HCSHB1165--UNIFORMCOMMERCIALCODE
SPONSOR: Hicks
COMMITTEEACTION:Voted"DoPasswithHCS"bytheStanding
CommitteeonGeneralLawsbyavoteof7to4,with5present.
ThefollowingisasummaryoftheHouseCommitteeSubstituteforHB
1165.
TherevisionstotheUniformCommercialCode(UCC)arefocused
primarilyinthefollowingareas:digitalassets,controllable
electronicrecords;chattelpaper;bundledorhybridtransactions,
consistingofthesaleorleaseofgoodstogetherwiththesale,
lease,orlicensingofotherpropertyandtheprovisionofservices
asanintegratedtransaction;documentsoftitle;paymentsystems;
miscellaneousUCCamendments;andconsumerissues.
GENERALPROVISIONS(Sections400.1-201to400.1-306)
Thedefinitionof"person"isamendedtoincludeaprotectedseries
establishedundernon-UCClaw.Severaldefinitionshavebeen
includedorrevised. Thedefinitionof"money"excludesanymedium
ofexchangeinelectronicform.Theterm"electronic"isdefined
tomeantechnologyhavingelectrical,digital,magnetic,wireless,
optical,electromagnetic, orsimilarcapabilities. Thereisalsoa
reviseddefinitionof"conspicuous"anddefinitionsof"send"and
"sign"whichaddressrecordsotherthanwritings.
SALESANDLEASES(Sections400.2-102to400.2A-205)
Thebillclarifiestheprovisionsrelatingtohybridtransactions
andchangesthecurrentreferencesto"writing"or"written"
communicationtoreferinsteadtoa"record." Thebilldefinesa
"hybridlease"tomeanasingletransactionthatinvolvesleaseof
goodsandprovisionofservices;asaleofothergoods;orasale,
lease,orlicenseofpropertyotherthangoods.
Thebillalsodefines"hybridlease"andtheapplicationofthe
sectionstoahybridlease.Inahybridlease,ifthelease-of-
goodsaspectsdonotpredominateonlytheprovisionsthatrelate
primarilytothelease-of-goodsaspectsofthetransactionapply.
Thebillincludesprovisionsthatapplyiftheleaseisafinance
leaseandforpromisesofthelesseeinafinancelease.Ifthe
lease-of-goodsaspectspredominate,Sections400.2-102to400.2A-
205,RSMo,wouldapplytothetransaction,butdonotprecludethe
applicationofotherlawsthatdonotrelatetotheleaseofgoods. NEGOTIABLEINSTRUMENTS,BANKDEPOSITSANDCOLLECTIONS(Sections
400.3-104to400.4A-305)
Thisbillincludeschangestonegotiability, remotedeposit
capture,statementsofaccount,definitionofpaymentorder,and
securityprocedures. Thebillreplacesreferencestoa"writing"
withreferencestoa"record".
LETTERSOFCREDIT(Section400.5-116)
Currently,forthepurposeofjurisdiction,choiceoflawand
recognitionofinterbranchlettersofcredit,thebranchesofa
bankareconsideredseparatejuridicalentitiesandabankis
locatedattheplacewhereitsrelevantbranchislocated. The
billclarifiesthatabranchofabankisconsideredtobethe
addressindicatedinthebranch'sundertaking. Ifmorethanone
addressisindicated,thebranchisconsideredtobelocatedatthe
addressfromwhichtheundertakingwasissued.
DOCUMENTSOFTITLE(400.7-102to400.7-106)
Currently,subsection(a)ofSection400.7-106setsforththe
generaltestforcontrolinthatthesystememployedforevidencing
thetransferofinterestsintheelectronicdocumentreliably
establishesthatpersonasthepersontowhichtheelectronic
documentwasissuedortransferred. Subsections(b)and(c)of
Section400.7-106containasystemtobeabletodemonstrateand
identify,atanypointintime,thepersonentitledunderthe
electronicdocument. Thesysteminsubsection(b)requiresthe
existenceofonlyoneauthoritativecopyofthedocumentbutthe
systeminsubsection(c)allowsforeitherasingleauthoritative
copyormultipleauthoritativecopies.
Thebillincludesprovisionsrelatingtoexclusivityofpowersin
subsections(d)and(e)ofSection400.7-106,apresumptionof
exclusivityofpowersinsubsection(f)ofSection400.7-106,anda
newsubsection(g)inSection400.7-106oncontrolthroughanother
person.
INVESTMENTSECURITIES(Sections400.8-102to400.8-303)
Thisbillincorporatesdefinitionscontainedinothersectionsin
thebilltoinvestmentsecurities. Thebillspecifiestherightof
"control"tomeanthatthepurchaserhastakenwhateverstepsare
necessary,giventhemannerinwhichthesecuritiesorother
financialassetsareheld,toplaceitselfinapositionwhereit
canhavethesecuritiesorotherfinancialassetssold,without
furtheractionbytheowner,registeredowner,entitlementholder, transferor,orotherpersonwithaninterestinthesecuritiesor
otherfinancialassets.
Inaddition,thebillspecifiesthemeansbywhichapurchasercan
obtaincontrolofasecurityentitlement. Currently,apurchaser
hascontrolifitistheentitlementholder;ifthesecurities
intermediaryhasagreedtoactonentitlementordersoriginatedby
thepurchaserifnofurtherconsentbytheentitlementholderis
required. Asspecifiedinthebill,apurchasermayobtaincontrol
ifanotherpersonhascontrolandthepersonacknowledgesthatit
hascontrolonthepurchaser’sbehalf.
SECUREDTRANSACTIONS(Sections400.9-102to400.9-628)
Thebillcontainsnewdefinitionsoftheterms"assignee",
"assignor","controllableaccount","controllablepayment
intangible",and"money".Italsomodifiesexistingdefinitions
suchas"account".
Thebillrelatestosecurityinterestsincontrollableelectronic
recordsandintherightstopaymentthatareembeddedinthe
controllableelectronicrecords,controllableaccounts,and
controllablepaymentintangibles. Asspecifiedinthebill,
perfectionistheenforceability againstthirdpartiesofsecurity
interestsintheseassets.Perfectionmaybeachievedbyasecured
partyobtainingcontroloftheassetorfilingafinancing
statementintheappropriatejurisdiction’s filingoffice.A
securityinterestperfectedbycontrolhaspriorityoverasecurity
interestperfectedbyfiling.
Thebillredefines"chattelpaper",suchasinstallmentsale
contractsandpersonalpropertyleases,astherighttopaymentof
amonetaryobligationthatissecuredbyasecurityinterestin
specificgoodsorowedunderaleaseofspecificgoods,ifthe
righttopaymentandinterestinthegoodsareevidencedbya
record.Thereviseddefinitionmoreaccuratelyreflectsthe
distinctionbetweentheseller’sorlessor’srighttopaymentand
therecordevidencingthatright.Thereviseddefinitionalso
resolvesuncertaintythathasarisenwhengoodsareleasedaspart
ofahybridtransactioninvolvingservicesornon-goodspropertyas
wellasspecificgoods.Thisbilladdressesadditionalissues
relatingtohybridtransactions,andprovidesanamendeddefinition
of"control"ofanauthoritativeelectroniccopyofarecord
evidencingchattelpaper,whichreflectsamoreaccurateand
technologically flexibleapproach. Asecurityinterestinchattel
papermaybeperfectedbytakingpossessionoftheauthoritative
tangiblecopies,andobtainingcontroloftheelectronic
authoritativecopies,ifany. Theterm"money",asdefinedinthebill,appliesthroughoutthe
UCCunlessotherwiseprovided. Thebillprovidesthatperfection
ofasecurityinterestinelectronicmoney,asubsetofmoney,as
originalcollateralmustbebycontrol,notfiling.Thebill
includesareviseddefinitionof"money"thatexcludesdeposit
accountsandmoneyinanelectronicformthatcannotbesubjected
tocontrol. Thebillupdatesandclarifiesthetake-freerulesfor
transfereesofbothelectronicmoneyandtangiblemoneyand
transfereesoffundsfromdepositaccounts.
Thisbillincludesdetailedprovisionsoncontrolrelatingto
controlofdepositaccounts,controlofauthoritativeelectronic
copyofrecordevidencingchattelpaper,andcontrolofelectronic
money.
Thebillrevisestheformandinstructionsforproviding
notificationofdispositionofcollateralforaconsumer-goods
transactionandfornonconsumer-goodstransaction.
CONTROLLABLEELECTRONICRECORDS(Sections400.12-101to400.12-107)
Thebilldefinestheterms"controllableelectronicrecord",
"qualifyingpurchaser","transferablerecord",and"value". The
terms"electronic"and"record"thataredefinedinSection400.1-
201havebeenincorporatedwhichprovidesforamoreexpansive
definitionof"electronicrecord". However,thedefinitionof
"electronicrecord"containssomeexclusions.
Ifthereisaconflictbetweenthesectionsgoverningthe
controllableelectronicrecordsandthesectionsgoverningsecured
transactions,thelattercontrols. TheprovisionsofSection
400.12-104applytocontrollableaccountsandcontrollablepayment
intangiblesinthesamemannerthattheyapplytocontrollable
electronicrecords. Thepurchaserobtainscontrolbyobtaining
controlofthecontrollableelectronicrecordthatevidencesthe
accountorpaymentintangible. Undersubsection(c)ofSection
400.12-104,theresolutionofquestionsconcerningthetransferof
rightsinacontrollableelectronicrecord,suchastheactsthat
mustbetakentoeffectuateatransferofrightsandthescopeof
therightsthatatransfereeacquires,isdeterminedbyotherlaw.
Subsections(d)through(h)ofSection400.12-104,contain
importantexceptionstosubsection(c).
Thebillincludesprovisionsthatexaminecontrol. Anelectronic
recordisa"controllableelectronicrecord"underSections400.12-
101to400.12-107onlyifitcanbesubjectedtocontrolunder
Section400.12-105,andonlyapersonhavingcontrolofa
controllableelectronicrecordiseligibletobecomeaqualifying
purchaserandsototakefreeofclaimsofapropertyinterestin thecontrollableelectronicrecord,oranycontrollableaccountor
controllablepaymentintangibleevidencedbythecontrollable
electronicrecord,andtobeprotectedbythe"no-action"rule.
Controllableelectronicrecorddoesnotincludeanelectronic
recordcurrentlyauthorizedoradoptedbyagovernmentandisnota
mediumofexchangeinasystemthatexistedandoperatedforsuch
exchangepriortoauthorizationoradoptionbyagovernment.
Thebillincludesprovisionsgoverningthemeaningofexclusive
power,whenthepowerisnotsharedwithanotherperson,the
presumptionofexclusivityofcertainpowers,andcontrolthrough
anotherperson.Thebillexplainstherequirementsonhowan
accountdebtoronacontrollableaccountorcontrollablepayment
intangiblemaydischargeitsobligation.
Thebillprovidesthatthelocallawofacontrollableelectronic
record'sjurisdictiongovernsamatterthatiscoveredbySections
400.12-101to400.12-107.Ifthechoiceoflawreferstoa
jurisdictionthathasadoptedSections400.12-101to400.12-107,
thosematterswouldincludetheinterpretation andapplicationof
thesesections,includingitsdefinitions. Thebilldesignatesthe
DistrictofColumbiaasthelocationofadebtorthatotherwise
wouldbelocatedinajurisdictionwhoselawdoesnotprovidefora
generallyapplicablesystemofpublicnotice,suchasfilingor
registration,fornonpossessorysecurityinterests. This
designationalsoassumesthattheDistrictofColumbiawillhave
adoptedArticle12andtheconformingamendmentstoArticles1and
9insubstantiallytheuniformversion,withoutmaterial
modificationoftheofficialtext.
TRANSITIONALPROVISIONSFORUCCAMENDMENTS(Sections400.199-101to
400.199-306)
Asspecifiedinthebill,severalmaterialchangesinthelawwould
begiveneffectoneyearafterauniformeffectivedate.Thebill
includesauniformadjustmentdatewhichisJuly1,2025onwhich
severalmaterialprovisionswillapply,particularlynewpriority
rulesthatwouldoverridepre-effectivedateestablished
priorities.
Thefollowingisasummaryofthepublictestimonyfromthe
committeehearing. Thetestimonywasbasedontheintroduced
versionofthebill.
PROPONENTS: Supporterssaythatthisupdatesandmodernizes
Missouri'scommercialcode,incorporatingrecentlyfinalized
amendmentstotheUniformCommercialCode(UCC),includingupdating
terminologyandcertaintransactionalrequirements. Thisis importanttoempowerMissouritocooperateinareasoflawwith
otherstateswhereuniformityisnecessary. TheUCCisimportant
andbroad,touchingonnearlyeverytransaction. Havingauniform
andup-to-dateUCCthatalignswithotherstatesiscriticalto
ensuresmooth,consistent,andreliablebusinesstransactions.
ThisbillrepresentsthefirstmajorsetofamendmentstotheUCC
in12years.Thisupdateisnownecessaryduetotechnology
changesandadvancements. ThisupdatetotheUCCnowcontemplates
virtualcurrencyandotheruniqueelectronicrecordsthatmaycome
inthefuture.Thisbillisprovidesanimportantstructurefor
industrytogrowinapositiveandproductiveway.Thisbillgives
finalityandcertaintytotransactions,whichwillencourage
businessgrowth.
TestifyinginpersonforthebillwereRepresentative Hicks;
MissouriCreditUnionAssociation;BenOrzeske,UniformLaw
Commission;andtheMissouriBankersAssociation.
OPPONENTS: Therewasnooppositionvoicedtothecommittee.
Writtentestimonyhasbeensubmittedforthisbill.Thefull
writtentestimonyandwitnessestestifyingonlinecanbefound
underTestimonyonthebillpageontheHousewebsite.