Senate File 2389 - Reprinted SENATE FILE 2389 BY COMMITTEE ON JUDICIARY (SUCCESSOR TO SF 540) (SUCCESSOR TO SSB 1177) (COMPANION TO HF 2519 BY COMMITTEE ON JUDICIARY) (As Amended and Passed by the Senate February 21, 2024 ) 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 SF 2389 (5) 90 da/jh/mb
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- SF 2389 (5) 90 da/jh/mb 1/ 84
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- SF 2389 (5) 90 da/jh/mb 2/ 84
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- SF 2389 (5) 90 da/jh/mb 3/ 84
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- SF 2389 (5) 90 da/jh/mb 4/ 84
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- SF 2389 (5) 90 da/jh/mb 5/ 84
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- SF 2389 (5) 90 da/jh/mb 6/ 84
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- SF 2389 (5) 90 da/jh/mb 7/ 84
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- SF 2389 (5) 90 da/jh/mb 8/ 84
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- SF 2389 (5) 90 da/jh/mb 9/ 84
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- SF 2389 (5) 90 da/jh/mb 10/ 84
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, Code 2024, is 34 amended by adding the following new paragraph: 35 -11- SF 2389 (5) 90 da/jh/mb 11/ 84
S.F. 2389 NEW PARAGRAPH . 0j. Central bank digital currency means a 1 digital currency, a digital medium of exchange, or a digital 2 monetary unit of account issued by the United States federal 3 reserve system, a federal agency, a foreign government, a 4 foreign central bank, or a foreign reserve system, that is made 5 directly available to a consumer by such entities. The term 6 includes a digital currency, a digital medium of exchange, or a 7 digital monetary unit of account issued by the United States 8 federal reserve system, a federal agency, a foreign government, 9 a foreign central bank, or a foreign reserve system, that is 10 processed or validated directly by such entities. 11 Sec. 11. Section 554.1201, subsection 2, paragraphs j, o, v, 12 y, ab, ak, and al, Code 2024, are amended to read as follows: 13 j. Conspicuous , with reference to a term, means so 14 written, displayed, or presented that , based on the totality 15 of the circumstances, a reasonable person against which it 16 is to operate ought to have noticed it. Whether a term is 17 conspicuous or not is a decision for the court. Conspicuous 18 terms include the following: 19 (1) a heading in capitals equal to or greater in size than 20 the surrounding text, or in contrasting type, font, or color to 21 the surrounding text of the same or lesser size; and 22 (2) language in the body of a record or display in larger 23 type than the surrounding text, or in contrasting type, font, 24 or color to the surrounding text of the same size, or set off 25 from surrounding text of the same size by symbols or other 26 marks that call attention to the language. 27 o. Delivery , with respect to an electronic document 28 of title , means voluntary transfer of control and , with 29 respect to an instrument, a tangible document of title, or an 30 authoritative tangible copy of a record evidencing chattel 31 paper, means voluntary transfer of possession. 32 v. Holder means: 33 (1) the person in possession of a negotiable instrument that 34 is payable either to bearer or to an identified person that is 35 -12- SF 2389 (5) 90 da/jh/mb 12/ 84
S.F. 2389 the person in possession; 1 (2) the person in possession of a negotiable tangible 2 document of title if the goods are deliverable either to bearer 3 or to the order of the person in possession; or 4 (3) the person in control , other than pursuant to section 5 554.7106, subsection 7, of a negotiable electronic document of 6 title. 7 y. Money means a medium of exchange that : is currently 8 authorized or adopted by a domestic or foreign government. The 9 term includes a monetary unit of account established by an 10 intergovernmental organization, or pursuant to an agreement 11 between two or more countries. The term does not include an 12 electronic record that is a medium of exchange recorded and 13 transferable in a system that existed and operated for the 14 medium of exchange before the medium of exchange was authorized 15 or adopted by the government. The term also does not include a 16 central bank digital currency. 17 (1) is currently authorized or adopted by a domestic or 18 foreign government, by an intergovernmental organization, or 19 pursuant to an agreement between two or more governments; and 20 (2) was initially issued, created, or distributed by 21 a domestic or foreign government, by an intergovernmental 22 organization, or pursuant to an agreement between two or more 23 governments. 24 ab. Person means an individual, corporation, business 25 trust, estate, trust, partnership, limited liability company, 26 association, joint venture, government, governmental 27 subdivision, agency, or instrumentality, public corporation, 28 or any other legal or commercial entity. The term includes 29 a protected series, however denominated, of an entity if the 30 protected series is established under law other than this 31 chapter that limits, or limits if conditions specified under 32 the law are satisfied, the ability of a creditor of the entity 33 or of any other protected series of the entity to satisfy a 34 claim from assets of the protected series. 35 -13- SF 2389 (5) 90 da/jh/mb 13/ 84
S.F. 2389 ak. Send in connection with a writing, record , or notice 1 notification means: 2 (1) to deposit in the mail , or deliver for transmission , 3 or transmit by any other usual means of communication , with 4 postage or cost of transmission provided for , and properly 5 addressed and, in the case of an instrument, to an address 6 specified thereon or otherwise agreed, or if there be none to 7 any address reasonable under the circumstances; or 8 (2) in any other way to cause to be received any the record 9 or notice notification to be received within the time it would 10 have arrived been received if properly sent under subparagraph 11 (1) . 12 al. (1) Signed includes using any symbol executed 13 or adopted Sign means, with present intention intent to 14 authenticate or adopt or accept a writing. record: 15 (a) to execute or adopt a tangible symbol; or 16 (b) to attach to or logically associate with the record an 17 electronic symbol, sound, or process. 18 (2) Signed , signing , and signature have corresponding 19 meanings. 20 Sec. 12. Section 554.1301, subsection 3, paragraph g, Code 21 2024, is amended to read as follows: 22 g. Sections 554.13105 and 554.13106 . ; 23 Sec. 13. Section 554.1301, subsection 3, Code 2024, is 24 amended by adding the following new paragraph: 25 NEW PARAGRAPH . h. Section 554.14107. 26 Sec. 14. Section 554.1306, Code 2024, is amended to read as 27 follows: 28 554.1306 Waiver or renunciation of claim or right after 29 breach. 30 A claim or right arising out of an alleged breach may 31 be discharged in whole or in part without consideration by 32 agreement of the aggrieved party in an authenticated a signed 33 record. 34 PART C 35 -14- SF 2389 (5) 90 da/jh/mb 14/ 84
S.F. 2389 ARTICLE 2 1 SALES 2 Sec. 15. Section 554.2102, Code 2024, is amended to read as 3 follows: 4 554.2102 Scope certain security and other transactions 5 excluded from this Article . 6 1. Unless the context otherwise requires, this Article 7 applies to transactions in goods; it does not apply to any 8 transaction which although in the form of an unconditional 9 contract to sell or present sale is intended to operate only 10 as a security transaction nor does this Article impair or 11 repeal any statute regulating sales to consumers, farmers or 12 other specified classes of buyers and except as provided in 13 subsection 3, this Article applies to transactions in goods 14 and, in the case of a hybrid transaction, it applies to the 15 extent provided in subsection 2 . 16 2. In a hybrid transaction: 17 a. if the sale-of-qoods aspects do not predominate, only 18 the provisions of this Article which relate primarily to 19 the sale-of-goods aspects of the transaction apply, and the 20 provisions that relate primarily to the transaction as a whole 21 do not apply. 22 b. if the sale-of-goods aspects predominate, this Article 23 applies to the transaction but does not preclude application 24 in appropriate circumstances of other law to aspects of the 25 transaction which do not relate to the sale of goods. 26 3. This Article does not: 27 a. apply to a transaction that, even though in the form of 28 an unconditional contract to sell or present sale, operates 29 only to create a security interest; or 30 b. impair or repeal a statute regulating sales to consumers, 31 farmers, or other specified classes of buyers. 32 Sec. 16. Section 554.2106, Code 2024, is amended to read as 33 follows: 34 554.2106 Definitions: contract agreement contract 35 -15- SF 2389 (5) 90 da/jh/mb 15/ 84
S.F. 2389 for sale sale present sale conforming to contract 1 termination cancellation hybrid transaction . 2 1. In this Article unless the context otherwise requires 3 contract and agreement are limited to those relating to the 4 present or future sale of goods. Contract for sale includes 5 both a present sale of goods and a contract to sell goods at a 6 future time. A sale consists in the passing of title from the 7 seller to the buyer for a price ( section 554.2401 ). A present 8 sale means a sale which is accomplished by the making of the 9 contract. 10 2. Goods or conduct including any part of a performance 11 are conforming or conform to the contract when they are in 12 accordance with the obligations under the contract. 13 3. Termination occurs when either party pursuant to 14 a power created by agreement or law puts an end to the 15 contract otherwise than for its breach. On termination 16 all obligations which are still executory on both sides are 17 discharged but any right based on prior breach or performance 18 survives. 19 4. Cancellation occurs when either party puts an end to 20 the contract for breach by the other and its effect is the same 21 as that of termination except that the canceling party also 22 retains any remedy for breach of the whole contract or any 23 unperformed balance. 24 5. Hybrid transaction means a single transaction involving 25 a sale of goods and: 26 a. the provision of services; 27 b. a lease of other goods; or 28 c. a sale, lease, or license of property other than goods. 29 Sec. 17. Section 554.2201, subsections 1 and 2, Code 2024, 30 are amended to read as follows: 31 1. Except as otherwise provided in this section a contract 32 for the sale of goods for the price of five hundred dollars 33 or more is not enforceable by way of action or defense unless 34 there is some writing a record sufficient to indicate that a 35 -16- SF 2389 (5) 90 da/jh/mb 16/ 84
S.F. 2389 contract for sale has been made between the parties and signed 1 by the party against whom enforcement is sought or by that the 2 partys authorized agent or broker. A writing record is not 3 insufficient because it omits or incorrectly states a term 4 agreed upon but the contract is not enforceable under this 5 paragraph subsection beyond the quantity of goods shown in such 6 writing the record . 7 2. Between merchants if within a reasonable time a writing 8 record in confirmation of the contract and sufficient against 9 the sender is received and the party receiving it has reason to 10 know its contents, it satisfies the requirements of subsection 11 1 against such the party unless written notice in a record of 12 objection to its contents is given within ten days after it is 13 received. 14 Sec. 18. Section 554.2202, Code 2024, is amended to read as 15 follows: 16 554.2202 Final written expression parol or extrinsic 17 evidence. 18 Terms with respect to which the confirmatory memoranda of 19 the parties agree or which are otherwise set forth in a writing 20 record intended by the parties as a final expression of their 21 agreement with respect to such terms as are included therein 22 may not be contradicted by evidence of any prior agreement or 23 of a contemporaneous oral agreement but may be explained or 24 supplemented : 25 1. by course of performance, course of dealing, or usage of 26 trade ( section 554.1303 ); and 27 2. by evidence of consistent additional terms unless the 28 court finds the writing record to have been intended also as a 29 complete and exclusive statement of the terms of the agreement. 30 Sec. 19. Section 554.2203, Code 2024, is amended to read as 31 follows: 32 554.2203 Seals inoperative. 33 The affixing of a seal to a writing record evidencing a 34 contract for sale or an offer to buy or sell goods does not 35 -17- SF 2389 (5) 90 da/jh/mb 17/ 84
S.F. 2389 constitute the writing record a sealed instrument and the law 1 with respect to sealed instruments does not apply to such a 2 contract or offer. 3 Sec. 20. Section 554.2205, Code 2024, is amended to read as 4 follows: 5 554.2205 Firm offers. 6 An offer by a merchant to buy or sell goods in a signed 7 writing record which by its terms gives assurance that it will 8 be held open is not revocable, for lack of consideration, 9 during the time stated or if no time is stated for a reasonable 10 time, but in no event may such period of irrevocability exceed 11 three months; but any such term of assurance on a form supplied 12 by the offeree must be separately signed by the offeror. 13 Sec. 21. Section 554.2209, subsection 2, Code 2024, is 14 amended to read as follows: 15 2. A signed agreement which excludes modification or 16 rescission except by a signed writing or other signed record 17 cannot be otherwise modified or rescinded, but except as 18 between merchants such a requirement on a form supplied by the 19 merchant must be separately signed by the other party. 20 PART D 21 ARTICLE 3 22 NEGOTIABLE INSTRUMENTS 23 Sec. 22. Section 554.3104, subsection 1, paragraph c, Code 24 2024, is amended to read as follows: 25 c. does not state any other undertaking or instruction 26 by the person promising or ordering payment to do any act in 27 addition to the payment of money, but the promise or order 28 may contain an undertaking or power to give, maintain, or 29 protect collateral to secure payment, an authorization or 30 power to the holder to confess judgment or realize on or 31 dispose of collateral, or a waiver of the benefit of any law 32 intended for the advantage or protection of an obligor , a term 33 that specifies the law that governs the promise or order, 34 or an undertaking to resolve in a specified forum a dispute 35 -18- SF 2389 (5) 90 da/jh/mb 18/ 84
S.F. 2389 concerning the promise or order . 1 Sec. 23. Section 554.3105, subsection 1, Code 2024, is 2 amended to read as follows: 3 1. Issue means : 4 a. the first delivery of an instrument by the maker or 5 drawer, whether to a holder or nonholder, for the purpose of 6 giving rights on the instrument to any person . ; or 7 b. if agreed by the payee, the first transmission by the 8 drawer to the payee of an image of an item and information 9 derived from the item that enables the depositary bank to 10 collect the item by transferring or presenting under federal 11 law an electronic check. 12 Sec. 24. Section 554.3401, Code 2024, is amended to read as 13 follows: 14 554.3401 Signature necessary for liability on instrument . 15 1. A person is not liable on an instrument unless the person 16 signed the instrument, or the person is represented by an agent 17 or representative who signed the instrument and the signature 18 is binding on the represented person under section 554.3402 . 19 2. A signature may be made manually or by means of a device 20 or machine, and by the use of any name, including a trade or 21 assumed name, or by a word, mark, or symbol executed or adopted 22 by a person with present intention to authenticate a writing. 23 Sec. 25. Section 554.3604, subsection 1, Code 2024, is 24 amended to read as follows: 25 1. A person entitled to enforce an instrument, with or 26 without consideration, may discharge the obligation of a party 27 to pay the instrument by an intentional voluntary act, such 28 as surrender of the instrument to the party, destruction, 29 mutilation, or cancellation of the instrument, cancellation 30 or striking out of the partys signature, or the addition of 31 words to the instrument indicating discharge; or by agreeing 32 not to sue or otherwise renouncing rights against the party 33 by a signed writing record . The obligation of a party to 34 pay a check is not discharged solely by destruction of the 35 -19- SF 2389 (5) 90 da/jh/mb 19/ 84
S.F. 2389 check in connection with a process in which information is 1 extracted from the check and an image of the check is made and, 2 subsequently, the information and image are transmitted for 3 payment. 4 PART E 5 ARTICLE 5 6 LETTERS OF CREDIT 7 Sec. 26. Section 554.5104, Code 2024, is amended to read as 8 follows: 9 554.5104 Formal requirements. 10 A letter of credit, confirmation, advice, transfer, 11 amendment, or cancellation may be issued in any form that is 12 a signed record and is authenticated by a signature or in 13 accordance with the agreement of the parties or the standard 14 practice referred to in section 554.5108, subsection 5 . 15 Sec. 27. Section 554.5116, Code 2024, is amended to read as 16 follows: 17 554.5116 Choice of law and forum. 18 1. The liability of an issuer, nominated person, or 19 adviser for action or omission is governed by the law of the 20 jurisdiction chosen by an agreement in the form of a record 21 signed or otherwise authenticated by the affected parties in 22 the manner provided in section 554.5104 or by a provision 23 in the persons letter of credit, confirmation, or other 24 undertaking. The jurisdiction whose law is chosen need not 25 bear any relation to the transaction. 26 2. Unless subsection 1 applies, the liability of an issuer, 27 nominated person, or adviser for action or omission is governed 28 by the law of the jurisdiction in which the person is located. 29 The person is considered to be located at the address indicated 30 in the persons undertaking. If more than one address is 31 indicated, the person is considered to be located at the 32 address from which the persons undertaking was issued. For 33 the purpose of jurisdiction, choice of law, and recognition 34 of interbranch letters of credit, but not enforcement of a 35 -20- SF 2389 (5) 90 da/jh/mb 20/ 84
S.F. 2389 judgment, all branches of a bank are considered separate 1 juridical entities and a bank is considered to be located at 2 the place where its relevant branch is considered to be located 3 under this subsection . 4 3. For the purpose of jurisdiction, choice of law, 5 and recognition of interbranch letters of credit, but 6 not enforcement of a judgment, all branches of a bank are 7 considered separate juridical entities and a bank is considered 8 to be located at the place where its relevant branch is 9 considered to be located under subsection 4. 10 4. A branch of a bank is considered to be located at the 11 address indicated in the branchs undertaking. If more than 12 one address is indicated, the branch is considered to be 13 located at the address from which the undertaking was issued. 14 5. Except as otherwise provided in this subsection , the 15 liability of an issuer, nominated person, or adviser is 16 governed by any rules of custom or practice, such as the 17 uniform customs and practice for documentary credits, to which 18 the letter of credit, confirmation, or other undertaking is 19 expressly made subject. If this Article would govern the 20 liability of an issuer, nominated person, or adviser under 21 subsection 1 or 2 , the relevant undertaking incorporates 22 rules of custom or practice, and there is conflict between 23 this Article and those rules as applied to that undertaking, 24 those rules govern except to the extent of any conflict with 25 the nonvariable provisions specified in section 554.5103, 26 subsection 3 . 27 4. 6. If there is conflict between this Article and Article 28 3 , 4 , 9 , or 12 , this Article governs. 29 5. 7. The forum for settling disputes arising out of an 30 undertaking within this Article may be chosen in the manner and 31 with the binding effect that governing law may be chosen in 32 accordance with subsection 1 . 33 PART F 34 ARTICLE 7 35 -21- SF 2389 (5) 90 da/jh/mb 21/ 84
S.F. 2389 DOCUMENTS OF TITLE 1 Sec. 28. Section 554.7102, subsection 1, paragraphs j and k, 2 Code 2024, are amended by striking the paragraphs. 3 Sec. 29. Section 554.7106, Code 2024, is amended to read as 4 follows: 5 554.7106 Control of electronic document of title. 6 1. A person has control of an electronic document of title 7 if a system employed for evidencing the transfer of interests 8 in the electronic document reliably establishes that person 9 as the person to which the electronic document was issued or 10 transferred. 11 2. A system satisfies subsection 1 , and a person is deemed 12 to have has control of an electronic document of title, if the 13 document is created, stored, and assigned transferred in such 14 a manner that: 15 a. a single authoritative copy of the document exists which 16 is unique, identifiable, and, except as otherwise provided in 17 paragraphs d , e , and f , unalterable; 18 b. the authoritative copy identifies the person asserting 19 control as: 20 (1) the person to which the document was issued; or 21 (2) if the authoritative copy indicates that the document 22 has been transferred, the person to which the document was most 23 recently transferred; 24 c. the authoritative copy is communicated to and maintained 25 by the person asserting control or its designated custodian; 26 d. copies or amendments that add or change an identified 27 assignee transferee of the authoritative copy can be made only 28 with the consent of the person asserting control; 29 e. each copy of the authoritative copy and any copy of 30 a copy is readily identifiable as a copy that is not the 31 authoritative copy; and 32 f. any amendment of the authoritative copy is readily 33 identifiable as authorized or unauthorized. 34 3. A system satisfies subsection 1, and a person has 35 -22- SF 2389 (5) 90 da/jh/mb 22/ 84
S.F. 2389 control of an electronic document of title, if an authoritative 1 electronic copy of the document, a record attached to or 2 logically associated with the electronic copy, or a system in 3 which the electronic copy is recorded: 4 a. enables the person readily to identify each electronic 5 copy as either an authoritative copy or a nonauthoritative 6 copy; 7 b. enables the person readily to identify itself in any 8 way, including by name, identifying number, cryptographic 9 key, office, or account number, as the person to which each 10 authoritative electronic copy was issued or transferred; and 11 c. gives the person exclusive power, subject to subsection 12 4, to: 13 (1) prevent others from adding or changing the person to 14 which each authoritative electronic copy has been issued or 15 transferred; and 16 (2) transfer control of each authoritative electronic copy. 17 4. Subject to subsection 5, a power is exclusive under 18 subsection 3, paragraph c , subparagraphs (1) and (2), even if: 19 a. the authoritative electronic copy, a record attached 20 to or logically associated with the authoritative electronic 21 copy, or a system in which the authoritative electronic copy 22 is recorded limits the use of the document of title or has 23 a protocol that is programmed to cause a change, including a 24 transfer or loss of control; or 25 b. the power is shared with another person. 26 5. A power of a person is not shared with another person 27 under subsection 4, paragraph b , and the persons power is not 28 exclusive if: 29 a. the person can exercise the power only if the power also 30 is exercised by the other person; and 31 b. the other person: 32 (1) can exercise the power without exercise of the power by 33 the person; or 34 (2) is the transferor to the person of an interest in the 35 -23- SF 2389 (5) 90 da/jh/mb 23/ 84
S.F. 2389 document of title. 1 6. If a person has the powers specified in subsection 2 3, paragraph c , subparagraphs (1) and (2), the powers are 3 presumed to be exclusive. 4 7. A person has control of an electronic document of title 5 if another person, other than the transferor to the person of 6 an interest in the document: 7 a. has control of the document and acknowledges that it has 8 control on behalf of the person; or 9 b. obtains control of the document after having acknowledged 10 that it will obtain control of the document on behalf of the 11 person. 12 8. A person that has control under this section is not 13 required to acknowledge that it has control on behalf of 14 another person. 15 9. If a person acknowledges that it has or will obtain 16 control on behalf of another person, unless the person 17 otherwise agrees or law other than this Article or Article 9 18 otherwise provides, the person does not owe any duty to the 19 other person and is not required to confirm the acknowledgment 20 to any other person. 21 Sec. 30. DIRECTIONS TO CODE EDITOR ARTICLE 7 22 RENAMED. The Code editor is directed to change the title of 23 chapter 554, Article 7, from Warehouse Receipts, Bills of 24 Lading, and Other Documents of Title to Documents of Title. 25 PART G 26 ARTICLE 8 27 INVESTMENT SECURITIES 28 Sec. 31. Section 554.8102, subsection 1, paragraph f, 29 subparagraph (1), Code 2024, is amended to read as follows: 30 (1) send a signed writing record ; or 31 Sec. 32. Section 554.8102, subsection 2, Code 2024, is 32 amended to read as follows: 33 2. Other The following definitions applying to in this 34 Article and the sections in which they appear are other 35 -24- SF 2389 (5) 90 da/jh/mb 24/ 84
S.F. 2389 Articles apply to this Article : 1 a. Appropriate person . . . . . . . . . . . . Section 554.8107 2 b. Control . . . . . . . . . . . . . . . . . . . . . . . Section 554.8106 3 c. Controllable account . . . . . . . . . . Section 554.9102 4 d. Controllable electronic record . Section 554.14102 5 e. Controllable payment intangible . Section 554.9102 6 f. Delivery . . . . . . . . . . . . . . . . . . . . . . Section 554.8301 7 d. g. Investment company security . Section 554.8103 8 e. h. Issuer . . . . . . . . . . . . . . . . . . . . Section 554.8201 9 f. i. Overissue . . . . . . . . . . . . . . . . . Section 554.8210 10 g. j. Protected purchaser . . . . . . . Section 554.8303 11 h. k. Securities account . . . . . . . . Section 554.8501 12 Sec. 33. Section 554.8103, Code 2024, is amended by adding 13 the following new subsection: 14 NEW SUBSECTION . 8. A controllable account, controllable 15 electronic record, or controllable payment intangible is not 16 a financial asset unless section 554.8102, subsection 1, 17 paragraph i , subparagraph (1), subparagraph division (c), 18 applies. 19 Sec. 34. Section 554.8106, subsection 4, paragraph c, Code 20 2024, is amended to read as follows: 21 c. another person has control of the security entitlement on 22 behalf of the purchaser or, having previously acquired control 23 of the security entitlement, acknowledges that it has control 24 on behalf of the purchaser , other than the transferor to the 25 purchaser of an interest in the security entitlement: 26 (1) has control of the security entitlement and 27 acknowledges that it has control on behalf of the purchaser; or 28 (2) obtains control of the security entitlement after 29 having acknowledged that it will obtain control of the security 30 entitlement on behalf of the purchaser . 31 Sec. 35. Section 554.8106, Code 2024, is amended by adding 32 the following new subsections: 33 NEW SUBSECTION . 8. A person that has control under this 34 section is not required to acknowledge that it has control on 35 -25- SF 2389 (5) 90 da/jh/mb 25/ 84
S.F. 2389 behalf of a purchaser. 1 NEW SUBSECTION . 9. If a person acknowledges that it has or 2 will obtain control on behalf of a purchaser, 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 purchaser and is not required to confirm the acknowledgment to 6 any other person. 7 Sec. 36. Section 554.8110, Code 2024, is amended by adding 8 the following new subsection: 9 NEW SUBSECTION . 7. The local law of the issuers 10 jurisdiction or the securities intermediarys jurisdiction 11 governs a matter or transaction specified in subsection 1 or 2 12 even if the matter or transaction does not bear any relation to 13 the jurisdiction. 14 PART H 15 ARTICLE 9 16 SECURED TRANSACTIONS 17 Sec. 37. Section 554.9102, subsection 1, paragraphs b, c, 18 d, ab, ac, as, ax, bf, and br, Code 2024, are amended to read 19 as follows: 20 b. Account , except as used in account for , account 21 statement , account to , commodity account in paragraph n , 22 customers account , deposit account in paragraph ae , on 23 account of , and paragraph ae statement of account , means 24 a right to payment of a monetary obligation, whether or not 25 earned by performance, (i) for property that has been or is 26 to be sold, leased, licensed, assigned, or otherwise disposed 27 of; (ii) for services rendered or to be rendered; (iii) for 28 a policy of insurance issued or to be issued; (iv) for a 29 secondary obligation incurred or to be incurred; (v) for energy 30 provided or to be provided; (vi) for the use or hire of a vessel 31 under a charter or other contract; (vii) arising out of the use 32 of a credit or charge card or information contained on or for 33 use with the card; or (viii) as winnings in a lottery or other 34 game of chance operated or sponsored by a state, governmental 35 -26- SF 2389 (5) 90 da/jh/mb 26/ 84
S.F. 2389 unit of a state, or person licensed or authorized to operate 1 the game by a state or governmental unit of a state. The 2 term includes controllable accounts and health care insurance 3 receivables. The term does not include (i) chattel paper, (ii) 4 commercial tort claims, (iii) deposit accounts, (iv) investment 5 property, (v) letter-of-credit rights or letters of credit, 6 (vi) rights to payment for money or funds advanced or sold, 7 other than rights arising out of the use of a credit or charge 8 card or information contained on or for use with the card, or 9 (vii) rights to payment evidenced by an instrument. 10 c. Account debtor means a person obligated on an account, 11 chattel paper, or general intangible. The term does not 12 include persons obligated to pay a negotiable instrument, even 13 if the negotiable instrument constitutes part of evidences 14 chattel paper. 15 d. Accounting , except as used in accounting for , means a 16 record: 17 (1) authenticated signed by a secured party; 18 (2) indicating the aggregate unpaid secured obligations as 19 of a date not more than thirty-five days earlier or thirty-five 20 days later than the date of the record; and 21 (3) identifying the components of the obligations in 22 reasonable detail. 23 ab. Controllable account means an account evidenced by a 24 controllable electronic record that provides that the account 25 debtor undertakes to pay the person that has control under 26 section 554.14105 has control of the controllable electronic 27 record. 28 ac. Controllable payment intangible means a payment 29 intangible evidenced by a controllable electronic record that 30 provides that the account debtor undertakes to pay the person 31 that has control under section 554.14105 has control of the 32 controllable electronic record. 33 as. General intangible means any personal property, 34 including things in action, other than accounts, chattel paper, 35 -27- SF 2389 (5) 90 da/jh/mb 27/ 84
S.F. 2389 commercial tort claims, deposit accounts, documents, goods, 1 instruments, investment property, letter-of-credit rights, 2 letters of credit, money, and oil, gas, or other minerals 3 before extraction. The term includes controllable electronic 4 records, payment intangibles , and software. 5 ax. Instrument means a negotiable instrument or any 6 other writing that evidences a right to the payment of a 7 monetary obligation, is not itself a security agreement or 8 lease, and is of a type that in ordinary course of business 9 is transferred by delivery with any necessary indorsement or 10 assignment. The term does not include (i) investment property, 11 (ii) letters of credit, or (iii) writings that evidence a right 12 to payment arising out of the use of a credit or charge card 13 or information contained on or for use with the card , or (iv) 14 writings that evidence chattel paper . 15 bf. Money has the meaning provided in section 554.1201, 16 subsection 2 , paragraph y , but does not include (i) a deposit 17 account or (ii) money in an electronic form that cannot be 18 subjected to control under section 554.9105A . 19 br. Proposal means a record authenticated signed by a 20 secured party which includes the terms on which the secured 21 party is willing to accept collateral in full or partial 22 satisfaction of the obligation it secures pursuant to sections 23 554.9620 , 554.9621 , and 554.9622 . 24 Sec. 38. Section 554.9102, subsection 1, Code 2024, is 25 amended by adding the following new paragraphs: 26 NEW PARAGRAPH . 0g. Assignee , except as used in assignee 27 for benefit of creditors , means a person (i) in whose favor 28 a security interest that secures an obligation is created or 29 provided for under a security agreement, whether or not the 30 obligation is outstanding or (ii) to which an account, chattel 31 paper, payment intangible, or promissory note has been sold. 32 The term includes a person to which a security interest has 33 been transferred by a secured party. 34 NEW PARAGRAPH . 00g. Assignor means a person that (i) 35 -28- SF 2389 (5) 90 da/jh/mb 28/ 84
S.F. 2389 under a security agreement creates or provides for a security 1 interest that secures an obligation or (ii) sells an account, 2 chattel paper, payment intangible, or promissory note. The 3 term includes a secured party that has transferred a security 4 interest to another person. 5 Sec. 39. Section 554.9102, subsection 1, paragraphs g, ag, 6 ca, and ce, Code 2024, are amended by striking the paragraphs. 7 Sec. 40. Section 554.9102, subsection 1, paragraph k, Code 8 2024, is amended by striking the paragraph and inserting in 9 lieu thereof the following: 10 k. (1) Chattel paper means: 11 (a) a right to payment of a monetary obligation secured by 12 specific goods, if the right to payment and security agreement 13 are evidenced by a record; or 14 (b) a right to payment of a monetary obligation owed by a 15 lessee under a lease agreement with respect to specific goods 16 and a monetary obligation owed by the lessee in connection with 17 the transaction giving rise to the lease, if: 18 (i) the right to payment and lease agreement are evidenced 19 by a record; and 20 (ii) the predominant purpose of the transaction giving rise 21 to the lease was to give the lessee the right to possession and 22 use of the goods. 23 (2) Chattel paper does not include a right to payment 24 arising out of a charter or other contract involving the use or 25 hire of a vessel or a right to payment arising out of the use of 26 a credit or charge card or information contained on or for use 27 with the card. 28 Sec. 41. Section 554.9102, subsection 2, Code 2024, is 29 amended by adding the following new paragraph: 30 NEW PARAGRAPH . 0ae. Protected purchaser ... Section 31 554.8303. 32 Sec. 42. Section 554.9104, subsection 1, Code 2024, is 33 amended to read as follows: 34 1. Requirements for control. A secured party has control 35 -29- SF 2389 (5) 90 da/jh/mb 29/ 84
S.F. 2389 of a deposit account if: 1 a. the secured party is the bank with which the deposit 2 account is maintained; 3 b. the debtor, secured party, and bank have agreed in 4 an authenticated a signed record that the bank will comply 5 with instructions originated by the secured party directing 6 disposition of the funds in the deposit account without further 7 consent by the debtor; or 8 c. the secured party becomes the banks customer with 9 respect to the deposit account . ; or 10 d. another person, other than the debtor: 11 (1) has control of the deposit account and acknowledges that 12 it has control on behalf of the secured party; or 13 (2) obtains control of the deposit account after having 14 acknowledged that it will obtain control of the deposit account 15 on behalf of the secured party. 16 Sec. 43. Section 554.9105, Code 2024, is amended by striking 17 the section and inserting in lieu thereof the following: 18 554.9105 Control of electronic copy of record evidencing 19 chattel paper. 20 1. General rule: control of electronic copy of record 21 evidencing chattel paper. A purchaser has control of an 22 authoritative electronic copy of a record evidencing chattel 23 paper if a system employed for evidencing the assignment 24 of interests in the chattel paper reliably establishes the 25 purchaser as the person to which the authoritative electronic 26 copy was assigned. 27 2. Single authoritative copy. A system satisfies subsection 28 1 if the record or records evidencing the chattel paper are 29 created, stored, and assigned in a manner that: 30 a. a single authoritative copy of the record or records 31 exists which is unique, identifiable, and, except as otherwise 32 provided in paragraphs d , e , and f , unalterable; 33 b. the authoritative copy identifies the purchaser as the 34 assignee of the record or records; 35 -30- SF 2389 (5) 90 da/jh/mb 30/ 84
S.F. 2389 c. the authoritative copy is communicated to and maintained 1 by the purchaser or its designated custodian; 2 d. copies or amendments that add or change an identified 3 assignee of the authoritative copy can be made only with the 4 consent of the purchaser; 5 e. each copy of the authoritative copy and any copy of 6 a copy is readily identifiable as a copy that is not the 7 authoritative copy; and 8 f. any amendment of the authoritative copy is readily 9 identifiable as authorized or unauthorized. 10 3. One or more authoritative copies. A system satisfies 11 subsection 1, and a purchaser has control of an authoritative 12 electronic copy of a record evidencing chattel paper, if the 13 electronic copy, a record attached to or logically associated 14 with the electronic copy, or a system in which the electronic 15 copy is recorded: 16 a. enables the purchaser readily to identify each electronic 17 copy as either an authoritative copy or a nonauthoritative 18 copy; 19 b. enables the purchaser readily to identify itself in any 20 way, including by name, identifying number, cryptographic key, 21 office, or account number, as the assignee of the authoritative 22 electronic copy; and 23 c. gives the purchaser exclusive power, subject to 24 subsection 4, to: 25 (1) prevent others from adding or changing an identified 26 assignee of the authoritative electronic copy; and 27 (2) transfer control of the authoritative electronic copy. 28 4. Meaning of exclusive. Subject to subsection 5, a power 29 is exclusive under subsection 3, paragraph c , subparagraphs 30 (1) and (2), even if: 31 a. the authoritative electronic copy, a record attached 32 to or logically associated with the authoritative electronic 33 copy, or a system in which the authoritative electronic copy is 34 recorded limits the use of the authoritative electronic copy 35 -31- SF 2389 (5) 90 da/jh/mb 31/ 84
S.F. 2389 or has a protocol programmed to cause a change, including a 1 transfer or loss of control; or 2 b. the power is shared with another person. 3 5. When power not shared with another person. A power of a 4 purchaser is not shared with another person under subsection 4, 5 paragraph b , and the purchasers power is not exclusive if: 6 a. the purchaser can exercise the power only if the power 7 also is exercised by the other person; and 8 b. the other person: 9 (1) can exercise the power without exercise of the power by 10 the purchaser; or 11 (2) is the transferor to the purchaser of an interest in the 12 chattel paper. 13 6. Presumption of exclusivity of certain powers. If a 14 purchaser has the powers specified in subsection 3, paragraph 15 c , subparagraphs (1) and (2), the powers are presumed to be 16 exclusive. 17 7. Obtaining control through another person. A purchaser 18 has control of an authoritative electronic copy of a record 19 evidencing chattel paper if another person, other than the 20 transferor to the purchaser of an interest in the chattel 21 paper: 22 a. has control of the authoritative electronic copy and 23 acknowledges that it has control on behalf of the purchaser; or 24 b. obtains control of the authoritative electronic copy 25 after having acknowledged that it will obtain control of the 26 electronic copy on behalf of the purchaser. 27 Sec. 44. Section 554.9105A, Code 2024, is amended to read 28 as follows: 29 554.9105A Control of electronic money. 30 1. General rule : control of electronic money. A person 31 has control of electronic money if: 32 a. the electronic money , a record attached to or logically 33 associated with the electronic money, or a system in which the 34 electronic money is recorded gives the person: 35 -32- SF 2389 (5) 90 da/jh/mb 32/ 84
S.F. 2389 (1) the power to avail itself of substantially all the 1 benefit from the electronic money; and 2 (2) exclusive power, subject to subsection 2 , to: 3 (a) prevent others from availing themselves of 4 substantially all the benefit from the electronic money; and 5 (b) transfer control of the electronic money to another 6 person or cause another person to obtain control of other 7 electronic money as a result of the transfer of the electronic 8 money; and 9 b. the electronic money, a record attached to or logically 10 associated with the electronic money, or a system in which 11 the electronic money is recorded enables the person readily 12 to identify itself in any way, including by name, identifying 13 number, cryptographic key, office, or account number, as having 14 the powers under paragraph a . 15 2. Meaning of exclusive. Subject to subsection 3, a power 16 is exclusive under subsection 1, paragraph a , subparagraph 17 (2), subparagraph divisions (a) and (b) even 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 limits the use of the electronic 21 money or has a protocol programmed to cause a change, including 22 a transfer or loss of control; or 23 b. the power is shared with another person. 24 3. When power not shared with another person. A power of a 25 person is not shared with another person under subsection 2, 26 paragraph b and the persons power is not exclusive if: 27 a. the person can exercise the power only if the power also 28 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 person; or 32 (2) is the transferor to the person of an interest in the 33 electronic money. 34 4. Presumption of exclusivity of certain powers. If a 35 -33- SF 2389 (5) 90 da/jh/mb 33/ 84
S.F. 2389 person has the powers specified in subsection 1, paragraph a , 1 subparagraph (2), subparagraph divisions (a) and (b) the powers 2 are presumed to be exclusive. 3 2. 5. Control through another person. A person has 4 control of electronic money if another person, other than the 5 transferor of an interest in the electronic money: 6 a. has control of the electronic money and acknowledges that 7 it has control on behalf of the person, or 8 b. obtains control of the electronic money after having 9 acknowledged that it will obtain control of the electronic 10 money on behalf of the person. 11 3. Meaning of exclusive. A power is exclusive under 12 subsection 1 , paragraph a , subparagraph (2), even if: 13 a. the electronic money or a system in which the electronic 14 money is recorded limits the use of the electronic money or has 15 a protocol programmed to transfer control; or 16 b. the person has agreed to share the power with another 17 person. 18 Sec. 45. NEW SECTION . 554.9107B No requirement to 19 acknowledge or confirm; no duties. 20 1. No requirement to acknowledge. A person that has control 21 under section 554.9104, 554.9105, or 554.9105A is not required 22 to acknowledge that it has control on behalf of another person. 23 2. No duties or confirmation. If a person acknowledges 24 that it has or will obtain control on behalf of another 25 person, unless the person otherwise agrees or law other than 26 this Article otherwise provides, the person does not owe any 27 duty to the other person and is not required to confirm the 28 acknowledgment to any other person. 29 Sec. 46. Section 554.9203, subsection 2, Code 2024, is 30 amended to read as follows: 31 2. Enforceability. Except as otherwise provided in 32 subsections 3 through 10 9 , a security interest is enforceable 33 against the debtor and third parties with respect to the 34 collateral only if: 35 -34- SF 2389 (5) 90 da/jh/mb 34/ 84
S.F. 2389 a. value has been given; 1 b. the debtor has rights in the collateral or the power to 2 transfer rights in the collateral to a secured party; and 3 c. one of the following conditions is met: 4 (1) the debtor has authenticated signed a security 5 agreement that provides a description of the collateral and, if 6 the security interest covers timber to be cut, a description 7 of the land concerned; 8 (2) the collateral is not a certificated security and is 9 in the possession of the secured party under section 554.9313 10 pursuant to the debtors security agreement; 11 (3) the collateral is a certificated security in registered 12 form and the security certificate has been delivered to the 13 secured party under section 554.8301 pursuant to the debtors 14 security agreement; or 15 (4) the collateral is controllable accounts, controllable 16 electronic records, controllable payment intangibles, deposit 17 accounts, electronic chattel paper, electronic documents, 18 electronic money, investment property, or letter-of-credit 19 rights, and the secured party has control under section 20 554.7106 , 554.9104 , 554.9105 , 554.9105A , 554.9106 , 554.9107 , or 21 554.9107A pursuant to the debtors security agreement . ; or 22 (5) the collateral is chattel paper and the secured party 23 has possession and control under section 554.9314A pursuant to 24 the debtors security agreement. 25 Sec. 47. Section 554.9203, subsection 10, Code 2024, is 26 amended by striking the subsection. 27 Sec. 48. Section 554.9204, subsection 2, Code 2024, is 28 amended to read as follows: 29 2. When after-acquired property clause not effective. A 30 Subject to subsection 4, a security interest does not attach 31 under a term constituting an after-acquired property clause to: 32 a. consumer goods, other than an accession when given as 33 additional security, unless the debtor acquires rights in them 34 within ten days after the secured party gives value; or 35 -35- SF 2389 (5) 90 da/jh/mb 35/ 84
S.F. 2389 b. a commercial tort claim. 1 Sec. 49. Section 554.9204, Code 2024, is amended by adding 2 the following new subsection: 3 NEW SUBSECTION . 4. Limitation on subsection 2. Subsection 4 2 does not prevent a security interest from attaching: 5 a. to consumer goods as proceeds under section 554.9315, 6 subsection 1, or commingled goods under section 554.9336, 7 subsection 3; 8 b. to a commercial tort claim as proceeds under section 9 554.9315, subsection 1; or 10 c. under an after-acquired property clause to property that 11 is proceeds of consumer goods or a commercial tort claim. 12 Sec. 50. Section 554.9208, subsection 2, Code 2024, is 13 amended to read as follows: 14 2. Duties of secured party after receiving demand from 15 debtor. Within ten days after receiving an authenticated a 16 signed demand by the debtor: 17 a. a secured party having control of a deposit account 18 under section 554.9104, subsection 1 , paragraph b , shall 19 send to the bank with which the deposit account is maintained 20 an authenticated statement a signed record that releases the 21 bank from any further obligation to comply with instructions 22 originated by the secured party; 23 b. a secured party having control of a deposit account under 24 section 554.9104, subsection 1 , paragraph c , shall: 25 (1) pay the debtor the balance on deposit in the deposit 26 account; or 27 (2) transfer the balance on deposit into a deposit account 28 in the debtors name; 29 c. a secured party, other than a buyer, having control of 30 electronic chattel paper under section 554.9105 shall: of an 31 authoritative electronic copy of a record evidencing chattel 32 paper shall transfer control of the electronic copy to the 33 debtor or a person designated by the debtor; 34 (1) communicate the authoritative copy of the electronic 35 -36- SF 2389 (5) 90 da/jh/mb 36/ 84
S.F. 2389 chattel paper to the debtor or its designated custodian; 1 (2) if the debtor designates a custodian that is the 2 designated custodian with which the authoritative copy of 3 the electronic chattel paper is maintained for the secured 4 party, communicate to the custodian an authenticated record 5 releasing the designated custodian from any further obligation 6 to comply with instructions originated by the secured party 7 and instructing the custodian to comply with instructions 8 originated by the debtor; and 9 (3) take appropriate action to enable the debtor or its 10 designated custodian to make copies of or revisions to the 11 authoritative copy which add or change an identified assignee 12 of the authoritative copy without the consent of the secured 13 party; 14 d. a secured party having control of investment property 15 under section 554.8106, subsection 4 , paragraph b , or 16 section 554.9106, subsection 2 , shall send to the securities 17 intermediary or commodity intermediary with which the 18 security entitlement or commodity contract is maintained an 19 authenticated a signed record that releases the securities 20 intermediary or commodity intermediary from any further 21 obligation to comply with entitlement orders or directions 22 originated by the secured party; 23 e. a secured party having control of a letter-of-credit 24 right under section 554.9107 shall send to each person having 25 an unfulfilled obligation to pay or deliver proceeds of the 26 letter of credit to the secured party an authenticated a signed 27 release from any further obligation to pay or deliver proceeds 28 of the letter of credit to the secured party; 29 f. a secured party having control under section 554.7106 30 of an authoritative electronic copy of an electronic document 31 shall : transfer control of the electronic copy to the debtor or 32 a person designated by the debtor; 33 (1) give control of the electronic document to the debtor or 34 its designated custodian; 35 -37- SF 2389 (5) 90 da/jh/mb 37/ 84
S.F. 2389 (2) if the debtor designates a custodian that is the 1 designated custodian with which the authoritative copy of 2 the electronic document is maintained for the secured party, 3 communicate to the custodian an authenticated record releasing 4 the designated custodian from any further obligation to 5 comply with instructions originated by the secured party 6 and instructing the custodian to comply with instructions 7 originated by the debtor; and 8 (3) take appropriate action to enable the debtor or its 9 designated custodian to make copies of or revisions to the 10 authoritative copy which add or change an identified assignee 11 of the authoritative copy without the consent of the secured 12 party; 13 g. a secured party having control under section 554.9105A of 14 electronic money shall transfer control of the electronic money 15 to the debtor or a person designated by the debtor; and 16 h. a secured party having control under section 554.14105 17 of a controllable electronic record , other than a buyer of 18 a controllable account or controllable payment intangible 19 evidenced by the controllable electronic record, shall transfer 20 control of the controllable electronic record to the debtor or 21 a person designated by the debtor. 22 Sec. 51. Section 554.9209, subsection 2, Code 2024, is 23 amended to read as follows: 24 2. Duties of secured party after receiving demand from 25 debtor. Within ten days after receiving an authenticated a 26 signed demand by the debtor, a secured party shall send to an 27 account debtor that has received notification under section 28 554.9406, subsection 1, or section 554.14106, subsection 2, of 29 an assignment to the secured party as assignee under section 30 554.9406, subsection 1 , an authenticated a signed record that 31 releases the account debtor from any further obligation to the 32 secured party. 33 Sec. 52. Section 554.9210, subsections 1, 2, 3, 4, and 5, 34 Code 2024, are amended to read as follows: 35 -38- SF 2389 (5) 90 da/jh/mb 38/ 84
S.F. 2389 1. Definitions. In this section : 1 a. Request means a record of a type described in paragraph 2 b , c , or d . 3 b. Request for an accounting means a record authenticated 4 signed by a debtor requesting that the recipient provide an 5 accounting of the unpaid obligations secured by collateral and 6 reasonably identifying the transaction or relationship that is 7 the subject of the request. 8 c. Request regarding a list of collateral means a record 9 authenticated signed by a debtor requesting that the recipient 10 approve or correct a list of what the debtor believes to be the 11 collateral securing an obligation and reasonably identifying 12 the transaction or relationship that is the subject of the 13 request. 14 d. Request regarding a statement of account means a record 15 authenticated signed by a debtor requesting that the recipient 16 approve or correct a statement indicating what the debtor 17 believes to be the aggregate amount of unpaid obligations 18 secured by collateral as of a specified date and reasonably 19 identifying the transaction or relationship that is the subject 20 of the request. 21 2. Duty to respond to requests. Subject to subsections 3, 22 4, 5, and 6 , a secured party, other than a buyer of accounts, 23 chattel paper, payment intangibles, or promissory notes or a 24 consignor, shall comply with a request within fourteen days 25 after receipt: 26 a. in the case of a request for an accounting, by 27 authenticating signing and sending to the debtor an accounting; 28 and 29 b. in the case of a request regarding a list of 30 collateral or a request regarding a statement of account, by 31 authenticating signing and sending to the debtor an approval 32 or correction. 33 3. Request regarding list of collateral statement 34 concerning type of collateral. A secured party that claims a 35 -39- SF 2389 (5) 90 da/jh/mb 39/ 84
S.F. 2389 security interest in all of a particular type of collateral 1 owned by the debtor may comply with a request regarding a 2 list of collateral by sending to the debtor an authenticated 3 a signed record including a statement to that effect within 4 fourteen days after receipt. 5 4. Request regarding list of collateral no interest 6 claimed. A person that receives a request regarding a list 7 of collateral, claims no interest in the collateral when 8 it receives the request, and claimed an interest in the 9 collateral at an earlier time shall comply with the request 10 within fourteen days after receipt by sending to the debtor an 11 authenticated a signed record: 12 a. disclaiming any interest in the collateral; and 13 b. if known to the recipient, providing the name and mailing 14 address of any assignee of or successor to the recipients 15 interest in the collateral. 16 5. Request for accounting or regarding statement of account 17 no interest in obligation claimed. A person that receives a 18 request for an accounting or a request regarding a statement of 19 account, claims no interest in the obligations when it receives 20 the request, and claimed an interest in the obligations at an 21 earlier time shall comply with the request within fourteen 22 days after receipt by sending to the debtor an authenticated a 23 signed record: 24 a. disclaiming any interest in the obligations; and 25 b. if known to the recipient, providing the name and mailing 26 address of any assignee of or successor to the recipients 27 interest in the obligations. 28 Sec. 53. Section 554.9301, unnumbered paragraph 1, Code 29 2024, is amended to read as follows: 30 Except as otherwise provided in sections 554.9303 , 554.9304 , 31 554.9305 , and 554.9306 through 554.9306B , the following 32 rules determine the law governing perfection, the effect of 33 perfection or nonperfection, and the priority of a security 34 interest in collateral: 35 -40- SF 2389 (5) 90 da/jh/mb 40/ 84
S.F. 2389 Sec. 54. Section 554.9301, subsection 3, unnumbered 1 paragraph 1, Code 2024, is amended to read as follows: 2 Except as otherwise provided in subsection 4 , while tangible 3 negotiable tangible documents, goods, instruments, or tangible 4 money , or tangible chattel paper is located in a jurisdiction, 5 the local law of that jurisdiction governs: 6 Sec. 55. Section 554.9304, subsection 1, Code 2024, is 7 amended to read as follows: 8 1. Law of banks jurisdiction governs. The local law 9 of a banks jurisdiction governs perfection, the effect of 10 perfection or nonperfection, and the priority of a security 11 interest in a deposit account maintained with that bank even 12 if the transaction does not bear any relation to the banks 13 jurisdiction . 14 Sec. 56. Section 554.9305, subsection 1, Code 2024, is 15 amended by adding the following new paragraph: 16 NEW PARAGRAPH . e. Paragraphs b , c , and d apply 17 even if the transaction does not bear any relation to the 18 jurisdiction. 19 Sec. 57. Section 554.9306A, Code 2024, is amended by 20 striking the section and inserting in lieu thereof the 21 following: 22 554.9306A Law governing perfection and priority of security 23 interests in chattel paper. 24 1. Chattel paper evidenced by authoritative electronic 25 copy. Except as provided in subsection 4, if chattel paper 26 is evidenced only by an authoritative electronic copy of the 27 chattel paper or is evidenced by an authoritative electronic 28 copy and an authoritative tangible copy, the local law of the 29 chattel papers jurisdiction governs perfection, the effect of 30 perfection or nonperfection, and the priority of a security 31 interest in the chattel paper, even if the transaction does not 32 bear any relation to the chattel papers jurisdiction. 33 2. Chattel papers jurisdiction. The following rules 34 determine the chattel papers jurisdiction under this section: 35 -41- SF 2389 (5) 90 da/jh/mb 41/ 84
S.F. 2389 a. If the authoritative electronic copy of the record 1 evidencing chattel paper, or a record attached to or logically 2 associated with the electronic copy and readily available for 3 review, expressly provides that a particular jurisdiction is 4 the chattel papers jurisdiction for purposes of this section, 5 this part, this Article, or this chapter, that jurisdiction is 6 the chattel papers jurisdiction. 7 b. If paragraph a does not apply and the rules of the 8 system in which the authoritative electronic copy is recorded 9 are readily available for review and expressly provide that a 10 particular jurisdiction is the chattel papers jurisdiction 11 for purposes of this section, this part, this Article, or this 12 chapter that jurisdiction is the chattel papers jurisdiction. 13 c. If paragraphs a and b do not apply and the 14 authoritative electronic copy, or a record attached to or 15 logically associated with the electronic copy and readily 16 available for review, expressly provides that the chattel paper 17 is governed by the law of a particular jurisdiction, that 18 jurisdiction is the chattel papers jurisdiction. 19 d. If paragraphs a , b , and c do not apply and the 20 rules of the system in which the authoritative electronic copy 21 is recorded are readily available for review and expressly 22 provide that the chattel paper or the system is governed by 23 the law of a particular jurisdiction, that jurisdiction is the 24 chattel papers jurisdiction. 25 e. If paragraphs a through d do not apply, the chattel 26 papers jurisdiction is the jurisdiction in which the debtor 27 is located. 28 3. Chattel paper evidenced by authoritative tangible 29 copy. If an authoritative tangible copy of a record evidences 30 chattel paper and the chattel paper is not evidenced by an 31 authoritative electronic copy, while the authoritative tangible 32 copy of the record evidencing chattel paper is located in a 33 jurisdiction, the local law of that jurisdiction governs: 34 a. perfection of a security interest in the chattel paper by 35 -42- SF 2389 (5) 90 da/jh/mb 42/ 84
S.F. 2389 possession under section 554.9314A; and 1 b. the effect of perfection or nonperfection and the 2 priority of a security interest in the chattel paper. 3 4. When perfection governed by law of jurisdiction where 4 debtor located. The local law of the jurisdiction in which the 5 debtor is located governs perfection of a security interest in 6 chattel paper by filing. 7 Sec. 58. NEW SECTION . 554.9306B Law governing perfection 8 and priority of security interests in controllable accounts, 9 controllable electronic records, and controllable payment 10 intangibles. 11 1. Governing law: general rules. Except as provided in 12 subsection 2, the local law of the controllable electronic 13 records jurisdiction specified in section 554.14107, 14 subsections 3 and 4 governs perfection, the effect of 15 perfection or nonperfection, and the priority of a security 16 interest in a controllable electronic record and a security 17 interest in a controllable account or controllable payment 18 intangible evidenced by the controllable electronic record. 19 2. When perfection governed by law of jurisdiction where 20 debtor located. The local law of the jurisdiction in which the 21 debtor is located governs: 22 a. perfection of a security interest in a controllable 23 account, controllable electronic record, or controllable 24 payment intangible by filing; and 25 b. automatic perfection of a security interest in a 26 controllable payment intangible created by a sale of the 27 controllable payment intangible. 28 Sec. 59. Section 554.9308, subsection 8, Code 2024, is 29 amended by striking the subsection. 30 Sec. 60. Section 554.9310, subsection 2, paragraph h, Code 31 2024, is amended to read as follows: 32 h. in controllable accounts, controllable electronic 33 records, controllable payment intangibles, deposit accounts, 34 electronic chattel paper, electronic documents, investment 35 -43- SF 2389 (5) 90 da/jh/mb 43/ 84
S.F. 2389 property, or letter-of-credit rights which is are perfected by 1 control under section 554.9314 ; 2 Sec. 61. Section 554.9310, subsection 2, Code 2024, is 3 amended by adding the following new paragraph: 4 NEW PARAGRAPH . 0i. in chattel paper which is perfected by 5 possession and control under section 554.9314A; 6 Sec. 62. Section 554.9312, Code 2024, is amended to read as 7 follows: 8 554.9312 Perfection of security interests in chattel 9 paper, controllable accounts, controllable electronic records, 10 controllable payment intangibles, chattel paper, deposit 11 accounts, negotiable documents, goods covered by documents, 12 instruments, investment property, letter-of-credit rights, and 13 money perfection by permissive filing temporary perfection 14 without filing or transfer of possession. 15 1. Perfection by filing permitted. A security interest in 16 chattel paper, controllable accounts, controllable electronic 17 records, controllable payment intangibles, chattel paper, 18 negotiable documents, instruments, or investment property , or 19 negotiable documents may be perfected by filing. 20 2. Control or possession of certain collateral. Except as 21 otherwise provided in section 554.9315, subsections 3 and 4 , 22 for proceeds: 23 a. a security interest in a deposit account may be perfected 24 only by control under section 554.9314 ; 25 b. and except as otherwise provided in section 554.9308, 26 subsection 4 , a security interest in a letter-of-credit right 27 may be perfected only by control under section 554.9314 ; 28 c. a security interest in tangible money may be perfected 29 only by the secured partys taking possession under section 30 554.9313 ; and 31 d. a security interest in electronic money may be perfected 32 only by control under section 554.9314 . 33 3. Goods covered by negotiable document. While goods are 34 in the possession of a bailee that has issued a negotiable 35 -44- SF 2389 (5) 90 da/jh/mb 44/ 84
S.F. 2389 document covering the goods: 1 a. a security interest in the goods may be perfected by 2 perfecting a security interest in the document; and 3 b. a security interest perfected in the document has 4 priority over any security interest that becomes perfected in 5 the goods by another method during that time. 6 4. Goods covered by nonnegotiable document. While goods are 7 in the possession of a bailee that has issued a nonnegotiable 8 document covering the goods, a security interest in the goods 9 may be perfected by: 10 a. issuance of a document in the name of the secured party; 11 b. the bailees receipt of notification of the secured 12 partys interest; or 13 c. filing as to the goods. 14 5. Temporary perfection new value. A security 15 interest in certificated securities, negotiable documents, 16 or instruments is perfected without filing or the taking of 17 possession or control for a period of twenty days from the time 18 it attaches to the extent that it arises for new value given 19 under an authenticated a signed security agreement. 20 6. Temporary perfection goods or documents made available 21 to debtor. A perfected security interest in a negotiable 22 document or goods in possession of a bailee, other than one 23 that has issued a negotiable document for the goods, remains 24 perfected for twenty days without filing if the secured 25 party makes available to the debtor the goods or documents 26 representing the goods for the purpose of: 27 a. ultimate sale or exchange; or 28 b. loading, unloading, storing, shipping, transshipping, 29 manufacturing, processing, or otherwise dealing with them in a 30 manner preliminary to their sale or exchange. 31 7. Temporary perfection delivery of security certificate 32 or instrument to debtor. A perfected security interest in 33 a certificated security or instrument remains perfected for 34 twenty days without filing if the secured party delivers the 35 -45- SF 2389 (5) 90 da/jh/mb 45/ 84
S.F. 2389 security certificate or instrument to the debtor for the 1 purpose of: 2 a. ultimate sale or exchange; or 3 b. presentation, collection, enforcement, renewal, or 4 registration of transfer. 5 8. Expiration of temporary perfection. After the twenty-day 6 period specified in subsection 5, 6, or 7 expires, perfection 7 depends upon compliance with this Article . 8 Sec. 63. Section 554.9313, subsections 1, 3, and 4, Code 9 2024, are amended to read as follows: 10 1. Perfection by possession or delivery. Except as otherwise 11 provided in subsection 2 , a secured party may perfect a 12 security interest in tangible negotiable documents, goods, 13 instruments, negotiable tangible documents, or tangible 14 money , or tangible chattel paper by taking possession of the 15 collateral. A secured party may perfect a security interest in 16 certificated securities by taking delivery of the certificated 17 securities under section 554.8301 . 18 3. Collateral in possession of person other than 19 debtor. With respect to collateral other than certificated 20 securities and goods covered by a document, a secured party 21 takes possession of collateral in the possession of a person 22 other than the debtor, the secured party, or a lessee of 23 the collateral from the debtor in the ordinary course of the 24 debtors business, when: 25 a. the person in possession authenticates signs a record 26 acknowledging that it holds possession of the collateral for 27 the secured partys benefit; or 28 b. the person takes possession of the collateral after 29 having authenticated signed a record acknowledging that it 30 will hold possession of the collateral for the secured partys 31 benefit. 32 4. Time of perfection by possession continuation of 33 perfection. If perfection of a security interest depends upon 34 possession of the collateral by a secured party, perfection 35 -46- SF 2389 (5) 90 da/jh/mb 46/ 84
S.F. 2389 occurs no not earlier than the time the secured party takes 1 possession and continues only while the secured party retains 2 possession. 3 Sec. 64. Section 554.9314, subsections 1, 2, and 3, Code 4 2024, are amended to read as follows: 5 1. Perfection by control. A security interest in 6 controllable accounts, controllable electronic records, 7 controllable payment intangibles, deposit accounts, electronic 8 chattel paper, electronic documents, electronic money, 9 investment property, or letter-of-credit rights may be 10 perfected by control of the collateral under section 554.7106 , 11 554.9104 , 554.9105 , 554.9105A , 554.9106 , 554.9107 , or 12 554.9107A . 13 2. Specified collateral time of perfection by control 14 continuation of perfection. A security interest in controllable 15 accounts, controllable electronic records, controllable payment 16 intangibles, deposit accounts, electronic chattel paper, 17 electronic documents, electronic money, or letter-of-credit 18 rights is perfected by control under section 554.7106 , 19 554.9104 , 554.9105 , 554.9105A , 554.9107 , or 554.9107A when 20 not earlier than the time the secured party obtains control 21 and remains perfected by control only while the secured party 22 retains control. 23 3. Investment property time of perfection by control 24 continuation of perfection. A security interest in investment 25 property is perfected by control under section 554.9106 from 26 not earlier than the time the secured party obtains control and 27 remains perfected by control until: 28 a. the secured party does not have control; and 29 b. one of the following occurs: 30 (1) if the collateral is a certificated security, the debtor 31 has or acquires possession of the security certificate; 32 (2) if the collateral is an uncertificated security, the 33 issuer has registered or registers the debtor as the registered 34 owner; or 35 -47- SF 2389 (5) 90 da/jh/mb 47/ 84
S.F. 2389 (3) if the collateral is a security entitlement, the debtor 1 is or becomes the entitlement holder. 2 Sec. 65. NEW SECTION . 554.9314A Perfection by possession 3 and control of chattel paper. 4 1. Perfection by possession and control. A secured party 5 may perfect a security interest in chattel paper by taking 6 possession of each authoritative tangible copy of the record 7 evidencing the chattel paper and obtaining control of each 8 authoritative electronic copy of the electronic record 9 evidencing the chattel paper. 10 2. Time of perfection; continuation of perfection. A 11 security interest is perfected under subsection 1 not earlier 12 than the time the secured party takes possession and obtains 13 control and remains perfected under subsection 1 only while the 14 secured party retains possession and control. 15 3. Application of section 554.9313 to perfection by 16 possession of chattel paper. Section 554.9313, subsections 17 3 and 6 through 9, apply to perfection by possession of an 18 authoritative tangible copy of a record evidencing chattel 19 paper. 20 Sec. 66. Section 554.9316, subsections 1 and 6, Code 2024, 21 are amended to read as follows: 22 1. General rule effect on perfection of change in 23 governing law. A security interest perfected pursuant to 24 the law of the jurisdiction designated in section 554.9301, 25 subsection 1 , or section 554.9305, subsection 3 , section 26 554.9306A, subsection 4, or section 554.9306B, subsection 2, 27 remains perfected until the earliest of: 28 a. the time perfection would have ceased under the law of 29 that jurisdiction; 30 b. the expiration of four months after a change of the 31 debtors location to another jurisdiction; or 32 c. the expiration of one year after a transfer of collateral 33 to a person that thereby becomes a debtor and is located in 34 another jurisdiction. 35 -48- SF 2389 (5) 90 da/jh/mb 48/ 84
S.F. 2389 6. Change in jurisdiction of chattel paper, controllable 1 electronic record, bank, issuer, nominated person, securities 2 intermediary, or commodity intermediary. A security interest in 3 chattel paper, controllable accounts, controllable electronic 4 records, controllable payment intangibles, deposit accounts, 5 letter-of-credit rights, or investment property which is 6 perfected under the law of the chattel papers jurisdiction, 7 the controllable electronic records jurisdiction, the banks 8 jurisdiction, the issuers jurisdiction, a nominated persons 9 jurisdiction, the securities intermediarys jurisdiction, or 10 the commodity intermediarys jurisdiction, as applicable, 11 remains perfected until the earlier of: 12 a. the time the security interest would have become 13 unperfected under the law of that jurisdiction; or 14 b. the expiration of four months after a change of the 15 applicable jurisdiction to another jurisdiction. 16 Sec. 67. Section 554.9317, subsections 2 and 4, Code 2024, 17 are amended to read as follows: 18 2. Buyers that receive delivery. Except as otherwise 19 provided in subsection 5 , a buyer, other than a secured 20 party, of tangible chattel paper, tangible documents, goods, 21 instruments, tangible documents, or a certificated security 22 certificate takes free of a security interest or agricultural 23 lien if the buyer gives value and receives delivery of the 24 collateral without knowledge of the security interest or 25 agricultural lien and before it is perfected. 26 4. Licensees and buyers of certain collateral. A Subject to 27 subsections 6 through 9, a licensee of a general intangible or 28 a buyer, other than a secured party, of collateral other than 29 tangible chattel paper, tangible documents, electronic money, 30 goods, instruments, tangible documents, or a certificated 31 security takes free of a security interest if the licensee or 32 buyer gives value without knowledge of the security interest 33 and before it is perfected. 34 Sec. 68. Section 554.9317, Code 2024, is amended by adding 35 -49- SF 2389 (5) 90 da/jh/mb 49/ 84
S.F. 2389 the following new subsections: 1 NEW SUBSECTION . 6. Buyers of chattel paper. A buyer, other 2 than a secured party, of chattel paper takes free of a security 3 interest if, without knowledge of the security interest and 4 before it is perfected, the buyer gives value and: 5 a. receives delivery of each authoritative tangible copy of 6 the record evidencing the chattel paper; and 7 b. if each authoritative electronic copy of the record 8 evidencing the chattel paper can be subjected to control 9 under section 554.9105, obtains control of each authoritative 10 electronic copy. 11 NEW SUBSECTION . 7. Buyers of electronic documents. A buyer 12 of an electronic document takes free of a security interest 13 if, without knowledge of the security interest and before it 14 is perfected, the buyer gives value and, if each authoritative 15 electronic copy of the document can be subjected to control 16 under section 554.7106, obtains control of each authoritative 17 electronic copy. 18 NEW SUBSECTION . 8. Buyers of controllable electronic 19 records. A buyer of a controllable electronic record takes free 20 of a security interest if, without knowledge of the security 21 interest and before it is perfected, the buyer gives value and 22 obtains control of the controllable electronic record. 23 NEW SUBSECTION . 9. Buyers of controllable accounts and 24 controllable payment intangibles. A buyer, other than a secured 25 party, of a controllable account or a controllable payment 26 intangible takes free of a security interest if, without 27 knowledge of the security interest and before it is perfected, 28 the buyer gives value and obtains control of the controllable 29 account or controllable payment intangible. 30 Sec. 69. Section 554.9323, subsections 4 and 6, Code 2024, 31 are amended to read as follows: 32 4. Buyer of goods. Except as otherwise provided in 33 subsection 5 , a buyer of goods other than a buyer in ordinary 34 course of business takes free of a security interest to the 35 -50- SF 2389 (5) 90 da/jh/mb 50/ 84
S.F. 2389 extent that it secures advances made after the earlier of: 1 a. the time the secured party acquires knowledge of the 2 buyers purchase; or 3 b. forty-five days after the purchase. 4 6. Lessee of goods. Except as otherwise provided in 5 subsection 7 , a lessee of goods , other than a lessee in 6 ordinary course of business, takes the leasehold interest free 7 of a security interest to the extent that it secures advances 8 made after the earlier of: 9 a. the time the secured party acquires knowledge of the 10 lease; or 11 b. forty-five days after the lease contract becomes 12 enforceable. 13 Sec. 70. Section 554.9324, subsection 2, paragraph b, Code 14 2024, is amended to read as follows: 15 b. the purchase-money secured party sends an authenticated 16 signed notification to the holder of the conflicting security 17 interest; 18 Sec. 71. Section 554.9324, subsection 4, paragraph b, Code 19 2024, is amended to read as follows: 20 b. the purchase-money secured party sends an authenticated 21 a signed notification to the holder of the conflicting security 22 interest; 23 Sec. 72. Section 554.9330, subsections 1, 2, and 6, Code 24 2024, are amended to read as follows: 25 1. Purchasers priority security interest claimed merely 26 as proceeds. A purchaser of chattel paper has priority over a 27 security interest in the chattel paper which is claimed merely 28 as proceeds of inventory subject to a security interest if: 29 a. in good faith and in the ordinary course of the 30 purchasers business, the purchaser gives new value , and takes 31 possession of each authoritative tangible copy of the record 32 evidencing the chattel paper or , and obtains control of under 33 section 554.9105 of each authoritative electronic copy of the 34 record evidencing the chattel paper under section 554.9105 ; and 35 -51- SF 2389 (5) 90 da/jh/mb 51/ 84
S.F. 2389 b. the chattel paper does authoritative copies of the 1 record evidencing the chattel paper do not indicate that it the 2 chattel paper has been assigned to an identified assignee other 3 than the purchaser. 4 2. Purchasers priority other security interests. A 5 purchaser of chattel paper has priority over a security 6 interest in the chattel paper which is claimed other than 7 merely as proceeds of inventory subject to a security interest 8 if the purchaser gives new value , and takes possession of 9 each authoritative tangible copy of the record evidencing the 10 chattel paper or , and obtains control of under section 554.9105 11 of each authoritative electronic copy of the record evidencing 12 the chattel paper under section 554.9105 in good faith, in 13 the ordinary course of the purchasers business, and without 14 knowledge that the purchase violates the rights of the secured 15 party. 16 6. Indication of assignment gives knowledge. For purposes of 17 subsections 2 and 4 , if the authoritative copies of the record 18 evidencing chattel paper or an instrument indicates indicate 19 that it the chattel paper or instrument has been assigned to an 20 identified secured party other than the purchaser, a purchaser 21 of the chattel paper or instrument has knowledge that the 22 purchase violates the rights of the secured party. 23 Sec. 73. Section 554.9331, Code 2024, is amended to read as 24 follows: 25 554.9331 Priority of rights of purchasers of controllable 26 accounts, controllable electronic records, controllable payment 27 intangibles, documents, instruments, and securities under 28 other Articles priority of interests in financial assets 29 and security entitlements and protections protection against 30 assertions assertion of claims under Articles 8 and 14. 31 1. Rights under Articles 3, 7, 8, and 14 not limited. This 32 Article does not limit the rights of a holder in due course of a 33 negotiable instrument, a holder to which a negotiable document 34 of title has been duly negotiated, a protected purchaser of a 35 -52- SF 2389 (5) 90 da/jh/mb 52/ 84
S.F. 2389 security, or a qualifying purchaser of a controllable account, 1 controllable electronic record, or controllable payment 2 intangible. These holders or purchasers take priority over an 3 earlier security interest, even if perfected, to the extent 4 provided in Articles 3 , 7 , 8 , and 14 . 5 2. Protection under Articles 8 and 14. This Article does 6 not limit the rights of or impose liability on a person to the 7 extent that the person is protected against the assertion of 8 a claim under Article 8 or 14 . 9 3. Filing not notice. Filing under this Article does 10 not constitute notice of a claim or defense to the holders, 11 purchasers, or persons described in subsections 1 and 2 . 12 Sec. 74. Section 554.9332, Code 2024, is amended to read as 13 follows: 14 554.9332 Transfer of money transfer of funds from deposit 15 account. 16 1. Transferee of tangible money. A transferee of tangible 17 money takes the money free of a security interest in the money 18 if the transferee when receiving delivery receives possession 19 of the money does not act without acting in collusion with the 20 debtor in violating the rights of the secured party. 21 2. Transferee of electronic money. A transferee of 22 electronic money takes the money free of a security interest 23 in the money if the transferee when obtaining control of the 24 money does not act in collusion with the debtor in violating 25 the rights of the secured party. 26 3. 2. Transferee of funds from deposit account. A 27 transferee of funds from a deposit account takes the funds free 28 of a security interest in the deposit account if the transferee 29 when receiving receives the funds does not act without acting 30 in collusion with the debtor in violating the rights of the 31 secured party. 32 3. Transferee of electronic money. A transferee of 33 electronic money takes the money free of a security interest 34 if the transferee obtains control of the money without acting 35 -53- SF 2389 (5) 90 da/jh/mb 53/ 84
S.F. 2389 in collusion with the debtor in violating the rights of the 1 secured party. 2 Sec. 75. Section 554.9334, subsection 6, paragraph a, Code 3 2024, is amended to read as follows: 4 a. the encumbrancer or owner has, in an authenticated a 5 signed record, consented to the security interest or disclaimed 6 an interest in the goods as fixtures; or 7 Sec. 76. Section 554.9341, unnumbered paragraph 1, Code 8 2024, is amended to read as follows: 9 Except as otherwise provided in section 554.9340, subsection 10 3 , and unless the bank otherwise agrees in an authenticated a 11 signed record, a banks rights and duties with respect to a 12 deposit account maintained with the bank are not terminated, 13 suspended, or modified by: 14 Sec. 77. Section 554.9404, subsection 1, paragraph b, Code 15 2024, is amended to read as follows: 16 b. any other defense or claim of the account debtor against 17 the assignor which accrues before the account debtor receives 18 a notification of the assignment authenticated signed by the 19 assignor or the assignee. 20 Sec. 78. Section 554.9406, subsections 1, 4, 6, 7, and 11, 21 Code 2024, are amended to read as follows: 22 1. Discharge of account debtor effect of 23 notification. Subject to subsections 2 through 9 and 24 11 , an account debtor on an account, chattel paper, or a 25 payment intangible may discharge its obligation by paying the 26 assignor until, but not after, the account debtor receives 27 a notification, authenticated signed by the assignor or 28 the assignee, that the amount due or to become due has been 29 assigned and that payment is to be made to the assignee. After 30 receipt of the notification, the account debtor may discharge 31 its obligation by paying the assignee and may not discharge the 32 obligation by paying the assignor. 33 4. Term restricting assignment generally ineffective. In 34 this subsection, promissory note includes a negotiable 35 -54- SF 2389 (5) 90 da/jh/mb 54/ 84
S.F. 2389 instrument that evidences chattel paper. Except as otherwise 1 provided in subsection subsections 5 and 10A and sections 2 554.9407 and 554.13303 , and subject to subsection 8 , a term in 3 an agreement between an account debtor and an assignor or in a 4 promissory note is ineffective to the extent that it: 5 a. prohibits, restricts, or requires the consent of the 6 account debtor or person obligated on the promissory note to 7 the assignment or transfer of, or the creation, attachment, 8 perfection, or enforcement of a security interest in, the 9 account, chattel paper, payment intangible, or promissory note; 10 or 11 b. provides that the assignment or transfer or the creation, 12 attachment, perfection, or enforcement of the security interest 13 may give rise to a default, breach, right of recoupment, claim, 14 defense, termination, right of termination, or remedy under the 15 account, chattel paper, payment intangible, or promissory note. 16 6. Legal restrictions on assignment generally ineffective. 17 Except as otherwise provided in subsection 10A and sections 18 554.9407 and 554.13303 and subject to subsections 8 and 9, a 19 rule of law, statute, or regulation that prohibits, restricts, 20 or requires the consent of a government, governmental body or 21 official, or account debtor to the assignment or transfer of, 22 or creation of a security interest in, an account or chattel 23 paper is ineffective to the extent that the rule of law, 24 statute, or regulation: 25 a. prohibits, restricts, or requires the consent of the 26 government, governmental body or official, or account debtor 27 to the assignment or transfer of, or the creation, attachment, 28 perfection, or enforcement of a security interest in the 29 account or chattel paper; or 30 b. provides that the assignment or transfer or the creation, 31 attachment, perfection, or enforcement of the security interest 32 may give rise to a default, breach, right of recoupment, claim, 33 defense, termination, right of termination, or remedy under the 34 account or chattel paper. 35 -55- SF 2389 (5) 90 da/jh/mb 55/ 84
S.F. 2389 7. Subsection 2 , paragraph c, not waivable. Subject to 1 subsection subsections 8 and 11 , an account debtor may shall 2 not waive or vary its option under subsection 2 , paragraph c . 3 11. Inapplicability of certain subsections. Subsections 1 4 through , 2, 3 , and 7 do not apply to a controllable account or 5 controllable payment intangible. 6 Sec. 79. Section 554.9406, Code 2024, is amended by adding 7 the following new subsection: 8 NEW SUBSECTION . 10A. Inapplicability to interests in certain 9 entities. Subsections 4, 6, and 10 do not apply to a security 10 interest in an ownership interest in a general partnership, 11 limited partnership, or limited liability company. 12 Sec. 80. Section 554.9408, subsection 1, unnumbered 13 paragraph 1, Code 2024, is amended to read as follows: 14 Except as otherwise provided in subsection 2 subsections 2 15 and 6 , a term in a promissory note or in an agreement between 16 an account debtor and a debtor which relates to a health 17 care insurance receivable or a general intangible, including 18 a contract, permit, license, or franchise, and which term 19 prohibits, restricts, or requires the consent of the person 20 obligated on the promissory note or the account debtor to, 21 the assignment or transfer of, or creation, attachment, or 22 perfection of a security interest in, the promissory note, 23 health care insurance receivable, or general intangible, is 24 ineffective to the extent that the term: 25 Sec. 81. Section 554.9408, subsection 3, unnumbered 26 paragraph 1, Code 2024, is amended to read as follows: 27 A Except as otherwise provided in subsection 6, a rule 28 of law, statute, or regulation that prohibits, restricts, or 29 requires the consent of a government, governmental body or 30 official, person obligated on a promissory note, or account 31 debtor to the assignment or transfer of, or creation of a 32 security interest in, a promissory note, health care insurance 33 receivable, or general intangible, including a contract, 34 permit, license, or franchise between an account debtor and 35 -56- SF 2389 (5) 90 da/jh/mb 56/ 84
S.F. 2389 a debtor, is ineffective to the extent that the rule of law, 1 statute, or regulation: 2 Sec. 82. Section 554.9408, Code 2024, is amended by adding 3 the following new subsections: 4 NEW SUBSECTION . 6. Inapplicability to interests in certain 5 entities. This section does not apply to a security interest 6 in an ownership interest in a general partnership, limited 7 partnership, or limited liability company. 8 NEW SUBSECTION . 7. Promissory note. In this section, 9 promissory note includes a negotiable instrument that 10 evidences chattel paper. 11 Sec. 83. Section 554.9509, subsections 1 and 2, Code 2024, 12 are amended to read as follows: 13 1. Person entitled to file record. A person may file an 14 initial financing statement, amendment that adds collateral 15 covered by a financing statement, or amendment that adds a 16 debtor to a financing statement only if: 17 a. the debtor authorizes the filing in an authenticated a 18 signed record or pursuant to subsection 2 or 3 ; or 19 b. the person holds an agricultural lien that has 20 become effective at the time of filing and the financing 21 statement covers only collateral in which the person holds an 22 agricultural lien. 23 2. Security agreement as authorization. By authenticating 24 signing or becoming bound as debtor by a security agreement, 25 a debtor or new debtor authorizes the filing of an initial 26 financing statement, and an amendment, covering: 27 a. the collateral described in the security agreement; and 28 b. property that becomes collateral under section 554.9315, 29 subsection 1 , paragraph b , whether or not the security 30 agreement expressly covers proceeds. 31 Sec. 84. Section 554.9513, subsections 2 and 3, Code 2024, 32 are amended to read as follows: 33 2. Time for compliance with subsection 1 . To comply with 34 subsection 1 , a secured party shall cause the secured party of 35 -57- SF 2389 (5) 90 da/jh/mb 57/ 84
S.F. 2389 record to file the termination statement: 1 a. within one month after there is no obligation secured 2 by the collateral covered by the financing statement and 3 no commitment to make an advance, incur an obligation, or 4 otherwise give value; or 5 b. if earlier, within twenty days after the secured party 6 receives an authenticated a signed demand from a debtor. 7 3. Other collateral. In cases not governed by subsection 8 1 , within twenty days after a secured party receives an 9 authenticated a signed demand from a debtor, the secured 10 party shall cause the secured party of record for a financing 11 statement to send to the debtor a termination statement for the 12 financing statement or file the termination statement in the 13 filing office if: 14 a. except in the case of a financing statement covering 15 accounts or chattel paper that has been sold or goods that 16 are the subject of a consignment, there is no obligation 17 secured by the collateral covered by the financing statement 18 and no commitment to make an advance, incur an obligation, or 19 otherwise give value; 20 b. the financing statement covers accounts or chattel paper 21 that has been sold but as to which the account debtor or other 22 person obligated has discharged its obligation; 23 c. the financing statement covers goods that were the 24 subject of a consignment to the debtor but are not in the 25 debtors possession; or 26 d. the debtor did not authorize the filing of the initial 27 financing statement. 28 Sec. 85. Section 554.9605, Code 2024, is amended to read as 29 follows: 30 554.9605 Unknown debtor or secondary obligor. 31 1. Duties to unknown persons general rule In general: no 32 duty owed by a secured party . Except as provided in subsection 33 2 , a secured party does not owe a duty based on its status as 34 secured party: 35 -58- SF 2389 (5) 90 da/jh/mb 58/ 84
S.F. 2389 a. to a person that is a debtor or obligor, unless the 1 secured party knows: 2 (1) that the person is a debtor or obligor; 3 (2) the identity of the person; and 4 (3) how to communicate with the person; or 5 b. to a secured party or lienholder that has filed a 6 financing statement against a person, unless the secured party 7 knows: 8 (1) that the person is a debtor; and 9 (2) the identity of the person. 10 2. When secured party owes duty to debtor notwithstanding 11 subsection 1 Exception: secured party owes a duty to debtor 12 or obligor . A secured party owes a duty based on its status 13 as a secured party to a person that is a debtor if, at the 14 time the secured party obtains control of collateral that is 15 a controllable account, controllable electronic record, or 16 controllable payment intangible, or at the time the security 17 interest attaches to the collateral, whichever is later: 18 a. the person is a debtor or obligor; and 19 b. the secured party has knowledge knows that the nature 20 of the collateral or a system in which the collateral is 21 recorded would prevent the secured party from acquiring the 22 knowledge specified information in subsection 1 , paragraph a , 23 subparagraph (1), (2), or (3) relating to the person is not 24 provided by the collateral, a record attached to or logically 25 associated with the collateral, or the system in which the 26 collateral is recorded . 27 Sec. 86. Section 554.9608, subsection 1, paragraph a, 28 subparagraph (3), Code 2024, is amended to read as follows: 29 (3) the satisfaction of obligations secured by any 30 subordinate security interest in or other lien on the 31 collateral subject to the security interest or agricultural 32 lien under which the collection or enforcement is made if the 33 secured party receives an authenticated a signed demand for 34 proceeds before distribution of the proceeds is completed. 35 -59- SF 2389 (5) 90 da/jh/mb 59/ 84
S.F. 2389 Sec. 87. Section 554.9611, subsection 1, paragraph a, Code 1 2024, is amended to read as follows: 2 a. a secured party sends to the debtor and any secondary 3 obligor an authenticated a signed notification of disposition; 4 or 5 Sec. 88. Section 554.9611, subsections 2 and 3, Code 2024, 6 are amended to read as follows: 7 2. Notification of disposition required. Except as otherwise 8 provided in subsection 4 , a secured party that disposes of 9 collateral under section 554.9610 shall send to the persons 10 specified in subsection 3 a reasonable authenticated signed 11 notification of disposition. 12 3. Persons to be notified. To comply with subsection 2 , the 13 secured party shall send an authenticated a signed notification 14 of disposition to: 15 a. the debtor; 16 b. any secondary obligor; and 17 c. if the collateral is other than consumer goods: 18 (1) any other person from which the secured party has 19 received, before the notification date, an authenticated 20 a signed notification of a claim of an interest in the 21 collateral; 22 (2) any other secured party or lienholder that, ten days 23 before the notification date, held a security interest in or 24 other lien on the collateral perfected by the filing of a 25 financing statement that: 26 (a) identified the collateral; 27 (b) was indexed under the debtors name as of that date; and 28 (c) was filed in the office in which to file a financing 29 statement against the debtor covering the collateral as of that 30 date; and 31 (3) any other secured party that, ten days before the 32 notification date, held a security interest in the collateral 33 perfected by compliance with a statute, regulation, or treaty 34 described in section 554.9311, subsection 1 . 35 -60- SF 2389 (5) 90 da/jh/mb 60/ 84
S.F. 2389 Sec. 89. Section 554.9611, subsection 5, paragraph b, 1 subparagraph (2), Code 2024, is amended to read as follows: 2 (2) received a response to the request for information and 3 sent an authenticated a signed notification of disposition to 4 each secured party or other lienholder named in that response 5 whose financing statement covered the collateral. 6 Sec. 90. Section 554.9613, Code 2024, is amended by striking 7 the section and inserting in lieu thereof the following: 8 554.9613 Contents and form of notification before disposition 9 of collateral general. 10 1. Contents and form of notification. Except in a 11 consumer-goods transaction, the following rules apply: 12 a. The contents of a notification of disposition are 13 sufficient if the notification: 14 (1) describes the debtor and the secured party; 15 (2) describes the collateral that is the subject of the 16 intended disposition; 17 (3) states the method of intended disposition; 18 (4) states that the debtor is entitled to an accounting of 19 the unpaid indebtedness and states the charge, if any, for an 20 accounting; and 21 (5) states the time and place of a public disposition or the 22 time after which any other disposition is to be made. 23 b. Whether the contents of a notification that lacks any 24 of the information specified in paragraph a are nevertheless 25 sufficient is a question of fact. 26 c. The contents of a notification providing substantially 27 the information specified in paragraph a are sufficient, even 28 if the notification includes: 29 (1) information not specified by that paragraph; or 30 (2) minor errors that are not seriously misleading. 31 d. A particular phrasing of the notification is not 32 required. 33 e. The following form of notification and the form appearing 34 in section 554.9614, subsection 1, paragraph c , when 35 -61- SF 2389 (5) 90 da/jh/mb 61/ 84
S.F. 2389 completed in accordance with the instructions in subsection 2 1 and section 554.9614, subsection 2, each provides sufficient 2 information: 3 NOTIFICATION OF DISPOSITION 4 OF COLLATERAL 5 To: (Name of debtor, obligor, or other person to which the 6 notification is sent) 7 From: (Name, address, and telephone number of secured party) 8 {1} Name of any debtor that is not an addressee: (Name of 9 each debtor) 10 {2} We will sell (describe collateral) (to the highest 11 qualified bidder) at public sale. A sale could include a lease 12 or license. The sale will be held as follows: 13 (Date) 14 (Time) 15 (Place) 16 {3} We will sell (describe collateral) at private sale 17 sometime after (date). A sale could include a lease or 18 license. 19 {4} You are entitled to an accounting of the unpaid 20 indebtedness secured by the property that we intend to sell or, 21 as applicable, lease or license. 22 {5} If you request an accounting you must pay a charge of 23 $(amount). 24 {6} You may request an accounting by calling us at (telephone 25 number). 26 [End of Form] 27 2. Instructions for form of notification. The following 28 instructions apply to the form of notification in subsection 29 1, paragraph e : 30 a. The instructions in this subsection refer to the 31 numbers in braces before items in the form of notification in 32 subsection 1, paragraph e . Do not include the numbers or 33 braces in the notification. The numbers and braces are used 34 only for the purpose of these instructions. 35 -62- SF 2389 (5) 90 da/jh/mb 62/ 84
S.F. 2389 b. Include and complete item {1} only if there is a debtor 1 that is not an addressee of the notification and list the name 2 or names. 3 c. Include and complete either item {2}, if the notification 4 relates to a public disposition of the collateral, or item {3}, 5 if the notification relates to a private disposition of the 6 collateral. If item {2} is included, include the words to the 7 highest qualified bidder only if applicable. 8 d. Include and complete items {4} and {6}. 9 e. Include and complete item {5} only if the sender will 10 charge the recipient for an accounting. 11 Sec. 91. Section 554.9614, Code 2024, is amended by striking 12 the section and inserting in lieu thereof the following: 13 554.9614 Contents and form of notification before disposition 14 of collateral consumer-goods transaction. 15 1. Contents and form of notification. In a consumer-goods 16 transaction, the following rules apply: 17 a. A notification of disposition must provide the following 18 information: 19 (1) the information specified in section 554.9613, 20 subsection 1, paragraph a ; 21 (2) a description of any liability for a deficiency of the 22 person to which the notification is sent; 23 (3) a telephone number from which the amount that must 24 be paid to the secured party to redeem the collateral under 25 section 554.9623 is available; and 26 (4) a telephone number or mailing address from which 27 additional information concerning the disposition and the 28 obligation secured is available. 29 b. A particular phrasing of the notification is not 30 required. 31 c. The following form of notification, when completed in 32 accordance with the instructions in paragraph b , provides 33 sufficient information: 34 NOTICE OF OUR PLAN TO SELL PROPERTY 35 -63- SF 2389 (5) 90 da/jh/mb 63/ 84
S.F. 2389 (Name and address of any obligor who is also a debtor) 1 Subject: (Identify transaction) 2 We have your (describe collateral), because you broke 3 promises in our agreement. 4 {1} We will sell (describe collateral) at public sale. A 5 sale could include a lease or license. The sale will be held 6 as follows: 7 (Date) 8 (Time) 9 (Place) 10 You may attend the sale and bring bidders if you want. 11 {2} We will sell (describe collateral) at private sale 12 sometime after (date). A sale could include a lease or 13 license. 14 {3} The money that we get from the sale, after paying our 15 costs, will reduce the amount you owe. If we get less money 16 than you owe, you (will or will not, as applicable) still owe 17 us the difference. If we get more money than you owe, you will 18 get the extra money, unless we must pay it to someone else. 19 {4} You can get the property back at any time before we sell 20 it by paying us the full amount you owe, not just the past due 21 payments, including our expenses. To learn the exact amount 22 you must pay, call us at (telephone number). 23 {5} If you want us to explain to you in (writing) (writing 24 or in (description of electronic record)) (description of 25 electronic record) how we have figured the amount that you 26 owe us, {6} call us at (telephone number) (or) (write us at 27 (secured partys address)) (or contact us by (description 28 of electronic communication method)) {7} and request (a 29 written explanation) (a written explanation or an explanation 30 in (description of electronic record)) (an explanation in 31 (description of electronic record)). 32 {8} We will charge you $(amount) for the explanation if we 33 sent you another written explanation of the amount you owe us 34 within the last six months. 35 -64- SF 2389 (5) 90 da/jh/mb 64/ 84
S.F. 2389 {9} If you need more information about the sale (call us 1 at (telephone number)) (or) (write us at (secured partys 2 address)) (or contact us by (description of electronic 3 communication method)). 4 {10} We are sending this notice to the following other people 5 who have an interest in (describe collateral) or who owe money 6 under your agreement: 7 (Names of all other debtors and obligors, if any) 8 [End of Form] 9 2. Instructions for form of notification. The following 10 instructions apply to the form of notification in subsection 11 1, paragraph c : 12 a. The instructions in this subsection refer to the 13 numbers in braces before items in the form of notification in 14 subsection 1, paragraph c . Do not include the numbers or 15 braces in the notification. The numbers and braces are used 16 only for the purpose of these instructions. 17 b. Include and complete either item {1}, if the notification 18 relates to a public disposition of the collateral, or item {2}, 19 if the notification relates to a private disposition of the 20 collateral. 21 c. Include and complete items {3}, {4}, {5}, {6}, and {7}. 22 d. In item {5}, include and complete any one of the three 23 alternative methods for the explanation writing, writing or 24 electronic record, or electronic record. 25 e. In item {6}, include the telephone number. In addition, 26 the sender may include and complete either or both of the two 27 additional alternative methods of communication writing 28 or electronic communication for the recipient of the 29 notification to communicate with the sender. Neither of the 30 two additional methods of communication is required to be 31 included. 32 f. In item {7}, include and complete the method or methods 33 for the explanation writing, writing or electronic record, 34 or electronic record included in item {5}. 35 -65- SF 2389 (5) 90 da/jh/mb 65/ 84
S.F. 2389 g. Include and complete item {8} only if a written 1 explanation is included in item {5} as a method for 2 communicating the explanation and the sender will charge the 3 recipient for another written explanation. 4 h. In item {9}, include either the telephone number or 5 the address or both the telephone number and the address. In 6 addition, the sender may include and complete the additional 7 method of communication electronic communication for the 8 recipient of the notification to communicate with the sender. 9 The additional method of electronic communication is not 10 required to be included. 11 i. If item {10} does not apply, insert None after 12 agreement:. 13 Sec. 92. Section 554.9615, subsection 1, paragraph c, 14 subparagraph (1), Code 2024, is amended to read as follows: 15 (1) the secured party receives from the holder of the 16 subordinate security interest or other lien an authenticated a 17 signed demand for proceeds before distribution of the proceeds 18 is completed; and 19 Sec. 93. Section 554.9615, subsection 1, paragraph d, Code 20 2024, is amended to read as follows: 21 d. a secured party that is a consignor of the collateral if 22 the secured party receives from the consignor an authenticated 23 a signed demand for proceeds before distribution of the 24 proceeds is completed. 25 Sec. 94. Section 554.9616, subsection 1, paragraph a, 26 unnumbered paragraph 1, Code 2024, is amended to read as 27 follows: 28 Explanation means a writing record that: 29 Sec. 95. Section 554.9616, subsection 1, paragraph b, 30 subparagraph (1), Code 2024, is amended to read as follows: 31 (1) authenticated signed by a debtor or consumer obligor; 32 Sec. 96. Section 554.9616, subsection 2, paragraph a, 33 subparagraph (1), Code 2024, is amended to read as follows: 34 (1) before or when the secured party accounts to the debtor 35 -66- SF 2389 (5) 90 da/jh/mb 66/ 84
S.F. 2389 and pays any surplus or first makes written demand in a record 1 on the consumer obligor after the disposition for payment of 2 the deficiency; and 3 Sec. 97. Section 554.9616, subsection 3, unnumbered 4 paragraph 1, Code 2024, is amended to read as follows: 5 To comply with subsection 1 , paragraph a , subparagraph (2), 6 a writing an explanation must provide the following information 7 in the following order: 8 Sec. 98. Section 554.9619, subsection 1, unnumbered 9 paragraph 1, Code 2024, is amended to read as follows: 10 In this section , transfer statement means a record 11 authenticated signed by a secured party stating: 12 Sec. 99. Section 554.9620, subsection 1, paragraph b, 13 unnumbered paragraph 1, Code 2024, is amended to read as 14 follows: 15 the secured party does not receive, within the time set forth 16 in subsection 4 , a notification of objection to the proposal 17 authenticated signed by: 18 Sec. 100. Section 554.9620, subsection 2, paragraph a, Code 19 2024, is amended to read as follows: 20 a. the secured party consents to the acceptance in an 21 authenticated a signed record or sends a proposal to the 22 debtor; and 23 Sec. 101. Section 554.9620, subsection 3, Code 2024, is 24 amended to read as follows: 25 3. Debtors consent. For purposes of this section : 26 a. a debtor consents to an acceptance of collateral in 27 partial satisfaction of the obligation it secures only if 28 the debtor agrees to the terms of the acceptance in a record 29 authenticated signed after default; and 30 b. a debtor consents to an acceptance of collateral in full 31 satisfaction of the obligation it secures only if the debtor 32 agrees to the terms of the acceptance in a record authenticated 33 signed after default or the secured party: 34 (1) sends to the debtor after default a proposal that is 35 -67- SF 2389 (5) 90 da/jh/mb 67/ 84
S.F. 2389 unconditional or subject only to a condition that collateral 1 not in the possession of the secured party be preserved or 2 maintained; 3 (2) in the proposal, proposes to accept collateral in full 4 satisfaction of the obligation it secures; and 5 (3) does not receive a notification of objection 6 authenticated signed by the debtor within twenty days after the 7 proposal is sent. 8 Sec. 102. Section 554.9620, subsection 6, paragraph b, Code 9 2024, is amended to read as follows: 10 b. within any longer period to which the debtor and all 11 secondary obligors have agreed in an agreement to that effect 12 entered into and authenticated signed after default. 13 Sec. 103. Section 554.9621, subsection 1, paragraph a, Code 14 2024, is amended to read as follows: 15 a. any person from which the secured party has received, 16 before the debtor consented to the acceptance, an authenticated 17 a signed notification of a claim of an interest in the 18 collateral; 19 Sec. 104. Section 554.9624, Code 2024, is amended to read 20 as follows: 21 554.9624 Waiver. 22 1. Waiver of disposition notification. A debtor or secondary 23 obligor may waive the right to notification of disposition of 24 collateral under section 554.9611 only by an agreement to that 25 effect entered into and authenticated signed after default. 26 2. Waiver of mandatory disposition. A debtor may waive 27 the right to require disposition of collateral under section 28 554.9620, subsection 5 , only by an agreement to that effect 29 entered into and authenticated signed after default. 30 3. Waiver of redemption right. Except in a consumer-goods 31 transaction, a debtor or secondary obligor may waive the 32 right to redeem collateral under section 554.9623 only by an 33 agreement to that effect entered into and authenticated signed 34 after default. 35 -68- SF 2389 (5) 90 da/jh/mb 68/ 84
S.F. 2389 Sec. 105. Section 554.9628, subsection 1, unnumbered 1 paragraph 1, Code 2024, is amended to read as follows: 2 Unless Subject to subsection 6, unless a secured party knows 3 that a person is a debtor or obligor, knows the identity of the 4 person, and knows how to communicate with the person: 5 Sec. 106. Section 554.9628, subsection 6, Code 2024, is 6 amended by striking the subsection and inserting in lieu 7 thereof the following: 8 6. Exception: limitation of liability under subsections 9 1 and 2 does not apply. Subsections 1 and 2 do not apply to 10 limit the liability of a secured party to a person if, at the 11 time the secured party obtains control of collateral that is 12 a controllable account, controllable electronic record, or 13 controllable payment intangible or at the time the security 14 interest attaches to the collateral, whichever is later: 15 a. the person is a debtor or obligor; and 16 b. the secured party knows that the information in 17 subsection 2, paragraph a , subparagraph (1), (2), or (3), 18 relating to the person is not provided by the collateral, a 19 record attached to or logically associated with the collateral, 20 or the system in which the collateral is recorded. 21 PART I 22 ARTICLE 12 23 FUNDS TRANSFERS 24 Sec. 107. Section 554.12103, Code 2024, is amended to read 25 as follows: 26 554.12103 Payment order definitions. 27 1. In this Article unless the context otherwise requires : 28 1. a. Payment order means an instruction of a sender to 29 a receiving bank, transmitted orally , electronically, or in 30 writing or in a record , to pay, or to cause another bank to pay, 31 a fixed or determinable amount of money to a beneficiary if all 32 of the following apply : 33 (1) The instruction does not state a condition to payment to 34 the beneficiary other than time of payment . , 35 -69- SF 2389 (5) 90 da/jh/mb 69/ 84
S.F. 2389 (2) The receiving bank is to be reimbursed by debiting an 1 account of, or otherwise receiving payment from, the sender . , 2 and 3 (3) The instruction is transmitted by the sender directly to 4 the receiving bank or to an agent, funds-transfer system, or 5 communication system for transmittal to the receiving bank. 6 b. A payment order instructing more than one payment to be 7 made to a beneficiary is a separate payment order with respect 8 to each payment. 9 c. A payment order is issued when it is sent to the 10 receiving bank. 11 2. b. Beneficiary means the person to be paid by the 12 beneficiarys bank. 13 3. c. Beneficiarys bank means the bank identified in a 14 payment order in which an account of the beneficiary is to be 15 credited pursuant to the order or which otherwise is to make 16 payment to the beneficiary if the order does not provide for 17 payment to an account. 18 4. d. Receiving bank means the bank to which the senders 19 instruction is addressed. 20 5. e. Sender means the person giving the instruction to 21 the receiving bank. 22 2. If an instruction complying with subsection 1, paragraph 23 a , is to make more than one payment to a beneficiary, the 24 instruction is a separate payment order with respect to each 25 payment. 26 3. A payment order is issued when it is sent to the 27 receiving bank. 28 Sec. 108. Section 554.12201, Code 2024, is amended to read 29 as follows: 30 554.12201 Security procedure. 31 Security procedure means a procedure established by 32 agreement between a customer and a receiving bank for the 33 purpose of verifying that a payment order or communication 34 amending or canceling a payment order is that of the customer, 35 -70- SF 2389 (5) 90 da/jh/mb 70/ 84
S.F. 2389 or detecting error in the transmission or the content of the 1 payment order or communication. A security procedure may 2 impose an obligation on the receiving bank or the customer and 3 may require the use of algorithms or other codes, identifying 4 words , or numbers, symbols, sounds, biometrics, encryption, 5 callback procedures, or similar security devices. Comparison 6 of a signature on a payment order or communication with an 7 authorized specimen signature of the customer or requiring a 8 payment order to be sent from a known electronic mail address, 9 internet protocol address, or telephone number is not by itself 10 a security procedure. 11 Sec. 109. Section 554.12202, subsections 2 and 3, Code 2024, 12 are amended to read as follows: 13 2. If a bank and its customer have agreed that the 14 authenticity of payment orders issued to the bank in the 15 name of the customer as sender will be verified pursuant 16 to a security procedure, a payment order received by the 17 receiving bank is effective as the order of the customer, 18 whether or not authorized, if the security procedure is a 19 commercially reasonable method of providing security against 20 unauthorized payment orders, and the bank proves that it 21 accepted the payment order in good faith and in compliance with 22 the banks obligations under the security procedure and any 23 written agreement or instruction of the customer , evidenced 24 by a record, restricting acceptance of payment orders issued 25 in the name of the customer. The bank is not required to 26 follow an instruction that violates a written an agreement 27 with the customer , evidenced by a record, or notice of which 28 is not received at a time and in a manner affording the bank a 29 reasonable opportunity to act on it before the payment order 30 is accepted. 31 3. Commercial reasonableness of a security procedure is 32 a question of law to be determined by considering the wishes 33 of the customer expressed to the bank, the circumstances 34 of the customer known to the bank, including the size, 35 -71- SF 2389 (5) 90 da/jh/mb 71/ 84
S.F. 2389 type, and frequency of payment orders normally issued by 1 the customer to the bank, alternative security procedures 2 offered to the customer, and security procedures in general 3 use by customers and receiving banks similarly situated. A 4 security procedure is deemed to be commercially reasonable if 5 the security procedure was chosen by the customer after the 6 bank offered, and the customer refused, a security procedure 7 that was commercially reasonable for that customer, and the 8 customer expressly agreed in writing a record to be bound by 9 any payment order, whether or not authorized, issued in the 10 customers name and accepted by the bank in compliance with the 11 banks obligations under the security procedure chosen by the 12 customer. 13 Sec. 110. Section 554.12203, Code 2024, is amended to read 14 as follows: 15 554.12203 Unenforceability of certain verified payment 16 orders. 17 1. If an accepted payment order is not , under section 18 554.12202, subsection 1, an authorized order of a customer 19 identified as sender pursuant to section 554.12202, subsection 20 1 , but is effective as an order of the customer pursuant to 21 section 554.12202, subsection 2 , the following rules apply: 22 1. a. By express written agreement, evidenced by a record 23 the receiving bank may limit the extent to which it is entitled 24 to enforce or retain payment of the payment order. 25 2. b. The receiving bank is not entitled to enforce or 26 retain payment of the payment order if the customer proves 27 that the order was not caused, directly or indirectly, by a 28 person entrusted at any time with the authority to act for 29 the customer with respect to payment orders or the security 30 procedure, or who obtained access to transmitting facilities 31 of the customer or who obtained, from a source controlled by 32 the customer and without authority of the receiving bank, 33 information facilitating breach of the security procedure, 34 regardless of how the information was obtained or whether the 35 -72- SF 2389 (5) 90 da/jh/mb 72/ 84
S.F. 2389 customer was at fault. Information includes any access device, 1 computer software, or similar items. 2 3. 2. This section applies to amendments of payment orders 3 in the same manner it applies to payment orders. 4 Sec. 111. Section 554.12207, subsection 3, paragraph b, 5 Code 2024, is amended to read as follows: 6 b. If the originator is not a bank and proves that the 7 person identified by number was not entitled to receive payment 8 from the originator, the originator is not obligated obliged 9 to pay the originators its order unless the originators 10 bank proves that the originator had notice , before acceptance 11 by of the originators bank of the originators order, had 12 notice that payment of a payment order issued by the originator 13 might be made by the beneficiarys bank on the basis of an 14 identifying or bank account number even if it identifies a 15 person different from the named beneficiary. Proof of notice 16 may be made by any admissible evidence. The originators bank 17 satisfies the burden of proof if it proves that the originator , 18 before the payment was accepted, signed a writing record 19 stating the information to which the notice relates before the 20 payment order was accepted . 21 Sec. 112. Section 554.12208, subsection 2, paragraph b, 22 Code 2024, is amended to read as follows: 23 b. If the sender is not a bank and the receiving bank proves 24 that the sender, before the payment order was accepted, had 25 notice that the receiving bank might rely on the number as the 26 proper identification of the intermediary or beneficiarys 27 bank even if it identifies a person different from the bank 28 identified by name, the rights and obligations of the sender 29 and the receiving bank are governed by paragraph a , as though 30 the sender were a bank. Proof of notice may be made by any 31 admissible evidence. The receiving bank satisfies the burden 32 of proof if it proves that the sender, before the payment order 33 was accepted, signed a writing record stating the information 34 to which the notice relates. 35 -73- SF 2389 (5) 90 da/jh/mb 73/ 84
S.F. 2389 Sec. 113. Section 554.12210, subsection 1, Code 2024, is 1 amended to read as follows: 2 1. A payment order is rejected by the receiving bank 3 by a notice of rejection transmitted to the sender orally , 4 electronically, or in writing a record . A notice of rejection 5 need not use any particular words and is sufficient if the 6 notice indicates that the receiving bank is rejecting the order 7 or will not execute or pay the order. Rejection is effective 8 when the notice is given if transmission is by a means that is 9 reasonable under the circumstances. If notice of rejection is 10 given by a means that is not reasonable, rejection is effective 11 when the notice is received. If an agreement of the sender 12 and receiving bank establishes the means to be used to reject 13 a payment order, any means complying with the agreement is 14 reasonable and any means not complying is not reasonable unless 15 no significant delay in receipt of the notice resulted from the 16 use of the noncomplying means. 17 Sec. 114. Section 554.12211, subsection 1, Code 2024, is 18 amended to read as follows: 19 1. A communication of the sender of a payment order 20 canceling or amending the order may be transmitted to the 21 receiving bank orally , electronically, or in writing a record . 22 If a security procedure is in effect between the sender and 23 the receiving bank, the communication is not effective to 24 cancel or amend the order unless the communication is verified 25 pursuant to the security procedure or the bank agrees to the 26 cancellation or amendment. 27 Sec. 115. Section 554.12305, subsections 3 and 4, Code 2024, 28 are amended to read as follows: 29 3. In addition to the amounts payable under subsections 30 1 and 2 , damages, including consequential damages, are 31 recoverable to the extent provided in an express written 32 agreement of the receiving bank , evidenced by a record . 33 4. If a receiving bank fails to execute a payment order 34 that the receiving bank was obligated by express agreement 35 -74- SF 2389 (5) 90 da/jh/mb 74/ 84
S.F. 2389 to execute, the receiving bank is liable to the sender for 1 the senders expenses in the transaction and for incidental 2 expenses and interest losses resulting from the failure to 3 execute. Additional damages, including consequential damages, 4 are recoverable to the extent provided in an express written 5 agreement of the receiving bank, evidenced by a record, but are 6 not otherwise recoverable. 7 PART J 8 ARTICLE 13 9 LEASES 10 Sec. 116. Section 554.13102, Code 2024, is amended to read 11 as follows: 12 554.13102 Scope. 13 1. This Article applies to any transaction, regardless of 14 form, that creates a lease and, in the case of a hybrid lease, 15 it applies to the extent provided in subsection 2 . 16 2. In a hybrid lease: 17 a. if the lease-of-goods aspects do not predominate: 18 (1) only the provisions of this Article which relate 19 primarily to the lease-of-goods aspects of the transaction 20 apply, and the provisions that relate primarily to the 21 transaction as a whole do not apply; 22 (2) section 554.13209 applies if the lease is a finance 23 lease; and 24 (3) section 554.13407 applies to the promises of the lessee 25 in a finance lease to the extent the promises are consideration 26 for the right to possession and use of the leased goods; and 27 b. if the lease-of-goods aspects predominate, this Article 28 applies to the transaction, but does not preclude application 29 in appropriate circumstances of other law to aspects of the 30 lease which do not relate to the lease of goods. 31 Sec. 117. Section 554.13103, subsection 1, Code 2024, is 32 amended by adding the following new paragraph: 33 NEW PARAGRAPH . 0i. Hybrid lease means a single 34 transaction involving a lease of goods and: 35 -75- SF 2389 (5) 90 da/jh/mb 75/ 84
S.F. 2389 (1) the provision of services; 1 (2) a sale of other goods; or 2 (3) a sale, lease, or license of property other than goods. 3 Sec. 118. Section 554.13107, Code 2024, is amended to read 4 as follows: 5 554.13107 Waiver or renunciation of claim or right after 6 default. 7 Any claim or right arising out of an alleged default or 8 breach of warranty may be discharged in whole or in part 9 without consideration by a written waiver or renunciation in a 10 signed and record delivered by the aggrieved party. 11 Sec. 119. Section 554.13201, subsections 1, 3, and 5, Code 12 2024, are amended to read as follows: 13 1. A lease contract is not enforceable by way of action or 14 defense unless: 15 a. the total payments to be made under the lease contract, 16 excluding payments for options to renew or buy, are less than 17 one thousand dollars; or 18 b. there is a writing record , signed by the party against 19 whom enforcement is sought or by that partys authorized agent, 20 sufficient to indicate that a lease contract has been made 21 between the parties and to describe the goods leased and the 22 lease term. 23 3. A writing record is not insufficient because it omits or 24 incorrectly states a term agreed upon, but the lease contract 25 is not enforceable under subsection 1 , paragraph b , beyond 26 the lease term and the quantity of goods shown in the writing 27 record . 28 5. The lease term under a lease contract referred to in 29 subsection 4 is: 30 a. if there is a writing record signed by the party against 31 whom enforcement is sought or by that partys authorized agent 32 specifying the lease term, the term so specified; 33 b. if the party against whom enforcement is sought admits in 34 that partys pleading, testimony, or otherwise in court a lease 35 -76- SF 2389 (5) 90 da/jh/mb 76/ 84
S.F. 2389 term, the term so admitted; or 1 c. a reasonable lease term. 2 Sec. 120. Section 554.13202, Code 2024, is amended to read 3 as follows: 4 554.13202 Final written expression parol or extrinsic 5 evidence. 6 Terms with respect to which the confirmatory memoranda of 7 the parties agree or which are otherwise set forth in a writing 8 record intended by the parties as a final expression of their 9 agreement with respect to such terms as are included therein 10 may not be contradicted by evidence of any prior agreement or 11 of a contemporaneous oral agreement but may be explained or 12 supplemented: 13 1. by course of dealing or usage of trade or by course of 14 performance; and 15 2. by evidence of consistent additional terms unless the 16 court finds the writing record to have been intended also as a 17 complete and exclusive statement of the terms of the agreement. 18 Sec. 121. Section 554.13203, Code 2024, is amended to read 19 as follows: 20 554.13203 Seals inoperative. 21 The affixing of a seal to a writing record evidencing a 22 lease contract or an offer to enter into a lease contract does 23 not render the writing record a sealed instrument and the law 24 with respect to sealed instruments does not apply to the lease 25 contract or offer. 26 Sec. 122. Section 554.13205, Code 2024, is amended to read 27 as follows: 28 554.13205 Firm offers. 29 An offer by a merchant to lease goods to or from another 30 person in a signed writing record that by its terms gives 31 assurance it will be held open is not revocable, for lack of 32 consideration, during the time stated or, if no time is stated, 33 for a reasonable time, but in no event may the period of 34 irrevocability exceed three months. Any such term of assurance 35 -77- SF 2389 (5) 90 da/jh/mb 77/ 84
S.F. 2389 on a form supplied by the offeree must be separately signed by 1 the offeror. 2 Sec. 123. Section 554.13208, subsection 2, Code 2024, is 3 amended to read as follows: 4 2. A signed lease agreement that excludes modification or 5 rescission except by a signed writing may record shall not 6 be otherwise modified or rescinded, but, except as between 7 merchants, such a requirement on a form supplied by a merchant 8 must be separately signed by the other party. 9 PART K 10 ARTICLE 15 11 TRANSITIONAL PROVISIONS 12 Sec. 124. NEW SECTION . 554.15101 Short title. 13 This Article may be cited as the Transitional Provisions for 14 Uniform Commercial Code Amendments (2022). 15 Sec. 125. NEW SECTION . 554.15102 Definitions. 16 1. Article 15 definitions. In this Article: 17 a. Article 14 means Article 14 of this chapter. 18 b. Article 14 property means a controllable account, 19 controllable electronic record, or controllable payment 20 intangible. 21 2. Definitions in other Articles. The following definitions 22 in other Articles of this chapter apply to this Article: 23 a. Controllable account ... Section 554.9102. 24 b. Controllable electronic record ... Section 554.14102. 25 c. Controllable payment intangible ... Section 554.9102. 26 d. Electronic money ... Section 554.9102. 27 e. Financing statement ... Section 554.9102. 28 3. Article 1 definitions and principles. Article 1 contains 29 general definitions and principles of construction and 30 interpretation applicable throughout this Article. 31 Sec. 126. NEW SECTION . 554.15201 Saving clause. 32 Except as provided in part 3, a transaction validly entered 33 into before the effective date of this Act and the rights, 34 duties, and interests flowing from the transaction remain valid 35 -78- SF 2389 (5) 90 da/jh/mb 78/ 84
S.F. 2389 thereafter and may be terminated, completed, consummated, 1 or enforced as required or permitted by law other than this 2 chapter or, if applicable, this chapter, as though this Act had 3 not taken effect. 4 Sec. 127. NEW SECTION . 554.15301 Saving clause. 5 1. Pre-effective-date transaction, lien, or interest. Except 6 as provided in this part, Article 9, as amended by this Act, 7 and Article 14, as amended by this Act, apply to a transaction, 8 lien, or other interest in property, even if the transaction, 9 lien, or interest was entered into, created, or acquired before 10 the effective date of this Act. 11 2. Continuing validity. Except as provided in subsection 3 12 and sections 554.15302 through 554.15306: 13 a. a transaction, lien, or interest in property that 14 was validly entered into, created, or transferred before 15 the effective date of this Act and was not governed by this 16 chapter, but would be subject to Article 9 as amended by this 17 Act or Article 14, as amended by this Act, if it had been 18 entered into, created, or transferred on or after the effective 19 date of this Act, including the rights, duties, and interests 20 flowing from the transaction, lien, or interest, remains valid 21 on and after the effective date of this Act; and 22 b. the transaction, lien, or interest may be terminated, 23 completed, consummated, and enforced as required or permitted 24 by this Act or by the law that would apply if this Act had not 25 taken effect. 26 3. Pre-effective-date proceeding. This Act does not affect 27 an action, case, or proceeding commenced before the effective 28 date of this Act. 29 Sec. 128. NEW SECTION . 554.15302 Security interest 30 perfected before effective date. 31 1. Continuing perfection: perfection requirements 32 satisfied. A security interest that is enforceable and 33 perfected immediately before the effective date of this Act 34 is a perfected security interest under this Act if, on the 35 -79- SF 2389 (5) 90 da/jh/mb 79/ 84
S.F. 2389 effective date of this Act, the requirements for enforceability 1 and perfection under this Act are satisfied without further 2 action. 3 2. Continuing perfection: enforceability or perfection 4 requirements not satisfied. If a security interest is 5 enforceable and perfected immediately before the effective 6 date of this Act, but the requirements for enforceability or 7 perfection under this Act are not satisfied on the effective 8 date of this Act, the security interest: 9 a. is a perfected security interest until the earlier of 10 the time perfection would have ceased under the law in effect 11 immediately before the effective date of this Act or July 1, 12 2025; 13 b. remains enforceable thereafter only if the security 14 interest satisfies the requirements for enforceability under 15 section 554.9203, as amended by this Act, before July 1, 2025; 16 and 17 c. remains perfected thereafter only if the requirements 18 for perfection under this Act are satisfied before the time 19 specified in paragraph a . 20 Sec. 129. NEW SECTION . 554.15303 Security interest 21 unperfected before effective date. 22 A security interest that is enforceable immediately before 23 the effective date of this Act but is unperfected at that time: 24 1. remains an enforceable security interest until July 1, 25 2025; 26 2. remains enforceable thereafter if the security interest 27 becomes enforceable under section 554.9203, as amended by this 28 Act, on the effective date of this Act or before July 1, 2025; 29 and 30 3. becomes perfected: 31 a. without further action, on the effective date of this Act 32 if the requirements for perfection under this Act are satisfied 33 before or at that time; or 34 b. when the requirements for perfection are satisfied if the 35 -80- SF 2389 (5) 90 da/jh/mb 80/ 84
S.F. 2389 requirements are satisfied after that time. 1 Sec. 130. NEW SECTION . 554.15304 Effectiveness of actions 2 taken before effective date. 3 1. Pre-effective-date action; attachment and perfection 4 before July 1, 2025. If action, other than the filing of a 5 financing statement, is taken before the effective date of this 6 Act and this action would have resulted in perfection of the 7 security interest had the security interest become enforceable 8 before the effective date of this Act, this action is effective 9 to perfect a security interest that attaches under this Act 10 before July 1, 2025. An attached security interest becomes 11 unperfected on July 1, 2025, unless the security interest 12 becomes a perfected security interest under this Act before 13 July 1, 2025. 14 2. Pre-effective-date filing. The filing of a financing 15 statement before the effective date of this Act is effective 16 to perfect a security interest on the effective date of this 17 Act to the extent the filing would satisfy the requirements for 18 perfection under this Act. 19 3. Pre-effective-date enforceability action. The taking of 20 an action before the effective date of this Act is sufficient 21 for the enforceability of a security interest on the effective 22 date of this Act if this action would satisfy the requirements 23 for enforceability under this Act. 24 Sec. 131. NEW SECTION . 554.15305 Priority. 25 1. Determination of priority. Subject to subsections 2 and 26 3, this Act determines the priority of conflicting claims to 27 collateral. 28 2. Established priorities. Subject to subsection 3, if the 29 priorities of claims to collateral were established before the 30 effective date of this Act, Article 9, as in effect before the 31 effective date of this Act, determines priority. 32 3. Determination of certain priorities on July 1, 2025. On 33 July 1, 2025, to the extent the priorities determined by 34 Article 9, as amended by this Act, modify the priorities 35 -81- SF 2389 (5) 90 da/jh/mb 81/ 84
S.F. 2389 established before the effective date of this Act, the 1 priorities of claims to Article 14 property and electronic 2 money established before the effective date of this Act cease 3 to apply. 4 Sec. 132. NEW SECTION . 554.15306 Priority of claims when 5 priority rules of Article 9 do not apply. 6 1. Determination of priority. Subject to subsections 2 and 7 3, Article 14 determines the priority of conflicting claims to 8 Article 14 property when the priority rules of Article 9, as 9 amended by this Act, do not apply. 10 2. Established priorities. Subject to subsection 3, when 11 the priority rules of Article 9, as amended by this Act, do not 12 apply and the priorities of claims to Article 14 property were 13 established before the effective date of this Act, law other 14 than Article 14 determines priority. 15 3. Determination of certain priorities on July 1, 2025. When 16 the priority rules of Article 9, as amended by this Act, do 17 not apply, to the extent the priorities determined by this Act 18 modify the priorities established before the effective date 19 of this Act, the priorities of claims to Article 14 property 20 established before the effective date of this Act cease to 21 apply on July 1, 2025. 22 Sec. 133. DIRECTIONS TO THE CODE EDITOR ARTICLE 15 23 PARTS. The Code editor is directed to divide the provisions of 24 chapter 554, Article 15, as enacted in this division of this 25 Act, into parts as follows: 26 1. Part 1, including sections 554.15101 and 554.15102. 27 2. Part 2, including section 554.15201. 28 3. Part 3, including sections 554.15301, 554.15302, 29 554.15303, 554.15304, 554.15305, and 554.15306. 30 DIVISION II 31 DIGITAL ASSETS 32 Sec. 134. Section 554E.1, Code 2024, is amended by striking 33 the section and inserting in lieu thereof the following: 34 554E.1 Definitions. 35 -82- SF 2389 (5) 90 da/jh/mb 82/ 84
S.F. 2389 As used in this chapter, unless the context otherwise 1 requires: 2 1. Contract means the same as defined in section 554D.103. 3 2. Digital asset means any electronic record that 4 represents, evidences, or comprises economic value or economic, 5 proprietary, or access rights, is maintained or stored in or 6 as an electronic ledger or other record of transactions, or 7 is used as a medium of exchange, unit of account, method of 8 payment, or store of value. 9 3. Distributed ledger technology means an electronic 10 record that is a ledger or other record of transactions or 11 other data to which all of the following apply: 12 a. The electronic record is uniformly ordered. 13 b. The electronic record is redundantly maintained or 14 processed by or distributed over more than one computer 15 or machine to ensure the consistency, immutability, 16 decentralization, or nonrepudiation of the ledger or other 17 record of transactions or other data. 18 4. Electronic means the same as defined in section 19 554D.103. 20 5. Electronic record means the same as defined in section 21 554D.103. 22 6. Electronic services system means the county land record 23 information system, or electronic services system, created 24 under the agreement entered into under chapter 28E between the 25 counties and the Iowa county recorders association as required 26 by 2005 Iowa Acts, ch. 179, 101, as amended by 2021 Iowa Acts, 27 ch. 126, 2. 28 7. Record means the same as defined in section 554D.103. 29 8. a. Smart contract means an electronic record that is 30 an event-driven program or computerized transaction protocol 31 that runs on a distributed, decentralized, shared, and 32 replicated ledger that executes the terms of a contract. 33 b. For purposes of this subsection, executes the terms 34 of a contract may include taking, obtaining, exercising, or 35 -83- SF 2389 (5) 90 da/jh/mb 83/ 84
S.F. 2389 transferring control or custody of assets or other property. 1 9. Transaction means a sale, trade, exchange, transfer, 2 payment, or conversion of a digital asset or any other property 3 or any other action or set of actions occurring between two or 4 more persons relating to the conduct of business, commercial, 5 or governmental affairs. 6 Sec. 135. Section 554E.2, Code 2024, is amended to read as 7 follows: 8 554E.2 Classification of digital assets. 9 Digital assets are intangible personal property. 10 -84- SF 2389 (5) 90 da/jh/mb 84/ 84