ENGROSSED ORIGINAL
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A BILL 1
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25-5 3
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IN THE COUNCIL OF THE DISTRICT OF COLUMBIA 5
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__________________________ 7
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To amend Subtitle I of Title 28 of the District of Columbia Code, to add a new Article 12—10
Controllable Electronic Records, to provide rules for transactions involving digital assets, 11
including cryptocurrency, non-fungible tokens, and electronic promises to pay, and to 12
provide for their negotiability and their perfection by control; to make conforming and 13
related amendments to Article 1—General Provisions, Article 2—Sales, Article 2A—14
Leases, Article 4A—Funds Transfers, Article 5—Letters of Credit, Article 7—15
Documents of Title, Article 8—Investment Securities, and Article 9—Secured 16
Transactions; to provide transition rules to protect the expectations of parties to existing 17
transactions; and for other purposes. 18
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BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this 20
act may be cited as the “Uniform Commercial Code Amendment Act of 2023”. 21
Sec. 2. Subtitle I of Title 28 of the District of Columbia Code is amended as follows: 22
(a) The Table of Contents is amended as follows: 23
(1) The section heading for section 28:2-106 is amended by striking the period at 24
the end and inserting the phrase “; hybrid transaction.” in its place. 25
(2) The section heading for section 28:2-202 is amended by striking the word 26
“written”. 27
(3) The section heading for section 28:2A-202 is amended by striking the word 28
“written”. 29
(4) The section heading for section 28:3-401 is amended to read as follows: 30 ENGROSSED ORIGINAL
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“28:3-401. Signature necessary for liability on instrument.” 31
(5) The section heading for section 28:9-105 is amended to read as follows: 32
“28:9-105. Control of electronic copy of record evidencing chattel paper.” 33
(6) A new section heading is added after the section heading for section 28:9-105 34
to read as follows: 35
“28:9-105A. Control of electronic money.” 36
(7) New section headings are added after the section heading for section 28:9-107 37
to read as follows: 38
“28:9-107A. Control of controllable electronic record, controllable account, or controllable 39
payment intangible. 40
“28:9-107B. No Requirement to Acknowledge or Confirm; No Duties.” 41
(8) New section headings are added after the section heading for section 28:9-306 42
to read as follows: 43
“28:9-306A. Law governing perfection and priority of security interests in chattel paper. 44
“28:9-306B. Law governing perfection and priority of security interests in controllable accounts, 45
controllable electronic records, and controllable payment intangibles.” 46
(9) The section heading for section 28:9-312 is amended to read as follows: 47
"28:9-312. Perfection of security interests in chattel paper, controllable accounts, controllable 48
electronic records, controllable payment intangibles, deposit accounts, negotiable documents, 49
goods covered by documents, instruments, investment property, letter-of-credit rights, and 50 ENGROSSED ORIGINAL
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money; perfection by permissive filing; temporary perfection without filing or transfer of 51
possession.” 52
(10) A new section heading is added after the section heading for section 28:9-53
314 to read as follows: 54
“28:9-314A. Perfection by possession and control of chattel paper.” 55
(11) A new section heading is added after the section heading for section 28:9-56
326 to read as follows: 57
“28:9-326A. Priority of security interest in controllable account, controllable electronic record, 58
and controllable payment intangible.” 59
(12) The section heading for section 28:9-331 is amended to read as follows: 60
“28:9-331. Priority of rights of purchasers of controllable accounts, controllable electronic 61
records, controllable payment intangibles, documents, instruments, and securities under other 62
articles; priority of interests in financial assets and security entitlements and protection against 63
assertion of claim under Articles 8 and 12.” 64
(13) Headings for a new article 12 are added to read as follows: 65
“Article 12. Controllable Electronic Records.” 66
“Part I. General Provisions. 67
“28:12-101. Title. 68
“28:12-102. Definitions. 69
“28:12-103. Relation to Article 9 and consumer laws. 70 ENGROSSED ORIGINAL
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“28:12-104. Rights in controllable account, controllable electronic record, and controllable 71
payment intangible. 72
“28:12-105. Control of controllable electronic record. 73
“28:12-106. Discharge of account debtor on controllable account or controllable 74
payment intangible. 75
“28:12-107. Governing law. 76
“Part II. Transitional Provisions for Articles 9 and 12.” 77
“28:12-201. Definitions. 78
“28:12-202. Saving clause. 79
“28:12-203. Security interest perfected before effective date of 2023 Act. 80
“28:12-204. Security interest unperfected before effective date of 2023 Act. 81
“28:12-206. Effectiveness of actions taken before effective date of 2023 Act. 82
“28:12-206. Priority. 83
“28:12-207. Priority of claims when priority rules of Article 9 do not apply.” 84
(b) Article 1 is amended as follows: 85
(1) Section 28:1-201(b) is amended as follows: 86
(A) Paragraph (10) is amended to read as follows: 87
“(10) “Conspicuous”, with reference to a term, means so written, displayed, or presented 88
that, based on the totality of the circumstances, a reasonable person against which it is to operate 89
ought to have noticed it. Whether a term is “conspicuous” or not is a decision for the court.” 90 ENGROSSED ORIGINAL
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(B) Paragraph (15) is amended to read as follows: 91
“(15) “Delivery”, with respect to an electronic document of title, means voluntary 92
transfer of control; and, with respect to an instrument, a tangible document of title, or an 93
authoritative tangible copy of a record evidencing chattel paper, means voluntary transfer of 94
possession.” 95
(C) A new paragraph (16A) is added to read as follows: 96
“(16A) “Electronic” means relating to technology having electrical, digital, magnetic, 97
wireless, optical, electromagnetic, or similar capabilities.” 98
(D) Paragraph (21)(C) is amended by striking the word “control” and 99
inserting the phrase “control, other than pursuant to § 28:7-106(g),”. 100
(E) Paragraph (24) is amended to read as follows: 101
“(24) “Money” means a medium of exchange that is currently authorized or adopted by a 102
domestic or foreign government. The term “money” includes a monetary unit of account 103
established by an intergovernmental organization or pursuant to an agreement between 2 or more 104
countries. The term “money” does not include an electronic record that is a medium of exchange 105
recorded and transferable in a system that existed and operated for the medium of exchange 106
before the medium of exchange was authorized or adopted by the government.” 107
(F) Paragraph (27) is amended by to read as follows: 108
“(27) “Person” means an individual, estate, business or nonprofit entity, government or 109
governmental subdivision, agency, or instrumentality, or other legal entity. The term “person” 110 ENGROSSED ORIGINAL
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includes a protected series, however denominated, of an entity, if the protected series is 111
established under law, other than this subtitle, that limits, or limits if conditions specified under 112
the law are satisfied, the ability of a creditor of the entity or of any other protected series of the 113
entity to satisfy a claim from assets of the protected series.” 114
(G) Paragraph (36) is amended by to read as follows: 115
“(36) “Send”, in connection with a record or notification means: 116
“(A) To deposit in the mail, or deliver for transmission, or transmit by any other 117
usual means of communication, with postage or cost of transmission provided for, addressed to 118
any address reasonable under the circumstances; or 119
“(B) To cause the record or notification to be received within the time it would 120
have been received if properly sent under subparagraph (A).” 121
(H) Paragraph (37) is amended by to read as follows: 122
“(37)(A) “Sign” means, with present intent to authenticate or adopt a record: 123
“(i) To execute or adopt a tangible symbol; or 124
“(ii) To attach to or logically associate with the record an electronic 125
symbol, sound, or process. 126
“(B) “Signed”, “signing”, and “signature” have corresponding meanings.” 127
(2) Section 28:1-204 is amended by deleting the phrase “Articles 3, 4, and 5” and 128
inserting the phrase “articles 3, 4, 5, and 12” in its place. 129
(3) Section 28:1-301(c) is amended as follows: 130 ENGROSSED ORIGINAL
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(A) Paragraph (7) is amended by striking the period at the end and 131
inserting a semicolon in its place; and 132
(B) A new paragraph (8) is added to read as follows: 133
“(8) Section 28:12-107.” 134
(4) Section 28:1-306 is amended by striking the phrase “an authenticated” and 135
inserting the phrase “a signed” in its place. 136
(c) Article 2 is amended as follows: 137
(1) Section 28:2-102 is amended to read as follows: 138
Ҥ 28:2-102. Scope; certain security and other transactions excluded from this article. 139
“(a) Unless the context otherwise requires, and except as provided in subsection (c) of 140
this section, this article applies to transactions in goods and, in the case of a hybrid transaction, it 141
applies to the extent provided in subsection (b) of this section. 142
“(b) In a hybrid transaction: 143
“(1) If the sale-of-goods aspects do not predominate, only the provisions of this 144
article that relate primarily to the sale-of-goods aspects of the transaction apply, and the 145
provisions that relate primarily to the transaction as a whole do not apply. 146
“(2) If the sale-of-goods aspects predominate, this article applies to the transaction 147
but does not preclude application in appropriate circumstances of other law to aspects of the 148
transaction which do not relate to the sale of goods. 149
“(c) This article does not: 150 ENGROSSED ORIGINAL
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“(1) Apply to a transaction that, even though in the form of an unconditional 151
contract to sell or present sale, operates only to create a security interest; or 152
“(2) Impair or repeal a statute regulating sales to consumers, farmers, or other 153
specified classes of buyers.” 154
(2) Section 28:2-106 is amended as follows: 155
(A) The section heading is amended by striking the period at the end and 156
inserting the phrase “; hybrid transaction.” in its place. 157
(B) A new paragraph (5) is added to read as follows: 158
“(5) “Hybrid transaction” means a single transaction involving a sale of goods 159
and: 160
“(A) The provision of services; 161
“(B) A lease of other goods; or 162
“(C) A sale, lease, or license of property other than goods.” 163
(3) Section 28:2-201 is amended as follows: 164
(A) Paragraph (1) is amended to read as follows: 165
“(1) Except as otherwise provided in this section a contract for the sale of goods for the 166
price of $500 or more is not enforceable by way of action or defense unless there is a record 167
sufficient to indicate that a contract for sale has been made between the parties and signed by the 168
party against whom enforcement is sought or by the party’s authorized agent or broker. A record 169
is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not 170 ENGROSSED ORIGINAL
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enforceable under this subsection beyond the quantity of goods shown in the record.” 171
(B) Paragraph (2) is amended to read as follows: 172
“(2) Between merchants if within a reasonable time a record in confirmation of the 173
contract and sufficient against the sender is received and the party receiving it has reason to 174
know its contents, it satisfies the requirements of subsection (1) of this section against the party 175
unless notice in a record of objection to its contents is given within 10 days after it is received.” 176
(4) Section 28:2-202 is amended as follows: 177
(A) The section heading is amended by striking the word “written”. 178
(B) Subsection (b) is amended by striking the word “writing” and inserting 179
the word “record” in its place. 180
(5) Section 28:2-203 is amended by striking the word “writing” both places it 181
appears and inserting the word “record” in its place. 182
(6) Section 28:2-205 is amended by striking the word “writing” and inserting the 183
word “record” in its place. 184
(7) Section 28:209(2) is amended by striking the word “writing” and inserting the 185
phrase “writing or other signed record” in its place. 186
(d) Article 2A is amended as follows: 187
(1) Section 28:2A-102 is amended to read as follows: 188
“28:2A-102. Scope. 189
“(a) This article applies to any transaction, regardless of form, that creates a lease; in 190 ENGROSSED ORIGINAL
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the case of a hybrid lease, this article applies to the extent provided in subsection (b) of this 191
section. 192
“(b) In a hybrid lease: 193
“(1) If the lease-of-goods aspects do not predominate: 194
“(A) Only the provisions of this article which relate primarily to the 195
lease-of-goods aspects of the transaction apply, and the provisions that relate primarily to the 196
transaction as a whole do not apply; 197
“(B) Section 28:2A-209 applies if the lease is a finance lease; and 198
“(C) Section 28:2A-407 applies to the promises of the lessee in a 199
finance lease to the extent the promises are consideration for the right to possession and use 200
of the leased goods; and 201
“(2) If the lease-of-goods aspects predominate, this article applies to the 202
transaction, but does not preclude application in appropriate circumstances of other law to 203
aspects of the lease which do not relate to the lease of goods.” 204
(2) Section 28:2A-103(a) is amended by adding a new paragraph (8A) to read 205
as follows: 206
“(8A) “Hybrid lease” means a single transaction involving a lease of goods and: 207
“(A) The provision of services; 208
“(B) A sale of other goods; or 209
“(C) A sale, lease, or license of property other than goods.” 210 ENGROSSED ORIGINAL
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(3) Section 28:2A-107 is amended by striking the phrase “written waiver or 211
renunciation signed and” and inserting the phrase “waiver or renunciation in a signed record” 212
in its place. 213
(4) Section 28:2A-201 is amended as follows: 214
(A) Subsection (a)(2) is amended by striking the word “writing” and 215
inserting the word “record” in its place.” 216
(B) Subsection (c) is amended by striking the word “writing” both time 217
it appears and inserting the word “record” in its place. 218
(C) Subsection (e)(1) is amended by striking the word “writing” and 219
inserting the word “record” in its place.” 220
(5) Section 28:2A-202 is amended as follows: 221
(A) The section heading is amended by striking the word “written”. 222
(B) The lead-in sentence is amended by striking the word “writing” and 223
inserting the word “record” in its place. 224
(C) Paragraph (2) is amended by striking the word “writing” and 225
inserting the word “record” in its place. 226
(6) Section 28:2A-203 is amended by striking the word “writing” both times it 227
appears and inserting the word “record” in its place. 228
(7) Section 28:2A-205 is amended by striking the word “writing” and inserting 229
the word “record” in its place. 230 ENGROSSED ORIGINAL
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(8) Section 28:2A-208(b) is amended by striking the word “writing” and 231
inserting the word “record” in its place. 232
(e) Article 3 is amended as follows: 233
(1) Section 28:3-104(a)(3) is amended to read as follows: 234
“(3) Does not state any other undertaking or instruction by the person 235
promising or ordering payment to do any act in addition to the payment of money, but the 236
promise or order may contain (i) an undertaking or power to give, maintain, or protect 237
collateral to secure payment, (ii) an authorization or power to the holder to confess judgment 238
or realize on or dispose of collateral, (iii) a waiver of the benefit of any law intended for the 239
advantage or protection of an obligor, (iv) a term that specifies the law that governs the 240
promise or order, or (v) an undertaking to resolve in a specified forum a dispute concerning 241
the promise or order.” 242
(2) Section 28:3-105(a) is amended to read as follows: 243
“(a) “Issue” means: 244
“(1) The first delivery of an instrument by the maker or drawer, whether to a 245
holder or non-holder, for the purpose of giving rights on the instrument to any person; or 246
“(2) If agreed by the payee, the first transmission by the drawer to the payee of 247
an image of an item and information derived from the item that enables the depositary bank 248
to collect the item by transferring or presenting under federal law an electronic check.” 249
(3) Section 28:3-401(b) is repealed. 250 ENGROSSED ORIGINAL
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(4) Section 28:3-604 is amended as follows: 251
(A) Subsection (a) is amended by adding a new sentence at the end to 252
read as follows: “The obligation of a party to pay a check is not discharged solely by 253
destruction of the check in connection with a process in which information is extracted from 254
the check and an image of the check is made and, subsequently, the information and image 255
are transmitted for payment.” 256
(B) Subsection (c) is repealed. 257
(f) Article 4A is amended as follows: 258
(1) Section 28:4A-103(a)(3) is amended by striking the phrase “, 259
electronically, or in writing” and inserting the phrase “or in a record” in its place. 260
(2) Section 28:4A-201 is amended to read as follows: 261
““Security procedure” means a procedure established by agreement of a customer and 262
a receiving bank for the purpose of (i) verifying that a payment order or communication 263
amending or cancelling a payment order is that of the customer, or (ii) detecting error in the 264
transmission or the content of the payment order or communication. A security procedure 265
may impose an obligation on the receiving bank or the customer and may require the use of 266
algorithms or other codes, identifying words, or numbers, symbols, sounds, biometrics, 267
encryption, callback procedures, or similar security devices. Comparison of a signature on a 268
payment order or communication with an authorized specimen signature of the customer or 269
requiring a payment order to be sent from a known email address, Internet Protocol address, 270 ENGROSSED ORIGINAL
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or telephone number is not by itself a security procedure.” 271
(3) Section 28:4A-202 is amended as follows: 272
(A) Subsection (b) is amended to read as follows: 273
“(b) If a bank and its customer have agreed that the authenticity of payment orders 274
issued to the bank in the name of the customer as sender will be verified pursuant to a 275
security procedure, a payment order received by the receiving bank is effective as the order 276
of the customer, whether or not authorized, if (i) the security procedure is a commercially 277
reasonable method of providing security against unauthorized payment orders, and (ii) the 278
bank proves that it accepted the payment order in good faith and in compliance with the 279
bank’s obligations under the security procedure and any agreement or instruction of the 280
customer, evidenced by a record, restricting acceptance of payment orders issued in the name 281
of the customer. The bank is not required to follow an instruction that violates an agreement 282
with the customer, evidenced by a record, or notice of which is not received at a time and in 283
a manner affording the bank a reasonable opportunity to act on it before the payment order is 284
accepted.” 285
(B) Subsection (c) is amended by: 286
(i) Striking the word “writing” and inserting the phrase “a 287
record” in its place; and 288
(ii) Striking the phrase “in compliance with the security 289
procedure chosen by the customer” and inserting the phrase “in compliance with the bank’s 290 ENGROSSED ORIGINAL
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security obligation under the security procedure chosen by the customer” 291
(4) Section 28:4A-203(a)(1) is amended by striking the phrase “written 292
agreement” and inserting the phrase “agreement evidenced by a record” in its place. 293
(5) Section 28:4A-207(c)(2) is amended by striking the word “writing” and 294
inserting the word “record” in its place. 295
(6) Section 28:4A-208(b)(2) is amended by striking the word “writing” and 296
inserting the word “record” in its place. 297
(7) Section 28:4A-210(a) is amended by striking the phrase “, electronically, 298
or in writing” and inserting the phrase “or in a record” in its place. 299
(8) Section 28:4A-211(a) is amended by striking the phrase “, electronically, 300
or in a writing” and inserting the phrase “or in a record” in its place. 301
(9) Section 28:4A-305 is amended as follows: 302
(A) Subsection (c) is amended by striking the phrase “written 303
agreement of the receiving bank” and inserting the phrase “agreement of the receiving bank, 304
evidenced by a record”. 305
(B) Subsection (d) is amended by striking the phrase “written 306
agreement of the receiving bank” and inserting the phrase “agreement of the receiving bank, 307
evidenced by a record”. 308
(g) Article 5 is amended as follows: 309
(1) Section 28:5-104 is amended by striking the phrase “record and is 310 ENGROSSED ORIGINAL
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authenticated (i) by a signature or (ii) in accordance with the agreement of the parties or the 311
standard practice referred to in § 28:5-108(e)” and inserting the phrase “signed record” in its 312
place. 313
(2) Section 28:5-116 is amended as follows: 314
(A) Subsection (a) is amended by striking the phrase “or otherwise 315
authenticated by the affected parties in the manner provided in § 28:5-104” and inserting the 316
phrase “by the affected parties” in its place. 317
(B) Subsection (b) is amended by striking the fourth sentence. 318
(C) A new subsection (b-1) is added to read as follows: 319
“(b-1) For the purpose of jurisdiction, choice of law, and recognition of interbranch 320
letters of credit, but not enforcement of a judgment, all branches of a bank are considered 321
separate juridical entities and a bank is considered to be located at the place where its 322
relevant branch is considered to be located under subsection (b-2) of this section.”. 323
(F) A new subsection (b-2) is added to read as follows: 324
“(b-2) A branch of a bank is considered to be located at the address indicated in the 325
branch’s undertaking. If more than one address is indicated, the branch is considered to be 326
located at the address from which the undertaking was issued.”. 327
(h) Article 7 is amended as follows: 328
(1) Section 28:7-102(a) is amended as follows: 329
(A) Paragraph (10) is repealed. 330 ENGROSSED ORIGINAL
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(B) Paragraph (12) is repealed. 331
(2) Section 28:7-106 is amended to read as follows: 332
(A) Subsection (b) is amended as follows: 333
(i) The lead-in language is amended as follows: 334
(I) Striking the phrase “is deemed to have” and inserting 335
the word “has” in its place; and 336
(II) striking the phrase “assigned in such” and inserting 337
the phrase “transferred in” in its place. 338
(ii) Paragraph (4) is amended by striking the word “assignee” 339
and inserting the word “transferee” in its place. 340
(B) New subsections are added to read as follows: 341
“(c) A system satisfies subsection (a) of this section, and a person has control of an 342
electronic document of title, if an authoritative electronic copy of the document, a record 343
attached to or logically associated with the electronic copy, or a system in which the 344
electronic copy is recorded: 345
“(1) Enables the person readily to identify each electronic copy as either an 346
authoritative copy or a non-authoritative copy; 347
“(2) Enables the person readily to identify itself in any way, including by 348
name, identifying number, cryptographic key, office, or account number, as the person to 349
which each authoritative electronic copy was issued or transferred; and 350 ENGROSSED ORIGINAL
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“(3) Gives the person exclusive power, subject to subsection (d) of this 351
section, to: 352
“(A) Prevent others from adding or changing the person to which each 353
authoritative electronic copy has been issued or transferred; and 354
“(B) Transfer control of each authoritative electronic copy. 355
“(d) Subject to subsection (e) of this section, a power is exclusive under subsection 356
(c)(3) of this section even if: 357
“(1) The authoritative electronic copy, a record attached to or logically 358
associated with the authoritative electronic copy, or a system in which the authoritative 359
electronic copy is recorded limits the use of the document of title or has a protocol that is 360
programmed to cause a change, including a transfer or loss of control; or 361
“(2) The power is shared with another person. 362
“(e) A power of a person is not shared with another person under subsection (d)(2) of 363
this section and the person’s power is not exclusive if: 364
“(1) The person can exercise the power only if the power also is exercised by 365
the other person; and 366
“(2) The other person: 367
“(A) Can exercise the power without exercise of the power by the 368
person; or 369
“(B) Is the transferor to the person of an interest in the document of 370 ENGROSSED ORIGINAL
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title. 371
“(f) If a person has the powers specified in subsection (c)(3) of this section, those 372
powers are presumed to be exclusive. 373
“(g) A person has control of an electronic document of title if another person, other 374
than the transferor to the person of an interest in the document: 375
“(1) Has control of the document and acknowledges that it has control on 376
behalf of the person; or 377
“(2) Obtains control of the document after having acknowledged that it will 378
obtain control of the document on behalf of the person. 379
“(h) A person that has control under this section is not required to acknowledge that it 380
has control on behalf of another person. 381
“(i) If a person acknowledges that it has or will obtain control on behalf of another 382
person, unless the person otherwise agrees or law other than this article or article 9 otherwise 383
provides, the person does not owe any duty to the other person and is not required to confirm 384
the acknowledgment to any other person.” 385
(i) Article 8 is amended as follows: 386
(1) Section 28:8-102 is amended as follows: 387
(A) Subsection (a)(6)(A) is amended by striking the word “writing” and 388
inserting the word “record” in its place. 389
(B) Subsection (b) is amended to read as follows: 390 ENGROSSED ORIGINAL
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“(b) The following definitions in this article and other articles apply to this article: 391
"(1) “Appropriate person”. § 28:8-107. 392
“(2) “Control”. § 28:8-106. 393
“(3) “Controllable account”. § 28:9-102. 394
“(4) “Controllable electronic record”. § 28:12-102. 395
“(5) “Controllable payment intangible”. § 28:9-102. 396
“(6) “Delivery”. § 28:8-28:8-301. 397
“(7) “Investment company security”. § 28:8-103. 398
“(8) “Issuer”. § 28:8-201. 399
“(9) “Overissue”. § 28:8-210. 400
“(10) “Protected purchaser”. § 28:8-303. 401
“(11) “Securities account”. § 28:8-501.” 402
(2) Section 28:8-103 is amended by adding a new subsection (h) to read 403
as follows: 404
“(h) A controllable account, controllable electronic record, or controllable payment 405
intangible is not a financial asset unless § 28:8-102(a)(9)(A)(iii) applies.” 406
(3) Section 28:8-106 is amended as follows: 407
(A) Subsection (d)(3) is amended to read as follows: 408
“(3) Another person, other than the transferor to the purchaser of an interest in 409
the security entitlement: 410 ENGROSSED ORIGINAL
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“(A) Has control of the security entitlement and acknowledges that it 411
has control on behalf of the purchaser; or 412
“(B) Obtains control of the security entitlement after having 413
acknowledged that it will obtain control of the security entitlement on behalf of the 414
purchaser.” 415
(B) New subsections (h) and (i) are added to read as follows: 416
“(h) A person that has control under this section is not required to acknowledge that it has 417
control on behalf of a purchaser. 418
“(i) If a person acknowledges that it has or will obtain control on behalf of a purchaser, 419
unless the person otherwise agrees or law other than this article or article 9 otherwise provides, 420
the person does not owe any duty to the purchaser and is not required to confirm the 421
acknowledgment to any other person.” 422
(4) Section 28:8-110 is amended by adding a new subsection (g) to read as 423
follows: 424
“(g) The local law of the issuer’s jurisdiction or the securities intermediary’s 425
jurisdiction governs a matter or transaction specified in subsection (a) or (b) of this section, 426
even if the matter or transaction does not bear any relation to the jurisdiction.” 427
(5) Section 28:8-303(b) is amended by striking the phrase “In addition to 428
acquiring the rights of a purchaser, a” and inserting the word “A” in its place. 429
(j) Article 9 is amended as follows: 430 ENGROSSED ORIGINAL
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(1) Section 28:9-102 is amended as follows: 431
(A) Subsection (a) is amended as follows: 432
(i) Paragraph (2) is amended to read as follows: 433
“(2) “Account”, except as used in “account for”, “account statement”, 434
“account to”, “commodity account” in paragraph (14) of this subsection, “customer’s 435
account”, “deposit account” in paragraph (29) of this subsection, “on account of”, and 436
“statement of account”, means a right to payment of a monetary obligation, whether or not 437
earned by performance, (i) for property that has been or is to be sold, leased, licensed, 438
assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a 439
policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be 440
incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a 441
charter or other contract, (vii) arising out of the use of a credit or charge card or information 442
contained on or for use with the card, or (viii) as winnings in a lottery or other game of 443
chance operated or sponsored by a State, governmental unit of a State, or person licensed or 444
authorized to operate the game by a State or governmental unit of a State. The term includes 445
controllable accounts and health-care-insurance receivables. The term does not include (i) 446
chattel paper, (ii) commercial tort claims, (iii) deposit accounts, (iv) investment property, (v) 447
letter-of-credit rights or letters of credit, (vi) rights to payment for money or funds advanced 448
or sold, other than rights arising out of the use of a credit or charge card or information 449
contained on or for use with the card, or (vii) rights to payment evidenced by an instrument.” 450 ENGROSSED ORIGINAL
23
(ii) Paragraph (3) is amended by striking the phrase “instrument 451
constitutes part of” and inserting the phrase “negotiable instrument evidences” in its place. 452
(iii) Paragraph (4)(A) is amended by striking the word 453
“Authenticated” and inserting the word “Signed” in its place. 454
(iv) Paragraph (7) is repealed. 455
(v) New paragraphs (7A) and (7B) are added to read as follows: 456
“(7A) “Assignee”, except as used in “assignee for benefit of creditors”, means 457
a person (i) in whose favor a security interest that secures an obligation is created or 458
provided for under a security agreement, whether or not the obligation is outstanding or (ii) 459
to which an account, chattel paper, payment intangible, or promissory note has been sold. 460
The term includes a person to which a security interest has been transferred by a secured 461
party. 462
“(7B) “Assignor” means a person that (i) under a security agreement creates or 463
provides for a security interest that secures an obligation or (ii) sells an account, chattel 464
paper, payment intangible, or promissory note. The term includes a secured party that has 465
transferred a security interest to another person.” 466
(vi) Paragraph (11) is amended to read as follows: 467
“(11)(A) “Chattel paper” means: 468
“(i) A right to payment of a monetary obligation secured by 469
specific goods, if the right to payment and security agreement are evidenced by a record; or 470 ENGROSSED ORIGINAL
24
“(ii) A right to payment of a monetary obligation owed by a 471
lessee under a lease agreement with respect to specific goods and a monetary obligation 472
owed by the lessee in connection with the transaction giving rise to the lease, if: 473
“(I) The right to payment and lease agreement are 474
evidenced by a record; and 475
“(II) The predominant purpose of the transaction giving 476
rise to the lease was to give the lessee the right to possession and use of the goods. 477
“(B) The term does not include a right to payment arising out of a 478
charter or other contract involving the use or hire of a vessel or a right to payment arising out 479
of the use of a credit or charge card or information contained on or for use with the card.” 480
(vii) New paragraphs (27A) and (27B) are added to read as 481
follows: 482
“(27A) “Controllable account” means an account evidenced by a controllable 483
electronic record that provides that the account debtor undertakes to pay the person that has 484
control under § 28:12-105 of the controllable electronic record. 485
“(27B) “Controllable payment intangible” means a payment intangible 486
evidenced by a controllable electronic record that provides that the account debtor undertakes 487
to pay the person that has control under §28:12-105 of the controllable electronic record.” 488
(viii) Paragraph (31) is repealed. 489
(ix) A new paragraph (31A) is added to read as follows: 490 ENGROSSED ORIGINAL
25
“(31A) “Electronic money” means money in an electronic form.” 491
(x) Paragraph (42) is amended by striking the second sentence 492
and inserting the sentence “The term includes controllable electronic records, payment 493
intangibles, and software.” in its place. 494
(xi) Paragraph (47) is amended striking the period at the end and 495
inserting the phrase “, or (iv) writings that evidence chattel paper.” in its place. 496
(xii) A new paragraph (54A) is added to read as follows: 497
“(54A) “Money” has the meaning in §28:1-201(b)(24), but does not include (i) 498
a deposit account or (ii) money in an electronic form that cannot be subjected to control 499
under §28:9-105A.” 500
(xiii) Paragraph (61) is amended by adding a new sentence at 501
the end to read as follows: “The term includes a controllable payment intangible.” 502
(xiv) Paragraph (66) is amended by striking the word 503
“authenticated” and inserting the word “signed” in its place. 504
(xv) Paragraph (75) is repealed. 505
(xvi) Paragraph (79) is repealed. 506
(xvii) A new paragraph (79A) is added to read as follows: 507
“(79A) “Tangible money” means money in a tangible form”. 508
(B) Subsection (b) is amended to read as follows: 509
“(b) “Control” as provided in § 28:7-106 and the following definitions in other 510 ENGROSSED ORIGINAL
26
articles apply to this article: 511
“(1) “Applicant” § 28:5-102. 512
“(2) “Beneficiary” § 28:5-102. 513
“(3) “Broker” § 28:8-102. 514
“(4) “Certificated security” § 28:8-102. 515
“(5) “Check” § 28:3-104. 516
“(6) “Clearing corporation” § 28:8-102. 517
“(7) “Contract for sale” § 28:2-106. 518
“(8) “Controllable electronic record”. § 28:12-102. 519
“(9) “Customer” § 28:4-104. 520
“(10) “Entitlement holder” § 28:8-102. 521
“(11) “Financial asset” § 28:8-102. 522
“(12) “Holder in due course” § 28:3-302. 523
“(13)(A) “Issuer” (with respect to a letter of credit or letter-of-credit right) § 524
28:5-102; 525
“(B) “Issuer” (with respect to a security) § 28:8-201; and 526
“(C) “Issuer” (with respect to documents of title) § 28:7-102. 527
“(14) “Lease” § 28:2A-103. 528
“(15) “Lease agreement” § 28:2A-103. 529
“(16) “Lease contract” § 28:2A-103. 530 ENGROSSED ORIGINAL
27
“(17) “Leasehold interest” § 28:2A-103. 531
“(18) “Lessee” § 28:2A-103. 532
“(19) “Lessee in ordinary course of business” § 28:2A-103. 533
“(20) “Lessor” § 28:2A-103. 534
“(21) “Lessor's residual interest” § 28:2A-103. 535
“(22) “Letter of credit” § 28:5-102. 536
“(23) “Merchant” § 28:2-104. 537
“(24) “Negotiable instrument” § 28:3-104. 538
“(25) “Nominated person” § 28:5-102. 539
“(26) “Note” § 28:3-104. 540
“(27) “Proceeds of a letter of credit” § 28:5-114. 541
“(28) “Protected purchaser”. § 28:8-303. 542
“(29) “Prove” § 28:3-103. 543
“(30) “Qualifying purchaser”. § 28:12-102. 544
“(31) “Sale” § 28:2-106. 545
“(32) “Securities account” § 28:8-501. 546
“(33) “Securities intermediary” § 28:8-102. 547
“(34) “Security” § 28:8-102. 548
“(35) “Security certificate” § 28:8-102. 549
“(36) “Security entitlement” § 28:8-102. 550 ENGROSSED ORIGINAL
28
“(37) “Uncertificated security” §§ 28:9-104.” 551
(2) Section 28:9-104(a) is amended as follows: 552
(A) Paragraph (2) is amended by: 553
(i) Striking the phrase “an authenticated” and inserting the 554
phrase “a signed” in its place; and 555
(ii) Striking the word “or”. 556
(B) Paragraph (3) is amended by striking the period and inserting the 557
phrase “; or” in its place. 558
(C) A new paragraph (4) is added to read as follows: 559
“(4) Another person, other than the debtor: 560
“(A) Has control of the deposit account and acknowledges that it has 561
control on behalf of the secured party; or 562
“(B) Obtains control of the deposit account after acknowledged that it 563
will obtain control of the deposit account on behalf of the secured party.” 564
(3) Section 28:9-105 is amended to read as follows: 565
Ҥ 28:9-105. Control of electronic copy of record evidencing chattel paper. 566
“(a) A purchaser has control of an authoritative electronic copy of a record evidencing 567
chattel paper if a system employed for evidencing the assignment of interests in the chattel 568
paper reliably establishes the purchaser as the person to which the authoritative electronic 569
copy was assigned. 570 ENGROSSED ORIGINAL
29
“(b) A system satisfies subsection (a) if the record or records evidencing the chattel 571
paper are created, stored, and assigned in a manner that: 572
“(1) A single authoritative copy of the record or records exists which is 573
unique, identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6) of this 574
section, unalterable; 575
“(2) The authoritative copy identifies the purchaser as the assignee of the 576
record or records; 577
“(3) The authoritative copy is communicated to and maintained by the 578
purchaser or its designated custodian; 579
“(4) Copies or amendments that add or change an identified assignee of the 580
authoritative copy can be made only with the consent of the purchaser; 581
“(5) Each copy of the authoritative copy and any copy of a copy is readily 582
identifiable as a copy that is not the authoritative copy; and 583
“(6) Any amendment of the authoritative copy is readily identifiable as 584
authorized or unauthorized. 585
“(c) A system satisfies subsection (a) of this section, and a purchaser has control of an 586
authoritative electronic copy of a record evidencing chattel paper, if the electronic copy, a 587
record attached to or logically associated with the electronic copy, or a system in which the 588
electronic copy is recorded: 589
“(1) Enables the purchaser readily to identify each electronic copy as either an 590 ENGROSSED ORIGINAL
30
authoritative copy or a non-authoritative copy; 591
“(2) Enables the purchaser readily to identify itself in any way, including by 592
name, identifying number, cryptographic key, office, or account number, as the assignee of 593
the authoritative electronic copy; and 594
“(3) Gives the purchaser exclusive power, subject to subsection (d) of this 595
section, to: 596
“(A) Prevent others from adding or changing an identified assignee of 597
the authoritative electronic copy; and 598
“(B) Transfer control of the authoritative electronic copy. 599
“(d) Subject to subsection (e) of this section, a power is exclusive under subsection 600
(c)(3)(A) and (B) of this section even if: 601
“(1) The authoritative electronic copy, a record attached to or logically 602
associated with the authoritative electronic copy, or a system in which the authoritative 603
electronic copy is recorded limits the use of the authoritative electronic copy or has a 604
protocol programmed to cause a change, including a transfer or loss of control; or 605
“(2) The power is shared with another person. 606
“(e) A power of a purchaser is not shared with another person under subsection (d)(2) 607
of this section and the purchaser’s power is not exclusive if: 608
“(1) The purchaser can exercise the power only if the power also is exercised 609
by the other person; and 610 ENGROSSED ORIGINAL
31
“(2) The other person: 611
“(A) Can exercise the power without exercise of the power by the 612
purchaser; or 613
“(B) Is the transferor to the purchaser of an interest in the chattel paper. 614
“(f) If a purchaser has the powers specified in subsection (c)(3)(A) and (B) of this 615
section, the powers are presumed to be exclusive. 616
“(g) A purchaser has control of an authoritative electronic copy of a record 617
evidencing chattel paper if another person, other than the transferor to the purchaser of an 618
interest in the chattel paper: 619
“(1) Has control of the authoritative electronic copy and acknowledges that it 620
has control on behalf of the purchaser; or 621
“(2) Obtains control of the authoritative electronic copy after having 622
acknowledged that it will obtain control of the electronic copy on behalf of the purchaser.” 623
(4) A new section 28:9-105A is added to read as follows: 624
Ҥ 28:9-105A. Control of electronic money. 625
“(a) A person has control of electronic money if: 626
“(1) The electronic money, a record attached to or logically associated with the 627
electronic money, or a system in which the electronic money is recorded gives the person: 628
“(A) Power to avail itself of substantially all the benefit from the 629
electronic money; and 630 ENGROSSED ORIGINAL
32
“(B) Exclusive power, subject to subsection (b) of this section, to: 631
“(i) Prevent others from availing themselves of substantially all 632
the benefit from the electronic money; and 633
“(ii) Transfer control of the electronic money to another person 634
or cause another person to obtain control of other electronic money as a result of the transfer 635
of the electronic money; and 636
“(2) The electronic money, a record attached to or logically associated with the 637
electronic money, or a system in which the electronic money is recorded enables the person 638
readily to identify itself in any way, including by name, identifying number, cryptographic 639
key, office, or account number, as having the powers under paragraph (1) of this subsection. 640
“(b) Subject to subsection (c) of this section, a power is exclusive under subsection 641
(a)(1)(B)(i) and (ii) of this section even if: 642
“(1) The electronic money, a record attached to or logically associated with the 643
electronic money, or a system in which the electronic money is recorded limits the use of the 644
electronic money or has a protocol programmed to cause a change, including a transfer or 645
loss of control; or 646
“(2) The power is shared with another person. 647
“(c) A power of a person is not shared with another person under subsection (b)(2) of 648
this section and the person’s power is not exclusive if: 649
“(1) The person can exercise the power only if the power also is exercised by 650 ENGROSSED ORIGINAL
33
the other person; and 651
“(2) The other person: 652
“(A) Can exercise the power without exercise of the power by the 653
person; or 654
“(B) Is the transferor to the person of an interest in the electronic 655
money. 656
“(d) If a person has the powers specified in subsection (a)(1)(B)(i) and (ii) of this 657
section, the powers are presumed to be exclusive. 658
“(e) A person has control of electronic money if another person, other than the 659
transferor to the person of an interest in the electronic money: 660
“(1) Has control of the electronic money and acknowledges that it has control 661
on behalf of the person; or 662
“(2) Obtains control of the electronic money after having acknowledged that it 663
will obtain control of the electronic money on behalf of the person.” 664
(5) New sections 28:9-107A and 28:9-107B are added to read as follows: 665
Ҥ 28:9-107A. Control of controllable electronic record, controllable account, or 666
controllable payment intangible. 667
“(a) A secured party has control of a controllable electronic record as provided in 668
§ 28:12-105. 669
“(b) A secured party has control of a controllable account or controllable payment 670 ENGROSSED ORIGINAL
34
intangible if the secured party has control of the controllable electronic record that evidences 671
the controllable account or controllable payment intangible. 672
Ҥ 28:9-107B. No requirement to acknowledge or confirm; no duties. 673
“(a) A person that has control under § 28:9-104, § 28:9-105, or § 28:9-105A is not 674
required to acknowledge that it has control on behalf of another person. 675
“(b) If a person acknowledges that it has or will obtain control on behalf of another 676
person, unless the person otherwise agrees or law other than this article otherwise provides, 677
the person does not owe any duty to the other person and is not required to confirm the 678
acknowledgment to any other person.” 679
(6) Section 28:9-203(b)(3) is amended as follows: 680
(A) Subparagraph (A) is amended by striking the word “authenticated” 681
and inserting the word “signed” in its place. 682
(B) Subparagraph (C) is amended by striking the word “or”. 683
(C) Subparagraph (D) is amended to read as follows: 684
“(D) the collateral is controllable accounts, controllable electronic 685
records, controllable payment intangibles, deposit accounts, electronic documents, electronic 686
money, investment property, or letter-of-credit rights, and the secured party has control under 687
§ 28:7-106, § 28:9-104, § 28:9-105A, § 28:9-106, § 28:9-107, or § 28:9-107A pursuant to the 688
debtor’s security agreement; or”. 689
(D) A new subparagraph (E) is added to read as follows: 690 ENGROSSED ORIGINAL
35
“(E) The collateral is chattel paper and the secured party has possession 691
and control under § 28:9-314A pursuant to the debtor’s security agreement.” 692
(7) Section 28:9-204 is amended as follows: 693
(A) Subparagraph (b) is amended by striking the word “A” the first 694
time it appears and inserting the phrase “Subject to subsection (b1) of this section, a” in its 695
place. 696
(B) A new subsection (b-1): 697
“(b-1) Subsection (b) of this section does not prevent a security interest from 698
attaching: 699
“(1) To consumer goods as proceeds under § 28:9-315(a) or commingled 700
goods under § 28:9-336(c); 701
“(2) To a commercial tort claim as proceeds under § 28:9-315(a); or 702
“(3) Under an after-acquired property clause to property that is proceeds of 703
consumer goods or a commercial tort claim.” 704
(8) Section 28:9-207(c) is amended by striking the phrase “§ 28:7-106, § 28:9-705
104, § 28:9-105, § 28:9-106, or § 28:9-107” and inserting the phrase “§ 28:7-106, § 28:9-706
104, § 28:9-105, § 28:9-105A, § 28:9-106, § 28:9-107, or § 28:9-107A” in its place. 707
(9) Section 28:9-208(b) is amended as follows: 708
(A) Striking the phrase “an authenticated” and inserting the phrase “a 709
signed” in its place. 710 ENGROSSED ORIGINAL
36
(B) Paragraph (3) is amended to read as follows: 711
“(3) A secured party, other than a buyer, having control under § 28:9-105 of an 712
authoritative electronic copy of a record evidencing chattel paper shall transfer control of the 713
electronic copy to the debtor or a person designated by the debtor;”. 714
(C) Paragraph (4) is amended by striking the phrase “an authenticated” 715
and inserting the phrase “a signed” in its place. 716
(D) Paragraph (5) is amended by: 717
(i) Striking the phrase “an authenticated” and inserting the 718
phrase “a signed” in its place; and 719
(ii) Striking the phrase “; and” and inserting a semicolon in its 720
place. 721
(E) Paragraph (6) is amended to read as follows: 722
“(6) A secured party having control under § 28:7-106 of an authoritative 723
electronic copy of an electronic document of title shall transfer control of the electronic copy 724
to the debtor or a person designated by the debtor;”. 725
(F) New paragraphs (7) and (8) are added to read as follows: 726
“(7) A secured party having control under § 28:9-105A of electronic money 727
shall transfer control of the electronic money to the debtor or a person designated by the 728
debtor; and 729
“(8) A secured party having control under § 28:12-105 of a controllable 730 ENGROSSED ORIGINAL
37
electronic record, other than a buyer of a controllable account or controllable payment 731
intangible evidenced by the controllable electronic record, shall transfer control of the 732
controllable electronic record to the debtor or a person designated by the debtor.” 733
(10) Section 28:9-209(b) is amended to read as follows: 734
“(b) Within 10 days after receiving a signed demand by the debtor, a secured party 735
shall send to an account debtor that has received notification under § 28:9-406(a) or § 28:12-736
106(b) of an assignment to the secured party as assignee a signed record that releases the 737
account debtor from any further obligation to the secured party.” 738
(11) Section 28:9-210 is amended as follows: 739
(A) Subsection (a) is amended as by striking the word “authenticated” 740
wherever it appears and inserting the word “signed” in its place. 741
(B) Subsection (b) is amended by striking the word “authenticating” 742
wherever it appears and inserting the word “signing” in its place. 743
(C) Subsection (c) is amended by striking the phrase “an authenticated” 744
and inserting the phrase “a signed” in its place. 745
(D) Subsection (d) is amended by striking the phrase “an authenticated” 746
and inserting the phrase “a signed” in its place. 747
(E) Subsection (e) is amended by striking the phrase “an authenticated” 748
and inserting the phrase “a signed” in its place. 749
(12) Section 28:9-301 is amended as follows: 750 ENGROSSED ORIGINAL
38
(A) The lead-in language is amended by striking the word “28:9-306" 751
and inserting the word “28:9-306B” in its place. 752
(B) Paragraph (3) is amended by striking the phrase “while tangible 753
negotiable documents, goods, instruments, money, or tangible chattel paper” and inserting 754
the phrase “while negotiable tangible documents, goods, instruments, or tangible money” in 755
its place. 756
(13) Section 28:9-304(a) is amended by striking the phrase “bank.” and 757
inserting the phrase “bank, even if the transaction does not bear any relation to the bank’s 758
jurisdiction.” in its place. 759
(14) Section 28:9-305(a) is amended by adding a new paragraph (5) to read as 760
follows: 761
“(5) Paragraphs (2), (3), and (4) of this subsection apply even if the transaction 762
does not bear any relation to the jurisdiction.” 763
(15) New sections 28:9-306A and 28:9-306B are added to read as follows: 764
Ҥ 28:9-306A. Law governing perfection and priority of security interests in chattel 765
paper. 766
“(a) Except as provided in subsection (d) of this section, if chattel paper is evidenced 767
only by an authoritative electronic copy of the chattel paper or is evidenced by an 768
authoritative electronic copy and an authoritative tangible copy, the local law of the chattel 769
paper’s jurisdiction governs perfection, the effect of perfection or nonperfection, and the 770 ENGROSSED ORIGINAL
39
priority of a security interest in the chattel paper, even if the transaction does not bear any 771
relation to the chattel paper’s jurisdiction. 772
“(b) The following rules determine the chattel paper’s jurisdiction under this section: 773
“(1) If the authoritative electronic copy of the record evidencing chattel paper, 774
or a record attached to or logically associated with the electronic copy and readily available 775
for review, expressly provides that a particular jurisdiction is the chattel paper’s jurisdiction 776
for purposes of this part, this article, or this subtitle, that jurisdiction is the chattel paper’s 777
jurisdiction. 778
“(2) If paragraph (1) of this subsection does not apply and the rules of the 779
system in which the authoritative electronic copy is recorded are readily available for review 780
and expressly provide that a particular jurisdiction is the chattel paper’s jurisdiction for 781
purposes of this part, this article, or this subtitle, that jurisdiction is the chattel paper’s 782
jurisdiction. 783
“(3) If paragraphs (1) and (2) of this subsection do not apply and the 784
authoritative electronic copy, or a record attached to or logically associated with the 785
electronic copy and readily available for review, expressly provides that the chattel paper is 786
governed by the law of a particular jurisdiction, that jurisdiction is the chattel paper’s 787
jurisdiction. 788
“(4) If paragraphs (1), (2), and (3) of this subsection do not apply and the rules 789
of the system in which the authoritative electronic copy is recorded are readily available for 790 ENGROSSED ORIGINAL
40
review and expressly provide that the chattel paper or the system is governed by the law of a 791
particular jurisdiction, that jurisdiction is the chattel paper’s jurisdiction. 792
“(5) If paragraphs (1) through (4) of this subsection do not apply, the chattel 793
paper’s jurisdiction is the jurisdiction in which the debtor is located. 794
“(c) If an authoritative tangible copy of a record evidences chattel paper and the 795
chattel paper is not evidenced by an authoritative electronic copy, while the authoritative 796
tangible copy of the record evidencing chattel paper is located in a jurisdiction, the local law 797
of that jurisdiction governs: 798
“(1) Perfection of a security interest in the chattel paper by possession under 799
§ 28:9-314A; and 800
“(2) The effect of perfection or nonperfection and the priority of a security 801
interest in the chattel paper. 802
“(d) The local law of the jurisdiction in which the debtor is located governs perfection 803
of a security interest in chattel paper by filing. 804
Ҥ 28:9-306B. Law governing perfection and priority of security interests in 805
controllable accounts, controllable electronic records, and controllable payment intangibles. 806
“(a) Except as provided in subsection (b) of this section, the local law of the 807
controllable electronic record’s jurisdiction specified in § 28:12-107(c) governs perfection, 808
the effect of perfection or nonperfection, and the priority of a security interest in a 809
controllable electronic record and a security interest in a controllable account or controllable 810 ENGROSSED ORIGINAL
41
payment intangible evidenced by the controllable electronic record. 811
“(b) The local law of the jurisdiction in which the debtor is located governs: 812
“(1) Perfection of a security interest in a controllable account, controllable 813
electronic record, or controllable payment intangible by filing; and 814
“(2) Automatic perfection of a security interest in a controllable payment 815
intangible created by a sale of the controllable payment intangible.” 816
(16) Section 28:9-310(b) is amended as follows: 817
(A) Paragraph (8) is amended by striking the phrase “In deposit 818
accounts, electronic chattel paper;” and inserting the phrase “In controllable accounts, 819
controllable electronic records, controllable payment intangibles, deposit accounts,” in its 820
place. 821
(B) A new paragraph (8A) is added to read as follows: 822
“(8A) In chattel paper which is perfected by possession and control under 823
§ 28:9-314A;”. 824
(17) Section 28:9-312 is amended as follows: 825
(A) The section heading is amended by striking the phrase “in chattel 826
paper,” and inserting the phrase “in chattel paper, controllable accounts, controllable 827
electronic records, controllable payment intangibles,”. 828
(B) Subsection (a) is amended to read as follows: 829
“(a) A security interest in chattel paper, controllable accounts, controllable electronic 830 ENGROSSED ORIGINAL
42
records, controllable payment intangibles, instruments, investment property, or negotiable 831
documents may be perfected by filing.” 832
(C) Subsection (b) is amended as follows: 833
(i) Paragraph (2) is amended by striking the word “and”. 834
(ii) Paragraph (3) is amended to read as follows: 835
“(3) a security interest in tangible money may be perfected only by the secured 836
party’s taking possession under § 28:9-313; and”. 837
(iii) A new paragraph (4) is added to read as follows: 838
“(4) A security interest in electronic money may be perfected only by control 839
under § 28:9-314.”. 840
(D) Subsection (e) is amended by striking the phrase “an authenticated” 841
and inserting the phrase “a signed” in its place. 842
(18) Section 28:9-313 is amended as follows: 843
(A) Subsection (a) is amended by striking the phase “in tangible 844
negotiable documents, goods, instruments, money, or tangible chattel paper” and inserting 845
the phrase “in goods, instruments, negotiable tangible documents, or tangible money” in its 846
place. 847
(B) Subsection (c) is amended as follows: 848
(i) Paragraph (1) is amended by striking the word 849
“authenticates” and inserting the word “signs” in its place. 850 ENGROSSED ORIGINAL
43
(ii) Paragraph (2) is amended to read as follows: 851
“(2) The person takes possession of the collateral after having signed a record 852
acknowledging that it will hold possession of the collateral for the secured party’s benefit.” 853
(C) Subsection (d) is amended by striking the phrase “no earlier than” 854
and inserting the word “not earlier than” in its place. 855
(19) Section 28:9-314 is amended as follows: 856
(A) Subsection (a) is amended to read as follows: 857
“(a) A security interest in controllable accounts, controllable electronic records, 858
controllable payment intangibles, deposit accounts, electronic documents, electronic money, 859
investment property, or letter-of-credit rights may be perfected by control of the collateral 860
under § 28:7-106, § 28:9-104, § 28:9-105A, § 28:9-106, § 28:9-107, or § 28:9-107A.” 861
(B) Subsection (b) is amended to read as follows: 862
“(b) A security interest in controllable accounts, controllable electronic records, 863
controllable payment intangibles, deposit accounts, electronic documents, electronic money, 864
or letter-of-credit rights is perfected by control under § 28:7-106, § 28:9-104, § 28:9-105A, 865
§ 28:9-107, or § 28:9-107A not earlier than the time the secured party obtains control and 866
remains perfected by control only while the secured party retains control.” 867
(C) Subsection (c) is amended by striking the word “from the time” and 868
inserting the phrase “not earlier than the time” in its place. 869
(20) A new section 28:9-314A is added to read as follows: 870 ENGROSSED ORIGINAL
44
Ҥ 28:9-314A. Perfection by possession and control of chattel paper. 871
“(a) A secured party may perfect a security interest in chattel paper by taking 872
possession of each authoritative tangible copy of the record evidencing the chattel paper and 873
obtaining control of each authoritative electronic copy of the electronic record evidencing the 874
chattel paper. 875
“(b) A security interest is perfected under subsection (a) of this section not earlier 876
than the time the secured party takes possession and obtains control and remains perfected 877
under subsection (a) of this section only while the secured party retains possession and 878
control. 879
“(c) § 28:9-313(c) and (f) through (i) applies to perfection by possession of an 880
authoritative tangible copy of a record evidencing chattel paper.” 881
(21) Section 28:9-316 is amended as follows: 882
(A) Subsection (a) is amended by striking the phrase “or § 28:9-305(c)” 883
and inserting the phrase “, § 28:9-305(c), § 28:9-306A(d), or § 28:9-306B(b)” in its place. 884
(B) Subsection (f) is amended striking the phrase “deposit accounts, 885
letter-of-credit rights, or investment property which is perfected under the law of” and 886
inserting the phrase “chattel paper, controllable accounts, controllable electronic records, 887
controllable payment intangibles, deposit accounts, letter-of-credit rights, or investment 888
property which is perfected under the law of the chattel paper’s jurisdiction, the controllable 889
electronic record’s jurisdiction,” in its place. 890 ENGROSSED ORIGINAL
45
(22) Section 28:9-317 is amended as follows: 891
(A) Subsection (b) is amended by striking the phrase “of tangible 892
chattel paper, tangible documents, goods, instruments,” and inserting the phrase “of goods, 893
instruments, tangible documents,” in its place. 894
(B) Subsection (d) is amended to read as follows: 895
“(d) Subject to subsections (f) through (i) of this section, a licensee of a general 896
intangible or a buyer, other than a secured party, of collateral other than electronic money, 897
goods, instruments, tangible documents, or a certificated security takes free of a security 898
interest if the licensee or buyer gives value without knowledge of the security interest and 899
before it is perfected.” 900
(C) The following new subsections are added to read as follows: 901
“(f) A buyer, other than a secured party, of chattel paper takes free of a security 902
interest if, without knowledge of the security interest and before it is perfected, the buyer 903
gives value and: 904
“(1) Receives delivery of each authoritative tangible copy of the record 905
evidencing the chattel paper; and 906
“(2) If each authoritative electronic copy of the record evidencing the chattel 907
paper can be subjected to control under § 28:9-105, obtains control of each authoritative 908
electronic copy. 909
“(g) A buyer of an electronic document takes free of a security interest if, without 910 ENGROSSED ORIGINAL
46
knowledge of the security interest and before it is perfected, the buyer gives value and, if 911
each authoritative electronic copy of the document can be subjected to control under § 28:7-912
106, obtains control of each authoritative electronic copy. 913
“(h) A buyer of a controllable electronic record takes free of a security interest if, 914
without knowledge of the security interest and before it is perfected, the buyer gives value 915
and obtains control of the controllable electronic record. 916
“(i) A buyer, other than a secured party, of a controllable account or a controllable 917
payment intangible takes free of a security interest if, without knowledge of the security 918
interest and before it is perfected, the buyer gives value and obtains control of the 919
controllable account or controllable payment intangible.” 920
(23) Section 28:9-323 is amended as follows: 921
(A) Subsection (d) is amended by striking the phrase “other than a 922
buyer in the ordinary course of business”. 923
(B) Subsection (f) is amended by striking the phrase “, other than a 924
lessee in ordinary course of business”. 925
(24) Section 28:9-324 is amended as follows: 926
(A) Subsection (b)(2) is amended by striking the phrase “an 927
authenticated” and inserting the phrase “a signed” in its place. 928
(B) Subsection (d)(2) is amended by striking the phrase “an 929
authenticated” and inserting the phrase “a signed” in its place. 930 ENGROSSED ORIGINAL
47
(25) A new section 28:9-326A is added to read as follows: 931
Ҥ 28:9-326A. Priority of security interest in controllable account, controllable 932
electronic record, and controllable payment intangible. 933
“A security interest in a controllable account, controllable electronic record, or 934
controllable payment intangible held by a secured party having control of the account, 935
electronic record, or payment intangible has priority over a conflicting security interest held 936
by a secured party that does not have control.” 937
(26) Section 28:9-330 is amended as follows: 938
(A) Subsection (a) is amended to read as follows: 939
“(a) A purchaser of chattel paper has priority over a security interest in the chattel 940
paper which is claimed merely as proceeds of inventory subject to a security interest if: 941
“(1) in good faith and in the ordinary course of the purchaser’s business, the 942
purchaser gives new value, takes possession of each authoritative tangible copy of the record 943
evidencing the chattel paper, and obtains control under § 28:9-105 of each authoritative 944
electronic copy of the record evidencing the chattel paper; and 945
“(2) the authoritative copies of the record evidencing the chattel paper do not 946
indicate that it the chattel paper has been assigned to an identified assignee other than the 947
purchaser.” 948
(B) Subsection (b) is amended to read as follows: 949
“(b) A purchaser of chattel paper has priority over a security interest in the 950 ENGROSSED ORIGINAL
48
chattel paper which is claimed other than merely as proceeds of inventory subject to a 951
security interest if the purchaser gives new value, takes possession of each authoritative 952
tangible copy of the record evidencing the chattel paper, and obtains control under § 28:9-953
105 of each authoritative electronic copy of the record evidencing the chattel paper in good 954
faith, in the ordinary course of the purchaser’s business, and without knowledge that the 955
purchase violates the rights of the secured party.” 956
(C) Subsection (f) is amended to read as follows: 957
“(f) For purposes of subsections (b) and (d) of this section, if the authoritative copies 958
of the record evidencing chattel paper or an instrument indicate that the chattel paper or 959
instrument has been assigned to an identified secured party other than the purchaser, a 960
purchaser of the chattel paper or instrument has knowledge that the purchase violates the 961
rights of the secured party.” 962
(27) Section 28:9-331 is amended as follows: 963
(A) The section heading is amended to read as follows: 964
Ҥ 28:9-331. Priority of rights of purchasers of controllable accounts, controllable 965
electronic records, controllable payment intangibles, documents, instruments, and securities 966
under other articles; priority of interests in financial assets and security entitlements and 967
protection against assertion of claim under Articles 8 and 12.” 968
(B) Subsection (a) is amended to read as follows: 969
“(a) This article does not limit the rights of a holder in due course of a negotiable 970 ENGROSSED ORIGINAL
49
instrument, a holder to which a negotiable document of title has been duly negotiated, a 971
protected purchaser of a security, or a qualifying purchaser of a controllable account, 972
controllable electronic record, or controllable payment intangible. These holders or 973
purchasers take priority over an earlier security interest, even if perfected, to the extent 974
provided in Articles 3, 7, 8, and 12.” 975
(C) Subsection (b) is amended striking the phrase “Article 8.” and 976
inserting the phrase “Article 8 or 12” in its place. 977
(28) Section 28:9-332 is amended as follows: 978
(A) Subsection (a) is amended to read as follows: 979
“(a) A transferee of tangible money takes the money free of a security interest if the 980
transferee receives possession of the money without acting in collusion with the debtor in 981
violating the rights of the secured party.” 982
(B) Subsection (b) is amended by striking the phrase “unless the 983
transferee acts” and inserting the phrase “if the transferee receives the funds without acting” 984
in its place. 985
(C) A new subsection (c) is added to read as follows: 986
“(c) A transferee of electronic money takes the money free of a security interest if the 987
transferee obtains control of the money without acting in collusion with the debtor in 988
violating the rights of the secured party.” 989
(29) Section 28:9-334(f)(1) is amended by striking the phrase “an 990 ENGROSSED ORIGINAL
50
authenticated” and inserting the phrase “a signed” in its place. 991
(30) Section 28:9-341 is amended by striking the phrase “an authenticated” 992
and inserting the phrase “a signed” in its place. 993
(31) Section 28:9-404(a)(2) is amended by striking the phrase “authenticated” 994
and inserting the phrase “signed” in its place. 995
(32) Section 28:9-406 is amended as follows: 996
(A) Subsection (a) is amended by: 997
(i) Striking the phrase “subsection (b) through (i)” and inserting 998
the phrase “subsections (b) through (k)”; and 999
(ii) Striking the word “authenticated” and inserting the word 1000
“signed” in its place. 1001
(B) Subsection (b) is amended by striking the phrase “subsection (h)” 1002
and inserting the phrase “subsections (h) and (k)” in its place. 1003
© Subsecti©(c) is amended by striking the phrase “subsection (h)” and 1004
inserting the phrase “subsections (h) and (k)” in its place. 1005
(D) Subsection (d) is amended striking the phrase “Except as otherwise 1006
provided in subsection (e)” and inserting the phrease “In this subsection, “promissory note” 1007
includes a negotiable instrument that evidences chattel paper. Except as otherwise provided 1008
in subsections of this section” in its place. 1009
(E) Subsection (f) is amended by striking the phrase “§§ 28:2A-303 and 1010 ENGROSSED ORIGINAL
51
28:9-407” and inserting the phrase “subsection (j) of this section and §§ 28:2A-303 and 28:9-1011
407”. 1012
(F) Subsection (g) is amended by striking the phrase “subsection (h)” 1013
and inserting the phrase “subsections (h) and (k) of this section” in its place. 1014
(G) New subsections (j) and (k) are added to read as follows: 1015
“(j) Subsections (d) and (e) of this section do not apply to a security interest in an 1016
ownership interest in a general partnership, limited partnership, or limited liability 1017
company.” 1018
“(k) Subsections (a), (b), (c) and (g) of this section do not apply to a controllable 1019
account or controllable payment intangible.” 1020
(33) Section 28:9-408 is amended as follows: 1021
(A) Subsection (a) is amended by striking the phrase “subsection (b)” 1022
and inserting the phrase “subsections (b) and (e) of this section” in its place. 1023
(B) Subsection (c) is amended by striking the phrase “A rule of law” 1024
and inserting the phrase “Except as otherwise provided in subsection (e) of this section, a 1025
rule of law” in its place. 1026
(C) New subsections (e) and (f) are added to read as follows: 1027
“(e) This section does not apply to a security interest in an ownership interest in a 1028
general partnership, limited partnership, or limited liability company. 1029
“(f) For the purposes of this section, “promissory note” includes a negotiable 1030 ENGROSSED ORIGINAL
52
instrument that evidences chattel paper.” 1031
(34) Section 28:9-509 is amended as followed: 1032
(A) Subsection (a)(1) is amended by striking the phrase “an 1033
authenticated” and inserting the phrase “a signed” in its place. 1034
(B) Subsection (b) is amended by striking the word “authenticating” 1035
and inserting the word “signing” in its place. 1036
(35) Section 28:9-513 is amended as follows: 1037
(A) Subsection (b)(2) is amended by striking the phrase “an 1038
authenticated” and inserting the phrase “a signed” in its place. 1039
(B) Subsection (c) is amended by striking the phrase “an authenticated” 1040
and inserting the phrase “a signed” in its place. 1041
(36) Section 28:9-601(b) is amended by striking the phrase “28:7-106, § 28:9-1042
104, § 28:9-105, § 28:9-107, or § 28:9-107” and inserting the phrase “28:7-106, § 28:9-104, 1043
§ 28:9-105, § 28:9-105A, § 28:9-107, § 28:9-107, or § 28:9-107A,” in its place. 1044
(37) Section 28:9-605 is amended as follows: 1045
(A) The lead-in language is amended to read as follows: 1046
“(a) Except as provided in subsection (b), a secured party does not owe a duty based 1047
on its status as a third party.” 1048
(B) A new subsection (b) is added to read as follows: 1049
“(b) A secured party owes a duty based on its status as a secured party to a person if, 1050 ENGROSSED ORIGINAL
53
at the time the secured party obtains control of collateral that is a controllable account, 1051
controllable electronic record, or controllable payment intangible or at the time the security 1052
interest attaches to the collateral, whichever is later: 1053
“(1) The person is a debtor or obligor; and 1054
“(2) The secured party knows that the information in subsection (a)(1)(A), (B), 1055
or (C) of this section relating to the person is not provided by the collateral, a record attached 1056
to or logically associated with the collateral, or the system in which the collateral is 1057
recorded.” 1058
(38) Section 28:9-608(a)(1)(C) is amended by striking the phrase “an 1059
authenticated”. 1060
(39) Section 28:9-611 is amended as follows: 1061
(A) Subsection (a)(1) is amended by striking the phrase “an 1062
authenticated” and inserting the phrase “a signed” in its place. 1063
(B) Subsection (b) is amended by striking the phrase “authenticated” 1064
and inserting the phrase “signed” in its place. 1065
(C) Subsection (c) is amended by striking the phrase “an authenticated” 1066
wherever it appears and inserting the phrase “a signed” in its place. 1067
(D) Subsection (e)(2)(B) is amended by striking the phrase “an 1068
authenticated” and inserting the phrase “a signed” in its place. 1069
(40) Section 28:9-613 is amended as follows: 1070 ENGROSSED ORIGINAL
54
(A) The existing text is designated as subsection (a). 1071
(B) The newly designated subsection (a)(5) 1072
is amended to read as follows: 1073
“(5) The following form of notification and the form appearing in § 28:9-1074
614(a)(3), when completed in accordance with the instructions in subsection (b) of this 1075
section and § 28:9-614(b), each provides sufficient information: 1076
“NOTIFICATION OF DISPOSITION OF COLLATERAL 1077
“To: (Name of debtor, obligor, or other person to which the notification is sent) 1078
“From: (Name, address, and telephone number of secured party) 1079
“(1) Name of any debtor that is not an addressee: (Name of each debtor) 1080
“(2) We will sell (describe collateral) (to the highest qualified bidder) at public sale. 1081
A sale could include a lease or license. The sale will be held as follows: 1082
“(Date) 1083
“(Time) 1084
“(Place) 1085
“(3) We will sell (describe collateral) at private sale sometime after (date). A sale 1086
could include a lease or license. 1087
“(4) You are entitled to an accounting of the unpaid indebtedness secured by the 1088
property that we intend to sell or, as applicable, lease or license. 1089
“(5) If you request an accounting you must pay a charge of $ (amount). 1090 ENGROSSED ORIGINAL
55
“(6) You may request an accounting by calling us at (telephone number). 1091
“(End of Form) 1092
(B) A new subsection (b) is added to read as follows: 1093
“(b) The following instructions apply to the form of notification in subsection (a)(5) 1094
of this section: 1095
“(1) The instructions in this subsection refer to the numbers in braces before 1096
items in the form of notification in subsection (a)(5) of this section. Do not include the 1097
numbers or braces in the notification. The numbers and braces are used only for the purpose 1098
of these instructions. 1099
“(2) Include and complete item (1) only if there is a debtor that is not an 1100
addressee of the notification and list the name or names. 1101
“(3) Include and complete either item (2), if the notification relates to a public 1102
disposition of the collateral, or item (3), if the notification relates to a private disposition of 1103
the collateral. If item (2) is included, include the words “to the highest qualified bidder” only 1104
if applicable. 1105
“(4) Include and complete items (4) and (6). 1106
“(5) Include and complete item (5) only if the sender will charge the recipient 1107
for an accounting.” 1108
(41) Section 28:9-614 is amended as follows: 1109
(A) The existing text is designated as subsection (a). 1110 ENGROSSED ORIGINAL
56
(B) The new designated subsection (a) is amended as follows: 1111
(i) Paragraph (1)(A) is amended by striking the phrase Ҥ 28:9-1112
613(1)” and inserting the phrase “§ 28:9-613(a)(1)” in its place. 1113
(ii) Paragraph (3) is amended to read as follows: 1114
“(3) The following form of notification, when completed in accordance with 1115
the instructions in subsection (b) of this section, provides sufficient information: 1116
“(Name and address of secured party) 1117
“(Date) 1118
“NOTICE OF OUR PLAN TO SELL PROPERTY 1119
“(Name and address of any obligor who is also a debtor) 1120
“Subject: (Identify transaction) 1121
“We have your (describe collateral) because you broke promises in our agreement. 1122
“(1) We will sell (describe collateral) at public sale. A sale could include a lease or 1123
license. The sale will be held as follows: 1124
“(Date) 1125
“(Time) 1126
“(Place) 1127
“You may attend the sale and bring bidders if you want. 1128
“(2) We will sell (describe collateral) at private sale sometime after (date). A sale 1129
could include a lease or license. 1130 ENGROSSED ORIGINAL
57
“(3) The money that we get from the sale, after paying our costs, will reduce the 1131
amount you owe. If we get less money than you owe, you (will or will not, as applicable) still 1132
owe us the difference. If we get more money than you owe, you will get the extra money, 1133
unless we must pay it to someone else. 1134
“(4) You can get the property back at any time before we sell it by paying us the full 1135
amount you owe, not just the past due payments, including our expenses. To learn the exact 1136
amount you must pay, call us at (telephone number). 1137
“(5) If you want us to explain to you in (writing) (writing or in (description of 1138
electronic record)) (description of electronic record) how we have figured the amount that 1139
you owe us, 1140
“(6) call us at (telephone number) (or) (write us at (secured party’s address)) (or 1141
contact us by (description of electronic communication method)). 1142
“(7) and request (a written explanation) (a written explanation or an explanation in 1143
(description of electronic record)) (an explanation in (description of electronic record)). 1144
“(8) We will charge you $ (amount) for the explanation if we sent you another written 1145
explanation of the amount you owe us within the last six months. 1146
“(9) If you need more information about the sale (call us at (telephone number)) (or) 1147
(write us at (secured party’s address)) (or contact us by (description of electronic 1148
communication method)). 1149
“(10) We are sending this notice to the following other people who have an interest in 1150 ENGROSSED ORIGINAL
58
(describe collateral) or who owe money under your agreement: 1151
“(Names of all other debtors and obligors, if any) 1152
“[End of Form]” 1153
(C) A new subsection (b) is added to read as follows: 1154
“(b) The following instructions apply to the form of notification in subsection (a)(3) 1155
of this section: 1156
“(1) The instructions in this subsection refer to the numbers in braces before 1157
items in the form of notification in subsection (a)(3) of this section. Do not include the 1158
numbers or braces in the notification. The numbers and braces are used only for the purpose 1159
of these instructions. 1160
“(2) Include and complete either item (1), if the notification relates to a public 1161
disposition of the collateral, or item (2), if the notification relates to a private disposition of 1162
the collateral. 1163
“(3) Include and complete items (3), (4), (5), (6), and (7). 1164
“(4) In item (5), include and complete any one of the three alternative methods 1165
for the explanation, writing, writing or electronic record, or electronic record. 1166
“(5) In item (6), include the telephone number. In addition, the sender may 1167
include and complete either or both of the two additional alternative methods of 1168
communication, writing or electronic communication, for the recipient of the notification to 1169
communicate with the sender. Neither of the two additional methods of communication is 1170 ENGROSSED ORIGINAL
59
required to be included. 1171
“(6) In item (7), include and complete the method or methods for the 1172
explanation, writing, writing or electronic record, or electronic record, included in item (5). 1173
“(7) Include and complete item (8) only if a written explanation is included in 1174
item (5) as a method for communicating the explanation and the sender will charge the 1175
recipient for another written explanation. 1176
“(8) In item (9), include either the telephone number or the address or both the 1177
telephone number and the address. In addition, the sender may include and complete the 1178
additional method of communication, electronic communication, for the recipient of the 1179
notification to communicate with the sender. The additional method of electronic 1180
communication is not required to be included. 1181
“(9) If item (10) does not apply, insert “None” after “agreement:”. 1182
(42) Section 28:9-615(a) is amended by striking the phrase “an authenticated” 1183
wherever it appears and inserting the phrase “a signed” in its place. 1184
(43) Section 28:9-616 is amended as follows: 1185
(A) Subsection (a) is amended as follows: 1186
(i) Paragraph (1) is amended by striking the word “writing” and 1187
inserting the word “record” in its place. 1188
(ii) Paragraph (2)(A) is amended by striking the word 1189
“authenticated” and inserting the word “signed” in its place. 1190 ENGROSSED ORIGINAL
60
(B) Subsection (b)(1)(A) is amended by striking the phrase “written 1191
demand” and inserting the phrase “demand in a record” in its place. 1192
(C) Subsection (c) is amended by striking the phrase “a writing” and 1193
inserting the phrase “an explanation” in its place. 1194
(44) Section 28:9-619(a) is amended by striking the word “authenticated” and 1195
inserting the word “signed” in its place. 1196
(45) Section 28:9-620 is amended as follows: 1197
(A) Subsection (a)(2) is amended by striking the word “authenticated” 1198
and inserting the word “signed” in its place. 1199
(B) Subsection (b)(1) is amended by striking the phrase “an 1200
authenticated” and inserting the phrase “a signed” in its place. 1201
(C) Subsection (c) is amended by striking the word “authenticated” 1202
wherever it appears and inserting the word “signed” in its place. 1203
(D) Subsection (f)(2) is amended by striking the word “authenticated” 1204
and inserting the word “signed’ in its place. 1205
(46) Section 28:9-621(a)(1) is amended by striking the phase “an 1206
authenticated” and inserting the phrase “a signed” in its place. 1207
(47) Section 28:9-624 is amended by striking the word “authenticated” 1208
wherever it appears and inserting the word “signed’ in its place. 1209
(48) Section 28:9-628 is amended as follows: 1210 ENGROSSED ORIGINAL
61
(A) Subsection (a) is amended by striking the phrase “Unless a” and 1211
inserting the phrase “Subject to subsection (f), unless a” in its place. 1212
(B) A new subsection (f) is added to read as follows: 1213
“(f) Subsections (a) and (b) of this section do not apply to limit the liability of a 1214
secured party to a person if, at the time the secured party obtains control of collateral that is a 1215
controllable account, controllable electronic record, or controllable payment intangible or at 1216
the time the security interest attaches to the collateral, whichever is later: 1217
“(1) The person is a debtor or obligor; and 1218
“(2) The secured party knows that the information in subsection (b)(1)(A), (B), 1219
or (C) of this section relating to the person is not provided by the collateral, a record attached 1220
to or logically associated with the collateral, or the system in which the collateral is 1221
recorded.” 1222
(k) A new article 12 is added to read as follows: 1223
“ARTICLE 12. CONTROLLABLE ELECTRONIC RECORDS . 1224
“Part 1. General Provisions. 1225
Ҥ 28:12-101. Short title. 1226
“This article may be cited as “Uniform Commercial Code—Controllable Electronic 1227
Records”. 1228
Ҥ 28:12-102. Definitions. 1229
“(a) For the purposes of this article, the term: 1230 ENGROSSED ORIGINAL
62
“(1) “Controllable electronic record” means a record stored in an electronic 1231
medium that can be subjected to control under § 28:12-105. The term does not include a 1232
controllable account, a controllable payment intangible, a deposit account, an electronic copy 1233
of a record evidencing chattel paper, an electronic document of title, electronic money, 1234
investment property, or a transferable record. 1235
“(2) “Qualifying purchaser” means a purchaser of a controllable electronic 1236
record or an interest in a controllable electronic record that obtains control of the controllable 1237
electronic record for value, in good faith, and without notice of a claim of a property right in 1238
the controllable electronic record. 1239
“(3) “Transferable record” has the meaning provided for that term in: 1240
“(A) Section 201(a)(1) of the Electronic Signatures in Global and 1241
National Commerce Act, 15 U.S.C. § 7021(a)(1); or 1242
“(B) § 28-4915(a). 1243
“(4) “Value” has the meaning provided in § 28:3-303(a), as if references in 1244
that section to an “instrument” were references to a controllable account, controllable 1245
electronic record, or controllable payment intangible. 1246
“(b) The definitions in § 28:9-102 of “account debtor”, “controllable account”, 1247
“controllable payment intangible”, “chattel paper”, “deposit account”, “electronic money”, 1248
and “investment property” apply to this article. 1249
“(c) Article 1 contains general definitions and principles of construction and 1250 ENGROSSED ORIGINAL
63
interpretation applicable throughout this article. 1251
Ҥ 28:12-103. Relation to Article 9 and consumer laws. 1252
“(a) If there is conflict between this article and article 9, article 9 governs. 1253
“(b) A transaction subject to this article is subject to any applicable rule of law that 1254
establishes a different rule for consumers and §§ 28-3301 to 28-3315. 1255
Ҥ 28:12-104. Rights in controllable account, controllable electronic record, and 1256
controllable payment intangible. 1257
“(a) This section applies to the acquisition and purchase of rights in a controllable 1258
account or controllable payment intangible, including the rights and benefits under 1259
subsections (c), (d), (e), (g), and (h) of this section, of a purchaser and qualifying purchaser, 1260
in the same manner this section applies to a controllable electronic record. 1261
“(b) To determine whether a purchaser of a controllable account or a controllable 1262
payment intangible is a qualifying purchaser, the purchaser obtains control of the account or 1263
payment intangible if it obtains control of the controllable electronic record that evidences 1264
the account or payment intangible. 1265
“(c) Except as provided in this section, law other than this article determines whether 1266
a person acquires a right in a controllable electronic record and the right the person acquires. 1267
“(d) A purchaser of a controllable electronic record acquires all rights in the 1268
controllable electronic record that the transferor had or had power to transfer, except that a 1269
purchaser of a limited interest in a controllable electronic record acquires rights only to the 1270 ENGROSSED ORIGINAL
64
extent of the interest purchased. 1271
“(e) A qualifying purchaser acquires its rights in the controllable electronic record 1272
free of a claim of a property right in the controllable electronic record. 1273
“(f) Except as provided in subsections (a) and (e) of this section for a controllable 1274
account and a controllable payment intangible or law other than this article, a qualifying 1275
purchaser takes a right to payment, right to performance, or other interest in property 1276
evidenced by the controllable electronic record subject to a claim of a property right in the 1277
right to payment, right to performance, or other interest in property. 1278
“(g) An action may not be asserted against a qualifying purchaser based on both a 1279
purchase by the qualifying purchaser of a controllable electronic record and a claim of a 1280
property right in another controllable electronic record, whether the action is framed in 1281
conversion, replevin, constructive trust, equitable lien, or other theory. 1282
“(h) Filing of a financing statement under article 9 is not notice of a claim of a 1283
property right in a controllable electronic record. 1284
Ҥ 28:12-105. Control of controllable electronic record. 1285
“(a) A person has control of a controllable electronic record if the electronic record, a 1286
record attached to or logically associated with the electronic record, or a system in which the 1287
electronic record is recorded: 1288
“(1) Gives the person: 1289
“(A) Power to avail itself of substantially all the benefit from the 1290 ENGROSSED ORIGINAL
65
electronic record; and 1291
“(B) Exclusive power, subject to subsection (b) of this section, to: 1292
“(i) Prevent others from availing themselves of substantially all 1293
the benefit from the electronic record; and 1294
“(ii) Transfer control of the electronic record to another person 1295
or cause another person to obtain control of another controllable electronic record as a result 1296
of the transfer of the electronic record; and 1297
“(2) Enables the person readily to identify itself in any way, including by 1298
name, identifying number, cryptographic key, office, or account number, as having the 1299
powers specified in paragraph (1) of this subsection. 1300
“(b) Subject to subsection (c) of this section, a power is exclusive under subsections 1301
(a)(1)(B)(i) and (ii) of this section even if: 1302
“(1) The controllable electronic record, a record attached to or logically 1303
associated with the electronic record, or a system in which the electronic record is recorded 1304
limits the use of the electronic record or has a protocol programmed to cause a change, 1305
including a transfer or loss of control or a modification of benefits afforded by the electronic 1306
record; or 1307
“(2) The power is shared with another person. 1308
“(c) A power of a person is not shared with another person under subsection (b)(2) of 1309
this section and the person’s power is not exclusive if: 1310 ENGROSSED ORIGINAL
66
“(1) The person can exercise the power only if the power also is exercised by 1311
the other person; and 1312
“(2) The other person: 1313
“(A) Can exercise the power without exercise of the power by the 1314
person; or 1315
“(B) Is the transferor to the person of an interest in the controllable 1316
electronic record or a controllable account or controllable payment intangible evidenced by 1317
the controllable electronic record. 1318
“(d) If a person has the powers specified in subsection (a)(1)(B)(i) and (ii) of this 1319
section, the powers are presumed to be exclusive. 1320
“(e) A person has control of a controllable electronic record if another person, other 1321
than the transferor to the person of an interest in the controllable electronic record or a 1322
controllable account or controllable payment intangible evidenced by the controllable 1323
electronic record: 1324
“(1) Has control of the electronic record and acknowledges that it has control 1325
on behalf of the person; or 1326
“(2) Obtains control of the electronic record after having acknowledged that it 1327
will obtain control of the electronic record on behalf of the person. 1328
“(f) A person that has control under this section is not required to acknowledge that it 1329
has control on behalf of another person. 1330 ENGROSSED ORIGINAL
67
“(g) If a person acknowledges that it has or will obtain control on behalf of another 1331
person, unless the person otherwise agrees or law other than this article or article 9 otherwise 1332
provides, the person does not owe any duty to the other person and is not required to confirm 1333
the acknowledgment to any other person. 1334
Ҥ 28:12-106. Discharge of account debtor on controllable account or controllable 1335
payment intangible. 1336
“(a) An account debtor on a controllable account or controllable payment intangible 1337
may discharge its obligation by paying: 1338
“(1) The person having control of the controllable electronic record that 1339
evidences the controllable account or controllable payment intangible; or 1340
“(2) Except as provided in subsection (b) of this section, a person that 1341
formerly had control of the controllable electronic record. 1342
“(b) Subject to subsection (d) of this section, the account debtor may not discharge its 1343
obligation by paying a person that formerly had control of the controllable electronic record 1344
if the account debtor receives a notification that: 1345
“(1) Is signed by a person that formerly had control or the person to which 1346
control was transferred; 1347
“(2) Reasonably identifies the controllable account or controllable payment 1348
intangible; 1349
“(3) Notifies the account debtor that control of the controllable electronic 1350 ENGROSSED ORIGINAL
68
record that evidences the controllable account or controllable payment intangible was 1351
transferred; 1352
“(4) Identifies the transferee, in any reasonable way, including by name, 1353
identifying number, cryptographic key, office, or account number; and 1354
“(5) Provides a commercially reasonable method by which the account debtor 1355
is to pay the transferee. 1356
“(c) After receipt of a notification that complies with subsection (b) of this section, 1357
the account debtor may discharge its obligation by paying in accordance with the notification 1358
and may not discharge the obligation by paying a person that formerly had control. 1359
“(d) Subject to subsection (h) of this section, notification is ineffective under 1360
subsection (b) of this section: 1361
“(1) Unless, before the notification is sent, the account debtor and the person 1362
that, at that time, had control of the controllable electronic record that evidences the 1363
controllable account or controllable payment intangible agree in a signed record to a 1364
commercially reasonable method by which a person may furnish reasonable proof that 1365
control has been transferred; 1366
“(2) To the extent an agreement between the account debtor and seller of a 1367
payment intangible limits the account debtor’s duty to pay a person other than the seller and 1368
the limitation is effective under law other than this article; or 1369
“(3) At the option of the account debtor, if the notification notifies the account 1370 ENGROSSED ORIGINAL
69
debtor to: 1371
“(A) Divide a payment; 1372
“(B) Make less than the full amount of an installment or other periodic 1373
payment; or 1374
“(C) Pay any part of a payment by more than one method or to more 1375
than one person. 1376
“(e) Subject to subsection (h) of this section, if requested by the account debtor, the 1377
person giving the notification under subsection (b) of this section seasonably shall furnish 1378
reasonable proof, using the method in the agreement referred to in subsection (d)(1) of this 1379
section, that control of the controllable electronic record has been transferred. Unless the 1380
person complies with the request, the account debtor may discharge its obligation by paying 1381
a person that formerly had control, even if the account debtor has received a notification 1382
under subsection (b) of this section. 1383
“(f) A person furnishes reasonable proof under subsection (e) of this section that 1384
control has been transferred if the person demonstrates, using the method in the agreement 1385
referred to in subsection (d)(1) of this section, that the transferee has the power to: 1386
“(1) Avail itself of substantially all the benefit from the controllable electronic 1387
record; 1388
“(2) Prevent others from availing themselves of substantially all the benefit 1389
from the controllable electronic record; and 1390 ENGROSSED ORIGINAL
70
“(3) Transfer the powers specified in paragraphs (1) and (2) of this subsection 1391
to another person. 1392
“(g) Subject to subsection (h) of this section, an account debtor may not waive or vary 1393
its rights under subsections (d)(1) and (e) of this section or its option under subsection (d)(3) 1394
of this section. 1395
“(h) This section is subject to law other than this article which establishes a different 1396
rule for an account debtor who is an individual and who incurred the obligation primarily for 1397
personal, family, or household purposes. 1398
Ҥ 28:12-107. Governing law. 1399
“(a) Except as provided in subsection (b) of this section, the local law of a 1400
controllable electronic record’s jurisdiction governs a matter covered by this article. 1401
“(b) For a controllable electronic record that evidences a controllable account or 1402
controllable payment intangible, the local law of the controllable electronic record’s 1403
jurisdiction governs a matter covered by § 28:12-106 unless an effective agreement 1404
determines that the local law of another jurisdiction governs. 1405
“(c) The following rules determine a controllable electronic record’s jurisdiction 1406
under this section: 1407
“(1) If the controllable electronic record, or a record attached to or logically 1408
associated with the controllable electronic record and readily available for review, expressly 1409
provides that a particular jurisdiction is the controllable electronic record’s jurisdiction for 1410 ENGROSSED ORIGINAL
71
purposes of this article or this subtitle, that jurisdiction is the controllable electronic record’s 1411
jurisdiction. 1412
“(2) If paragraph (1) of this subsection does not apply and the rules of the 1413
system in which the controllable electronic record is recorded are readily available for review 1414
and expressly provide that a particular jurisdiction is the controllable electronic record’s 1415
jurisdiction for purposes of this article or this subtitle, that jurisdiction is the controllable 1416
electronic record’s jurisdiction. 1417
“(3) If paragraphs (1) and (2) of this subsection do not apply and the 1418
controllable electronic record, or a record attached to or logically associated with the 1419
controllable electronic record and readily available for review, expressly provides that the 1420
controllable electronic record is governed by the law of a particular jurisdiction, that 1421
jurisdiction is the controllable electronic record’s jurisdiction. 1422
“(4) If paragraphs (1), (2), and (3) of this subsection do not apply and the rules 1423
of the system in which the controllable electronic record is recorded are readily available for 1424
review and expressly provide that the controllable electronic record or the system is 1425
governed by the law of a particular jurisdiction, that jurisdiction is the controllable electronic 1426
record’s jurisdiction. 1427
“(5) If paragraphs (1) through (4) of this subsection do not apply, the 1428
controllable electronic record’s jurisdiction is the District of Columbia. 1429
“(d) To the extent subsections (a) and (b) of this section provide that the local law of 1430 ENGROSSED ORIGINAL
72
the controllable electronic record’s jurisdiction governs a matter covered by this article, that 1431
law governs even if the matter or a transaction to which the matter relates does not bear any 1432
relation to the controllable electronic record’s jurisdiction. 1433
“(e) The rights acquired under § 28:12-104 by a purchaser or qualifying purchaser are 1434
governed by the law applicable under this section at the time of purchase. 1435
“Part 2. Transitional Provisions for Articles 9 and 12. 1436
Ҥ 28:12-201. Definitions. 1437
“(a) In this part, the term: 1438
“(1) “Adjustment date” means July 1, 2025, or the date that is one year after 1439
the effective date of this act, whichever is later. 1440
“(2) “Article 12 property” means a controllable account, controllable 1441
electronic record, or controllable payment intangible. 1442
“(3) “2023 Act” means the Uniform Commercial Code Amendment Act of 1443
2023. 1444
“(b) The following definitions in other articles of this subtitle apply to this part. 1445
“(1) “Controllable account” § 28:9-102. 1446
“(2) “Controllable electronic record” § 28:12-102. 1447
“(3) “Controllable payment intangible” § 28:9-102. 1448
“(4) “Electronic money” § 28:9-102. 1449
“(5) “Financing statement” § 28:9-102. 1450 ENGROSSED ORIGINAL
73
Ҥ 28:12-202. Saving clause. 1451
“(a) Except as provided in this part, a transaction validly entered into before the 1452
effective date of the 2023 Act and the rights, duties, and interests flowing from the 1453
transaction remain valid thereafter and may be terminated, completed, consummated, or 1454
enforced as required or permitted by law other than this subtitle or, if applicable, this 1455
subtitle, as though the 2023 Act had not taken effect. 1456
“(b) Except as provided in this part, article 9, as amended by the 2023 Act, and article 1457
12 apply to a transaction, lien, or other interest in property, even if the transaction, lien, or 1458
interest was entered into, created, or acquired before the effective date of this act. 1459
“(c) Except as provided in subsection (d) of this section and §§ 28:12-203 to 12-208: 1460
“(1) A transaction, lien, or interest in property that was validly entered into, 1461
created, or transferred before the effective date of the 2023 Act and was not governed by this 1462
subtitle, but would be subject to article 9 as amended by the 2023 Act or article 12 if it had 1463
been entered into, created, or transferred on or after the effective date of the 2023 Act, 1464
including the rights, duties, and interests flowing from the transaction, lien, or interest, 1465
remains valid on and after the effective date of the 2023 Act; and 1466
“(2) the transaction, lien, or interest may be terminated, completed, 1467
consummated, and enforced as required or permitted by the 2023 Act or by the law that 1468
would apply if the 2023 Act had not taken effect. 1469
“(d) The 2023 Act does not affect an action, case, or proceeding commenced before 1470 ENGROSSED ORIGINAL
74
the effective date of the 2023 Act. 1471
Ҥ 28:12-203. Security interest perfected before effective date of 2023 Act. 1472
“(a) A security interest that is enforceable and perfected immediately before the 1473
effective date of the 2023 Act is a perfected security interest under the 2023 Act if, on the 1474
effective date of the 2023 Act, the requirements for enforceability and perfection under the 1475
2023 Act are satisfied without further action. 1476
“(b) If a security interest is enforceable and perfected immediately before the 1477
effective date of the 2023 Act, but the requirements for enforceability or perfection under the 1478
2023 Act are not satisfied on the effective date of the 2023 Act, the security interest: 1479
“(1) Is a perfected security interest until the earlier of the time perfection 1480
would have ceased under the law in effect immediately before the effective date of the 2023 1481
Act or the adjustment date; 1482
“(2) Remains enforceable thereafter only if the security interest satisfies the 1483
requirements for enforceability under § 28:9-203, as amended by the 2023 Act, before the 1484
adjustment date; and 1485
“(3) Remains perfected thereafter only if the requirements for perfection under 1486
the 2023 Act are satisfied before the time specified in paragraph (1) of this subsection. 1487
Ҥ 28:12-204. Security interest unperfected before effective date of 2023 Act. 1488
“A security interest that is enforceable immediately before the effective date of the 1489
2023 Act but is unperfected at that time: 1490 ENGROSSED ORIGINAL
75
“(1) Remains an enforceable security interest until the adjustment date; 1491
“(2) Remains enforceable thereafter if the security interest becomes 1492
enforceable under § 28:9-203, as amended by the 2023 Act, on the effective date of the 2023 1493
Act or before the adjustment date; and 1494
“(3) Becomes perfected: 1495
“(A) Without further action, on the effective date of the 2023 Act if the 1496
requirements for perfection under the 2023 Act are satisfied before or at that time; or 1497
“(B) When the requirements for perfection are satisfied if the 1498
requirements are satisfied after that time. 1499
Ҥ 28:12-205. Effectiveness of actions taken before effective date of 2023 Act. 1500
“(a) If action, other than the filing of a financing statement, is taken before the 1501
effective date of the 2023 Act and the action would have resulted in perfection of the security 1502
interest had the security interest become enforceable before the effective date of the 2023 1503
Act, the action is effective to perfect a security interest that attaches under the 2023 Act 1504
before the adjustment date. An attached security interest becomes unperfected on the 1505
adjustment date unless the security interest becomes a perfected security interest under the 1506
2023 Act before the adjustment date. 1507
“(b) The filing of a financing statement before the effective date of the 2023 Act is 1508
effective to perfect a security interest on the effective date of the 2023 Act to the extent the 1509
filing would satisfy the requirements for perfection under the 2023 Act. 1510 ENGROSSED ORIGINAL
76
“(c) The taking of an action before the effective date of the 2023 Act is sufficient for 1511
the enforceability of a security interest on the effective date of the 2023 Act if the action 1512
would satisfy the requirements for enforceability under the 2023 Act. 1513
Ҥ 28:12-206. Priority. 1514
“(a) Subject to subsections (b) and (c) of this section, the 2023 Act determines the 1515
priority of conflicting claims to collateral. 1516
“(b) Subject to subsection (c) of this section, if the priorities of claims to collateral 1517
were established before the effective date of the 2023 Act, article 9 as in effect before the 1518
effective date of the 2023 Act determines priority. 1519
“(c) On the adjustment date, to the extent the priorities determined by article 9 as 1520
amended by the 2023 Act modify the priorities established before the effective date of the 1521
2023 Act, the priorities of claims to Article 12 property and electronic money established 1522
before the effective date of the 2023 Act cease to apply. 1523
Ҥ 28:12-207. Priority of claims when priority rules of article 9 do not apply. 1524
“(a) Subject to subsections (b) and (c) of this section, article 12 determines the 1525
priority of conflicting claims to Article 12 property when the priority rules of article 9 as 1526
amended by the 2023 Act do not apply. 1527
“(b) Subject to subsection (c) of this section, when the priority rules of article 9 as 1528
amended by the 2023 Act do not apply and the priorities of claims to Article 12 property 1529
were established before the effective date of the 2023 Act, law other than article 12 1530 ENGROSSED ORIGINAL
77
determines priority. 1531
“(c) When the priority rules of article 9 as amended by the 2023 Act do not apply, to 1532
the extent the priorities determined by the 2023 Act modify the priorities established before 1533
the effective date of the 2023 Act, the priorities of claims to article 12 property established 1534
before the effective date of the 2023 Act cease to apply on the adjustment date.” 1535
Sec. 3. Fiscal impact statement. 1536
The Council adopts the fiscal impact statement in the committee report as the fiscal 1537
impact statement required by section 602(c)(3) of the District of Columbia Home Rule Act, 1538
approved December 24, 1973 (87 Stat. 813; D.C. Official Code § 1-206.02(c)(3)). 1539
Sec. 4. Effective date. 1540
This act shall take effect following approval by the Mayor (or in the event of veto by 1541
the Mayor, action by the Council to override the veto), a 30-day period of Congressional 1542
review as provided in section 602(c)(1) of the District of Columbia Home Rule Act, 1543
approved December 24, 1973 (87 Stat. 813; D.C. Official Code § 1-206.02(c)(1)), and 1544
publication in the District of Columbia Register. 1545