explanation or an
9372	9372	explanation in (description of electronic record)) (an
9373	9373	explanation in (description of electronic record)).
9374	9374	{8} We will charge you $ (amount) for the explanation
9375	9375	if we sent you another written explanation of the amount you
9376	9376	owe us within the last six months.
9377	9377	{9} If you need more information about the sale, (call
9378	9378	us at (telephone number) (or) (write us at (secured party's
9379	9379	address)) (or contact us by (description of electronic
9380	9380	communication method)).
9381	9381	{10} We are sending this notice to the following other
9382	9382	people who have an interest in (describe collateral) or who
9383	9383	owe money under your agreement:
9384	9384	(Names of all other debtors and obligors, if any)
9385	9385	4593
9386	9386	4594
9387	9387	4595
9388	9388	4596
9389	9389	4597
9390	9390	4598
9391	9391	4599
9392	9392	4600
9393	9393	4601
9394	9394	4602
9395	9395	4603
9396	9396	4604
9397	9397	4605
9398	9398	4606
9399	9399	4607
9400	9400	4608
9401	9401	4609
9402	9402	4610
9403	9403	4611
9404	9404	4612
9405	9405	4613
9406	9406	4614
9407	9407	4615
9408	9408	4616
9409	9409	4617
9410	9410	4618
9411	9411	4619
9412	9412	4620 SB231 INTRODUCEDSB231 INTRODUCED
9413	9413	Page 166
9414	9414	[End of Form]
9415	9415	(4) A notification in the form of paragraph (3) is
9416	9416	sufficient, even if additional information appears at the end
9417	9417	of the form.
9418	9418	(5) A notification in the form of paragraph (3) is
9419	9419	sufficient, even if it includes errors in information not
9420	9420	required by paragraph (1), unless the error is misleading with
9421	9421	respect to rights arising under this article.
9422	9422	(6) If a notification under this section is not in the
9423	9423	form of paragraph (3), law other than this article determines
9424	9424	the effect of including information not required by paragraph
9425	9425	(1).
9426	9426	(b) Instructions for form of notification. The
9427	9427	following instructions apply to the form of notification in
9428	9428	subsection (a)(3):
9429	9429	(1) The instructions in this subsection refer to the
9430	9430	numbers in braces before items in the form of notification in
9431	9431	subsection (a)(3). Do not include the numbers or braces in the
9432	9432	notification. The numbers and braces are used only for the
9433	9433	purpose of these instructions.
9434	9434	(2) Include and complete either item {1}, if the
9435	9435	notification relates to a public disposition of the
9436	9436	collateral, or item {2}, if the notification relates to a
9437	9437	private disposition of the collateral.
9438	9438	(3) Include and complete items {3}, {4}, {5}, {6}, and
9439	9439	{7}.
9440	9440	(4) In item {5}, include and complete any one of the
9441	9441	three alternative methods for the explanation: writing,
9442	9442	4621
9443	9443	4622
9444	9444	4623
9445	9445	4624
9446	9446	4625
9447	9447	4626
9448	9448	4627
9449	9449	4628
9450	9450	4629
9451	9451	4630
9452	9452	4631
9453	9453	4632
9454	9454	4633
9455	9455	4634
9456	9456	4635
9457	9457	4636
9458	9458	4637
9459	9459	4638
9460	9460	4639
9461	9461	4640
9462	9462	4641
9463	9463	4642
9464	9464	4643
9465	9465	4644
9466	9466	4645
9467	9467	4646
9468	9468	4647
9469	9469	4648 SB231 INTRODUCEDSB231 INTRODUCED
9470	9470	Page 167
9471	9471	writing or electronic record, or electronic record.
9472	9472	(5) In item {6}, include the telephone number. In
9473	9473	addition, the sender may include and complete either or both
9474	9474	of the two additional alternative methods of communication,
9475	9475	writing or electronic communication, for the recipient of the
9476	9476	notification to communicate with the sender. Neither of the
9477	9477	two additional methods of communication are required to be
9478	9478	included.
9479	9479	(6) In item {7}, include and complete the method or
9480	9480	methods for the explanation, writing, writing or electronic
9481	9481	record, or electronic record, which are included in item {5}.
9482	9482	(7) Include and complete item {8} only if a written
9483	9483	explanation is included in item {5} as a method for
9484	9484	communicating the explanation and the sender will charge the
9485	9485	recipient for another written explanation.
9486	9486	(8) In item {9}, include either the telephone number or
9487	9487	the address or both the telephone number and the address. In
9488	9488	addition, the sender may include and complete the additional
9489	9489	method of communication--electronic communication--for the
9490	9490	recipient of the notification to communicate with the sender.
9491	9491	The additional method of electronic communication is not
9492	9492	required to be included.
9493	9493	(9) If item {10} does not apply, insert "None" after
9494	9494	"agreement:"."
9495	9495	"§7-9A-615. Application of proceeds of disposition;
9496	9496	liability for deficiency and right to surplus.
9497	9497	(a) Application of proceeds. A secured party shall
9498	9498	apply or pay over for application the cash proceeds of
9499	9499	4649
9500	9500	4650
9501	9501	4651
9502	9502	4652
9503	9503	4653
9504	9504	4654
9505	9505	4655
9506	9506	4656
9507	9507	4657
9508	9508	4658
9509	9509	4659
9510	9510	4660
9511	9511	4661
9512	9512	4662
9513	9513	4663
9514	9514	4664
9515	9515	4665
9516	9516	4666
9517	9517	4667
9518	9518	4668
9519	9519	4669
9520	9520	4670
9521	9521	4671
9522	9522	4672
9523	9523	4673
9524	9524	4674
9525	9525	4675
9526	9526	4676 SB231 INTRODUCEDSB231 INTRODUCED
9527	9527	Page 168
9528	9528	disposition under Section 7-9A-610 in the following order to:
9529	9529	(1) the reasonable expenses of retaking, holding,
9530	9530	preparing for disposition, processing, and disposing, and, to
9531	9531	the extent provided for by agreement and not prohibited by
9532	9532	law, reasonable attorney's fees and legal expenses incurred by
9533	9533	the secured party;
9534	9534	(2) the satisfaction of obligations secured by the
9535	9535	security interest or agricultural lien under which the
9536	9536	disposition is made;
9537	9537	(3) the satisfaction of obligations secured by any
9538	9538	subordinate security interest in or other subordinate lien on
9539	9539	the collateral if:
9540	9540	(A) the secured party receives from the holder of the
9541	9541	subordinate security interest or other lien an authenticated a
9542	9542	signed demand for proceeds before distribution of the proceeds
9543	9543	is completed; and
9544	9544	(B) in a case in which a consignor has an interest in
9545	9545	the collateral, the subordinate security interest or other
9546	9546	lien is senior to the interest of the consignor; and
9547	9547	(4) a secured party that is a consignor of the
9548	9548	collateral if the secured party receives from the consignor an
9549	9549	authenticated a signed demand for proceeds before distribution
9550	9550	of the proceeds is completed.
9551	9551	(b) Proof of subordinate interest. If requested by a
9552	9552	secured party, a holder of a subordinate security interest or
9553	9553	other lien shall furnish reasonable proof of the interest or
9554	9554	lien within a reasonable time. Unless the holder does so, the
9555	9555	secured party need not comply with the holder's demand under
9556	9556	4677
9557	9557	4678
9558	9558	4679
9559	9559	4680
9560	9560	4681
9561	9561	4682
9562	9562	4683
9563	9563	4684
9564	9564	4685
9565	9565	4686
9566	9566	4687
9567	9567	4688
9568	9568	4689
9569	9569	4690
9570	9570	4691
9571	9571	4692
9572	9572	4693
9573	9573	4694
9574	9574	4695
9575	9575	4696
9576	9576	4697
9577	9577	4698
9578	9578	4699
9579	9579	4700
9580	9580	4701
9581	9581	4702
9582	9582	4703
9583	9583	4704 SB231 INTRODUCEDSB231 INTRODUCED
9584	9584	Page 169
9585	9585	subsection (a)(3).
9586	9586	(c) Application of noncash proceeds. A secured party
9587	9587	need not apply or pay over for application noncash proceeds of
9588	9588	disposition under Section 7-9A-610 unless the failure to do so
9589	9589	would be commercially unreasonable. A secured party that
9590	9590	applies or pays over for application noncash proceeds shall do
9591	9591	so in a commercially reasonable manner.
9592	9592	(d) Surplus or deficiency if obligation secured. If the
9593	9593	security interest under which a disposition is made secures
9594	9594	payment or performance of an obligation, after making the
9595	9595	payments and applications required by subsection (a) and
9596	9596	permitted by subsection (c):
9597	9597	(1) unless subsection (a)(4) requires the secured party
9598	9598	to apply or pay over cash proceeds to a consignor, the secured
9599	9599	party shall account to and pay a debtor for any surplus; and
9600	9600	(2) the obligor is liable for any deficiency.
9601	9601	(e) No surplus or deficiency in sales of certain rights
9602	9602	to payment. If the underlying transaction is a sale of
9603	9603	accounts, chattel paper, payment intangibles, or promissory
9604	9604	notes:
9605	9605	(1) the debtor is not entitled to any surplus; and
9606	9606	(2) the obligor is not liable for any deficiency.
9607	9607	(f) Calculation of surplus or deficiency in disposition
9608	9608	to person related to secured party. The surplus or deficiency
9609	9609	following a disposition is calculated based on the amount of
9610	9610	proceeds that would have been realized in a disposition
9611	9611	complying with this part to a transferee other than the
9612	9612	secured party, a person related to the secured party, or a
9613	9613	4705
9614	9614	4706
9615	9615	4707
9616	9616	4708
9617	9617	4709
9618	9618	4710
9619	9619	4711
9620	9620	4712
9621	9621	4713
9622	9622	4714
9623	9623	4715
9624	9624	4716
9625	9625	4717
9626	9626	4718
9627	9627	4719
9628	9628	4720
9629	9629	4721
9630	9630	4722
9631	9631	4723
9632	9632	4724
9633	9633	4725
9634	9634	4726
9635	9635	4727
9636	9636	4728
9637	9637	4729
9638	9638	4730
9639	9639	4731
9640	9640	4732 SB231 INTRODUCEDSB231 INTRODUCED
9641	9641	Page 170
9642	9642	secondary obligor if:
9643	9643	(1) the transferee in the disposition is the secured
9644	9644	party, a person related to the secured party, or a secondary
9645	9645	obligor; and
9646	9646	(2) the amount of proceeds of the disposition is
9647	9647	significantly below the range of proceeds that a complying
9648	9648	disposition to a person other than the secured party, a person
9649	9649	related to the secured party, or a secondary obligor would
9650	9650	have brought.
9651	9651	(g) Cash proceeds received by junior secured party. A
9652	9652	secured party that receives cash proceeds of a disposition in
9653	9653	good faith and without knowledge that the receipt violates the
9654	9654	rights of the holder of a security interest or other lien that
9655	9655	is not subordinate to the security interest or agricultural
9656	9656	lien under which the disposition is made:
9657	9657	(1) takes the cash proceeds free of the security
9658	9658	interest or other lien;
9659	9659	(2) is not obligated to apply the proceeds of the
9660	9660	disposition to the satisfaction of obligations secured by the
9661	9661	security interest or other lien; and
9662	9662	(3) is not obligated to account to or pay the holder of
9663	9663	the security interest or other lien for any surplus."
9664	9664	"§7-9A-616. Explanation of calculation of surplus or
9665	9665	deficiency.
9666	9666	(a) Definitions. In this section:
9667	9667	(1) "Explanation" means a writing record that:
9668	9668	(A) states the amount of the surplus or deficiency;
9669	9669	(B) provides an explanation in accordance with
9670	9670	4733
9671	9671	4734
9672	9672	4735
9673	9673	4736
9674	9674	4737
9675	9675	4738
9676	9676	4739
9677	9677	4740
9678	9678	4741
9679	9679	4742
9680	9680	4743
9681	9681	4744
9682	9682	4745
9683	9683	4746
9684	9684	4747
9685	9685	4748
9686	9686	4749
9687	9687	4750
9688	9688	4751
9689	9689	4752
9690	9690	4753
9691	9691	4754
9692	9692	4755
9693	9693	4756
9694	9694	4757
9695	9695	4758
9696	9696	4759
9697	9697	4760 SB231 INTRODUCEDSB231 INTRODUCED
9698	9698	Page 171
9699	9699	subsection (c) of how the secured party calculated the surplus
9700	9700	or deficiency;
9701	9701	(C) states, if applicable, that future debits, credits,
9702	9702	charges, including additional credit service charges or
9703	9703	interest, rebates, and expenses may affect the amount of the
9704	9704	surplus or deficiency; and
9705	9705	(D) provides a telephone number or mailing address from
9706	9706	which additional information concerning the transaction is
9707	9707	available.
9708	9708	(2) "Request" means a record:
9709	9709	(A) authenticated signed by a debtor or consumer
9710	9710	obligor;
9711	9711	(B) requesting that the recipient provide an
9712	9712	explanation; and
9713	9713	(C) sent after disposition of the collateral under
9714	9714	Section 7-9A-610.
9715	9715	(b) Explanation of calculation. In a consumer-goods
9716	9716	transaction in which the debtor is entitled to a surplus or a
9717	9717	consumer obligor is liable for a deficiency under Section
9718	9718	7-9A-615, the secured party shall:
9719	9719	(1) send an explanation to the debtor or consumer
9720	9720	obligor, as applicable, after the disposition and:
9721	9721	(A) before or when the secured party accounts to the
9722	9722	debtor and pays any surplus or first makes written demand in a
9723	9723	record on the consumer obligor after the disposition for
9724	9724	payment of the deficiency; and
9725	9725	(B) within 14 days after receipt of a request; or
9726	9726	(2) in the case of a consumer obligor who is liable for
9727	9727	4761
9728	9728	4762
9729	9729	4763
9730	9730	4764
9731	9731	4765
9732	9732	4766
9733	9733	4767
9734	9734	4768
9735	9735	4769
9736	9736	4770
9737	9737	4771
9738	9738	4772
9739	9739	4773
9740	9740	4774
9741	9741	4775
9742	9742	4776
9743	9743	4777
9744	9744	4778
9745	9745	4779
9746	9746	4780
9747	9747	4781
9748	9748	4782
9749	9749	4783
9750	9750	4784
9751	9751	4785
9752	9752	4786
9753	9753	4787
9754	9754	4788 SB231 INTRODUCEDSB231 INTRODUCED
9755	9755	Page 172
9756	9756	a deficiency, within 14 days after receipt of a request, send
9757	9757	to the consumer obligor a record waiving the secured party's
9758	9758	right to a deficiency.
9759	9759	(c) Required information. To comply with subsection
9760	9760	(a)(1)(B), a writing an explanation must provide the following
9761	9761	information in the following order:
9762	9762	(1) the aggregate amount of obligations secured by the
9763	9763	security interest under which the disposition was made, and,
9764	9764	if the amount reflects a rebate of unearned interest or credit
9765	9765	service charge, an indication of that fact, calculated as of a
9766	9766	specified date:
9767	9767	(A) if the secured party takes or receives possession
9768	9768	of the collateral after default, not more than 35 days before
9769	9769	the secured party takes or receives possession; or
9770	9770	(B) if the secured party takes or receives possession
9771	9771	of the collateral before default or does not take possession
9772	9772	of the collateral, not more than 35 days before the
9773	9773	disposition;
9774	9774	(2) the amount of proceeds of the disposition;
9775	9775	(3) the aggregate amount of the obligations after
9776	9776	deducting the amount of proceeds;
9777	9777	(4) the amount, in the aggregate or by type, and types
9778	9778	of expenses, including expenses of retaking, holding,
9779	9779	preparing for disposition, processing, and disposing of the
9780	9780	collateral, and attorney's fees secured by the collateral
9781	9781	which are known to the secured party and relate to the current
9782	9782	disposition;
9783	9783	(5) the amount, in the aggregate or by type, and types
9784	9784	4789
9785	9785	4790
9786	9786	4791
9787	9787	4792
9788	9788	4793
9789	9789	4794
9790	9790	4795
9791	9791	4796
9792	9792	4797
9793	9793	4798
9794	9794	4799
9795	9795	4800
9796	9796	4801
9797	9797	4802
9798	9798	4803
9799	9799	4804
9800	9800	4805
9801	9801	4806
9802	9802	4807
9803	9803	4808
9804	9804	4809
9805	9805	4810
9806	9806	4811
9807	9807	4812
9808	9808	4813
9809	9809	4814
9810	9810	4815
9811	9811	4816 SB231 INTRODUCEDSB231 INTRODUCED
9812	9812	Page 173
9813	9813	of credits, including rebates of interest or credit service
9814	9814	charges, to which the obligor is known to be entitled and
9815	9815	which are not reflected in the amount in paragraph (1); and
9816	9816	(6) the amount of the surplus or deficiency.
9817	9817	(d) Substantial compliance. A particular phrasing of
9818	9818	the explanation is not required. An explanation complying
9819	9819	substantially with the requirements of subsection (a) is
9820	9820	sufficient, even if it includes minor errors that are not
9821	9821	seriously misleading.
9822	9822	(e) Charges for responses. A debtor or consumer obligor
9823	9823	is entitled without charge to one response to a request under
9824	9824	this section during any six-month period in which the secured
9825	9825	party did not send to the debtor or consumer obligor an
9826	9826	explanation pursuant to subsection (b)(1). The secured party
9827	9827	may require payment of a charge not exceeding $25twenty-five
9828	9828	dollars ($25) for each additional response."
9829	9829	"§7-9A-619. Transfer of record or legal title.
9830	9830	(a) "Transfer statement." In this section, "transfer
9831	9831	statement" means a record authenticated signed by a secured
9832	9832	party stating:
9833	9833	(1) that the debtor has defaulted in connection with an
9834	9834	obligation secured by specified collateral;
9835	9835	(2) that the secured party has exercised its
9836	9836	post-default remedies with respect to the collateral;
9837	9837	(3) that, by reason of the exercise, a transferee has
9838	9838	acquired the rights of the debtor in the collateral; and
9839	9839	(4) the name and mailing address of the secured party,
9840	9840	debtor, and transferee.
9841	9841	4817
9842	9842	4818
9843	9843	4819
9844	9844	4820
9845	9845	4821
9846	9846	4822
9847	9847	4823
9848	9848	4824
9849	9849	4825
9850	9850	4826
9851	9851	4827
9852	9852	4828
9853	9853	4829
9854	9854	4830
9855	9855	4831
9856	9856	4832
9857	9857	4833
9858	9858	4834
9859	9859	4835
9860	9860	4836
9861	9861	4837
9862	9862	4838
9863	9863	4839
9864	9864	4840
9865	9865	4841
9866	9866	4842
9867	9867	4843
9868	9868	4844 SB231 INTRODUCEDSB231 INTRODUCED
9869	9869	Page 174
9870	9870	(b) Effect of transfer statement. A transfer statement
9871	9871	entitles the transferee to the transfer of record of all
9872	9872	rights of the debtor in the collateral specified in the
9873	9873	statement in any official filing, recording, registration, or
9874	9874	certificate-of-title system covering the collateral. If a
9875	9875	transfer statement is presented with the applicable fee and
9876	9876	request form to the official or office responsible for
9877	9877	maintaining the system, the official or office shall:
9878	9878	(1) accept the transfer statement;
9879	9879	(2) promptly amend its records to reflect the transfer;
9880	9880	and
9881	9881	(3) if applicable, issue a new appropriate certificate
9882	9882	of title in the name of the transferee.
9883	9883	(c) Transfer not a disposition; no relief of secured
9884	9884	party's duties. A transfer of the record or legal title to
9885	9885	collateral to a secured party under subsection (b) or
9886	9886	otherwise is not of itself a disposition of collateral under
9887	9887	this article and does not of itself relieve the secured party
9888	9888	of its duties under this article."
9889	9889	"§7-9A-620. Acceptance of collateral in full or partial
9890	9890	satisfaction of obligation; compulsory disposition of
9891	9891	collateral.
9892	9892	(a) Conditions to acceptance in satisfaction. Except as
9893	9893	otherwise provided in subsection (g), a secured party may
9894	9894	accept collateral in full or partial satisfaction of the
9895	9895	obligation it secures only if:
9896	9896	(1) the debtor consents to the acceptance under
9897	9897	subsection (c);
9898	9898	4845
9899	9899	4846
9900	9900	4847
9901	9901	4848
9902	9902	4849
9903	9903	4850
9904	9904	4851
9905	9905	4852
9906	9906	4853
9907	9907	4854
9908	9908	4855
9909	9909	4856
9910	9910	4857
9911	9911	4858
9912	9912	4859
9913	9913	4860
9914	9914	4861
9915	9915	4862
9916	9916	4863
9917	9917	4864
9918	9918	4865
9919	9919	4866
9920	9920	4867
9921	9921	4868
9922	9922	4869
9923	9923	4870
9924	9924	4871
9925	9925	4872 SB231 INTRODUCEDSB231 INTRODUCED
9926	9926	Page 175
9927	9927	(2) the secured party does not receive, within the time
9928	9928	set forth in subsection (d), a notification of objection to
9929	9929	the proposal authenticated signed by:
9930	9930	(A) a person to which the secured party was required to
9931	9931	send a proposal under Section 7-9A-621; or
9932	9932	(B) any other person, other than the debtor, holding an
9933	9933	interest in the collateral subordinate to the security
9934	9934	interest that is the subject of the proposal;
9935	9935	(3) if the collateral is consumer goods, the collateral
9936	9936	is not in the possession of the debtor when the debtor
9937	9937	consents to the acceptance; and
9938	9938	(4) subsection (e) does not require the secured party
9939	9939	to dispose of the collateral or the debtor waives the
9940	9940	requirement pursuant to Section 7-9A-624.
9941	9941	(b) Purported acceptance ineffective. A purported or
9942	9942	apparent acceptance of collateral under this section is
9943	9943	ineffective unless:
9944	9944	(1) the secured party consents to the acceptance in an
9945	9945	authenticated a signed record or sends a proposal to the
9946	9946	debtor; and
9947	9947	(2) the conditions of subsection (a) are met.
9948	9948	(c) Debtor's consent. For purposes of this section:
9949	9949	(1) a debtor consents to an acceptance of collateral in
9950	9950	partial satisfaction of the obligation it secures only if the
9951	9951	debtor agrees to the terms of the acceptance in a record
9952	9952	authenticated signed after default; and
9953	9953	(2) a debtor consents to an acceptance of collateral in
9954	9954	full satisfaction of the obligation it secures only if the
9955	9955	4873
9956	9956	4874
9957	9957	4875
9958	9958	4876
9959	9959	4877
9960	9960	4878
9961	9961	4879
9962	9962	4880
9963	9963	4881
9964	9964	4882
9965	9965	4883
9966	9966	4884
9967	9967	4885
9968	9968	4886
9969	9969	4887
9970	9970	4888
9971	9971	4889
9972	9972	4890
9973	9973	4891
9974	9974	4892
9975	9975	4893
9976	9976	4894
9977	9977	4895
9978	9978	4896
9979	9979	4897
9980	9980	4898
9981	9981	4899
9982	9982	4900 SB231 INTRODUCEDSB231 INTRODUCED
9983	9983	Page 176
9984	9984	debtor agrees to the terms of the acceptance in a record
9985	9985	authenticated signed after default or the secured party:
9986	9986	(A) sends to the debtor after default a proposal that
9987	9987	is unconditional or subject only to a condition that
9988	9988	collateral not in the possession of the secured party be
9989	9989	preserved or maintained;
9990	9990	(B) in the proposal, proposes to accept collateral in
9991	9991	full satisfaction of the obligation it secures; and
9992	9992	(C) does not receive a notification of objection
9993	9993	authenticated signed by the debtor within 20 days after the
9994	9994	proposal is sent.
9995	9995	(d) Effectiveness of notification. To be effective
9996	9996	under subsection (a)(2), a notification of objection must be
9997	9997	received by the secured party:
9998	9998	(1) in the case of a person to which the proposal was
9999	9999	sent pursuant to Section 7-9A-621, within 20 days after
10000	10000	notification was sent to that person; and
10001	10001	(2) in other cases:
10002	10002	(A) within 20 days after the last notification was sent
10003	10003	pursuant to Section 7-9A-621; or
10004	10004	(B) if a notification was not sent, before the debtor
10005	10005	consents to the acceptance under subsection (c).
10006	10006	(e) Mandatory disposition of consumer goods. A secured
10007	10007	party that has taken possession of collateral shall dispose of
10008	10008	the collateral pursuant to Section 7-9A-610 within the time
10009	10009	specified in subsection (f) if:
10010	10010	(1) 60 percent of the cash price has been paid in the
10011	10011	case of a purchase-money security interest in consumer goods;
10012	10012	4901
10013	10013	4902
10014	10014	4903
10015	10015	4904
10016	10016	4905
10017	10017	4906
10018	10018	4907
10019	10019	4908
10020	10020	4909
10021	10021	4910
10022	10022	4911
10023	10023	4912
10024	10024	4913
10025	10025	4914
10026	10026	4915
10027	10027	4916
10028	10028	4917
10029	10029	4918
10030	10030	4919
10031	10031	4920
10032	10032	4921
10033	10033	4922
10034	10034	4923
10035	10035	4924
10036	10036	4925
10037	10037	4926
10038	10038	4927
10039	10039	4928 SB231 INTRODUCEDSB231 INTRODUCED
10040	10040	Page 177
10041	10041	or
10042	10042	(2) 60 percent of the principal amount of the
10043	10043	obligation secured has been paid in the case of a
10044	10044	non-purchase-money security interest in consumer goods.
10045	10045	(f) Compliance with mandatory disposition requirement.
10046	10046	To comply with subsection (e), the secured party shall dispose
10047	10047	of the collateral:
10048	10048	(1) within 90 days after taking possession; or
10049	10049	(2) within any longer period to which the debtor and
10050	10050	all secondary obligors have agreed in an agreement to that
10051	10051	effect entered into and authenticated signed after default.
10052	10052	(g) No partial satisfaction in consumer transaction. In
10053	10053	a consumer transaction, a secured party may not accept
10054	10054	collateral in partial satisfaction of the obligation it
10055	10055	secures."
10056	10056	"§7-9A-621. Notification of proposal to accept
10057	10057	collateral.
10058	10058	(a) Persons to which proposal to be sent. A secured
10059	10059	party that desires to accept collateral in full or partial
10060	10060	satisfaction of the obligation it secures shall send its
10061	10061	proposal to:
10062	10062	(1) any person from which the secured party has
10063	10063	received, before the debtor consented to the acceptance, an
10064	10064	authenticated a signed notification of a claim of an interest
10065	10065	in the collateral;
10066	10066	(2) any other secured party or lienholder that, 10 days
10067	10067	before the debtor consented to the acceptance, held a security
10068	10068	interest in or other lien on the collateral perfected by the
10069	10069	4929
10070	10070	4930
10071	10071	4931
10072	10072	4932
10073	10073	4933
10074	10074	4934
10075	10075	4935
10076	10076	4936
10077	10077	4937
10078	10078	4938
10079	10079	4939
10080	10080	4940
10081	10081	4941
10082	10082	4942
10083	10083	4943
10084	10084	4944
10085	10085	4945
10086	10086	4946
10087	10087	4947
10088	10088	4948
10089	10089	4949
10090	10090	4950
10091	10091	4951
10092	10092	4952
10093	10093	4953
10094	10094	4954
10095	10095	4955
10096	10096	4956 SB231 INTRODUCEDSB231 INTRODUCED
10097	10097	Page 178
10098	10098	filing of a financing statement that:
10099	10099	(A) identified the collateral;
10100	10100	(B) was indexed under the debtor's name as of that
10101	10101	date; and
10102	10102	(C) was filed in the office or offices in which to file
10103	10103	a financing statement against the debtor covering the
10104	10104	collateral as of that date; and
10105	10105	(3) any other secured party that, 10 days before the
10106	10106	debtor consented to the acceptance, held a security interest
10107	10107	in the collateral perfected by compliance with a statute,
10108	10108	regulation, or treaty described in Section 7-9A-311(a).
10109	10109	(b) Proposal to be sent to secondary obligor in partial
10110	10110	satisfaction. A secured party that desires to accept
10111	10111	collateral in partial satisfaction of the obligation it
10112	10112	secures shall send its proposal to any secondary obligor in
10113	10113	addition to the persons described in subsection (a)."
10114	10114	"§7-9A-624. Waiver.
10115	10115	(a) Waiver of disposition notification. A debtor or
10116	10116	secondary obligor may waive the right to notification of
10117	10117	disposition of collateral under Section 7-9A-611 only by an
10118	10118	agreement to that effect entered into and authenticated signed
10119	10119	after default.
10120	10120	(b) Waiver of mandatory disposition. A debtor may waive
10121	10121	the right to require disposition of collateral under Section
10122	10122	7-9A-620(e) only by an agreement to that effect entered into
10123	10123	and authenticated signed after default.
10124	10124	(c) Waiver of redemption right. Except in a
10125	10125	consumer-goods transaction, a debtor or secondary obligor may
10126	10126	4957
10127	10127	4958
10128	10128	4959
10129	10129	4960
10130	10130	4961
10131	10131	4962
10132	10132	4963
10133	10133	4964
10134	10134	4965
10135	10135	4966
10136	10136	4967
10137	10137	4968
10138	10138	4969
10139	10139	4970
10140	10140	4971
10141	10141	4972
10142	10142	4973
10143	10143	4974
10144	10144	4975
10145	10145	4976
10146	10146	4977
10147	10147	4978
10148	10148	4979
10149	10149	4980
10150	10150	4981
10151	10151	4982
10152	10152	4983
10153	10153	4984 SB231 INTRODUCEDSB231 INTRODUCED
10154	10154	Page 179
10155	10155	waive the right to redeem collateral under Section 7-9A-623
10156	10156	only by an agreement to that effect entered into and
10157	10157	authenticated signed after default."
10158	10158	"§7-9A-628. Nonliability and limitation on liability of
10159	10159	secured party; liability of secondary obligor.
10160	10160	(a) Limitation of liability of secured party for
10161	10161	noncompliance with article. Unless Subject to subsection (f),
10162	10162	unless a secured party knows that a person is a debtor or
10163	10163	obligor, knows the identity of the person, and knows how to
10164	10164	communicate with the person:
10165	10165	(1) the secured party is not liable to the person, or
10166	10166	to a secured party or lienholder that has filed a financing
10167	10167	statement against the person, for failure to comply with this
10168	10168	article; and
10169	10169	(2) the secured party's failure to comply with this
10170	10170	article does not affect the liability of the person for a
10171	10171	deficiency.
10172	10172	(b) Limitation of liability based on status as secured
10173	10173	party. Subject to subsection (f), a A secured party is not
10174	10174	liable because of its status as secured party:
10175	10175	(1) to a person that is a debtor or obligor, unless the
10176	10176	secured party knows:
10177	10177	(A) that the person is a debtor or obligor;
10178	10178	(B) the identity of the person; and
10179	10179	(C) how to communicate with the person; or
10180	10180	(2) to a secured party or lienholder that has filed a
10181	10181	financing statement against a person, unless the secured party
10182	10182	knows:
10183	10183	4985
10184	10184	4986
10185	10185	4987
10186	10186	4988
10187	10187	4989
10188	10188	4990
10189	10189	4991
10190	10190	4992
10191	10191	4993
10192	10192	4994
10193	10193	4995
10194	10194	4996
10195	10195	4997
10196	10196	4998
10197	10197	4999
10198	10198	5000
10199	10199	5001
10200	10200	5002
10201	10201	5003
10202	10202	5004
10203	10203	5005
10204	10204	5006
10205	10205	5007
10206	10206	5008
10207	10207	5009
10208	10208	5010
10209	10209	5011
10210	10210	5012 SB231 INTRODUCEDSB231 INTRODUCED
10211	10211	Page 180
10212	10212	(A) that the person is a debtor; and
10213	10213	(B) the identity of the person.
10214	10214	(c) Limitation of liability if reasonable belief that
10215	10215	transaction not a consumer-goods transaction or consumer
10216	10216	transaction. A secured party is not liable to any person, and
10217	10217	a person's liability for a deficiency is not affected, because
10218	10218	of any act or omission arising out of the secured party's
10219	10219	reasonable belief that a transaction is not a consumer-goods
10220	10220	transaction or a consumer transaction or that goods are not
10221	10221	consumer goods, if the secured party's belief is based on its
10222	10222	reasonable reliance on:
10223	10223	(1) a debtor's representation concerning the purpose
10224	10224	for which collateral was to be used, acquired, or held; or
10225	10225	(2) an obligor's representation concerning the purpose
10226	10226	for which a secured obligation was incurred.
10227	10227	(d) Limitation of liability for statutory damages. A
10228	10228	secured party is not liable to any person under Section
10229	10229	7-9A-625(c)(2) for its failure to comply with Section
10230	10230	7-9A-616.
10231	10231	(e) Limitation of multiple liability for statutory
10232	10232	damages. A secured party is not liable under Section
10233	10233	7-9A-625(c)(2) more than once with respect to any one secured
10234	10234	obligation.
10235	10235	(f) Exception: Limitation of liability under
10236	10236	subsections (a) and (b) does not apply. Subsections (a) and
10237	10237	(b) do not apply to limit the liability of a secured party to
10238	10238	a person if, at the time the secured party obtains control of
10239	10239	collateral that is a controllable account, controllable
10240	10240	5013
10241	10241	5014
10242	10242	5015
10243	10243	5016
10244	10244	5017
10245	10245	5018
10246	10246	5019
10247	10247	5020
10248	10248	5021
10249	10249	5022
10250	10250	5023
10251	10251	5024
10252	10252	5025
10253	10253	5026
10254	10254	5027
10255	10255	5028
10256	10256	5029
10257	10257	5030
10258	10258	5031
10259	10259	5032
10260	10260	5033
10261	10261	5034
10262	10262	5035
10263	10263	5036
10264	10264	5037
10265	10265	5038
10266	10266	5039
10267	10267	5040 SB231 INTRODUCEDSB231 INTRODUCED
10268	10268	Page 181
10269	10269	electronic record, or controllable payment intangible or at
10270	10270	the time the security interest attaches to the collateral,
10271	10271	whichever is later:
10272	10272	(1) the person is a debtor or obligor; and
10273	10273	(2) the secured party knows that the information in
10274	10274	subsection (b)(1)(A), (B), or (C) relating to the person is
10275	10275	not provided by the collateral, a record attached to or
10276	10276	logically associated with the collateral, or the system in
10277	10277	which the collateral is recorded.
10278	10278	Section 2. Sections 7-9A-107A, 7-9A-107B, 7-9A-306A,
10279	10279	7-9A-306B, 7-9A-314A, and 7-9A-326A are added to the Code of
10280	10280	Alabama 1975, to read as follows:
10281	10281	§7-9A-107A. Control of controllable electronic record,
10282	10282	controllable account, or controllable payment intangible.
10283	10283	(a) Control under Section 7-12-105. A secured party has
10284	10284	control of a controllable electronic record as provided in
10285	10285	Section 7-12-105.
10286	10286	(b) Control of controllable account and controllable
10287	10287	payment intangible. A secured party has control of a
10288	10288	controllable account or controllable payment intangible if the
10289	10289	secured party has control of the controllable electronic
10290	10290	record that evidences the controllable account or controllable
10291	10291	payment intangible.
10292	10292	§7-9A-107B. No requirement to acknowledge or confirm;
10293	10293	no duties.
10294	10294	(a) No requirement to acknowledge. A person that has
10295	10295	control under Section 7-9A-104, or 7-9A-105, is not required
10296	10296	to acknowledge that it has control on behalf of another
10297	10297	5041
10298	10298	5042
10299	10299	5043
10300	10300	5044
10301	10301	5045
10302	10302	5046
10303	10303	5047
10304	10304	5048
10305	10305	5049
10306	10306	5050
10307	10307	5051
10308	10308	5052
10309	10309	5053
10310	10310	5054
10311	10311	5055
10312	10312	5056
10313	10313	5057
10314	10314	5058
10315	10315	5059
10316	10316	5060
10317	10317	5061
10318	10318	5062
10319	10319	5063
10320	10320	5064
10321	10321	5065
10322	10322	5066
10323	10323	5067
10324	10324	5068 SB231 INTRODUCEDSB231 INTRODUCED
10325	10325	Page 182
10326	10326	person.
10327	10327	(b) No duties or confirmation. If a person acknowledges
10328	10328	that it has or will obtain control on behalf of another
10329	10329	person, unless the person otherwise agrees or law other than
10330	10330	this article otherwise provides, the person does not owe any
10331	10331	duty to the other person and is not required to confirm the
10332	10332	acknowledgment to any other person.
10333	10333	§7-9A-306A. Law governing perfection and priority of
10334	10334	security interests in chattel paper.
10335	10335	(a) Chattel paper evidenced by authoritative electronic
10336	10336	copy. Except as provided in subsection (d), if chattel paper
10337	10337	is evidenced only by an authoritative electronic copy of the
10338	10338	chattel paper or is evidenced by an authoritative electronic
10339	10339	copy and an authoritative tangible copy, the local law of the
10340	10340	chattel paper's jurisdiction governs perfection, the effect of
10341	10341	perfection or nonperfection, and the priority of a security
10342	10342	interest in the chattel paper, even if the transaction does
10343	10343	not bear any relation to the chattel paper's jurisdiction.
10344	10344	(b) Chattel paper's jurisdiction. The following rules
10345	10345	determine the chattel paper's jurisdiction under this section:
10346	10346	(1) If the authoritative electronic copy of the record
10347	10347	evidencing chattel paper, or a record attached to or logically
10348	10348	associated with the electronic copy and readily available for
10349	10349	review, expressly provides that a particular jurisdiction is
10350	10350	the chattel paper's jurisdiction for purposes of this part,
10351	10351	this article, or the Uniform Commercial Code, that
10352	10352	jurisdiction is the chattel paper's jurisdiction.
10353	10353	(2) If paragraph (1) does not apply and the rules of
10354	10354	5069
10355	10355	5070
10356	10356	5071
10357	10357	5072
10358	10358	5073
10359	10359	5074
10360	10360	5075
10361	10361	5076
10362	10362	5077
10363	10363	5078
10364	10364	5079
10365	10365	5080
10366	10366	5081
10367	10367	5082
10368	10368	5083
10369	10369	5084
10370	10370	5085
10371	10371	5086
10372	10372	5087
10373	10373	5088
10374	10374	5089
10375	10375	5090
10376	10376	5091
10377	10377	5092
10378	10378	5093
10379	10379	5094
10380	10380	5095
10381	10381	5096 SB231 INTRODUCEDSB231 INTRODUCED
10382	10382	Page 183
10383	10383	the system in which the authoritative electronic copy is
10384	10384	recorded are readily available for review and expressly
10385	10385	provide that a particular jurisdiction is the chattel paper's
10386	10386	jurisdiction for purposes of this part, this article, or the
10387	10387	Uniform Commercial Code, that jurisdiction is the chattel
10388	10388	paper's jurisdiction.
10389	10389	(3) If paragraphs (1) and (2) do not apply and the
10390	10390	authoritative electronic copy, or a record attached to or
10391	10391	logically associated with the electronic copy and readily
10392	10392	available for review, expressly provides that the chattel
10393	10393	paper is governed by the law of a particular jurisdiction,
10394	10394	that jurisdiction is the chattel paper's jurisdiction.
10395	10395	(4) If paragraphs (1), (2), and (3) do not apply and
10396	10396	the rules of the system in which the authoritative electronic
10397	10397	copy is recorded are readily available for review and
10398	10398	expressly provide that the chattel paper or the system is
10399	10399	governed by the law of a particular jurisdiction, that
10400	10400	jurisdiction is the chattel paper's jurisdiction.
10401	10401	(5) If paragraphs (1) through (4) do not apply, the
10402	10402	chattel paper's jurisdiction is the jurisdiction in which the
10403	10403	debtor is located.
10404	10404	(c) Chattel paper evidenced by authoritative tangible
10405	10405	copy. If an authoritative tangible copy of a record evidences
10406	10406	chattel paper and the chattel paper is not evidenced by an
10407	10407	authoritative electronic copy, while the authoritative
10408	10408	tangible copy of the record evidencing chattel paper is
10409	10409	located in a jurisdiction, the local law of that jurisdiction
10410	10410	governs:
10411	10411	5097
10412	10412	5098
10413	10413	5099
10414	10414	5100
10415	10415	5101
10416	10416	5102
10417	10417	5103
10418	10418	5104
10419	10419	5105
10420	10420	5106
10421	10421	5107
10422	10422	5108
10423	10423	5109
10424	10424	5110
10425	10425	5111
10426	10426	5112
10427	10427	5113
10428	10428	5114
10429	10429	5115
10430	10430	5116
10431	10431	5117
10432	10432	5118
10433	10433	5119
10434	10434	5120
10435	10435	5121
10436	10436	5122
10437	10437	5123
10438	10438	5124 SB231 INTRODUCEDSB231 INTRODUCED
10439	10439	Page 184
10440	10440	(1) perfection of a security interest in the chattel
10441	10441	paper by possession under Section 7-9A-314A; and
10442	10442	(2) the effect of perfection or nonperfection and the
10443	10443	priority of a security interest in the chattel paper.
10444	10444	(d) When perfection governed by law of jurisdiction
10445	10445	where debtor located. The local law of the jurisdiction in
10446	10446	which the debtor is located governs perfection of a security
10447	10447	interest in chattel paper by filing."
10448	10448	§7-9A-306B. Law governing perfection and priority of
10449	10449	security interests in controllable accounts, controllable
10450	10450	electronic records, and controllable payment intangibles.
10451	10451	(a) Governing law: general rules. Except as provided in
10452	10452	subsection (b), the local law of the controllable electronic
10453	10453	record's jurisdiction specified in Section 7-12-107(c) and (d)
10454	10454	governs perfection, the effect of perfection or nonperfection,
10455	10455	and the priority of a security interest in a controllable
10456	10456	electronic record and a security interest in a controllable
10457	10457	account or controllable payment intangible evidenced by the
10458	10458	controllable electronic record.
10459	10459	(b) When perfection governed by law of jurisdiction
10460	10460	where the debtor is located. The local law of the jurisdiction
10461	10461	in which the debtor is located governs:
10462	10462	(1) perfection of a security interest in a controllable
10463	10463	account, controllable electronic record, or controllable
10464	10464	payment intangible by filing; and
10465	10465	(2) automatic perfection of a security interest in a
10466	10466	controllable payment intangible created by a sale of the
10467	10467	controllable payment intangible.
10468	10468	5125
10469	10469	5126
10470	10470	5127
10471	10471	5128
10472	10472	5129
10473	10473	5130
10474	10474	5131
10475	10475	5132
10476	10476	5133
10477	10477	5134
10478	10478	5135
10479	10479	5136
10480	10480	5137
10481	10481	5138
10482	10482	5139
10483	10483	5140
10484	10484	5141
10485	10485	5142
10486	10486	5143
10487	10487	5144
10488	10488	5145
10489	10489	5146
10490	10490	5147
10491	10491	5148
10492	10492	5149
10493	10493	5150
10494	10494	5151
10495	10495	5152 SB231 INTRODUCEDSB231 INTRODUCED
10496	10496	Page 185
10497	10497	§7-9A-314A. Perfection by possession and control of
10498	10498	chattel paper.
10499	10499	(a) Perfection by possession and control. A secured
10500	10500	party may perfect a security interest in chattel paper by
10501	10501	taking possession of each authoritative tangible copy of the
10502	10502	record evidencing the chattel paper and obtaining control of
10503	10503	each authoritative electronic copy of the electronic record
10504	10504	evidencing the chattel paper.
10505	10505	(b) Time of perfection; continuation of perfection. A
10506	10506	security interest is perfected under subsection (a) not
10507	10507	earlier than the time the secured party takes possession and
10508	10508	obtains control and remains perfected under subsection (a)
10509	10509	only while the secured party retains possession and control.
10510	10510	(c) Application of Section 7-9A-313 to perfection by
10511	10511	possession of chattel paper. Subsections (c) and (f) through
10512	10512	(i) of Section 7-9A-313 apply to perfection by possession of
10513	10513	an authoritative tangible copy of a record evidencing chattel
10514	10514	paper.
10515	10515	§7-9A-326A. Priority of security interest in
10516	10516	controllable account, controllable electronic record, and
10517	10517	controllable payment intangible.
10518	10518	A security interest in a controllable account,
10519	10519	controllable electronic record, or controllable payment
10520	10520	intangible held by a secured party having control of the
10521	10521	account, electronic record, or payment intangible has priority
10522	10522	over a conflicting security interest held by a secured party
10523	10523	that does not have control.
10524	10524	Section 3. Article 12 is added to Title 7 of the Code
10525	10525	5153
10526	10526	5154
10527	10527	5155
10528	10528	5156
10529	10529	5157
10530	10530	5158
10531	10531	5159
10532	10532	5160
10533	10533	5161
10534	10534	5162
10535	10535	5163
10536	10536	5164
10537	10537	5165
10538	10538	5166
10539	10539	5167
10540	10540	5168
10541	10541	5169
10542	10542	5170
10543	10543	5171
10544	10544	5172
10545	10545	5173
10546	10546	5174
10547	10547	5175
10548	10548	5176
10549	10549	5177
10550	10550	5178
10551	10551	5179
10552	10552	5180 SB231 INTRODUCEDSB231 INTRODUCED
10553	10553	Page 186
10554	10554	of Alabama 1975, to read as follows:
10555	10555	ARTICLE 12
10556	10556	CONTROLLABLE ELECTRONIC RECORDS
10557	10557	§7-12-101. Short title.
10558	10558	This article may be cited as Uniform Commercial
10559	10559	Code—Controllable Electronic Records.
10560	10560	§7-12-102. Definitions.
10561	10561	(a) Article 12 definitions. In this article:
10562	10562	(1) "Controllable electronic record" means a record
10563	10563	stored in an electronic medium that can be subjected to
10564	10564	control under Section 7-12-105. The term does not include a
10565	10565	controllable account, a controllable payment intangible, a
10566	10566	deposit account, an electronic copy of a record evidencing
10567	10567	chattel paper, an electronic document of title, investment
10568	10568	property, a transferable record, or an electronic record that
10569	10569	is currently authorized or adopted by a domestic or foreign
10570	10570	government and is not a medium of exchange that was recorded
10571	10571	and transferable in a system that existed and operated for the
10572	10572	medium of exchange before the medium of exchange was
10573	10573	authorized or adopted by a government.
10574	10574	(2) "Qualifying purchaser" means a purchaser of a
10575	10575	controllable electronic record or an interest in a
10576	10576	controllable electronic record that obtains control of the
10577	10577	controllable electronic record for value, in good faith, and
10578	10578	without notice of a claim of a property right in the
10579	10579	controllable electronic record.
10580	10580	(3) "Transferable record" has the meaning provided for
10581	10581	that term in:
10582	10582	5181
10583	10583	5182
10584	10584	5183
10585	10585	5184
10586	10586	5185
10587	10587	5186
10588	10588	5187
10589	10589	5188
10590	10590	5189
10591	10591	5190
10592	10592	5191
10593	10593	5192
10594	10594	5193
10595	10595	5194
10596	10596	5195
10597	10597	5196
10598	10598	5197
10599	10599	5198
10600	10600	5199
10601	10601	5200
10602	10602	5201
10603	10603	5202
10604	10604	5203
10605	10605	5204
10606	10606	5205
10607	10607	5206
10608	10608	5207
10609	10609	5208 SB231 INTRODUCEDSB231 INTRODUCED
10610	10610	Page 187
10611	10611	(A) Section 201(a)(1) of the Electronic Signatures in
10612	10612	Global and National Commerce Act, 15 U.S.C. § 7021(a)(1), as
10613	10613	amended; or
10614	10614	(B) Section 8-1A-16(a).
10615	10615	(4) "Value" has the meaning provided in Section
10616	10616	7-3-303(a), as if references in that subsection to an
10617	10617	"instrument" were references to a controllable account,
10618	10618	controllable electronic record, or controllable payment
10619	10619	intangible.
10620	10620	(b) Definitions in Article 9A. The definitions in
10621	10621	Article 9A of "account debtor," "controllable account,"
10622	10622	"controllable payment intangible," "chattel paper," "deposit
10623	10623	account," and "investment property" apply to this article.
10624	10624	(c) Article 1 definitions and principles. Article 1
10625	10625	contains general definitions and principles of construction
10626	10626	and interpretation applicable throughout this article.
10627	10627	§7-12-103. Relation to Article 9A and consumer laws.
10628	10628	(a) Article 9A governs in case of conflict. If there is
10629	10629	conflict between this article and Article 9A, Article 9A
10630	10630	governs.
10631	10631	(b) Applicable consumer law and other laws. A
10632	10632	transaction subject to this article is subject to any
10633	10633	applicable rule of law that establishes a different rule for
10634	10634	consumers and to (i) any other statute or regulation that
10635	10635	regulates the rates, charges, agreements, and practices for
10636	10636	loans, credit sales, or other extensions of credit and (ii)
10637	10637	any consumer-protection statute or regulation.
10638	10638	§7-12-104. Rights in controllable account, controllable
10639	10639	5209
10640	10640	5210
10641	10641	5211
10642	10642	5212
10643	10643	5213
10644	10644	5214
10645	10645	5215
10646	10646	5216
10647	10647	5217
10648	10648	5218
10649	10649	5219
10650	10650	5220
10651	10651	5221
10652	10652	5222
10653	10653	5223
10654	10654	5224
10655	10655	5225
10656	10656	5226
10657	10657	5227
10658	10658	5228
10659	10659	5229
10660	10660	5230
10661	10661	5231
10662	10662	5232
10663	10663	5233
10664	10664	5234
10665	10665	5235
10666	10666	5236 SB231 INTRODUCEDSB231 INTRODUCED
10667	10667	Page 188
10668	10668	electronic record, and controllable payment intangible.
10669	10669	(a) Applicability of section to controllable account
10670	10670	and controllable payment intangible. This section applies to
10671	10671	the acquisition and purchase of rights in a controllable
10672	10672	account or controllable payment intangible, including the
10673	10673	rights and benefits under subsections (c), (d), (e), (g), and
10674	10674	(h) of a purchaser and qualifying purchaser, in the same
10675	10675	manner this section applies to a controllable electronic
10676	10676	record.
10677	10677	(b) Control of controllable account and controllable
10678	10678	payment intangible. To determine whether a purchaser of a
10679	10679	controllable account or a controllable payment intangible is a
10680	10680	qualifying purchaser, the purchaser obtains control of the
10681	10681	account or payment intangible if it obtains control of the
10682	10682	controllable electronic record that evidences the account or
10683	10683	payment intangible.
10684	10684	(c) Applicability of other law to acquisition of
10685	10685	rights. Except as provided in this section, law other than
10686	10686	this article determines whether a person acquires a right in a
10687	10687	controllable electronic record and the right the person
10688	10688	acquires.
10689	10689	(d) Shelter principle and purchase of limited interest.
10690	10690	A purchaser of a controllable electronic record acquires all
10691	10691	rights in the controllable electronic record that the
10692	10692	transferor had or had power to transfer, except that a
10693	10693	purchaser of a limited interest in a controllable electronic
10694	10694	record acquires rights only to the extent of the interest
10695	10695	purchased.
10696	10696	5237
10697	10697	5238
10698	10698	5239
10699	10699	5240
10700	10700	5241
10701	10701	5242
10702	10702	5243
10703	10703	5244
10704	10704	5245
10705	10705	5246
10706	10706	5247
10707	10707	5248
10708	10708	5249
10709	10709	5250
10710	10710	5251
10711	10711	5252
10712	10712	5253
10713	10713	5254
10714	10714	5255
10715	10715	5256
10716	10716	5257
10717	10717	5258
10718	10718	5259
10719	10719	5260
10720	10720	5261
10721	10721	5262
10722	10722	5263
10723	10723	5264 SB231 INTRODUCEDSB231 INTRODUCED
10724	10724	Page 189
10725	10725	(e) Rights of qualifying purchaser. A qualifying
10726	10726	purchaser acquires its rights in the controllable electronic
10727	10727	record free of a claim of a property right in the controllable
10728	10728	electronic record.
10729	10729	(f) Limitation of rights of qualifying purchaser in
10730	10730	other property. Except as provided in subsections (a) and (e)
10731	10731	for a controllable account and a controllable payment
10732	10732	intangible or law other than this article, a qualifying
10733	10733	purchaser takes a right to payment, right to performance, or
10734	10734	other interest in property evidenced by the controllable
10735	10735	electronic record subject to a claim of a property right in
10736	10736	the right to payment, right to performance, or other interest
10737	10737	in property.
10738	10738	(g) No-action protection for qualifying purchaser. An
10739	10739	action may not be asserted against a qualifying purchaser
10740	10740	based on both a purchase by the qualifying purchaser of a
10741	10741	controllable electronic record and a claim of a property right
10742	10742	in another controllable electronic record, whether the action
10743	10743	is framed in conversion, replevin, constructive trust,
10744	10744	equitable lien, or other theory.
10745	10745	(h) Filing not notice. Filing of a financing statement
10746	10746	under Article 9A is not notice of a claim of a property right
10747	10747	in a controllable electronic record.
10748	10748	§7-12-105. Control of controllable electronic record.
10749	10749	(a) General rule: control of controllable electronic
10750	10750	record. A person has control of a controllable electronic
10751	10751	record if the electronic record, a record attached to or
10752	10752	logically associated with the electronic record, or a system
10753	10753	5265
10754	10754	5266
10755	10755	5267
10756	10756	5268
10757	10757	5269
10758	10758	5270
10759	10759	5271
10760	10760	5272
10761	10761	5273
10762	10762	5274
10763	10763	5275
10764	10764	5276
10765	10765	5277
10766	10766	5278
10767	10767	5279
10768	10768	5280
10769	10769	5281
10770	10770	5282
10771	10771	5283
10772	10772	5284
10773	10773	5285
10774	10774	5286
10775	10775	5287
10776	10776	5288
10777	10777	5289
10778	10778	5290
10779	10779	5291
10780	10780	5292 SB231 INTRODUCEDSB231 INTRODUCED
10781	10781	Page 190
10782	10782	in which the electronic record is recorded:
10783	10783	(1) gives the person:
10784	10784	(A) power to avail itself of substantially all the
10785	10785	benefits from the electronic record; and
10786	10786	(B) exclusive power, subject to subsection (b), to:
10787	10787	(i) prevent others from availing themselves of
10788	10788	substantially all the benefits from the electronic record; and
10789	10789	(ii) transfer control of the electronic record to
10790	10790	another person or cause another person to obtain control of
10791	10791	another controllable electronic record as a result of the
10792	10792	transfer of the electronic record; and
10793	10793	(2) enables the person readily to identify itself in
10794	10794	any way, including by name, identifying number, cryptographic
10795	10795	key, office, or account number, as having the powers specified
10796	10796	in paragraph (1).
10797	10797	(b) Meaning of exclusive. Subject to subsection (c), a
10798	10798	power is exclusive under subsection (a)(1)(B)(i) and (ii) even
10799	10799	if:
10800	10800	(1) the controllable electronic record, a record
10801	10801	attached to or logically associated with the electronic
10802	10802	record, or a system in which the electronic record is recorded
10803	10803	limits the use of the electronic record or has a protocol
10804	10804	programmed to cause a change, including a transfer or loss of
10805	10805	control or a modification of benefits afforded by the
10806	10806	electronic record; or
10807	10807	(2) the power is shared with another person.
10808	10808	(c) When power not shared with another person. A power
10809	10809	of a person is not shared with another person under subsection
10810	10810	5293
10811	10811	5294
10812	10812	5295
10813	10813	5296
10814	10814	5297
10815	10815	5298
10816	10816	5299
10817	10817	5300
10818	10818	5301
10819	10819	5302
10820	10820	5303
10821	10821	5304
10822	10822	5305
10823	10823	5306
10824	10824	5307
10825	10825	5308
10826	10826	5309
10827	10827	5310
10828	10828	5311
10829	10829	5312
10830	10830	5313
10831	10831	5314
10832	10832	5315
10833	10833	5316
10834	10834	5317
10835	10835	5318
10836	10836	5319
10837	10837	5320 SB231 INTRODUCEDSB231 INTRODUCED
10838	10838	Page 191
10839	10839	(b)(2) and the person's power is not exclusive if:
10840	10840	(1) the person can exercise the power only if the power
10841	10841	also is exercised by the other person; and
10842	10842	(2) the other person:
10843	10843	(A) can exercise the power without exercise of the
10844	10844	power by the person; or
10845	10845	(B) is the transferor to the person of an interest in
10846	10846	the controllable electronic record or a controllable account
10847	10847	or controllable payment intangible evidenced by the
10848	10848	controllable electronic record.
10849	10849	(d) Presumption of exclusivity of certain powers. If a
10850	10850	person has the powers specified in subsection (a)(1)(B)(i) and
10851	10851	(ii), the powers are presumed to be exclusive.
10852	10852	(e) Control through another person. A person has
10853	10853	control of a controllable electronic record if another person,
10854	10854	other than the transferor to the person of an interest in the
10855	10855	controllable electronic record or a controllable account or
10856	10856	controllable payment intangible evidenced by the controllable
10857	10857	electronic record:
10858	10858	(1) has control of the electronic record and
10859	10859	acknowledges that it has control on behalf of the person; or
10860	10860	(2) obtains control of the electronic record after
10861	10861	having acknowledged that it will obtain control of the
10862	10862	electronic record on behalf of the person.
10863	10863	(f) No requirement to acknowledge. A person that has
10864	10864	control under this section is not required to acknowledge that
10865	10865	it has control on behalf of another person.
10866	10866	(g) No duties or confirmation. If a person acknowledges
10867	10867	5321
10868	10868	5322
10869	10869	5323
10870	10870	5324
10871	10871	5325
10872	10872	5326
10873	10873	5327
10874	10874	5328
10875	10875	5329
10876	10876	5330
10877	10877	5331
10878	10878	5332
10879	10879	5333
10880	10880	5334
10881	10881	5335
10882	10882	5336
10883	10883	5337
10884	10884	5338
10885	10885	5339
10886	10886	5340
10887	10887	5341
10888	10888	5342
10889	10889	5343
10890	10890	5344
10891	10891	5345
10892	10892	5346
10893	10893	5347
10894	10894	5348 SB231 INTRODUCEDSB231 INTRODUCED
10895	10895	Page 192
10896	10896	that it has or will obtain control on behalf of another
10897	10897	person, unless the person otherwise agrees or law other than
10898	10898	this article or Article 9A otherwise provides, the person does
10899	10899	not owe any duty to the other person and is not required to
10900	10900	confirm the acknowledgment to any other person.
10901	10901	§7-12-106. Discharge of account debtor on controllable
10902	10902	account or controllable payment intangible.
10903	10903	(a) Discharge of account debtor. An account debtor on a
10904	10904	controllable account or controllable payment intangible may
10905	10905	discharge its obligation by paying:
10906	10906	(1) the person having control of the controllable
10907	10907	electronic record that evidences the controllable account or
10908	10908	controllable payment intangible; or
10909	10909	(2) except as provided in subsection (b), a person that
10910	10910	formerly had control of the controllable electronic record.
10911	10911	(b) Content and effect of notification. Subject to
10912	10912	subsection (d), the account debtor may not discharge its
10913	10913	obligation by paying a person that formerly had control of the
10914	10914	controllable electronic record if the account debtor receives
10915	10915	a notification that:
10916	10916	(1) is signed by a person that formerly had control or
10917	10917	the person to which control was transferred;
10918	10918	(2) reasonably identifies the controllable account or
10919	10919	controllable payment intangible;
10920	10920	(3) notifies the account debtor that control of the
10921	10921	controllable electronic record that evidences the controllable
10922	10922	account or controllable payment intangible was transferred;
10923	10923	(4) identifies the transferee, in any reasonable way,
10924	10924	5349
10925	10925	5350
10926	10926	5351
10927	10927	5352
10928	10928	5353
10929	10929	5354
10930	10930	5355
10931	10931	5356
10932	10932	5357
10933	10933	5358
10934	10934	5359
10935	10935	5360
10936	10936	5361
10937	10937	5362
10938	10938	5363
10939	10939	5364
10940	10940	5365
10941	10941	5366
10942	10942	5367
10943	10943	5368
10944	10944	5369
10945	10945	5370
10946	10946	5371
10947	10947	5372
10948	10948	5373
10949	10949	5374
10950	10950	5375
10951	10951	5376 SB231 INTRODUCEDSB231 INTRODUCED
10952	10952	Page 193
10953	10953	including by name, identifying number, cryptographic key,
10954	10954	office, or account number; and
10955	10955	(5) provides a commercially reasonable method by which
10956	10956	the account debtor is to pay the transferee.
10957	10957	(c) Discharge following effective notification. After
10958	10958	receipt of a notification that complies with subsection (b),
10959	10959	the account debtor may discharge its obligation by paying in
10960	10960	accordance with the notification and may not discharge the
10961	10961	obligation by paying a person that formerly had control.
10962	10962	(d) When notification ineffective. Subject to
10963	10963	subsection (h), notification is ineffective under subsection
10964	10964	(b):
10965	10965	(1) unless, before the notification is sent, the
10966	10966	account debtor and the person that, at that time, had control
10967	10967	of the controllable electronic record that evidences the
10968	10968	controllable account or controllable payment intangible agree
10969	10969	in a signed record to a commercially reasonable method by
10970	10970	which a person may furnish reasonable proof that control has
10971	10971	been transferred;
10972	10972	(2) to the extent an agreement between the account
10973	10973	debtor and seller of a payment intangible limits the account
10974	10974	debtor's duty to pay a person other than the seller and the
10975	10975	limitation is effective under law other than this article; or
10976	10976	(3) at the option of the account debtor, if the
10977	10977	notification notifies the account debtor to:
10978	10978	(A) divide a payment;
10979	10979	(B) make less than the full amount of an installment or
10980	10980	other periodic payment; or
10981	10981	5377
10982	10982	5378
10983	10983	5379
10984	10984	5380
10985	10985	5381
10986	10986	5382
10987	10987	5383
10988	10988	5384
10989	10989	5385
10990	10990	5386
10991	10991	5387
10992	10992	5388
10993	10993	5389
10994	10994	5390
10995	10995	5391
10996	10996	5392
10997	10997	5393
10998	10998	5394
10999	10999	5395
11000	11000	5396
11001	11001	5397
11002	11002	5398
11003	11003	5399
11004	11004	5400
11005	11005	5401
11006	11006	5402
11007	11007	5403
11008	11008	5404 SB231 INTRODUCEDSB231 INTRODUCED
11009	11009	Page 194
11010	11010	(C) pay any part of a payment by more than one method
11011	11011	or to more than one person.
11012	11012	(e) Proof of transfer of control. Subject to subsection
11013	11013	(h), if requested by the account debtor, the person giving the
11014	11014	notification under subsection (b) seasonably shall furnish
11015	11015	reasonable proof, using the method in the agreement referred
11016	11016	to in subsection (d)(1), that control of the controllable
11017	11017	electronic record has been transferred. Unless the person
11018	11018	complies with the request, the account debtor may discharge
11019	11019	its obligation by paying a person that formerly had control,
11020	11020	even if the account debtor has received a notification under
11021	11021	subsection (b).
11022	11022	(f) What constitutes reasonable proof. A person
11023	11023	furnishes reasonable proof under subsection (e) that control
11024	11024	has been transferred if the person demonstrates, using the
11025	11025	method in the agreement referred to in subsection (d)(1), that
11026	11026	the transferee has the power to:
11027	11027	(1) avail itself of substantially all the benefits from
11028	11028	the controllable electronic record;
11029	11029	(2) prevent others from availing themselves of
11030	11030	substantially all the benefits from the controllable
11031	11031	electronic record; and
11032	11032	(3) transfer the powers specified in paragraphs (1) and
11033	11033	(2) to another person.
11034	11034	(g) Rights not waivable. Subject to subsection (h), an
11035	11035	account debtor may not waive or vary its rights under
11036	11036	subsections (d)(1) and (e) or its option under subsection
11037	11037	(d)(3).
11038	11038	5405
11039	11039	5406
11040	11040	5407
11041	11041	5408
11042	11042	5409
11043	11043	5410
11044	11044	5411
11045	11045	5412
11046	11046	5413
11047	11047	5414
11048	11048	5415
11049	11049	5416
11050	11050	5417
11051	11051	5418
11052	11052	5419
11053	11053	5420
11054	11054	5421
11055	11055	5422
11056	11056	5423
11057	11057	5424
11058	11058	5425
11059	11059	5426
11060	11060	5427
11061	11061	5428
11062	11062	5429
11063	11063	5430
11064	11064	5431
11065	11065	5432 SB231 INTRODUCEDSB231 INTRODUCED
11066	11066	Page 195
11067	11067	(h) Rule for individual under other law. This section
11068	11068	is subject to law other than this article which establishes a
11069	11069	different rule for an account debtor who is an individual and
11070	11070	who incurred the obligation primarily for personal, family, or
11071	11071	household purposes.
11072	11072	§7-12-107. Governing law.
11073	11073	(a) Governing law: general rule. Except as provided in
11074	11074	subsection (b), the local law of a controllable electronic
11075	11075	record's jurisdiction governs a matter covered by this
11076	11076	article.
11077	11077	(b) Governing law: Section 7-12-106. For a controllable
11078	11078	electronic record that evidences a controllable account or
11079	11079	controllable payment intangible, the local law of the
11080	11080	controllable electronic record's jurisdiction governs a matter
11081	11081	covered by Section 7-12-106 unless an effective agreement
11082	11082	determines that the local law of another jurisdiction governs.
11083	11083	(c) Controllable electronic record's jurisdiction. The
11084	11084	following rules determine a controllable electronic record's
11085	11085	jurisdiction under this section:
11086	11086	(1) If the controllable electronic record, or a record
11087	11087	attached to or logically associated with the controllable
11088	11088	electronic record and readily available for review, expressly
11089	11089	provides that a particular jurisdiction is the controllable
11090	11090	electronic record's jurisdiction for purposes of this article
11091	11091	or the Uniform Commercial Code, that jurisdiction is the
11092	11092	controllable electronic record's jurisdiction.
11093	11093	(2) If paragraph (1) does not apply and the rules of
11094	11094	the system in which the controllable electronic record is
11095	11095	5433
11096	11096	5434
11097	11097	5435
11098	11098	5436
11099	11099	5437
11100	11100	5438
11101	11101	5439
11102	11102	5440
11103	11103	5441
11104	11104	5442
11105	11105	5443
11106	11106	5444
11107	11107	5445
11108	11108	5446
11109	11109	5447
11110	11110	5448
11111	11111	5449
11112	11112	5450
11113	11113	5451
11114	11114	5452
11115	11115	5453
11116	11116	5454
11117	11117	5455
11118	11118	5456
11119	11119	5457
11120	11120	5458
11121	11121	5459
11122	11122	5460 SB231 INTRODUCEDSB231 INTRODUCED
11123	11123	Page 196
11124	11124	recorded are readily available for review and expressly
11125	11125	provide that a particular jurisdiction is the controllable
11126	11126	electronic record's jurisdiction for purposes of this article
11127	11127	or the Uniform Commercial Code, that jurisdiction is the
11128	11128	controllable electronic record's jurisdiction.
11129	11129	(3) If paragraphs (1) and (2) do not apply and the
11130	11130	controllable electronic record, or a record attached to or
11131	11131	logically associated with the controllable electronic record
11132	11132	and readily available for review, expressly provides that the
11133	11133	controllable electronic record is governed by the law of a
11134	11134	particular jurisdiction, that jurisdiction is the controllable
11135	11135	electronic record's jurisdiction.
11136	11136	(4) If paragraphs (1), (2), and (3) do not apply and
11137	11137	the rules of the system in which the controllable electronic
11138	11138	record is recorded are readily available for review and
11139	11139	expressly provide that the controllable electronic record or
11140	11140	the system is governed by the law of a particular
11141	11141	jurisdiction, that jurisdiction is the controllable electronic
11142	11142	record's jurisdiction.
11143	11143	(5) If paragraphs (1) through (4) do not apply, the
11144	11144	controllable electronic record's jurisdiction is the District
11145	11145	of Columbia.
11146	11146	(d) Applicability of Article 12. If subsection (c)(5)
11147	11147	applies and Article 12 is not in effect in the District of
11148	11148	Columbia without material modification, the governing law for
11149	11149	a matter covered by this article is the law of the District of
11150	11150	Columbia as though Article 12 were in effect in the District
11151	11151	of Columbia without material modification. In this subsection,
11152	11152	5461
11153	11153	5462
11154	11154	5463
11155	11155	5464
11156	11156	5465
11157	11157	5466
11158	11158	5467
11159	11159	5468
11160	11160	5469
11161	11161	5470
11162	11162	5471
11163	11163	5472
11164	11164	5473
11165	11165	5474
11166	11166	5475
11167	11167	5476
11168	11168	5477
11169	11169	5478
11170	11170	5479
11171	11171	5480
11172	11172	5481
11173	11173	5482
11174	11174	5483
11175	11175	5484
11176	11176	5485
11177	11177	5486
11178	11178	5487
11179	11179	5488 SB231 INTRODUCEDSB231 INTRODUCED
11180	11180	Page 197
11181	11181	"Article 12" means Article 12 of Uniform Commercial Code
11182	11182	Amendments (2022).
11183	11183	(e) Relation of matter or transaction to controllable
11184	11184	electronic record's jurisdiction not necessary. To the extent
11185	11185	subsections (a) and (b) provide that the local law of the
11186	11186	controllable electronic record's jurisdiction governs a matter
11187	11187	covered by this article, that law governs even if the matter
11188	11188	or a transaction to which the matter relates does not bear any
11189	11189	relation to the controllable electronic record's jurisdiction.
11190	11190	(f) Rights of purchasers determined at time of
11191	11191	purchase. The rights acquired under Section 7-12-104 by a
11192	11192	purchaser or qualifying purchaser are governed by the law
11193	11193	applicable under this section at the time of purchase.
11194	11194	Section 4. Article 12A is added to Title 7, Code of
11195	11195	Alabama 1975, to read as follows:
11196	11196	Article 12A. Transitional Provisions for Uniform
11197	11197	Commercial Code Amendments (2022).
11198	11198	Part 1. General Provisions and Definitions.
11199	11199	Section 7-12A-101. Short Title.
11200	11200	This article may be cited as Transitional Provisions
11201	11201	for Uniform Commercial Code Amendments (2022).
11202	11202	Section 7-12A-102. Definitions.
11203	11203	(a) Article 12A Definitions. In this article:
11204	11204	(1) "Adjustment date" means July 1, 2025, or the date
11205	11205	that is one year after the effective date of this act,
11206	11206	whichever is later.
11207	11207	(2) "Article 12" means Article 12 of the Uniform
11208	11208	Commercial Code.
11209	11209	5489
11210	11210	5490
11211	11211	5491
11212	11212	5492
11213	11213	5493
11214	11214	5494
11215	11215	5495
11216	11216	5496
11217	11217	5497
11218	11218	5498
11219	11219	5499
11220	11220	5500
11221	11221	5501
11222	11222	5502
11223	11223	5503
11224	11224	5504
11225	11225	5505
11226	11226	5506
11227	11227	5507
11228	11228	5508
11229	11229	5509
11230	11230	5510
11231	11231	5511
11232	11232	5512
11233	11233	5513
11234	11234	5514
11235	11235	5515
11236	11236	5516 SB231 INTRODUCEDSB231 INTRODUCED
11237	11237	Page 198
11238	11238	(3) "Article 12 property" means a controllable account,
11239	11239	controllable electronic record, or controllable payment
11240	11240	intangible.
11241	11241	(4) "Article 9A" means Article 9A of the Uniform
11242	11242	Commercial Code.
11243	11243	(b) Definitions in other articles. The following
11244	11244	definitions in other articles of the Uniform Commercial Code
11245	11245	apply to this article:
11246	11246	"Controllable account." Section 7-9A-102.
11247	11247	"Controllable electronic record." Section 7-12-102.
11248	11248	"Controllable payment intangible." Section 7-9A-102.
11249	11249	"Financing statement." Section 7-9A-102.
11250	11250	(c) Article 1 definitions and principles. Article 1 of
11251	11251	the Uniform Commercial Code contains general definitions and
11252	11252	principles of construction and interpretation applicable
11253	11253	throughout this article.
11254	11254	Part 2. General Transitional Provision.
11255	11255	Section 7-12A-201. Saving Clause.
11256	11256	Except as provided in Part 3, a transaction validly
11257	11257	entered into before the effective date of this act and the
11258	11258	rights, duties, and interests flowing from the transaction
11259	11259	remain valid thereafter and may be terminated, completed,
11260	11260	consummated, or enforced as required or permitted by law other
11261	11261	than the Uniform Commercial Code or, if applicable, the
11262	11262	Uniform Commercial Code, as though this act had not taken
11263	11263	effect.
11264	11264	Part 3. Transitional Provisions for Articles 9A and 12.
11265	11265	Section 7-12A-301. Saving Clause.
11266	11266	5517
11267	11267	5518
11268	11268	5519
11269	11269	5520
11270	11270	5521
11271	11271	5522
11272	11272	5523
11273	11273	5524
11274	11274	5525
11275	11275	5526
11276	11276	5527
11277	11277	5528
11278	11278	5529
11279	11279	5530
11280	11280	5531
11281	11281	5532
11282	11282	5533
11283	11283	5534
11284	11284	5535
11285	11285	5536
11286	11286	5537
11287	11287	5538
11288	11288	5539
11289	11289	5540
11290	11290	5541
11291	11291	5542
11292	11292	5543
11293	11293	5544 SB231 INTRODUCEDSB231 INTRODUCED
11294	11294	Page 199
11295	11295	(a) Pre-effective date transaction, lien, or interest.
11296	11296	Except as provided in this part, Article 9A as amended by this
11297	11297	act and Article 12 apply to a transaction, lien, or other
11298	11298	interest in property, even if the transaction, lien, or
11299	11299	interest was entered into, created, or acquired before the
11300	11300	effective date of this act.
11301	11301	(b) Continuing validity. Except as provided in
11302	11302	subsection (c) and Sections 7-12A-302 through 7-12A-306:
11303	11303	(1) a transaction, lien, or interest in property that
11304	11304	was validly entered into, created, or transferred before the
11305	11305	effective date of this act and was not governed by the Uniform
11306	11306	Commercial Code, but would be subject to Article 9A as amended
11307	11307	by this act or Article 12 if it had been entered into,
11308	11308	created, or transferred on or after the effective date of this
11309	11309	act, including the rights, duties, and interests flowing from
11310	11310	the transaction, lien, or interest, remains valid on and after
11311	11311	the effective date of this act; and
11312	11312	(2) the transaction, lien, or interest may be
11313	11313	terminated, completed, consummated, and enforced as required
11314	11314	or permitted by this act or by the law that would apply if
11315	11315	this act had not taken effect.
11316	11316	(c) Pre-effective date proceeding. This act does not
11317	11317	affect an action, case, or proceeding commenced before the
11318	11318	effective date of this act.
11319	11319	Section 7-12A-302. Security Interest Perfected Before
11320	11320	Effective Date.
11321	11321	(a) Continuing perfection: perfection requirements
11322	11322	satisfied. A security interest that is enforceable and
11323	11323	5545
11324	11324	5546
11325	11325	5547
11326	11326	5548
11327	11327	5549
11328	11328	5550
11329	11329	5551
11330	11330	5552
11331	11331	5553
11332	11332	5554
11333	11333	5555
11334	11334	5556
11335	11335	5557
11336	11336	5558
11337	11337	5559
11338	11338	5560
11339	11339	5561
11340	11340	5562
11341	11341	5563
11342	11342	5564
11343	11343	5565
11344	11344	5566
11345	11345	5567
11346	11346	5568
11347	11347	5569
11348	11348	5570
11349	11349	5571
11350	11350	5572 SB231 INTRODUCEDSB231 INTRODUCED
11351	11351	Page 200
11352	11352	perfected immediately before the effective date of this act is
11353	11353	a perfected security interest under this act if, on the
11354	11354	effective date of this act, the requirements for
11355	11355	enforceability and perfection under this act are satisfied
11356	11356	without further action.
11357	11357	(b) Continuing perfection: enforceability or perfection
11358	11358	requirements not satisfied. If a security interest is
11359	11359	enforceable and perfected immediately before the effective
11360	11360	date of this act, but the requirements for enforceability or
11361	11361	perfection under this act are not satisfied on the effective
11362	11362	date of this act, the security interest:
11363	11363	(1) is a perfected security interest until the earlier
11364	11364	of the time perfection would have ceased under the law in
11365	11365	effect immediately before the effective date of this act or
11366	11366	the adjustment date;
11367	11367	(2) remains enforceable thereafter only if the security
11368	11368	interest satisfies the requirements for enforceability under
11369	11369	Section 7-9A-203, as amended by this act, before the
11370	11370	adjustment date; and
11371	11371	(3) remains perfected thereafter only if the
11372	11372	requirements for perfection under this act are satisfied
11373	11373	before the time specified in paragraph (1).
11374	11374	Section 7-12A-303. Security Interest Unperfected Before
11375	11375	Effective Date.
11376	11376	A security interest that is enforceable immediately
11377	11377	before the effective date of this act but is unperfected at
11378	11378	that time:
11379	11379	(1) remains an enforceable security interest until the
11380	11380	5573
11381	11381	5574
11382	11382	5575
11383	11383	5576
11384	11384	5577
11385	11385	5578
11386	11386	5579
11387	11387	5580
11388	11388	5581
11389	11389	5582
11390	11390	5583
11391	11391	5584
11392	11392	5585
11393	11393	5586
11394	11394	5587
11395	11395	5588
11396	11396	5589
11397	11397	5590
11398	11398	5591
11399	11399	5592
11400	11400	5593
11401	11401	5594
11402	11402	5595
11403	11403	5596
11404	11404	5597
11405	11405	5598
11406	11406	5599
11407	11407	5600 SB231 INTRODUCEDSB231 INTRODUCED
11408	11408	Page 201
11409	11409	adjustment date;
11410	11410	(2) remains enforceable thereafter if the security
11411	11411	interest becomes enforceable under Section 7-9A-203, as
11412	11412	amended by this act, on the effective date of this act or
11413	11413	before the adjustment date; and
11414	11414	(3) becomes perfected:
11415	11415	(A) without further action, on the effective date of
11416	11416	this act if the requirements for perfection under this act are
11417	11417	satisfied before or at that time; or
11418	11418	(B) when the requirements for perfection are satisfied
11419	11419	if the requirements are satisfied after that time.
11420	11420	Section 7-12A-304. Effectiveness of Actions Taken
11421	11421	Before Effective Date.
11422	11422	(a) Pre-effective-date action; attachment and
11423	11423	perfection before adjustment date. If action, other than the
11424	11424	filing of a financing statement, is taken before the effective
11425	11425	date of this act and the action would have resulted in
11426	11426	perfection of the security interest had the security interest
11427	11427	become enforceable before the effective date of this act, the
11428	11428	action is effective to perfect a security interest that
11429	11429	attaches under this act before the adjustment date. An
11430	11430	attached security interest becomes unperfected on the
11431	11431	adjustment date unless the security interest becomes a
11432	11432	perfected security interest under this act before the
11433	11433	adjustment date.
11434	11434	(b) Pre-effective-date filing. The filing of a
11435	11435	financing statement before the effective date of this act is
11436	11436	effective to perfect a security interest on the effective date
11437	11437	5601
11438	11438	5602
11439	11439	5603
11440	11440	5604
11441	11441	5605
11442	11442	5606
11443	11443	5607
11444	11444	5608
11445	11445	5609
11446	11446	5610
11447	11447	5611
11448	11448	5612
11449	11449	5613
11450	11450	5614
11451	11451	5615
11452	11452	5616
11453	11453	5617
11454	11454	5618
11455	11455	5619
11456	11456	5620
11457	11457	5621
11458	11458	5622
11459	11459	5623
11460	11460	5624
11461	11461	5625
11462	11462	5626
11463	11463	5627
11464	11464	5628 SB231 INTRODUCEDSB231 INTRODUCED
11465	11465	Page 202
11466	11466	of this act to the extent the filing would satisfy the
11467	11467	requirements for perfection under this act.
11468	11468	(c) Pre-effective-date enforceability action. The
11469	11469	taking of an action before the effective date of this act is
11470	11470	sufficient for the enforceability of a security interest on
11471	11471	the effective date of this act if the action would satisfy the
11472	11472	requirements for enforceability under this act.
11473	11473	Section 7-12A-305. Priority.
11474	11474	(a) Determination of priority. Subject to subsections
11475	11475	(b) and (c), this act determines the priority of conflicting
11476	11476	claims to collateral.
11477	11477	(b) Established priorities. Subject to subsection (c),
11478	11478	if the priorities of claims to collateral were established
11479	11479	before the effective date of this act, Article 9A as in effect
11480	11480	before the effective date of this act determines priority.
11481	11481	(c) Determination of certain priorities on adjustment
11482	11482	date. On the adjustment date, to the extent the priorities
11483	11483	determined by Article 9A as amended by this act modify the
11484	11484	priorities established before the effective date of this act,
11485	11485	the priorities of claims to Article 12 property established
11486	11486	before the effective date of this act cease to apply.
11487	11487	Section 7-12A-306. Priority of Claims When Priority
11488	11488	Rules of Article 9A Do Not Apply.
11489	11489	(a) Determination of priority. Subject to subsections
11490	11490	(b) and (c), Article 12 determines the priority of conflicting
11491	11491	claims to Article 12 property when the priority rules of
11492	11492	Article 9A as amended by this act do not apply.
11493	11493	(b) Established priorities. Subject to subsection (c),
11494	11494	5629
11495	11495	5630
11496	11496	5631
11497	11497	5632
11498	11498	5633
11499	11499	5634
11500	11500	5635
11501	11501	5636
11502	11502	5637
11503	11503	5638
11504	11504	5639
11505	11505	5640
11506	11506	5641
11507	11507	5642
11508	11508	5643
11509	11509	5644
11510	11510	5645
11511	11511	5646
11512	11512	5647
11513	11513	5648
11514	11514	5649
11515	11515	5650
11516	11516	5651
11517	11517	5652
11518	11518	5653
11519	11519	5654
11520	11520	5655
11521	11521	5656 SB231 INTRODUCEDSB231 INTRODUCED
11522	11522	Page 203
11523	11523	when the priority rules of Article 9A as amended by this act
11524	11524	do not apply and the priorities of claims to Article 12
11525	11525	property were established before the effective date of this
11526	11526	act, law other than Article 12 determines priority.
11527	11527	(c) Determination of certain priorities on adjustment
11528	11528	date. When the priority rules of Article 9A as amended by this
11529	11529	act do not apply, to the extent the priorities determined by
11530	11530	this act modify the priorities established before the
11531	11531	effective date of this act, the priorities of claims to
11532	11532	Article 12 property established before the effective date of
11533	11533	this act cease to apply on the adjustment date.
11534	11534	Section 5. This act shall become effective January 1,
11535	11535	2024, following its passage and approval by the Governor, or
11536	11536	its otherwise becoming law.
11537	11537	5657
11538	11538	5658
11539	11539	5659
11540	11540	5660
11541	11541	5661
11542	11542	5662
11543	11543	5663
11544	11544	5664
11545	11545	5665
11546	11546	5666
11547	11547	5667
11548	11548	5668
11549	11549	5669
11550	11550	5670