Stricken language would be deleted from and underlined language would be added to present law.
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State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1746 3
4
By: Representative M. Brown 5
By: Senator Dees 6
7
For An Act To Be Entitled 8
AN ACT TO AMEND THE UNIFORM COMMERCIAL CODE; AND FOR 9
OTHER PURPOSES. 10
11
12
Subtitle 13
TO AMEND THE UNIFORM COMMERCIAL CODE. 14
15
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 16
17
SECTION 1. Arkansas Code § 4 -1-201(b), concerning the general 18
definitions in the Uniform Commercial Code, is amended to read as follows: 19
(b) Subject to definitions contained in other chapters of this 20
subtitle that apply to particular chapters or parts thereof: 21
(1) “Action”, in the sense of a judicial proceeding, includes 22
recoupment, counterclaim, set-off, suit in equity, and any other proceedings 23
in which rights are determined. 24
(2) “Aggrieved party” means a party entitled to pursue a remedy. 25
(3) “Agreement”, as distinguished from “contract”, means the 26
bargain of the parties in fact, as found in their language or inferred from 27
other circumstances, including course of performance, course of dealing, or 28
usage of trade as provided in § 4-1-303. 29
(4) “Bank” means a person engaged in the business of banking and 30
includes a savings bank, savings and loan association, credit union, and 31
trust company. 32
(5) “Bearer” means a person in control of a negotiable 33
electronic document of title or a person in possession of a negotiable 34
instrument, negotiable tangible document of title, or certificated security 35
that is payable to bearer or indorsed in blank. 36 HB1746
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(6) “Bill of lading” means a document of title evidencing the 1
receipt of goods for shipment issued by a person engaged in the business of 2
directly or indirectly transporting or forwarding goods. The term does not 3
include a warehouse receipt. 4
(7) “Branch” includes a separately incorporated foreign branch 5
of a bank. 6
(8) “Burden of establishing” a fact means the burden of 7
persuading the trier of fact that the existence of the fact is more probable 8
than its nonexistence. 9
(9) “Buyer in ordinary course of business” means a person that 10
buys goods in good faith, without knowledge that the sale violates the rights 11
of another person in the goods, and in the ordinary course from a person, 12
other than a pawnbroker, in the business of selling goods of that kind. A 13
person buys goods in the ordinary course if the sale to the person comports 14
with the usual or customary practices in the kind of business in which the 15
seller is engaged or with the seller's own usual or customary practices. A 16
person that sells oil, gas, or other minerals at the wellhead or minehead is 17
a person in the business of selling goods of that kind. A buyer in ordinary 18
course of business may buy for cash, by exchange of other property, or on 19
secured or unsecured credit, and may acquire goods or documents of title 20
under a preexisting contract for sale. Only a buyer that takes possession of 21
the goods or has a right to recover the goods from the seller under Chapter 2 22
may be a buyer in ordinary course of business. “Buyer in ordinary course of 23
business” does not include a person that acquires goods in a transfer in bulk 24
or as security for or in total or partial satisfaction of a money debt. 25
(10) “Conspicuous”, with reference to a term, means so written, 26
displayed, or presented that, based on the totality of the circumstances, a 27
reasonable person against which it is to operate ought to have noticed it. 28
Whether a term is “conspicuous” or not is a decision for the court. 29
Conspicuous terms include the following: 30
(A) a heading in capitals equal to or greater in size than 31
the surrounding text, or in contrasting type, font, or color to the 32
surrounding text of the same or lesser size; and 33
(B) language in the body of a record or display in larger 34
type than the surrounding text, or in contrasting type, font, or color to the 35
surrounding text of the same size, or set off from surrounding text of the 36 HB1746
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same size by symbols or other marks that call attention to the language. 1
(11) “Consumer” means an individual who enters into a 2
transaction primarily for personal, family, or household purposes. 3
(12) “Contract”, as distinguished from “agreement”, means the 4
total legal obligation that results from the parties' agreement as determined 5
by this subtitle as supplemented by any other applicable laws. 6
(13) “Creditor” includes a general creditor, a secured creditor, 7
a lien creditor, and any representative of creditors, including an assignee 8
for the benefit of creditors, a trustee in bankruptcy, a receiver in equity, 9
and an executor or administrator of an insolvent debtor's or assignor's 10
estate. 11
(14) “Defendant” includes a person in the position of defendant 12
in a counterclaim, cross-claim, or third-party claim. 13
(15) “Delivery”, with respect to an electronic document of 14
title, means voluntary transfer of control and, with respect to an 15
instrument, a tangible document of title, or an authoritative tangible copy 16
of a record evidencing chattel paper, means voluntary transfer of possession. 17
(16) “Document of title” means a record (i) that in the regular 18
course of business or financing is treated as adequately evidencing that the 19
person in possession or control of the record is entitled to receive, 20
control, hold, and dispose of the record and the goods the record covers and 21
(ii) that purports to be issued by or addressed to a bailee and to cover 22
goods in the bailee's possession which are either identified or are fungible 23
portions of an identified mass. The term includes a bill of lading, transport 24
document, dock warrant, dock receipt, warehouse receipt, and order for 25
delivery of goods. An electronic document of title means a document of title 26
evidenced by a record consisting of information stored in an electronic 27
medium. A tangible document of title means a document of title evidenced by a 28
record consisting of information that is inscribed on a tangible medium. 29
(16A) "Electronic" means relating to technology having 30
electrical, digital, magnetic, wireless, optical, electromagnetic, or similar 31
capabilities. 32
(17) “Fault” means a default, breach, or wrongful act or 33
omission. 34
(18) “Fungible goods” means: 35
(A) goods of which any unit, by nature or usage of trade, 36 HB1746
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is the equivalent of any other like unit; or 1
(B) goods that by agreement are treated as equivalent. 2
(19) “Genuine” means free of forgery or counterfeiting. 3
(20) “Good faith,” except otherwise provided in Chapter 5, means 4
honesty in fact and the observance of reasonable commercial standards of fair 5
dealing. 6
(21) “Holder” means: 7
(A) the person in possession of a negotiable instrument 8
that is payable either to bearer or to an identified person that is the 9
person in possession; 10
(B) the person in possession of a negotiable tangible 11
document of title if the goods are deliverable either to bearer or to the 12
order of the person in possession; or 13
(C) the person in control, other than pursuant to § 4-7-14
106(g), of a negotiable electronic document of title. 15
(22) “Insolvency proceeding” includes an assignment for the 16
benefit of creditors or other proceeding intended to liquidate or 17
rehabilitate the estate of the person involved. 18
(23) “Insolvent” means: 19
(A) having generally ceased to pay debts in the ordinary 20
course of business other than as a result of bona fide dispute; 21
(B) being unable to pay debts as they become due; or 22
(C) being insolvent within the meaning of federal 23
bankruptcy law. 24
(24) “Money” means a medium of exchange that is currently 25
authorized or adopted by a domestic or foreign government. The term includes 26
a monetary unit of account established by an intergovernmental organization 27
or by agreement between two (2) or more countries. The term does not include 28
an electronic record that is a medium of exchange recorded and transferable 29
in a system that existed and operated for the medium of exchange before the 30
medium of exchange was authorized or adopted by the government. 31
(25) “Organization” means a person other than an individual. 32
(26) “Party”, as distinguished from a “third party”, means a 33
person that has engaged in a transaction or made an agreement subject to this 34
subtitle. 35
(27) “Person” means an individual, corporation, business trust, 36 HB1746
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estate, trust, partnership, limited liability company, association, joint 1
venture, government, governmental subdivision, agency, or instrumentality, 2
public corporation, or any other legal or commercial entity. The term 3
includes a protected series, however denominated, of an entity if the 4
protected series is established under law other than the Uniform Commercial 5
Code that limits, or limits if conditions specified under the law are 6
satisfied, the ability of a creditor of the entity or of any other protected 7
series of the entity to satisfy a claim from assets of the protected series. 8
(28) “Present value” means the amount as of a date certain of 9
one (1) or more sums payable in the future, discounted to the date certain by 10
use of either an interest rate specified by the parties if that rate is not 11
manifestly unreasonable at the time the transaction is entered into or, if an 12
interest rate is not so specified, a commercially reasonable rate that takes 13
into account the facts and circumstances at the time the transaction is 14
entered into. 15
(29) “Purchase” means taking by sale, lease, discount, 16
negotiation, mortgage, pledge, lien, security interest, issue or reissue, 17
gift, or any other voluntary transaction creating an interest in property. 18
(30) “Purchaser” means a person that takes by purchase. 19
(31) “Record” means information that is inscribed on a tangible 20
medium or that is stored in an electronic or other medium and is retrievable 21
in perceivable form. 22
(32) “Remedy” means any remedial right to which an aggrieved 23
party is entitled with or without resort to a tribunal. 24
(33) “Representative” means a person empowered to act for 25
another, including an agent, an officer of a corporation or association, and 26
a trustee, executor, or administrator of an estate. 27
(34) “Right” includes remedy. 28
(35) “Security interest” means an interest in personal property 29
or fixtures which secures payment or performance of an obligation. “Security 30
interest” includes any interest of a consignor and a buyer of accounts, 31
chattel paper, a payment intangible, or a promissory note in a transaction 32
that is subject to Chapter 9. “Security interest” does not include the 33
special property interest of a buyer of goods on identification of those 34
goods to a contract for sale under § 4-2-401, but a buyer may also acquire a 35
“security interest” by complying with Chapter 9. Except as otherwise provided 36 HB1746
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in § 4-2-505, the right of a seller or lessor of goods under Chapter 2 or 2A 1
to retain or acquire possession of the goods is not a “security interest”, 2
but a seller or lessor may also acquire a “security interest” by complying 3
with Chapter 9. The retention or reservation of title by a seller of goods 4
notwithstanding shipment or delivery to the buyer under § 4-2-401 is limited 5
in effect to a reservation of a “security interest.” Whether a transaction in 6
the form of a lease creates a “security interest” is determined pursuant to § 7
4-1-203. 8
(36) “Send”, in connection with a writing, record, or notice 9
notification, means: 10
(A) to deposit in the mail, or deliver for transmission, 11
or transmit by any other usual means of communication, with postage or cost 12
of transmission provided for, and properly addressed and, in the case of an 13
instrument, to an address specified thereon or otherwise agreed, or if there 14
be none addressed to any address reasonable under the circumstances; or 15
(B) in any other way to cause to be received any record or 16
notice within the time it would have arrived if properly sent to cause the 17
record or notification to be received within the time it would have been 18
received if properly sent under subparagraph (A). 19
(37) “Signed” includes using any symbol executed or adopted with 20
present intention to adopt or accept a writing "Sign" means, with present 21
intent to authenticate or adopt a record: 22
(A) execute or adopt a tangible symbol; or 23
(B) attach to or logically associate with the record an 24
electronic symbol, sound, or process. 25
"Signed", "signing", and "signature" have corresponding meanings. 26
(38) “State” means a state of the United States, the District of 27
Columbia, Puerto Rico, the United States Virgin Islands, or any territory or 28
insular possession subject to the jurisdiction of the United States. 29
(39) “Surety” includes a guarantor or other secondary obligor. 30
(40) “Term” means a portion of an agreement that relates to a 31
particular matter. 32
(41) “Unauthorized signature” means a signature made without 33
actual, implied, or apparent authority. The term includes a forgery. 34
(42) “Warehouse receipt” means a document of title issued by a 35
person engaged in the business of storing goods for hire. 36 HB1746
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(43) “Writing” includes printing, typewriting, or any other 1
intentional reduction to tangible form. “Written” has a corresponding 2
meaning. 3
4
SECTION 2. Arkansas Code § 4 -1-204 is amended to read as follows: 5
4-1-204. Value. 6
Except as otherwise provided in Chapters 3, 4, and 5, and 12, a person 7
gives value for rights if the person acquires them: 8
(1) in return for a binding commitment to extend credit or for 9
the extension of immediately available credit, whether or not drawn upon and 10
whether or not a charge-back is provided for in the event of difficulties in 11
collection; 12
(2) as security for, or in total or partial satisfaction of, a 13
preexisting claim; 14
(3) by accepting delivery under a preexisting contract for 15
purchase; or 16
(4) in return for any consideration sufficient to support a 17
simple contract. 18
19
SECTION 3. Arkansas Code § 4 -1-301 is amended to read as follows: 20
4-1-301. Territorial application of the subtitle — Parties' power to 21
choose applicable law. 22
(1) Except as provided in this section, when a transaction bears 23
a reasonable relation to this state and also to another state or nation, the 24
parties may agree that the law either of this state or of such other state or 25
nation shall govern their rights and duties. Failing such agreement this 26
subtitle applies to transactions bearing an appropriate relation to this 27
state. 28
(2) Where one of the following provisions of this subtitle 29
specifies the applicable law, that provision governs and a contrary agreement 30
is effective only to the extent permitted by the law (including the conflict 31
of laws rules) so specified: 32
Rights of creditors against sold goods. Section 4-2-402. 33
Applicability of the chapter on leases. Sections 4-2A-105 and 4-34
2A-106. 35
Applicability of the chapter on bank deposits and collections. 36 HB1746
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Section 4-4-102. 1
Governing law in the chapter on funds transfers. Section 4-4A-2
507. 3
Letters of Credit. Section 4-5-116. 4
Applicability of the chapter on Investment Securities. Section 4-5
8-110. 6
Law governing perfection, the effect of perfection or non-7
perfection, and the priority of security interests and agricultural liens. 8
Sections 4-9-301 through 4-9-307. 9
Governing law in the chapter on controllable electronic records. 10
Section 4-12-107. 11
12
SECTION 4. Arkansas Code § 4 -1-306 is amended to read as follows: 13
4-1-306. Waiver or renunciation of claim or right after breach. 14
A claim or right arising out of an alleged breach may be discharged in 15
whole or in part without consideration by agreement of the aggrieved party in 16
an authenticated a signed record. 17
18
SECTION 5. Arkansas Code § 4 -2-102 is amended to read as follows: 19
4-2-102. Scope — Certain security and other transactions excluded from 20
chapter. 21
(1) Unless the context otherwise requires, and except as provided in 22
subsection (3), this chapter applies to transactions in goods and, in the 23
case of a hybrid transaction, it applies to the extent provided in subsection 24
(2); it does not apply to any transaction which although in the form of an 25
unconditional contract to sell or present sale is intended to operate only as 26
a security transaction nor does this chapter impair or repeal any statute 27
regulating sales to consumers, farmers or other specified classes of buyers. 28
(2) In a hybrid transaction: 29
(a) If the sale-of-goods aspects do not predominate, only the 30
provisions of this chapter which relate primarily to the sale-of-goods 31
aspects of the transaction apply, and the provisions that relate primarily to 32
the transaction as a whole do not apply. 33
(b) If the sale-of-goods aspects predominate, this chapter 34
applies to the transaction but does not preclude application in appropriate 35
circumstances of other law to aspects of the transaction which do not relate 36 HB1746
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to the sale of goods. 1
(3) This chapter does not: 2
(a) apply to a transaction that, even though in the form of an 3
unconditional contract to sell or present sale, operates only to create a 4
security interest; or 5
(b) impair or repeal a statute regulating sales to consumers, 6
farmers, or other specified classes of buyers. 7
8
SECTION 6. Arkansas Code § 4 -2-106 is amended to read as follows: 9
4-2-106. Definitions — “Contract” — “Agreement” — “Contract for sale” 10
— “Sale” — “Present sale” — “Conforming” to contract — “Termination” — 11
“Cancellation” — "Hybrid Transaction" . 12
(1) In this chapter unless the context otherwise requires “contract” 13
and “agreement” are limited to those relating to the present or future sale 14
of goods. “Contract for sale” includes both a present sale of goods and a 15
contract to sell goods at a future time. A “sale” consists in the passing of 16
title from the seller to the buyer for a price (§ 4-2-401). A “present sale” 17
means a sale which is accomplished by the making of the contract. 18
(2) Goods or conduct including any part of a performance are 19
“conforming” or conform to the contract when they are in accordance with the 20
obligations under the contract. 21
(3) “Termination” occurs when either party pursuant to a power created 22
by agreement or law puts an end to the contract otherwise than for its 23
breach. On “termination” all obligations which are still executory on both 24
sides are discharged but any right based on prior breach or performance 25
survives. 26
(4) “Cancellation” occurs when either party puts an end to the 27
contract for breach by the other and its effect is the same as that of 28
“termination” except that the cancelling party also retains any remedy for 29
breach of the whole contract or any unperformed balance. 30
(5) “Hybrid transaction” means a single transaction involving a sale of 31
goods and: 32
(a) the provision of services; 33
(b) a lease of other goods; or 34
(c) a sale, lease, or license of property other than goods. 35
36 HB1746
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SECTION 7. Arkansas Code § 4 -2-201 is amended to read as follows: 1
4-2-201. Formal requirements — Statute of frauds. 2
(1) Except as otherwise provided in this section a contract for the 3
sale of goods for the price of five hundred dollars ($500) or more is not 4
enforceable by way of action or defense unless there is some writing a record 5
sufficient to indicate that a contract for sale has been made between the 6
parties and signed by the party against whom enforcement is sought or by his 7
the party's authorized agent or broker. A writing record is not insufficient 8
because it omits or incorrectly states a term agreed upon but the contract is 9
not enforceable under this paragraph subsection beyond the quantity of goods 10
shown in such writing the record. 11
(2) Between merchants if within a reasonable time a writing record in 12
confirmation of the contract and sufficient against the sender is received 13
and the party receiving it has reason to know its contents, it satisfies the 14
requirements of subsection (1) against such the party unless written notice 15
in a record of objection to its contents is given within ten (10) days after 16
it is received. 17
(3) A contract which does not satisfy the requirements of subsection 18
(1) but which is valid in other respects is enforceable: 19
(a) if the goods are to be specially manufactured for the buyer 20
and are not suitable for sale to others in the ordinary course of the 21
seller's business and the seller, before notice of repudiation is received 22
and under circumstances which reasonably indicate that the goods are for the 23
buyer, has made either a substantial beginning of their manufacture or 24
commitments for their procurement; or 25
(b) if the party against whom enforcement is sought admits in 26
his pleading, testimony or otherwise in court that a contract for sale was 27
made, but the contract is not enforceable under this provision beyond the 28
quantity of goods admitted; or 29
(c) with respect to goods for which payment has been made and 30
accepted or which have been received and accepted (§ 4-2-606). 31
32
SECTION 8. Arkansas Code § 4 -2-202 is amended to read as follows: 33
4-2-202. Final written expression — Parol or extrinsic evidence. 34
Terms with respect to which the confirmatory memoranda of the parties 35
agree or which are otherwise set forth in a writing record intended by the 36 HB1746
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parties as a final expression of their agreement with respect to such terms 1
as are included therein may not be contradicted by evidence of any prior 2
agreement or of a contemporaneous oral agreement but may be explained or 3
supplemented: 4
(a) by course of performance, course of dealing, or usage of 5
trade (§ 4-1-303); and 6
(b) by evidence of consistent additional terms unless the court 7
finds the writing record to have been intended also as a complete and 8
exclusive statement of the terms of the agreement. 9
10
SECTION 9. Arkansas Code § 4 -2-203 is amended to read as follows: 11
4-2-203. Seals inoperative. 12
The affixing of a seal to a writing record evidencing a contract for 13
sale or an offer to buy or sell goods does not constitute the writing record 14
a sealed instrument and the law with respect to sealed instruments does not 15
apply to such a contract or offer. 16
17
SECTION 10. Arkansas Code § 4-2-205 is amended to read as follows: 18
4-2-205. Firm offers. 19
An offer by a merchant to buy or sell goods in a signed writing record 20
which by its terms gives assurance that it will be held open is not 21
revocable, for lack of consideration, during the time stated or if no time is 22
stated for a reasonable time, but in no event may such period of 23
irrevocability exceed three (3) months; but any such term of assurance on a 24
form supplied by the offeree must be separately signed by the offeror. 25
26
SECTION 11. Arkansas Code § 4 -2-209(2), concerning the modification or 27
rescission of a signed writing under the Uniform Commercial Code, is amended 28
to read as follows: 29
(2) A signed agreement which excludes modification or rescission 30
except by a signed writing or other signed record cannot be otherwise 31
modified or rescinded, but except as between merchants such a requirement on 32
a form supplied by the merchant must be separately signed by the other party. 33
34
SECTION 12. Arkansas Code § 4 -2A-102 is amended to read as follows: 35
4-2A-102. Scope. 36 HB1746
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(1) This chapter applies to any transaction, regardless of form, that 1
creates a lease and, in the case of a hybrid lease, it applies to the extent 2
provided in subsection (2). 3
(2) In a hybrid lease: 4
(a) if the lease-of-goods aspects do not predominate: 5
(i) only the provisions of this chapter which relate 6
primarily to the lease -of-goods aspects of the transaction apply, and the 7
provisions that relate primarily to the transaction as a whole do not apply ; 8
(ii) Section 4-2A-209 applies if the lease is a finance 9
lease; and 10
(iii) Section 4-2A-407 applies to the promises of the 11
lessee in a finance lease to the extent the promises are consideration for 12
the right to possession and use of the leased goods; and 13
(b) if the lease-of-goods aspects predominate, this chapter 14
applies to the transaction , but does not preclude application in appropriate 15
circumstances of other law to aspects of the lease which do not relate to the 16
lease of goods. 17
18
SECTION 13. Arkansas Code § 4 -2A-103(1), concerning definitions used 19
in the Uniform Commercial Code, is amended to read as follows: 20
(1) In this chapter unless the context otherwise requires: 21
(a) “Buyer in ordinary course of business” means a person who in 22
good faith and without knowledge that the sale to him or her is in violation 23
of the ownership rights or security interest or leasehold interest of a third 24
party in the goods, buys in ordinary course from a person in the business of 25
selling goods of that kind but does not include a pawnbroker. “Buying” may be 26
for cash or by exchange of other property or on secured or unsecured credit 27
and includes acquiring goods or documents of title under a pre-existing 28
contract for sale but does not include a transfer in bulk or as security for 29
or in total or partial satisfaction of a money debt. 30
(b) “Cancellation” occurs when either party puts an end to the 31
lease contract for default by the other party. 32
(c) “Commercial unit” means such a unit of goods as by 33
commercial usage is a single whole for purposes of lease and division of 34
which materially impairs its character or value on the market or in use. A 35
commercial unit may be a single article, as a machine, or a set of articles, 36 HB1746
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as a suite of furniture or a line of machinery, or a quantity, as a gross or 1
carload, or any other unit treated in use or in the relevant market as a 2
single whole. 3
(d) “Conforming” goods or performance under a lease contract 4
means goods or performance that are in accordance with the obligations under 5
the lease contract. 6
(e) “Consumer lease” means a lease that a lessor regularly 7
engaged in the business of leasing or selling makes to a lessee who is an 8
individual and who takes under the lease primarily for a personal, family, or 9
household purpose, if the total payments to be made under the lease contract, 10
excluding payments for options to renew or buy, do not exceed twenty-five 11
thousand dollars ($25,000). 12
(f) “Fault” means wrongful act, omission, breach, or default. 13
(g) “Finance lease” means a lease with respect to which: 14
(i) the lessor does not select, manufacture, or supply the 15
goods; 16
(ii) the lessor acquires the goods or the right to 17
possession and use of the goods in connection with the lease; and 18
(iii) one of the following occurs: 19
(A) the lessee receives a copy of the contract by 20
which the lessor acquired the goods or the right to possession and use of the 21
goods before signing the lease contract; 22
(B) the lessee's approval of the contract by which 23
the lessor acquired the goods or the right to possession and use of the goods 24
is a condition to effectiveness of the lease contract; 25
(C) the lessee, before signing the lease contract, 26
receives an accurate and complete statement designating the promises and 27
warranties, and any disclaimers of warranties, limitations or modifications 28
of remedies, or liquidated damages, including those of a third party, such as 29
the manufacturer of the goods, provided to the lessor by the person supplying 30
the goods in connection with or as part of the contract by which the lessor 31
acquired the goods or the right to possession and use of the goods; or 32
(D) if the lease is not a consumer lease, the 33
lessor, before the lessee signs the lease contract, informs the lessee in 34
writing (a) of the identity of the person supplying the goods to the lessor, 35
unless the lessee has selected that person and directed the lessor to acquire 36 HB1746
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the goods or the right to possession and use of the goods from that person, 1
(b) that the lessee is entitled under this chapter to the promises and 2
warranties, including those of any third party, provided to the lessor by the 3
person supplying the goods in connection with or as part of the contract by 4
which the lessor acquired the goods or the right to possession and use of the 5
goods, and (c) that the lessee may communicate with the person supplying the 6
goods to the lessor and receive an accurate and complete statement of those 7
promises and warranties, including any disclaimers and limitations of them or 8
of remedies. 9
(h) “Goods” means all things that are movable at the time of 10
identification to the lease contract, or are fixtures (§ 4-2A-309), but the 11
term does not include money, documents, instruments, accounts, chattel paper, 12
general intangibles, or minerals or the like, including oil and gas, before 13
extraction. The term also includes the unborn young of animals. 14
(h.1) "Hybrid lease" means a single transaction involving a 15
lease of goods and: 16
(i) the provision of services; 17
(ii) a sale of other goods; or 18
(iii) a sale, lease, or license of property other than 19
goods. 20
(i) “Installment lease contract” means a lease contract that 21
authorizes or requires the delivery of goods in separate lots to be 22
separately accepted, even though the lease contract contains a clause “each 23
delivery is a separate lease” or its equivalent. 24
(j) “Lease” means a transfer of the right to possession and use 25
of goods for a term in return for consideration, but a sale, including a sale 26
on approval or a sale or return, or retention or creation of a security 27
interest is not a lease. Unless the context clearly indicates otherwise, the 28
term includes a sublease. 29
(k) “Lease agreement” means the bargain, with respect to the 30
lease, of the lessor and the lessee in fact as found in their language or by 31
implication from other circumstances including course of dealing or usage of 32
trade or course of performance as provided in this chapter. Unless the 33
context clearly indicates otherwise, the term includes a sublease agreement. 34
(l) “Lease contract” means the total legal obligation that 35
results from the lease agreement as affected by this chapter and any other 36 HB1746
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applicable rules of law. Unless the context clearly indicates otherwise, the 1
term includes a sublease contract. 2
(m) “Leasehold interest” means the interest of the lessor or the 3
lessee under a lease contract. 4
(n) “Lessee” means a person who acquires the right to possession 5
and use of goods under a lease. Unless the context clearly indicates 6
otherwise, the term includes a sublessee. 7
(o) “Lessee in ordinary course of business” means a person who 8
in good faith and without knowledge that the lease to him or her is in 9
violation of the ownership rights or security interest or leasehold interest 10
of a third party in the goods, leases in ordinary course from a person in the 11
business of selling or leasing goods of that kind but does not include a 12
pawnbroker. “Leasing” may be for cash or by exchange of other property or on 13
secured or unsecured credit and includes acquiring goods or documents of 14
title under a pre-existing lease contract but does not include a transfer in 15
bulk or as security for or in total or partial satisfaction of a money debt. 16
(p) “Lessor” means a person who transfers the right to 17
possession and use of goods under a lease. Unless the context clearly 18
indicates otherwise, the term includes a sublessor. 19
(q) “Lessor's residual interest” means the lessor's interest in 20
the goods after expiration, termination, or cancellation of the lease 21
contract. 22
(r) “Lien” means a charge against or interest in goods to secure 23
payment of a debt or performance of an obligation, but the term does not 24
include a security interest. 25
(s) “Lot” means a parcel or a single article that is the subject 26
matter of a separate lease or delivery, whether or not it is sufficient to 27
perform the lease contract. 28
(t) “Merchant lessee” means a lessee that is a merchant with 29
respect to goods of the kind subject to the lease. 30
(u) “Present value” means the amount as of a date certain of one 31
or more sums payable in the future, discounted to the date certain. The 32
discount is determined by the interest rate specified by the parties if the 33
rate was not manifestly unreasonable at the time the transaction was entered 34
into; otherwise, the discount is determined by a commercially reasonable rate 35
that takes into account the facts and circumstances of each case at the time 36 HB1746
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the transaction was entered into. 1
(v) “Purchase” includes taking by sale, lease, mortgage, 2
security interest, pledge, gift, or any other voluntary transaction creating 3
an interest in goods. 4
(w) “Sublease” means a lease of goods the right to possession 5
and use of which was acquired by the lessor as a lessee under an existing 6
lease. 7
(x) “Supplier” means a person from whom a lessor buys or leases 8
goods to be leased under a finance lease. 9
(y) “Supply contract” means a contract under which a lessor buys 10
or leases goods to be leased. 11
(z) “Termination” occurs when either party pursuant to a power 12
created by agreement or law puts an end to the lease contract otherwise than 13
for default. 14
15
SECTION 14. Arkansas Code § 4 -2A-107 is amended to read as follows: 16
4-2A-107. Waiver or renunciation of claim or right after default. 17
Any claim or right arising out of an alleged default or breach of 18
warranty may be discharged in whole or in part without consideration by a 19
written waiver or renunciation in a signed and record delivered by the 20
aggrieved party. 21
22
SECTION 15. Arkansas Code § 4 -2A-201 is amended to read as follows: 23
4-2A-201. Statute of frauds. 24
(1) A lease contract is not enforceable by way of action or defense 25
unless: 26
(a) the total payments to be made under the lease contract, 27
excluding payments for options to renew or buy, are less than one thousand 28
dollars ($1,000); or 29
(b) there is a writing record, signed by the party against whom 30
enforcement is sought or by that party's authorized agent, sufficient to 31
indicate that a lease contract has been made between the parties and to 32
describe the goods leased and the lease term. 33
(2) Any description of leased goods or of the lease term is sufficient 34
and satisfies subsection (1)(b), whether or not it is specific, if it 35
reasonably identifies what is described. 36 HB1746
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(3) A writing record is not insufficient because it omits or 1
incorrectly states a term agreed upon, but the lease contract is not 2
enforceable under subsection (1)(b) beyond the lease term and the quantity of 3
goods shown in the writing record. 4
(4) A lease contract that does not satisfy the requirements of 5
subsection (1), but which is valid in other respects, is enforceable: 6
(a) if the goods are to be specially manufactured or obtained 7
for the lessee and are not suitable for lease or sale to others in the 8
ordinary course of the lessor's business, and the lessor, before notice of 9
repudiation is received and under circumstances that reasonably indicate that 10
the goods are for the lessee, has made either a substantial beginning of 11
their manufacture or commitments for their procurement; 12
(b) if the party against whom enforcement is sought admits in 13
that party's pleading, testimony or otherwise in court that a lease contract 14
was made, but the lease contract is not enforceable under this provision 15
beyond the quantity of goods admitted; or 16
(c) with respect to goods that have been received and accepted 17
by the lessee. 18
(5) The lease term under a lease contract referred to in subsection 19
(4) is: 20
(a) if there is a writing record signed by the party against 21
whom enforcement is sought or by that party's authorized agent specifying the 22
lease term, the term so specified; 23
(b) if the party against whom enforcement is sought admits in 24
that party's pleading, testimony, or otherwise in court a lease term, the 25
term so admitted; or 26
(c) a reasonable lease term. 27
28
SECTION 16. Arkansas Code § 4 -2A-202 is amended to read as follows: 29
4-2A-202. Final written expression — Parol or extrinsic evidence. 30
Terms with respect to which the confirmatory memoranda of the parties 31
agree or which are otherwise set forth in a writing record intended by the 32
parties as a final expression of their agreement with respect to such terms 33
as are included therein may not be contradicted by evidence of any prior 34
agreement or of a contemporaneous oral agreement but may be explained or 35
supplemented: 36 HB1746
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(a) by course of dealing or usage of trade or by course of 1
performance; and 2
(b) by evidence of consistent additional terms unless the court 3
finds the writing record to have been intended also as a complete and 4
exclusive statement of the terms of the agreement. 5
6
SECTION 17. Arkansas Code § 4 -2A-203 is amended to read as follows: 7
4-2A-203. Seals inoperative. 8
The affixing of a seal to a writing record evidencing a lease contract 9
or an offer to enter into a lease contract does not render the writing record 10
a sealed instrument and the law with respect to sealed instruments does not 11
apply to the lease contract or offer. 12
13
SECTION 18. Arkansas Code § 4 -2A-205 is amended to read as follows: 14
4-2A-205. Firm offers. 15
An offer by a merchant to lease goods to or from another person in a 16
signed writing record that by its terms gives assurance it will be held open 17
is not revocable, for lack of consideration, during the time stated or, if no 18
time is stated, for a reasonable time, but in no event may the period of 19
irrevocability exceed three (3) months. Any such term of assurance on a form 20
supplied by the offeree must be separately signed by the offeror. 21
22
SECTION 19. Arkansas Code § 4 -2A-208(2), concerning the modification 23
or rescission of a signed writing under the Uniform Commercial Code, is 24
amended to read as follows: 25
(2) A signed lease agreement that excludes modification or rescission 26
except by a signed writing record may not be otherwise modified or rescinded, 27
but, except as between merchants, such a requirement on a form supplied by a 28
merchant must be separately signed by the other party. 29
30
SECTION 20. Arkansas Code § 4 -3-104(a), concerning the definition of 31
"negotiable instrument" used in the Uniform Commercial Code, is amended to 32
read as follows: 33
(a) Except as provided in subsections (c) and (d), “negotiable 34
instrument” means an unconditional promise or order to pay a fixed amount of 35
money, with or without interest or other charges described in the promise or 36 HB1746
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order, if it: 1
(1) is payable to bearer or to order at the time it is issued or 2
first comes into possession of a holder; 3
(2) is payable on demand or at a definite time; and 4
(3) does not state any other undertaking or instruction by the 5
person promising or ordering payment to do any act in addition to the payment 6
of money, but the promise or order may contain (i) an undertaking or power to 7
give, maintain, or protect collateral to secure payment, (ii) an 8
authorization or power to the holder to confess judgment or realize on or 9
dispose of collateral, or (iii) a waiver of the benefit of any law intended 10
for the advantage or protection of an obligor, (iv) a term that specifies the 11
law that governs the promise or order, or (v) an undertaking to resolve in a 12
specified forum a dispute concerning the promise or order. 13
14
SECTION 21. Arkansas Code § 4 -3-105(a), concerning the definition of 15
"issue" used in the Uniform Commercial Code, is amended to read as follows: 16
(a) “Issue” means: 17
(1) the first delivery of an instrument by the maker or drawer, 18
whether to a holder or nonholder, for the purpose of giving rights on the 19
instrument to any person; or 20
(2) if agreed by the payee, the first transmission by the drawer 21
to the payee of an image of an item and information derived from the item 22
that enables the depositary bank to collect the item by transferring or 23
presenting under federal law an electronic check. 24
25
SECTION 22. Arkansas Code § 4 -3-401 is amended to read as follows: 26
4-3-401. Signature necessary for liability on instrument . 27
(a) A person is not liable on an instrument unless (i) the person 28
signed the instrument, or (ii) the person is represented by an agent or 29
representative who signed the instrument and the signature is binding on the 30
represented person under § 4-3-402. 31
(b) A signature may be made (i) manually or by means of a device or 32
machine, and (ii) by the use of any name, including a trade or assumed name, 33
or by a word, mark, or symbol executed or adopted by a person with present 34
intention to authenticate a writing. 35
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SECTION 23. Arkansas Code § 4 -3-604 is amended to read as follows: 1
4-3-604. Discharge by cancellation or renunciation. 2
(a) A person entitled to enforce an instrument, with or without 3
consideration, may discharge the obligation of a party to pay the instrument 4
(i) by an intentional voluntary act, such as surrender of the instrument to 5
the party, destruction, mutilation, or cancellation of the instrument, 6
cancellation or striking out of the party's signature, or the addition of 7
words to the instrument indicating discharge, or (ii) by agreeing not to sue 8
or otherwise renouncing rights against the party by a signed record. The 9
obligation of a party to pay a check is not discharged solely by destruction 10
of the check in connection with a process in which information is extracted 11
from the check and an image of the check is made and, subsequently, the 12
information and image are transmitted for payment. 13
(b) Cancellation or striking out of an indorsement pursuant to 14
subsection (a) does not affect the status and rights of a party derived from 15
the indorsement. 16
(c) In this section, “signed,” with respect to a record that is not a 17
writing, includes the attachment to or logical association with the record of 18
an electronic symbol, sound, or process with the present intent to adopt or 19
accept the record. 20
21
SECTION 24. Arkansas Code § 4 -4A-103(a)(1), concerning the definition 22
of "payment order" used in the Uniform Commercial Code, is amended to read as 23
follows: 24
(1) “Payment order” means an instruction of a sender to a 25
receiving bank, transmitted orally, electronically, or in writing or in a 26
record, to pay, or to cause another bank to pay, a fixed or determinable 27
amount of money to a beneficiary if: 28
(i) the instruction does not state a condition to payment 29
to the beneficiary other than time of payment, 30
(ii) the receiving bank is to be reimbursed by debiting an 31
account of, or otherwise receiving payment from, the sender, and 32
(iii) the instruction is transmitted by the sender 33
directly to the receiving bank or to an agent, funds-transfer system, or 34
communication system for transmittal to the receiving bank. 35
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SECTION 25. Arkansas Code § 4 -4A-201 is amended to read as follows: 1
4-4A-201. Security procedure. 2
“Security procedure” means a procedure established by agreement of a 3
customer and a receiving bank for the purpose of (i) verifying that a payment 4
order or communication amending or cancelling a payment order is that of the 5
customer, or (ii) detecting error in the transmission or the content of the 6
payment order or communication. A security procedure may impose an obligation 7
on the receiving bank or the customer and may require the use of algorithms 8
or other codes, identifying words, or numbers, symbols, sounds, biometrics, 9
encryption, callback procedures, or similar security devices. Comparison of a 10
signature on a payment order or communication with an authorized specimen 11
signature of the customer or requiring a payment order to be sent from a 12
known email address, IP address, or telephone number is not by itself a 13
security procedure. 14
15
SECTION 26. Arkansas Code § 4 -4A-202(b), concerning the verification 16
and authenticity of payment orders under the Uniform Commercial Code, is 17
amended to read as follows: 18
(b) If a bank and its customer have agreed that the authenticity of 19
payment orders issued to the bank in the name of the customer as sender will 20
be verified pursuant to a security procedure, a payment order received by the 21
receiving bank is effective as the order of the customer, whether or not 22
authorized, if (i) the security procedure is a commercially reasonable method 23
of providing security against unauthorized payment orders, and (ii) the bank 24
proves that it accepted the payment order in good faith and in compliance 25
with the bank's obligations under the security procedure and any written 26
agreement or instruction of the customer, evidenced by a record, restricting 27
acceptance of payment orders issued in the name of the customer. The bank is 28
not required to follow an instruction that violates a written an agreement 29
with the customer, evidenced by a record, or notice of which is not received 30
at a time and in a manner affording the bank a reasonable opportunity to act 31
on it before the payment order is accepted. 32
33
SECTION 27. Arkansas Code § 4 -4A-202(c), concerning the commercial 34
reasonableness of the security procedure used to verify the authenticity of a 35
payment order under the Uniform Commercial Code, is amended to read as 36 HB1746
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follows: 1
(c) Commercial reasonableness of a security procedure is a question of 2
law to be determined by considering the wishes of the customer expressed to 3
the bank, the circumstances of the customer known to the bank, including the 4
size, type, and frequency of payment orders normally issued by the customer 5
to the bank, alternative security procedures offered to the customer, and 6
security procedures in general use by customers and receiving banks similarly 7
situated. A security procedure is deemed to be commercially reasonable if (i) 8
the security procedure was chosen by the customer after the bank offered, and 9
the customer refused, a security procedure that was commercially reasonable 10
for that customer, and (ii) the customer expressly agreed in writing a record 11
to be bound by any payment order, whether or not authorized, issued in its 12
name and accepted by the bank in compliance with the bank's obligations under 13
the security procedure chosen by the customer. 14
15
SECTION 28. Arkansas Code § 4 -4A-203(a)(1), concerning the 16
unenforceability of certain payment orders under the Uniform Commercial Code, 17
is amended to read as follows: 18
(1) By express written agreement evidenced by a record, the 19
receiving bank may limit the extent to which it is entitled to enforce or 20
retain payment of the payment order. 21
22
SECTION 29. Arkansas Code § 4 -4A-207(c)(2), concerning the rules 23
applicable for misdescription of a beneficiary of a payment order under the 24
Uniform Commercial Code, is amended to read as follows: 25
(2) If the originator is not a bank and proves that the person 26
identified by number was not entitled to receive payment from the originator, 27
the originator is not obliged to pay its order unless the originator's bank 28
proves that the originator, before acceptance of the originator's order, had 29
notice that payment of a payment order issued by the originator might be made 30
by the beneficiary's bank on the basis of an identifying or bank account 31
number even if it identifies a person different from the named beneficiary. 32
Proof of notice may be made by any admissible evidence. The originator's bank 33
satisfies the burden of proof if it proves that the originator, before the 34
payment order was accepted, signed a writing record stating the information 35
to which the notice relates. 36 HB1746
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1
SECTION 30. Arkansas Code § 4 -4A-208(b)(2), concerning the 2
misdescription of an intermediary bank or beneficiary's bank in a payment 3
order under the Uniform Commercial Code, is amended to read as follows: 4
(2) If the sender is not a bank and the receiving bank proves 5
that the sender, before the payment order was accepted, had notice that the 6
receiving bank might rely on the number as the proper identification of the 7
intermediary or beneficiary's bank even if it identifies a person different 8
from the bank identified by name, the rights and obligations of the sender 9
and the receiving bank are governed by subsection (b)(1), as though the 10
sender were a bank. Proof of notice may be made by any admissible evidence. 11
The receiving bank satisfies the burden of proof if it proves that the 12
sender, before the payment order was accepted, signed a writing record 13
stating the information to which the notice relates. 14
15
SECTION 31. Arkansas Code § 4 -4A-210(a), concerning the rejection of a 16
payment order under the Uniform Commercial Code, is amended to read as 17
follows: 18
(a) A payment order is rejected by the receiving bank by a notice of 19
rejection transmitted to the sender orally, electronically, or in writing a 20
record. A notice of rejection need not use any particular words and is 21
sufficient if it indicates that the receiving bank is rejecting the order or 22
will not execute or pay the order. Rejection is effective when the notice is 23
given if transmission is by a means that is reasonable in the circumstances. 24
If notice of rejection is given by a means that is not reasonable, rejection 25
is effective when the notice is received. If an agreement of the sender and 26
receiving bank establishes the means to be used to reject a payment order, 27
(i) any means complying with the agreement is reasonable and (ii) any means 28
not complying is not reasonable unless no significant delay in receipt of the 29
notice resulted from the use of the noncomplying means. 30
31
SECTION 32. Arkansas Code § 4 -4A-211(a), concerning the cancellation 32
and amendment of a payment order under the Uniform Commercial Code, is 33
amended to read as follows: 34
(a) A communication of the sender of a payment order cancelling or 35
amending the order may be transmitted to the receiving bank orally, 36 HB1746
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electronically, or in writing a record. If a security procedure is in effect 1
between the sender and the receiving bank, the communication is not effective 2
to cancel or amend the order unless the communication is verified pursuant to 3
the security procedure or the bank agrees to the cancellation or amendment. 4
5
SECTION 33. Arkansas Code § 4 -4A-305(c) and (d), concerning the 6
liability of consequential damages for late or improper execution or failure 7
to execute a payment order under the Uniform Commercial Code, are amended to 8
read as follows: 9
(c) In addition to the amounts payable under subsections (a) and (b), 10
damages, including consequential damages, are recoverable to the extent 11
provided in an express written agreement of the receiving bank, evidenced by 12
a record. 13
(d) If a receiving bank fails to execute a payment order it was 14
obliged by express agreement to execute, the receiving bank is liable to the 15
sender for its expenses in the transaction and for incidental expenses and 16
interest losses resulting from the failure to execute. Additional damages, 17
including consequential damages, are recoverable to the extent provided in an 18
express written agreement of the receiving bank, evidenced by a record, but 19
are not otherwise recoverable. 20
21
SECTION 34. Arkansas Code § 4-5-104 is amended to read as follows: 22
4-5-104. Formal requirements. 23
A letter of credit, confirmation, advice, transfer, amendment, or 24
cancellation may be issued in any form that is a signed record and is 25
authenticated (i) by a signature or (ii) in accordance with the agreement of 26
the parties or the standard practice referred to in § 4-5-108(e). 27
28
SECTION 35. Arkansas Code § 4 -5-116 is amended to read as follows: 29
4-5-116. Choice of law and forum. 30
(a) The liability of an issuer, nominated person, or adviser for 31
action or omission is governed by the law of the jurisdiction chosen by an 32
agreement in the form of a record signed or otherwise authenticated by the 33
affected parties in the manner provided in § 4-5-104 or by a provision in the 34
person's letter of credit, confirmation, or other undertaking. The 35
jurisdiction whose law is chosen need not bear any relation to the 36 HB1746
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transaction. 1
(b) Unless subsection (a) of this section applies, the liability of an 2
issuer, nominated person, or adviser for action or omission is governed by 3
the law of the jurisdiction in which the person is located. The person is 4
considered to be located at the address indicated in the person's 5
undertaking. If more than one (1) address is indicated, the person is 6
considered to be located at the address from which the person's undertaking 7
was issued. 8
(c) For the purpose of jurisdiction, choice of law, and recognition of 9
interbranch letters of credit, but not enforcement of a judgment, all 10
branches of a bank are considered separate juridical entities and a bank is 11
considered to be located at the place where its relevant branch is considered 12
to be located under this subsection (d). 13
(d) A branch of a bank is considered to be located at the address 14
indicated in the branch's undertaking. If more than one address is indicated, 15
the branch is considered to be located at the address from which the 16
undertaking was issued. 17
(c)(e) Except as otherwise provided in this subsection, the liability 18
of an issuer, nominated person, or adviser is governed by any rules of custom 19
or practice, such as the Uniform Customs and Practice for Documentary 20
Credits, to which the letter of credit, confirmation, or other undertaking is 21
expressly made subject. If (i) this chapter would govern the liability of an 22
issuer, nominated person, or adviser under subsection (a) or (b) of this 23
section, (ii) the relevant undertaking incorporates rules of custom or 24
practice, and (iii) there is conflict between this chapter and those rules as 25
applied to that undertaking, those rules govern except to the extent of any 26
conflict with the nonvariable provisions specified in § 4-5-103(c). 27
(d)(f) If there is conflict between this chapter and Chapter 3, 4, 4A, 28
or 9, this chapter governs. 29
(e)(g) The forum for settling disputes arising out of an undertaking 30
within this chapter may be chosen in the manner and with the binding effect 31
that governing law may be chosen in accordance with subsection (a) of this 32
section. 33
34
SECTION 36. Arkansas Code § 4 -7-102(a)(12), concerning the definition 35
of "sign" in the Uniform Commercial Code, is amended to read as follows: 36 HB1746
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(12) “Sign” means, with present intent to authenticate or adopt 1
a record: 2
(A) to execute or adopt a tangible symbol; or 3
(B) to attach to or logically associate with the record an 4
electronic sound, symbol, or process. [Reserved.] 5
6
SECTION 37. Arkansas Code § 4 -7-106 is amended to read as follows: 7
4-7-106. Control of electronic document of title. 8
(a) A person has control of an electronic document of title if a 9
system employed for evidencing the transfer of interests in the electronic 10
document reliably establishes that person as the person to which the 11
electronic document was issued or transferred. 12
(b) A system satisfies subsection (a), and a person is deemed to have 13
has control of an electronic document of title, if the document is created, 14
stored, and assigned transferred in such a manner that: 15
(1) a single authoritative copy of the document exists which is 16
unique, identifiable, and, except as otherwise provided in paragraphs (4), 17
(5), and (6), unalterable; 18
(2) the authoritative copy identifies the person asserting 19
control as: 20
(A) the person to which the document was issued; or 21
(B) if the authoritative copy indicates that the document 22
has been transferred, the person to which the document was most recently 23
transferred; 24
(3) the authoritative copy is communicated to and maintained by 25
the person asserting control or its designated custodian; 26
(4) copies or amendments that add or change an identified 27
assignee transferee of the authoritative copy can be made only with the 28
consent of the person asserting control; 29
(5) each copy of the authoritative copy and any copy of a copy 30
is readily identifiable as a copy that is not the authoritative copy; and 31
(6) any amendment of the authoritative copy is readily 32
identifiable as authorized or unauthorized. 33
(c) A system satisfies subsection (a), and a person has control of an 34
electronic document of title, if an authoritative electronic copy of the 35
document, a record attached to or logically associated with the electronic 36 HB1746
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copy, or a system in which the electronic copy is recorded: 1
(1) enables the person readily to identify each electronic copy 2
as either an authoritative copy or a nonauthoritative copy; 3
(2) enables the person readily to identify itself in any way, 4
including by name, identifying number, cryptographic key, office, or account 5
number, as the person to which each authoritative electronic copy was issued 6
or transferred; and 7
(3) gives the person exclusive power, subject to subsection (d), 8
to: 9
(A) prevent others from adding or changing the person to 10
which each authoritative electronic copy has been issued or transferred; and 11
(B) transfer control of each authoritative electronic 12
copy. 13
(d) Subject to subsection (e), a power is exclusive under subsection 14
(c)(3)(A) and (B) even if: 15
(1) the authoritative electronic copy, a record attached to or 16
logically associated with the authoritative electronic copy, or a system in 17
which the authoritative electronic copy is recorded limits the use of the 18
document of title or has a protocol that is programmed to cause a change, 19
including a transfer or loss of control; or 20
(2) the power is shared with another person. 21
(e) A power of a person is not shared with another person under 22
subsection (d)(2) and the person’s power is not exclusive if: 23
(1) the person can exercise the power only if the power also is 24
exercised by the other person; and 25
(2) the other person: 26
(A) can exercise the power without exercise of the power 27
by the person; or 28
(B) is the transferor to the person of an interest in the 29
document of title. 30
(f) If a person has the powers specified in subsection (c)(3)(A) and 31
(B), the powers are presumed to be exclusive. 32
(g) A person has control of an electronic document of title if another 33
person, other than the transferor to the person of an interest in the 34
document: 35
(1) has control of the document and acknowledges that it has 36 HB1746
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control on behalf of the person; or 1
(2) obtains control of the document after having acknowledged 2
that it will obtain control of the document on behalf of the person. 3
(h) A person that has control under this section is not required to 4
acknowledge that it has control on behalf of another person. 5
(i) If a person acknowledges that it has or will obtain control on 6
behalf of another person, unless the person otherwise agrees or law other 7
than this chapter or Chapter 9 otherwise provides, the person does not owe 8
any duty to the other person and is not required to confirm the 9
acknowledgment to any other person. 10
11
SECTION 38. Arkansas Code § 4 -8-102(a)(6), concerning the definition 12
of "communicate" in the Uniform Commercial Code, is amended to read as 13
follows: 14
(6) “Communicate” means to: 15
(i) send a signed writing record; or 16
(ii) transmit information by any mechanism agreed upon by 17
the persons transmitting and receiving the information. 18
19
SECTION 39. Arkansas Code § 4 -8-102(b), concerning definitions used in 20
the Uniform Commercial Code, is amended to read as follows: 21
(b) Other The following definitions applying to in this chapter and 22
the sections in which they appear are other chapters apply to this chapter: 23
Appropriate person § 4-8-107 24
Control § 4-8-106 25
Controllable account § 4-9-102 26
Controllable electronic record § 4-12-102 27
Controllable payment intangible § 4-9-102 28
Delivery § 4-8-301 29
Investment company security § 4-8-103 30
Issuer § 4-8-201 31
Overissue § 4-8-210 32
Protected purchaser § 4-8-303 33
Securities account § 4-8-501 34
35
SECTION 40. Arkansas Code § 4 -8-103, concerning the rules for 36 HB1746
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determining whether certain obligations and interests are securities or 1
financial assets in the Uniform Commercial Code, is amended to add an 2
additional subsection to read as follows: 3
(h) A controllable account, controllable electronic record, or 4
controllable payment intangible is not a financial asset unless § 4-8-5
102(a)(9)(iii) applies. 6
7
SECTION 41. Arkansas Code § 4 -8-106(d), concerning control of a 8
security entitlement by a purchaser under the Uniform Commercial Code, is 9
amended to read as follows: 10
(d) A purchaser has “control” of a security entitlement if: 11
(1) the purchaser becomes the entitlement holder; 12
(2) the securities intermediary has agreed that it will comply 13
with entitlement orders originated by the purchaser without further consent 14
by the entitlement holder; or 15
(3) another person, has control of the security entitlement on 16
behalf of the purchaser or, having previously acquired control of the 17
security entitlement, acknowledges that it has control on behalf of the 18
purchaser other than the transferor to the purchaser of an interest in the 19
security entitlement: 20
(A) has control of the security entitlement and 21
acknowledges that it has control on behalf of the purchaser; or 22
(B) obtains control of the security entitlement after 23
having acknowledged that it will obtain control of the security entitlement 24
on behalf of the purchaser. 25
26
SECTION 42. Arkansas Code § 4 -8-106, concerning control under the 27
Uniform Commercial Code, is amended to add additional subsections to read as 28
follows: 29
(h) A person that has control under this section is not required to 30
acknowledge that it has control on behalf of a purchaser. 31
(i) If a person acknowledges that it has or will obtain control on 32
behalf of a purchaser, unless the person otherwise agrees or law other than 33
this chapter or Chapter 9 otherwise provides, the person does not owe any 34
duty to the purchaser and is not required to confirm the acknowledgment to 35
any other person. 36 HB1746
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1
SECTION 43. Arkansas Code § 4 -8-110, concerning the applicability of 2
the Uniform Commercial Code and choice of law under the Uniform Commercial 3
Code, is amended to add an additional subsection to read as follows: 4
(g) The local law of the issuer’s jurisdiction or the securities 5
intermediary’s jurisdiction governs a matter or transaction specified in 6
subsection (a) or (b) even if the matter or transaction does not bear any 7
relation to the jurisdiction. 8
9
SECTION 44. Arkansas Code § 4 -8-303(b), concerning a protected 10
purchaser under the Uniform Commercial Code, is amended to read as follows: 11
(b) In addition to acquiring the rights of a purchaser, a A protected 12
purchaser also acquires its interest in the security free of any adverse 13
claim. 14
15
SECTION 45. Arkansas Code § 4 -9-102 is amended to read as follows: 16
4-9-102. Definitions and index of definitions. 17
(a) In this chapter: 18
(1) “Accession” means goods that are physically united with 19
other goods in such a manner that the identity of the original goods is not 20
lost. 21
(2) “Account”, except as used in “account for”, "account 22
statement", "account to", "commodity account" in paragraph (14), "customer's 23
account", "deposit account" in paragraph (29), "on account of", and 24
"statement of account", means a right to payment of a monetary obligation, 25
whether or not earned by performance, (i) for property that has been or is to 26
be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for 27
services rendered or to be rendered, (iii) for a policy of insurance issued 28
or to be issued, (iv) for a secondary obligation incurred or to be incurred, 29
(v) for energy provided or to be provided, (vi) for the use or hire of a 30
vessel under a charter or other contract, (vii) arising out of the use of a 31
credit or charge card or information contained on or for use with the card, 32
or (viii) as winnings in a lottery or other game of chance operated or 33
sponsored by a state, governmental unit of a state, or person licensed or 34
authorized to operate the game by a state or governmental unit of a state. 35
The term includes controllable accounts and health-care-insurance 36 HB1746
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receivables. The term does not include (i) rights to payment evidenced by 1
chattel paper or an instrument chattel paper, (ii) commercial tort claims, 2
(iii) deposit accounts, (iv) investment property, (v) letter-of-credit rights 3
or letters of credit, or (vi) rights to payment for money or funds advanced 4
or sold, other than rights arising out of the use of a credit or charge card 5
or information contained on or for use with the card, or (vii) rights to 6
payment evidenced by an instrument. 7
(3) “Account debtor” means a person obligated on an account, 8
chattel paper, or general intangible. The term does not include persons 9
obligated to pay a negotiable instrument, even if the negotiable instrument 10
constitutes part of evidences chattel paper. 11
(4) “Accounting”, except as used in “accounting for”, means a 12
record: 13
(A) authenticated signed by a secured party; 14
(B) indicating the aggregate unpaid secured obligations as 15
of a date not more than thirty-five (35) days earlier or thirty-five (35) 16
days later than the date of the record; and 17
(C) identifying the components of the obligations in 18
reasonable detail. 19
(5) “Agricultural lien” means an interest, other than a security 20
interest or a landlord's lien under § 18-41-101 or § 18-41-103, in farm 21
products: 22
(A) which secures payment or performance of an obligation 23
for: 24
(i) goods or services furnished in connection with a 25
debtor's farming operation; or 26
(ii) rent on real property leased by a debtor in 27
connection with its farming operation; 28
(B) which is created by statute in favor of a person that: 29
(i) in the ordinary course of its business furnished 30
goods or services to a debtor in connection with a debtor's farming 31
operation; or 32
(ii) leased real property to a debtor in connection 33
with the debtor's farming operation; and 34
(C) whose effectiveness does not depend on the person's 35
possession of the personal property. 36 HB1746
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(6) “As-extracted collateral” means: 1
(A) oil, gas, or other minerals that are subject to a 2
security interest that: 3
(i) is created by a debtor having an interest in the 4
minerals before extraction; and 5
(ii) attaches to the minerals as extracted; or 6
(B) accounts arising out of the sale at the wellhead or 7
minehead of oil, gas, or other minerals in which the debtor had an interest 8
before extraction. 9
(7) “Authenticate” means: 10
(A) to sign; or 11
(B) with present intent to adopt or accept a record, to 12
attach to or logically associate with the record an electronic sound, symbol, 13
or process. [Reserved.] 14
(7A) “Assignee”, except as used in “assignee for benefit of 15
creditors”, means a person (i) in whose favor a security interest that 16
secures an obligation is created or provided for under a security agreement, 17
whether or not the obligation is outstanding or (ii) to which an account, 18
chattel paper, payment intangible, or promissory note has been sold. The term 19
includes a person to which a security interest has been transferred by a 20
secured party. 21
(7B) “Assignor” means a person that (i) under a security 22
agreement creates or provides for a security interest that secures an 23
obligation or (ii) sells an account, chattel paper, payment intangible, or 24
promissory note. The term includes a secured party that has transferred a 25
security interest to another person. 26
(8) “Bank” means an organization that is engaged in the business 27
of banking. The term includes savings banks, savings and loan associations, 28
credit unions, and trust companies. 29
(9) “Cash proceeds” means proceeds that are money, checks, 30
deposit accounts, or the like. 31
(10) “Certificate of title” means a certificate of title with 32
respect to which a statute provides for the security interest in question to 33
be indicated on the certificate as a condition or result of the security 34
interest's obtaining priority over the rights of a lien creditor with respect 35
to the collateral. The term includes another record maintained as an 36 HB1746
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alternative to a certificate of title by the governmental unit that issues 1
certificates of title if a statute permits the security interest in question 2
to be indicated on the record as a condition or result of the security 3
interest's obtaining priority over the rights of a lien creditor with respect 4
to the collateral. 5
(11) “Chattel paper” means: 6
(A) a record or records that evidence both a monetary 7
obligation and a security interest in specific goods, a security interest in 8
specific goods and software used in the goods, a security interest in 9
specific goods and license of software used in the goods, a lease of specific 10
goods, or a lease of specific goods and license of software used in the 11
goods. In this paragraph, “monetary obligation” means a monetary obligation 12
secured by the goods or owed under a lease of the goods and includes a 13
monetary obligation with respect to software used in the goods. The term does 14
not include (i) charters or other contracts involving the use or hire of a 15
vessel or (ii) records that evidence a right to payment arising out of the 16
use of a credit or charge card or information contained on or for use with 17
the card. If a transaction is evidenced by records that include an instrument 18
or series of instruments, the group of records taken together constitutes 19
chattel paper right to payment of a monetary obligation secured by specific 20
goods, if the right to payment and security agreement are evidenced by a 21
record; or 22
(B) a right to payment of a monetary obligation owed by a 23
lessee under a lease agreement with respect to specific goods and a monetary 24
obligation owed by the lessee in connection with the transaction giving rise 25
to the lease, if: 26
(i) the right to payment and lease agreement are 27
evidenced by a record; and 28
(ii) the predominant purpose of the transaction 29
giving rise to the lease was to give the lessee the right to possession and 30
use of the goods. 31
The term does not include a right to payment arising out of a charter or 32
other contract involving the use or hire of a vessel or a right to payment 33
arising out of the use of a credit or charge card or information contained on 34
or for use with the card . 35
(12) “Collateral” means the property subject to a security 36 HB1746
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interest or agricultural lien. The term includes: 1
(A) proceeds to which a security interest attaches; 2
(B) accounts, chattel paper, payment intangibles, and 3
promissory notes that have been sold; and 4
(C) goods that are the subject of a consignment. 5
(13) “Commercial tort claim” means a claim arising in tort with 6
respect to which: 7
(A) the claimant is an organization; or 8
(B) the claimant is an individual and the claim: 9
(i) arose in the course of the claimant's business 10
or profession; and 11
(ii) does not include damages arising out of 12
personal injury to or the death of an individual. 13
(14) “Commodity account” means an account maintained by a 14
commodity intermediary in which a commodity contract is carried for a 15
commodity customer. 16
(15) “Commodity contract” means a commodity futures contract, an 17
option on a commodity futures contract, a commodity option, or another 18
contract if the contract or option is: 19
(A) traded on or subject to the rules of a board of trade 20
that has been designated as a contract market for such a contract pursuant to 21
federal commodities laws; or 22
(B) traded on a foreign commodity board of trade, 23
exchange, or market, and is carried on the books of a commodity intermediary 24
for a commodity customer. 25
(16) “Commodity customer” means a person for which a commodity 26
intermediary carries a commodity contract on its books. 27
(17) “Commodity intermediary” means a person that: 28
(A) is registered as a futures commission merchant under 29
federal commodities law; or 30
(B) in the ordinary course of its business provides 31
clearance or settlement services for a board of trade that has been 32
designated as a contract market pursuant to federal commodities law. 33
(18) “Communicate” means: 34
(A) to send a written or other tangible record; 35
(B) to transmit a record by any means agreed upon by the 36 HB1746
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persons sending and receiving the record; or 1
(C) in the case of transmission of a record to or by a 2
filing office, to transmit a record by any means prescribed by filing office 3
rule. 4
(19) “Consignee” means a merchant to which goods are delivered 5
in a consignment. 6
(20) “Consignment” means a transaction, regardless of its form, 7
in which a person delivers goods to a merchant for the purpose of sale and: 8
(A) the merchant: 9
(i) deals in goods of that kind under a name other 10
than the name of the person making delivery; 11
(ii) is not an auctioneer; and 12
(iii) is not generally known by its creditors to be 13
substantially engaged in selling the goods of others; 14
(B) with respect to each delivery, the aggregate value of 15
the goods is one thousand dollars ($1,000) or more at the time of delivery; 16
(C) the goods are not consumer goods immediately before 17
delivery; and 18
(D) the transaction does not create a security interest 19
that secures an obligation. 20
(21) “Consignor” means a person that delivers goods to a 21
consignee in a consignment. 22
(22) “Consumer debtor” means a debtor in a consumer transaction. 23
(23) “Consumer goods” means goods that are used or bought for 24
use primarily for personal, family, or household purposes. 25
(24) “Consumer-goods transaction” means a consumer transaction 26
in which: 27
(A) an individual incurs an obligation primarily for 28
personal, family, or household purposes; and 29
(B) a security interest in consumer goods secures the 30
obligation. 31
(25) “Consumer obligor” means an obligor who is an individual 32
and who incurred the obligation as part of a transaction entered into 33
primarily for personal, family, or household purposes. 34
(26) “Consumer transaction” means a transaction in which (i) an 35
individual incurs an obligation primarily for personal, family, or household 36 HB1746
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purposes, (ii) a security interest secures the obligation, and (iii) the 1
collateral is held or acquired primarily for personal, family, or household 2
purposes. The term includes consumer-goods transactions. 3
(27) “Continuation statement” means an amendment of a financing 4
statement which: 5
(A) identifies, by its file number, the initial financing 6
statement to which it relates; and 7
(B) indicates that it is a continuation statement for, or 8
that it is filed to continue the effectiveness of, the identified financing 9
statement. 10
(27A) “Controllable account” means an account evidenced by a 11
controllable electronic record that provides that the account debtor 12
undertakes to pay the person that has control under § 4 -12-105 of the 13
controllable electronic record. 14
(27B) “Controllable payment intangible” means a payment 15
intangible evidenced by a controllable electronic record that provides that 16
the account debtor undertakes to pay the person that has control under § 4 -17
12-105 of the controllable electronic record. 18
(28) “Debtor” means: 19
(A) a person having an interest, other than a security 20
interest or other lien, in the collateral, whether or not the person is an 21
obligor; 22
(B) a seller of accounts, chattel paper, payment 23
intangibles, or promissory notes; or 24
(C) a consignee. 25
(29) “Deposit account” means a demand, time, savings, passbook, 26
or similar account maintained with a bank. The term does not include 27
investment property or accounts evidenced by an instrument. 28
(30) “Document” means a document of title or a receipt of the 29
type described in § 4-7-201(b). 30
(31) “Electronic chattel paper” means chattel paper evidenced by 31
a record or records consisting of information stored in an electronic medium. 32
[Reserved.] 33
(31A) “Electronic money” means money in an electronic form. 34
(32) “Encumbrance” means a right, other than an ownership 35
interest, in real property. The term includes mortgages and other liens on 36 HB1746
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real property. 1
(33) “Equipment” means goods other than inventory, farm 2
products, or consumer goods. 3
(34) “Farm products” means goods, other than standing timber, 4
with respect to which the debtor is engaged in a farming operation and which 5
are: 6
(A) crops grown, growing, or to be grown, including: 7
(i) crops produced on trees, vines, and bushes; and 8
(ii) aquatic goods produced in aquacultural 9
operations; 10
(B) livestock, born or unborn, including aquatic goods 11
produced in aquacultural operations; 12
(C) supplies used or produced in a farming operation; or 13
(D) products of crops or livestock in their unmanufactured 14
states. 15
(35) “Farming operation” means raising, cultivating, 16
propagating, fattening, grazing, or any other farming, livestock, or 17
aquacultural operation. 18
(36) “File number” means the number assigned to an initial 19
financing statement pursuant to § 4-9-519(a). 20
(37) “Filing office” means an office designated in § 4-9-501 as 21
the place to file a financing statement. 22
(38) “Filing office rule” means a rule adopted pursuant to § 4-23
9-526. 24
(39) “Financing statement” means a record or records composed of 25
an initial financing statement and any filed record relating to the initial 26
financing statement. 27
(40) “Fixture filing” means the filing of a financing statement 28
covering goods that are or are to become fixtures and satisfying § 4-9-502(a) 29
and (b). The term includes the filing of a financing statement covering goods 30
of a transmitting utility which are or are to become fixtures. 31
(41) “Fixtures” means goods that have become so related to 32
particular real property that an interest in them arises under real property 33
law. 34
(42) “General intangible” means any personal property, including 35
things in action, other than accounts, chattel paper, commercial tort claims, 36 HB1746
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deposit accounts, documents, goods, instruments, investment property, letter-1
of-credit rights, letters of credit, money, and oil, gas, or other minerals 2
before extraction. The term includes controllable electronic records, payment 3
intangibles, and software. 4
(43) [Reserved.] 5
(44) “Goods” means all things that are movable when a security 6
interest attaches. The term includes (i) fixtures, (ii) standing timber that 7
is to be cut and removed under a conveyance or contract for sale, (iii) the 8
unborn young of animals, (iv) crops grown, growing, or to be grown, even if 9
the crops are produced on trees, vines, or bushes, and (v) manufactured 10
homes. The term also includes a computer program embedded in goods and any 11
supporting information provided in connection with a transaction relating to 12
the program if (i) the program is associated with the goods in such a manner 13
that it customarily is considered part of the goods, or (ii) by becoming the 14
owner of the goods, a person acquires a right to use the program in 15
connection with the goods. The term does not include a computer program 16
embedded in goods that consist solely of the medium in which the program is 17
embedded. The term also does not include accounts, chattel paper, commercial 18
tort claims, deposit accounts, documents, general intangibles, instruments, 19
investment property, letter-of-credit rights, letters of credit, money, or 20
oil, gas, or other minerals before extraction. 21
(45) “Governmental unit” means a subdivision, agency, 22
department, county, parish, municipality, or other unit of the government of 23
the United States, a state, or a foreign country. The term includes an 24
organization having a separate corporate existence if the organization is 25
eligible to issue debt on which interest is exempt from income taxation under 26
the laws of the United States. 27
(46) “Health-care-insurance receivable” means an interest in or 28
claim under a policy of insurance which is a right to payment of a monetary 29
obligation for health-care goods or services provided. 30
(47) “Instrument” means a negotiable instrument or any other 31
writing that evidences a right to the payment of a monetary obligation, is 32
not itself a security agreement or lease, and is of a type that in ordinary 33
course of business is transferred by delivery with any necessary indorsement 34
or assignment. The term does not include (i) investment property, (ii) 35
letters of credit, or (iii) writings that evidence a right to payment arising 36 HB1746
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out of the use of a credit or charge card or information contained on or for 1
use with the card, or (iv) writings that evidence chattel paper. 2
(48) “Inventory” means goods, other than farm products, which: 3
(A) are leased by a person as lessor; 4
(B) are held by a person for sale or lease or to be 5
furnished under a contract of service; 6
(C) are furnished by a person under a contract of service; 7
or 8
(D) consist of raw materials, work in process, or 9
materials used or consumed in a business. 10
(49) “Investment property” means a security, whether 11
certificated or uncertificated, security entitlement, securities account, 12
commodity contract, or commodity account. 13
(50) “Jurisdiction of organization”, with respect to a 14
registered organization, means the jurisdiction under whose law the 15
organization is organized. 16
(51) “Letter-of-credit right” means a right to payment or 17
performance under a letter of credit, whether or not the beneficiary has 18
demanded or is at the time entitled to demand payment or performance. The 19
term does not include the right of a beneficiary to demand payment or 20
performance under a letter of credit. 21
(52) “Lien creditor” means: 22
(A) a creditor that has acquired a lien on the property 23
involved by attachment, levy, or the like; 24
(B) an assignee for benefit of creditors from the time of 25
assignment; 26
(C) a trustee in bankruptcy from the date of the filing of 27
the petition; or 28
(D) a receiver in equity from the time of appointment. 29
(53) “Manufactured home” means a structure, transportable in one 30
(1) or more sections, which, in the traveling mode, is eight body feet or 31
more in width or 40 body feet or more in length, or, when erected on site, is 32
320 or more square feet, and which is built on a permanent chassis and 33
designed to be used as a dwelling with or without a permanent foundation when 34
connected to the required utilities, and includes the plumbing, heating, air-35
conditioning, and electrical systems contained therein. The term includes any 36 HB1746
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structure that meets all of the requirements of this paragraph except the 1
size requirements and with respect to which the manufacturer voluntarily 2
files a certification required by the United States Secretary of Housing and 3
Urban Development and complies with the standards established under Title 42 4
of the United States Code. 5
(54) “Manufactured-home transaction” means a secured 6
transaction: 7
(A) that creates a purchase-money security interest in a 8
manufactured home, other than a manufactured home held as inventory; or 9
(B) in which a manufactured home, other than a 10
manufactured home held as inventory, is the primary collateral. 11
(54A) “Money” has the meaning in § 4 -1-201(b)(24), but does not 12
include (i) a deposit account or (ii) money in an electronic form that cannot 13
be subjected to control under § 4 -9-105A. 14
(55) “Mortgage” means a consensual interest in real property, 15
including fixtures, which secures payment or performance of an obligation. 16
(56) “New debtor” means a person that becomes bound as debtor 17
under § 4-9-203(d) by a security agreement previously entered into by another 18
person. 19
(57) “New value” means (i) money, (ii) money's worth in 20
property, services, or new credit, or (iii) release by a transferee of an 21
interest in property previously transferred to the transferee. The term does 22
not include an obligation substituted for another obligation. 23
(58) “Noncash proceeds” means proceeds other than cash proceeds. 24
(59) “Obligor” means a person that, with respect to an 25
obligation secured by a security interest in or an agricultural lien on the 26
collateral, (i) owes payment or other performance of the obligation, (ii) has 27
provided property other than the collateral to secure payment or other 28
performance of the obligation, or (iii) is otherwise accountable in whole or 29
in part for payment or other performance of the obligation. The term does not 30
include issuers or nominated persons under a letter of credit. 31
(60) “Original debtor”, except as used in § 4-9-310(c), means a 32
person that, as debtor, entered into a security agreement to which a new 33
debtor has become bound under § 4-9-203(d). 34
(61) “Payment intangible” means a general intangible under which 35
the account debtor's principal obligation is a monetary obligation. The term 36 HB1746
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includes a controllable payment intangible. 1
(62) “Person related to”, with respect to an individual, means: 2
(A) the spouse of the individual; 3
(B) a brother, brother-in-law, sister, or sister-in-law of 4
the individual; 5
(C) an ancestor or lineal descendant of the individual or 6
the individual's spouse; or 7
(D) any other relative, by blood or marriage, of the 8
individual or the individual's spouse who shares the same home with the 9
individual. 10
(63) “Person related to”, with respect to an organization, 11
means: 12
(A) a person directly or indirectly controlling, 13
controlled by, or under common control with the organization; 14
(B) an officer or director of, or a person performing 15
similar functions with respect to, the organization; 16
(C) an officer or director of, or a person performing 17
similar functions with respect to, a person described in subparagraph (A); 18
(D) the spouse of an individual described in subparagraph 19
(A), (B), or (C); or 20
(E) an individual who is related by blood or marriage to 21
an individual described in subparagraph (A), (B), (C), or (D) and shares the 22
same home with the individual. 23
(64) “Proceeds”, except as used in § 4-9-609(b), means the 24
following property: 25
(A) whatever is acquired upon the sale, lease, license, 26
exchange, or other disposition of collateral; 27
(B) whatever is collected on, or distributed on account 28
of, collateral; 29
(C) rights arising out of collateral; 30
(D) to the extent of the value of collateral, claims 31
arising out of the loss, nonconformity, or interference with the use of, 32
defects or infringement of rights in, or damage to, the collateral; or 33
(E) to the extent of the value of collateral and to the 34
extent payable to the debtor or the secured party, insurance payable by 35
reason of the loss or nonconformity of, defects or infringement of rights in, 36 HB1746
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or damage to, the collateral. 1
(65) “Promissory note” means an instrument that evidences a 2
promise to pay a monetary obligation, does not evidence an order to pay, and 3
does not contain an acknowledgment by a bank that the bank has received for 4
deposit a sum of money or funds. 5
(66) “Proposal” means a record authenticated signed by a secured 6
party which includes the terms on which the secured party is willing to 7
accept collateral in full or partial satisfaction of the obligation it 8
secures pursuant to §§ 4-9-620, 4-9-621, and 4-9-622. 9
(67) “Public-finance transaction” means a secured transaction in 10
connection with which: 11
(A) debt securities are issued; 12
(B) all or a portion of the securities issued have an 13
initial stated maturity of at least twenty (20) years; and 14
(C) the debtor, obligor, secured party, account debtor or 15
other person obligated on collateral, assignor or assignee of a secured 16
obligation, or assignor or assignee of a security interest is a state or a 17
governmental unit of a state. 18
(68) “Public organic record” means a record that is available to 19
the public for inspection and is: 20
(A) a record consisting of the record initially filed with 21
or issued by a State or the United States to form or organize an organization 22
and any record filed with or issued by the State or the United States which 23
amends or restates the initial record; 24
(B) an organic record of a business trust consisting of 25
the record initially filed with a State and any record filed with the State 26
which amends or restates the initial record, if a statute of the State 27
governing business trusts requires that the record be filed with the State; 28
or 29
(C) a record consisting of legislation enacted by the 30
legislature of a State or the Congress of the United States which forms or 31
organizes an organization, any record amending the legislation, and any 32
record filed with or issued by the State or the United States which amends or 33
restates the name of the organization. 34
(69) “Pursuant to commitment”, with respect to an advance made 35
or other value given by a secured party, means pursuant to the secured 36 HB1746
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party's obligation, whether or not a subsequent event of default or other 1
event not within the secured party's control has relieved or may relieve the 2
secured party from its obligation. 3
(70) [Repealed.] 4
(71) “Record”, except as used in “for record”, “of record”, 5
“record or legal title”, and “record owner”, means information that is 6
inscribed on a tangible medium or which is stored in an electronic or other 7
medium and is retrievable in perceivable form. 8
(72) “Registered organization” means an organization formed or 9
organized solely under the law of a single State or the United States by the 10
filing of a public organic record with, the issuance of a public organic 11
record by, or the enactment of legislation by the State or the United States. 12
The term includes a business trust that is formed or organized under the law 13
of a single State if a statute of the State governing business trusts 14
requires that the business trust's organic record be filed with the State. 15
(73) “Secondary obligor” means an obligor to the extent that: 16
(A) the obligor's obligation is secondary; or 17
(B) the obligor has a right of recourse with respect to an 18
obligation secured by collateral against the debtor, another obligor, or 19
property of either. 20
(74) “Secured party” means: 21
(A) a person in whose favor a security interest is created 22
or provided for under a security agreement, whether or not any obligation to 23
be secured is outstanding; 24
(B) a person that holds an agricultural lien; 25
(C) a consignor; 26
(D) a person to which accounts, chattel paper, payment 27
intangibles, or promissory notes have been sold; 28
(E) a trustee, indenture trustee, agent, collateral agent, 29
or other representative in whose favor a security interest or agricultural 30
lien is created or provided for; or 31
(F) a person that holds a security interest arising under 32
§ 4-2-401, § 4-2-505, § 4-2-711(3), § 4-2A-508(5), § 4-4-210, or § 4-5-118. 33
(75) “Security agreement” means an agreement that creates or 34
provides for a security interest. 35
(76) “Send”, in connection with a record or notification, means: 36 HB1746
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(A) to deposit in the mail, deliver for transmission, or 1
transmit by any other usual means of communication, with postage or cost of 2
transmission provided for, addressed to any address reasonable under the 3
circumstances; or 4
(B) to cause the record or notification to be received 5
within the time that it would have been received if properly sent under 6
subparagraph (A). [Reserved.] 7
(77) “Software” means a computer program and any supporting 8
information provided in connection with a transaction relating to the 9
program. The term does not include a computer program that is included in the 10
definition of goods. 11
(78) “State” means a state of the United States, the District of 12
Columbia, Puerto Rico, the United States Virgin Islands, or any territory or 13
insular possession subject to the jurisdiction of the United States. 14
(79) “Supporting obligation” means a letter-of-credit right or 15
secondary obligation that supports the payment or performance of an account, 16
chattel paper, a document, a general intangible, an instrument, or investment 17
property. 18
(80) “Tangible chattel paper” means chattel paper evidenced by a 19
record or records consisting of information that is inscribed on a tangible 20
medium. [Reserved.] 21
(80A) "Tangible money" means money in a tangible form. 22
(81) “Termination statement” means an amendment of a financing 23
statement which: 24
(A) identifies, by its file number, the initial financing 25
statement to which it relates; and 26
(B) indicates either that it is a termination statement or 27
that the identified financing statement is no longer effective. 28
(82) “Transmitting utility” means a person primarily engaged in 29
the business of: 30
(A) operating a railroad, subway, street railway, or 31
trolley bus; 32
(B) transmitting communications electrically, 33
electromagnetically, or by light; 34
(C) transmitting goods by pipeline or sewer; or 35
(D) producing or transmitting electricity, steam, gas, or 36 HB1746
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water. 1
(b) “Control” as provided in § 4-7-106 and the following definitions 2
in other chapters apply to this chapter: 3
“Applicant”. Section 4-5-102. 4
“Beneficiary”. Section 4-5-102. 5
“Broker”. Section 4-8-102. 6
“Certificated security”. Section 4-8-102. 7
“Check”. Section 4-3-104. 8
“Clearing corporation”. Section 4-8-102. 9
“Contract for sale”. Section 4-2-106. 10
"Controllable electronic record". Section 4-12-102. 11
“Customer”. Section 4-4-104. 12
“Entitlement holder”. Section 4-8-102. 13
“Financial asset”. Section 4-8-102. 14
“Holder in due course”. Section 4-3-302. 15
“Issuer” (with respect to a letter of credit or letter-of-credit 16
right). Section 4-5-102. 17
“Issuer” (with respect to a security). Section 4-8-201. 18
“Issuer” (with respect to documents of title). Section 4-7-102. 19
“Lease”. Section 4-2A-103. 20
“Lease agreement”. Section 4-2A-103. 21
“Lease contract”. Section 4-2A-103. 22
“Leasehold interest”. Section 4-2A-103. 23
“Lessee”. Section 4-2A-103. 24
“Lessee in ordinary course of business”. Section 4-2A-103. 25
“Lessor”. Section 4-2A-103. 26
“Lessor's residual interest”. Section 4-2A-103. 27
“Letter of credit”. Section 4-5-102. 28
“Merchant”. Section 4-2-104. 29
“Negotiable instrument”. Section 4-3-104. 30
“Nominated person”. Section 4-5-102. 31
“Note”. Section 4-3-104. 32
“Proceeds of a letter of credit”. Section 4-5-114. 33
"Protected purchaser". Section 4-8-303. 34
“Prove”. Section 4-3-103. 35
"Qualifying purchaser". Section 4-12-102. 36 HB1746
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“Sale”. Section 4-2-106. 1
“Securities account”. Section 4-8-501. 2
“Securities intermediary”. Section 4-8-102. 3
“Security”. Section 4-8-102. 4
“Security certificate”. Section 4-8-102. 5
“Security entitlement”. Section 4-8-102. 6
“Uncertificated security”. Section 4-8-102. 7
“Virtual currency”. Section 4-11-102. 8
(c) Chapter 1 contains general definitions and principles of 9
construction and interpretation applicable throughout this chapter. 10
11
SECTION 46. Arkansas Code § 4 -9-104(a), concerning the control of a 12
deposit account in the Uniform Commercial Code, is amended to read as 13
follows: 14
(a) A secured party has control of a deposit account if: 15
(1) the secured party is the bank with which the deposit account 16
is maintained; 17
(2) the debtor, secured party, and bank have agreed in an 18
authenticated a signed record that the bank will comply with instructions 19
originated by the secured party directing disposition of the funds in the 20
deposit account without further consent by the debtor; or 21
(3) the secured party becomes the bank's customer with respect 22
to the deposit account; or 23
(4) another person, other than the debtor: 24
(A) has control of the deposit account and acknowledges 25
that it has control on behalf of the secured party; or 26
(B) obtains control of the deposit account after having 27
acknowledged that it will obtain control of the deposit account on behalf of 28
the secured party. 29
30
SECTION 47. Arkansas Code § 4 -9-105 is amended to read as follows: 31
4-9-105. Control of electronic copy of record evidencing chattel 32
paper. 33
(a) A secured party purchaser has control of electronic an 34
authoritative electronic copy of a record evidencing chattel paper if a 35
system employed for evidencing the transfer assignment of interests in the 36 HB1746
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chattel paper reliably establishes the secured party purchaser as the person 1
to which the chattel paper authoritative electronic copy was assigned. 2
(b) A system satisfies subsection (a) if the record or records 3
comprising evidencing the chattel paper are created, stored, and assigned in 4
such a manner that: 5
(1) a single authoritative copy of the record or records exists 6
which is unique, identifiable, and, except as otherwise provided in 7
paragraphs (4), (5), and (6), unalterable; 8
(2) the authoritative copy identifies the secured party 9
purchaser as the assignee of the record or records; 10
(3) the authoritative copy is communicated to and maintained by 11
the secured party purchaser or its designated custodian; 12
(4) copies or amendments that add or change an identified 13
assignee of the authoritative copy can be made only with the consent of the 14
secured party purchaser; 15
(5) each copy of the authoritative copy and any copy of a copy 16
is readily identifiable as a copy that is not the authoritative copy; and 17
(6) any amendment of the authoritative copy is readily 18
identifiable as authorized or unauthorized. 19
(c) A system satisfies subsection (a), and a purchaser has control of 20
an authoritative electronic copy of a record evidencing chattel paper, if the 21
electronic copy, a record attached to or logically associated with the 22
electronic copy, or a system in which the electronic copy is recorded: 23
(1) enables the purchaser readily to identify each electronic 24
copy as either an authoritative copy or a nonauthoritative copy; 25
(2) enables the purchaser readily to identify itself in any way, 26
including by name, identifying number, cryptographic key, office, or account 27
number, as the assignee of the authoritative electronic copy; and 28
(3) gives the purchaser exclusive power, subject to subsection 29
(d), to: 30
(A) prevent others from adding or changing an identified 31
assignee of the authoritative electronic copy; and 32
(B) transfer control of the authoritative electronic copy. 33
(d) Subject to subsection (e), a power is exclusive under subsection 34
(c)(3)(A) and (B) even if: 35
(1) the authoritative electronic copy, a record attached to or 36 HB1746
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logically associated with the authoritative electronic copy, or a system in 1
which the authoritative electronic copy is recorded limits the use of the 2
authoritative electronic copy or has a protocol programmed to cause a change, 3
including a transfer or loss of control; or 4
(2) the power is shared with another person. 5
(e) A power of a purchaser is not shared with another person under 6
subsection (d)(2) and the purchaser’s power is not exclusive if: 7
(1) the purchaser can exercise the power only if the power also 8
is exercised by the other person; and 9
(2) the other person: 10
(A) can exercise the power without exercise of the power 11
by the purchaser; or 12
(B) is the transferor to the purchaser of an interest in 13
the chattel paper. 14
(f) If a purchaser has the powers specified in subsection (c)(3)(A) 15
and (B), the powers are presumed to be exclusive. 16
(g) A purchaser has control of an authoritative electronic copy of a 17
record evidencing chattel paper if another person, other than the transferor 18
to the purchaser of an interest in the chattel paper: 19
(1) has control of the authoritative electronic copy and 20
acknowledges that it has control on behalf of the purchaser; or 21
(2) obtains control of the authoritative electronic copy after 22
having acknowledged that it will obtain control of the electronic copy on 23
behalf of the purchaser. 24
25
SECTION 48. Arkansas Code Title 4, Chapter 9, Subchapter 1, is amended 26
to add an additional section to read as follows: 27
4-9-105A. Control of electronic money. 28
(a) A person has control of electronic money if: 29
(1) the electronic money, a record attached to or logically 30
associated with the electronic money, or a system in which the electronic 31
money is recorded gives the person: 32
(A) power to avail itself of substantially all the benefit 33
from the electronic money; and 34
(B) exclusive power, subject to subsection (b), to: 35
(i) prevent others from availing themselves of 36 HB1746
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substantially all the benefit from the electronic money; and 1
(ii) transfer control of the electronic money to 2
another person or cause another person to obtain control of other electronic 3
money as a result of the transfer of the electronic money; and 4
(2) the electronic money, a record attached to or logically 5
associated with the electronic money, or a system in which the electronic 6
money is recorded enables the person readily to identify itself in any way, 7
including by name, identifying number, cryptographic key, office, or account 8
number, as having the powers under paragraph (1). 9
(b) Subject to subsection (c), a power is exclusive under subsection 10
(a)(1)(B)(i) and (ii) even if: 11
(1) the electronic money, a record attached to or logically 12
associated with the electronic money, or a system in which the electronic 13
money is recorded limits the use of the electronic money or has a protocol 14
programmed to cause a change, including a transfer or loss of control; or 15
(2) the power is shared with another person. 16
(c) A power of a person is not shared with another person under 17
subsection (b)(2) and the person’s power is not exclusive if: 18
(1) the person can exercise the power only if the power also is 19
exercised by the other person; and 20
(2) the other person: 21
(A) can exercise the power without exercise of the power 22
by the person; or 23
(B) is the transferor to the person of an interest in the 24
electronic money. 25
(d) If a person has the powers specified in subsection (a)(1)(B)(i) 26
and (ii), the powers are presumed to be exclusive. 27
(e) A person has control of electronic money if another person, other 28
than the transferor to the person of an interest in the electronic money: 29
(1) has control of the electronic money and acknowledges that it 30
has control on behalf of the person; or 31
(2) obtains control of the electronic money after having 32
acknowledged that it will obtain control of the electronic money on behalf of 33
the person. 34
35
SECTION 49. Arkansas Code Title 4, Chapter 9, Subchapter 1, is amended 36 HB1746
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to add additional sections to read as follows: 1
4-9-107A. Control of controllable electronic record, controllable 2
account, or controllable payment intangible. 3
(a) A secured party has control of a controllable electronic record as 4
provided in § 4-12-105. 5
(b) A secured party has control of a controllable account or 6
controllable payment intangible if the secured party has control of the 7
controllable electronic record that evidences the controllable account or 8
controllable payment intangible. 9
10
4-9-107B. No requirement to acknowledge or confirm; No duties. 11
(a) A person that has control under § 4 -9-104, § 4-9-105, or § 4-9-12
105A is not required to acknowledge that it has control on behalf of another 13
person. 14
(b) If a person acknowledges that it has or will obtain control on 15
behalf of another person, unless the person otherwise agrees or law other 16
than this chapter otherwise provides, the person does not owe any duty to the 17
other person and is not required to confirm the acknowledgment to any other 18
person. 19
20
SECTION 50. Arkansas Code § 4 -9-203(b), concerning the attachment and 21
enforceability of a security interest against a debtor and third parties in 22
the Uniform Commercial Code, is amended to read as follows: 23
(b) Except as otherwise provided in subsections (c) through (i), a 24
security interest is enforceable against the debtor and third parties with 25
respect to the collateral only if: 26
(1) value has been given; 27
(2) the debtor has rights in the collateral or the power to 28
transfer rights in the collateral to a secured party; and 29
(3) one of the following conditions is met: 30
(A) the debtor has authenticated signed a security 31
agreement that provides a description of the collateral and, if the security 32
interest covers timber to be cut, a description of the land concerned; 33
(B) the collateral is not a certificated security and is 34
in the possession of the secured party under § 4-9-313 pursuant to the 35
debtor's security agreement; 36 HB1746
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(C) the collateral is a certificated security in 1
registered form and the security certificate has been delivered to the 2
secured party under § 4-8-301 pursuant to the debtor's security agreement; or 3
(D) the collateral is controllable accounts, controllable 4
electronic records, controllable payment intangibles, deposit accounts, 5
electronic chattel paper documents, electronic money, investment property, or 6
letter-of-credit rights, or electronic documents, and the secured party has 7
control under § 4-7-106, § 4-9-104, § 4-9-105, § 4-9-105A, § 4-9-106, or § 4-8
9-107, or § 4-9-107A pursuant to the debtor's security agreement; or 9
(E) the collateral is chattel paper and the secured party 10
has possession and control under § 4-9-314A pursuant to the debtor's security 11
agreement. 12
13
SECTION 51. Arkansas Code § 4 -9-204 is amended to read as follows: 14
4-9-204. After-acquired property — Future advances. 15
(a) Except as otherwise provided in subsection (b), a security 16
agreement may create or provide for a security interest in after-acquired 17
collateral. 18
(b) A Subject to subsection (b.1), a security interest does not attach 19
under a term constituting an after-acquired property clause to: 20
(1) consumer goods, other than an accession when given as 21
additional security, unless the debtor acquires rights in them within ten 22
(10) days after the secured party gives value; or 23
(2) a commercial tort claim. 24
(b.1) Subsection (b) does not prevent a security interest from 25
attaching: 26
(1) to consumer goods as proceeds under § 4-9-315(a) or 27
commingled goods under § 4-9-336(c); 28
(2) to a commercial tort claim as proceeds under § 4-9-315(a); 29
or 30
(3) under an after-acquired property clause to property that is 31
proceeds of consumer goods or a commercial tort claim. 32
(c) A security agreement may provide that collateral secures, or that 33
accounts, chattel paper, payment intangibles, or promissory notes are sold in 34
connection with, future advances or other value, whether or not the advances 35
or value are given pursuant to commitment. 36 HB1746
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1
SECTION 52. Arkansas Code § 4 -9-207(c), concerning the rights of a 2
secured party having possession or control of collateral under the Uniform 3
Commercial Code, is amended to read as follows: 4
(c) Except as otherwise provided in subsection (d), a secured party 5
having possession of collateral or control of collateral under § 4-7-106, § 6
4-9-104, § 4-9-105, § 4-9-105A, § 4-9-106, or § 4-9-107, or § 4-9-107A: 7
(1) may hold as additional security any proceeds, except money 8
or funds, received from the collateral; 9
(2) shall apply money or funds received from the collateral to 10
reduce the secured obligation, unless remitted to the debtor; and 11
(3) may create a security interest in the collateral. 12
13
SECTION 53. Arkansas Code § 4 -9-208(b), concerning the additional 14
duties of a secured party having control of collateral in the Uniform 15
Commercial Code, is amended to read as follows: 16
(b) Within ten (10) days after receiving an authenticated a signed 17
demand by the debtor: 18
(1) a secured party having control of a deposit account under § 19
4-9-104(a)(2) shall send to the bank with which the deposit account is 20
maintained an authenticated statement a signed record that releases the bank 21
from any further obligation to comply with instructions originated by the 22
secured party; 23
(2) a secured party having control of a deposit account under § 24
4-9-104(a)(3) shall: 25
(A) pay the debtor the balance on deposit in the deposit 26
account; or 27
(B) transfer the balance on deposit into a deposit account 28
in the debtor's name; 29
(3) a secured party, other than a buyer, having control of 30
electronic chattel paper under § 4-9-105 shall: 31
(A) communicate the authoritative copy of the electronic 32
chattel paper to the debtor or its designated custodian; 33
(B) if the debtor designates a custodian that is the 34
designated custodian with which the authoritative copy of the electronic 35
chattel paper is maintained for the secured party, communicate to the 36 HB1746
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custodian an authenticated record releasing the designated custodian from any 1
further obligation to comply with instructions originated by the secured 2
party and instructing the custodian to comply with instructions originated by 3
the debtor; and 4
(C) take appropriate action to enable the debtor or its 5
designated custodian to make copies of or revisions to the authoritative copy 6
which add or change an identified assignee of the authoritative copy without 7
the consent of the secured party of an authoritative electronic copy of a 8
record evidencing chattel paper shall transfer control of the electronic copy 9
to the debtor or a person designated by the debtor; 10
(4) a secured party having control of investment property under 11
§ 4-8-106(d)(2) or § 4-9-106(b) shall send to the securities intermediary or 12
commodity intermediary with which the security entitlement or commodity 13
contract is maintained an authenticated a signed record that releases the 14
securities intermediary or commodity intermediary from any further obligation 15
to comply with entitlement orders or directions originated by the secured 16
party; 17
(5) a secured party having control of a letter-of-credit right 18
under § 4-9-107 shall send to each person having an unfulfilled obligation to 19
pay or deliver proceeds of the letter of credit to the secured party an 20
authenticated a signed release from any further obligation to pay or deliver 21
proceeds of the letter of credit to the secured party; and 22
(6) a secured party having control under § 4-7-106 of an 23
authoritative electronic copy of an electronic document shall: transfer 24
control of the electronic copy to the debtor or a person designated by the 25
debtor; 26
(A) give control of the electronic document to the debtor 27
or its designated custodian; 28
(B) if the debtor designates a custodian that is the 29
designated custodian with which the authoritative copy of the electronic 30
document is maintained for the secured party, communicate to the custodian an 31
authenticated record releasing the designated custodian from any further 32
obligation to comply with instructions originated by the secured party and 33
instructing the custodian to comply with instructions originated by the 34
debtor; and 35
(C) take appropriate action to enable the debtor or its 36 HB1746
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designated custodian to make copies of or revisions to the authoritative copy 1
which add or change an identified assignee of the authoritative copy without 2
the consent of the secured party 3
(7) a secured party having control under § 4 -9-105A of 4
electronic money shall transfer control of the electronic money to the debtor 5
or a person designated by the debtor; and 6
(8) a secured party having control under § 4 -12-105 of a 7
controllable electronic record, other than a buyer of a controllable account 8
or controllable payment intangible evidenced by the controllable electronic 9
record, shall transfer control of the controllable electronic record to the 10
debtor or a person designated by the debtor . 11
12
SECTION 54. Arkansas Code § 4 -9-209(b), concerning the duties of a 13
secured party if an account debtor has been notified of an assignment in the 14
Uniform Commercial Code, is amended to read as follows: 15
(b) Within ten (10) days after receiving an authenticated a signed 16
demand by the debtor, a secured party shall send to an account debtor that 17
has received notification under § 4-9-406(a) or § 4-12-106(b) of an 18
assignment to the secured party as assignee under § 4-9-406(a) an 19
authenticated a signed record that releases the account debtor from any 20
further obligation to the secured party. 21
22
SECTION 55. Arkansas Code § 4 -9-210 is amended to read as follows: 23
4-9-210. Request for accounting — Request regarding list of collateral 24
or statement of account. 25
(a) In this section: 26
(1) “Request” means a record of a type described in paragraph 27
(2), (3), or (4). 28
(2) “Request for an accounting” means a record authenticated 29
signed by a debtor requesting that the recipient provide an accounting of the 30
unpaid obligations secured by collateral and reasonably identifying the 31
transaction or relationship that is the subject of the request. 32
(3) “Request regarding a list of collateral” means a record 33
authenticated signed by a debtor requesting that the recipient approve or 34
correct a list of what the debtor believes to be the collateral securing an 35
obligation and reasonably identifying the transaction or relationship that is 36 HB1746
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the subject of the request. 1
(4) “Request regarding a statement of account” means a record 2
authenticated signed by a debtor requesting that the recipient approve or 3
correct a statement indicating what the debtor believes to be the aggregate 4
amount of unpaid obligations secured by collateral as of a specified date and 5
reasonably identifying the transaction or relationship that is the subject of 6
the request. 7
(b) Subject to subsections (c), (d), (e), and (f), a secured party, 8
other than a buyer of accounts, chattel paper, payment intangibles, or 9
promissory notes or a consignor, shall comply with a request within fourteen 10
(14) days after receipt: 11
(1) in the case of a request for an accounting, by 12
authenticating signing and sending to the debtor an accounting; and 13
(2) in the case of a request regarding a list of collateral or a 14
request regarding a statement of account, by authenticating signing and 15
sending to the debtor an approval or correction. 16
(c) A secured party that claims a security interest in all of a 17
particular type of collateral owned by the debtor may comply with a request 18
regarding a list of collateral by sending to the debtor an authenticated a 19
signed record including a statement to that effect within fourteen (14) days 20
after receipt. 21
(d) A person that receives a request regarding a list of collateral, 22
claims no interest in the collateral when it receives the request, and 23
claimed an interest in the collateral at an earlier time shall comply with 24
the request within fourteen (14) days after receipt by sending to the debtor 25
an authenticated a signed record: 26
(1) disclaiming any interest in the collateral; and 27
(2) if known to the recipient, providing the name and mailing 28
address of any assignee of or successor to the recipient's interest in the 29
collateral. 30
(e) A person that receives a request for an accounting or a request 31
regarding a statement of account, claims no interest in the obligations when 32
it receives the request, and claimed an interest in the obligations at an 33
earlier time shall comply with the request within fourteen (14) days after 34
receipt by sending to the debtor an authenticated a signed record: 35
(1) disclaiming any interest in the obligations; and 36 HB1746
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(2) if known to the recipient, providing the name and mailing 1
address of any assignee of or successor to the recipient's interest in the 2
obligations. 3
(f) A debtor is entitled without charge to one response to a request 4
under this section during any six-month period. The secured party may require 5
payment of a charge not exceeding twenty-five dollars ($25) for each 6
additional response. 7
8
SECTION 56. Arkansas Code § 4 -9-301 is amended to read as follows: 9
4-9-301. Law governing perfection and priority of security interests. 10
Except as otherwise provided in §§ 4-9-303 — 4-9-306 4-9-306B, the 11
following rules determine the law governing perfection, the effect of 12
perfection or nonperfection, and the priority of a security interest in 13
collateral: 14
(1) Except as otherwise provided in this section, while a debtor 15
is located in a jurisdiction, the local law of that jurisdiction governs 16
perfection, the effect of perfection or nonperfection, and the priority of a 17
security interest in collateral. 18
(2) While collateral is located in a jurisdiction, the local law 19
of that jurisdiction governs perfection, the effect of perfection or 20
nonperfection, and the priority of a possessory security interest in that 21
collateral. 22
(3) Except as otherwise provided in paragraph (4) of this 23
section, while tangible negotiable documents, goods, instruments, or tangible 24
money, or tangible chattel paper is located in a jurisdiction, the local law 25
of that jurisdiction governs: 26
(A) perfection of a security interest in the goods by 27
filing a fixture filing; 28
(B) perfection of a security interest in timber to be cut; 29
and 30
(C) the effect of perfection or nonperfection and the 31
priority of a nonpossessory security interest in the collateral. 32
(4) The local law of the jurisdiction in which the wellhead or 33
minehead is located governs perfection, the effect of perfection or 34
nonperfection, and the priority of a security interest in as-extracted 35
collateral. 36 HB1746
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1
SECTION 57. Arkansas Code § 4 -9-304(a), concerning the law governing 2
perfection and priority of security interests in deposit accounts in the 3
Uniform Commercial Code, is amended to read as follows: 4
(a) The local law of a bank's jurisdiction governs perfection, the 5
effect of perfection or nonperfection, and the priority of a security 6
interest in a deposit account maintained with that bank even if the 7
transaction does not bear any relation to the bank's jurisdiction. 8
9
SECTION 58. Arkansas Code § 4 -9-305(a), concerning the law governing 10
perfection and priority of security interests in investment property in the 11
Uniform Commercial Code, is amended to add an additional subdivision to read 12
as follows: 13
(5) Paragraphs (2), (3), and (4) apply even if the transaction 14
does not bear any relation to the jurisdiction. 15
16
SECTION 59. Arkansas Code Title 4, Chapter 9, Subchapter 3, is amended 17
to add additional sections to read as follows: 18
4-9-306A. Law governing perfection and priority of security 19
interests in chattel paper. 20
(a) Except as provided in subsection (d), if chattel paper is 21
evidenced only by an authoritative electronic copy of the chattel paper or is 22
evidenced by an authoritative electronic copy and an authoritative tangible 23
copy, the local law of the chattel paper’s jurisdiction governs perfection, 24
the effect of perfection or nonperfection, and the priority of a security 25
interest in the chattel paper, even if the transaction does not bear any 26
relation to the chattel paper’s jurisdiction. 27
(b) The following rules determine the chattel paper’s jurisdiction 28
under this section: 29
(1) If the authoritative electronic copy of the record 30
evidencing chattel paper, or a record attached to or logically associated 31
with the electronic copy and readily available for review, expressly provides 32
that a particular jurisdiction is the chattel paper’s jurisdiction for 33
purposes of this part, this chapter, or the Uniform Commercial Code, that 34
jurisdiction is the chattel paper’s jurisdiction. 35
(2) If paragraph (1) does not apply and the rules of the system 36 HB1746
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in which the authoritative electronic copy is recorded are readily available 1
for review and expressly provide that a particular jurisdiction is the 2
chattel paper’s jurisdiction for purposes of this part, this chapter, or the 3
Uniform Commercial Code, that jurisdiction is the chattel paper’s 4
jurisdiction. 5
(3) If paragraphs (1) and (2) do not apply and the authoritative 6
electronic copy, or a record attached to or logically associated with the 7
electronic copy and readily available for review, expressly provides that the 8
chattel paper is governed by the law of a particular jurisdiction, that 9
jurisdiction is the chattel paper’s jurisdiction. 10
(4) If paragraphs (1), (2), and (3) do not apply and the rules 11
of the system in which the authoritative electronic copy is recorded are 12
readily available for review and expressly provide that the chattel paper or 13
the system is governed by the law of a particular jurisdiction, that 14
jurisdiction is the chattel paper’s jurisdiction. 15
(5) If paragraphs (1) through (4) do not apply, the chattel 16
paper’s jurisdiction is the jurisdiction in which the debtor is located. 17
(c) If an authoritative tangible copy of a record evidences chattel 18
paper and the chattel paper is not evidenced by an authoritative electronic 19
copy, while the authoritative tangible copy of the record evidencing chattel 20
paper is located in a jurisdiction, the local law of that jurisdiction 21
governs: 22
(1) perfection of a security interest in the chattel paper by 23
possession under § 4 -9-314A; and 24
(2) the effect of perfection or nonperfection and the priority 25
of a security interest in the chattel paper. 26
(d) The local law of the jurisdiction in which the debtor is located 27
governs perfection of a security interest in chattel paper by filing. 28
29
4-9-306B. Law governing perfection and priority of security 30
interests in controllable accounts, controllable electronic records, and 31
controllable payment intangibles. 32
(a) Except as provided in subsection (b), the local law of the 33
controllable electronic record’s jurisdiction specified in § 4 -12-107(c) and 34
(d) governs perfection, the effect of perfection or nonperfection, and the 35
priority of a security interest in a controllable electronic record and a 36 HB1746
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security interest in a controllable account or controllable payment 1
intangible evidenced by the controllable electronic record. 2
(b) The local law of the jurisdiction in which the debtor is located 3
governs: 4
(1) perfection of a security interest in a controllable account, 5
controllable electronic record, or controllable payment intangible by filing; 6
and 7
(2) automatic perfection of a security interest in a 8
controllable payment intangible created by a sale of the controllable payment 9
intangible. 10
11
SECTION 60. Arkansas Code § 4 -9-310(b), concerning when the filing of 12
a financing statement is not a requirement to perfect a security interest in 13
the Uniform Commercial Code, is amended to read as follows: 14
(b) The filing of a financing statement is not necessary to perfect a 15
security interest: 16
(1) that is perfected under § 4-9-308(d), (e), (f), or (g); 17
(2) that is perfected under § 4-9-309 when it attaches; 18
(3) in property subject to a statute, regulation, or treaty 19
described in § 4-9-311(a); 20
(4) in goods in possession of a bailee which is perfected under 21
§ 4-9-312(d)(1) or (2); 22
(5) in certificated securities, documents, goods, or instruments 23
which is perfected without filing or possession under § 4-9-312(e), (f), or 24
(g); 25
(6) in collateral in the secured party's possession under § 4-9-26
313; 27
(7) in a certificated security which is perfected by delivery of 28
the security certificate to the secured party under § 4-9-313; 29
(8) in controllable accounts, controllable electronic records, 30
controllable payment intangibles, deposit accounts, electronic chattel paper, 31
electronic documents, investment property, virtual currencies, or letter-of-32
credit rights which is perfected by control under § 4-9-314; 33
(8.1) in chattel paper which is perfected by possession and 34
control under § 4-9-314A; 35
(9) in proceeds which is perfected under § 4-9-315; or 36 HB1746
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(10) that is perfected under § 4-9-316. 1
2
SECTION 61. Arkansas Code § 4-9-312 is amended to read as follows: 3
4-9-312. Perfection of security interests in chattel paper, 4
controllable accounts, controllable electronic records, controllable payment 5
intangibles, deposit accounts, negotiable documents, goods covered by 6
documents, instruments, investment property, virtual currencies, letter -of-7
credit rights, and money — Perfection by permissive filing — Temporary 8
perfection without filing or transfer of possession. 9
(a) A security interest in chattel paper, negotiable documents, 10
controllable accounts, controllable electronic records, controllable payment 11
intangibles, instruments, investment property, and virtual currencies, or 12
negotiable documents may be perfected by filing. 13
(b) Except as otherwise provided in § 4-9-315(c) and (d) for proceeds: 14
(1) a security interest in a deposit account may be perfected 15
only by control under § 4-9-314; 16
(2) and except as otherwise provided in § 4-9-308(d), a security 17
interest in a letter-of-credit right may be perfected only by control under § 18
4-9-314; and 19
(3) a security interest in tangible money may be perfected only 20
by the secured party's taking possession under § 4-9-313; and 21
(4) a security interest in electronic money may be perfected 22
only by control under § 4-9-314. 23
(c) While goods are in the possession of a bailee that has issued a 24
negotiable document covering the goods: 25
(1) a security interest in the goods may be perfected by 26
perfecting a security interest in the document; and 27
(2) a security interest perfected in the document has priority 28
over any security interest that becomes perfected in the goods by another 29
method during that time. 30
(d) While goods are in the possession of a bailee that has issued a 31
nonnegotiable document covering the goods, a security interest in the goods 32
may be perfected by: 33
(1) issuance of a document in the name of the secured party; 34
(2) the bailee's receipt of notification of the secured party's 35
interest; or 36 HB1746
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(3) filing as to the goods. 1
(e) A security interest in certificated securities, negotiable 2
documents, or instruments is perfected without filing or the taking of 3
possession or control for a period of twenty (20) days from the time it 4
attaches to the extent that it arises for new value given under an 5
authenticated a signed security agreement. 6
(f) A perfected security interest in a negotiable document or goods in 7
possession of a bailee, other than one that has issued a negotiable document 8
for the goods, remains perfected for twenty (20) days without filing if the 9
secured party makes available to the debtor the goods or documents 10
representing the goods for the purpose of: 11
(1) ultimate sale or exchange; or 12
(2) loading, unloading, storing, shipping, transshipping, 13
manufacturing, processing, or otherwise dealing with them in a manner 14
preliminary to their sale or exchange. 15
(g) A perfected security interest in a certificated security or 16
instrument remains perfected for twenty (20) days without filing if the 17
secured party delivers the security certificate or instrument to the debtor 18
for the purpose of: 19
(1) ultimate sale or exchange; or 20
(2) presentation, collection, enforcement, renewal, or 21
registration of transfer. 22
(h) After the twenty-day period specified in subsection (e), (f), or 23
(g) expires, perfection depends upon compliance with this chapter. 24
25
SECTION 62. Arkansas Code § 4 -9-313(a), concerning when possession by 26
or delivery to a secured party perfects a security interest without filing in 27
the Uniform Commercial Code, is amended to read as follows: 28
(a) Except as otherwise provided in subsection (b), a secured party 29
may perfect a security interest in tangible negotiable documents, goods, 30
instruments, negotiable tangible documents, or tangible money, or tangible 31
chattel paper by taking possession of the collateral. A secured party may 32
perfect a security interest in certificated securities by taking delivery of 33
the certificated securities under § 4-8-301. 34
35
SECTION 63. Arkansas Code § 4 -9-313(c), concerning when a secured 36 HB1746
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party takes possession of collateral in the Uniform Commercial Code, is 1
amended to read as follows: 2
(c) With respect to collateral other than certificated securities and 3
goods covered by a document, a secured party takes possession of collateral 4
in the possession of a person other than the debtor, the secured party, or a 5
lessee of the collateral from the debtor in the ordinary course of the 6
debtor's business, when: 7
(1) the person in possession authenticates signs a record 8
acknowledging that it holds possession of the collateral for the secured 9
party's benefit; or 10
(2) the person takes possession of the collateral after having 11
authenticated signed a record acknowledging that it will hold possession of 12
the collateral for the secured party's benefit. 13
14
SECTION 64. Arkansas Code § 4 -9-313(d), concerning the timeline of 15
perfection of a security interests dependent upon possession in the Uniform 16
Commercial Code, is amended to read as follows: 17
(d) If perfection of a security interest depends upon possession of 18
the collateral by a secured party, perfection occurs no not earlier than the 19
time the secured party takes possession and continues only while the secured 20
party retains possession. 21
22
SECTION 65. Arkansas Code § 4 -9-314 is amended to read as follows: 23
4-9-314. Perfection by control. 24
(a) A security interest in investment property, deposit accounts, 25
letter-of-credit rights, virtual currencies, electronic chattel paper, or 26
electronic documents controllable accounts, controllable electronic records, 27
controllable payment intangibles, deposit accounts, electronic documents, 28
electronic money, investment property, or letter-of-credit rights may be 29
perfected by control of the collateral under § 4-7-106, § 4-9-104, § 4-9-105 30
§ 4-9-105A, § 4-9-106, or § 4-9-107, or § 4-9-107A. 31
(b) A security interest in deposit accounts, electronic chattel paper, 32
virtual currencies, letter-of-credit rights, or electronic documents 33
controllable accounts, controllable electronic records, controllable payment 34
intangibles, deposit accounts, electronic documents, electronic money, or 35
letter-of-credit rights is perfected by control under § 4-7-106, § 4-9-104, § 36 HB1746
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4-9-105 § 4-9-105A, § 4-9-106, or § 4-9-107, or § 4-9-107A when not earlier 1
than the time the secured party obtains control and remains perfected by 2
control only while the secured party retains control. 3
(c) A security interest in investment property is perfected by control 4
under § 4-9-106 from not earlier than the time the secured party obtains 5
control and remains perfected by control until: 6
(1) the secured party does not have control; and 7
(2) one of the following occurs: 8
(A) if the collateral is a certificated security, the 9
debtor has or acquires possession of the security certificate; 10
(B) if the collateral is an uncertificated security, the 11
issuer has registered or registers the debtor as the registered owner; or 12
(C) if the collateral is a security entitlement, the 13
debtor is or becomes the entitlement holder. 14
15
SECTION 66. Arkansas Code Title 4, Chapter 9, Subchapter 3, is amended 16
to add an additional section to read as follows: 17
4-9-314A. Perfection by possession and control of chattel paper. 18
(a) A secured party may perfect a security interest in chattel paper 19
by taking possession of each authoritative tangible copy of the record 20
evidencing the chattel paper and obtaining control of each authoritative 21
electronic copy of the electronic record evidencing the chattel paper. 22
(b) A security interest is perfected under subsection (a) not earlier 23
than the time the secured party takes possession and obtains control and 24
remains perfected under subsection (a) only while the secured party retains 25
possession and control. 26
(c) Section 4-9-313(c) and (f) through (i) applies to perfection by 27
possession of an authoritative tangible copy of a record evidencing chattel 28
paper. 29
30
SECTION 67. Arkansas Code § 4 -9-316(a), concerning the effect of 31
change in governing law in the Uniform Commercial Code, is amended to read 32
as follows: 33
(a) A security interest perfected pursuant to the law of the 34
jurisdiction designated in § 4-9-301(1), or § 4-9-305(c), § 4-9-306A(d), or § 35
4-9-306B(b) remains perfected until the earliest of: 36 HB1746
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(1) the time perfection would have ceased under the law of that 1
jurisdiction; 2
(2) the expiration of four (4) months after a change of the 3
debtor's location to another jurisdiction; or 4
(3) the expiration of one (1) year after a transfer of 5
collateral to a person that thereby becomes a debtor and is located in 6
another jurisdiction. 7
8
SECTION 68. Arkansas Code § 4 -9-316(f), concerning the effect of 9
change in governing law in the Uniform Commercial Code, is amended to read as 10
follows: 11
(f) A security interest in chattel paper, controllable accounts, 12
controllable electronic records, controllable payment intangibles, deposit 13
accounts, letter-of-credit rights, or investment property which is perfected 14
under the law of the chattel paper's jurisdiction, the controllable 15
electronic record's jurisdiction, the bank's jurisdiction, the issuer's 16
jurisdiction, a nominated person's jurisdiction, the securities 17
intermediary's jurisdiction, or the commodity intermediary's jurisdiction, as 18
applicable, remains perfected until the earlier of: 19
(1) the time the security interest would have become unperfected 20
under the law of that jurisdiction; or 21
(2) the expiration of four (4) months after a change of the 22
applicable jurisdiction to another jurisdiction. 23
24
SECTION 69. Arkansas Code § 4 -9-317 is amended to read as follows: 25
4-9-317. Interests that take priority over or take free of security 26
interest or agricultural lien. 27
(a) A security interest or agricultural lien is subordinate to the 28
rights of: 29
(1) a person entitled to priority under § 4-9-322; and 30
(2) except as otherwise provided in subsection (e), a person 31
that becomes a lien creditor before the earlier of the time: 32
(A) the security interest or agricultural lien is 33
perfected; or 34
(B) one of the conditions specified in § 4-9-203(b)(3) is 35
met and a financing statement covering the collateral is filed. 36 HB1746
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(b) Except as otherwise provided in subsection (e), a buyer, other 1
than a secured party, of tangible chattel paper, tangible documents, of 2
goods, instruments, tangible documents, or a certificated security takes free 3
of a security interest or agricultural lien if the buyer gives value and 4
receives delivery of the collateral without knowledge of the security 5
interest or agricultural lien and before it is perfected. 6
(c) Except as otherwise provided in subsection (e), a lessee of goods 7
takes free of a security interest or agricultural lien if the lessee gives 8
value and receives delivery of the collateral without knowledge of the 9
security interest or agricultural lien and before it is perfected. 10
(d) A Subject to subsections (f) through (i), a licensee of a general 11
intangible or a buyer, other than a secured party, of collateral other than 12
tangible chattel paper, tangible documents, electronic money, goods, 13
instruments, or a certificated security takes free of a security interest if 14
the licensee or buyer gives value without knowledge of the security interest 15
and before it is perfected. 16
(e) Except as otherwise provided in §§ 4-9-320 and 4-9-321, if a 17
person files a financing statement with respect to a purchase-money security 18
interest before or within twenty (20) days after the debtor receives delivery 19
of the collateral, the security interest takes priority over the rights of a 20
buyer, lessee, or lien creditor which arise between the time the security 21
interest attaches and the time of filing. 22
(f) A buyer, other than a secured party, of chattel paper takes free 23
of a security interest if, without knowledge of the security interest and 24
before it is perfected, the buyer gives value and: 25
(1) receives delivery of each authoritative tangible copy of the 26
record evidencing the chattel paper; and 27
(2) if each authoritative electronic copy of the record 28
evidencing the chattel paper can be subjected to control under § 4 -9-105, 29
obtains control of each authoritative electronic copy. 30
(g) A buyer of an electronic document takes free of a security 31
interest if, without knowledge of the security interest and before it is 32
perfected, the buyer gives value and, if each authoritative electronic copy 33
of the document can be subjected to control under § 4 -7-106, obtains control 34
of each authoritative electronic copy. 35
(h) A buyer of a controllable electronic record takes free of a 36 HB1746
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security interest if, without knowledge of the security interest and before 1
it is perfected, the buyer gives value and obtains control of the 2
controllable electronic record. 3
(i) A buyer, other than a secured party, of a controllable account or 4
a controllable payment intangible takes free of a security interest if, 5
without knowledge of the security interest and before it is perfected, the 6
buyer gives value and obtains control of the controllable account or 7
controllable payment intangible. 8
9
SECTION 70. Arkansas Code § 4 -9-323(d), concerning future advances in 10
the Uniform Commercial Code, is amended to read as follows: 11
(d) Except as otherwise provided in subsection (e), a buyer of goods 12
other than a buyer in ordinary course of business takes free of a security 13
interest to the extent that it secures advances made after the earlier of: 14
(1) the time the secured party acquires knowledge of the buyer's 15
purchase; or 16
(2) forty-five (45) days after the purchase. 17
18
SECTION 71. Arkansas Code § 4 -9-323(f), concerning future advances in 19
the Uniform Commercial Code, is amended to read as follows: 20
(f) Except as otherwise provided in subsection (g), a lessee of goods, 21
other than a lessee in ordinary course of business, takes the leasehold 22
interest free of a security interest to the extent that it secures advances 23
made after the earlier of: 24
(1) the time the secured party acquires knowledge of the lease; 25
or 26
(2) forty-five (45) days after the lease contract becomes 27
enforceable. 28
29
SECTION 72. Arkansas Code § 4 -9-324(b), concerning the priority of 30
purchase-money security interests in the Uniform Commercial Code, is amended 31
to read as follows: 32
(b) Subject to subsection (c) and except as otherwise provided in 33
subsection (g), a perfected purchase-money security interest in inventory has 34
priority over a conflicting security interest in the same inventory, has 35
priority over a conflicting security interest in chattel paper or an 36 HB1746
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instrument constituting proceeds of the inventory and in proceeds of the 1
chattel paper, if so provided in § 4-9-330, and, except as otherwise provided 2
in § 4-9-327, also has priority in identifiable cash proceeds of the 3
inventory to the extent the identifiable cash proceeds are received on or 4
before the delivery of the inventory to a buyer, if: 5
(1) the purchase-money security interest is perfected when the 6
debtor receives possession of the inventory; 7
(2) the purchase-money secured party sends an authenticated a 8
signed notification to the holder of the conflicting security interest; 9
(3) the holder of the conflicting security interest receives the 10
notification within five (5) years before the debtor receives possession of 11
the inventory; and 12
(4) the notification states that the person sending the 13
notification has or expects to acquire a purchase-money security interest in 14
inventory of the debtor and describes the inventory. 15
16
SECTION 73. Arkansas Code § 4 -9-324(d), concerning the priority of 17
purchase-money security interests in the Uniform Commercial Code, is amended 18
to read as follows: 19
(d) Subject to subsection (e) and except as otherwise provided in 20
subsection (g), a perfected purchase-money security interest in livestock 21
that are farm products has priority over a conflicting security interest in 22
the same livestock, and, except as otherwise provided in § 4-9-327, a 23
perfected security interest in their identifiable proceeds and identifiable 24
products in their unmanufactured states also has priority, if: 25
(1) the purchase-money security interest is perfected when the 26
debtor receives possession of the livestock; 27
(2) the purchase-money secured party sends an authenticated a 28
signed notification to the holder of the conflicting security interest; 29
(3) the holder of the conflicting security interest receives the 30
notification within six months before the debtor receives possession of the 31
livestock; and 32
(4) the notification states that the person sending the 33
notification has or expects to acquire a purchase-money security interest in 34
livestock of the debtor and describes the livestock. 35
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SECTION 74. Arkansas Code Title 4, Chapter 9, Subchapter 3, is amended 1
to add an additional section to read as follows: 2
4-9-326A. Priority of security interest in controllable account, 3
controllable electronic record, and controllable payment intangible. 4
A security interest in a controllable account, controllable electronic 5
record, or controllable payment intangible held by a secured party having 6
control of the account, electronic record, or payment intangible has priority 7
over a conflicting security interest held by a secured party that does not 8
have control. 9
10
SECTION 75. Arkansas Code § 4 -9-330 is amended to read as follows: 11
4-9-330. Priority of purchaser of chattel paper or instrument. 12
(a) A purchaser of chattel paper has priority over a security interest 13
in the chattel paper which is claimed merely as proceeds of inventory subject 14
to a security interest if: 15
(1) in good faith and in the ordinary course of the purchaser's 16
business, the purchaser gives new value, and takes possession of each 17
authoritative tangible copy of the record evidencing the chattel paper, or 18
and obtains control of under § 4-9-105 of each authoritative electronic copy 19
of the record evidencing the chattel paper under § 4-9-105; and 20
(2) the chattel paper does authoritative copies of the record 21
evidencing the chattel paper do not indicate that it the chattel paper has 22
been assigned to an identified assignee other than the purchaser. 23
(b) A purchaser of chattel paper has priority over a security interest 24
in the chattel paper which is claimed other than merely as proceeds of 25
inventory subject to a security interest if the purchaser gives new value, 26
and takes possession of each authoritative tangible copy of the record 27
evidencing the chattel paper, or and obtains control of under § 4-9-105 of 28
each authoritative electronic copy of the record evidencing the chattel paper 29
under § 4-9-105 in good faith, in the ordinary course of the purchaser's 30
business, and without knowledge that the purchase violates the rights of the 31
secured party. 32
(c) Except as otherwise provided in § 4-9-327, a purchaser having 33
priority in chattel paper under subsection (a) or (b) also has priority in 34
proceeds of the chattel paper to the extent that: 35
(1) § 4-9-322 provides for priority in the proceeds; or 36 HB1746
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(2) the proceeds consist of the specific goods covered by the 1
chattel paper or cash proceeds of the specific goods, even if the purchaser's 2
security interest in the proceeds is unperfected. 3
(d) Except as otherwise provided in § 4-9-331(a), a purchaser of an 4
instrument has priority over a security interest in the instrument perfected 5
by a method other than possession if the purchaser gives value and takes 6
possession of the instrument in good faith and without knowledge that the 7
purchase violates the rights of the secured party. 8
(e) For purposes of subsections (a) and (b), the holder of a purchase-9
money security interest in inventory gives new value for chattel paper 10
constituting proceeds of the inventory. 11
(f) For purposes of subsections (b) and (d), if the authoritative 12
copies of the record evidencing chattel paper or an instrument indicates 13
indicate that it the chattel paper or instrument has been assigned to an 14
identified secured party other than the purchaser, a purchaser of the chattel 15
paper or instrument has knowledge that the purchase violates the rights of 16
the secured party. 17
18
SECTION 76 Arkansas Code § 4-9-331 is amended to read as follows: 19
4-9-331. Priority of rights of purchasers of instruments controllable 20
accounts, controllable electronic records, controllable payment intangibles , 21
documents, instruments, and securities, and virtual currencies under other 22
chapters — Priority of interests in financial assets and security 23
entitlements and protection against assertion of claim under Chapter 8, and 24
virtual currencies under Chapter 11 Chapter 12. 25
(a) This chapter does not limit the rights of a holder in due course 26
of a negotiable instrument, a holder to which a negotiable document of title 27
has been duly negotiated, a protected purchaser of a security, or a 28
qualifying purchaser of a virtual currency, controllable account, 29
controllable electronic record, or controllable payment intangible. These 30
holders or purchasers take priority over an earlier security interest, even 31
if perfected, to the extent provided in Chapter 3, Chapter 7, Chapter 8, and 32
Chapter 11 Chapter 12. 33
(b) This chapter does not limit the rights of or impose liability on a 34
person to the extent that the person is protected against the assertion of a 35
claim under Chapter 8 or Chapter 11 Chapter 12. 36 HB1746
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(c) Filing under this chapter does not constitute notice of a claim or 1
defense to the holders, or purchasers, or persons described in subsections 2
(a) and (b). 3
4
SECTION 77. Arkansas Code § 4 -9-332 is amended to read as follows: 5
4-9-332. Transfer of money — Transfer of funds from deposit account. 6
(a) A transferee of tangible money takes the money free of a security 7
interest unless the transferee acts if the transferee receives possession of 8
the money without acting in collusion with the debtor in violating the rights 9
of the secured party. 10
(b) A transferee of funds from a deposit account takes the funds free 11
of a security interest in the deposit account unless the transferee acts if 12
the transferee receives the funds without acting in collusion with the debtor 13
in violating the rights of the secured party. 14
(c) A transferee of electronic money takes the money free of a 15
security interest if the transferee obtains control of the money without 16
acting in collusion with the debtor in violating the rights of the secured 17
party. 18
19
SECTION 78. Arkansas Code § 4 -9-334(f), concerning the priority of 20
security interests in fixtures and crops in the Uniform Commercial Code, is 21
amended to read as follows: 22
(f) A security interest in fixtures, whether or not perfected, has 23
priority over a conflicting interest of an encumbrancer or owner of the real 24
property if: 25
(1) the encumbrancer or owner has, in an authenticated a signed 26
record, consented to the security interest or disclaimed an interest in the 27
goods as fixtures; or 28
(2) the debtor has a right to remove the goods as against the 29
encumbrancer or owner. 30
31
SECTION 79. Arkansas Code § 4 -9-341 is amended to read as follows: 32
4-9-341. Bank's rights and duties with respect to deposit account. 33
Except as otherwise provided in § 4-9-340(c), and unless the bank 34
otherwise agrees in an authenticated a signed record, a bank's rights and 35
duties with respect to a deposit account maintained with the bank are not 36 HB1746
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terminated, suspended, or modified by: 1
(1) the creation, attachment, or perfection of a security 2
interest in the deposit account; 3
(2) the bank's knowledge of the security interest; or 4
(3) the bank's receipt of instructions from the secured party. 5
6
SECTION 80. Arkansas Code § 4 -9-404(a), concerning the rights acquired 7
by an assignee in the Uniform Commercial Code, is amended to read as follows: 8
(a) Unless an account debtor has made an enforceable agreement not to 9
assert defenses or claims, and subject to subsections (b)-(e), the rights of 10
an assignee are subject to: 11
(1) all terms of the agreement between the account debtor and 12
assignor and any defense or claim in recoupment arising from the transaction 13
that gave rise to the contract; and 14
(2) any other defense or claim of the account debtor against the 15
assignor which accrues before the account debtor receives a notification of 16
the assignment authenticated signed by the assignor or the assignee. 17
18
SECTION 81. Arkansas Code § 4 -9-406 is amended to read as follows: 19
4-9-406. Discharge of account debtor — Notification of assignment — 20
Identification and proof of assignment — Restrictions on assignment of 21
accounts, chattel paper, payment intangibles, and promissory notes 22
ineffective. 23
(a) Subject to subsections (b)-(i) and (k), an account debtor on an 24
account, chattel paper, or a payment intangible may discharge its obligation 25
by paying the assignor until, but not after, the account debtor receives a 26
notification, authenticated signed by the assignor or the assignee, that the 27
amount due or to become due has been assigned and that payment is to be made 28
to the assignee. After receipt of the notification, the account debtor may 29
discharge its obligation by paying the assignee and may not discharge the 30
obligation by paying the assignor. 31
(b) Subject to subsection (h) subsections (h) and (k), notification is 32
ineffective under subsection (a): 33
(1) if it does not reasonably identify the rights assigned; 34
(2) to the extent that an agreement between an account debtor 35
and a seller of a payment intangible limits the account debtor's duty to pay 36 HB1746
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a person other than the seller and the limitation is effective under law 1
other than this chapter; or 2
(3) at the option of an account debtor, if the notification 3
notifies the account debtor to make less than the full amount of any 4
installment or other periodic payment to the assignee, even if: 5
(A) only a portion of the account, chattel paper, or 6
payment intangible has been assigned to that assignee; 7
(B) a portion has been assigned to another assignee; or 8
(C) the account debtor knows that the assignment to that 9
assignee is limited. 10
(c) Subject to subsection (h) subsections (h) and (k), if requested by 11
the account debtor, an assignee shall seasonably furnish reasonable proof 12
that the assignment has been made. Unless the assignee complies, the account 13
debtor may discharge its obligation by paying the assignor, even if the 14
account debtor has received a notification under subsection (a). 15
(d) Except In this subsection, "promissory note" includes a negotiable 16
instrument that evidences chattel paper. Except as otherwise provided in 17
subsection (e) and §§ 4-2A-303 and 4-9-407, and subject to subsection (h), a 18
term in an agreement between an account debtor and an assignor or in a 19
promissory note is ineffective to the extent that it: 20
(1) prohibits, restricts, or requires the consent of the account 21
debtor or person obligated on the promissory note to the assignment or 22
transfer of, or the creation, attachment, perfection, or enforcement of a 23
security interest in, the account, chattel paper, payment intangible, or 24
promissory note; or 25
(2) provides that the assignment or transfer or the creation, 26
attachment, perfection, or enforcement of the security interest may give rise 27
to a default, breach, right of recoupment, claim, defense, termination, right 28
of termination, or remedy under the account, chattel paper, payment 29
intangible, or promissory note. 30
(e) Subsection (d) does not apply to the sale of a payment intangible 31
or promissory note, other than a sale pursuant to a disposition under § 4-9-32
610 or an acceptance of collateral under § 4-9-620. 33
(f) Except as otherwise provided in §§ 4-2A-303 and 4-9-407 and 34
subject to subsections (h) and (i), a rule of law, statute, or regulation 35
that prohibits, restricts, or requires the consent of a government, 36 HB1746
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governmental body or official, or account debtor to the assignment or 1
transfer of, or creation of a security interest in, an account or chattel 2
paper is ineffective to the extent that the rule of law, statute, or 3
regulation: 4
(1) prohibits, restricts, or requires the consent of the 5
government, governmental body or official, or account debtor to the 6
assignment or transfer of, or the creation, attachment, perfection, or 7
enforcement of a security interest in the account or chattel paper; or 8
(2) provides that the assignment or transfer or the creation, 9
attachment, perfection, or enforcement of the security interest may give rise 10
to a default, breach, right of recoupment, claim, defense, termination, right 11
of termination, or remedy under the account or chattel paper. 12
(g) Subject to subsection (h) subsections (h) and (k), an account 13
debtor may not waive or vary its option under subsection (b)(3). 14
(h) This section is subject to law other than this chapter which 15
establishes a different rule for an account debtor who is an individual and 16
who incurred the obligation primarily for personal, family, or household 17
purposes. 18
(i) This section does not apply to an assignment of a health-care- 19
insurance receivable. Subsections (d) and (f) do not apply to assignment or 20
transfer of, or the creation, attachment, perfection, or enforcement of a 21
security interest in: 22
(1) a right the assignment or transfer of which is prohibited or 23
restricted by § 11-9-110(a). 24
(2) a claim or right to receive amounts (whether by suit or 25
agreement and whether as lump sums or as periodic payments) as damages (other 26
than punitive damages) on account of personal physical injuries or physical 27
sickness. 28
(3) a claim or right to receive benefits under a special needs 29
trust as described in 42 U.S.C. § 1396p(d)(4). 30
(j) Except to the extent otherwise provided in subsection (i), this 31
section prevails over any inconsistent provision of an existing or future 32
statute, rule or regulation of this state unless the provision is contained 33
in a statute of this state, refers expressly to this section and states that 34
the provision prevails over this section. 35
(k) Subsections (a), (b), (c), and (g) do not apply to a controllable 36 HB1746
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account or controllable payment intangible. 1
2
SECTION 82. Arkansas Code § 4 -9-408, concerning restrictions on 3
assignment of promissory notes, health -care-insurance receivables, and 4
certain general intangibles ineffective in the Uniform Commercial Code, is 5
amended to add an additional subsection to read as follows: 6
(g) In this section, "promissory note" includes a negotiable 7
instrument that evidences chattel paper. 8
9
SECTION 83. Arkansas Code § 4-9-509(a) and (b), concerning persons 10
entitled to file a record under the Uniform Commercial Code, are amended to 11
read as follows: 12
(a) A person may file an initial financing statement, amendment that 13
adds collateral covered by a financing statement, or amendment that adds a 14
debtor to a financing statement only if: 15
(1) the debtor authorizes the filing in an authenticated a 16
signed record or pursuant to subsection (b) or (c); or 17
(2) the person holds an agricultural lien that has become 18
effective at the time of filing and the financing statement covers only 19
collateral in which the person holds an agricultural lien. 20
(b) By authenticating signing or becoming bound as debtor by a 21
security agreement, a debtor or new debtor authorizes the filing of an 22
initial financing statement, and an amendment, covering: 23
(1) the collateral described in the security agreement; and 24
(2) property that becomes collateral under § 4-9-315(a)(2), 25
whether or not the security agreement expressly covers proceeds. 26
27
SECTION 84. Arkansas Code § 4 -9-513(b) and (c), concerning the 28
termination statement under the Uniform Commercial Code, are amended to read 29
as follows: 30
(b) To comply with subsection (a), a secured party shall cause the 31
secured party of record to file the termination statement: 32
(1) within one (1) month after there is no obligation secured by 33
the collateral covered by the financing statement and no commitment to make 34
an advance, incur an obligation, or otherwise give value; or 35
(2) if earlier, within twenty (20) days after the secured party 36 HB1746
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receives an authenticated a signed demand from a debtor. 1
(c) In cases not governed by subsection (a), within twenty (20) days 2
after a secured party receives an authenticated a signed demand from a 3
debtor, the secured party shall cause the secured party of record for a 4
financing statement to send to the debtor a termination statement for the 5
financing statement or file the termination statement in the filing office 6
if: 7
(1) except in the case of a financing statement covering 8
accounts or chattel paper that has been sold or goods that are the subject of 9
a consignment, there is no obligation secured by the collateral covered by 10
the financing statement and no commitment to make an advance, incur an 11
obligation, or otherwise give value; 12
(2) the financing statement covers accounts or chattel paper 13
that has been sold but as to which the account debtor or other person 14
obligated has discharged its obligation; 15
(3) the financing statement covers goods that were the subject 16
of a consignment to the debtor but are not in the debtor's possession; or 17
(4) the debtor did not authorize the filing of the initial 18
financing statement. 19
20
SECTION 85. Arkansas Code § 4 -9-601(b), concerning the rights and 21
duties of a secured party in the Uniform Commercial Code, is amended to read 22
as follows: 23
(b) A secured party in possession of collateral or control of 24
collateral under § 4-7-106, § 4-9-104, § 4-9-105, § 4-9-105A, § 4-9-106, or § 25
4-9-107, or § 4-9-107A has the rights and duties provided in § 4-9-207. 26
27
SECTION 86. Arkansas Code § 4 -9-605 is amended to read as follows: 28
4-9-605. Unknown debtor or secondary obligor. 29
(a) A Except as provided in subsection (b), a secured party does not 30
owe a duty based on its status as secured party: 31
(1) to a person that is a debtor or obligor, unless the secured 32
party knows: 33
(A) that the person is a debtor or obligor; 34
(B) the identity of the person; and 35
(C) how to communicate with the person; or 36 HB1746
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(2) to a secured party or lienholder that has filed a financing 1
statement against a person, unless the secured party knows: 2
(A) that the person is a debtor; and 3
(B) the identity of the person. 4
(b) A secured party owes a duty based on its status as a secured party 5
to a person if, at the time the secured party obtains control of collateral 6
that is a controllable account, controllable electronic record, or 7
controllable payment intangible or at the time the security interest attaches 8
to the collateral, whichever is later: 9
(1) the person is a debtor or obligor; and 10
(2) the secured party knows that the information in subsection 11
(a)(1)(A), (B), or (C) relating to the person is not provided by the 12
collateral, a record attached to or logically associated with the collateral, 13
or the system in which the collateral is recorded. 14
15
SECTION 87. Arkansas Code § 4 -9-608(a)(1), concerning the application 16
of proceeds of collection or enforcement under the Uniform Commercial Code, 17
is amended to read as follows: 18
(1) A secured party shall apply or pay over for application the 19
cash proceeds of collection or enforcement under § 4-9-607 in the following 20
order to: 21
(A) the reasonable expenses of collection and enforcement 22
and, to the extent provided for by agreement and not prohibited by law, 23
reasonable attorney's fees and legal expenses incurred by the secured party; 24
(B) the satisfaction of obligations secured by the 25
security interest or agricultural lien under which the collection or 26
enforcement is made; and 27
(C) the satisfaction of obligations secured by any 28
subordinate security interest in or other lien on the collateral subject to 29
the security interest or agricultural lien under which the collection or 30
enforcement is made if the secured party receives an authenticated a signed 31
demand for proceeds before distribution of the proceeds is completed. 32
33
SECTION 88. Arkansas Code § 4 -9-611 is amended to read as follows: 34
4-9-611. Notification before disposition of collateral. 35
(a) In this section, “notification date” means the earlier of the date 36 HB1746
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on which: 1
(1) a secured party sends to the debtor and any secondary 2
obligor an authenticated a signed notification of disposition; or 3
(2) the debtor and any secondary obligor waive the right to 4
notification. 5
(b) Except as otherwise provided in subsection (d), a secured party 6
that disposes of collateral under § 4-9-610 shall send to the persons 7
specified in subsection (c) a reasonable authenticated signed notification of 8
disposition. 9
(c) To comply with subsection (b), the secured party shall send an 10
authenticated a signed notification of disposition to: 11
(1) the debtor; 12
(2) any secondary obligor; and 13
(3) if the collateral is other than consumer goods: 14
(A) any other person from which the secured party has 15
received, before the notification date, an authenticated a signed 16
notification of a claim of an interest in the collateral; 17
(B) any other secured party or lienholder that, ten (10) 18
days before the notification date, held a security interest in or other lien 19
on the collateral perfected by the filing of a financing statement that: 20
(i) identified the collateral; 21
(ii) was indexed under the debtor's name as of that 22
date; and 23
(iii) was filed in the office in which to file a 24
financing statement against the debtor covering the collateral as of that 25
date; and 26
(C) any other secured party that, ten (10) days before the 27
notification date, held a security interest in the collateral perfected by 28
compliance with a statute, regulation, or treaty described in § 4-9-311(a). 29
(d) Subsection (b) does not apply if the collateral is perishable or 30
threatens to decline speedily in value or is of a type customarily sold on a 31
recognized market. 32
(e) A secured party complies with the requirement for notification 33
prescribed by subdivision (c)(3)(B) if: 34
(1) not later than twenty (20) days or earlier than thirty (30) 35
days before the notification date, the secured party requests, in a 36 HB1746
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commercially reasonable manner, information concerning financing statements 1
indexed under the debtor's name in the office indicated in subdivision 2
(c)(3)(B); and 3
(2) before the notification date, the secured party: 4
(A) did not receive a response to the request for 5
information; or 6
(B) received a response to the request for information and 7
sent an authenticated a signed notification of disposition to each secured 8
party or other lienholder named in that response whose financing statement 9
covered the collateral. 10
11
SECTION 89. Arkansas Code § 4 -9-613 is amended to read as follows: 12
4-9-613. Contents and form of notification before disposition of 13
collateral: General. 14
(a) Except in a consumer-goods transaction, the following rules apply: 15
(1) The contents of a notification of disposition are sufficient 16
if the notification: 17
(A) describes the debtor and the secured party; 18
(B) describes the collateral that is the subject of the 19
intended disposition; 20
(C) states the method of intended disposition; 21
(D) states that the debtor is entitled to an accounting of 22
the unpaid indebtedness and states the charge, if any, for an accounting; and 23
(E) states the time and place of a public disposition or 24
the time after which any other disposition is to be made. 25
(2) Whether the contents of a notification that lacks any of the 26
information specified in paragraph (1) are nevertheless sufficient is a 27
question of fact. 28
(3) The contents of a notification providing substantially the 29
information specified in paragraph (1) are sufficient, even if the 30
notification includes: 31
(A) information not specified by that paragraph; or 32
(B) minor errors that are not seriously misleading. 33
(4) A particular phrasing of the notification is not required. 34
(5) The following form of notification and the form appearing in 35
§ 4-9-614(3) § 4-9-614(a)(3), when completed in accordance with the 36 HB1746
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instructions in subsection (b) and § 4-9-614(b), each provides sufficient 1
information: 2
NOTIFICATION OF DISPOSITION OF COLLATERAL 3
To: [Name of debtor, obligor, or other person to which 4
the notification is sent] 5
From: [Name, address, and telephone number of secured 6
party] 7
{1} Name of any Debtor(s) debtor that is not an addressee : [Include 8
only if debtor(s) are not an addressee] (Name of each debtor) 9
{2} We will sell (describe collateral)(to the highest qualified 10
bidder) at public sale. A sale could include a lease or license. The sale 11
will be held as follows: 12
[For a public disposition:] 13
We will sell [or lease or license, as applicable] the [describe collateral] 14
[to the highest qualified bidder] in public as follows: 15
Day and (Date): 16
(Time): 17
(Place): 18
[For a private disposition:] 19
{3} We will sell [or lease or license, as applicable] the [ (describe 20
collateral]) privately at private sale sometime after [day and (date]). A 21
sale could include a lease or license. 22
{4} You are entitled to an accounting of the unpaid indebtedness 23
secured by the property that we intend to sell [or lease or license, as 24
applicable] [for a charge of $ ] or, as applicable, lease or license . 25
{5} If you request an accounting you must pay a charge of $ (amount). 26
{6} You may request an accounting by calling us at [telephone number] 27
(telephone number). 28
[End of Form] 29
(b) The following instructions apply to the form of notification in 30
subsection (a)(5): 31
(1) The instructions in this subsection refer to the numbers in 32
braces before items in the form of notification in subsection (a)(5). Do not 33
include the numbers or braces in the notification. The numbers and braces are 34
used only for the purpose of these instructions. 35
(2) Include and complete item {1} only if there is a debtor that 36 HB1746
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is not an addressee of the notification and list the name or names. 1
(3) Include and complete either item {2}, if the notification 2
relates to a public disposition of the collateral, or item {3}, if the 3
notification relates to a private disposition of the collateral. If item {2} 4
is included, include the words “to the highest qualified bidder” only if 5
applicable. 6
(4) Include and complete items {4} and {6}. 7
(5) Include and complete item {5} only if the sender will charge 8
the recipient for an accounting. 9
10
SECTION 90. Arkansas Code § 4 -9-614 is amended to read as follows: 11
4-9-614. Contents and form of notification before disposition of 12
collateral: Consumer -goods transaction. 13
(a) In a consumer-goods transaction, the following rules apply: 14
(1) A notification of disposition must provide the following 15
information: 16
(A) the information specified in § 4-9-613(1) § 4-9-17
613(a)(1); 18
(B) a description of any liability for a deficiency of the 19
person to which the notification is sent; 20
(C) a telephone number from which the amount that must be 21
paid to the secured party to redeem the collateral under § 4-9-623 is 22
available; and 23
(D) a telephone number or mailing address from which 24
additional information concerning the disposition and the obligation secured 25
is available. 26
(2) A particular phrasing of the notification is not required. 27
(3) The following form of notification, when completed in 28
accordance with the instructions in subsection (b), provides sufficient 29
information: 30
[(Name and address of secured party )] 31
[(Date)] 32
NOTICE OF OUR PLAN TO SELL PROPERTY 33
[(Name and address of any obligor who is also a debtor )] 34
Subject: [Identification of Transaction] (Identity 35
transaction) 36 HB1746
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We have your [(describe collateral)], because you broke promises in our 1
agreement. 2
[For a public disposition:] 3
{1} We will sell [(describe collateral)] at public sale. A sale could 4
include a lease or license. The sale will be held as follows: 5
(Date:) 6
(Time:) 7
(Place:) 8
You may attend the sale and bring bidders if you want. 9
[For a private disposition:] 10
{2} We will sell [(describe collateral)] at private sale sometime 11
after [(date)]. A sale could include a lease or license. 12
{3} The money that we get from the sale , (after paying our costs ), 13
will reduce the amount you owe. If we get less money than you owe, you [(will 14
or will not, as applicable ]) still owe us the difference. If we get more 15
money than you owe, you will get the extra money, unless we must pay it to 16
someone else. 17
{4} You can get the property back at any time before we sell it by 18
paying us the full amount you owe , (not just the past due payments ), 19
including our expenses. To learn the exact amount you must pay, call us at 20
[(telephone number)]. 21
{5} If you want us to explain to you in (writing)(writing or in 22
(description of electronic record))(description of electronic record) how we 23
have figured the amount that you owe us, you may {6} call us at [(telephone 24
number)] [(or)(write us at [(secured party’s address ]])) (or contact us by 25
(description of electronic communication method)) {7) and request (a written 26
explanation)(a written explanation or an explanation in (description of 27
electronic record))(an explanation in (description of electronic record)) . 28
{8} [We will charge you $ (amount) for the explanation if we sent you 29
another written explanation of the amount you owe us within the last six 30
months.] 31
{9} If you need more information about the sale (call us at 32
[(telephone number])) [(or)(write us at [(secured party’s address ]]))(or 33
contact us by (description of electronic communication method)) . 34
{10} We are sending this notice to the following other people who have 35
an interest in [(describe collateral]) or who owe money under your agreement: 36 HB1746
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[(Names of all other debtors and obligors, if any ]) 1
[End of Form] 2
(4) A notification in the form of paragraph (3) is sufficient, 3
even if additional information appears at the end of the form. 4
(5) A notification in the form of paragraph (3) is sufficient, 5
even if it includes errors in information not required by paragraph (1), 6
unless the error is misleading with respect to rights arising under this 7
chapter. 8
(6) If a notification under this section is not in the form of 9
paragraph (3), law other than this chapter determines the effect of including 10
information not required by paragraph (1). 11
(b) The following instructions apply to the form of notification in 12
subsection (a)(3): 13
(1) The instructions in this subsection refer to the numbers in 14
braces before items in the form of notification in subsection (a)(3). Do not 15
include the numbers or braces in the notification. The numbers and braces are 16
used only for the purpose of these instructions. 17
(2) Include and complete either item {1}, if the notification 18
relates to a public disposition of the collateral, or item {2}, if the 19
notification relates to a private disposition of the collateral. 20
(3) Include and complete items {3}, {4}, {5}, {6}, and {7}. 21
(4) In item {5}, include and complete any one of the three 22
alternative methods for the explanation —writing, writing or electronic 23
record, or electronic record. 24
(5) In item {6}, include the telephone number. In addition, the 25
sender may include and complete either or both of the two additional 26
alternative methods of communication —writing or electronic communication —for 27
the recipient of the notification to communicate with the sender. Neither of 28
the two additional methods of communication is required to be included. 29
(6) In item {7}, include and complete the method or methods for 30
the explanation—writing, writing or electronic record, or electronic record —31
included in item {5}. 32
(7) Include and complete item {8} only if a written explanation 33
is included in item {5} as a method for communicating the explanation and the 34
sender will charge the recipient for another written explanation. 35
(8) In item {9}, include either the telephone number or the 36 HB1746
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address or both the telephone number and the address. In addition, the sender 1
may include and complete the additional method of communication —electronic 2
communication—for the recipient of the notification to communicate with the 3
sender. The additional method of electronic communication is not required to 4
be included. 5
(9) If item {10} does not apply, insert “None” after 6
“agreement:”. 7
8
SECTION 91. Arkansas Code § 4 -9-615(a), concerning an application of 9
proceeds of disposition under the Uniform Commercial Code, is amended to read 10
as follows: 11
(a) A secured party shall apply or pay over for application the cash 12
proceeds of disposition under § 4-9-610 in the following order to: 13
(1) the reasonable expenses of retaking, holding, preparing for 14
disposition, processing, and disposing, and, to the extent provided for by 15
agreement and not prohibited by law, reasonable attorney's fees and legal 16
expenses incurred by the secured party; 17
(2) the satisfaction of obligations secured by the security 18
interest or agricultural lien under which the disposition is made; 19
(3) the satisfaction of obligations secured by any subordinate 20
security interest in or other subordinate lien on the collateral if: 21
(A) the secured party receives from the holder of the 22
subordinate security interest or other lien an authenticated a signed demand 23
for proceeds before distribution of the proceeds is completed; and 24
(B) in a case in which a consignor has an interest in the 25
collateral, the subordinate security interest or other lien is senior to the 26
interest of the consignor; and 27
(4) a secured party that is a consignor of the collateral if the 28
secured party receives from the consignor an authenticated a signed demand 29
for proceeds before distribution of the proceeds is completed. 30
31
SECTION 92. Arkansas Code § 4-9-616(a)-(c), concerning the explanation 32
of calculation of surplus or deficiency, are amended to read as follows: 33
(a) In this section: 34
(1) “Explanation” means a writing record that: 35
(A) states the amount of the surplus or deficiency; 36 HB1746
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(B) provides an explanation in accordance with subsection 1
(c) of how the secured party calculated the surplus or deficiency; 2
(C) states, if applicable, that future debits, credits, 3
charges, including additional credit service charges or interest, rebates, 4
and expenses may affect the amount of the surplus or deficiency; and 5
(D) provides a telephone number or mailing address from 6
which additional information concerning the transaction is available. 7
(2) “Request” means a record: 8
(A) authenticated signed by a debtor or consumer obligor; 9
(B) requesting that the recipient provide an explanation; 10
and 11
(C) sent after disposition of the collateral under § 4-9-12
610. 13
(b) In a consumer-goods transaction in which the debtor is entitled to 14
a surplus or a consumer obligor is liable for a deficiency under § 4-9-615, 15
the secured party shall: 16
(1) send an explanation to the debtor or consumer obligor, as 17
applicable, after the disposition and: 18
(A) before or when the secured party accounts to the 19
debtor and pays any surplus or first makes written demand in a record on the 20
consumer obligor after the disposition for payment of the deficiency; and 21
(B) within fourteen (14) days after receipt of a request; 22
or 23
(2) in the case of a consumer obligor who is liable for a 24
deficiency, within fourteen (14) days after receipt of a request, send to the 25
consumer obligor a record waiving the secured party's right to a deficiency. 26
(c) To comply with subsection (a)(1)(B), a writing an explanation must 27
provide the following information in the following order: 28
(1) the aggregate amount of obligations secured by the security 29
interest under which the disposition was made, and, if the amount reflects a 30
rebate of unearned interest or credit service charge, an indication of that 31
fact, calculated as of a specified date: 32
(A) if the secured party takes or receives possession of 33
the collateral after default, not more than thirty-five (35) days before the 34
secured party takes or receives possession; or 35
(B) if the secured party takes or receives possession of 36 HB1746
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the collateral before default or does not take possession of the collateral, 1
not more than thirty-five (35) days before the disposition; 2
(2) the amount of proceeds of the disposition; 3
(3) the aggregate amount of the obligations after deducting the 4
amount of proceeds; 5
(4) the amount, in the aggregate or by type, and types of 6
expenses, including expenses of retaking, holding, preparing for disposition, 7
processing, and disposing of the collateral, and attorney's fees secured by 8
the collateral which are known to the secured party and relate to the current 9
disposition; 10
(5) the amount, in the aggregate or by type, and types of 11
credits, including rebates of interest or credit service charges, to which 12
the obligor is known to be entitled and which are not reflected in the amount 13
in paragraph (1); and 14
(6) the amount of the surplus or deficiency. 15
16
SECTION 93. Arkansas Code § 4 -9-619(a), concerning the transfer of 17
record or legal title under the Uniform Commercial Code, is amended to read 18
as follows: 19
(a) In this section, “transfer statement” means a record authenticated 20
signed by a secured party stating: 21
(1) that the debtor has defaulted in connection with an 22
obligation secured by specified collateral; 23
(2) that the secured party has exercised its post-default 24
remedies with respect to the collateral; 25
(3) that, by reason of the exercise, a transferee has acquired 26
the rights of the debtor in the collateral; and 27
(4) the name and mailing address of the secured party, debtor, 28
and transferee. 29
30
SECTION 94. Arkansas Code § 4 -9-620 is amended to read as follows: 31
4-9-620. Acceptance of collateral in full or partial satisfaction of 32
obligation — Compulsory disposition of collateral. 33
(a) Except as otherwise provided in subsection (g), a secured party 34
may accept collateral in full or partial satisfaction of the obligation it 35
secures only if: 36 HB1746
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(1) the debtor consents to the acceptance under subsection (c); 1
(2) the secured party does not receive, within the time set 2
forth in subsection (d), a notification of objection to the proposal 3
authenticated signed by: 4
(A) a person to which the secured party was required to 5
send a proposal under § 4-9-621; or 6
(B) any other person, other than the debtor, holding an 7
interest in the collateral subordinate to the security interest that is the 8
subject of the proposal; 9
(3) if the collateral is consumer goods, the collateral is not 10
in the possession of the debtor when the debtor consents to the acceptance; 11
and 12
(4) subsection (e) does not require the secured party to dispose 13
of the collateral or the debtor waives the requirement pursuant to § 4-9-624. 14
(b) A purported or apparent acceptance of collateral under this 15
section is ineffective unless: 16
(1) the secured party consents to the acceptance in an 17
authenticated a signed record or sends a proposal to the debtor; and 18
(2) the conditions of subsection (a) are met. 19
(c) For purposes of this section: 20
(1) a debtor consents to an acceptance of collateral in partial 21
satisfaction of the obligation it secures only if the debtor agrees to the 22
terms of the acceptance in a record authenticated signed after default; and 23
(2) a debtor consents to an acceptance of collateral in full 24
satisfaction of the obligation it secures only if the debtor agrees to the 25
terms of the acceptance in a record authenticated signed after default or the 26
secured party: 27
(A) sends to the debtor after default a proposal that is 28
unconditional or subject only to a condition that collateral not in the 29
possession of the secured party be preserved or maintained; 30
(B) in the proposal, proposes to accept collateral in full 31
satisfaction of the obligation it secures; and 32
(C) does not receive a notification of objection 33
authenticated signed by the debtor within twenty (20) days after the proposal 34
is sent. 35
(d) To be effective under subsection (a)(2), a notification of 36 HB1746
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objection must be received by the secured party: 1
(1) in the case of a person to which the proposal was sent 2
pursuant to § 4-9-621, within twenty (20) days after notification was sent to 3
that person; and 4
(2) in other cases: 5
(A) within twenty (20) days after the last notification 6
was sent pursuant to § 4-9-621; or 7
(B) if a notification was not sent, before the debtor 8
consents to the acceptance under subsection (c). 9
(e) A secured party that has taken possession of collateral shall 10
dispose of the collateral pursuant to § 4-9-610 within the time specified in 11
subsection (f) if: 12
(1) sixty percent (60%) of the cash price has been paid in the 13
case of a purchase-money security interest in consumer goods; or 14
(2) sixty percent (60%) of the principal amount of the 15
obligation secured has been paid in the case of a non-purchase-money security 16
interest in consumer goods. 17
(f) To comply with subsection (e), the secured party shall dispose of 18
the collateral: 19
(1) within ninety (90) days after taking possession; or 20
(2) within any longer period to which the debtor and all 21
secondary obligors have agreed in an agreement to that effect entered into 22
and authenticated signed after default. 23
(g) In a consumer transaction, a secured party may not accept 24
collateral in partial satisfaction of the obligation it secures. 25
26
SECTION 95. Arkansas Code § 4-9-621(a), concerning the notification of 27
proposal to accept collateral under the Uniform Commercial Code, is amended 28
to read as follows: 29
(a) A secured party that desires to accept collateral in full or 30
partial satisfaction of the obligation it secures shall send its proposal to: 31
(1) any person from which the secured party has received, before 32
the debtor consented to the acceptance, an authenticated a signed 33
notification of a claim of an interest in the collateral; 34
(2) any other secured party or lienholder that, ten (10) days 35
before the debtor consented to the acceptance, held a security interest in or 36 HB1746
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other lien on the collateral perfected by the filing of a financing statement 1
that: 2
(A) identified the collateral; 3
(B) was indexed under the debtor's name as of that date; 4
and 5
(C) was filed in the office or offices in which to file a 6
financing statement against the debtor covering the collateral as of that 7
date; and 8
(3) any other secured party that, ten (10) days before the 9
debtor consented to the acceptance, held a security interest in the 10
collateral perfected by compliance with a statute, regulation, or treaty 11
described in § 4-9-311(a). 12
13
SECTION 96. Arkansas Code § 4 -9-624 is amended to read as follows: 14
4-9-624. Waiver. 15
(a) A debtor or secondary obligor may waive the right to notification 16
of disposition of collateral under § 4-9-611 only by an agreement to that 17
effect entered into and authenticated signed after default. 18
(b) A debtor may waive the right to require disposition of collateral 19
under § 4-9-620(e) only by an agreement to that effect entered into and 20
authenticated signed after default. 21
(c) Except in a consumer-goods transaction, a debtor or secondary 22
obligor may waive the right to redeem collateral under § 4-9-623 only by an 23
agreement to that effect entered into and authenticated signed after default. 24
25
SECTION 97. Arkansas Code § 4 -9-628 is amended to read as follows: 26
4-9-628. Nonliability and limitation on liability of secured party — 27
Liability of secondary obligor. 28
(a) Unless Subject to subsection (f), unless a secured party knows 29
that a person is a debtor or obligor, knows the identity of the person, and 30
knows how to communicate with the person: 31
(1) the secured party is not liable to the person, or to a 32
secured party or lienholder that has filed a financing statement against the 33
person, for failure to comply with this chapter; and 34
(2) the secured party's failure to comply with this chapter does 35
not affect the liability of the person for a deficiency. 36 HB1746
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(b) A Subject to subsection (f), a secured party is not liable because 1
of its status as secured party: 2
(1) to a person that is a debtor or obligor, unless the secured 3
party knows: 4
(A) that the person is a debtor or obligor; 5
(B) the identity of the person; and 6
(C) how to communicate with the person; or 7
(2) to a secured party or lienholder that has filed a financing 8
statement against a person, unless the secured party knows: 9
(A) that the person is a debtor; and 10
(B) the identity of the person. 11
(c) A secured party is not liable to any person, and a person's 12
liability for a deficiency is not affected, because of any act or omission 13
arising out of the secured party's reasonable belief that a transaction is 14
not a consumer-goods transaction or a consumer transaction or that goods are 15
not consumer goods, if the secured party's belief is based on its reasonable 16
reliance on: 17
(1) a debtor's representation concerning the purpose for which 18
collateral was to be used, acquired, or held; or 19
(2) an obligor's representation concerning the purpose for which 20
a secured obligation was incurred. 21
(d) A secured party is not liable to any person under § 4-9-625(c)(2) 22
for its failure to comply with § 4-9-616. 23
(e) A secured party is not liable under § 4-9-625(c)(2) more than once 24
with respect to any one (1) secured obligation. 25
(f) Subsections (a) and (b) do not apply to limit the liability of a 26
secured party to a person if, at the time the secured party obtains control 27
of collateral that is a controllable account, controllable electronic record, 28
or controllable payment intangible or at the time the security interest 29
attaches to the collateral, whichever is later: 30
(1) the person is a debtor or obligor; and 31
(2) the secured party knows that the information in subsection 32
(b)(1)(A), (B), or (C) relating to the person is not provided by the 33
collateral, a record attached to or logically associated with the collateral, 34
or the system in which the collateral is recorded. 35
36 HB1746
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SECTION 98. Arkansas Code Title 4, Chapter 11, Subchapter 1 is 1
repealed. 2
4-11-101. Short title. 3
This chapter may be cited as Uniform Commercial Code—Virtual Currency 4
of Arkansas. 5
6
4-11-102. Definitions. 7
In this chapter, “virtual currency”: 8
(1) means a digital representation of value that: 9
(A) is used as a medium of exchange, unit of account, or 10
store of value; and 11
(B) is not legal tender, whether or not denominated in 12
legal tender; and 13
(2) does not include: 14
(A) a transaction in which a merchant grants, as part of 15
an affinity or rewards program, value that cannot be taken from or exchanged 16
with the merchant for legal tender, bank credit, or virtual currency; or 17
(B) a digital representation of value issued by or on 18
behalf of a publisher and used solely within an online game, game platform, 19
or family of games sold by the same publisher or offered on the same game 20
platform. 21
22
4-11-103. Scope. 23
This chapter applies to virtual currency. 24
25
4-11-104. Rights in virtual currency. 26
(a) In this section: 27
(1) “Adverse claim” means a claim that a claimant has a property 28
interest in a virtual currency and that it is a violation of the rights of 29
the claimant for another person to hold, transfer, or deal with the virtual 30
currency. 31
(2) “Qualifying purchaser” means a purchaser that obtains 32
control of a virtual currency for value and without notice of any adverse 33
claim. 34
(b) Subject to subsections (c) through (h), law other than this 35
chapter determines whether a person acquires rights in a virtual currency and 36 HB1746
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the rights that the person acquires. 1
(c) A purchaser of a virtual currency acquires all rights in the 2
virtual currency that the transferor had or had power to transfer. 3
(d) A purchaser of a limited interest in a virtual currency acquires 4
rights only to the extent of the interest purchased. 5
(e) In addition to acquiring the rights of a purchaser, a qualifying 6
purchaser acquires its rights in a virtual currency free of any adverse 7
claim. 8
(f) An action based on an adverse claim to a virtual currency, whether 9
framed in conversion, replevin, constructive trust, equitable lien, or other 10
theory, may not be asserted against a qualifying purchaser that acquires its 11
interest in, and obtains control of, the virtual currency for value and 12
without notice of the adverse claim. 13
(g) A person has notice of an adverse claim if: 14
(1) the person knows of the adverse claim; or 15
(2) the person is aware of facts sufficient to indicate that 16
there is a significant probability that the adverse claim exists and 17
deliberately avoids information that would establish the existence of the 18
adverse claim. 19
(h) Filing of a financing statement under Chapter 9 is not notice of 20
an adverse claim to a virtual currency. 21
22
4-11-105. Control of virtual currency. 23
(a) A person has “control” of a virtual currency if the following 24
conditions are met: 25
(1) the virtual currency or the system in which it is recorded, 26
if any, gives the person: 27
(A) the power to derive substantially all the benefit from 28
the virtual currency; 29
(B) subject to subsection (b), the exclusive power to 30
prevent others from deriving substantially all the benefit from the virtual 31
currency; and 32
(C) subject to subsection (b), the exclusive power to 33
transfer control of the virtual currency to another person or cause another 34
person to obtain control of a virtual currency that derives from the virtual 35
currency; and 36 HB1746
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(2) the virtual currency, a record attached to or logically 1
associated with the virtual currency, or the system in which the virtual 2
currency is recorded, if any, enables the person to readily identify itself 3
as having the powers specified in subparagraph (a)(1). 4
(b) A power specified in subparagraph (a)(1)(B) or (a)(1)(C) can be 5
exclusive, even if: 6
(1) the virtual currency or the system in which it is recorded, 7
if any, limits the use to which the virtual currency may be put or has 8
protocols that are programmed to result in a transfer of control; and 9
(2) the person has agreed to share the power with another 10
person. 11
(c) For the purposes of subparagraph (a)(2), a person may be 12
identified in any way, including by name, identifying number, cryptographic 13
key, office, or account number. 14
15
4-11-106. Savings clause. 16
This chapter does not affect an action, case, or proceeding commenced 17
before this chapter takes effect. 18
19
SECTION 99. Arkansas Code Title 4 is amended to add additional 20
chapters to read as follows: 21
CHAPTER 12 22
CONTROLLABLE ELECTRONIC RECORDS 23
24
4-12-101. Title. 25
This chapter may be cited as Uniform Commercial Code —Controllable 26
Electronic Records. 27
28
4-12-102. Definitions. 29
(a) In this chapter: 30
(1) “Controllable electronic record” means a record stored in an 31
electronic medium that can be subjected to control under § 4 -12-105. The term 32
does not include a controllable account, a controllable payment intangible, a 33
deposit account, an electronic copy of a record evidencing chattel paper, an 34
electronic document of title, electronic money, investment property, or a 35
transferable record. 36 HB1746
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(2) “Qualifying purchaser” means a purchaser of a controllable 1
electronic record or an interest in a controllable electronic record that 2
obtains control of the controllable electronic record for value, in good 3
faith, and without notice of a claim of a property right in the controllable 4
electronic record. 5
(3) “Transferable record” has the meaning provided for that term 6
in: 7
(A) Section 201(a)(1) of the Electronic Signatures in 8
Global and National Commerce Act, 15 U.S.C. Section 7021(a)(1), as amended; 9
or 10
(B) Uniform Electronic Transactions Act, § 25 -32-116. 11
(4) “Value” has the meaning provided in § 4 -3-303(a), as if 12
references in that subsection to an “instrument” were references to a 13
controllable account, controllable electronic record, or controllable payment 14
intangible. 15
(b) The definitions in Chapter 9 of “account debtor”, “controllable 16
account”, “controllable payment intangible”, “chattel paper”, “deposit 17
account”, “electronic money”, and “investment property” apply to this 18
chapter. 19
(c) Chapter 1 contains general definitions and principles of 20
construction and interpretation applicable throughout this chapter. 21
22
4-12-103. Relation to Chapter 9 and consumer laws. 23
(a) If there is conflict between this chapter and Chapter 9, Chapter 9 24
governs. 25
(b) A transaction subject to this chapter is subject to any applicable 26
rule of law that establishes a different rule for consumers and to (i) any 27
other statute or regulation that regulates the rates, charges, agreements, 28
and practices for loans, credit sales, or other extensions of credit and (ii) 29
any consumer-protection statute or regulation. 30
31
4-12-104. Rights in controllable account, controllable electronic 32
record, and controllable payment intangible. 33
(a) This section applies to the acquisition and purchase of rights in 34
a controllable account or controllable payment intangible, including the 35
rights and benefits under subsections (c), (d), (e), (g), and (h) of a 36 HB1746
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purchaser and qualifying purchaser, in the same manner this section applies 1
to a controllable electronic record. 2
(b) To determine whether a purchaser of a controllable account or a 3
controllable payment intangible is a qualifying purchaser, the purchaser 4
obtains control of the account or payment intangible if it obtains control of 5
the controllable electronic record that evidences the account or payment 6
intangible. 7
(c) Except as provided in this section, law other than this chapter 8
determines whether a person acquires a right in a controllable electronic 9
record and the right the person acquires. 10
(d) A purchaser of a controllable electronic record acquires all 11
rights in the controllable electronic record that the transferor had or had 12
power to transfer, except that a purchaser of a limited interest in a 13
controllable electronic record acquires rights only to the extent of the 14
interest purchased. 15
(e) A qualifying purchaser acquires its rights in the controllable 16
electronic record free of a claim of a property right in the controllable 17
electronic record. 18
(f) Except as provided in subsections (a) and (e) for a controllable 19
account and a controllable payment intangible or law other than this chapter, 20
a qualifying purchaser takes a right to payment, right to performance, or 21
other interest in property evidenced by the controllable electronic record 22
subject to a claim of a property right in the right to payment, right to 23
performance, or other interest in property. 24
(g) An action may not be asserted against a qualifying purchaser based 25
on both a purchase by the qualifying purchaser of a controllable electronic 26
record and a claim of a property right in another controllable electronic 27
record, whether the action is framed in conversion, replevin, constructive 28
trust, equitable lien, or other theory. 29
(h) Filing of a financing statement under Chapter 9 is not notice of a 30
claim of a property right in a controllable electronic record. 31
32
4-12-105. Control of controllable electronic record. 33
(a) A person has control of a controllable electronic record if the 34
electronic record, a record attached to or logically associated with the 35
electronic record, or a system in which the electronic record is recorded: 36 HB1746
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(1) gives the person: 1
(A) power to avail itself of substantially all the benefit 2
from the electronic record; and 3
(B) exclusive power, subject to subsection (b), to: 4
(i) prevent others from availing themselves of 5
substantially all the benefit from the electronic record; and 6
(ii) transfer control of the electronic record to 7
another person or cause another person to obtain control of another 8
controllable electronic record as a result of the transfer of the electronic 9
record; and 10
(2) enables the person readily to identify itself in any way, 11
including by name, identifying number, cryptographic key, office, or account 12
number, as having the powers specified in paragraph (1). 13
(b) Subject to subsection (c), a power is exclusive under subsection 14
(a)(1)(B)(i) and (ii) even if: 15
(1) the controllable electronic record, a record attached to or 16
logically associated with the electronic record, or a system in which the 17
electronic record is recorded limits the use of the electronic record or has 18
a protocol programmed to cause a change, including a transfer or loss of 19
control or a modification of benefits afforded by the electronic record; or 20
(2) the power is shared with another person. 21
(c) A power of a person is not shared with another person under 22
subsection (b)(2) and the person’s power is not exclusive if: 23
(1) the person can exercise the power only if the power also is 24
exercised by the other person; and 25
(2) the other person: 26
(A) can exercise the power without exercise of the power 27
by the person; or 28
(B) is the transferor to the person of an interest in the 29
controllable electronic record or a controllable account or controllable 30
payment intangible evidenced by the controllable electronic record. 31
(d) If a person has the powers specified in subsection (a)(1)(B)(i) 32
and (ii), the powers are presumed to be exclusive. 33
(e) A person has control of a controllable electronic record if 34
another person, other than the transferor to the person of an interest in the 35
controllable electronic record or a controllable account or controllable 36 HB1746
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payment intangible evidenced by the controllable electronic record: 1
(1) has control of the electronic record and acknowledges that 2
it has control on behalf of the person; or 3
(2) obtains control of the electronic record after having 4
acknowledged that it will obtain control of the electronic record on behalf 5
of the person. 6
(f) A person that has control under this section is not required to 7
acknowledge that it has control on behalf of another person. 8
(g) If a person acknowledges that it has or will obtain control on 9
behalf of another person, unless the person otherwise agrees or law other 10
than this chapter or Chapter 9 otherwise provides, the person does not owe 11
any duty to the other person and is not required to confirm the 12
acknowledgment to any other person. 13
14
4-12-106. Discharge of account debtor on controllable account or 15
controllable payment intangible. 16
(a) An account debtor on a controllable account or controllable 17
payment intangible may discharge its obligation by paying: 18
(1) the person having control of the controllable electronic 19
record that evidences the controllable account or controllable payment 20
intangible; or 21
(2) except as provided in subsection (b), a person that formerly 22
had control of the controllable electronic record. 23
(b) Subject to subsection (d), the account debtor may not discharge 24
its obligation by paying a person that formerly had control of the 25
controllable electronic record if the account debtor receives a notification 26
that: 27
(1) is signed by a person that formerly had control or the 28
person to which control was transferred; 29
(2) reasonably identifies the controllable account or 30
controllable payment intangible; 31
(3) notifies the account debtor that control of the controllable 32
electronic record that evidences the controllable account or controllable 33
payment intangible was transferred; 34
(4) identifies the transferee, in any reasonable way, including 35
by name, identifying number, cryptographic key, office, or account number; 36 HB1746
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and 1
(5) provides a commercially reasonable method by which the 2
account debtor is to pay the transferee. 3
(c) After receipt of a notification that complies with subsection (b), 4
the account debtor may discharge its obligation by paying in accordance with 5
the notification and may not discharge the obligation by paying a person that 6
formerly had control. 7
(d) Subject to subsection (h), notification is ineffective under 8
subsection (b): 9
(1) unless, before the notification is sent, the account debtor 10
and the person that, at that time, had control of the controllable electronic 11
record that evidences the controllable account or controllable payment 12
intangible agree in a signed record to a commercially reasonable method by 13
which a person may furnish reasonable proof that control has been 14
transferred; 15
(2) to the extent an agreement between the account debtor and 16
seller of a payment intangible limits the account debtor’s duty to pay a 17
person other than the seller and the limitation is effective under law other 18
than this chapter; or 19
(3) at the option of the account debtor, if the notification 20
notifies the account debtor to: 21
(A) divide a payment; 22
(B) make less than the full amount of an installment or 23
other periodic payment; or 24
(C) pay any part of a payment by more than one method or 25
to more than one person. 26
(e) Subject to subsection (h), if requested by the account debtor, the 27
person giving the notification under subsection (b) seasonably shall furnish 28
reasonable proof, using the method in the agreement referred to in subsection 29
(d)(1), that control of the controllable electronic record has been 30
transferred. Unless the person complies with the request, the account debtor 31
may discharge its obligation by paying a person that formerly had control, 32
even if the account debtor has received a notification under subsection (b). 33
(f) A person furnishes reasonable proof under subsection (e) that 34
control has been transferred if the person demonstrates, using the method in 35
the agreement referred to in subsection (d)(1), that the transferee has the 36 HB1746
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power to: 1
(1) avail itself of substantially all the benefit from the 2
controllable electronic record; 3
(2) prevent others from availing themselves of substantially all 4
the benefit from the controllable electronic record; and 5
(3) transfer the powers specified in paragraphs (1) and (2) to 6
another person. 7
(g) Subject to subsection (h), an account debtor may not waive or vary 8
its rights under subsections (d)(1) and (e) or its option under subsection 9
(d)(3). 10
(h) This section is subject to law other than this chapter which 11
establishes a different rule for an account debtor who is an individual and 12
who incurred the obligation primarily for personal, family, or household 13
purposes. 14
15
4-12-107. Governing Law. 16
(a) Except as provided in subsection (b), the local law of a 17
controllable electronic record’s jurisdiction governs a matter covered by 18
this chapter. 19
(b) For a controllable electronic record that evidences a controllable 20
account or controllable payment intangible, the local law of the controllable 21
electronic record’s jurisdiction governs a matter covered by § 4 -12-106 22
unless an effective agreement determines that the local law of another 23
jurisdiction governs. 24
(c) The following rules determine a controllable electronic record’s 25
jurisdiction under this section: 26
(1) If the controllable electronic record, or a record attached 27
to or logically associated with the controllable electronic record and 28
readily available for review, expressly provides that a particular 29
jurisdiction is the controllable electronic record’s jurisdiction for 30
purposes of this chapter or the Uniform Commercial Code, that jurisdiction is 31
the controllable electronic record’s jurisdiction. 32
(2) If paragraph (1) does not apply and the rules of the system 33
in which the controllable electronic record is recorded are readily available 34
for review and expressly provide that a particular jurisdiction is the 35
controllable electronic record’s jurisdiction for purposes of this chapter or 36 HB1746
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the Uniform Commercial Code, that jurisdiction is the controllable electronic 1
record’s jurisdiction. 2
(3) If paragraphs (1) and (2) do not apply and the controllable 3
electronic record, or a record attached to or logically associated with the 4
controllable electronic record and readily available for review, expressly 5
provides that the controllable electronic record is governed by the law of a 6
particular jurisdiction, that jurisdiction is the controllable electronic 7
record’s jurisdiction. 8
(4) If paragraphs (1), (2), and (3) do not apply and the rules 9
of the system in which the controllable electronic record is recorded are 10
readily available for review and expressly provide that the controllable 11
electronic record or the system is governed by the law of a particular 12
jurisdiction, that jurisdiction is the controllable electronic record’s 13
jurisdiction. 14
(5) If paragraphs (1) through (4) do not apply, the controllable 15
electronic record’s jurisdiction is the District of Columbia. 16
(d) If subsection (c)(5) applies and Chapter 12 is not in effect in 17
the District of Columbia without material modification, the governing law for 18
a matter covered by this chapter is the law of the District of Columbia as 19
though Chapter 12 were in effect in the District of Columbia without material 20
modification. In this subsection, “Chapter 12” means Chapter 12 of Uniform 21
Commercial Code Amendments (2022). 22
(e) To the extent subsections (a) and (b) provide that the local law 23
of the controllable electronic record’s jurisdiction governs a matter covered 24
by this chapter, that law governs even if the matter or a transaction to 25
which the matter relates does not bear any relation to the controllable 26
electronic record’s jurisdiction. 27
(f) The rights acquired under § 4 -12-104 by a purchaser or qualifying 28
purchaser are governed by the law applicable under this section at the time 29
of purchase. 30
31
CHAPTER 12A 32
TRANSITIONAL PROVISIONS FOR UNIFORM COMMERCIAL CODE AMENDMENTS (2022) 33
PART 1 — GENERAL PROVISIONS AND DEFINITIONS 34
35
4-12A-101. Title. 36 HB1746
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This chapter may be cited as "Transitional Provisions for Uniform 1
Commercial Code Amendments (2022)". 2
3
4-12A-102. Definitions. 4
(a) In this chapter: 5
(1) "Adjustment date" means September 1, 2027. 6
(2) "Chapter 12" means Chapter 12 of the Uniform Commercial 7
Code. 8
(3) "Chapter 12 property" means a controllable account, 9
controllable electronic record, or controllable payment intangible. 10
(b) The following definitions in other chapters of the Uniform 11
Commercial Code apply to this chapter. 12
"Controllable account". Section 4 -9-102. 13
"Controllable electronic record". Section 4 -12-102. 14
"Controllable payment intangible". Section 4 -9-102. 15
"Electronic money". Section 4 -9-102. 16
"Financing statement". Section 4 -9-102. 17
(c) Chapter 1 contains general definitions and principles of 18
construction and interpretation applicable throughout this chapter. 19
20
PART 2 — GENERAL TRANSITIONAL PROVISION 21
22
4-12A-201. Saving Clause. 23
Except as provided in Part 3, a transaction validly entered into before 24
September 1, 2026, and the rights, duties, and interests flowing from the 25
transaction remain valid thereafter and may be terminated, completed, 26
consummated, or enforced as required or permitted by law other than the 27
Uniform Commercial Code or, if applicable, the Uniform Commercial Code, as 28
though this act had not taken effect. 29
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PART 3 — TRANSITIONAL PROVISIONS FOR CHAPTERS 9 AND 12 31
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4-12A-301. Saving Clause. 33
(a) Except as provided in this part, Chapter 9 as amended by this act 34
and Chapter 12 apply to a transaction, lien, or other interest in property, 35
even if the transaction, lien, or interest was entered into, created, or 36 HB1746
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acquired before September 1, 2026. 1
(b) Except as provided in subsection (c) and § 4 -12A-302 through § 4-2
12A-306: 3
(1) a transaction, lien, or interest in property that was 4
validly entered into, created, or transferred before September 1, 2026 and 5
was not governed by the Uniform Commercial Code, but would be subject to 6
Chapter 9 as amended by this act or Chapter 12 if it had been entered into, 7
created, or transferred on or after September 1, 2026, including the rights, 8
duties, and interests flowing from the transaction, lien, or interest, 9
remains valid on and after September 1, 2026; and 10
(2) the transaction, lien, or interest may be terminated, 11
completed, consummated, and enforced as required or permitted by this act or 12
by the law that would apply if this act had not taken effect. 13
(c) This act does not affect an action, case, or proceeding commenced 14
before September 1, 2026. 15
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4-12A-302. Security interest perfected before effective date. 17
(a) A security interest that is enforceable and perfected immediately 18
before September 1, 2026 is a perfected security interest under this act if, 19
on September 1, 2026, the requirements for enforceability and perfection 20
under this act are satisfied without further action. 21
(b) If a security interest is enforceable and perfected immediately 22
before September 1, 2026, but the requirements for enforceability or 23
perfection under this act are not satisfied on September 1, 2026, the 24
security interest: 25
(1) is a perfected security interest until the earlier of the 26
time perfection would have ceased under the law in effect immediately before 27
September 1, 2026 or the adjustment date; 28
(2) remains enforceable thereafter only if the security interest 29
satisfies the requirements for enforceability under § 4 -9-203, as amended by 30
this act, before the adjustment date; and 31
(3) remains perfected thereafter only if the requirements for 32
perfection under this act are satisfied before the time specified in 33
paragraph (1). 34
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4-12A-303. Security interest unperfected before effective date. 36 HB1746
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A security interest that is enforceable immediately before September 1, 1
2026, but is unperfected at that time: 2
(1) remains an enforceable security interest until the 3
adjustment date; 4
(2) remains enforceable thereafter if the security interest 5
becomes enforceable under § 4 -9-203, as amended by this act, on September 1, 6
2026, or before the adjustment date; and 7
(3) becomes perfected: 8
(A) without further action, on September 1, 2026, if the 9
requirements for perfection under this act are satisfied before or at that 10
time; or 11
(B) when the requirements for perfection are satisfied if 12
the requirements are satisfied after that time. 13
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4-12A-304. Effectiveness of actions taken before effective date. 15
(a) If action, other than the filing of a financing statement, is 16
taken before September 1, 2026, and the action would have resulted in 17
perfection of the security interest had the security interest become 18
enforceable before September 1, 2026, the action is effective to perfect a 19
security interest that attaches under this act before the adjustment date. An 20
attached security interest becomes unperfected on the adjustment date unless 21
the security interest becomes a perfected security interest under this act 22
before the adjustment date. 23
(b) The filing of a financing statement before September 1, 2026, is 24
effective to perfect a security interest on September 1, 2026, to the extent 25
the filing would satisfy the requirements for perfection under this act. 26
(c) The taking of an action before September 1, 2026, is sufficient 27
for the enforceability of a security interest on September 1, 2026, if the 28
action would satisfy the requirements for enforceability under this act. 29
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4-12A-305. Priority. 31
(a) Subject to subsections (b) and (c), this act determines the 32
priority of conflicting claims to collateral. 33
(b) Subject to subsection (c), if the priorities of claims to 34
collateral were established before September 1, 2026, Chapter 9 as in effect 35
before September 1, 2026, determines priority. 36 HB1746
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(c) On the adjustment date, to the extent the priorities determined by 1
Chapter 9 as amended by this act modify the priorities established before 2
September 1, 2026, the priorities of claims to Chapter 12 property and 3
electronic money established before September 1, 2026, cease to apply. 4
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4-12A-306. Priority of claims when priority rules of Chapter 9 do 6
not apply. 7
(a) Subject to subsections (b) and (c), Chapter 12 determines the 8
priority of conflicting claims to Chapter 12 property when the priority rules 9
of Chapter 9 as amended by this act do not apply. 10
(b) Subject to subsection (c), when the priority rules of Chapter 9 as 11
amended by this act do not apply and the priorities of claims to Chapter 12 12
property were established before September 1, 2026, law other than Chapter 12 13
determines priority. 14
(c) When the priority rules of Chapter 9 as amended by this act do not 15
apply, to the extent the priorities determined by this act modify the 16
priorities established before September 1, 2026, the priorities of claims to 17
Chapter 12 property established before September 1, 2026, cease to apply on 18
the adjustment date. 19
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SECTION 100. DO NOT CODIFY. Effective date. 21
This act takes effect on September 1, 2026. 22
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