Massachusetts 2025-2026 Regular Session

Massachusetts Senate Bill S684 Compare Versions

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1	1	1 of 1
2	2	SENATE DOCKET, NO. 744 FILED ON: 1/14/2025
3	3	SENATE . . . . . . . . . . . . . . No. 684
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Cynthia Stone Creem
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act relative to the Massachusetts Uniform Commercial Code.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :Cynthia Stone CreemNorfolk and Middlesex 1 of 88
16	16	SENATE DOCKET, NO. 744 FILED ON: 1/14/2025
17	17	SENATE . . . . . . . . . . . . . . No. 684
18	18	By Ms. Creem, a petition (accompanied by bill, Senate, No. 684) of Cynthia Stone Creem for
19	19	legislation relative to the Massachusetts Uniform Commercial Code. Financial Services.
20	20	The Commonwealth of Massachusetts
21	21	_______________
22	22	In the One Hundred and Ninety-Fourth General Court
23	23	(2025-2026)
24	24	_______________
25	25	An Act relative to the Massachusetts Uniform Commercial Code.
26	26	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
27	27	of the same, as follows:
28	28	1 SECTION 1. Section 1-201(b)(10) of chapter 106 of the General Laws, as appearing in
29	29	2the 2022 Official Edition, is hereby amended by (i) inserting, after the word “that”, the following
30	30	3words:-- “, based on the totality of the circumstances,”, (ii) striking out the words “Conspicuous
31	31	4terms include the following:” in that Section, and (iii) striking out subsections (A) and (B).
32	32	5 SECTION 2. Said chapter 106 is hereby amended by striking out Section 1-201(b)(15),
33	33	6and inserting in place thereof the following Section:--
34	34	7 (15) “Delivery”, with respect to an electronic document of title, means voluntary transfer
35	35	8of control and, with respect to an instrument, a tangible document of title, or an authoritative
36	36	9tangible copy of a record evidencing chattel paper, means voluntary transfer of possession.
37	37	10 SECTION 3. Section 1-201(b)(16) of said chapter 106 is hereby is hereby amended by
38	38	11inserting the following new Section at the end of Section 1-201(b):-- 2 of 88
39	39	12 (16A) “Electronic” means relating to technology having electrical, digital, magnetic,
40	40	13wireless, optical, electromagnetic, or similar capabilities.
41	41	14 SECTION 4. Section 1-201(b)(21) of said chapter 106 is hereby amended by inserting in
42	42	15subsection C, after the word “control”, the following words:-- “, other than pursuant to Section 7-
43	43	16106(g)”.
44	44	17 SECTION 5. Said chapter 106 is hereby amended by striking out Section 1-201(b)(24),
45	45	18and inserting in place thereof the following Section:--
46	46	19 (24) “Money” means a medium of exchange that is currently authorized or adopted by a
47	47	20domestic or foreign government. The term includes a monetary unit of account established by an
48	48	21intergovernmental organization, or pursuant to an agreement between two or more countries. The
49	49	22term does not include an electronic record that is a medium of exchange recorded and
50	50	23transferable in a system that existed and operated for the medium of exchange before the
51	51	24medium of exchange was authorized or adopted by the government.
52	52	25 SECTION 6. Said chapter 106 is hereby amended by striking out Section 1-201(b)(27),
53	53	26and inserting in place thereof the following Section:--
54	54	27 (27) “Person” means an individual, corporation, business trust, estate, trust, partnership,
55	55	28limited liability company, association, joint venture, government, governmental subdivision,
56	56	29agency, or instrumentality, or any other legal or commercial entity. The term includes a protected
57	57	30series, however denominated, of an entity if the protected series is established under law other
58	58	31than this chapter that limits, or limits if conditions specified under the law are satisfied, the
59	59	32ability of a creditor of the entity or of any other protected series of the entity to satisfy a claim
60	60	33from assets of the protected series. 3 of 88
61	61	34 SECTION 7. Said chapter 106 is hereby amended by striking out Section 1-201(b)(36),
62	62	35and inserting in place thereof the following Section:--
63	63	36 (36) “Send”, in connection with a record or notification, means:
64	64	37 (A) to deposit in the mail, deliver for transmission, or transmit by any other usual means
65	65	38of communication, with postage or cost of transmission provided for, addressed to any address
66	66	39reasonable under the circumstances; or
67	67	40 (B) to cause the record or notification to be received within the time it would have been
68	68	41received if properly sent under subparagraph (A).
69	69	42 SECTION 8. Said chapter 106 is hereby amended by striking out Section 1-201(b)(37),
70	70	43and inserting in place thereof the following Section:--
71	71	44 (37) “Sign” means, with present intent to authenticate or adopt a record:
72	72	45 (A) execute or adopt a tangible symbol; or
73	73	46 (B) attach to or logically associate with the record an electronic symbol, sound, or
74	74	47process.
75	75	48 “Signed”, “signing”, and “signature” have corresponding meanings.
76	76	49 SECTION 9. Section 1-204 of said chapter 106 is hereby amended by (i) striking out the
77	77	50words “and 5,” and (ii) inserting in place thereof the following words:-- “5 and 12,”.
78	78	51 SECTION 10. Section 1-301(c) of said chapter 106 is hereby further amended by (i)
79	79	52striking out the period at the end of subsection (8) and by inserting in place thereof the
80	80	53following:-- “;”, and (ii) inserting the following new section at the end of Section 1-301(c):-- 4 of 88
81	81	54 (9) Section 12-107.
82	82	55 SECTION 11. Section 1-306 of said chapter 106 is hereby amended by striking out the
83	83	56words “an authenticated” after the words “party in” and by inserting in place thereof the
84	84	57following words:-- “a signed”.
85	85	58 SECTION 12. Said chapter 106 is hereby amended by striking out Section 2-102 and
86	86	59inserting in place thereof the following Section:--
87	87	60 SECTION 2-102. Scope; Certain Security and Other Transactions Excluded from this
88	88	61Article.
89	89	62 (1) Unless the context otherwise requires, and except as provided in subsection (3), this
90	90	63Article applies to transactions in goods and, in the case of a hybrid transaction, it applies to the
91	91	64extent provided in subsection (2).
92	92	65 (2) In a hybrid transaction:
93	93	66 (a) If the sale-of-goods aspects do not predominate, only the provisions of this Article
94	94	67that relate primarily to the sale-of-goods aspects of the transaction apply, and the provisions that
95	95	68relate primarily to the transaction as a whole do not apply.
96	96	69 (b) If the sale-of-goods aspects predominate, this Article applies to the transaction but
97	97	70does not preclude application in appropriate circumstances of other law to aspects of the
98	98	71transaction that do not relate to the sale of goods.
99	99	72 (3) This Article does not: 5 of 88
100	100	73 (a) apply to a transaction that, even though in the form of an unconditional contract to sell
101	101	74or present sale, operates only to create a security interest; or
102	102	75 (b) impair or repeal a statute regulating sales to consumers, farmers, or other specified
103	103	76classes of buyers.
104	104	77 SECTION 13. Section 2-106 of said chapter 106 is hereby amended by inserting (i) in the
105	105	78title of the section, after the word “Cancellation” and before the period, the words “; Hybrid
106	106	79Transaction” and (ii) the following new clause:--
107	107	80 (5) “Hybrid transaction” means a single transaction involving a sale of goods and:
108	108	81 (a) the provision of services;
109	109	82 (b) a lease of other goods; or
110	110	83 (c) a sale, lease, or license of property other than goods.
111	111	84 SECTION 14. Section 2-201 of said chapter 106 is hereby amended by striking out
112	112	85subsection (1), and by inserting in place thereof the following new subsection:--
113	113	86 (1) Except as otherwise provided in this section a contract for the sale of goods for the
114	114	87price of $500 or more is not enforceable by way of action or defense unless there is a record
115	115	88sufficient to indicate that a contract for sale has been made between the parties and signed by the
116	116	89party against whom enforcement is sought or by the party’s authorized agent or broker. A record
117	117	90is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not
118	118	91enforceable under this subsection beyond the quantity of goods shown in the record. 6 of 88
119	119	92 SECTION 15. Section 2-201 of said chapter 106 is further amended by striking out
120	120	93subsection (2), and by and inserting in place thereof the following new subsection:--
121	121	94 (2) Between merchants if within a reasonable time a record in confirmation of the
122	122	95contract and sufficient against the sender is received and the party receiving it has reason to
123	123	96know its contents, it satisfies the requirements of subsection (1) against the party unless notice in
124	124	97a record of objection to its contents is given within 10 days after it is received.
125	125	98 SECTION 16. Section 2-202 of said chapter 106 is hereby amended by (i) striking out in
126	126	99the title of the section the word “written” after the word “final”, (ii) striking out the word
127	127	100“writing” wherever it appears in that Section and by inserting in each place thereof the following
128	128	101word:-- “record”, and (iii) inserting a colon after the word “supplemented”.
129	129	102 SECTION 17. Section 2-203 of said chapter 106 is hereby amended by striking out the
130	130	103word “writing” where it appears in that Section and by inserting in each place thereof the
131	131	104following word:-- “record”.
132	132	105 SECTION 18. Section 2-205 of said chapter 106 is hereby amended by striking out the
133	133	106word “writing” wherever it appears in that Section and by inserting in each place thereof the
134	134	107following word:-- “record”.
135	135	108 SECTION 19. Section 2-209 of said chapter 106 is hereby amended by inserting, after the
136	136	109word “writing”, the following:-- “or other signed record”.
137	137	110 SECTION 20. Section 2-607(3) of said chapter 106 is hereby amended by (i) striking out
138	138	111the word “he” after the word “after” in subsection (a) and inserting in place thereof the word “it”, 7 of 88
139	139	112and (ii) striking out the words “such a” after the word “of” in subsection (b) and inserting in
140	140	113place thereof the following word:-- “the”.
141	141	114 SECTION 21. Section 2-607(5) of said chapter 106 is hereby amended by striking out the
142	142	115word “he” after the word “defend” in that Section, and by inserting in place thereof the
143	143	116following:-- “the seller”.
144	144	117 SECTION 22. Said chapter 106 is hereby amended by striking out Section 2A-102, and
145	145	118by inserting in place thereof the following new Section:--
146	146	119 Section 2A-102. Scope.
147	147	120 (1) This Article applies to any transaction, regardless of form, that creates a lease and, in
148	148	121the case of a hybrid lease, it applies to the extent provided in subsection (2).
149	149	122 (2) In a hybrid lease:
150	150	123 (a) if the lease-of-goods aspects do not predominate:
151	151	124 (i) only the provisions of this Article which relate primarily to the lease-of-goods aspects
152	152	125of the transaction apply, and the provisions that relate primarily to the transaction as a whole do
153	153	126not apply;
154	154	127 (ii) Section 2A 209 applies if the lease is a finance lease; and
155	155	128 (iii) Section 2A-407 applies to the promises of the lessee in a finance lease to the extent
156	156	129the promises are consideration for the right to possession and use of the leased goods; and 8 of 88
157	157	130 (b) if the lease-of-goods aspects predominate, this Article applies to the transaction, but
158	158	131does not preclude application in appropriate circumstances of other law to aspects of the lease
159	159	132which do not relate to the lease of goods.
160	160	133 SECTION 23. Section 2A-103 of said chapter 106 is hereby amended by inserting at the
161	161	134end of subsection (1) the following new clause:--
162	162	135 (h.1) “Hybrid lease” means a single transaction involving a lease of goods and:
163	163	136 (i) the provision of services;
164	164	137 (ii) a sale of other goods; or
165	165	138 (iii) a sale, lease, or license of property other than goods.
166	166	139 SECTION 24. Section 2A-107 of said chapter 106 is hereby amended by (i) striking out
167	167	140the word “written” after the word “a”, (ii) inserting the words “in a” after the word
168	168	141“renunciation”, and (iii) striking out the word “and” after the word “signed” and inserting in
169	169	142place thereof the following:-- “record”.
170	170	143 SECTION 25. Section 2A-201 of said chapter 106 is hereby amended by striking out the
171	171	144word “writing” wherever it appears in that Section and by inserting in each place thereof the
172	172	145following:-- “record”.
173	173	146 SECTION 26. Section 2A-202 of said chapter 106 is hereby amended by (i) striking out
174	174	147the word “written” after the word “final” in the title of that Section, and (ii) striking out the word
175	175	148“writing” wherever it appears in that Section and inserting in each place thereof the following:--
176	176	149“record”. 9 of 88
177	177	150 SECTION 27. Section 2A-203 of said chapter 106 is hereby amended by striking out the
178	178	151word “writing” wherever it appears in that Section and by inserting in each place thereof the
179	179	152following:-- “record”.
180	180	153 SECTION 28. Section 2A-205 of said chapter 106 is hereby amended by striking out the
181	181	154word “writing” where it appears in that Section and by inserting in each place thereof the
182	182	155following:-- “record”.
183	183	156 SECTION 29. Section 2A-208 of said chapter 106 is hereby amended by striking out the
184	184	157word “writing” where it appears in that Section and by inserting in each place thereof the
185	185	158following:-- “record”.
186	186	159 SECTION 30. Section 3-103(a) of chapter 106 of the General Laws is hereby amended
187	187	160by (i) striking the definition out of the definition of “good faith”, (ii) inserting the following
188	188	161definitions in alphabetical order and (iii) renumbering all of the definitions in numerical order:--
189	189	162 (2) “Consumer account” means an account established by an individual primarily for
190	190	163personal, family, or household purposes.
191	191	164 (3) “Consumer transaction” means a transaction in which an individual incurs an
192	192	165obligation primarily for personal, family, or household purposes.
193	193	166 (10) “Principal obligor,” with respect to an instrument, means the accommodated party or
194	194	167any other party to the instrument against whom a secondary obligor has recourse under this
195	195	168Article.
196	196	169 (13) “Record” means information that is inscribed on a tangible medium or that is stored
197	197	170in an electronic or other medium and is retrievable in perceivable form. 10 of 88
198	198	171 (15) “Remotely-created consumer item” means an item drawn on a consumer account,
199	199	172which is not created by the payor bank and does not bear a handwritten signature purporting to
200	200	173be the signature of the drawer.
201	201	174 (16) “Secondary obligor,” with respect to an instrument, means (i) an indorser or an
202	202	175accommodation party, (ii) a drawer having the obligation described in Section 3-414(d), or (iii)
203	203	176any other party to the instrument that has recourse against another party to the instrument
204	204	177pursuant to Section 3-116(b).
205	205	178 SECTION 31. Section 3-103(b) of said chapter 106 is hereby amended by inserting a
206	206	179reference to a definition for “Account” which appears in “Section 4-104”.
207	207	180 SECTION 32. Section 3-104(a)(3) of said chapter 106 is hereby amended by striking the
208	208	181word “or” following “collateral,” in subsection (ii), by inserting a comma after the word
209	209	182“obligor” in subsection (iii) and by inserting the following new clauses at the end of Section 3-
210	210	183104(a):--
211	211	184 (iv) a term that specifies the law that governs the promise or order, or
212	212	185 (v) an undertaking to resolve in a specified forum a dispute concerning the promise or
213	213	186order.
214	214	187 SECTION 33: Section 3-105(a) of said chapter is hereby amended by inserting before the
215	215	188words “the first”, the following:--“(1)”, and by inserting after the word “person”, the following:--
216	216	189“; or”.
217	217	190 SECTION 34: Section 3-105(a) of said chapter is further amended by inserting the
218	218	191following new section after Section 3-105(a)(1):-- 11 of 88
219	219	192 (2) if agreed by the payee, the first transmission by the drawer to the payee of an image
220	220	193of an item and information derived from the item that enables the depositary bank to collect the
221	221	194item by transferring or presenting under federal law an electronic check.
222	222	195 SECTION 35. Section 3-106 of said chapter 106 is hereby amended by striking out the
223	223	196word “writing” wherever it appears in that Section and by inserting in each place thereof the
224	224	197following word:-- “record”.
225	225	198 SECTION 36. Section 3-116(b) of said chapter 106 is hereby amended by striking out the
226	226	199words “3-419(e)” in that Section and by inserting in place thereof the following words:-- “3-
227	227	200419(f)”.
228	228	201 SECTION 37. Section 3-116(c) of said chapter 106 is hereby repealed.
229	229	202 SECTION 38. Section 3-119 of said chapter 106 is hereby amended by striking out the
230	230	203word “written” in that Section and by inserting, after the word “litigation”, the following words:-
231	231	204- “in a record”.
232	232	205 SECTION 39. Section 3-305(a) of said chapter 106 is hereby amended by striking out the
233	233	206words “stated in subsection (b)” in that Section and by inserting in place thereof the following
234	234	207words:-- “otherwise provided in this section”.
235	235	208 SECTION 40. Section 3-305 of said chapter 106 is hereby amended by inserting the
236	236	209following new subsections at the end of Section 3-305:--
237	237	210 (e) In a consumer transaction, if law other than this Article requires that an instrument
238	238	211include a statement to the effect that the rights of a holder or transferee are subject to a claim or 12 of 88
239	239	212defense that the issuer could assert against the original payee and the instrument does not include
240	240	213such a statement:
241	241	214 (1) the instrument has the same effect as if the instrument included such a statement;
242	242	215 (2) the issuer may assert against the holder or transferee all claims and defenses that
243	243	216would have been available if the instrument included such a statement; and
244	244	217 (3) the extent to which the claims may be asserted against the holder or transferee is
245	245	218determined as if the instrument included such a statement.
246	246	219 (f) This section is subject to law other than this Article which establishes a different rule
247	247	220for consumer transactions.
248	248	221 SECTION 41. Said chapter 106 is hereby amended by striking out Section 3-309(a), and
249	249	222inserting in place thereof the following Section:--
250	250	223 (a) A person not in possession of an instrument is entitled to enforce the instrument if:
251	251	224 (1) the person seeking to enforce the instrument:
252	252	225 (A) was entitled to enforce the instrument when loss of possession occurred; or
253	253	226 (B) has directly or indirectly acquired ownership of the instrument from a person that was
254	254	227entitled to enforce the instrument when loss of possession occurred;
255	255	228 (2) the loss of possession was not the result of a transfer by the person or a lawful seizure;
256	256	229and 13 of 88
257	257	230 (3) the person cannot reasonably obtain possession of the instrument because the
258	258	231instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful
259	259	232possession of an unknown person or a person that cannot be found or is not amenable to service
260	260	233of process.
261	261	234 SECTION 42. Section 3-312(a)(3) of said chapter 106 is hereby amended by striking out
262	262	235the word “written” in that Section and by inserting, after the word “made”, the following words:-
263	263	236- “in a record”.
264	264	237 SECTION 43: Section 3-401 of said chapter is hereby amended by striking out the word
265	265	238“(a)” before the words “A person”, and by striking out section 3-401(b).
266	266	239 SECTION 44. Section 3-416(a) of said chapter 106 is hereby amended by (i) striking out
267	267	240the word “and” after the word “warrantor;” in clause (4), (ii) striking out the period at the end of
268	268	241clause (5), (iii) inserting in place thereof the following:-- “; and”, and (iv) by inserting the
269	269	242following new clause:--
270	270	243 (6) with respect to a remotely-created consumer item, that the person on whose account
271	271	244the item is drawn authorized the issuance of the item in the amount for which the item is drawn.
272	272	245 SECTION 45. Section 3-416 of said chapter 106 is hereby further amended by inserting
273	273	246the following new subsection at the end of Section 3-416:--
274	274	247 (e) A claim for breach of the warranty in subsection (a)(6) is available against a previous
275	275	248transferor of the item only to the extent that under applicable law (including the applicable
276	276	249choice-of-law principle) all previous transferors of the item made the warranty in subsection
277	277	250(a)(6). 14 of 88
278	278	251 SECTION 46. Section 3-417(a) of said chapter 106 is hereby amended by (i) striking out
279	279	252the word “and” after the word “altered;” in clause (2), (ii) striking out the period at the end of
280	280	253clause (3) and inserting in place thereof the following:-- “; and”, and (iii) by inserting the
281	281	254following new clause:--
282	282	255 (4) with respect to any remotely-created consumer item, that the person on whose account
283	283	256the item is drawn authorized the issuance of the item in the amount for which the item is drawn.
284	284	257 SECTION 47. Section 3-417 of said chapter 106 is hereby further amended by inserting
285	285	258the following new subsection at the end of Section 3-417:--
286	286	259 (g) A claim for breach of the warranty in subsection (a)(4) is available against a previous
287	287	260transferor of the item only to the extent that under applicable law (including the applicable
288	288	261choice-of-law principle) all previous transferors of the item made the warranty in subsection
289	289	262(a)(4).
290	290	263 SECTION 48. Section 3-419 of said chapter 106 is hereby amended by striking out
291	291	264subsection (e) and by inserting the following new subsections at the end of Section 3-419:--
292	292	265 (e) If the signature of a party to an instrument is accompanied by words indicating that
293	293	266the party guarantees payment or the signer signs the instrument as an accommodation party in
294	294	267some other manner that does not unambiguously indicate an intention to guarantee collection
295	295	268rather than payment, the signer is obliged to pay the amount due on the instrument to a person
296	296	269entitled to enforce the instrument in the same circumstances as the accommodated party would
297	297	270be obliged, without prior resort to the accommodated party by the person entitled to enforce the
298	298	271instrument. 15 of 88
299	299	272 (f) An accommodation party who pays the instrument is entitled to reimbursement from
300	300	273the accommodated party and is entitled to enforce the instrument against the accommodated
301	301	274party. In proper circumstances, an accommodation party may obtain relief that requires the
302	302	275accommodated party to perform its obligations on the instrument. An accommodated party that
303	303	276pays the instrument has no right of recourse against, and is not entitled to contribution from, an
304	304	277accommodation party.
305	305	278 SECTION 49. Said chapter 106 is hereby amended by striking out Section 3-602, and
306	306	279inserting in place thereof the following Section:--
307	307	280 SECTION 3-602. PAYMENT.
308	308	281 (a) Subject to subsection (e), an instrument is paid to the extent payment is made by or on
309	309	282behalf of a party obliged to pay the instrument, and to a person entitled to enforce the instrument.
310	310	283 (b) Subject to subsection (e), a note is paid to the extent payment is made by or on behalf
311	311	284of a party obliged to pay the note to a person that formerly was entitled to enforce the note only
312	312	285if at the time of the payment the party obliged to pay has not received adequate notification that
313	313	286the note has been transferred and that payment is to be made to the transferee. A notification is
314	314	287adequate only if it is signed by the transferor or the transferee, reasonably identifies the
315	315	288transferred note, and provides an address at which payments subsequently are to be made. Upon
316	316	289request, a transferee shall seasonably furnish reasonable proof that the note has been transferred.
317	317	290Unless the transferee complies with the request, a payment to the person that formerly was
318	318	291entitled to enforce the note is effective for purposes of subsection (c) even if the party obliged to
319	319	292pay the note has received a notification under this subsection. 16 of 88
320	320	293 (c) Subject to subsection (e), to the extent of a payment under subsections (a) and (b), the
321	321	294obligation of the party obliged to pay the instrument is discharged even if payment is made with
322	322	295knowledge of a claim to the instrument under Section 3-306 by another person.
323	323	296 (d) Subject to subsection (e), a transferee, or any party that has acquired rights in the
324	324	297instrument directly or indirectly from a transferee, including a party that has rights as a holder in
325	325	298due course, is deemed to have notice of any payment that is made under subsection (b) after the
326	326	299note is transferred to the transferee but before the party obliged to pay the note receives adequate
327	327	300notification of the transfer.
328	328	301 (e) The obligation of a party to pay an instrument is not discharged under subsections (a)
329	329	302through (d) if:
330	330	303 (1) a claim to the instrument under Section 3-306 is enforceable against the party
331	331	304receiving payment and (i) payment is made with knowledge by the payor that payment is
332	332	305prohibited by injunction or similar process of a court of competent jurisdiction, or (ii) in the case
333	333	306of an instrument other than a cashier's check, teller's check, or certified check, the party making
334	334	307payment accepted, from the person having a claim to the instrument, indemnity against loss
335	335	308resulting from refusal to pay the person entitled to enforce the instrument; or
336	336	309 (2) the person making payment knows that the instrument is a stolen instrument and pays
337	337	310a person it knows is in wrongful possession of the instrument.
338	338	311 SECTION 50. Section 3-604(a) of said chapter 106 is hereby amended by striking out the
339	339	312word “writing” in that Section and by inserting in place thereof the following word:-- “record”. 17 of 88
340	340	313 SECTION 51: Section 3-604(a)(ii) of said chapter 106 is hereby amended by inserting,
341	341	314after the word “record.” the following words:--
342	342	315 The obligation of a party to pay a check is not discharged solely by destruction of the
343	343	316check in connection with a process in which information is extracted from the check and an
344	344	317image of the check is made and, subsequently, the information and image are transmitted for
345	345	318payment.
346	346	319 SECTION 52. Section 3-604 of said chapter 106 is further amended by striking
347	347	320subsection (c).
348	348	321 SECTION 53. Said chapter 106 is hereby amended by striking out Section 3-605, and
349	349	322inserting in place thereof the following Section:--
350	350	323 SECTION 3-605. DISCHARGE OF SECONDARY OBLIGORS.
351	351	324 (a) If a person entitled to enforce an instrument releases the obligation of a principal
352	352	325obligor in whole or in part and another party to the instrument is a secondary obligor with respect
353	353	326to the obligation of that principal obligor, the following rules apply:
354	354	327 (1) Any obligations of the principal obligor to the secondary obligor with respect to any
355	355	328previous payment by the secondary obligor are not affected. Unless the terms of the release
356	356	329preserve the secondary obligor's recourse, the principal obligor is discharged, to the extent of the
357	357	330release, from any other duties to the secondary obligor under this Article.
358	358	331 (2) Unless the terms of the release provide that the person entitled to enforce the
359	359	332instrument retains the right to enforce the instrument against the secondary obligor, the
360	360	333secondary obligor is discharged to the same extent as the principal obligor from any unperformed 18 of 88
361	361	334portion of its obligation on the instrument. If the instrument is a check and the obligation of the
362	362	335secondary obligor is based on an indorsement of the check, the secondary obligor is discharged
363	363	336without regard to the language or circumstances of the discharge or other release.
364	364	337 (3) If the secondary obligor is not discharged under paragraph (2), the secondary obligor
365	365	338is discharged to the extent of the value of the consideration for the release and to the extent that
366	366	339the release would otherwise cause loss to the secondary obligor.
367	367	340 (b) If a person entitled to enforce an instrument grants a principal obligor an extension of
368	368	341the time at which one or more payments are due on the instrument and another party to the
369	369	342instrument is a secondary obligor with respect to the obligation of that principal obligor, the
370	370	343following rules apply:
371	371	344 (1) Any obligations of the principal obligor to the secondary obligor with respect to any
372	372	345previous payment by the secondary obligor are not affected. Unless the terms of the extension
373	373	346preserve the secondary obligor's recourse, the extension correspondingly extends the time for
374	374	347performance of any other duties owed to the secondary obligor by the principal obligor under
375	375	348this Article.
376	376	349 (2) The secondary obligor is discharged to the extent that the extension would otherwise
377	377	350cause loss to the secondary obligor.
378	378	351 (3) To the extent that the secondary obligor is not discharged under paragraph (2), the
379	379	352secondary obligor may perform its obligations to a person entitled to enforce the instrument as if
380	380	353the time for payment had not been extended or, unless the terms of the extension provide that the
381	381	354person entitled to enforce the instrument retains the right to enforce the instrument against the 19 of 88
382	382	355secondary obligor as if the time for payment had not been extended, treat the time for
383	383	356performance of its obligations as having been extended correspondingly.
384	384	357 (c) If a person entitled to enforce an instrument agrees, with or without consideration, to a
385	385	358modification of the obligation of a principal obligor other than a complete or partial release or an
386	386	359extension of the due date and another party to the instrument is a secondary obligor with respect
387	387	360to the obligation of that principal obligor, the following rules apply:
388	388	361 (1) Any obligations of the principal obligor to the secondary obligor with respect to any
389	389	362previous payment by the secondary obligor are not affected. The modification correspondingly
390	390	363modifies any other duties owed to the secondary obligor by the principal obligor under this
391	391	364Article.
392	392	365 (2) The secondary obligor is discharged from any unperformed portion of its obligation to
393	393	366the extent that the modification would otherwise cause loss to the secondary obligor.
394	394	367 (3) To the extent that the secondary obligor is not discharged under paragraph (2), the
395	395	368secondary obligor may satisfy its obligation on the instrument as if the modification had not
396	396	369occurred or treat its obligation on the instrument as having been modified correspondingly.
397	397	370 (d) If the obligation of a principal obligor is secured by an interest in collateral, another
398	398	371party to the instrument is a secondary obligor with respect to that obligation, and a person
399	399	372entitled to enforce the instrument impairs the value of the interest in collateral, the obligation of
400	400	373the secondary obligor is discharged to the extent of the impairment. The value of an interest in
401	401	374collateral is impaired to the extent the value of the interest is reduced to an amount less than the
402	402	375amount of the recourse of the secondary obligor or the reduction in value of the interest causes
403	403	376an increase in the amount by which the amount of the recourse exceeds the value of the interest. 20 of 88
404	404	377For purposes of this subsection, impairing the value of an interest in collateral includes failure to
405	405	378obtain or maintain perfection or recordation of the interest in collateral; release of collateral
406	406	379without substitution of collateral of equal value or equivalent reduction of the underlying
407	407	380obligation; failure to perform a duty to preserve the value of collateral owed, under Article 9 or
408	408	381other law, to a debtor or other person secondarily liable; and failure to comply with applicable
409	409	382law in disposing of or otherwise enforcing the interest in collateral.
410	410	383 (e) A secondary obligor is not discharged under subsections (a)(3), (b), (c), or (d) unless
411	411	384the person entitled to enforce the instrument knows that the person is a secondary obligor or has
412	412	385notice under Section 3-419(c) that the instrument was signed for accommodation.
413	413	386 (f) A secondary obligor is not discharged under this section if the secondary obligor
414	414	387consents to the occurrence or nonoccurrence of the event or conduct that is the basis of the
415	415	388discharge or the instrument or a separate agreement of the party provides for waiver of discharge
416	416	389under this section specifically or by general language indicating that parties waive defenses
417	417	390based on suretyship or impairment of collateral. Unless the circumstances indicate otherwise,
418	418	391consent by the principal obligor to an act that would lead to a discharge under this section
419	419	392constitutes consent to that act by the secondary obligor if the secondary obligor controls the
420	420	393principal obligor or deals with the person entitled to enforce the instrument on behalf of the
421	421	394principal obligor.
422	422	395 (g) A release or extension preserves a secondary obligor's recourse if the terms of the
423	423	396release or extension provide that:
424	424	397 (1) the person entitled to enforce the instrument retains the right to enforce the instrument
425	425	398against the secondary obligor; and 21 of 88
426	426	399 (2) the recourse of the secondary obligor continues as if the release or extension had not
427	427	400been granted.
428	428	401 (h) Except as otherwise provided in subsection (i), a secondary obligor asserting
429	429	402discharge under this section has the burden of persuasion both with respect to the occurrence of
430	430	403the acts alleged to harm the secondary obligor and loss or prejudice caused by those acts.
431	431	404 (i) If the secondary obligor demonstrates prejudice caused by an impairment of its
432	432	405recourse and the circumstances of the case indicate that the amount of loss is not reasonably
433	433	406susceptible of calculation or requires proof of facts that are not ascertainable, it is presumed that
434	434	407the act impairing recourse caused a loss or impairment equal to the liability of the secondary
435	435	408obligor on the instrument. In that event, the burden of persuasion as to any lesser amount of the
436	436	409loss is on the person entitled to enforce the instrument.
437	437	410 SECTION 54. Section 4-104(b) of said chapter 106 is hereby amended by striking out the
438	438	411reference to the definition for “bank” and to the definition for “good faith”.
439	439	412 SECTION 55. Section 4-104(c) of said chapter 106 is hereby amended by inserting a
440	440	413reference to a definition for “record” which appears in “Section 3-103”, and by inserting a
441	441	414reference to a definition for “remotely-created consumer item” which appears in “Section 3-
442	442	415103”.
443	443	416 SECTION 56. Section 4A-103(a)(1) of said chapter 106 is hereby amended by (i) striking
444	444	417out the comma following the word “orally” and (ii) striking out the words “electronically, or in a
445	445	418writing” following the word “orally”, and inserting in place thereof the following:-- “or in a
446	446	419record”. 22 of 88
447	447	420 SECTION 57. Section 4A-201(ii) of said chapter 106 is hereby amended by inserting,
448	448	421following the words “A security procedure”, the following:-- “may impose an obligation on the
449	449	422receiving bank or the customer and”
450	450	423 SECTION 58. Section 4A-201(ii) of said chapter 106 is further amended by (i) striking
451	451	424out the word “or” following the word “words” and inserting in place thereof a comma, (ii)
452	452	425inserting, following the word “numbers”, the following:-- “, symbols, sounds, biometrics”, and
453	453	426(iii) inserting, following the word “customer”, the following:-- “or requiring a payment order to
454	454	427be sent from a known email address, IP address, or telephone number”
455	455	428 SECTION 59. Section 4A-202(b)(ii) of said chapter 106 is hereby amended by (i)
456	456	429inserting, following the words “in compliance with”, the following words:-- “the bank’s
457	457	430obligations under”, (ii) striking out the word “written” following the words “procedure and any”,
458	458	431(iii) inserting the words “, evidenced by a record” following the words “instruction of the
459	459	432customer”, (iv) striking out the words “a written” following the word “violates” and inserting in
460	460	433place thereof the word “an”, and (iv) inserting, following the words “agreement with a
461	461	434customer”, the following:-- “evidenced by a record”
462	462	435 SECTION 60. Section 4A-202(c)(ii) of said chapter 106 is hereby amended by (i) striking
463	463	436out the word “writing” and inserting in place thereof the following words:-- “a record”, and (ii)
464	464	437inserting, following the words “in compliance with”, the following words:-- “the bank’s
465	465	438obligations under”.
466	466	439 SECTION 61. Section 4A-203(a)(1) of said chapter 106 is hereby amended by striking
467	467	440out the word “written” in that subsection and by inserting, after the word “agreement”, the words
468	468	441“evidenced by a record”. 23 of 88
469	469	442 SECTION 62. Section 4-207(a) of said chapter 106 is hereby amended by (i) striking out
470	470	443the word “and” after the word “warrantor;” in clause (4), (ii) striking out the period at the end of
471	471	444clause (5) and inserting in place thereof the following:-- “; and” and (iii) inserting the following
472	472	445new clause:--
473	473	446 (6) with respect to any remotely-created consumer item, the person on whose account the
474	474	447item is drawn authorized the issuance of the item in the amount for which the item is drawn.
475	475	448 SECTION 63. Section 4-207 of said chapter 106 is hereby further amended by inserting
476	476	449the following new subsection at the end of Section 4-207:--
477	477	450 (f) A claim for breach of the warranty in subsection (a)(6) is available against a previous
478	478	451transferor of the item only to the extent that under applicable law (including the applicable
479	479	452choice-of-law principle) all previous transferors of the item made the warranty in subsection
480	480	453(a)(6).
481	481	454 SECTION 64. Section 4-208(a) of said chapter 106 is hereby amended by (i) striking out
482	482	455the word “and” after the word “altered;” in clause (2), (ii) striking out the period at the end of
483	483	456clause (3), and inserting in place thereof the following:-- “; and” and (iii) inserting the following
484	484	457new clause:--
485	485	458 (4) with respect to any remotely-created consumer item, the person on whose account the
486	486	459item is drawn authorized the issuance of the item in the amount for which the item is drawn.
487	487	460 SECTION 65. Section 4-208 of said chapter 106 is hereby further amended by inserting
488	488	461the following new subsection at the end of Section 4-208:-- 24 of 88
489	489	462 (g) A claim for breach of the warranty in subsection (a)(4) is available against a previous
490	490	463transferor of the item only to the extent that under applicable law (including the applicable
491	491	464choice-of-law principle) all previous transferors of the item made the warranty in subsection
492	492	465(a)(4).
493	493	466 SECTION 66. Section 4-212(a) of said chapter 106 is hereby amended by striking out the
494	494	467word “written” in that Section and by inserting in place thereof the following words:-- “record
495	495	468providing”.
496	496	469 SECTION 67. Section 4-301(a) of said chapter 106 is hereby amended by striking out the
497	497	470word “or” in clause (1), by striking out clause (2) and by inserting the following new clauses at
498	498	471the end of Section 4-301(a):--
499	499	472 (2) returns an image of the item, if the party to which the return is made has entered into
500	500	473an agreement to accept the an image as a return of the item; and the image is returned in
501	501	474accordance with that agreement; or
502	502	475 (3) sends a record providing notice of dishonor or nonpayment if the item is unavailable
503	503	476for return.
504	504	477 SECTION 68. Section 4-403(b) of said chapter 106 is hereby amended by striking out the
505	505	478word “writing” wherever it appears in that Section and by inserting in each place thereof the
506	506	479following word:-- “a record”.
507	507	480 SECTION 69. Section 4A-207(c)(2) of said chapter 106 is hereby amended by (i) striking
508	508	481out the word “writing” in that subsection and inserting in place thereof the word “record”. 25 of 88
509	509	482 SECTION 70. Section 4A-208(b)(2) of said chapter 106 is hereby amended by striking
510	510	483out the word “writing” in that Section and by inserting in place thereof the word “record”.
511	511	484 SECTION 71. Section 4A-210(a) of said chapter 106 is hereby amended by striking out
512	512	485the word “, electronically,” in that Section, and by striking out the word “writing” in that Section
513	513	486and inserting in place thereof the following words:-- “a record”.
514	514	487 SECTION 72. Section 4A-211(a) of said chapter 106 is hereby amended by striking out
515	515	488the word “, electronically,” in that Section, and by striking out the word “writing” in that Section
516	516	489and inserting in place thereof the following words:-- “a record”.
517	517	490 SECTION 73. Section 4A-305(c) of said chapter 106 is hereby amended by striking out
518	518	491the word “written”, and by inserting, following the word “bank”, the following words:--“,
519	519	492evidenced by a record”.
520	520	493 SECTION 74. Section 4A-305(d) of said chapter 106 is hereby amended by striking out
521	521	494the word “written”, and by inserting, following the words “of the receiving bank,”, the following
522	522	495words:-- “evidenced by a record,”.
523	523	496 SECTION 75. Section 5-104 of said chapter 106 is hereby amended by inserting the word
524	524	497“signed” before the word “record”, and by striking out the words “and is authenticated (i) by a
525	525	498signature or (ii) in accordance with the agreement of the parties or the standard practice referred
526	526	499to in Section 5-108(e)”.
527	527	500 SECTION 76. Section 5-116(a) of said chapter 106 is hereby amended by striking out the
528	528	501words “or otherwise authenticated” in that Section, and by striking out the words “in the manner
529	529	502provided in Section 5-104” in that Section. 26 of 88
530	530	503 SECTION 77. Section 5-116 of said chapter 106 is hereby amended by inserting the word
531	531	504“(c)” following the words “undertaking was issued.” in subsection (b), by starting a new
532	532	505paragraph with the sentence now beginning with a (c) so that the new paragraph will be
533	533	506subsection (c), by striking out the word “this” following the words “located under” in new
534	534	507subsection (c), and by inserting the word “(d)” at the end of the new subsection (c)
535	535	508 SECTION 78. Section 5-116 of said chapter 106 is hereby further amended by inserting
536	536	509the following new subsection following the new subsection (c):--
537	537	510 (d) A branch of a bank is considered to be located at the address indicated in the branch’s
538	538	511undertaking. If more than one address is indicated, the branch is considered to be located at the
539	539	512address from which the undertaking was issued.
540	540	513 SECTION 79. Section 5-116 of said chapter 106 is hereby further amended by striking
541	541	514out the word “(c)” from that Section and by inserting in place thereof the word “(e)”, by striking
542	542	515out the word “(d)” from that Section and by inserting in place thereof the word “(f)”, and by
543	543	516striking out the word “(e)” from that Section and by inserting in place thereof the word “(g)”
544	544	517 SECTION 80. Section 7-102(a)(10) of said chapter 106 is hereby amended by striking
545	545	518out the words ““Record” means information that is inscribed on a tangible medium or that is
546	546	519stored in an electronic or other medium and is retrievable in perceivable form.” and by inserting
547	547	520in place thereof the word “[Reserved.]”
548	548	521 SECTION 81. Section 7-102(a)(11) of said chapter 106 is hereby amended by striking
549	549	522out the words ““Sign” means, with present intent to authenticate or adopt a record: (A) to
550	550	523execute or adopt a tangible symbol; or (B) to attach to or logically associate with the record an
551	551	524electronic sound, symbol, or process.” and by inserting in place thereof the word “[Reserved.]”. 27 of 88
552	552	525 SECTION 82. Section 7-106(b) of said chapter 106 is hereby amended by (i) striking out
553	553	526the words “is deemed to have” in that Section and by inserting in place thereof the word “has”,
554	554	527(ii) striking out the word “assigned” in that section and by inserting in place thereof the word
555	555	528“transferred”, (iii) striking out the word “such” before the words “a manner”, and (iv) striking
556	556	529out the word “assignee” in subsection (4) of that section and by inserting in place thereof the
557	557	530word “transferee”.
558	558	531 SECTION 83. Section 7-106 of said chapter 106 is further hereby amended by inserting,
559	559	532following subsection (b), the following new subsections:--
560	560	533 (c) A system satisfies subsection (a), and a person has control of an electronic document
561	561	534of title, if an authoritative electronic copy of the document, a record attached to or logically
562	562	535associated with the electronic copy, or a system in which the electronic copy is recorded:
563	563	536 (1) enables the person readily to identify each electronic copy as either an authoritative
564	564	537copy or a nonauthoritative copy;
565	565	538 (2) enables the person readily to identify itself in any way, including by name, identifying
566	566	539number, cryptographic key, office, or account number, as the person to which each authoritative
567	567	540electronic copy was issued or transferred; and
568	568	541 (3) gives the person exclusive power, subject to subsection (d), to:
569	569	542 (A) prevent others from adding or changing the person to which each authoritative
570	570	543electronic copy has been issued or transferred; and
571	571	544 (B) transfer control of each authoritative electronic copy. 28 of 88
572	572	545 (d) Subject to subsection (e), a power is exclusive under subsection (c)(3)(A) and (B),
573	573	546even if:
574	574	547 (1) the authoritative electronic copy, a record attached to or logically associated with the
575	575	548authoritative electronic copy, or a system in which the authoritative electronic copy is recorded
576	576	549limits the use of the document of title or has a protocol that is programmed to cause a change,
577	577	550including a transfer or loss of control; or
578	578	551 (2) the power is shared with another person.
579	579	552 (e) A power of a person is not shared with another person under subsection (d)(2) and the
580	580	553person’s power is not exclusive if:
581	581	554 (1) the person can exercise the power only if the power also is exercised by the other
582	582	555person; and
583	583	556 (2) the other person:
584	584	557 (A) can exercise the power without exercise of the power by the person; or
585	585	558 (B) is the transferor to the person of an interest in the document of title.
586	586	559 (f) If a person has the powers specified in subsection (c)(3)(A) and (B), the powers are
587	587	560presumed to be exclusive.
588	588	561 (g) A person has control of an electronic document of title if another person, other than
589	589	562the transferor to the person of an interest in the document:
590	590	563 (1) has control of the document and acknowledges that it has control on behalf of the
591	591	564person; or 29 of 88
592	592	565 (2) obtains control of the document after having acknowledged that it will obtain control
593	593	566of the document on behalf of the person.
594	594	567 (h) A person that has control under this section is not required to acknowledge that it has
595	595	568control on behalf of another person.
596	596	569 (i) If a person acknowledges that it has or will obtain control on behalf of another person,
597	597	570unless the person otherwise agrees or law other than this article or Article 9 otherwise provides,
598	598	571the person does not owe any duty to the other person and is not required to confirm the
599	599	572acknowledgment to any other person.
600	600	573 SECTION 84. Section 8-102(a)(6)(i) of said chapter 106 is hereby amended by striking
601	601	574out the word “writing” in that Section and by inserting in place thereof the word “record”.
602	602	575 SECTION 85. Section 8-102 of said chapter 106 is hereby amended by striking
603	603	576subsection (b) and by inserting in place thereof the following new section:
604	604	577 (b) The following definitions in this Article and other Articles apply to this Article:
605	605	578 SECTION 86. Section 8-102(a) of said chapter 106 is hereby further amended by
606	606	579inserting the following definitions in alphabetical order:
607	607	580 “Controllable account”. Section 9-102.
608	608	581 “Controllable electronic record”. Section 12-102.
609	609	582 “Controllable payment intangible”. Section 9-102.
610	610	583 SECTION 87. Section 8-103 of said chapter 106 is hereby amended by inserting, at the
611	611	584end of Section 8-103, the following new section:-- 30 of 88
612	612	585 (h) A controllable account, controllable electronic record, or controllable payment
613	613	586intangible is not a financial asset unless Section 8-102(a)(9)(iii) applies.
614	614	587 SECTION 88. Section 8-106(d)(3) of said chapter 106 is hereby amended by striking out
615	615	588the words “person has control of the security entitlement on behalf of the purchaser or, having
616	616	589previously acquired control of the security entitlement, acknowledges that it has control on
617	617	590behalf of the purchaser.” and by inserting in place thereof the following words and new clauses:-
618	618	591-
619	619	592 “person, other than the transferor to the purchaser of an interest in the security
620	620	593entitlement:
621	621	594 (A) has control of the security entitlement and acknowledges that it has control on behalf
622	622	595of the purchaser; or
623	623	596 (B) obtains control of the security entitlement after having acknowledged that it will
624	624	597obtain control of the security entitlement on behalf of the purchaser”
625	625	598 SECTION 89. Section 8-106 of said chapter 106 is further hereby amended by inserting,
626	626	599following subsection (g), the following new subsections:--
627	627	600 (h) A person that has control under this section is not required to acknowledge that it has
628	628	601control on behalf of a purchaser.
629	629	602 (i) If a person acknowledges that it has or will obtain control on behalf of a purchaser,
630	630	603unless the person otherwise agrees or law other than this Article or Article 9 otherwise provides,
631	631	604the person does not owe any duty to the purchaser and is not required to confirm the
632	632	605acknowledgment to any other person. 31 of 88
633	633	606 SECTION 90. Section 8-110 of said chapter 106 is hereby amended by inserting, at the
634	634	607end of subsection (f), the following new subsection:--
635	635	608 (g) The local law of the issuer’s jurisdiction or the securities intermediary’s jurisdiction
636	636	609governs a matter or transaction specified in subsection (a) or (b) even if the matter or transaction
637	637	610does not bear any relation to the jurisdiction.
638	638	611 SECTION 91. Section 8-303(b) of said chapter 106 is hereby amended by striking out the
639	639	612words “In addition to acquiring the rights of a purchaser, a” and by inserting in place thereof the
640	640	613word “A”.
641	641	614 SECTION 92. Section 9-102(a) of said chapter 106 is hereby amended by inserting, after
642	642	615the words “account for,”, the following:-- “ “account statement”, “account to”, “commodity
643	643	616account” in paragraph (14), “customer’s account”, “deposit account” in paragraph (29), “on
644	644	617account of”, and “statement of account”,.
645	645	618 SECTION 93. Section 9-102(a)(2) of said chapter 106 is further amended by (i) inserting
646	646	619the word “controllable accounts and” after the words “The term includes”, (ii) striking out the
647	647	620words “rights to payment evidenced by chattel paper or an instrument” and inserting in place
648	648	621thereof the words “chattel paper” in clause (i), after the word “(i)”, (iii) striking the word “or”
649	649	622after clause (v), and (iv) inserting, at the end of the section, the following: -- “, or (vii) rights to
650	650	623payment evidenced by an instrument”.
651	651	624 SECTION 94. Section 9-102(a)(3) of said chapter 106 is hereby amended by inserting the
652	652	625words “negotiable” after the words “even if the”, by striking out the words “constitutes part of”,
653	653	626after the word “instrument” and inserting in place thereof the following: -- “evidences”. 32 of 88
654	654	627 SECTION 95. Section 9-102(a)(4) of said chapter 106 is hereby amended by striking out
655	655	628the words “authenticated”, after the word “(A)” and inserting in place thereof the following: --
656	656	629“signed”.
657	657	630 SECTION 96. Section 9-102(a)(7) of said chapter 106 is hereby amended by striking out
658	658	631the words “”Authenticate” means: (A) to sign; or (B) with present intent to adopt or accept a
659	659	632record, to attach to or logically associate with the record and electronic sound, symbol, or
660	660	633process.” and by inserting in place thereof the word “[Reserved.]”.
661	661	634 SECTION 97. Said chapter 106 is hereby amended by inserting following Section 9-
662	662	635102(a)(7), the following new definitions:
663	663	636 (7A) “Assignee”, except as used in “assignee for benefit of creditors”, means a person (i)
664	664	637in whose favor a security interest that secures an obligation is created or provided for under a
665	665	638security agreement, whether or not the obligation is outstanding or (ii) to which an account,
666	666	639chattel paper, payment intangible, or promissory note has been sold. The term includes a person
667	667	640to which a security interest has been transferred by a secured party.
668	668	641 (7B) “Assignor” means a person that (i) under a security agreement creates or provides
669	669	642for a security interest that secures an obligation or (ii) sells an account, chattel paper, payment
670	670	643intangible, or promissory note. The term includes a secured party that has transferred a security
671	671	644interest to another person.
672	672	645 SECTION 98. Said chapter 106 is hereby amended by striking out Section 9-102(a)(11)
673	673	646and by inserting in place thereof the following new definition:--
674	674	647 (11) “Chattel paper” means: 33 of 88
675	675	648 (A) a right to payment of a monetary obligation secured by specific goods, if the right to
676	676	649payment and security agreement are evidenced by a record; or
677	677	650 (B) a right to payment of a monetary obligation owed by a lessee under a lease agreement
678	678	651with respect to specific goods and a monetary obligation owed by the lessee in connection with
679	679	652the transaction giving rise to the lease, if:
680	680	653 (i) the right to payment and lease agreement are evidenced by a record; and
681	681	654 (ii) the predominant purpose of the transaction giving rise to the lease was to give the
682	682	655lessee the right to possession and use of the goods.
683	683	656 The term does not include a right to payment arising out of a charter or other contract
684	684	657involving the use or hire of a vessel or a right to payment arising out of the use of a credit or
685	685	658charge card or information contained on or for use with the card.
686	686	659 SECTION 99. Section 9-102(a) of said chapter 106 is hereby amended by inserting the
687	687	660following new definitions following Section 9-102(a)(27):--
688	688	661 (27A) “Controllable account” means an account evidenced by a controllable electronic
689	689	662record that provides that the account debtor undertakes to pay the person that has control under
690	690	663Section 12-105 of the controllable electronic record.
691	691	664 (27B) “Controllable payment intangible” means a payment intangible evidenced by a
692	692	665controllable electronic record that provides that the account debtor undertakes to pay the person
693	693	666that has control under Section 12-105 of the controllable electronic record.
694	694	667 SECTION 100. Said chapter 106 is hereby amended by striking out Section 9-102(a)(31)
695	695	668and by inserting in place thereof the following new definitions:-- 34 of 88
696	696	669 (31) [Reserved.]
697	697	670 (31A) “Electronic money” means money in an electronic form.
698	698	671 SECTION 101. Section 9-102(a)(42) of said chapter 106 is hereby amended by inserting,
699	699	672after the word “includes”, the following:-- “controllable electronic records,”.
700	700	673 SECTION 102. Section 9-102(a)(47) of said chapter 106 is hereby amended by striking
701	701	674out the word “or”, after the word “credit,”, and by inserting after the words “with the card”. the
702	702	675following:-- “, or (iv) writings that evidence chattel paper”.
703	703	676 SECTION 103. Section 9-102(a) of said chapter 106 is hereby amended by inserting the
704	704	677following new definition following Section 9-102(a)(54):
705	705	678 (54A) “Money” has the meaning in Section 1-201(b)(24), but does not include (i) a
706	706	679deposit account or (ii) money in an electronic form that cannot be subjected to control under
707	707	680Section 9-105A.
708	708	681 SECTION 104. Section 9-102(a)(61) of said chapter 106 is hereby amended by inserting
709	709	682at the end of that section the following:-- “The term includes a controllable payment intangible.”
710	710	683 SECTION 105. Section 9-102(a)(66) of said chapter 106 is hereby amended by striking
711	711	684out the word “authenticated”, after the word “record”, and by inserting in place thereof the
712	712	685following:-- “signed”.
713	713	686 SECTION 106. Said chapter 106 is hereby amended by striking out Section 9-102(a)(75)
714	714	687and by inserting in place thereof the following new definition:--
715	715	688 (75) [Reserved.] 35 of 88
716	716	689 SECTION 107. Said chapter 106 is hereby amended by striking out Section 9-102(a)(79)
717	717	690and by inserting in place thereof the following new definitions:--
718	718	691 (79) [Reserved.]
719	719	692 (79A) “Tangible money” means money in a tangible form.
720	720	693 SECTION 108. Section 9-102(b) of said chapter 106 is hereby amended by inserting the
721	721	694following definitional cross-references in alphabetical order:--
722	722	695 “Controllable electronic record”. Section 12-102.
723	723	696 “Protected purchaser”. Section 8-303.
724	724	697 “Qualifying purchaser”. Section 12-102.
725	725	698 SECTION 109. Section 9-104(a) of said chapter 106 is hereby amended by (i) striking
726	726	699out the words “an authenticated”, after the word “in” in clause (2) and inserting in place thereof
727	727	700the words “a signed”, (ii) striking the word “or” in clause (2) after the word “debtor;” (iii)
728	728	701striking the period after the word “account”, and (iv) inserting the word “; or” after the word
729	729	702“account”.
730	730	703 SECTION 110. Section 9-104(a) of said chapter 106 is further amended by inserting the
731	731	704following new clause:
732	732	705 (4) another person, other than the debtor:
733	733	706 (A) has control of the deposit account and acknowledges that it has control on behalf of
734	734	707the secured party; or 36 of 88
735	735	708 (B) obtains control of the deposit account after having acknowledged that it will obtain
736	736	709control of the deposit account on behalf of the secured party.
737	737	710 SECTION 111. Said chapter 106 is hereby amended by striking out Section 9-105 and by
738	738	711inserting in place thereof the following new section:--
739	739	712 Section 9-105. Control of Electronic Copy of Record Evidencing Chattel Paper.
740	740	713 (a) General rule: control of electronic copy of record evidencing chattel paper. A
741	741	714purchaser has control of an authoritative electronic copy of a record evidencing chattel paper if a
742	742	715system employed for evidencing the assignment of interests in the chattel paper reliably
743	743	716establishes the purchaser as the person to which the authoritative electronic copy was assigned.
744	744	717 (b) Single authoritative copy. A system satisfies subsection (a) if the record or records
745	745	718evidencing the chattel paper are created, stored, and assigned in a manner that:
746	746	719 (1) a single authoritative copy of the record or records exists which is unique,
747	747	720identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable;
748	748	721 (2) the authoritative copy identifies the purchaser as the assignee of the record or records;
749	749	722 (3) the authoritative copy is communicated to and maintained by the purchaser or its
750	750	723designated custodian;
751	751	724 (4) copies or amendments that add or change an identified assignee of the authoritative
752	752	725copy can be made only with the consent of the purchaser;
753	753	726 (5) each copy of the authoritative copy and any copy of a copy is readily identifiable as a
754	754	727copy that is not the authoritative copy; and 37 of 88
755	755	728 (6) any amendment of the authoritative copy is readily identifiable as authorized or
756	756	729unauthorized.
757	757	730 (c) One or more authoritative copies. A system satisfies subsection (a), and a purchaser
758	758	731has control of an authoritative electronic copy of a record evidencing chattel paper, if the
759	759	732electronic copy, a record attached to or logically associated with the electronic copy, or a system
760	760	733in which the electronic copy is recorded:
761	761	734 (1) enables the purchaser readily to identify each electronic copy as either an
762	762	735authoritative copy or a nonauthoritative copy;
763	763	736 (2) enables the purchaser readily to identify itself in any way, including by name,
764	764	737identifying number, cryptographic key, office, or account number, as the assignee of the
765	765	738authoritative electronic copy; and
766	766	739 (3) gives the purchaser exclusive power, subject to subsection (d), to:
767	767	740 (A) prevent others from adding or changing an identified assignee of the authoritative
768	768	741electronic copy; and
769	769	742 (B) transfer control of the authoritative electronic copy.
770	770	743 (d) Meaning of exclusive. Subject to subsection (e), a power is exclusive under
771	771	744subsection (c)(3)(A) and (B), even if:
772	772	745 (1) the authoritative electronic copy, a record attached to or logically associated with the
773	773	746authoritative electronic copy, or a system in which the authoritative electronic copy is recorded
774	774	747limits the use of the authoritative electronic copy or has a protocol programmed to cause a
775	775	748change, including a transfer or loss of control; or 38 of 88
776	776	749 (2) the power is shared with another person.
777	777	750 (e) When power not shared with another person. A power of a purchaser is not shared
778	778	751with another person under subsection (d)(2) and the purchaser’s power is not exclusive if:
779	779	752 (1) the purchaser can exercise the power only if the power also is exercised by the other
780	780	753person; and
781	781	754 (2) the other person:
782	782	755 (A) can exercise the power without exercise of the power by the purchaser; or
783	783	756 (B) is the transferor to the purchaser of an interest in the chattel paper.
784	784	757 (f) Presumption of exclusivity of certain powers. If a purchaser has the powers specified
785	785	758in subsection (c)(3)(A) and (B), the powers are presumed to be exclusive.
786	786	759 (g) Obtaining control through another person. A purchaser has control of an authoritative
787	787	760electronic copy of a record evidencing chattel paper if another person, other than the transferor to
788	788	761the purchaser of an interest in the chattel paper:
789	789	762 (1) has control of the authoritative electronic copy and acknowledges that it has control
790	790	763on behalf of the purchaser; or
791	791	764 (2) obtains control of the authoritative electronic copy after having acknowledged that it
792	792	765will obtain control of the electronic copy on behalf of the purchaser.
793	793	766 SECTION 112. Section 9-105A of said chapter 106 is hereby amended by inserting the
794	794	767following new section:- 39 of 88
795	795	768 Section 9-105A. Control of Electronic Money.
796	796	769 (a) General rule: control of electronic money. A person has control of electronic money
797	797	770if:
798	798	771 (1) the electronic money, a record attached to or logically associated with the electronic
799	799	772money, or a system in which the electronic money is recorded gives the person:
800	800	773 (A) power to avail itself of substantially all the benefit from the electronic money; and
801	801	774 (B) exclusive power, subject to subsection (b), to:
802	802	775 (i) prevent others from availing themselves of substantially all the benefit from the
803	803	776electronic money; and
804	804	777 (ii) transfer control of the electronic money to another person or cause another person to
805	805	778obtain control of other electronic money as a result of the transfer of the electronic money; and
806	806	779 (2) the electronic money, a record attached to or logically associated with the electronic
807	807	780money, or a system in which the electronic money is recorded enables the person readily to
808	808	781identify itself in any way, including by name, identifying number, cryptographic key, office, or
809	809	782account number, as having the powers under paragraph (1).
810	810	783 (b) Meaning of exclusive. Subject to subsection (c) a power is exclusive under subsection
811	811	784(a)(1)(B)(i) and (ii) even if:
812	812	785 (1) the electronic money, a record attached to or logically associated with the electronic
813	813	786money, or a system in which the electronic money is recorded limits the use of the electronic
814	814	787money or has a protocol programmed to cause a change, including a transfer or loss of control; or 40 of 88
815	815	788 (2) the power is shared with another person.
816	816	789 (c) When power not shared with another person. A power of a person is not shared with
817	817	790another person under subsection (b)(2) and the person’s power is not exclusive if:
818	818	791 (1) the person can exercise the power only if the power also is exercised by the other
819	819	792person; and
820	820	793 (2) the other person:
821	821	794 (A) can exercise the power without exercise of the power by the person; or
822	822	795 (B) is the transferor to the person of an interest in the electronic money.
823	823	796 (d) Presumption of exclusivity of certain powers. If a person has the powers specified in
824	824	797subsection (a)(1)(B)(i) and (ii), the powers are presumed to be exclusive.
825	825	798 (e) Control through another person. A person has control of electronic money if another
826	826	799person, other than the transferor to the person of an interest in the electronic money:
827	827	800 (1) has control of the electronic money and acknowledges that it has control on behalf of
828	828	801the person; or
829	829	802 (2) obtains control of the electronic money after having acknowledged that it will obtain
830	830	803control of the electronic money on behalf of the person.
831	831	804 SECTION 113. Section 9-107 of said chapter 106 is further amended by inserting the
832	832	805following new sections: 41 of 88
833	833	806 Section 9-107A. Control of Controllable Electronic Record, Controllable Account, or
834	834	807Controllable Payment Intangible.
835	835	808 (a) Control under Section 12-105. A secured party has control of a controllable electronic
836	836	809record as provided in Section 12-105.
837	837	810 (b) Control of controllable account and controllable payment intangible. A secured party
838	838	811has control of a controllable account or controllable payment intangible if the secured party has
839	839	812control of the controllable electronic record that evidences the controllable account or
840	840	813controllable payment intangible.
841	841	814 Section 9-107B. No Requirement to Acknowledge or Confirm; No Duties.
842	842	815 (a) No requirement to acknowledge. A person that has control under Section 9-104, 9-
843	843	816105, or 9-105A is not required to acknowledge that it has control on behalf of another person.
844	844	817 (b) No duties or confirmation. If a person acknowledges that it has or will obtain control
845	845	818on behalf of another person, unless the person otherwise agrees or law other than this article
846	846	819otherwise provides, the person does not owe any duty to the other person and is not required to
847	847	820confirm the acknowledgment to any other person.
848	848	821 SECTION 114. Section 9-203(b)(3) of said chapter 106 is hereby amended by (i) striking
849	849	822out the word “authenticated”, in subsection (A) and inserting in place thereof the word “signed”
850	850	823and (ii) striking the word “or”, in subsection 3(C).
851	851	824 SECTION 115. Section 9-203(b)(3) of said chapter 106 is further amended by striking
852	852	825out subsection (D) and by inserting at the end of subsection (C) the following new sections:-- 42 of 88
853	853	826 (D) the collateral is controllable accounts, controllable electronic records, controllable
854	854	827payment intangibles, deposit accounts, electronic documents, electronic money, investment
855	855	828property, or letter-of-credit rights, and the secured party has control under Section 7-106, 9-104,
856	856	8299-105A, 9-106, or 9-107A pursuant to the debtor’s security agreement; or
857	857	830 (E) the collateral is chattel paper and the secured party has possession and control under
858	858	831Section 9-314A pursuant to the debtor’s security agreement.
859	859	832 SECTION 116. Section 9-204(b) of said chapter 106 is hereby amended by striking out
860	860	833the word “A” before the word “security”, and by inserting in place thereof the following:--
861	861	834“Subject to Subsection (b.1), a”.
862	862	835 SECTION 117. Section 9-204 of said chapter 106 is hereby further amended by inserting
863	863	836at the end of subsection (b) the following new subsection:--
864	864	837 (b.1) Limitation on subsection (b). Subsection (b) does not prevent a security interest
865	865	838from attaching:
866	866	839 (1) to consumer goods as proceeds under Section 9-315(a) or commingled goods under
867	867	840Section 9 336(c);
868	868	841 (2) to a commercial tort claim as proceeds under Section 9-315(a); or
869	869	842 (3) under an after-acquired property clause to property that is proceeds of consumer
870	870	843goods or a commercial tort claim.
871	871	844 SECTION 118. Section 9-207 of said chapter 106 is hereby amended by striking out
872	872	845subsection (c) and by inserting in place thereof the following new subsection:-- 43 of 88
873	873	846 (c) Duties and rights when secured party in possession or control. Except as otherwise
874	874	847provided in subsection (d), a secured party having possession of collateral or control of collateral
875	875	848under Section 7-106, 9-104, 9-105, 9-105A, 9-106, or 9-107, or 9-107A:
876	876	849 SECTION 119. Section 9-208(b) of said chapter 106 is hereby amended by striking out
877	877	850the words “an authenticated” after the word “receiving” in and by inserting in place thereof the
878	878	851following:-- “a signed”.
879	879	852 SECTION 120. Section 9-208(b)(1) of said chapter 106 is hereby amended by striking
880	880	853out the words “an authenticated statement” and by inserting in place thereof the following:--“a
881	881	854signed record”.
882	882	855 SECTION 121. Section 9-208(b) of said chapter 106 is hereby amended by striking out
883	883	856clauses (3) and (6) by inserting in place of each thereof the following new clauses:--
884	884	857 (3) a secured party, other than a buyer, having control under Section 9-105 of an
885	885	858authoritative electronic copy of a record evidencing chattel paper shall transfer control of the
886	886	859electronic copy to the debtor or a person designated by the debtor;
887	887	860 (6) a secured party having control under Section 7-106 of an authoritative electronic copy
888	888	861of an electronic document shall transfer control of the electronic copy to the debtor or a person
889	889	862designated by the debtor;
890	890	863 (7) a secured party having control under Section 9-105A of electronic money shall
891	891	864transfer control of the electronic money to the debtor or a person designated by the debtor; and
892	892	865 (8) a secured party having control under Section 12-105 of a controllable electronic
893	893	866record, other than a buyer of a controllable account or controllable payment intangible evidenced 44 of 88
894	894	867by the controllable electronic record, shall transfer control of the controllable electronic record to
895	895	868the debtor or a person designated by the debtor.
896	896	869 SECTION 122. Section 9-208(b)(4) of said chapter 106 is hereby amended by striking
897	897	870the words “an authenticated” after the word “maintained” and by inserting in place thereof the
898	898	871following:--“a signed”.
899	899	872 SECTION 123. Section 9-208(b)(5) of said chapter 106 is hereby amended by striking
900	900	873the words “an authenticated” after the word “maintained”, by inserting in place thereof the
901	901	874following:--“a signed”, and by striking the word “and” at the end of such subsection.
902	902	875 SECTION 124. Section 9-209 of said chapter 106 is hereby amended by striking out
903	903	876subsection (b) and inserting in place thereof the following new subsection:--
904	904	877 (b) Duties of secured party after receiving demand from debtor. Within 10 days after
905	905	878receiving a signed demand by the debtor, a secured party shall send to an account debtor that has
906	906	879received notification under Section 9-406(a) or 12-106(b) of an assignment to the secured party
907	907	880as assignee a signed record that releases the account debtor from any further obligation to the
908	908	881secured party.
909	909	882 SECTION 125. Section 9-210(a) of said chapter 106 is hereby amended by striking out
910	910	883the word “authenticated” wherever the word appears in that Section and by inserting in place
911	911	884thereof the word “signed”.
912	912	885 SECTION 126. Section 9-210(b)(2) of said chapter 106 is hereby amended by striking
913	913	886out the word “authenticating” in that Section and by inserting in place thereof the word
914	914	887“signing”. 45 of 88
915	915	888 SECTION 127. Sections 9-210(c), (d), and (e) of said chapter 106 is hereby amended by
916	916	889striking out the words “an authenticated” in such Sections and by inserting in place thereof the
917	917	890words “a signed”.
918	918	891 SECTION 128. Section 9-301 of said chapter 106 is hereby amended by striking out the
919	919	892word “9-306”, after the word “through” and by inserting in place thereof the word “9-306B”.
920	920	893 SECTION 129. Section 9-301 of said chapter 106 is hereby amended by striking out
921	921	894subsection (3) and inserting in place thereof the following new subsection:--
922	922	895 (3) Except as otherwise provided in paragraph (4), while negotiable tangible documents,
923	923	896goods, instruments, or tangible money is located in a jurisdiction, the local law of that
924	924	897jurisdiction governs:
925	925	898 (A) perfection of a security interest in the goods by filing a fixture filing;
926	926	899 (B) perfection of a security interest in timber to be cut; and
927	927	900 (C) the effect of perfection or nonperfection and the priority of a nonpossessory security
928	928	901interest in the collateral.
929	929	902 SECTION 130. Section 9-304 of said chapter 106 is hereby amended by deleting the
930	930	903period at the end of subsection (a), and by inserting, at the end of subsection (a), the following:--
931	931	904“ even if the transaction does not bear any relation to the bank’s jurisdiction.”
932	932	905 SECTION 131. Section 9-305 of said chapter 106 is hereby amended by inserting, at the
933	933	906end of subsection (4), the following new subsection:-- 46 of 88
934	934	907 (5) Paragraphs (2), (3), and (4) apply even if the transaction does not bear any relation to
935	935	908the jurisdiction.
936	936	909 SECTION 132. Said chapter 106 is hereby amended by inserting after Section 9-306 the
937	937	910following new sections:
938	938	911 Section 9-306A. Law Governing Perfection and Priority of Security Interests in Chattel
939	939	912Paper.
940	940	913 (a) Chattel paper evidenced by authoritative electronic copy. Except as provided in
941	941	914subsection (d), if chattel paper is evidenced only by an authoritative electronic copy of the chattel
942	942	915paper or is evidenced by an authoritative electronic copy and an authoritative tangible copy, the
943	943	916local law of the chattel paper’s jurisdiction governs perfection, the effect of perfection or
944	944	917nonperfection, and the priority of a security interest in the chattel paper, even if the transaction
945	945	918does not bear any relation to the chattel paper’s jurisdiction.
946	946	919 (b) Chattel paper’s jurisdiction. The following rules determine the chattel paper’s
947	947	920jurisdiction under this section:
948	948	921 (1) If the authoritative electronic copy of the record evidencing chattel paper, or a record
949	949	922attached to or logically associated with the electronic copy and readily available for review,
950	950	923expressly provides that a particular jurisdiction is the chattel paper’s jurisdiction for purposes of
951	951	924this part, this article, or this chapter, that jurisdiction is the chattel paper’s jurisdiction.
952	952	925 (2) If paragraph (1) does not apply and the rules of the system in which the authoritative
953	953	926electronic copy is recorded are readily available for review and expressly provide that a 47 of 88
954	954	927particular jurisdiction is the chattel paper’s jurisdiction for purposes of this part, this article, or
955	955	928this chapter, that jurisdiction is the chattel paper’s jurisdiction.
956	956	929 (3) If paragraphs (1) and (2) do not apply and the authoritative electronic copy, or a
957	957	930record attached to or logically associated with the electronic copy and readily available for
958	958	931review, expressly provides that the chattel paper is governed by the law of a particular
959	959	932jurisdiction, that jurisdiction is the chattel paper’s jurisdiction.
960	960	933 (4) If paragraphs (1), (2), and (3) do not apply and the rules of the system in which the
961	961	934authoritative electronic copy is recorded are readily available for review and expressly provide
962	962	935that the chattel paper or the system is governed by the law of a particular jurisdiction, that
963	963	936jurisdiction is the chattel paper’s jurisdiction.
964	964	937 (5) If paragraphs (1) through (4) do not apply, the chattel paper’s jurisdiction is the
965	965	938jurisdiction in which the debtor is located.
966	966	939 (c) Chattel paper evidenced by authoritative tangible copy. If an authoritative tangible
967	967	940copy of a record evidences chattel paper and the chattel paper is not evidenced by an
968	968	941authoritative electronic copy, while the authoritative tangible copy of the record evidencing
969	969	942chattel paper is located in a jurisdiction, the local law of that jurisdiction governs:
970	970	943 (1) perfection of a security interest in the chattel paper by possession under Section 9-
971	971	944314A; and
972	972	945 (2) the effect of perfection or nonperfection and the priority of a security interest in the
973	973	946chattel paper. 48 of 88
974	974	947 (d) When perfection governed by law of jurisdiction where debtor located. The local law
975	975	948of the jurisdiction in which the debtor is located governs perfection of a security interest in
976	976	949chattel paper by filing.
977	977	950 Section 9-306B. Law Governing Perfection and Priority of Security Interests in
978	978	951Controllable Accounts, Controllable Electronic Records, and Controllable Payment Intangibles.
979	979	952 (a) Governing law: general rules. Except as provided in subsection (b), the local law of
980	980	953the controllable electronic record’s jurisdiction specified in Section 12-107(c) and (d) governs
981	981	954perfection, the effect of perfection or nonperfection, and the priority of a security interest in a
982	982	955controllable electronic record and a security interest in a controllable account or controllable
983	983	956payment intangible evidenced by the controllable electronic record.
984	984	957 (b) When perfection governed by law of jurisdiction where debtor located. The local law
985	985	958of the jurisdiction in which the debtor is located governs:
986	986	959 (1) perfection of a security interest in a controllable account, controllable electronic
987	987	960record, or controllable payment intangible by filing; and
988	988	961 (2) automatic perfection of a security interest in a controllable payment intangible created
989	989	962by a sale of the controllable payment intangible.
990	990	963 SECTION 133. Section 9-310(b) of said chapter 106 is hereby amended by striking out
991	991	964subsection (8) and inserting in place thereof the following new sections:--
992	992	965 (8) in controllable accounts, controllable electronic records, controllable payment
993	993	966intangibles, deposit accounts, electronic documents, investment property, or letter-of-credit
994	994	967rights which is perfected by control under Section 9-314; 49 of 88
995	995	968 (8.1) in chattel paper which is perfected by possession and control under Section 9-314A;
996	996	969 SECTION 134. Said chapter 106 is hereby amended by striking out Section 9-312 and
997	997	970inserting in place thereof the following new section:--
998	998	971 Section 9-312. Perfection of Security Interests in Chattel Paper, Controllable Accounts,
999	999	972Controllable Electronic Records, Controllable Payment Intangibles, Deposit Accounts,
1000	1000	973Negotiable Documents, Goods Covered by Documents, Instruments, Investment Property,
1001	1001	974Letter-of-Credit Rights, and Money; Perfection by Permissive Filing; Temporary Perfection
1002	1002	975Without Filing or Transfer of Possession.
1003	1003	976 (a) Perfection by filing permitted. A security interest in chattel paper, controllable
1004	1004	977accounts, controllable electronic records, controllable payment intangibles, instruments,
1005	1005	978investment property, or negotiable documents may be perfected by filing.
1006	1006	979 (b) Control or possession of certain collateral. Except as otherwise provided in Section 9-
1007	1007	980315(c) and (d) for proceeds:
1008	1008	981 (1) a security interest in a deposit account may be perfected only by control under Section
1009	1009	9829-314;
1010	1010	983 (2) except as otherwise provided in Section 9-308(d), a security interest in a letter-of-
1011	1011	984credit right may be perfected only by control under Section 9-314;
1012	1012	985 (3) a security interest in tangible money may be perfected only by the secured party’s
1013	1013	986taking possession under Section 9-313; and
1014	1014	987 (4) a security interest in electronic money may be perfected only by control under Section
1015	1015	9889-314. 50 of 88
1016	1016	989 (c) Goods covered by negotiable document. While goods are in the possession of a bailee
1017	1017	990that has issued a negotiable document covering the goods:
1018	1018	991 (1) a security interest in the goods may be perfected by perfecting a security interest in
1019	1019	992the document; and
1020	1020	993 (2) a security interest perfected in the document has priority over any security interest
1021	1021	994that becomes perfected in the goods by another method during that time.
1022	1022	995 (d) Goods covered by nonnegotiable document. While goods are in the possession of a
1023	1023	996bailee that has issued a nonnegotiable document covering the goods, a security interest in the
1024	1024	997goods may be perfected by:
1025	1025	998 (1) issuance of a document in the name of the secured party;
1026	1026	999 (2) the bailee’s receipt of notification of the secured party’s interest; or
1027	1027	1000 (3) filing as to the goods.
1028	1028	1001 (e) Temporary perfection: new value. A security interest in certificated securities,
1029	1029	1002negotiable documents, or instruments is perfected without filing or the taking of possession or
1030	1030	1003control for a period of 20 days from the time it attaches to the extent that it arises for new value
1031	1031	1004given under a signed security agreement.
1032	1032	1005 SECTION 135. Section 9-313 of said chapter 106 is hereby amended by striking out
1033	1033	1006subsection (a) and inserting in place thereof the following new subsection:--
1034	1034	1007 (a) Perfection by possession or delivery. Except as otherwise provided in subsection (b),
1035	1035	1008a secured party may perfect a security interest in goods, instruments, negotiable tangible 51 of 88
1036	1036	1009documents, or tangible money by taking possession of the collateral. A secured party may perfect
1037	1037	1010a security interest in certificated securities by taking delivery of the certificated securities under
1038	1038	1011Section 8-301.
1039	1039	1012 SECTION 136. Section 9-313(c) of said chapter 106 is hereby amended by striking out
1040	1040	1013clauses (1) and (2) and by inserting in place thereof the following new clauses:--
1041	1041	1014 (1) the person in possession signs a record acknowledging that it holds possession of the
1042	1042	1015collateral for the secured party’s benefit; or
1043	1043	1016 (2) the person takes possession of the collateral after having signed a record
1044	1044	1017acknowledging that it will hold possession of the collateral for the secured party’s benefit.
1045	1045	1018 SECTION 137. Section 9-313(d) of said chapter 106 is hereby amended by striking out
1046	1046	1019the word “no” and by inserting in place thereof the word “not”.
1047	1047	1020 SECTION 138. Section 9-314 of said chapter 106 is hereby amended by striking out
1048	1048	1021subsections (a) and (b) and inserting in place thereof the following new subsections:--
1049	1049	1022 (a) Perfection by control. A security interest in controllable accounts, controllable
1050	1050	1023electronic records, controllable payment intangibles, deposit accounts, electronic documents,
1051	1051	1024electronic money, investment property, or letter-of-credit rights may be perfected by control of
1052	1052	1025the collateral under Section 7-106, 9-104, 9-105A, 9-106, 9-107, or 9-107A.
1053	1053	1026 (b) Specified collateral: time of perfection by control; continuation of perfection. A
1054	1054	1027security interest in controllable accounts, controllable electronic records, controllable payment
1055	1055	1028intangibles, deposit accounts, electronic documents, electronic money, or letter-of-credit rights is
1056	1056	1029perfected by control under Section 7-106, 9-104, 9-105A, 9-107, or 9-107A not earlier than the 52 of 88
1057	1057	1030time the secured party obtains control and remains perfected by control only while the secured
1058	1058	1031party retains control.
1059	1059	1032 SECTION 139. Section 9-314(c) of said chapter 106 is hereby amended by striking out
1060	1060	1033the word “from” after the word “9-106”, and by inserting in place thereof the following:--“not
1061	1061	1034earlier than”.
1062	1062	1035 SECTION 140. Said chapter 106 is hereby amended inserting the following new section
1063	1063	1036following Section 9-314:--
1064	1064	1037 Section 9-314A. Perfection by Possession and Control of Chattel Paper.
1065	1065	1038 (a) Perfection by possession and control. A secured party may perfect a security interest
1066	1066	1039in chattel paper by taking possession of each authoritative tangible copy of the record evidencing
1067	1067	1040the chattel paper and obtaining control of each authoritative electronic copy of the electronic
1068	1068	1041record evidencing the chattel paper.
1069	1069	1042 (b) Time of perfection; continuation of perfection. A security interest is perfected under
1070	1070	1043subsection (a) not earlier than the time the secured party takes possession and obtains control and
1071	1071	1044remains perfected under subsection (a) only while the secured party retains possession and
1072	1072	1045control.
1073	1073	1046 (c) Application of Section 9-313 to perfection by possession of chattel paper. Section 9-
1074	1074	1047313(c) and (f) through (i) applies to perfection by possession of an authoritative tangible copy of
1075	1075	1048a record evidencing chattel paper.
1076	1076	1049 SECTION 141. Section 9-316 of said chapter 106 is hereby amended by striking out the
1077	1077	1050chapeau of subsection (a) and inserting in place thereof the following new chapeau:-- 53 of 88
1078	1078	1051 (a) General rule: effect on perfection of change in governing law. A security interest
1079	1079	1052perfected pursuant to the law of the jurisdiction designated in Section 9-301(1), 9-305(c), 9-
1080	1080	1053306A(d), or 9-306B(b) remains perfected until the earliest of:
1081	1081	1054 SECTION 142. Section 9-316 of said chapter 106 is hereby further amended by striking
1082	1082	1055out the chapeau of subsection (f) and inserting in place thereof the following new chapeau:--
1083	1083	1056 (f) Change in jurisdiction of chattel paper, controllable electronic record, bank, issuer,
1084	1084	1057nominated person, securities intermediary, or commodity intermediary. A security interest in
1085	1085	1058chattel paper, controllable accounts, controllable electronic records, controllable payment
1086	1086	1059intangibles, deposit accounts, letter-of-credit rights, or investment property which is perfected
1087	1087	1060under the law of the chattel paper’s jurisdiction, the controllable electronic record’s jurisdiction,
1088	1088	1061the bank’s jurisdiction, the issuer’s jurisdiction, a nominated person’s jurisdiction, the securities
1089	1089	1062intermediary’s jurisdiction, or the commodity intermediary’s jurisdiction, as applicable, remains
1090	1090	1063perfected until the earlier of:
1091	1091	1064 SECTION 143. Section 9-317 of said chapter 106 is hereby amended by striking out
1092	1092	1065subsection (b) and inserting in place thereof the following new subsection:--
1093	1093	1066 (b) Buyers that receive delivery. Except as otherwise provided in subsection (e), a buyer,
1094	1094	1067other than a secured party, of goods, instruments, tangible documents, or a security certificate
1095	1095	1068takes free of a security interest or agricultural lien if the buyer gives value and receives delivery
1096	1096	1069of the collateral without knowledge of the security interest or agricultural lien and before it is
1097	1097	1070perfected.
1098	1098	1071 SECTION 144. Section 9-317 of said chapter 106 is hereby amended by striking out
1099	1099	1072subsection (d) and inserting in place thereof the following new subsection:-- 54 of 88
1100	1100	1073 (d) Licensees and buyers of certain collateral. Subject to subsections (f) through (i), a
1101	1101	1074licensee of a general intangible or a buyer, other than a secured party, of collateral other than
1102	1102	1075electronic money, goods, instruments, tangible documents or a certificated security takes free of
1103	1103	1076a security interest if the licensee or buyer gives value without knowledge of the security interest
1104	1104	1077and before it is perfected.
1105	1105	1078 SECTION 145. Section 9-317 of said chapter 106 is hereby further amended by inserting
1106	1106	1079at the end of subsection (e) the following new subsections:
1107	1107	1080 (f) Buyers of chattel paper. A buyer, other than a secured party, of chattel paper takes free
1108	1108	1081of a security interest if, without knowledge of the security interest and before it is perfected, the
1109	1109	1082buyer gives value and:
1110	1110	1083 (1) receives delivery of each authoritative tangible copy of the record evidencing the
1111	1111	1084chattel paper; and
1112	1112	1085 (2) if each authoritative electronic copy of the record evidencing the chattel paper can be
1113	1113	1086subjected to control under Section 9-105, obtains control of each authoritative electronic copy.
1114	1114	1087 (g) Buyers of electronic documents. A buyer of an electronic document takes free of a
1115	1115	1088security interest if, without knowledge of the security interest and before it is perfected, the
1116	1116	1089buyer gives value and, if each authoritative electronic copy of the document can be subjected to
1117	1117	1090control under Section 7-106, obtains control of each authoritative electronic copy.
1118	1118	1091 (h) Buyers of controllable electronic records. A buyer of a controllable electronic record
1119	1119	1092takes free of a security interest if, without knowledge of the security interest and before it is
1120	1120	1093perfected, the buyer gives value and obtains control of the controllable electronic record. 55 of 88
1121	1121	1094 (i) Buyers of controllable accounts and controllable payment intangibles. A buyer, other
1122	1122	1095than a secured party, of a controllable account or a controllable payment intangible takes free of
1123	1123	1096a security interest if, without knowledge of the security interest and before it is perfected, the
1124	1124	1097buyer gives value and obtains control of the controllable account or controllable payment
1125	1125	1098intangible.
1126	1126	1099 SECTION 146. Section 9-323(d) of said chapter 106 is hereby amended by striking out
1127	1127	1100the words “other than a buyer in ordinary course of business”, after the word “goods”.
1128	1128	1101 SECTION 147. Section 9-323(f) of said chapter 106 is hereby amended by striking out
1129	1129	1102the words “other than a lessee in ordinary course of business”, after the word “goods”.
1130	1130	1103 SECTION 148. Section 9-324 of said chapter 106 is hereby amended by striking out the
1131	1131	1104words “an authenticated” wherever it appears in that Section and by inserting in each place
1132	1132	1105thereof the following:-- “a signed”.
1133	1133	1106 SECTION 149. Said chapter 106 is hereby amended by inserting following Section 326
1134	1134	1107the following new section:
1135	1135	1108 Section 9-326A. Priority of Security Interest in Controllable Account, Controllable
1136	1136	1109Electronic Record, and Controllable Payment Intangible. A security interest in a controllable
1137	1137	1110account, controllable electronic record, or controllable payment intangible held by a secured
1138	1138	1111party having control of the account, electronic record, or payment intangible has priority over a
1139	1139	1112conflicting security interest held by a secured party that does not have control.
1140	1140	1113 SECTION 150. Section 9-330 of said chapter 106 is hereby amended by striking out
1141	1141	1114subsections (a) and (b) and by inserting in place thereof the following new subsections:-- 56 of 88
1142	1142	1115 (a) Purchaser’s priority: security interest claimed merely as proceeds. A purchaser of
1143	1143	1116chattel paper has priority over a security interest in the chattel paper which is claimed merely as
1144	1144	1117proceeds of inventory subject to a security interest if:
1145	1145	1118 (1) in good faith and in the ordinary course of the purchaser’s business, the purchaser
1146	1146	1119gives new value, takes possession of each authoritative tangible copy of the record evidencing
1147	1147	1120the chattel paper, and obtains control under Section 9-105 of each authoritative electronic copy
1148	1148	1121of the record evidencing the chattel paper; and
1149	1149	1122 (2) the authoritative copies of the record evidencing the chattel paper do not indicate that
1150	1150	1123the chattel paper has been assigned to an identified assignee other than the purchaser.
1151	1151	1124 (b) Purchaser’s priority: other security interests. A purchaser of chattel paper has priority
1152	1152	1125over a security interest in the chattel paper which is claimed other than merely as proceeds of
1153	1153	1126inventory subject to a security interest if the purchaser gives new value, takes possession of each
1154	1154	1127authoritative tangible copy of the record evidencing the chattel paper, and obtains control under
1155	1155	1128Section 9-105 of each authoritative electronic copy of the record evidencing the chattel paper in
1156	1156	1129good faith, in the ordinary course of the purchaser’s business, and without knowledge that the
1157	1157	1130purchase violates the rights of the secured party.
1158	1158	1131 SECTION 151. Section 9-330 of said chapter 106 is hereby further amended by striking
1159	1159	1132out subsection (f) and by inserting in place thereof the following new subsection:--
1160	1160	1133 (f) Indication of assignment gives knowledge. For purposes of subsections (b) and (d), if
1161	1161	1134the authoritative copies of the record evidencing chattel paper or an instrument indicate that the
1162	1162	1135chattel paper or instrument has been assigned to an identified secured party other than the 57 of 88
1163	1163	1136purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase
1164	1164	1137violates the rights of the secured party.
1165	1165	1138 SECTION 152. Said chapter 106 is hereby amended by striking out Section 9-331 and by
1166	1166	1139inserting in place thereof the following new Section:--
1167	1167	1140 Section 9-331. Priority of Rights of Purchasers of Controllable Accounts, Controllable
1168	1168	1141Electronic Records, Controllable Payment Intangibles, Documents, Instruments, and Securities
1169	1169	1142Under Other Articles; Priority of Interests in Financial Assets and Security Entitlements and
1170	1170	1143Protection Against Assertion of Claim Under Articles 8 and 12.
1171	1171	1144 (a) Rights under Articles 3, 7, 8, and 12 not limited. This article does not limit the rights
1172	1172	1145of a holder in due course of a negotiable instrument, a holder to which a negotiable document of
1173	1173	1146title has been duly negotiated, a protected purchaser of a security, or a qualifying purchaser of a
1174	1174	1147controllable account, controllable electronic record, or controllable payment intangible. These
1175	1175	1148holders or purchasers take priority over an earlier security interest, even if perfected, to the
1176	1176	1149extent provided in Articles 3, 7, 8, and 12.
1177	1177	1150 (b) Protection under Articles 8 and 12. This article does not limit the rights of or impose
1178	1178	1151liability on a person to the extent that the person is protected against the assertion of a claim
1179	1179	1152under Article 8 or 12.
1180	1180	1153 (c) Filing not notice. Filing under this article does not constitute notice of a claim or
1181	1181	1154defense to the holders, purchasers, or persons described in subsections (a) and (b).
1182	1182	1155 SECTION 153. Said chapter 106 is hereby amended by striking out Section 9-332 and by
1183	1183	1156inserting in place thereof the following new Section:-- 58 of 88
1184	1184	1157 Section 9-332. Transfer of Money; Transfer of Funds from Deposit Account.
1185	1185	1158 (a) Transferee of tangible money. A transferee of tangible money takes the money free of
1186	1186	1159a security interest if the transferee receives possession of the money without acting in collusion
1187	1187	1160with the debtor in violating the rights of the secured party.
1188	1188	1161 (b) Transferee of funds from deposit account. A transferee of funds from a deposit
1189	1189	1162account takes the funds free of a security interest in the deposit account if the transferee receives
1190	1190	1163the funds without acting in collusion with the debtor in violating the rights of the secured party.
1191	1191	1164 (c) Transferee of electronic money. A transferee of electronic money takes the money
1192	1192	1165free of a security interest if the transferee obtains control of the money without acting in
1193	1193	1166collusion with the debtor in violating the rights of the secured party.
1194	1194	1167 SECTION 154. Section 9-334(f) of said chapter 106 is hereby amended by striking out
1195	1195	1168the words “an authenticated” in that subsection (1) and by inserting in place thereof the
1196	1196	1169following:-- “a signed”.
1197	1197	1170 SECTION 155. Section 9-338 of said chapter 106 is hereby amended by striking out in
1198	1198	1171clause (2) and inserting in place thereof the following new clause (2):--
1199	1199	1172 a purchaser, other than a secured party, of the collateral takes free of the security interest
1200	1200	1173or agricultural lien to the extent that, in reasonable reliance upon the incorrect information, the
1201	1201	1174purchaser gives value and, in the case of , tangible documents, goods, instruments, or a security
1202	1202	1175certificate, receives possession or delivery of the collateral, and, in the case of chattel paper,
1203	1203	1176takes possession of each authoritative tangible copy of the record evidencing the chattel paper 59 of 88
1204	1204	1177and obtains control of each authoritative electronic copy of the electronic record evidencing the
1205	1205	1178chattel paper.
1206	1206	1179 SECTION 156. Section 9-341 of said chapter 106 is hereby amended by striking out the
1207	1207	1180words “an authenticated”, after the words “agrees in”, and by inserting in place thereof the
1208	1208	1181following:-- “a signed”.
1209	1209	1182 SECTION 157. Section 9-404(a) of said chapter 106 is hereby amended by striking out
1210	1210	1183the words “authenticated” in clause (2) and by inserting in place thereof the following word:--
1211	1211	1184“signed”.
1212	1212	1185 SECTION 158. Section 9-406 of said chapter 106 is hereby amended by striking out
1213	1213	1186subsections (a) through (c) and by inserting in place thereof the following new subsections:--
1214	1214	1187 (a) Discharge of account debtor; effect of notification. Subject to subsections (b) through
1215	1215	1188(i) and (l), an account debtor on an account, chattel paper, or a payment intangible may discharge
1216	1216	1189its obligation by paying the assignor until, but not after, the account debtor receives a
1217	1217	1190notification, signed by the assignor or the assignee, that the amount due or to become due has
1218	1218	1191been assigned and that payment is to be made to the assignee. After receipt of the notification,
1219	1219	1192the account debtor may discharge its obligation by paying the assignee and may not discharge
1220	1220	1193the obligation by paying the assignor.
1221	1221	1194 (b) When notification ineffective. Subject to subsections (h) and (l), notification is
1222	1222	1195ineffective under subsection (a):
1223	1223	1196 (A) only a portion of the account, chattel paper, or payment intangible has been assigned
1224	1224	1197to that assignee; 60 of 88
1225	1225	1198 (B) a portion has been assigned to another assignee; or
1226	1226	1199 (C) the account debtor knows that the assignment to that assignee is limited.
1227	1227	1200 (c) Proof of assignment. Subject to subsections (h) and (l), if requested by the account
1228	1228	1201debtor, an assignee shall seasonably furnish reasonable proof that the assignment has been made.
1229	1229	1202Unless the assignee complies, the account debtor may discharge its obligation by paying the
1230	1230	1203assignor, even if the account debtor has received a notification under subsection (a).
1231	1231	1204 SECTION 159. Section 4-406(d) of said chapter 106 is amended by adding the following
1232	1232	1205new sentence at the beginning of subsection (d): --" In this subsection, “promissory note”
1233	1233	1206includes a negotiable instrument that evidences chattel paper.”
1234	1234	1207 SECTION 160. Section 9-406 of said chapter 106 is further amended by striking out the
1235	1235	1208words “subsection (h)”, after the word “to” in subsection (g), and by inserting in place thereof
1236	1236	1209the following:-- “subsections (h) and (l)”.
1237	1237	1210 SECTION 161. Section 9-406 of said chapter 106 is hereby amended by inserting
1238	1238	1211following subsection (j) the following new subsections: --
1239	1239	1212 (k) Inapplicability to interests in certain entities. Subsections (d), (f), and (j) do not apply
1240	1240	1213to a security interest in an ownership interest in a general partnership, limited partnership, or
1241	1241	1214limited liability company.
1242	1242	1215 (l) Inapplicability of certain subsections. Subsections (a), (b), (c), and (g) do not apply to
1243	1243	1216a controllable account or controllable payment intangible.
1244	1244	1217 SECTION 162. Section 9-408 of said chapter 106 is hereby amended by inserting at the
1245	1245	1218end of subsection (f) the following new sections: -- 61 of 88
1246	1246	1219 (f) Inapplicability to interests in certain entities. This section does not apply to a security
1247	1247	1220interest in an ownership interest in a general partnership, limited partnership, or limited liability
1248	1248	1221company.
1249	1249	1222 (g) “Promissory note.” In this section, “promissory note” includes a negotiable
1250	1250	1223instrument that evidences chattel paper.
1251	1251	1224 SECTION 163. Section 9-509(a)(1) of said chapter 106 is hereby amended by striking
1252	1252	1225out the words “an authenticated” and by inserting in the following words:-- “a signed”.
1253	1253	1226 SECTION 164. Section 9-509(b) of said chapter 106 is hereby amended by striking out
1254	1254	1227the word “authenticating” in that Section and by inserting in place thereof the following word:--
1255	1255	1228“signing”.
1256	1256	1229 SECTION 165. Section 9-513 of said chapter 106 is hereby amended by striking out the
1257	1257	1230words “an authenticated” wherever they appear in that Section and by inserting in each place
1258	1258	1231thereof the following words:-- “a signed”.
1259	1259	1232 SECTION 166. Section 9-601(b) of said chapter 106 is hereby amended by inserting the
1260	1260	1233word “9-105A,” after the word “9-105,” in that Section, by striking out the word “or” following
1261	1261	1234the word “9-106,” in that Section, and by inserting the words “, or 9-107A” following the word
1262	1262	1235“9-107” in that Section
1263	1263	1236 SECTION 167. Section 9-605 of said chapter 106 is hereby amended by striking out the
1264	1264	1237word “A” at the beginning of that Section and by inserting in place thereof the following words:-
1265	1265	1238- “(a) In general: No duty owed by secured party. Except as provided in subsection (b), a” 62 of 88
1266	1266	1239 SECTION 168. Section 9-605 of said chapter 106 is further hereby amended by inserting,
1267	1267	1240at the end of subsection (a), the following new subsection:--
1268	1268	1241 (b) Exception: Secured party owes duty to debtor or obligor. A secured party owes a duty
1269	1269	1242based on its status as a secured party to a person if, at the time the secured party obtains control
1270	1270	1243of collateral that is a controllable account, controllable electronic record, or controllable payment
1271	1271	1244intangible or at the time the security interest attaches to the collateral, whichever is later:
1272	1272	1245 (1) the person is a debtor or obligor; and
1273	1273	1246 (2) the secured party knows that the information in subsection (a)(1)(A), (B), or (C)
1274	1274	1247relating to the person is not provided by the collateral, a record attached to or logically associated
1275	1275	1248with the collateral, or the system in which the collateral is recorded.
1276	1276	1249 SECTION 169. Section 9-608(a)(1)(C) of said chapter 106 is hereby amended by striking
1277	1277	1250out the words “an authenticated” in that Section and by inserting in place thereof the following
1278	1278	1251words:-- “a signed”.
1279	1279	1252 SECTION 170. Section 9-611 of said chapter 106 is hereby amended by striking out the
1280	1280	1253words “an authenticated” wherever they appear in that Section and by inserting in each place
1281	1281	1254thereof the following words:-- “a signed”.
1282	1282	1255 SECTION 171. Section 9-611(b) of said chapter 106 is hereby amended by striking out
1283	1283	1256the word “authenticated” in that Section and by inserting in place thereof the following word:--
1284	1284	1257“signed”. 63 of 88
1285	1285	1258 SECTION 172. Section 9-613 of said chapter 106 is hereby amended by inserting before
1286	1286	1259the word “Except” in the beginning of that section the following:-- “(a) Contents and form of
1287	1287	1260notification.”
1288	1288	1261 SECTION 173. Section 9-613 of said chapter 106 is hereby amended by striking the
1289	1289	1262chapeau of clause (5) and by inserting in its place the following new chapeau:
1290	1290	1263 (5) The following form of notification and the form appearing in Section 9-614(a)(3),
1291	1291	1264when completed in accordance with the instructions in subsection (b) and Section 9-614(b), each
1292	1292	1265provides sufficient information:
1293	1293	1266 SECTION 174. Section 9-613 of said chapter 106 is hereby amended by striking out the
1294	1294	1267NOTIFICATION OF DISPOSITION OF COLLATERAL form in that Section and by inserting
1295	1295	1268in place thereof the following form:--
1296	1296	1269 NOTIFICATION OF DISPOSITION OF COLLATERAL
1297	1297	1270 To: (Name of debtor, obligor, or other person to which the notification is sent)
1298	1298	1271 From: (Name, address, and telephone number of secured party)
1299	1299	1272 {1} Name of any debtor that is not an addressee:
1300	1300	1273 (Name of each debtor)
1301	1301	1274 {2} We will sell (describe collateral) (to the highest qualified bidder) at public sale. A
1302	1302	1275sale could include a lease or license. The sale will be held as follows:
1303	1303	1276 (Date) 64 of 88
1304	1304	1277 (Time)
1305	1305	1278 (Place)
1306	1306	1279 {3} We will sell (describe collateral) at private sale sometime after (date). A sale could
1307	1307	1280include a lease or license.
1308	1308	1281 {4} You are entitled to an accounting of the unpaid indebtedness secured by the property
1309	1309	1282that we intend to sell or, as applicable, lease or license.
1310	1310	1283 {5} If you request an accounting you must pay a charge of $ (amount)
1311	1311	1284 {6} You may request an accounting by calling us at (telephone number).
1312	1312	1285 [End of Form]
1313	1313	1286 (b) Instructions for form of notification. The following instructions apply to the form of
1314	1314	1287notification in subsection (a)(5):
1315	1315	1288 (1) The instructions in this subsection refer to the numbers in braces before items in the
1316	1316	1289form of notification in subsection (a)(5). Do not include the numbers or braces in the
1317	1317	1290notification. The numbers and braces are used only for the purpose of these instructions.
1318	1318	1291 (2) Include and complete item {1} only if there is a debtor that is not an addressee of the
1319	1319	1292notification and list the name or names.
1320	1320	1293 (3) Include and complete either item {2}, if the notification relates to a public disposition
1321	1321	1294of the collateral, or item {3}, if the notification relates to a private disposition of the collateral. If
1322	1322	1295item {2} is included, include the words “to the highest qualified bidder” only if applicable. 65 of 88
1323	1323	1296 (4) Include and complete items {4} and {6}.
1324	1324	1297 (5) Include and complete item {5} only if the sender will charge the recipient for an
1325	1325	1298accounting.
1326	1326	1299 SECTION 175. Section 9-614 of said chapter 106 is hereby amended by inserting before
1327	1327	1300the word “In” in the beginning of that Section the following:-- “(a) Contents and form of
1328	1328	1301notification.”
1329	1329	1302 SECTION 176. Section 9-614(a), as amended, of said chapter 106 is hereby amended by
1330	1330	1303striking out the word “9-613(1)“ in clause (1) of that Section and by inserting in place thereof the
1331	1331	1304word “9-613(a)(1)”
1332	1332	1305 SECTION 177. Section 9-614(3) of said chapter 106 is hereby amended by striking the
1333	1333	1306comma after the word “completed”, by inserting after the word “completed” the words “in
1334	1334	1307accordance with the instructions in subsection (b),”.
1335	1335	1308 SECTION 178. Section 9-614(3) of said chapter 106 is hereby amended by striking out
1336	1336	1309the NOTICE OF OUR PLAN TO SELL PROPERTY form in that Section and by inserting in
1337	1337	1310place thereof the following form:--
1338	1338	1311 (Name and address of secured party)
1339	1339	1312 (Date)
1340	1340	1313 NOTICE OF OUR PLAN TO SELL PROPERTY
1341	1341	1314 (Name and address of any obligor who is also a debtor)
1342	1342	1315 Subject: (Identify transaction) 66 of 88
1343	1343	1316 We have your (describe collateral), because you broke promises in our agreement.
1344	1344	1317 {1} We will sell (describe collateral) at public sale. A sale could include a lease or
1345	1345	1318license. The sale will be held as follows:
1346	1346	1319 (Date)
1347	1347	1320 (Time)
1348	1348	1321 (Place)
1349	1349	1322 You may attend the sale and bring bidders if you want.
1350	1350	1323 {2} We will sell (describe collateral) at private sale sometime after (date). A sale could
1351	1351	1324include a lease or license.
1352	1352	1325 {3} The money that we get from the sale, after paying our costs, will reduce the amount
1353	1353	1326you owe. If we get less money than you owe, you (will or will not, as applicable) still owe us the
1354	1354	1327difference. If we get more money than you owe, you will get the extra money, unless we must
1355	1355	1328pay it to someone else.
1356	1356	1329 {4} You can get the property back at any time before we sell it by paying us the full
1357	1357	1330amount you owe, not just the past due payments, including our expenses. To learn the exact
1358	1358	1331amount you must pay, call us at (telephone number).
1359	1359	1332 {5} If you want us to explain to you in (writing) (writing or in (description of electronic
1360	1360	1333record)) (description of electronic record) how we have figured the amount that you owe us, {6}
1361	1361	1334call us at (telephone number) (or) (write us at (secured party’s address)) (or contact us by
1362	1362	1335(description of electronic communication method)) {7} and request (a written explanation) (a 67 of 88
1363	1363	1336written explanation or an explanation in (description of electronic record)) (an explanation in
1364	1364	1337(description of electronic record)).
1365	1365	1338 {8} We will charge you $ (amount) for the explanation if we sent you another written
1366	1366	1339explanation of the amount you owe us within the last six months.
1367	1367	1340 {9} If you need more information about the sale (call us at (telephone number)) (or)
1368	1368	1341(write us at (secured party’s address)) (or contact us by (description of electronic communication
1369	1369	1342method)).
1370	1370	1343 {10} We are sending this notice to the following other people who have an interest in
1371	1371	1344(describe collateral) or who owe money under your agreement:
1372	1372	1345 (Names of all other debtors and obligors, if any)
1373	1373	1346 [End of Form]
1374	1374	1347 SECTION 179. Section 9-614 of said chapter 106 is hereby amended by inserting
1375	1375	1348following Section 6.14(a) as amended, the following new subsection:--
1376	1376	1349 (b) Instructions for form of notification. The following instructions apply to the form of
1377	1377	1350notification in subsection (a)(3):
1378	1378	1351 (1) The instructions in this subsection refer to the numbers in braces before items in the
1379	1379	1352form of notification in subsection (a)(3). Do not include the numbers or braces in the
1380	1380	1353notification. The numbers and braces are used only for the purpose of these instructions.
1381	1381	1354 (2) Include and complete either item {1}, if the notification relates to a public disposition
1382	1382	1355of the collateral, or item {2}, if the notification relates to a private disposition of the collateral. 68 of 88
1383	1383	1356 (3) Include and complete items {3}, {4}, {5}, {6}, and {7}.
1384	1384	1357 (4) In item {5}, include and complete any one of the three alternative methods for the
1385	1385	1358explanation— writing, writing or electronic record, or electronic record.
1386	1386	1359 (5) In item {6}, include the telephone number. In addition, the sender may include and
1387	1387	1360complete either or both of the two additional alternative methods of communication—writing or
1388	1388	1361electronic communication —for the recipient of the notification to communicate with the sender.
1389	1389	1362Neither of the two additional methods of communication is required to be included.
1390	1390	1363 (6) In item {7}, include and complete the method or methods for the explanation —
1391	1391	1364writing, writing or electronic record, or electronic record—included in item {5}.
1392	1392	1365 (7) Include and complete item {8} only if a written explanation is included in item {5} as
1393	1393	1366a method for communicating the explanation and the sender will charge the recipient for another
1394	1394	1367written explanation.
1395	1395	1368 (8) In item {9}, include either the telephone number or the address or both the telephone
1396	1396	1369number and the address. In addition, the sender may include and complete the additional method
1397	1397	1370of communication—electronic communication—for the recipient of the notification to
1398	1398	1371communicate with the sender. The additional method of electronic communication is not
1399	1399	1372required to be included.
1400	1400	1373 (9) If item {10} does not apply, insert “None” after “agreement:”.
1401	1401	1374 SECTION 180. Section 9-615 of said chapter 106 is hereby amended by striking out the
1402	1402	1375words “an authenticated” wherever they appear in that Section and by inserting in each place
1403	1403	1376thereof the following words:-- “a signed”. 69 of 88
1404	1404	1377 SECTION 181. Section 9-616(a)(1) of said chapter 106 is hereby amended by striking
1405	1405	1378out the word “writing” in that Section and by inserting in place thereof the following word:--
1406	1406	1379“record”.
1407	1407	1380 SECTION 182. Section 9-616(a)(2) of said chapter 106 is hereby amended by striking
1408	1408	1381out the word “authenticated” in that Section and by inserting in place thereof the following
1409	1409	1382word:-- “signed”.
1410	1410	1383 SECTION 183. Section 9-616(b)(1)(A) of said chapter 106 is hereby amended by striking
1411	1411	1384out the word “written” in that Section and by inserting, following the word “demand”, the
1412	1412	1385following words:-- “in a record”.
1413	1413	1386 SECTION 184. Section 9-616(c) of said chapter 106 is hereby amended by striking out
1414	1414	1387the words “a writing” in that Section and by inserting in place thereof the following words:-- “an
1415	1415	1388explanation”.
1416	1416	1389 SECTION 185. Section 9-619(a) of said chapter 106 is hereby amended by striking out
1417	1417	1390the word “authenticated” in that Section and by inserting in place thereof the following word:--
1418	1418	1391“signed”.
1419	1419	1392 SECTION 186. Section 9-620(a)(2) of said chapter 106 is hereby amended by striking
1420	1420	1393out the word “authenticated” and by inserting in each place thereof the following word:--
1421	1421	1394“signed”.
1422	1422	1395 SECTION 187. Section 9-620(b) of said chapter 106 is hereby amended by striking out
1423	1423	1396the word “an authenticated” in that Section and by inserting in each place thereof the following
1424	1424	1397words:-- “a signed”. 70 of 88
1425	1425	1398 SECTION 188. Section 9-620(c) of said chapter 106 is hereby amended by striking out
1426	1426	1399the word “authenticated” wherever it appears in that Section and by inserting in each place
1427	1427	1400thereof the following word:-- “signed”.
1428	1428	1401 SECTION 189. Section 9-620(f)(2) of said chapter 106 is hereby amended by striking out
1429	1429	1402the word “authenticated” and by inserting in each place thereof the following word:-- “signed”.
1430	1430	1403 SECTION 190. Section 9-621(a)(1) of said chapter 106 is hereby amended by striking
1431	1431	1404out the words “an authenticated” and by inserting in place thereof the following words:-- “a
1432	1432	1405signed”.
1433	1433	1406 SECTION 191. Section 9-624 of said chapter 106 is hereby amended by striking out the
1434	1434	1407word “authenticated” wherever it appears in that Section and by inserting in each place thereof
1435	1435	1408the following word:-- “signed”.
1436	1436	1409 SECTION 192. Section 9-628(a) of said chapter 106 is hereby amended by striking out
1437	1437	1410the word “Unless” in that Section and by inserting in place thereof the following words:--
1438	1438	1411“Subject to subsection (f), unless”.
1439	1439	1412 SECTION 193. Section 9-628(b) of said chapter 106 is hereby amended by striking out
1440	1440	1413the word “A”, following the words “Limitation of liability based on status as secured party.” in
1441	1441	1414that Section and by inserting in place thereof the following words:-- “Subject to subsection (f),
1442	1442	1415a”.
1443	1443	1416 SECTION 194. Section 9-628 of said chapter 106 is further hereby amended by inserting,
1444	1444	1417at the end of subsection (e), the following new subsection:-- 71 of 88
1445	1445	1418 (f) Exception: Limitation of liability under subsections (a) and (b) does not apply.
1446	1446	1419Subsections (a) and (b) do not apply to limit the liability of a secured party to a person if, at the
1447	1447	1420time the secured party obtains control of collateral that is a controllable account, controllable
1448	1448	1421electronic record, or controllable payment intangible or at the time the security interest attaches
1449	1449	1422to the collateral, whichever is later:
1450	1450	1423 (1) the person is a debtor or obligor; and
1451	1451	1424 (2) the secured party knows that the information in subsection (b)(1)(A), (B), or (C)
1452	1452	1425relating to the person is not provided by the collateral, a record attached to or logically associated
1453	1453	1426with the collateral, or the system in which the collateral is recorded.
1454	1454	1427 SECTION 195. Chapter 106 is further amended by adding the following new article after
1455	1455	1428Article 9:--
1456	1456	1429 ARTICLE 12
1457	1457	1430 CONTROLLABLE ELECTRONIC RECORDS
1458	1458	1431 Section 12-101. Title.
1459	1459	1432 This article may be cited as Uniform Commercial Code —Controllable Electronic
1460	1460	1433Records.
1461	1461	1434 Section 12-102. Definitions.
1462	1462	1435 (a) Article 12 definitions.
1463	1463	1436 In this article: 72 of 88
1464	1464	1437 (1) “Controllable electronic record” means a record stored in an electronic medium that
1465	1465	1438can be subjected to control under Section 12-105. The term does not include a controllable
1466	1466	1439account, a controllable payment intangible, a deposit account, an electronic copy of a record
1467	1467	1440evidencing chattel paper, an electronic document of title, electronic money, investment property,
1468	1468	1441or a transferable record.
1469	1469	1442 (2) “Qualifying purchaser” means a purchaser of a controllable electronic record or an
1470	1470	1443interest in a controllable electronic record that obtains control of the controllable electronic
1471	1471	1444record for value, in good faith, and without notice of a claim of a property right in the
1472	1472	1445controllable electronic record.
1473	1473	1446 (3) “Transferable record” has the meaning provided for that term in:
1474	1474	1447 (A) Section 201(a)(1) of the Electronic Signatures in Global and National Commerce
1475	1475	1448Act, 15 U.S.C. Section 7021(a)(1), as amended; or
1476	1476	1449 (B) Section 16(a) of the Massachusetts Uniform Electronic Transactions Act, Chapter
1477	1477	1450110G.
1478	1478	1451 (4) “Value” has the meaning provided in Section 3-303(a), as if references in that
1479	1479	1452subsection to an “instrument” were references to a controllable account, controllable electronic
1480	1480	1453record, or controllable payment intangible.
1481	1481	1454 (b) Definitions in Article 9. The definitions in Article 9 of “account debtor”, “controllable
1482	1482	1455account”, “controllable payment intangible”, “chattel paper”, “deposit account”, “electronic
1483	1483	1456money”, and “investment property” apply to this article. 73 of 88
1484	1484	1457 (c) Article 1 definitions and principles. Article 1 contains general definitions and
1485	1485	1458principles of construction and interpretation applicable throughout this article.
1486	1486	1459 Section 12-103. Relation to Article 9 and Consumer Laws.
1487	1487	1460 (a) Article 9 governs in case of conflict. If there is conflict between this article and
1488	1488	1461Article 9, Article 9 governs.
1489	1489	1462 (b) Applicable consumer law and other laws. A transaction subject to this article is
1490	1490	1463subject to any applicable rule of law that establishes a different rule for consumers, to any other
1491	1491	1464statute or regulation of the commonwealth that regulates the rates, charges, agreements, and
1492	1492	1465practices for loans, credit sales, or other extensions of credit, and to any consumer-protection
1493	1493	1466statute or regulation of the commonwealth.
1494	1494	1467 Section 12-104. Rights in Controllable Account, Controllable Electronic Record, and
1495	1495	1468Controllable Payment Intangible.
1496	1496	1469 (a) Applicability of section to controllable account and controllable payment intangible.
1497	1497	1470This section applies to the acquisition and purchase of rights in a controllable account or
1498	1498	1471controllable payment intangible, including the rights and benefits under subsections (c), (d), (e),
1499	1499	1472(g), and (h) of a purchaser and qualifying purchaser, in the same manner this section applies to a
1500	1500	1473controllable electronic record.
1501	1501	1474 (b) Control of controllable account and controllable payment intangible. To determine
1502	1502	1475whether a purchaser of a controllable account or a controllable payment intangible is a qualifying
1503	1503	1476purchaser, the purchaser obtains control of the account or payment intangible if it obtains control
1504	1504	1477of the controllable electronic record that evidences the account or payment intangible. 74 of 88
1505	1505	1478 (c) Applicability of other law to acquisition of rights. Except as provided in this section,
1506	1506	1479law other than this article determines whether a person acquires a right in a controllable
1507	1507	1480electronic record and the right the person acquires.
1508	1508	1481 (d) Shelter principle and purchase of limited interest. A purchaser of a controllable
1509	1509	1482electronic record acquires all rights in the controllable electronic record that the transferor had or
1510	1510	1483had power to transfer, except that a purchaser of a limited interest in a controllable electronic
1511	1511	1484record acquires rights only to the extent of the interest purchased.
1512	1512	1485 (e) Rights of qualifying purchaser. A qualifying purchaser acquires its rights in the
1513	1513	1486controllable electronic record free of a claim of a property right in the controllable electronic
1514	1514	1487record.
1515	1515	1488 (f) Limitation of rights of qualifying purchaser in other property. Except as provided in
1516	1516	1489subsections (a) and (e) for a controllable account and a controllable payment intangible or law
1517	1517	1490other than this article, a qualifying purchaser takes a right to payment, right to performance, or
1518	1518	1491other interest in property evidenced by the controllable electronic record subject to a claim of a
1519	1519	1492property right in the right to payment, right to performance, or other interest in property.
1520	1520	1493 (g) No-action protection for qualifying purchaser. An action may not be asserted against a
1521	1521	1494qualifying purchaser based on both a purchase by the qualifying purchaser of a controllable
1522	1522	1495electronic record and a claim of a property right in another controllable electronic record,
1523	1523	1496whether the action is framed in conversion, replevin, constructive trust, equitable lien, or other
1524	1524	1497theory.
1525	1525	1498 (h) Filing not notice. Filing of a financing statement under Article 9 is not notice of a
1526	1526	1499claim of a property right in a controllable electronic record. 75 of 88
1527	1527	1500 Section 12-105. Control of Controllable Electronic Record.
1528	1528	1501 (a) General rule: control of controllable electronic record. A person has control of a
1529	1529	1502controllable electronic record if the electronic record, a record attached to or logically associated
1530	1530	1503with the electronic record, or a system in which the electronic record is recorded:
1531	1531	1504 (1) gives the person:
1532	1532	1505 (A) power to avail itself of substantially all the benefit from the electronic record; and
1533	1533	1506 (B) exclusive power, subject to subsection (b), to:
1534	1534	1507 (i) prevent others from availing themselves of substantially all the benefit from the
1535	1535	1508electronic record; and
1536	1536	1509 (ii) transfer control of the electronic record to another person or cause another person to
1537	1537	1510obtain control of another controllable electronic record as a result of the transfer of the electronic
1538	1538	1511record; and
1539	1539	1512 (2) enables the person readily to identify itself in any way, including by name, identifying
1540	1540	1513number, cryptographic key, office, or account number, as having the powers specified in
1541	1541	1514paragraph (1).
1542	1542	1515 (b) Meaning of exclusive. Subject to subsection (c), a power is exclusive under
1543	1543	1516subsection (a)(1)(B)(i) and (ii) even if:
1544	1544	1517 (1) the controllable electronic record, a record attached to or logically associated with the
1545	1545	1518electronic record, or a system in which the electronic record is recorded limits the use of the 76 of 88
1546	1546	1519electronic record or has a protocol programmed to cause a change, including a transfer or loss of
1547	1547	1520control or a modification of benefits afforded by the electronic record; or
1548	1548	1521 (2) the power is shared with another person.
1549	1549	1522 (c) When power not shared with another person. A power of a person is not shared with
1550	1550	1523another person under subsection (b)(2) and the person’s power is not exclusive if:
1551	1551	1524 (1) the person can exercise the power only if the power also is exercised by the other
1552	1552	1525person; and
1553	1553	1526 (2) the other person:
1554	1554	1527 (A) can exercise the power without exercise of the power by the person; or
1555	1555	1528 (B) is the transferor to the person of an interest in the controllable electronic record or a
1556	1556	1529controllable account or controllable payment intangible evidenced by the controllable electronic
1557	1557	1530record.
1558	1558	1531 (d) Presumption of exclusivity of certain powers. If a person has the powers specified in
1559	1559	1532subsection (a)(1)(B)(i) and (ii), the powers are presumed to be exclusive.
1560	1560	1533 (e) Control through another person. A person has control of a controllable electronic
1561	1561	1534record if another person, other than the transferor to the person of an interest in the controllable
1562	1562	1535electronic record or a controllable account or controllable payment intangible evidenced by the
1563	1563	1536controllable electronic record:
1564	1564	1537 (1) has control of the electronic record and acknowledges that it has control on behalf of
1565	1565	1538the person; or 77 of 88
1566	1566	1539 (2) obtains control of the electronic record after having acknowledged that it will obtain
1567	1567	1540control of the electronic record on behalf of the person.
1568	1568	1541 (f) No requirement to acknowledge. A person that has control under this section is not
1569	1569	1542required to acknowledge that it has control on behalf of another person.
1570	1570	1543 (g) No duties or confirmation. If a person acknowledges that it has or will obtain control
1571	1571	1544on behalf of another person, unless the person otherwise agrees or law other than this article or
1572	1572	1545Article 9 otherwise provides, the person does not owe any duty to the other person and is not
1573	1573	1546required to confirm the acknowledgment to any other person.
1574	1574	1547 Section 12-106. Discharge of Account Debtor on Controllable Account or Controllable
1575	1575	1548Payment Intangible.
1576	1576	1549 (a) Discharge of account debtor. An account debtor on a controllable account or
1577	1577	1550controllable payment intangible may discharge its obligation by paying:
1578	1578	1551 (1) the person having control of the controllable electronic record that evidences the
1579	1579	1552controllable account or controllable payment intangible; or
1580	1580	1553 (2) except as provided in subsection (b), a person that formerly had control of the
1581	1581	1554controllable electronic record.
1582	1582	1555 (b) Content and effect of notification. Subject to subsection (d), the account debtor may
1583	1583	1556not discharge its obligation by paying a person that formerly had control of the controllable
1584	1584	1557electronic record if the account debtor receives a notification that:
1585	1585	1558 (1) is signed by a person that formerly had control or the person to which control was
1586	1586	1559transferred; 78 of 88
1587	1587	1560 (2) reasonably identifies the controllable account or controllable payment intangible;
1588	1588	1561 (3) notifies the account debtor that control of the controllable electronic record that
1589	1589	1562evidences the controllable account or controllable payment intangible was transferred;
1590	1590	1563 (4) identifies the transferee, in any reasonable way, including by name, identifying
1591	1591	1564number, cryptographic key, office, or account number; and
1592	1592	1565 (5) provides a commercially reasonable method by which the account debtor is to pay the
1593	1593	1566transferee.
1594	1594	1567 (c) Discharge following effective notification. After receipt of a notification that complies
1595	1595	1568with subsection (b), the account debtor may discharge its obligation by paying in accordance
1596	1596	1569with the notification and may not discharge the obligation by paying a person that formerly had
1597	1597	1570control.
1598	1598	1571 (d) When notification ineffective. Subject to subsection (h), notification is ineffective
1599	1599	1572under subsection (b):
1600	1600	1573 (1) unless, before the notification is sent, the account debtor and the person that, at that
1601	1601	1574time, had control of the controllable electronic record that evidences the controllable account or
1602	1602	1575controllable payment intangible agree in a signed record to a commercially reasonable method
1603	1603	1576by which a person may furnish reasonable proof that control has been transferred;
1604	1604	1577 (2) to the extent an agreement between the account debtor and seller of a payment
1605	1605	1578intangible limits the account debtor’s duty to pay a person other than the seller and the limitation
1606	1606	1579is effective under law other than this article; or
1607	1607	1580 (3) at the option of the account debtor, if the notification notifies the account debtor to: 79 of 88
1608	1608	1581 (A) divide a payment;
1609	1609	1582 (B) make less than the full amount of an installment or other periodic payment; or
1610	1610	1583 (C) pay any part of a payment by more than one method or to more than one person.
1611	1611	1584 (e) Proof of transfer of control. Subject to subsection (h), if requested by the account
1612	1612	1585debtor, the person giving the notification under subsection (b) seasonably shall furnish
1613	1613	1586reasonable proof, using the method in the agreement referred to in subsection (d)(1), that control
1614	1614	1587of the controllable electronic record has been transferred. Unless the person complies with the
1615	1615	1588request, the account debtor may discharge its obligation by paying a person that formerly had
1616	1616	1589control, even if the account debtor has received a notification under subsection (b).
1617	1617	1590 (f) What constitutes reasonable proof. A person furnishes reasonable proof under
1618	1618	1591subsection (e) that control has been transferred if the person demonstrates, using the method in
1619	1619	1592the agreement referred to in subsection (d)(1), that the transferee has the power to:
1620	1620	1593 (1) avail itself of substantially all the benefit from the controllable electronic record;
1621	1621	1594 (2) prevent others from availing themselves of substantially all the benefit from the
1622	1622	1595controllable electronic record; and
1623	1623	1596 (3) transfer the powers specified in paragraphs (1) and (2) to another person.
1624	1624	1597 (g) Rights not waivable. Subject to subsection (h), an account debtor may not waive or
1625	1625	1598vary its rights under subsections (d)(1) and (e) or its option under subsection (d)(3). 80 of 88
1626	1626	1599 (h) Rule for individual under other law. This section is subject to law other than this
1627	1627	1600article which establishes a different rule for an account debtor who is an individual and who
1628	1628	1601incurred the obligation primarily for personal, family, or household purposes.
1629	1629	1602 Section 12-107. Governing Law.
1630	1630	1603 (a) Governing law: general rule. Except as provided in subsection (b), the local law of a
1631	1631	1604controllable electronic record’s jurisdiction governs a matter covered by this article.
1632	1632	1605 (b) Governing law: Section 12-106. For a controllable electronic record that evidences a
1633	1633	1606controllable account or controllable payment intangible, the local law of the controllable
1634	1634	1607electronic record’s jurisdiction governs a matter covered by Section 12-106 unless an effective
1635	1635	1608agreement determines that the local law of another jurisdiction governs.
1636	1636	1609 (c) Controllable electronic record’s jurisdiction. The following rules determine a
1637	1637	1610controllable electronic record’s jurisdiction under this section:
1638	1638	1611 (1) If the controllable electronic record, or a record attached to or logically associated
1639	1639	1612with the controllable electronic record and readily available for review, expressly provides that a
1640	1640	1613particular jurisdiction is the controllable electronic record’s jurisdiction for purposes of this
1641	1641	1614article or this chapter, that jurisdiction is the controllable electronic record’s jurisdiction.
1642	1642	1615 (2) If paragraph (1) does not apply and the rules of the system in which the controllable
1643	1643	1616electronic record is recorded are readily available for review and expressly provide that a
1644	1644	1617particular jurisdiction is the controllable electronic record’s jurisdiction for purposes of this
1645	1645	1618article or this chapter, that jurisdiction is the controllable electronic record’s jurisdiction. 81 of 88
1646	1646	1619 (3) If paragraphs (1) and (2) do not apply and the controllable electronic record, or a
1647	1647	1620record attached to or logically associated with the controllable electronic record and readily
1648	1648	1621available for review, expressly provides that the controllable electronic record is governed by the
1649	1649	1622law of a particular jurisdiction, that jurisdiction is the controllable electronic record’s
1650	1650	1623jurisdiction.
1651	1651	1624 (4) If paragraphs (1), (2), and (3) do not apply and the rules of the system in which the
1652	1652	1625controllable electronic record is recorded are readily available for review and expressly provide
1653	1653	1626that the controllable electronic record or the system is governed by the law of a particular
1654	1654	1627jurisdiction, that jurisdiction is the controllable electronic record’s jurisdiction.
1655	1655	1628 (5) If paragraphs (1) through (4) do not apply, the controllable electronic record’s
1656	1656	1629jurisdiction is the District of Columbia.
1657	1657	1630 (d) Applicability of Article 12. If subsection (c)(5) applies and Article 12 is not in effect
1658	1658	1631in the District of Columbia without material modification, the governing law for a matter
1659	1659	1632covered by this article is the law of the District of Columbia as though Article 12 were in effect
1660	1660	1633in the District of Columbia without material modification. In this subsection, “Article 12” means
1661	1661	1634Article 12 of Uniform Commercial Code Amendments (2022).
1662	1662	1635 (e) Relation of matter or transaction to controllable electronic record’s jurisdiction not
1663	1663	1636necessary. To the extent subsections (a) and (b) provide that the local law of the controllable
1664	1664	1637electronic record’s jurisdiction governs a matter covered by this article, that law governs even if
1665	1665	1638the matter or a transaction to which the matter relates does not bear any relation to the
1666	1666	1639controllable electronic record’s jurisdiction. 82 of 88
1667	1667	1640 (f) Rights of purchasers determined at time of purchase. The rights acquired under
1668	1668	1641Section 12-104 by a purchaser or qualifying purchaser are governed by the law applicable under
1669	1669	1642this section at the time of purchase.
1670	1670	1643 SECTION 196. Chapter 106 is further amended by adding the following new article after
1671	1671	1644Article 12:--
1672	1672	1645 ARTICLE A
1673	1673	1646 TRANSITIONAL PROVISIONS FOR UNIFORM COMMERCIAL CODE
1674	1674	1647AMENDMENTS (2022)
1675	1675	1648 PART 1
1676	1676	1649 GENERAL PROVISIONS AND DEFINITIONS
1677	1677	1650 Section A-101. Title.
1678	1678	1651 This article may be cited as Transitional Provisions for Uniform Commercial Code
1679	1679	1652Amendments (2022).
1680	1680	1653 Section A-102. Definitions.
1681	1681	1654 (a) Article A Definitions. In this article:
1682	1682	1655 (1) “Adjustment date” means July 1, 2025, or the date that is one year after January 1,
1683	1683	16562027, whichever is later.
1684	1684	1657 (2) “Article 12” means Article 12 of this chapter. 83 of 88
1685	1685	1658 (3) “Article 12 property” means a controllable account, controllable electronic record, or
1686	1686	1659controllable payment intangible.
1687	1687	1660 (b) Definitions in other articles. The following definitions in other articles of this chapter
1688	1688	1661apply to this article.
1689	1689	1662 “Controllable account”. Section 9-102.
1690	1690	1663 “Controllable electronic record”. Section 12-102.
1691	1691	1664 “Controllable payment intangible”. Section 9-102.
1692	1692	1665 “Electronic money”. Section 9-102.
1693	1693	1666 “Financing statement”. Section 9-102.
1694	1694	1667 (c) Article 1 definitions and principles. Article 1 contains general definitions and
1695	1695	1668principles of construction and interpretation applicable throughout this article. References in this
1696	1696	1669article to ''this act'' refer to the legislative enactment by which chapter 106 of the General Laws is
1697	1697	1670amended effective on the date provided in Section A-401.
1698	1698	1671 PART 2
1699	1699	1672 GENERAL TRANSITIONAL PROVISION
1700	1700	1673 Section A-201. Saving Clause.
1701	1701	1674 Except as provided in Part 3, a transaction validly entered into before January 1, 2027
1702	1702	1675and the rights, duties, and interests flowing from the transaction remain valid thereafter and may 84 of 88
1703	1703	1676be terminated, completed, consummated, or enforced as required or permitted by law other than
1704	1704	1677this chapter or, if applicable, this chapter as though this act had not taken effect.
1705	1705	1678 PART 3
1706	1706	1679 TRANSITIONAL PROVISIONS FOR ARTICLES 9 AND 12
1707	1707	1680 Section A-301. Saving Clause.
1708	1708	1681 (a) Pre-effective-date transaction, lien, or interest. Except as provided in this part, Article
1709	1709	16829 as amended by this act and Article 12 apply to a transaction, lien, or other interest in property,
1710	1710	1683even if the transaction, lien, or interest was entered into, created, or acquired before January 1,
1711	1711	16842027.
1712	1712	1685 (b) Continuing validity. Except as provided in subsection (c) and Sections A-302 through
1713	1713	1686A-306:
1714	1714	1687 (1) a transaction, lien, or interest in property that was validly entered into, created, or
1715	1715	1688transferred before January 1, 2027 and was not governed by this chapter, but would be subject to
1716	1716	1689Article 9 as amended by this act or Article 12 if it had been entered into, created, or transferred
1717	1717	1690on or after January 1, 2027, including the rights, duties, and interests flowing from the
1718	1718	1691transaction, lien, or interest, remains valid on and after January 1, 2027; and
1719	1719	1692 (2) the transaction, lien, or interest may be terminated, completed, consummated, and
1720	1720	1693enforced as required or permitted by this chapter as amended by this act or by the law that would
1721	1721	1694apply if this act had not taken effect.
1722	1722	1695 (c) Pre-effective-date proceeding. This act does not affect an action, case, or proceeding
1723	1723	1696commenced before January 1, 2027. 85 of 88
1724	1724	1697 Section A-302. Security Interest Perfected Before Effective Date.
1725	1725	1698 (a) Continuing perfection: perfection requirements satisfied. A security interest that is
1726	1726	1699enforceable and perfected immediately before January 1, 2027 is a perfected security interest
1727	1727	1700under this chapter as amended by this act if, on January 1, 2027, the requirements for
1728	1728	1701enforceability and perfection under this chapter as amended by this act are satisfied without
1729	1729	1702further action.
1730	1730	1703 (b) Continuing perfection: enforceability or perfection requirements not satisfied. If a
1731	1731	1704security interest is enforceable and perfected immediately before January 1, 2027, but the
1732	1732	1705requirements for enforceability or perfection under this chapter as amended by this act, are not
1733	1733	1706satisfied on January 1, 2027, the security interest:
1734	1734	1707 (1) is a perfected security interest until the earlier of the time perfection would have
1735	1735	1708ceased under the law in effect immediately before January 1, 2027 or the adjustment date;
1736	1736	1709 (2) remains enforceable thereafter only if the security interest satisfies the requirements
1737	1737	1710for enforceability under Section 9-203, as amended by this act before the adjustment date; and
1738	1738	1711 (3) remains perfected thereafter only if the requirements for perfection under this chapter
1739	1739	1712as amended by this act are satisfied before the time specified in paragraph (1).
1740	1740	1713 Section A-303. Security Interest Unperfected Before Effective Date.
1741	1741	1714 A security interest that is enforceable immediately before January 1, 2027 but is
1742	1742	1715unperfected at that time:
1743	1743	1716 (1) remains an enforceable security interest until the adjustment date; 86 of 88
1744	1744	1717 (2) remains enforceable thereafter if the security interest becomes enforceable under
1745	1745	1718Section 9-203, as amended by this act, on January 1, 2027 or before the adjustment date; and
1746	1746	1719 (3) becomes perfected:
1747	1747	1720 (A) without further action, on January 1, 2027 if the requirements for perfection under
1748	1748	1721this chapter as amended by this act are satisfied before or at that time; or
1749	1749	1722 (B) when the requirements for perfection are satisfied if the requirements are satisfied
1750	1750	1723after that time.
1751	1751	1724 Section A-304. Effectiveness of Actions Taken Before Effective Date.
1752	1752	1725 (a) Pre-effective-date action; attachment and perfection before adjustment date. If action,
1753	1753	1726other than the filing of a financing statement, is taken before January 1, 2027 and the action
1754	1754	1727would have resulted in perfection of the security interest had the security interest become
1755	1755	1728enforceable before January 1, 2027, the action is effective to perfect a security interest that
1756	1756	1729attaches under this chapter as amended by this act before the adjustment date. An attached
1757	1757	1730security interest becomes unperfected on the adjustment date unless the security interest becomes
1758	1758	1731a perfected security interest under this chapter as amended by this act before the adjustment date.
1759	1759	1732 (b) Pre-effective-date filing. The filing of a financing statement before January 1, 2027 is
1760	1760	1733effective to perfect a security interest on January 1, 2027 to the extent the filing would satisfy the
1761	1761	1734requirements for perfection under this chapter as amended by this act.
1762	1762	1735 (c) Pre-effective-date enforceability action. The taking of an action before January 1,
1763	1763	17362027 is sufficient for the enforceability of a security interest on January 1, 2027 if the action
1764	1764	1737would satisfy the requirements for enforceability under this chapter as amended by this act. 87 of 88
1765	1765	1738 Section A-305. Priority.
1766	1766	1739 (a) Determination of priority. Subject to subsections (b) and (c), this chapter as amended
1767	1767	1740by this act determines the priority of conflicting claims to collateral.
1768	1768	1741 (b) Established priorities. Subject to subsection (c), if the priorities of claims to collateral
1769	1769	1742were established before January 1, 2027, Article 9 as in effect before January 1, 2027 determines
1770	1770	1743priority.
1771	1771	1744 (c) Determination of certain priorities on adjustment date. On the adjustment date, to the
1772	1772	1745extent the priorities determined by Article 9 as amended by this act modify the priorities
1773	1773	1746established before January 1, 2027, the priorities of claims to Article 12 property and electronic
1774	1774	1747money established before January 1, 2027 cease to apply.
1775	1775	1748 Section A-306. Priority of Claims When Priority Rules of Article 9 Do Not Apply.
1776	1776	1749 (a) Determination of priority. Subject to subsections (b) and (c), Article 12 determines the
1777	1777	1750priority of conflicting claims to Article 12 property when the priority rules of Article 9 as
1778	1778	1751amended by this act do not apply.
1779	1779	1752 (b) Established priorities. Subject to subsection (c), when the priority rules of Article 9 as
1780	1780	1753amended by this act do not apply and the priorities of claims to Article 12 property were
1781	1781	1754established before January 1, 2027, law other than Article 12 determines priority.
1782	1782	1755 (c) Determination of certain priorities on adjustment date. When the priority rules of
1783	1783	1756Article 9 as amended by this act do not apply, to the extent the priorities determined by this
1784	1784	1757chapter as amended by this act modify the priorities established before January 1, 2027, the 88 of 88
1785	1785	1758priorities of claims to Article 12 property established before January 1, 2027 cease to apply on
1786	1786	1759the adjustment date.
1787	1787	1760 PART 4
1788	1788	1761 EFFECTIVE DATE
1789	1789	1762 Section A-401. Effective Date.
1790	1790	1763 This act takes effect on January 1, 2027.