Iowa Senate Bill SF2389 Introduced / Bill

                    Senate File 2389 - Introduced   SENATE FILE 2389   BY COMMITTEE ON JUDICIARY   (SUCCESSOR TO SF 540)   (SUCCESSOR TO SSB 1177)   (COMPANION TO HF 2519 BY   COMMITTEE ON JUDICIARY)   A BILL FOR   An Act relating to commercial transactions, including control 1   and transmission of electronic records and digital assets. 2   BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3   TLSB 1411SZ (4) 90   da/jh  

  S.F. 2389   DIVISION I 1   UNIFORM COMMERCIAL CODE 2   PART A 3   ARTICLE 14 4   CONTROLLABLE ELECTRONIC RECORDS 5   Section 1. Section 554.14101, Code 2024, is amended to read 6   as follows: 7   554.14101 Short title. 8   This Article may be cited as the   Uniform Commercial Code  9   Controllable Electronic Records. 10   Sec. 2. Section 554.14102, Code 2024, is amended to read as 11   follows: 12   554.14102 Definitions. 13   1. Article 14   definitions. Article 14 definitions. In this 14   Article : 15   a. Controllable electronic record means a record stored 16   in an electronic medium that can be subjected to control under 17   section 554.14105 . The term does not include a controllable   18   account, a controllable payment intangible, a   deposit account, 19   electronic chattel paper, an electronic copy of a record 20   evidencing chattel paper, an   electronic document of title, 21   electronic money, investment property, or a transferable 22   record. 23   b. Qualifying purchaser means a purchaser of a 24   controllable electronic record or an interest in the   a 25   controllable electronic record that obtains control of the 26   controllable electronic record for value, in good faith, 27   and without notice of a claim of a property right in the 28   controllable electronic record. 29   c. Transferable record means   has the meaning provided for 30   that term in :   31   (1) Transferable record   , as defined in the federal Section 32   201(a)(1) of the Electronic Signatures in Global and National 33   Commerce Act, 15 U.S.C. 7021(a)(1), as amended .   ; or 34   (2) Transferable record   as defined in the uniform 35   -1-   LSB 1411SZ (4) 90   da/jh   1/ 90                          

  S.F. 2389   electronic transactions Uniform Electronic Transactions Act, 1   section 554D.118, subsection 1 . 2   d. Value has the meaning provided in section 554.3303, 3   subsection 1 , as if references in that subsection to an   4   instrument   were references to a controllable account, 5   controllable electronic record, or controllable payment   6   intangible . 7   2. Definitions in Article 9 . Definitions in Article 9 . The 8   definitions in Article 9 of account debtor , authenticate   , 9   controllable account , controllable payment intangible , 10   chattel paper , deposit account , electronic chattel paper   , 11   electronic money , and investment property apply to this 12   Article . 13   3.   Article 1 definitions and principles. Article 1 contains 14   general definitions and principles of construction and 15   interpretation applicable throughout this Article. 16   Sec. 3. Section 554.14103, Code 2024, is amended to read as 17   follows: 18   554.14103 Scope   Relation to Article 9 and consumer laws . 19   1. Article 9 governs in case of conflict. If there is 20   conflict between this Article and Article 9 , Article 9 governs. 21   2. Applicable consumer law and other laws. A transaction 22   subject to this Article is subject to: 23   a. any applicable rule of law that establishes a different 24   rule for consumers, including as provided in chapter 537 and 25   any other consumer protection statute or regulation of this 26   state; and   27   b. any other statute or regulation of this state that 28   regulates the rates, charges, agreements, and practices for 29   loans, credit sales, or other extensions of credit or credit 30   transactions, including as provided in chapter 535 . 31   2A.   National digital currency not supported, endorsed, 32   created, or implemented. This Article shall not be construed 33   to support, endorse, create, or implement a national digital   34   currency. 35   -2-   LSB 1411SZ (4) 90   da/jh   2/ 90                                    

  S.F. 2389   Sec. 4. Section 554.14104, Code 2024, is amended to read as 1   follows: 2   554.14104 Rights in controllable account, controllable 3   electronic record, and controllable payment intangible. 4   1. Applicability of section to controllable account and 5   controllable payment intangible. This section applies to the 6   acquisition and purchase of rights in a controllable account 7   or controllable payment intangible, including the rights and   8   benefits under subsections 3, 4, 5, 7, and 8   of a purchaser 9   and a qualifying purchaser , and under subsections 3, 4, and 6 , 10   and   in the same manner this section applies to a controllable 11   electronic record. 12   2. Control of controllable account and controllable payment 13   intangible.   To determine whether a purchaser of a controllable 14   account or a controllable payment intangible is a qualifying 15   purchaser, the purchaser obtains control of the account or 16   payment intangible if it obtains control of the controllable 17   electronic record that evidences the account or payment   18   intangible.   19   2. 3. Applicability of other law to acquisition of 20   rights. Except as provided in this section , law other than 21   this Article determines whether a person acquires a right in 22   a controllable electronic record and the right the person 23   acquires. 24   3.   4. Shelter principle and purchase of limited interest. A 25   purchaser of a controllable electronic record acquires 26   all rights in the controllable electronic record that the 27   transferor had or had power to transfer, except that a 28   purchaser of a limited interest in a controllable electronic 29   record acquires rights only to the extent of the interest 30   purchased. 31   4.   5. Rights of qualifying purchaser. A qualifying 32   purchaser acquires its rights in the controllable electronic 33   record free of a claim of a property right in the controllable 34   electronic record. 35   -3-   LSB 1411SZ (4) 90   da/jh   3/ 90                           

  S.F. 2389   5. 6. Limitation of rights of qualifying purchaser in 1   other property. Except as provided in subsections 1 and 4   2   5 for a controllable accounts account and a controllable 3   payment intangibles intangible or law other than this Article , 4   a qualifying purchaser takes a right to payment, right to 5   performance, or other interest in property evidenced by the 6   controllable electronic record subject to a claim of a property 7   right in the right to payment, right to performance, or other 8   interest in property. 9   6.   7. No-action protection for qualifying purchaser. An 10   action shall not be asserted against a qualifying purchaser 11   based on both a purchase by the qualifying purchaser of a 12   controllable electronic record and a claim of a property 13   right in another controllable electronic record, whether the   14   action is framed in conversion, replevin, constructive trust, 15   equitable lien, or other theory. 16   7. 8. Filing not notice. Filing of a financing statement 17   under Article 9 is not notice of a claim of a property right in 18   a controllable electronic record. 19   Sec. 5. Section 554.14105, Code 2024, is amended to read as 20   follows: 21   554.14105 Control of controllable electronic record. 22   1. General rule :    control of controllable electronic 23   record. A person has control of a controllable electronic 24   record if the electronic record, a record attached to or 25   logically associated with the electronic record, or a system in 26   which the electronic record is recorded :   27   a. the electronic record, a record attached to or logically   28   associated with the electronic record, or a system in which the 29   electronic record is recorded   gives the person: 30   (1) the power to avail itself of substantially all the 31   benefit from the electronic record; and 32   (2) exclusive power, subject to subsection 2 , to: 33   (a) prevent others from availing themselves of 34   substantially all the benefit from the electronic record; and 35   -4-   LSB 1411SZ (4) 90   da/jh   4/ 90                             

  S.F. 2389   (b) transfer control of the electronic record to another 1   person or cause another person to obtain control of another 2   controllable electronic record as a result of the transfer of 3   the electronic record; and 4   b. the electronic record, a record attached to or logically 5   associated with the electronic record, or a system in which   6   the electronic record is recorded enables the person readily 7   to identify itself in any way, including by name, identifying 8   number, cryptographic key, office, or account number, as having 9   the powers specified in paragraph a . 10   2.   Control through another person. A person has control of 11   a controllable electronic record if another person, other than 12   the transferor of an interest in the electronic record: 13   a.   has control of the electronic record and acknowledges 14   that it has control on behalf of the person, or 15   b. obtains control of the electronic record after having 16   acknowledged that it will obtain control of the electronic 17   record on behalf of the person.   18   3.   2. Meaning of exclusive. A power specified in Subject 19   to subsection 1 3 , paragraph a , subparagraph (2), a power is 20   exclusive ,   under subsection 1, paragraph a , subparagraph (2), 21   subparagraph divisions (a) and (b) even if: 22   a. the controllable electronic record , a record attached   23   to or logically associated with the electronic record, or a 24   system in which the electronic record is recorded limits the 25   use of the electronic record or has a protocol programmed to 26   cause a change, including a transfer or loss of control or a 27   modification of benefits afforded by the electronic record; or 28   b. the person has agreed to share the power is shared with 29   another person. 30   3.   When power not shared with another person. A power of a 31   person is not shared with another person under subsection 2,   32   paragraph b and the persons power is not exclusive if: 33   a.   the person can exercise the power only if the power also 34   is exercised by the other person; and 35   -5-   LSB 1411SZ (4) 90   da/jh   5/ 90                                                      

  S.F. 2389   b. the other person: 1   (1)   can exercise the power without exercise of the power by 2   the person; or 3   (2) is the transferor to the person of an interest in the 4   controllable electronic record or a controllable account or   5   controllable payment intangible evidenced by the controllable   6   electronic record. 7   4. Presumption of exclusivity of certain powers. If a 8   person has the powers specified in subsection 1, paragraph   a , 9   subparagraph (2), subparagraph divisions (a) and (b) the powers 10   are presumed to be exclusive.   11   5. Control through another person. A person has control of 12   a controllable electronic record if another person, other than 13   the transferor to the person of an interest in the controllable   14   electronic record or a controllable account or controllable 15   payment intangible evidenced by the controllable electronic 16   record: 17   a.   has control of the electronic record and acknowledges 18   that it has control on behalf of the person; or   19   b. obtains control of the electronic record after having 20   acknowledged that it will obtain control of the electronic   21   record on behalf of the person. 22   6.   No requirement to acknowledge. A person that has control 23   under this section is not required to acknowledge that it has 24   control on behalf of another person. 25   7. No duties or confirmation. If a person acknowledges that 26   it has or will obtain control on behalf of another person, 27   unless the person otherwise agrees or law other than this 28   Article or Article 9 otherwise provides, the person does not 29   owe any duty to the other person and is not required to confirm   30   the acknowledgment to any other person. 31   Sec. 6. Section 554.14106, Code 2024, is amended to read as   32   follows:   33   554.14106 Discharge of account debtor on controllable account 34   or controllable payment intangible. 35   -6-   LSB 1411SZ (4) 90   da/jh   6/ 90                                                             

  S.F. 2389   1. Discharge of account debtor. An account debtor on a 1   controllable account or controllable payment intangible may 2   discharge its obligation by paying: 3   a. the person having control of the controllable electronic 4   record that evidences the controllable account or controllable 5   payment intangible; or 6   b. except as provided in subsection 2 , a person that 7   formerly had control of the controllable electronic record. 8   2. Effect   Content and effect of notification. Subject to 9   subsection 4 , an the account debtor shall not discharge its 10   obligation by paying a person that formerly had control of the 11   controllable electronic record if the account debtor receives a 12   notification that: 13   a. is authenticated   signed by a person that formerly had 14   control or the person to which control was transferred; 15   b. reasonably identifies the controllable account or 16   controllable payment intangible; 17   c. notifies the account debtor that control of the 18   controllable electronic record that evidences the controllable 19   account or controllable payment intangible was transferred; 20   d. identifies the transferee, in any reasonable way, 21   including by name, identifying number, cryptographic key, 22   office, or account number; and 23   e. provides a commercially reasonable method by which the 24   account debtor is to pay the transferee. 25   3. Discharge following effective notification. After 26   receipt of a notification that complies with subsection 2 , the 27   account debtor may discharge its obligation only   by paying in 28   accordance with the notification and shall not discharge the 29   obligation by paying a person that formerly had control. 30   4. When notification ineffective. Notification   Subject to 31   subsection 8, notification   is ineffective under subsection 2 :   32   a. unless, before the notification is sent, an   the account   33   debtor and the person that, at that time, had control of the 34   controllable electronic record that evidences the controllable 35   -7-   LSB 1411SZ (4) 90   da/jh   7/ 90              

  S.F. 2389   account or controllable payment intangible agree in an 1   authenticated   a signed record to a commercially reasonable 2   method by which a person must furnish reasonable proof that 3   control has been transferred; 4   b. to the extent an agreement between an   the account debtor 5   and seller of a payment intangible limits the account debtors 6   duty to pay a person other than the seller and the limitation 7   is effective under law other than this Article ; or 8   c. at the option of an   the account debtor, if the 9   notification notifies the account debtor to: 10   (1) divide a payment; 11   (2) make less than the full amount of any   an installment or 12   other periodic payment; or 13   (3) pay any part of a payment by more than one method or to 14   more than one person. 15   5. Proof of transfer of control. If   Subject to subsection 16   8, if requested by the account debtor, the person giving the 17   notification under subsection 2   seasonably shall furnish 18   reasonable proof, using the agreed   method in the agreement 19   referred to in subsection 4, paragraph a , that control of the 20   controllable electronic record has been transferred. Unless 21   the person complies with the request, the account debtor may 22   discharge its obligation by paying a person that formerly had 23   control, even if the account debtor has received a notification 24   under subsection 2 . 25   6. What constitutes reasonable proof. A person furnishes 26   reasonable proof under subsection 5   that control has been 27   transferred if the person demonstrates, using the agreed method 28   in the agreement referred to in subsection 4, paragraph a , 29   that the transferee has the power to: 30   a. avail itself of substantially all the benefit from the 31   controllable electronic record;   32   b. prevent others from availing themselves of substantially 33   all the benefit from the controllable electronic record; and 34   c. transfer the powers mentioned   specified in paragraphs a 35   -8-   LSB 1411SZ (4) 90   da/jh   8/ 90                         

  S.F. 2389   and b to another person. 1   7. Rights not waivable. An   Subject to subsection 8, 2   an account debtor shall not waive or vary its rights under 3   subsection 4 , paragraph a , and subsection 5 or its option 4   under subsection 4 , paragraph c . 5   8. Rule for individual under other law. This section is 6   subject to law other than this Article which establishes a 7   different rule for an account debtor who is an individual and 8   who incurred the obligation primarily for personal, family, or   9   household purposes. 10   Sec. 7. Section 554.14107, Code 2024, is amended by striking 11   the section and inserting in lieu thereof the following: 12   554.14107 Governing law. 13   1. Governing law: general rule. Except as provided in 14   subsection 2, the local law of a controllable electronic 15   records jurisdiction governs a matter covered by this Article. 16   2. Governing law: section 554.14106. For a controllable 17   electronic record that evidences a controllable account 18   or controllable payment intangible, the local law of the 19   controllable electronic records jurisdiction governs a matter 20   covered by section 554.14106 unless an effective agreement 21   determines that the local law of another jurisdiction governs. 22   3. Controllable electronic records jurisdiction. The 23   following rules determine a controllable electronic records 24   jurisdiction under this section: 25   a. if the controllable electronic record, or a record 26   attached to or logically associated with the controllable 27   electronic record and readily available for review, expressly 28   provides that a particular jurisdiction is the controllable 29   electronic records jurisdiction for purposes of this section, 30   Article, or chapter, that jurisdiction is the controllable 31   electronic records jurisdiction. 32   b. if paragraph a does not apply and the rules of the 33   system in which the controllable electronic record is recorded 34   are readily available for review and expressly provide that a 35   -9-   LSB 1411SZ (4) 90   da/jh   9/ 90              

  S.F. 2389   particular jurisdiction is the controllable electronic records 1   jurisdiction for purposes of this section, Article, or chapter, 2   that jurisdiction is the controllable electronic records 3   jurisdiction. 4   c. if paragraphs a and b do not apply and the 5   controllable electronic record, or a record attached to or 6   logically associated with the controllable electronic record 7   and readily available for review, expressly provides that the 8   controllable electronic record is governed by the law of a 9   particular jurisdiction, that jurisdiction is the controllable 10   electronic records jurisdiction. 11   d. if paragraphs a , b , and c do not apply and the 12   rules of the system in which the controllable electronic 13   record is recorded are readily available for review and 14   expressly provide that the controllable electronic record or 15   the system is governed by the law of a particular jurisdiction, 16   that jurisdiction is the controllable electronic records 17   jurisdiction. 18   e. if paragraphs a through d do not apply, the 19   controllable electronic records jurisdiction is the District 20   of Columbia. 21   4. Applicability of Article 12. If subsection 3, paragraph 22   e , applies and Article 12 is not in effect in the District of 23   Columbia without material modification, the governing law for 24   a matter covered by this Article is the law of the District of 25   Columbia as though Article 12 were in effect in the District of 26   Columbia without material modification. In this subsection,   27   Article 12 means Article 12 of Uniform Commercial Code 28   Amendments (2022) approved by the uniform law commission at its 29   annual meeting in July 2022. 30   5. Relation of matter or transaction to controllable   31   electronic records jurisdiction not necessary. To the 32   extent subsections 1 and 2 provide that the local law of the 33   controllable electronic records jurisdiction governs a matter 34   covered by this Article, that law governs even if the matter 35   -10-   LSB 1411SZ (4) 90   da/jh   10/ 90  

  S.F. 2389   or a transaction to which the matter relates does not bear any 1   relation to the controllable electronic records jurisdiction. 2   6. Rights of purchasers determined at time of purchase. The 3   rights acquired under section 554.14104 by a purchaser or 4   qualifying purchaser are governed by the law applicable under 5   this section at the time of purchase. 6   Sec. 8. Section 554.14108, Code 2024, is amended to read as 7   follows: 8   554.14108 Applicability. 9   1.   This Article applies to any transaction involving a 10   controllable electronic record that arises on or after July 1, 11   2022. This Article does not apply to any transaction involving 12   a controllable electronic record that arises before July 1, 13   2022, even if the transaction would be subject to this Article 14   if the transaction had arisen on or after July 1, 2022. This 15   Article does not apply to a right of action with regard to any 16   transaction involving a controllable electronic record that has 17   accrued before July 1, 2022. 18   2.   This section is repealed on July 1, 2025. 19   Sec. 9. Section 554.14109, Code 2024, is amended to read as 20   follows: 21   554.14109 Savings clause. 22   1.   Any transaction involving a controllable electronic 23   record that arose before July 1, 2022, and the rights, 24   obligations, and interests flowing from that transaction are 25   governed by any statute or other rule amended or repealed by 26   this Article as if such amendment or repeal had not occurred 27   and may be terminated, completed, consummated, or enforced 28   under that statute or other rule. 29   2.   This section is repealed on July 1, 2025. 30   PART B 31   ARTICLE 1   32   GENERAL PROVISIONS   33   Sec. 10. Section 554.1201, subsection 2, paragraphs j, o, v, 34   y, ab, ak, and al, Code 2024, are amended to read as follows: 35   -11-   LSB 1411SZ (4) 90   da/jh   11/ 90          

  S.F. 2389   j. Conspicuous , with reference to a term, means so 1   written, displayed, or presented that , based on the totality   2   of the circumstances, a reasonable person against which it 3   is to operate ought to have noticed it. Whether a term is 4   conspicuous or not is a decision for the court. Conspicuous   5   terms include the following:   6   (1) a heading in capitals equal to or greater in size than 7   the surrounding text, or in contrasting type, font, or color to 8   the surrounding text of the same or lesser size; and   9   (2) language in the body of a record or display in larger 10   type than the surrounding text, or in contrasting type, font,   11   or color to the surrounding text of the same size, or set off 12   from surrounding text of the same size by symbols or other 13   marks that call attention to the language.   14   o. Delivery , with respect to an electronic document 15   of title , means voluntary transfer of control and , with 16   respect to an instrument, a tangible document of title, or an 17   authoritative tangible copy of a record evidencing   chattel 18   paper, means voluntary transfer of possession. 19   v. Holder means: 20   (1) the person in possession of a negotiable instrument that 21   is payable either to bearer or to an identified person that is 22   the person in possession; 23   (2) the person in possession of a negotiable tangible 24   document of title if the goods are deliverable either to bearer 25   or to the order of the person in possession; or 26   (3) the person in control , other than pursuant to section   27   554.7106, subsection 7, of a negotiable electronic document of 28   title. 29   y. Money means a medium of exchange that :   is currently 30   authorized or adopted by a domestic or foreign government. The 31   term includes a monetary unit of account established by an   32   intergovernmental organization, or pursuant to an agreement 33   between two or more countries. The term does not include an   34   electronic record that is a medium of exchange recorded and 35   -12-   LSB 1411SZ (4) 90   da/jh   12/ 90                               

  S.F. 2389   transferable in a system that existed and operated for the 1   medium of exchange before the medium of exchange was authorized   2   or adopted by the government. 3   (1) is currently authorized or adopted by a domestic or 4   foreign government, by an intergovernmental organization, or   5   pursuant to an agreement between two or more governments; and   6   (2) was initially issued, created, or distributed by 7   a domestic or foreign government, by an intergovernmental 8   organization, or pursuant to an agreement between two or more   9   governments. 10   ab. Person means an individual, corporation, business 11   trust, estate, trust, partnership, limited liability company, 12   association, joint venture, government, governmental 13   subdivision, agency, or instrumentality, public corporation,   14   or any other legal or commercial entity. The term includes 15   a protected series, however denominated, of an entity if the 16   protected series is established under law other than this 17   chapter that limits, or limits if conditions specified under   18   the law are satisfied, the ability of a creditor of the entity   19   or of any other protected series of the entity to satisfy a 20   claim from assets of the protected series.   21   ak. Send in connection with a writing, record , or notice 22   notification   means: 23   (1) to deposit in the mail , or deliver for transmission , 24   or transmit by any other usual means of communication , with 25   postage or cost of transmission provided for , and properly 26   addressed and, in the case of an instrument, to an address 27   specified thereon or otherwise agreed, or if there be none to 28   any address reasonable under the circumstances; or 29   (2) in any other way   to cause to be received any the record 30   or notice notification to be received within the time it would   31   have arrived   been received if properly sent under subparagraph 32   (1)   . 33   al. (1)   Signed includes using any symbol executed 34   or adopted   Sign means, with present intention intent to 35   -13-   LSB 1411SZ (4) 90   da/jh   13/ 90                                                      

  S.F. 2389   authenticate or adopt or accept a writing. record: 1   (a)   to execute or adopt a tangible symbol; or 2   (b) to attach to or logically associate with the record an 3   electronic symbol, sound, or process. 4   (2)   Signed , signing , and signature have corresponding 5   meanings.   6   Sec. 11. Section 554.1301, subsection 3, paragraph g, Code 7   2024, is amended to read as follows: 8   g. Sections 554.13105 and 554.13106 .   ; 9   Sec. 12. Section 554.1301, subsection 3, Code 2024, is 10   amended by adding the following new paragraph: 11   NEW PARAGRAPH   . h. Section 554.14107. 12   Sec. 13. Section 554.1306, Code 2024, is amended to read as 13   follows: 14   554.1306 Waiver or renunciation of claim or right after 15   breach. 16   A claim or right arising out of an alleged breach may 17   be discharged in whole or in part without consideration by 18   agreement of the aggrieved party in an authenticated   a signed 19   record. 20   PART C 21   ARTICLE 2 22   SALES 23   Sec. 14. Section 554.2102, Code 2024, is amended to read as 24   follows: 25   554.2102 Scope  certain security and other transactions 26   excluded from this Article . 27   1.   Unless the context otherwise requires, this Article 28   applies to transactions in goods; it does not apply to any 29   transaction which although in the form of an unconditional   30   contract to sell or present sale is intended to operate only 31   as a security transaction nor does   this Article impair or 32   repeal any statute regulating sales to consumers, farmers or 33   other specified classes of buyers   and except as provided in 34   subsection 3, this Article applies to transactions in goods 35   -14-   LSB 1411SZ (4) 90   da/jh   14/ 90                                       

  S.F. 2389   and, in the case of a hybrid transaction, it applies to the 1   extent provided in subsection 2   . 2   2. In a hybrid transaction: 3   a. if the sale-of-qoods aspects do not predominate, only 4   the provisions of this Article which relate primarily to   5   the sale-of-goods aspects of the transaction apply, and the   6   provisions that relate primarily to the transaction as a whole 7   do not apply. 8   b.   if the sale-of-goods aspects predominate, this Article 9   applies to the transaction but does not preclude application 10   in appropriate circumstances of other law to aspects of the   11   transaction which do not relate to the sale of goods. 12   3. This Article does not: 13   a.   apply to a transaction that, even though in the form of 14   an unconditional contract to sell or present sale, operates 15   only to create a security interest; or 16   b. impair or repeal a statute regulating sales to consumers, 17   farmers, or other specified classes of buyers.   18   Sec. 15. Section 554.2106, Code 2024, is amended to read as 19   follows: 20   554.2106 Definitions: contract  agreement  contract 21   for sale  sale  present sale  conforming to contract 22    termination  cancellation  hybrid transaction   . 23   1. In this Article unless the context otherwise requires 24   contract and agreement are limited to those relating to the 25   present or future sale of goods. Contract for sale includes 26   both a present sale of goods and a contract to sell goods at a 27   future time. A sale consists in the passing of title from the 28   seller to the buyer for a price ( section 554.2401 ). A present 29   sale means a sale which is accomplished by the making of the 30   contract.   31   2. Goods or conduct including any part of a performance 32   are conforming or conform to the contract when they are in 33   accordance with the obligations under the contract. 34   3. Termination occurs when either party pursuant to 35   -15-   LSB 1411SZ (4) 90   da/jh   15/ 90                                 

  S.F. 2389   a power created by agreement or law puts an end to the 1   contract otherwise than for its breach. On termination 2   all obligations which are still executory on both sides are 3   discharged but any right based on prior breach or performance 4   survives. 5   4. Cancellation occurs when either party puts an end to 6   the contract for breach by the other and its effect is the same 7   as that of termination except that the canceling party also 8   retains any remedy for breach of the whole contract or any 9   unperformed balance. 10   5.   Hybrid transaction means a single transaction involving 11   a sale of goods and: 12   a. the provision of services; 13   b.   a lease of other goods; or 14   c. a sale, lease, or license of property other than goods. 15   Sec. 16. Section 554.2201, subsections 1 and 2, Code 2024, 16   are amended to read as follows: 17   1. Except as otherwise provided in this section a contract 18   for the sale of goods for the price of five hundred dollars 19   or more is not enforceable by way of action or defense unless 20   there is some writing   a record sufficient to indicate that a 21   contract for sale has been made between the parties and signed 22   by the party against whom enforcement is sought or by that   the 23   partys authorized agent or broker. A writing record is not 24   insufficient because it omits or incorrectly states a term 25   agreed upon but the contract is not enforceable under this 26   paragraph subsection beyond the quantity of goods shown in such 27   writing the record . 28   2. Between merchants if within a reasonable time a writing 29   record   in confirmation of the contract and sufficient against 30   the sender is received and the party receiving it has reason to 31   know its contents, it satisfies the requirements of subsection 32   1 against such   the party unless written notice in a record of 33   objection to its contents is given within ten days after it is 34   received. 35   -16-   LSB 1411SZ (4) 90   da/jh   16/ 90                                 

  S.F. 2389   Sec. 17. Section 554.2202, Code 2024, is amended to read as 1   follows: 2   554.2202 Final written   expression  parol or extrinsic 3   evidence. 4   Terms with respect to which the confirmatory memoranda of 5   the parties agree or which are otherwise set forth in a writing 6   record intended by the parties as a final expression of their 7   agreement with respect to such terms as are included therein 8   may not be contradicted by evidence of any prior agreement or 9   of a contemporaneous oral agreement but may be explained or 10   supplemented :   11   1. by course of performance, course of dealing, or usage of 12   trade ( section 554.1303 ); and 13   2. by evidence of consistent additional terms unless the 14   court finds the writing   record to have been intended also as a 15   complete and exclusive statement of the terms of the agreement. 16   Sec. 18. Section 554.2203, Code 2024, is amended to read as 17   follows: 18   554.2203 Seals inoperative. 19   The affixing of a seal to a writing   record evidencing a 20   contract for sale or an offer to buy or sell goods does not 21   constitute the writing   record a sealed instrument and the law 22   with respect to sealed instruments does not apply to such a 23   contract or offer. 24   Sec. 19. Section 554.2205, Code 2024, is amended to read as 25   follows: 26   554.2205 Firm offers.   27   An offer by a merchant to buy or sell goods in a signed 28   writing record which by its terms gives assurance that it will 29   be held open is not revocable, for lack of consideration, 30   during the time stated or if no time is stated for a reasonable 31   time, but in no event may such period of irrevocability exceed 32   three months; but any such term of assurance on a form supplied 33   by the offeree must be separately signed by the offeror. 34   Sec. 20. Section 554.2209, subsection 2, Code 2024, is   35   -17-   LSB 1411SZ (4) 90   da/jh   17/ 90              

  S.F. 2389   amended to read as follows: 1   2. A signed agreement which excludes modification or 2   rescission except by a signed writing or other signed record   3   cannot be otherwise modified or rescinded, but except as 4   between merchants such a requirement on a form supplied by the 5   merchant must be separately signed by the other party. 6   PART D 7   ARTICLE 3 8   NEGOTIABLE INSTRUMENTS 9   Sec. 21. Section 554.3104, subsection 1, paragraph c, Code 10   2024, is amended to read as follows: 11   c. does not state any other undertaking or instruction 12   by the person promising or ordering payment to do any act in 13   addition to the payment of money, but the promise or order 14   may contain an undertaking or power to give, maintain, or 15   protect collateral to secure payment, an authorization or 16   power to the holder to confess judgment or realize on or 17   dispose of collateral, or   a waiver of the benefit of any law 18   intended for the advantage or protection of an obligor , a term   19   that specifies the law that governs the promise or order, 20   or an undertaking to resolve in a specified forum a dispute   21   concerning the promise or order . 22   Sec. 22. Section 554.3105, subsection 1, Code 2024, is 23   amended to read as follows: 24   1. Issue means :   25   a. the first delivery of an instrument by the maker or 26   drawer, whether to a holder or nonholder, for the purpose of 27   giving rights on the instrument to any person . ; or 28   b. if agreed by the payee, the first transmission by the 29   drawer to the payee of an image of an item and information   30   derived from the item that enables the depositary bank to 31   collect the item by transferring or presenting under federal   32   law an electronic check. 33   Sec. 23. Section 554.3401, Code 2024, is amended to read as   34   follows:   35   -18-   LSB 1411SZ (4) 90   da/jh   18/ 90                   

  S.F. 2389   554.3401 Signature necessary for liability on instrument . 1   1.   A person is not liable on an instrument unless the person 2   signed the instrument, or the person is represented by an agent 3   or representative who signed the instrument and the signature 4   is binding on the represented person under section 554.3402 . 5   2. A signature may be made manually or by means of a device 6   or machine, and by the use of any name, including a trade or 7   assumed name, or by a word, mark, or symbol executed or adopted 8   by a person with present intention to authenticate a writing.   9   Sec. 24. Section 554.3604, subsection 1, Code 2024, is 10   amended to read as follows: 11   1. A person entitled to enforce an instrument, with or 12   without consideration, may discharge the obligation of a party 13   to pay the instrument by an intentional voluntary act, such 14   as surrender of the instrument to the party, destruction, 15   mutilation, or cancellation of the instrument, cancellation 16   or striking out of the partys signature, or the addition of 17   words to the instrument indicating discharge; or by agreeing 18   not to sue or otherwise renouncing rights against the party 19   by a signed writing   record . The obligation of a party to 20   pay a check is not discharged solely by destruction of the   21   check in connection with a process in which information is 22   extracted from the check and an image of the check is made and,   23   subsequently, the information and image are transmitted for 24   payment. 25   PART E 26   ARTICLE 5   27   LETTERS OF CREDIT   28   Sec. 25. Section 554.5104, Code 2024, is amended to read as   29   follows:   30   554.5104 Formal requirements. 31   A letter of credit, confirmation, advice, transfer, 32   amendment, or cancellation may be issued in any form that is 33   a signed   record and is authenticated by a signature or in 34   accordance with the agreement of the parties or the standard 35   -19-   LSB 1411SZ (4) 90   da/jh   19/ 90                     

  S.F. 2389   practice referred to in section 554.5108, subsection 5 . 1   Sec. 26. Section 554.5116, Code 2024, is amended to read as 2   follows: 3   554.5116 Choice of law and forum. 4   1. The liability of an issuer, nominated person, or 5   adviser for action or omission is governed by the law of the 6   jurisdiction chosen by an agreement in the form of a record 7   signed or otherwise authenticated   by the affected parties in 8   the manner provided in   section 554.5104 or by a provision 9   in the persons letter of credit, confirmation, or other 10   undertaking. The jurisdiction whose law is chosen need not 11   bear any relation to the transaction. 12   2. Unless subsection 1 applies, the liability of an issuer, 13   nominated person, or adviser for action or omission is governed 14   by the law of the jurisdiction in which the person is located. 15   The person is considered to be located at the address indicated 16   in the persons undertaking. If more than one address is 17   indicated, the person is considered to be located at the 18   address from which the persons undertaking was issued. For   19   the purpose of jurisdiction, choice of law, and recognition 20   of interbranch letters of credit, but not enforcement of a   21   judgment, all branches of a bank are considered separate 22   juridical entities and a bank is considered to be located at   23   the place where its relevant branch is considered to be located 24   under this subsection . 25   3. For the purpose of jurisdiction, choice of law, 26   and recognition of interbranch letters of credit, but 27   not enforcement of a judgment, all branches of a bank are 28   considered separate juridical entities and a bank is considered 29   to be located at the place where its relevant branch is   30   considered to be located under subsection 4. 31   4.   A branch of a bank is considered to be located at the 32   address indicated in the branchs undertaking. If more than   33   one address is indicated, the branch is considered to be   34   located at the address from which the undertaking was issued. 35   -20-   LSB 1411SZ (4) 90   da/jh   20/ 90                             

  S.F. 2389   5. Except as otherwise provided in this subsection , the 1   liability of an issuer, nominated person, or adviser is 2   governed by any rules of custom or practice, such as the 3   uniform customs and practice for documentary credits, to which 4   the letter of credit, confirmation, or other undertaking is 5   expressly made subject. If this Article would govern the 6   liability of an issuer, nominated person, or adviser under 7   subsection 1 or 2 , the relevant undertaking incorporates 8   rules of custom or practice, and there is conflict between 9   this Article and those rules as applied to that undertaking, 10   those rules govern except to the extent of any conflict with 11   the nonvariable provisions specified in section 554.5103, 12   subsection 3 . 13   4.   6. If there is conflict between this Article and Article 14   3 , 4 , 9 , or 12 , this Article governs. 15   5. 7. The forum for settling disputes arising out of an 16   undertaking within this Article may be chosen in the manner and 17   with the binding effect that governing law may be chosen in 18   accordance with subsection 1 . 19   PART F 20   ARTICLE 7 21   DOCUMENTS OF TITLE 22   Sec. 27. Section 554.7102, subsection 1, paragraphs j and k, 23   Code 2024, are amended by striking the paragraphs. 24   Sec. 28. Section 554.7106, Code 2024, is amended to read as 25   follows: 26   554.7106 Control of electronic document of title. 27   1. A person has control of an electronic document of title 28   if a system employed for evidencing the transfer of interests 29   in the electronic document reliably establishes that person 30   as the person to which the electronic document was issued or 31   transferred. 32   2. A system satisfies subsection 1 , and a person is deemed   33   to have   has control of an electronic document of title, if the 34   document is created, stored, and assigned transferred in such 35   -21-   LSB 1411SZ (4) 90   da/jh   21/ 90             

  S.F. 2389   a manner that: 1   a. a single authoritative copy of the document exists which 2   is unique, identifiable, and, except as otherwise provided in 3   paragraphs d , e , and f , unalterable; 4   b. the authoritative copy identifies the person asserting 5   control as: 6   (1) the person to which the document was issued; or 7   (2) if the authoritative copy indicates that the document 8   has been transferred, the person to which the document was most 9   recently transferred; 10   c. the authoritative copy is communicated to and maintained 11   by the person asserting control or its designated custodian; 12   d. copies or amendments that add or change an identified 13   assignee   transferee of the authoritative copy can be made only 14   with the consent of the person asserting control; 15   e. each copy of the authoritative copy and any copy of 16   a copy is readily identifiable as a copy that is not the 17   authoritative copy; and 18   f. any amendment of the authoritative copy is readily 19   identifiable as authorized or unauthorized. 20   3.   A system satisfies subsection 1, and a person has 21   control of an electronic document of title, if an authoritative 22   electronic copy of the document, a record attached to or   23   logically associated with the electronic copy, or a system in 24   which the electronic copy is recorded: 25   a. enables the person readily to identify each electronic 26   copy as either an authoritative copy or a nonauthoritative 27   copy; 28   b. enables the person readily to identify itself in any 29   way, including by name, identifying number, cryptographic   30   key, office, or account number, as the person to which each 31   authoritative electronic copy was issued or transferred; and   32   c. gives the person exclusive power, subject to subsection 33   4, to:   34   (1) prevent others from adding or changing the person to 35   -22-   LSB 1411SZ (4) 90   da/jh   22/ 90                             

  S.F. 2389   which each authoritative electronic copy has been issued or 1   transferred; and   2   (2) transfer control of each authoritative electronic copy. 3   4. Subject to subsection 5, a power is exclusive under 4   subsection 3, paragraph   c , subparagraphs (1) and (2), even if: 5   a.   the authoritative electronic copy, a record attached 6   to or logically associated with the authoritative electronic 7   copy, or a system in which the authoritative electronic copy 8   is recorded limits the use of the document of title or has   9   a protocol that is programmed to cause a change, including a 10   transfer or loss of control; or   11   b. the power is shared with another person. 12   5. A power of a person is not shared with another person 13   under subsection 4, paragraph   b , and the persons power is not 14   exclusive if: 15   a. the person can exercise the power only if the power also 16   is exercised by the other person; and 17   b.   the other person: 18   (1)   can exercise the power without exercise of the power by 19   the person; or 20   (2)   is the transferor to the person of an interest in the 21   document of title. 22   6.   If a person has the powers specified in subsection 23   3, paragraph c , subparagraphs (1) and (2), the powers are 24   presumed to be exclusive. 25   7. A person has control of an electronic document of title 26   if another person, other than the transferor to the person of 27   an interest in the document: 28   a. has control of the document and acknowledges that it has 29   control on behalf of the person; or   30   b. obtains control of the document after having acknowledged 31   that it will obtain control of the document on behalf of the   32   person. 33   8.   A person that has control under this section is not 34   required to acknowledge that it has control on behalf of 35   -23-   LSB 1411SZ (4) 90   da/jh   23/ 90                                                                       

  S.F. 2389   another person. 1   9.   If a person acknowledges that it has or will obtain 2   control on behalf of another person, unless the person 3   otherwise agrees or law other than this Article or Article 9 4   otherwise provides, the person does not owe any duty to the   5   other person and is not required to confirm the acknowledgment   6   to any other person. 7   Sec. 29. DIRECTIONS TO CODE EDITOR  ARTICLE 7 8   RENAMED. The Code editor is directed to change the title of 9   chapter 554, Article 7, from Warehouse Receipts, Bills of 10   Lading, and Other Documents of Title to Documents of Title. 11   PART G 12   ARTICLE 8 13   INVESTMENT SECURITIES 14   Sec. 30. Section 554.8102, subsection 1, paragraph f, 15   subparagraph (1), Code 2024, is amended to read as follows: 16   (1) send a signed writing   record ; or 17   Sec. 31. Section 554.8102, subsection 2, Code 2024, is 18   amended to read as follows: 19   2. Other   The following definitions applying to in this 20   Article and the sections in which they appear are   other 21   Articles apply to this Article : 22   a. Appropriate person . . . . . . . . . . . . Section 554.8107 23   b. Control . . . . . . . . . . . . . . . . . . . . . . . Section 554.8106 24   c. Controllable account   . . . . . . . . . . Section 554.9102 25   d. Controllable electronic record . Section 554.14102 26   e. Controllable payment intangible . Section 554.9102 27   f.   Delivery . . . . . . . . . . . . . . . . . . . . . . Section 554.8301 28   d.   g. Investment company security . Section 554.8103 29   e.   h. Issuer . . . . . . . . . . . . . . . . . . . . Section 554.8201 30   f.   i. Overissue . . . . . . . . . . . . . . . . . Section 554.8210 31   g.   j. Protected purchaser . . . . . . . Section 554.8303 32   h.   k. Securities account . . . . . . . . Section 554.8501 33   Sec. 32. Section 554.8103, Code 2024, is amended by adding 34   the following new subsection: 35   -24-   LSB 1411SZ (4) 90   da/jh   24/ 90                                                      

  S.F. 2389   NEW SUBSECTION . 8. A controllable account, controllable 1   electronic record, or controllable payment intangible is not 2   a financial asset unless section 554.8102, subsection 1, 3   paragraph i , subparagraph (1), subparagraph division (c), 4   applies. 5   Sec. 33. Section 554.8106, subsection 4, paragraph c, Code 6   2024, is amended to read as follows: 7   c. another person has control of the security entitlement on   8   behalf of the purchaser or, having previously acquired control   9   of the security entitlement, acknowledges that it has control 10   on behalf of the purchaser   , other than the transferor to the 11   purchaser of an interest in the security entitlement: 12   (1) has control of the security entitlement and 13   acknowledges that it has control on behalf of the purchaser; or   14   (2) obtains control of the security entitlement after 15   having acknowledged that it will obtain control of the security 16   entitlement on behalf of the purchaser . 17   Sec. 34. Section 554.8106, Code 2024, is amended by adding 18   the following new subsections: 19   NEW SUBSECTION   . 8. A person that has control under this 20   section is not required to acknowledge that it has control on 21   behalf of a purchaser. 22   NEW SUBSECTION   . 9. If a person acknowledges that it has or 23   will obtain control on behalf of a purchaser, unless the person 24   otherwise agrees or law other than this Article or Article 9 25   otherwise provides, the person does not owe any duty to the 26   purchaser and is not required to confirm the acknowledgment to 27   any other person. 28   Sec. 35. Section 554.8110, Code 2024, is amended by adding 29   the following new subsection: 30   NEW SUBSECTION   . 7. The local law of the issuers 31   jurisdiction or the securities intermediarys jurisdiction 32   governs a matter or transaction specified in subsection 1 or 2 33   even if the matter or transaction does not bear any relation to 34   the jurisdiction. 35   -25-   LSB 1411SZ (4) 90   da/jh   25/ 90                     

  S.F. 2389   PART H 1   ARTICLE 9 2   SECURED TRANSACTIONS 3   Sec. 36. Section 554.9102, subsection 1, paragraphs b, c, 4   d, ab, ac, as, ax, bf, and br, Code 2024, are amended to read 5   as follows: 6   b. Account , except as used in account for , account   7   statement , account to , commodity account in paragraph n , 8   customers account   , deposit account in paragraph ae , on 9   account of , and paragraph ae statement of account , means 10   a right to payment of a monetary obligation, whether or not 11   earned by performance, (i) for property that has been or is 12   to be sold, leased, licensed, assigned, or otherwise disposed 13   of; (ii) for services rendered or to be rendered; (iii) for 14   a policy of insurance issued or to be issued; (iv) for a 15   secondary obligation incurred or to be incurred; (v) for energy 16   provided or to be provided; (vi) for the use or hire of a vessel 17   under a charter or other contract; (vii) arising out of the use 18   of a credit or charge card or information contained on or for 19   use with the card; or (viii) as winnings in a lottery or other 20   game of chance operated or sponsored by a state, governmental 21   unit of a state, or person licensed or authorized to operate 22   the game by a state or governmental unit of a state. The 23   term includes controllable accounts and health care insurance 24   receivables. The term does not include (i) chattel paper, (ii) 25   commercial tort claims, (iii) deposit accounts, (iv) investment 26   property, (v) letter-of-credit rights or letters of credit, 27   (vi) rights to payment for money or funds advanced or sold, 28   other than rights arising out of the use of a credit or charge 29   card or information contained on or for use with the card, or   30   (vii) rights to payment evidenced by an instrument. 31   c. Account debtor means a person obligated on an account, 32   chattel paper, or general intangible. The term does not 33   include persons obligated to pay a negotiable instrument, even 34   if the negotiable   instrument constitutes part of evidences 35   -26-   LSB 1411SZ (4) 90   da/jh   26/ 90                       

  S.F. 2389   chattel paper. 1   d. Accounting , except as used in accounting for , means a 2   record: 3   (1) authenticated   signed by a secured party; 4   (2) indicating the aggregate unpaid secured obligations as 5   of a date not more than thirty-five days earlier or thirty-five 6   days later than the date of the record; and 7   (3) identifying the components of the obligations in 8   reasonable detail. 9   ab. Controllable account means an account evidenced by a 10   controllable electronic record that provides that the account 11   debtor undertakes to pay the person that has control   under 12   section 554.14105 has control of the controllable electronic 13   record. 14   ac. Controllable payment intangible means a payment 15   intangible evidenced by a controllable electronic record that 16   provides that the account debtor undertakes to pay the person 17   that has control   under section 554.14105 has control of the 18   controllable electronic record. 19   as. General intangible means any personal property, 20   including things in action, other than accounts, chattel paper, 21   commercial tort claims, deposit accounts, documents, goods, 22   instruments, investment property, letter-of-credit rights, 23   letters of credit, money, and oil, gas, or other minerals 24   before extraction. The term includes controllable electronic   25   records, payment intangibles , and software. 26   ax. Instrument means a negotiable instrument or any 27   other writing that evidences a right to the payment of a 28   monetary obligation, is not itself a security agreement or 29   lease, and is of a type that in ordinary course of business 30   is transferred by delivery with any necessary indorsement or 31   assignment. The term does not include (i)   investment property, 32   (ii) letters of credit, or (iii) writings that evidence a right 33   to payment arising out of the use of a credit or charge card 34   or information contained on or for use with the card , or (iv)   35   -27-   LSB 1411SZ (4) 90   da/jh   27/ 90                

  S.F. 2389   writings that evidence chattel paper . 1   bf. Money has the meaning provided in section 554.1201, 2   subsection 2 , paragraph y , but does not include (i)   a deposit 3   account or (ii) money in an electronic form that cannot be 4   subjected to control under section 554.9105A   . 5   br. Proposal means a record authenticated   signed by a 6   secured party which includes the terms on which the secured 7   party is willing to accept collateral in full or partial 8   satisfaction of the obligation it secures pursuant to sections 9   554.9620 , 554.9621 , and 554.9622 . 10   Sec. 37. Section 554.9102, subsection 1, Code 2024, is 11   amended by adding the following new paragraphs: 12   NEW PARAGRAPH   . 0g. Assignee , except as used in assignee 13   for benefit of creditors , means a person (i) in whose favor 14   a security interest that secures an obligation is created or 15   provided for under a security agreement, whether or not the 16   obligation is outstanding or (ii) to which an account, chattel 17   paper, payment intangible, or promissory note has been sold. 18   The term includes a person to which a security interest has 19   been transferred by a secured party. 20   NEW PARAGRAPH   . 00g. Assignor means a person that (i) 21   under a security agreement creates or provides for a security 22   interest that secures an obligation or (ii) sells an account, 23   chattel paper, payment intangible, or promissory note. The 24   term includes a secured party that has transferred a security 25   interest to another person. 26   Sec. 38. Section 554.9102, subsection 1, paragraphs g, ag, 27   ca, and ce, Code 2024, are amended by striking the paragraphs. 28   Sec. 39. Section 554.9102, subsection 1, paragraph k, Code 29   2024, is amended by striking the paragraph and inserting in 30   lieu thereof the following: 31   k. (1) Chattel paper means: 32   (a) a right to payment of a monetary obligation secured by 33   specific goods, if the right to payment and security agreement 34   are evidenced by a record; or 35   -28-   LSB 1411SZ (4) 90   da/jh   28/ 90          

  S.F. 2389   (b) a right to payment of a monetary obligation owed by a 1   lessee under a lease agreement with respect to specific goods 2   and a monetary obligation owed by the lessee in connection with 3   the transaction giving rise to the lease, if: 4   (i) the right to payment and lease agreement are evidenced 5   by a record; and 6   (ii) the predominant purpose of the transaction giving rise 7   to the lease was to give the lessee the right to possession and 8   use of the goods. 9   (2) Chattel paper does not include a right to payment 10   arising out of a charter or other contract involving the use or 11   hire of a vessel or a right to payment arising out of the use of 12   a credit or charge card or information contained on or for use 13   with the card. 14   Sec. 40. Section 554.9102, subsection 2, Code 2024, is 15   amended by adding the following new paragraph: 16   NEW PARAGRAPH   . 0ae. Protected purchaser ... Section 17   554.8303. 18   Sec. 41. Section 554.9104, subsection 1, Code 2024, is 19   amended to read as follows: 20   1. Requirements for control. A secured party has control 21   of a deposit account if: 22   a. the secured party is the bank with which the deposit 23   account is maintained; 24   b. the debtor, secured party, and bank have agreed in 25   an authenticated   a signed record that the bank will comply 26   with instructions originated by the secured party directing 27   disposition of the funds in the deposit account without further 28   consent by the debtor; or 29   c. the secured party becomes the banks customer with 30   respect to the deposit account .   ; or 31   d.   another person, other than the debtor: 32   (1) has control of the deposit account and acknowledges that 33   it has control on behalf of the secured party; or   34   (2) obtains control of the deposit account after having 35   -29-   LSB 1411SZ (4) 90   da/jh   29/ 90                  

  S.F. 2389   acknowledged that it will obtain control of the deposit account 1   on behalf of the secured party.   2   Sec. 42. Section 554.9105, Code 2024, is amended by striking 3   the section and inserting in lieu thereof the following: 4   554.9105 Control of electronic copy of record evidencing 5   chattel paper. 6   1. General rule: control of electronic copy of record 7   evidencing chattel paper. A purchaser has control of an 8   authoritative electronic copy of a record evidencing chattel 9   paper if a system employed for evidencing the assignment 10   of interests in the chattel paper reliably establishes the 11   purchaser as the person to which the authoritative electronic 12   copy was assigned. 13   2. Single authoritative copy. A system satisfies subsection 14   1 if the record or records evidencing the chattel paper are 15   created, stored, and assigned in a manner that: 16   a. a single authoritative copy of the record or records 17   exists which is unique, identifiable, and, except as otherwise 18   provided in paragraphs d , e , and f , unalterable; 19   b. the authoritative copy identifies the purchaser as the 20   assignee of the record or records; 21   c. the authoritative copy is communicated to and maintained 22   by the purchaser or its designated custodian; 23   d. copies or amendments that add or change an identified 24   assignee of the authoritative copy can be made only with the 25   consent of the purchaser; 26   e. each copy of the authoritative copy and any copy of 27   a copy is readily identifiable as a copy that is not the 28   authoritative copy; and 29   f. any amendment of the authoritative copy is readily 30   identifiable as authorized or unauthorized. 31   3. One or more authoritative copies. A system satisfies 32   subsection 1, and a purchaser has control of an authoritative 33   electronic copy of a record evidencing chattel paper, if the 34   electronic copy, a record attached to or logically associated 35   -30-   LSB 1411SZ (4) 90   da/jh   30/ 90    

  S.F. 2389   with the electronic copy, or a system in which the electronic 1   copy is recorded: 2   a. enables the purchaser readily to identify each electronic 3   copy as either an authoritative copy or a nonauthoritative 4   copy; 5   b. enables the purchaser readily to identify itself in any 6   way, including by name, identifying number, cryptographic key, 7   office, or account number, as the assignee of the authoritative 8   electronic copy; and 9   c. gives the purchaser exclusive power, subject to 10   subsection 4, to: 11   (1) prevent others from adding or changing an identified 12   assignee of the authoritative electronic copy; and 13   (2) transfer control of the authoritative electronic copy. 14   4. Meaning of exclusive. Subject to subsection 5, a power 15   is exclusive under subsection 3, paragraph c , subparagraphs 16   (1) and (2), even if: 17   a. the authoritative electronic copy, a record attached 18   to or logically associated with the authoritative electronic 19   copy, or a system in which the authoritative electronic copy is 20   recorded limits the use of the authoritative electronic copy 21   or has a protocol programmed to cause a change, including a 22   transfer or loss of control; or 23   b. the power is shared with another person. 24   5. When power not shared with another person. A power of a 25   purchaser is not shared with another person under subsection 4, 26   paragraph b , and the purchasers power is not exclusive if: 27   a. the purchaser can exercise the power only if the power 28   also is exercised by the other person; and 29   b. the other person: 30   (1) can exercise the power without exercise of the power by 31   the purchaser; or 32   (2) is the transferor to the purchaser of an interest in the 33   chattel paper. 34   6. Presumption of exclusivity of certain powers. If a 35   -31-   LSB 1411SZ (4) 90   da/jh   31/ 90  

  S.F. 2389   purchaser has the powers specified in subsection 3, paragraph 1   c , subparagraphs (1) and (2), the powers are presumed to be 2   exclusive. 3   7. Obtaining control through another person. A purchaser 4   has control of an authoritative electronic copy of a record 5   evidencing chattel paper if another person, other than the 6   transferor to the purchaser of an interest in the chattel 7   paper: 8   a. has control of the authoritative electronic copy and 9   acknowledges that it has control on behalf of the purchaser; or 10   b. obtains control of the authoritative electronic copy 11   after having acknowledged that it will obtain control of the 12   electronic copy on behalf of the purchaser. 13   Sec. 43. Section 554.9105A, Code 2024, is amended to read 14   as follows: 15   554.9105A Control of electronic money. 16   1. General rule :    control of electronic money. A person 17   has control of electronic money if: 18   a. the electronic money , a record attached to or logically   19   associated with the electronic money, or a system in which the 20   electronic money is recorded gives the person: 21   (1) the   power to avail itself of substantially all the 22   benefit from the electronic money; and 23   (2) exclusive power, subject to subsection 2 , to: 24   (a) prevent others from availing themselves of 25   substantially all the benefit from the electronic money; and 26   (b) transfer control of the electronic money to another 27   person or cause another person to obtain control of other 28   electronic money as a result of the transfer of the electronic 29   money; and 30   b. the electronic money, a record attached to or logically 31   associated with the electronic money, or a system in which 32   the electronic money is recorded enables the person readily 33   to identify itself in any way, including by name, identifying 34   number, cryptographic key, office, or account number, as having 35   -32-   LSB 1411SZ (4) 90   da/jh   32/ 90       

  S.F. 2389   the powers under paragraph a . 1   2.   Meaning of exclusive. Subject to subsection 3, a power 2   is exclusive under subsection 1, paragraph a , subparagraph 3   (2), subparagraph divisions (a) and (b) even if: 4   a.   the electronic money, a record attached to or logically 5   associated with the electronic money, or a system in which the   6   electronic money is recorded limits the use of the electronic 7   money or has a protocol programmed to cause a change, including 8   a transfer or loss of control; or   9   b. the power is shared with another person. 10   3.   When power not shared with another person. A power of a 11   person is not shared with another person under subsection 2, 12   paragraph b and the persons power is not exclusive if: 13   a.   the person can exercise the power only if the power also 14   is exercised by the other person; and 15   b. the other person: 16   (1) can exercise the power without exercise of the power by 17   the person; or   18   (2)   is the transferor to the person of an interest in the 19   electronic money. 20   4.   Presumption of exclusivity of certain powers. If a 21   person has the powers specified in subsection 1, paragraph a , 22   subparagraph (2), subparagraph divisions (a) and (b) the powers   23   are presumed to be exclusive. 24   2. 5. Control through another person. A person has 25   control of electronic money if another person, other than the 26   transferor of an interest in the electronic money: 27   a. has control of the electronic money and acknowledges that 28   it has control on behalf of the person, or 29   b. obtains control of the electronic money after having 30   acknowledged that it will obtain control of the electronic 31   money on behalf of the person. 32   3.   Meaning of exclusive. A power is exclusive under 33   subsection 1   , paragraph a , subparagraph (2), even if: 34   a. the electronic money or a system in which the electronic 35   -33-   LSB 1411SZ (4) 90   da/jh   33/ 90                                                                     

  S.F. 2389   money is recorded limits the use of the electronic money or has 1   a protocol programmed to transfer control; or   2   b. the person has agreed to share the power with another 3   person. 4   Sec. 44. NEW SECTION   . 554.9107B No requirement to 5   acknowledge or confirm; no duties. 6   1. No requirement to acknowledge. A person that has control 7   under section 554.9104, 554.9105, or 554.9105A is not required 8   to acknowledge that it has control on behalf of another person. 9   2. No duties or confirmation. If a person acknowledges 10   that it has or will obtain control on behalf of another 11   person, unless the person otherwise agrees or law other than 12   this Article otherwise provides, the person does not owe any 13   duty to the other person and is not required to confirm the 14   acknowledgment to any other person. 15   Sec. 45. Section 554.9203, subsection 2, Code 2024, is 16   amended to read as follows: 17   2. Enforceability. Except as otherwise provided in 18   subsections 3 through 10   9 , a security interest is enforceable 19   against the debtor and third parties with respect to the 20   collateral only if: 21   a. value has been given; 22   b. the debtor has rights in the collateral or the power to 23   transfer rights in the collateral to a secured party; and 24   c. one of the following conditions is met: 25   (1) the debtor has authenticated   signed a security 26   agreement that provides a description of the collateral and, if 27   the security interest covers timber to be cut, a description 28   of the land concerned; 29   (2) the collateral is not a certificated security and is 30   in the possession of the secured party under section 554.9313 31   pursuant to the debtors security agreement; 32   (3) the collateral is a certificated security in registered 33   form and the security certificate has been delivered to the 34   secured party under section 554.8301 pursuant to the debtors 35   -34-   LSB 1411SZ (4) 90   da/jh   34/ 90             

  S.F. 2389   security agreement; or 1   (4) the collateral is controllable accounts, controllable 2   electronic records, controllable payment intangibles, deposit 3   accounts, electronic chattel paper,   electronic documents, 4   electronic money, investment property, or letter-of-credit 5   rights, and the secured party has control under section 6   554.7106 , 554.9104 , 554.9105 , 554.9105A , 554.9106 , 554.9107 , or 7   554.9107A pursuant to the debtors security agreement . ; or 8   (5)   the collateral is chattel paper and the secured party 9   has possession and control under section 554.9314A pursuant to 10   the debtors security agreement.   11   Sec. 46. Section 554.9203, subsection 10, Code 2024, is 12   amended by striking the subsection. 13   Sec. 47. Section 554.9204, subsection 2, Code 2024, is 14   amended to read as follows: 15   2. When after-acquired property clause not effective. A   16   Subject to subsection 4, a security interest does not attach 17   under a term constituting an after-acquired property clause to: 18   a. consumer goods, other than an accession when given as 19   additional security, unless the debtor acquires rights in them 20   within ten days after the secured party gives value; or 21   b. a commercial tort claim. 22   Sec. 48. Section 554.9204, Code 2024, is amended by adding 23   the following new subsection: 24   NEW SUBSECTION   . 4. Limitation on subsection 2. Subsection 25   2 does not prevent a security interest from attaching: 26   a. to consumer goods as proceeds under section 554.9315, 27   subsection 1, or commingled goods under section 554.9336, 28   subsection 3; 29   b. to a commercial tort claim as proceeds under section 30   554.9315, subsection 1; or 31   c. under an after-acquired property clause to property that 32   is proceeds of consumer goods or a commercial tort claim. 33   Sec. 49. Section 554.9208, subsection 2, Code 2024, is   34   amended to read as follows: 35   -35-   LSB 1411SZ (4) 90   da/jh   35/ 90                

  S.F. 2389   2. Duties of secured party after receiving demand from 1   debtor. Within ten days after receiving an authenticated   a 2   signed demand by the debtor: 3   a. a secured party having control of a deposit account 4   under section 554.9104, subsection 1 , paragraph b , shall 5   send to the bank with which the deposit account is maintained 6   an authenticated statement a signed record that releases the 7   bank from any further obligation to comply with instructions 8   originated by the secured party; 9   b. a secured party having control of a deposit account under 10   section 554.9104, subsection 1 , paragraph c , shall: 11   (1) pay the debtor the balance on deposit in the deposit 12   account; or 13   (2) transfer the balance on deposit into a deposit account 14   in the debtors name; 15   c. a secured party, other than a buyer, having control of   16   electronic chattel paper under section 554.9105 shall: of an 17   authoritative electronic copy of a record evidencing chattel   18   paper shall transfer control of the electronic copy to the   19   debtor or a person designated by the debtor; 20   (1)   communicate the authoritative copy of the electronic 21   chattel paper to the debtor or its designated custodian; 22   (2)   if the debtor designates a custodian that is the 23   designated custodian with which the authoritative copy of 24   the electronic chattel paper is maintained for the secured 25   party, communicate to the custodian an authenticated record 26   releasing the designated custodian from any further obligation 27   to comply with instructions originated by the secured party 28   and instructing the custodian to comply with instructions 29   originated by the debtor; and   30   (3) take appropriate action to enable the debtor or its 31   designated custodian to make copies of or revisions to the   32   authoritative copy which add or change an identified assignee 33   of the authoritative copy without the consent of the secured   34   party;   35   -36-   LSB 1411SZ (4) 90   da/jh   36/ 90                                   

  S.F. 2389   d. a secured party having control of investment property 1   under section 554.8106, subsection 4 , paragraph b , or 2   section 554.9106, subsection 2 , shall send to the securities 3   intermediary or commodity intermediary with which the 4   security entitlement or commodity contract is maintained an 5   authenticated   a signed record that releases the securities 6   intermediary or commodity intermediary from any further 7   obligation to comply with entitlement orders or directions 8   originated by the secured party; 9   e. a secured party having control of a letter-of-credit 10   right under section 554.9107 shall send to each person having 11   an unfulfilled obligation to pay or deliver proceeds of the 12   letter of credit to the secured party an authenticated   a signed 13   release from any further obligation to pay or deliver proceeds 14   of the letter of credit to the secured party; 15   f. a secured party having control under section 554.7106   16   of an authoritative electronic copy of an electronic document 17   shall :   transfer control of the electronic copy to the debtor or 18   a person designated by the debtor;   19   (1) give control of the electronic document to the debtor or 20   its designated custodian;   21   (2) if the debtor designates a custodian that is the 22   designated custodian with which the authoritative copy of   23   the electronic document is maintained for the secured party, 24   communicate to the custodian an authenticated record releasing 25   the designated custodian from any further obligation to 26   comply with instructions originated by the secured party 27   and instructing the custodian to comply with instructions 28   originated by the debtor; and 29   (3)   take appropriate action to enable the debtor or its 30   designated custodian to make copies of or revisions to the 31   authoritative copy which add or change an identified assignee   32   of the authoritative copy without the consent of the secured 33   party;   34   g. a secured party having control under section 554.9105A of 35   -37-   LSB 1411SZ (4) 90   da/jh   37/ 90                                 

  S.F. 2389   electronic money shall transfer control of the electronic money 1   to the debtor or a person designated by the debtor; and 2   h. a secured party having control under section 554.14105 3   of a controllable electronic record , other than a buyer of   4   a controllable account or controllable payment intangible   5   evidenced by the controllable electronic record,   shall transfer 6   control of the controllable electronic record to the debtor or 7   a person designated by the debtor. 8   Sec. 50. Section 554.9209, subsection 2, Code 2024, is 9   amended to read as follows: 10   2. Duties of secured party after receiving demand from 11   debtor. Within ten days after receiving an authenticated   a 12   signed demand by the debtor, a secured party shall send to an 13   account debtor that has received notification under section   14   554.9406, subsection 1, or section 554.14106, subsection 2, of 15   an assignment to the secured party as assignee under section 16   554.9406, subsection 1 , an authenticated a signed record that 17   releases the account debtor from any further obligation to the 18   secured party. 19   Sec. 51. Section 554.9210, subsections 1, 2, 3, 4, and 5, 20   Code 2024, are amended to read as follows: 21   1. Definitions. In this section : 22   a. Request means a record of a type described in paragraph 23   b , c , or d . 24   b. Request for an accounting means a record authenticated   25   signed by a debtor requesting that the recipient provide an 26   accounting of the unpaid obligations secured by collateral and 27   reasonably identifying the transaction or relationship that is 28   the subject of the request. 29   c. Request regarding a list of collateral means a record 30   authenticated   signed by a debtor requesting that the recipient 31   approve or correct a list of what the debtor believes to be the 32   collateral securing an obligation and reasonably identifying 33   the transaction or relationship that is the subject of the 34   request. 35   -38-   LSB 1411SZ (4) 90   da/jh   38/ 90                   

  S.F. 2389   d. Request regarding a statement of account means a record 1   authenticated   signed by a debtor requesting that the recipient 2   approve or correct a statement indicating what the debtor 3   believes to be the aggregate amount of unpaid obligations 4   secured by collateral as of a specified date and reasonably 5   identifying the transaction or relationship that is the subject 6   of the request. 7   2. Duty to respond to requests. Subject to subsections 3, 8   4, 5, and 6 , a secured party, other than a buyer of accounts, 9   chattel paper, payment intangibles, or promissory notes or a 10   consignor, shall comply with a request within fourteen days 11   after receipt: 12   a. in the case of a request for an accounting, by 13   authenticating   signing and sending to the debtor an accounting; 14   and 15   b. in the case of a request regarding a list of 16   collateral or a request regarding a statement of account, by 17   authenticating   signing and sending to the debtor an approval 18   or correction. 19   3. Request regarding list of collateral  statement 20   concerning type of collateral. A secured party that claims a 21   security interest in all of a particular type of collateral 22   owned by the debtor may comply with a request regarding a 23   list of collateral by sending to the debtor an authenticated   24   a signed record including a statement to that effect within 25   fourteen days after receipt. 26   4. Request regarding list of collateral  no interest 27   claimed. A person that receives a request regarding a list 28   of collateral, claims no interest in the collateral when 29   it receives the request, and claimed an interest in the 30   collateral at an earlier time shall comply with the request 31   within fourteen days after receipt by sending to the debtor an   32   authenticated a signed record: 33   a. disclaiming any interest in the collateral; and 34   b. if known to the recipient, providing the name and mailing 35   -39-   LSB 1411SZ (4) 90   da/jh   39/ 90             

  S.F. 2389   address of any assignee of or successor to the recipients 1   interest in the collateral. 2   5. Request for accounting or regarding statement of account 3    no interest in obligation claimed. A person that receives a 4   request for an accounting or a request regarding a statement of 5   account, claims no interest in the obligations when it receives 6   the request, and claimed an interest in the obligations at an 7   earlier time shall comply with the request within fourteen 8   days after receipt by sending to the debtor an authenticated   a 9   signed record: 10   a. disclaiming any interest in the obligations; and 11   b. if known to the recipient, providing the name and mailing 12   address of any assignee of or successor to the recipients 13   interest in the obligations. 14   Sec. 52. Section 554.9301, unnumbered paragraph 1, Code 15   2024, is amended to read as follows: 16   Except as otherwise provided in sections 554.9303 ,   554.9304 , 17   554.9305   , and 554.9306 through 554.9306B , the following 18   rules determine the law governing perfection, the effect of 19   perfection or nonperfection, and the priority of a security 20   interest in collateral: 21   Sec. 53. Section 554.9301, subsection 3, unnumbered 22   paragraph 1, Code 2024, is amended to read as follows: 23   Except as otherwise provided in subsection 4 , while tangible   24   negotiable tangible documents, goods, instruments, or tangible 25   money , or tangible chattel paper is located in a jurisdiction, 26   the local law of that jurisdiction governs: 27   Sec. 54. Section 554.9304, subsection 1, Code 2024, is   28   amended to read as follows: 29   1. Law of banks jurisdiction governs. The local law 30   of a banks jurisdiction governs perfection, the effect of 31   perfection or nonperfection, and the priority of a security 32   interest in a deposit account maintained with that bank even   33   if the transaction does not bear any relation to the banks   34   jurisdiction . 35   -40-   LSB 1411SZ (4) 90   da/jh   40/ 90                   

  S.F. 2389   Sec. 55. Section 554.9305, subsection 1, Code 2024, is 1   amended by adding the following new paragraph: 2   NEW PARAGRAPH   . e. Paragraphs b , c , and d apply 3   even if the transaction does not bear any relation to the 4   jurisdiction. 5   Sec. 56. Section 554.9306A, Code 2024, is amended by 6   striking the section and inserting in lieu thereof the 7   following: 8   554.9306A Law governing perfection and priority of security 9   interests in chattel paper. 10   1. Chattel paper evidenced by authoritative electronic 11   copy. Except as provided in subsection 4, if chattel paper 12   is evidenced only by an authoritative electronic copy of the 13   chattel paper or is evidenced by an authoritative electronic 14   copy and an authoritative tangible copy, the local law of the 15   chattel papers jurisdiction governs perfection, the effect of 16   perfection or nonperfection, and the priority of a security 17   interest in the chattel paper, even if the transaction does not 18   bear any relation to the chattel papers jurisdiction. 19   2. Chattel papers jurisdiction. The following rules 20   determine the chattel papers jurisdiction under this section: 21   a. If the authoritative electronic copy of the record 22   evidencing chattel paper, or a record attached to or logically 23   associated with the electronic copy and readily available for 24   review, expressly provides that a particular jurisdiction is 25   the chattel papers jurisdiction for purposes of this section, 26   this part, this Article, or this chapter, that jurisdiction is 27   the chattel papers jurisdiction. 28   b. If paragraph a does not apply and the rules of the 29   system in which the authoritative electronic copy is recorded 30   are readily available for review and expressly provide that a 31   particular jurisdiction is the chattel papers jurisdiction 32   for purposes of this section, this part, this Article, or this 33   chapter that jurisdiction is the chattel papers jurisdiction. 34   c. If paragraphs a and b do not apply and the 35   -41-   LSB 1411SZ (4) 90   da/jh   41/ 90   

  S.F. 2389   authoritative electronic copy, or a record attached to or 1   logically associated with the electronic copy and readily 2   available for review, expressly provides that the chattel paper 3   is governed by the law of a particular jurisdiction, that 4   jurisdiction is the chattel papers jurisdiction. 5   d. If paragraphs a , b , and c do not apply and the 6   rules of the system in which the authoritative electronic copy 7   is recorded are readily available for review and expressly 8   provide that the chattel paper or the system is governed by 9   the law of a particular jurisdiction, that jurisdiction is the 10   chattel papers jurisdiction. 11   e. If paragraphs a through d do not apply, the chattel 12   papers jurisdiction is the jurisdiction in which the debtor 13   is located. 14   3. Chattel paper evidenced by authoritative tangible 15   copy. If an authoritative tangible copy of a record evidences 16   chattel paper and the chattel paper is not evidenced by an 17   authoritative electronic copy, while the authoritative tangible 18   copy of the record evidencing chattel paper is located in a 19   jurisdiction, the local law of that jurisdiction governs: 20   a. perfection of a security interest in the chattel paper by 21   possession under section 554.9314A; and 22   b. the effect of perfection or nonperfection and the 23   priority of a security interest in the chattel paper. 24   4. When perfection governed by law of jurisdiction where 25   debtor located. The local law of the jurisdiction in which the 26   debtor is located governs perfection of a security interest in 27   chattel paper by filing. 28   Sec. 57. NEW SECTION   . 554.9306B Law governing perfection 29   and priority of security interests in controllable accounts, 30   controllable electronic records, and controllable payment 31   intangibles. 32   1. Governing law: general rules. Except as provided in 33   subsection 2, the local law of the controllable electronic   34   records jurisdiction specified in section 554.14107, 35   -42-   LSB 1411SZ (4) 90   da/jh   42/ 90   

  S.F. 2389   subsections 3 and 4 governs perfection, the effect of 1   perfection or nonperfection, and the priority of a security 2   interest in a controllable electronic record and a security 3   interest in a controllable account or controllable payment 4   intangible evidenced by the controllable electronic record. 5   2. When perfection governed by law of jurisdiction where 6   debtor located. The local law of the jurisdiction in which the 7   debtor is located governs: 8   a. perfection of a security interest in a controllable 9   account, controllable electronic record, or controllable 10   payment intangible by filing; and 11   b. automatic perfection of a security interest in a 12   controllable payment intangible created by a sale of the 13   controllable payment intangible. 14   Sec. 58. Section 554.9308, subsection 8, Code 2024, is 15   amended by striking the subsection. 16   Sec. 59. Section 554.9310, subsection 2, paragraph h, Code 17   2024, is amended to read as follows: 18   h. in controllable accounts, controllable electronic 19   records, controllable payment intangibles, deposit accounts, 20   electronic chattel paper,   electronic documents, investment 21   property, or letter-of-credit rights which is are perfected by 22   control under section 554.9314 ; 23   Sec. 60. Section 554.9310, subsection 2, Code 2024, is 24   amended by adding the following new paragraph: 25   NEW PARAGRAPH   . 0i. in chattel paper which is perfected by 26   possession and control under section 554.9314A; 27   Sec. 61. Section 554.9312, Code 2024, is amended to read as   28   follows:   29   554.9312 Perfection of security interests in chattel   30   paper, controllable accounts, controllable electronic records, 31   controllable payment intangibles, chattel paper,   deposit 32   accounts, negotiable documents, goods covered by documents, 33   instruments, investment property, letter-of-credit rights, and 34   money  perfection by permissive filing  temporary perfection 35   -43-   LSB 1411SZ (4) 90   da/jh   43/ 90          

  S.F. 2389   without filing or transfer of possession. 1   1. Perfection by filing permitted. A security interest in 2   chattel paper,   controllable accounts, controllable electronic 3   records, controllable payment intangibles, chattel paper, 4   negotiable documents,   instruments, or investment property , or 5   negotiable documents   may be perfected by filing. 6   2. Control or possession of certain collateral. Except as 7   otherwise provided in section 554.9315, subsections 3 and 4 , 8   for proceeds: 9   a. a security interest in a deposit account may be perfected 10   only by control under section 554.9314 ; 11   b. and   except as otherwise provided in section 554.9308, 12   subsection 4 , a security interest in a letter-of-credit right 13   may be perfected only by control under section 554.9314 ; 14   c. a security interest in tangible money may be perfected 15   only by the secured partys taking possession under section 16   554.9313 ; and 17   d. a security interest in electronic money may be perfected 18   only by control under section 554.9314 . 19   3. Goods covered by negotiable document. While goods are 20   in the possession of a bailee that has issued a negotiable 21   document covering the goods: 22   a. a security interest in the goods may be perfected by 23   perfecting a security interest in the document; and 24   b. a security interest perfected in the document has 25   priority over any security interest that becomes perfected in 26   the goods by another method during that time. 27   4. Goods covered by nonnegotiable document. While goods are 28   in the possession of a bailee that has issued a nonnegotiable 29   document covering the goods, a security interest in the goods 30   may be perfected by: 31   a. issuance of a document in the name of the secured party; 32   b. the bailees receipt of notification of the secured 33   partys interest; or 34   c. filing as to the goods. 35   -44-   LSB 1411SZ (4) 90   da/jh   44/ 90         

  S.F. 2389   5. Temporary perfection  new value. A security 1   interest in certificated securities, negotiable documents, 2   or instruments is perfected without filing or the taking of 3   possession or control for a period of twenty days from the time 4   it attaches to the extent that it arises for new value given 5   under an authenticated   a signed security agreement. 6   6. Temporary perfection  goods or documents made available 7   to debtor. A perfected security interest in a negotiable 8   document or goods in possession of a bailee, other than one 9   that has issued a negotiable document for the goods, remains 10   perfected for twenty days without filing if the secured 11   party makes available to the debtor the goods or documents 12   representing the goods for the purpose of: 13   a. ultimate sale or exchange; or 14   b. loading, unloading, storing, shipping, transshipping, 15   manufacturing, processing, or otherwise dealing with them in a 16   manner preliminary to their sale or exchange. 17   7. Temporary perfection  delivery of security certificate 18   or instrument to debtor. A perfected security interest in 19   a certificated security or instrument remains perfected for 20   twenty days without filing if the secured party delivers the 21   security certificate or instrument to the debtor for the 22   purpose of: 23   a. ultimate sale or exchange; or 24   b. presentation, collection, enforcement, renewal, or 25   registration of transfer. 26   8. Expiration of temporary perfection. After the twenty-day 27   period specified in subsection 5, 6, or 7 expires, perfection 28   depends upon compliance with this Article . 29   Sec. 62. Section 554.9313, subsections 1, 3, and 4, Code   30   2024, are amended to read as follows: 31   1. Perfection by possession or delivery. Except as otherwise 32   provided in subsection 2 , a secured party may perfect a 33   security interest in tangible negotiable documents,   goods, 34   instruments, negotiable tangible documents, or tangible 35   -45-   LSB 1411SZ (4) 90   da/jh   45/ 90      

  S.F. 2389   money , or tangible chattel paper by taking possession of the 1   collateral. A secured party may perfect a security interest in 2   certificated securities by taking delivery of the certificated 3   securities under section 554.8301 . 4   3. Collateral in possession of person other than 5   debtor. With respect to collateral other than certificated 6   securities and goods covered by a document, a secured party 7   takes possession of collateral in the possession of a person 8   other than the debtor, the secured party, or a lessee of 9   the collateral from the debtor in the ordinary course of the 10   debtors business, when: 11   a. the person in possession authenticates   signs a record 12   acknowledging that it holds possession of the collateral for 13   the secured partys benefit; or 14   b. the person takes possession of the collateral after 15   having authenticated   signed a record acknowledging that it 16   will hold possession of the collateral for the secured partys 17   benefit. 18   4. Time of perfection by possession  continuation of 19   perfection. If perfection of a security interest depends upon 20   possession of the collateral by a secured party, perfection 21   occurs no   not earlier than the time the secured party takes 22   possession and continues only while the secured party retains 23   possession. 24   Sec. 63. Section 554.9314, subsections 1, 2, and 3, Code 25   2024, are amended to read as follows: 26   1. Perfection by control. A security interest in 27   controllable accounts, controllable electronic records,   28   controllable payment intangibles, deposit accounts, electronic   29   chattel paper,   electronic documents, electronic money, 30   investment property, or letter-of-credit rights may be 31   perfected by control of the collateral under section 554.7106 , 32   554.9104 , 554.9105   , 554.9105A , 554.9106 , 554.9107 , or   33   554.9107A . 34   2. Specified collateral  time of perfection by control  35   -46-   LSB 1411SZ (4) 90   da/jh   46/ 90              

  S.F. 2389   continuation of perfection. A security interest in controllable 1   accounts, controllable electronic records, controllable payment 2   intangibles, deposit accounts, electronic chattel paper,   3   electronic documents, electronic money, or letter-of-credit 4   rights is perfected by control under section 554.7106 , 5   554.9104 , 554.9105 , 554.9105A , 554.9107 , or 554.9107A when 6   not earlier than the time the secured party obtains control 7   and remains perfected by control only while the secured party 8   retains control. 9   3. Investment property  time of perfection by control  10   continuation of perfection. A security interest in investment 11   property is perfected by control under section 554.9106 from   12   not earlier than the time the secured party obtains control and 13   remains perfected by control until: 14   a. the secured party does not have control; and 15   b. one of the following occurs: 16   (1) if the collateral is a certificated security, the debtor 17   has or acquires possession of the security certificate; 18   (2) if the collateral is an uncertificated security, the 19   issuer has registered or registers the debtor as the registered 20   owner; or 21   (3) if the collateral is a security entitlement, the debtor 22   is or becomes the entitlement holder. 23   Sec. 64. NEW SECTION   . 554.9314A Perfection by possession 24   and control of chattel paper. 25   1. Perfection by possession and control. A secured party 26   may perfect a security interest in chattel paper by taking 27   possession of each authoritative tangible copy of the record 28   evidencing the chattel paper and obtaining control of each 29   authoritative electronic copy of the electronic record 30   evidencing the chattel paper. 31   2. Time of perfection; continuation of perfection. A 32   security interest is perfected under subsection 1 not earlier 33   than the time the secured party takes possession and obtains 34   control and remains perfected under subsection 1 only while the 35   -47-   LSB 1411SZ (4) 90   da/jh   47/ 90          

  S.F. 2389   secured party retains possession and control. 1   3. Application of section 554.9313 to perfection by 2   possession of chattel paper. Section 554.9313, subsections 3   3 and 6 through 9, apply to perfection by possession of an 4   authoritative tangible copy of a record evidencing chattel 5   paper. 6   Sec. 65. Section 554.9316, subsections 1 and 6, Code 2024, 7   are amended to read as follows: 8   1. General rule  effect on perfection of change in 9   governing law. A security interest perfected pursuant to 10   the law of the jurisdiction designated in section 554.9301, 11   subsection 1 , or   section 554.9305, subsection 3 , section 12   554.9306A, subsection 4, or section 554.9306B, subsection 2, 13   remains perfected until the earliest of: 14   a. the time perfection would have ceased under the law of 15   that jurisdiction; 16   b. the expiration of four months after a change of the 17   debtors location to another jurisdiction; or 18   c. the expiration of one year after a transfer of collateral 19   to a person that thereby becomes a debtor and is located in 20   another jurisdiction. 21   6. Change in jurisdiction of chattel paper, controllable   22   electronic record,   bank, issuer, nominated person, securities 23   intermediary, or commodity intermediary. A security interest in 24   chattel paper, controllable accounts, controllable electronic 25   records, controllable payment intangibles, deposit accounts, 26   letter-of-credit rights, or investment property which is 27   perfected under the law of the chattel papers jurisdiction,   28   the controllable electronic records jurisdiction, the   banks 29   jurisdiction, the issuers jurisdiction, a nominated persons 30   jurisdiction, the securities intermediarys jurisdiction, or 31   the commodity intermediarys jurisdiction, as applicable, 32   remains perfected until the earlier of: 33   a. the time the security interest would have become 34   unperfected under the law of that jurisdiction; or 35   -48-   LSB 1411SZ (4) 90   da/jh   48/ 90           

  S.F. 2389   b. the expiration of four months after a change of the 1   applicable jurisdiction to another jurisdiction. 2   Sec. 66. Section 554.9317, subsections 2 and 4, Code 2024, 3   are amended to read as follows: 4   2. Buyers that receive delivery. Except as otherwise 5   provided in subsection 5 , a buyer, other than a secured 6   party, of tangible chattel paper, tangible documents,   goods, 7   instruments, tangible documents, or a certificated security 8   certificate   takes free of a security interest or agricultural 9   lien if the buyer gives value and receives delivery of the 10   collateral without knowledge of the security interest or 11   agricultural lien and before it is perfected. 12   4. Licensees and buyers of certain collateral. A   Subject to 13   subsections 6 through 9, a   licensee of a general intangible or 14   a buyer, other than a secured party, of collateral other than 15   tangible chattel paper, tangible documents, electronic money, 16   goods, instruments, tangible documents, or a certificated 17   security takes free of a security interest if the licensee or 18   buyer gives value without knowledge of the security interest 19   and before it is perfected. 20   Sec. 67. Section 554.9317, Code 2024, is amended by adding 21   the following new subsections: 22   NEW SUBSECTION   . 6. Buyers of chattel paper. A buyer, other 23   than a secured party, of chattel paper takes free of a security 24   interest if, without knowledge of the security interest and 25   before it is perfected, the buyer gives value and: 26   a. receives delivery of each authoritative tangible copy of 27   the record evidencing the chattel paper; and 28   b. if each authoritative electronic copy of the record 29   evidencing the chattel paper can be subjected to control 30   under section 554.9105, obtains control of each authoritative 31   electronic copy. 32   NEW SUBSECTION   . 7. Buyers of electronic documents. A buyer 33   of an electronic document takes free of a security interest 34   if, without knowledge of the security interest and before it 35   -49-   LSB 1411SZ (4) 90   da/jh   49/ 90              

  S.F. 2389   is perfected, the buyer gives value and, if each authoritative 1   electronic copy of the document can be subjected to control 2   under section 554.7106, obtains control of each authoritative 3   electronic copy. 4   NEW SUBSECTION . 8. Buyers of controllable electronic 5   records. A buyer of a controllable electronic record takes free 6   of a security interest if, without knowledge of the security 7   interest and before it is perfected, the buyer gives value and 8   obtains control of the controllable electronic record. 9   NEW SUBSECTION   . 9. Buyers of controllable accounts and 10   controllable payment intangibles. A buyer, other than a secured 11   party, of a controllable account or a controllable payment 12   intangible takes free of a security interest if, without 13   knowledge of the security interest and before it is perfected, 14   the buyer gives value and obtains control of the controllable 15   account or controllable payment intangible. 16   Sec. 68. Section 554.9323, subsections 4 and 6, Code 2024, 17   are amended to read as follows: 18   4. Buyer of goods. Except as otherwise provided in 19   subsection 5 , a buyer of goods other than a buyer in ordinary   20   course of business   takes free of a security interest to the 21   extent that it secures advances made after the earlier of: 22   a. the time the secured party acquires knowledge of the 23   buyers purchase; or 24   b. forty-five days after the purchase. 25   6. Lessee of goods. Except as otherwise provided in 26   subsection 7 , a lessee of goods , other than a lessee in   27   ordinary course of business, takes the leasehold interest free 28   of a security interest to the extent that it secures advances 29   made after the earlier of:   30   a. the time the secured party acquires knowledge of the 31   lease; or 32   b. forty-five days after the lease contract becomes 33   enforceable. 34   Sec. 69. Section 554.9324, subsection 2, paragraph b, Code 35   -50-   LSB 1411SZ (4) 90   da/jh   50/ 90        

  S.F. 2389   2024, is amended to read as follows: 1   b. the purchase-money secured party sends an authenticated   2   signed notification to the holder of the conflicting security 3   interest; 4   Sec. 70. Section 554.9324, subsection 4, paragraph b, Code 5   2024, is amended to read as follows: 6   b. the purchase-money secured party sends an authenticated 7   a signed notification to the holder of the conflicting security 8   interest; 9   Sec. 71. Section 554.9330, subsections 1, 2, and 6, Code 10   2024, are amended to read as follows: 11   1. Purchasers priority  security interest claimed merely 12   as proceeds. A purchaser of chattel paper has priority over a 13   security interest in the chattel paper which is claimed merely 14   as proceeds of inventory subject to a security interest if: 15   a. in good faith and in the ordinary course of the 16   purchasers business, the purchaser gives new value ,   and takes 17   possession of each authoritative tangible copy of the record   18   evidencing   the chattel paper or , and obtains control of under 19   section 554.9105 of each authoritative electronic copy of the 20   record evidencing   the chattel paper under section 554.9105 ; and 21   b. the chattel paper does authoritative copies of the 22   record evidencing the chattel paper do   not indicate that it the 23   chattel paper has been assigned to an identified assignee other 24   than the purchaser. 25   2. Purchasers priority  other security interests. A 26   purchaser of chattel paper has priority over a security 27   interest in the chattel paper which is claimed other than 28   merely as proceeds of inventory subject to a security interest 29   if the purchaser gives new value ,   and takes possession of 30   each authoritative tangible copy of the record evidencing the 31   chattel paper or   , and obtains control of under section 554.9105 32   of each authoritative electronic copy of the record evidencing 33   the chattel paper under   section 554.9105 in good faith, in 34   the ordinary course of the purchasers business, and without 35   -51-   LSB 1411SZ (4) 90   da/jh   51/ 90                                  

  S.F. 2389   knowledge that the purchase violates the rights of the secured 1   party. 2   6. Indication of assignment gives knowledge. For purposes of 3   subsections 2 and 4 , if the authoritative copies of the record   4   evidencing   chattel paper or an instrument indicates indicate 5   that it   the chattel paper or instrument has been assigned to an 6   identified secured party other than the purchaser, a purchaser 7   of the chattel paper or instrument has knowledge that the 8   purchase violates the rights of the secured party. 9   Sec. 72. Section 554.9331, Code 2024, is amended to read as 10   follows: 11   554.9331 Priority of rights of purchasers of controllable 12   accounts, controllable electronic   records, controllable payment 13   intangibles, documents, instruments, and securities under 14   other Articles  priority of interests in financial assets 15   and security entitlements and protections   protection against 16   assertions assertion of claims under Articles 8 and 14. 17   1. Rights under Articles 3, 7, 8, and 14 not limited. This 18   Article does not limit the rights of a holder in due course of a 19   negotiable instrument, a holder to which a negotiable document 20   of title has been duly negotiated, a protected purchaser of a 21   security, or a qualifying purchaser of a controllable account, 22   controllable electronic record, or controllable payment 23   intangible. These holders or purchasers take priority over an 24   earlier security interest, even if perfected, to the extent 25   provided in Articles 3 , 7 , 8 , and 14 . 26   2. Protection under Articles 8 and 14. This Article does   27   not limit the rights of or impose liability on a person to the 28   extent that the person is protected against the assertion of 29   a claim under Article 8 or 14 . 30   3. Filing not notice. Filing under this Article does 31   not constitute notice of a claim or defense to the holders, 32   purchasers, or persons described in subsections 1 and 2 . 33   Sec. 73. Section 554.9332, Code 2024, is amended to read as 34   follows:   35   -52-   LSB 1411SZ (4) 90   da/jh   52/ 90             

  S.F. 2389   554.9332 Transfer of money  transfer of funds from deposit 1   account. 2   1. Transferee of tangible money. A transferee of tangible 3   money takes the money free of a security interest in the money   4   if the transferee when receiving delivery   receives possession 5   of the money does not act   without acting in collusion with the 6   debtor in violating the rights of the secured party. 7   2. Transferee of electronic money. A transferee of 8   electronic money takes the money free of a security interest   9   in the money if the transferee when obtaining control of the 10   money does not act in collusion with the debtor in violating   11   the rights of the secured party. 12   3. 2. Transferee of funds from deposit account. A 13   transferee of funds from a deposit account takes the funds free 14   of a security interest in the deposit account if the transferee 15   when receiving   receives the funds does not act without acting 16   in collusion with the debtor in violating the rights of the 17   secured party. 18   3.   Transferee of electronic money. A transferee of 19   electronic money takes the money free of a security interest 20   if the transferee obtains control of the money without acting   21   in collusion with the debtor in violating the rights of the 22   secured party.   23   Sec. 74. Section 554.9334, subsection 6, paragraph a, Code 24   2024, is amended to read as follows: 25   a. the encumbrancer or owner has, in an authenticated a 26   signed record, consented to the security interest or disclaimed 27   an interest in the goods as fixtures; or 28   Sec. 75. Section 554.9341, unnumbered paragraph 1, Code 29   2024, is amended to read as follows:   30   Except as otherwise provided in section 554.9340, subsection 31   3 , and unless the bank otherwise agrees in an authenticated   a 32   signed   record, a banks rights and duties with respect to a 33   deposit account maintained with the bank are not terminated, 34   suspended, or modified by: 35   -53-   LSB 1411SZ (4) 90   da/jh   53/ 90                                     

  S.F. 2389   Sec. 76. Section 554.9404, subsection 1, paragraph b, Code 1   2024, is amended to read as follows: 2   b. any other defense or claim of the account debtor against 3   the assignor which accrues before the account debtor receives 4   a notification of the assignment authenticated signed by the 5   assignor or the assignee. 6   Sec. 77. Section 554.9406, subsections 1, 4, 6, 7, and 11, 7   Code 2024, are amended to read as follows: 8   1. Discharge of account debtor  effect of 9   notification. Subject to subsections 2 through 9 and 10   11 , an account debtor on an account, chattel paper, or a 11   payment intangible may discharge its obligation by paying the 12   assignor until, but not after, the account debtor receives 13   a notification, authenticated   signed by the assignor or 14   the assignee, that the amount due or to become due has been 15   assigned and that payment is to be made to the assignee. After 16   receipt of the notification, the account debtor may discharge 17   its obligation by paying the assignee and may not discharge the 18   obligation by paying the assignor. 19   4. Term restricting assignment generally ineffective. In   20   this subsection,   promissory note includes a negotiable 21   instrument that evidences chattel paper. Except as otherwise 22   provided in subsection   subsections 5 and 10A and sections 23   554.9407 and 554.13303 , and subject to subsection 8 , a term in 24   an agreement between an account debtor and an assignor or in a 25   promissory note is ineffective to the extent that it: 26   a. prohibits, restricts, or requires the consent of the 27   account debtor or person obligated on the promissory note to 28   the assignment or transfer of, or the creation, attachment, 29   perfection, or enforcement of a security interest in, the 30   account, chattel paper, payment intangible, or promissory note; 31   or 32   b. provides that the assignment or transfer or the creation, 33   attachment, perfection, or enforcement of the security interest 34   may give rise to a default, breach, right of recoupment, claim, 35   -54-   LSB 1411SZ (4) 90   da/jh   54/ 90              

  S.F. 2389   defense, termination, right of termination, or remedy under the 1   account, chattel paper, payment intangible, or promissory note. 2   6. Legal restrictions on assignment generally ineffective. 3   Except as otherwise provided in subsection 10A and   sections 4   554.9407 and 554.13303 and subject to subsections 8 and 9, a 5   rule of law, statute, or regulation that prohibits, restricts, 6   or requires the consent of a government, governmental body or 7   official, or account debtor to the assignment or transfer of, 8   or creation of a security interest in, an account or chattel 9   paper is ineffective to the extent that the rule of law, 10   statute, or regulation: 11   a. prohibits, restricts, or requires the consent of the 12   government, governmental body or official, or account debtor 13   to the assignment or transfer of, or the creation, attachment, 14   perfection, or enforcement of a security interest in the 15   account or chattel paper; or 16   b. provides that the assignment or transfer or the creation, 17   attachment, perfection, or enforcement of the security interest 18   may give rise to a default, breach, right of recoupment, claim, 19   defense, termination, right of termination, or remedy under the 20   account or chattel paper. 21   7. Subsection 2 , paragraph c, not waivable. Subject to 22   subsection   subsections 8 and 11 , an account debtor may shall 23   not waive or vary its option under subsection 2 , paragraph c . 24   11. Inapplicability of certain subsections. Subsections 1 25   through , 2, 3 , and 7 do not apply to a controllable account or 26   controllable payment intangible. 27   Sec. 78. Section 554.9406, Code 2024, is amended by adding 28   the following new subsection: 29   NEW SUBSECTION   . 10A. Inapplicability to interests in certain 30   entities. Subsections 4, 6, and 10 do not apply to a security 31   interest in an ownership interest in a general partnership, 32   limited partnership, or limited liability company. 33   Sec. 79. Section 554.9408, subsection 1, unnumbered   34   paragraph 1, Code 2024, is amended to read as follows: 35   -55-   LSB 1411SZ (4) 90   da/jh   55/ 90            

  S.F. 2389   Except as otherwise provided in subsection 2 subsections 2 1   and 6   , a term in a promissory note or in an agreement between 2   an account debtor and a debtor which relates to a health 3   care insurance receivable or a general intangible, including 4   a contract, permit, license, or franchise, and which term 5   prohibits, restricts, or requires the consent of the person 6   obligated on the promissory note or the account debtor to, 7   the assignment or transfer of, or creation, attachment, or 8   perfection of a security interest in, the promissory note, 9   health care insurance receivable, or general intangible, is 10   ineffective to the extent that the term: 11   Sec. 80. Section 554.9408, subsection 3, unnumbered 12   paragraph 1, Code 2024, is amended to read as follows: 13   A   Except as otherwise provided in subsection 6, a rule 14   of law, statute, or regulation that prohibits, restricts, or 15   requires the consent of a government, governmental body or 16   official, person obligated on a promissory note, or account 17   debtor to the assignment or transfer of, or creation of a 18   security interest in, a promissory note, health care insurance 19   receivable, or general intangible, including a contract, 20   permit, license, or franchise between an account debtor and 21   a debtor, is ineffective to the extent that the rule of law, 22   statute, or regulation: 23   Sec. 81. Section 554.9408, Code 2024, is amended by adding 24   the following new subsections: 25   NEW SUBSECTION   . 6. Inapplicability to interests in certain 26   entities. This section does not apply to a security interest 27   in an ownership interest in a general partnership, limited 28   partnership, or limited liability company. 29   NEW SUBSECTION   . 7. Promissory note. In this section, 30   promissory note includes a negotiable instrument that 31   evidences chattel paper. 32   Sec. 82. Section 554.9509, subsections 1 and 2, Code 2024, 33   are amended to read as follows: 34   1. Person entitled to file record. A person may file an 35   -56-   LSB 1411SZ (4) 90   da/jh   56/ 90         

  S.F. 2389   initial financing statement, amendment that adds collateral 1   covered by a financing statement, or amendment that adds a 2   debtor to a financing statement only if: 3   a. the debtor authorizes the filing in an authenticated   a 4   signed   record or pursuant to subsection 2 or 3 ; or 5   b. the person holds an agricultural lien that has 6   become effective at the time of filing and the financing 7   statement covers only collateral in which the person holds an 8   agricultural lien. 9   2. Security agreement as authorization. By authenticating   10   signing   or becoming bound as debtor by a security agreement, 11   a debtor or new debtor authorizes the filing of an initial 12   financing statement, and an amendment, covering: 13   a. the collateral described in the security agreement; and 14   b. property that becomes collateral under section 554.9315, 15   subsection 1 , paragraph b , whether or not the security 16   agreement expressly covers proceeds. 17   Sec. 83. Section 554.9513, subsections 2 and 3, Code 2024, 18   are amended to read as follows: 19   2. Time for compliance with subsection 1 . To comply with 20   subsection 1 , a secured party shall cause the secured party of 21   record to file the termination statement: 22   a. within one month after there is no obligation secured 23   by the collateral covered by the financing statement and 24   no commitment to make an advance, incur an obligation, or 25   otherwise give value; or 26   b. if earlier, within twenty days after the secured party 27   receives an authenticated   a signed demand from a debtor. 28   3. Other collateral. In cases not governed by subsection 29   1 , within twenty days after a secured party receives an   30   authenticated a signed demand from a debtor, the secured 31   party shall cause the secured party of record for a financing 32   statement to send to the debtor a termination statement for the 33   financing statement or file the termination statement in the 34   filing office if: 35   -57-   LSB 1411SZ (4) 90   da/jh   57/ 90            

  S.F. 2389   a. except in the case of a financing statement covering 1   accounts or chattel paper that has been sold or goods that 2   are the subject of a consignment, there is no obligation 3   secured by the collateral covered by the financing statement 4   and no commitment to make an advance, incur an obligation, or 5   otherwise give value; 6   b. the financing statement covers accounts or chattel paper 7   that has been sold but as to which the account debtor or other 8   person obligated has discharged its obligation; 9   c. the financing statement covers goods that were the 10   subject of a consignment to the debtor but are not in the 11   debtors possession; or 12   d. the debtor did not authorize the filing of the initial 13   financing statement. 14   Sec. 84. Section 554.9605, Code 2024, is amended to read as 15   follows: 16   554.9605 Unknown debtor or secondary obligor. 17   1. Duties to unknown persons  general rule   In general: no 18   duty owed by a secured party   . Except as provided in subsection 19   2 , a secured party does not owe a duty based on its status as 20   secured party: 21   a. to a person that is a debtor or obligor, unless the 22   secured party knows: 23   (1) that the person is a debtor or obligor; 24   (2) the identity of the person; and 25   (3) how to communicate with the person; or 26   b. to a secured party or lienholder that has filed a 27   financing statement against a person, unless the secured party 28   knows: 29   (1) that the person is a debtor; and 30   (2) the identity of the person. 31   2. When secured party owes duty to debtor notwithstanding   32   subsection 1 Exception: secured party owes a duty to debtor 33   or obligor   . A secured party owes a duty based on its status 34   as a secured party to a person that is a debtor if, at the 35   -58-   LSB 1411SZ (4) 90   da/jh   58/ 90          

  S.F. 2389   time the secured party obtains control of collateral that is 1   a controllable account, controllable electronic record, or 2   controllable payment intangible, or at the time the security   3   interest attaches to the collateral, whichever is later: 4   a.   the person is a debtor or obligor; and 5   b.   the secured party has knowledge knows that the nature 6   of the collateral or a system in which the collateral is 7   recorded would prevent the secured party from acquiring the 8   knowledge specified   information in subsection 1 , paragraph a , 9   subparagraph (1), (2), or (3) relating to the person is not 10   provided by the collateral, a record attached to or logically   11   associated with the collateral, or the system in which the 12   collateral is recorded . 13   Sec. 85. Section 554.9608, subsection 1, paragraph a, 14   subparagraph (3), Code 2024, is amended to read as follows: 15   (3) the satisfaction of obligations secured by any 16   subordinate security interest in or other lien on the 17   collateral subject to the security interest or agricultural 18   lien under which the collection or enforcement is made if the 19   secured party receives an authenticated   a signed demand for 20   proceeds before distribution of the proceeds is completed. 21   Sec. 86. Section 554.9611, subsection 1, paragraph a, Code 22   2024, is amended to read as follows: 23   a. a secured party sends to the debtor and any secondary 24   obligor an authenticated   a signed notification of disposition; 25   or 26   Sec. 87. Section 554.9611, subsections 2 and 3, Code 2024,   27   are amended to read as follows: 28   2. Notification of disposition required. Except as otherwise 29   provided in subsection 4 , a secured party that disposes of 30   collateral under section 554.9610 shall send to the persons 31   specified in subsection 3 a reasonable authenticated   signed 32   notification of disposition. 33   3. Persons to be notified. To comply with subsection 2 , the 34   secured party shall send an authenticated   a signed notification 35   -59-   LSB 1411SZ (4) 90   da/jh   59/ 90                            

  S.F. 2389   of disposition to: 1   a. the debtor; 2   b. any secondary obligor; and 3   c. if the collateral is other than consumer goods: 4   (1) any other person from which the secured party has 5   received, before the notification date, an authenticated   6   a signed notification of a claim of an interest in the 7   collateral; 8   (2) any other secured party or lienholder that, ten days 9   before the notification date, held a security interest in or 10   other lien on the collateral perfected by the filing of a 11   financing statement that: 12   (a) identified the collateral; 13   (b) was indexed under the debtors name as of that date; and 14   (c) was filed in the office in which to file a financing 15   statement against the debtor covering the collateral as of that 16   date; and 17   (3) any other secured party that, ten days before the 18   notification date, held a security interest in the collateral 19   perfected by compliance with a statute, regulation, or treaty 20   described in section 554.9311, subsection 1 . 21   Sec. 88. Section 554.9611, subsection 5, paragraph b, 22   subparagraph (2), Code 2024, is amended to read as follows: 23   (2) received a response to the request for information and 24   sent an authenticated   a signed notification of disposition to 25   each secured party or other lienholder named in that response 26   whose financing statement covered the collateral. 27   Sec. 89. Section 554.9613, Code 2024, is amended by striking 28   the section and inserting in lieu thereof the following: 29   554.9613 Contents and form of notification before disposition 30   of collateral  general. 31   1. Contents and form of notification. Except in a 32   consumer-goods transaction, the following rules apply: 33   a. The contents of a notification of disposition are 34   sufficient if the notification:   35   -60-   LSB 1411SZ (4) 90   da/jh   60/ 90      

  S.F. 2389   (1) describes the debtor and the secured party; 1   (2) describes the collateral that is the subject of the 2   intended disposition; 3   (3) states the method of intended disposition; 4   (4) states that the debtor is entitled to an accounting of 5   the unpaid indebtedness and states the charge, if any, for an 6   accounting; and 7   (5) states the time and place of a public disposition or the 8   time after which any other disposition is to be made. 9   b. Whether the contents of a notification that lacks any 10   of the information specified in paragraph a are nevertheless 11   sufficient is a question of fact. 12   c. The contents of a notification providing substantially 13   the information specified in paragraph a are sufficient, even 14   if the notification includes: 15   (1) information not specified by that paragraph; or 16   (2) minor errors that are not seriously misleading. 17   d. A particular phrasing of the notification is not 18   required. 19   e. The following form of notification and the form appearing 20   in section 554.9614, subsection 1, paragraph c , when 21   completed in accordance with the instructions in subsection 2 22   and section 554.9614, subsection 2, each provides sufficient 23   information: 24   NOTIFICATION OF DISPOSITION 25   OF COLLATERAL 26   To: (Name of debtor, obligor, or other person to which the 27   notification is sent) 28   From: (Name, address, and telephone number of secured party) 29   {1} Name of any debtor that is not an addressee: (Name of 30   each debtor) 31   {2} We will sell (describe collateral) (to the highest 32   qualified bidder) at public sale. A sale could include a lease 33   or license. The sale will be held as follows:   34   (Date) 35   -61-   LSB 1411SZ (4) 90   da/jh   61/ 90  

  S.F. 2389   (Time) 1   (Place) 2   {3} We will sell (describe collateral) at private sale 3   sometime after (date). A sale could include a lease or 4   license. 5   {4} You are entitled to an accounting of the unpaid 6   indebtedness secured by the property that we intend to sell or, 7   as applicable, lease or license. 8   {5} If you request an accounting you must pay a charge of 9   $(amount). 10   {6} You may request an accounting by calling us at (telephone 11   number). 12   [End of Form] 13   2. Instructions for form of notification. The following 14   instructions apply to the form of notification in subsection 15   1, paragraph e : 16   a. The instructions in this subsection refer to the 17   numbers in braces before items in the form of notification in 18   subsection 1, paragraph e . Do not include the numbers or 19   braces in the notification. The numbers and braces are used 20   only for the purpose of these instructions. 21   b. Include and complete item {1} only if there is a debtor 22   that is not an addressee of the notification and list the name 23   or names. 24   c. Include and complete either item {2}, if the notification 25   relates to a public disposition of the collateral, or item {3}, 26   if the notification relates to a private disposition of the 27   collateral. If item {2} is included, include the words to the 28   highest qualified bidder only if applicable. 29   d. Include and complete items {4} and {6}. 30   e. Include and complete item {5} only if the sender will 31   charge the recipient for an accounting. 32   Sec. 90. Section 554.9614, Code 2024, is amended by striking 33   the section and inserting in lieu thereof the following: 34   554.9614 Contents and form of notification before disposition 35   -62-   LSB 1411SZ (4) 90   da/jh   62/ 90  

  S.F. 2389   of collateral  consumer-goods transaction. 1   1. Contents and form of notification. In a consumer-goods 2   transaction, the following rules apply: 3   a. A notification of disposition must provide the following 4   information: 5   (1) the information specified in section 554.9613, 6   subsection 1, paragraph a ; 7   (2) a description of any liability for a deficiency of the 8   person to which the notification is sent; 9   (3) a telephone number from which the amount that must 10   be paid to the secured party to redeem the collateral under 11   section 554.9623 is available; and 12   (4) a telephone number or mailing address from which 13   additional information concerning the disposition and the 14   obligation secured is available. 15   b. A particular phrasing of the notification is not 16   required. 17   c. The following form of notification, when completed in 18   accordance with the instructions in paragraph b , provides 19   sufficient information: 20   NOTICE OF OUR PLAN TO SELL PROPERTY 21   (Name and address of any obligor who is also a debtor) 22   Subject: (Identify transaction) 23   We have your (describe collateral), because you broke 24   promises in our agreement. 25   {1} We will sell (describe collateral) at public sale. A 26   sale could include a lease or license. The sale will be held   27   as follows: 28   (Date) 29   (Time) 30   (Place) 31   You may attend the sale and bring bidders if you want. 32   {2} We will sell (describe collateral) at private sale 33   sometime after (date). A sale could include a lease or 34   license.   35   -63-   LSB 1411SZ (4) 90   da/jh   63/ 90  

  S.F. 2389   {3} The money that we get from the sale, after paying our 1   costs, will reduce the amount you owe. If we get less money 2   than you owe, you (will or will not, as applicable) still owe 3   us the difference. If we get more money than you owe, you will 4   get the extra money, unless we must pay it to someone else. 5   {4} You can get the property back at any time before we sell 6   it by paying us the full amount you owe, not just the past due 7   payments, including our expenses. To learn the exact amount 8   you must pay, call us at (telephone number). 9   {5} If you want us to explain to you in (writing) (writing 10   or in (description of electronic record)) (description of 11   electronic record) how we have figured the amount that you 12   owe us, {6} call us at (telephone number) (or) (write us at 13   (secured partys address)) (or contact us by (description 14   of electronic communication method)) {7} and request (a 15   written explanation) (a written explanation or an explanation 16   in (description of electronic record)) (an explanation in 17   (description of electronic record)). 18   {8} We will charge you $(amount) for the explanation if we 19   sent you another written explanation of the amount you owe us 20   within the last six months. 21   {9} If you need more information about the sale (call us 22   at (telephone number)) (or) (write us at (secured partys 23   address)) (or contact us by (description of electronic 24   communication method)). 25   {10} We are sending this notice to the following other people 26   who have an interest in (describe collateral) or who owe money 27   under your agreement: 28   (Names of all other debtors and obligors, if any) 29   [End of Form] 30   2. Instructions for form of notification. The following 31   instructions apply to the form of notification in subsection 32   1, paragraph c : 33   a. The instructions in this subsection refer to the   34   numbers in braces before items in the form of notification in   35   -64-   LSB 1411SZ (4) 90   da/jh   64/ 90  

  S.F. 2389   subsection 1, paragraph c . Do not include the numbers or 1   braces in the notification. The numbers and braces are used 2   only for the purpose of these instructions. 3   b. Include and complete either item {1}, if the notification 4   relates to a public disposition of the collateral, or item {2}, 5   if the notification relates to a private disposition of the 6   collateral. 7   c. Include and complete items {3}, {4}, {5}, {6}, and {7}. 8   d. In item {5}, include and complete any one of the three 9   alternative methods for the explanation  writing, writing or 10   electronic record, or electronic record. 11   e. In item {6}, include the telephone number. In addition, 12   the sender may include and complete either or both of the two 13   additional alternative methods of communication  writing 14   or electronic communication  for the recipient of the 15   notification to communicate with the sender. Neither of the 16   two additional methods of communication is required to be 17   included. 18   f. In item {7}, include and complete the method or methods 19   for the explanation  writing, writing or electronic record, 20   or electronic record  included in item {5}. 21   g. Include and complete item {8} only if a written 22   explanation is included in item {5} as a method for 23   communicating the explanation and the sender will charge the 24   recipient for another written explanation. 25   h. In item {9}, include either the telephone number or 26   the address or both the telephone number and the address. In 27   addition, the sender may include and complete the additional 28   method of communication  electronic communication  for the 29   recipient of the notification to communicate with the sender. 30   The additional method of electronic communication is not 31   required to be included. 32   i. If item {10} does not apply, insert None after 33   agreement:. 34   Sec. 91. Section 554.9615, subsection 1, paragraph c, 35   -65-   LSB 1411SZ (4) 90   da/jh   65/ 90  

  S.F. 2389   subparagraph (1), Code 2024, is amended to read as follows: 1   (1) the secured party receives from the holder of the 2   subordinate security interest or other lien an authenticated   a 3   signed demand for proceeds before distribution of the proceeds 4   is completed; and 5   Sec. 92. Section 554.9615, subsection 1, paragraph d, Code 6   2024, is amended to read as follows: 7   d. a secured party that is a consignor of the collateral if 8   the secured party receives from the consignor an authenticated   9   a signed demand for proceeds before distribution of the 10   proceeds is completed. 11   Sec. 93. Section 554.9616, subsection 1, paragraph a, 12   unnumbered paragraph 1, Code 2024, is amended to read as 13   follows: 14   Explanation means a writing   record that: 15   Sec. 94. Section 554.9616, subsection 1, paragraph b, 16   subparagraph (1), Code 2024, is amended to read as follows: 17   (1) authenticated   signed by a debtor or consumer obligor; 18   Sec. 95. Section 554.9616, subsection 2, paragraph a, 19   subparagraph (1), Code 2024, is amended to read as follows: 20   (1) before or when the secured party accounts to the debtor 21   and pays any surplus or first makes written   demand in a record 22   on the consumer obligor after the disposition for payment of 23   the deficiency; and 24   Sec. 96. Section 554.9616, subsection 3, unnumbered 25   paragraph 1, Code 2024, is amended to read as follows: 26   To comply with subsection 1 , paragraph a , subparagraph (2), 27   a writing   an explanation must provide the following information 28   in the following order: 29   Sec. 97. Section 554.9619, subsection 1, unnumbered   30   paragraph 1, Code 2024, is amended to read as follows: 31   In this section , transfer statement means a record 32   authenticated   signed by a secured party stating: 33   Sec. 98. Section 554.9620, subsection 1, paragraph b, 34   unnumbered paragraph 1, Code 2024, is amended to read as 35   -66-   LSB 1411SZ (4) 90   da/jh   66/ 90                 

  S.F. 2389   follows: 1   the secured party does not receive, within the time set forth 2   in subsection 4 , a notification of objection to the proposal 3   authenticated   signed by: 4   Sec. 99. Section 554.9620, subsection 2, paragraph a, Code 5   2024, is amended to read as follows: 6   a. the secured party consents to the acceptance in an 7   authenticated a signed record or sends a proposal to the 8   debtor; and 9   Sec. 100. Section 554.9620, subsection 3, Code 2024, is 10   amended to read as follows: 11   3. Debtors consent. For purposes of this section : 12   a. a debtor consents to an acceptance of collateral in 13   partial satisfaction of the obligation it secures only if 14   the debtor agrees to the terms of the acceptance in a record 15   authenticated   signed after default; and 16   b. a debtor consents to an acceptance of collateral in full 17   satisfaction of the obligation it secures only if the debtor 18   agrees to the terms of the acceptance in a record authenticated   19   signed after default or the secured party: 20   (1) sends to the debtor after default a proposal that is 21   unconditional or subject only to a condition that collateral 22   not in the possession of the secured party be preserved or 23   maintained; 24   (2) in the proposal, proposes to accept collateral in full 25   satisfaction of the obligation it secures; and 26   (3) does not receive a notification of objection 27   authenticated   signed by the debtor within twenty days after the 28   proposal is sent. 29   Sec. 101. Section 554.9620, subsection 6, paragraph b, Code 30   2024, is amended to read as follows: 31   b. within any longer period to which the debtor and all 32   secondary obligors have agreed in an agreement to that effect 33   entered into and authenticated   signed after default. 34   Sec. 102. Section 554.9621, subsection 1, paragraph a, Code 35   -67-   LSB 1411SZ (4) 90   da/jh   67/ 90               

  S.F. 2389   2024, is amended to read as follows: 1   a. any person from which the secured party has received, 2   before the debtor consented to the acceptance, an authenticated   3   a signed notification of a claim of an interest in the 4   collateral; 5   Sec. 103. Section 554.9624, Code 2024, is amended to read 6   as follows: 7   554.9624 Waiver. 8   1. Waiver of disposition notification. A debtor or secondary 9   obligor may waive the right to notification of disposition of 10   collateral under section 554.9611 only by an agreement to that 11   effect entered into and authenticated   signed after default. 12   2. Waiver of mandatory disposition. A debtor may waive 13   the right to require disposition of collateral under section 14   554.9620, subsection 5 , only by an agreement to that effect 15   entered into and authenticated   signed after default. 16   3. Waiver of redemption right. Except in a consumer-goods 17   transaction, a debtor or secondary obligor may waive the 18   right to redeem collateral under section 554.9623 only by an 19   agreement to that effect entered into and authenticated   signed 20   after default. 21   Sec. 104. Section 554.9628, subsection 1, unnumbered 22   paragraph 1, Code 2024, is amended to read as follows: 23   Unless   Subject to subsection 6, unless a secured party knows 24   that a person is a debtor or obligor, knows the identity of the 25   person, and knows how to communicate with the person: 26   Sec. 105. Section 554.9628, subsection 6, Code 2024, is   27   amended by striking the subsection and inserting in lieu 28   thereof the following: 29   6. Exception: limitation of liability under subsections 30   1 and 2 does not apply. Subsections 1 and 2 do not apply to 31   limit the liability of a secured party to a person if, at the 32   time the secured party obtains control of collateral that is 33   a controllable account, controllable electronic record, or 34   controllable payment intangible or at the time the security 35   -68-   LSB 1411SZ (4) 90   da/jh   68/ 90            

  S.F. 2389   interest attaches to the collateral, whichever is later: 1   a. the person is a debtor or obligor; and 2   b. the secured party knows that the information in 3   subsection 2, paragraph a , subparagraph (1), (2), or (3), 4   relating to the person is not provided by the collateral, a 5   record attached to or logically associated with the collateral, 6   or the system in which the collateral is recorded. 7   PART I 8   ARTICLE 12 9   FUNDS TRANSFERS 10   Sec. 106. Section 554.12103, Code 2024, is amended to read 11   as follows: 12   554.12103 Payment order  definitions. 13   1.   In this Article unless the context otherwise requires : 14   1. a. Payment order means an instruction of a sender to 15   a receiving bank, transmitted orally , electronically, or in 16   writing or in a record , to pay, or to cause another bank to pay, 17   a fixed or determinable amount of money to a beneficiary if all   18   of the following apply   : 19   (1) The instruction does not state a condition to payment to 20   the beneficiary other than time of payment .   , 21   (2) The receiving bank is to be reimbursed by debiting an 22   account of, or otherwise receiving payment from, the sender .   , 23   and 24   (3) The instruction is transmitted by the sender directly to 25   the receiving bank or to an agent, funds-transfer system, or 26   communication system for transmittal to the receiving bank. 27   b. A payment order instructing more than one payment to be 28   made to a beneficiary is a separate payment order with respect 29   to each payment.   30   c. A payment order is issued when it is sent to the 31   receiving bank.   32   2. b. Beneficiary means the person to be paid by the 33   beneficiarys bank. 34   3.   c. Beneficiarys bank means the bank identified in a 35   -69-   LSB 1411SZ (4) 90   da/jh   69/ 90                            

  S.F. 2389   payment order in which an account of the beneficiary is to be 1   credited pursuant to the order or which otherwise is to make 2   payment to the beneficiary if the order does not provide for 3   payment to an account. 4   4. d. Receiving bank means the bank to which the senders 5   instruction is addressed. 6   5.   e. Sender means the person giving the instruction to 7   the receiving bank. 8   2.   If an instruction complying with subsection 1, paragraph 9   a , is to make more than one payment to a beneficiary, the 10   instruction is a separate payment order with respect to each   11   payment. 12   3. A payment order is issued when it is sent to the 13   receiving bank.   14   Sec. 107. Section 554.12201, Code 2024, is amended to read 15   as follows: 16   554.12201 Security procedure. 17   Security procedure means a procedure established by 18   agreement between a customer and a receiving bank for the 19   purpose of verifying that a payment order or communication 20   amending or canceling a payment order is that of the customer, 21   or detecting error in the transmission or the content of the 22   payment order or communication. A security procedure may   23   impose an obligation on the receiving bank or the customer and 24   may require the use of algorithms or other codes, identifying 25   words , or numbers, symbols, sounds, biometrics, encryption, 26   callback procedures, or similar security devices. Comparison 27   of a signature on a payment order or communication with an 28   authorized specimen signature of the customer or requiring a 29   payment order to be sent from a known electronic mail address,   30   internet protocol address, or telephone number is not by itself 31   a security procedure. 32   Sec. 108. Section 554.12202, subsections 2 and 3, Code 2024, 33   are amended to read as follows: 34   2. If a bank and its customer have agreed that the 35   -70-   LSB 1411SZ (4) 90   da/jh   70/ 90                         

  S.F. 2389   authenticity of payment orders issued to the bank in the 1   name of the customer as sender will be verified pursuant 2   to a security procedure, a payment order received by the 3   receiving bank is effective as the order of the customer, 4   whether or not authorized, if the security procedure is a 5   commercially reasonable method of providing security against 6   unauthorized payment orders, and the bank proves that it 7   accepted the payment order in good faith and in compliance with 8   the banks obligations under   the security procedure and any 9   written agreement or instruction of the customer , evidenced 10   by a record,   restricting acceptance of payment orders issued 11   in the name of the customer. The bank is not required to 12   follow an instruction that violates a written an agreement 13   with the customer , evidenced by a record,   or notice of which 14   is not received at a time and in a manner affording the bank a 15   reasonable opportunity to act on it before the payment order 16   is accepted. 17   3. Commercial reasonableness of a security procedure is 18   a question of law to be determined by considering the wishes 19   of the customer expressed to the bank, the circumstances 20   of the customer known to the bank, including the size, 21   type, and frequency of payment orders normally issued by 22   the customer to the bank, alternative security procedures 23   offered to the customer, and security procedures in general 24   use by customers and receiving banks similarly situated. A 25   security procedure is deemed to be commercially reasonable if 26   the security procedure was chosen by the customer after the 27   bank offered, and the customer refused, a security procedure 28   that was commercially reasonable for that customer, and the 29   customer expressly agreed in writing   a record to be bound by 30   any payment order, whether or not authorized, issued in the 31   customers name and accepted by the bank in compliance with the 32   banks obligations under the   security procedure chosen by the 33   customer.   34   Sec. 109. Section 554.12203, Code 2024, is amended to read   35   -71-   LSB 1411SZ (4) 90   da/jh   71/ 90            

  S.F. 2389   as follows: 1   554.12203 Unenforceability of certain verified payment 2   orders. 3   1.   If an accepted payment order is not , under section 4   554.12202, subsection 1,   an authorized order of a customer 5   identified as sender pursuant to   section 554.12202, subsection 6   1 , but is effective as an order of the customer pursuant to 7   section 554.12202, subsection 2 , the following rules apply: 8   1.   a. By express written agreement, evidenced by a record 9   the receiving bank may limit the extent to which it is entitled 10   to enforce or retain payment of the payment order. 11   2.   b. The receiving bank is not entitled to enforce or 12   retain payment of the payment order if the customer proves 13   that the order was not caused, directly or indirectly, by a 14   person entrusted at any time with the authority to act for 15   the customer with respect to payment orders or the security 16   procedure, or who obtained access to transmitting facilities 17   of the customer or who obtained, from a source controlled by 18   the customer and without authority of the receiving bank, 19   information facilitating breach of the security procedure, 20   regardless of how the information was obtained or whether the 21   customer was at fault. Information includes any access device, 22   computer software, or similar items. 23   3.   2. This section applies to amendments of payment orders 24   in the same manner it applies to payment orders. 25   Sec. 110. Section 554.12207, subsection 3, paragraph b, 26   Code 2024, is amended to read as follows:   27   b. If the originator is not a bank and proves that the 28   person identified by number was not entitled to receive payment 29   from the originator, the originator is not obligated   obliged 30   to pay the originators   its order unless the originators 31   bank proves that the originator had notice   , before acceptance 32   by of the originators bank of the originators order, had 33   notice   that payment of a payment order issued by the originator 34   might be made by the beneficiarys bank on the basis of an 35   -72-   LSB 1411SZ (4) 90   da/jh   72/ 90                          

  S.F. 2389   identifying or bank account number even if it identifies a 1   person different from the named beneficiary. Proof of notice 2   may be made by any admissible evidence. The originators bank 3   satisfies the burden of proof if it proves that the originator ,   4   before the payment was accepted,   signed a writing record 5   stating the information to which the notice relates before the   6   payment order was accepted . 7   Sec. 111. Section 554.12208, subsection 2, paragraph b, 8   Code 2024, is amended to read as follows: 9   b. If the sender is not a bank and the receiving bank proves 10   that the sender, before the payment order was accepted, had 11   notice that the receiving bank might rely on the number as the 12   proper identification of the intermediary or beneficiarys 13   bank even if it identifies a person different from the bank 14   identified by name, the rights and obligations of the sender 15   and the receiving bank are governed by paragraph a , as though 16   the sender were a bank. Proof of notice may be made by any 17   admissible evidence. The receiving bank satisfies the burden 18   of proof if it proves that the sender, before the payment order 19   was accepted, signed a writing   record stating the information 20   to which the notice relates. 21   Sec. 112. Section 554.12210, subsection 1, Code 2024, is 22   amended to read as follows: 23   1. A payment order is rejected by the receiving bank 24   by a notice of rejection transmitted to the sender orally ,   25   electronically, or in writing a record . A notice of rejection 26   need not use any particular words and is sufficient if the 27   notice indicates that the receiving bank is rejecting the order 28   or will not execute or pay the order. Rejection is effective 29   when the notice is given if transmission is by a means that is 30   reasonable under the circumstances. If notice of rejection is 31   given by a means that is not reasonable, rejection is effective 32   when the notice is received. If an agreement of the sender 33   and receiving bank establishes the means to be used to reject 34   a payment order, any means complying with the agreement is 35   -73-   LSB 1411SZ (4) 90   da/jh   73/ 90              

  S.F. 2389   reasonable and any means not complying is not reasonable unless 1   no significant delay in receipt of the notice resulted from the 2   use of the noncomplying means. 3   Sec. 113. Section 554.12211, subsection 1, Code 2024, is 4   amended to read as follows: 5   1. A communication of the sender of a payment order 6   canceling or amending the order may be transmitted to the 7   receiving bank orally , electronically,   or in writing a record . 8   If a security procedure is in effect between the sender and 9   the receiving bank, the communication is not effective to 10   cancel or amend the order unless the communication is verified 11   pursuant to the security procedure or the bank agrees to the 12   cancellation or amendment. 13   Sec. 114. Section 554.12305, subsections 3 and 4, Code 2024, 14   are amended to read as follows: 15   3. In addition to the amounts payable under subsections 16   1 and 2 , damages, including consequential damages, are 17   recoverable to the extent provided in an express written   18   agreement of the receiving bank , evidenced by a record   . 19   4. If a receiving bank fails to execute a payment order 20   that the receiving bank was obligated by express agreement 21   to execute, the receiving bank is liable to the sender for 22   the senders expenses in the transaction and for incidental 23   expenses and interest losses resulting from the failure to 24   execute. Additional damages, including consequential damages, 25   are recoverable to the extent provided in an express written   26   agreement of the receiving bank, evidenced by a record, but are 27   not otherwise recoverable.   28   PART J   29   ARTICLE 13   30   LEASES   31   Sec. 115. Section 554.13102, Code 2024, is amended to read   32   as follows:   33   554.13102 Scope. 34   1.   This Article applies to any transaction, regardless of 35   -74-   LSB 1411SZ (4) 90   da/jh   74/ 90          

  S.F. 2389   form, that creates a lease and, in the case of a hybrid lease, 1   it applies to the extent provided in subsection 2   . 2   2. In a hybrid lease: 3   a. if the lease-of-goods aspects do not predominate: 4   (1)   only the provisions of this Article which relate 5   primarily to the lease-of-goods aspects of the transaction   6   apply, and the provisions that relate primarily to the 7   transaction as a whole do not apply; 8   (2)   section 554.13209 applies if the lease is a finance 9   lease; and 10   (3)   section 554.13407 applies to the promises of the lessee 11   in a finance lease to the extent the promises are consideration 12   for the right to possession and use of the leased goods; and 13   b.   if the lease-of-goods aspects predominate, this Article 14   applies to the transaction, but does not preclude application 15   in appropriate circumstances of other law to aspects of the 16   lease which do not relate to the lease of goods. 17   Sec. 116. Section 554.13103, subsection 1, Code 2024, is 18   amended by adding the following new paragraph: 19   NEW PARAGRAPH   . 0i. Hybrid lease means a single 20   transaction involving a lease of goods and: 21   (1) the provision of services; 22   (2) a sale of other goods; or 23   (3) a sale, lease, or license of property other than goods. 24   Sec. 117. Section 554.13107, Code 2024, is amended to read 25   as follows: 26   554.13107 Waiver or renunciation of claim or right after 27   default.   28   Any claim or right arising out of an alleged default or 29   breach of warranty may be discharged in whole or in part 30   without consideration by a written   waiver or renunciation in a 31   signed and   record delivered by the aggrieved party. 32   Sec. 118. Section 554.13201, subsections 1, 3, and 5, Code   33   2024, are amended to read as follows: 34   1. A lease contract is not enforceable by way of action or 35   -75-   LSB 1411SZ (4) 90   da/jh   75/ 90                                    

  S.F. 2389   defense unless: 1   a. the total payments to be made under the lease contract, 2   excluding payments for options to renew or buy, are less than 3   one thousand dollars; or 4   b. there is a writing record , signed by the party against 5   whom enforcement is sought or by that partys authorized agent, 6   sufficient to indicate that a lease contract has been made 7   between the parties and to describe the goods leased and the 8   lease term. 9   3. A writing   record is not insufficient because it omits or 10   incorrectly states a term agreed upon, but the lease contract 11   is not enforceable under subsection 1 , paragraph b , beyond 12   the lease term and the quantity of goods shown in the writing   13   record   . 14   5. The lease term under a lease contract referred to in 15   subsection 4 is: 16   a. if there is a writing record signed by the party against 17   whom enforcement is sought or by that partys authorized agent 18   specifying the lease term, the term so specified; 19   b. if the party against whom enforcement is sought admits in 20   that partys pleading, testimony, or otherwise in court a lease 21   term, the term so admitted; or 22   c. a reasonable lease term. 23   Sec. 119. Section 554.13202, Code 2024, is amended to read 24   as follows: 25   554.13202 Final written expression  parol or extrinsic 26   evidence.   27   Terms with respect to which the confirmatory memoranda of 28   the parties agree or which are otherwise set forth in a writing   29   record   intended by the parties as a final expression of their 30   agreement with respect to such terms as are included therein 31   may not be contradicted by evidence of any prior agreement or 32   of a contemporaneous oral agreement but may be explained or 33   supplemented: 34   1. by course of dealing or usage of trade or by course of 35   -76-   LSB 1411SZ (4) 90   da/jh   76/ 90            

  S.F. 2389   performance; and 1   2. by evidence of consistent additional terms unless the 2   court finds the writing   record to have been intended also as a 3   complete and exclusive statement of the terms of the agreement. 4   Sec. 120. Section 554.13203, Code 2024, is amended to read 5   as follows: 6   554.13203 Seals inoperative. 7   The affixing of a seal to a writing record evidencing a 8   lease contract or an offer to enter into a lease contract does 9   not render the writing   record a sealed instrument and the law 10   with respect to sealed instruments does not apply to the lease 11   contract or offer. 12   Sec. 121. Section 554.13205, Code 2024, is amended to read 13   as follows: 14   554.13205 Firm offers. 15   An offer by a merchant to lease goods to or from another 16   person in a signed writing   record that by its terms gives 17   assurance it will be held open is not revocable, for lack of 18   consideration, during the time stated or, if no time is stated, 19   for a reasonable time, but in no event may the period of 20   irrevocability exceed three months. Any such term of assurance 21   on a form supplied by the offeree must be separately signed by 22   the offeror. 23   Sec. 122. Section 554.13208, subsection 2, Code 2024, is 24   amended to read as follows: 25   2. A signed lease agreement that excludes modification or 26   rescission except by a signed writing may   record shall not 27   be otherwise modified or rescinded, but, except as between 28   merchants, such a requirement on a form supplied by a merchant 29   must be separately signed by the other party. 30   PART K 31   ARTICLE 15   32   TRANSITIONAL PROVISIONS   33   Sec. 123. NEW SECTION   . 554.15101 Short title.   34   This Article may be cited as the Transitional Provisions for 35   -77-   LSB 1411SZ (4) 90   da/jh   77/ 90             

  S.F. 2389   Uniform Commercial Code Amendments (2022). 1   Sec. 124. NEW SECTION   . 554.15102 Definitions. 2   1. Article 15 definitions. In this Article: 3   a. Article 14 means Article 14 of this chapter. 4   b. Article 14 property means a controllable account, 5   controllable electronic record, or controllable payment 6   intangible. 7   2. Definitions in other Articles. The following definitions 8   in other Articles of this chapter apply to this Article: 9   a. Controllable account ... Section 554.9102. 10   b. Controllable electronic record ... Section 554.14102. 11   c. Controllable payment intangible ... Section 554.9102. 12   d. Electronic money ... Section 554.9102. 13   e. Financing statement ... Section 554.9102. 14   3. Article 1 definitions and principles. Article 1 contains 15   general definitions and principles of construction and 16   interpretation applicable throughout this Article. 17   Sec. 125. NEW SECTION   . 554.15201 Saving clause. 18   Except as provided in part 3, a transaction validly entered 19   into before the effective date of this Act and the rights, 20   duties, and interests flowing from the transaction remain valid 21   thereafter and may be terminated, completed, consummated, 22   or enforced as required or permitted by law other than this 23   chapter or, if applicable, this chapter, as though this Act had 24   not taken effect. 25   Sec. 126. NEW SECTION   . 554.15301 Saving clause. 26   1. Pre-effective-date transaction, lien, or interest. Except 27   as provided in this part, Article 9, as amended by this Act, 28   and Article 14, as amended by this Act, apply to a transaction, 29   lien, or other interest in property, even if the transaction, 30   lien, or interest was entered into, created, or acquired before 31   the effective date of this Act.   32   2. Continuing validity. Except as provided in subsection 3 33   and sections 554.15302 through 554.15306: 34   a. a transaction, lien, or interest in property that 35   -78-   LSB 1411SZ (4) 90   da/jh   78/ 90     

  S.F. 2389   was validly entered into, created, or transferred before 1   the effective date of this Act and was not governed by this 2   chapter, but would be subject to Article 9 as amended by this 3   Act or Article 14, as amended by this Act, if it had been 4   entered into, created, or transferred on or after the effective 5   date of this Act, including the rights, duties, and interests 6   flowing from the transaction, lien, or interest, remains valid 7   on and after the effective date of this Act; and 8   b. the transaction, lien, or interest may be terminated, 9   completed, consummated, and enforced as required or permitted 10   by this Act or by the law that would apply if this Act had not 11   taken effect. 12   3. Pre-effective-date proceeding. This Act does not affect 13   an action, case, or proceeding commenced before the effective 14   date of this Act. 15   Sec. 127. NEW SECTION   . 554.15302 Security interest 16   perfected before effective date. 17   1. Continuing perfection: perfection requirements 18   satisfied. A security interest that is enforceable and 19   perfected immediately before the effective date of this Act 20   is a perfected security interest under this Act if, on the 21   effective date of this Act, the requirements for enforceability 22   and perfection under this Act are satisfied without further 23   action. 24   2. Continuing perfection: enforceability or perfection 25   requirements not satisfied. If a security interest is 26   enforceable and perfected immediately before the effective 27   date of this Act, but the requirements for enforceability or 28   perfection under this Act are not satisfied on the effective 29   date of this Act, the security interest: 30   a. is a perfected security interest until the earlier of 31   the time perfection would have ceased under the law in effect 32   immediately before the effective date of this Act or July 1, 33   2025;   34   b. remains enforceable thereafter only if the security 35   -79-   LSB 1411SZ (4) 90   da/jh   79/ 90   

  S.F. 2389   interest satisfies the requirements for enforceability under 1   section 554.9203, as amended by this Act, before July 1, 2025; 2   and 3   c. remains perfected thereafter only if the requirements 4   for perfection under this Act are satisfied before the time 5   specified in paragraph a . 6   Sec. 128. NEW SECTION   . 554.15303 Security interest 7   unperfected before effective date. 8   A security interest that is enforceable immediately before 9   the effective date of this Act but is unperfected at that time: 10   1. remains an enforceable security interest until July 1, 11   2025; 12   2. remains enforceable thereafter if the security interest 13   becomes enforceable under section 554.9203, as amended by this 14   Act, on the effective date of this Act or before July 1, 2025; 15   and 16   3. becomes perfected: 17   a. without further action, on the effective date of this Act 18   if the requirements for perfection under this Act are satisfied 19   before or at that time; or 20   b. when the requirements for perfection are satisfied if the 21   requirements are satisfied after that time. 22   Sec. 129. NEW SECTION   . 554.15304 Effectiveness of actions 23   taken before effective date. 24   1. Pre-effective-date action; attachment and perfection 25   before July 1, 2025. If action, other than the filing of a 26   financing statement, is taken before the effective date of this 27   Act and this action would have resulted in perfection of the 28   security interest had the security interest become enforceable 29   before the effective date of this Act, this action is effective   30   to perfect a security interest that attaches under this Act 31   before July 1, 2025. An attached security interest becomes 32   unperfected on July 1, 2025, unless the security interest 33   becomes a perfected security interest under this Act before 34   July 1, 2025. 35   -80-   LSB 1411SZ (4) 90   da/jh   80/ 90    

  S.F. 2389   2. Pre-effective-date filing. The filing of a financing 1   statement before the effective date of this Act is effective 2   to perfect a security interest on the effective date of this 3   Act to the extent the filing would satisfy the requirements for 4   perfection under this Act. 5   3. Pre-effective-date enforceability action. The taking of 6   an action before the effective date of this Act is sufficient 7   for the enforceability of a security interest on the effective 8   date of this Act if this action would satisfy the requirements 9   for enforceability under this Act. 10   Sec. 130. NEW SECTION   . 554.15305 Priority. 11   1. Determination of priority. Subject to subsections 2 and 12   3, this Act determines the priority of conflicting claims to 13   collateral. 14   2. Established priorities. Subject to subsection 3, if the 15   priorities of claims to collateral were established before the 16   effective date of this Act, Article 9, as in effect before the 17   effective date of this Act, determines priority. 18   3. Determination of certain priorities on July 1, 2025. On 19   July 1, 2025, to the extent the priorities determined by 20   Article 9, as amended by this Act, modify the priorities 21   established before the effective date of this Act, the 22   priorities of claims to Article 14 property and electronic 23   money established before the effective date of this Act cease 24   to apply. 25   Sec. 131. NEW SECTION   . 554.15306 Priority of claims when 26   priority rules of Article 9 do not apply. 27   1. Determination of priority. Subject to subsections 2 and 28   3, Article 14 determines the priority of conflicting claims to 29   Article 14 property when the priority rules of Article 9, as 30   amended by this Act, do not apply. 31   2. Established priorities. Subject to subsection 3, when 32   the priority rules of Article 9, as amended by this Act, do not 33   apply and the priorities of claims to Article 14 property were 34   established before the effective date of this Act, law other 35   -81-   LSB 1411SZ (4) 90   da/jh   81/ 90    

  S.F. 2389   than Article 14 determines priority. 1   3. Determination of certain priorities on July 1, 2025. When 2   the priority rules of Article 9, as amended by this Act, do 3   not apply, to the extent the priorities determined by this Act 4   modify the priorities established before the effective date 5   of this Act, the priorities of claims to Article 14 property 6   established before the effective date of this Act cease to 7   apply on July 1, 2025. 8   Sec. 132. DIRECTIONS TO THE CODE EDITOR  ARTICLE 15 9   PARTS. The Code editor is directed to divide the provisions of 10   chapter 554, Article 15, as enacted in this division of this 11   Act, into parts as follows: 12   1. Part 1, including sections 554.15101 and 554.15102. 13   2. Part 2, including section 554.15201. 14   3. Part 3, including sections 554.15301, 554.15302, 15   554.15303, 554.15304, 554.15305, and 554.15306. 16   DIVISION II 17   DIGITAL ASSETS 18   Sec. 133. Section 554E.1, Code 2024, is amended by striking 19   the section and inserting in lieu thereof the following: 20   554E.1 Definitions. 21   As used in this chapter, unless the context otherwise 22   requires: 23   1. Contract means the same as defined in section 554D.103. 24   2. Digital asset means any electronic record that 25   represents, evidences, or comprises economic value or economic, 26   proprietary, or access rights, is maintained or stored in or 27   as an electronic ledger or other record of transactions, or 28   is used as a medium of exchange, unit of account, method of 29   payment, or store of value. 30   3. Distributed ledger technology means an electronic 31   record that is a ledger or other record of transactions or 32   other data to which all of the following apply: 33   a. The electronic record is uniformly ordered. 34   b. The electronic record is redundantly maintained or 35   -82-   LSB 1411SZ (4) 90   da/jh   82/ 90  

  S.F. 2389   processed by or distributed over more than one computer 1   or machine to ensure the consistency, immutability, 2   decentralization, or nonrepudiation of the ledger or other 3   record of transactions or other data. 4   4. Electronic means the same as defined in section 5   554D.103. 6   5. Electronic record means the same as defined in section 7   554D.103. 8   6. Electronic services system means the county land record 9   information system, or electronic services system, created 10   under the agreement entered into under chapter 28E between the 11   counties and the Iowa county recorders association as required 12   by 2005 Iowa Acts, ch. 179, 101, as amended by 2021 Iowa Acts, 13   ch. 126, 2. 14   7. Record means the same as defined in section 554D.103. 15   8. a. Smart contract means an electronic record that is 16   an event-driven program or computerized transaction protocol 17   that runs on a distributed, decentralized, shared, and 18   replicated ledger that executes the terms of a contract. 19   b. For purposes of this subsection, executes the terms 20   of a contract may include taking, obtaining, exercising, or 21   transferring control or custody of assets or other property. 22   9. Transaction means a sale, trade, exchange, transfer, 23   payment, or conversion of a digital asset or any other property 24   or any other action or set of actions occurring between two or 25   more persons relating to the conduct of business, commercial, 26   or governmental affairs. 27   Sec. 134. Section 554E.2, Code 2024, is amended to read as   28   follows:   29   554E.2 Classification of digital assets. 30   Digital assets are intangible   personal property. 31   EXPLANATION 32   The inclusion of this explanation does not constitute agreement with 33   the explanations substance by the members of the general assembly. 34   GENERAL. This bill amends provisions regulating commercial 35   -83-   LSB 1411SZ (4) 90   da/jh   83/ 90   

  S.F. 2389   transactions not involving land and specifically a number of 1   provisions in two Code chapters, Code chapter 554 (the Uniform 2   Commercial Code or UCC), especially as it relates to electronic 3   transactions, and Code chapter 554E, regulating digital assets. 4   GENERAL  UCC. The first part of the bill amends provisions 5   in Code chapter 554 governing certain commercial transactions 6   involving forms of personal electronic property that do not 7   derive value from physical attributes (sometimes referred 8   to as forms of intangible personal property). In 2022, the 9   general assembly enacted two bills dealing with these types of 10   transactions: (1) new Article 14 of the UCC (Code chapter 554) 11   and referred to as the Uniform Commercial Code  Controllable 12   Electronic Records (2022 Iowa Acts, chapter 1117) and (2) new 13   Code chapter 554E referring to smart contracts, distributed 14   ledger technology, and digital assets (2022 Iowa Acts, chapter 15   1116). 16   BACKGROUND  CONTROLLABLE ELECTRONIC RECORDS. The 2022 17   Act creating new Article 14 of the UCC, in part, included 18   amendments to Article 1 providing general provisions applicable 19   throughout the UCC, and amendments to Article 9 governing 20   secured transactions, as prepared by a committee appointed 21   jointly by the uniform law commission and the American law 22   institute. The Act provided for forms of electronic property 23   sometimes referred to as digital assets including non-fiat 24   currency and blockchain based non-fungible tokens, commonly 25   referred to as NFTs, and transactions involving a sale to a 26   purchaser (qualified purchaser) and an associated payment 27   obligation (a controllable payment intangible) by an account 28   debtor. Note, the UCC does not use the term intangible 29   property but personal property which includes general 30   intangibles, including controllable electronic records. 31   BILLS PROVISIONS  CONTROLLABLE ELECTRONIC RECORDS. The 32   bill eliminates several terms, including electronic chattel 33   paper and substitutes the term used to complete a document 34   from authenticate to sign. The bill provides for rights 35   -84-   LSB 1411SZ (4) 90   da/jh   84/ 90  

  S.F. 2389   in controllable accounts, controllable electronic records, 1   and controllable payment intangibles (amended Code section 2   554.14104), the control of controllable electronic records 3   (amended Code section 554.14105), and what state law controls 4   in cases of jurisdictional questions (amended Code section 5   554.14107). The bill defines a number of terms used throughout 6   the UCC, including money. The bill contains an Iowa-only 7   provision that provides that the Article is not to be construed 8   to support, endorse, create, or implement a national digital 9   currency. 10   BILLS PROVISIONS  OTHER UCC ARTICLES. The remainder of 11   the bills first part amends other UCC Articles. These include 12   Article 1, including general provisions, Article 2 regulating 13   sales, Article 3 regulating negotiable instruments, Article 5 14   regulating letters of credit, Article 7 regulating documents of 15   title (a change of title) currently referred to as warehouse 16   receipts and bills of lading, Article 8 regulating investment 17   securities, Article 9 regulating secured transactions, Article 18   12 regulating funds transfers, Article 13 regulating leases, 19   and Article 15 including transitional provisions. 20   BILLS PROVISIONS  TERMINOLOGY. Article 1 includes 21   general provisions that govern the entire Code chapter, 22   including definitions (Code section 554.1201). The bill 23   defines money as a medium of exchange authorized or adopted 24   by a domestic or foreign government or as part of an agreement 25   between governments. The bill revises the definition of 26   signed to include an electronic signature. The bill broadens 27   the definition of conspicuous, which is a term used to 28   describe a reliable record by eliminating references to print 29   media. The bill broadens the definition of person to include 30   a protected series which refers to a separate entity that is 31   associated with a business organization and specifically a 32   limited liability company (see Code chapter 489, subchapter 33   XIV). The bill also replaces the term writing with record 34   in Articles 3 and 9, which is a term connected to electronic   35   -85-   LSB 1411SZ (4) 90   da/jh   85/ 90  

  S.F. 2389   commerce. 1   BILLS PROVISIONS  SALES AND LEASES. The bill amends 2   provisions in Articles 2 and 13 by recognizing a hybrid 3   transaction (in Article 2, see Code sections 554.2102 and 4   554.2106 and in Article 13 see Code sections 554.13102 and 5   554.13103). This type of transaction involves two aspects: 6   first, either the sale or lease of goods and second, some 7   other form of property (e.g., a license) or services. The 8   bill provides rules for determining what law applies to a 9   given transaction based on the predominating aspect of that 10   transaction. 11   BILLS PROVISIONS  NEGOTIABLE INSTRUMENTS. The bill 12   amends provisions in Article 3 by recognizing choice-of-law 13   provisions or choice-of-forum provisions included in a 14   negotiable instrument (Code section 554.3104). The bill 15   provides for transmission and processing of certain items as 16   electronic checks (Code section 554.3105). Finally, a partys 17   obligation to pay a check is not discharged because of the 18   checks destruction in cases where the information of the check 19   is preserved in an electronic format (Code section 554.3604). 20   BILLS PROVISIONS  LETTERS OF CREDIT. The bill amends 21   provisions in Article 5 by providing that a letter of credit 22   may be issued in any form as a signed record rather than as 23   authenticated by signature. In determining a choice-of-law 24   question, a bank is considered to be located at the address of 25   its branch where the letter of credit was issued (Code section 26   554.5116). 27   BILLS PROVISIONS  DOCUMENTS OF TITLE. The bill amends 28   provisions in Article 7 by providing criteria and conditions 29   for determining the rights of a person who has control of 30   an electronic document of title, and specifically under a 31   system for evidencing the transfer of interests in electronic 32   documents (Code section 554.7106). The electronic system must 33   operate to allow a person in control to identify the electronic 34   copy, allow the person to identify themselves, and give the 35   -86-   LSB 1411SZ (4) 90   da/jh   86/ 90  

  S.F. 2389   person exclusive power over an electronic copy. 1   BILLS PROVISIONS  INVESTMENT SECURITIES. The bill 2   amends provisions in Article 8 regarding a persons control 3   of a controllable account, controllable electronic record, or 4   controllable payment intangible (Code section 554.8102), the 5   rights of a entitlement holder identified as the person having 6   rights in a financial asset (Code section 554.8106), and the 7   rights of a purchaser who becomes an entitlement holder. The 8   bill revises conditions used to determine when a purchaser has 9   control over a security entitlement. The bill also provides 10   for choice-of-law rules involving the issuers jurisdiction 11   (Code section 554.8110). 12   BILLS PROVISIONS  SECURED TRANSACTIONS. New Article 14 13   is closely connected to Article 9, which allows a creditor to 14   obtain a security interest attached to a debtors personal 15   property as collateral and to obtain priority when enforcing 16   that security interest over other creditors having a security 17   interest in that same collateral. The bill amends a number 18   of important definitions (Code section 554.9102). The term 19   account means having a present and future right to a payment 20   based on the transfer of services or property including by sale 21   or lease, and includes accounts receivable, but excludes an 22   item represented by a negotiable instrument or chattel paper. 23   The term assignor means the person who grants a security 24   interest to secure an obligation or a seller of accounts, 25   chattel paper, payment intangibles, or promissory notes, and 26   the term assignee means the person in whose favor a security 27   interest is granted to secure an obligation or a buyer of 28   accounts, chattel paper, payment intangibles, or promissory 29   notes. The term payment intangible (under the catchall term 30   general intangible) means a debtors principal obligation 31   is the payment of money and includes a controllable payment 32   intangible. The term account debtor means a person who owes 33   an obligation on an account, chattel paper, or intangible 34   property. The term chattel paper means a debt obligation 35   -87-   LSB 1411SZ (4) 90   da/jh   87/ 90  

  S.F. 2389   supported with a security interest in tangible property. 1   The bill describes conditions in determining if a purchaser 2   has control of an authoritative electronic copy of a record 3   evidencing chattel paper (Code section 554.9105) or if a person 4   has control of electronic money (Code section 554.9105A). A 5   person who has control is not required to acknowledge that 6   control (Code section 554.9107B). The bill provides conditions 7   for determining if a security interest is enforceable against 8   a debtor or third party regarding collateral (Code section 9   554.9203). The bill states that a security interest may attach 10   to consumer goods as proceeds, to a commercial tort claim, 11   or under an after-acquired property clause (Code section 12   554.9204). The bill includes a new requirement applicable to 13   a secured party having control of an authoritative electronic 14   copy of a record evidencing chattel paper, an electronic 15   document, electronic money, or a controllable electronic 16   record. The secured party must transfer the copy or control 17   to the debtor or a person designated by the debtor (Code 18   section 554.9208). The bill provides for cases which govern 19   perfection and priority of a security interest in deposit 20   accounts and investment property when a banks jurisdiction 21   is at issue (Code sections 554.9304 and 554.9305). The 22   bill sets forth requirements governing the perfection and 23   priority of security interests in chattel paper (Code section 24   554.9306A), and controllable accounts, controllable electronic 25   records, and controllable payment intangibles (Code section 26   554.9306B). The bill includes requirements for the perfection 27   of a security interest in chattel paper by possession and 28   control (Code section 554.9314A). The bill provides for 29   changes in law or jurisdiction governing chattel paper, 30   controllable accounts, controllable electronic records, and 31   controllable payment intangibles (Code section 554.9316). 32   The bill includes criteria for a buyer to take free of a 33   security interest of chattel paper, an electronic document, a 34   controllable electronic record, and a controllable account or a 35   -88-   LSB 1411SZ (4) 90   da/jh   88/ 90  

  S.F. 2389   controllable payment intangible (Code section 554.9317). The 1   bill addresses the priority of chattel paper as it relates to 2   tangible copies and electronic copies (Code section 554.9330). 3   The bill provides that the transferee of electronic money 4   takes the money free of a security interest if the transferee 5   obtains control of the money without acting in collusion 6   with the debtor in violating the rights of the secured party 7   (Code section 554.9332). The bill provides criteria for 8   determining if a secured party owes a duty to an unknown debtor 9   or secondary obligor based on their status as a secured party 10   (Code section 554.9605). The bill revises the contents of the 11   notification of disposition of collateral form and provides for 12   corresponding instructions (Code section 554.9613). Similarly, 13   the bill revises the contests of the notification before 14   disposition of collateral form and provides for corresponding 15   instructions (Code section 554.9614). 16   FUNDS TRANSFER. The bill amends provisions in Article 12, 17   by providing for secure payments systems. The bill describes 18   what constitutes a security procedure, including the use of 19   certain protocols (Code section 554.12201). The bill provides 20   that verifying an electronic mail address, internet protocol 21   address, or telephone number is not a security procedure. 22   TRANSITIONAL PROVISIONS. The bill provides for a number 23   of transitional provisions, including a saving clause (Code 24   sections 554.15201 and 554.15301), the enforceability of a 25   security interest that is perfected or unperfected before the 26   bills effective date (Code sections 554.15302 and 554.15303), 27   the effectiveness of actions taken before the bills effective 28   date (Code section 554.15304), and rules of priority (Code 29   sections 554.15305 and 554.15306). 30   BACKGROUND  REGULATION OF DIGITAL ASSETS. The 2022 Act   31   regulating transactions involving distributed ledger technology 32   and smart contracts is connected to Article 14. In both 33   cases, the medium of exchange is a digital asset. Distributed 34   ledger technology allows different computers to validate 35   -89-   LSB 1411SZ (4) 90   da/jh   89/ 90  

  S.F. 2389   transactions and update records and a smart contract is a type 1   of electronic record that executes the term of a contract, 2   including the transfer of assets. A digital asset is a form 3   of an electronic record that represents or is used as a medium 4   of exchange, unit of account, method of payment, or store of 5   value. However, the term expressly excludes certain personal 6   property recognized under the UCC, including a deposit account, 7   electronic record evidencing chattel paper, electronic chattel 8   paper, controllable account, controllable payment intangible, 9   money, electronic document of title, investment property, or a 10   transferable record (Code section 554E.1). A contract cannot 11   be denied legal effect or enforceability solely because it 12   is effectuated by distributed ledger technology or a smart 13   contract (Code section 554E.3). In addition, the 2022 Act 14   provides that a real estate conveyance can be recorded by a 15   county if the evidence of conveyance complies with the general 16   requirements of Code chapter 558 and is in a format conforming 17   with standards established by the electronic services system 18   allowing counties and the Iowa county recorders association 19   to enter into an agreement under Code chapter 28E for the 20   implementation of the county land record information system 21   (Code section 554E.4). 22   BILLS PROVISIONS  REGULATION OF DIGITAL ASSETS. The 23   bill amends the definition of digital asset by eliminating 24   exceptions recognized by the UCC including electronic records 25   evidencing chattel paper. The bill provides that a digital 26   asset is classified simply as personal property rather than 27   intangible personal property. Finally, the bill defines 28   electronic services system by citing its source in the Iowa 29   Acts.   30   -90-   LSB 1411SZ (4) 90   da/jh   90/ 90