FIRSTREGULARSESSION
HOUSECOMMITTEESUBSTITUTEFOR
HOUSEBILLNO.1165
102NDGENERALASSEMBLY
2226H.02C DANARADEMANMILLER,ChiefClerk
ANACT
Torepealsections400.1-201,400.1-204,400.1-301,400.1-306,400.2-102,400.2-106,400.2-
201,400.2-202,400.2-203,400.2-205,400.2-209,400.2A-102,400.2A-103,400.2A-
107,400.2A-201,400.2A-202,400.2A-203,400.2A-205,400.2A-208,400.3-104,
400.3-105,400.3-401,400.3-604,400.4A-103,400.4A-201,400.4A-202,400.4A-
203,400.4A-207,400.4A-208,400.4A-210,400.4A-211,400.4A-305,400.5-104,
400.5-116,400.7-102,400.7-106,400.8-102,400.8-103,400.8-106,400.8-110,400.8-
303,400.9-102,400.9-104,400.9-105,400.9-203,400.9-204,400.9-207,400.9-208,
400.9-209,400.9-210,400.9-301,400.9-304,400.9-305,400.9-310,400.9-312,
400.9-313,400.9-314,400.9-316,400.9-317,400.9-323,400.9-324,400.9-330,
400.9-331,400.9-332,400.9-334,400.9-341,400.9-404,400.9-406,400.9-408,
400.9-509,400.9-513,400.9-601,400.9-605,400.9-608,400.9-611,400.9-613,
400.9-614,400.9-615,400.9-616,400.9-619,400.9-620,400.9-621,400.9-624,and
400.9-628,RSMo,andtoenactinlieuthereofonehundredsevennewsections
relatingtotheuniformcommercialcode.
BeitenactedbytheGeneralAssemblyofthestateofMissouri,asfollows:
SectionA.Sections400.1-201,400.1-204,400.1-301,400.1-306,400.2-102,400.2-
2106,400.2-201,400.2-202,400.2-203,400.2-205,400.2-209,400.2A-102,400.2A-103,
3400.2A-107,400.2A-201,400.2A-202,400.2A-203,400.2A-205,400.2A-208,400.3-104,
4400.3-105,400.3-401,400.3-604,400.4A-103,400.4A-201,400.4A-202,400.4A-203,
5400.4A-207,400.4A-208,400.4A-210,400.4A-211,400.4A-305,400.5-104,400.5-116,
6400.7-102,400.7-106,400.8-102,400.8-103,400.8-106,400.8-110,400.8-303,400.9-102,
7400.9-104,400.9-105,400.9-203,400.9-204,400.9-207,400.9-208,400.9-209,400.9-210,
8400.9-301,400.9-304,400.9-305,400.9-310,400.9-312,400.9-313,400.9-314,400.9-316,
EXPLANATION—Matterenclosedinbold-facedbrackets[thus] intheabovebillisnotenactedandis
intendedtobeomittedfromthelaw.Matterinbold-facetypeintheabovebillisproposedlanguage. 9400.9-317,400.9-323,400.9-324,400.9-330,400.9-331,400.9-332,400.9-334,400.9-341,
10400.9-404,400.9-406,400.9-408,400.9-509,400.9-513,400.9-601,400.9-605,400.9-608,
11400.9-611,400.9-613,400.9-614,400.9-615,400.9-616,400.9-619,400.9-620,400.9-621,
12400.9-624,and400.9-628,RSMo,arerepealedandonehundredsevennewsectionsenacted
13inlieuthereof,tobeknownassections400.1-201,400.1-204,400.1-301,400.1-306,400.2-
14102,400.2-106,400.2-201,400.2-202,400.2-203,400.2-205,400.2-209,400.2A-102,
15400.2A-103,400.2A-107,400.2A-201,400.2A-202,400.2A-203,400.2A-205,400.2A-208,
16400.3-104,400.3-105,400.3-401,400.3-604,400.4A-103,400.4A-201,400.4A-202,400.4A-
17203,400.4A-207,400.4A-208,400.4A-210,400.4A-211,400.4A-305,400.5-104,400.5-116,
18400.7-102,400.7-106,400.8-102,400.8-103,400.8-106,400.8-110,400.8-303,400.9-102,
19400.9-104,400.9-105,400.9-107A,400.9-107B,400.9-203,400.9-204,400.9-207,400.9-
20208,400.9-209,400.9-210,400.9-301,400.9-304,400.9-305,400.9-306A,400.9-306B,
21400.9-310,400.9-312,400.9-313,400.9-314,400.9-314A,400.9-316,400.9-317,400.9-323,
22400.9-324,400.9-326A,400.9-330,400.9-331,400.9-332,400.9-334,400.9-341,400.9-404,
23400.9-406,400.9-408,400.9-509,400.9-513,400.9-601,400.9-605,400.9-608,400.9-611,
24400.9-613,400.9-614,400.9-615,400.9-616,400.9-619,400.9-620,400.9-621,400.9-624,
25400.9-628,400.12-101,400.12-102,400.12-103,400.12-104,400.12-105,400.12-106,
26400.12-107,400.199-101,400.199-102,400.199-201,400.199-301,400.199-302,400.199-
27303,400.199-304,400.199-305,400.199-306,and400.199-401,toreadasfollows:
400.1-201.(a)Unlessthecontextotherwiserequires,wordsorphrasesdefinedinthis
2section,orintheadditionaldefinitionscontainedinotherarticlesofthischapterthatapplyto
3particulararticlesorpartsthereof,havethemeaningsstated.
4 (b)Subjecttodefinitionscontainedinotherarticlesofthischapterthatapplyto
5particulararticlesorpartsthereof:
6 (1)"Action",inthesenseofajudicialproceeding,includesrecoupment,
7counterclaim,set-off,suitinequity,andanyotherproceedinginwhichrightsaredetermined.
8 (2)"Aggrievedparty"meansapartyentitledtopursuearemedy.
9 (3)"Agreement",asdistinguishedfrom"contract",meansthebargainofthepartiesin
10fact,asfoundintheirlanguageorinferredfromothercircumstances,includingcourseof
11performance,courseofdealing,orusageoftradeasprovidedinsection400.1-303.
12 (4)"Bank"meansapersonengagedinthebusinessofbankingandincludesasavings
13bank,savingsandloanassociation,creditunion,andtrustcompany.
14 (5)"Bearer"meansapersoninpossessionofanegotiableinstrument,documentof
15title,orcertificatedsecuritythatispayabletobearerorindorsedinblank.
16 (6)"Billoflading"meansadocumentevidencingthereceiptofgoodsforshipment
17issuedbyapersonengagedinthebusinessoftransportingorforwardinggoods.
18 (7)"Branch"includesaseparatelyincorporatedforeignbranchofabank.
HCSHB1165 2 19 (8)"Burdenofestablishing"afactmeanstheburdenofpersuadingthetrieroffact
20thattheexistenceofthefactismoreprobablethanitsnonexistence.
21 (9)"Buyerinordinarycourseofbusiness"meansapersonthatbuysgoodsingood
22faith,withoutknowledgethatthesaleviolatestherightsofanotherpersoninthegoods,and
23intheordinarycoursefromaperson,otherthanapawnbroker,inthebusinessofselling
24goodsofthatkind.Apersonbuysgoodsintheordinarycourseifthesaletotheperson
25comportswiththeusualorcustomarypracticesinthekindofbusinessinwhichtheselleris
26engagedorwiththeseller'sownusualorcustomarypractices.Apersonthatsellsoil,gas,or
27othermineralsatthewellheadormineheadisapersoninthebusinessofsellinggoodsofthat
28kind.Abuyerinordinarycourseofbusinessmaybuyforcash,byexchangeofother
29property,oronsecuredorunsecuredcredit,andmayacquiregoodsordocumentsoftitle
30underapreexistingcontractforsale.Onlyabuyerthattakespossessionofthegoodsorhasa
31righttorecoverthegoodsfromthesellerunderarticle2maybeabuyerinordinarycourseof
32business."Buyerinordinarycourseofbusiness"doesnotincludeapersonthatacquires
33goodsinatransferinbulkorassecurityfororintotalorpartialsatisfactionofamoneydebt.
34 (10)"Conspicuous",withreferencetoaterm,meanssowritten,displayed,or
35presentedthat,basedonthetotalityofthecircumstances,areasonablepersonagainst
36whichitistooperateoughttohavenoticedit.Whetheratermis"conspicuous"ornotisa
37decisionforthecourt.[Conspicuoustermsincludethefollowing:
38 (A)aheadingincapitalsequaltoorgreaterinsizethanthesurroundingtext,orin
39contrastingtype,font,orcolortothesurroundingtextofthesameorlessersize;and
40 (B)languageinthebodyofarecordordisplayinlargertypethanthesurrounding
41text,orincontrastingtype,font,orcolortothesurroundingtextofthesamesize,orsetoff
42fromsurroundingtextofthesamesizebysymbolsorothermarksthatcallattentiontothe
43language.]
44 (11)"Consumer"meansanindividualwhoentersintoatransactionprimarilyfor
45personal,family,orhouseholdpurposes.
46 (12)"Contract",asdistinguishedfrom"agreement",meansthetotallegalobligation
47thatresultsfromtheparties'agreementasdeterminedbythischapterassupplementedbyany
48otherapplicablelaws.
49 (13)"Creditor"includesageneralcreditor,asecuredcreditor,aliencreditor,andany
50representativeofcreditors,includinganassigneeforthebenefitofcreditors,atrusteein
51bankruptcy,areceiverinequity,andanexecutororadministratorofaninsolventdebtor'sor
52assignor'sestate.
53 (14)"Defendant"includesapersoninthepositionofdefendantinacounterclaim,
54cross-claim,orthird-partyclaim.
HCSHB1165 3 55 (15)"Delivery",withrespecttoanelectronicdocumentoftitle,meansvoluntary
56transferofcontroland,withrespecttoaninstrument,atangibledocumentoftitle,oran
57authoritativetangiblecopyofarecordevidencingchattelpaper,meansvoluntarytransfer
58ofpossession.
59 (16)"Documentoftitle"includesbilloflading,dockwarrant,dockreceipt,
60warehousereceiptororderforthedeliveryofgoods,andalsoanyotherdocumentwhichin
61theregularcourseofbusinessorfinancingistreatedasadequatelyevidencingthattheperson
62inpossessionofitisentitledtoreceive,hold,anddisposeofthedocumentandthegoodsit
63covers.Tobeadocumentoftitle,adocumentshallpurporttobeissuedbyoraddressedtoa
64baileeandpurporttocovergoodsinthebailee'spossessionwhichareeitheridentifiedorare
65fungibleportionsofanidentifiedmass.
66 (16A)"Electronic"meansrelatingtotechnologyhavingelectrical,digital,
67magnetic,wireless,optical,electromagnetic,orsimilarcapabilities.
68 (17)"Fault"meansadefault,breach,orwrongfulactoromission.
69 (18)"Fungiblegoods"means:
70 (A)goodsofwhichanyunit,bynatureorusageoftrade,istheequivalentofany
71otherlikeunit;or
72 (B)goodsthatbyagreementaretreatedasequivalent.
73 (19)"Genuine"meansfreeofforgeryorcounterfeiting.
74 (20)"Goodfaith",exceptasotherwiseprovidedinarticle5,meanshonestyinfact
75andtheobservanceofreasonablecommercialstandardsoffairdealing.
76 (21)"Holder"means:
77 (A)thepersoninpossessionofanegotiableinstrumentthatispayableeithertobearer
78ortoanidentifiedpersonthatisthepersoninpossession;[or]
79 (B)thepersoninpossessionofadocumentoftitleifthegoodsaredeliverableeither
80tobearerortotheorderofthepersoninpossession; or
81 (C)thepersonincontrol,otherthanpursuanttoSection400.7-106(g),ofa
82negotiableelectronicdocumentoftitle.
83 (22)"Insolvencyproceeding"includesanassignmentforthebenefitofcreditorsor
84otherproceedingintendedtoliquidateorrehabilitatetheestateofthepersoninvolved.
85 (23)"Insolvent"means:
86 (A)havinggenerallyceasedtopaydebtsintheordinarycourseofbusinessotherthan
87asaresultofbonafidedispute;
88 (B)beingunabletopaydebtsastheybecomedue;or
89 (C)beinginsolventwithinthemeaningoffederalbankruptcylaw.
90 (24)"Money"meansamediumofexchangethatiscurrentlyauthorizedoradopted
91byadomesticorforeigngovernmentandisnotinanelectronicform. Thetermincludesa
HCSHB1165 4 92monetaryunitofaccountestablishedbyanintergovernmentalorganizationorbyagreement
93betweentwoormorecountries.
94 (25)"Organization"meansapersonotherthananindividual.
95 (26)"Party",asdistinguishedfrom"thirdparty",meansapersonthathasengagedin
96atransactionormadeanagreementsubjecttothischapter.
97 (27)"Person"meansanindividual,corporation,businesstrust,estate,trust,
98partnership,limitedliabilitycompany,association,jointventure,government,governmental
99subdivision,agency,orinstrumentality,[publiccorporation,] oranyotherlegalorcommercial
100entity.Thetermincludesaprotectedseries,howeverdenominated,ofanentityifthe
101protectedseriesisestablishedunderlawotherthanunderthischapterthatlimits,or
102limitsifconditionsspecifiedunderthelawaresatisfied,theabilityofacreditorofthe
103entityorofanyotherprotectedseriesoftheentitytosatisfyaclaimfromassetsofthe
104protectedseries.
105 (28)"Presentvalue"meanstheamountasofadatecertainofoneormoresums
106payableinthefuture,discountedtothedatecertainbyuseofeitheraninterestratespecified
107bythepartiesifthatrateisnotmanifestlyunreasonableatthetimethetransactionisentered
108intoor,ifaninterestrateisnotsospecified,acommerciallyreasonableratethattakesinto
109accountthefactsandcircumstancesatthetimethetransactionisenteredinto.
110 (29)"Purchase"meanstakingbysale,lease,discount,negotiation,mortgage,pledge,
111lien,securityinterest,issueorreissue,gift,oranyothervoluntarytransactioncreatingan
112interestinproperty.
113 (30)"Purchaser"meansapersonthattakesbypurchase.
114 (31)"Record"meansinformationthatisinscribedonatangiblemediumorthatis
115storedinanelectronicorothermediumandisretrievableinperceivableform.
116 (32)"Remedy"meansanyremedialrighttowhichanaggrievedpartyisentitledwith
117orwithoutresorttoatribunal.
118 (33)"Representative"meansapersonempoweredtoactforanother,includingan
119agent,anofficerofacorporationorassociation,andatrustee,executor,oradministratorofan
120estate.
121 (34)"Right"includesremedy.
122 (35)"Securityinterest"meansaninterestinpersonalpropertyorfixtureswhich
123securespaymentorperformanceofanobligation."Securityinterest"includesanyinterestof
124aconsignorandabuyerofaccounts,chattelpaper,apaymentintangible,orapromissorynote
125inatransactionthatissubjecttoarticle9."Securityinterest"doesnotincludethespecial
126propertyinterestofabuyerofgoodsonidentificationofthosegoodstoacontractforsale
127undersection400.2-401,butabuyermayalsoacquirea"securityinterest"bycomplyingwith
128article9.Exceptasotherwiseprovidedinsection400.2-505,therightofasellerorlessorof
HCSHB1165 5 129goodsunderarticle2or2Atoretainoracquirepossessionofthegoodsisnota"security
130interest",butasellerorlessormayalsoacquirea"securityinterest"bycomplyingwitharticle
1319.Theretentionorreservationoftitlebyasellerofgoodsnotwithstandingshipmentor
132deliverytothebuyerundersection400.2-401islimitedineffecttoareservationofa
133"securityinterest".Whetheratransactionintheformofaleasecreatesa"securityinterest"is
134determinedpursuanttosection400.1-203.
135 (36)"Send", inconnectionwitha[writing,] record[,] or[notice] notification,means:
136 (A)todepositinthemail[or],deliverfortransmission, ortransmitbyanyother
137usualmeansofcommunication, withpostageorcostoftransmissionprovidedfor[and
138properlyaddressedand,inthecaseofaninstrument,toanaddressspecifiedthereonor
139otherwiseagreed,oriftherebenone], addressedtoanyaddressreasonableunderthe
140circumstances;or
141 (B)[inanyotherwaytocausetobereceivedanyrecordornoticewithinthetimeit
142wouldhavearrivedifproperlysent]tocausetherecordornotificationtobereceived
143withinthetimeitwouldhavebeenreceivedifproperlysentundersubparagraph(A).
144 (37)["Signed"includesusinganysymbolexecutedoradoptedwithpresentintention
145toadoptoracceptawriting] "Sign"means,withpresentintenttoauthenticateoradopta
146record:
147 (A)executeoradoptatangiblesymbol;or
148 (B)attachtoorlogicallyassociatewiththerecordanelectronicsymbol,sound,
149orprocess.
150
151"Signed","signing",and"signature"havecorrespondingmeanings.
152 (38)"State"meansaStateoftheUnitedStates,theDistrictofColumbia,PuertoRico,
153theUnitedStatesVirginIslands,oranyterritoryorinsularpossessionsubjecttothe
154jurisdictionoftheUnitedStates.
155 (39)"Surety"includesaguarantororothersecondaryobligor.
156 (40)"Term"meansaportionofanagreementthatrelatestoaparticularmatter.
157 (41)"Unauthorizedsignature"meansasignaturemadewithoutactual,implied,or
158apparentauthority.Thetermincludesaforgery.
159 (42)"Warehousereceipt"meansareceiptissuedbyapersonengagedinthebusiness
160ofstoringgoodsforhire.
161 (43)"Writing"includesprinting,typewriting,oranyotherintentionalreductionto
162tangibleform."Written"hasacorrespondingmeaning.
400.1-204.Exceptasotherwiseprovidedinarticles3,4,[and]5,and12,aperson
2givesvalueforrightsifthepersonacquiresthem:
HCSHB1165 6 3 (1)inreturnforabindingcommitmenttoextendcreditorfortheextensionof
4immediatelyavailablecredit,whetherornotdrawnuponandwhetherornotacharge-backis
5providedforintheeventofdifficultiesincollection;
6 (2)assecurityfor,orintotalorpartialsatisfactionof,apreexistingclaim;
7 (3)byacceptingdeliveryunderapreexistingcontractforpurchase;or
8 (4)inreturnforanyconsiderationsufficienttosupportasimplecontract.
400.1-301.(a)Exceptasotherwiseprovidedinthissection,whenatransactionbears
2areasonablerelationtothisstateandalsotoanotherstateornationthepartiesmayagreethat
3thelaweitherofthisstateorofsuchotherstateornationshallgoverntheirrightsandduties.
4 (b)Intheabsenceofanagreementeffectiveundersubsection(a),andexceptas
5providedinsubsection(c),thischapterappliestotransactionsbearinganappropriaterelation
6tothisstate.
7 (c)Ifoneofthefollowingprovisionsofthischapterspecifiestheapplicablelaw,that
8provisiongovernsandacontraryagreementiseffectiveonlytotheextentpermittedbythe
9lawsospecified:
10 (1)section400.2-402;
11 (2)sections400.2A-105and400.2A-106;
12 (3)section400.4-102;
13 (4)section400.4A-507;
14 (5)section400.5-116;
15 (6)section400.8-110;
16 (7)sections400.9-301through400.9-307;
17 (8)section400.12-107.
400.1-306.Aclaimorrightarisingoutofanallegedbreachmaybedischargedin
2wholeorinpartwithoutconsiderationbyagreementoftheaggrievedpartyin[an
3authenticated] asignedrecord.
400.2-102.(1)Unlessthecontextotherwiserequires,[thisarticleappliesto
2transactionsingoods;itdoesnotapplytoanytransactionwhichalthoughintheformofan
3unconditionalcontracttosellorpresentsaleisintendedtooperateonlyasasecurity
4transactionnordoesthisarticleimpairorrepealanystatuteregulatingsalestoconsumers,
5farmersorotherspecifiedclassesofbuyers] andexceptasprovidedinsubsection(3),this
6Articleappliestotransactionsingoodsand,inthecaseofahybridtransaction,it
7appliestotheextentprovidedinsubsection(2).
8 (2)Inahybridtransaction:
9 (a)Ifthesale-of-goodsaspectsdonotpredominate,onlytheprovisionsofthis
10Articlewhichrelateprimarilytothesale-of-goodsaspectsofthetransactionapply,and
11theprovisionsthatrelateprimarilytothetransactionasawholedonotapply.
HCSHB1165 7 12 (b)Ifthesale-of-goodsaspectspredominate,thisArticleappliestothe
13transactionbutdoesnotprecludeapplicationinappropriatecircumstancesofotherlaw
14toaspectsofthetransactionwhichdonotrelatetothesaleofgoods.
15 (3)ThisArticledoesnot:
16 (a)Applytoatransactionthat,eventhoughintheformofanunconditional
17contracttosellorpresentsale,operatesonlytocreateasecurityinterest;or
18 (b)Impairorrepealastatuteregulatingsalestoconsumers,farmers,orother
19specifiedclassesofbuyers.
400.2-106.(1)Inthisarticleunlessthecontextotherwiserequires"contract"and
2"agreement"arelimitedtothoserelatingtothepresentorfuturesaleofgoods."Contractfor
3sale"includesbothapresentsaleofgoodsandacontracttosellgoodsatafuturetime.A
4"sale"consistsinthepassingoftitlefromthesellertothebuyerforaprice(section400.2-
5401).A"present"meansasalewhichisaccomplishedbythemakingofthecontract.
6 (2)Goodsorconductincludinganypartofaperformanceare"conforming"or
7conformtothecontractwhentheyareinaccordancewiththeobligationsunderthecontract.
8 (3)"Termination"occurswheneitherpartypursuanttoapowercreatedbyagreement
9orlawputsanendtothecontractotherwisethanforitsbreach.On"termination"all
10obligationswhicharestillexecutoryonbothsidesaredischargedbutanyrightbasedonprior
11breachorperformancesurvives.
12 (4)"Cancellation"occurswheneitherpartyputsanendtothecontractforbreachby
13theotheranditseffectisthesameasthatof"termination"exceptthatthecancellingparty
14alsoretainsanyremedyforbreachofthewholecontractoranyunperformedbalance.
15 (5)"Hybridtransaction"meansasingletransactioninvolvingasaleofgoods
16and:
17 (a)theprovisionofservices;
18 (b)aleaseofothergoods;or
19 (c)asale,lease,orlicenseofpropertyotherthangoods.
400.2-201.(1)Exceptasotherwiseprovidedinthissectionacontractforthesaleof
2goodsforthepriceoffivehundreddollarsormoreisnotenforceablebywayofactionor
3defenseunlessthereis[somewriting] arecordsufficienttoindicatethatacontractforsale
4hasbeenmadebetweenthepartiesandsignedbythepartyagainstwhomenforcementis
5soughtorby[his]theparty'sauthorizedagentorbroker.A[writing] recordisnot
6insufficientbecauseitomitsorincorrectlystatesatermagreeduponbutthecontractisnot
7enforceableunderthis[paragraph] subsectionbeyondthequantityofgoodsshownin[such
8writing] therecord.
9 (2)Betweenmerchantsifwithinareasonabletimea[writing] recordinconfirmation
10ofthecontractandsufficientagainstthesenderisreceivedandthepartyreceivingithas
HCSHB1165 8 11reasontoknowitscontents,itsatisfiestherequirementsofsubsection(1)against[such] the
12partyunless[written] noticeinarecordofobjectiontoitscontentsisgivenwithintendays
13afteritisreceived.
14 (3)Acontractwhichdoesnotsatisfytherequirementsofsubsection(1)butwhichis
15validinotherrespectsisenforceable
16 (a)ifthegoodsaretobespeciallymanufacturedforthebuyerandarenotsuitablefor
17saletoothersintheordinarycourseoftheseller'sbusinessandtheseller,beforenoticeof
18repudiationisreceivedandundercircumstanceswhichreasonablyindicatethatthegoodsare
19forthebuyer,hasmadeeitherasubstantialbeginningoftheirmanufactureorcommitments
20fortheirprocurement;or
21 (b)ifthepartyagainstwhomenforcementissoughtadmitsinhispleading,testimony
22orotherwiseincourtthatacontractforsalewasmadebutthecontractisnotenforceable
23underthisprovisionbeyondthequantityofgoodsadmitted;or
24 (c)withrespecttogoodsforwhichpaymenthasbeenmadeandacceptedorwhich
25havebeenreceivedandaccepted(section400.2-606).
400.2-202.Termswithrespecttowhichtheconfirmatorymemorandaoftheparties
2agreeorwhichareotherwisesetforthina[writing] recordintendedbythepartiesasafinal
3expressionoftheiragreementwithrespecttosuchtermsasareincludedthereinmaynotbe
4contradictedbyevidenceofanyprioragreementorofacontemporaneousoralagreementbut
5maybeexplainedorsupplemented
6 (a)bycourseofdealingorusageoftrade(section400.1-205)orbycourseof
7performance(section400.2-208);and
8 (b)byevidenceofconsistentadditionaltermsunlessthecourtfindsthe[writing]
9recordtohavebeenintendedalsoasacompleteandexclusivestatementofthetermsofthe
10agreement.
400.2-203.Theaffixingofasealtoa[writing] recordevidencingacontractforsale
2oranoffertobuyorsellgoodsdoesnotconstitutethe[writing] recordasealedinstrument
3andthelawwithrespecttosealedinstrumentsdoesnotapplytosuchacontractoroffer.
400.2-205.Anofferbyamerchanttobuyorsellgoodsinasigned[writing] record
2whichbyitstermsgivesassurancethatitwillbeheldopenisnotrevocable,forlackof
3consideration,duringthetimestatedorifnotimeisstatedforareasonabletime,butinno
4eventmaysuchperiodofirrevocabilityexceedthreemonths;butanysuchtermofassurance
5onaformsuppliedbytheoffereemustbeseparatelysignedbytheofferor.
400.2-209.(1)Anagreementmodifyingacontractwithinthisarticleneedsno
2considerationtobebinding.
3 (2)Asignedagreementwhichexcludesmodificationorrescissionexceptbyasigned
4writingorothersignedrecordcannotbeotherwisemodifiedorrescinded,butexceptas
HCSHB1165 9 5betweenmerchantssucharequirementonaformsuppliedbythemerchantmustbeseparately
6signedbytheotherparty.
7 (3)Therequirementsofthestatuteoffraudssectionofthisarticle(section400.2-201)
8mustbesatisfiedifthecontractasmodifiediswithinitsprovisions.
9 (4)Althoughanattemptatmodificationorrescissiondoesnotsatisfythe
10requirementsofsubsection(2)or(3)itcanoperateasawaiver.
11 (5)Apartywhohasmadeawaiveraffectinganexecutoryportionofthecontractmay
12retractthewaiverbyreasonablenotificationreceivedbytheotherpartythatstrict
13performancewillberequiredofanytermwaived,unlesstheretractionwouldbeunjustin
14viewofamaterialchangeofpositioninrelianceonthewaiver.
400.2A-102.(1)ThisArticleappliestoanytransaction,regardlessofform,that
2createsaleaseand,inthecaseofahybridlease,itappliestotheextentprovidedin
3subsection(2).
4 (2)Inahybridlease:
5 (a)Ifthelease-of-goodsaspectsdonotpredominate:
6 (i)OnlytheprovisionsofthisArticlewhichrelateprimarilytothelease-of-goods
7aspectsofthetransactionapply,andtheprovisionsthatrelateprimarilytothe
8transactionasawholedonotapply;
9 (ii)Section400.2A-209appliesiftheleaseisafinancelease;and
10 (iii)Section400.2A-407appliestothepromisesofthelesseeinafinanceleaseto
11theextentthepromisesareconsiderationfortherighttopossessionanduseoftheleased
12goods;and
13 (b)Ifthelease-of-goodsaspectspredominate,thisArticleappliestothe
14transaction,butdoesnotprecludeapplicationinappropriatecircumstancesofotherlaw
15toaspectsoftheleasewhichdonotrelatetotheleaseofgoods.
400.2A-103.(1)Inthisarticleunlessthecontextotherwiserequires:
2 (a)"Buyerinordinarycourseofbusiness"meansapersonwhoingoodfaithand
3withoutknowledgethatthesaletohimorherisinviolationoftheownershiprightsor
4securityinterestorleaseholdinterestofathirdpartyinthegoodsbuysinordinarycourse
5fromapersoninthebusinessofsellinggoodsofthatkindbutdoesnotincludeapawnbroker.
6"Buying"maybeforcashorbyexchangeofotherpropertyoronsecuredorunsecuredcredit
7andincludesreceivinggoodsordocumentsoftitleunderapreexistingcontractforsalebut
8doesnotincludeatransferinbulkorassecurityfororintotalorpartialsatisfactionofa
9moneydebt.
10 (b)"Cancellation"occurswheneitherpartyputsanendtotheleasecontractfor
11defaultbytheotherparty.
HCSHB1165 10 12 (c)"Commercialunit"meanssuchaunitofgoodsasbycommercialusageisasingle
13wholeforpurposesofleaseanddivisionofwhichmateriallyimpairsitscharacterorvalueon
14themarketorinuse.Acommercialunitmaybeasinglearticle,asamachine,orasetof
15articles,asasuiteoffurnitureoralineofmachinery,oraquantity,asagrossorcarload,or
16anyotherunittreatedinuseorintherelevantmarketasasinglewhole.
17 (d)"Conforming"goodsorperformanceunderaleasecontractmeansgoodsor
18performancethatareinaccordancewiththeobligationsundertheleasecontract.
19 (e)"Consumerlease"meansaleasethatalessorregularlyengagedinthebusinessof
20leasingorsellingmakestoalesseewhoisanindividualandwhotakesunderthelease
21primarilyforapersonal,family,orhouseholdpurpose,ifthetotalpaymentstobemadeunder
22theleasecontract,excludingpaymentsforoptiontoreneworbuy,donotexceedfifty
23thousanddollars.
24 (f)"Fault"meanswrongfulact,omission,breach,ordefault.
25 (g)"Financelease"meansaleasewithrespecttowhich:
26 (i)thelessordoesnotselect,manufacture,orsupplythegoods;
27 (ii)thelessoracquiresthegoodsortherighttopossessionanduseofthegoodsin
28connectionwiththelease;and
29 (iii)oneofthefollowingoccurs:
30 (A)thelesseereceivesacopyofthecontractbywhichthelessoracquiredthegoods
31ortherighttopossessionanduseofthegoodsbeforesigningtheleasecontract;
32 (B)thelessee'sapprovalofthecontractbywhichthelessoracquiredthegoodsorthe
33righttopossessionanduseofthegoodsisaconditiontoeffectivenessoftheleasecontract;
34 (C)thelessor(aa)informsthelesseeinwritingoftheidentityofthesupplier,unless
35thelesseehasselectedthesupplieranddirectedthelessortopurchasethegoodsfromthe
36supplier,(bb)informsthelesseeinwritingthatthelesseemayhaverightsunderthecontract
37evidencingthelessor'spurchaseofthegoods,and(cc)advisedthelesseeinwritingtocontact
38thesupplierforadescriptionofanysuchrights,or
39 (D)theleasecontractdisclosesallwarrantiesandotherrightsprovidedtothelessee
40bythelessorandsupplierinconnectionwiththeleasecontractandinformsthelesseethat
41therearenowarrantiesorotherrightsprovidedtothelesseebythelessorandsupplierother
42thanthosedisclosedintheleasecontract.
43 (h)"Goods"meansallthingsthataremovableatthetimeofidentificationtothelease
44contract,orarefixturesasdefinedinSection400.2A-309,butthetermdoesnotinclude
45money,documents,instruments,accounts,chattelpaper,generalintangibles,ormineralsor
46thelike,includingoilandgas,beforeextraction.Thetermalsoincludestheunbornyoungof
47animals.
48 (h.1)"Hybridlease"meansasingletransactioninvolvingaleaseofgoodsand:
HCSHB1165 11 49 (i)theprovisionofservices;
50 (ii)asaleofothergoods;or
51 (iii)asale,lease,orlicenseofpropertyotherthangoods.
52 (i)"Installmentleasecontract"meansaleasecontractthatauthorizesorrequiresthe
53deliveryofgoodsinseparatelotstobeseparatelyaccepted,eventhoughtheleasecontract
54containsaclause"eachdeliveryisaseparatelease"oritsequivalent.
55 (j)"Lease"meansatransferoftherighttopossessionanduseofgoodsforatermin
56returnforconsideration,butasale,includingasaleonapprovalorasaleorreturn,or
57retentionorcreationofasecurityinterestisnotalease.Unlessthecontextclearlyindicates
58otherwise,thetermincludesasublease.
59 (k)"Leaseagreement"meansthebargain,withrespecttothelease,ofthelessorand
60thelesseeinfactasfoundintheirlanguageorbyimplicationfromothercircumstances
61includingcourseofdealingorusageoftradeorcourseofperformanceasprovidedinthis
62Article.Unlessthecontextclearlyindicatesotherwise,thetermincludesasublease
63agreement.
64 (l)"Leasecontract"meansthetotallegalobligationthatresultsfromthelease
65agreementasaffectedbythisArticleandanyotherapplicablerulesoflaw.Unlessthe
66contextclearlyindicatesotherwise,thetermincludesasubleasecontract.
67 (m)"Leaseholdinterest"meanstheinterestofthelessororthelesseeunderalease
68contract.
69 (n)"Lessee"meansapersonwhoacquirestherighttopossessionanduseofgoods
70underalease.Unlessthecontextclearlyindicatesotherwise,thetermincludesasublessee.
71 (o)"Lesseeinordinarycourseofbusiness"meansapersonwhoingoodfaithand
72withoutknowledgethattheleasetohimorherisinviolationoftheownershiprightsor
73securityinterestorleaseholdinterestofathirdpartyinthegoodsleasesinordinarycourse
74fromapersoninthebusinessofsellingorleasinggoodsofthatkindbutdoesnotincludea
75pawnbroker."Leasing"maybeforcashorbyexchangeofotherpropertyoronsecuredor
76unsecuredcreditandincludesreceivinggoodsordocumentsoftitleunderapreexistinglease
77contractbutdoesnotincludeatransferinbulkorassecurityfororintotalorpartial
78satisfactionofamoneydebt.
79 (p)"Lessor"meansapersonwhotransferstherighttopossessionanduseofgoods
80underalease.Unlessthecontextclearlyindicatesotherwise,thetermincludesasublessor.
81 (q)"Lessor'sresidualinterest"meansthelessor'sinterestinthegoodsafter
82expiration,termination,orcancellationoftheleasecontract.
83 (r)"Lien"meansachargeagainstorinterestingoodstosecurepaymentofadebtor
84performanceofanobligation,butthetermdoesnotincludeasecurityinterest.
HCSHB1165 12 85 (s)"Lot"meansaparcelorasinglearticlethatisthesubjectmatterofaseparatelease
86ordelivery,whetherornotitissufficienttoperformtheleasecontract.
87 (t)"Merchantlessee"meansalesseethatisamerchantwithrespecttogoodsofthe
88kindsubjecttothelease.
89 (u)"Presentvalue"meanstheamountasofadatecertainofoneormoresums
90payableinthefuture,discountedtothedatecertain.Thediscountisdeterminedbythe
91interestratespecifiedbythepartiesiftheratewasnotmanifestlyunreasonableatthetimethe
92transactionwasenteredinto;otherwise,thediscountisdeterminedbyacommercially
93reasonableratethattakesintoaccountthefactsandcircumstancesofeachcaseatthetimethe
94transactionwasenteredinto.
95 (v)"Purchase"includestakingbysale,lease,mortgage,securityinterest,pledge,gift,
96oranyothervoluntarytransactioncreatinganinterestingoods.
97 (w)"Sublease"meansaleaseofgoodstherighttopossessionanduseofwhichwas
98acquiredbythelessorasalesseeunderanexistinglease.
99 (x)"Supplier"meansapersonfromwhomalessorbuysorleasesgoodstobeleased
100underafinancelease.
101 (y)"Supplycontract"meansacontractunderwhichalessorbuysorleasesgoodsto
102beleased.
103 (z)"Termination"occurswheneitherpartypursuanttoapowercreatedbyagreement
104orlawputsanendtotheleasecontractotherwisethanfordefault.
105 (2)Otherdefinitionsapplyingtothisarticleandthesectionsinwhichtheyappearare:
106 "Accessions". Section400.2A-310(1).
107 "Constructionmortgage". Section400.2A-309(1)(d).
108 "Encumbrance". Section400.2A-309(1)(e).
109 "Fixtures". Section400.2A-309(1)(a).
110 "Fixturefiling". Section400.2A-309(1)(b).
111 "Purchasemoneylease". Section400.2A-309(1)(c).
112 (3)Thefollowingdefinitionsinotherarticlesapplytothisarticle:
113 "Account". Section400.9-102(a)(2).
114 "Betweenmerchants". Section400.2-104(3).
115 "Buyer". Section400.2-103(1)(a).
116 "Chattelpaper". Section400.9-102(a)(10).
117 "Consumergoods". Section400.9-102(a)(22).
118 "Document". Section400.9-102(a)(29).
119 "Entrusting". Section400.2-403(3).
120 "Generalintangible". Section400.9-102(a)(41).
HCSHB1165 13 121 "Goodfaith". Section400.2-103(1)(b).
122 "Instrument". Section400.9-102(a)(46).
123 "Merchant". Section400.2-104(1).
124 "Mortgage". Section400.9-102(a)(54).
125 "Pursuanttocommitment". Section400.9-102(a)(68).
126 "Receipt". Section400.2-103(1)(c).
127 "Sale". Section400.2-106(1).
128 "Saleonapproval". Section400.2-326.
129 "Saleorreturn". Section400.2-326.
130 "Seller". Section400.2-103(1)(d).
131 (4)Inadditionarticle1containsgeneraldefinitionsandprinciplesofconstructionand
132interpretationapplicablethroughoutthisarticle.
400.2A-107.Anyclaimorrightarisingoutofanallegeddefaultorbreachof
2warrantymaybedischargedinwholeorinpartwithoutconsiderationbya[written] waiveror
3renunciationinasigned[and]recorddeliveredbytheaggrievedparty.
400.2A-201.(1)Aleasecontractisnotenforceablebywayofactionordefense
2unless:
3 (a)thetotalpaymentstobemadeundertheleasecontract,excludingpaymentsfor
4optionstoreneworbuy,arelessthanonethousanddollars;or
5 (b)thereisa[writing] record,signedbythepartyagainstwhomenforcementis
6soughtorbythatparty'sauthorizedagent,sufficienttoindicatethataleasecontracthasbeen
7madebetweenthepartiesandtodescribethegoodsleasedandtheleaseterm.
8 (2)Anydescriptionofleasedgoodsoroftheleasetermissufficientandsatisfies
9subsection(1)(b),whetherornotitisspecific,ifitreasonablyidentifieswhatisdescribed.
10 (3)A[writing] recordisnotinsufficientbecauseitomitsorincorrectlystatesaterm
11agreedupon,buttheleasecontractisnotenforceableundersubsection(1)(b)beyondthe
12leasetermandthequantityofgoodsshowninthe[writing] record.
13 (4)Aleasecontractthatdoesnotsatisfytherequirementsofsubsection(1),butwhich
14isvalidinotherrespects,isenforceable:
15 (a)ifthegoodsaretobespecificallymanufacturedorobtainedforthelesseeandare
16notsuitableforleaseorsaletoothersintheordinarycourseofthelessor'sbusiness,andthe
17lessor,beforenoticeofrepudiationisreceivedandundercircumstancesthatreasonably
18indicatethatthegoodsareforthelessee,hasmadeeitherasubstantialbeginningoftheir
19manufactureorcommitmentsfortheirprocurement;
HCSHB1165 14 20 (b)ifthepartyagainstwhomenforcementissoughtadmitsinthatparty'spleading,
21testimonyorotherwiseincourtthataleasecontractwasmade,buttheleasecontractisnot
22enforceableunderthisprovisionbeyondthequantityofgoodsadmitted;or
23 (c)withrespecttogoodsthathavebeenreceivedandacceptedbythelessee.
24 (5)Theleasetermunderaleasecontractreferredtoinsubsection(4)is:
25 (a)ifthereisa[writing] recordsignedbythepartyagainstwhomenforcementis
26soughtorbythatparty'sauthorizedagentspecifyingtheleaseterm,thetermsospecified;
27 (b)ifthepartyagainstwhomenforcementissoughtadmitsinthatparty'spleading,
28testimony,orotherwiseincourtaleaseterm,thetermsoadmitted;or
29 (c)areasonableleaseterm.
400.2A-202.Termswithrespecttowhichtheconfirmatorymemorandaoftheparties
2agreeorwhichareotherwisesetforthina[writing] recordintendedbythepartiesasafinal
3expressionoftheiragreementwithrespecttosuchtermsasareincludedthereinmaynotbe
4contradictedbyevidenceofanyprioragreementorofacontemporaneousoralagreementbut
5maybeexplainedorsupplemented:
6 (a)bycourseofdealingorusageoftradeorbycourseofperformance;and
7 (b)byevidenceofconsistentadditionaltermsunlessthecourtfindsthe[writing]
8recordtohavebeenintendedalsoasacompleteandexclusivestatementofthetermsofthe
9agreement.
400.2A-203.Theaffixingofasealtoa[writing] recordevidencingaleasecontract
2oranoffertoenterintoaleasecontractdoesnotrenderthe[writing] recordasealed
3instrumentandthelawwithrespecttosealedinstrumentsdoesnotapplytotheleasecontract
4oroffer.
400.2A-205.Anofferbyamerchanttoleasegoodstoorfromanotherpersonina
2signed[writing] recordthatbyitstermsgivesassuranceitwillbeheldopenisnotrevocable,
3forlackofconsideration,duringthetimestatedor,ifnotimeisstated,forareasonabletime,
4butinnoeventmaytheperiodofirrevocabilityexceedthreemonths.Anysuchtermof
5assuranceonaformsuppliedbytheoffereemustbeseparatelysignedbytheofferor.
400.2A-208.(1)Anagreementmodifyingaleasecontractneedsnoconsiderationto
2bebinding.
3 (2)Asignedleaseagreementthatexcludesmodificationorrescissionexceptbya
4signed[writing] recordmaynotbeotherwisemodifiedorrescinded,but,exceptasbetween
5merchants,sucharequirementonaformsuppliedbyamerchantmustbeseparatelysignedby
6theotherparty.
7 (3)Althoughanattemptatmodificationorrescissiondoesnotsatisfythe
8requirementsofsubsection(2),itmayoperateasawaiver.
HCSHB1165 15 9 (4)Apartywhohasmadeawaiveraffectinganexecutoryportionofaleasecontract
10mayretractthewaiverbyreasonablenotificationreceivedbytheotherpartythatstrict
11performancewillberequiredofanytermwaived,unlesstheretractionwouldbeunjustin
12viewofamaterialchangeofpositioninrelianceonthewaiver.
400.3-104.(a)Exceptasprovidedinsubsections(c)and(d),"negotiableinstrument"
2meansanunconditionalpromiseorordertopayafixedamountofmoney,withorwithout
3interestorotherchargesdescribedinthepromiseororder,ifit:
4 (1)ispayabletobearerortoorderatthetimeitisissuedorfirstcomesinto
5possessionofaholder;
6 (2)ispayableondemandoratadefinitetime;and
7 (3)doesnotstateanyotherundertakingorinstructionbythepersonpromisingor
8orderingpaymenttodoanyactinadditiontothepaymentofmoney,butthepromiseororder
9maycontain(i)anundertakingorpowertogive,maintain,orprotectcollateraltosecure
10payment,(ii)anauthorizationorpowertotheholdertoconfessjudgmentorrealizeonor
11disposeofcollateral,[or](iii)awaiverofthebenefitofanylawintendedfortheadvantageor
12protectionofanobligor, (iv)atermthatspecifiesthelawthatgovernsthepromiseor
13order,or(v)anundertakingtoresolveinaspecifiedforumadisputeconcerningthe
14promiseororder.
15 (b)"Instrument"meansanegotiableinstrument.
16 (c)Anorderthatmeetsalloftherequirementsofsubsection(a),exceptparagraph(1),
17andotherwisefallswithinthedefinitionof"check"insubsection(f)isanegotiable
18instrumentandacheck.
19 (d)Apromiseororderotherthanacheckisnotaninstrumentif,atthetimeitis
20issuedorfirstcomesintopossessionofaholder,itcontainsaconspicuousstatement,however
21expressed,totheeffectthatthepromiseororderisnotnegotiableorisnotaninstrument
22governedbythisArticle.
23 (e)Aninstrumentisa"note"ifitisapromiseandisa"draft"ifitisanorder.Ifan
24instrumentfallswithinthedefinitionofboth"note"and"draft,"apersonentitledtoenforce
25theinstrumentmaytreatitaseither.
26 (f)"Check"means(i)adraft,otherthanadocumentarydraft,payableondemandand
27drawnonabankor(ii)acashier'scheckorteller'scheck.Aninstrumentmaybeacheckeven
28thoughitisdescribedonitsfacebyanotherterm,suchas"moneyorder."
29 (g)"Cashier'scheck"meansadraftwithrespecttowhichthedraweranddraweeare
30thesamebankorbranchesofthesamebank.
31 (h)"Teller'scheck"meansadraftdrawnbyabank(i)onanotherbank,or(ii)payable
32atorthroughabank.
HCSHB1165 16 33 (i)"Traveler'scheck"meansaninstrumentthat(i)ispayableondemand,(ii)isdrawn
34onorpayableatorthroughabank,(iii)isdesignatedbytheterm"traveler'scheck"orbya
35substantiallysimilarterm,and(iv)requires,asaconditiontopayment,acountersignatureby
36apersonwhosespecimensignatureappearsontheinstrument.
37 (j)"Certificateofdeposit"meansaninstrumentcontaininganacknowledgementbya
38bankthatasumofmoneyhasbeenreceivedbythebankandapromisebythebanktorepay
39thesumofmoney.Acertificateofdepositisanoteofthebank.
40 (k)"Demanddraft",awritingnotsignedbythecustomerthatiscreatedbyathird
41partyunderthepurportedauthorityofthecustomerforthepurposeofchargingthecustomer's
42accountwithabank.Ademanddraftshallcontainthecustomer'saccountnumberandmay
43containanyorallofthefollowing:
44 a.Thecustomer'sprintedortypewrittenname;
45 b.Anotationthatthecustomerauthorizedthedraft;or
46 c.Thestatement"Nosignaturerequired"orwordstothateffect.
47
48Ademanddraftshallnotincludeacheckpurportedlydrawnbyandbearingthesignatureofa
49fiduciary,asdefinedinparagraph(1)ofsubsection(a)ofsection400.3.-307.
400.3-105.(a)"Issue"means:
2 (1)thefirstdeliveryofaninstrumentbythemakerordrawer,whethertoaholderor
3nonholder,forthepurposeofgivingrightsontheinstrumenttoanyperson; or
4 (2)ifagreedbythepayee,thefirsttransmissionbythedrawertothepayeeofan
5imageofanitemandinformationderivedfromtheitemthatenablesthedepositary
6banktocollecttheitembytransferringorpresentingunderfederallawanelectronic
7check.
8 (b)Anunissuedinstrument,oranunissuedincompleteinstrumentthatiscompleted,
9isbindingonthemakerordrawer,butnonissuanceisadefense.Aninstrumentthatis
10conditionallyissuedorisissuedforaspecialpurposeisbindingonthemakerordrawer,but
11failureoftheconditionorspecialpurposetobefulfilledisadefense.
12 (c)"Issuer"appliestoissuedandunissuedinstrumentsandmeansamakerordrawer
13ofaninstrument.
400.3-401.[(a)]Apersonisnotliableonaninstrumentunless(i)thepersonsigned
2theinstrument,or(ii)thepersonisrepresentedbyanagentorrepresentativewhosignedthe
3instrumentandthesignatureisbindingontherepresentedpersonunderSection400.3-402.
4 [(b)Asignaturemaybemade(i)manuallyorbymeansofadeviceormachine,and
5(ii)bytheuseofanyname,includingatradeorassumedname,orbyaword,mark,orsymbol
6executedoradoptedbyapersonwithpresentintentiontoauthenticateawriting.]
HCSHB1165 17 400.3-604.(a)Apersonentitledtoenforceaninstrument,withorwithout
2consideration,maydischargetheobligationofapartytopaytheinstrument(i)byan
3intentionalvoluntaryact,suchassurrenderoftheinstrumenttotheparty,destruction,
4mutilation,orcancellationoftheinstrument,cancellationorstrikingoutoftheparty's
5signature,ortheadditionofwordstotheinstrumentindicatingdischarge,or(ii)byagreeing
6nottosueorotherwiserenouncingrightsagainstthepartybyasigned[writing] record.The
7obligationofapartytopayacheckisnotdischargedsolelybydestructionofthecheck
8inconnectionwithaprocessinwhichinformationisextractedfromthecheckandan
9imageofthecheckismadeand,subsequently,theinformationandimageare
10transmittedforpayment.
11 (b)Cancellationorstrikingoutofanendorsementpursuanttosubsection(a)doesnot
12affectthestatusandrightsofapartyderivedfromtheendorsement.
400.4A-103.(a)InthisArticle:
2 (1)"Paymentorder"meansaninstructionofasendertoareceivingbank,transmitted
3orally[, electronically,]orin[writing] arecord,topay,ortocauseanotherbanktopay,a
4fixedordeterminableamountofmoneytoabeneficiaryif:
5 (i)theinstructiondoesnotstateaconditiontopaymenttothebeneficiaryotherthan
6timeofpayment;
7 (ii)thereceivingbankistobereimbursedbydebitinganaccountof,orotherwise
8receivingpaymentfrom,thesender;and
9 (iii)theinstructionistransmittedbythesenderdirectlytothereceivingbankortoan
10agent,funds-transfersystem,orcommunicationsystemfortransmittaltothereceivingbank;
11 (2)"Beneficiary"meansthepersontobepaidbythebeneficiary'sbank;
12 (3)"Beneficiary'sbank"meansthebankidentifiedinapaymentorderinwhichan
13accountofthebeneficiaryistobecreditedpursuanttotheorderorwhichotherwiseisto
14makepaymenttothebeneficiaryiftheorderdoesnotprovideforpaymenttoanaccount;
15 (4)"Receivingbank"meansthebanktowhichthesender'sinstructionisaddressed;
16 (5)"Sender"meansthepersongivingtheinstructiontothereceivingbank.
17 (b)Ifaninstructioncomplyingwithsubsection(a)(1)istomakemorethanone
18paymenttoabeneficiary,theinstructionisaseparatepaymentorderwithrespecttoeach
19payment.
20 (c)Apaymentorderisissuedwhenitissenttothereceivingbank.
400.4A-201."Securityprocedure"meansaprocedureestablishedbyagreementofa
2customerandareceivingbankforthepurposeof(i)verifyingthatapaymentorderor
3communicationamendingorcancellingapaymentorderisthatofthecustomer,or(ii)
4detectingerrorinthetransmissionorthecontentofthepaymentorderorcommunication.A
5securityproceduremayimposeanobligationonthereceivingbankorthecustomerand
HCSHB1165 18 6requiretheuseofalgorithmsorothercodes,identifyingwords[or],numbers,symbols,
7sounds,biometrics,encryption,callbackprocedures,orsimilarsecuritydevices.
8Comparisonofasignatureonapaymentorderorcommunicationwithanauthorized
9specimensignatureofthecustomerorrequiringapaymentordertobesentfromaknown
10emailaddress,IPaddress,ortelephonenumberisnotbyitselfasecurityprocedure.
400.4A-202.(a)Apaymentorderreceivedbythereceivingbankistheauthorized
2orderofthepersonidentifiedassenderifthatpersonauthorizedtheorderorisotherwise
3boundbyitunderthelawofagency.
4 (b)Ifabankanditscustomerhaveagreedthattheauthenticityofpaymentorders
5issuedtothebankinthenameofthecustomerassenderwillbeverifiedpursuanttoasecurity
6procedure,apaymentorderreceivedbythereceivingbankiseffectiveastheorderofthe
7customer,whetherornotauthorized,if(i)thesecurityprocedureisacommercially
8reasonablemethodofprovidingsecurityagainstunauthorizedpaymentorders,and(ii)the
9bankprovesthatitacceptedthepaymentorderingoodfaithandincompliancewiththe
10bank'sobligationsunderthesecurityprocedureandany[written] agreementorinstruction
11ofthecustomer, evidencedbyarecord,restrictingacceptanceofpaymentordersissuedin
12thenameofthecustomer.Thebankisnotrequiredtofollowaninstructionthatviolates[a
13written] anagreementwiththecustomer, evidencedbyarecord,ornoticeofwhichisnot
14receivedatatimeandinamanneraffordingthebankareasonableopportunitytoactonit
15beforethepaymentorderisaccepted.
16 (c)Commercialreasonablenessofasecurityprocedureisaquestionoflawtobe
17determinedbyconsideringthewishesofthecustomerexpressedtothebank,the
18circumstancesofthecustomerknowntothebank,includingthesize,type,andfrequency
19ofpaymentordersnormallyissuedbythecustomertothebank,alternativesecurity
20proceduresofferedtothecustomer,andsecurityproceduresingeneralusebycustomersand
21receivingbankssimilarlysituated.Asecurityprocedureisdeemedtobecommercially
22reasonableif(i)thesecurityprocedurewaschosenbythecustomerafterthebankoffered,
23andthecustomerrefused,asecurityprocedurethatwascommerciallyreasonableforthat
24customer,and(ii)thecustomerexpresslyagreedin[writing] arecordtobeboundbyany
25paymentorder,whetherornotauthorized,issuedinitsnameandacceptedbythebankin
26compliancewiththebank'sobligationsunderthesecurityprocedurechosenbythe
27customer.
28 (d)Theterm"sender"inthisArticleincludesthecustomerinwhosenameapayment
29orderisissuediftheorderistheauthorizedorderofthecustomerundersubsection(a),oritis
30effectiveastheorderofthecustomerundersubsection(b).
31 (e)Thissectionappliestoamendmentsandcancellationsofpaymentorderstothe
32sameextentitappliestopaymentorders.
HCSHB1165 19 33 (f)Exceptasprovidedinthissectionandinsection400.4A-203(a)(1),rightsand
34obligationsarisingunderthissectionorsection400.4A-203maynotbevariedbyagreement.
400.4A-203.(a)Ifanacceptedpaymentorderisnot,undersection400.4A-202(a),
2anauthorizedorderofacustomeridentifiedassender,butiseffectiveasanorderofthe
3customerpursuanttosection400.4A-202(b),thefollowingrulesapply:
4 (1)Byexpress[written] agreementevidencedbyarecord, thereceivingbankmay
5limittheextenttowhichitisentitledtoenforceorretainpaymentofthepaymentorder.
6 (2)Thereceivingbankisnotentitledtoenforceorretainpaymentofthepayment
7orderifthecustomerprovesthattheorderwasnotcaused,directlyorindirectly,byaperson
8(i)entrustedatanytimewithdutiestoactforthecustomerwithrespecttopaymentordersor
9thesecurityprocedure,or(ii)whoobtainedaccesstotransmittingfacilitiesofthecustomeror
10whoobtained,fromasourcecontrolledbythecustomerandwithoutauthorityofthe
11receivingbank,informationfacilitatingbreachofthesecurityprocedure,regardlessofhow
12theinformationwasobtainedorwhetherthecustomerwasatfault.Informationincludesany
13accessdevice,computersoftware,orthelike.
14 (b)Thissectionappliestoamendmentsofpaymentorderstothesameextentit
15appliestopaymentorders.
400.4A-207.(a)Subjecttosubsection(b),if,inapaymentorderreceivedbythe
2beneficiary'sbank,thename,bankaccountnumber,orotheridentificationofthebeneficiary
3referstoanonexistentorunidentifiablepersonoraccount,nopersonhasrightsasa
4beneficiaryoftheorderandacceptanceoftheordercannotoccur.
5 (b)Ifapaymentorderreceivedbythebeneficiary'sbankidentifiesthebeneficiary
6bothbynameandbyanidentifyingorbankaccountnumberandthenameandnumber
7identifydifferentpersons,thefollowingrulesapply:
8 (1)Exceptasotherwiseprovidedinsubsection3ofthissection,ifthebeneficiary's
9bankdoesnotknowthatthenameandnumberrefertodifferentpersons,itmayrelyonthe
10numberastheproperidentificationofthebeneficiaryoftheorder.Thebeneficiary'sbank
11neednotdeterminewhetherthenameandnumberrefertothesameperson.
12 (2)Ifthebeneficiary'sbankpaysthepersonidentifiedbynameorknowsthatthe
13nameandnumberidentifydifferentpersons,nopersonhasrightsasbeneficiaryexceptthe
14personpaidbythebeneficiary'sbankifthatpersonwasentitledtoreceivepaymentfromthe
15originatorofthefundstransfer.Ifnopersonhasrightsasbeneficiary,acceptanceoftheorder
16cannotoccur.
17 (c)If(i)apaymentorderdescribedinsubsection(b)isaccepted,(ii)theoriginator's
18paymentorderdescribedthebeneficiaryinconsistentlybynameandnumber,and(iii)the
19beneficiary'sbankpaysthepersonidentifiedbynumberaspermittedbysubsection(b)(1),the
20followingrulesapply:
HCSHB1165 20 21 (1)Iftheoriginatorisabank,theoriginatorisobligedtopayitsorder.
22 (2)Iftheoriginatorisnotabankandprovesthatthepersonidentifiedbynumberwas
23notentitledtoreceivepaymentfromtheoriginator,theoriginatorisnotobligedtopayits
24orderunlesstheoriginator'sbankprovesthattheoriginator,beforeacceptanceofthe
25originator'sorder,hadnoticethatpaymentofapaymentorderissuedbytheoriginatormight
26bemadebythebeneficiary'sbankonthebasisofanidentifyingorbankaccountnumbereven
27ifitidentifiesapersondifferentfromthenamedbeneficiary.Proofofnoticemaybemadeby
28anyadmissibleevidence.Theoriginator'sbanksatisfiestheburdenofproofifitprovesthat
29theoriginator,beforethepaymentorderwasaccepted,signeda[writing] recordstatingthe
30informationtowhichthenoticerelates.
31 (d)Inacasegovernedbysubsection(b)(1),ifthebeneficiary'sbankrightfullypays
32thepersonidentifiedbynumberandthatpersonwasnotentitledtoreceivepaymentfromthe
33originator,theamountpaidmayberecoveredfromthatpersontotheextentallowedbythe
34lawgoverningmistakeandrestitutionasfollows:
35 (1)Iftheoriginatorisobligedtopayitspaymentorderasstatedinsubsection(c),the
36originatorhastherighttorecover;
37 (2)Iftheoriginatorisnotabankandisnotobligedtopayitspaymentorder,the
38originator'sbankhastherighttorecover.
400.4A-208.(a)Thissubsectionappliestoapaymentorderidentifyingan
2intermediarybankorthebeneficiary'sbankonlybyanidentifyingnumber:
3 (1)Thereceivingbankmayrelyonthenumberastheproperidentificationofthe
4intermediaryorbeneficiary'sbankandneednotdeterminewhetherthenumberidentifiesa
5bank.
6 (2)Thesenderisobligedtocompensatethereceivingbankforanylossandexpenses
7incurredbythereceivingbankasaresultofitsrelianceonthenumberinexecutingor
8attemptingtoexecutetheorder.
9 (b)Thissubsectionappliestoapaymentorderidentifyinganintermediarybankorthe
10beneficiary'sbankbothbynameandanidentifyingnumberifthenameandnumberidentify
11differentpersons.
12 (1)Ifthesenderisabank,thereceivingbankmayrelyonthenumberastheproper
13identificationoftheintermediaryorbeneficiary'sbankifthereceivingbank,whenitexecutes
14thesender'sorder,doesnotknowthatthenameandnumberidentifydifferentpersons.The
15receivingbankneednotdeterminewhetherthenameandnumberrefertothesamepersonor
16whetherthenumberreferstoabank.Thesenderisobligedtocompensatethereceivingbank
17foranylossandexpensesincurredbythereceivingbankasaresultofitsrelianceonthe
18numberinexecutingorattemptingtoexecutetheorder.
HCSHB1165 21 19 (2)Ifthesenderisnotabankandthereceivingbankprovesthatthesender,before
20thepaymentorderwasaccepted,hadnoticethatthereceivingbankmightrelyonthenumber
21astheproperidentificationoftheintermediaryorbeneficiary'sbankevenifitidentifiesa
22persondifferentfromthebankidentifiedbyname,therightsandobligationsofthesenderand
23thereceivingbankaregovernedbysubsection(b)(1),asthoughthesenderwereabank.Proof
24ofnoticemaybemadebyanyadmissibleevidence.Thereceivingbanksatisfiestheburden
25ofproofifitprovesthatthesender,beforethepaymentorderwasaccepted,signeda[writing]
26recordstatingtheinformationtowhichthenoticerelates.
27 (3)Regardlessofwhetherthesenderisabank,thereceivingbankmayrelyonthe
28nameastheproperidentificationoftheintermediaryorbeneficiary'sbankifthereceiving
29bank,atthetimeitexecutesthesender'sorder,doesnotknowthatthenameandnumber
30identifydifferentpersons.Thereceivingbankneednotdeterminewhetherthenameand
31numberrefertothesameperson.
32 (4)Ifthereceivingbankknowsthatthenameandnumberidentifydifferentpersons,
33relianceoneitherthenameorthenumberinexecutingthesender'spaymentorderisabreach
34oftheobligationstatedinsection400.4A-302(a)(1).
400.4A-210.(a)Apaymentorderisrejectedbythereceivingbankbyanoticeof
2rejectiontransmittedtothesenderorally[, electronically,]orin[writing] arecord.Anotice
3ofrejectionneednotuseanyparticularwordsandissufficientifitindicatesthatthereceiving
4bankisrejectingtheorderorwillnotexecuteorpaytheorder.Rejectioniseffectivewhen
5thenoticeisgiveniftransmissionisbyameansthatisreasonableinthecircumstances.If
6noticeofrejectionisgivenbyameansthatisnotreasonable,rejectioniseffectivewhenthe
7noticeisreceived.Ifanagreementofthesenderandreceivingbankestablishesthemeansto
8beusedtorejectapaymentorder,(i)anymeanscomplyingwiththeagreementisreasonable
9and(ii)anymeansnotcomplyingisnotreasonableunlessnosignificantdelayinreceiptof
10thenoticeresultedfromtheuseofthenoncomplyingmeans.
11 (b)Thissubsectionappliesifareceivingbankotherthanthebeneficiary'sbankfails
12toexecuteapaymentorderdespitetheexistenceontheexecutiondateofawithdrawable
13creditbalanceinanauthorizedaccountofthesendersufficienttocovertheorder.Ifthe
14senderdoesnotreceivenoticeofrejectionoftheorderontheexecutiondateandthe
15authorizedaccountofthesenderdoesnotbearinterest,thebankisobligedtopayinterestto
16thesenderontheamountoftheorderforthenumberofdayselapsingaftertheexecutiondate
17totheearlierofthedaytheorderiscancelledpursuanttosection400.4A-211(d)ortheday
18thesenderreceivesnoticeorlearnsthattheorderwasnotexecuted,countingthefinaldayof
19theperiodasanelapsedday.Ifthewithdrawablecreditbalanceduringthatperiodfallsbelow
20theamountoftheorder,theamountofinterestisreducedaccordingly.
HCSHB1165 22 21 (c)Ifareceivingbanksuspendspayments,allunacceptedpaymentordersissuedtoit
22aredeemedrejectedatthetimethebanksuspendspayments.
23 (d)Acceptanceofapaymentorderprecludesalaterrejectionoftheorder.Rejection
24ofapaymentorderprecludesalateracceptanceoftheorder.
400.4A-211.(a)Acommunicationofthesenderofapaymentordercancellingor
2amendingtheordermaybetransmittedtothereceivingbankorally[, electronically,]orin
3[writing] arecord.Ifasecurityprocedureisineffectbetweenthesenderandthereceiving
4bank,thecommunicationisnoteffectivetocanceloramendtheorderunlessthe
5communicationisverifiedpursuanttothesecurityprocedureorthebankagreestothe
6cancellationoramendment.
7 (b)Subjecttosubsection(a),acommunicationbythesendercancellingoramending
8apaymentorderiseffectivetocanceloramendtheorderifnoticeofthecommunicationis
9receivedatatimeandinamanneraffordingthereceivingbankareasonableopportunityto
10actonthecommunicationbeforethebankacceptsthepaymentorder.
11 (c)Afterapaymentorderhasbeenaccepted,cancellationoramendmentoftheorder
12isnoteffectiveunlessthereceivingbankagreesorafunds-transfersystemruleallows
13cancellationoramendmentwithoutagreementofthebank.
14 (1)Withrespecttoapaymentorderacceptedbyareceivingbankotherthanthe
15beneficiary'sbank,cancellationoramendmentisnoteffectiveunlessaconforming
16cancellationoramendmentofthepaymentorderissuedbythereceivingbankisalsomade.
17 (2)Withrespecttoapaymentorderacceptedbythebeneficiary'sbank,cancellation
18oramendmentisnoteffectiveunlesstheorderwasissuedinexecutionofanunauthorized
19paymentorder,orbecauseofamistakebyasenderinthefundstransferwhichresultedinthe
20issuanceofapaymentorder(i)thatisaduplicateofapaymentorderpreviouslyissuedbythe
21sender,(ii)thatorderspaymenttoabeneficiarynotentitledtoreceivepaymentfromthe
22originator,or(iii)thatorderspaymentinanamountgreaterthantheamountthebeneficiary
23wasentitledtoreceivefromtheoriginator.Ifthepaymentorderiscancelledoramended,the
24beneficiary'sbankisentitledtorecoverfromthebeneficiaryanyamountpaidtothe
25beneficiarytotheextentallowedbythelawgoverningmistakeandrestitution.
26 (d)Anunacceptedpaymentorderiscancelledbyoperationoflawatthecloseofthe
27fifthfunds-transferbusinessdayofthereceivingbankaftertheexecutiondateorpayment
28dateoftheorder.
29 (e)Acancelledpaymentordercannotbeaccepted.Ifanacceptedpaymentorderis
30cancelled,theacceptanceisnullifiedandnopersonhasanyrightorobligationbasedonthe
31acceptance.Amendmentofapaymentorderisdeemedtobecancellationoftheoriginal
32orderatthetimeofamendmentandissueofanewpaymentorderintheamendedformatthe
33sametime.
HCSHB1165 23 34 (f)Unlessotherwiseprovidedinanagreementofthepartiesorinafunds-transfer
35systemrule,ifthereceivingbank,afteracceptingapaymentorder,agreestocancellationor
36amendmentoftheorderbythesenderorisboundbyafunds-transfersystemruleallowing
37cancellationoramendmentwithoutthebank'sagreement,thesender,whetherornot
38cancellationoramendmentiseffective,isliabletothebankforanylossandexpenses,
39includingreasonableattorney'sfees,incurredbythebankasaresultofthecancellationor
40amendmentorattemptedcancellationoramendment.
41 (g)Apaymentorderisnotrevokedbythedeathorlegalincapacityofthesender
42unlessthereceivingbankknowsofthedeathorofanadjudicationofincapacitybyacourtof
43competentjurisdictionandhasreasonableopportunitytoactbeforeacceptanceoftheorder.
44 (h)Afunds-transfersystemruleisnoteffectivetotheextentitconflictswith
45subsection(c)(2).
400.4A-305.(a)Ifafundstransferiscompletedbutexecutionofapaymentorderby
2thereceivingbankinbreachofsection400.4A-302resultsindelayinpaymenttothe
3beneficiary,thebankisobligedtopayinteresttoeithertheoriginatororthebeneficiaryofthe
4fundstransferfortheperiodofdelaycausedbytheimproperexecution.Exceptasprovided
5insubsection(c),additionaldamagesarenotrecoverable.
6 (b)Ifexecutionofapaymentorderbyareceivingbankinbreachofsection400.4A-
7302resultsin(i)noncompletionofthefundstransfer,(ii)failuretouseanintermediarybank
8designatedbytheoriginator,or(iii)issuanceofapaymentorderthatdoesnotcomplywith
9thetermsofthepaymentorderoftheoriginator,thebankisliabletotheoriginatorforits
10expensesinthefundstransferandforincidentalexpensesandinterestlosses,totheextentnot
11coveredbysubsection(a),resultingfromtheimproperexecution.Exceptasprovidedin
12subsection(c),additionaldamagesarenotrecoverable.
13 (c)Inadditiontotheamountspayableundersubsections(a)and(b),damages,
14includingconsequentialdamages,arerecoverabletotheextentprovidedinanexpress
15[written] agreementofthereceivingbank, evidencedbyarecord.
16 (d)Ifareceivingbankfailstoexecuteapaymentorderitwasobligedbyexpress
17agreementtoexecute,thereceivingbankisliabletothesenderforitsexpensesinthe
18transactionandforincidentalexpensesandinterestlossesresultingfromthefailureto
19execute.Additionaldamages,includingconsequentialdamages,arerecoverabletotheextent
20providedinanexpress[written] agreementofthereceivingbank,evidencedbyarecord,but
21arenototherwiserecoverable.
22 (e)Reasonableattorney'sfeesarerecoverableifdemandforcompensationunder
23subsection(a)or(b)ismadeandrefusedbeforeanactionisbroughtontheclaim.Ifaclaim
24ismadeforbreachofanagreementundersubsection(d)andtheagreementdoesnotprovide
HCSHB1165 24 25fordamages,reasonableattorney'sfeesarerecoverableifdemandforcompensationunder
26subsection(d)ismadeandrefusedbeforeanactionisbroughtontheclaim.
27 (f)Exceptasstatedinthissection,theliabilityofareceivingbankundersubsections
28(a)and(b)maynotbevariedbyagreement.
400.5-104.Aletterofcredit,confirmation,advice,transfer,amendmentor
2cancellationmaybeissuedinanyformthatisasignedrecord[andisauthenticated:
3 (i)Byasignature;or
4 (ii)Inaccordancewiththeagreementofthepartiesorthestandardpracticereferredto
5insection400.5-108(e)].
400.5-116.(a)Theliabilityofanissuer,nominatedpersonoradviserforactionor
2omissionisgovernedbythelawofthejurisdictionchosenbyanagreementintheformofa
3recordsigned[orotherwiseauthenticated] bytheaffectedparties[inthemannerprovidedin
4section400.5-104] orbyaprovisionintheperson'sletterofcredit,confirmationorother
5undertaking.Thejurisdictionwhoselawischosenneednotbearanyrelationtothe
6transaction.
7 (b)Unlesssubsection(a)applies,theliabilityofanissuer,nominatedpersonor
8adviserforactionoromissionisgovernedbythelawofthejurisdictioninwhichthepersonis
9located.Thepersonisconsideredtobelocatedattheaddressindicatedintheperson's
10undertaking.Ifmorethanoneaddressisindicated,thepersonisconsideredtobelocatedat
11theaddressfromwhichtheperson'sundertakingwasissued.
12 (c)Forthepurposeofjurisdiction,choiceoflawandrecognitionofinterbranch
13lettersofcredit,butnotenforcementofajudgment,allbranchesofabankareconsidered
14separatejuridicalentitiesandabankisconsideredtobelocatedattheplacewhereitsrelevant
15branchisconsideredtobelocatedunder[this]subsection(d).
16 (d)Abranchofabankisconsideredtobelocatedattheaddressindicatedinthe
17branch'sundertaking.Ifmorethanoneaddressisindicated,thebranchisconsidered
18tobelocatedattheaddressfromwhichtheundertakingwasissued.
19 [(c)](e)Exceptasotherwiseprovidedinthissubsection,theliabilityofanissuer,
20nominatedpersonoradviserisgovernedbyanyrulesofcustomorpractice,suchasthe
21UniformCustomsandPracticeforDocumentaryCredits,towhichtheletterofcredit,
22confirmationorotherundertakingisexpresslymadesubject.If:
23 (i)Thisarticlewouldgoverntheliabilityofanissuer,nominatedpersonoradviser
24undersubsection(a)or(b);
25 (ii)Therelevantundertakingincorporatesrulesofcustomorpractice;and
26 (iii)Thereisaconflictbetweenthisarticleandthoserulesasappliedtothat
27undertaking,thoserulesgovernexcepttotheextentofanyconflictwiththenonvariable
28provisionsspecifiedinsection400.5-103(c).
HCSHB1165 25 29 [(d)](f)Ifthereisconflictbetweenthisarticleandarticle3,4,4Aor9ofthischapter,
30thisarticlegoverns.
31 [(e)](g)Theforumforsettlingdisputesarisingoutofanundertakingwithinthis
32articlemaybechoseninthemannerandwiththebindingeffectthatgoverninglawmaybe
33choseninaccordancewithsubsection(a).
400.7-102.(a)Inthisarticle,unlessthecontextotherwiserequires:
2 (1)"Bailee"meansapersonthatbyawarehousereceipt,billoflading,orother
3documentoftitleacknowledgespossessionofgoodsandcontractstodeliverthem.
4 (2)"Carrier"meansapersonthatissuesabilloflading.
5 (3)"Consignee"meansapersonnamedinabillofladingtowhichortowhoseorder
6thebillpromisesdelivery.
7 (4)"Consignor"meansapersonnamedinabillofladingasthepersonfromwhich
8thegoodshavebeenreceivedforshipment.
9 (5)"Deliveryorder"meansarecordthatcontainsanordertodelivergoodsdirectedto
10awarehouse,carrier,orotherpersonthatintheordinarycourseofbusinessissueswarehouse
11receiptsorbillsoflading.
12 (6)"Goodfaith"hasthesamemeaningasinsubdivision(20)ofsubsection(b)of
13section400.1-201.
14 (7)"Goods"meansallthingsthataretreatedasmovableforthepurposesofacontract
15forstorageortransportation.
16 (8)"Issuer"meansabaileethatissuesadocumentoftitleor,inthecaseofan
17unaccepteddeliveryorder,thepersonthatordersthepossessorofgoodstodeliver.Theterm
18includesapersonforwhichanagentoremployeepurportstoactinissuingadocumentifthe
19agentoremployeehasrealorapparentauthoritytoissuedocuments,eveniftheissuerdidnot
20receiveanygoods,thegoodsweremisdescribed,orinanyotherrespecttheagentor
21employeeviolatedtheissuer'sinstructions.
22 (9)"Personentitledunderthedocument"meanstheholder,inthecaseofanegotiable
23documentoftitle,orthepersontowhichdeliveryofthegoodsistobemadebythetermsof,
24orpursuanttoinstructionsinarecordunder,anonnegotiabledocumentoftitle.
25 (10)["Record"hasthesamemeaningasinsubdivision(31)ofsubsection(b)of
26section400.1-201.
27 (11)"Sign"means,withpresentintenttoauthenticateoradoptarecord:
28 (A)toexecuteoradoptatangiblesymbol;or
29 (B)toattachtoorlogicallyassociatewiththerecordanelectronicsound,symbol,or
30process.
31 (12)] "Shipper"meansapersonthatentersintoacontractoftransportationwitha
32carrier.
HCSHB1165 26 33 [(13)] (11)"Warehouse"meansapersonengagedinthebusinessofstoringgoodsfor
34hire.
35 (b)Definitionsinotherarticlesapplyingtothisarticleandthesectionsinwhichthey
36appearare:
37 (1)"Contractforsale",section400.2-106.
38 (2)"Lesseeintheordinarycourseofbusiness",section400.2A-103.
39 (3)"Receipt"ofgoods,section400.2-103.
40 (c)Inaddition,article1containsgeneraldefinitionsandprinciplesofconstruction
41andinterpretationapplicablethroughoutthisarticle.
400.7-106.(a)Apersonhascontrolofanelectronicdocumentoftitleifasystem
2employedforevidencingthetransferofinterestsintheelectronicdocumentreliably
3establishesthatpersonasthepersontowhichtheelectronicdocumentwasissuedor
4transferred.
5 (b)Asystemsatisfiessubsection(a),andaperson[isdeemedtohave]hascontrolof
6anelectronicdocumentoftitle,ifthedocumentiscreated,stored,and[assigned] transferred
7in[such] amannerthat:
8 (1)asingleauthoritativecopyofthedocumentexistswhichisunique,identifiable,
9and,exceptasotherwiseprovidedinparagraphs(4),(5),and(6),unalterable;
10 (2)theauthoritativecopyidentifiesthepersonassertingcontrolas:
11 (A)thepersontowhichthedocumentwasissued;or
12 (B)iftheauthoritativecopyindicatesthatthedocumenthasbeentransferred,the
13persontowhichthedocumentwasmostrecentlytransferred;
14 (3)theauthoritativecopyiscommunicatedtoandmaintainedbythepersonasserting
15controloritsdesignatedcustodian;
16 (4)copiesoramendmentsthataddorchangeanidentified[assignee] transfereeof
17theauthoritativecopycanbemadeonlywiththeconsentofthepersonassertingcontrol;
18 (5)eachcopyoftheauthoritativecopyandanycopyofacopyisreadilyidentifiable
19asacopythatisnottheauthoritativecopy;and
20 (6)anyamendmentoftheauthoritativecopyisreadilyidentifiableasauthorizedor
21unauthorized.
22 (c)Asystemsatisfiessubsection(a),andapersonhascontrolofanelectronic
23documentoftitle,ifanauthoritativeelectroniccopyofthedocument,arecordattached
24toorlogicallyassociatedwiththeelectroniccopy,orasysteminwhichtheelectronic
25copyisrecorded:
26 (1)enablesthepersonreadilytoidentifyeachelectroniccopyaseitheran
27authoritativecopyoranonauthoritativecopy;
HCSHB1165 27 28 (2)enablesthepersonreadilytoidentifyitselfinanyway,includingbyname,
29identifyingnumber,cryptographickey,office,oraccountnumber,asthepersonto
30whicheachauthoritativeelectroniccopywasissuedortransferred;and
31 (3)givesthepersonexclusivepower,subjecttosubsection(d),to:
32 (A)preventothersfromaddingorchangingthepersontowhicheach
33authoritativeelectroniccopyhasbeenissuedortransferred;and
34 (B)transfercontrolofeachauthoritativeelectroniccopy.
35 (d)Subjecttosubsection(e),apowerisexclusiveundersubsection(c)(3)(A)and
36(B)evenif:
37 (1)theauthoritativeelectroniccopy,arecordattachedtoorlogicallyassociated
38withtheauthoritativeelectroniccopy,orasysteminwhichtheauthoritativeelectronic
39copyisrecordedlimitstheuseofthedocumentoftitleorhasaprotocolthatis
40programmedtocauseachange,includingatransferorlossofcontrol;or
41 (2)thepowerissharedwithanotherperson.
42 (e)Apowerofapersonisnotsharedwithanotherpersonundersubsection(d)
43(2)andtheperson'spowerisnotexclusiveif:
44 (1)thepersoncanexercisethepoweronlyifthepoweralsoisexercisedbythe
45otherperson;and
46 (2)theotherperson:
47 (A)canexercisethepowerwithoutexerciseofthepowerbytheperson;or
48 (B)isthetransferortothepersonofaninterestinthedocumentoftitle.
49 (f)Ifapersonhasthepowersspecifiedinsubsection(c)(3)(A)and(B),the
50powersarepresumedtobeexclusive.
51 (g)Apersonhascontrolofanelectronicdocumentoftitleifanotherperson,
52otherthanthetransferortothepersonofaninterestinthedocument:
53 (1)hascontrolofthedocumentandacknowledgesthatithascontrolonbehalfof
54theperson;or
55 (2)obtainscontrolofthedocumentafterhavingacknowledgedthatitwillobtain
56controlofthedocumentonbehalfoftheperson.
57 (h)Apersonthathascontrolunderthissectionisnotrequiredtoacknowledge
58thatithascontrolonbehalfofanotherperson.
59 (i)Ifapersonacknowledgesthatithasorwillobtaincontrolonbehalfof
60anotherperson,unlessthepersonotherwiseagreesorlawotherthanthisarticleor
61Article9otherwiseprovides,thepersondoesnotoweanydutytotheotherpersonandis
62notrequiredtoconfirmtheacknowledgmenttoanyotherperson.
400.8-102.(a)Inthisarticle:
HCSHB1165 28 2 (1)"Adverseclaim"meansaclaimthataclaimanthasapropertyinterestina
3financialassetandthatitisaviolationoftherightsoftheclaimantforanotherpersontohold,
4transferordealwiththefinancialasset;
5 (2)"Bearerform",asappliedtoacertificatedsecurity,meansaforminwhichthe
6securityispayabletothebearerofthesecuritycertificateaccordingtoitstermsbutnotby
7reasonofanindorsement;
8 (3)"Broker"meansapersondefinedasabrokerordealerunderthefederalsecurities
9laws,butwithoutexcludingabankactinginthatcapacity;
10 (4)"Certificatedsecurity"meansasecuritythatisrepresentedbyacertificate;
11 (5)"Clearingcorporation"means:
12 (i)Apersonthatisregisteredasa"clearingagency"underthefederalsecuritieslaws;
13 (ii)Afederalreservebank;or
14 (iii)Anyotherpersonthatprovidesclearanceorsettlementserviceswithrespectto
15financialassetsthatwouldrequireittoregisterasaclearingagencyunderthefederal
16securitieslawsbutforanexclusionorexemptionfromtheregistrationrequirement,ifits
17activitiesasaclearingcorporation,includingpromulgationofrules,aresubjecttoregulation
18byafederalorstategovernmentalauthority;
19 (6)"Communicate"meansto:
20 (i)Sendasigned[writing] record;or
21 (ii)Transmitinformationbyanymechanismagreeduponbythepersonstransmitting
22andreceivingtheinformation;
23 (7)"Entitlementholder"meansapersonidentifiedintherecordsofasecurities
24intermediaryasthepersonhavingasecurityentitlementagainstthesecuritiesintermediary.If
25apersonacquiresasecurityentitlementbyvirtueofsection400.8-501(b)(2)or(3),that
26personistheentitlementholder;
27 (8)"Entitlementorder"meansanotificationcommunicatedtoasecurities
28intermediarydirectingtransferorredemptionofafinancialassettowhichtheentitlement
29holderhasasecurityentitlement;
30 (9)"Financialasset",exceptasotherwiseprovidedinsection400.8-103,means:
31 (i)Asecurity;
32 (ii)Anobligationofapersonorashare,participationorotherinterestinapersonor
33inpropertyoranenterpriseofaperson,whichis,orisofatype,dealtinortradedonfinancial
34markets,orwhichisrecognizedinanyareainwhichitisissuedordealtinasamediumfor
35investment;or
36 (iii)Anypropertythatisheldbyasecuritiesintermediaryforanotherpersonina
37securitiesaccountifthesecuritiesintermediaryhasexpresslyagreedwiththeotherperson
38thatthepropertyistobetreatedasafinancialassetunderthisarticle.
HCSHB1165 29 39
40Ascontextrequires,thetermmeanseithertheinterestitselforthemeansbywhichaperson's
41claimtoitisevidenced,includingacertificatedoruncertificatedsecurity,asecurity
42certificateorasecurityentitlement;
43 (10)"Goodfaith",forpurposesoftheobligationofgoodfaithintheperformanceor
44enforcementofcontractsordutieswithinthisarticle,meanshonestyinfactandthe
45observanceofreasonablecommercialstandardsoffairdealing;
46 (11)"Indorsement"meansasignaturethataloneoraccompaniedbyotherwordsis
47madeonasecuritycertificateinregisteredformoronaseparatedocumentforthepurposeof
48assigning,transferringorredeemingthesecurityorgrantingapowertoassign,transferor
49redeemit;
50 (12)"Instruction"meansanotificationcommunicatedtotheissuerofan
51uncertificatedsecuritywhichdirectsthatthetransferofthesecurityberegisteredorthat
52thesecurityberedeemed;
53 (13)"Registeredform",asappliedtoacertificatedsecurity,meansaforminwhich:
54 (i)Thesecuritycertificatespecifiesapersonentitledtothesecurity;and
55 (ii)Atransferofthesecuritymayberegistereduponbooksmaintainedforthat
56purposebyoronbehalfoftheissuer,orthesecuritycertificatesostates;
57 (14)"Securitiesintermediary"means:
58 (i)Aclearingcorporation;or
59 (ii)Aperson,includingabankorbroker,thatintheordinarycourseofitsbusiness
60maintainssecuritiesaccountsforothersandisactinginthatcapacity;
61 (15)"Security",exceptasotherwiseprovidedinsection400.8-103,meansan
62obligationofanissuerorashare,participationorotherinterestinanissuerorinpropertyor
63anenterpriseofanissuer:
64 (i)Whichisrepresentedbyasecuritycertificateinbearerorregisteredform,orthe
65transferofwhichmayberegistereduponbooksmaintainedforthatpurposebyoronbehalfof
66theissuer;
67 (ii)Whichisoneofaclassorseriesorbyitstermsisdivisibleintoaclassorseriesof
68shares,participations,interestsorobligations;and
69 (iii)Which:
70 (A)Is,orisofatype,dealtinortradedonsecuritiesexchangesorsecuritiesmarkets;
71or
72 (B)Isamediumforinvestmentandbyitstermsexpresslyprovidesthatitisasecurity
73governedbythisarticle;
74 (16)"Securitycertificate"meansacertificaterepresentingasecurity;
HCSHB1165 30 75 (17)"Securityentitlement"meanstherightsandpropertyinterestofanentitlement
76holderwithrespecttoafinancialassetspecifiedinsections400.8-501to400.8-510;
77 (18)"Uncertificatedsecurity"meansasecuritythatisnotrepresentedbyacertificate.
78 (b)[Other] Thefollowingdefinitions[applyingto]inthisarticleand[thesectionsin
79whichtheyappearare]otherarticlesapplytothisarticle:
80 ["Appropriateperson".] [Section400.8-107.]
81 ["Control".] [Section400.8-106.]
82 ["Delivery".] [Section400.8-301.]
83 ["Investmentcompanysecurity".] [Section400.8-103.]
84 ["Issuer".] [Section400.8-201.]
85 ["Overissue".] [Section400.8-210.]
86 ["Protectedpurchaser".] [Section400.8-303.]
87 ["Securitiesaccount".] [Section400.8-501.]
88 "Appropriateperson".Section400.8-107.
89 "Control".Section400.8-106.
90 "Controllableaccount".Section400.9-102.
91 "Controllableelectronicrecord".Section400.12-102.
92 "Controllablepaymentintangible".Section400.9-102.
93 "Delivery".Section400.8-301.
94 "Investmentcompanysecurity".Section400.8-103.
95 "Issuer".Section400.8-201.
96 "Overissue".Section400.8-210.
97 "Protectedpurchaser".Section400.8-303.
98 "Securitiesaccount".Section400.8-501.
99 (c)Inaddition,article1ofthischaptercontainsgeneraldefinitionsandprinciplesof
100constructionandinterpretationapplicablethroughoutthisarticle.
101 (d)Thecharacterizationofaperson,business,ortransactionforpurposesofthis
102articledoesnotdeterminethecharacterizationoftheperson,businessortransactionfor
103purposesofanyotherlaw,regulationorrule.
400.8-103.(a)Ashareorsimilarequityinterestissuedbyacorporation,business
2trust,jointstockcompanyorsimilarentityisasecurity.
3 (b)An"investmentcompanysecurity"isasecurity."Investmentcompanysecurity"
4meansashareorsimilarequityinterestissuedbyanentitythatisregisteredasaninvestment
5companyunderthefederalinvestmentcompanylaws,aninterestinaunitinvestmenttrust
6thatissoregistered,oraface-amountcertificateissuedbyaface-amountcertificatecompany
HCSHB1165 31 7thatissoregistered.Investmentcompanysecuritydoesnotincludeaninsurancepolicyor
8endowmentpolicyorannuitycontractissuedbyaninsurancecompany.
9 (c)Aninterestinapartnershiporlimitedliabilitycompanyisnotasecurityunlessit
10isdealtinortradedonsecuritiesexchangesorinsecuritiesmarkets,itstermsexpressly
11providethatitisasecuritygovernedbythisarticle,oritisaninvestmentcompanysecurity.
12However,aninterestinapartnershiporlimitedliabilitycompanyisafinancialassetifitis
13heldinasecuritiesaccount.
14 (d)Awritingthatisasecuritycertificateisgovernedbythisarticleandnotbyarticle
153ofthischapter,eventhoughitalsomeetstherequirementsofthatarticle.However,a
16negotiableinstrumentgovernedbyarticle3ofthischapterisafinancialassetifitisheldina
17securitiesaccount.
18 (e)Anoptionorsimilarobligationissuedbyaclearingcorporationtoitsparticipants
19isnotasecurity,butisafinancialasset.
20 (f)Acommoditycontract,asdefinedinsection400.9-102(a)(14),isnotasecurityor
21afinancialasset.
22 (g)Acontrollableaccount,controllableelectronicrecord,orcontrollable
23paymentintangibleisnotafinancialassetunlessSection400.8-102(a)(9)(iii)applies.
400.8-106.(a)Apurchaserhas"control"ofacertificatedsecurityinbearerformif
2thecertificatedsecurityisdeliveredtothepurchaser.
3 (b)Apurchaserhas"control"ofacertificatedsecurityinregisteredformifthe
4certificatedsecurityisdeliveredtothepurchaser,and:
5 (1)Thecertificateisindorsedtothepurchaserorinblankbyaneffective
6indorsement;or
7 (2)Thecertificateisregisteredinthenameofthepurchaser,uponoriginalissueor
8registrationoftransferbytheissuer.
9 (c)Apurchaserhas"control"ofanuncertificatedsecurityif:
10 (1)Theuncertificatedsecurityisdeliveredtothepurchaser;or
11 (2)Theissuerhasagreedthatitwillcomplywithinstructionsoriginatedbythe
12purchaserwithoutfurtherconsentbytheregisteredowner.
13 (d)Apurchaserhas"control"ofasecurityentitlementif:
14 (1)Thepurchaserbecomestheentitlementholder;
15 (2)Thesecuritiesintermediaryhasagreedthatitwillcomplywithentitlementorders
16originatedbythepurchaserwithoutfurtherconsentbytheentitlementholder;or
17 (3)Anotherperson[hascontrolofthesecurityentitlementonbehalfofthepurchaser
18or,havingpreviouslyacquiredcontrolofthesecurityentitlement,acknowledgesthatithas
19controlonbehalfofthepurchaser], otherthanthetransferortothepurchaserofan
20interestinthesecurityentitlement:
HCSHB1165 32 21 (A)hascontrolofthesecurityentitlementandacknowledgesthatithascontrol
22onbehalfofthepurchaser;or
23 (B)obtainscontrolofthesecurityentitlementafterhavingacknowledgedthatit
24willobtaincontrolofthesecurityentitlementonbehalfofthepurchaser.
25 (e)Ifaninterestinasecurityentitlementisgrantedbytheentitlementholdertothe
26entitlementholder'sownsecuritiesintermediary,thesecuritiesintermediaryhascontrol.
27 (f)Apurchaserwhohassatisfiedtherequirementsofsubsection(c)or(d)hascontrol
28eveniftheregisteredownerinthecaseofsubsection(c)ortheentitlementholderinthecase
29ofsubsection(d)retainstherighttomakesubstitutionsfortheuncertificatedsecurityor
30securityentitlement,tooriginateinstructionsorentitlementorderstotheissuerorsecurities
31intermediary,orotherwisetodealwiththeuncertificatedsecurityorsecurityentitlement.
32 (g)Anissuerorasecuritiesintermediarymaynotenterintoanagreementofthekind
33describedinsubsection(c)(2)or(d)(2)withouttheconsentoftheregisteredowneror
34entitlementholder,butanissuerorasecuritiesintermediaryisnotrequiredtoenterintosuch
35anagreementeventhoughtheregisteredownerorentitlementholdersodirects.Anissueror
36securitiesintermediarythathasenteredintosuchanagreementisnotrequiredtoconfirmthe
37existenceoftheagreementtoanotherpartyunlessrequestedtodosobytheregisteredowner
38orentitlementholder.
39 (h)Apersonthathascontrolunderthissectionisnotrequiredtoacknowledge
40thatithascontrolonbehalfofapurchaser.
41 (i)Ifapersonacknowledgesthatithasorwillobtaincontrolonbehalfofa
42purchaser,unlessthepersonotherwiseagreesorlawotherthanthisArticleorArticle9
43otherwiseprovides,thepersondoesnotoweanydutytothepurchaserandisnot
44requiredtoconfirmtheacknowledgmenttoanyotherperson.
400.8-110.(a)Thelocallawoftheissuer'sjurisdiction,asspecifiedinsubsection(d),
2governs:
3 (1)Thevalidityofasecurity;
4 (2)Therightsanddutiesoftheissuerwithrespecttoregistrationoftransfer;
5 (3)Theeffectivenessofregistrationoftransferbytheissuer;
6 (4)Whethertheissuerowesanydutiestoanadverseclaimanttoasecurity;and
7 (5)Whetheranadverseclaimcanbeassertedagainstapersontowhomtransferofa
8certificatedoruncertificatedsecurityisregisteredorapersonwhoobtainscontrolofan
9uncertificatedsecurity.
10 (b)Thelocallawofthesecuritiesintermediary'sjurisdiction,asspecifiedin
11subsection(e),governs:
12 (1)Acquisitionofasecurityentitlementfromthesecuritiesintermediary;
HCSHB1165 33 13 (2)Therightsanddutiesofthesecuritiesintermediaryandentitlementholderarising
14outofasecurityentitlement;
15 (3)Whetherthesecuritiesintermediaryowesanydutiestoanadverseclaimanttoa
16securityentitlement;and
17 (4)Whetheranadverseclaimcanbeassertedagainstapersonwhoacquiresasecurity
18entitlementfromthesecuritiesintermediaryorapersonwhopurchasesasecurityentitlement
19orinterestthereinfromanentitlementholder.
20 (c)Thelocallawofthejurisdictioninwhichasecuritycertificateislocatedatthe
21timeofdeliverygovernswhetheranadverseclaimcanbeassertedagainstapersontowhom
22thesecuritycertificateisdelivered.
23 (d)"Issuer'sjurisdiction"meansthejurisdictionunderwhichtheissuerofthesecurity
24isorganizedor,ifpermittedbythelawofthatjurisdiction,thelawofanotherjurisdiction
25specifiedbytheissuer.Anissuerorganizedunderthelawofthisstatemayspecifythelawof
26anotherjurisdictionasthelawgoverningthemattersspecifiedinsubsection(a)(2)through
27(5).
28 (e)Thefollowingrulesdeterminea"securitiesintermediary'sjurisdiction"for
29purposesofthissection:
30 (1)Ifanagreementbetweenthesecuritiesintermediaryanditsentitlementholder
31governingthesecuritiesaccountexpresslyprovidesthataparticularjurisdictionisthe
32securitiesintermediary'sjurisdictionforpurposesofthispart,thisarticle,orchapter400,that
33jurisdictionisthesecuritiesintermediary'sjurisdiction;
34 (2)Ifparagraph(1)doesnotapplyandanagreementbetweenthesecurities
35intermediaryanditsentitlementholdergoverningthesecuritiesaccountexpresslyprovides
36thattheagreementisgovernedbythelawofaparticularjurisdiction,thatjurisdictionisthe
37securitiesintermediary'sjurisdiction.
38 (3)Ifneitherparagraph(1)norparagraph(2)applies,andanagreementbetweenthe
39securitiesintermediaryanditsentitlementholdergoverningthesecuritiesaccountexpressly
40providesthatthesecuritiesaccountismaintainedatanofficeinaparticularjurisdiction,that
41jurisdictionisthesecuritiesintermediary'sjurisdiction;
42 (4)Ifnoneoftheprecedingparagraphsapply,thesecuritiesintermediary's
43jurisdictionisthejurisdictioninwhichtheofficeidentifiedinanaccountstatementasthe
44officeservingtheentitlementholder'saccountislocated.
45 (5)Ifnoneoftheprecedingparagraphsapply,thesecuritiesintermediary's
46jurisdictionisthejurisdictioninwhichthechiefexecutiveofficeofthesecurities
47intermediaryislocated.
48 (f)Asecuritiesintermediary'sjurisdictionisnotdeterminedbythephysicallocation
49ofcertificatesrepresentingfinancialassets,orbythejurisdictioninwhichisorganizedthe
HCSHB1165 34 50issuerofthefinancialassetwithrespecttowhichanentitlementholderhasasecurity
51entitlement,orbythelocationoffacilitiesfordataprocessingorotherrecordkeeping
52concerningtheaccount.
53 (g)Thelocallawoftheissuer'sjurisdictionorthesecuritiesintermediary's
54jurisdictiongovernsamatterortransactionspecifiedinsubsection(a)or(b)evenifthe
55matterortransactiondoesnotbearanyrelationtothejurisdiction.
400.8-303.(a)"Protectedpurchaser"meansapurchaserofacertificatedor
2uncertificatedsecurity,orofaninteresttherein,who:
3 (1)Givesvalue;
4 (2)Doesnothavenoticeofanyadverseclaimtothesecurity;and
5 (3)Obtainscontrolofthecertificatedoruncertificatedsecurity.
6 (b)[Inadditiontoacquiringtherightsofapurchaser,]Aprotectedpurchaseralso
7acquiresitsinterestinthesecurityfreeofanyadverseclaim.
400.9-102.(a)Inthisarticle:
2 (1)"Accession"meansgoodsthatarephysicallyunitedwithothergoodsinsucha
3mannerthattheidentityoftheoriginalgoodsisnotlost;
4 (2)"Account",exceptasusedin"accountfor","accountstatement","accountto",
5"commodityaccount"inparagraph(14),"customer'saccount","depositaccount"in
6paragraph(29),"onaccountof",and"statementofaccount",meansarighttopayment
7ofamonetaryobligation,whetherornotearnedbyperformance,(i)forpropertythathasbeen
8oristobesold,leased,licensed,assigned,orotherwisedisposedof,(ii)forservicesrendered
9ortoberendered,(iii)forapolicyofinsuranceissuedortobeissued,(iv)forasecondary
10obligationincurredortobeincurred,(v)forenergyprovidedortobeprovided,(vi)forthe
11useorhireofavesselunderacharterorothercontract,(vii)arisingoutoftheuseofacredit
12orchargecardorinformationcontainedonorforusewiththecard,or(viii)aswinningsina
13lotteryorothergameofchanceoperatedorsponsoredbyastate,governmentalunitofastate,
14orpersonlicensedorauthorizedtooperatethegamebyastateorgovernmentalunitofastate.
15Thetermincludescontrollableaccountsandhealth-care-insurancereceivables.Theterm
16doesnotinclude(i)[rightstopaymentevidencedby]chattelpaper[oraninstrument], (ii)
17commercialtortclaims,(iii)depositaccounts,(iv)investmentproperty,(v)letter-of-credit
18rightsorlettersofcredit,[or](vi)rightstopaymentformoneyorfundsadvancedorsold,
19otherthanrightsarisingoutoftheuseofacreditorchargecardorinformationcontainedon
20orforusewiththecard,or(vii)rightstopaymentevidencedbyaninstrument;
21 (3)"Accountdebtor"meansapersonobligatedonanaccount,chattelpaper,or
22generalintangible.Thetermdoesnotincludepersonsobligatedtopayanegotiable
23instrument,evenifthenegotiableinstrument[constitutespartof]evidenceschattelpaper;
24 (4)"Accounting",exceptasusedin"accountingfor",meansarecord:
HCSHB1165 35 25 (A)[Authenticated] Signedbyasecuredparty;
26 (B)Indicatingtheaggregateunpaidsecuredobligationsasofadatenotmorethan
27thirty-fivedaysearlierorthirty-fivedayslaterthanthedateoftherecord;and
28 (C)Identifyingthecomponentsoftheobligationsinreasonabledetail;
29 (5)"Agriculturallien"meansaninterest,otherthanasecurityinterest,infarm
30products:
31 (A)Whichsecurespaymentorperformanceofanobligationfor:
32 (i)Goodsorservicesfurnishedinconnectionwithadebtor'sfarmingoperation;or
33 (ii)Rentonrealpropertyleasedbyadebtorinconnectionwithitsfarmingoperation;
34 (B)Whichiscreatedbystatuteinfavorofapersonthat:
35 (i)Intheordinarycourseofitsbusinessfurnishedgoodsorservicestoadebtorin
36connectionwithadebtor'sfarmingoperation;or
37 (ii)Leasedrealpropertytoadebtorinconnectionwiththedebtor'sfarmingoperation;
38and
39 (C)Whoseeffectivenessdoesnotdependontheperson'spossessionofthepersonal
40property;
41 (6)"As-extractedcollateral"means:
42 (A)Oil,gas,orothermineralsthataresubjecttoasecurityinterestthat:
43 (i)Iscreatedbyadebtorhavinganinterestinthemineralsbeforeextraction;and
44 (ii)Attachestothemineralsasextracted;or
45 (B)Accountsarisingoutofthesaleatthewellheadormineheadofoil,gas,orother
46mineralsinwhichthedebtorhadaninterestbeforeextraction;
47 (7)["Authenticate"means:
48 (A)Tosign;or
49 (B)Withthepresentintenttoadoptoracceptarecord,toattachtoorlogically
50associatewiththerecordanelectronicsound,symbolorprocess;] "Assignee",exceptas
51usedin"assigneeforbenefitofcreditors",meansaperson(i)inwhosefavorasecurity
52interestthatsecuresanobligationiscreatedorprovidedforunderasecurityagreement,
53whetherornottheobligationisoutstandingor(ii)towhichanaccount,chattelpaper,
54paymentintangible,orpromissorynotehasbeensold.Thetermincludesapersonto
55whichasecurityinteresthasbeentransferredbyasecuredparty;
56 (7A)"Assignor"meansapersonthat(i)underasecurityagreementcreatesor
57providesforasecurityinterestthatsecuresanobligationor(ii)sellsanaccount,chattel
58paper,paymentintangible,orpromissorynote.Thetermincludesasecuredpartythat
59hastransferredasecurityinteresttoanotherperson;
HCSHB1165 36 60 (8)"Bank"meansanorganizationthatisengagedinthebusinessofbanking.The
61termincludessavingsbanks,savingsandloanassociations,creditunions,andtrust
62companies;
63 (9)"Cashproceeds"meansproceedsthataremoney,checks,depositaccounts,orthe
64like;
65 (10)"Certificateoftitle"meansacertificateoftitlewithrespecttowhichastatute
66providesforthesecurityinterestinquestiontobeindicatedonthecertificateasaconditionor
67resultofthesecurityinterest'sobtainingpriorityovertherightsofaliencreditorwithrespect
68tothecollateral.Thetermincludesanotherrecordmaintainedasanalternativetoacertificate
69oftitlebythegovernmentalunitthatissuescertificatesoftitleifastatutepermitsthesecurity
70interestinquestiontobeindicatedontherecordasaconditionorresultofthesecurity
71interest'sobtainingpriorityovertherightsofaliencreditorwithrespecttothecollateral;
72 (11)"Chattelpaper"means[arecordorrecordsthatevidencebothamonetary
73obligationandasecurityinterestinspecificgoods,asecurityinterestinspecificgoodsand
74softwareusedinthegoods,asecurityinterestinspecificgoodsandlicenseofsoftwareused
75inthegoods,aleaseofspecificgoods,oraleaseofspecificgoodsandlicenseofsoftware
76usedinthegoods.Inthisparagraph,"monetaryobligation"meansamonetaryobligation
77securedbythegoodsorowedunderaleaseofthegoodsandincludesamonetaryobligation
78withrespecttosoftwareusedinthegoods.Thetermdoesnotinclude(i)chartersorother
79contractsinvolvingtheuseorhireofavesselor(ii)recordsthatevidencearighttopayment
80arisingoutoftheuseofacreditorchargecardorinformationcontainedonorforusewiththe
81card.Ifatransactionisevidencedbyrecordsthatincludeaninstrumentorseriesof
82instruments,thegroupofrecordstakentogetherconstituteschattelpaper]:
83 (A)Arighttopaymentofamonetaryobligationsecuredbyspecificgoods,ifthe
84righttopaymentandsecurityagreementareevidencedbyarecord;or
85 (B)Arighttopaymentofamonetaryobligationowedbyalesseeunderalease
86agreementwithrespecttospecificgoodsandamonetaryobligationowedbythelesseein
87connectionwiththetransactiongivingrisetothelease,if:
88 (i)Therighttopaymentandleaseagreementareevidencedbyarecord;and
89 (ii)Thepredominantpurposeofthetransactiongivingrisetotheleasewasto
90givethelesseetherighttopossessionanduseofthegoods.
91
92Thetermdoesnotincludearighttopaymentarisingoutofacharterorothercontract
93involvingtheuseorhireofavesselorarighttopaymentarisingoutoftheuseofa
94creditorchargecardorinformationcontainedonorforusewiththecard;
95 (12)"Collateral"meansthepropertysubjecttoasecurityinterestoragriculturallien.
96Thetermincludes:
HCSHB1165 37 97 (A)Proceedstowhichasecurityinterestattaches;
98 (B)Accounts,chattelpaper,paymentintangibles,andpromissorynotesthathave
99beensold;and
100 (C)Goodsthatarethesubjectofaconsignment;
101 (13)"Commercialtortclaim"meansaclaimarisingintortwithrespecttowhich:
102 (A)Theclaimantisanorganization;or
103 (B)Theclaimantisanindividualandtheclaim:
104 (i)Aroseinthecourseoftheclaimant'sbusinessorprofession;and
105 (ii)Doesnotincludedamagesarisingoutofpersonalinjurytoorthedeathofan
106individual;
107 (14)"Commodityaccount"meansanaccountmaintainedbyacommodity
108intermediaryinwhichacommoditycontractiscarriedforacommoditycustomer;
109 (15)"Commoditycontract"meansacommodityfuturescontract,anoptionona
110commodityfuturescontract,acommodityoption,oranothercontractifthecontractoroption
111is:
112 (A)Tradedonorsubjecttotherulesofaboardoftradethathasbeendesignatedasa
113contractmarketforsuchacontractpursuanttofederalcommoditieslaws;or
114 (B)Tradedonaforeigncommodityboardoftrade,exchange,ormarket,andis
115carriedonthebooksofacommodityintermediaryforacommoditycustomer;
116 (16)"Commoditycustomer"meansapersonforwhichacommodityintermediary
117carriesacommoditycontractonitsbooks;
118 (17)"Commodityintermediary"meansapersonthat:
119 (A)Isregisteredasafuturescommissionmerchantunderfederalcommoditieslaw;or
120 (B)Intheordinarycourseofitsbusinessprovidesclearanceorsettlementservicesfor
121aboardoftradethathasbeendesignatedasacontractmarketpursuanttofederalcommodities
122law;
123 (18)"Communicate"means:
124 (A)Tosendawrittenorothertangiblerecord;
125 (B)Totransmitarecordbyanymeansagreeduponbythepersonssendingand
126receivingtherecord;or
127 (C)Inthecaseoftransmissionofarecordtoorbyafilingoffice,totransmitarecord
128byanymeansprescribedbyfiling-officerule;
129 (19)"Consignee"meansamerchanttowhichgoodsaredeliveredinaconsignment;
130 (20)"Consignment"meansatransaction,regardlessofitsform,inwhichaperson
131deliversgoodstoamerchantforthepurposeofsaleand:
132 (A)Themerchant:
HCSHB1165 38 133 (i)Dealsingoodsofthatkindunderanameotherthanthenameofthepersonmaking
134delivery;
135 (ii)Isnotanauctioneer;and
136 (iii)Isnotgenerallyknownbyitscreditorstobesubstantiallyengagedinsellingthe
137goodsofothers;
138 (B)Withrespecttoeachdelivery,theaggregatevalueofthegoodsisonethousand
139dollarsormoreatthetimeofdelivery;
140 (C)Thegoodsarenotconsumergoodsimmediatelybeforedelivery;and
141 (D)Thetransactiondoesnotcreateasecurityinterestthatsecuresanobligation;
142 (21)"Consignor"meansapersonthatdeliversgoodstoaconsigneeinaconsignment;
143 (22)"Consumerdebtor"meansadebtorinaconsumertransaction;
144 (23)"Consumergoods"meansgoodsthatareusedorboughtforuseprimarilyfor
145personal,family,orhouseholdpurposes;
146 (24)"Consumer-goodstransaction"meansaconsumertransactioninwhich:
147 (A)Anindividualincursanobligationprimarilyforpersonal,family,orhousehold
148purposes;and
149 (B)Asecurityinterestinconsumergoodssecurestheobligation;
150 (25)"Consumerobligor"meansanobligorwhoisanindividualandwhoincurredthe
151obligationaspartofatransactionenteredintoprimarilyforpersonal,family,orhousehold
152purposes;
153 (26)"Consumertransaction"meansatransactioninwhich(i)anindividualincursan
154obligationprimarilyforpersonal,family,orhouseholdpurposes,(ii)asecurityinterest
155securestheobligation,and(iii)thecollateralisheldoracquiredprimarilyforpersonal,
156family,orhouseholdpurposes.Thetermincludesconsumer-goodstransactions;
157 (27)"Continuationstatement"meansanamendmentofafinancingstatementwhich:
158 (A)Identifies,byitsfilenumber,theinitialfinancingstatementtowhichitrelates;
159and
160 (B)Indicatesthatitisacontinuationstatementfor,orthatitisfiledtocontinuethe
161effectivenessof,theidentifiedfinancingstatement;
162 (27A)"Controllableaccount"meansanaccountevidencedbyacontrollable
163electronicrecordthatprovidesthattheaccountdebtorundertakestopaytheperson
164thathascontrolundersection400.12-105ofthecontrollableelectronicrecord;
165 (27B)"Controllablepaymentintangible"meansapaymentintangibleevidenced
166byacontrollableelectronicrecordthatprovidesthattheaccountdebtorundertakesto
167paythepersonthathascontrolundersection400.12-105ofthecontrollableelectronic
168record;
169 (28)"Debtor"means:
HCSHB1165 39 170 (A)Apersonhavinganinterest,otherthanasecurityinterestorotherlien,inthe
171collateral,whetherornotthepersonisanobligor;
172 (B)Asellerofaccounts,chattelpaper,paymentintangibles,orpromissorynotes;or
173 (C)Aconsignee;
174 (29)"Depositaccount"meansademand,time,savings,passbook,orsimilaraccount
175maintainedwithabank.Thetermdoesnotincludeinvestmentpropertyoraccounts
176evidencedbyaninstrument;
177 (30)"Document"meansadocumentoftitleorareceiptofthetypedescribedin
178section400.7-201(b);
179 (31)["Electronicchattelpaper"meanschattelpaperevidencedbyarecordorrecords
180consistingofinformationstoredinanelectronicmedium;
181 (32)]"Encumbrance"meansaright,otherthananownershipinterest,inrealproperty.
182Thetermincludesmortgagesandotherliensonrealproperty;
183 [(33)] (32)"Equipment"meansgoodsotherthaninventory,farmproducts,or
184consumergoods;
185 [(34)] (33)"Farmproducts"meansgoods,otherthanstandingtimber,withrespectto
186whichthedebtorisengagedinafarmingoperationandwhichare:
187 (A)Cropsgrown,growing,ortobegrown,including:
188 (i)Cropsproducedontrees,vines,andbushes;and
189 (ii)Aquaticgoodsproducedinaquaculturaloperations;
190 (B)Livestock,bornorunborn,includingaquaticgoodsproducedinaquacultural
191operations;
192 (C)Suppliesusedorproducedinafarmingoperation;or
193 (D)Productsofcropsorlivestockintheirunmanufacturedstates;
194 [(35)] (34)"Farmingoperation"meansraising,cultivating,propagating,fattening,
195grazing,oranyotherfarming,livestock,oraquaculturaloperation;
196 [(36)] (35)"Filenumber"meansthenumberassignedtoaninitialfinancingstatement
197pursuanttosection400.9-519(a);
198 [(37)] (36)"Filingoffice"meansanofficedesignatedinsection400.9-501asthe
199placetofileafinancingstatement;
200 [(38)] (37)"Filing-officerule"meansaruleadoptedpursuanttosection400.9-526;
201 [(39)] (38)"Financingstatement"meansarecordorrecordscomposedofaninitial
202financingstatementandanyfiledrecordrelatingtotheinitialfinancingstatement;
203 [(40)] (39)"Fixturefiling"meansthefilingofafinancingstatementcoveringgoods
204thatareoraretobecomefixturesandsatisfyingsection400.9-502(a)and(b).Theterm
205includesthefilingofafinancingstatementcoveringgoodsofatransmittingutilitywhichare
206oraretobecomefixtures;
HCSHB1165 40 207 [(41)] (40)"Fixtures"meansgoodsthathavebecomesorelatedtoparticularreal
208propertythataninterestinthemarisesunderrealpropertylaw;
209 [(42)] (41)"Generalintangible"meansanypersonalproperty,includingthingsin
210action,otherthanaccounts,chattelpaper,commercialtortclaims,depositaccounts,
211documents,goods,instruments,investmentproperty,letter-of-creditrights,lettersofcredit,
212money,andoil,gas,orothermineralsbeforeextraction.Thetermincludescontrollable
213electronicrecords,paymentintangibles, andsoftware;
214 [(43)"Goodfaith"meanshonestyinfact;
215 (44)] (42)"Goods"meansallthingsthataremovablewhenasecurityinterest
216attaches.Thetermincludes(i)fixtures,(ii)standingtimberthatistobecutandremoved
217underaconveyanceorcontractforsale,(iii)theunbornyoungofanimals,(iv)cropsgrown,
218growing,ortobegrown,evenifthecropsareproducedontrees,vines,orbushes,and(v)
219manufacturedhomes.Thetermalsoincludesacomputerprogramembeddedingoodsand
220anysupportinginformationprovidedinconnectionwithatransactionrelatingtotheprogram
221if(i)theprogramisassociatedwiththegoodsinsuchamannerthatitcustomarilyis
222consideredpartofthegoods,or(ii)bybecomingtheownerofthegoods,apersonacquiresa
223righttousetheprograminconnectionwiththegoods.Thetermdoesnotincludeacomputer
224programembeddedingoodsthatconsistsolelyofthemediuminwhichtheprogramis
225embedded.Thetermalsodoesnotincludeaccounts,chattelpaper,commercialtortclaims,
226depositaccounts,documents,generalintangibles,instruments,investmentproperty,letter-of-
227creditrights,lettersofcredit,money,oroil,gas,orothermineralsbeforeextraction;
228 [(45)] (43)"Governmentalunit"meansasubdivision,agency,department,county,
229parish,municipality,orotherunitofthegovernmentoftheUnitedStates,astate,oraforeign
230country.Thetermincludesanorganizationhavingaseparatecorporateexistenceifthe
231organizationiseligibletoissuedebtonwhichinterestisexemptfromincometaxationunder
232thelawsoftheUnitedStates;
233 [(46)] (44)"Health-care-insurancereceivable"meansaninterestinorclaimundera
234policyofinsurancewhichisarighttopaymentofamonetaryobligationforhealth-caregoods
235orservicesprovidedortobeprovided;
236 [(47)] (45)"Instrument"meansanegotiableinstrumentoranyotherwritingthat
237evidencesarighttothepaymentofamonetaryobligation,isnotitselfasecurityagreementor
238lease,andisofatypethatinordinarycourseofbusinessistransferredbydeliverywithany
239necessaryindorsementorassignment.Thetermdoesnotinclude(i)investmentproperty,(ii)
240lettersofcredit,[or](iii)writingsthatevidencearighttopaymentarisingoutoftheuseofa
241creditorchargecardorinformationcontainedonorforusewiththecard,or(iv)writings
242thatevidencechattelpaper;
243 [(48)] (46)"Inventory"meansgoods,otherthanfarmproducts,which:
HCSHB1165 41 244 (A)Areleasedbyapersonaslessor;
245 (B)Areheldbyapersonforsaleorleaseortobefurnishedunderacontractof
246service;
247 (C)Arefurnishedbyapersonunderacontractofservice;or
248 (D)Consistofrawmaterials,workinprocess,ormaterialsusedorconsumedina
249business;
250 [(49)] (47)"Investmentproperty"meansasecurity,whethercertificatedor
251uncertificated,securityentitlement,securitiesaccount,commoditycontract,orcommodity
252account;
253 [(50)] (48)"Jurisdictionoforganization",withrespecttoaregisteredorganization,
254meansthejurisdictionunderwhoselawtheorganizationisformedororganized;
255 [(51)] (49)"Letter-of-creditright"meansarighttopaymentorperformanceundera
256letterofcredit,whetherornotthebeneficiaryhasdemandedorisatthetimeentitledto
257demandpaymentorperformance.Thetermdoesnotincludetherightofabeneficiaryto
258demandpaymentorperformanceunderaletterofcredit;
259 [(52)] (50)"Liencreditor"means:
260 (A)Acreditorthathasacquiredalienonthepropertyinvolvedbyattachment,levy,
261orthelike;
262 (B)Anassigneeforbenefitofcreditorsfromthetimeofassignment;
263 (C)Atrusteeinbankruptcyfromthedateofthefilingofthepetition;or
264 (D)Areceiverinequityfromthetimeofappointment;
265 [(53)] (51)"Manufacturedhome"meansastructure,transportableinoneormore
266sections,which,inthetravelingmode,iseightbodyfeetormoreinwidthorfortybodyfeet
267ormoreinlength,or,whenerectedonsite,isthreehundredtwentyormoresquarefeet,and
268whichisbuiltonapermanentchassisanddesignedtobeusedasadwellingwithorwithouta
269permanentfoundationwhenconnectedtotherequiredutilities,andincludestheplumbing,
270heating,air-conditioning,andelectricalsystemscontainedtherein.Thetermincludesany
271structurethatmeetsalloftherequirementsofthisparagraphexceptthesizerequirementsand
272withrespecttowhichthemanufacturervoluntarilyfilesacertificationrequiredbytheUnited
273StatesSecretaryofHousingandUrbanDevelopmentandcomplieswiththestandards
274establishedunderTitle42oftheUnitedStatesCode;
275 [(54)] (52)"Manufactured-hometransaction"meansasecuredtransaction:
276 (A)Thatcreatesapurchase-moneysecurityinterestinamanufacturedhome,other
277thanamanufacturedhomeheldasinventory;or
278 (B)Inwhichamanufacturedhome,otherthanamanufacturedhomeheldas
279inventory,istheprimarycollateral;
HCSHB1165 42 280 (53)"Money"hasthemeaninginsection400.1-201(b)(24),butdoesnotinclude
281adepositaccount;
282 [(55)] (54)"Mortgage"meansaconsensualinterestinrealproperty,including
283fixtures,whichsecurespaymentorperformanceofanobligation;
284 [(56)] (55)"Newdebtor"meansapersonthatbecomesboundasdebtorundersection
285400.9-203(d)byasecurityagreementpreviouslyenteredintobyanotherperson;
286 [(57)] (56)"Newvalue"means(i)money,(ii)money'sworthinproperty,services,or
287newcredit,or(iii)releasebyatransfereeofaninterestinpropertypreviouslytransferredto
288thetransferee.Thetermdoesnotincludeanobligationsubstitutedforanotherobligation;
289 [(58)] (57)"Noncashproceeds"meansproceedsotherthancashproceeds;
290 [(59)] (58)"Obligor"meansapersonthat,withrespecttoanobligationsecuredbya
291securityinterestinoranagriculturallienonthecollateral,(i)owespaymentorother
292performanceoftheobligation,(ii)hasprovidedpropertyotherthanthecollateraltosecure
293paymentorotherperformanceoftheobligation,or(iii)isotherwiseaccountableinwholeor
294inpartforpaymentorotherperformanceoftheobligation.Thetermdoesnotincludeissuers
295ornominatedpersonsunderaletterofcredit;
296 [(60)] (59)"Originaldebtor",exceptasusedinsection400.9-310(c),meansaperson
297that,asdebtor,enteredintoasecurityagreementtowhichanewdebtorhasbecomebound
298undersection400.9-203(d);
299 [(61)] (60)"Paymentintangible"meansageneralintangibleunderwhichtheaccount
300debtor'sprincipalobligationisamonetaryobligation. Thetermincludesacontrollable
301paymentintangible;
302 [(62)] (61)"Personrelatedto",withrespecttoanindividual,means:
303 (A)Thespouseoftheindividual;
304 (B)Abrother,brother-in-law,sister,orsister-in-lawoftheindividual;
305 (C)Anancestororlinealdescendantoftheindividualortheindividual'sspouse;or
306 (D)Anyotherrelative,bybloodormarriage,oftheindividualortheindividual's
307spousewhosharesthesamehomewiththeindividual;
308 [(63)] (62)"Personrelatedto",withrespecttoanorganization,means:
309 (A)Apersondirectlyorindirectlycontrolling,controlledby,orundercommon
310controlwiththeorganization;
311 (B)Anofficerordirectorof,orapersonperformingsimilarfunctionswithrespectto,
312theorganization;
313 (C)Anofficerordirectorof,orapersonperformingsimilarfunctionswithrespectto,
314apersondescribedinsubparagraph(A);
315 (D)Thespouseofanindividualdescribedinsubparagraph(A),(B),or(C);or
HCSHB1165 43 316 (E)Anindividualwhoisrelatedbybloodormarriagetoanindividualdescribedin
317subparagraph(A),(B),(C),or(D)andsharesthesamehomewiththeindividual;
318 [(64)] (63)"Proceeds",exceptasusedinsection400.9-609(b),meansthefollowing
319property:
320 (A)Whateverisacquireduponthesale,lease,license,exchange,orotherdisposition
321ofcollateral;
322 (B)Whateveriscollectedon,ordistributedonaccountof,collateral;
323 (C)Rightsarisingoutofcollateral;
324 (D)Totheextentofthevalueofcollateral,claimsarisingoutoftheloss,
325nonconformity,orinterferencewiththeuseof,defectsorinfringementofrightsin,ordamage
326to,thecollateral;or
327 (E)Totheextentofthevalueofcollateralandtotheextentpayabletothedebtoror
328thesecuredparty,insurancepayablebyreasonofthelossornonconformityof,defectsor
329infringementofrightsin,ordamageto,thecollateral;
330 [(65)] (64)"Promissorynote"meansaninstrumentthatevidencesapromisetopaya
331monetaryobligation,doesnotevidenceanordertopay,anddoesnotcontainan
332acknowledgmentbyabankthatthebankhasreceivedfordepositasumofmoneyorfunds;
333 [(66)] (65)"Proposal"meansarecord[authenticated] signedbyasecuredparty
334whichincludesthetermsonwhichthesecuredpartyiswillingtoacceptcollateralinfullor
335partialsatisfactionoftheobligationitsecurespursuanttosections400.9-620,400.9-621and
336400.9-622;
337 [(67)] (66)"Publicorganicrecord"meansarecordthatisavailabletothepublicfor
338inspectionandis:
339 (A)Arecordconsistingoftherecordinitiallyfiledwithorissuedbyastateorthe
340UnitedStatestoformororganizeanorganizationandanyrecordfiledwithorissuedbythe
341stateortheUnitedStateswhichamendsorrestatestheinitialrecord;
342 (B)Anorganicrecordofabusinesstrustconsistingoftherecordinitiallyfiledwitha
343stateandanyrecordfiledwiththestatewhichamendsorrestatestheinitialrecord,ifastatute
344ofthestategoverningbusinesstrustsrequiresthattherecordbefiledwiththestate;or
345 (C)Arecordconsistingoflegislationenactedbythelegislatureofastateorthe
346CongressoftheUnitedStateswhichformsororganizesanorganization,anyrecordamending
347thelegislation,andanyrecordfiledwithorissuedbythestateortheUnitedStateswhich
348amendsorrestatesthenameoftheorganization;
349 [(68)] (67)"Pursuanttocommitment",withrespecttoanadvancemadeorothervalue
350givenbyasecuredparty,meanspursuanttothesecuredparty'sobligation,whetherornota
351subsequenteventofdefaultorothereventnotwithinthesecuredparty'scontrolhasrelieved
352ormayrelievethesecuredpartyfromitsobligation;
HCSHB1165 44 353 [(69)] (68)"Record",exceptasusedin"forrecord","ofrecord","recordorlegal
354title",and"recordowner",meansinformationthatisinscribedonatangiblemediumorwhich
355isstoredinanelectronicorothermediumandisretrievableinperceivableform;
356 [(70)] (69)"Registeredorganization"meansanorganizationformedororganized
357solelyunderthelawofasinglestateortheUnitedStatesbythefilingofapublicorganic
358recordwith,theissuanceofapublicorganicrecordby,ortheenactmentoflegislationbythe
359stateortheUnitedStates.Thetermincludesabusinesstrustthatisformedororganized
360underthelawofasinglestateifastatuteofthestategoverningbusinesstrustsrequiresthat
361thebusinesstrust'sorganicrecordbefiledwiththestate;
362 [(71)] (70)"Secondaryobligor"meansanobligortotheextentthat:
363 (A)Theobligor'sobligationissecondary;or
364 (B)Theobligorhasarightofrecoursewithrespecttoanobligationsecuredby
365collateralagainstthedebtor,anotherobligor,orpropertyofeither;
366 [(72)] (71)"Securedparty"means:
367 (A)Apersoninwhosefavorasecurityinterestiscreatedorprovidedforundera
368securityagreement,whetherornotanyobligationtobesecuredisoutstanding;
369 (B)Apersonthatholdsanagriculturallien;
370 (C)Aconsignor;
371 (D)Apersontowhichaccounts,chattelpaper,paymentintangibles,orpromissory
372noteshavebeensold;
373 (E)Atrustee,indenturetrustee,agent,collateralagent,orotherrepresentativein
374whosefavorasecurityinterestoragriculturallieniscreatedorprovidedfor;or
375 (F)Apersonthatholdsasecurityinterestarisingundersections400.2-401,400.2-
376505,400.2-711(3),400.2A-508(5),400.4-210or400.5-118;
377 [(73)] (72)"Securityagreement"meansanagreementthatcreatesorprovidesfora
378securityinterest;
379 [(74)"Send",inconnectionwitharecordornotification,means:
380 (A)Todepositinthemail,deliverfortransmission,ortransmitbyanyotherusual
381meansofcommunication,withpostageorcostoftransmissionprovidedfor,addressedtoany
382addressreasonableunderthecircumstances;or
383 (B)Tocausetherecordornotificationtobereceivedwithinthetimethatitwould
384havebeenreceivedifproperlysentundersubparagraph(A);
385 (75)](73)"Software"meansacomputerprogramandanysupportinginformation
386providedinconnectionwithatransactionrelatingtotheprogram.Thetermdoesnotinclude
387acomputerprogramthatisincludedinthedefinitionofgoods;
HCSHB1165 45 388 [(76)] (74)"State"meansastateoftheUnitedStates,theDistrictofColumbia,Puerto
389Rico,theUnitedStatesVirginIslands,oranyterritoryorinsularpossessionsubjecttothe
390jurisdictionoftheUnitedStates;
391 [(77)] (75)"Supportingobligation"meansaletter-of-creditrightorsecondary
392obligationthatsupportsthepaymentorperformanceofanaccount,chattelpaper,adocument,
393ageneralintangible,aninstrument,orinvestmentproperty;
394 [(78)"Tangiblechattelpaper"meanschattelpaperevidencedbyarecordorrecords
395consistingofinformationthatisinscribedonatangiblemedium;
396 (79)](76)"Tangiblemoney"meansmoneyinatangibleform;
397 (77)"Terminationstatement"meansanamendmentofafinancingstatementwhich:
398 (A)Identifies,byitsfilenumber,theinitialfinancingstatementtowhichitrelates;
399and
400 (B)Indicateseitherthatitisaterminationstatementorthattheidentifiedfinancing
401statementisnolongereffective;
402 [(80)] (78)"Transmittingutility"meansapersonprimarilyengagedinthebusiness
403of:
404 (A)Operatingarailroad,subway,streetrailway,ortrolleybus;
405 (B)Transmittingcommunicationselectrically,electromagnetically,orbylight;
406 (C)Transmittinggoodsbypipelineorsewer;or
407 (D)Transmittingorproducingandtransmittingelectricity,steam,gas,orwater.
408 (b)"Control"asprovidedinsection400.8-106andthefollowingdefinitionsinother
409articlesapplytothisarticle:
410 ["Applicant"] [Section400.5-102.]
411 ["Beneficiary"] [Section400.5-102.]
412 ["Broker"] [Section400.8-102.]
413 ["Certificatedsecurity"] [Section400.8-102.]
414 ["Check"] [Section400.3-104.]
415 ["Clearingcorporation"] [Section400.8-102.]
416 ["Contractforsale"] [Section400.2-106.]
417 ["Customer"] [Section400.4-104.]
418 ["Entitlementholder"] [Section400.8-102.]
419 ["Financialasset"] [Section400.8-102.]
420 ["Holderinduecourse"] [Section400.3-302.]
421 ["Issuer"(withrespecttoaletterofcreditor
422 letter-of-creditright)] [Section400.5-102.]
423 ["Issuer"(withrespecttoasecurity)] [Section400.8-201.]
HCSHB1165 46 424 ["Lease"] [Section400.2A-103.]
425 ["Leaseagreement"] [Section400.2A-103.]
426 ["Leasecontract"] [Section400.2A-103.]
427 ["Leaseholdinterest"] [Section400.2A-103.]
428 ["Lessee"] [Section400.2A-103.]
429 ["Lesseeinordinarycourseofbusiness"] [Section400.2A-103.]
430 ["Lessor"] [Section400.2A-103.]
431 ["Lessor'sresidualinterest"] [Section400.2A-103.]
432 ["Letterofcredit"] [Section400.5-102.]
433 ["Merchant"] [Section400.2-104.]
434 ["Negotiableinstrument"] [Section400.3-104.]
435 ["Nominatedperson"] [Section400.5-102.]
436 ["Note"] [Section400.3-104.]
437 ["Proceedsofaletterofcredit"] [Section400.5-114.]
438 ["Prove"] [Section400.3-103.]
439 ["Sale"] [Section400.2-106.]
440 ["Securitiesaccount"] [Section400.8-501.]
441 ["Securitiesintermediary"] [Section400.8-102.]
442 ["Security"] [Section400.8-102.]
443 ["Securitycertificate"] [Section400.8-102.]
444 ["Securityentitlement"] [Section400.8-102.]
445 ["Uncertificatedsecurity"] [Section400.8-102.]
446 "Applicant"Section400.5-102.
447 "Beneficiary"Section400.5-102.
448 "Broker"Section400.8-102.
449 "Certifiedsecurity"Section400.8-102.
450 "Check"Section400.3-104.
451 "Clearingcorporation"Section400.8-102.
452 "Contractforsale"Section400.2-106.
453 "Controllableelectronicrecord"Section400.12-102.
454 "Customer"Section400.4-104.
455 "Entitlementholder"Section400.8-102.
456 "Financialasset"Section400.8-102.
457 "Holderinduecourse"Section400.3-302.
HCSHB1165 47 458 "Issuer"(withrespecttoaletterofcreditorletter-of-creditright)Section400.5-
459102.
460 "Issuer"(withrespecttoasecurity)Section400.8-201.
461 "Lease"Section400.2A-103.
462 "Leaseagreement"Section400.2A-103.
463 "Leasecontract"Section400.2A-103.
464 "Leaseholdinterest"Section400.2A-103.
465 "Lessee"Section400.2A-103.
466 "Lesseeinordinarycourseofbusiness"Section400.2A-103.
467 "Lessor"Section400.2A-103.
468 "Lessor'sresidualinterest"Section400.2A-103.
469 "Letterofcredit"Section400.5-102.
470 "Merchant"Section400.2-104.
471 "Negotiableinstrument"Section400.3-104.
472 "Nominatedperson"Section400.5-102.
473 "Note"Section400.3-104.
474 "Proceedsofaletterofcredit"Section400.5-114.
475 "Protectedpurchaser"Section400.8-303.
476 "Prove"Section400.3-103.
477 "Qualifyingpurchaser"Section400.12-102.
478 "Sale"Section400.2-106.
479 "Securitiesaccount"Section400.8-501.
480 "Securitiesintermediary"Section400.8-102.
481 "Security"Section400.8-102.
482 "Securitycertificate"Section400.8-102.
483 "Securityentitlement"Section400.8-102.
484 "Uncertificatedsecurity"Section400.8-102.
485 (c)Thissectioncontainsgeneraldefinitionsandprinciplesofconstructionand
486interpretationapplicablethroughoutsections400.9-103to400.9-809.
400.9-104.(a)Asecuredpartyhascontrolofadepositaccountif:
2 (1)Thesecuredpartyisthebankwithwhichthedepositaccountismaintained;
3 (2)Thedebtor,securedparty,andbankhaveagreedin[anauthenticated] asigned
4recordthatthebankwillcomplywithinstructionsoriginatedbythesecuredpartydirecting
5dispositionofthefundsintheaccountwithoutfurtherconsentbythedebtor;[or]
6 (3)Thesecuredpartybecomesthebank'scustomerwithrespecttothedeposit
7account; or
8 (4)Anotherperson,otherthanthedebtor:
HCSHB1165 48 9 (A)Hascontrolofthedepositaccountandacknowledgesthatithascontrolon
10behalfofthesecuredparty;or
11 (B)Obtainscontrolofthedepositaccountafterhavingacknowledgedthatitwill
12obtaincontrolofthedepositaccountonbehalfofthesecuredparty.
13 (b)Asecuredpartythathassatisfiedsubsection(a)hascontrol,evenifthedebtor
14retainstherighttodirectthedispositionoffundsfromthedepositaccount.
400.9-105.(a)A[securedparty] purchaserhascontrolofanauthoritative
2electroniccopyofarecordevidencingchattelpaperifasystememployedforevidencingthe
3[transfer] assignmentofinterestsinthechattelpaperreliablyestablishesthe[securedparty]
4purchaserasthepersontowhichthe[chattelpaper] authoritativeelectroniccopywas
5assigned.
6 (b)Asystemsatisfiessubsection(a)iftherecordorrecords[comprising] evidencing
7thechattelpaperarecreated,stored,andassignedinsuchamannerthat:
8 (1)Asingleauthoritativecopyoftherecordorrecordsexistswhichisunique,
9identifiable, and,exceptasotherwiseprovidedinparagraphs(4),(5),and(6),unalterable;
10 (2)Theauthoritativecopyidentifiesthe[securedparty] purchaserastheassigneeof
11therecordorrecords;
12 (3)Theauthoritativecopyiscommunicatedtoandmaintainedbythe[securedparty]
13purchaseroritsdesignatedcustodian;
14 (4)Copiesoramendmentsthataddorchangeanidentifiedassigneeofthe
15authoritativecopycanbemadeonlywiththeconsentofthe[securedparty] purchaser;
16 (5)Eachcopyoftheauthoritativecopyandanycopyofacopyisreadilyidentifiable
17asacopythatisnottheauthoritativecopy;and
18 (6)Anyamendmentoftheauthoritativecopyisreadilyidentifiableasauthorizedor
19unauthorized.
20 (c)Asystemsatisfiessubsection(a),andapurchaserhascontrolofan
21authoritativeelectroniccopyofarecordevidencingchattelpaper,iftheelectroniccopy,
22arecordattachedtoorlogicallyassociatedwiththeelectroniccopy,orasysteminwhich
23theelectroniccopyisrecorded:
24 (1)Enablesthepurchaserreadilytoidentifyeachelectroniccopyaseitheran
25authoritativecopyoranonauthoritativecopy;
26 (2)Enablesthepurchaserreadilytoidentifyitselfinanyway,includingby
27name,identifyingnumber,cryptographickey,office,oraccountnumber,astheassignee
28oftheauthoritativeelectroniccopy;and
29 (3)Givesthepurchaserexclusivepower,subjecttosubsection(d),to:
30 (A)Preventothersfromaddingorchanginganidentifiedassigneeofthe
31authoritativeelectroniccopy;and
HCSHB1165 49 32 (B)Transfercontroloftheauthoritativeelectroniccopy.
33 (d)Subjecttosubsection(e),apowerisexclusiveundersubsection(c)(3)(A)and
34(B)evenif:
35 (1)Theauthoritativeelectroniccopy,arecordattachedtoorlogicallyassociated
36withtheauthoritativeelectroniccopy,orasysteminwhichtheauthoritativeelectronic
37copyisrecordedlimitstheuseoftheauthoritativeelectroniccopyorhasaprotocol
38programmedtocauseachange,includingatransferorlossofcontrol;or
39 (2)Thepowerissharedwithanotherperson.
40 (e)Apowerofapurchaserisnotsharedwithanotherpersonundersubsection
41(d)(2)andthepurchaser'spowerisnotexclusiveif:
42 (1)Thepurchasercanexercisethepoweronlyifthepoweralsoisexercisedby
43theotherperson;and
44 (2)Theotherperson:
45 (A)Canexercisethepowerwithoutexerciseofthepowerbythepurchaser;or
46 (B)Isthetransferortothepurchaserofaninterestinthechattelpaper.
47 (f)Ifapurchaserhasthepowersspecifiedinsubsection(c)(3)(A)and(B),the
48powersarepresumedtobeexclusive.
49 (g)Apurchaserhascontrolofanauthoritativeelectroniccopyofarecord
50evidencingchattelpaperifanotherperson,otherthanthetransferortothepurchaserof
51aninterestinthechattelpaper:
52 (1)Hascontroloftheauthoritativeelectroniccopyandacknowledgesthatithas
53controlonbehalfofthepurchaser;or
54 (2)Obtainscontroloftheauthoritativeelectroniccopyafterhaving
55acknowledgedthatitwillobtaincontroloftheelectroniccopyonbehalfofthe
56purchaser.
400.9-107A.(a)Asecuredpartyhascontrolofacontrollableelectronicrecord
2asprovidedinSection400.12-105.
3 (b)Asecuredpartyhascontrolofacontrollableaccountorcontrollable
4paymentintangibleifthesecuredpartyhascontrolofthecontrollableelectronicrecord
5thatevidencesthecontrollableaccountorcontrollablepaymentintangible.
400.9-107B.(a)Apersonthathascontrolundersection400.9-104,400.9-105,or
2400.9-105Aisnotrequiredtoacknowledgethatithascontrolonbehalfofanother
3person.
4 (b)Ifapersonacknowledgesthatithasorwillobtaincontrolonbehalfof
5anotherperson,unlessthepersonotherwiseagreesorlawotherthanthisarticle
6otherwiseprovides,thepersondoesnotoweanydutytotheotherpersonandisnot
7requiredtoconfirmtheacknowledgmenttoanyotherperson.
HCSHB1165 50 400.9-203.(a)Asecurityinterestattachestocollateralwhenitbecomesenforceable
2againstthedebtorwithrespecttothecollateral,unlessanagreementexpresslypostponesthe
3timeofattachment.
4 (b)Exceptasotherwiseprovidedinsubsections(c)through(i),asecurityinterestis
5enforceableagainstthedebtorandthirdpartieswithrespecttothecollateralonlyif:
6 (1)Valuehasbeengiven;
7 (2)Thedebtorhasrightsinthecollateralorthepowertotransferrightsinthe
8collateraltoasecuredparty;and
9 (3)Oneofthefollowingconditionsismet:
10 (A)Thedebtorhas[authenticated] signedasecurityagreementthatprovidesa
11descriptionofthecollateraland,ifthesecurityinterestcoverstimbertobecut,adescription
12ofthelandconcerned;
13 (B)Thecollateralisnotacertificatedsecurityandisinthepossessionofthesecured
14partyundersection400.9-313pursuanttothedebtor'ssecurityagreement;
15 (C)Thecollateralisacertificatedsecurityinregisteredformandthesecurity
16certificatehasbeendeliveredtothesecuredpartyundersection400.8-301pursuanttothe
17debtor'ssecurityagreement;[or]
18 (D)Thecollateraliscontrollableaccounts,controllableelectronicrecords,
19controllablepaymentintangibles,depositaccounts,[electronicchattelpaper,]electronic
20documents,investmentproperty,orletter-of-creditrights,andthesecuredpartyhascontrol
21undersection400.9-104,[400.9-105,] 400.9-106[or],400.9-107, or400.9-107Apursuantto
22thedebtor'ssecurityagreement; or
23 (E)Thecollateralischattelpaperandthesecuredpartyhaspossessionand
24controlundersection400.9-314Apursuanttothedebtor'ssecurityagreement.
25 (c)Subsection(b)issubjecttosection400.4-210onthesecurityinterestofa
26collectingbank,section400.5-118onthesecurityinterestofaletter-of-creditissueror
27nominatedperson,section400.9-110onasecurityinterestarisingunderarticle2or2A,and
28section400.9-206onsecurityinterestsininvestmentproperty.
29 (d)Apersonbecomesboundasdebtorbyasecurityagreemententeredintoby
30anotherpersonif,byoperationoflawotherthanthisarticleorbycontract:
31 (1)Thesecurityagreementbecomeseffectivetocreateasecurityinterestinthe
32person'sproperty;or
33 (2)Thepersonbecomesgenerallyobligatedfortheobligationsoftheotherperson,
34includingtheobligationsecuredunderthesecurityagreement,andacquiresorsucceedstoall
35orsubstantiallyalloftheassetsoftheotherperson.
36 (e)Ifanewdebtorbecomesboundasdebtorbyasecurityagreemententeredintoby
37anotherperson:
HCSHB1165 51 38 (1)Theagreementsatisfiessubsection(b)(3)withrespecttoexistingorafter-acquired
39propertyofthenewdebtortotheextentthepropertyisdescribedintheagreement;and
40 (2)Anotheragreementisnotnecessarytomakeasecurityinterestintheproperty
41enforceable.
42 (f)Theattachmentofasecurityinterestincollateralgivesthesecuredpartytherights
43toproceedsprovidedbysection400.9-315andisalsoattachmentofasecurityinterestina
44supportingobligationforthecollateral.
45 (g)Theattachmentofasecurityinterestinarighttopaymentorperformancesecured
46byasecurityinterestorotherlienonpersonalorrealpropertyisalsoattachmentofasecurity
47interestinthesecurityinterest,mortgage,orotherlien.
48 (h)Theattachmentofasecurityinterestinasecuritiesaccountisalsoattachmentofa
49securityinterestinthesecurityentitlementscarriedinthesecuritiesaccount.
50 (i)Theattachmentofasecurityinterestinacommodityaccountisalsoattachmentof
51asecurityinterestinthecommoditycontractscarriedinthecommodityaccount.
400.9-204.(a)Exceptasotherwiseprovidedinsubsection(b),asecurityagreement
2maycreateorprovideforasecurityinterestinafter-acquiredcollateral.
3 (b)[A]Subjecttosubsection(b.1),asecurityinterestdoesnotattachunderaterm
4constitutinganafter-acquiredpropertyclauseto:
5 (1)Consumergoods,otherthananaccessionwhengivenasadditionalsecurity,
6unlessthedebtoracquiresrightsinthemwithintendaysafterthesecuredpartygivesvalue;
7or
8 (2)Acommercialtortclaim.
9 (b.1)Subsection(b)doesnotpreventasecurityinterestfromattaching:
10 (1)ToconsumergoodsasproceedsunderSection400.9‑315(a)orcommingled
11goodsunderSection400.9‑336(c);
12 (2)ToacommercialtortclaimasproceedsunderSection400.9‑315(a);or
13 (3)Underanafter-acquiredpropertyclausetopropertythatisproceedsof
14consumergoodsoracommercialtortclaim.
15 (c)Asecurityagreementmayprovidethatcollateralsecures,orthataccounts,chattel
16paper,paymentintangibles,orpromissorynotesaresoldinconnectionwith,futureadvances
17orothervalue,whetherornottheadvancesorvaluearegivenpursuanttocommitment.
400.9-207.(a)Exceptasotherwiseprovidedinsubsection(d),asecuredpartyshall
2usereasonablecareinthecustodyandpreservationofcollateralinthesecuredparty's
3possession.Inthecaseofchattelpaperoraninstrument,reasonablecareincludestaking
4necessarystepstopreserverightsagainstpriorpartiesunlessotherwiseagreed.
5 (b)Exceptasotherwiseprovidedinsubsection(d),ifasecuredpartyhaspossession
6ofcollateral:
HCSHB1165 52 7 (1)Reasonableexpenses,includingthecostofinsuranceandpaymentoftaxesor
8othercharges,incurredinthecustody,preservation,use,oroperationofthecollateralare
9chargeabletothedebtorandaresecuredbythecollateral;
10 (2)Theriskofaccidentallossordamageisonthepartyhavingpossessionofthe
11collateral;
12 (3)Thesecuredpartyshallkeepthecollateralidentifiable,butfungiblecollateralmay
13becommingled;and
14 (4)Thesecuredpartymayuseoroperatethecollateral:
15 (A)Forthepurposeofpreservingthecollateraloritsvalue;
16 (B)Aspermittedbyanorderofacourthavingcompetentjurisdiction;or
17 (C)Exceptinthecaseofconsumergoods,inthemannerandtotheextentagreedby
18thedebtor.
19 (c)Exceptasotherwiseprovidedinsubsection(d),asecuredpartyhavingpossession
20ofcollateralorcontrolofcollateralundersection400.9-104,400.9-105,400.9-105A,400.9-
21106[or],400.9-107, or400.9-107A:
22 (1)Mayholdasadditionalsecurityanyproceeds,exceptmoneyorfunds,received
23fromthecollateral;
24 (2)Shallapplymoneyorfundsreceivedfromthecollateraltoreducethesecured
25obligation,unlessremittedtothedebtor;and
26 (3)Maycreateasecurityinterestinthecollateral.
27 (d)Ifthesecuredpartyisabuyerofaccounts,chattelpaper,paymentintangibles,or
28promissorynotesoraconsignor:
29 (1)Subsection(a)doesnotapplyunlessthesecuredpartyisentitledunderan
30agreement:
31 (A)Tochargebackuncollectedcollateral;or
32 (B)Otherwisetofullorlimitedrecourseagainstthedebtororasecondaryobligor
33basedonthenonpaymentorotherdefaultofanaccountdebtororotherobligoronthe
34collateral;and
35 (2)Subsections(b)and(c)donotapply.
400.9-208.(a)Thissectionappliestocasesinwhichthereisnooutstandingsecured
2obligationandthesecuredpartyisnotcommittedtomakeadvances,incurobligations,or
3otherwisegivevalue.
4 (b)Withintendaysafterreceiving[anauthenticated] asigneddemandbythedebtor:
5 (1)Asecuredpartyhavingcontrolofadepositaccountundersection400.9-104(a)(2)
6shallsendtothebankwithwhichthedepositaccountismaintained[anauthenticated
7statement] asignedrecordthatreleasesthebankfromanyfurtherobligationtocomplywith
8instructionsoriginatedbythesecuredparty;
HCSHB1165 53 9 (2)Asecuredpartyhavingcontrolofadepositaccountundersection400.9-104(a)(3)
10shall:
11 (A)Paythedebtorthebalanceondepositinthedepositaccount;or
12 (B)Transferthebalanceondepositintoadepositaccountinthedebtor'sname;
13 (3)Asecuredparty,otherthanabuyer,havingcontrol[ofelectronicchattelpaper]
14undersection400.9-105ofanauthoritativeelectroniccopyofarecordevidencingchattel
15paper[shall:
16 (A)Communicatetheauthoritativecopyoftheelectronicchattelpapertothedebtor
17oritsdesignatedcustodian;
18 (B)Ifthedebtordesignatesacustodianthatisthedesignatedcustodianwithwhich
19theauthoritativecopyoftheelectronicchattelpaperismaintainedforthesecuredparty,
20communicatetothecustodiananauthenticatedrecordreleasingthedesignatedcustodianfrom
21anyfurtherobligationtocomplywithinstructionsoriginatedbythesecuredpartyand
22instructingthecustodiantocomplywithinstructionsoriginatedbythedebtor;and
23 (C)Takeappropriateactiontoenablethedebtororitsdesignatedcustodiantomake
24copiesoforrevisionstotheauthoritativecopywhichaddorchangeanidentifiedassigneeof
25theauthoritativecopywithouttheconsentofthesecuredparty]shalltransfercontrolofthe
26electroniccopytothedebtororapersondesignatedbythedebtor;
27 (4)Asecuredpartyhavingcontrolofinvestmentpropertyundersection400.8-106(d)
28(2)or400.9-106(b)shallsendtothesecuritiesintermediaryorcommodityintermediarywith
29whichthesecurityentitlementorcommoditycontractismaintained[anauthenticated] a
30signedrecordthatreleasesthesecuritiesintermediaryorcommodityintermediaryfromany
31furtherobligationtocomplywithentitlementordersordirectionsoriginatedbythesecured
32party;[and]
33 (5)Asecuredpartyhavingcontrolofaletter-of-creditrightundersection400.9-107
34shallsendtoeachpersonhavinganunfulfilledobligationtopayordeliverproceedsofthe
35letterofcredittothesecuredparty[anauthenticated] asignedreleasefromanyfurther
36obligationtopayordeliverproceedsoftheletterofcredittothesecuredparty;
37 (6)Asecuredpartyhavingcontrolundersection400.7-106ofanauthoritative
38electroniccopyofanelectronicdocumentshalltransfercontroloftheelectroniccopyto
39thedebtororapersondesignedbythedebtor;and
40 (7)Asecuredpartyhavingcontrolundersection400.12-105ofacontrollable
41electronicrecord,otherthanabuyerofacontrollableaccountorcontrollablepayment
42intangibleevidencedbythecontrollableelectronicrecord,shalltransfercontrolofthe
43controllableelectronicrecordtothedebtororapersondesignatedbythedebtor.
400.9-209.(a)Exceptasotherwiseprovidedinsubsection(c),thissectionappliesif:
2 (1)Thereisnooutstandingsecuredobligation;and
HCSHB1165 54 3 (2)Thesecuredpartyisnotcommittedtomakeadvances,incurobligations,or
4otherwisegivevalue.
5 (b)Withintendaysafterreceiving[anauthenticated] asigneddemandbythedebtor,
6asecuredpartyshallsendtoanaccountdebtorthathasreceivednotificationundersection
7400.9-406(a)or400.12-106(b)ofanassignmenttothesecuredpartyasassignee[under
8section400.9-406(a)anauthenticated] asignedrecordthatreleasestheaccountdebtorfrom
9anyfurtherobligationtothesecuredparty.
10 (c)Thissectiondoesnotapplytoanassignmentconstitutingthesaleofanaccount,
11chattelpaper,orpaymentintangible.
400.9-210.(a)Inthissection:
2 (1)"Request"meansarecordofatypedescribedinparagraph(2),(3),or(4);
3 (2)"Requestforanaccounting"meansarecord[authenticated] signedbyadebtor
4requestingthattherecipientprovideanaccountingoftheunpaidobligationssecuredby
5collateralandreasonablyidentifyingthetransactionorrelationshipthatisthesubjectofthe
6request;
7 (3)"Requestregardingalistofcollateral"meansarecord[authenticated] signedbya
8debtorrequestingthattherecipientapproveorcorrectalistofwhatthedebtorbelievestobe
9thecollateralsecuringanobligationandreasonablyidentifyingthetransactionorrelationship
10thatisthesubjectoftherequest;
11 (4)"Requestregardingastatementofaccount"meansarecord[authenticated] signed
12byadebtorrequestingthattherecipientapproveorcorrectastatementindicatingwhatthe
13debtorbelievestobetheaggregateamountofunpaidobligationssecuredbycollateralasofa
14specifieddateandreasonablyidentifyingthetransactionorrelationshipthatisthesubjectof
15therequest.
16 (b)Subjecttosubsections(c),(d),(e),and(f),asecuredparty,otherthanabuyerof
17accounts,chattelpaper,paymentintangibles,orpromissorynotesoraconsignor,shall
18complywitharequestwithinfourteendaysafterreceipt:
19 (1)Inthecaseofarequestforanaccounting,by[authenticating] signingandsending
20tothedebtoranaccounting;and
21 (2)Inthecaseofarequestregardingalistofcollateralorarequestregardinga
22statementofaccount,by[authenticating] signingandsendingtothedebtoranapprovalor
23correction.
24 (c)Asecuredpartythatclaimsasecurityinterestinallofaparticulartypeof
25collateralownedbythedebtormaycomplywitharequestregardingalistofcollateralby
26sendingtothedebtor[anauthenticated] asignedrecordincludingastatementtothateffect
27withinfourteendaysafterreceipt.
HCSHB1165 55 28 (d)Apersonthatreceivesarequestregardingalistofcollateral,claimsnointerestin
29thecollateralwhenitreceivestherequest,andclaimedaninterestinthecollateralatanearlier
30timeshallcomplywiththerequestwithinfourteendaysafterreceiptbysendingtothedebtor
31[anauthenticated] asignedrecord:
32 (1)Disclaiminganyinterestinthecollateral;and
33 (2)Ifknowntotherecipient,providingthenameandmailingaddressofanyassignee
34oforsuccessortotherecipient'ssecurityinterestinthecollateral.
35 (e)Apersonthatreceivesarequestforanaccountingorarequestregardinga
36statementofaccount,claimsnointerestintheobligationswhenitreceivestherequest,and
37claimedaninterestintheobligationsatanearliertimeshallcomplywiththerequestwithin
38fourteendaysafterreceiptbysendingtothedebtor[anauthenticated] asignedrecord:
39 (1)Disclaiminganyinterestintheobligations;and
40 (2)Ifknowntotherecipient,providingthenameandmailingaddressofanyassignee
41oforsuccessortotherecipient'sinterestintheobligations.
42 (f)Adebtorisentitledwithoutchargetooneresponsetoarequestunderthissection
43duringanysix-monthperiod.Thesecuredpartymayrequirepaymentofachargenot
44exceedingtwenty-fivedollarsforeachadditionalresponse.
400.9-301.Exceptasotherwiseprovidedinsections400.9-303through[400.9-306]
2400.9-306B, thefollowingrulesdeterminethelawgoverningperfection,theeffectof
3perfectionornonperfection,andthepriorityofasecurityinterestincollateral:
4 (1)Exceptasotherwiseprovidedinthissection,whileadebtorislocatedina
5jurisdiction,thelocallawofthatjurisdictiongovernsperfection,theeffectofperfectionor
6nonperfection,andthepriorityofasecurityinterestincollateral;
7 (2)Whilecollateralislocatedinajurisdiction,thelocallawofthatjurisdiction
8governsperfection,theeffectofperfectionornonperfection,andthepriorityofapossessory
9securityinterestinthatcollateral;
10 (3)Exceptasotherwiseprovidedinparagraph(4),whilenegotiabletangible
11documents,goods,instruments,ortangiblemoney[, ortangiblechattelpaper] islocatedina
12jurisdiction,thelocallawofthatjurisdictiongoverns:
13 (A)Perfectionofasecurityinterestinthegoodsbyfilingafixturefiling;
14 (B)Perfectionofasecurityinterestintimbertobecut;and
15 (C)Theeffectofperfectionornonperfectionandthepriorityofanonpossessory
16securityinterestinthecollateral;
17 (4)Thelocallawofthejurisdictioninwhichthewellheadormineheadislocated
18governsperfection,theeffectofperfectionornonperfection,andthepriorityofasecurity
19interestinas-extractedcollateral.
HCSHB1165 56 400.9-304.(a)Thelocallawofabank'sjurisdictiongovernsperfection,theeffectof
2perfectionornonperfection,andthepriorityofasecurityinterestinadepositaccount
3maintainedwiththatbankevenifthetransactiondoesnotbearanyrelationtothebank's
4jurisdiction.
5 (b)Thefollowingrulesdetermineabank'sjurisdictionforpurposesofthispart:
6 (1)Ifanagreementbetweenthebankandthedebtorgoverningthedepositaccount
7expresslyprovidesthataparticularjurisdictionisthebank'sjurisdictionforpurposesofthis
8part,thisarticle,orthischapter,thatjurisdictionisthebank'sjurisdiction;
9 (2)Ifparagraph(1)doesnotapplyandanagreementbetweenthebankandits
10customergoverningthedepositaccountexpresslyprovidesthattheagreementisgovernedby
11thelawofaparticularjurisdiction,thatjurisdictionisthebank'sjurisdiction;
12 (3)Ifneitherparagraph(1)norparagraph(2)appliesandanagreementbetweenthe
13bankanditscustomergoverningthedepositaccountexpresslyprovidesthatthedeposit
14accountismaintainedatanofficeinaparticularjurisdiction,thatjurisdictionisthebank's
15jurisdiction;
16 (4)Ifnoneoftheprecedingparagraphsapplies,thebank'sjurisdictionisthe
17jurisdictioninwhichtheofficeidentifiedinanaccountstatementastheofficeservingthe
18customer'saccountislocated;
19 (5)Ifnoneoftheprecedingparagraphsapplies,thebank'sjurisdictionisthe
20jurisdictioninwhichthechiefexecutiveofficeofthebankislocated.
400.9-305.(a)Exceptasotherwiseprovidedinsubsection(c),thefollowingrules
2apply:
3 (1)Whileasecuritycertificateislocatedinajurisdiction,thelocallawofthat
4jurisdictiongovernsperfection,theeffectofperfectionornonperfection,andthepriorityofa
5securityinterestinthecertificatedsecurityrepresentedthereby;
6 (2)Thelocallawoftheissuer'sjurisdictionasspecifiedinsection400.8-110(d)
7governsperfection,theeffectofperfectionornonperfection,andthepriorityofasecurity
8interestinanuncertificatedsecurity;
9 (3)Thelocallawofthesecuritiesintermediary'sjurisdictionasspecifiedinsection
10400.8-110(e)governsperfection,theeffectofperfectionornonperfection,andthepriorityof
11asecurityinterestinasecurityentitlementorsecuritiesaccount;
12 (4)Thelocallawofthecommodityintermediary'sjurisdictiongovernsperfection,the
13effectofperfectionornonperfection,andthepriorityofasecurityinterestinacommodity
14contractorcommodityaccount;
15 (5)Paragraphs(2),(3),and(4)applyevenifthetransactiondoesnotbearany
16relationtothejurisdiction.
HCSHB1165 57 17 (b)Thefollowingrulesdetermineacommodityintermediary'sjurisdictionfor
18purposesofthispart:
19 (1)Ifanagreementbetweenthecommodityintermediaryandcommoditycustomer
20governingthecommodityaccountexpresslyprovidesthataparticularjurisdictionisthe
21commodityintermediary'sjurisdictionforpurposesofthispart,thisarticle,orthischapter,
22thatjurisdictionisthecommodityintermediary'sjurisdiction;
23 (2)Ifparagraph(1)doesnotapplyandanagreementbetweenthecommodity
24intermediaryandcommoditycustomergoverningthecommodityaccountexpresslyprovides
25thattheagreementisgovernedbythelawofaparticularjurisdiction,thatjurisdictionisthe
26commodityintermediary'sjurisdiction;
27 (3)Ifneitherparagraph(1)norparagraph(2)appliesandanagreementbetweenthe
28commodityintermediaryandcommoditycustomergoverningthecommodityaccount
29expresslyprovidesthatthecommodityaccountismaintainedatanofficeinaparticular
30jurisdiction,thatjurisdictionisthecommodityintermediary'sjurisdiction;
31 (4)Ifnoneoftheprecedingparagraphsapplies,thecommodityintermediary's
32jurisdictionisthejurisdictioninwhichtheofficeidentifiedinanaccountstatementasthe
33officeservingthecommoditycustomer'saccountislocated;
34 (5)Ifnoneoftheprecedingparagraphsapplies,thecommodityintermediary's
35jurisdictionisthejurisdictioninwhichthechiefexecutiveofficeofthecommodity
36intermediaryislocated.
37 (c)Thelocallawofthejurisdictioninwhichthedebtorislocatedgoverns:
38 (1)Perfectionofasecurityinterestininvestmentpropertybyfiling;
39 (2)Automaticperfectionofasecurityinterestininvestmentpropertycreatedbya
40brokerorsecuritiesintermediary;and
41 (3)Automaticperfectionofasecurityinterestinacommoditycontractorcommodity
42accountcreatedbyacommodityintermediary.
400.9-306A.(a)Exceptasprovidedinsubsection(d),ifchattelpaperis
2evidencedonlybyanauthoritativeelectroniccopyofthechattelpaperorisevidenced
3byanauthoritativeelectroniccopyandanauthoritativetangiblecopy,thelocallawof
4thechattelpaper'sjurisdictiongovernsperfection,theeffectofperfectionor
5nonperfection,andthepriorityofasecurityinterestinthechattelpaper,evenifthe
6transactiondoesnotbearanyrelationtothechattelpaper'sjurisdiction.
7 (b)Thefollowingrulesdeterminethechattelpaper'sjurisdictionunderthis
8section:
9 (1)Iftheauthoritativeelectroniccopyoftherecordevidencingchattelpaper,or
10arecordattachedtoorlogicallyassociatedwiththeelectroniccopyandreadilyavailable
11forreview,expresslyprovidesthataparticularjurisdictionisthechattelpaper's
HCSHB1165 58 12jurisdictionforpurposesofthispart,thisarticle,orthischapter,thatjurisdictionisthe
13chattelpaper'sjurisdiction.
14 (2)Ifparagraph(1)doesnotapplyandtherulesofthesysteminwhichthe
15authoritativeelectroniccopyisrecordedarereadilyavailableforreviewandexpressly
16providethataparticularjurisdictionisthechattelpaper'sjurisdictionforpurposesof
17thispart,thisarticle,orthischapter,thatjurisdictionisthechattelpaper'sjurisdiction.
18 (3)Ifparagraphs(1)and(2)donotapplyandtheauthoritativeelectroniccopy,
19orarecordattachedtoorlogicallyassociatedwiththeelectroniccopyandreadily
20availableforreview,expresslyprovidesthatthechattelpaperisgovernedbythelawofa
21particularjurisdiction,thatjurisdictionisthechattelpaper'sjurisdiction.
22 (4)Ifparagraphs(1),(2),and(3)donotapplyandtherulesofthesystemin
23whichtheauthoritativeelectroniccopyisrecordedarereadilyavailableforreviewand
24expresslyprovidethatthechattelpaperorthesystemisgovernedbythelawofa
25particularjurisdiction,thatjurisdictionisthechattelpaper'sjurisdiction.
26 (5)Ifparagraphs(1)through(4)donotapply,thechattelpaper'sjurisdictionis
27thejurisdictioninwhichthedebtorislocated.
28 (c)Ifanauthoritativetangiblecopyofarecordevidenceschattelpaperandthe
29chattelpaperisnotevidencedbyanauthoritativeelectroniccopy,whilethe
30authoritativetangiblecopyoftherecordevidencingchattelpaperislocatedina
31jurisdiction,thelocallawofthatjurisdictiongoverns:
32 (1)Perfectionofasecurityinterestinthechattelpaperbypossessionunder
33section400.9-314A;and
34 (2)Theeffectofperfectionornonperfectionandthepriorityofasecurity
35interestinthechattelpaper.
36 (d)Thelocallawofthejurisdictioninwhichthedebtorislocatedgoverns
37perfectionofasecurityinterestinchattelpaperbyfiling.
400.9-306B.(a)Exceptasprovidedinsubsection(b),thelocallawofthe
2controllableelectronicrecord'sjurisdictionspecifiedinsection400.12-107(c)and(d)
3governsperfection,theeffectofperfectionornonperfection,andthepriorityofa
4securityinterestinacontrollableelectronicrecordandasecurityinterestina
5controllableaccountorcontrollablepaymentintangibleevidencedbythecontrollable
6electronicrecord.
7 (b)Thelocallawofthejurisdictioninwhichthedebtorislocatedgoverns:
8 (1)Perfectionofasecurityinterestinacontrollableaccount,controllable
9electronicrecord,orcontrollablepaymentintangiblebyfiling;and
10 (2)Automaticperfectionofasecurityinterestinacontrollablepayment
11intangiblecreatedbyasaleofthecontrollablepaymentintangible.
HCSHB1165 59 400.9-310.(a)Exceptasotherwiseprovidedinsubsection(b)andsection400.9-312
2(b),afinancingstatementmustbefiledtoperfectallsecurityinterestsandagriculturalliens.
3 (b)Thefilingofafinancingstatementisnotnecessarytoperfectasecurityinterest:
4 (1)Thatisperfectedundersection400.9-308(c),(d),(e)or(f);
5 (2)Thatisperfectedundersection400.9-309whenitattaches;
6 (3)Inpropertysubjecttoastatute,regulation,ortreatydescribedinsection400.9-311
7(a);
8 (4)Ingoodsinpossessionofabaileewhichisperfectedundersection400.9-312(d)
9(1)or(2);
10 (5)Incertificatedsecurities,documents,goods,orinstrumentswhichisperfected
11withoutfilingorpossessionundersection400.9-312(e),(f),or(g);
12 (6)Incollateralinthesecuredparty'spossessionundersection400.9-313;
13 (7)Inacertificatedsecuritywhichisperfectedbydeliveryofthesecuritycertificate
14tothesecuredpartyundersection400.9-313;
15 (8)Incontrollableaccounts,controllableelectronicrecords,controllable
16paymentintangibles,depositaccounts,[electronicchattelpaper,]electronicdocuments,
17investmentproperty,orletter-of-creditrightswhichisperfectedbycontrolundersection
18400.9-314;
19 (8.1)Inchattelpaperwhichisperfectedbypossessionandcontrolundersection
20400.9-314A;
21 (9)Inproceedswhichisperfectedundersection400.9-315;or
22 (10)Thatisperfectedundersection400.9-316.
23 (c)Ifasecuredpartyassignsaperfectedsecurityinterestoragriculturallien,afiling
24underthisarticleisnotrequiredtocontinuetheperfectedstatusofthesecurityinterestagainst
25creditorsofandtransfereesfromtheoriginaldebtor.
400.9-312.(a)Asecurityinterestinchattelpaper,[negotiabledocuments,]
2controllableaccounts,controllableelectronicrecords,controllablepaymentintangibles,
3instruments,[or]investmentproperty, ornegotiabledocumentsmaybeperfectedbyfiling.
4 (b)Exceptasotherwiseprovidedinsection400.9-315(c)and(d)forproceeds:
5 (1)Asecurityinterestinadepositaccountmaybeperfectedonlybycontrolunder
6section400.9-314;
7 (2)Andexceptasotherwiseprovidedinsection400.9-308(c),asecurityinterestina
8letter-of-creditrightmaybeperfectedonlybycontrolundersection400.9-314;and
9 (3)Asecurityinterestinmoneymaybeperfectedonlybythesecuredparty'staking
10possessionundersection400.9-313.
11 (c)Whilegoodsareinthepossessionofabaileethathasissuedanegotiable
12documentcoveringthegoods:
HCSHB1165 60 13 (1)Asecurityinterestinthegoodsmaybeperfectedbyperfectingasecurityinterest
14inthedocument;and
15 (2)Asecurityinterestperfectedinthedocumenthaspriorityoveranysecurity
16interestthatbecomesperfectedinthegoodsbyanothermethodduringthattime.
17 (d)Whilegoodsareinthepossessionofabaileethathasissuedanonnegotiable
18documentcoveringthegoods,asecurityinterestinthegoodsmaybeperfectedby:
19 (1)Issuanceofadocumentinthenameofthesecuredparty;
20 (2)Thebailee'sreceiptofnotificationofthesecuredparty'sinterest;or
21 (3)Filingastothegoods.
22 (e)Asecurityinterestincertificatedsecurities,negotiabledocuments,orinstruments
23isperfectedwithoutfilingorthetakingofpossessionforaperiodoftwentydaysfromthe
24timeitattachestotheextentthatitarisesfornewvaluegivenunder[anauthenticated] a
25signedsecurityagreement.
26 (f)Aperfectedsecurityinterestinanegotiabledocumentorgoodsinpossessionofa
27bailee,otherthanonethathasissuedanegotiabledocumentforthegoods,remainsperfected
28fortwentydayswithoutfilingifthesecuredpartymakesavailabletothedebtorthegoodsor
29documentsrepresentingthegoodsforthepurposeof:
30 (1)Ultimatesaleorexchange;or
31 (2)Loading,unloading,storing,shipping,transshipping,manufacturing,processing,
32orotherwisedealingwiththeminamannerpreliminarytotheirsaleorexchange.
33 (g)Aperfectedsecurityinterestinacertificatedsecurityorinstrumentremains
34perfectedfortwentydayswithoutfilingifthesecuredpartydeliversthesecuritycertificateor
35instrumenttothedebtorforthepurposeof:
36 (1)Ultimatesaleorexchange;or
37 (2)Presentation,collection,enforcement,renewal,orregistrationoftransfer.
38 (h)Afterthetwenty-dayperiodspecifiedinsubsection(e),(f),or(g)expires,
39perfectiondependsuponcompliancewiththisarticle.
400.9-313.(a)Exceptasotherwiseprovidedinsubsection(b),asecuredpartymay
2perfectasecurityinterestin[negotiabledocuments,] goods,instruments,negotiabletangible
3documents,ortangiblemoney[, ortangiblechattelpaper] bytakingpossessionofthe
4collateral.Asecuredpartymayperfectasecurityinterestincertificatedsecuritiesbytaking
5deliveryofthecertificatedsecuritiesundersection400.8-301.
6 (b)Withrespecttogoodscoveredbyacertificateoftitleissuedbythisstate,a
7securedpartymayperfectasecurityinterestinthegoodsbytakingpossessionofthegoods
8onlyinthecircumstancesdescribedinsection400.9-316(d).
9 (c)Withrespecttocollateralotherthancertificatedsecuritiesandgoodscoveredbya
10document,asecuredpartytakespossessionofcollateralinthepossessionofapersonother
HCSHB1165 61 11thanthedebtor,thesecuredparty,oralesseeofthecollateralfromthedebtorintheordinary
12courseofthedebtor'sbusiness,when:
13 (1)Thepersoninpossession[authenticates] signsarecordacknowledgingthatit
14holdspossessionofthecollateralforthesecuredparty'sbenefit;or
15 (2)Thepersontakespossessionofthecollateralafterhaving[authenticated] signeda
16recordacknowledgingthatitwillholdpossessionofthecollateralforthesecuredparty's
17benefit.
18 (d)Ifperfectionofasecurityinterestdependsuponpossessionofthecollateralbya
19securedparty,perfectionoccurs[no]notearlierthanthetimethesecuredpartytakes
20possessionandcontinuesonlywhilethesecuredpartyretainspossession.
21 (e)Asecurityinterestinacertificatedsecurityinregisteredformisperfectedby
22deliverywhendeliveryofthecertificatedsecurityoccursundersection400.8-301and
23remainsperfectedbydeliveryuntilthedebtorobtainspossessionofthesecuritycertificate.
24 (f)Apersoninpossessionofcollateralisnotrequiredtoacknowledgethatitholds
25possessionforasecuredparty'sbenefit.
26 (g)Ifapersonacknowledgesthatitholdspossessionforthesecuredparty'sbenefit:
27 (1)Theacknowledgmentiseffectiveundersubsection(c)orsection400.8-301(a),
28eveniftheacknowledgmentviolatestherightsofadebtor;and
29 (2)Unlessthepersonotherwiseagreesorlawotherthanthisarticleotherwise
30provides,thepersondoesnotoweanydutytothesecuredpartyandisnotrequiredtoconfirm
31theacknowledgmenttoanotherperson.
32 (h)Asecuredpartyhavingpossessionofcollateraldoesnotrelinquishpossessionby
33deliveringthecollateraltoapersonotherthanthedebtororalesseeofthecollateralfromthe
34debtorintheordinarycourseofthedebtor'sbusinessifthepersonwasinstructedbeforethe
35deliveryorisinstructedcontemporaneouslywiththedelivery:
36 (1)Toholdpossessionofthecollateralforthesecuredparty'sbenefit;or
37 (2)Toredeliverthecollateraltothesecuredparty.
38 (i)Asecuredpartydoesnotrelinquishpossession,evenifadeliveryundersubsection
39(h)violatestherightsofadebtor.Apersontowhichcollateralisdeliveredundersubsection
40(h)doesnotoweanydutytothesecuredpartyandisnotrequiredtoconfirmthedeliveryto
41anotherpersonunlessthepersonotherwiseagreesorlawotherthanthisarticleotherwise
42provides.
400.9-314.(a)Asecurityinterestin[investmentproperty,depositaccounts,letter-of-
2creditrights,orelectronicchattelpaper] controllableaccounts,controllableelectronic
3records,controllablepaymentintangibles,depositaccounts,electronicdocuments,
4investmentproperty,orletter-of-creditrightsmaybeperfectedbycontrolofthecollateral
5undersection400.9-104,[400.9-105,] 400.9-106[or]400.9-107, or400.9-107A.
HCSHB1165 62 6 (b)Asecurityinterestin[depositaccounts,electronicchattelpaper,orletter-of-credit
7rights] controllableaccounts,controllableelectronicrecords,controllablepayment
8intangibles,depositaccounts,electronicdocuments,orletter-of-creditrightsisperfected
9bycontrolundersection400.7-106,400.9-104,[400.9-105or]400.9-107[when], or400.9-
10107Anotearlierthanthetimethesecuredpartyobtainscontrolandremainsperfectedby
11controlonlywhilethesecuredpartyretainscontrol.
12 (c)Asecurityinterestininvestmentpropertyisperfectedbycontrolundersection
13400.9-106[from] notearlierthanthetimethesecuredpartyobtainscontrolandremains
14perfectedbycontroluntil:
15 (1)Thesecuredpartydoesnothavecontrol;and
16 (2)Oneofthefollowingoccurs:
17 (A)Ifthecollateralisacertificatedsecurity,thedebtorhasoracquirespossessionof
18thesecuritycertificate;
19 (B)Ifthecollateralisanuncertificatedsecurity,theissuerhasregisteredorregisters
20thedebtorastheregisteredowner;or
21 (C)Ifthecollateralisasecurityentitlement,thedebtorisorbecomestheentitlement
22holder.
400.9-314A.(a)Asecuredpartymayperfectasecurityinterestinchattelpaper
2bytakingpossessionofeachauthoritativetangiblecopyoftherecordevidencingthe
3chattelpaperandobtainingcontrolofeachauthoritativeelectroniccopyofthe
4electronicrecordevidencingthechattelpaper.
5 (b)Asecurityinterestisperfectedundersubsection(a)notearlierthanthetime
6thesecuredpartytakespossessionandobtainscontrolandremainsperfectedunder
7subsection(a)onlywhilethesecuredpartyretainspossessionandcontrol.
8 (c)Section400.9-313(c)and(f)through(i)appliestoperfectionbypossessionof
9anauthoritativetangiblecopyofarecordevidencingchattelpaper.
400.9-316.(a)Asecurityinterestperfectedpursuanttothelawofthejurisdiction
2designatedinsection400.9-301(1)[or],400.9-305(c), 400.9-306A(d),or400.9-306B(b)
3remainsperfecteduntiltheearliestof:
4 (1)Thetimeperfectionwouldhaveceasedunderthelawofthatjurisdiction;
5 (2)Theexpirationoffourmonthsafterachangeofthedebtor'slocationtoanother
6jurisdiction;or
7 (3)Theexpirationofoneyearafteratransferofcollateraltoapersonthatthereby
8becomesadebtorandislocatedinanotherjurisdiction.
9 (b)Ifasecurityinterestdescribedinsubsection(a)becomesperfectedunderthelaw
10oftheotherjurisdictionbeforetheearliesttimeoreventdescribedinthatsubsection,it
11remainsperfectedthereafter.Ifthesecurityinterestdoesnotbecomeperfectedunderthelaw
HCSHB1165 63 12oftheotherjurisdictionbeforetheearliesttimeorevent,itbecomesunperfectedandis
13deemednevertohavebeenperfectedasagainstapurchaserofthecollateralforvalue.
14 (c)Apossessorysecurityinterestincollateral,otherthangoodscoveredbya
15certificateoftitleandas-extractedcollateralconsistingofgoods,remainscontinuously
16perfectedif:
17 (1)Thecollateralislocatedinonejurisdictionandsubjecttoasecurityinterest
18perfectedunderthelawofthatjurisdiction;
19 (2)Thereafterthecollateralisbroughtintoanotherjurisdiction;and
20 (3)Uponentryintotheotherjurisdiction,thesecurityinterestisperfectedunderthe
21lawoftheotherjurisdiction.
22 (d)Exceptasotherwiseprovidedinsubsection(e),asecurityinterestingoods
23coveredbyacertificateoftitlewhichisperfectedbyanymethodunderthelawofanother
24jurisdictionwhenthegoodsbecomecoveredbyacertificateoftitlefromthisstateremains
25perfecteduntilthesecurityinterestwouldhavebecomeunperfectedunderthelawoftheother
26jurisdictionhadthegoodsnotbecomesocovered.
27 (e)Asecurityinterestdescribedinsubsection(d)becomesunperfectedasagainsta
28purchaserofthegoodsforvalueandisdeemednevertohavebeenperfectedasagainsta
29purchaserofthegoodsforvalueiftheapplicablerequirementsforperfectionundersection
30400.9-311(b)or400.9-313arenotsatisfiedbeforetheearlierof:
31 (1)Thetimethesecurityinterestwouldhavebecomeunperfectedunderthelawof
32theotherjurisdictionhadthegoodsnotbecomecoveredbyacertificateoftitlefromthisstate;
33or
34 (2)Theexpirationoffourmonthsafterthegoodshadbecomesocovered.
35 (f)Asecurityinterestinchattelpaper,controllableaccounts,controllable
36electronicrecords,controllablepaymentintangibles,depositaccounts,letter-of-credit
37rights,orinvestmentpropertywhichisperfectedunderthelawofthechattelpaper's
38jurisdiction,thecontrollableelectronicrecord'sjurisdiction,thebank'sjurisdiction,the
39issuer'sjurisdiction,anominatedperson'sjurisdiction,thesecuritiesintermediary's
40jurisdiction,orthecommodityintermediary'sjurisdiction,asapplicable,remainsperfected
41untiltheearlierof:
42 (1)Thetimethesecurityinterestwouldhavebecomeunperfectedunderthelawof
43thatjurisdiction;or
44 (2)Theexpirationoffourmonthsafterachangeoftheapplicablejurisdictionto
45anotherjurisdiction.
46 (g)Ifasecurityinterestdescribedinsubsection(f)becomesperfectedunderthelaw
47oftheotherjurisdictionbeforetheearlierofthetimeortheendoftheperioddescribedinthat
48subsection,itremainsperfectedthereafter.Ifthesecurityinterestdoesnotbecomeperfected
HCSHB1165 64 49underthelawoftheotherjurisdictionbeforetheearlierofthattimeortheendofthatperiod,
50itbecomesunperfectedandisdeemednevertohavebeenperfectedasagainstapurchaserof
51thecollateralforvalue.
52 (h)Thefollowingrulesapplytocollateraltowhichasecurityinterestattacheswithin
53fourmonthsafterthedebtorchangesitslocationtoanotherjurisdiction:
54 (1)Afinancingstatementfiledbeforethechangepursuanttothelawofthe
55jurisdictiondesignatedinsection400.9-301(1)or400.9-305(c)iseffectivetoperfecta
56securityinterestinthecollateralifthefinancingstatementwouldhavebeeneffectiveto
57perfectasecurityinterestinthecollateralhadthedebtornotchangeditslocation.
58 (2)Ifasecurityinterestperfectedbyafinancingstatementthatiseffectiveunder
59paragraph(1)becomesperfectedunderthelawoftheotherjurisdictionbeforetheearlierof
60thetimethefinancingstatementwouldhavebecomeineffectiveunderthelawofthe
61jurisdictiondesignatedinsection400.9-301(1)or400.9-305(c)ortheexpirationofthefour-
62monthperiod,itremainsperfectedthereafter.Ifthesecurityinterestdoesnotbecome
63perfectedunderthelawoftheotherjurisdictionbeforetheearliertimeorevent,itbecomes
64unperfectedandisdeemednevertohavebeenperfectedasagainstapurchaserofthe
65collateralforvalue.
66 (i)Ifafinancingstatementnaminganoriginaldebtorisfiledpursuanttothelawof
67thejurisdictiondesignatedinsection400.9-301(1)or400.9-305(c)andthenewdebtoris
68locatedinanotherjurisdiction,thefollowingrulesapply:
69 (1)Thefinancingstatementiseffectivetoperfectasecurityinterestincollateral
70acquiredbythenewdebtorbefore,andwithinfourmonthsafter,thenewdebtorbecomes
71boundundersection400.9-203(d),ifthefinancingstatementwouldhavebeeneffectiveto
72perfectasecurityinterestinthecollateralhadthecollateralbeenacquiredbytheoriginal
73debtor.
74 (2)Asecurityinterestperfectedbythefinancingstatementandwhichbecomes
75perfectedunderthelawoftheotherjurisdictionbeforetheearlierofthetimethefinancing
76statementwouldhavebecomeineffectiveunderthelawofthejurisdictiondesignatedin
77section400.9-301(1)or400.9-305(c)ortheexpirationofthefour-monthperiodremains
78perfectedthereafter.Asecurityinterestthatisperfectedbythefinancingstatementbutthat
79doesnotbecomeperfectedunderthelawoftheotherjurisdictionbeforetheearliertimeor
80eventbecomesunperfectedandisdeemednevertohavebeenperfectedasagainstapurchaser
81ofthecollateralforvalue.
400.9-317.(a)Asecurityinterestoragriculturallienissubordinatetotherightsof:
2 (1)Apersonentitledtopriorityundersection400.9-322;and
3 (2)Exceptasotherwiseprovidedinsubsection(e),apersonthatbecomesalien
4creditorbeforetheearlierofthetime:
HCSHB1165 65 5 (A)Thesecurityinterestoragriculturallienisperfected;or
6 (B)Oneoftheconditionsspecifiedinsection400.9-203(b)(3)ismetandafinancing
7statementcoveringthecollateralisfiled.
8 (b)Exceptasotherwiseprovidedinsubsection(e),abuyer,otherthanasecured
9party,[oftangiblechattelpaper,documents,] ofgoods,instruments,tangibledocuments,ora
10[certificated] securitycertificatetakesfreeofasecurityinterestoragriculturallienifthe
11buyergivesvalueandreceivesdeliveryofthecollateralwithoutknowledgeofthesecurity
12interestoragriculturallienandbeforeitisperfected.
13 (c)Exceptasotherwiseprovidedinsubsection(e),alesseeofgoodstakesfreeofa
14securityinterestoragriculturallienifthelesseegivesvalueandreceivesdeliveryofthe
15collateralwithoutknowledgeofthesecurityinterestoragriculturallienandbeforeitis
16perfected.
17 (d)Subjecttosubsections(f)through(i),alicenseeofageneralintangibleora
18buyer,otherthanasecuredparty,ofcollateralotherthan[tangiblechattelpaper,tangible
19documents,] goods,instruments,tangibledocuments,oracertificatedsecuritytakesfreeofa
20securityinterestifthelicenseeorbuyergivesvaluewithoutknowledgeofthesecurityinterest
21andbeforeitisperfected.
22 (e)Exceptasotherwiseprovidedinsections400.9-320and400.9-321,ifaperson
23filesafinancingstatementwithrespecttoapurchase-moneysecurityinterestbeforeorwithin
24twentydaysafterthedebtorreceivesdeliveryofthecollateral,thesecurityinteresttakes
25priorityovertherightsofabuyer,lessee,orliencreditorwhicharisebetweenthetimethe
26securityinterestattachesandthetimeoffiling.
27 (f)Abuyer,otherthanasecuredparty,ofchattelpapertakesfreeofasecurity
28interestif,withoutknowledgeofthesecurityinterestandbeforeitisperfected,the
29buyergivesvalueand:
30 (1)Receivesdeliveryofeachauthoritativetangiblecopyoftherecordevidencing
31thechattelpaper;and
32 (2)Ifeachauthoritativeelectroniccopyoftherecordevidencingthechattel
33papercanbesubjectedtocontrolundersection400.9-105,obtainscontrolofeach
34authoritativeelectroniccopy.
35 (g)Abuyerofanelectronicdocumenttakesfreeofasecurityinterestif,without
36knowledgeofthesecurityinterestandbeforeitisperfected,thebuyergivesvalueand,if
37eachauthoritativeelectroniccopyofthedocumentcanbesubjectedtocontrolunder
38section400.7-106,obtainscontrolofeachauthoritativeelectroniccopy.
39 (h)Abuyerofacontrollableelectronicrecordtakesfreeofasecurityinterestif,
40withoutknowledgeofthesecurityinterestandbeforeitisperfected,thebuyergives
41valueandobtainscontrolofthecontrollableelectronicrecord.
HCSHB1165 66 42 (i)Abuyer,otherthanasecuredparty,ofacontrollableaccountora
43controllablepaymentintangibletakesfreeofasecurityinterestif,withoutknowledgeof
44thesecurityinterestandbeforeitisperfected,thebuyergivesvalueandobtainscontrol
45ofthecontrollableaccountorcontrollablepaymentintangible.
400.9-323.(a)Exceptasotherwiseprovidedinsubsection(c),forpurposesof
2determiningthepriorityofaperfectedsecurityinterestundersection400.9-322(a)(1),
3perfectionofthesecurityinterestdatesfromthetimeanadvanceismadetotheextentthatthe
4securityinterestsecuresanadvancethat:
5 (1)Ismadewhilethesecurityinterestisperfectedonly:
6 (A)Undersection400.9-309whenitattaches;or
7 (B)Temporarilyundersection400.9-312(e),(f),or(g);and
8 (2)Isnotmadepursuanttoacommitmententeredintobeforeorwhilethesecurity
9interestisperfectedbyamethodotherthanundersection400.9-309or400.9-312(e),(f),or
10(g).
11 (b)Exceptasotherwiseprovidedinsubsection(c),asecurityinterestissubordinate
12totherightsofapersonthatbecomesaliencreditortotheextentthatthesecurityinterest
13securesanadvancemademorethanforty-fivedaysafterthepersonbecomesaliencreditor
14unlesstheadvanceismade:
15 (1)Withoutknowledgeofthelien;or
16 (2)Pursuanttoacommitmententeredintowithoutknowledgeofthelien.
17 (c)Subsections(a)and(b)donotapplytoasecurityinterestheldbyasecuredparty
18thatisabuyerofaccounts,chattelpaper,paymentintangibles,orpromissorynotesora
19consignor.
20 (d)Exceptasotherwiseprovidedinsubsection(e),abuyerofgoods[otherthana
21buyerinordinarycourseofbusiness] takesfreeofasecurityinteresttotheextentthatit
22securesadvancesmadeaftertheearlierof:
23 (1)Thetimethesecuredpartyacquiresknowledgeofthebuyer'spurchase;or
24 (2)Forty-fivedaysafterthepurchase.
25 (e)Subsection(d)doesnotapplyiftheadvanceismadepursuanttoacommitment
26enteredintowithoutknowledgeofthebuyer'spurchaseandbeforetheexpirationoftheforty-
27five-dayperiod.
28 (f)Exceptasotherwiseprovidedinsubsection(g),alesseeofgoods[, otherthana
29lesseeinordinarycourseofbusiness,] takestheleaseholdinterestfreeofasecurityinterestto
30theextentthatitsecuresadvancesmadeaftertheearlierof:
31 (1)Thetimethesecuredpartyacquiresknowledgeofthelease;or
32 (2)Forty-fivedaysaftertheleasecontractbecomesenforceable.
HCSHB1165 67 33 (g)Subsection(f)doesnotapplyiftheadvanceismadepursuanttoacommitment
34enteredintowithoutknowledgeoftheleaseandbeforetheexpirationoftheforty-five-day
35period.
400.9-324.(a)Exceptasotherwiseprovidedinsubsection(g),aperfectedpurchase-
2moneysecurityinterestingoodsotherthaninventoryorlivestockhaspriorityovera
3conflictingsecurityinterestinthesamegoods,and,exceptasotherwiseprovidedinsection
4400.9-327,aperfectedsecurityinterestinitsidentifiableproceedsalsohaspriority,ifthe
5purchase-moneysecurityinterestisperfectedwhenthedebtorreceivespossessionofthe
6collateralorwithintwentydaysthereafter.
7 (b)Subjecttosubsection(c)andexceptasotherwiseprovidedinsubsection(g),a
8perfectedpurchase-moneysecurityinterestininventoryhaspriorityoveraconflicting
9securityinterestinthesameinventory,haspriorityoveraconflictingsecurityinterestin
10chattelpaperoraninstrumentconstitutingproceedsoftheinventoryandinproceedsofthe
11chattelpaper,ifsoprovidedinsection400.9-330,and,exceptasotherwiseprovidedin
12section400.9-327,alsohaspriorityinidentifiablecashproceedsoftheinventorytotheextent
13theidentifiablecashproceedsarereceivedonorbeforethedeliveryoftheinventorytoa
14buyer,if:
15 (1)Thepurchase-moneysecurityinterestisperfectedwhenthedebtorreceives
16possessionoftheinventory;
17 (2)Thepurchase-moneysecuredpartysends[anauthenticated] asignednotification
18totheholderoftheconflictingsecurityinterest;
19 (3)Theholderoftheconflictingsecurityinterestreceivesthenotificationwithinfive
20yearsbeforethedebtorreceivespossessionoftheinventory;and
21 (4)Thenotificationstatesthatthepersonsendingthenotificationhasorexpectsto
22acquireapurchase-moneysecurityinterestininventoryofthedebtoranddescribesthe
23inventory.
24 (c)Subsections(b)(2)through(4)applyonlyiftheholderoftheconflictingsecurity
25interesthadfiledafinancingstatementcoveringthesametypesofinventory:
26 (1)Ifthepurchase-moneysecurityinterestisperfectedbyfiling,beforethedateof
27thefiling;or
28 (2)Ifthepurchase-moneysecurityinterestistemporarilyperfectedwithoutfilingor
29possessionundersection400.9-312(f),beforethebeginningofthetwenty-dayperiod
30thereunder.
31 (d)Subjecttosubsection(e)andexceptasotherwiseprovidedinsubsection(g),a
32perfectedpurchase-moneysecurityinterestinlivestockthatarefarmproductshaspriority
33overaconflictingsecurityinterestinthesamelivestock,and,exceptasotherwiseprovidedin
HCSHB1165 68 34section400.9-327,aperfectedsecurityinterestintheiridentifiableproceedsandidentifiable
35productsintheirunmanufacturedstatesalsohaspriority,if:
36 (1)Thepurchase-moneysecurityinterestisperfectedwhenthedebtorreceives
37possessionofthelivestock;
38 (2)Thepurchase-moneysecuredpartysends[anauthenticated] asignednotification
39totheholderoftheconflictingsecurityinterest;
40 (3)Theholderoftheconflictingsecurityinterestreceivesthenotificationwithinsix
41monthsbeforethedebtorreceivespossessionofthelivestock;and
42 (4)Thenotificationstatesthatthepersonsendingthenotificationhasorexpectsto
43acquireapurchase-moneysecurityinterestinlivestockofthedebtoranddescribesthe
44livestock.
45 (e)Subsections(d)(2)through(4)applyonlyiftheholderoftheconflictingsecurity
46interesthadfiledafinancingstatementcoveringthesametypesoflivestock:
47 (1)Ifthepurchase-moneysecurityinterestisperfectedbyfiling,beforethedateof
48thefiling;or
49 (2)Ifthepurchase-moneysecurityinterestistemporarilyperfectedwithoutfilingor
50possessionundersection400.9-312(f),beforethebeginningofthetwenty-dayperiod
51thereunder.
52 (f)Exceptasotherwiseprovidedinsubsection(g),aperfectedpurchase-money
53securityinterestinsoftwarehaspriorityoveraconflictingsecurityinterestinthesame
54collateral,and,exceptasotherwiseprovidedinsection400.9-327,aperfectedsecurity
55interestinitsidentifiableproceedsalsohaspriority,totheextentthatthepurchase-money
56securityinterestinthegoodsinwhichthesoftwarewasacquiredforusehaspriorityinthe
57goodsandproceedsofthegoodsunderthissection.
58 (g)Ifmorethanonesecurityinterestqualifiesforpriorityinthesamecollateralunder
59subsection(a),(b),(d),or(f):
60 (1)Asecurityinterestsecuringanobligationincurredasallorpartofthepriceofthe
61collateralhaspriorityoverasecurityinterestsecuringanobligationincurredforvaluegiven
62toenablethedebtortoacquirerightsinortheuseofcollateral;and
63 (2)Inallothercases,section400.9-322(a)appliestothequalifyingsecurityinterests.
400.9-326A.Asecurityinterestinacontrollableaccount,controllableelectronic
2record,orcontrollablepaymentintangibleheldbyasecuredpartyhavingcontrolofthe
3account,electronicrecord,orpaymentintangiblehaspriorityoveraconflictingsecurity
4interestheldbyasecuredpartythatdoesnothavecontrol.
400.9-330.(a)Apurchaserofchattelpaperhaspriorityoverasecurityinterestinthe
2chattelpaperwhichisclaimedmerelyasproceedsofinventorysubjecttoasecurityinterest
3if:
HCSHB1165 69 4 (1)Ingoodfaithandintheordinarycourseofthepurchaser'sbusiness,thepurchaser
5givesnewvalue[and],takespossessionofeachauthoritativetangiblecopyoftherecord
6evidencingthechattelpaper[or],andobtainscontrol[of]undersection400.9-105ofeach
7authoritativeelectroniccopyoftherecordevidencingthechattelpaper[undersection
8400.9-105]; and
9 (2)The[chattelpaperdoes] authoritativecopiesoftherecordevidencingthe
10chattelpaperdonotindicatethat[it]thechattelpaperhasbeenassignedtoanidentified
11assigneeotherthanthepurchaser.
12 (b)Apurchaserofchattelpaperhaspriorityoverasecurityinterestinthechattel
13paperwhichisclaimedotherthanmerelyasproceedsofinventorysubjecttoasecurity
14interestifthepurchasergivesnewvalue[and],takespossessionofeachauthoritative
15tangiblecopyoftherecordevidencingthechattelpaper[or],andobtainscontrol[of]under
16section400.9-105ofeachauthoritativeelectroniccopyoftherecordevidencingthe
17chattelpaper[undersection400.9-105] ingoodfaith,intheordinarycourseofthepurchaser's
18business,andwithoutknowledgethatthepurchaseviolatestherightsofthesecuredparty.
19 (c)Exceptasotherwiseprovidedinsection400.9-327,apurchaserhavingpriorityin
20chattelpaperundersubsection(a)or(b)alsohaspriorityinproceedsofthechattelpaperto
21theextentthat:
22 (1)Section400.9-322providesforpriorityintheproceeds;or
23 (2)Theproceedsconsistofthespecificgoodscoveredbythechattelpaperorcash
24proceedsofthespecificgoods,evenifthepurchaser'ssecurityinterestintheproceedsis
25unperfected.
26 (d)Exceptasotherwiseprovidedinsection400.9-331(a),apurchaserofan
27instrumenthaspriorityoverasecurityinterestintheinstrumentperfectedbyamethodother
28thanpossessionifthepurchasergivesvalueandtakespossessionoftheinstrumentingood
29faithandwithoutknowledgethatthepurchaseviolatestherightsofthesecuredparty.
30 (e)Forpurposesofsubsections(a)and(b),theholderofapurchase-moneysecurity
31interestininventorygivesnewvalueforchattelpaperconstitutingproceedsoftheinventory.
32 (f)Forpurposesofsubsections(b)and(d),iftheauthoritativecopiesoftherecord
33evidencingchattelpaperoraninstrument[indicates] indicatethat[it]thechattelpaperor
34instrumenthasbeenassignedtoanidentifiedsecuredpartyotherthanthepurchaser,a
35purchaserofthechattelpaperorinstrumenthasknowledgethatthepurchaseviolatesthe
36rightsofthesecuredparty.
400.9-331.(a)Thisarticledoesnotlimittherightsofaholderinduecourseofa
2negotiableinstrument,aholdertowhichanegotiabledocumentoftitlehasbeenduly
3negotiated,[or]aprotectedpurchaserofasecurity, oraqualifyingpurchaserofa
4controllableaccount,controllableelectronicrecord,orcontrollablepaymentintangible.
HCSHB1165 70 5Theseholdersorpurchaserstakepriorityoveranearliersecurityinterest,evenifperfected,to
6theextentprovidedinarticles3,7,[and]8,and12.
7 (b)Thisarticledoesnotlimittherightsoforimposeliabilityonapersontotheextent
8thatthepersonisprotectedagainsttheassertionofanadverseclaimunderarticle8or12.
9 (c)Filingunderthisarticledoesnotconstitutenoticeofaclaimordefensetothe
10holders,orpurchasers,orpersonsdescribedinsubsections(a)and(b).
400.9-332.(a)Atransfereeoftangiblemoneytakesthemoneyfreeofasecurity
2interest[unlessthetransfereeacts]ifthetransfereereceivespossessionofthemoney
3withoutactingincollusionwiththedebtorinviolatingtherightsofthesecuredparty.
4 (b)Atransfereeoffundsfromadepositaccounttakesthefundsfreeofasecurity
5interestinthedepositaccount[unlessthetransfereeacts]ifthetransfereereceivesthefunds
6withoutactingincollusionwiththedebtorinviolatingtherightsofthesecuredparty.
400.9-334.(a)Asecurityinterestunderthisarticlemaybecreatedingoodsthatare
2fixturesormaycontinueingoodsthatbecomefixtures.Asecurityinterestdoesnotexist
3underthisarticleinordinarybuildingmaterialsincorporatedintoanimprovementonland.
4 (b)Thisarticledoesnotpreventcreationofanencumbranceuponfixturesunderreal
5propertylaw.
6 (c)Incasesnotgovernedbysubsections(d)through(h),asecurityinterestinfixtures
7issubordinatetoaconflictinginterestofanencumbrancerorowneroftherelatedreal
8propertyotherthanthedebtor.
9 (d)Exceptasotherwiseprovidedinsubsection(h),aperfectedsecurityinterestin
10fixtureshaspriorityoveraconflictinginterestofanencumbrancerorownerofthereal
11propertyifthedebtorhasaninterestofrecordinorisinpossessionoftherealpropertyand:
12 (1)Thesecurityinterestisapurchase-moneysecurityinterest;
13 (2)Theinterestoftheencumbrancerorownerarisesbeforethegoodsbecome
14fixtures;and
15 (3)Thesecurityinterestisperfectedbyafixturefilingbeforethegoodsbecome
16fixturesorwithintwentydaysthereafter.
17 (e)Aperfectedsecurityinterestinfixtureshaspriorityoveraconflictinginterestof
18anencumbrancerorowneroftherealpropertyif:
19 (1)Thedebtorhasaninterestofrecordintherealpropertyorisinpossessionofthe
20realpropertyandthesecurityinterest:
21 (A)Isperfectedbyafixturefilingbeforetheinterestoftheencumbrancerorowneris
22ofrecord;and
23 (B)Haspriorityoveranyconflictinginterestofapredecessorintitleofthe
24encumbrancerorowner;
HCSHB1165 71 25 (2)Beforethegoodsbecomefixtures,thesecurityinterestisperfectedbyanymethod
26permittedbythisarticleandthefixturesarereadilyremovable:
27 (A)Factoryorofficemachines;
28 (B)Equipmentthatisnotprimarilyusedorleasedforuseintheoperationofthereal
29property;or
30 (C)Replacementsofdomesticappliancesthatareconsumergoods;
31 (3)Theconflictinginterestisalienontherealpropertyobtainedbylegalorequitable
32proceedingsafterthesecurityinterestwasperfectedbyanymethodpermittedbythisarticle;
33or
34 (4)Thesecurityinterestis:
35 (A)Createdinamanufacturedhomeinamanufactured-hometransaction;and
36 (B)Perfectedpursuanttoastatutedescribedinsection400.9-311(a)(2).
37 (f)Asecurityinterestinfixtures,whetherornotperfected,haspriorityovera
38conflictinginterestofanencumbrancerorowneroftherealpropertyif:
39 (1)Theencumbrancerorownerhas,in[anauthenticated] asignedrecord,consented
40tothesecurityinterestordisclaimedaninterestinthegoodsasfixtures;or
41 (2)Thedebtorhasarighttoremovethegoodsasagainsttheencumbrancerorowner.
42 (g)Thepriorityofthesecurityinterestundersubsection(f)continuesforareasonable
43timeifthedebtor'srighttoremovethegoodsasagainsttheencumbrancerorowner
44terminates.
45 (h)Amortgageisaconstructionmortgagetotheextentthatitsecuresanobligation
46incurredfortheconstructionofanimprovementonland,includingtheacquisitioncostofthe
47land,ifarecordedrecordofthemortgagesoindicates.Exceptasotherwiseprovidedin
48subsections(e)and(f),asecurityinterestinfixturesissubordinatetoaconstructionmortgage
49ifarecordofthemortgageisrecordedbeforethegoodsbecomefixturesandthegoods
50becomefixturesbeforethecompletionoftheconstruction.Amortgagehasthisprioritytothe
51sameextentasaconstructionmortgagetotheextentthatitisgiventorefinanceaconstruction
52mortgage.
53 (i)Aperfectedsecurityinterestincropsgrowingonrealpropertyhaspriorityovera
54conflictinginterestofanencumbrancerorowneroftherealpropertyifthedebtorhasan
55interestofrecordinorisinpossessionoftherealproperty.
56 (j)Subsection(i)prevailsoveranyinconsistentprovisionsofotherstatutes.
400.9-341.Exceptasotherwiseprovidedinsection400.9-340(c),andunlessthebank
2otherwiseagreesin[anauthenticated] asignedrecord,abank'srightsanddutieswithrespect
3toadepositaccountmaintainedwiththebankarenotterminated,suspended,ormodifiedby:
4 (1)Thecreation,attachment,orperfectionofasecurityinterestinthedeposit
5account;
HCSHB1165 72 6 (2)Thebank'sknowledgeofthesecurityinterest;or
7 (3)Thebank'sreceiptofinstructionsfromthesecuredparty.
400.9-404.(a)Unlessanaccountdebtorhasmadeanenforceableagreementnotto
2assertdefensesorclaims,andsubjecttosubsections(b)through(e),therightsofanassignee
3aresubjectto:
4 (1)Alltermsoftheagreementbetweentheaccountdebtorandassignorandany
5defenseorclaiminrecoupmentarisingfromthetransactionthatgaverisetothecontract;and
6 (2)Anyotherdefenseorclaimoftheaccountdebtoragainsttheassignorwhich
7accruesbeforetheaccountdebtorreceivesanotificationoftheassignment[authenticated]
8signedbytheassignorortheassignee.
9 (b)Subjecttosubsection(c)andexceptasotherwiseprovidedinsubsection(d),the
10claimofanaccountdebtoragainstanassignormaybeassertedagainstanassigneeunder
11subsection(a)onlytoreducetheamounttheaccountdebtorowes.
12 (c)Thissectionissubjecttolawotherthanthisarticlewhichestablishesadifferent
13ruleforanaccountdebtorwhoisanindividualandwhoincurredtheobligationprimarilyfor
14personal,family,orhouseholdpurposes.
15 (d)Inaconsumertransaction,ifarecordevidencestheaccountdebtor'sobligation,
16lawotherthanthisarticlerequiresthattherecordincludeastatementtotheeffectthatthe
17accountdebtor'srecoveryagainstanassigneewithrespecttoclaimsanddefensesagainstthe
18assignormaynotexceedamountspaidbytheaccountdebtorundertherecord,andtherecord
19doesnotincludesuchastatement,theextenttowhichaclaimofanaccountdebtoragainstthe
20assignormaybeassertedagainstanassigneeisdeterminedasiftherecordincludedsucha
21statement.
22 (e)Thissectiondoesnotapplytoanassignmentofahealth-care-insurance
23receivable.
400.9-406.(a)Subjecttosubsections(b)through(i)and(k),anaccountdebtoronan
2account,chattelpaper,orapaymentintangiblemaydischargeitsobligationbypayingthe
3assignoruntil,butnotafter,theaccountdebtorreceivesanotification,[authenticated] signed
4bytheassignorortheassignee,thattheamountdueortobecomeduehasbeenassignedand
5thatpaymentistobemadetotheassignee.Afterreceiptofthenotification,theaccount
6debtormaydischargeitsobligationbypayingtheassigneeandmaynotdischargethe
7obligationbypayingtheassignor.
8 (b)Subjectto[subsection] subsections(h)and(k),notificationisineffectiveunder
9subsection(a):
10 (1)Ifitdoesnotreasonablyidentifytherightsassigned;
HCSHB1165 73 11 (2)Totheextentthatanagreementbetweenanaccountdebtorandasellerofa
12paymentintangiblelimitstheaccountdebtor'sdutytopayapersonotherthanthesellerand
13thelimitationiseffectiveunderlawotherthanthisarticle;or
14 (3)Attheoptionofanaccountdebtor,ifthenotificationnotifiestheaccountdebtorto
15makelessthanthefullamountofanyinstallmentorotherperiodicpaymenttotheassignee,
16evenif:
17 (A)Onlyaportionoftheaccount,chattelpaper,orgeneralintangiblehasbeen
18assignedtothatassignee;
19 (B)Aportionhasbeenassignedtoanotherassignee;or
20 (C)Theaccountdebtorknowsthattheassignmenttothatassigneeislimited.
21 (c)Subjectto[subsection] subsections(h)and(k),ifrequestedbytheaccount
22debtor,anassigneeshallseasonablyfurnishreasonableproofthattheassignmenthasbeen
23made.Unlesstheassigneecomplies,theaccountdebtormaydischargeitsobligationby
24payingtheassignor,eveniftheaccountdebtorhasreceivedanotificationundersubsection
25(a).
26 (d)Inthissubsection,"promissorynote"includesanegotiableinstrumentthat
27evidenceschattelpaper.Exceptasotherwiseprovidedinsubsection(e)andsections
28400.2A-303and400.9-407,andsubjecttosubsection(h),aterminanagreementbetweenan
29accountdebtorandanassignororinapromissorynoteisineffectivetotheextentthatit:
30 (1)Prohibits,restricts,orrequirestheconsentoftheaccountdebtororperson
31obligatedonthepromissorynotetotheassignmentortransferof,orthecreation,attachment,
32perfection,orenforcementofasecurityinterestin,theaccount,chattelpaper,payment
33intangible,orpromissorynote;or
34 (2)Providesthattheassignmentortransferorthecreation,attachment,perfection,or
35enforcementofthesecurityinterestmaygiverisetoadefault,breach,rightofrecoupment,
36claim,defense,termination,rightoftermination,orremedyundertheaccount,chattelpaper,
37paymentintangible,orpromissorynote.
38 (e)Subsection(d)doesnotapplytothesaleofapaymentintangibleorpromissory
39note,otherthanasalepursuanttoadispositionundersection400.9-610oranacceptanceof
40collateralundersection400.9-620.
41 (f)Exceptasotherwiseprovidedinsections400.2A-303and400.9-407,andsubject
42tosubsections(h)and(i),aruleoflaw,statute,orregulation,thatprohibits,restricts,or
43requirestheconsentofagovernment,governmentalbodyorofficial,oraccountdebtortothe
44assignmentortransferof,orcreationofasecurityinterestin,anaccountorchattelpaperis
45ineffectivetotheextentthattheruleoflaw,statute,orregulation:
HCSHB1165 74 46 (1)Prohibits,restricts,orrequirestheconsentofthegovernment,governmentalbody
47orofficial,oraccountdebtortotheassignmentortransferof,orthecreation,attachment,
48perfection,orenforcementofasecurityinterestin,theaccountorchattelpaper;or
49 (2)Providesthattheassignmentortransferorthecreation,attachment,perfection,or
50enforcementofthesecurityinterestmaygiverisetoadefault,breach,rightofrecoupment,
51claim,defense,termination,rightoftermination,orremedyundertheaccountorchattel
52paper.
53 (g)Subjectto[subsection] subsections(h)and(k),anaccountdebtormaynotwaive
54orvaryitsoptionundersubsection(b)(3).
55 (h)Thissectionissubjecttolawotherthanthisarticlewhichestablishesadifferent
56ruleforanaccountdebtorwhoisanindividualandwhoincurredtheobligationprimarilyfor
57personal,family,orhouseholdpurposes.
58 (i)Thissectiondoesnotapplytoanassignmentofahealth-care-insurancereceivable.
59 (j)Thissectionprevailsoveranyinconsistentprovisionsofanystatutes,rules,and
60regulations.
61 (k)Subsections(a),(b),(c),and(g)donotapplytoacontrollableaccountor
62controllablepaymentintangible.
400.9-408.(a)Exceptasotherwiseprovidedinsubsection(b),aterminapromissory
2noteorinanagreementbetweenanaccountdebtorandadebtorwhichrelatestoahealth-
3care-insurancereceivableorageneralintangible,includingacontract,permit,license,or
4franchise,andwhichtermprohibits,restricts,orrequirestheconsentofthepersonobligated
5onthepromissorynoteortheaccountdebtorto,theassignmentortransferof,orcreation,
6attachment,orperfectionofasecurityinterestin,thepromissorynote,health-care-insurance
7receivable,orgeneralintangible,isineffectivetotheextentthattheterm:
8 (1)Wouldimpairthecreation,attachment,orperfectionofasecurityinterest;or
9 (2)Providesthattheassignmentortransferorthecreation,attachment,orperfection
10ofthesecurityinterestmaygiverisetoadefault,breach,rightofrecoupment,claim,defense,
11termination,rightoftermination,orremedyunderthepromissorynote,health-care-insurance
12receivable,orgeneralintangible.
13 (b)Subsection(a)appliestoasecurityinterestinapaymentintangibleorpromissory
14noteonlyifthesecurityinterestarisesoutofasaleofthepaymentintangibleorpromissory
15note,otherthanasalepursuanttoadispositionundersection400.9-610oranacceptanceof
16collateralundersection400.9-620.
17 (c)Aruleoflaw,statute,orregulationthatprohibits,restricts,orrequirestheconsent
18ofagovernment,governmentalbodyorofficial,personobligatedonapromissorynote,or
19accountdebtortotheassignmentortransferof,orcreationofasecurityinterestin,a
20promissorynote,health-care-insurancereceivable,orgeneralintangible,includingacontract,
HCSHB1165 75 21permit,license,orfranchisebetweenanaccountdebtorandadebtor,isineffectivetothe
22extentthattheruleoflaw,statute,orregulation:
23 (1)Wouldimpairthecreation,attachment,orperfectionofasecurityinterest;or
24 (2)Providesthattheassignmentortransferorthecreation,attachment,orperfection
25ofthesecurityinterestmaygiverisetoadefault,breach,rightofrecoupment,claim,defense,
26termination,rightoftermination,orremedyunderthepromissorynote,health-care-insurance
27receivable,orgeneralintangible.
28 (d)Totheextentthataterminapromissorynoteorinanagreementbetweenan
29accountdebtorandadebtorwhichrelatestoahealth-care-insurancereceivableorgeneral
30intangibleoraruleoflaw,statute,orregulationdescribedinsubsection(c)wouldbeeffective
31underlawotherthanthisarticlebutisineffectiveundersubsection(a)or(c),thecreation,
32attachment,orperfectionofasecurityinterestinthepromissorynote,health-care-insurance
33receivable,orgeneralintangible:
34 (1)Isnotenforceableagainstthepersonobligatedonthepromissorynoteorthe
35accountdebtor;
36 (2)Doesnotimposeadutyorobligationonthepersonobligatedonthepromissory
37noteortheaccountdebtor;
38 (3)Doesnotrequirethepersonobligatedonthepromissorynoteortheaccount
39debtortorecognizethesecurityinterest,payorrenderperformancetothesecuredparty,or
40acceptpaymentorperformancefromthesecuredparty;
41 (4)Doesnotentitlethesecuredpartytouseorassignthedebtor'srightsunderthe
42promissorynote,health-care-insurancereceivable,orgeneralintangible,includinganyrelated
43informationormaterialsfurnishedtothedebtorinthetransactiongivingrisetothe
44promissorynote,health-care-insurancereceivable,orgeneralintangible;
45 (5)Doesnotentitlethesecuredpartytouse,assign,possess,orhaveaccesstoany
46tradesecretsorconfidentialinformationofthepersonobligatedonthepromissorynoteorthe
47accountdebtor;and
48 (6)Doesnotentitlethesecuredpartytoenforcethesecurityinterestinthepromissory
49note,health-care-insurancereceivable,orgeneralintangible.
50 (e)Thissectionprevailsoveranyinconsistentprovisionsofanystatutes,rules,and
51regulations.
52 (f)Inthissection,"promissorynote"includesanegotiableinstrumentthat
53evidenceschattelpaper.
400.9-509.(a)Apersonmayfileaninitialfinancingstatement,amendmentthatadds
2collateralcoveredbyafinancingstatement,oramendmentthataddsadebtortoafinancing
3statementonlyif:
HCSHB1165 76 4 (1)Thedebtorauthorizesthefilingin[anauthenticated] asignedrecordorpursuant
5tosubsection(b)or(c);or
6 (2)Thepersonholdsanagriculturallienthathasbecomeeffectiveatthetimeoffiling
7andthefinancingstatementcoversonlycollateralinwhichthepersonholdsanagricultural
8lien.
9 (b)By[authenticating] signingorbecomingboundasdebtorbyasecurityagreement,
10adebtorornewdebtorauthorizesthefilingofaninitialfinancingstatement,andan
11amendment,covering:
12 (1)Thecollateraldescribedinthesecurityagreement;and
13 (2)Propertythatbecomescollateralundersection400.9-315(a)(2),whetherornotthe
14securityagreementexpresslycoversproceeds.
15 (c)Byacquiringcollateralinwhichasecurityinterestoragriculturalliencontinues
16undersection400.9-315(a)(1),adebtorauthorizesthefilingofaninitialfinancingstatement,
17andanamendment,coveringthecollateralandpropertythatbecomescollateralundersection
18400.9-315(a)(2).
19 (d)Apersonmayfileanamendmentotherthananamendmentthataddscollateral
20coveredbyafinancingstatementoranamendmentthataddsadebtortoafinancingstatement
21onlyif:
22 (1)Thesecuredpartyofrecordauthorizesthefiling;or
23 (2)Theamendmentisaterminationstatementforafinancingstatementastowhich
24thesecuredpartyofrecordhasfailedtofileorsendaterminationstatementasrequiredby
25section400.9-513(a)or(c),thedebtorauthorizesthefiling,andtheterminationstatement
26indicatesthatthedebtorauthorizedittobefiled.
27 (e)Ifthereismorethanonesecuredpartyofrecordforafinancingstatement,each
28securedpartyofrecordmayauthorizethefilingofanamendmentundersubsection(d).
400.9-513.(a)Asecuredpartyshallcausethesecuredpartyofrecordforafinancing
2statementtofileaterminationstatementforthefinancingstatementifthefinancingstatement
3coversconsumergoodsand:
4 (1)Thereisnoobligationsecuredbythecollateralcoveredbythefinancingstatement
5andnocommitmenttomakeanadvance,incuranobligation,orotherwisegivevalue;or
6 (2)Thedebtordidnotauthorizethefilingoftheinitialfinancingstatement.
7 (b)Tocomplywithsubsection(a),asecuredpartyshallcausethesecuredpartyof
8recordtofiletheterminationstatement:
9 (1)Withinonemonthafterthereisnoobligationsecuredbythecollateralcoveredby
10thefinancingstatementandnocommitmenttomakeanadvance,incuranobligation,or
11otherwisegivevalue;or
HCSHB1165 77 12 (2)Ifearlier,withintwentydaysafterthesecuredpartyreceives[anauthenticated] a
13signeddemandfromadebtor.
14 (c)Incasesnotgovernedbysubsection(a),withintwentydaysafterasecuredparty
15receives[anauthenticated] asigneddemandfromadebtor,thesecuredpartyshallcausethe
16securedpartyofrecordforafinancingstatementtosendtothedebtoraterminationstatement
17forthefinancingstatementorfiletheterminationstatementinthefilingofficeif:
18 (1)Exceptinthecaseofafinancingstatementcoveringaccountsorchattelpaperthat
19hasbeensoldorgoodsthatarethesubjectofaconsignment,thereisnoobligationsecuredby
20thecollateralcoveredbythefinancingstatementandnocommitmenttomakeanadvance,
21incuranobligation,orotherwisegivevalue;
22 (2)Thefinancingstatementcoversaccountsorchattelpaperthathasbeensoldbutas
23towhichtheaccountdebtororotherpersonobligatedhasdischargeditsobligation;
24 (3)Thefinancingstatementcoversgoodsthatwerethesubjectofaconsignmentto
25thedebtorbutarenotinthedebtor'spossession;or
26 (4)Thedebtordidnotauthorizethefilingoftheinitialfinancingstatement.
27 (d)Exceptasotherwiseprovidedinsection400.9-510,uponthefilingofa
28terminationstatementwiththefilingoffice,thefinancingstatementtowhichthetermination
29statementrelatesceasestobeeffective.Exceptasotherwiseprovidedinsection400.9-510,
30forpurposesofsections400.9-519(g),400.9-522(a),and400.9-523(c),thefilingwiththe
31filingofficeofaterminationstatementrelatingtoafinancingstatementthatindicatesthatthe
32debtorisatransmittingutilityalsocausestheeffectivenessofthefinancingstatementto
33lapse.
400.9-601.(a)Afterdefault,asecuredpartyhastherightsprovidedinthispartand,
2exceptasotherwiseprovidedinsection400.9-602,thoseprovidedbyagreementofthe
3parties.Asecuredparty:
4 (1)Mayreduceaclaimtojudgment,foreclose,orotherwiseenforcetheclaim,
5securityinterest,oragriculturallienbyanyavailablejudicialprocedure;and
6 (2)Ifthecollateralisdocuments,mayproceedeitherastothedocumentsorastothe
7goodstheycover.
8 (b)Asecuredpartyinpossessionofcollateralorcontrolofcollateralundersection
9400.9-104,400.9-105,400.9-105A,400.9-106[or],400.9-107, or400.9-107Ahastherights
10anddutiesprovidedinsection400.9-207.
11 (c)Therightsundersubsections(a)and(b)arecumulativeandmaybeexercised
12simultaneously.
13 (d)Exceptasotherwiseprovidedinsubsection(g)andsection400.9-605,after
14default,adebtorandanobligorhavetherightsprovidedinthispartandbyagreementofthe
15parties.
HCSHB1165 78 16 (e)Ifasecuredpartyhasreduceditsclaimtojudgment,thelienofanylevythatmay
17bemadeuponthecollateralbyvirtueofanexecutionbaseduponthejudgmentrelatesbackto
18theearliestof:
19 (1)Thedateofperfectionofthesecurityinterestoragriculturallieninthecollateral;
20or
21 (2)Thedateoffilingafinancingstatementcoveringthecollateral;
22 (3)Anydatespecifiedinastatuteunderwhichtheagriculturallienwascreated.
23 (f)Asalepursuanttoanexecutionisaforeclosureofthesecurityinterestor
24agriculturallienbyjudicialprocedurewithinthemeaningofthissection.Asecuredparty
25maypurchaseatthesaleandthereafterholdthecollateralfreeofanyotherrequirementsof
26thisarticle.
27 (g)Exceptasotherwiseprovidedinsection400.9-607(c),thispartimposesnoduties
28uponasecuredpartythatisaconsignororisabuyerofaccounts,chattelpaper,payment
29intangibles,orpromissorynotes.
400.9-605.(a)Exceptasprovidedinsubsection(b),asecuredpartydoesnotowea
2dutybasedonitsstatusassecuredparty:
3 (1)Toapersonthatisadebtororobligor,unlessthesecuredpartyknows:
4 (A)Thatthepersonisadebtororobligor;
5 (B)Theidentityoftheperson;and
6 (C)Howtocommunicatewiththeperson;or
7 (2)Toasecuredpartyorlienholderthathasfiledafinancingstatementagainsta
8person,unlessthesecuredpartyknows:
9 (A)Thatthepersonisadebtor;and
10 (B)Theidentityoftheperson.
11 (b)Asecuredpartyowesadutybasedonitsstatusasasecuredpartytoaperson
12if,atthetimethesecuredpartyobtainscontrolofcollateralthatisacontrollable
13account,controllableelectronicrecord,orcontrollablepaymentintangibleoratthe
14timethesecurityinterestattachestothecollateral,whicheverislater:
15 (1)Thepersonisadebtororobligor;and
16 (2)Thesecuredpartyknowsthattheinformationinsubsection(a)(1)(A),(B),or
17(C)relatingtothepersonisnotprovidedbythecollateral,arecordattachedtoor
18logicallyassociatedwiththecollateral,orthesysteminwhichthecollateralisrecorded.
400.9-608.(a)Ifasecurityinterestoragriculturalliensecurespaymentor
2performanceofanobligation,thefollowingrulesapply:
3 (1)Asecuredpartyshallapplyorpayoverforapplicationthecashproceedsof
4collectionorenforcementundersection400.9-607inthefollowingorderto:
HCSHB1165 79 5 (A)Thereasonableexpensesofcollectionandenforcementand,totheextent
6providedforbyagreementandnotprohibitedbylaw,reasonableattorney'sfeesandlegal
7expensesincurredbythesecuredparty;
8 (B)Thesatisfactionofobligationssecuredbythesecurityinterestoragriculturallien
9underwhichthecollectionorenforcementismade;and
10 (C)Thesatisfactionofobligationssecuredbyanysubordinatesecurityinterestinor
11otherlienonthecollateralsubjecttothesecurityinterestoragriculturallienunderwhichthe
12collectionorenforcementismadeifthesecuredpartyreceives[anauthenticated] asigned
13demandforproceedsbeforedistributionoftheproceedsiscompleted;
14 (2)Ifrequestedbyasecuredparty,aholderofasubordinatesecurityinterestorother
15lienshallfurnishreasonableproofoftheinterestorlienwithinareasonabletime.Unlessthe
16holdercomplies,thesecuredpartyneednotcomplywiththeholder'sdemandunder
17paragraph(1)(C);
18 (3)Asecuredpartyneednotapplyorpayoverforapplicationnoncashproceedsof
19collectionandenforcementundersection400.9-607unlessthefailuretodosowouldbe
20commerciallyunreasonable.Asecuredpartythatappliesorpaysoverforapplication
21noncashproceedsshalldosoinacommerciallyreasonablemanner;
22 (4)Asecuredpartyshallaccounttoandpayadebtorforanysurplus,andtheobligor
23isliableforanydeficiency.
24 (b)Iftheunderlyingtransactionisasaleofaccounts,chattelpaper,payment
25intangibles,orpromissorynotes,thedebtorisnotentitledtoanysurplus,andtheobligoris
26notliableforanydeficiency.
400.9-611.(a)Inthissection,"notificationdate"meanstheearlierofthedateon
2which:
3 (1)Asecuredpartysendstothedebtorandanysecondaryobligor[anauthenticated]
4asignednotificationofdisposition;or
5 (2)Thedebtorandanysecondaryobligorwaivetherighttonotification.
6 (b)Exceptasotherwiseprovidedinsubsection(d),asecuredpartythatdisposesof
7collateralundersection400.9-610shallsendtothepersonsspecifiedinsubsection(c)a
8reasonable[authenticated] signednotificationofdisposition.
9 (c)Tocomplywithsubsection(b),thesecuredpartyshallsend[anauthenticated] a
10signednotificationofdispositionto:
11 (1)Thedebtor;
12 (2)Anysecondaryobligor;and
13 (3)Ifthecollateralisotherthanconsumergoods:
HCSHB1165 80 14 (A)Anyotherpersonfromwhichthesecuredpartyhasreceived,beforethe
15notificationdate,[anauthenticated] asignednotificationofaclaimofaninterestinthe
16collateral;
17 (B)Anyothersecuredpartyorlienholderthat,tendaysbeforethenotificationdate,
18heldasecurityinterestinorotherlienonthecollateralperfectedbythefilingofafinancing
19statementthat:
20 (i)Identifiedthecollateral;
21 (ii)Wasindexedunderthedebtor'snameasofthatdate;and
22 (iii)Wasfiledintheofficeinwhichtofileafinancingstatementagainstthedebtor
23coveringthecollateralasofthatdate;and
24 (C)Anyothersecuredpartythat,tendaysbeforethenotificationdate,heldasecurity
25interestinthecollateralperfectedbycompliancewithastatute,regulation,ortreatydescribed
26insection400.9-311(a).
27 (d)Subsection(b)doesnotapplyifthecollateralisperishableorthreatenstodecline
28speedilyinvalueorisofatypecustomarilysoldonarecognizedmarket.
29 (e)Asecuredpartycomplieswiththerequirementfornotificationprescribedby
30subsection(c)(3)(B)if:
31 (1)Notlaterthantwentydaysorearlierthanthirtydaysbeforethenotificationdate,
32thesecuredpartyrequests,inacommerciallyreasonablemanner,informationconcerning
33financingstatementsindexedunderthedebtor'snameintheofficeindicatedinsubsection(c)
34(3)(B);and
35 (2)Beforethenotificationdate,thesecuredparty:
36 (A)Didnotreceivearesponsetotherequestforinformation;or
37 (B)Receivedaresponsetotherequestforinformationandsent[anauthenticated] a
38signednotificationofdispositiontoeachsecuredpartyorotherlienholdernamedinthat
39responsewhosefinancingstatementcoveredthecollateral.
400.9-613.(a)Exceptinaconsumer-goodstransaction,thefollowingrulesapply:
2 (1)Thecontentsofanotificationofdispositionaresufficientifthenotification:
3 (A)Describesthedebtorandthesecuredparty;
4 (B)Describesthecollateralthatisthesubjectoftheintendeddisposition;
5 (C)Statesthemethodofintendeddisposition;
6 (D)Statesthatthedebtorisentitledtoanaccountingoftheunpaidindebtednessand
7statesthecharge,ifany,foranaccounting;and
8 (E)Statesthetimeandplaceofapublicdispositionorthetimeafterwhichanyother
9dispositionistobemade;
10 (2)Whetherthecontentsofanotificationthatlacksanyoftheinformationspecified
11inparagraph(1)areneverthelesssufficientisaquestionoffact;
HCSHB1165 81 12 (3)Thecontentsofanotificationprovidingsubstantiallytheinformationspecifiedin
13paragraph(1)aresufficient,evenifthenotificationincludes:
14 (A)Informationnotspecifiedbythatparagraph;or
15 (B)Minorerrorsthatarenotseriouslymisleading;
16 (4)Aparticularphrasingofthenotificationisnotrequired;
17 (5)Thefollowingformofnotificationandtheformappearinginsection[400.9-614
18(3)]400.9-614(a)(3), whencompletedinaccordancewiththeinstructionsinsubsection
19(b)andsection9-614(b), eachprovidessufficientinformation:
20 [NOTIFICATIONOFDISPOSITIONOFCOLLATERAL]
[To:]21 [(Nameofdebtor,obligor,orotherpersonto
22 whichthenotificationissent)]
[From:]23 [(Name,address,andtelephonenumberof
24 securedparty)]
25 [NameofDebtor
26 (s):] [(Includeonlyifdebtor(s)arenotanaddressee)]
27 [(Forapublicdisposition:)]
28 [Wewillsell(orleaseorlicense,asapplicable)the(describecollateral)
29 (tothehighestqualifiedbidder)inpublicasfollows:]
30 [DayandDate:] [______]
31 [Time:] [______]
32 [Place:] [______]
33 [(Foraprivatedisposition:)]
34 [Wewillsell(orleaseorlicense,asapplicable)the(describecollateral)
35 privatelysometimeafter(dayanddate).]
36 [Youareentitledtoanaccountingoftheunpaidindebtednesssecured
37 bythepropertythatweintendtosell(orleaseorlicense,asapplicable)
38 (forachargeof$).Youmayrequestanaccountingbycallingusat
39 (telephonenumber).]
40 [(EndofForm)]
41 NOTIFICATIONOFDISPOSITIONOFCOLLATERAL
42 To:(Nameofdebtor,obligor,orotherpersontowhichthenotificationissent)
43 From:(Name,address,andtelephonenumberofsecuredparty)
44 {1}Nameofanydebtorthatisnotanaddressee:(Nameofeachdebtor)
45 {2}Wewillsell(describecollateral)(tothehighestqualifiedbidder)atpublic
46sale.Asalecouldincludealeaseorlicense.Thesalewillbeheldasfollows:
47 (Date)
48 (Time)
HCSHB1165 82 49 (Place)
50 {3}Wewillsell(describecollateral)atprivatesalesometimeafter(date).Asale
51couldincludealeaseorlicense.
52 {4}Youareentitledtoanaccountingoftheunpaidindebtednesssecuredbythe
53propertythatweintendtosellor,asapplicable,leaseorlicense.
54 {5}Ifyourequestanaccountingyoumustpayachargeof$(amount).
55 {6}Youmayrequestanaccountingbycallingusat(telephonenumber).
56 (EndofForm)
57 (b)Thefollowinginstructionsapplytotheformofnotificationinsubsection(a)
58(5):
59 (1)Theinstructionsinthissubsectionrefertothenumbersinbracesbefore
60itemsintheformofnotificationinsubsection(a)(5).Donotincludethenumbersor
61bracesinthenotification.Thenumbersandbracesareusedonlyforthepurposeof
62theseinstructions.
63 (2)Includeandcompleteitem{1}onlyifthereisadebtorthatisnotan
64addresseeofthenotificationandlistthenameornames.
65 (3)Includeandcompleteeitheritem{2},ifthenotificationrelatestoapublic
66dispositionofthecollateral,oritem{3},ifthenotificationrelatestoaprivatedisposition
67ofthecollateral.Ifitem{2}isincluded,includethewords"tothehighestqualified
68bidder"onlyifapplicable.
69 (4)Includeandcompleteitems{4}and{6}.
70 (5)Includeandcompleteitem{5}onlyifthesenderwillchargetherecipientfor
71anaccounting.
400.9-614.(a)Inaconsumer-goodstransaction,thefollowingrulesapply:
2 (1)Anotificationofdispositionmustprovidethefollowinginformation:
3 (A)Theinformationspecifiedinsection[400.9-613(1)] 400.9-613(a)(1);
4 (B)Adescriptionofanyliabilityforadeficiencyofthepersontowhichthe
5notificationissent;
6 (C)Atelephonenumberfromwhichtheamountthatmustbepaidtothesecured
7partytoredeemthecollateralundersection400.9-623isavailable;and
8 (D)Atelephonenumberormailingaddressfromwhichadditionalinformation
9concerningthedispositionandtheobligationsecuredisavailable;
10 (2)Aparticularphrasingofthenotificationisnotrequired;
11 (3)Thefollowingformofnotification,whencompletedinaccordancewiththe
12instructionsinsubsection(b),providessufficientinformation:
13 [(Nameandaddressofsecuredparty)]
14 [(Date)]
HCSHB1165 83 15 [NOTICEOFOURPLANTOSELLPROPERTY]
16 [(Nameandaddressofanyobligorwhoisalsoadebtor)]
17 [Subject:(IdentificationofTransaction)]
18 [Wehaveyour(describecollateral),becauseyoubrokepromisesinour
19 agreement.]
20 [(Forapublicdisposition:)]
21 [Wewillsell(describecollateral)atpublicsale.]
22 [Asalecouldincludealeaseorlicense.Thesalewillbeheldas
23 follows:]
24 [Date:]
25 [Time:]
26 [Place:]
27 [Youmayattendthesaleandbringbiddersifyouwant.]
28 [(Foraprivatedisposition:)]
29 [Wewillsell(describecollateral)atprivatesalesometimeafter(date).
30 Asalecouldincludealeaseorlicense.]
31 [Themoneythatwegetfromthesale(afterpayingourcosts)will
32 reducetheamountyouowe.Ifwegetlessmoneythanyouowe,you
33 (willorwillnot,asapplicable)stilloweusthedifference.Ifweget
34 moremoneythanyouowe,youwillgettheextramoney,unlesswe
35 mustpayittosomeoneelse.]
36 [Youcangetthepropertybackatanytimebeforewesellitbypaying
37 usthefullamountyouowe(notjustthepastduepayments),including
38 ourexpenses.Tolearntheexactamountyoumustpay,callusat
39 (telephonenumber).]
40 [Ifyouwantustoexplaintoyouinwritinghowwehavefiguredthe
41 amountthatyouoweus,youmaycallusat(telephonenumber)(or
42 writeusat(securedparty'saddress))andrequestawrittenexplanation.
43 (Wewillchargeyou$fortheexplanationifwesentyouanother
44 writtenexplanationoftheamountyouoweuswithinthelastsix
45 months.)]
46 [Ifyouneedmoreinformationaboutthesalecallusat(telephone
47 number)(orwriteusat(securedparty'saddress)).]
48 [Wearesendingthisnoticetothefollowingotherpeoplewhohavean
49 interestin(describecollateral)orwhoowemoneyunderyour
50 agreement:]
HCSHB1165 84 51 [(Namesofallotherdebtorsandobligors,ifany)]
52 [(EndofForm)]
53 (Nameandaddressofsecuredparty)
54 (Date)
55 NOTICEOFOURPLANTOSELLPROPERTY
56 (Nameandaddressofanyobligorwhoisalsoadebtor)
57 Subject:(Identifytransaction)
58 Wehaveyour(describecollateral),becauseyoubrokepromisesinour
59agreement.
60 {1}Wewillsell(describecollateral)atpublicsale.Asalecouldincludealeaseor
61license.Thesalewillbeheldasfollows:
62 (Date)
63 (Time)
64 (Place)
65 Youmayattendthesaleandbringbiddersifyouwant.
66 {2}Wewillsell(describecollateral)atprivatesalesometimeafter(date).Asale
67couldincludealeaseorlicense.
68 {3}Themoneythatwegetfromthesale,afterpayingourcosts,willreducethe
69amountyouowe.Ifwegetlessmoneythanyouowe,you(willorwillnot,asapplicable)
70stilloweusthedifference.Ifwegetmoremoneythanyouowe,youwillgettheextra
71money,unlesswemustpayittosomeoneelse.
72 {4}Youcangetthepropertybackatanytimebeforewesellitbypayingusthe
73fullamountyouowe,notjustthepastduepayments,includingourexpenses.Tolearn
74theexactamountyoumustpay,callusat(telephonenumber).
75 {5}Ifyouwantustoexplaintoyouin(writing)(writingorin(descriptionof
76electronicrecord))(descriptionofelectronicrecord)howwehavefiguredtheamount
77thatyouoweus,{6}callusat(telephonenumber)(or)(writeusat(securedparty’s
78address))(orcontactusby(descriptionofelectroniccommunicationmethod)){7}and
79request(awrittenexplanation)(awrittenexplanationoranexplanationin(description
80ofelectronicrecord))(anexplanationin(descriptionofelectronicrecord)).
81 {8}Wewillchargeyou$(amount)fortheexplanationifwesentyouanother
82writtenexplanationoftheamountyouoweuswithinthelastsixmonths.
83 {9}Ifyouneedmoreinformationaboutthesale(callusat(telephonenumber))
84(or)(writeusat(securedparty'saddress))(orcontactusby(descriptionofelectronic
85communicationmethod)).
HCSHB1165 85 86 {10}Wearesendingthisnoticetothefollowingotherpeoplewhohavean
87interestin(describecollateral)orwhoowemoneyunderyouragreement:
88 (Namesofallotherdebtorsandobligors,ifany)
89 (EndofForm)
90 (4)Anotificationintheformofparagraph(3)issufficient,evenifadditional
91informationappearsattheendoftheform;
92 (5)Anotificationintheformofparagraph(3)issufficient,evenifitincludeserrors
93ininformationnotrequiredbyparagraph(1),unlesstheerrorismisleadingwithrespectto
94rightsarisingunderthisarticle;
95 (6)Ifanotificationunderthissectionisnotintheformofparagraph(3),lawother
96thanthisarticledeterminestheeffectofincludinginformationnotrequiredbyparagraph(1).
97 (b)Thefollowinginstructionsapplytotheformofnotificationinsubsection(a)
98(3):
99 (1)Theinstructionsinthissubsectionrefertothenumbersinbracesbefore
100itemsintheformofnotificationinsubsection(a)(3).Donotincludethenumbersor
101bracesinthenotification.Thenumbersandbracesareusedonlyforthepurposeof
102theseinstructions.
103 (2)Includeandcompleteeitheritem{1},ifthenotificationrelatestoapublic
104dispositionofthecollateral,oritem{2},ifthenotificationrelatestoaprivatedisposition
105ofthecollateral.
106 (3)Includeandcompleteitems{3},{4},{5},{6},and{7}.
107 (4)Initem{5},includeandcompleteanyoneofthethreealternativemethods
108fortheexplanation—writing,writingorelectronicrecord,orelectronicrecord.
109 (5)Initem{6},includethetelephonenumber.Inaddition,thesendermay
110includeandcompleteeitherorbothofthetwoadditionalalternativemethodsof
111communication—writingorelectroniccommunication—fortherecipientofthe
112notificationtocommunicatewiththesender.Neitherofthetwoadditionalmethods
113ofcommunicationisrequiredtobeincluded.
114 (6)Initem{7},includeandcompletethemethodormethodsfortheexplanation
115—writing,writingorelectronicrecord,orelectronicrecord—includedinitem{5}.
116 (7)Includeandcompleteitem{8}onlyifawrittenexplanationisincludedin
117item{5}asamethodforcommunicatingtheexplanationandthesenderwillchargethe
118recipientforanotherwrittenexplanation.
119 (8)Initem{9},includeeitherthetelephonenumberortheaddressorboththe
120telephonenumberandtheaddress.Inaddition,thesendermayincludeandcomplete
121theadditionalmethodofcommunication—electroniccommunication—fortherecipient
HCSHB1165 86 122ofthenotificationtocommunicatewiththesender.Theadditionalmethodofelectronic
123communicationisnotrequiredtobeincluded.
124 (9)Ifitem{10}doesnotapply,insert"None"after"agreement:".
400.9-615.(a)Asecuredpartyshallapplyorpayoverforapplicationthecash
2proceedsofdispositionundersection400.9-610inthefollowingorderto:
3 (1)Thereasonableexpensesofretaking,holding,preparingfordisposition,
4processing,anddisposing,and,totheextentprovidedforbyagreementandnotprohibitedby
5law,reasonableattorney'sfeesandlegalexpensesincurredbythesecuredparty;
6 (2)Thesatisfactionofobligationssecuredbythesecurityinterestoragriculturallien
7underwhichthedispositionismade;
8 (3)Thesatisfactionofobligationssecuredbyanysubordinatesecurityinterestinor
9othersubordinatelienonthecollateralif:
10 (A)Thesecuredpartyreceivesfromtheholderofthesubordinatesecurityinterestor
11otherlien[anauthenticated] asigneddemandforproceedsbeforedistributionoftheproceeds
12iscompleted;and
13 (B)Inacaseinwhichaconsignorhasaninterestinthecollateral,thesubordinate
14securityinterestorotherlienisseniortotheinterestoftheconsignor;and
15 (4)Asecuredpartythatisaconsignorofthecollateralifthesecuredpartyreceives
16fromtheconsignor[anauthenticated] asigneddemandforproceedsbeforedistributionofthe
17proceedsiscompleted.
18 (b)Ifrequestedbyasecuredparty,aholderofasubordinatesecurityinterestorother
19lienshallfurnishreasonableproofoftheinterestorlienwithinareasonabletime.Unlessthe
20holderdoesso,thesecuredpartyneednotcomplywiththeholder'sdemandundersubsection
21(a)(3).
22 (c)Asecuredpartyneednotapplyorpayoverforapplicationnoncashproceedsof
23dispositionundersection400.9-610unlessthefailuretodosowouldbecommercially
24unreasonable.Asecuredpartythatappliesorpaysoverforapplicationnoncashproceeds
25shalldosoinacommerciallyreasonablemanner.
26 (d)Ifthesecurityinterestunderwhichadispositionismadesecurespaymentor
27performanceofanobligation,aftermakingthepaymentsandapplicationsrequiredby
28subsection(a)andpermittedbysubsection(c):
29 (1)Unlesssubsection(a)(4)requiresthesecuredpartytoapplyorpayovercash
30proceedstoaconsignor,thesecuredpartyshallaccounttoandpayadebtorforanysurplus;
31and
32 (2)Theobligorisliableforanydeficiency.
33 (e)Iftheunderlyingtransactionisasaleofaccounts,chattelpaper,payment
34intangibles,orpromissorynotes:
HCSHB1165 87 35 (1)Thedebtorisnotentitledtoanysurplus;and
36 (2)Theobligorisnotliableforanydeficiency.
37 (f)Thesurplusordeficiencyfollowingadispositioniscalculatedbasedonthe
38amountofproceedsthatwouldhavebeenrealizedinadispositioncomplyingwiththispartto
39atransfereeotherthanthesecuredparty,apersonrelatedtothesecuredparty,orasecondary
40obligorif:
41 (1)Thetransfereeinthedispositionisthesecuredparty,apersonrelatedtothe
42securedparty,orasecondaryobligor;and
43 (2)Theamountofproceedsofthedispositionissignificantlybelowtherangeof
44proceedsthatacomplyingdispositiontoapersonotherthanthesecuredparty,aperson
45relatedtothesecuredparty,orasecondaryobligorwouldhavebrought.
46 (g)Asecuredpartythatreceivescashproceedsofadispositioningoodfaithand
47withoutnoticethatthereceiptviolatestherightsoftheholderofasecurityinterestorother
48lienthatisnotsubordinatetothesecurityinterestunderwhichthedispositionismade:
49 (1)Takesthecashproceedsfreeofthesecurityinterestorotherlien;
50 (2)Isnotobligatedtoapplytheproceedsofthedispositiontothesatisfactionof
51obligationssecuredbythesecurityinterestorotherlien;and
52 (3)Isnotobligatedtoaccounttoorpaytheholderofthesecurityinterestorotherlien
53foranysurplus.
400.9-616.(a)Inthissection:
2 (1)"Explanation"meansa[writing] recordthat:
3 (A)Statestheamountofthesurplusordeficiency;
4 (B)Providesanexplanationinaccordancewithsubsection(c)ofhowthesecured
5partycalculatedthesurplusordeficiency;
6 (C)States,ifapplicable,thatfuturedebits,credits,charges,includingadditional
7creditservicechargesorinterest,rebates,andexpensesmayaffecttheamountofthesurplus
8ordeficiency;and
9 (D)Providesatelephonenumberormailingaddressfromwhichadditional
10informationconcerningthetransactionisavailable.
11 (2)"Request"meansarecord:
12 (A)[Authenticated] Signedbyadebtororconsumerobligor;
13 (B)Requestingthattherecipientprovideanexplanation;and
14 (C)Sentafterdispositionofthecollateralundersection400.9-610.
15 (b)Inaconsumer-goodstransactioninwhichthedebtorisentitledtoasurplusora
16consumerobligorisliableforadeficiencyundersection400.9-615,thesecuredpartyshall:
17 (1)Sendanexplanationtothedebtororconsumerobligor,asapplicable,afterthe
18dispositionand:
HCSHB1165 88 19 (A)Beforeorwhenthesecuredpartyaccountstothedebtorandpaysanysurplusor
20firstmakes[written] demandinarecordontheconsumerobligorafterthedispositionfor
21paymentofthedeficiency;and
22 (B)Withinfourteendaysafterreceiptofarequest;or
23 (2)Inthecaseofaconsumerobligorwhoisliableforadeficiency,withinfourteen
24daysafterreceiptofarequest,sendtotheconsumerobligorarecordwaivingthesecured
25party'srighttoadeficiency.
26 (c)Tocomplywithsubsection(a)(1)(B),[awriting] anexplanationmustprovidethe
27followinginformationinthefollowingorder:
28 (1)Theaggregateamountofobligationssecuredbythesecurityinterestunderwhich
29thedispositionwasmade,and,iftheamountreflectsarebateofunearnedinterestorcredit
30servicecharge,anindicationofthatfact,calculatedasofaspecifieddate:
31 (A)Ifthesecuredpartytakesorreceivespossessionofthecollateralafterdefault,not
32morethanthirty-fivedaysbeforethesecuredpartytakesorreceivespossession;or
33 (B)Ifthesecuredpartytakesorreceivespossessionofthecollateralbeforedefaultor
34doesnottakepossessionofthecollateral,notmorethanthirty-fivedaysbeforethe
35disposition;
36 (2)Theamountofproceedsofthedisposition;
37 (3)Theaggregateamountoftheobligationsafterdeductingtheamountofproceeds;
38 (4)Theamount,intheaggregateorbytype,andtypesofexpenses,including
39expensesofretaking,holding,preparingfordisposition,processing,anddisposingofthe
40collateral,andattorney'sfeessecuredbythecollateralwhichareknowntothesecuredparty
41andrelatetothecurrentdisposition;
42 (5)Theamount,intheaggregateorbytype,andtypesofcredits,includingrebatesof
43interestorcreditservicecharges,towhichtheobligorisknowntobeentitledandwhichare
44notreflectedintheamountinparagraph(1);and
45 (6)Theamountofthesurplusordeficiency.
46 (d)Aparticularphrasingoftheexplanationisnotrequired.Anexplanation
47complyingsubstantiallywiththerequirementsofsubsection(a)issufficient,evenifit
48includesminorerrorsthatarenotseriouslymisleading.
49 (e)Adebtororconsumerobligorisentitledwithoutchargetooneresponsetoa
50requestunderthissectionduringanysix-monthperiodinwhichthesecuredpartydidnot
51sendtothedebtororconsumerobligoranexplanationpursuanttosubsection(b)(1).The
52securedpartymayrequirepaymentofachargenotexceedingtwenty-fivedollarsforeach
53additionalresponse.
400.9-619.(a)Inthissection,"transferstatement"meansarecord[authenticated]
2signedbyasecuredpartystating:
HCSHB1165 89 3 (1)Thatthedebtorhasdefaultedinconnectionwithanobligationsecuredby
4specifiedcollateral;
5 (2)Thatthesecuredpartyhasexerciseditspost-defaultremedieswithrespecttothe
6collateral;
7 (3)That,byreasonoftheexercise,atransfereehasacquiredtherightsofthedebtorin
8thecollateral;and
9 (4)Thenameandmailingaddressofthesecuredparty,debtor,andtransferee.
10 (b)Atransferstatemententitlesthetransfereetothetransferofrecordofallrightsof
11thedebtorinthecollateralspecifiedinthestatementinanyofficialfiling,recording,
12registration,orcertificate-of-titlesystemcoveringthecollateral.Ifatransferstatementis
13presentedwiththeapplicablefeeandrequestformtotheofficialorofficeresponsiblefor
14maintainingthesystem,theofficialorofficeshall:
15 (1)Acceptthetransferstatement;
16 (2)Promptlyamenditsrecordstoreflectthetransfer;and
17 (3)Ifapplicable,issueanewappropriatecertificateoftitleinthenameofthe
18transferee.
19 (c)Atransferoftherecordorlegaltitletocollateraltoasecuredpartyunder
20subsection(b)orotherwiseisnotofitselfadispositionofcollateralunderthisarticleand
21doesnotofitselfrelievethesecuredpartyofitsdutiesunderthisarticle.
400.9-620.(a)Exceptasotherwiseprovidedinsubsection(g),asecuredpartymay
2acceptcollateralinfullorpartialsatisfactionoftheobligationitsecuresonlyif:
3 (1)Thedebtorconsentstotheacceptanceundersubsection(c);
4 (2)Thesecuredpartydoesnotreceive,withinthetimesetforthinsubsection(d),a
5notificationofobjectiontotheproposal[authenticated] signedby:
6 (A)Apersontowhichthesecuredpartywasrequiredtosendaproposalunder
7section400.9-621;or
8 (B)Anyotherperson,otherthanthedebtor,holdinganinterestinthecollateral
9subordinatetothesecurityinterestthatisthesubjectoftheproposal;
10 (3)Ifthecollateralisconsumergoods,thecollateralisnotinthepossessionofthe
11debtorwhenthedebtorconsentstotheacceptance;and
12 (4)Subsection(e)doesnotrequirethesecuredpartytodisposeofthecollateralorthe
13debtorwaivestherequirementpursuanttosection400.9-624.
14 (b)Apurportedorapparentacceptanceofcollateralunderthissectionisineffective
15unless:
16 (1)Thesecuredpartyconsentstotheacceptancein[anauthenticated] asignedrecord
17orsendsaproposaltothedebtor;and
18 (2)Theconditionsofsubsection(a)aremet.
HCSHB1165 90 19 (c)Forpurposesofthissection:
20 (1)Adebtorconsentstoanacceptanceofcollateralinpartialsatisfactionofthe
21obligationitsecuresonlyifthedebtoragreestothetermsoftheacceptanceinarecord
22[authenticated] signedafterdefault;and
23 (2)Adebtorconsentstoanacceptanceofcollateralinfullsatisfactionofthe
24obligationitsecuresonlyifthedebtoragreestothetermsoftheacceptanceinarecord
25[authenticated] signedafterdefaultorthesecuredparty:
26 (A)Sendstothedebtorafterdefaultaproposalthatisunconditionalorsubjectonlyto
27aconditionthatcollateralnotinthepossessionofthesecuredpartybepreservedor
28maintained;
29 (B)Intheproposal,proposestoacceptcollateralinfullsatisfactionoftheobligation
30itsecures;and
31 (C)Doesnotreceiveanotificationofobjection[authenticated] signedbythedebtor
32withintwentydaysaftertheproposalissent.
33 (d)Tobeeffectiveundersubsection(a)(2),anotificationofobjectionmustbe
34receivedbythesecuredparty:
35 (1)Inthecaseofapersontowhichtheproposalwassentpursuanttosection400.9-
36621,withintwentydaysafternotificationwassenttothatperson;and
37 (2)Inothercases:
38 (A)Withintwentydaysafterthelastnotificationwassentpursuanttosection400.9-
39621;or
40 (B)Ifanotificationwasnotsent,beforethedebtorconsentstotheacceptanceunder
41subsection(c).
42 (e)Asecuredpartythathastakenpossessionofcollateralshalldisposeofthe
43collateralpursuanttosection400.9-610withinthetimespecifiedinsubsection(f)if:
44 (1)Sixtypercentofthecashpricehasbeenpaidinthecaseofapurchase-money
45securityinterestinconsumergoods;or
46 (2)Sixtypercentoftheprincipalamountoftheobligationsecuredhasbeenpaidin
47thecaseofanon-purchase-moneysecurityinterestinconsumergoods.
48 (f)Tocomplywithsubsection(e),thesecuredpartyshalldisposeofthecollateral:
49 (1)Withinninetydaysaftertakingpossession;or
50 (2)Withinanylongerperiodtowhichthedebtorandallsecondaryobligorshave
51agreedinanagreementtothateffectenteredintoand[authenticated] signedafterdefault.
52 (g)Inaconsumertransaction,asecuredpartymaynotacceptcollateralinpartial
53satisfactionoftheobligationitsecures.
400.9-621.(a)Asecuredpartythatdesirestoacceptcollateralinfullorpartial
2satisfactionoftheobligationitsecuresshallsenditsproposalto:
HCSHB1165 91 3 (1)Anypersonfromwhichthesecuredpartyhasreceived,beforethedebtor
4consentedtotheacceptance,[anauthenticated] asignednotificationofaclaimofaninterest
5inthecollateral;
6 (2)Anyothersecuredpartyorlienholderthat,tendaysbeforethedebtorconsentedto
7theacceptance,heldasecurityinterestinorotherlienonthecollateralperfectedbythefiling
8ofafinancingstatementthat:
9 (A)Identifiedthecollateral;
10 (B)Wasindexedunderthedebtor'snameasofthatdate;and
11 (C)Wasfiledintheofficeorofficesinwhichtofileafinancingstatementagainstthe
12debtorcoveringthecollateralasofthatdate;and
13 (3)Anyothersecuredpartythat,tendaysbeforethedebtorconsentedtothe
14acceptance,heldasecurityinterestinthecollateralperfectedbycompliancewithastatute,
15regulation,ortreatydescribedinsection400.9-311(a).
16 (b)Asecuredpartythatdesirestoacceptcollateralinpartialsatisfactionofthe
17obligationitsecuresshallsenditsproposaltoanysecondaryobligorinadditiontothepersons
18describedinsubsection(a).
400.9-624.(a)Adebtororsecondaryobligormaywaivetherighttonotificationof
2dispositionofcollateralundersection400.9-611onlybyanagreementtothateffectentered
3intoand[authenticated] signedafterdefault.
4 (b)Adebtormaywaivetherighttorequiredispositionofcollateralundersection
5400.9-620(e)onlybyanagreementtothateffectenteredintoand[authenticated] signedafter
6default.
7 (c)Exceptinaconsumer-goodstransaction,adebtororsecondaryobligormaywaive
8therighttoredeemcollateralundersection400.9-623onlybyanagreementtothateffect
9enteredintoand[authenticated] signedafterdefault.
400.9-628.(a)Subjecttosubsection(e),unlessasecuredpartyknowsthataperson
2isadebtororobligor,knowstheidentityoftheperson,andknowshowtocommunicatewith
3theperson:
4 (1)Thesecuredpartyisnotliabletotheperson,ortoasecuredpartyorlienholder
5thathasfiledafinancingstatementagainsttheperson,forfailuretocomplywiththisarticle;
6and
7 (2)Thesecuredparty'sfailuretocomplywiththisarticledoesnotaffecttheliability
8ofthepersonforadeficiency.
9 (b)Subjecttosubsection(e),asecuredpartyisnotliablebecauseofitsstatusas
10securedparty:
11 (1)Toapersonthatisadebtororobligor,unlessthesecuredpartyknows:
12 (A)Thatthepersonisadebtororobligor;
HCSHB1165 92 13 (B)Theidentityoftheperson;and
14 (C)Howtocommunicatewiththeperson;or
15 (2)Toasecuredpartyorlienholderthathasfiledafinancingstatementagainsta
16person,unlessthesecuredpartyknows:
17 (A)Thatthepersonisadebtor;and
18 (B)Theidentityoftheperson.
19 (c)Asecuredpartyisnotliabletoanyperson,andaperson'sliabilityforadeficiency
20isnotaffected,becauseofanyactoromissionarisingoutofthesecuredparty'sreasonable
21beliefthatatransactionisnotaconsumer-goodstransactionoraconsumertransactionorthat
22goodsarenotconsumergoods,ifthesecuredparty'sbeliefisbasedonitsreasonablereliance
23on:
24 (1)Adebtor'srepresentationconcerningthepurposeforwhichcollateralwastobe
25used,acquired,orheld;or
26 (2)Anobligor'srepresentationconcerningthepurposeforwhichasecuredobligation
27wasincurred.
28 (d)Asecuredpartyisnotliableundersection400.9-625(c)(2)morethanoncewith
29respecttoanyonesecuredobligation.
30 (e)Subsections(a)and(b)donotapplytolimittheliabilityofasecuredpartyto
31apersonif,atthetimethesecuredpartyobtainscontrolofcollateralthatisa
32controllableaccount,controllableelectronicrecord,orcontrollablepaymentintangible
33oratthetimethesecurityinterestattachestothecollateral,whicheverislater:
34 (1)Thepersonisadebtororobligor;and
35 (2)Thesecuredpartyknowsthattheinformationinsubsection(b)(1)(A),(B),or
36(C)relatingtothepersonisnotprovidedbythecollateral,arecordattachedtoor
37logicallyassociatedwiththecollateral,orthesysteminwhichthecollateralisrecorded.
400.12-101.ThisarticlemaybecitedasUniformCommercialCode—
2ControllableElectronicRecords.
400.12-102.(a)Inthisarticle:
2 (1)"Controllableelectronicrecord"meansarecordstoredinanelectronic
3mediumthatcanbesubjectedtocontrolundersection400.12-105.Thetermdoesnot
4includeacontrollableaccount,acontrollablepaymentintangible,adepositaccount,an
5electroniccopyofarecordevidencingchattelpaper,anelectronicdocumentoftitle,
6investmentproperty,transferablerecord,oranelectronicrecordthatiscurrently
7authorizedoradoptedbyadomesticorforeigngovernmentandisnotamediumof
8exchangethatwasrecordedandtransferableinasystemthatexistedandoperatedfor
9themediumofexchangebeforethemediumofexchangewasauthorizedoradoptedbya
10government.
HCSHB1165 93 11 (2)"Qualifyingpurchaser"meansapurchaserofacontrollableelectronic
12recordoraninterestinacontrollableelectronicrecordthatobtainscontrolofthe
13controllableelectronicrecordforvalue,ingoodfaith,andwithoutnoticeofaclaimofa
14propertyrightinthecontrollableelectronicrecord.
15 (3)"Transferablerecord"hasthemeaningprovidedforthatterminSection201
16(a)(1)oftheElectronicSignaturesinGlobalandNationalCommerceAct,15U.S.C.
17Section7021(a)(1),asamended.
18 (4)"Value"hasthemeaningprovidedinsection400.3-303(a),asifreferencesin
19thatsubsectiontoan"instrument"werereferencestoacontrollableaccount,
20controllableelectronicrecord,orcontrollablepaymentintangible.
21 (b)ThedefinitionsinArticle9of"accountdebtor","controllableaccount",
22"controllablepaymentintangible","chattelpaper","depositaccount",and
23"investmentproperty"applytothisarticle.
24 (c)Article1containsgeneraldefinitionsandprinciplesofconstructionand
25interpretationapplicablethroughoutthisarticle.
400.12-103.(a)IfthereisconflictbetweenthisarticleandArticle9,Article9
2governs.
3 (b)Atransactionsubjecttothisarticleissubjecttoanyapplicableruleoflaw
4thatestablishesadifferentruleforconsumers.
400.12-104.(a)Thissectionappliestotheacquisitionandpurchaseofrightsina
2controllableaccountorcontrollablepaymentintangible,includingtherightsand
3benefitsundersubsections(c),(d),(e),(g),and(h)ofapurchaserandqualifying
4purchaser,inthesamemannerthissectionappliestoacontrollableelectronicrecord.
5 (b)Todeterminewhetherapurchaserofacontrollableaccountoracontrollable
6paymentintangibleisaqualifyingpurchaser,thepurchaserobtainscontrolofthe
7accountorpaymentintangibleifitobtainscontrolofthecontrollableelectronicrecord
8thatevidencestheaccountorpaymentintangible.
9 (c)Exceptasprovidedinthissection,lawotherthanthisarticledetermines
10whetherapersonacquiresarightinacontrollableelectronicrecordandtherightthe
11personacquires.
12 (d)Apurchaserofacontrollableelectronicrecordacquiresallrightsinthe
13controllableelectronicrecordthatthetransferorhadorhadpowertotransfer,except
14thatapurchaserofalimitedinterestinacontrollableelectronicrecordacquiresrights
15onlytotheextentoftheinterestpurchased.
16 (e)Aqualifyingpurchaseracquiresitsrightsinthecontrollableelectronic
17recordfreeofaclaimofapropertyrightinthecontrollableelectronicrecord.
HCSHB1165 94 18 (f)Exceptasprovidedinsubsections(a)and(e)foracontrollableaccountanda
19controllablepaymentintangibleorlawotherthanthisarticle,aqualifyingpurchaser
20takesarighttopayment,righttoperformance,orotherinterestinpropertyevidenced
21bythecontrollableelectronicrecordsubjecttoaclaimofapropertyrightintherightto
22payment,righttoperformance,orotherinterestinproperty.
23 (g)Anactionmaynotbeassertedagainstaqualifyingpurchaserbasedonbotha
24purchasebythequalifyingpurchaserofacontrollableelectronicrecordandaclaimofa
25propertyrightinanothercontrollableelectronicrecord,whethertheactionisframedin
26conversion,replevin,constructivetrust,equitablelien,orothertheory.
27 (h)FilingofafinancingstatementunderArticle9isnotnoticeofaclaimofa
28propertyrightinacontrollableelectronicrecord.
400.12-105.(a)Apersonhascontrolofacontrollableelectronicrecordifthe
2electronicrecord,arecordattachedtoorlogicallyassociatedwiththeelectronicrecord,
3orasysteminwhichtheelectronicrecordisrecorded:
4 (1)Givestheperson:
5 (A)Powertoavailitselfofsubstantiallyallthebenefitfromtheelectronic
6record;and
7 (B)Exclusivepower,subjecttosubsection(b),to:
8 (i)Preventothersfromavailingthemselvesofsubstantiallyallthebenefitfrom
9theelectronicrecord;and
10 (ii)Transfercontroloftheelectronicrecordtoanotherpersonorcauseanother
11persontoobtaincontrolofanothercontrollableelectronicrecordasaresultofthe
12transferoftheelectronicrecord;and
13 (2)Enablesthepersonreadilytoidentifyitselfinanyway,includingbyname,
14identifyingnumber,cryptographickey,office,oraccountnumber,ashavingthepowers
15specifiedinparagraph(1).
16 (b)Subjecttosubsection(c),apowerisexclusiveundersubsection(a)(1)(B)(i)
17and(ii)evenif:
18 (1)Thecontrollableelectronicrecord,arecordattachedtoorlogically
19associatedwiththeelectronicrecord,orasysteminwhichtheelectronicrecordis
20recordedlimitstheuseoftheelectronicrecordorhasaprotocolprogrammedtocausea
21change,includingatransferorlossofcontroloramodificationofbenefitsaffordedby
22theelectronicrecord;or
23 (2)Thepowerissharedwithanotherperson.
24 (c)Apowerofapersonisnotsharedwithanotherpersonundersubsection(b)
25(2)andtheperson'spowerisnotexclusiveif:
HCSHB1165 95 26 (1)Thepersoncanexercisethepoweronlyifthepoweralsoisexercisedbythe
27otherperson;and
28 (2)Theotherperson:
29 (A)Canexercisethepowerwithoutexerciseofthepowerbytheperson;or
30 (B)Isthetransferortothepersonofaninterestinthecontrollableelectronic
31recordoracontrollableaccountorcontrollablepaymentintangibleevidencedbythe
32controllableelectronicrecord.
33 (d)Ifapersonhasthepowersspecifiedinsubsection(a)(1)(B)(i)and(ii),the
34powersarepresumedtobeexclusive.
35 (e)Apersonhascontrolofacontrollableelectronicrecordifanotherperson,
36otherthanthetransferortothepersonofaninterestinthecontrollableelectronic
37recordoracontrollableaccountorcontrollablepaymentintangibleevidencedbythe
38controllableelectronicrecord:
39 (1)Hascontroloftheelectronicrecordandacknowledgesthatithascontrolon
40behalfoftheperson;or
41 (2)Obtainscontroloftheelectronicrecordafterhavingacknowledgedthatit
42willobtaincontroloftheelectronicrecordonbehalfoftheperson.
43 (f)Apersonthathascontrolunderthissectionisnotrequiredtoacknowledge
44thatithascontrolonbehalfofanotherperson.
45 (g)Ifapersonacknowledgesthatithasorwillobtaincontrolonbehalfof
46anotherperson,unlessthepersonotherwiseagreesorlawotherthanthisarticleor
47Article9otherwiseprovides,thepersondoesnotoweanydutytotheotherpersonandis
48notrequiredtoconfirmtheacknowledgmenttoanyotherperson.
400.12-106.(a)Anaccountdebtoronacontrollableaccountorcontrollable
2paymentintangiblemaydischargeitsobligationbypaying:
3 (1)Thepersonhavingcontrolofthecontrollableelectronicrecordthatevidences
4thecontrollableaccountorcontrollablepaymentintangible;or
5 (2)Exceptasprovidedinsubsection(b),apersonthatformerlyhadcontrolof
6thecontrollableelectronicrecord.
7 (b)Subjecttosubsection(d),theaccountdebtormaynotdischargeitsobligation
8bypayingapersonthatformerlyhadcontrolofthecontrollableelectronicrecordifthe
9accountdebtorreceivesanotificationthat:
10 (1)Issignedbyapersonthatformerlyhadcontrolorthepersontowhich
11controlwastransferred;
12 (2)Reasonablyidentifiesthecontrollableaccountorcontrollablepayment
13intangible;
HCSHB1165 96 14 (3)Notifiestheaccountdebtorthatcontrolofthecontrollableelectronicrecord
15thatevidencesthecontrollableaccountorcontrollablepaymentintangiblewas
16transferred;
17 (4)Identifiesthetransferee,inanyreasonableway,includingbyname,
18identifyingnumber,cryptographickey,office,oraccountnumber;and
19 (5)Providesacommerciallyreasonablemethodbywhichtheaccountdebtoris
20topaythetransferee.
21 (c)Afterreceiptofanotificationthatcomplieswithsubsection(b),theaccount
22debtormaydischargeitsobligationbypayinginaccordancewiththenotificationand
23maynotdischargetheobligationbypayingapersonthatformerlyhadcontrol.
24 (d)Subjecttosubsection(h),notificationisineffectiveundersubsection(b):
25 (1)Unless,beforethenotificationissent,theaccountdebtorandthepersonthat,
26atthattime,hadcontrolofthecontrollableelectronicrecordthatevidencesthe
27controllableaccountorcontrollablepaymentintangibleagreeinasignedrecordtoa
28commerciallyreasonablemethodbywhichapersonmayfurnishreasonableproofthat
29controlhasbeentransferred;
30 (2)Totheextentanagreementbetweentheaccountdebtorandsellerofa
31paymentintangiblelimitstheaccountdebtor'sdutytopayapersonotherthantheseller
32andthelimitationiseffectiveunderlawotherthanthisarticle;or
33 (3)Attheoptionoftheaccountdebtor,ifthenotificationnotifiestheaccount
34debtorto:
35 (A)Divideapayment;
36 (B)Makelessthanthefullamountofaninstallmentorotherperiodicpayment;
37or
38 (C)payanypartofapaymentbymorethanonemethodortomorethanone
39person.
40 (e)Subjecttosubsection(h),ifrequestedbytheaccountdebtor,theperson
41givingthenotificationundersubsection(b)seasonablyshallfurnishreasonableproof,
42usingthemethodintheagreementreferredtoinsubsection(d)(1),thatcontrolofthe
43controllableelectronicrecordhasbeentransferred.Unlessthepersoncomplieswiththe
44request,theaccountdebtormaydischargeitsobligationbypayingapersonthat
45formerlyhadcontrol,eveniftheaccountdebtorhasreceivedanotificationunder
46subsection(b).
47 (f)Apersonfurnishesreasonableproofundersubsection(e)thatcontrolhas
48beentransferredifthepersondemonstrates,usingthemethodintheagreementreferred
49toinsubsection(d)(1),thatthetransfereehasthepowerto:
HCSHB1165 97 50 (1)Availitselfofsubstantiallyallthebenefitfromthecontrollableelectronic
51record;
52 (2)Preventothersfromavailingthemselvesofsubstantiallyallthebenefitfrom
53thecontrollableelectronicrecord;and
54 (3)Transferthepowersspecifiedinparagraphs(1)and(2)toanotherperson.
55 (g)Subjecttosubsection(h),anaccountdebtormaynotwaiveorvaryitsrights
56undersubsections(d)(1)and(e)oritsoptionundersubsection(d)(3).
57 (h)Thissectionissubjecttolawotherthanthisarticlewhichestablishesa
58differentruleforanaccountdebtorwhoisanindividualandwhoincurredthe
59obligationprimarilyforpersonal,family,orhouseholdpurposes.
400.12-107.(a)Exceptasprovidedinsubsection(b),thelocallawofa
2controllableelectronicrecord'sjurisdictiongovernsamattercoveredbythisarticle.
3 (b)Foracontrollableelectronicrecordthatevidencesacontrollableaccountor
4controllablepaymentintangible,thelocallawofthecontrollableelectronicrecord's
5jurisdictiongovernsamattercoveredbysection400.12-106unlessaneffective
6agreementdeterminesthatthelocallawofanotherjurisdictiongoverns.
7 (c)Thefollowingrulesdetermineacontrollableelectronicrecord'sjurisdiction
8underthissection:
9 (1)Ifthecontrollableelectronicrecord,orarecordattachedtoorlogically
10associatedwiththecontrollableelectronicrecordandreadilyavailableforreview,
11expresslyprovidesthataparticularjurisdictionisthecontrollableelectronicrecord's
12jurisdictionforpurposesofthisarticleorthischapter,thatjurisdictionisthe
13controllableelectronicrecord'sjurisdiction.
14 (2)Ifparagraph(1)doesnotapplyandtherulesofthesysteminwhichthe
15controllableelectronicrecordisrecordedarereadilyavailableforreviewandexpressly
16providethataparticularjurisdictionisthecontrollableelectronicrecord'sjurisdiction
17forpurposesofthisarticleorthischapter,thatjurisdictionisthecontrollableelectronic
18record'sjurisdiction.
19 (3)Ifparagraphs(1)and(2)donotapplyandthecontrollableelectronicrecord,
20orarecordattachedtoorlogicallyassociatedwiththecontrollableelectronicrecord
21andreadilyavailableforreview,expresslyprovidesthatthecontrollableelectronic
22recordisgovernedbythelawofaparticularjurisdiction,thatjurisdictionisthe
23controllableelectronicrecord'sjurisdiction.
24 (4)Ifparagraphs(1),(2),and(3)donotapplyandtherulesofthesystemin
25whichthecontrollableelectronicrecordisrecordedarereadilyavailableforreviewand
26expresslyprovidethatthecontrollableelectronicrecordorthesystemisgovernedby
HCSHB1165 98 27thelawofaparticularjurisdiction,thatjurisdictionisthecontrollableelectronic
28record'sjurisdiction.
29 (5)Ifparagraphs(1)through(4)donotapply,thecontrollableelectronic
30record'sjurisdictionistheDistrictofColumbia.
31 (d)Ifsubsection(c)(5)appliesandArticle12isnotineffectintheDistrictof
32Columbiawithoutmaterialmodification,thegoverninglawforamattercoveredbythis
33articleisthelawoftheDistrictofColumbiaasthoughArticle12wereineffectinthe
34DistrictofColumbiawithoutmaterialmodification.Inthissubsection,"Article12"
35meansArticle12ofUniformCommercialCodeAmendments(2022).
36 (e)Totheextentsubsections(a)and(b)providethatthelocallawofthe
37controllableelectronicrecord'sjurisdictiongovernsamattercoveredbythisarticle,
38thatlawgovernsevenifthematteroratransactiontowhichthematterrelatesdoesnot
39bearanyrelationtothecontrollableelectronicrecord’sjurisdiction.
40 (f)TherightsacquiredunderSection400.12-104byapurchaserorqualifying
41purchaseraregovernedbythelawapplicableunderthissectionatthetimeofpurchase.
400.199-101.ThisarticlemaybecitedasTransitionalProvisionsforUniform
2CommercialCodeAmendments(2022).
400.199-102.(a)Inthisarticle:
2 (1)"Adjustmentdate"meansJuly1,2025.
3 (2)"Article12"meansArticle12ofthischapter.
4 (3)"Article12property"meansacontrollableaccount,controllableelectronic
5record,orcontrollablepaymentintangible.
6 (b)Thefollowingdefinitionsinotherarticlesofthischapterapplytothisarticle.
7 "Controllableaccount".Section400.9-102.
8 "Controllableelectronicrecord".Section400.12-102.
9 "Controllablepaymentintangible".Section400.9-102.
10 "Financingstatement".Section400.9-102.
11 (c)Article1containsgeneraldefinitionsandprinciplesofconstructionand
12interpretationapplicablethroughoutthisarticle.
400.199-201.Exceptasprovidedinsections400.199-301,400.199-302,400.199-
2303,400.199-304,400.199-305,and400.199-306,atransactionvalidlyenteredinto
3beforeAugust28,2023,andtherights,duties,andinterestsflowingfromthetransaction
4remainvalidthereafterandmaybeterminated,completed,consummated,orenforced
5asrequiredorpermittedbylawotherthanthischapteror,ifapplicable,thischapter,as
6thoughthisacthadnottakeneffect.
400.199-301.(a)Exceptasprovidedinsections400.199-301,400.199-302,
2400.199-303,400.199-304,400.199-305,and400.199-306,Article9asamendedbythis
HCSHB1165 99 3actandArticle12applytoatransaction,lien,orotherinterestinproperty,evenifthe
4transaction,lien,orinterestwasenteredinto,created,oracquiredbeforeAugust28,
52023.
6 (b)Exceptasprovidedinsubsection(c)andsections400.199-302through
7400.199-306:
8 (1)Atransaction,lien,orinterestinpropertythatwasvalidlyenteredinto,
9created,ortransferredbeforeAugust28,2023andwasnotgovernedbythischapter,
10butwouldbesubjecttoArticle9asamendedbythisactorArticle12ifithadbeen
11enteredinto,created,ortransferredonorafterAugust28,2023,includingtherights,
12duties,andinterestsflowingfromthetransaction,lien,orinterest,remainsvalidonand
13afterAugust28,2023;and
14 (2)Thetransaction,lien,orinterestmaybeterminated,completed,
15consummated,andenforcedasrequiredorpermittedbythisactorbythelawthat
16wouldapplyifthisacthadnottakeneffect.
17 (c)Thisactdoesnotaffectanaction,case,orproceedingcommencedbefore
18August28,2023.
400.199-302.(a)Asecurityinterestthatisenforceableandperfected
2immediatelybeforeAugust28,2023isaperfectedsecurityinterestunderthisactif,
3onAugust28,2023,therequirementsforenforceabilityandperfectionunderthisact
4aresatisfiedwithoutfurtheraction.
5 (b)IfasecurityinterestisenforceableandperfectedimmediatelybeforeAugust
628,2023,buttherequirementsforenforceabilityorperfectionunderthisactarenot
7satisfiedonAugust28,2023,thesecurityinterest:
8 (1)Isaperfectedsecurityinterestuntiltheearlierofthetimeperfectionwould
9haveceasedunderthelawineffectimmediatelybeforeAugust28,2023,orthe
10adjustmentdate;
11 (2)Remainsenforceablethereafteronlyifthesecurityinterestsatisfiesthe
12requirementsforenforceabilityundersection400.9-203,asamendedbythisact,before
13theadjustmentdate;and
14 (3)Remainsperfectedthereafteronlyiftherequirementsforperfectionunder
15thisactaresatisfiedbeforethetimespecifiedinparagraph(1).
400.199-303.AsecurityinterestthatisenforceableimmediatelybeforeAugust
228,2023,butisunperfectedatthattime:
3 (1)Remainsanenforceablesecurityinterestuntiltheadjustmentdate;
4 (2)Remainsenforceablethereafterifthesecurityinterestbecomesenforceable
5undersection400.9-203,asamendedbythisact,onAugust28,2023,orbeforethe
6adjustmentdate;and
HCSHB1165 100 7 (3)Becomesperfected:
8 (A)Withoutfurtheraction,onAugust28,2023,iftherequirementsfor
9perfectionunderthisactaresatisfiedbeforeoratthattime;or
10 (B)Whentherequirementsforperfectionaresatisfiediftherequirementsare
11satisfiedafterthattime.
400.199-304.(a)Ifaction,otherthanthefilingofafinancingstatement,istaken
2beforeAugust28,2023,andtheactionwouldhaveresultedinperfectionofthesecurity
3interesthadthesecurityinterestbecomeenforceablebeforeAugust28,2023,theaction
4iseffectivetoperfectasecurityinterestthatattachesunderthisactbeforethe
5adjustmentdate.Anattachedsecurityinterestbecomesunperfectedontheadjustment
6dateunlessthesecurityinterestbecomesaperfectedsecurityinterestunderthisact
7beforetheadjustmentdate.
8 (b)ThefilingofafinancingstatementbeforeAugust28,2023,iseffectiveto
9perfectasecurityinterestonAugust28,2023,totheextentthefilingwouldsatisfythe
10requirementsforperfectionunderthisact.
11 (c)ThetakingofanactionbeforeAugust28,2023,issufficientforthe
12enforceabilityofasecurityinterestonAugust28,2023,iftheactionwouldsatisfythe
13requirementsforenforceabilityunderthisact.
400.199-305.(a)Subjecttosubsections(b)and(c),thisactdeterminesthe
2priorityofconflictingclaimstocollateral.
3 (b)Subjecttosubsection(c),iftheprioritiesofclaimstocollateralwere
4establishedbeforeAugust28,2023,Article9asineffectbeforeAugust28,2023,
5determinespriority.
6 (c)Ontheadjustmentdate,totheextenttheprioritiesdeterminedbyArticle9
7asamendedbythisactmodifytheprioritiesestablishedbeforeAugust28,2023,the
8prioritiesofclaimstoArticle12propertyestablishedbeforeAugust28,2023,ceaseto
9apply.
400.199-306.(a)Subjecttosubsections(b)and(c),Article12determinesthe
2priorityofconflictingclaimstoArticle12propertywhenthepriorityrulesofArticle9
3asamendedbythisactdonotapply.
4 (b)Subjecttosubsection(c),whenthepriorityrulesofArticle9asamendedby
5thisactdonotapplyandtheprioritiesofclaimstoArticle12propertywereestablished
6beforeAugust28,2023,lawotherthanArticle12determinespriority.
7 (c)WhenthepriorityrulesofArticle9asamendedbythisactdonotapply,to
8theextenttheprioritiesdeterminedbythisactmodifytheprioritiesestablishedbefore
9August28,2023,theprioritiesofclaimstoArticle12propertyestablishedbeforeAugust
1028,2023,ceasetoapplyontheadjustmentdate.
HCSHB1165 101 400.199-401.ThisacttakeseffectonAugust28,2023.
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HCSHB1165 102