| 1 | 1 | | <STYLE><!--U {color: Green}S {color: RED} I {color: DARKBLUE; background-color:yellow} P.brk {page-break-before:always}--></STYLE> <BASEFONT SIZE=3> <PRE WIDTH="136"> <FONT SIZE=5><B> STATE OF NEW YORK</B></FONT> ________________________________________________________________________ 3307--A 2025-2026 Regular Sessions <FONT SIZE=5><B> IN ASSEMBLY</B></FONT> January 27, 2025 ___________ Introduced by M. of A. BORES -- read once and referred to the Committee on Judiciary -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the uniform commercial code, in relation to addressing emerging technologies <B><U>The People of the State of New York, represented in Senate and Assem-</U></B> <B><U>bly, do enact as follows:</U></B> 1 Section 1. Paragraphs 10, 15, 21, 24, 27, 36 and 37 of subsection (b) 2 of section 1--201 of the uniform commercial code, as added by chapter 3 505 of the laws of 2014, are amended and a new paragraph 16-a is added 4 to read as follows: 5 (10) "Conspicuous", with reference to a term, means so written, 6 displayed, or presented that<B><U>, based on the totality of the circum-</U></B> 7 <B><U>stances,</U></B> a reasonable person against which it is to operate ought to 8 have noticed it. Whether a term is "conspicuous" or not is a decision 9 for the court. 10 (15) "Delivery", with respect to an electronic document of title means 11 voluntary transfer of control and with respect to an instrument, a 12 tangible document of title, or <B><U>an authoritative tangible copy of a</U></B> 13 <B><U>record evidencing</U></B> chattel paper, means voluntary transfer of possession. 14 <B><U>(16-a) "Electronic" means relating to technology having electrical,</U></B> 15 <B><U>digital, magnetic, wireless, optical, electromagnetic, or similar capa-</U></B> 16 <B><U>bilities.</U></B> 17 (21) "Holder" means: 18 (A) the person in possession of a negotiable instrument that is paya- 19 ble either to bearer or to an identified person that is the person in 20 possession; or 21 (B) the person in possession of a negotiable tangible document of 22 title if the goods are deliverable either to bearer or to the order of 23 the person in possession; or EXPLANATION--Matter in <B><U>italics</U></B> (underscored) is new; matter in brackets [<B><S> </S></B>] is old law to be omitted. LBD04308-05-5 </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 2 1 (C) the person in control<B><U>, other than pursuant to Section 7--106(g),</U></B> 2 of a negotiable electronic document of title. 3 (24) "Money" means a medium of exchange <B><U>that is</U></B> currently authorized 4 or adopted by a domestic or foreign government. The term includes a 5 monetary unit of account established by an intergovernmental organiza- 6 tion or by agreement between two or more countries. <B><U>The term does not</U></B> 7 <B><U>include an electronic record that is a medium of exchange recorded and</U></B> 8 <B><U>transferable in a system that existed and operated for the medium of</U></B> 9 <B><U>exchange before the medium of exchange was authorized or adopted by the</U></B> 10 <B><U>government.</U></B> 11 (27) "Person" means an individual, corporation, business trust, 12 estate, trust, partnership, limited liability company, association, 13 joint venture, government, governmental subdivision, agency, [<B><S>or instru-</S></B> 14 <B><S>mentality, public corporation,</S></B>] or any other legal or commercial entity. 15 <B><U>The term includes a protected series, however denominated, of an entity</U></B> 16 <B><U>if the protected series is established under law other than this act</U></B> 17 <B><U>that limits, or limits if conditions specified under the law are satis-</U></B> 18 <B><U>fied, the ability of a creditor of the entity or of any other protected</U></B> 19 <B><U>series of the entity to satisfy a claim from assets of the protected</U></B> 20 <B><U>series.</U></B> 21 (36) "Send"<B><U>,</U></B> in connection with a [<B><S>writing,</S></B>] record[<B><S>, or notice</S></B>] <B><U>or</U></B> 22 <B><U>notification</U></B> means: 23 (A) to deposit in the mail [<B><S>or</S></B>]<B><U>,</U></B> deliver for transmission<B><U>, or transmit</U></B> 24 by any other usual means of communication with postage or cost of trans- 25 mission provided for [<B><S>and properly</S></B>]<B><U>,</U></B> addressed [<B><S>and, in the case of an</S></B> 26 <B><S>instrument, to an address specified thereon or otherwise agreed, or if</S></B> 27 <B><S>there be none</S></B>] to any address reasonable under the circumstances; or 28 (B) [<B><S>in any other way</S></B>] to cause <B><U>the record or notification</U></B> to be 29 received [<B><S>any record or notice</S></B>] within the time it would have [<B><S>arrived</S></B>] 30 <B><U>been received</U></B> if properly sent <B><U>pursuant to subparagraph (A)</U></B>. 31 (37) [<B><S>"Signed" includes using any symbol executed or adopted with</S></B> 32 <B><S>present intention to adopt or accept a writing.</S></B>] <B><U>"Sign" means, with</U></B> 33 <B><U>present intent to authenticate or adopt a record:</U></B> 34 <B><U>(A) execute or adopt a tangible symbol; or</U></B> 35 <B><U>(B) attach to or logically associate with the record an electronic</U></B> 36 <B><U>symbol, sound, or process.</U></B> 37 <B><U>"Signed, "signing", and "signature" have corresponding meanings.</U></B> 38 § 2. Section 1--204 of the uniform commercial code, as added by chap- 39 ter 505 of the laws of 2014, is amended to read as follows: 40 Section 1--204. Value. 41 Except as otherwise provided in articles 3, 4, [<B><S>and</S></B>] 5, <B><U>and 12 of this</U></B> 42 <B><U>act</U></B> a person gives value for rights if the person acquires them: 43 (a) in return for a binding commitment to extend credit or for the 44 extension of immediately available credit, whether or not drawn upon and 45 whether or not a charge-back is provided for in the event of difficul- 46 ties in collection; 47 (b) as security for, or in total or partial satisfaction of, a preex- 48 isting claim; 49 (c) by accepting delivery under a preexisting contract for purchase; 50 or 51 (d) in return for any consideration sufficient to support a simple 52 contract. 53 § 3. Subsection (c) of section 1--301 of the uniform commercial code, 54 as added by chapter 505 of the laws of 2014, is amended to read as 55 follows: </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 3 1 (c) If one of the following provisions of this act specifies the 2 applicable law, that provision governs and a contrary agreement is 3 effective only to the extent permitted by the law so specified: 4 (1) Section 2--402; 5 (2) Sections 2-A--105 and 2-A--106; 6 (3) Section 4--102; 7 (4) Section 4-A--507; 8 (5) Section 5--116; 9 (6) Section 8--110; [<B><S>and</S></B>] 10 (7) Sections 9--301 through 9--307<B><U>; and</U></B> 11 <B><U>(8) Section 12--107</U></B>. 12 § 4. Section 1--306 of the uniform commercial code, as added by chap- 13 ter 505 of the laws of 2014, is amended to read as follows: 14 Section 1--306. Waiver or Renunciation of Claim or Right After Breach. 15 A claim or right arising out of an alleged breach may be discharged in 16 whole or in part without consideration by agreement of the aggrieved 17 party in [<B><S>an authenticated</S></B>] <B><U>a signed</U></B> record. 18 § 5. Section 2--102 of the uniform commercial code is amended to read 19 as follows: 20 Section 2--102. Scope; Certain Security and Other Transactions Excluded 21 From This Article. 22 <B><U>(1)</U></B> Unless the context otherwise requires, <B><U>and except as provided in</U></B> 23 <B><U>subsection (3)</U></B>, this Article applies to transactions in goods[<B><S>; it does</S></B> 24 <B><S>not apply to any transaction which although in the form of an uncondi-</S></B> 25 <B><S>tional contract to sell or present sale is intended to operate only as a</S></B> 26 <B><S>security transaction nor does this Article impair or repeal any statute</S></B> 27 <B><S>regulating sales to consumers, farmers or other specified classes of</S></B> 28 <B><S>buyers</S></B>] <B><U>and, in the case of a hybrid transaction, it applies to the</U></B> 29 <B><U>extent provided in subsection (2).</U></B> 30 <B><U>(2) In a hybrid transaction:</U></B> 31 <B><U>(a) If the sale-of-goods aspects do not predominate, only the</U></B> 32 <B><U>provisions of this Article which relate primarily to the sale-of-goods</U></B> 33 <B><U>aspects of the transaction apply, and the provisions that relate prima-</U></B> 34 <B><U>rily to the transaction as a whole do not apply.</U></B> 35 <B><U>(b) If the sale-of-goods aspects predominate, this Article applies to</U></B> 36 <B><U>the transaction but does not preclude application in appropriate circum-</U></B> 37 <B><U>stances of other law to aspects of the transaction which do not relate</U></B> 38 <B><U>to the sale of goods.</U></B> 39 <B><U>(3) This Article does not:</U></B> 40 <B><U>(a) apply to a transaction that, even though in the form of an uncon-</U></B> 41 <B><U>ditional contract to sell or present sale, operates only to create a</U></B> 42 <B><U>security interest; or</U></B> 43 <B><U>(b) impair or repeal a statute regulating sales to consumers, farmers,</U></B> 44 <B><U>or other specified classes of buyers</U></B>. 45 § 6. Section 2--106 of the uniform commercial code is amended to read 46 as follows: 47 Section 2--106. Definitions. "Contract"; "Agreement"; "Contract for 48 Sale"; "Sale"; "Present Sale"; "Conforming" to 49 Contract; "Termination"; "Cancellation"<B><U>; "Hybrid Tran-</U></B> 50 <B><U>saction"</U></B>. 51 (1) In this Article, unless the context otherwise requires<B><U>,</U></B> "contract" 52 and "agreement" are limited to those relating to the present or future 53 sale of goods. "Contract for sale" includes both a present sale of goods 54 and a contract to sell goods at a future time. A "sale" consists in the 55 passing of title from the seller to the buyer for a price (Section </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 4 1 2--401). A "present sale" means a sale which is accomplished by the 2 making of the contract. 3 (2) Goods or conduct including any part of a performance are "conform- 4 ing" or conform to the contract when they are in accordance with the 5 obligations under the contract. 6 (3) "Termination" occurs when either party pursuant to a power created 7 by agreement or law puts an end to the contract otherwise than for its 8 breach. On "termination" all obligations which are still executory on 9 both sides are discharged but any right based on prior breach or 10 performance survives. 11 (4) "Cancellation" occurs when either party puts an end to the 12 contract for breach by the other and its effect is the same as that of 13 "termination" except that the cancelling party also retains any remedy 14 for breach of the whole contract or any unperformed balance. 15 <B><U>(5) "Hybrid transaction" means a single transaction involving a sale</U></B> 16 <B><U>of goods and:</U></B> 17 <B><U>(a) the provision of services;</U></B> 18 <B><U>(b) a lease of other goods; or</U></B> 19 <B><U>(c) a sale, lease, or license of property other than goods.</U></B> 20 § 7. Subsections 1 and 2 of section 2--201 of the uniform commercial 21 code are amended to read as follows: 22 (1) Except as otherwise provided in this section a contract for the 23 sale of goods for the price of $500 or more is not enforceable by way of 24 action or defense unless there is [<B><S>some writing</S></B>] <B><U>a record</U></B> sufficient to 25 indicate that a contract for sale has been made between the parties and 26 signed by the party against whom enforcement is sought or by [<B><S>his</S></B>] <B><U>the</U></B> 27 <B><U>party's</U></B> authorized agent or broker. A [<B><S>writing</S></B>] <B><U>record</U></B> is not insuffi- 28 cient because it omits or incorrectly states a term agreed upon but the 29 contract is not enforceable under this [<B><S>paragraph</S></B>] <B><U>subsection</U></B> beyond the 30 quantity of goods shown in [<B><S>such writing</S></B>] <B><U>the record</U></B>. 31 (2) Between merchants if within a reasonable time a [<B><S>writing</S></B>] <B><U>record</U></B> 32 in confirmation of the contract and sufficient against the sender is 33 received and the party receiving it has reason to know its contents, it 34 satisfies the requirements of subsection (1) against [<B><S>such</S></B>] <B><U>the</U></B> party 35 unless [<B><S>written</S></B>] notice <B><U>in a record</U></B> of objection to its contents is 36 given within ten days after it is received. 37 § 8. Section 2--202 of the uniform commercial code, as amended by 38 chapter 505 of the laws of 2014, is amended to read as follows: 39 Section 2--202. Final Written Expression: Parol or Extrinsic Evidence. 40 Terms with respect to which the confirmatory memoranda of the parties 41 agree or which are otherwise set forth in a [<B><S>writing</S></B>] <B><U>record</U></B> intended by 42 the parties as a final expression of their agreement with respect to 43 such terms as are included therein may not be contradicted by evidence 44 of any prior agreement or of a contemporaneous oral agreement but may be 45 explained or supplemented 46 (a) by course of performance, course of dealing, or usage of trade 47 (Section 1--303); and 48 (b) by evidence of consistent additional terms unless the court finds 49 the [<B><S>writing</S></B>] <B><U>record</U></B> to have been intended also as a complete and exclu- 50 sive statement of the terms of the agreement. 51 § 9. Section 2--203 of the uniform commercial code is amended to read 52 as follows: 53 Section 2--203. Seals Inoperative. 54 The affixing of a seal to a [<B><S>writing</S></B>] <B><U>record</U></B> evidencing a contract for 55 sale or an offer to buy or sell goods does not constitute the [<B><S>writing</S></B>] </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 5 1 <B><U>record</U></B> a sealed instrument and the law with respect to sealed instru- 2 ments does not apply to such a contract or offer. 3 § 10. Section 2--205 of the uniform commercial code is amended to read 4 as follows: 5 Section 2--205. Firm Offers. 6 An offer by a merchant to buy or sell goods in a signed [<B><S>writing</S></B>] 7 <B><U>record</U></B> which by its terms gives assurance that it will be held open is 8 not revocable, for lack of consideration, during the time stated or if 9 no time is stated for a reasonable time, but in no event may such period 10 of irrevocability exceed three months; but any such term of assurance on 11 a form supplied by the offeree must be separately signed by the offeror. 12 § 11. Subsection 2 of section 2--209 of the uniform commercial code is 13 amended to read as follows: 14 (2) A signed agreement which excludes modification or rescission 15 except by a signed writing <B><U>or other signed record</U></B> cannot be otherwise 16 modified or rescinded, but except as between merchants such a require- 17 ment on a form supplied by the merchant must be separately signed by the 18 other party. 19 § 12. Section 2-A-102 of the uniform commercial code, as added by 20 chapter 114 of the laws of 1994, is amended to read as follows: 21 Section 2-A-102. Scope. 22 <B><U>(1)</U></B> This Article applies to any transaction, regardless of form, that 23 creates a lease <B><U>and, in the case of a hybrid lease, it applies to the</U></B> 24 <B><U>extent provided in subsection (2)</U></B>. 25 <B><U>(2) In a hybrid lease:</U></B> 26 <B><U>(a) if the lease-of-goods aspects do not predominate:</U></B> 27 <B><U>(i) only the provisions of this article which relate primarily to the</U></B> 28 <B><U>lease-of-goods aspects of the transaction apply, and the provisions that</U></B> 29 <B><U>relate primarily to the transaction as a whole do not apply;</U></B> 30 <B><U>(ii) Section 2-A-209 applies if the lease is a finance lease; and</U></B> 31 <B><U>(iii) Section 2-A-407 applies to the promises of the lessee in a</U></B> 32 <B><U>finance lease to the extent the promises are consideration for the right</U></B> 33 <B><U>to possession and use of the leased goods; and</U></B> 34 <B><U>(b) if the lease-of-goods aspects predominate, this Article applies to</U></B> 35 <B><U>the transaction, but does not preclude application in appropriate</U></B> 36 <B><U>circumstances of other law to aspects of the lease which do not relate</U></B> 37 <B><U>to the lease of goods.</U></B> 38 § 13. Subsection 1 of section 2-A-103 of the uniform commercial code 39 is amended by adding a new paragraph (h-1) to read as follows: 40 <B><U>(h-1) "Hybrid lease" means a single transaction involving a lease of</U></B> 41 <B><U>goods and:</U></B> 42 <B><U>(i) the provision of services;</U></B> 43 <B><U>(ii) a sale of other goods; or</U></B> 44 <B><U>(iii) a sale, lease, or license of property other than goods.</U></B> 45 § 14. Section 2-A-107 of the uniform commercial code, as added by 46 chapter 114 of the laws of 1994, is amended to read as follows: 47 Section 2-A-107. Waiver or Renunciation of Claim or Right After Default. 48 Any claim or right arising out of an alleged default or breach of 49 warranty may be discharged in whole or in part without consideration by 50 a [<B><S>written</S></B>] waiver or renunciation <B><U>in a</U></B> signed [<B><S>and</S></B>] <B><U>record</U></B> delivered by 51 the aggrieved party. 52 § 15. Subsections 1, 3 and 5 of section 2-A-201 of the uniform commer- 53 cial code, as added by chapter 114 of the laws of 1994, are amended to 54 read as follows: 55 (1) A lease contract is not enforceable by way of action or defense 56 unless: </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 6 1 (a) the total payments to be made under the lease contract, 2 excluding payments for options to renew or buy, are less than 3 $1,000; or 4 (b) there is a [<B><S>writing</S></B>] <B><U>record</U></B>, signed by the party against whom 5 enforcement is sought or by that party's authorized agent, 6 sufficient to indicate that a lease contract has been made 7 between the parties and to describe the goods leased and the 8 lease term. 9 (3) A [<B><S>writing</S></B>] <B><U>record</U></B> is not insufficient because it omits or incor- 10 rectly states a term agreed upon, but the lease contract is not enforce- 11 able under subsection (1)(b) beyond the lease term and the quantity of 12 goods shown in the [<B><S>writing</S></B>] <B><U>record</U></B>. 13 (5) The lease term under a lease contract referred to in subsection 14 (4) is: 15 (a) if there is a [<B><S>writing</S></B>] <B><U>record</U></B> signed by the party against 16 whom enforcement is sought or by that party's authorized 17 agent specifying the lease term, the term so specified; 18 (b) if the party against whom enforcement is sought admits in 19 that party's pleading, testimony, or otherwise in court a 20 lease term, the term so admitted; or 21 (c) a reasonable lease term. 22 § 16. Section 2-A-202 of the uniform commercial code, as added by 23 chapter 114 of the laws of 1994, is amended to read as follows: 24 Section 2-A-202. Final Written Expression: Parol or Extrinsic Evidence. 25 Terms with respect to which the confirmatory memoranda of the parties 26 agree or which are otherwise set forth in a [<B><S>writing</S></B>] <B><U>record</U></B> intended by 27 the parties as a final expression of their agreement with respect to 28 such terms as are included therein may not be contradicted by evidence 29 of any prior agreement or of a contemporaneous oral agreement but may be 30 explained or supplemented: 31 (a) by course of dealing or usage of trade or by course of 32 performance; and 33 (b) by evidence of consistent additional terms unless the court 34 finds the [<B><S>writing</S></B>] <B><U>record</U></B> to have been intended also as a 35 complete and exclusive statement of the terms of the agree- 36 ment. 37 § 17. Section 2-A-203 of the uniform commercial code, as added by 38 chapter 114 of the laws of 1994, is amended to read as follows: 39 Section 2-A-203. Seals Inoperative. 40 The affixing of a seal to a [<B><S>writing</S></B>] <B><U>record</U></B> evidencing a lease 41 contract or an offer to enter into a lease contract does not render the 42 [<B><S>writing</S></B>] <B><U>record</U></B> a sealed instrument and the law with respect to sealed 43 instruments does not apply to the lease contract or offer. 44 § 18. Section 2-A-205 of the uniform commercial code, as added by 45 chapter 114 of the laws of 1994, is amended to read as follows: 46 Section 2-A-205. Firm Offers. 47 An offer by a merchant to lease goods to or from another person in a 48 signed [<B><S>writing</S></B>] <B><U>record</U></B> that by its terms gives assurance it will be 49 held open is not revocable, for lack of consideration, during the time 50 stated or, if no time is stated, for a reasonable time, but in no event 51 may the period of irrevocability exceed three months. Any such term of 52 assurance on a form supplied by the offeree must be separately signed by 53 the offeror. 54 § 19. Subsection 2 of section 2-A-208 of the uniform commercial code, 55 as added by chapter 114 of the laws of 1994, is amended to read as 56 follows: </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 7 1 (2) A signed lease agreement that excludes modification or rescission 2 except by a signed [<B><S>writing</S></B>] <B><U>record</U></B> may not be otherwise modified or 3 rescinded, but, except as between merchants, such a requirement on a 4 form supplied by a merchant must be separately signed by the other 5 party. 6 § 20. Paragraph (a) of subsection 1 of section 3--102 of the uniform 7 commercial code is amended to read as follows: 8 (a) "Issue" means<B><U>:</U></B> 9 <B><U>(i)</U></B> the first delivery of an instrument to a holder or a 10 remitter<B><U>; or</U></B> 11 <B><U>(ii) if agreed by the payee, the first transmission by the</U></B> 12 <B><U>drawer to the payee of an image of an item and information</U></B> 13 <B><U>derived from the item that enables the depositary bank to</U></B> 14 <B><U>collect the item by transferring or presenting under federal</U></B> 15 <B><U>law an electronic check</U></B>. 16 § 21. Paragraph (g) of subsection 1 of section 3--112 of the uniform 17 commercial code is amended and two new paragraphs (h) and (i) are added 18 to read as follows: 19 (g) a statement in a draft drawn in a set of parts (Section 20 3--801) to the effect that the order is effective only if no 21 other part has been honored[<B><S>.</S></B>]<B><U>; or</U></B> 22 <B><U>(h) a term that specifies the law that governs the promise or</U></B> 23 <B><U>order; or</U></B> 24 <B><U>(i) an undertaking to resolve in a specified forum a dispute</U></B> 25 <B><U>concerning the promise or order.</U></B> 26 § 22. Section 3--605 of the uniform commercial code is amended by 27 adding a new subsection 3 to read as follows: 28 <B><U>(3) The obligation of a party to pay a check is not discharged solely</U></B> 29 <B><U>by destruction of the check in connection with a process in which infor-</U></B> 30 <B><U>mation is extracted from the check and an image of the check is made</U></B> 31 <B><U>and, subsequently, the information and image are transmitted for</U></B> 32 <B><U>payment.</U></B> 33 § 23. Paragraph (a) of subsection 1 of section 4-A-103 of the uniform 34 commercial code, as added by chapter 208 of the laws of 1990, is amended 35 to read as follows: 36 (a) "Payment order" means an instruction of a sender to a receiv- 37 ing bank, transmitted orally[<B><S>, electronically,</S></B>] or in [<B><S>writ-</S></B> 38 <B><S>ing</S></B>] <B><U>a record</U></B>, to pay, or to cause another bank to pay, a 39 fixed or determinable amount of money to a beneficiary if: 40 (i) the instruction does not state a condition to payment to 41 the beneficiary other than time of payment, 42 (ii) the receiving bank is to be reimbursed by debiting an 43 account of, or otherwise receiving payment from, the 44 sender, and 45 (iii) the instruction is transmitted by the sender directly to 46 the receiving bank or to an agent, funds transfer system, 47 or communication system for transmittal to the receiving 48 bank. 49 § 24. Section 4-A-201 of the uniform commercial code, as added by 50 chapter 208 of the laws of 1990, is amended to read as follows: 51 Section 4-A-201. Security Procedure. 52 "Security procedure" means a procedure established by agreement of a 53 customer and a receiving bank for the purpose of (1) verifying that a 54 payment order or communication amending or cancelling a payment order is 55 that of the customer, or (2) detecting error in the transmission or the 56 content of the payment order or communication. A security procedure may </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 8 1 <B><U>impose an obligation on the receiving bank or the customer and may</U></B> 2 require the use of algorithms or other codes, identifying words [<B><S>or</S></B>]<B><U>,</U></B> 3 numbers, <B><U>symbols, sounds, biometrics,</U></B> encryption, callback procedures, 4 or similar security devices. Comparison of a signature on a payment 5 order or communication with an authorized specimen signature of the 6 customer <B><U>or requiring a payment order to be sent from a known email</U></B> 7 <B><U>address, IP address, or telephone number</U></B> is not by itself a security 8 procedure. 9 § 25. Subsections 2 and 3 of section 4-A-202 of the uniform commercial 10 code, as added by chapter 208 of the laws of 1990, are amended to read 11 as follows: 12 (2) If a bank and its customer have agreed that the authenticity of 13 payment orders issued to the bank in the name of the customer as sender 14 will be verified pursuant to a security procedure, a payment order 15 received by the receiving bank is effective as the order of the custom- 16 er, whether or not authorized, if (a) the security procedure is a 17 commercially reasonable method of providing security against unauthor- 18 ized payment orders, and (b) the bank proves that it accepted the 19 payment order in good faith and in compliance with the <B><U>bank's obli-</U></B> 20 <B><U>gations under the</U></B> security procedure and any [<B><S>written</S></B>] agreement or 21 instruction of the customer<B><U>, evidenced by a record,</U></B> restricting accept- 22 ance of payment orders issued in the name of the customer. The bank is 23 not required to follow an instruction that violates [<B><S>a written</S></B>] <B><U>an</U></B> 24 agreement with the customer<B><U>, evidenced by a record,</U></B> or notice of which 25 is not received at a time and in a manner affording the bank a reason- 26 able opportunity to act on it before the payment order is accepted. 27 (3) Commercial reasonableness of a security procedure is a question of 28 law to be determined by considering the wishes of the customer expressed 29 to the bank, the circumstances of the customer known to the bank, 30 including the size, type, and frequency of payment orders normally 31 issued by the customer to the bank, alternative security procedures 32 offered to the customer, and security procedures in general use by 33 customers and receiving banks similarly situated. A security procedure 34 is deemed to be commercially reasonable if (a) the security procedure 35 was chosen by the customer after the bank offered, and the customer 36 refused, a security procedure that was commercially reasonable for that 37 customer, and (b) the customer expressly agreed in [<B><S>writing</S></B>] <B><U>a record</U></B> to 38 be bound by any payment order, whether or not authorized, issued in its 39 name and accepted by the bank in compliance with the <B><U>bank's obligations</U></B> 40 <B><U>under the</U></B> security procedure chosen by the customer. 41 § 26. Subsection 1 of section 4-A-203 of the uniform commercial code, 42 as added by chapter 208 of the laws of 1990, is amended to read as 43 follows: 44 (1) If an accepted payment order is not, under subsection (1) of 45 Section 4-A-202, an authorized order of a customer identified as sender, 46 but is effective as an order of the customer pursuant to subsection (2) 47 of Section 4-A-202, the following rules apply: 48 (a) By express [<B><S>written</S></B>] agreement <B><U>evidenced by a record</U></B>, the 49 receiving bank may limit the extent to which it is entitled 50 to enforce or retain payment of the payment order. 51 (b) The receiving bank is not entitled to enforce or retain 52 payment of the payment order if the customer proves that the 53 order was not caused, directly or indirectly, by a person (i) 54 entrusted at any time with duties to act for the customer 55 with respect to payment orders or the security procedure, or 56 (ii) who obtained access to transmitting facilities of the </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 9 1 customer or who obtained, from a source controlled by the 2 customer and without authority of the receiving bank, infor- 3 mation facilitating breach of the security procedure, regard- 4 less of how the information was obtained or whether the 5 customer was at fault. Information includes any access 6 device, computer software, or the like. 7 § 27. Subsection 3 of section 4-A-207 of the uniform commercial code, 8 as added by chapter 208 of the laws of 1990, is amended to read as 9 follows: 10 (3) If (i) a payment order described in subsection (2) is accepted, 11 (ii) the originator's payment order described the beneficiary inconsist- 12 ently by name and number, and (iii) the beneficiary's bank pays the 13 person identified by number as permitted by paragraph (a) of subsection 14 (2), the following rules apply: 15 (a) If the originator is a bank, the originator is obliged to pay 16 its order. 17 (b) If the originator is not a bank and proves that the person 18 identified by number was not entitled to receive payment from 19 the originator, the originator is not obliged to pay its 20 order unless the originator's bank proves that the origina- 21 tor, before acceptance of the originator's order, had notice 22 that payment of a payment order issued by the originator 23 might be made by the beneficiary's bank on the basis of an 24 identifying or bank account number even if it identifies a 25 person different from the named beneficiary. Proof of notice 26 may be made by any admissible evidence. The originator's bank 27 satisfies the burden of proof if it proves that the origina- 28 tor, before the payment order was accepted, signed a [<B><S>writ-</S></B> 29 <B><S>ing</S></B>] <B><U>record</U></B> stating the information to which the notice 30 relates. 31 § 28. Paragraph (b) of subsection 2 of section 4-A-208 of the uniform 32 commercial code, as added by chapter 208 of the laws of 1990, is amended 33 to read as follows: 34 (b) If the sender is not a bank and the receiving bank proves 35 that the sender, before the payment order was accepted, had 36 notice that the receiving bank might rely on the number as 37 the proper identification of the intermediary or benefici- 38 ary's bank even if it identifies a person different from the 39 bank identified by name, the rights and obligations of the 40 sender and the receiving bank are governed by paragraph (a) 41 of subsection (2), as though the sender were a bank. Proof of 42 notice may be made by any admissible evidence. The receiving 43 bank satisfies the burden of proof if it proves that the 44 sender, before the payment order was accepted, signed a 45 [<B><S>writing</S></B>] <B><U>record</U></B> stating the information to which the notice 46 relates. 47 § 29. Subsection 1 of section 4-A-210 of the uniform commercial code, 48 as added by chapter 208 of the laws of 1990, is amended to read as 49 follows: 50 (1) A payment order is rejected by the receiving bank by a notice of 51 rejection transmitted to the sender orally, [<B><S>electronically,</S></B>] or in 52 [<B><S>writing</S></B>] <B><U>a record</U></B>. A notice of rejection need not use any particular 53 words and is sufficient if it indicates that the receiving bank is 54 rejecting the order or will not execute or pay the order. Rejection is 55 effective when the notice is given if transmission is by a means that is 56 reasonable in the circumstances. If notice of rejection is given by a </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 10 1 means that is not reasonable, rejection is effective when the notice is 2 received. If an agreement of the sender and receiving bank establishes 3 the means to be used to reject a payment order, (i) any means complying 4 with the agreement is reasonable and (ii) any means not complying is not 5 reasonable unless no significant delay in receipt of the notice resulted 6 from the use of the noncomplying means. 7 § 30. Subsection 1 of section 4-A-211 of the uniform commercial code, 8 as added by chapter 208 of the laws of 1990, is amended to read as 9 follows: 10 (1) A communication of the sender of a payment order cancelling or 11 amending the order may be transmitted to the receiving bank orally[<B><S>,</S></B> 12 <B><S>electronically,</S></B>] or in [<B><S>writing</S></B>] <B><U>a record</U></B>. If a security procedure is in 13 effect between the sender and the receiving bank, the communication is 14 not effective to cancel or amend the order unless the communication is 15 verified pursuant to the security procedure or the bank agrees to the 16 cancellation or amendment. 17 § 31. Subsections 3 and 4 of section 4-A-305 of the uniform commercial 18 code, as added by chapter 208 of the laws of 1990, are amended to read 19 as follows: 20 (3) In addition to the amounts payable under subsections (1) and (2), 21 damages, including consequential damages, are recoverable to the extent 22 provided in an express [<B><S>written</S></B>] agreement of the receiving bank<B><U>,</U></B> 23 <B><U>evidenced by a record</U></B>. 24 (4) If a receiving bank fails to execute a payment order it was 25 obliged by express agreement to execute, the receiving bank is liable to 26 the sender for its expenses in the transaction and for incidental 27 expenses and interest losses resulting from the failure to execute. 28 Additional damages, including consequential damages, are recoverable to 29 the extent provided in an express [<B><S>written</S></B>] agreement of the receiving 30 bank<B><U>, evidenced by a record</U></B>, but are not otherwise recoverable. 31 § 32. Section 5--104 of the uniform commercial code, as added by chap- 32 ter 471 of the laws of 2000, is amended to read as follows: 33 Section 5--104. Formal requirements. 34 A letter of credit, confirmation, advice, transfer, amendment, or 35 cancellation may be issued in any form that is a <B><U>signed</U></B> record [<B><S>and is</S></B> 36 <B><S>authenticated:</S></B> 37 <B><S>(a) by a signature, or</S></B> 38 <B><S>(b) in accordance with the agreement of the parties or the standard</S></B> 39 <B><S>practice referred to in subsection (e) of section 5--108</S></B>]. 40 § 33. Section 5--116 of the uniform commercial code, as added by chap- 41 ter 471 of the laws of 2000, is amended to read as follows: 42 Section 5--116. Choice of law and forum. 43 (a) The liability of an issuer, nominated person, or adviser for 44 action or omission is governed by the law of the jurisdiction chosen by 45 an agreement in the form of a record signed [<B><S>or otherwise authenticated</S></B>] 46 by the affected parties [<B><S>in the manner provided in section 5--104</S></B>] or by 47 a provision in the person's letter of credit, confirmation, or other 48 undertaking. The jurisdiction whose law is chosen need not bear any 49 relation to the transaction. 50 (b) Unless subsection (a) of this section applies, the liability of an 51 issuer, nominated person, or adviser for action or omission is governed 52 by the law of the jurisdiction in which the person is located. The 53 person is considered to be located at the address indicated in the 54 person's undertaking. If more than one address is indicated, the person 55 is considered to be located at the address from which the person's 56 undertaking was issued. For the purpose of jurisdiction, choice of law, </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 11 1 and recognition of interbranch letters of credit, but not enforcement of 2 a [<B><S>judgement</S></B>] <B><U>judgment</U></B>, all branches of a bank are considered separate 3 juridical entities and a bank is considered to be located at the place 4 where its relevant branch is considered to be located under [<B><S>this</S></B>] 5 subsection <B><U>(c)</U></B>. 6 (c) <B><U>A branch of a bank is considered to be located at the address</U></B> 7 <B><U>indicated in the branch's undertaking. If more than one address is</U></B> 8 <B><U>indicated, the branch is considered to be located at the address from</U></B> 9 <B><U>which the undertaking was issued.</U></B> 10 <B><U>(d)</U></B> Except as otherwise provided in this subsection, the liability of 11 an issuer, nominated person, or adviser is governed by any rules of 12 custom or practice, such as the uniform customs and practice for docu- 13 mentary credits, to which the letter of credit, confirmation, or other 14 undertaking is expressly made subject. If (1) this article would govern 15 the liability of an issuer, nominated person, or adviser under 16 subsection (a) or (b) of this section, (2) the relevant undertaking 17 incorporates rules of custom or practice, and (3) there is conflict 18 between this article and those rules as applied to that undertaking, 19 those rules govern except to the extent of any conflict with the nonvar- 20 iable provisions specified in subsection (c) of section 5--103. 21 [<B><S>(d)</S></B>] <B><U>(e)</U></B> If there is conflict between this article and article 3, 4, 22 4-A or 9, this article governs. 23 [<B><S>(e)</S></B>] <B><U>(f)</U></B> The forum for settling disputes arising out of an undertak- 24 ing within this article may be chosen in the manner and with the binding 25 effect that governing law may be chosen in accordance with subsection 26 (a) of this section. 27 § 34. Paragraph 11 of subsection (a) of section 7--102 of the uniform 28 commercial code, as added by chapter 505 of the laws of 2014, is amended 29 to read as follows: 30 (11) [<B><S>"Sign" means, with present intent to authenticate or adopt a</S></B> 31 <B><S>record:</S></B> 32 <B><S>(A) to execute or adopt a tangible symbol; or</S></B> 33 <B><S>(B) to attach to or logically associate with the record an electronic</S></B> 34 <B><S>sound, symbol, or process</S></B>] <B><U>Reserved</U></B>. 35 § 35. Section 7--106 of the uniform commercial code, as added by chap- 36 ter 505 of the laws of 2014, is amended to read as follows: 37 Section 7--106. Control of Electronic Document of Title. 38 (a) A person has control of an electronic document of title if a 39 system employed for evidencing the transfer of interests in the elec- 40 tronic document reliably establishes that person as the person to which 41 the electronic document was issued or transferred. 42 (b) A system satisfies subsection (a), and a person [<B><S>is deemed to</S></B> 43 <B><S>have</S></B>] <B><U>has</U></B> control of an electronic document of title, if the document is 44 created, stored and [<B><S>assigned</S></B>] <B><U>transferred</U></B> in [<B><S>such</S></B>] a manner that: 45 (1) a single authoritative copy of the document exists which is 46 unique, identifiable, and, except as otherwise provided in paragraphs 47 (4), (5), and (6), unalterable; 48 (2) the authoritative copy identifies the person asserting control as: 49 (A) the person to which the document was issued; or 50 (B) if the authoritative copy indicates that the document has been 51 transferred, the person to which the document was most recently trans- 52 ferred; 53 (3) the authoritative copy is communicated to and maintained by the 54 person asserting control or its designated custodian; </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 12 1 (4) copies or amendments that add or change an identified [<B><S>assignee</S></B>] 2 <B><U>transferee</U></B> of the authoritative copy can be made only with the consent 3 of the person asserting control; 4 (5) each copy of the authoritative copy and any copy of a copy is 5 readily identifiable as a copy that is not the authoritative copy; and 6 (6) any amendment of the authoritative copy is readily identifiable as 7 authorized or unauthorized. 8 <B><U>(c) A system satisfies subsection (a), and a person has control of an</U></B> 9 <B><U>electronic document of title, if an authoritative electronic copy of the</U></B> 10 <B><U>document, a record attached to or logically associated with the elec-</U></B> 11 <B><U>tronic copy, or a system in which the electronic copy is recorded:</U></B> 12 <B><U>(1) enables the person readily to identify each electronic copy as</U></B> 13 <B><U>either an authoritative copy or a nonauthoritative copy;</U></B> 14 <B><U>(2) enables the person readily to identify itself in any way, includ-</U></B> 15 <B><U>ing by name, identifying number, cryptographic key, office, or account</U></B> 16 <B><U>number, as the person to which each authoritative electronic copy was</U></B> 17 <B><U>issued or transferred; and</U></B> 18 <B><U>(3) gives the person exclusive power, subject to subsection (d), to:</U></B> 19 <B><U>(A) prevent others from adding or changing the person to which each</U></B> 20 <B><U>authoritative electronic copy has been issued or transferred; and</U></B> 21 <B><U>(B) transfer control of each authoritative electronic copy.</U></B> 22 <B><U>(d) Subject to subsection (e), a power is exclusive under subsection</U></B> 23 <B><U>(c) (3) (A) even if:</U></B> 24 <B><U>(1) the authoritative electronic copy, a record attached to or</U></B> 25 <B><U>logically associated with the authoritative electronic copy, or a system</U></B> 26 <B><U>in which the authoritative electronic copy is recorded limits the use of</U></B> 27 <B><U>the document of title or has a protocol that is programmed to cause a</U></B> 28 <B><U>change, including a transfer or loss of control; or</U></B> 29 <B><U>(2) the power is shared with another person.</U></B> 30 <B><U>(e) A power of a person is not shared with another person under</U></B> 31 <B><U>subsection (d) (2) and the person's power is not exclusive if:</U></B> 32 <B><U>(1) the person can exercise the power only if the power also is exer-</U></B> 33 <B><U>cised by the other person; and</U></B> 34 <B><U>(2) the other person:</U></B> 35 <B><U>(A) can exercise the power without exercise of the power by the</U></B> 36 <B><U>person; or</U></B> 37 <B><U>(B) is the transferor to the person of an interest in the document of</U></B> 38 <B><U>title.</U></B> 39 <B><U>(f) If a person has the powers specified in subsection (c) (3) (A) and</U></B> 40 <B><U>(B), the powers are presumed to be exclusive.</U></B> 41 <B><U>(g) A person has control of an electronic document of title if another</U></B> 42 <B><U>person, other than the transferor to the person of an interest in the</U></B> 43 <B><U>document:</U></B> 44 <B><U>(1) has control of the document and acknowledges that it has control</U></B> 45 <B><U>on behalf of the person; or</U></B> 46 <B><U>(2) obtains control of the document after having acknowledged that it</U></B> 47 <B><U>will obtain control of the document on behalf of the person.</U></B> 48 <B><U>(h) A person that has control under this section is not required to</U></B> 49 <B><U>acknowledge that it has control on behalf of another person.</U></B> 50 <B><U>(i) If a person acknowledges that it has or will obtain control on</U></B> 51 <B><U>behalf of another person, unless the person otherwise agrees or law</U></B> 52 <B><U>other than this article or Article 9 otherwise provides, the person does</U></B> 53 <B><U>not owe any duty to the other person and is not required to confirm the</U></B> 54 <B><U>acknowledgment to any other person.</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 13 1 § 36. Paragraph 6 of subsection (a) of section 8--102 of the uniform 2 commercial code, as added by chapter 566 of the laws of 1997, is amended 3 to read as follows: 4 (6) "Communicate" means to: 5 (i) send a signed [<B><S>writing</S></B>] <B><U>record</U></B>; or 6 (ii) transmit information by any mechanism agreed upon by 7 the persons transmitting and receiving the information. 8 § 37. Subsections (b) and (e) of section 8--102 of the uniform commer- 9 cial code, subsection (b) as added by chapter 566 of the laws of 1997 10 and subsection (e) as added by chapter 84 of the laws of 2001, are 11 amended to read as follows: 12 (b) Other definitions applying to this Article and the sections in 13 which they appear are: 14 "Appropriate person". Section 8--107. 15 "Control". Section 8--106. 16 <B><U>"Controllable account".</U></B> <B><U>Section 9--102.</U></B> 17 <B><U>"Controllable electronic record".</U></B> <B><U>Section 12--102.</U></B> 18 <B><U>"Controllable payment intangible".</U></B> <B><U>Section 9--102.</U></B> 19 "Delivery". Section 8--301. 20 "Investment company security". Section 8--103. 21 "Issuer". Section 8--201. 22 "Overissue". Section 8--210. 23 "Protected purchaser". Section 8--303. 24 "Securities account". Section 8--501. 25 (e) The following definitions in Article 9 apply to this article: 26 Cooperative interest Section [<B><S>9--102(a)(27-b)</S></B>] 27 <B><U>9--102(a)(27-d)</U></B> 28 Cooperative organization Section [<B><S>9--102(a)(27-c)</S></B>] 29 <B><U>9--102(a)(27-e)</U></B> 30 Cooperative record Section [<B><S>9--102(a)(27-e)</S></B>] 31 <B><U>9--102(a)(27-g)</U></B> 32 § 38. Section 8--103 of the uniform commercial code is amended by 33 adding a new subsection (i) to read as follows: 34 <B><U>(i) A controllable account, controllable electronic record, or</U></B> 35 <B><U>controllable payment intangible is not a financial asset unless Section</U></B> 36 <B><U>8--102(a)(9)(iii) applies.</U></B> 37 § 39. Subsection (d) of section 8--106 of the uniform commercial code, 38 as amended by chapter 84 of the laws of 2001, is amended and two new 39 subsections (j) and (k) are added to read as follows: 40 (d) A purchaser has "control" of a security entitlement if: 41 (1) the purchaser becomes the entitlement holder; 42 (2) the securities intermediary has agreed that it will comply 43 with entitlement orders originated by the purchaser without 44 further consent by the entitlement holder; or 45 (3) another person<B><U>, other than the transferor to the purchaser of</U></B> 46 <B><U>an interest in the security entitlement:</U></B> 47 [<B><S>has control of the security entitlement on behalf of the</S></B> 48 <B><S>purchaser or, having previously acquired control of the secu-</S></B> 49 <B><S>rity entitlement, acknowledges that it has control on behalf</S></B> 50 <B><S>of the purchaser.</S></B>] 51 <B><U>(A) has control of the security entitlement and acknowledges that</U></B> 52 <B><U>it has control on behalf of the purchaser; or</U></B> 53 <B><U>(B) obtains control of the security entitlement after having</U></B> 54 <B><U>acknowledged that it will obtain control of the security</U></B> 55 <B><U>entitlement on behalf of the purchaser.</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 14 1 <B><U>(j) A person that has control under this section is not required to</U></B> 2 <B><U>acknowledge that it has control on behalf of a purchaser.</U></B> 3 <B><U>(k) If a person acknowledges that it has or will obtain control on</U></B> 4 <B><U>behalf of a purchaser, unless the person otherwise agrees or law other</U></B> 5 <B><U>than this article or Article 9 otherwise provides, the person does not</U></B> 6 <B><U>owe any duty to the purchaser and is not required to confirm the</U></B> 7 <B><U>acknowledgment to any other person.</U></B> 8 § 40. Section 8--110 of the uniform commercial code is amended by 9 adding a new subsection (g) to read as follows: 10 <B><U>(g) The local law of the issuer's jurisdiction or the securities</U></B> 11 <B><U>intermediary's jurisdiction governs a matter or transaction specified in</U></B> 12 <B><U>subsection (a) or (b) even if the matter or transaction does not bear</U></B> 13 <B><U>any relation to the jurisdiction.</U></B> 14 § 41. Subsection (b) of section 8--303 of the uniform commercial code, 15 as added by chapter 566 of the laws of 1997, is amended to read as 16 follows: 17 (b) [<B><S>In addition to acquiring the rights of a purchaser, a</S></B>] <B><U>A</U></B> 18 protected purchaser also acquires its interest in the security free of 19 any adverse claim. 20 § 42. Paragraphs 2, 3, 4, 7, 11, 27-a, 27-b, 27-c, 27-d, 27-e, 27-f, 21 31, 42, 47, 61, 66, 66-a, 75 and 79 of subsection (a) of section 9--102 22 of the uniform commercial code, as amended by chapter 505 of the laws of 23 2014, are amended, and five new paragraphs 7-a, 7-b, 31-a, 54-a and 79-a 24 are added to read as follows: 25 (2) "Account", except as used in "account for", <B><U>"account state-</U></B> 26 <B><U>ment", "account to", "commodity account" in paragraph (14),</U></B> 27 <B><U>"customer account", "deposit account" in paragraph (29), "on</U></B> 28 <B><U>account of", and "statement of account",</U></B> means a right to 29 payment of a monetary obligation, whether or not earned by 30 performance, (i) for property that has been or is to be sold, 31 leased, licensed, assigned, or otherwise disposed of, (ii) 32 for services rendered or to be rendered, (iii) for a policy 33 of insurance issued or to be issued, (iv) for a secondary 34 obligation incurred or to be incurred, (v) for energy 35 provided or to be provided, (vi) for the use or hire of a 36 vessel under a charter or other contract, (vii) arising out 37 of the use of a credit or charge card or information 38 contained on or for use with the card, or (viii) as winnings 39 in a lottery or other game of chance operated or sponsored by 40 a state, governmental unit of a State, or person licensed or 41 authorized to operate the game by a State or governmental 42 unit of a State. The term includes <B><U>controllable accounts and</U></B> 43 health-care-insurance receivables. The term does not include 44 (i) [<B><S>rights to payment evidenced by</S></B>] chattel paper [<B><S>or an</S></B> 45 <B><S>instrument</S></B>], (ii) commercial tort claims, (iii) deposit 46 accounts, (iv) investment property, (v) letter-of-credit 47 rights or letters of credit, [<B><S>or</S></B>] (vi) rights to payment for 48 money or funds advanced or sold, other than rights arising 49 out of the use of a credit or charge card or information 50 contained on or for use with the card<B><U>, or (vii) rights to</U></B> 51 <B><U>payment evidences by an instrument</U></B>. 52 (3) "Account debtor" means a person obligated on an account, 53 chattel paper, or general intangible. The term does not 54 include persons obligated to pay a negotiable instrument, 55 even if the instrument [<B><S>constitutes part of</S></B>] <B><U>evidences</U></B> chat- 56 tel paper. </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 15 1 (4) "Accounting", except as used in "accounting for", means a 2 record: 3 (A) [<B><S>authenticated</S></B>] <B><U>signed</U></B> by a secured party; 4 (B) indicating the aggregate unpaid secured obligations as of 5 a date not more than 35 days earlier or 35 days later 6 than the date of the record; and 7 (C) identifying the components of the obligations in reason- 8 able detail. 9 (7) [<B><S>"Authenticate" means:</S></B> 10 <B><S>(A) to sign; or</S></B> 11 <B><S>(B) with present intent to adopt or accept a record, to</S></B> 12 <B><S>attach to or logically associate with the record an elec-</S></B> 13 <B><S>tronic sound, symbol, or process</S></B>] <B><U>Reserved</U></B>. 14 <B><U>(7-a) "Assignee", except as used in "assignee for benefit of</U></B> 15 <B><U>creditors", means a person (A) in whose favor a securi-</U></B> 16 <B><U>ty interest that secures an obligation is created or</U></B> 17 <B><U>provided for under a security agreement, whether or not</U></B> 18 <B><U>the obligation is outstanding or (B) to which an account,</U></B> 19 <B><U>chattel paper, payment intangible, or promissory note has</U></B> 20 <B><U>been sold. The term includes a person to which a security</U></B> 21 <B><U>interest has been transferred by a secured party.</U></B> 22 <B><U>(7-b) "Assignor" means a person that (A) under a security</U></B> 23 <B><U>agreement creates or provides for a security interest that</U></B> 24 <B><U>secures an obligation or (B) sells an account, chattel paper,</U></B> 25 <B><U>payment intangible, or promissory note. The term includes a</U></B> 26 <B><U>secured party that has transferred a security interest to</U></B> 27 <B><U>another person.</U></B> 28 (11) "Chattel paper" means [<B><S>a record or records that evidence</S></B> 29 <B><S>both a monetary obligation and a security interest in specif-</S></B> 30 <B><S>ic goods, a security interest in specific goods and software</S></B> 31 <B><S>used in the goods, a security interest in specific goods and</S></B> 32 <B><S>license of software used in the goods, a lease of specific</S></B> 33 <B><S>goods, or a lease of specific goods and license of software</S></B> 34 <B><S>used in the goods. In this paragraph, "monetary obligation"</S></B> 35 <B><S>means a monetary obligation secured by the goods or owed</S></B> 36 <B><S>under a lease of the goods and includes a monetary obligation</S></B> 37 <B><S>with respect to software used in the goods. The term does not</S></B> 38 <B><S>include (i) charters or other contracts involving the use or</S></B> 39 <B><S>hire of a vessel or (ii) records that evidence a right to</S></B> 40 <B><S>payment arising out of the use of a credit or charge card or</S></B> 41 <B><S>information contained on or for use with the card. If a tran-</S></B> 42 <B><S>saction is evidenced by records that include an instrument or</S></B> 43 <B><S>series of instruments, the group of records taken together</S></B> 44 <B><S>constitutes chattel paper.</S></B>]<B><U>:</U></B> 45 <B><U>(A) a right to payment of a monetary obligation secured by</U></B> 46 <B><U>specific goods, if the right to payment and security</U></B> 47 <B><U>agreement are evidenced by a record; or</U></B> 48 <B><U>(B) a right to payment of a monetary obligation owed by a</U></B> 49 <B><U>lessee under a lease agreement with respect to specific</U></B> 50 <B><U>goods and a monetary obligation owed by the lessee in</U></B> 51 <B><U>connection with the transaction giving rise to the lease,</U></B> 52 <B><U>if:</U></B> 53 <B><U>(i) the right to payment and lease agreement are evidenced by</U></B> 54 <B><U>a record; and</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 16 1 <B><U>(ii) the predominant purpose of the transaction giving rise</U></B> 2 <B><U>to the lease was to give the lessee the right to</U></B> 3 <B><U>possession and use of the goods; but</U></B> 4 <B><U>(C) does not include a right to payment arising out of a</U></B> 5 <B><U>charter or other contract involving the use or hire of a</U></B> 6 <B><U>vessel or a right to payment arising out of the use of a</U></B> 7 <B><U>credit or charge card or information contained on or for</U></B> 8 <B><U>use with the card.</U></B> 9 (27-a) <B><U>"Controllable account" means an account evidenced by a</U></B> 10 <B><U>controllable electronic record that provides that the</U></B> 11 <B><U>account debtor undertakes to pay the person that has</U></B> 12 <B><U>control under Section 12--105 of the controllable elec-</U></B> 13 <B><U>tronic record.</U></B> 14 <B><U>(27-b) "Controllable payment intangible" means a payment intangi-</U></B> 15 <B><U>ble evidenced by a controllable electronic record that</U></B> 16 <B><U>provides that the account debtor undertakes to pay the</U></B> 17 <B><U>person that has control under Section 12--105 of the</U></B> 18 <B><U>controllable electronic record.</U></B> 19 <B><U>(27-c)</U></B> "Cooperative addendum" means a record that satisfies 20 Section 9--502(e). 21 [<B><S>(27-b)</S></B>] <B><U>(27-d)</U></B> "Cooperative interest" means an ownership inter- 22 est in a cooperative organization, which interest, when 23 created, is coupled with possessory rights of a proprie- 24 tary nature in identified physical space belonging to the 25 cooperative organization. A subsequent termination of the 26 possessory rights shall not cause an ownership interest to 27 cease being a cooperative interest. 28 [<B><S>(27-c)</S></B>] <B><U>(27-e)</U></B> "Cooperative organization" means an organization 29 which has as its principal asset an interest in real prop- 30 erty in this state and in which organization all ownership 31 interests are cooperative interests. 32 [<B><S>(27-d)</S></B>] <B><U>(27-f)</U></B> "Cooperative organization security interest" 33 means a security interest which is in a cooperative inter- 34 est, is in favor of the cooperative organization, is 35 created by the cooperative record, and secures only obli- 36 gations incident to ownership of that cooperative inter- 37 est. 38 [<B><S>(27-e)</S></B>] <B><U>(27-g)</U></B> "Cooperative record" means those records which, 39 as a whole, evidence cooperative interests and define the 40 mutual rights and obligations of the owners of the cooper- 41 ative interests and the cooperative organization. 42 [<B><S>(27-f)</S></B>] <B><U>(27-h)</U></B> "Cooperative unit" means the physical space asso- 43 ciated with a cooperative interest. 44 (31) [<B><S>"Electronic chattel paper" means chattel paper evidenced by</S></B> 45 <B><S>a record or records consisting of information stored in an</S></B> 46 <B><S>electronic medium.</S></B>] <B><U>Reserved.</U></B> 47 <B><U>(31-a) "Electronic money" means money in an electronic form.</U></B> 48 (42) "General intangible" means any personal property, including 49 things in action, other than accounts, chattel paper, 50 commercial tort claims, deposit accounts, documents, goods, 51 instruments, investment property, letter-of-credit rights, 52 letters of credit, money, and oil, gas, or other minerals 53 before extraction. The term includes <B><U>controllable electronic</U></B> 54 <B><U>records,</U></B> payment intangibles and software. 55 (47) "Instrument" means a negotiable instrument or any other 56 writing that evidences a right to the payment of a monetary </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 17 1 obligation, is not itself a security agreement or lease, and 2 is of a type that in ordinary course of business is trans- 3 ferred by delivery with any necessary indorsement or assign- 4 ment. The term does not include (i) investment property, 5 (ii) letters of credit, [<B><S>or</S></B>] (iii) writings that evidence a 6 right to payment arising out of the use of a credit or 7 charge card or information contained on or for use with the 8 card<B><U>, or (iv) writings that evidence chattel paper</U></B>. 9 <B><U>(54-a) "Money" has the same meaning as in Section 1--201(b)(24),</U></B> 10 <B><U>but does not include (A) a deposit account or (B) money in</U></B> 11 <B><U>an electronic form that cannot be subjected to control under</U></B> 12 <B><U>Section 9-105A</U></B>. 13 (61) "Payment intangible" means a general intangible under which 14 the account debtor's principal obligation is a monetary 15 obligation. <B><U>The term includes a controllable payment intan-</U></B> 16 <B><U>gible.</U></B> 17 (66) "Proposal" means a record [<B><S>authenticated</S></B>] <B><U>signed</U></B> by a 18 secured party which includes the terms on which the secured 19 party is willing to accept collateral in full or partial 20 satisfaction of the obligation it secures pursuant to 21 Sections 9--620, 9--621, and 9--622. 22 (66-a) "Prove" with respect to a fact means to meet the burden of 23 establishing the fact (Section [<B><S>1-201(8)</S></B>] <B><U>1--201(b)(8)</U></B>). 24 (75) [<B><S>"Send", in connection with a record or notification,</S></B> 25 <B><S>means:</S></B> 26 <B><S>(A) to deposit in the mail, deliver for transmission, or</S></B> 27 <B><S>transmit by any other usual means of communication, with</S></B> 28 <B><S>postage or cost of transmission provided for, addressed</S></B> 29 <B><S>to any address reasonable under the circumstances; or</S></B> 30 <B><S>(B) to cause the record or notification to be received within</S></B> 31 <B><S>the time that it would have been received if properly</S></B> 32 <B><S>sent under subparagraph (A).</S></B>] <B><U>Reserved.</U></B> 33 (79) [<B><S>"Tangible chattel paper" means chattel paper evidenced by</S></B> 34 <B><S>a record or records consisting of information that is</S></B> 35 <B><S>inscribed on a tangible medium.</S></B>] <B><U>Reserved.</U></B> 36 <B><U>(79-a) "Tangible money" means money in a tangible form.</U></B> 37 § 43. Subsection (b) of section 9--102 of the uniform commercial code 38 is amended by adding three new definitions Controllable electronic 39 record, Protected purchaser and Qualifying purchaser in alphabetical 40 order to read as follows: 41 <B><U>"Controllable electronic record"</U></B> <B><U>Section 12--102.</U></B> 42 <B><U>"Protected purchaser"</U></B> <B><U>Section 8--303.</U></B> 43 <B><U>"Qualifying purchaser"</U></B> <B><U>Section 12--102.</U></B> 44 § 44. Paragraphs 2 and 5 of subsection (a) of section 9--104 of the 45 uniform commercial code, as amended by chapter 505 of the laws of 2014, 46 are amended to read as follows: 47 (2) the debtor, secured party, and bank have agreed in [<B><S>an</S></B> 48 <B><S>authenticated</S></B>] <B><U>a signed</U></B> record that the bank will comply with 49 instructions originated by the secured party directing dispo- 50 sition of the funds in the deposit account without further 51 consent by the debtor; 52 (5) another person<B><U>, other than the debtor:</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 18 1 <B><U>(A)</U></B> has control of the deposit account <B><U>and acknowledges that it has</U></B> 2 <B><U>control</U></B> on behalf of the secured party [<B><S>or, having previously acquired</S></B>]<B><U>;</U></B> 3 <B><U>or</U></B> 4 <B><U>(B) obtains</U></B> control of the deposit account[<B><S>, acknowledges</S></B>] <B><U>after</U></B> 5 <B><U>having acknowledged</U></B> that it [<B><S>has</S></B>] <B><U>will obtain</U></B> control <B><U>of the deposit</U></B> 6 <B><U>account</U></B> on behalf of the secured party. 7 § 45. Section 9--105 of the uniform commercial code, as added by chap- 8 ter 84 of the laws of 2001, is amended to read as follows: 9 Section 9--105. Control of Electronic <B><U>Copy of Record Evidencing</U></B> Chattel 10 Paper. 11 [<B><S>A secured party has control of electronic chattel paper if the record</S></B> 12 <B><S>or records comprising the chattel paper are created, stored, and</S></B> 13 <B><S>assigned in such a manner that:</S></B>] 14 <B><U>(a) General rule: control of electronic copy of record evidencing</U></B> 15 <B><U>chattel paper. A purchaser has control of an authoritative electronic</U></B> 16 <B><U>copy of a record evidencing chattel paper if a system employed for</U></B> 17 <B><U>evidencing the assignment of interests in the chattel paper reliably</U></B> 18 <B><U>establishes the purchaser as the person to which the authoritative elec-</U></B> 19 <B><U>tronic copy was assigned.</U></B> 20 <B><U>(b) Single authoritative copy. A system satisfies subsection (a) if</U></B> 21 <B><U>the record or records evidencing the chattel paper are created, stored,</U></B> 22 <B><U>and assigned in a manner that:</U></B> 23 (1) a single authoritative copy of the record or records exists 24 which is unique, identifiable and, except as otherwise 25 provided in paragraphs (4), (5), and (6), unalterable; 26 (2) the authoritative copy identifies the secured party as the 27 assignee of the record or records; 28 (3) the authoritative copy is communicated to and maintained by 29 the secured party or its designated custodian; 30 (4) copies or revisions that add or change an identified assignee 31 of the authoritative copy can be made only with the partic- 32 ipation of the secured party; 33 (5) each copy of the authoritative copy and any copy of a copy is 34 readily identifiable as a copy that is not the authoritative 35 copy; and 36 (6) any revision of the authoritative copy is readily identifi- 37 able as an authorized or unauthorized revision. 38 <B><U>(c) One or more authoritative copies. A system satisfies subsection</U></B> 39 <B><U>(a), and a purchaser has control of an authoritative electronic copy of</U></B> 40 <B><U>a record evidencing chattel paper, if the electronic copy, a record</U></B> 41 <B><U>attached to or logically associated with the electronic copy, or a</U></B> 42 <B><U>system in which the electronic copy is recorded:</U></B> 43 <B><U>(1) enables the purchaser readily to identify each electronic copy as</U></B> 44 <B><U>either an authoritative copy or a nonauthoritative copy;</U></B> 45 <B><U>(2) enables the purchaser readily to identify itself in any way,</U></B> 46 <B><U>including by name, identifying number, cryptographic key, office, or</U></B> 47 <B><U>account number, as the assignee of the authoritative electronic copy;</U></B> 48 <B><U>and</U></B> 49 <B><U>(3) gives the purchaser exclusive power, subject to subsection (d),</U></B> 50 <B><U>to:</U></B> 51 <B><U>(A) prevent others from adding or changing an identified assignee of</U></B> 52 <B><U>the authoritative electronic copy; and</U></B> 53 <B><U>(B) transfer control of the authoritative electronic copy.</U></B> 54 <B><U>(d) Meaning of exclusive. Subject to subsection (e), a power is exclu-</U></B> 55 <B><U>sive under subsection (c)(3)(A) and (B) even if:</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 19 1 <B><U>(1) the authoritative electronic copy, a record attached to or</U></B> 2 <B><U>logically associated with the authoritative electronic copy, or a system</U></B> 3 <B><U>in which the authoritative electronic copy is recorded limits the use of</U></B> 4 <B><U>the authoritative electronic copy or has a protocol programmed to cause</U></B> 5 <B><U>a change, including a transfer or loss of control; or</U></B> 6 <B><U>(2) the power is shared with another person.</U></B> 7 <B><U>(e) When power not shared with another person. A power of a purchaser</U></B> 8 <B><U>is not shared with another person under subsection (d)(2) and the</U></B> 9 <B><U>purchaser's power is not exclusive if:</U></B> 10 <B><U>(1) the purchaser can exercise the power only if the power also is</U></B> 11 <B><U>exercised by the other person; and</U></B> 12 <B><U>(2) the other person:</U></B> 13 <B><U>(A) can exercise the power without exercise of the power by the</U></B> 14 <B><U>purchaser; or</U></B> 15 <B><U>(B) is the transferor to the purchaser of an interest in the chattel</U></B> 16 <B><U>paper.</U></B> 17 <B><U>(f) Presumption of exclusivity of certain powers. If a purchaser has</U></B> 18 <B><U>the powers specified in subsection (c)(3)(A) and (B), the powers are</U></B> 19 <B><U>presumed to be exclusive.</U></B> 20 <B><U>(g) Obtaining control through another person. A purchaser has control</U></B> 21 <B><U>of an authoritative electronic copy of a record evidencing chattel paper</U></B> 22 <B><U>if another person, other than the transferor to the purchaser of an</U></B> 23 <B><U>interest in the chattel paper:</U></B> 24 <B><U>(1) has control of the authoritative electronic copy and acknowledges</U></B> 25 <B><U>that it has control on behalf of the purchaser; or</U></B> 26 <B><U>(2) obtains control of the authoritative electronic copy after having</U></B> 27 <B><U>acknowledged that it will obtain control of the electronic copy on</U></B> 28 <B><U>behalf of the purchaser.</U></B> 29 § 46. The uniform commercial code is amended by adding three new 30 sections 9--105A, 9--107A and 9--107B to read as follows: 31 <B><U>Section 9--105A. Control of Electronic Money.</U></B> 32 <B><U>(a) General rule: control of electronic money. A person has control</U></B> 33 <B><U>of electronic money if:</U></B> 34 <B><U>(1) the electronic money, a record attached to or logically associated</U></B> 35 <B><U>with the electronic money, or a system in which the electronic money is</U></B> 36 <B><U>recorded gives the person:</U></B> 37 <B><U>(A) power to avail itself of substantially all the benefit from the</U></B> 38 <B><U>electronic money; and</U></B> 39 <B><U>(B) exclusive power, subject to subsection (b), to:</U></B> 40 <B><U>(i) prevent others from availing themselves of substantially all the</U></B> 41 <B><U>benefit from the electronic money; and</U></B> 42 <B><U>(ii) transfer control of the electronic money to another person or</U></B> 43 <B><U>cause another person to obtain control of other electronic money as a</U></B> 44 <B><U>result of the transfer of the electronic money; and</U></B> 45 <B><U>(2) the electronic money, a record attached to or logically associated</U></B> 46 <B><U>with the electronic money, or a system in which the electronic money is</U></B> 47 <B><U>recorded enables the person readily to identify itself in any way,</U></B> 48 <B><U>including by name, identifying number, cryptographic key, office, or</U></B> 49 <B><U>account number, as having the powers under paragraph (1).</U></B> 50 <B><U>(b) Meaning of exclusive. Subject to subsection (c), a power is</U></B> 51 <B><U>exclusive under subsection (a)(1)(B)(i) and (ii) even if:</U></B> 52 <B><U>(1) the electronic money, a record attached to or logically associated</U></B> 53 <B><U>with the electronic money, or a system in which the electronic money is</U></B> 54 <B><U>recorded limits the use of the electronic money or has a protocol</U></B> 55 <B><U>programmed to cause a change, including a transfer or loss of control;</U></B> 56 <B><U>or</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 20 1 <B><U>(2) the power is shared with another person.</U></B> 2 <B><U>(c) When power not shared with another person. A power of a person is</U></B> 3 <B><U>not shared with another person under subsection (b)(2) and the person's</U></B> 4 <B><U>power is not exclusive if:</U></B> 5 <B><U>(1) the person can exercise the power only if the power also is exer-</U></B> 6 <B><U>cised by the other person; and</U></B> 7 <B><U>(2) the other person:</U></B> 8 <B><U>(A) can exercise the power without exercise of the power by the</U></B> 9 <B><U>person; or</U></B> 10 <B><U>(B) is the transferor to the person of an interest in the electronic</U></B> 11 <B><U>money.</U></B> 12 <B><U>(d) Presumption of exclusivity of certain powers. If a person has the</U></B> 13 <B><U>powers specified in subsection (a)(1)(B)(i) and (ii), the powers are</U></B> 14 <B><U>presumed to be exclusive.</U></B> 15 <B><U>(e) Control through another person. A person has control of electron-</U></B> 16 <B><U>ic money if another person, other than the transferor to the person of</U></B> 17 <B><U>an interest in the electronic money:</U></B> 18 <B><U>(1) has control of the electronic money and acknowledges that it has</U></B> 19 <B><U>control on behalf of the person; or</U></B> 20 <B><U>(2) obtains control of the electronic money after having acknowledged</U></B> 21 <B><U>that it will obtain control of the electronic money on behalf of the</U></B> 22 <B><U>person.</U></B> 23 <B><U>Section 9--107A. Control of Controllable Electronic Record, Controllable</U></B> 24 <B><U>Account, or Controllable Payment Intangible.</U></B> 25 <B><U>(a) Control under Section 12--105. A secured party has control of a</U></B> 26 <B><U>controllable electronic record as provided in Section 12--105.</U></B> 27 <B><U>(b) Control of controllable account and controllable payment intangi-</U></B> 28 <B><U>ble. A secured party has control of a controllable account or control-</U></B> 29 <B><U>lable payment intangible if the secured party has control of the</U></B> 30 <B><U>controllable electronic record that evidences the controllable account</U></B> 31 <B><U>or controllable payment intangible.</U></B> 32 <B><U>Section 9--107B. No Requirement to Acknowledge or Confirm; No Duties.</U></B> 33 <B><U>(a) No requirement to acknowledge. A person that has control under</U></B> 34 <B><U>Section 9--104, 9--105, or 9--105A is not required to acknowledge that</U></B> 35 <B><U>it has control on behalf of another person.</U></B> 36 <B><U>(b) No duties or confirmation. If a person acknowledges that it has or</U></B> 37 <B><U>will obtain control on behalf of another person, unless the person</U></B> 38 <B><U>otherwise agrees or law other than this article otherwise provides, the</U></B> 39 <B><U>person does not owe any duty to the other person and is not required to</U></B> 40 <B><U>confirm the acknowledgment to any other person.</U></B> 41 § 47. Subsection (b) of section 9--203 of the uniform commercial code, 42 as added by chapter 84 of the laws of 2001 and subparagraph (D) of para- 43 graph 3 as amended by chapter 505 of the laws of 2014, is amended to 44 read as follows: 45 (b) Enforceability. Except as otherwise provided in subsections (c) 46 through (i), a security interest is enforceable against the debtor and 47 third parties with respect to the collateral only if: 48 (1) value has been given; 49 (2) the debtor has rights in the collateral or the power to 50 transfer rights in the collateral to a secured party; and 51 (3) one of the following conditions is met: 52 (A) the debtor has [<B><S>authenticated</S></B>] <B><U>signed</U></B> a security agree- 53 ment that provides a description of the collateral and, 54 if the security interest covers timber to be cut, a 55 description of the land concerned; </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 21 1 (B) the collateral is not a certificated security and is in 2 the possession of the secured party under Section 9--313 3 pursuant to the debtor's security agreement; 4 (C) the collateral is a certificated security in registered 5 form and the security certificate has been delivered to 6 the secured party under Section 8--301 pursuant to the 7 debtor's security agreement; [<B><S>or</S></B>] 8 (D) the collateral is <B><U>controllable accounts, controllable</U></B> 9 <B><U>electronic records, controllable payment intangibles,</U></B> 10 deposit accounts, electronic [<B><S>chattel paper</S></B>] <B><U>documents,</U></B> 11 <B><U>electronic money</U></B>, investment property[<B><S>,</S></B>] <B><U>or</U></B> letter-of- 12 credit rights, [<B><S>or electronic documents,</S></B>] and the secured 13 party has control under Section 7--106, 9--104, 9--105, 14 <B><U>9--105A,</U></B> 9--106, [<B><S>or</S></B>] 9--107<B><U>, or 9--107A</U></B> pursuant to the 15 debtor's security agreement<B><U>; or</U></B> 16 <B><U>(E) the collateral is chattel paper and the secured party has</U></B> 17 <B><U>possession and control under Section 9--314A pursuant to</U></B> 18 <B><U>the debtor's security agreement</U></B>. 19 § 48. Subsection (b) of section 9--204 of the uniform commercial code, 20 as added by chapter 84 of the laws of 2001, is amended and a new 21 subsection (b-1) is added to read as follows: 22 (b) When after-acquired property clause not effective. [<B><S>A</S></B>] <B><U>Subject to</U></B> 23 <B><U>subsection (b-1), a</U></B> security interest does not attach under a term 24 constituting an after-acquired property clause to: 25 (1) consumer goods, other than an accession when given as addi- 26 tional security, unless the debtor acquires rights in them 27 within 10 days after the secured party gives value; or 28 (2) a commercial tort claim. 29 <B><U>(b-1) Limitation on subsection (b). Subsection (b) does not prevent a</U></B> 30 <B><U>security interest from attaching:</U></B> 31 <B><U>(1) to consumer goods as proceeds under Section 9--315(a) or</U></B> 32 <B><U>commingled goods under Section 9--336(c);</U></B> 33 <B><U>(2) to a commercial tort claim as proceeds under Section</U></B> 34 <B><U>9--315(a); or</U></B> 35 <B><U>(3) under an after-acquired property clause to property that is</U></B> 36 <B><U>proceeds of consumer goods or a commercial tort claim.</U></B> 37 § 49. Subsection (c) of section 9--207 of the uniform commercial code, 38 as amended by chapter 505 of the laws of 2014, is amended to read as 39 follows: 40 (c) Duties and rights when secured party in possession or control. 41 Except as otherwise provided in subsection (d), a secured party having 42 possession of collateral or control of collateral under Section 7--106, 43 9--104, 9--105, <B><U>9--105A,</U></B> 9--106, [<B><S>or</S></B>] 9--107<B><U>, or 9--107A</U></B>: 44 (1) may hold as additional security any proceeds, except money or 45 funds, received from the collateral; 46 (2) shall apply money or funds received from the collateral to 47 reduce the secured obligation, unless remitted to the debtor; 48 and 49 (3) may create a security interest in the collateral. 50 § 50. Subsection (b) of section 9--208 of the uniform commercial code, 51 as added by chapter 84 of the laws of 2001, paragraphs 4 and 5 as 52 amended and paragraph 6 as added by chapter 505 of the laws of 2014, is 53 amended to read as follows: 54 (b) Duties of secured party after receiving demand from debtor. Within 55 10 days after receiving [<B><S>an authenticated</S></B>] <B><U>a signed</U></B> demand by the 56 debtor: </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 22 1 (1) a secured party having control of a deposit account under 2 Section 9--104(a)(2) shall send to the bank with which the 3 deposit account is maintained [<B><S>an authenticated statement</S></B>] <B><U>a</U></B> 4 <B><U>signed record</U></B> that releases the bank from any further obli- 5 gation to comply with instructions originated by the secured 6 party; 7 (2) a secured party having control of a deposit account under 8 Section 9--104(a)(3) shall: 9 (A) pay the debtor the balance on deposit in the deposit 10 account; or 11 (B) transfer the balance on deposit into a deposit account in 12 the debtor's name; 13 (3) a secured party, other than a buyer, having control [<B><S>of elec-</S></B> 14 <B><S>tronic chattel paper</S></B>] under Section 9--105 [<B><S>shall:</S></B> 15 <B><S>(A) communicate the authoritative copy of the electronic</S></B> 16 <B><S>chattel paper to the debtor or its designated custodian;</S></B> 17 <B><S>(B) if the debtor designates a custodian that is the desig-</S></B> 18 <B><S>nated custodian with which the authoritative copy of the</S></B> 19 <B><S>electronic chattel paper is maintained for the secured</S></B> 20 <B><S>party, communicate to the custodian an authenticated</S></B> 21 <B><S>record releasing the designated custodian from any</S></B> 22 <B><S>further obligation to comply with instructions originated</S></B> 23 <B><S>by the secured party and instructing the custodian to</S></B> 24 <B><S>comply with instructions originated by the debtor; and</S></B> 25 <B><S>(C) take appropriate action to enable the debtor or its</S></B> 26 <B><S>designated custodian to make copies of or revisions to</S></B> 27 <B><S>the authoritative copy which add or change an identified</S></B> 28 <B><S>assignee of the authoritative copy without the consent of</S></B> 29 <B><S>the secured party</S></B>] <B><U>of an authoritative electronic copy of</U></B> 30 <B><U>a record evidencing chattel paper shall transfer control</U></B> 31 <B><U>of the electronic copy to debtor or a person designated</U></B> 32 <B><U>by the debtor</U></B>; 33 (4) a secured party having control of investment property under 34 Section 8--106(d)(2) or 9--106(b) shall send to the securi- 35 ties intermediary or commodity intermediary with which the 36 security entitlement or commodity contract is maintained [<B><S>an</S></B> 37 <B><S>authenticated</S></B>] <B><U>a signed</U></B> record that releases the securities 38 intermediary or commodity intermediary from any further obli- 39 gation to comply with entitlement orders or directions origi- 40 nated by the secured party; 41 (5) a secured party having control of a letter-of-credit right 42 under Section 9--107 shall send to each person having an 43 unfulfilled obligation to pay or deliver proceeds of the 44 letter-of-credit to the secured party [<B><S>an authenticated</S></B>] <B><U>a</U></B> 45 <B><U>signed</U></B> release from any further obligation to pay or deliver 46 proceeds of the letter-of-credit to the secured party; [<B><S>and</S></B>] 47 (6) a secured party having control [<B><S>of an electronic document</S></B> 48 <B><S>shall:</S></B> 49 <B><S>(A) give control of the electronic document to the debtor or</S></B> 50 <B><S>its designated custodian;</S></B> 51 <B><S>(B) if the debtor designates a custodian that is the desig-</S></B> 52 <B><S>nated custodian with which the authoritative copy of the</S></B> 53 <B><S>electronic document is maintained for the secured party,</S></B> 54 <B><S>communicate to the custodian an authenticated record</S></B> 55 <B><S>releasing the designated custodian from any further obli-</S></B> 56 <B><S>gation to comply with instructions originated by the</S></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 23 </S></B> 1 <B><S>secured party and instructing the custodian to comply</S></B> 2 <B><S>with instructions originated by the debtor; and</S></B> 3 <B><S>(C) take appropriate action to enable the debtor or its</S></B> 4 <B><S>designated custodian to make copies of or revisions to</S></B> 5 <B><S>the authoritative copy which add or change an identified</S></B> 6 <B><S>assignee of the authoritative copy without the consent of</S></B> 7 <B><S>the secured party</S></B>] <B><U>under Section 7--106 of an authori-</U></B> 8 <B><U>tative electronic copy of an electronic document of title</U></B> 9 <B><U>shall transfer control of the electronic copy to the</U></B> 10 <B><U>debtor or a person designated by the debtor;</U></B> 11 <B><U>(7) a secured party having control under Section 9--105A of</U></B> 12 <B><U>electronic money shall transfer control of the electronic</U></B> 13 <B><U>money to the debtor or a person designated by the debtor;</U></B> 14 <B><U>and</U></B> 15 <B><U>(8) a secured party having control under Section 12--105 of a</U></B> 16 <B><U>controllable electronic record, other than a buyer of a</U></B> 17 <B><U>controllable account or controllable payment intangible</U></B> 18 <B><U>evidenced by the controllable electronic record, shall</U></B> 19 <B><U>transfer control of the controllable electronic record to</U></B> 20 <B><U>the debtor or a person designated by the debtor</U></B>. 21 § 51. Subsection (b) of section 9--209 of the uniform commercial code, 22 as added by chapter 84 of the laws of 2001, is amended to read as 23 follows: 24 (b) Duties of secured party after receiving demand from debtor. Within 25 10 days after receiving [<B><S>an authenticated</S></B>] <B><U>a signed</U></B> demand by the 26 debtor, a secured party shall send to an account debtor that has 27 received notification <B><U>under Section 9--406(a) or 12--106(b)</U></B> of an 28 assignment to the secured party as assignee [<B><S>under Section 9--406(a) an</S></B> 29 <B><S>authenticated</S></B>] <B><U>a signed</U></B> record that releases the account debtor from any 30 further obligation to the secured party. 31 § 52. Section 9--210 of the uniform commercial code, as added by chap- 32 ter 84 of the laws of 2001, is amended to read as follows: 33 Section 9--210. Request for Accounting; Request Regarding List of Colla- 34 teral or Statement of Account. 35 (a) Definitions in this section: 36 (1) "Request" means a record of a type described in paragraph 37 (2), (3), or (4). 38 (2) "Request for an accounting" means a record [<B><S>authenticated</S></B>] 39 <B><U>signed</U></B> by a debtor requesting that the recipient provide an 40 accounting of the unpaid obligations secured by collateral 41 and reasonably identifying the transaction or relationship 42 that is the subject of the request. 43 (3) "Request regarding a list of collateral" means a record 44 [<B><S>authenticated</S></B>] <B><U>signed</U></B> by a debtor requesting that the recip- 45 ient approve or correct a list of what the debtor believes to 46 be the collateral securing an obligation and reasonably iden- 47 tifying the transaction or relationship that is the subject 48 of the request. 49 (4) "Request regarding a statement of account" means a record 50 [<B><S>authenticated</S></B>] <B><U>signed</U></B> by a debtor requesting that the recip- 51 ient approve or correct a statement indicating what the 52 debtor believes to be the aggregate amount of unpaid obli- 53 gations secured by collateral as of a specified date and 54 reasonably identifying the transaction or relationship that 55 is the subject of the request. </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 24 1 (b) Duty to respond to requests. Subject to subsections (c), (d), (e), 2 and (f), a secured party, other than a buyer of accounts, chattel paper, 3 payment intangibles, or promissory notes or a consignor, shall comply 4 with a request within 14 days after receipt: 5 (1) in the case of a request for an accounting, by [<B><S>authenticat-</S></B> 6 <B><S>ing</S></B>] <B><U>signing</U></B> and sending to the debtor an accounting; and 7 (2) in the case of a request regarding a list of collateral or a 8 request regarding a statement of account, by [<B><S>authenticating</S></B>] 9 <B><U>signing</U></B> and sending to the debtor an approval or correction. 10 (c) Request regarding list of collateral; statement concerning type of 11 collateral. A secured party that claims a security interest in all of a 12 particular type of collateral owned by the debtor may comply with a 13 request regarding a list of collateral by sending to the debtor [<B><S>an</S></B> 14 <B><S>authenticated</S></B>] <B><U>a signed</U></B> record including a statement to that effect 15 within 14 days after receipt. 16 (d) Request regarding list of collateral; no interest claimed. A 17 person that receives a request regarding a list of collateral, claims no 18 interest in the collateral when it receives the request, and claimed an 19 interest in the collateral at an earlier time shall comply with the 20 request within 14 days after receipt by sending to the debtor [<B><S>an</S></B> 21 <B><S>authenticated</S></B>] <B><U>a signed</U></B> record: 22 (1) disclaiming any interest in the collateral; and 23 (2) if known to the recipient, providing the name and mailing 24 address of any assignee of or successor to the recipient's 25 interest in the collateral. 26 (e) Request for accounting or regarding statement of account; no 27 interest in obligation claimed. A person that receives a request for an 28 accounting or a request regarding a statement of account, claims no 29 interest in the obligations when it receives the request, and claimed an 30 interest in the obligations at an earlier time shall comply with the 31 request within 14 days after receipt by sending to the debtor [<B><S>an</S></B> 32 <B><S>authenticated</S></B>] <B><U>a signed</U></B> record: 33 (1) disclaiming any interest in the obligations; and 34 (2) if known to the recipient, providing the name and mailing 35 address of any assignee of or successor to the recipient's 36 interest in the obligations. 37 (f) Charges for responses. A debtor is entitled without charge to one 38 response to a request under this section during any six-month period. 39 The secured party may require payment of a charge not exceeding $25 for 40 each additional response. 41 § 53. The opening paragraph and subsection (c) of section 9--301 of 42 the uniform commercial code, the opening paragraph as added by chapter 43 84 of the laws of 2001 and subsection (c) as amended by chapter 505 of 44 the laws of 2014, are amended to read as follows: 45 Except as otherwise provided in Sections 9--303 through [<B><S>9--306</S></B>] 46 <B><U>9-306B</U></B>, the following rules determine the law governing perfection, the 47 effect of perfection or nonperfection, and the priority of a security 48 interest in collateral: 49 (c) Except as otherwise provided in subsection (d), while [<B><S>tangible</S></B>] 50 negotiable <B><U>tangible</U></B> documents, goods, instruments, [<B><S>money,</S></B>] or tangible 51 [<B><S>chattel paper</S></B>] <B><U>money</U></B> is located in a jurisdiction, the local law of 52 that jurisdiction governs: 53 (1) perfection of a security interest in the goods by filing a 54 fixture filing; 55 (2) perfection of a security interest in timber to be cut; and </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 25 1 (3) the effect of perfection or nonperfection and the priority of 2 a nonpossessory security interest in the collateral. 3 § 54. Subsection (a) of section 9--304 of the uniform commercial code, 4 as added by chapter 84 of the laws of 2001, is amended to read as 5 follows: 6 (a) Law of bank's jurisdiction governs. The local law of a bank's 7 jurisdiction governs perfection, the effect of perfection or nonper- 8 fection, and the priority of a security interest in a deposit account 9 maintained with that bank <B><U>even if the transaction does not bear any</U></B> 10 <B><U>relation to the bank's jurisdiction</U></B>. 11 § 55. Subsection (a) of section 9--305 of the uniform commercial code 12 is amended by adding a new paragraph 5 to read as follows: 13 <B><U>(5) Paragraphs (2), (3), and (4) apply even if the transaction does</U></B> 14 <B><U>not bear any relation to the jurisdiction.</U></B> 15 § 56. The uniform commercial code is amended by adding two new 16 sections 9-306A and 9-306B to read as follows: 17 <B><U>Section 9-306A. Law Governing Perfection and Priority of Security Inter-</U></B> 18 <B><U>ests in Chattel Paper.</U></B> 19 <B><U>(a) Chattel paper evidenced by authoritative electronic copy. Except</U></B> 20 <B><U>as provided in subsection (d), if chattel paper is evidenced only by an</U></B> 21 <B><U>authoritative electronic copy of the chattel paper or is evidenced by an</U></B> 22 <B><U>authoritative electronic copy and an authoritative tangible copy, the</U></B> 23 <B><U>local law of the chattel paper's jurisdiction governs perfection, the</U></B> 24 <B><U>effect of perfection or nonperfection, and the priority of a security</U></B> 25 <B><U>interest in the chattel paper, even if the transaction does not bear any</U></B> 26 <B><U>relation to the chattel paper's jurisdiction.</U></B> 27 <B><U>(b) Chattel paper's jurisdiction. The following rules determine the</U></B> 28 <B><U>chattel paper's jurisdiction under this section:</U></B> 29 <B><U>(1) If the authoritative electronic copy of the record evidencing</U></B> 30 <B><U>chattel paper, or a record attached to or logically associated with the</U></B> 31 <B><U>electronic copy and readily available for review, expressly provides</U></B> 32 <B><U>that a particular jurisdiction is the chattel paper's jurisdiction for</U></B> 33 <B><U>purposes of this part, this article, or this code, that jurisdiction is</U></B> 34 <B><U>the chattel paper's jurisdiction.</U></B> 35 <B><U>(2) If paragraph (1) does not apply and the rules of the system in</U></B> 36 <B><U>which the authoritative electronic copy is recorded are readily avail-</U></B> 37 <B><U>able for review and expressly provide that a particular jurisdiction is</U></B> 38 <B><U>the chattel paper's jurisdiction for purposes of this part, this arti-</U></B> 39 <B><U>cle, or this code, that jurisdiction is the chattel paper's jurisdic-</U></B> 40 <B><U>tion.</U></B> 41 <B><U>(3) If paragraphs (1) and (2) do not apply and the authoritative elec-</U></B> 42 <B><U>tronic copy, or a record attached to or logically associated with the</U></B> 43 <B><U>electronic copy and readily available for review, expressly provides</U></B> 44 <B><U>that the chattel paper is governed by the law of a particular jurisdic-</U></B> 45 <B><U>tion, that jurisdiction is the chattel paper's jurisdiction.</U></B> 46 <B><U>(4) If paragraphs (1), (2) and (3) do not apply and the rules of the</U></B> 47 <B><U>system in which the authoritative electronic copy is recorded are readi-</U></B> 48 <B><U>ly available for review and expressly provide that the chattel paper or</U></B> 49 <B><U>the system is governed by the law of a particular jurisdiction, that</U></B> 50 <B><U>jurisdiction is the chattel paper's jurisdiction.</U></B> 51 <B><U>(5) If paragraphs (1) through (4) do not apply, the chattel paper's</U></B> 52 <B><U>jurisdiction is the jurisdiction in which the debtor is located.</U></B> 53 <B><U>(c) Chattel paper evidenced by authoritative tangible copy. If an</U></B> 54 <B><U>authoritative tangible copy of a record evidences chattel paper and the</U></B> 55 <B><U>chattel paper is not evidenced by an authoritative electronic copy,</U></B> 56 <B><U>while the authoritative tangible copy of the record evidencing chattel</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 26 1 <B><U>paper is located in a jurisdiction, the local law of that jurisdiction</U></B> 2 <B><U>governs:</U></B> 3 <B><U>(1) perfection of a security interest in the chattel paper by</U></B> 4 <B><U>possession under Section 9--314A; and</U></B> 5 <B><U>(2) the effect of perfection or nonperfection and the priority of a</U></B> 6 <B><U>security interest in the chattel paper.</U></B> 7 <B><U>(d) When perfection governed by law of jurisdiction where debtor</U></B> 8 <B><U>located. The local law of the jurisdiction in which the debtor is</U></B> 9 <B><U>located governs perfection of a security interest in chattel paper by</U></B> 10 <B><U>filing.</U></B> 11 <B><U>Section 9-306B. Law Governing Perfection and Priority of Security Inter-</U></B> 12 <B><U>ests in Controllable Accounts, Controllable Electron-</U></B> 13 <B><U>ic Records, and Controllable Payment Intangibles.</U></B> 14 <B><U>(a) Governing law: general rules. Except as provided in subsection</U></B> 15 <B><U>(b), the local law of the controllable electronic record's jurisdiction</U></B> 16 <B><U>specified in Section 12--107(c) and (d) governs perfection, the effect</U></B> 17 <B><U>of perfection or nonperfection, and the priority of a security interest</U></B> 18 <B><U>in a controllable electronic record and a security interest in a</U></B> 19 <B><U>controllable account or controllable payment intangible evidenced by the</U></B> 20 <B><U>controllable electronic record.</U></B> 21 <B><U>(b) When perfection governed by law of jurisdiction where debtor</U></B> 22 <B><U>located. The local law of the jurisdiction in which the debtor is</U></B> 23 <B><U>located governs:</U></B> 24 <B><U>(1) perfection of a security interest in a controllable account,</U></B> 25 <B><U>controllable electronic record, or controllable payment intangible by</U></B> 26 <B><U>filing; and</U></B> 27 <B><U>(2) automatic perfection of a security interest in a controllable</U></B> 28 <B><U>payment intangible created by a sale of the controllable payment intan-</U></B> 29 <B><U>gible.</U></B> 30 § 57. Paragraph 8 of subsection (b) of section 9--310 of the uniform 31 commercial code, as amended by chapter 505 of the laws of 2014, is 32 amended and a new paragraph 8-a is added to read as follows: 33 (8) in <B><U>controllable accounts, controllable electronic records,</U></B> 34 <B><U>controllable payment intangibles,</U></B> deposit accounts, [<B><S>elec-</S></B> 35 <B><S>tronic chattel paper,</S></B>] electronic documents, investment prop- 36 erty, or letter-of-credit rights which is perfected by 37 control under Section 9--314; 38 <B><U>(8-a) in chattel paper which is perfected by possession and</U></B> 39 <B><U>control under Section 9--314A;</U></B> 40 § 58. The section heading and subsections (a), (b) and (e) of section 41 9--312 of the uniform commercial code, the section heading and 42 subsections (a) and (b) as added by chapter 84 of the laws of 2001, and 43 subsection (e) as amended by chapter 505 of the laws of 2014, are 44 amended to read as follows: 45 Perfection of Security Interests in Chattel Paper, <B><U>Controllable</U></B> 46 <B><U>Accounts, Controllable Electronic Records, Controlla-</U></B> 47 <B><U>ble Payment Intangibles,</U></B> Deposit Accounts, Documents, 48 Goods Covered by Documents, Instruments, Investment 49 Property, Letter-of-credit Rights, and Money; 50 Perfection by Permissive Filing; Temporary Perfection 51 Without Filing or Transfer of Possession. 52 (a) Perfection by filing permitted. A security interest in chattel 53 paper, [<B><S>negotiable documents,</S></B>] <B><U>controllable accounts, controllable elec-</U></B> 54 <B><U>tronic records, controllable payment intangibles,</U></B> instruments, [<B><S>or</S></B>] 55 investment property<B><U>, or negotiable documents</U></B> may be perfected by filing. </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 27 1 (b) Control or possession of certain collateral. Except as otherwise 2 provided in Section 9--315(c) and (d) for proceeds: 3 (1) a security interest in a deposit account may be perfected 4 only by control under Section 9--314; 5 (2) and except as otherwise provided in Section 9--308(d), a 6 security interest in a letter-of-credit right may be 7 perfected only by control under Section 9--314; [<B><S>and</S></B>] 8 (3) a security interest in <B><U>tangible</U></B> money may be perfected only 9 by the secured party's taking possession under Section 10 9--313<B><U>; and</U></B> 11 <B><U>(4) a security interest in electronic money may be</U></B> 12 <B><U>perfected only by control under Section 9--314</U></B>. 13 (e) Temporary perfection: new value. A security interest in certif- 14 icated securities, negotiable documents, or instruments is perfected 15 without filing or the taking of possession or control for a period of 20 16 days from the time it attaches to the extent that it arises for new 17 value given under [<B><S>an authenticated</S></B>] <B><U>a signed</U></B> security agreement. 18 § 59. Subsections (a), (c) and (d) of section 9--313 of the uniform 19 commercial code, subsection (a) as amended by chapter 505 of the laws of 20 2014, and subsections (c) and (d) as added by chapter 84 of the laws of 21 2001, are amended to read as follows: 22 (a) Perfection by possession or delivery. Except as otherwise provided 23 in subsection (b), a secured party may perfect a security interest in 24 [<B><S>tangible</S></B>] <B><U>goods, instruments,</U></B> negotiable <B><U>tangible</U></B> documents, [<B><S>goods,</S></B> 25 <B><S>instruments, money,</S></B>] or tangible [<B><S>chattel paper</S></B>] <B><U>money</U></B> by taking 26 possession of the collateral. A secured party may perfect a security 27 interest in certificated securities by taking delivery of the certif- 28 icated securities under Section 8--301. 29 (c) Collateral in possession of person other than debtor. With respect 30 to collateral other than certificated securities and goods covered by a 31 document, a secured party takes possession of collateral in the 32 possession of a person other than the debtor, the secured party, or a 33 lessee of the collateral from the debtor in the ordinary course of the 34 debtor's business, when: 35 (1) the person in possession [<B><S>authenticates</S></B>] <B><U>signs</U></B> a record 36 acknowledging that it holds possession of the collateral for 37 the secured party's benefit; or 38 (2) the person takes possession of the collateral after having 39 [<B><S>authenticated</S></B>] <B><U>signed</U></B> a record acknowledging that it will 40 hold possession of <B><U>the</U></B> collateral for the secured party's 41 benefit. 42 (d) Time of perfection by possession; continuation of perfection. If 43 perfection of a security interest depends upon possession of the collat- 44 eral by a secured party, perfection occurs [<B><S>no</S></B>] <B><U>not</U></B> earlier than the 45 time the secured party takes possession and continues only while the 46 secured party retains possession. 47 § 60. Section 9--314 of the uniform commercial code, as added by chap- 48 ter 84 of the laws of 2001, subsections (a) and (b) as amended by chap- 49 ter 505 of the laws of 2014, is amended to read as follows: 50 Section 9--314. Perfection by Control. 51 (a) Perfection by control. A security interest in <B><U>controllable</U></B> 52 <B><U>accounts, controllable electronic records, controllable payment intangi-</U></B> 53 <B><U>bles, deposit accounts, electronic documents, electronic money,</U></B> invest- 54 ment property, [<B><S>deposit accounts,</S></B>] <B><U>or</U></B> letter-of-credit rights, [<B><S>elec-</S></B> 55 <B><S>tronic chattel paper, or electronic documents</S></B>] may be perfected by </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 28 1 control of the collateral under Section 7--106, 9--104, [<B><S>9--105</S></B>] 2 <B><U>9--105A</U></B>, 9--106, [<B><S>or</S></B>] 9--107 <B><U>or 9--107A</U></B>. 3 (b) Specified collateral: time of perfection by control; continuation 4 of perfection. A security interest in <B><U>controllable accounts, controlla-</U></B> 5 <B><U>ble electronic records, controllable payment intangibles,</U></B> deposit 6 accounts, electronic [<B><S>chattel paper</S></B>] <B><U>documents</U></B>, <B><U>electronic money, or</U></B> 7 letter-of-credit rights[<B><S>, or electronic documents</S></B>] is perfected by 8 control under Section 7--106, 9--104, [<B><S>9--105</S></B>] <B><U>9--105A</U></B>, [<B><S>or</S></B>] 9--107<B><U>, or</U></B> 9 <B><U>9--107A not earlier than the time</U></B> when the secured party obtains control 10 and remains perfected by control only while the secured party retains 11 control. 12 (c) Investment property: time of perfection by control; continuation 13 of perfection. A security interest in investment property is perfected 14 by control under Section 9--106 [<B><S>from</S></B>] <B><U>not earlier than</U></B> the time the 15 secured party obtains control and remains perfected by control until: 16 (1) the secured party does not have control; and 17 (2) one of the following occurs: 18 (A) if the collateral is a certificated security, the debtor 19 has or acquires possession of the security certificate; 20 (B) if the collateral is an uncertificated security, the 21 issuer has registered or registers the debtor as the 22 registered owner; or 23 (C) if the collateral is a security entitlement, the debtor 24 is or becomes the entitlement holder. 25 (d) Cooperative interests. Subsections (a) through (c) do not apply to 26 cooperative interests. 27 § 61. The uniform commercial code is amended by adding a new section 28 9-314A to read as follows: 29 <B><U>Section 9-314A. Perfection by Possession and Control of Chattel Paper.</U></B> 30 <B><U>(a) Perfection by possession and control. A secured party may perfect</U></B> 31 <B><U>a security interest in chattel paper by taking possession of each</U></B> 32 <B><U>authoritative tangible copy of the record evidencing the chattel paper</U></B> 33 <B><U>and obtaining control of each authoritative electronic copy of the elec-</U></B> 34 <B><U>tronic record evidencing the chattel paper.</U></B> 35 <B><U>(b) Time of perfection; continuation of perfection. A security inter-</U></B> 36 <B><U>est is perfected under subsection (a) not earlier than the time the</U></B> 37 <B><U>secured party takes possession and obtains control and remains perfected</U></B> 38 <B><U>under subsection (a) only while the secured party retains possession and</U></B> 39 <B><U>control.</U></B> 40 <B><U>(c) Application of Section 9--313 to perfection by possession of chat-</U></B> 41 <B><U>tel paper. Section 9--313(c) and (f) through (i) applies to perfection</U></B> 42 <B><U>by possession of an authoritative tangible copy of a record evidencing</U></B> 43 <B><U>chattel paper.</U></B> 44 § 62. Subsections (a) and (f) of section 9--316 of the uniform commer- 45 cial code, as added by chapter 84 of the laws of 2001, are amended to 46 read as follows: 47 (a) General rule: effect on perfection of change in governing law. A 48 security interest perfected pursuant to the law of the jurisdiction 49 designated in Section 9--301(a) [<B><S>or</S></B>]<B><U>,</U></B> 9--305(c)<B><U>, 9-306A(d), or 9-306B(b)</U></B> 50 remains perfected until the earliest of: 51 (1) the time perfection would have ceased under the law of that 52 jurisdiction; 53 (2) the expiration of four months after a change of the debtor's 54 location to another jurisdiction; or </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 29 1 (3) the expiration of one year after a transfer of collateral to 2 a person that thereby becomes a debtor and is located in 3 another jurisdiction. 4 (f) Change in jurisdiction of <B><U>chattel paper, controllable electronic</U></B> 5 <B><U>record,</U></B> bank, issuer, nominated person, securities intermediary, or 6 commodity intermediary. A security interest in <B><U>chattel paper, controlla-</U></B> 7 <B><U>ble accounts, controllable electronic records, controllable payment</U></B> 8 <B><U>intangibles,</U></B> deposit accounts, letter-of-credit rights, or investment 9 property which is perfected under the law of <B><U>the chattel paper's juris-</U></B> 10 <B><U>diction, the controllable electronic record's jurisdiction,</U></B> the bank's 11 jurisdiction, the issuer's jurisdiction, a nominated person's jurisdic- 12 tion, the securities intermediary's jurisdiction, or the commodity 13 intermediary's jurisdiction, as applicable, remains perfected until the 14 earlier of: 15 (1) the time the security interest would have become unperfected 16 under the law of that jurisdiction; or 17 (2) the expiration of four months after a change of the applica- 18 ble jurisdiction to another jurisdiction. 19 § 63. Subsections (b) and (d) of section 9--317 of the uniform commer- 20 cial code, as amended by chapter 505 of the laws of 2014, are amended 21 and four new subsections (f), (g), (h) and (i) are added to read as 22 follows: 23 (b) Buyers that receive delivery. Except as otherwise provided in 24 subsection (e), a buyer, other than a secured party, of [<B><S>tangible chat-</S></B> 25 <B><S>tel paper</S></B>] <B><U>goods, instruments</U></B>, tangible documents, [<B><S>goods, instruments,</S></B>] 26 or a certificated security takes free of a security interest or agricul- 27 tural lien if the buyer gives value and receives delivery of the collat- 28 eral without knowledge of the security interest or agricultural lien and 29 before it is perfected. 30 (d) Licensees and buyers of certain collateral. [<B><S>A</S></B>] <B><U>Subject to</U></B> 31 <B><U>subsections (f) through (i), a</U></B> licensee of a general intangible or a 32 buyer, other than a secured party, of [<B><S>accounts,</S></B>] <B><U>collateral other than</U></B> 33 electronic [<B><S>chattel paper</S></B>] <B><U>money</U></B>, [<B><S>electronic documents, general intan-</S></B> 34 <B><S>gibles, or investment property other than</S></B>] <B><U>goods, instruments, intangi-</U></B> 35 <B><U>ble documents or</U></B> a certificated security takes free of a security inter- 36 est if the licensee or buyer gives value without knowledge of the 37 security interest and before it is perfected. 38 <B><U>(f) Buyers of chattel paper. A buyer, other than a secured party, of</U></B> 39 <B><U>chattel paper takes free of a security interest if, without knowledge of</U></B> 40 <B><U>the security interest and before it is perfected, the buyer gives value</U></B> 41 <B><U>and:</U></B> 42 <B><U>(1) receives delivery of each authoritative tangible copy of the</U></B> 43 <B><U>record evidencing the chattel paper; and</U></B> 44 <B><U>(2) if each authoritative electronic copy of the record evidencing the</U></B> 45 <B><U>chattel paper can be subjected to control under Section 9--105, obtains</U></B> 46 <B><U>control of each authoritative electronic copy.</U></B> 47 <B><U>(g) Buyers of electronic documents. A buyer of an electronic document</U></B> 48 <B><U>takes free of a security interest if, without knowledge of the security</U></B> 49 <B><U>interest and before it is perfected, the buyer gives value and, if each</U></B> 50 <B><U>authoritative electronic copy of the document can be subjected to</U></B> 51 <B><U>control under Section 7--106, obtains control of each authoritative</U></B> 52 <B><U>electronic copy.</U></B> 53 <B><U>(h) Buyers of controllable electronic records. A buyer of a control-</U></B> 54 <B><U>lable electronic record takes free of a security interest if, without</U></B> 55 <B><U>knowledge of the security interest and before it is perfected, the buyer</U></B> 56 <B><U>gives value and obtains control of the controllable electronic record.</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 30 1 <B><U>(i) Buyers of controllable accounts and controllable payment intangi-</U></B> 2 <B><U>bles. A buyer, other than a secured party, of a controllable account or</U></B> 3 <B><U>a controllable payment intangible takes free of a security interest if,</U></B> 4 <B><U>without knowledge of the security interest and before it is perfected,</U></B> 5 <B><U>the buyer gives value and obtains control of the controllable account or</U></B> 6 <B><U>controllable payment intangible.</U></B> 7 § 64. Subsections (d) and (f) of section 9--323 of the uniform commer- 8 cial code, as added by chapter 84 of the laws of 2001, are amended to 9 read as follows: 10 (d) Buyer of goods. Except as otherwise provided in subsection (e), a 11 buyer of goods [<B><S>other than a buyer in ordinary course of business</S></B>] takes 12 free of a security interest to the extent that it secures advances made 13 after the earlier of: 14 (1) the time the secured party acquires knowledge of the buyer's 15 purchase; or 16 (2) 45 days after the purchase. 17 (f) Lessee of goods. Except as otherwise provided in subsection (g), a 18 lessee of goods[<B><S>, other than a lessee in ordinary course of business,</S></B>] 19 takes the leasehold interest free of a security interest to the extent 20 that it secures advances made after the earlier of: 21 (1) the time the secured party acquires knowledge of the lease; 22 or 23 (2) 45 days after the lease contract becomes enforceable. 24 § 65. Subsections (b) and (d) of section 9--324 of the uniform commer- 25 cial code, as added by chapter 84 of the laws of 2001, are amended to 26 read as follows: 27 (b) Inventory purchase-money priority. Subject to subsection (c) and 28 except as otherwise provided in subsection (g), a perfected purchase-mo- 29 ney security interest in inventory has priority over a conflicting secu- 30 rity interest in the same inventory, has priority over a conflicting 31 security interest in chattel paper or an instrument constituting 32 proceeds of the inventory and in proceeds of the chattel paper, if so 33 provided in Section 9--330, and, except as otherwise provided in Section 34 9--327, also has priority in identifiable cash proceeds of the inventory 35 to the extent the identifiable cash proceeds are received on or before 36 the delivery of the inventory to a buyer, if: 37 (1) the purchase-money security interest is perfected when the 38 debtor receives possession of the inventory; 39 (2) the purchase-money secured party sends [<B><S>an authenticated</S></B>] <B><U>a</U></B> 40 <B><U>signed</U></B> notification to the holder of the conflicting security 41 interest; 42 (3) the holder of the conflicting security interest receives the 43 notification within five years before the debtor receives 44 possession of the inventory; and 45 (4) the notification states that the person sending the notifica- 46 tion has or expects to acquire a purchase-money security 47 interest in inventory of the debtor and describes the inven- 48 tory. 49 (d) Livestock purchase-money priority. Subject to subsection (e) and 50 except as otherwise provided in subsection (g), a perfected purchase-mo- 51 ney security interest in livestock that are farm products has priority 52 over a conflicting security interest in the same livestock, and, except 53 as otherwise provided in Section 9--327, a perfected security interest 54 in their identifiable proceeds and identifiable products in their unman- 55 ufactured states also has priority, if: </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 31 1 (1) the purchase-money security interest is perfected when the 2 debtor receives possession of the livestock; 3 (2) the purchase-money secured party sends [<B><S>an authenticated</S></B>] <B><U>a</U></B> 4 <B><U>signed</U></B> notification to the holder of the conflicting security 5 interest; 6 (3) the holder of the conflicting security interest receives the 7 notification within six months before the debtor receives 8 possession of the livestock; and 9 (4) the notification states that the person sending the notifica- 10 tion has or expects to acquire a purchase-money security 11 interest in livestock of the debtor and describes the live- 12 stock. 13 § 66. The uniform commercial code is amended by adding a new section 14 9-326A to read as follows: 15 <B><U>Section 9-326A. Priority of Security Interest in Controllable Account,</U></B> 16 <B><U>Controllable Electronic Record, and Controllable</U></B> 17 <B><U>Payment Intangible.</U></B> 18 <B><U>A security interest in a controllable account, controllable electronic</U></B> 19 <B><U>record, or controllable payment intangible held by a secured party</U></B> 20 <B><U>having control of the account, electronic record, or payment intangible</U></B> 21 <B><U>has priority over a conflicting security interest held by a secured</U></B> 22 <B><U>party that does not have control.</U></B> 23 § 67. Subsections (a), (b) and (f) of section 9--330 of the uniform 24 commercial code, as added by chapter 84 of the laws of 2001, are amended 25 to read as follows: 26 (a) Purchaser's priority: security interest claimed merely as 27 proceeds. A purchaser of chattel paper has priority over a security 28 interest in the chattel paper which is claimed merely as proceeds of 29 inventory subject to a security interest if: 30 (1) in good faith and in the ordinary course of the purchaser's 31 business, the purchaser gives new value [<B><S>and</S></B>]<B><U>,</U></B> takes 32 possession of [<B><S>the chattel paper or obtains control of</S></B>] <B><U>each</U></B> 33 <B><U>authoritative tangible copy of the record evidencing</U></B> the 34 chattel paper<B><U>, and obtains control</U></B> under Section 9--105 <B><U>of</U></B> 35 <B><U>each authoritative electronic copy of the record evidencing</U></B> 36 <B><U>the chattel paper</U></B>; and 37 (2) <B><U>the authoritative copies of the record evidencing</U></B> the chattel 38 paper [<B><S>does</S></B>] <B><U>do</U></B> not indicate that [<B><S>it</S></B>] <B><U>the chattel paper</U></B> has 39 been assigned to an identified assignee other than the 40 purchaser. 41 (b) Purchaser's priority: other security interests. A purchaser of 42 chattel paper has priority over a security interest in the chattel paper 43 which is claimed other than merely as proceeds of inventory subject to a 44 security interest if the purchaser gives new value [<B><S>and</S></B>]<B><U>,</U></B> takes 45 possession of <B><U>each authoritative tangible copy of the record evidencing</U></B> 46 the chattel paper [<B><S>or</S></B>]<B><U>, and</U></B> obtains control [<B><S>of the chattel paper</S></B>] under 47 Section 9--105 <B><U>of each authoritative electronic copy of the record</U></B> 48 <B><U>evidencing the chattel paper</U></B> in good faith, in the ordinary course of 49 the purchaser's business, and without knowledge that the purchase 50 violates the rights of the secured party. 51 (f) Indication of assignment gives knowledge. For purposes of 52 subsections (b) and (d), if <B><U>the authoritative copies of the record</U></B> 53 <B><U>evidencing</U></B> chattel paper or an instrument [<B><S>indicates</S></B>] <B><U>indicate</U></B> that [<B><S>it</S></B>] 54 <B><U>the chattel paper or instrument</U></B> has been assigned to an identified 55 secured party other than the purchaser, a purchaser of the chattel paper </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 32 1 or instrument has knowledge that the purchase violates the rights of the 2 secured party. 3 § 68. Section 9--331 of the uniform commercial code, as added by chap- 4 ter 84 of the laws of 2001, is amended to read as follows: 5 Section 9--331. Priority of Rights of Purchasers of <B><U>Controllable</U></B> 6 <B><U>Accounts, Controllable Electronic Records, Controlla-</U></B> 7 <B><U>ble Payment Intangibles, Documents,</U></B> Instruments, 8 [<B><S>Documents,</S></B>] and Securities under Other Articles; 9 Priority of Interests in Financial Assets and Security 10 Entitlements <B><U>and Protection Against Assertion of Claim</U></B> 11 under [<B><S>Article</S></B>] <B><U>Articles</U></B> 8 <B><U>and 12</U></B>. 12 (a) Rights under Articles 3, 7, [<B><S>and</S></B>] 8<B><U>, and 12</U></B> not limited. This 13 article does not limit the rights of a holder in due course of a negoti- 14 able instrument, a holder to which a negotiable document of title has 15 been duly negotiated, [<B><S>or a</S></B>] protected purchaser of a security<B><U>, or a</U></B> 16 <B><U>qualifying purchaser of a controllable account, controllable electronic</U></B> 17 <B><U>record, or controllable payment intangible</U></B>. These holders or purchasers 18 take priority over an earlier security interest, even if perfected, to 19 the extent provided in Articles 3, 7, [<B><S>and</S></B>] 8<B><U>, and 12</U></B>. 20 (b) Protection under [<B><S>Article</S></B>] <B><U>Articles</U></B> 8 <B><U>and 12</U></B>. This article does 21 not limit the rights of or impose liability on a person to the extent 22 that the person is protected against the assertion of a claim under 23 Article 8 <B><U>or 12</U></B>. 24 (c) Filing not notice. Filing under this article does not constitute 25 notice of a claim or defense to the holders, or purchasers, or persons 26 described in subsections (a) and (b). 27 (d) Section not applicable to cooperative interests. Subsections (a), 28 (b), and (c) do not apply to cooperative interests. 29 § 69. Section 9--332 of the uniform commercial code, as added by 30 chapter 84 of the laws of 2001, is amended to read as follows: 31 Section 9--332. Transfer of Money; Transfer of Funds from Deposit 32 Account. 33 (a) Transferee of <B><U>tangible</U></B> money. A transferee of <B><U>tangible</U></B> money 34 takes the money free of a security interest [<B><S>unless</S></B>] <B><U>if</U></B> the transferee 35 [<B><S>acts</S></B>] <B><U>receives possession of the money without acting</U></B> in collusion with 36 the debtor in violating the rights of the secured party. 37 (b) Transferee of funds from deposit account. A transferee of funds 38 from a deposit account takes the funds free of a security interest in 39 the deposit account [<B><S>unless</S></B>] <B><U>if</U></B> the transferee [<B><S>acts</S></B>] <B><U>receives the funds</U></B> 40 <B><U>without acting</U></B> in collusion with the debtor in violating the rights of 41 the secured party. 42 <B><U>(c) Transferee of electronic money. A transferee of electronic money</U></B> 43 <B><U>takes the money free of a security interest if the transferee obtains</U></B> 44 <B><U>control of the money without acting in collusion with the debtor in</U></B> 45 <B><U>violating the rights of the secured party.</U></B> 46 § 70. Subsection (f) of section 9--334 of the uniform commercial code, 47 as added by chapter 84 of the laws of 2001, is amended to read as 48 follows: 49 (f) Priority based on consent, disclaimer, or right to remove. A secu- 50 rity interest in fixtures, whether or not perfected, has priority over a 51 conflicting interest of an encumbrancer or owner of the real property 52 if: 53 (1) the encumbrancer or owner has, in [<B><S>an authenticated</S></B>] <B><U>a signed</U></B> 54 record, consented to the security interest or disclaimed an 55 interest in the goods as fixtures; or </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 33 1 (2) the debtor has a right to remove the goods as against the 2 encumbrancer or owner. 3 § 71. Section 9--341 of the uniform commercial code, as added by chap- 4 ter 84 of the laws of 2001, is amended to read as follows: 5 Section 9--341. Bank's Rights and Duties with Respect to Deposit 6 Account. 7 Except as otherwise provided in Section 9--340 (c), and unless the 8 bank otherwise agrees in [<B><S>an authenticated</S></B>] <B><U>a signed</U></B> record, a bank's 9 rights and duties with respect to a deposit account maintained with the 10 bank are not terminated, suspended, or modified by: 11 (a) the creation, attachment, or perfection of a security inter- 12 est in the deposit account; 13 (b) the bank's knowledge of the security interest; or 14 (c) the bank's receipt of instructions from the secured party. 15 § 72. Paragraph 2 of subsection (a) of section 9--404 of the uniform 16 commercial code, as added by chapter 84 of the laws of 2001, is amended 17 to read as follows: 18 (2) any other defense or claim of the account debtor against the 19 assignor which accrues before the account debtor receives a 20 notification of the assignment [<B><S>authenticated</S></B>] <B><U>signed</U></B> by the 21 assignor or the assignee. 22 § 73. Section 9--406 of the uniform commercial code, as added by chap- 23 ter 84 of the laws of 2001, is amended to read as follows: 24 Section 9--406. Discharge of Account Debtor; Notification of Assignment; 25 Identification and Proof of Assignment; Restrictions 26 on Assignment of Accounts, Chattel Paper, Payment 27 Intangibles, and Promissory Notes Ineffective. 28 (a) Discharge of account debtor; effect of notification. Subject to 29 subsections (b) through [<B><S>(h)</S></B>] <B><U>(i)</U></B>, an account debtor on an account, 30 chattel paper, or a payment intangible may discharge its obligation by 31 paying the assignor until, but not after, the account debtor receives a 32 notification, [<B><S>authenticated</S></B>] <B><U>signed</U></B> by the assignor or the assignee, 33 that the amount due or to become due has been assigned and that payment 34 is to be made to the assignee. After receipt of the notification, the 35 account debtor may discharge its obligation by paying the assignee and 36 may not discharge the obligation by paying the assignor. 37 (b) When notification ineffective. Subject to [<B><S>subsection</S></B>] <B><U>subsections</U></B> 38 (g) <B><U>and (i)</U></B>, notification is ineffective under subsection (a): 39 (1) if it does not reasonably identify the rights assigned; 40 (2) to the extent that an agreement between an account debtor and 41 a seller of a payment intangible limits the account debtor's 42 duty to pay a person other than the seller and the limitation 43 is effective under law other than this article; or 44 (3) at the option of an account debtor, if the notification noti- 45 fies the account debtor to make less than the full amount of 46 any installment or other periodic payment to the assignee, 47 even if: 48 (A) only a portion of the account, chattel paper, or payment 49 intangible has been assigned to that assignee; 50 (B) a portion has been assigned to another assignee; or 51 (C) the account debtor knows that the assignment to that 52 assignee is limited. 53 (c) Proof of assignment. Subject to [<B><S>subsection</S></B>] <B><U>subsections</U></B> (g) <B><U>and</U></B> 54 <B><U>(i)</U></B>, if requested by the account debtor, an assignee shall seasonably 55 furnish reasonable proof that the assignment has been made. Unless the 56 assignee complies, the account debtor may discharge its obligation by </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 34 1 paying the assignor, even if the account debtor has received a notifica- 2 tion under subsection (a). 3 (d) Term restricting assignment generally ineffective. <B><U>For purposes of</U></B> 4 <B><U>this subsection, "promissory note" includes a negotiable instrument that</U></B> 5 <B><U>evidences chattel paper.</U></B> Except as otherwise provided in subsection (e) 6 and Sections 2-A-303 and 9--407, and subject to subsection (g), a term 7 in an agreement between an account debtor and an assignor or in a prom- 8 issory note is ineffective to the extent that it: 9 (1) prohibits, restricts, or requires the consent of the account 10 debtor or person obligated on the promissory note to the 11 assignment or transfer of, or the creation, attachment, 12 perfection, or enforcement of a security interest in, the 13 account, chattel paper, payment intangible, or promissory 14 note; or 15 (2) provides that the assignment or transfer or the creation, 16 attachment, perfection, or enforcement of the security inter- 17 est may give rise to a default, breach, right of recoupment, 18 claim, defense, termination, right of termination, or remedy 19 under the account, chattel paper, payment intangible, or 20 promissory note. 21 (e) Inapplicability of subsection (d) to certain sales. Subsection (d) 22 does not apply to the sale of a payment intangible or promissory note. 23 (f) Subsection (b)(3) not waivable. Subject to [<B><S>subsection</S></B>] 24 <B><U>subsections</U></B> (g) <B><U>and (i)</U></B>, an account debtor may not waive or vary its 25 option under subsection (b)(3). 26 (g) Rule for individual under other law. This section is subject to a 27 rule of law, statute, rule or regulation other than this article which 28 establishes a different rule for an account debtor who is an individual 29 and who incurred the obligation primarily for personal, family, or 30 household purposes. 31 (h) Inapplicability. This section does not apply to: 32 (1) an assignment of a health care insurance receivable to the 33 extent such assignment conflicts with other law or the 34 parties have otherwise agreed in writing that such receivable 35 is non-assignable, 36 (2) a claim or right to receive compensation for injuries or 37 sickness as described in 26 U.S.C. § 104(a)(1) and (2), as 38 amended from time to time, or 39 (3) a claim or right to receive benefits under a special needs 40 trust as described in 42 U.S.C. § 1396p (d)(4), as amended 41 from time to time. 42 <B><U>(i) Inapplicability of certain subsections. Subsections (a), (b), (c)</U></B> 43 <B><U>and (f) do not apply to a controllable account or controllable payment</U></B> 44 <B><U>intangible.</U></B> 45 § 74. Section 9--408 of the uniform commercial code is amended by 46 adding a new subsection (e) to read as follows: 47 <B><U>(e) "Promissory note". In this section, "promissory note" includes a</U></B> 48 <B><U>negotiable instrument that evidences chattel paper.</U></B> 49 § 75. Paragraph 1 of subsection (a) and the opening paragraph of 50 subsection (b) of section 9--509 of the uniform commercial code, as 51 added by chapter 84 of the laws of 2001, are amended to read as follows: 52 (1) the debtor authorizes the filing in [<B><S>an authenticated</S></B>] <B><U>a</U></B> 53 <B><U>signed</U></B> record or pursuant to subsection (b) or (c); or <B><U>a</U></B> 54 <B><U>security agreement as authorization</U></B>. </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 35 1 By [<B><S>authenticating</S></B>] <B><U>signing</U></B> or becoming bound as debtor by a security 2 agreement, a debtor or new debtor authorizes the filing of an initial 3 financing statement, and an amendment, covering: 4 § 76. Paragraph 2 of subsection (b) and the opening paragraph of 5 subsection (c) of section 9--513 of the uniform commercial code, as 6 added by chapter 84 of the laws of 2001, are amended to read as follows: 7 (2) if earlier, within 20 days after the secured party receives 8 [<B><S>an authenticated</S></B>] <B><U>a signed</U></B> demand from a debtor. 9 In cases not governed by subsection (a), within 20 days after a 10 secured party receives [<B><S>an authenticated</S></B>] <B><U>a signed</U></B> demand from a debtor, 11 the secured party shall cause the secured party of record for a financ- 12 ing statement to send to the debtor a termination statement for the 13 financing statement or file the termination statement in the filing 14 office if: 15 § 77. Subsection (b) of section 9--601 of the uniform commercial code, 16 as amended by chapter 505 of the laws of 2014, is amended to read as 17 follows: 18 (b) Rights and duties of secured party in possession or control. A 19 secured party in possession of collateral or control of collateral under 20 Section 7--106, 9--104, 9--105, <B><U>9--105A,</U></B> 9--106, [<B><S>or</S></B>] 9--107<B><U>, or 9--107A</U></B> 21 has the rights and duties provided in Section 9--207. 22 § 78. Section 9--605 of the uniform commercial code, as added by chap- 23 ter 84 of the laws of 2001, is amended to read as follows: 24 Section 9--605. Unknown Debtor or Secondary Obligor. 25 [<B><S>A</S></B>] <B><U>(a) In general: No duty owed by secured party. Except as</U></B> 26 <B><U>provided in subsection (b), a</U></B> secured party does not owe a duty based on 27 its status as secured party: 28 [<B><S>(a)</S></B>] <B><U>(1)</U></B> to a person that is a debtor or obligor, unless the secured 29 party knows: 30 [<B><S>(1)</S></B>] <B><U>(A)</U></B> that the person is a debtor or obligor; 31 [<B><S>(2)</S></B>] <B><U>(B)</U></B> the identity of the person; and 32 [<B><S>(3)</S></B>] <B><U>(C)</U></B> how to communicate with the person; or 33 [<B><S>(b)</S></B>] <B><U>(2)</U></B> to a secured party or lienholder that has filed a financing 34 statement against a person, unless the secured party knows: 35 [<B><S>(1)</S></B>] <B><U>(A)</U></B> that the person is a debtor; and 36 [<B><S>(2)</S></B>] <B><U>(B)</U></B> the identity of the person. 37 <B><U>(b) Exception: Secured party owes duty to debtor or obligor. A</U></B> 38 <B><U>secured party owes a duty based on its status as a secured party to a</U></B> 39 <B><U>person if, at the time the secured party obtains control of collateral</U></B> 40 <B><U>that is a controllable account, controllable electronic record, or</U></B> 41 <B><U>controllable payment intangible or at the time the security interest</U></B> 42 <B><U>attaches to the collateral, whichever is later:</U></B> 43 <B><U>(1) the person is a debtor or obligor; and</U></B> 44 <B><U>(2) the secured party knows that the information in subsection</U></B> 45 <B><U>(a)(1)(A), (B), or (C) relating to the person is not provided by the</U></B> 46 <B><U>collateral, a record attached to or logically associated with the colla-</U></B> 47 <B><U>teral, or the system in which the collateral is recorded.</U></B> 48 § 79. Subparagraph (C) of paragraph 1 of subsection (a) of section 49 9--608 of the uniform commercial code, as added by chapter 84 of the 50 laws of 2001, is amended to read as follows: 51 (C) the satisfaction of obligations secured by any subordi- 52 nate security interest in or other lien on the collateral 53 subject to the security interest or agricultural lien 54 under which the collection or enforcement is made if the 55 secured party receives [<B><S>an authenticated</S></B>] <B><U>a signed</U></B> demand </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 36 1 for proceeds before distribution of the proceeds is 2 completed. 3 § 80. Subsections (a), (b), (c) and (e) of section 9--611 of the 4 uniform commercial code, as added by chapter 84 of the laws of 2001, are 5 amended to read as follows: 6 (a) "Notification date." In this section, "notification date" means 7 the earlier of the date on which: 8 (1) a secured party sends to the debtor and any secondary obligor 9 [<B><S>an authenticated</S></B>] <B><U>a signed</U></B> notification of disposition; or 10 (2) the debtor and any secondary obligor waive the right to 11 notification. 12 (b) Notification of disposition required. Except as otherwise provided 13 in subsection (d), a secured party that disposes of collateral under 14 Section 9--610 shall send to the persons specified in subsection (c) a 15 reasonable [<B><S>authenticated</S></B>] <B><U>signed</U></B> notification of disposition. 16 (c) Persons to be notified. To comply with subsection (b), the secured 17 party shall send [<B><S>an authenticated</S></B>] <B><U>a signed</U></B> notification of disposition 18 to: 19 (1) the debtor; 20 (2) any secondary obligor; and 21 (3) if the collateral is other than consumer goods: 22 (A) any other person from which the secured party has 23 received, before the notification date, [<B><S>an authenticat-</S></B> 24 <B><S>ed</S></B>] <B><U>a signed</U></B> notification of a claim of an interest in 25 the collateral; 26 (B) any other secured party or lienholder that, 10 days 27 before the notification date, held a security interest in 28 or other lien on the collateral perfected by the filing 29 of a financing statement that: 30 (i) identified the collateral; 31 (ii) was indexed under the debtor's name as of that date; 32 and 33 (iii) was filed in the office in which to file a financ- 34 ing statement against the debtor covering the 35 collateral as of that date; and 36 (C) any other secured party that, 10 days before the notifi- 37 cation date, held a security interest in the collateral 38 perfected by compliance with a statute, regulation, or 39 treaty described in Section 9--311(a). 40 (e) Compliance with subsection (c) (3) (B). A secured party complies 41 with the requirement for notification prescribed by subsection (c) 42 (3) (B) if: 43 (1) not later than twenty days or earlier than thirty days before 44 the notification date, the secured party requests, in a 45 commercially reasonable manner, information concerning 46 financing statements indexed under the debtor's name in the 47 office indicated in subsection (c) (3) (B); and 48 (2) before the notification date, the secured party: 49 (A) did not receive a response to the request for informa- 50 tion; or 51 (B) received a response to the request for information and 52 sent [<B><S>an authenticated</S></B>] <B><U>a signed</U></B> notification of disposi- 53 tion to each secured party or other lienholder named in 54 that response whose financing statement covered the 55 collateral. </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 37 1 § 81. Section 9--613 of the uniform commercial code, as added by chap- 2 ter 84 of the laws of 2001, is amended to read as follows: 3 Section 9--613. Contents and Form of Notification Before Disposition of 4 Collateral: General. 5 <B><U>(a) Contents and form of notification.</U></B> Except in a consumer-goods 6 transaction, the following rules apply: 7 [<B><S>(a)</S></B>] <B><U>(1)</U></B> The contents of a notification of disposition are suffi- 8 cient if the notification: 9 [<B><S>(1)</S></B>] <B><U>(A)</U></B> describes the debtor and the secured party; 10 [<B><S>(2)</S></B>] <B><U>(B)</U></B> describes the collateral that is the subject of the 11 intended disposition; 12 [<B><S>(3)</S></B>] <B><U>(C)</U></B> states the method of intended disposition; 13 [<B><S>(4)</S></B>] <B><U>(D)</U></B> states that the debtor is entitled to an accounting of 14 the unpaid indebtedness and states the charge, if any, for an 15 accounting; and 16 [<B><S>(5)</S></B>] <B><U>(E)</U></B> states the time and place of a public disposition or 17 the time after which any other disposition is to be made. 18 [<B><S>(b)</S></B>] <B><U>(2)</U></B> Whether the contents of a notification that lacks any of 19 the information specified in subsection (a) are nevertheless sufficient 20 is a question of fact. 21 [<B><S>(c)</S></B>] <B><U>(3)</U></B> The contents of a notification providing substantially the 22 information specified in subsection (a) are sufficient, even if the 23 notification includes: 24 [<B><S>(1)</S></B>] <B><U>(A)</U></B> information not specified by subsection (a); or 25 [<B><S>(2)</S></B>] <B><U>(B)</U></B> minor errors that are not seriously misleading. 26 [<B><S>(d)</S></B>] <B><U>(4)</U></B> A particular phrasing of the notification is not required. 27 [<B><S>(e)</S></B>] <B><U>(5)</U></B> The following form of notification and the form appearing 28 in Section [<B><S>9--614(c)</S></B>] <B><U>9--614(a)(3)</U></B>, when completed <B><U>in accordance with</U></B> 29 <B><U>the instructions in subsection (b) and Section 9--614(b)</U></B>, each provides 30 sufficient information: 31 NOTIFICATION OF DISPOSITION OF COLLATERAL 32 To: (Name of debtor, obligor, or other person to which the notifica- 33 tion is sent) 34 From: (Name, address, and telephone number of secured party) 35 [<B><S>Name of Debtor(s): (Include only if debtor(s) are not an addressee)</S></B> 36 <B><S>(For a public disposition:)</S></B> 37 <B><S>We will sell (or lease or license, as applicable) the (describe colla-</S></B> 38 <B><S>teral) (to the highest qualified bidder) in public as follows:</S></B> 39 <B><S>Day and Date: ____________________</S></B> 40 <B><S>Time: ____________________</S></B> 41 <B><S>Place: ____________________</S></B> 42 <B><S>(For a private disposition:)</S></B> 43 <B><S>We will sell (or lease or license, as applicable) the (describe colla-</S></B> 44 <B><S>teral) privately sometime after (day and date).</S></B> 45 <B><S>You are entitled to an accounting of the unpaid indebtedness secured</S></B> 46 <B><S>by the property that we intend to sell (or lease or license, as applica-</S></B> 47 <B><S>ble) (for a charge of $ ). You may request an accounting by calling us</S></B> 48 <B><S>at (telephone number).</S></B>] 49 <B><U>{1} Name of any debtor that is not an addressee: (Name of each</U></B> 50 <B><U>debtor)</U></B> 51 <B><U>{2} We will sell (describe collateral) (to the highest qualified</U></B> 52 <B><U>bidder) at public sale. A sale could include a lease or license. The</U></B> 53 <B><U>sale will be held as follows:</U></B> 54 <B><U>(Date)</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 38 1 <B><U>(Time)</U></B> 2 <B><U>(Place)</U></B> 3 <B><U>{3} We will sell (describe collateral) at private sale sometime after</U></B> 4 <B><U>(date). A sale could include a lease or license.</U></B> 5 <B><U>{4} You are entitled to an accounting of the unpaid indebtedness</U></B> 6 <B><U>secured by the property that we intend to sell or, as applicable, lease</U></B> 7 <B><U>or license.</U></B> 8 <B><U>{5} If you request an accounting you must pay a charge of $ (amount).</U></B> 9 <B><U>{6} You may request an accounting by calling us at (telephone number).</U></B> 10 <B><U>(End of Form)</U></B> 11 <B><U>(b) Instructions for form of notification. The following instructions</U></B> 12 <B><U>apply to the form of notification in subsection (a)(5):</U></B> 13 <B><U>(1) The instructions in this subsection refer to the numbers in braces</U></B> 14 <B><U>before items in the form of notification in subsection (a)(5). Do not</U></B> 15 <B><U>include the numbers or braces in the notification. The numbers and</U></B> 16 <B><U>braces are used only for the purpose of these instructions.</U></B> 17 <B><U>(2) Include and complete subsection (a)(5) item {1} only if there is a</U></B> 18 <B><U>debtor that is not an addressee of the notification and list the name or</U></B> 19 <B><U>names.</U></B> 20 <B><U>(3) Include and complete either item {2}, if the notification relates</U></B> 21 <B><U>to a public disposition of the collateral, or item {3}, if the notifica-</U></B> 22 <B><U>tion relates to a private disposition of the collateral. If item {2} is</U></B> 23 <B><U>included, include the words "to the highest qualified bidder" only if</U></B> 24 <B><U>applicable.</U></B> 25 <B><U>(4) Include and complete items {4} and {6}.</U></B> 26 <B><U>(5) Include and complete item {5} only if the sender will charge the</U></B> 27 <B><U>recipient for an accounting.</U></B> 28 § 82. Section 9--614 of the uniform commercial code, as added by chap- 29 ter 84 of the laws of 2001, is amended to read as follows: 30 Section 9--614. Contents and Form of Notification Before Disposition of 31 Collateral: Consumer-goods Transaction. 32 <B><U>(a) Contents and form of notification.</U></B> In a consumer-goods trans- 33 action, the following rules apply: 34 [<B><S>(a)</S></B>]<B><U>(1)</U></B> A notification of disposition must provide the following 35 information: 36 [<B><S>(1)</S></B>]<B><U>(A)</U></B> the information specified in Section 9--613(a); 37 [<B><S>(2)</S></B>]<B><U>(B)</U></B> a description of any liability for a deficiency of the 38 person to which the notification is sent; 39 [<B><S>(3)</S></B>]<B><U>(C)</U></B> a telephone number from which the amount that must be 40 paid to the secured party to redeem the collateral under 41 Section 9--623 is available; and 42 [<B><S>(4)</S></B>]<B><U>(D)</U></B> a telephone number or mailing address from which addi- 43 tional information concerning the disposition and the obli- 44 gation secured is available. 45 [<B><S>(b)</S></B>]<B><U>(2)</U></B> A particular phrasing of the notification is not required. 46 [<B><S>(c)</S></B>]<B><U>(3)</U></B> The following form of notification, when completed <B><U>in accord-</U></B> 47 <B><U>ance with the instructions in subsection (b)</U></B>, provides sufficient infor- 48 mation: 49 (Name and address of secured party) 50 (Date) </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 39 1 NOTICE OF OUR PLAN TO SELL PROPERTY 2 (Name and address of any obligor who is also a debtor) 3 Subject: (Identification of Transaction) 4 We have your (describe collateral), because you broke promises in our 5 agreement. 6 [<B><S>(For a public disposition:)</S></B>] 7 <B><U>{1}</U></B> We will sell (describe collateral) at public sale. A sale could 8 include a lease or license. The sale will be held as follows: 9 Date: ____________________ 10 Time: ____________________ 11 Place: ____________________ 12 You may attend the sale and bring bidders if you want. 13 [<B><S>(For a private disposition:)</S></B>] 14 <B><U>{2}</U></B> We will sell (describe collateral) at private sale sometime after 15 (date). A sale could include a lease or license. 16 <B><U>{3}</U></B> The money that we get from the sale [<B><S>(</S></B>]<B><U>,</U></B> after paying our 17 costs[<B><S>)</S></B>]<B><U>,</U></B> will reduce the amount you owe. If we get less money than you 18 owe, you (will or will not, as applicable) still owe us the difference. 19 If we get more money than you owe, you will get the extra money, unless 20 we must pay it to someone else. 21 <B><U>{4}</U></B> You can get the property back at any time before we sell it by 22 paying us the full amount you owe [<B><S>(</S></B>]<B><U>,</U></B> not just the past due 23 payments[<B><S>)</S></B>], including our expenses. To learn the exact amount you must 24 pay, call us at (telephone number). 25 <B><U>{5}</U></B> If you want us to explain to you in writing <B><U>or in (description of</U></B> 26 <B><U>electronic record) (description of electronic record)</U></B> how we have 27 figured the amount that you owe us, [<B><S>you may</S></B>] <B><U>{6}</U></B> call us at (telephone 28 number) [<B><S>(</S></B>]or write us at (secured party's address)[<B><S>)</S></B>] <B><U>or contact us by</U></B> 29 <B><U>(description of electronic communication method) {7}</U></B> and request a writ- 30 ten explanation <B><U>or an explanation in (description of electronic record)</U></B> 31 <B><U>an explanation in (description of electronic record)</U></B>. 32 [<B><S>(</S></B>]<B><U>{8}</U></B> We will charge you $ <B><U>(amount)</U></B> for the explanation if we sent 33 you another written explanation of the amount you owe us within the last 34 six months.[<B><S>)</S></B>] 35 <B><U>{9}</U></B> If you need more information about the sale call us at (telephone 36 number) [<B><S>(</S></B>]or write us at (secured party's address)[<B><S>)</S></B>] <B><U>or contact us by</U></B> 37 <B><U>(description of electronic communication method)</U></B>. 38 <B><U>{10}</U></B> We are sending this notice to the following other people who have 39 an interest in (describe collateral) or who owe money under your agree- 40 ment: 41 (Names of all other debtors and obligors, if any) 42 <B><U>(End of Form)</U></B> 43 [<B><S>(d)</S></B>]<B><U>(4)</U></B> A notification in the form of [<B><S>subsection (c)</S></B>] <B><U>paragraph (3)</U></B> 44 is sufficient, even if additional information appears at the end of the 45 form. 46 [<B><S>(e)</S></B>]<B><U>(5)</U></B> A notification in the form of [<B><S>subsection (c)</S></B>] <B><U>paragraph (3)</U></B> 47 is sufficient, even if it includes errors in information not required by 48 [<B><S>subsection (a)</S></B>] <B><U>paragraph (3)</U></B>, unless the error is misleading with 49 respect to rights arising under this article. 50 [<B><S>(f)</S></B>]<B><U>(6)</U></B> If a notification under this section is not in the form of 51 [<B><S>subsection (c)</S></B>] <B><U>paragraph (3)</U></B>, law other than this article determines 52 the effect of including information not required by [<B><S>subsection (a)</S></B>] 53 <B><U>paragraph (3)</U></B>. </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 40 1 <B><U>(b) Instructions for form of notification. The following instructions</U></B> 2 <B><U>apply to the form of notification in subsection (a)(3):</U></B> 3 <B><U>(1) The instructions in this subsection refer to the numbers in braces</U></B> 4 <B><U>before items in the form of notification in subsection (a)(3). Do not</U></B> 5 <B><U>include the numbers or braces in the notification. The numbers and brac-</U></B> 6 <B><U>es are used only for the purpose of these instructions.</U></B> 7 <B><U>(2) Include and complete either item {1}, if the notification relates</U></B> 8 <B><U>to a public disposition of the collateral, or item {2}, if the notifica-</U></B> 9 <B><U>tion relates to a private disposition of the collateral.</U></B> 10 <B><U>(3) Include and complete items {3}, {4}, {5}, {6}, and {7}.</U></B> 11 <B><U>(4) In item {5}, include and complete any one of the three alternative</U></B> 12 <B><U>methods for the explanation--writing, writing or electronic record, or</U></B> 13 <B><U>electronic record.</U></B> 14 <B><U>(5) In item {6}, include the telephone number. In addition, the sender</U></B> 15 <B><U>may include and complete either or both of the two additional alterna-</U></B> 16 <B><U>tive methods of communication--writing or electronic communication-for</U></B> 17 <B><U>the recipient of the notification to communicate with the sender.</U></B> 18 <B><U>Neither of the two additional methods of communication is required to be</U></B> 19 <B><U>included.</U></B> 20 <B><U>(6) In item {7}, include and complete the method or methods for the</U></B> 21 <B><U>explanation--writing, writing or electronic record, or electronic</U></B> 22 <B><U>record--included in item {5}.</U></B> 23 <B><U>(7) Include and complete item {8} only if a written explanation is</U></B> 24 <B><U>included in item {5} as a method for communicating the explanation and</U></B> 25 <B><U>the sender will charge the recipient for another written explanation.</U></B> 26 <B><U>(8) In item {9}, include either the telephone number or the address or</U></B> 27 <B><U>both the telephone number and the address. In addition, the sender may</U></B> 28 <B><U>include and complete the additional method of communication--electronic</U></B> 29 <B><U>communication--for the recipient of the notification to communicate with</U></B> 30 <B><U>the sender. The additional method of electronic communication is not</U></B> 31 <B><U>required to be included.</U></B> 32 <B><U>(9) If item {10} does not apply, insert "None" after "agreement:".</U></B> 33 § 83. Paragraphs 3 and 4 of subsection (a) of section 9--615 of the 34 uniform commercial code, as added by chapter 84 of the laws of 2001, are 35 amended to read as follows: 36 (3) the satisfaction of obligations secured by any subordinate 37 security interest in or other subordinate lien on the collat- 38 eral if: 39 (A) the secured party receives from the holder of the subor- 40 dinate security interest or other lien [<B><S>an authenticated</S></B>] 41 <B><U>a signed</U></B> demand for proceeds before distribution of the 42 proceeds is completed; and 43 (B) in a case in which a consignor has an interest in the 44 collateral, the subordinate security interest or other 45 lien is senior to the interest of the consignor; and 46 (4) a secured party that is a consignor of the collateral if the 47 secured party receives from the consignor [<B><S>an authenticated</S></B>] 48 <B><U>a signed</U></B> demand for proceeds before distribution of the 49 proceeds is completed. 50 § 84. Subsections (a) and (b) and the opening paragraph of subsection 51 (c) of section 9--616 of the uniform commercial code, as added by chap- 52 ter 84 of the laws of 2001, are amended to read as follows: 53 (a) Definitions. In this section: 54 (1) "Explanation" means a [<B><S>writing</S></B>] <B><U>record</U></B> that: 55 (A) states the amount of the surplus or deficiency; </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 41 1 (B) provides an explanation in accordance with subsection (c) 2 of how the secured party calculated the surplus or defi- 3 ciency; 4 (C) states, if applicable, that future debits, credits, 5 charges, including additional credit service charges or 6 interest, rebates, and expenses may affect the amount of 7 the surplus or deficiency; and 8 (D) provides a telephone number or mailing address from which 9 additional information concerning the transaction is 10 available. 11 (2) "Request" means a record: 12 (A) [<B><S>authenticated</S></B>] <B><U>signed</U></B> by a debtor or consumer obligor; 13 (B) requesting that the recipient provide an explanation; and 14 (C) sent after disposition of the collateral under Section 15 9--610. 16 (b) Explanation of calculation. In a consumer-goods transaction in 17 which the debtor is entitled to a surplus or a consumer obligor is 18 liable for a deficiency under Section 9--615, the secured party shall: 19 (1) send an explanation to the debtor or consumer obligor, as 20 applicable, after the disposition and: 21 (A) before or when the secured party accounts to the debtor 22 and pays any surplus or first makes [<B><S>written</S></B>] demand <B><U>in a</U></B> 23 <B><U>record</U></B> on the consumer obligor after the disposition for 24 payment of the deficiency; and 25 (B) within fourteen days after receipt of a request; or 26 (2) in the case of a consumer obligor who is liable for a defi- 27 ciency, within fourteen days after receipt of a request, send 28 to the consumer obligor a record waiving the secured party's 29 right to a deficiency. 30 To comply with subsection (a)(1)(B), [<B><S>a writing</S></B>] <B><U>an explanation</U></B> 31 must provide the following information in the following 32 order: 33 § 85. The opening paragraph of subsection (a) of section 9--619 of the 34 uniform commercial code, as added by chapter 84 of the laws of 2001, is 35 amended to read as follows: 36 In this section, "transfer statement" means a record [<B><S>authenticated</S></B>] 37 <B><U>signed</U></B> by a secured party stating: 38 § 86. The uniform commercial code is amended by adding a new article 39 12 to read as follows: 40 <B><U>ARTICLE 12</U></B> 41 <B><U>CONTROLLABLE ELECTRONIC RECORDS</U></B> 42 <B><U>Section 12--101. Short title.</U></B> 43 <B><U>This article may be cited as Uniform Commercial Code--Controllable</U></B> 44 <B><U>Electronic Records.</U></B> 45 <B><U>Section 12--102. Definitions.</U></B> 46 <B><U>(a) In this article:</U></B> 47 <B><U>(1) "Controllable electronic record" means a record stored in an elec-</U></B> 48 <B><U>tronic medium that can be subjected to control under Section 12-105. The</U></B> 49 <B><U>term does not include a controllable account, a controllable payment</U></B> 50 <B><U>intangible, a deposit account, an electronic copy of a record evidencing</U></B> 51 <B><U>chattel paper, an electronic document of title, electronic money,</U></B> 52 <B><U>investment property, or a transferable record.</U></B> 53 <B><U>(2) "Qualifying purchaser" means a purchaser of a controllable elec-</U></B> 54 <B><U>tronic record or an interest in a controllable electronic record that</U></B> 55 <B><U>obtains control of the controllable electronic record for value, in good</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 42 1 <B><U>faith, and without notice of a claim of a property right in the control-</U></B> 2 <B><U>lable electronic record. In the case of a controllable electronic record</U></B> 3 <B><U>that would be a "draft" or a "note", as those terms are defined in</U></B> 4 <B><U>Section 3--104, if the controllable electronic record were a signed</U></B> 5 <B><U>writing, Section 3--304(7) applies to the determination of whether a</U></B> 6 <B><U>purchaser obtains control of the controllable electronic record without</U></B> 7 <B><U>notice of a claim of a property right in it as if the reference in that</U></B> 8 <B><U>subsection to "the instrument" referred to the controllable electronic</U></B> 9 <B><U>record. The preceding sentence applies even if the controllable elec-</U></B> 10 <B><U>tronic record contains a term by which an obligor or account debtor on</U></B> 11 <B><U>the controllable account or controllable payment intangible evidenced by</U></B> 12 <B><U>the controllable electronic record waives or agrees not to assert</U></B> 13 <B><U>against an assignee of the controllable electronic record any claim or</U></B> 14 <B><U>defense that the obligor or account debtor may have against the assig-</U></B> 15 <B><U>nor.</U></B> 16 <B><U>(3) "Transferable record" means an electronic record that either:</U></B> 17 <B><U>(A) is a "transferable record" under Section 201(a)(1) of the Elec-</U></B> 18 <B><U>tronic Signatures in Global and National Commerce Act, 15 U.S.C.</U></B> 19 <B><U>Section 7021(a)(1), as amended; or,</U></B> 20 <B><U>(B) is governed by the law of any State that has enacted or adopted</U></B> 21 <B><U>the Uniform Electronic Transactions Act substantially as approved and</U></B> 22 <B><U>recommended for enactment in all the States by the National Conference</U></B> 23 <B><U>of Commissioners on Uniform State Laws in 1999 and is a "transferable</U></B> 24 <B><U>record" under Section 16(a) of that Act.</U></B> 25 <B><U>(4) "Value" has the meaning provided in Section 3-303(a), as if refer-</U></B> 26 <B><U>ences in that subsection to an "instrument" were references to a</U></B> 27 <B><U>controllable account, controllable electronic record, or controllable</U></B> 28 <B><U>payment intangible.</U></B> 29 <B><U>(b) Definitions in other articles. The following definitions in other</U></B> 30 <B><U>articles apply to this article:</U></B> 31 <B><U>(1) The definitions in Article 9 of "account debtor", "controllable</U></B> 32 <B><U>account", "controllable payment intangible", "chattel paper", "deposit</U></B> 33 <B><U>account", "electronic money", and "investment property" apply to this</U></B> 34 <B><U>article.</U></B> 35 <B><U>(2) Article 1 contains general definitions and principles of</U></B> 36 <B><U>construction and interpretation applicable throughout this article.</U></B> 37 <B><U>Section 12--103. Relation to Article 9 and Consumer Laws.</U></B> 38 <B><U>(a) Article 9 governs in case of conflict. If there is conflict</U></B> 39 <B><U>between this article and Article 9, Article 9 governs.</U></B> 40 <B><U>(b) Applicable consumer law and other laws. A transaction subject to</U></B> 41 <B><U>this article is subject to any applicable rule of law that establishes a</U></B> 42 <B><U>different rule for consumers, including Article 22-A of the General</U></B> 43 <B><U>Business Law and chapter 5 of title 20 of the New York City Administra-</U></B> 44 <B><U>tive Code.</U></B> 45 <B><U>(c) Enforceability or effectiveness. If an electronic record is a</U></B> 46 <B><U>controllable electronic record under this article, Section 307.2 of the</U></B> 47 <B><U>Electronic Signatures and Records Act (State Technology Law 301 et seq.)</U></B> 48 <B><U>shall not impair the enforceability or effectiveness of such electronic</U></B> 49 <B><U>record under this article nor shall such Act cause such controllable</U></B> 50 <B><U>electronic record to be governed by Article 3 rather than this article,</U></B> 51 <B><U>except to the extent the electronic record expressly provides otherwise</U></B> 52 <B><U>or was created prior to the effective date of this article.</U></B> 53 <B><U>Section 12--104. Rights in Controllable Account, Controllable Electronic</U></B> 54 <B><U>Record, and Controllable Payment Intangible.</U></B> 55 <B><U>(a) Applicability of section to controllable account and controllable</U></B> 56 <B><U>payment intangible. This section applies to the acquisition and</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 43 1 <B><U>purchase of rights in a controllable account or controllable payment</U></B> 2 <B><U>intangible, including the rights and benefits under subsections (c),</U></B> 3 <B><U>(d), (e), (g), and (h) of a purchaser and qualifying purchaser, in the</U></B> 4 <B><U>same manner this section applies to a controllable electronic record.</U></B> 5 <B><U>(b) Control of controllable account and controllable payment intangi-</U></B> 6 <B><U>ble. To determine whether a purchaser of a controllable account or a</U></B> 7 <B><U>controllable payment intangible is a qualifying purchaser, the purchaser</U></B> 8 <B><U>obtains control of the account or payment intangible if it obtains</U></B> 9 <B><U>control of the controllable electronic record that evidences the account</U></B> 10 <B><U>or payment intangible.</U></B> 11 <B><U>(c) Applicability of other law to acquisition of rights. Except as</U></B> 12 <B><U>provided in this section, law other than this article determines whether</U></B> 13 <B><U>a person acquires a right in a controllable electronic record and the</U></B> 14 <B><U>right the person acquires.</U></B> 15 <B><U>(d) Shelter principle and purchase of limited interest. A purchaser of</U></B> 16 <B><U>a controllable electronic record acquires all rights in the controllable</U></B> 17 <B><U>electronic record that the transferor had or had power to transfer,</U></B> 18 <B><U>except that a purchaser of a limited interest in a controllable elec-</U></B> 19 <B><U>tronic record acquires rights only to the extent of the interest</U></B> 20 <B><U>purchased.</U></B> 21 <B><U>(e) Rights of qualifying purchaser. A qualifying purchaser acquires</U></B> 22 <B><U>its rights in the controllable electronic record free of a claim of a</U></B> 23 <B><U>property right in the controllable electronic record.</U></B> 24 <B><U>(f) Limitation of rights of qualifying purchaser in other property.</U></B> 25 <B><U>Except as provided in subsections (a) and (e) for a controllable account</U></B> 26 <B><U>and a controllable payment intangible or law other than this article, a</U></B> 27 <B><U>qualifying purchaser takes a right to payment, right to performance, or</U></B> 28 <B><U>other interest in property evidenced by the controllable electronic</U></B> 29 <B><U>record subject to a claim of a property right in the right to payment,</U></B> 30 <B><U>right to performance, or other interest in property.</U></B> 31 <B><U>(g) No-action protection for qualifying purchaser. An action may not</U></B> 32 <B><U>be asserted against a qualifying purchaser based on both a purchase by</U></B> 33 <B><U>the qualifying purchaser of a controllable electronic record and a claim</U></B> 34 <B><U>of a property right in another controllable electronic record, whether</U></B> 35 <B><U>the action is framed in conversion, replevin, constructive trust, equi-</U></B> 36 <B><U>table lien, or other theory.</U></B> 37 <B><U>(h) Filing not notice. Filing of a financing statement under Article 9</U></B> 38 <B><U>is not notice of a claim of a property right in a controllable electron-</U></B> 39 <B><U>ic record.</U></B> 40 <B><U>Section 12--105. Control of Controllable Electronic Record.</U></B> 41 <B><U>(a) General rule: control of controllable electronic record. A person</U></B> 42 <B><U>has control of a controllable electronic record if the electronic</U></B> 43 <B><U>record, a record attached to or logically associated with the electronic</U></B> 44 <B><U>record, or a system in which the electronic record is recorded:</U></B> 45 <B><U>(1) gives the person:</U></B> 46 <B><U>(A) power to avail itself of substantially all the benefit from the</U></B> 47 <B><U>electronic record; and</U></B> 48 <B><U>(B) exclusive power, subject to subsection (b), to:</U></B> 49 <B><U>(i) prevent others from availing themselves of substantially all the</U></B> 50 <B><U>benefit from the electronic record; and</U></B> 51 <B><U>(ii) transfer control of the electronic record to another person or</U></B> 52 <B><U>cause another person to obtain control of another controllable electron-</U></B> 53 <B><U>ic record as a result of the transfer of the electronic record; and</U></B> 54 <B><U>(2) enables the person readily to identify itself in any way, includ-</U></B> 55 <B><U>ing by name, identifying number, cryptographic key, office, or account</U></B> 56 <B><U>number, as having the powers specified in paragraph (1).</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 44 1 <B><U>(b) Meaning of exclusive. Subject to subsection (c), a power is exclu-</U></B> 2 <B><U>sive under subsection (a)(1)(B)(i) and (ii) even if:</U></B> 3 <B><U>(1) the controllable electronic record, a record attached to or</U></B> 4 <B><U>logically associated with the electronic record, or a system in which</U></B> 5 <B><U>the electronic record is recorded limits the use of the electronic</U></B> 6 <B><U>record or has a protocol programmed to cause a change, including a</U></B> 7 <B><U>transfer or loss of control or a modification of benefits afforded by</U></B> 8 <B><U>the electronic record; or</U></B> 9 <B><U>(2) the power is shared with another person.</U></B> 10 <B><U>(c) When power not shared with another person. A power of a person is</U></B> 11 <B><U>not shared with another person under subsection (b)(2) and the person's</U></B> 12 <B><U>power is not exclusive if:</U></B> 13 <B><U>(1) the person can exercise the power only if the power also is exer-</U></B> 14 <B><U>cised by the other person; and</U></B> 15 <B><U>(2) the other person:</U></B> 16 <B><U>(A) can exercise the power without exercise of the power by the</U></B> 17 <B><U>person; or</U></B> 18 <B><U>(B) is the transferor to the person of an interest in the controllable</U></B> 19 <B><U>electronic record or a controllable account or controllable payment</U></B> 20 <B><U>intangible evidenced by the controllable electronic record.</U></B> 21 <B><U>(d) Presumption of exclusivity of certain powers. If a person has the</U></B> 22 <B><U>powers specified in subsection (a)(1)(B)(i) and (ii), the powers are</U></B> 23 <B><U>presumed to be exclusive.</U></B> 24 <B><U>(e) Control through another person. A person has control of a control-</U></B> 25 <B><U>lable electronic record if another person, other than the transferor to</U></B> 26 <B><U>the person of an interest in the controllable electronic record or a</U></B> 27 <B><U>controllable account or controllable payment intangible evidenced by the</U></B> 28 <B><U>controllable electronic record:</U></B> 29 <B><U>(1) has control of the electronic record and acknowledges that it has</U></B> 30 <B><U>control on behalf of the person; or</U></B> 31 <B><U>(2) obtains control of the electronic record after having acknowledged</U></B> 32 <B><U>that it will obtain control of the electronic record on behalf of the</U></B> 33 <B><U>person.</U></B> 34 <B><U>(f) No requirement to acknowledge. A person that has control under</U></B> 35 <B><U>this section is not required to acknowledge that it has control on</U></B> 36 <B><U>behalf of another person.</U></B> 37 <B><U>(g) No duties or confirmation. If a person acknowledges that it has or</U></B> 38 <B><U>will obtain control on behalf of another person, unless the person</U></B> 39 <B><U>otherwise agrees or law other than this article or Article 9 otherwise</U></B> 40 <B><U>provides, the person does not owe any duty to the other person and is</U></B> 41 <B><U>not required to confirm the acknowledgment to any other person.</U></B> 42 <B><U>Section 12--106. Discharge of Account Debtor on Controllable Account or</U></B> 43 <B><U>Controllable Payment Intangible.</U></B> 44 <B><U>(a) Discharge of account debtor. An account debtor on a controllable</U></B> 45 <B><U>account or controllable payment intangible may discharge its obligation</U></B> 46 <B><U>by paying:</U></B> 47 <B><U>(1) the person having control of the controllable electronic record</U></B> 48 <B><U>that evidences the controllable account or controllable payment intangi-</U></B> 49 <B><U>ble; or</U></B> 50 <B><U>(2) except as provided in subsection (b), a person that formerly had</U></B> 51 <B><U>control of the controllable electronic record.</U></B> 52 <B><U>(b) Content and effect of notification. Subject to subsection (d), the</U></B> 53 <B><U>account debtor may not discharge its obligation by paying a person that</U></B> 54 <B><U>formerly had control of the controllable electronic record if the</U></B> 55 <B><U>account debtor receives a notification that:</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 45 1 <B><U>(1) is signed by a person that formerly had control or the person to</U></B> 2 <B><U>which control was transferred;</U></B> 3 <B><U>(2) reasonably identifies the controllable account or controllable</U></B> 4 <B><U>payment intangible;</U></B> 5 <B><U>(3) notifies the account debtor that control of the controllable elec-</U></B> 6 <B><U>tronic record that evidences the controllable account or controllable</U></B> 7 <B><U>payment intangible was transferred;</U></B> 8 <B><U>(4) identifies the transferee, in any reasonable way, including by</U></B> 9 <B><U>name, identifying number, cryptographic key, office, or account number;</U></B> 10 <B><U>and</U></B> 11 <B><U>(5) provides a commercially reasonable method by which the account</U></B> 12 <B><U>debtor is to pay the transferee.</U></B> 13 <B><U>(c) Discharge following effective notification. After receipt of a</U></B> 14 <B><U>notification that complies with subsection (b), the account debtor may</U></B> 15 <B><U>discharge its obligation by paying in accordance with the notification</U></B> 16 <B><U>and may not discharge the obligation by paying a person that formerly</U></B> 17 <B><U>had control.</U></B> 18 <B><U>(d) When notification ineffective. Subject to subsection (h), notifi-</U></B> 19 <B><U>cation is ineffective under subsection (b):</U></B> 20 <B><U>(1) unless, before the notification is sent, the account debtor and</U></B> 21 <B><U>the person that, at that time, had control of the controllable electron-</U></B> 22 <B><U>ic record that evidences the controllable account or controllable</U></B> 23 <B><U>payment intangible agree in a signed record to a commercially reasonable</U></B> 24 <B><U>method by which a person may furnish reasonable proof that control has</U></B> 25 <B><U>been transferred;</U></B> 26 <B><U>(2) to the extent an agreement between the account debtor and seller</U></B> 27 <B><U>of a payment intangible limits the account debtor's duty to pay a person</U></B> 28 <B><U>other than the seller and the limitation is effective under law other</U></B> 29 <B><U>than this article; or</U></B> 30 <B><U>(3) at the option of the account debtor, if the notification notifies</U></B> 31 <B><U>the account debtor to:</U></B> 32 <B><U>(A) divide a payment;</U></B> 33 <B><U>(B) make less than the full amount of an installment or other periodic</U></B> 34 <B><U>payment; or</U></B> 35 <B><U>(C) pay any part of a payment by more than one method or to more than</U></B> 36 <B><U>one person.</U></B> 37 <B><U>(e) Proof of transfer of control. Subject to subsection (h), if</U></B> 38 <B><U>requested by the account debtor, the person giving the notification</U></B> 39 <B><U>under subsection (b) seasonably shall furnish reasonable proof, using</U></B> 40 <B><U>the method in the agreement referred to in subsection (d)(1), that</U></B> 41 <B><U>control of the controllable electronic record has been transferred.</U></B> 42 <B><U>Unless the person complies with the request, the account debtor may</U></B> 43 <B><U>discharge its obligation by paying a person that formerly had control,</U></B> 44 <B><U>even if the account debtor has received a notification under subsection</U></B> 45 <B><U>(b).</U></B> 46 <B><U>(f) What constitutes reasonable proof. A person furnishes reasonable</U></B> 47 <B><U>proof under subsection (e) that control has been transferred if the</U></B> 48 <B><U>person demonstrates, using the method in the agreement referred to in</U></B> 49 <B><U>subsection (d)(1), that the transferee has the power to:</U></B> 50 <B><U>(1) avail itself of substantially all the benefit from the controlla-</U></B> 51 <B><U>ble electronic record;</U></B> 52 <B><U>(2) prevent others from availing themselves of substantially all the</U></B> 53 <B><U>benefit from the controllable electronic record; and</U></B> 54 <B><U>(3) transfer the powers specified in paragraphs (1) and (2) to another</U></B> 55 <B><U>person.</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 46 1 <B><U>(g) Rights not waivable. Subject to subsection (h), an account debtor</U></B> 2 <B><U>may not waive or vary its rights under subsections (d)(1) and (e) or its</U></B> 3 <B><U>option under subsection (d)(3).</U></B> 4 <B><U>(h) Rule for individual under other law. This section is subject to</U></B> 5 <B><U>law other than this article which establishes a different rule for an</U></B> 6 <B><U>account debtor who is an individual and who incurred the obligation</U></B> 7 <B><U>primarily for personal, family, or household purposes.</U></B> 8 <B><U>Section 12--107. Governing Law.</U></B> 9 <B><U>(a) Governing law: general rule. Except as provided in subsection (b),</U></B> 10 <B><U>the local law of a controllable electronic record's jurisdiction governs</U></B> 11 <B><U>a matter covered by this article.</U></B> 12 <B><U>(b) Governing law: Section 12--106. For a controllable electronic</U></B> 13 <B><U>record that evidences a controllable account or controllable payment</U></B> 14 <B><U>intangible, the local law of the controllable electronic record's juris-</U></B> 15 <B><U>diction governs a matter covered by Section 12--106 unless an effective</U></B> 16 <B><U>agreement determines that the local law of another jurisdiction governs.</U></B> 17 <B><U>(c) Controllable electronic record's jurisdiction. The following rules</U></B> 18 <B><U>determine a controllable electronic record's jurisdiction under this</U></B> 19 <B><U>section:</U></B> 20 <B><U>(1) If the controllable electronic record, or a record attached to or</U></B> 21 <B><U>logically associated with the controllable electronic record and readily</U></B> 22 <B><U>available for review, expressly provides that a particular jurisdiction</U></B> 23 <B><U>is the controllable electronic record's jurisdiction for purposes of</U></B> 24 <B><U>this article, that jurisdiction is the controllable electronic record's</U></B> 25 <B><U>jurisdiction.</U></B> 26 <B><U>(2) If paragraph (1) does not apply and the rules of the system in</U></B> 27 <B><U>which the controllable electronic record is recorded are readily avail-</U></B> 28 <B><U>able for review and expressly provide that a particular jurisdiction is</U></B> 29 <B><U>the controllable electronic record's jurisdiction for purposes of this</U></B> 30 <B><U>article, that jurisdiction is the controllable electronic record's</U></B> 31 <B><U>jurisdiction.</U></B> 32 <B><U>(3) If paragraphs (1) and (2) do not apply and the controllable elec-</U></B> 33 <B><U>tronic record, or a record attached to or logically associated with the</U></B> 34 <B><U>controllable electronic record and readily available for review,</U></B> 35 <B><U>expressly provides that the controllable electronic record is governed</U></B> 36 <B><U>by the law of a particular jurisdiction, that jurisdiction is the</U></B> 37 <B><U>controllable electronic record's jurisdiction.</U></B> 38 <B><U>(4) If paragraphs (1), (2), and (3) do not apply and the rules of the</U></B> 39 <B><U>system in which the controllable electronic record is recorded are read-</U></B> 40 <B><U>ily available for review and expressly provide that the controllable</U></B> 41 <B><U>electronic record or the system is governed by the law of a particular</U></B> 42 <B><U>jurisdiction, that jurisdiction is the controllable electronic record's</U></B> 43 <B><U>jurisdiction.</U></B> 44 <B><U>(5) If paragraphs (1) through (4) do not apply, the controllable elec-</U></B> 45 <B><U>tronic record's jurisdiction is the District of Columbia.</U></B> 46 <B><U>(d) Applicability of Article 12. If subsection (c)(5) applies and</U></B> 47 <B><U>Article 12 is not in effect in the District of Columbia without material</U></B> 48 <B><U>modification, the governing law for a matter covered by this article is</U></B> 49 <B><U>the law of the District of Columbia as though Article 12 were in effect</U></B> 50 <B><U>in the District of Columbia without material modification. In this</U></B> 51 <B><U>subsection, "Article 12" means Article 12 of Uniform Commercial Code</U></B> 52 <B><U>Amendments (2022).</U></B> 53 <B><U>(e) Relation of matter or transaction to controllable electronic</U></B> 54 <B><U>record's jurisdiction not necessary. To the extent subsections (a) and</U></B> 55 <B><U>(b) provide that the local law of the controllable electronic record's</U></B> 56 <B><U>jurisdiction governs a matter covered by this article, that law governs</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 47 1 <B><U>even if the matter or a transaction to which the matter relates does not</U></B> 2 <B><U>bear any relation to the controllable electronic record's jurisdiction.</U></B> 3 <B><U>(f) Rights of purchasers determined at time of purchase. The rights</U></B> 4 <B><U>acquired under Section 12--104 by a purchaser or qualifying purchaser</U></B> 5 <B><U>are governed by the law applicable under this section at the time of</U></B> 6 <B><U>purchase.</U></B> 7 § 87. The uniform commercial code is amended by adding a new article 8 12-A to read as follows: 9 <B><U>ARTICLE 12-A</U></B> 10 <B><U>TRANSITIONAL PROVISIONS FOR UNIFORM COMMERCIAL</U></B> 11 <B><U>CODE AMENDMENTS</U></B> 12 <B><U>PART 1</U></B> 13 <B><U>GENERAL PROVISIONS AND DEFINITIONS</U></B> 14 <B><U>Section 12-A-101. Title. This article may be cited as Transitional</U></B> 15 <B><U>Provisions for the 2025 Uniform Commercial Code</U></B> 16 <B><U>Amendments.</U></B> 17 <B><U>Section 12-A-102. Definitions.</U></B> 18 <B><U>(a) Article A Definitions. In this article:</U></B> 19 <B><U>(1) "Adjustment date" means the date that is one year after the effec-</U></B> 20 <B><U>tive date.</U></B> 21 <B><U>(2) "Article 12" means Article 12 of this code.</U></B> 22 <B><U>(3) "Article 12 property" means a controllable account, controllable</U></B> 23 <B><U>electronic record, or controllable payment intangible.</U></B> 24 <B><U>(4) "Effective date" means the date determined pursuant to section 88</U></B> 25 <B><U>of the UCC Revision Act.</U></B> 26 <B><U>(5) "Revised UCC" means the Uniform Commercial Code as amended by the</U></B> 27 <B><U>UCC Revision Act.</U></B> 28 <B><U>(6) "UCC Revision Act" means the chapter of the laws of two thousand</U></B> 29 <B><U>twenty-five that added this article and article 12 to the Uniform</U></B> 30 <B><U>Commercial Code.</U></B> 31 <B><U>(b) Definitions in other articles. The following definitions in other</U></B> 32 <B><U>articles of this code apply to this article.</U></B> 33 <B><U>"Controllable account".</U></B> <B><U>Section 9--102.</U></B> 34 <B><U>"Controllable electronic record".</U></B> <B><U>Section 12--102.</U></B> 35 <B><U>"Controllable payment intangible".</U></B> <B><U>Section 9--102.</U></B> 36 <B><U>"Electronic money".</U></B> <B><U>Section 9--102.</U></B> 37 <B><U>"Financing statement".</U></B> <B><U>Section 9--102.</U></B> 38 <B><U>(c) Article 1 definitions and principles. Article 1 contains general</U></B> 39 <B><U>definitions and principles of construction and interpretation applicable</U></B> 40 <B><U>throughout this article.</U></B> 41 <B><U>PART 2</U></B> 42 <B><U>GENERAL TRANSITIONAL PROVISION</U></B> 43 <B><U>Section 12-A-201. Saving Clause.</U></B> 44 <B><U>Except as provided in Part 3, a transaction validly entered into</U></B> 45 <B><U>before the effective date of this article and the rights, duties, and</U></B> 46 <B><U>interests flowing from the transaction remain valid thereafter and may</U></B> 47 <B><U>be terminated, completed, consummated, or enforced as required or</U></B> 48 <B><U>permitted by law other than the Uniform Commercial Code or, if applica-</U></B> 49 <B><U>ble, the Uniform Commercial Code as though the UCC Revision Act had not</U></B> 50 <B><U>taken effect.</U></B> 51 <B><U>PART 3</U></B> 52 <B><U>TRANSITIONAL PROVISIONS FOR ARTICLES 9 AND 12</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 48 1 <B><U>Section 12-A-301. Saving Clause.</U></B> 2 <B><U>(a) Pre-effective-date transaction, lien, or interest. Except as</U></B> 3 <B><U>provided in this part, Article 9 as amended by the UCC Revision Act and</U></B> 4 <B><U>Article 12 apply to a transaction, lien, or other interest in property,</U></B> 5 <B><U>even if the transaction, lien, or interest was entered into, created, or</U></B> 6 <B><U>acquired before the effective date.</U></B> 7 <B><U>(b) Continuing validity. Except as provided in subsection (c) and</U></B> 8 <B><U>Sections 12-A-302 through 12-A-306:</U></B> 9 <B><U>(1) a transaction, lien, or interest in property that was validly</U></B> 10 <B><U>entered into, created, or transferred before the effective date of the</U></B> 11 <B><U>UCC Revision Act and was not governed by the Uniform Commercial Code,</U></B> 12 <B><U>but would be subject to Article 9 as amended by the UCC Revision Act or</U></B> 13 <B><U>Article 12 if it had been entered into, created, or transferred on or</U></B> 14 <B><U>after the effective date, including the rights, duties, and interests</U></B> 15 <B><U>flowing from the transaction, lien, or interest, remains valid on and</U></B> 16 <B><U>after the effective date of the UCC Revision Act; and</U></B> 17 <B><U>(2) the transaction, lien, or interest may be terminated, completed,</U></B> 18 <B><U>consummated, and enforced as required or permitted by the revised UCC or</U></B> 19 <B><U>by the law that would apply if the UCC Revision Act had not taken</U></B> 20 <B><U>effect.</U></B> 21 <B><U>(c) Pre-effective-date proceeding. The UCC Revision Act does not</U></B> 22 <B><U>affect an action, case, or proceeding commenced before the effective</U></B> 23 <B><U>date of the UCC Revision Act.</U></B> 24 <B><U>Section 12-A-302. Security Interest Perfected Before Effective Date.</U></B> 25 <B><U>(a) Continuing perfection: perfection requirements satisfied. A secu-</U></B> 26 <B><U>rity interest that is enforceable and perfected immediately before the</U></B> 27 <B><U>effective date of the UCC Revision Act is a perfected security interest</U></B> 28 <B><U>under the revised UCC if, on the effective date of the UCC Revision Act,</U></B> 29 <B><U>the requirements for enforceability and perfection under the revised UCC</U></B> 30 <B><U>are satisfied without further action.</U></B> 31 <B><U>(b) Continuing perfection: enforceability or perfection requirements</U></B> 32 <B><U>not satisfied. If a security interest is enforceable and perfected imme-</U></B> 33 <B><U>diately before the effective date of the UCC Revision Act, but the</U></B> 34 <B><U>requirements for enforceability or perfection under the revised UCC are</U></B> 35 <B><U>not satisfied on the effective date of the UCC Revision Act, the securi-</U></B> 36 <B><U>ty interest:</U></B> 37 <B><U>(1) is a perfected security interest until the earlier of the time</U></B> 38 <B><U>perfection would have ceased under the law in effect immediately before</U></B> 39 <B><U>the effective date of the UCC Revision Act or the adjustment date;</U></B> 40 <B><U>(2) remains enforceable thereafter only if the security interest</U></B> 41 <B><U>satisfies the requirements for enforceability under Section 9--203, as</U></B> 42 <B><U>amended by the UCC Revision Act; and</U></B> 43 <B><U>(3) remains perfected thereafter only if the requirements for</U></B> 44 <B><U>perfection under the revised UCC are satisfied before the time specified</U></B> 45 <B><U>in paragraph (1).</U></B> 46 <B><U>Section 12-A-303. Security Interest Unperfected Before Effective Date.</U></B> 47 <B><U>A security interest that is enforceable immediately before the effec-</U></B> 48 <B><U>tive date of the UCC Revision Act but is unperfected at that time:</U></B> 49 <B><U>(1) remains an enforceable security interest until the adjustment</U></B> 50 <B><U>date;</U></B> 51 <B><U>(2) remains enforceable thereafter if the security interest becomes</U></B> 52 <B><U>enforceable under Section 9--203, as amended by the UCC Revision Act, on</U></B> 53 <B><U>the effective date of the UCC Revision Act or before the adjustment</U></B> 54 <B><U>date; and</U></B> 55 <B><U>(3) becomes perfected:</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 49 1 <B><U>(A) without further action, on the effective date of the UCC Revision</U></B> 2 <B><U>Act if the requirements for perfection under the revised UCC are satis-</U></B> 3 <B><U>fied before or at that time; or</U></B> 4 <B><U>(B) when the requirements for perfection are satisfied if the require-</U></B> 5 <B><U>ments are satisfied after that time.</U></B> 6 <B><U>Section 12-A-304. Effectiveness of Actions Taken Before Effective Date.</U></B> 7 <B><U>(a) Pre-effective-date action; attachment and perfection before</U></B> 8 <B><U>adjustment date. If action, other than the filing of a financing state-</U></B> 9 <B><U>ment, is taken before the effective date of the UCC Revision Act and the</U></B> 10 <B><U>action would have resulted in perfection of the security interest had</U></B> 11 <B><U>the security interest become enforceable before the effective date of</U></B> 12 <B><U>the UCC Revision Act, the action is effective to perfect a security</U></B> 13 <B><U>interest that attaches under the revised UCC before the adjustment date.</U></B> 14 <B><U>An attached security interest becomes unperfected on the adjustment date</U></B> 15 <B><U>unless the security interest becomes a perfected security interest under</U></B> 16 <B><U>the revised UCC before the adjustment date.</U></B> 17 <B><U>(b) Pre-effective-date filing. The filing of a financing statement</U></B> 18 <B><U>before the effective date of the UCC Revision Act is effective to</U></B> 19 <B><U>perfect a security interest on the effective date of this article to the</U></B> 20 <B><U>extent the filing would satisfy the requirements for perfection under</U></B> 21 <B><U>the revised UCC.</U></B> 22 <B><U>(c) Pre-effective-date enforceability action. The taking of an action</U></B> 23 <B><U>before the effective date of the UCC Revision Act is sufficient for the</U></B> 24 <B><U>enforceability of a security interest on the effective date of the UCC</U></B> 25 <B><U>Revision Act if the action would satisfy the requirements for enforcea-</U></B> 26 <B><U>bility under the revised UCC.</U></B> 27 <B><U>Section 12-A-305. Priority.</U></B> 28 <B><U>(a) Determination of priority. Subject to subsections (b) and (c), the</U></B> 29 <B><U>revised UCC determines the priority of conflicting claims to collateral.</U></B> 30 <B><U>(b) Established priorities. Subject to subsection (c), if the priori-</U></B> 31 <B><U>ties of claims to collateral were established before the effective date</U></B> 32 <B><U>of the UCC Revision Act, Article 9 as in effect before the effective</U></B> 33 <B><U>date of the UCC Revision Act determines priority.</U></B> 34 <B><U>(c) Determination of certain priorities on adjustment date. On the</U></B> 35 <B><U>adjustment date, to the extent the priorities determined by Article 9 as</U></B> 36 <B><U>amended by the UCC Revision Act modify the priorities established before</U></B> 37 <B><U>the effective date of the UCC Revision Act, the priorities of claims to</U></B> 38 <B><U>Article 12 property and electronic money established before the effec-</U></B> 39 <B><U>tive date of the UCC Revision Act cease to apply.</U></B> 40 <B><U>Section 12-A-306. Priority of Claims When Priority Rules of Article 9 Do</U></B> 41 <B><U>Not Apply.</U></B> 42 <B><U>(a) Determination of priority. Subject to subsections (b) and (c),</U></B> 43 <B><U>Article 12 determines the priority of conflicting claims to Article 12</U></B> 44 <B><U>property when the priority rules of Article 9 as amended by the UCC</U></B> 45 <B><U>Revision Act do not apply.</U></B> 46 <B><U>(b) Established priorities. Subject to subsection (c), when the prior-</U></B> 47 <B><U>ity rules of Article 9 as amended by the UCC Revision Act do not apply</U></B> 48 <B><U>and the priorities of claims to Article 12 property were established</U></B> 49 <B><U>before the effective date of the UCC Revision Act, law other than Arti-</U></B> 50 <B><U>cle 12 determines priority.</U></B> 51 <B><U>(c) Determination of certain priorities on adjustment date. When the</U></B> 52 <B><U>priority rules of Article 9 as amended by the UCC Revision Act do not</U></B> 53 <B><U>apply, to the extent the priorities determined by the revised UCC modify</U></B> 54 <B><U>the priorities established before the effective date of the UCC Revision</U></B> 55 <B><U>Act, the priorities of claims to Article 12 property established before</U></B> </PRE><P CLASS="brk"><PRE WIDTH="136"> A. 3307--A 50 1 <B><U>the effective date of of the UCC Revision Act cease to apply on the</U></B> 2 <B><U>adjustment date.</U></B> 3 § 88. This act shall take effect on the one hundred eightieth day 4 after it shall have become a law. |
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