Ohio House Bill HB195 Latest Draft

                            As Introduced
136th General Assembly
Regular Session	H. B. No. 195
2025-2026
Representatives Isaacsohn, Mathews, A.
A B I L L
To amend sections 1301.101, 1301.102, 1301.103, 
1301.104, 1301.105, 1301.106, 1301.201, 
1301.204, 1301.205, 1301.206, 1301.301, 
1301.302, 1301.304, 1301.305, 1301.306, 1302.01, 
1302.02, 1302.04, 1302.05, 1302.06, 1302.08, 
1302.12, 1303.01, 1303.03, 1303.41, 1303.69, 
1304.51, 1304.56, 1304.57, 1304.58, 1304.62, 
1304.63, 1304.65, 1304.66, 1304.72, 1305.03, 
1305.15, 1307.102, 1307.106, 1308.01, 1308.02, 
1308.05, 1308.17, 1308.24, 1309.102, 1309.104, 
1309.105, 1309.203, 1309.204 , 1309.207, 
1309.208, 1309.209, 1309.210, 1309.301, 
1309.304, 1309.305, 1309.310, 1309.312, 
1309.313, 1309.314, 1309.316, 1309.317, 
1309.323, 1309.324, 1309.330, 1309.331, 
1309.332, 1309.334, 1309.341, 1309.404, 
1309.406, 1309.408, 1309.509, 1309.513 , 
1309.601, 1309.605, 1309.608, 1309.611, 
1309.613, 1309.614, 1309.615, 1309.616, 
1309.619, 1309.620, 1309.621, 1309.624, 
1309.628, 1310.01, 1310.02, 1310.05, 1310.08, 
1310.09, 1310.10, 1310.12, 1310.15, and 1311.55 
and to enact sections 1309.111, 1309.112, 
1309.113, 1309.343, 1309.344, 1309.345, 
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As Introduced
1309.346, 1314.101, 1314.102, 1314.103, 
1314.104, 1314.105, 1314.106, 1314.107 , 
1316.101, 1316.102, 1316.201, 1316.301, 
1316.302, 1316.303, 1316.304, 1316.305, and 
1316.306 of the Revised Code to make changes to 
the Ohio Uniform Commercial Code.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 1301.101, 1301.102, 1301.103, 
1301.104, 1301.105, 1301.106, 1301.201, 1301.204, 1301.205, 
1301.206, 1301.301, 1301.302, 1301.304, 1301.305, 1301.306, 
1302.01, 1302.02, 1302.04, 1302.05, 1302.06, 1302.08, 1302.12, 
1303.01, 1303.03, 1303.41, 1303.69, 1304.51, 1304.56, 1304.57, 
1304.58, 1304.62, 1304.63, 1304.65, 1304.66, 1304.72, 1305.03, 
1305.15, 1307.102, 1307.106, 1308.01, 1308.02, 1308.05, 1308.17, 
1308.24, 1309.102, 1309.104, 1309.105, 1309.203, 1309.204 , 
1309.207, 1309.208, 1309.209, 1309.210, 1309.301, 1309.304, 
1309.305, 1309.310, 1309.312, 1309.313, 1309.314, 1309.316, 
1309.317, 1309.323, 1309.324, 1309.330, 1309.331, 1309.332, 
1309.334, 1309.341, 1309.404, 1309.406, 1309.408, 1309.509, 
1309.513, 1309.601, 1309.605, 1309.608, 1309.611, 1309.613, 
1309.614, 1309.615, 1309.616, 1309.619, 1309.620, 1309.621, 
1309.624, 1309.628, 1310.01, 1310.02, 1310.05, 1310.08, 1310.09, 
1310.10, 1310.12, 1310.15, and 1311.55 be amended and sections 
1309.111, 1309.112, 1309.113, 1309.343, 1309.344, 1309.345, 
1309.346, 1314.101, 1314.102, 1314.103, 1314.104, 1314.105, 
1314.106, 1314.107, 1316.101, 1316.102, 1316.201, 1316.301, 
1316.302, 1316.303, 1316.304, 1316.305, and 1316.306 of the 
Revised Code be enacted to read as follows:
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Sec. 1301.101. Short titles [UCC 1-101] 
(A) Chapters 1301., 1302., 1303., 1304., 1305., 1307., 
1308., 1309., and 1310., and 1314. of the Revised Code may be 
cited as the Uniform Commercial Code.
(B) Sections 1301.101 to 1301.310 of the Revised Code may 
be cited as Uniform Commercial Code – General Provisions.
(C) This chapter uses the numbering system of the national 
conference of commissioners on uniform state laws. The digits to 
the right of the decimal point are sequential and not 
supplemental to any preceding Revised Code section.
Sec. 1301.102. Scope of Chapter 1301. [UCC 1-102] 
Sections 1301.101 to 1301.310 of the Revised Code apply to 
a transaction to the extent that it is governed by Chapter 
1302., 1303., 1304., 1305., 1307., 1308., 1309., or 1310., or 
1314. of the Revised Code.
Sec. 1301.103. Construction of Uniform Commercial Code to 
promote its purposes and policies; applicability of supplemental 
principles of law [UCC 1-103] 
(A) Chapters 1301., 1302., 1303., 1304, 1305., 1307., 
1308., 1309., and 1310., and 1314. of the Revised Code must be 
liberally construed and applied to promote their underlying 
purposes and policies, which are:
(1) To simplify, clarify, and modernize the law governing 
commercial transactions;
(2) To permit the continued expansion of commercial 
practices through custom, usage, and agreement of the parties; 
and
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As Introduced
(3) To make uniform the law among the various 
jurisdictions.
(B) Unless displaced by the particular provisions of 
Chapters 1301., 1302., 1303., 1304., 1305., 1307., 1308., 1309., 
and 1310., and 1314. of the Revised Code, the principles of law 
and equity, including the law merchant and the law relative to 
capacity to contract, principal and agent, estoppel, fraud, 
misrepresentation, duress, coercion, mistake, bankruptcy, and 
other validating or invalidating cause supplement their 
provisions.
Sec. 1301.104. Construction against implied repeal [UCC 1-
104] 
Chapters 1301., 1302., 1303., 1304., 1305., 1307., 1308., 
1309., and 1310., and 1314. of the Revised Code being a general 
act intended as a unified coverage of its subject matter, no 
part of it shall be deemed to be impliedly repealed by 
subsequent legislation if such construction can reasonably be 
avoided.
Sec. 1301.105. Severability [UCC 1-105] 
If any provision or clause of Chapter 1301., 1302., 1303., 
1304., 1305., 1307., 1308., 1309., or 1310., or 1314. of the 
Revised Code or its application to any person or circumstance is 
held invalid, the invalidity does not affect other provisions or 
applications of Chapter 1301., 1302., 1303., 1304., 1305., 
1307., 1308., 1309., or 1310., or 1314. of the Revised Code 
which can be given effect without the invalid provision or 
application, and to this end the provisions of Chapter 1301., 
1302., 1303., 1304., 1305., 1307., 1308., 1309., or 1310., or 
1314. of the Revised Code are severable.
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Sec. 1301.106. Use of singular and plural; gender [UCC 1-
106] 
In Chapters 1301., 1302., 1303., 1304., 1305., 1307., 
1308., 1309., and 1310., and 1314. of the Revised Code, unless 
the statutory context otherwise requires:
(A) Words in the singular number include the plural, and 
those in the plural include the singular; and
(B) Words of any gender also refer to any other gender.
Sec. 1301.201. General definitions [UCC 1-201] 
(A) Unless the context otherwise requires, words or 
phrases defined in this section, or in the additional 
definitions contained in Chapter 1301., 1302., 1303., 1304., 
1305., 1307., 1308., 1309., or 1310., or 1314. of the Revised 
Code, that apply to particular chapters or sections therein, 
have the meanings stated.
(B) Subject to definitions contained in Chapter 1301., 
1302., 1303., 1304., 1305., 1307., 1308., 1309., or 1310., or 
1314. of the Revised Code, that apply to particular chapters or 
sections therein:
(1) "Action", in the sense of a judicial proceeding, 
includes recoupment, counterclaim, set-off, suit in equity, and 
any other proceeding in which rights are determined.
(2) "Aggrieved party" means a party entitled to pursue a 
remedy.
(3) "Agreement", as distinguished from "contract", means 
the bargain of the parties in fact, as found in their language 
or inferred from other circumstances, including course of 
performance, course of dealing, or usage of trade as provided in 
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As Introduced
section 1301.303 of the Revised Code.
(4) "Bank" means a person engaged in the business of 
banking and includes a savings bank, savings and loan 
association, credit union, and trust company.
(5) "Bearer" means a person in control of a negotiable 
electronic document of title or a person in possession of a 
negotiable instrument, negotiable tangible document of title, or 
certificated security that is payable to bearer or indorsed in 
blank.
(6) "Bill of lading" means a document of title evidencing 
the receipt of goods for shipment issued by a person engaged in 
the business of directly or indirectly transporting or 
forwarding goods. The term does not include a warehouse receipt.
(7) "Branch" includes a separately incorporated foreign 
branch of a bank.
(8) "Burden of establishing" a fact means the burden of 
persuading the trier of fact that the existence of the fact is 
more probable than its nonexistence.
(9) "Buyer in ordinary course of business" means a person 
that buys goods in good faith, without knowledge that the sale 
violates the rights of another person in the goods, and in the 
ordinary course from a person, other than a pawnbroker, in the 
business of selling goods of that kind. A person buys goods in 
the ordinary course if the sale to the person comports with the 
usual or customary practices in the kind of business in which 
the seller is engaged or with the seller's own usual or 
customary practices. A person that sells oil, gas, or other 
minerals at the wellhead or minehead is a person in the business 
of selling goods of that kind. A buyer in ordinary course of 
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business may buy for cash, by exchange of other property, or on 
secured or unsecured credit, and may acquire goods or documents 
of title under a preexisting contract for sale. Only a buyer 
that takes possession of the goods or has a right to recover the 
goods from the seller under Chapter 1302. of the Revised Code 
may be a buyer in ordinary course of business. "Buyer in 
ordinary course of business" does not include a person that 
acquires goods in a transfer in bulk or as security for or in 
total or partial satisfaction of a money debt.
(10) "Conspicuous", with reference to a term, means so 
written, displayed, or presented that , based on the totality of 
the circumstances, a reasonable person against which it is to 
operate ought to have noticed it. Whether a term is 
"conspicuous" or not is for decision by the court. Conspicuous 
terms include the following:
(a) A heading in capitals equal to or greater in size than 
the surrounding text, or in contrasting type, font, or color to 
the surrounding text of the same or lesser size; and
(b) Language in the body of a record or display in larger 
type than the surrounding text, or in contrasting type, font, or 
color to the surrounding text of the same size, or set off from 
surrounding text of the same size by symbols or other marks that 
call attention to the language.
(11) "Consumer" means an individual who enters into a 
transaction primarily for personal, family, or household 
purposes.
(12) "Contract", as distinguished from "agreement", means 
the total legal obligation that results from the parties' 
agreement as determined by Chapters 1301., 1302., 1303., 1304., 
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1305., 1307., 1308., 1309., and 1310., and 1314. of the Revised 
Code as supplemented by any other applicable laws.
(13) "Creditor" includes a general creditor, a secured 
creditor, a lien creditor, and any representative of creditors, 
including an assignee for the benefit of creditors, a trustee in 
bankruptcy, a receiver in equity, and an executor or 
administrator of an insolvent debtor's or assignor's estate.
(14) "Defendant" includes a person in the position of 
defendant in a counterclaim, cross-claim, or third-party claim.
(15) "Delivery" with respect to an electronic document of 
title, means voluntary transfer of control and , with respect to 
an instrument, a tangible document of title, or an authoritative 
tangible copy of a record evidencing chattel paper, means 
voluntary transfer of possession.
(16) "Document of title" means a record (i) that in the 
regular course of business or financing is treated as adequately 
evidencing that the person in possession or control of the 
record is entitled to receive, control, hold, and dispose of the 
record and the goods the record covers and (ii) that purports to 
be issued by or addressed to a bailee and to cover goods in the 
bailee's possession which are either identified or are fungible 
portions of an identified mass. The term includes a bill of 
lading, transport document, dock warrant, dock receipt, 
warehouse receipt, and order for delivery of goods. An 
electronic document of title means a document of title evidenced 
by a record consisting of information stored in an electronic 
medium. A tangible document of title means a document of title 
evidenced by a record consisting of information that is 
inscribed on a tangible medium.
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(a) "Electronic" means relating to technology having 
electrical, digital, magnetic, wireless, optical, 
electromagnetic, or similar capabilities.
(17) "Fault" means a default, breach, or wrongful act or 
omission.
(18) "Fungible goods" means:
(a) Goods of which any unit, by nature or usage of trade, 
is the equivalent of any other like unit; or
(b) Goods that by agreement are treated as equivalent.
(19) "Genuine" means free of forgery or counterfeiting.
(20) "Good faith," except as otherwise provided in Chapter 
1305. of the Revised Code, means honesty in fact and the 
observance of reasonable commercial standards of fair dealing.
(21) "Holder" means:
(a) The person in possession of a negotiable instrument 
that is payable either to bearer or to an identified person that 
is the person in possession;
(b) The person in possession of a negotiable tangible 
document of title if the goods are deliverable either to bearer 
or to the order of the person in possession; or
(c) The person in control , other than pursuant to division 
(G) of section 1307.106 of the Revised Code, of a negotiable 
electronic document of title.
(22) "Insolvency proceeding" includes an assignment for 
the benefit of creditors or other proceeding intended to 
liquidate or rehabilitate the estate of the person involved.
(23) "Insolvent" means:
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As Introduced
(a) Having generally ceased to pay debts in the ordinary 
course of business other than as a result of a bona fide 
dispute;
(b) Being unable to pay debts as they become due; or
(c) Being insolvent within the meaning of federal 
bankruptcy law.
(24) "Money" means a medium of exchange that is currently 
authorized or adopted by a domestic or foreign government. The 
term includes a monetary unit of account established by an 
intergovernmental organization or by agreement between two or 
more countries. The term does not include an electronic record 
that is a medium of exchange recorded and transferable in a 
system that existed and operated for the medium of exchange 
before the medium of exchange was authorized or adopted by the 
government.
(25) "Organization" means a person other than an 
individual.
(26) "Party", as distinguished from "third party", means a 
person that has engaged in a transaction or made an agreement 
subject to Chapters 1301., 1302., 1303., 1304., 1305., 1307., 
1308., 1309., and 1310., and 1314. of the Revised Code.
(27) "Person" means an individual, corporation, business 
trust, estate, trust, partnership, limited liability company, 
association, joint venture, government, governmental 
subdivision, agency, or instrumentality, public corporation, or 
any other legal or commercial entity. The term includes a 
protected series, however denominated, of an entity if the 
protected series is established under law other than Chapters 
1301., 1302., 1303., 1304., 1305., 1307., 1308., 1309., 1310., 
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As Introduced
and 1314. of the Revised Code, that limits, or limits if 
conditions specified under the law are satisfied, the ability of 
a creditor of the entity or of any other protected series of the 
entity to satisfy a claim from assets of the protected series.
(28) "Present value" means the amount as of a date certain 
of one or more sums payable in the future, discounted to the 
date certain by use of either an interest rate specified by the 
parties if that rate is not manifestly unreasonable at the time 
the transaction is entered into or, if an interest rate is not 
so specified, a commercially reasonable rate that takes into 
account the facts and circumstances at the time the transaction 
is entered into.
(29) "Purchase" means taking by sale, lease, discount, 
negotiation, mortgage, pledge, lien, security interest, issue or 
reissue, gift, or any other voluntary transaction creating an 
interest in property.
(30) "Purchaser" means a person that takes by purchase.
(31) "Record" means information that is inscribed on a 
tangible medium or that is stored in an electronic or other 
medium and is retrievable in perceivable form.
(32) "Remedy" means any remedial right to which an 
aggrieved party is entitled with or without resort to a 
tribunal.
(33) "Representative" means a person empowered to act for 
another, including an agent, an officer of a corporation or 
association, and a trustee, executor, or administrator of an 
estate.
(34) "Right" includes remedy.
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(35) "Security interest" means an interest in personal 
property or fixtures which secures payment or performance of an 
obligation. "Security interest" includes any interest of a 
consignor and a buyer of accounts, chattel paper, a payment 
intangible, or a promissory note in a transaction that is 
subject to Chapter 1309. of the Revised Code. "Security 
interest" does not include the special property interest of a 
buyer of goods on identification of those goods to a contract 
for sale under section 1302.42 of the Revised Code, but a buyer 
may also acquire a "security interest" by complying with Chapter 
1309. of the Revised Code. Except as otherwise provided in 
section 1302.49 of the Revised Code, the right of a seller or 
lessor of goods under Chapter 1302. or 1310. of the Revised Code 
to retain or acquire possession of the goods is not a "security 
interest", but a seller or lessor may also acquire a "security 
interest" by complying with Chapter 1309. of the Revised Code. 
The retention or reservation of title by a seller of goods 
notwithstanding shipment or delivery to the buyer under section 
1302.42 of the Revised Code is limited in effect to a 
reservation of a "security interest." Whether a transaction in 
the form of a lease creates a "security interest" is determined 
pursuant to section 1301.203 of the Revised Code.
(36) "Send" in connection with any writing, record, or 
notice notification means:
(a) To deposit in the mail or , deliver for transmission , 
or transmit by any other usual means of communication with 
postage or cost of transmission provided for , and properly 
addressed and, in the case of an instrument, to an address 
specified thereon or otherwise agreed, or if there be none 
addressed to any address reasonable under the circumstances; or
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As Introduced
(b) In any other way to cause to be received any record or 
notice within the time it would have arrived if properly sent To 
cause the record or notification to be received within the time 
it would have been received if properly sent under division (B)
(36)(a) of this section .
(37) "Signed" includes using any symbol executed or 
adopted with present intention to adopt or accept a 
writing"Sign," "signing," and "signature" mean, with present 
intent to authenticate or adopt a record, to do either of the 
following:
(a) Execute or adopt a tangible symbol;
(b) Attach to or logically associate with the record an 
electronic symbol, sound, or process .
(38) "State" means a state of the United States, the 
District of Columbia, Puerto Rico, the United States Virgin 
Islands, or any territory or insular possession subject to the 
jurisdiction of the United States.
(39) "Surety" includes a guarantor or any other secondary 
obligor.
(40) "Term" means a portion of an agreement that relates 
to a particular matter.
(41) "Unauthorized signature" means a signature made 
without actual, implied, or apparent authority. The term 
includes a forgery.
(42) "Warehouse receipt" means a document of title issued 
by a person engaged in the business of storing goods for hire.
(43) "Writing" includes printing, typewriting, or any 
other intentional reduction to tangible form. "Written" has a 
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As Introduced
corresponding meaning.
Sec. 1301.204. Value [UCC 1-204] 
Except as otherwise provided in Chapters 1303., 1304., and 
1305., and 1314. of the Revised Code, a person gives value for 
rights if the person acquires them:
(A) In return for a binding commitment to extend credit or 
for the extension of immediately available credit, whether or 
not drawn upon and whether or not a charge-back is provided for 
in the event of difficulties in collection;
(B) As security for, or in total or partial satisfaction 
of, a preexisting claim;
(C) By accepting delivery under a preexisting contract for 
purchase; or
(D) In return for any consideration sufficient to support 
a simple contract.
Sec. 1301.205. Reasonable time; Seasonableness [UCC 1-205] 
(A) Whether a time for taking an action required by 
Chapters 1301., 1302., 1303., 1304., 1305., 1307., 1308., 1309., 
and 1310., and 1314. of the Revised Code is reasonable depends 
on the nature, purpose, and circumstances of the action.
(B) An action is taken seasonably if it is taken at or 
within the time agreed or, if no time is agreed, at or within a 
reasonable time.
Sec. 1301.206. Presumptions [UCC 1-206] 
Whenever Chapter 1301., 1302., 1303., 1304., 1305., 1307., 
1308., 1309., or 1310., or 1314. of the Revised Code creates a 
"presumption" with respect to a fact, or provides that a fact is 
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As Introduced
"presumed," the trier of fact must find the existence of the 
fact unless and until evidence is introduced that supports a 
finding of its nonexistence.
Sec. 1301.301. Territorial applicability; parties' power 
to choose applicable law [UCC 1-301] 
(A) Except as otherwise provided in this section, when a 
transaction bears a reasonable relation to this state and also 
to another state or nation the parties may agree that the law 
either of this state or of such other state or nation shall 
govern their rights and duties.
(B) In the absence of an agreement effective under 
division (A) of this section, and except as provided in division 
(C) of this section, Chapters 1301., 1302., 1303., 1304., 1305., 
1307., 1308., 1309., and 1310., and 1314. of the Revised Code 
apply to transactions bearing an appropriate relation to this 
state.
(C) If one of the following provisions of Chapters 1301., 
1302., 1303., 1304., 1305., 1307., 1308., 1309., and 1310., and 
1314. of the Revised Code specifies the applicable law, that 
provision governs and a contrary agreement is effective only to 
the extent permitted by the law so specified:
(1) Section 1302.43 of the Revised Code;
(2) Sections 1310.03 and 1310.04 of the Revised Code;
(3) Section 1304.02 of the Revised Code;
(4) Section 1304.85 of the Revised Code;
(5) Section 1305.15 of the Revised Code;
(6) Section 1308.05 of the Revised Code;
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As Introduced
(7) Sections 1309.301 to 1309.307 of the Revised Code ;
(8) Section 1314.107 of the Revised Code .
Sec. 1301.302. Variation by agreement [UCC 1-302] 
(A) Except as otherwise provided in division (B) of this 
section or elsewhere in Chapter 1301., 1303., 1304., 1305., 
1307., 1308., 1309., or 1310., or 1314. of the Revised Code, the 
effect of provisions of Chapters 1301., 1303., 1304., 1305., 
1307., 1308., 1309., and 1310., and 1314. of the Revised Code 
may be varied by agreement.
(B) The obligations of good faith, diligence, 
reasonableness, and care prescribed by Chapter 1301., 1302., 
1303., 1304., 1305., 1307., 1308., 1309., or 1310., or 1314. of 
the Revised Code may not be disclaimed by agreement. The 
parties, by agreement, may determine the standards by which the 
performance of those obligations is to be measured if those 
standards are not manifestly unreasonable. Whenever Chapter 
1301., 1302., 1303., 1304., 1305., 1307., 1308., 1309., or 
1310., or 1314. of the Revised Code requires an action to be 
taken within a reasonable time, a time that is not manifestly 
unreasonable may be fixed by agreement.
(C) The presence in certain provisions of Chapter 1301., 
1302., 1303., 1304., 1305., 1307., 1308., 1309., or 1310., or 
1314. of the Revised Code of the phrase "unless otherwise 
agreed", or words of similar import, does not imply that the 
effect of other provisions may not be varied by agreement under 
this section.
Sec. 1301.304. Obligation of good faith [UCC 1-304] 
Every contract or duty within Chapters 1301., 1302., 
1303., 1304., 1305., 1307., 1308., 1309., and 1310., and 1314. 
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of the Revised Code imposes an obligation of good faith in its 
performance and enforcement.
Sec. 1301.305. Remedies to be liberally administered [UCC 
1-305] 
(A) The remedies provided by Chapters 1301., 1302., 1303., 
1304., 1305., 1307., 1308., 1309., and 1310., and 1314. of the 
Revised Code must be liberally administered to the end that the 
aggrieved party may be put in as good a position as if the other 
party had fully performed but neither consequential or special 
damages nor penal damages may be had except as specifically 
provided in those chapters or by other rule of law.
(B) Any right or obligation declared by Chapters 1301., 
1302., 1303., 1304., 1305., 1307., 1308., 1309., and 1310., and 
1314. of the Revised Code is enforceable by action unless the 
provision declaring it specifies a different and limited effect.
Sec. 1301.306. Waiver or renunciation of claim or right 
after breach [UCC 1-306] 
A claim or right arising out of an alleged breach may be 
discharged in whole or in part without consideration by 
agreement of the aggrieved party in an authenticated a signed 
record.
Sec. 1302.01. Definitions [UCC 2-103 to 2-106]
(A) As used in sections 1302.01 to 1302.98 of the Revised 
Code, unless the context otherwise requires: 
(1) "Buyer" means a person who buys or contracts to buy 
goods.
(2) "Good faith" has the same meaning as in section 
1301.201 of the Revised Code.
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(3) "Receipt" of goods means taking physical possession of 
them.
(4) "Seller" means a person who sells or contracts to sell 
goods.
(5) "Merchant" means a person who deals in goods of the 
kind or otherwise by the person's occupation holds the person 
out as having knowledge or skill peculiar to the practices or 
goods involved in the transaction or to whom such knowledge or 
skill may be attributed by the person's employment of an agent 
or broker or other intermediary who by the agent's, broker's, or 
other intermediary's occupation holds the person out as having 
such knowledge or skill.
(6) "Financing agency" means a bank, finance company, or 
other person who in the ordinary course of business make 
advances against goods or documents of title or who by 
arrangement with either the seller or the buyer intervenes in 
ordinary course to make or collect payment due or claimed under 
the contract for sale, as by purchasing or paying the seller's 
draft or making advances against it or by merely taking it for 
collection whether or not documents of title accompany or are 
associated with the draft. "Financing agency" includes also a 
bank or other person who similarly intervenes between persons 
who are in the position of seller and buyer in respect to the 
goods under section 1302.81 of the Revised Code.
(7) "Between merchants" means in any transaction with 
respect to which both parties are chargeable with the knowledge 
or skill of merchants.
(8) "Goods" means all things (including specially 
manufactured goods) which are movable at the time of 
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As Introduced
identification to the contract for sale other than the money in 
which the price is to be paid, investment securities, and things 
in action. "Goods" also includes the unborn young of animals and 
growing crops and other identified things attached to realty as 
described in section 1302.03 of the Revised Code.
Goods must be both existing and identified before any 
interest in them can pass. Goods which are not both existing and 
identified are "Future" goods. A purported present sale of 
future goods or of any interest therein operates as a contract 
to sell.
There may be a sale of a part interest in existing 
identified goods.
An undivided share in an identified bulk of fungible goods 
is sufficiently identified to be sold although the quantity of 
the bulk is not determined. Any agreed proportion of such a bulk 
or any quantity thereof agreed upon by number, weight, or other 
measure may to the extent of the seller's interest in the bulk 
be sold to the buyer who then becomes an owner in common.
(9) "Lot" means a parcel or a single article which is the 
subject matter of a separate sale or delivery, whether or not it 
is sufficient to perform the contract.
(10) "Commercial unit" means such a unit of goods as by 
commercial usage is a single whole for purposes of sale and 
division of which materially impairs its character or value on 
the market or in use. A commercial unit may be a single article 
(as a machine) or a set of articles (as a suite of furniture or 
an assortment of sizes) or a quantity (as a bale, gross, or 
carload) or any other unit treated in use or in the relevant 
market as a single whole.
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(11) "Contract" and "agreement" are limited to those 
relating to the present or future sale of goods. "Contract for 
sale" includes both a present sale of goods and a contract to 
sell goods at a future time. A "sale" consists in the passing of 
title from the seller to the buyer for a price. A "present sale" 
means a sale which is accomplished by the making of the 
contract.
(12) Goods or conduct including any part of a performance 
are "conforming" or conform to the contract when they are in 
accordance with the obligations under the contract.
(13) "Termination" occurs when either party pursuant to a 
power created by agreement or law puts an end to the contract 
otherwise than for its breach. On "termination" all obligations 
which are still executory on both sides are discharged but any 
right based on prior breach or performance survives.
(14) "Cancellation" occurs when either party puts an end 
to the contract for breach by the other and its effect is the 
same as that of "termination" except that the cancelling party 
also retains any remedy for breach of the whole contract or any 
unperformed balance.
(15) "Hybrid transaction" means a single transaction 
involving a sale of goods and any of the following:
(a) The provision of services;
(b) A lease of other goods;
(c) A sale, lease, or license of property other than 
goods.
(B) Other definitions applying to sections 1302.01 to 
1302.98 of the Revised Code are:
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As Introduced
(1) "Acceptance", as defined in section 1302.64 of the 
Revised Code;
(2) "Banker's credit", as defined in section 1302.38 of 
the Revised Code;
(3) "Confirmed credit", as defined in section 1302.38 of 
the Revised Code;
(4) "Cover", as defined in section 1302.86 of the Revised 
Code;
(5) "Entrusting", as defined in section 1302.44 of the 
Revised Code;
(6) "Identification", as defined in section 1302.45 of the 
Revised Code;
(7) "Installment contract", as defined in section 1302.70 
of the Revised Code;
(8) "Letter of credit", as defined in section 1302.38 of 
the Revised Code;
(9) "Overseas", as defined in section 1302.36 of the 
Revised Code;
(10) "Person in position of a seller", as defined in 
section 1302.81 of the Revised Code;
(11) "Sale on approval", as defined in section 1302.39 of 
the Revised Code;
(12) "Sale or return", as defined in section 1302.39 of 
the Revised Code.
(C) As used in sections 1302.01 to 1302.98 of the Revised 
Code, "check" and "draft" have the meaning set forth in section 
1303.03 of the Revised Code, "consignee" and "consignor" have 
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As Introduced
the meaning set forth in section 1307.102 of the Revised Code, 
"consumer goods" has the meaning set forth in section 1309.102 
of the Revised Code, "control" has the same meaning as set forth 
in section 1307.106 of the Revised Code, and "dishonor" has the 
meaning set forth in section 1303.62 of the Revised Code.
(D) In addition, Chapter 1301. of the Revised Code 
contains general definitions and principles of construction and 
interpretation applicable throughout this chapter.
Sec. 1302.02. Scope; certain security and other 
transactions excluded [UCC 2-102]
(A) Unless the context otherwise requires, and except as 
provided in division (C) of this section, sections 1302.01 to 
1302.98, inclusive, of the Revised Code, apply to transactions 
in goods; they do not apply to any transaction which although in 
the form of an unconditional contract to sell or present sale is 
intended to operate only as a security transaction nor do 
sections 1302.01 to 1302.98, inclusive, of the Revised Code 
impair or repeal any statute regulating sales to consumers, 
farmers, or other specified classes of buyers and, in the case 
of a hybrid transaction, it applies to the extent provided under 
division (B) of this section .
(B) In a hybrid transaction:
(1) If the sale-of-goods aspects do not predominate, only 
the provisions of sections 1302.01 to 1302.98 of the Revised 
Code which relate primarily to the sale-of-goods aspects of the 
transactions apply, and the provisions that relate primarily to 
the transaction as a whole do not apply.
(2) If the sale-of-goods aspects predominate, sections 
1302.01 to 1302.98 of the Revised Code apply but do not preclude 
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As Introduced
application in the appropriate circumstances of other law to 
aspects of the transaction which do not relate to the sale of 
goods.
(C) Sections 1302.01 to 1302.98 of the Revised Code do 
not:
(1) Apply to a transaction that, even though in the form 
of an unconditional contract to sell or present sale, operates 
only to create a security interest;
(2) Impair or repeal a statute regulating sales to 
consumers, farmers, or other specified classes of buyers.
Sec. 1302.04. Formal requirements; statute of frauds [UCC-
2-201]
(A) Except as otherwise provided in this section , a 
contract for the sale of goods for the price of five hundred 
dollars or more is not enforceable by way of action or defense 
unless there is some writing a record sufficient to indicate 
that a contract for sale has been made between the parties and 
signed by the party against whom enforcement is sought or by 
histhe party's authorized agent or broker . A writing record is 
not insufficient because it omits or incorrectly states a term 
agreed upon but the contract is not enforceable under this 
division beyond the quantity of goods shown in such writingthe 
record.
(B) Between merchants if within a reasonable time a 
writing record in confirmation of the contract and sufficient 
against the sender is received and the party receiving it has 
reason to know its contents, it satisfies the requirements of 
division (A) of this section against such the party unless 
written notice in a record of objection to its contents is given 
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As Introduced
within ten days after it is received.
(C) A contract which does not satisfy the requirements of 
division (A) of this section but which is valid in other 
respects is enforceable:
(1) if the goods are to be specially manufactured for the 
buyer and are not suitable for sale to others in the ordinary 
course of the seller's business and the seller, before notice of 
repudiation is received and under circumstances which reasonably 
indicate that the goods are for the buyer, has made either a 
substantial beginning of their manufacture or commitments for 
their procurement; or
(2) if the party against whom enforcement is sought admits 
in histhe party's pleading, testimony, or otherwise in court 
that a contract for sale was made, but the contract is not 
enforceable under this provision beyond the quantity of goods 
admitted; or
(3) with respect to goods for which payment has been made 
and accepted or which have been received and accepted in 
accordance with section 1302.64 of the Revised Code.
Sec. 1302.05. Final expression: parol or extrinsic 
evidence [UCC 2-202]
Terms with respect to which the confirmatory memoranda of 
the parties agree or which are otherwise set forth in a writing 
record intended by the parties as a final expression of their 
agreement with respect to such terms as are included therein may 
not be contradicted by evidence of any prior agreement or of a 
contemporaneous oral agreement but may be explained or 
supplemented: 
(A) by course of performance, course of dealing, or usage 
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As Introduced
of trade as provided in section 1301.303 of the Revised Code; 
and
(B) by evidence of consistent additional terms unless the 
court finds the writing record to have been intended also as a 
complete and exclusive statement of the terms of the agreement.
Sec. 1302.06. Seals inoperative [UCC 2-203]
The affixing of a seal to a writing record evidencing a 
contract for sale or an offer to buy or sell goods does not 
constitute the writing record a sealed instrument and the law 
with respect to sealed instruments does not apply to such a 
contract or offer.
Sec. 1302.08. Firm offers [UCC 2-205]
An offer by a merchant to buy or sell goods in a signed 
writing record which by its terms gives assurance that it will 
be held open is not revocable, for lack of consideration, during 
the time stated or if no time is stated for a reasonable time, 
but in no event may such period of irrevocability exceed three 
months; but any such term of assurance on a form supplied by the 
offeree must be separately signed by the offeror.
Sec. 1302.12. Modification, rescission, and waiver [UCC 2-
209]
(A) An agreement modifying a contract within sections 
1302.01 to 1302.98, inclusive, of the Revised Code, needs no 
consideration to be binding.
(B) A signed agreement which excludes modification or 
rescission except by a signed writing or other signed record 
cannot be otherwise modified or rescinded, but except as between 
merchants such a requirement on a form supplied by the merchant 
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As Introduced
must be separately signed by the other party.
(C) The requirements of section 1302.04 of the Revised 
Code, must be satisfied if the contract as modified is within 
its provisions.
(D) Although an attempt at modification or rescission does 
not satisfy the requirements of division (B) or (C) of this 
section, it can operate as a waiver.
(E) A party who has made a waiver affecting an executory 
portion of the contract may retract the waiver by reasonable 
notification received by the other party that strict performance 
will be required of any term waived, unless the retraction would 
be unjust in view of a material change of position in reliance 
on the waiver.
Sec. 1303.01. Definitions [UCC 3-103]
(A) As used in this chapter, unless the context otherwise 
requires:
(1) "Acceptor" means a drawee who has accepted a draft.
(2) "Consumer account" means an account established by an 
individual primarily for personal, family, or household 
purposes.
(3) "Consumer transaction" means a transaction in which an 
individual incurs an obligation primarily for personal, family, 
or household purposes.
(4) "Drawee" means a person ordered in a draft to make 
payment.
(5) "Drawer" means a person who signs or is identified in 
a draft as a person ordering payment.
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As Introduced
(6) "Good faith" has the same meaning as in section 
1301.201 of the Revised Code.
(7) "Issue" means either of the following:
(a) The first delivery of an instrument by the maker or 
drawer to a holder or nonholder for the purpose of giving rights 
of the instrument to any person ;
(b) If agreed by the payee, the first transmission by the 
drawer to the payee of an image of an item and information 
derived from the item that enables the depositary bank to 
collect the item by transferring or presenting under federal law 
an electronic check.
(8) "Issuer" means a maker or drawer of an issued or 
unissued instrument.
(9) "Maker" means a person who signs or is identified in a 
note as a person undertaking to pay.
(10) "Order" means a written instruction to pay money 
signed by the person giving the instruction. The instruction may 
be addressed to any person, including the person giving the 
instruction, or to one or more persons jointly or in the 
alternative but not in succession. "Order" does not mean an 
authorization to pay unless the person authorized to pay also is 
instructed to pay.
(11) "Ordinary care" in the case of a person engaged in 
business means observance of the reasonable commercial standards 
that are prevailing in the area in which the person is located 
with respect to the business in which the person is engaged. In 
the case of a bank that takes an instrument for processing for 
collection or payment by automated means, reasonable commercial 
standards do not require the bank to examine the instrument if 
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As Introduced
the failure to examine does not violate the bank's prescribed 
procedures, and the bank's procedures do not vary unreasonably 
from general banking usage not disapproved by this chapter or 
Chapter 1304. of the Revised Code.
(12) "Party" means a party to an instrument.
(13) "Principal obligor," with respect to an instrument, 
means the accommodated party or any other party to the 
instrument against whom a secondary obligor has recourse under 
this chapter.
(14) "Promise" means a written undertaking to pay money 
that is signed by the person undertaking to pay. "Promise" does 
not include an acknowledgment of an obligation by the obligor 
unless the obligor also undertakes to pay the obligation.
(15) "Prove," with respect to a fact, means to meet the 
burden of establishing the fact.
(16) "Remitter" means a person who purchases an instrument 
from its issuer if the instrument is payable to an identified 
person other than the purchaser.
(17) "Remotely-created consumer item" means an item drawn 
on a consumer account, which is not created by the payor bank 
and does not bear a handwritten signature purporting to be the 
signature of the drawer.
(18) "Secondary obligor," with respect to an instrument, 
means any of the following:
(a) An indorser or an accommodation party;
(b) A drawer having the obligation described in division 
(D) of section 1303.54 of the Revised Code;
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As Introduced
(c) Any other party to the instrument that has recourse 
against another party to the instrument pursuant to division (B) 
of section 1303.14 of the Revised Code.
(B) As used in this chapter:
(1) "Acceptance" has the same meaning as in section 
1303.46 of the Revised Code.
(2) "Accommodation party" and "accommodated party" have 
the same meanings as in section 1303.59 of the Revised Code.
(3) "Account" has the same meaning as in section 1304.01 
of the Revised Code.
(4) "Alteration" has the same meaning as in section 
1303.50 of the Revised Code.
(5) "Anomalous indorsement," "blank indorsement," and 
"special indorsement" have the same meanings as in section 
1303.25 of the Revised Code.
(6) "Certificate of deposit," "cashier's check," "check," 
"draft," "instrument," "negotiable instrument," "note," 
"teller's check," and "traveler's check" have the same meanings 
as in section 1303.03 of the Revised Code.
(7) "Certified check" has the same meaning as in section 
1303.46 of the Revised Code.
(8) "Consideration" and "value" have the same meanings as 
in section 1303.33 of the Revised Code.
(9) "Holder in due course" has the same meaning as in 
section 1303.32 of the Revised Code.
(10) "Incomplete instrument" has the same meaning as in 
section 1303.11 of the Revised Code.
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As Introduced
(11) "Indorsement" and "indorser" have the same meanings 
as in section 1303.24 of the Revised Code.
(12) "Negotiation" has the same meaning as in section 
1303.21 of the Revised Code.
(13) "Payable at a definite time" and "payable on demand" 
have the same meanings as in section 1303.07 of the Revised 
Code.
(14) "Payable to bearer" and "payable to order" have the 
same meanings as in section 1303.10 of the Revised Code.
(15) "Payment" has the same meaning as in section 1303.67 
of the Revised Code.
(16) "Person entitled to enforce" has the same meaning as 
in section 1303.31 of the Revised Code.
(17) "Presentment" has the same meaning as in section 
1303.61 of the Revised Code. 
(18) "Reacquisition" has the same meaning as in section 
1303.27 of the Revised Code.
(19) "Transfer of instrument" has the same meaning as in 
section 1303.22 of the Revised Code.
(C) As used in this chapter, "banking day," "clearing 
house," "collecting bank," "customer," "depositary bank," 
"documentary draft," "intermediary bank," "item," "midnight 
deadline," "payor bank," and "suspends payments" have the same 
meanings as in section 1304.01 of the Revised Code.
(D) In addition, Chapter 1301. of the Revised Code 
contains general definitions and general principles of 
construction and interpretation applicable throughout this 
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As Introduced
chapter.
Sec. 1303.03. Negotiable instrument [UCC 3-104]
(A) Except as provided in divisions (C) and (D) of this 
section, "negotiable instrument" means an unconditional promise 
or order to pay a fixed amount of money, with or without 
interest or other charges described in the promise or order, if 
it meets all of the following requirements:
(1) It is payable to bearer or to order at the time it is 
issued or first comes into possession of a holder.
(2) It is payable on demand or at a definite time.
(3) It does not state any other undertaking or instruction 
by the person promising or ordering payment to do any act in 
addition to the payment of money, but the promise or order may 
contain any of the following:
(a) An undertaking or power to give, maintain, or protect 
collateral to secure payment;
(b) An authorization or power to the holder to confess 
judgment or realize on or dispose of collateral;
(c) A waiver of the benefit of any law intended for the 
advantage or protection of an obligor ;
(d) A term that specifies the law that governs the promise 
or order;
(e) An undertaking to resolve in a specified forum a 
dispute concerning the promise or order .
(B) "Instrument" means a negotiable instrument.
(C) An order that meets all of the requirements of 
divisions (A)(2) and (3) of this section and otherwise falls 
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867 H. B. No. 195 Page 32
As Introduced
within the definition of "check" is a negotiable instrument and 
a check.
(D) A promise or order other than a check is not an 
instrument if, at the time it is issued or first comes into 
possession of a holder, it contains a conspicuous statement, 
however expressed, to the effect that the promise or order is 
not negotiable or is not an instrument governed by this chapter.
(E)(1) "Note" means an instrument that is a promise.
(2) "Draft" means an instrument that is an order.
(3) If an instrument is both a "note" and a "draft," a 
person entitled to enforce the instrument may treat it as 
either.
(F) "Check" means either of the following:
(1) A draft, other than a documentary draft, payable on 
demand and drawn on a bank;
(2) A cashier's check or teller's check.
An instrument may be a "check" even though it is described 
on its face as a "money order" or by another term.
(G) "Cashier's check" means a draft with respect to which 
the drawer and drawee are the same bank or branches of the same 
bank.
(H) "Teller's check" means a draft drawn by a bank on 
another bank or payable at or through a bank.
(I) "Traveler's check" means an instrument that meets all 
of the following conditions:
(1) It is payable on demand.
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893 H. B. No. 195 Page 33
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(2) It is drawn on or payable at or through a bank.
(3) It is designated by the term "traveler's check" or by 
a substantially similar term.
(4) It requires, as a condition to payment, a 
countersignature by a person whose specimen signature appears on 
the instrument.
(J) "Certificate of deposit" means an instrument 
containing an acknowledgment by a bank that a sum of money has 
been received by the bank and a promise by the bank to repay the 
sum of money. A "certificate of deposit" is a note of the bank.
Sec. 1303.41. (A) Signature necessary for liability on 
instrument [UCC 3-401]
A person is not liable on an instrument unless the person 
signed the instrument or the person is represented by an agent 
or representative who signed the instrument and the signature is 
binding on the represented person pursuant to section 1303.42 of 
the Revised Code.
(B) A signature may be made manually or by means of a 
device or machine and by the use of any name, including a trade 
or assumed name, or by a word, mark, or symbol executed or 
adopted by a person with present intention to authenticate a 
writing.
Sec. 1303.69. Discharge by cancellation or renunciation 
[UCC 3-604]
(A) A person entitled to enforce an instrument, with or 
without consideration, may discharge the obligation of a party 
to pay the instrument in either of the following ways:
(1) By surrender of the instrument to the party, 
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921 H. B. No. 195 Page 34
As Introduced
destruction, mutilation, or cancellation of the instrument, 
cancellation or striking out of the party's signature, the 
addition of words to the instrument indicating discharge, or any 
other intentional voluntary act;
(2) By agreeing not to sue or otherwise renouncing rights 
against the party by a signed record.
(B) Cancellation or striking out of an indorsement 
pursuant to division (A) does not affect the status and rights 
of a party derived from the indorsement.
(C) As used in this section, "signed," with respect to a 
record that is not a writing, includes the attachment to or 
logical association with the record of an electronic symbol, 
sound, or process with the present intent to adopt or accept the 
recordThe obligation of a party to pay a check is not discharged 
solely by destruction of the check in connection with a process 
in which information is extracted from the check and an image of 
the check is made and, subsequently, the information and image 
are transmitted for payment .
Sec. 1304.51. Definitions [UCC 4A-103 to 4A-105]
(A) As used in sections 1304.51 to 1304.85 of the Revised 
Code: 
(1) "Authorized account" means a deposit account of a 
customer in a bank designated by the customer as a source of 
payment of payment orders issued by the customer to the bank. If 
a customer does not so designate an account, any account of the 
customer is an authorized account if payment of a payment order 
from that account is not inconsistent with a restriction on the 
use of that account.
(2) "Bank" means a person engaged in the business of 
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As Introduced
banking and includes a savings bank, savings and loan 
association, credit union, and trust company. A branch or 
separate office of a bank is a separate bank for purposes of 
sections 1304.51 to 1304.85 of the Revised Code.
(3) "Beneficiary" means the person to be paid by the 
beneficiary's bank.
(4) "Beneficiary's bank" means the bank identified in a 
payment order in which an account of the beneficiary is to be 
credited pursuant to the order or which otherwise is to make 
payment to the beneficiary if the order does not provide for 
payment to an account.
(5) "Customer" means a person, including a bank, having an 
account with a bank or from whom a bank has agreed to receive 
payment orders.
(6) "Funds transfer" means the series of transactions, 
beginning with the originator's payment order, made for the 
purpose of making payment to the beneficiary of the order. 
"Funds transfer" includes any payment order issued by the 
originator's bank or an intermediary bank intended to carry out 
the originator's payment order. A funds transfer is completed by 
acceptance by the beneficiary's bank of a payment order for the 
benefit of the beneficiary of the originator's payment order.
(7) "Funds-transfer business day" of a receiving bank 
means the part of a day during which the receiving bank is open 
for the receipt, processing, and transmittal of payment orders 
and cancellations and amendments of payment orders.
(8) "Funds-transfer system" means a wire transfer network, 
automated clearing house, or other communication system of a 
clearing house or other association of banks through which a 
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979 H. B. No. 195 Page 36
As Introduced
payment order by a bank may be transmitted to the bank to which 
the order is addressed.
(9) "Good faith" has the same meaning as in section 
1301.201 of the Revised Code.
(10) "Intermediary bank" means a receiving bank other than 
the originator's bank or the beneficiary's bank.
(11) "Originator" means the sender of the first payment 
order in a funds transfer.
(12) "Originator's bank" means the receiving bank to which 
the payment order of the originator is issued if the originator 
is not a bank, or the originator if the originator is a bank.
(13)(a) "Payment order" means an instruction of a sender 
to a receiving bank, transmitted orally, electronically, or in 
writinga record, to pay, or to cause another bank to pay, a 
fixed or determinable amount of money to a beneficiary if all of 
the following apply:
(i) The instruction does not state a condition to payment 
to the beneficiary other than time of payment.
(ii) The receiving bank is to be reimbursed by debiting an 
account of, or otherwise receiving payment from, the sender.
(iii) The instruction is transmitted by the sender 
directly to the receiving bank or to an agent, funds-transfer 
system, or communication system for transmittal to the receiving 
bank.
(b) If the instruction complying with division (A)(13)(a) 
of this section is to make more than one payment to a 
beneficiary, the instruction is a separate payment order with 
respect to each payment.
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1007 H. B. No. 195 Page 37
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(c) A payment order is issued when it is sent to the 
receiving bank.
(14) "Prove," with respect to a fact, means to meet the 
burden of establishing the fact.
(15) "Receiving bank" means the bank to which the sender's 
instruction is addressed.
(16) "Sender" means the person giving the instruction to 
the receiving bank.
(B) Other definitions applying to sections 1304.51 to 
1304.85 of the Revised Code are:
(1) "Acceptance" as defined in section 1304.64 of the 
Revised Code;
(2) "Executed" as defined in section 1304.68 of the 
Revised Code;
(3) "Execution date" as defined in section 1304.68 of the 
Revised Code;
(4) "Funds-transfer system rule" as defined in section 
1304.79 of the Revised Code;
(5) "Payment by beneficiary's bank to beneficiary" as 
defined in section 1304.77 of the Revised Code;
(6) "Payment by originator to beneficiary" as defined in 
section 1304.78 of the Revised Code;
(7) "Payment by sender to receiving bank" as defined in 
section 1304.75 of the Revised Code;
(8) "Payment date" as defined in section 1304.73 of the 
Revised Code;
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1033 H. B. No. 195 Page 38
As Introduced
(9) "Security procedure" as defined in section 1304.56 of 
the Revised Code.
(C) As used in sections 1304.51 to 1304.85 of the Revised 
Code, "clearing house," "item," and "suspends payments" have the 
same meanings as in section 1304.01 of the Revised Code.
(D) In addition, Chapter 1301. of the Revised Code 
contains general definitions and principles of construction and 
interpretation applicable throughout sections 1304.51 to 1304.85 
of the Revised Code.
Sec. 1304.56. Security procedure [UCC 4A-201]
"Security procedure" means a procedure established by 
agreement of a customer and a receiving bank for the purpose of 
verifying that a payment order or communication amending or 
cancelling a payment order is that of the customer, or detecting 
error in the transmission or the content of the payment order or 
communication. A security procedure may impose an obligation on 
the receiving bank or customer and may require the use of 
algorithms or other codes, identifying words or , numbers, 
symbols, sounds, biometrics, encryption, callback procedures, or 
similar security devices. Comparison of a signature on a payment 
order or communication with an authorized specimen signature of 
the customer or requiring a payment order to be sent from a 
known electronic mail address, internet protocol address, or 
telephone number is not by itself a security procedure.
Sec. 1304.57. Authorized and verified payment orders [UCC 
4A-202]
(A) A payment order received by the receiving bank is the 
authorized order of the person identified as sender if that 
person authorized the order or is otherwise bound by it under 
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1062 H. B. No. 195 Page 39
As Introduced
the law of agency.
(B)(1) If a bank and its customer have agreed that the 
authenticity of payment orders issued to the bank in the name of 
the customer as sender will be verified pursuant to a security 
procedure, a payment order received by the receiving bank is 
effective as the order of the customer, whether or not 
authorized, if both of the following apply:
(a) The security procedure is a commercially reasonable 
method of providing security against unauthorized payment 
orders.
(b) The bank proves that it accepted the payment order in 
good faith and in compliance with the bank's obligations under 
the security procedure and any written agreement or instruction 
of the customer, evidenced by a record, restricting acceptance 
of payment orders issued in the name of the customer.
(2) The bank is not required to follow an instruction that 
violates a written an agreement with the customer , evidenced by 
a record, or notice of which is not received at a time and in a 
manner affording the bank a reasonable opportunity to act on it 
before the payment order is accepted.
(C)(1) Commercial reasonableness of a security procedure 
is a question of law to be determined by considering all of the 
following:
(a) The wishes of the customer expressed to the bank;
(b) The circumstances of the customer known to the bank, 
including the size, type, and frequency of payment orders 
normally issued by the customer to the bank;
(c) Alternative security procedures offered to the 
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1090 H. B. No. 195 Page 40
As Introduced
customer;
(d) Security procedures in general use by customers and 
receiving banks similarly situated.
(2) A security procedure is deemed to be commercially 
reasonable if both of the following apply:
(a) The security procedure was chosen by the customer 
after the bank offered, and the customer refused, a security 
procedure that was commercially reasonable for that customer.
(b) The customer expressly agreed in writing a record to 
be bound by any payment order, whether or not authorized, issued 
in its name and accepted by the bank in compliance with the 
bank's obligations under the security procedure chosen by the 
customer.
(D) As used in sections 1304.51 to 1304.85 of the Revised 
Code, "sender" includes the customer in whose name a payment 
order is issued if the order is the authorized order of the 
customer under division (A) of this section, or is effective as 
the order of the customer under division (B) of this section.
(E) This section applies to amendments and cancellations 
of payment orders to the same extent it applies to payment 
orders.
(F) Except as provided in this section and in division (A)
(1) of section 1304.58 of the Revised Code, rights and 
obligations arising under this section or section 1304.58 of the 
Revised Code may not be varied by agreement.
Sec. 1304.58. Unenforceability of certain verified payment 
orders [UCC 4A-203]
(A) If an accepted payment order is not an authorized 
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1118 H. B. No. 195 Page 41
As Introduced
order of a customer identified as sender under division (A) of 
section 1304.57 of the Revised Code, but is effective as an 
order of the customer under division (B) of that section, both 
of the following apply:
(1) By express written agreement evidenced by a record , 
the receiving bank may limit the extent to which it is entitled 
to enforce or retain payment of the payment order.
(2) The receiving bank may not enforce or retain payment 
of the payment order if the customer proves that the order was 
not caused, directly or indirectly, by either of the following:
(a) A person entrusted at any time with duties to act for 
the customer with respect to payment orders or the security 
procedure;
(b) A person who obtained access to transmitting 
facilities of the customer or who obtained, from a source 
controlled by the customer and without authority of the 
receiving bank, information facilitating breach of the security 
procedure, regardless of how the information was obtained or 
whether the customer was at fault. As used in division (A)(2)(b) 
of this section, "information" includes any access device, 
computer software, or the like.
(B) This section applies to amendments of payment orders 
to the same extent it applies to payment orders.
Sec. 1304.62. Misdescription of beneficiary [UCC 4A-207]
(A) Subject to division (B) of this section, if, in a 
payment order received by the beneficiary's bank, the name, bank 
account number, or other identification of the beneficiary 
refers to a nonexistent or unidentifiable person or account, no 
person has rights as a beneficiary of the order and acceptance 
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1147 H. B. No. 195 Page 42
As Introduced
of the order cannot occur.
(B) If a payment order received by the beneficiary's bank 
identifies the beneficiary by name and an identifying or bank 
account number, and the name and number identify different 
persons, both of the following apply:
(1) Except as otherwise provided in division (C) of this 
section, if the beneficiary's bank does not know that the name 
and number refer to different persons, it may rely on the number 
as the proper identification of the beneficiary of the order. 
The beneficiary's bank need not determine whether the name and 
number refer to the same person.
(2) If the beneficiary's bank pays the person identified 
by name or knows that the name and number identify different 
persons, no person has rights as beneficiary except the person 
paid by the beneficiary's bank if that person was entitled to 
receive payment from the originator of the funds transfer. If no 
person has rights as beneficiary, acceptance of the order cannot 
occur.
(C) If a payment order described in division (B) of this 
section is accepted, the originator's payment order described 
the beneficiary inconsistently by name and number, and the 
beneficiary's bank pays the person identified by number as 
permitted by division (B)(1) of this section, both of the 
following apply:
(1) If the originator is a bank, the originator shall pay 
its order.
(2) If the originator is not a bank and proves that the 
person identified by number was not entitled to receive payment 
from the originator, the originator is not obliged to pay its 
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1176 H. B. No. 195 Page 43
As Introduced
order unless the originator's bank proves that the originator, 
before acceptance of the originator's order, had notice that 
payment of a payment order issued by the originator might be 
made by the beneficiary's bank on the basis of an identifying or 
bank account number even if it identifies a person different 
from the named beneficiary. Proof of notice may be made by any 
admissible evidence. The originator's bank satisfies the burden 
of proof if it proves that the originator, before the payment 
order was accepted, signed a writing record stating the 
information to which the notice relates.
(D) In a case governed by division (B)(1) of this section, 
if the beneficiary's bank rightfully pays the person identified 
by number and that person was not entitled to receive payment 
from the originator, the amount paid may be recovered from that 
person to the extent allowed by the law governing mistake and 
restitution as follows:
(1) If the originator is obliged to pay its payment order 
as stated in division (C) of this section, the originator may 
recover.
(2) If the originator is not a bank and is not obliged to 
pay its payment order, the originator's bank may recover.
Sec. 1304.63. Misdescription of intermediary bank or 
beneficiary's bank [UCC 4A-208]
(A)(1) Divisions (A)(2) and (3) of this section apply to a 
payment order identifying an intermediary bank or the 
beneficiary's bank only by an identifying number.
(2) The receiving bank may rely on the number as the 
proper identification of the intermediary or beneficiary's bank 
and need not determine whether the number identifies a bank.
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1205 H. B. No. 195 Page 44
As Introduced
(3) The sender shall compensate the receiving bank for any 
loss and expenses incurred by the receiving bank as a result of 
its reliance on the number in executing or attempting to execute 
the order.
(B)(1) Divisions (B)(2) to (5) of this section apply to a 
payment order identifying an intermediary bank or the 
beneficiary's bank both by name and an identifying number if the 
name and number identify different persons.
(2) If the sender is a bank, the receiving bank may rely 
on the number as the proper identification of the intermediary 
or beneficiary's bank if the receiving bank, when it executes 
the sender's order, does not know that the name and number 
identify different persons. The receiving bank need not 
determine whether the name and number refer to the same person 
or whether the number refers to a bank. The sender shall 
compensate the receiving bank for any loss and expenses incurred 
by the receiving bank as a result of its reliance on the number 
in executing or attempting to execute the order.
(3) If the sender is not a bank, and the receiving bank 
proves that the sender, before the payment order was accepted, 
had notice that the receiving bank might rely on the number as 
the proper identification of the intermediary or beneficiary's 
bank even if it identifies a person different from the bank 
identified by name, the rights and obligations of the sender and 
the receiving bank are governed by division (B)(2) of this 
section, as though the sender were a bank. Proof of notice may 
be made by any admissible evidence. The receiving bank satisfies 
the burden of proof itif it proves that the sender, before the 
payment order was accepted, signed a writing record stating the 
information to which the notice relates.
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As Introduced
(4) Regardless of whether the sender is a bank, the 
receiving bank may rely on the name as the proper identification 
of the intermediary or beneficiary's bank if the receiving bank, 
at the time it executes the sender's order, does not know that 
the name and number identify different persons. The receiving 
bank need not determine whether the name and number refer to the 
same person.
(5) If the receiving bank knows that the name and number 
identify different persons, reliance on either the name or the 
number in executing the sender's payment order is a breach of 
the obligation as provided in division (A)(1) of section 1304.69 
of the Revised Code.
Sec. 1304.65. Rejection of payment order [UCC 4A-210]
(A) A payment order is rejected by the receiving bank by a 
notice of rejection transmitted to the sender orally , 
electronically, or in writinga record. A notice of rejection 
need not use any particular words and is sufficient if it 
indicates that the receiving bank is rejecting the order or will 
not execute or pay the order. Rejection is effective when the 
notice is given if transmission is by a means that is reasonable 
in the circumstances. If notice of rejection is given by a means 
that is not reasonable, rejection is effective when the notice 
is received. If an agreement of the sender and receiving bank 
establishes the means to be used to reject a payment order, any 
means complying with the agreement is reasonable, and any means 
not complying is not reasonable unless no significant delay in 
receipt of the notice resulted from the use of the noncomplying 
means.
(B) This division applies if a receiving bank other than 
the beneficiary's bank fails to execute a payment order despite 
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1265 H. B. No. 195 Page 46
As Introduced
the existence on the execution date of a withdrawable credit 
balance in an authorized account of the sender sufficient to 
cover the order. If the sender does not receive notice of 
rejection of the order on the execution date and the authorized 
account of the sender does not bear interest, the bank shall pay 
interest to the sender on the amount of the order for the number 
of days elapsing after the execution date to the earlier of the 
day the order is canceled pursuant to division (D) of section 
1304.66 of the Revised Code or the day the sender receives 
notice or learns that the order was not executed, counting the 
final day of the period as an elapsed day. If the withdrawable 
credit balance during that period falls below the amount of the 
order, the amount of interest is reduced accordingly.
(C) If a receiving bank suspends payments, all unaccepted 
payment orders issued to it are deemed rejected at the time the 
bank suspends payments.
(D) Acceptance of a payment order precludes a later 
rejection of the order. Rejection of a payment order precludes a 
later acceptance of the order.
Sec. 1304.66. Cancellation and amendment of payment order 
[UCC 4A-211]
(A) A communication of the sender of a payment order 
canceling or amending the order may be transmitted to the 
receiving bank orally , electronically, or in writinga record. If 
a security procedure is in effect between the sender and the 
receiving bank, the communication is not effective to cancel or 
amend the order unless the communication is verified pursuant to 
the security procedure or the bank agrees to the cancellation or 
amendment.
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As Introduced
(B) Subject to division (A) of this section, a 
communication by the sender canceling or amending a payment 
order is effective to cancel or amend the order if notice of the 
communication is received at a time and in a manner affording 
the receiving bank a reasonable opportunity to act on the 
communication before the bank accepts the payment order.
(C)(1) After a payment order has been accepted, 
cancellation or amendment of the order is not effective unless 
the receiving bank agrees or a funds-transfer system rule allows 
cancellation or amendment without agreement of the bank.
(2) With respect to a payment order accepted by a 
receiving bank other than the beneficiary's bank, cancellation 
or amendment is not effective unless a conforming cancellation 
or amendment of the payment order issued by the receiving bank 
is also made.
(3) With respect to a payment order accepted by the 
beneficiary's bank, cancellation or amendment is not effective 
unless the order was issued in execution of an unauthorized 
payment order, or because of a mistake by a sender in the funds 
transfer that resulted in the issuance of a payment order that 
is a duplicate of a payment order previously issued by the 
sender, that orders payment to a beneficiary not entitled to 
receive payment from the originator, or that orders payment in 
an amount greater than the amount the beneficiary was entitled 
to receive from the originator. If the payment order is canceled 
or amended, the beneficiary's bank may recover from the 
beneficiary any amount paid to the beneficiary to the extent 
allowed by the law governing mistake and restitution.
(D) An unaccepted payment order is canceled by operation 
of law at the close of the fifth funds-transfer business day of 
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1324 H. B. No. 195 Page 48
As Introduced
the receiving bank after the execution date or payment date of 
the order.
(E) A canceled payment order cannot be accepted. If an 
accepted payment order is canceled, the acceptance is nullified, 
and no person has any right or obligation based on the 
acceptance. Amendment of a payment order is deemed to be 
cancellation of the original order at the time of amendment and 
issue of a new payment order in the amended form at the same 
time.
(F) Unless otherwise provided in an agreement of the 
parties or in a funds-transfer system rule, if the receiving 
bank, after accepting a payment order, agrees to cancellation or 
amendment of the order by the sender or is bound by a funds-
transfer system rule allowing cancellation or amendment without 
the bank's agreement, the sender, whether or not cancellation or 
amendment is effective, is liable to the bank for any loss and 
expenses, including reasonable attorney's fees, incurred by the 
bank as a result of the cancellation, amendment, or attempted 
cancellation or amendment.
(G) A payment order is not revoked by the death or legal 
incapacity of the sender unless the receiving bank knows of the 
death or of an adjudication of incapacity by a court of 
competent jurisdiction and has reasonable opportunity to act 
before acceptance of the order.
(H) A funds-transfer system rule is not effective to the 
extent it conflicts with division (C)(3) of this section.
Sec. 1304.72. Liability for late or improper execution or 
failure to execute payment order [UCC 4A-305]
(A) If a funds transfer is completed but execution of a 
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1353 H. B. No. 195 Page 49
As Introduced
payment order by the receiving bank without compliance with 
section 1304.69 of the Revised Code results in delay in payment 
to the beneficiary, the bank shall pay interest to either the 
originator or the beneficiary of the funds transfer for the 
period of delay caused by the improper execution. Except as 
provided in division (C) of this section, additional damages are 
not recoverable.
(B) If execution of a payment order by a receiving bank 
without compliance with section 1304.69 of the Revised Code 
results in noncompletion of the funds transfer, failure to use 
an intermediary bank designated by the originator, or issuance 
of a payment order that does not comply with the terms of the 
payment order of the originator, the bank is liable to the 
originator for its expenses in the funds transfer and for 
incidental expenses and interest losses, to the extent not 
covered by division (A) of this section, resulting from the 
improper execution. Except as provided in division (C) of this 
section, additional damages are not recoverable.
(C) In addition to the amounts payable under divisions (A) 
and (B) of this section, damages, including consequential 
damages, are recoverable to the extent provided in an express 
written agreement of the receiving bank , evidenced by a record .
(D) If a receiving bank fails to execute a payment order 
it was obliged by express agreement to execute, the receiving 
bank is liable to the sender for its expenses in the transaction 
and for incidental expenses and interest losses resulting from 
the failure to execute. Additional damages, including 
consequential damages, are recoverable to the extent provided in 
an express written agreement of the receiving bank, evidenced by 
a record, but are not otherwise recoverable.
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(E) Reasonable attorney's fees are recoverable if demand 
for compensation under division (A) or (B) of this section is 
made and refused before an action is brought on the claim. If a 
claim is made for breach of an agreement under division (D) of 
this section and the agreement does not provide for damages, 
reasonable attorney's fees are recoverable if demand for 
compensation under division (D) of this section is made and 
refused before an action is brought on the claim.
(F) Except as stated in this section, the liability of a 
receiving bank under divisions (A) and (B) of this section may 
not be varied by agreement.
Sec. 1305.03. Formal requirements [UCC 5-104]
A letter of credit, confirmation, advice, transfer, 
amendment, or cancellation may be issued in any form that is a 
signed record and is authenticated by a signature or in 
accordance with the agreement of the parties or the standard 
practice referred to in division (E) of section 1305.07 of the 
Revised Code.
Sec. 1305.15. Choice of law and forum [UCC 5-116]
(A) The liability of an issuer, nominated person, or 
adviser for action or omission is governed by the law of the 
jurisdiction chosen by an agreement in the form of a record 
signed or otherwise authenticated by the affected parties in the 
manner provided in section 1305.03 of the Revised Code or by a 
provision in the person's letter of credit, confirmation, or 
other undertaking. The jurisdiction whose law is chosen need not 
bear any relation to the transaction.
(B) Unless division (A) of this section applies, the 
liability of an issuer, nominated person, or adviser for action 
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As Introduced
or omission is governed by the law of the jurisdiction in which 
the person is located. The person is considered to be located at 
the address indicated in the person's undertaking. If more than 
one address is indicated, the person is considered to be located 
at the address from which the person's undertaking was issued. 
For 
(C) For the purpose of jurisdiction, choice of law, and 
recognition of interbranch letters of credit, but not 
enforcement of a judgment, all branches of a bank are considered 
separate juridical entities and a bank is considered to be 
located at the place where its relevant branch is considered to 
be located under this division (D) of this section .
(C) (D) A branch of a bank is considered to be located at 
the address indicated in the branch's undertaking. If more than 
one address is indicated, the branch is considered to be located 
at the address from which the undertaking was issued.
(E) Except as otherwise provided in this division, the 
liability of an issuer, nominated person, or adviser is governed 
by any rules of custom or practice, such as the uniform customs 
and practice for documentary credits, to which the letter of 
credit, confirmation, or other undertaking is expressly made 
subject. If (1) this chapter would govern the liability of an 
issuer, nominated person, or adviser under division (A) or (B) 
of this section, (2) the relevant undertaking incorporates rules 
of custom or practice, and (3) there is conflict between this 
chapter and those rules as applied to that undertaking, those 
rules govern except to the extent of any conflict with the 
nonvariable provisions specified in division (C) of section 
1305.02 of the Revised Code.
(D) (F) If there is conflict between this chapter and 
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As Introduced
Chapter 1303., 1304., or 1309. of the Revised Code, this chapter 
governs.
(E) (G) The forum for settling disputes arising out of an 
undertaking within this chapter may be chosen in the manner and 
with the binding effect that governing law may be chosen in 
accordance with division (A) of this section.
Sec. 1307.102. Definitions and index of definitions [UCC 
7-102] 
(A) As used in sections 1307.101 to 1307.603 of the 
Revised Code, unless the context otherwise requires:
(1) "Bailee" means a person that by a warehouse receipt, 
bill of lading, or other document of the title acknowledges 
possession of goods and contracts to deliver them.
(2) "Carrier" means a person that issues a bill of lading.
(3) "Consignee" means a person named in a bill of lading 
to which or to whose order the bill promises delivery.
(4) "Consignor" means a person named in a bill of lading 
as the person from which the goods have been received for 
shipment.
(5) "Delivery order" means a record that contains an order 
to deliver goods directed to a warehouse, carrier, or other 
person that in the ordinary course of business issues warehouse 
receipts or bills of lading.
(6) "Good faith" has the same meaning as in section 
1301.201 of the Revised Code.
(7) "Goods" means all things that are treated as movable 
for the purposes of a contract of storage or transportation.
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1469 H. B. No. 195 Page 53
As Introduced
(8) "Issuer" means a bailee that issues a document of 
title or, in the case of an unaccepted delivery order, the 
person that orders the possessor of goods to deliver. The term 
includes a person for which an agent or employee purports to act 
in issuing a document if the agent or employee has real or 
apparent authority to issue documents, even if the issuer did 
not receive any goods, the goods were misdescribed, or in any 
other respect the agent or employee violated the issuer's 
instructions.
(9) "Person entitled under the document" means the holder, 
in the case of a negotiable document of title, or the person to 
which delivery of the goods is to be made by the terms of, or 
pursuant to instructions in a record under, a nonnegotiable 
document of title.
(10) "Record" means information that is inscribed on a 
tangible medium or that is stored in an electronic or other 
medium and is retrievable in perceivable form [Reserved.]
(11) "Sign" means, with present intent to authenticate or 
adopt a record:
(a) To execute or adopt a tangible symbol; or
(b) To attach to or logically associate with the record an 
electronic sound, symbol, or process [Reserved.]
(12) "Shipper" means a person that enters into a contract 
of transportation with a carrier.
(13) "Warehouse" means a person engaged in the business of 
storing of goods for hire.
(B) As used in sections 1307.101 to 1307.603 of the 
Revised Code, "contract for sale" and "receipt" of goods have 
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1497 H. B. No. 195 Page 54
As Introduced
the meaning set forth in section 1302.01 of the Revised Code, 
and "lessee in the ordinary course of business" has the meaning 
set forth in section 1310.01 of the Revised Code.
(C) In addition, Chapter 1301. of the Revised Code 
contains general definitions and principles of construction and 
interpretation applicable throughout this chapter.
Sec. 1307.106. Control of electronic document of title 
[UCC 7-106] 
(A) A person has control of an electronic document of 
title if a system employed for evidencing the transfer of 
interests in the electronic document reliably establishes that 
person as the person to which the electronic document was issued 
or transferred.
(B) A system satisfies division (A) of this section, and a 
person is deemed to have has control of an electronic document 
of title, if the document is created, stored, and assigned 
transferred in such a manner that:
(1) A single authoritative copy of the document exists 
which is unique, identifiable, and, except as otherwise provided 
in divisions (B)(4), (5), and (6) of this section, unalterable;
(2) The authoritative copy identifies the person asserting 
control as:
(a) The person to which the document was issued; or
(b) If the authoritative copy indicates that the document 
has been transferred, the person to which the document was most 
recently transferred.
(3) The authoritative copy is communicated to and 
maintained by the person asserting control or its designated 
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As Introduced
custodian;
(4) Copies or amendments that add or change an identified 
assignee transferee of the authoritative copy can be made only 
with the consent of the person asserting control;
(5) Each copy of the authoritative copy and any copy of a 
copy is readily identifiable as a copy that is not the 
authoritative copy; and
(6) Any amendment of the authoritative copy is readily 
identifiable as authorized or unauthorized.
(C) A system satisfies division (A) of this section, and a 
person has control of an electronic document of title, if an 
authoritative electronic copy of the document, a record attached 
to or logically associated with the electronic copy, or a system 
in which the electronic copy is recorded does all of the 
following:
(1) Enables the person to readily identify each electronic 
copy as either an authoritative or nonauthoritative copy;
(2) Enables the person to readily identify itself in any 
way, including by name, identifying number, cryptographic key, 
office, or account number, as the person to which each 
authoritative electronic copy was issued or transferred;
(3) Gives the person exclusive power, subject to division 
(D) of this section, to do both of the following:
(a) Prevent others from adding or changing the person to 
which each authoritative electronic copy has been issued or 
transferred;
(b) Transfer control of each authoritative electronic 
copy.
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1553 H. B. No. 195 Page 56
As Introduced
(D) Subject to division (E) of this section, a power is 
exclusive under divisions (C)(3)(a) and (b) of this section even 
if one or both of the following apply:
(1) The authoritative electronic copy, a record attached 
to or logically associated with the authoritative electronic 
copy, or a system in which the authoritative electronic copy is 
recorded limits the use of the document of title or has a 
protocol that is programmed to cause a change, including a 
transfer or loss of control;
(2) The power is shared with another person.
(E) A power of a person is not shared with another person 
under division (D)(2) of this section and the person's power is 
not exclusive if both of the following apply:
(1) The person can exercise the power only if the power is 
also exercised by the other person;
(2) The other person either:
(a) Can exercise the power without exercise of the power 
by the person;
(b) Is the transferor to the person of an interest in the 
document of title.
(F) If a person has the powers specified in divisions (C)
(3)(a) and (b) of this section, the powers are presumed to be 
exclusive.
(G) A person has control of an electronic document of 
title if another person, other than the transferor to the person 
of an interest in the document, either:
(1) Has control of the document and acknowledges that it 
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1580 H. B. No. 195 Page 57
As Introduced
has control on behalf of the person;
(2) Obtains control of the document after having 
acknowledged that it will obtain control of the document on 
behalf of the person.
(H) A person that has control under this section is not 
required to acknowledge that it has control on behalf of another 
person.
(I) If a person acknowledges that it has or will obtain 
control on behalf of another person, unless the person otherwise 
agrees or law other than this chapter or Chapter 1309. of the 
Revised Code otherwise provides, the person does not owe any 
duty to the other person and is not required to confirm the 
acknowledgment to any person.
Sec. 1308.01. Definitions and index of definitions [UCC 8-
102]
(A) In this chapter: 
(1) "Adverse claim" means a claim that a claimant has a 
property interest in a financial asset and that it is a 
violation of the rights of the claimant for another person to 
hold, transfer, or deal with the financial asset.
(2) "Bearer form," as applied to a certificated security, 
means a form in which the security is payable to the bearer of 
the security certificate according to its terms but not by 
reason of an indorsement.
(3) "Broker" means a person defined as a broker or dealer 
under the federal securities laws, but without excluding a bank 
acting in that capacity.
(4) "Certificated security" means a security that is 
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As Introduced
represented by a certificate.
(5) "Clearing corporation" means:
(a) A person that is registered as a "clearing agency" 
under the federal securities laws;
(b) A federal reserve bank; or
(c) Any other person that provides clearance or settlement 
services with respect to financial assets that would require it 
to register as a clearing agency under the federal securities 
laws but for an exclusion or exemption from the registration 
requirement, if its activities as a clearing corporation, 
including promulgation of rules, are subject to regulation by a 
federal or state governmental authority.
(6) "Communicate" means to:
(a) Send a signed writingrecord; or
(b) Transmit information by any mechanism agreed upon by 
the persons transmitting and receiving the information.
(7) "Entitlement holder" means a person identified in the 
records of a securities intermediary as the person having a 
security entitlement against the securities intermediary. If a 
person acquires a security entitlement by virtue of division (B)
(2) or (3) of section 1308.51 of the Revised Code, that person 
is the entitlement holder.
(8) "Entitlement order" means a notification communicated 
to a securities intermediary directing transfer or redemption of 
a financial asset to which the entitlement holder has a security 
entitlement.
(9) "Financial asset," except as otherwise provided in 
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1635 H. B. No. 195 Page 59
As Introduced
section 1308.02 of the Revised Code, means:
(a) A security;
(b) An obligation of a person or a share, participation, 
or other interest in a person or in property or an enterprise of 
a person, which is, or is of a type, dealt in or traded on 
financial markets, or which is recognized in any area in which 
it is issued or dealt in as a medium for investment; or
(c) Any property that is held by a securities intermediary 
for another person in a securities account if the securities 
intermediary has expressly agreed with the other person that the 
property is to be treated as a financial asset under this 
chapter.
As context requires, the term means either the interest 
itself or the means by which a person's claim to it is 
evidenced, including a certificated or uncertificated security, 
a security certificate, or a security entitlement.
(10) "Good faith" has the same meaning as in section 
1301.201 of the Revised Code.
(11) "Indorsement" means a signature that alone or 
accompanied by other words is made on a security certificate in 
registered form or on a separate document for the purpose of 
assigning, transferring, or redeeming the security or granting a 
power to assign, transfer, or redeem it.
(12) "Instruction" means a notification communicated to 
the issuer of an uncertificated security which directs that the 
transfer of the security be registered or that the security be 
redeemed.
(13) "Registered form," as applied to a certificated 
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1663 H. B. No. 195 Page 60
As Introduced
security, means a form in which:
(a) The security certificate specifies a person entitled 
to the security; and
(b) A transfer of the security may be registered upon 
books maintained for that purpose by or on behalf of the issuer, 
or the security certificate so states.
(14) "Securities intermediary" means:
(a) A clearing corporation; or
(b) A person, including a bank or broker, that in the 
ordinary course of its business maintains securities accounts 
for others and is acting in that capacity.
(15) "Security," except as otherwise provided in section 
1308.02 of the Revised Code, means an obligation of an issuer or 
a share, participation, or other interest in an issuer or in 
property or an enterprise of an issuer:
(a) Which is represented by a security certificate in 
bearer or registered form, or the transfer of which may be 
registered upon books maintained for that purpose by or on 
behalf of the issuer;
(b) Which is one of a class or series or by its terms is 
divisible into a class or series of shares, participations, 
interests, or obligations; and
(c) Which:
(i) Is, or is of a type, dealt in or traded on securities 
exchanges or securities markets; or
(ii) Is a medium for investment and by its terms expressly 
provides that it is a security governed by this chapter.
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1690 H. B. No. 195 Page 61
As Introduced
(16) "Security certificate" means a certificate 
representing a security.
(17) "Security entitlement" means the rights and property 
interest of an entitlement holder with respect to a financial 
asset specified in sections 1308.51 to 1308.61 of the Revised 
Code.
(18) "Uncertificated security" means a security that is 
not represented by a certificate.
(B) Other definitions applying to this chapter and the 
sections in which they appear are:
(1) "Appropriate person," as defined in section 1308.23 of 
the Revised Code.
(2) "Control," as defined in section 1308.24 of the 
Revised Code.
(3) "Controllable account," as defined in section 1309.102 
of the Revised Code.
(4) "Controllable electronic record," as defined in 
section 1314.102 of the Revised Code.
(5) "Controllable payment intangible," as defined in 
section 1309.102 of the Revised Code.
(6) "Delivery," as defined in section 1308.27 of the 
Revised Code.
(4) (7) "Investment company security," as defined in 
section 1308.02 of the Revised Code.
(5) (8) "Issuer," as defined in section 1308.08 of the 
Revised Code.
(6) (9) "Overissue," as defined in section 1308.03 of the 
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As Introduced
Revised Code.
(7) (10) "Protected purchaser," as defined in section 
1308.17 of the Revised Code.
(8) (11) "Securities account," as defined in section 
1308.51 of the Revised Code.
(C) In addition, Chapter 1301. of the Revised Code 
contains general definitions and principles of construction and 
interpretation applicable throughout this chapter.
(D) The characterization of a person, business, or 
transaction for purposes of this chapter does not determine the 
characterization of the person, business, or transaction for 
purposes of any other law, regulation, or rule.
Sec. 1308.02. Rules for determining whether certain 
obligations and interests are securities or financial assets 
[UCC 8-103]
(A) A share or similar equity interest issued by a 
corporation, business trust, joint stock company, or similar 
entity is a security. 
(B) An "investment company security" is a security. 
"Investment company security" means a share or similar equity 
interest issued by an entity that is registered as an investment 
company under the federal investment company laws, an interest 
in a unit investment trust that is so registered, or a face-
amount certificate issued by a face-amount certificate company 
that is so registered. Investment company security does not 
include an insurance policy or endowment policy or annuity 
contract issued by an insurance company.
(C) An interest in a partnership or limited liability 
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1745 H. B. No. 195 Page 63
As Introduced
company is not a security unless it is dealt in or traded on 
securities exchanges or in securities markets, its terms 
expressly provide that it is a security governed by this 
chapter, or it is an investment company security. However, an 
interest in a partnership or limited liability company is a 
financial asset if it is held in a securities account.
(D) A writing that is a security certificate is governed 
by this chapter and not by Chapter 1303. of the Revised Code, 
even though it also meets the requirements of that chapter. 
However, a negotiable instrument governed by Chapter 1303. of 
the Revised Code is a financial asset if it is held in a 
securities account.
(E) An option or similar obligation issued by a clearing 
corporation to its participants is not a security, but is a 
financial asset.
(F) A commodity contract, as defined in division (A)(15) 
of section 1309.102 of the Revised Code, is not a security or a 
financial asset.
(G) A document of title is not a financial asset unless 
division (A)(9)(c) of section 1308.01 of the Revised Code 
applies.
(H) A controllable account, controllable electronic 
record, or controllable payment is not a financial asset unless 
division (A)(9)(c) of section 1308.01 of the Revised Code 
applies.
Sec. 1308.05. Applicability; choice of law [UCC 8-110]
(A) The local law of the issuer's jurisdiction, as 
specified in division (D) of this section, governs:
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1773 H. B. No. 195 Page 64
As Introduced
(1) The validity of a security;
(2) The rights and duties of the issuer with respect to 
registration of transfer;
(3) The effectiveness of registration of transfer by the 
issuer;
(4) Whether the issuer owes any duties to an adverse 
claimant to a security; and
(5) Whether an adverse claim can be asserted against a 
person to whom transfer of a certificated or uncertificated 
security is registered or a person who obtains control of an 
uncertificated security.
(B) The local law of the securities intermediary's 
jurisdiction, as specified in division (E) of this section, 
governs:
(1) Acquisition of a security entitlement from the 
securities intermediary;
(2) The rights and duties of the securities intermediary 
and entitlement holder arising out of a security entitlement;
(3) Whether the securities intermediary owes any duties to 
an adverse claimant to a security entitlement; and
(4) Whether an adverse claim can be asserted against a 
person who acquires a security entitlement from the securities 
intermediary or a person who purchases a security entitlement or 
interest therein from an entitlement holder.
(C) The local law of the jurisdiction in which a security 
certificate is located at the time of delivery governs whether 
an adverse claim can be asserted against a person to whom the 
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1800 H. B. No. 195 Page 65
As Introduced
security certificate is delivered.
(D) "Issuer's jurisdiction" means the jurisdiction under 
which the issuer of the security is organized or, if permitted 
by the law of that jurisdiction, the law of another jurisdiction 
specified by the issuer. An issuer organized under the law of 
this state may specify the law of another jurisdiction as the 
law governing the matters specified in divisions (A)(2) to (5) 
of this section.
(E) The following rules determine a "securities 
intermediary's jurisdiction" for purposes of this section:
(1) If an agreement between the securities intermediary 
and its entitlement holder governing the securities account 
expressly provides that a particular jurisdiction is the 
securities intermediary's jurisdiction for purposes of Chapter 
1308. or 1309. of the Revised Code, that jurisdiction is the 
securities intermediary's jurisdiction.
(2) If division (E)(1) of this section does not apply and 
an agreement between the securities intermediary and its 
entitlement holder governing the securities account expressly 
provides that the agreement is governed by the law of a 
particular jurisdiction, that jurisdiction is the securities 
intermediary's jurisdiction.
(3) If divisions (E)(1) and (2) of this section do not 
apply and an agreement between the securities intermediary and 
its entitlement holder governing the securities account 
expressly provides that the securities account is maintained at 
an office in a particular jurisdiction, that jurisdiction is the 
securities intermediary's jurisdiction.
(4) If divisions (E)(1), (2), and (3) of this section do 
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1829 H. B. No. 195 Page 66
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not apply, the securities intermediary's jurisdiction is the 
jurisdiction in which the office identified in an account 
statement as the office serving the entitlement holder's account 
is located.
(5) If divisions (E)(1), (2), (3), and (4) of this section 
do not apply, the securities intermediary's jurisdiction is the 
jurisdiction in which the chief executive office of the 
securities intermediary is located.
(F) A securities intermediary's jurisdiction is not 
determined by the physical location of certificates representing 
financial assets, or by the jurisdiction in which is organized 
the issuer of the financial asset with respect to which an 
entitlement holder has a security entitlement, or by the 
location of facilities for data processing or other record 
keeping concerning the account.
(G) The local law of the issuer's jurisdiction or the 
securities intermediary's jurisdiction governs a matter or 
transaction specified in division (A) or (B) of this section, 
even if the matter or transaction does not bear any relation to 
the jurisdiction.
Sec. 1308.17. Protected purchaser [8-303]
(A) A "protected purchaser" means a purchaser of a 
certificated or uncertificated security, or of an interest 
therein, who:
(1) Gives value;
(2) Does not have notice of any adverse claim to the 
security; and
(3) Obtains control of the certificated or uncertificated 
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security.
(B) In addition to acquiring the rights of a purchaser, a 
A protected purchaser also acquires its interest in the security 
free of any adverse claim.
Sec. 1308.24. Control [UCC 8-106]
(A) A purchaser has "control" of a certificated security 
in bearer form if the certificated security is delivered to the 
purchaser.
(B) A purchaser has "control" of a certificated security 
in registered form if the certificated security is delivered to 
the purchaser, and:
(1) The certificate is indorsed to the purchaser or in 
blank by an effective indorsement; or
(2) The certificate is registered in the name of the 
purchaser, upon original issue or registration of transfer by 
the issuer.
(C) A purchaser has "control" of an uncertificated 
security if:
(1) The uncertificated security is delivered to the 
purchaser; or
(2) The issuer has agreed that it will comply with 
instructions originated by the purchaser without further consent 
by the registered owner.
(D) A purchaser has "control" of a security entitlement 
if:
(1) The purchaser becomes the entitlement holder; or
(2) The securities intermediary has agreed that it will 
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comply with entitlement orders originated by the purchaser 
without further consent by the entitlement holder; or
(3) Another person has control of the security entitlement 
on behalf of the purchaser or, having previously acquired 
control of the security entitlement, acknowledges having control 
on behalf of the purchaser , other than the transferor to the 
purchaser of an interest in the security entitlement:
(a) Has control of the security entitlement and 
acknowledges that it has control on behalf of the purchaser; or
(b) Obtains control of the security entitlement after 
having acknowledged that it will obtain control of the security 
entitlement on behalf of the purchaser .
(E) If an interest in a security entitlement is granted by 
the entitlement holder to the entitlement holder's own 
securities intermediary, the securities intermediary has 
control.
(F) A purchaser who has satisfied the requirements of 
division (C) or (D) of this section has control even if the 
registered owner in the case of division (C) of this section or 
the entitlement holder in the case of division (D) of this 
section retains the right to make substitutions for the 
uncertificated security or security entitlement, to originate 
instructions or entitlement orders to the issuer or securities 
intermediary, or otherwise to deal with the uncertificated 
security or security entitlement.
(G) An issuer or a securities intermediary may not enter 
into an agreement of the kind described in division (C)(2) or 
(D)(2) of this section without the consent of the registered 
owner or entitlement holder, but an issuer or a securities 
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intermediary is not required to enter into such an agreement 
even though the registered owner or entitlement holder so 
directs. An issuer or securities intermediary that has entered 
into such an agreement is not required to confirm the existence 
of the agreement to another party unless requested to do so by 
the registered owner or entitlement holder.
(H) A person that has control under this section is not 
required to acknowledge that it has control on behalf of a 
purchaser.
(I) If a person acknowledges that it has or will obtain 
control on behalf of a purchaser, unless the person otherwise 
agrees or law other than this chapter or Chapter 1309. of the 
Revised Code otherwise provides, the person does not owe any 
duty to the purchaser and is not required to confirm the 
acknowledgement to any other person.
Sec. 1309.102. Definitions and index of definitions [UCC 
9-102]
(A) As used in this chapter, unless the context requires 
otherwise: 
(1) "Accession" means goods that are physically united 
with other goods in such a manner that the identity of the 
original goods is not lost.
(2)(a) "Account," except as used in "account for," 
"account statement," "account to," "commodity account," 
"customer's account," "deposit account," and "statement of 
account," means a right to payment of a monetary obligation, 
whether or not earned by performance, (i) for property that has 
been or is to be sold, leased, licensed, assigned, or otherwise 
disposed of, (ii) for services rendered or to be rendered, (iii) 
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for a policy of insurance issued or to be issued, (iv) for a 
secondary obligation incurred or to be incurred, (v) for energy 
provided or to be provided, (vi) for the use or hire of a vessel 
under a charter or other contract, (vii) arising out of the use 
of a credit or charge card or information contained on or for 
use with the card, or (viii) as winnings in a lottery or other 
game of chance operated or sponsored by a state, governmental 
unit of a state, or person licensed or authorized to operate the 
game by a state or governmental unit of a state.
(b) "Account" includes controllable accounts and health-
care insurance receivables.
(c) "Account" does not include (i) rights to payment 
evidenced by chattel paper or an instrument, (ii) commercial 
tort claims, (iii) deposit accounts, (iv) investment property, 
(v) letter-of-credit rights or letters of credit, or (vi) rights 
to payment for money or funds advanced or sold, other than 
rights arising out of the use of a credit or charge card or 
information contained on or for use with the card , or (vii) 
rights to payment evidenced by an instrument .
(3) "Account debtor" means a person who is obligated on an 
account, chattel paper, or general intangible. "Account debtor" 
does not include a person who is obligated to pay a negotiable 
instrument, even if the negotiable instrument constitutes part 
of evidences chattel paper.
(4) "Accounting," except as used in "accounting for," 
means a record:
(a) Authenticated Signed by a secured party;
(b) Indicating the aggregate unpaid secured obligations as 
of a date not more than thirty-five days earlier or thirty-five 
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days later than the date of the record; and
(c) Identifying the components of the obligations in 
reasonable detail.
(5) "Agricultural lien" means an interest, other than a 
security interest, in farm products:
(a) That secures payment or performance of an obligation 
for:
(i) Goods or services furnished in connection with a 
debtor's farming operation; or
(ii) Rent on real property leased by a debtor in 
connection with its farming operation.
(b) That is created by statute in favor of a person who:
(i) In the ordinary course of business, furnished goods or 
services to a debtor in connection with the debtor's farming 
operation; or
(ii) Leased real property to a debtor in connection with 
the debtor's farming operation; and
(c) Whose effectiveness does not depend on the person's 
possession of the personal property.
(6) "As-extracted collateral" means:
(a) Oil, gas, or other minerals that are subject to a 
security interest that:
(i) Is created by a debtor having an interest in the 
minerals before extraction; and
(ii) Attaches to the minerals as extracted; or
(b) Accounts arising out of the sale at the wellhead or 
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minehead of oil, gas, or other minerals in which the debtor had 
an interest before extraction.
(7) "Authenticate" means:
(a) To sign; or
(b) With present intent to adopt or accept a record, to 
attach to or logically associate with the record an electronic 
sound, symbol, or process [Reserved.]
(a) "Assignee," except as used in "assignee for benefit of 
creditors," means a person (i) in whose favor a security 
interest that secures an obligation is created or provided for 
under a security agreement, whether or not the obligation is 
outstanding, or (ii) to which an account, chattel paper, payment 
intangible, or promissory note has been sold. The term includes 
a person to which a security interest has been transferred by a 
secured party.
(b) "Assignor" means a person that (i) under a security 
agreement creates or provides for a security interest that 
secures an obligation, or (ii) sells an account, chattel paper, 
payment intangible, or promissory note. The term includes a 
secured party that has transferred a security interest to 
another person.
(8) "Bank" means an organization that is engaged in the 
business of banking. "Bank" includes savings banks, savings and 
loan associations, credit unions, and trust companies.
(9) "Cash proceeds" means proceeds that are money, checks, 
deposit accounts, or the like.
(10) "Certificate of title" means a certificate of title 
with respect to which a statute provides for the security 
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2025 H. B. No. 195 Page 73
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interest in question to be indicated on the certificate as a 
condition or result of the security interest's obtaining 
priority over the rights of a lien creditor with respect to the 
collateral. The term includes another record maintained as an 
alternative to a certificate of title by the governmental unit 
that issues certificates of title if a statute permits the 
security interest in question to be indicated on the record as a 
condition or result of the security interest's obtaining 
priority over the rights of a lien creditor with respect to the 
collateral.
(11)(a) (11) "Chattel paper" means a record that evidences 
both a monetary obligation and a security interest in specific 
goods, a security interest in specific goods and software used 
in the goods, a security interest in specific goods and license 
of software used in the goods, a lease of specific goods, or a 
lease of specific goods and license of software used in the 
goods.
As used in division (A)(11)(a) of this section, "monetary 
obligation" means a monetary obligation secured by the goods or 
owed under a lease of the goods and includes a monetary 
obligation with respect to software used in the goods.
(b) If a transaction is evidenced by records that include 
an instrument or series of instruments, the group of records 
taken together constitutes chattel paper.
(c) "Chattel paper" does not include (i) charters or other 
contracts involving the use or hire of a vessel or (ii) records 
that evidence a right to payment arising out of the use of a 
credit or charge card or information contained on or for use 
with the cardeither of the following:
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2054 H. B. No. 195 Page 74
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(a) A right to payment of a monetary obligation secured by 
specific goods, if the right to payment and security agreement 
are evidenced by a record;
(b) A right to payment of a monetary obligation owed by a 
lessee under a lease agreement with respect to specific goods 
and a monetary obligation owed by the lessee in connection with 
the transaction giving rise to the lease, if both of the 
following apply:
(i) The right to payment and lease agreement are evidenced 
by a record;
(ii) The predominant purpose of the transaction giving 
rise to the lease was to give the lessee the right to possession 
and use of goods.
The term does not include a right to payment arising out 
of a charter or other contract involving the use or hire of a 
vessel, or a right to payment arising out of the use of a credit 
or charge card or information contained on or for use with the 
card.
(12) "Collateral" means the property subject to a security 
interest or agricultural lien, including:
(a) Proceeds to which a security interest attaches;
(b) Accounts, chattel paper, payment intangibles, and 
promissory notes that have been sold; and
(c) Goods that are the subject of a consignment.
(13) "Commercial tort claim" means a claim arising in tort 
with respect to which:
(a) The claimant is an organization; or
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2081 H. B. No. 195 Page 75
As Introduced
(b) The claimant is an individual, and the claim:
(i) Arose in the course of the claimant's business or 
profession; and
(ii) Does not include damages arising out of personal 
injury to or the death of an individual.
(14) "Commodity account" means an account maintained by a 
commodity intermediary in which a commodity contract is carried 
for a commodity customer.
(15) "Commodity contract" means a commodity futures 
contract, an option on a commodity futures contract, a commodity 
option, or another contract if the contract or option is:
(a) Traded on or subject to the rules of a board of trade 
that has been designated as a contract market for such a 
contract pursuant to the federal commodities laws; or
(b) Traded on a foreign commodity board of trade, 
exchange, or market and is carried on the books of a commodity 
intermediary for a commodity customer.
(16) "Commodity customer" means a person for whom a 
commodity intermediary carries a commodity contract on its 
books.
(17) "Commodity intermediary" means a person that:
(a) Is registered as a futures commission merchant under 
the federal commodities laws; or
(b) In the ordinary course of its business provides 
clearance or settlement services for a board of trade that has 
been designated as a contract market pursuant to the federal 
commodities laws.
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(18) "Communicate" means:
(a) To send a written or other tangible record;
(b) To transmit a record by any means agreed upon by the 
persons sending and receiving the record; or
(c) In the case of transmission of a record to or by a 
filing office, to transmit a record by any means prescribed by 
filing-office rule.
(19) "Consignee" means a merchant to whom goods are 
delivered in a consignment.
(20) "Consignment" means a transaction, regardless of its 
form, in which a person delivers goods to a merchant for the 
purpose of sale and:
(a) The merchant:
(i) Deals in goods of that kind under a name other than 
the name of the person making delivery;
(ii) Is not an auctioneer; and
(iii) Is not generally known by its creditors to be 
substantially engaged in selling the goods of others;
(b) With respect to each delivery, the aggregate value of 
the goods is one thousand dollars or more at the time of 
delivery.
(c) The goods are not consumer goods immediately before 
delivery; and
(d) The transaction does not create a security interest 
that secures an obligation.
(21) "Consignor" means a person that delivers goods to a 
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As Introduced
consignee in a consignment.
(22) "Consumer debtor" means a debtor in a consumer 
transaction.
(23) "Consumer goods" means goods that are used or bought 
for use primarily for personal, family, or household purposes.
(24) "Consumer-goods transaction" means a consumer 
transaction in which:
(a) An individual incurs an obligation primarily for 
personal, family, or household purposes; and
(b) A security interest in consumer goods secures the 
obligation.
(25) "Consumer obligor" means an obligor who is an 
individual and who incurred the obligation as part of a 
transaction entered into primarily for personal, family, or 
household purposes.
(26) "Consumer transaction" means a transaction in which: 
(a) an individual incurs an obligation primarily for personal, 
family, or household purposes, (b) a security interest secures 
the obligation, and (c) the collateral is held or acquired 
primarily for personal, family, or household purposes. "Consumer 
transaction" includes consumer-goods transactions.
(27) (27)(a) "Continuation statement" means an amendment 
of a financing statement that:
(a) (i) Identifies, by its file number, the initial 
financing statement to which it relates; and
(b) (ii) Indicates that it is a continuation statement 
for, or that it is filed to continue the effectiveness of, the 
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As Introduced
identified financing statement.
(b) "Controllable account" means an account evidenced by a 
controllable electronic record that provides that the account 
debtor undertakes to pay the person that has control under 
section 1314.105 of the Revised Code of the controllable account 
record.
(c) "Controllable payment intangible" means a payment 
intangible evidenced by a controllable electronic record that 
provides that the account debtor undertakes to pay the person 
that has control under section 1314.105 of the Revised Code of 
the controllable electronic record.
(28) "Debtor" means:
(a) A person having an interest, other than a security 
interest or other lien, in the collateral, whether or not the 
person is an obligor;
(b) A seller of accounts, chattel paper, payment 
intangibles, or promissory notes; or
(c) A consignee.
(29) "Deposit account" means a demand, time, savings, 
passbook, or similar account maintained with a bank but does not 
include investment property or accounts evidenced by an 
instrument.
(30) "Document" means a document of title or a receipt of 
the type described in division (B) of section 1307.201 of the 
Revised Code.
(31) "Electronic chattel paper" means chattel paper 
evidenced by a record consisting of information stored in an 
electronic medium[Reserved.]
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(a) "Electronic money" means money in an electronic form .
(32) "Encumbrance" means a right, other than an ownership 
interest, in real property. "Encumbrance" includes mortgages and 
other liens on real property.
(33) "Equipment" means goods other than inventory, farm 
products, or consumer goods.
(34) "Farm products" means goods, other than standing 
timber, with respect to which the debtor is engaged in a farming 
operation and that are:
(a) Crops grown, growing, or to be grown, including:
(i) Crops produced on trees, vines, and bushes;
(ii) Aquatic goods produced in aquacultural operations;
(iii) Algacultural products as defined in section 901.511 
of the Revised Code that are produced as a result of aglaculture 
meaning the farming of algae.
(b) Livestock, born or unborn, including aquatic goods 
produced in aquacultural operations;
(c) Supplies used or produced in a farming operation; or
(d) Products of crops or livestock in their unmanufactured 
states.
(35) "Farming operation" means raising, cultivating, 
propagating, fattening, grazing, or any other farming, 
livestock, or aquacultural operation.
(36) "File number" means the number assigned to an initial 
financing statement under division (A) of section 1309.519 of 
the Revised Code.
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As Introduced
(37) "Filing office" means an office designated in section 
1309.501 of the Revised Code as the place to file a financing 
statement.
(38) "Filing-office rule" means a rule adopted under 
section 1309.526 of the Revised Code.
(39) "Financing statement" means a record composed of an 
initial financing statement and any filed record or records 
relating to the initial financing statement. For the purposes of 
this chapter, financing statements filed for recording with the 
secretary of state shall not be required to include social 
security or employer identification numbers.
(40) "Fixture filing" means the filing of a financing 
statement covering goods that are or are to become fixtures and 
satisfying divisions (A) and (B) of section 1309.502 of the 
Revised Code. "Fixture filing" includes the filing of a 
financing statement covering goods of a transmitting utility 
that are or are to become fixtures.
(41) "Fixtures" means goods that have become so related to 
particular real property that an interest in them arises under 
real property law.
(42) "General intangible" means any personal property, 
including things in action, other than accounts, chattel paper, 
commercial tort claims, deposit accounts, documents, goods, 
instruments, investment property, letter-of-credit rights, 
letters of credit, money, and oil, gas, or other minerals before 
extraction. "General intangible" includes controllable 
electronic records, payment intangibles, and software.
(43) "Good faith" has the same meaning as in section 
1301.201 of the Revised Code. [Reserved.]
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(44)(a) "Goods" means all things that are movable when a 
security interest attaches. "Goods" includes (i) fixtures, (ii) 
standing timber that is to be cut and removed under a conveyance 
or contract for sale, (iii) the unborn young of animals, (iv) 
crops grown, growing, or to be grown, even if the crops are 
produced on trees, vines, or bushes, and (v) manufactured homes.
(b) "Goods" also includes a computer program embedded in 
goods and any supporting information provided in connection with 
a transaction relating to the program if (i) the program is 
associated with the goods in such a manner that it customarily 
is considered part of the goods, or (ii) by becoming the owner 
of the goods, a person acquires a right to use the program in 
connection with the goods.
(c) "Goods" does not include a computer program embedded 
in goods that consist solely of the medium in which the program 
is embedded. "Goods" does not include accounts, chattel paper, 
commercial tort claims, deposit accounts, documents, general 
intangibles, instruments, investment property, letter-of-credit 
rights, letters of credit, money, or oil, gas, or other minerals 
before extraction.
(45) "Governmental unit" means a subdivision, agency, 
department, county, parish, municipal corporation, or other unit 
of the government of the United States, a state, or a foreign 
country. "Governmental unit" includes an organization having a 
separate corporate existence if the organization is eligible to 
issue debt on which interest is exempt from income taxation 
under the laws of the United States.
(46) "Health-care-insurance receivable" means an interest 
in or claim under a policy of insurance that is a right to 
payment of a monetary obligation for health-care goods or 
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2274 H. B. No. 195 Page 82
As Introduced
services provided.
(47)(a) "Instrument" means a negotiable instrument or any 
other writing that evidences a right to the payment of a 
monetary obligation, is not itself a security agreement or 
lease, and is of a type that in ordinary course of business is 
transferred by delivery with any necessary indorsement or 
assignment.
(b) "Instrument" does not include (i) investment property, 
(ii) letters of credit, or (iii) writings that evidence a right 
to payment arising out of the use of a credit or charge card or 
information contained on or for use with the card , or (iv) 
writings that evidence chattel paper .
(48) "Inventory" means goods, other than farm products, 
that:
(a) Are leased by a person as lessor;
(b) Are held by a person for sale or lease or to be 
furnished under a contract of service;
(c) Are furnished by a person under a contract of service; 
or
(d) Consist of raw materials, work in process, or 
materials used or consumed in a business.
(49) "Investment property" means a security, whether 
certificated or uncertificated, a security entitlement, a 
securities account, a commodity contract, or a commodity 
account.
(50) "Jurisdiction of organization," with respect to a 
registered organization, means the jurisdiction under whose law 
the organization is formed or organized.
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2302 H. B. No. 195 Page 83
As Introduced
(51) "Letter-of-credit right" means a right to payment or 
performance under a letter of credit, whether or not the 
beneficiary has demanded or is at the time entitled to demand 
payment or performance. "Letter-of-credit right" does not 
include the right of a beneficiary to demand payment or 
performance under a letter of credit.
(52) "Lien creditor" means:
(a) A creditor who has acquired a lien on the property 
involved by attachment, levy or the like;
(b) An assignee for benefit of creditors from the time of 
assignment;
(c) A trustee in bankruptcy from the date of the filing of 
the petition; or
(d) A receiver in equity from the time of appointment.
(53) "Manufactured home" means a structure, transportable 
in one or more sections, that, in the traveling mode, is eight 
body feet or more in width or forty body feet or more in length, 
or, when erected on site, is three hundred twenty or more square 
feet, and that is built on a permanent chassis and designed to 
be used as a dwelling with or without a permanent foundation 
when connected to the required utilities, and includes the 
plumbing, heating, air conditioning, and electrical systems 
contained in the structure. "Manufactured home" includes any 
structure that meets all of the requirements of this paragraph 
except the size requirements and with respect to which the 
manufacturer voluntarily files a certification required by the 
United States secretary of housing and urban development and 
complies with the standards established under Title 42 of the 
United States Code.
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2331 H. B. No. 195 Page 84
As Introduced
(54) (54)(a) "Manufactured-home transaction" means a 
secured transaction:
(a) (i) That creates a purchase-money security interest in 
a manufactured home, other than a manufactured home held as 
inventory; or
(b) (ii) In which a manufactured home, other than a 
manufactured home held as inventory, is the primary collateral.
(b) "Money" has the same meaning as in section 1301.201 of 
the Revised Code, but does not include either of the following:
(i) A deposit account;
(ii) Money in an electronic form that cannot be subjected 
to control under section 1309.105 of the Revised Code.
(55) "Mortgage" means a consensual interest in real 
property, including fixtures, that secures payment or 
performance of an obligation.
(56) "New debtor" means a person that becomes bound as 
debtor under division (D) of section 1309.203 of the Revised 
Code by a security agreement previously entered into by another 
person.
(57)(a) "New value" means (i) money, (ii) money's worth in 
property, services, or new credit, or (iii) release by a 
transferee of an interest in property previously transferred to 
the transferee.
(b) "New value" does not include an obligation substituted 
for another obligation.
(58) "Noncash proceeds" means proceeds other than cash 
proceeds.
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2358 H. B. No. 195 Page 85
As Introduced
(59)(a) "Obligor" means a person who, with respect to an 
obligation secured by a security interest in or an agricultural 
lien on the collateral, (i) owes payment or other performance of 
the obligation, (ii) has provided property other than the 
collateral to secure payment or other performance of the 
obligation, or (iii) is otherwise accountable in whole or in 
part for payment or other performance of the obligation.
(b) "Obligor" does not include issuers or nominated 
persons under a letter of credit.
(60) "Original debtor," except as used in division (C) of 
section 1309.310 of the Revised Code, means a person who, as 
debtor, entered into a security agreement to which a new debtor 
has become bound under division (D) of section 1309.203 of the 
Revised Code.
(61) "Payment intangible" means a general intangible under 
which the account debtor's principal obligation is a monetary 
obligation. The term includes a controllable payment intangible.
(62) "Person related to," with respect to an individual, 
means:
(a) The spouse of the individual;
(b) A brother, brother-in-law, sister, or sister-in-law of 
the individual;
(c) An ancestor or lineal descendant of the individual or 
the individual's spouse; or
(d) Any other relative, by blood or marriage, of the 
individual or the individual's spouse who shares the same home 
with the individual.
(63) "Person related to," with respect to an organization, 
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2386 H. B. No. 195 Page 86
As Introduced
means:
(a) A person directly or indirectly controlling, 
controlled by, or under common control with the organization;
(b) An officer or director of, or a person performing 
similar functions with respect to, the organization;
(c) An officer or director of, or a person performing 
similar functions with respect to, a person described in 
division (A)(63)(a) of this section;
(d) The spouse of an individual described in division (A)
(63)(a), (b), or (c) of this section; or
(e) An individual who is related by blood or marriage to 
an individual described in division (A)(63)(a), (b), (c), or (d) 
of this section and shares the same home with the individual.
(64) "Proceeds," except as used in division (B) of section 
1309.609 of the Revised Code, means the following property:
(a) Whatever is acquired upon the sale, lease, license, 
exchange, or other disposition of collateral;
(b) Whatever is collected on, or distributed on account 
of, collateral;
(c) Rights arising out of collateral;
(d) To the extent of the value of collateral, claims 
arising out of the loss, nonconformity, or interference with the 
use of, defects or infringement of rights in, or damage to the 
collateral; or
(e) To the extent of the value of collateral and to the 
extent payable to the debtor or the secured party, insurance 
payable by reason of the loss or nonconformity of, defects or 
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2413 H. B. No. 195 Page 87
As Introduced
infringement of rights in, or damage to the collateral.
(65) "Promissory note" means an instrument that evidences 
a promise to pay a monetary obligation, does not evidence an 
order to pay, and does not contain an acknowledgment by a bank 
that the bank has received for deposit a sum of money or funds.
(66) "Proposal" means a record authenticated signed by a 
secured party that includes the terms on which the secured party 
is willing to accept collateral in full or partial satisfaction 
of the obligation it secures pursuant to sections 1309.620, 
1309.621, and 1309.622 of the Revised Code.
(67) "Public-finance transaction" means a secured 
transaction in connection with which:
(a) Debt securities are issued;
(b) All or a portion of the securities issued have an 
initial stated maturity of at least twenty years; and
(c) The debtor, obligor, secured party, account debtor or 
other person obligated on collateral, assignor or assignee of a 
secured obligation, or assignor or assignee of a security 
interest is a state or a governmental unit of a state.
(68) "Public organic record" means a record that is 
available to the public for inspection and is:
(a) A record consisting of the record initially filed with 
or issued by a state or the United States to form or organize an 
organization and any record filed with or issued by the state or 
the United States that amends or restates the initial record;
(b) An organic record of a business trust consisting of 
the record initially filed with a state and any record filed 
with the state that amends or restates the initial record, if a 
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2441 H. B. No. 195 Page 88
As Introduced
statute of the state governing business trusts requires that the 
record be filed with the state; or
(c) A record consisting of legislation enacted by the 
legislature of a state or the congress of the United States that 
forms or organizes an organization, any record amending the 
legislation, and any record filed with or issued by the state or 
the United States that amends or restates the name of the 
organization.
(69) "Pursuant to commitment," with respect to an advance 
made or other value given by a secured party, means pursuant to 
the secured party's obligation, whether or not a subsequent 
event of default or other event not within the secured party's 
control has relieved or may relieve the secured party from its 
obligation.
(70) "Record," except as used in "for record," "of 
record," "record or legal title," and "record owner," means 
information that is inscribed on a tangible medium or that is 
stored in an electronic or other medium and is retrievable in 
perceivable form.
(71) "Registered organization" means an organization 
formed or organized solely under the law of a single state or 
the United States by the filing of a public organic record with, 
the issuance of a public organic record by, or the enactment of 
legislation by the state or the United States. The term includes 
a business trust that is formed or organized under the law of a 
single state if a statute of the state governing business trusts 
requires that the business trust's organic record be filed with 
the state.
(72) "Secondary obligor" means an obligor to the extent 
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2470 H. B. No. 195 Page 89
As Introduced
that:
(a) The obligor's obligation is secondary; or
(b) The obligor has a right of recourse with respect to an 
obligation secured by collateral against the debtor, another 
obligor, or property of either.
(73) "Secured party" means:
(a) A person in whose favor a security interest is created 
or provided for under a security agreement, whether or not any 
obligation to be secured is outstanding;
(b) A person that holds an agricultural lien;
(c) A consignor;
(d) A person to whom accounts, chattel paper, payment 
intangibles, or promissory notes have been sold;
(e) A trustee, indenture trustee, agent, collateral agent, 
or other representative in whose favor a security interest or 
agricultural lien is created or provided for; or
(f) A person who holds a security interest arising under 
section 1302.42, 1302.49, 1302.85, 1304.20, 1305.18, or 1310.54 
of the Revised Code.
(74) "Security agreement" means an agreement that creates 
or provides for a security interest.
(75) "Send," in connection with a record or notification, 
means:
(a) To deposit in the mail, deliver for transmission, or 
transmit by any other usual means of communication, with postage 
or cost of transmission provided for, addressed to any address 
reasonable under the circumstances; or
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2497 H. B. No. 195 Page 90
As Introduced
(b) To cause the record or notification to be received 
within the time that it would have been received if properly 
sent under division (A)(74)(a) of this section [Reserved.]
(76) "Software" means a computer program and any 
supporting information provided in connection with a transaction 
relating to the program. "Software" does not include a computer 
program that is included in the definition of goods.
(77) "State" means a state of the United States, the 
District of Columbia, Puerto Rico, the United States Virgin 
Islands, or any territory or insular possession subject to the 
jurisdiction of the United States.
(78) "Supporting obligation" means a letter-of-credit 
right or secondary obligation that supports the payment or 
performance of an account, chattel paper, a document, a general 
intangible, an instrument, or investment property.
(79) "Tangible chattel paper" means chattel paper 
evidenced by a record consisting of information that is 
inscribed on a tangible medium [Reserved.]
(a) "Tangible money" means money in a tangible form .
(80) "Termination statement" means an amendment of a 
financing statement that:
(a) Identifies, by its file number, the initial financing 
statement to which it relates; and
(b) Indicates either that it is a termination statement or 
that the identified financing statement is no longer effective.
(81) "Transmitting utility" means a person primarily 
engaged in the business of:
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2524 H. B. No. 195 Page 91
As Introduced
(a) Operating a railroad, subway, street railway, or 
trolley bus;
(b) Transmitting communications electrically, 
electromagnetically, or by light;
(c) Transmitting goods by pipeline or sewer; or
(d) Transmitting or producing and transmitting 
electricity, steam, gas, or water.
(B) Other definitions applying to this chapter are:
(1) "Applicant" has the same meaning as in section 1305.01 
of the Revised Code.
(2) "Beneficiary" has the same meaning as in section 
1305.01 of the Revised Code.
(3) "Broker" has the same meaning as in section 1308.01 of 
the Revised Code.
(4) "Certificated security" has the same meaning as in 
section 1308.01 of the Revised Code.
(5) "Check" has the same meaning as in section 1303.03 of 
the Revised Code.
(6) "Clearing corporation" has the same meaning as in 
section 1308.01 of the Revised Code.
(7) "Contract for sale" has the same meaning as in section 
1302.01 of the Revised Code.
(8) "Control" with respect to a document of title, has the 
same meaning as in section 1307.106 of the Revised Code.
(9) "Controllable electronic record" has the same meaning 
as in section 1314.102 of the Revised Code.
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2550 H. B. No. 195 Page 92
As Introduced
(10) "Customer" has the same meaning as in section 1304.01 
of the Revised Code.
(10) (11) "Entitlement holder" has the same meaning as in 
section 1308.01 of the Revised Code.
(11) (12) "Financial asset" has the same meaning as in 
section 1308.01 of the Revised Code.
(12) (13) "Holder in due course" has the same meaning as 
in section 1303.32 of the Revised Code.
(13) (14) "Issuer," with respect to a letter of credit or 
letter-of-credit right, has the same meaning as in section 
1305.01 of the Revised Code.
(14) (15) "Issuer," with respect to a security, has the 
same meaning as in section 1308.08 of the Revised Code.
(15) (16) "Issuer," with respect to a document of title, 
has the same meaning as in section 1307.102 of the Revised Code.
(16) (17) "Lease," "lease agreement," "lease contract," 
"leasehold interest," "lessee," "lessee in ordinary course of 
business," "lessor," and "lessor's residual interest" have the 
same meanings as in section 1310.01 of the Revised Code.
(17) (18) "Letter of credit" has the same meaning as in 
section 1305.01 of the Revised Code.
(18) (19) "Merchant" has the same meaning as in section 
1302.01 of the Revised Code.
(19) (20) "Negotiable instrument" has the same meaning as 
in section 1303.03 of the Revised Code.
(20) (21) "Nominated person" has the same meaning as in 
section 1305.01 of the Revised Code.
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2577 H. B. No. 195 Page 93
As Introduced
(21) (22) "Note" has the same meaning as in section 
1303.03 of the Revised Code.
(22) (23) "Proceeds of a letter of credit" has the same 
meaning as in section 1305.13 of the Revised Code.
(24) "Protected purchaser" has the same meaning as in 
section 1308.17 of the Revised Code.
(23) (25) "Prove" has the same meaning as in section 
1303.01 of the Revised Code.
(26) "Qualifying purchaser" has the same meaning as in 
section 1314.102 of the Revised Code.
(24) (27) "Sale" has the same meaning as in division (A)
(11) of section 1302.01 of the Revised Code.
(25) (28) "Securities account" has the same meaning as in 
section 1308.51 of the Revised Code.
(26) (29) "Securities intermediary," "security," "security 
certificate," "security entitlement," and "uncertificated 
security" have the same meanings as in section 1308.01 of the 
Revised Code.
(C) In addition, Chapter 1301. of the Revised Code 
contains general definitions and principles of construction and 
interpretations applicable throughout this chapter.
Sec. 1309.104. Control of deposit account [UCC 9-104]
(A) A secured party has control of a deposit account if:
(1) The secured party is the bank with which the deposit 
account is maintained;
(2) The debtor, secured party, and bank have agreed in an 
authenticated a signed record that the bank will comply with 
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2604 H. B. No. 195 Page 94
As Introduced
instructions originated by the secured party directing 
disposition of the funds in the deposit account without further 
consent by the debtor; or
(3) The secured party becomes the bank's customer with 
respect to the deposit account ; or
(4) Another person other than the debtor:
(a) Has control of the deposit account and acknowledges 
that it has control on behalf of the secured party; or
(b) Obtains control of the deposit account after having 
acknowledged that it will obtain control of the deposit account 
on behalf of the secured party .
(B) A secured party that has satisfied division (A) of 
this section has control of a deposit account, even if the 
debtor retains the right to direct the disposition of funds from 
the deposit account.
Sec. 1309.105. Control of electronic copy of record 
evidencing chattel paper [UCC 9-105]
(A) A secured party purchaser has control of electronic an 
authoritative electronic copy of a record evidencing chattel 
paper if a system employed for evidencing the transfer 
assignment of interests in the chattel paper reliably 
establishes the secured party purchaser as the person to which 
the chattel paper authoritative electronic copy was assigned. 
(B) A system satisfies division (A) of this section if the 
record or records comprising evidencing the chattel paper are 
created, stored, and assigned in such a manner that:
(1) A single authoritative copy of the record or records 
exists that is unique, identifiable, and, except as otherwise 
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2632 H. B. No. 195 Page 95
As Introduced
provided in divisions (B)(4), (5), and (6) of this section, 
unalterable;
(2) The authoritative copy identifies the secured party 
purchaser as the assignee of the record or records;
(3) The authoritative copy is communicated to and 
maintained by the secured party purchaser or its designated 
custodian;
(4) Copies or amendments that add or change an identified 
assignee of the authoritative copy may be made only with the 
consent of the secured partypurchaser;
(5) Each copy of the authoritative copy and any copy of a 
copy is readily identifiable as a copy that is not the 
authoritative copy; and
(6) Any amendment of the authoritative copy is readily 
identifiable as authorized or unauthorized.
(C) A system satisfies division (A) of this section, and a 
purchaser has control of an authoritative electronic copy of a 
record evidencing chattel paper, if the electronic copy, a 
record attached to or logically associated with the electronic 
copy, or a system in which the electronic copy is recorded:
(1) Enables the purchaser to readily identify each 
electronic copy as either an authoritative copy or a 
nonauthoritative copy;
(2) Enables the purchaser to readily identify itself in 
any way, including by name, identifying number, cryptographic 
key, office, or account number, as the assignee of the 
authoritative electronic copy; and
(3) Gives the purchaser exclusive power, subject to 
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2660 H. B. No. 195 Page 96
As Introduced
division (D) of this section, to:
(a) Prevent others from adding or changing an identified 
assignee of the authoritative electronic copy; and
(b) Transfer control of the authoritative electronic copy.
(D) Subject to division (E) of this section, a power is 
exclusive under divisions (C)(3)(a) and (b) of this section even 
if:
(1) The authoritative electronic copy, a record attached 
to or logically associated with the authoritative electronic 
copy, or a system in which the authoritative electronic copy is 
recorded limits the use of the authoritative electronic copy or 
has a protocol programmed to cause a change, including a 
transfer or loss of control; or
(2) The power is shared with another person.
(E) A power of a purchaser is not shared with another 
person under division (D)(2) of this section and the purchaser's 
power is not exclusive if:
(1) The purchaser can exercise the power only if the power 
is also exercised by the other person; and
(2) The other person:
(a) Can exercise power without exercise of the power of 
the purchaser; or
(b) Is the transferor to the purchaser of an interest in 
the chattel paper.
(F) If a purchaser has the powers specified in divisions 
(C)(3)(a) and (b) of this section, the powers are presumed to be 
exclusive.
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2687 H. B. No. 195 Page 97
As Introduced
(G) A purchaser has control of an authoritative electronic 
copy of a record evidencing chattel paper if another person, 
other than the transferor to the purchaser of an interest in the 
chattel paper:
(1) Has control of the authoritative electronic copy and 
acknowledges that it has control on behalf of the purchaser; or
(2) Obtains control of the authoritative electronic copy 
after having acknowledged that it will obtain control of the 
electronic copy on behalf of the purchaser.
Sec. 1309.111.  	Control of electronic money [UCC 9-105A] 
(A) A person has control of electronic money if both of 
the following apply:
(1) The electronic money, a record attached to or 
logically associated with the electronic money, or a system in 
which the electronic money is recorded gives the person both of 
the following:
(a) Power to avail itself of substantially all the 
benefits from the electronic money;
(b) Exclusive power, subject to division (B) of this 
section, to do both of the following:
(i) Prevent others from availing themselves of 
substantially all the benefit from the electronic money;
(ii) Transfer control of the electronic money to another 
person or cause another person to obtain control of other 
electronic money as a result of the transfer of the electronic 
money.
(2) The electronic money, a record attached to or 
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2714 H. B. No. 195 Page 98
As Introduced
logically associated with the electronic money, or a system in 
which the electronic money is recorded enables the person to 
readily identify itself in any way, including by name, 
identifying number, cryptographic key, office, or account 
number, as having the powers under division (A)(1) of this 
section.
(B) Subject to division (C) of this section, a power is 
exclusive under divisions (A)(1)(b)(i) and (ii) of this section 
even if either or both of the following apply:
(1) The electronic money, a record attached to or 
logically associated with the electronic money, or a system in 
which the electronic money is recorded limits the use of the 
electronic money or has a protocol programmed to cause a change, 
including a transfer or loss of control;
(2) The power is shared with another person.
(C) A power of a person is not shared with another person 
under division (B)(2) of this section and the person's power is 
not exclusive if both of the following apply:
(1) The person can exercise the power only if the power is 
also exercised by the other person.
(2) The other person either:
(a) Can exercise the power without exercise of the power 
by the person;
(b) Is the transferor to the person of an interest in the 
electronic money.
(D) If a person has the powers specified in divisions (A)
(1)(b)(i) and (ii) of this section, the powers are presumed to 
be exclusive.
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2742 H. B. No. 195 Page 99
As Introduced
(E) A person has control of electronic money if another 
person, other than the transferor to the person of an interest 
in the electronic money, either:
(1) Has control of the electronic money and acknowledges 
that it has control on behalf of the person;
(2) Obtains control of the electronic money after having 
acknowledged that it will obtain control of the electronic money 
on behalf of the person.
Sec. 1309.112.  	Control of controllable electronic record,  
controllable account, or controllable payment intangible [UCC 9-
107A]
(A) A secured party has control of a controllable 
electronic record as provided in section 1314.105 of the Revised 
Code.
(B) A secured party has control of a controllable account 
or controllable payment intangible if the secured party has 
control of the controllable electronic record that evidences the 
controllable account or controllable payment intangible.
Sec. 1309.113.  	No requirement to acknowledge or confirm;  
no duties [UCC 9-107B]
(A) A person that has control under section 1309.104 or 
1309.105 of the Revised Code is not required to acknowledge that 
it has control on behalf of another person.
(B) If a person acknowledges that it has or will obtain 
control on behalf of another person, unless the person otherwise 
agrees or law other than this chapter otherwise provides, the 
person does not owe any duty to the other person and is not 
required to confirm the acknowledgment to any other person.
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2770 H. B. No. 195 Page 100
As Introduced
Sec. 1309.203. Attachment and enforceability of security 
interest; proceeds; supporting obligations; formal requisites 
[UCC 9-203]
(A) A security interest attaches to collateral when it 
becomes enforceable against the debtor with respect to the 
collateral, unless an agreement expressly postpones the time of 
attachment. 
(B) Except as otherwise provided in divisions (C) to (I) 
of this section, a security interest is enforceable against the 
debtor and third parties with respect to the collateral only if:
(1) Value has been given;
(2) The debtor has rights in the collateral or the power 
to transfer rights in the collateral to a secured party; and
(3) One of the following conditions is met:
(a) The debtor has authenticated signed a security 
agreement that provides a description of the collateral and, if 
the security interest covers timber to be cut, a description of 
the land concerned;
(b) The collateral is not a certificated security and is 
in the possession of the secured party under section 1309.313 of 
the Revised Code pursuant to the debtor's security agreement;
(c) The collateral is a certificated security in 
registered form and the security certificate has been delivered 
to the secured party under section 1308.27 of the Revised Code 
pursuant to the debtor's security agreement; or
(d) The collateral is controllable accounts, controllable 
electronic records, controllable payment intangibles, deposit 
accounts, electronic chattel paperdocuments, electronic money , 
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2798 H. B. No. 195 Page 101
As Introduced
investment property, or letter-of-credit rights, or electronic 
documents, and the secured party has control under section 
1307.106, 1309.104, 1309.105, 1309.106, or 1309.107, 1309.111, 
or 1309.112 of the Revised Code pursuant to the debtor's 
security agreement; 
(e) The collateral is chattel paper and the secured party 
has possession and control under section 1309.345 of the Revised 
Code pursuant to the debtor's security agreement .
(C) Division (B) of this section is subject to section 
1304.20 of the Revised Code on the security interest of a 
collecting bank, section 1305.18 of the Revised Code on the 
security interest of a letter-of-credit issuer or nominated 
person, section 1309.110 of the Revised Code on a security 
interest arising under Chapter 1302. or 1310. of the Revised 
Code, and section 1309.206 of the Revised Code on security 
interests in investment property.
(D) A person becomes bound as debtor by a security 
agreement entered into by another person if, by operation of law 
other than this article or by contract:
(1) The security agreement becomes effective to create a 
security interest in the person's property; or
(2) The person becomes generally obligated for the 
obligations of the other person, including the obligation 
secured under the security agreement, and acquires or succeeds 
to all or substantially all of the assets of the other person.
(E) If a new debtor becomes bound as debtor by a security 
agreement entered into by another person:
(1) The agreement satisfies division (B)(3) of this 
section with respect to existing or after-acquired property of 
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2827 H. B. No. 195 Page 102
As Introduced
the new debtor to the extent the property is described in the 
agreement; and
(2) Another agreement is not necessary to make a security 
interest in the property enforceable.
(F) The attachment of a security interest in collateral 
gives the secured party the rights to proceeds provided by 
section 1309.315 of the Revised Code and is also attachment of a 
security interest in a supporting obligation for the collateral.
(G) The attachment of a security interest in a right to 
payment or performance secured by a security interest or other 
lien on personal or real property is also attachment of a 
security interest in the security interest, mortgage, or other 
lien.
(H) The attachment of a security interest in a securities 
account is also attachment of a security interest in the 
security entitlements carried in the securities account.
(I) The attachment of a security interest in a commodity 
account is also attachment of a security interest in the 
commodity contracts carried in the commodity account.
Sec. 1309.204. After-acquired property; future advances 
[UCC 9-204]
(A) Except as provided in division (B) of this section, a 
security agreement may create or provide for a security interest 
in after-acquired collateral.
(B) A Subject to division (D) of this section, a security 
interest does not attach under a term constituting an after-
acquired property clause to:
(1) Consumer goods other than accessions when given as 
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2855 H. B. No. 195 Page 103
As Introduced
additional security unless the debtor acquires rights in them 
within ten days after the secured party gives value; or
(2) A commercial tort claim.
(C) A security agreement may provide that collateral 
secures, or that accounts, chattel paper, payment intangibles, 
or promissory notes are sold in connection with, future advances 
or other value, whether or not the advances or value are given 
pursuant to commitment.
(D) Division (B) of this section does not prevent a 
security interest from attaching to any of the following:
(1) To consumer goods as proceeds under section 1309.315 
of the Revised Code or as commingled goods under section 
1309.336 of the Revised Code;
(2) To a commercial tort claim as proceeds under section 
1309.315 of the Revised Code;
(3) Under an after-acquired property clause to property 
that is proceeds of consumer goods or a commercial tort claim.
Sec. 1309.207. Rights and duties of secured party having 
possession or control of collateral [UCC 9-207]
(A) Except as otherwise provided in division (D) of this 
section, a secured party shall use reasonable care in the 
custody and preservation of collateral in the secured party's 
possession. In the case of an instrument or chattel paper, 
reasonable care includes taking necessary steps to preserve 
rights against prior parties unless otherwise agreed. 
(B) Except as otherwise provided in division (D) of this 
section, if a secured party has possession of collateral:
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2882 H. B. No. 195 Page 104
As Introduced
(1) Reasonable expenses, including the cost of insurance 
and payment of taxes or other charges, incurred in the custody, 
preservation, use, or operation of the collateral are chargeable 
to the debtor and are secured by the collateral;
(2) The risk of accidental loss or damage is on the debtor 
to the extent of a deficiency in any effective insurance 
coverage;
(3) The secured party shall keep the collateral 
identifiable but fungible collateral may be commingled; and
(4) The secured party may use or operate the collateral:
(a) For the purpose of preserving the collateral or its 
value;
(b) As permitted by an order of a court having competent 
jurisdiction; or
(c) Except in the case of consumer goods, in the manner 
and to the extent agreed by the debtor.
(C) Except as otherwise provided in division (D) of this 
section, a secured party having possession of collateral or 
control of collateral under section 1307.106, 1309.104, 
1309.105, 1309.106, or 1309.107, 1309.111, or 1309.112 of the 
Revised Code:
(1) May hold as additional security any proceeds, except 
money or funds, received from the collateral;
(2) Shall apply money or funds received from the 
collateral to reduce the secured obligation, unless remitted to 
the debtor; and
(3) May create a security interest in the collateral.
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2909 H. B. No. 195 Page 105
As Introduced
(D) If the secured party is a buyer of accounts, chattel 
paper, payment intangibles, or promissory notes or a consignor:
(1) Division (A) of this section does not apply unless the 
secured party is entitled under an agreement:
(a) To charge back uncollected collateral; or
(b) Otherwise to full or limited recourse against the 
debtor or a secondary obligor based on the nonpayment or other 
default of an account debtor or other obligor on the collateral; 
and
(2) Divisions (B) and (C) of this section do not apply.
Sec. 1309.208. Additional duties of secured party having 
control of collateral [UCC 9-208]
(A) This section applies to cases in which there is no 
outstanding secured obligation and the secured party is not 
committed to make advances, incur obligations, or otherwise give 
value. 
(B) Within ten days after receiving an authenticated a 
signed demand by the debtor:
(1) A secured party having control of a deposit account 
under division (A)(2) of section 1309.104 of the Revised Code 
shall send to the bank with which the deposit account is 
maintained an authenticated statement a signed record that 
releases the bank from any further obligation to comply with 
instructions originated by the secured party.
(2) A secured party having control of a deposit account 
under division (A)(3) of section 1309.104 of the Revised Code 
shall:
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2936 H. B. No. 195 Page 106
As Introduced
(a) Pay the debtor the balance on deposit in the deposit 
account; or
(b) Transfer the balance on deposit into a deposit account 
in the debtor's name.
(3) A secured party, other than a buyer, having control 
under section 1309.105 of the Revised Code of an authoritative 
electronic copy of a record evidencing chattel paper under 
section 1309.105 of the Revised Code shall:
(a) Communicate the authoritative copy of the electronic 
chattel paper to the debtor or its designated custodian;
(b) If the debtor designates a custodian that is the 
designated custodian with which the authoritative copy of the 
electronic chattel paper is maintained for the secured party, 
communicate to the custodian an authenticated record releasing 
the designated custodian from any further obligation to comply 
with instructions originated by the secured party and 
instructing the custodian to comply with instructions originated 
by the debtor; and
(c) Take appropriate action to enable the debtor or its 
designated custodian to make copies of or revisions to the 
authoritative copy that add or change an identified assignee of 
the authoritative copy without the consent of the secured party. 
transfer control of the electronic copy to the debtor or a 
person designated by the debtor;
(4) A secured party having control of investment property 
under division (D)(2) of section 1308.24 or division (B) of 
section 1309.106 of the Revised Code shall send to the 
securities intermediary or commodity intermediary with which the 
security entitlement or commodity contract is maintained an 
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2965 H. B. No. 195 Page 107
As Introduced
authenticated a signed record that releases the securities 
intermediary or commodity intermediary from any further 
obligation to comply with entitlement orders or directions 
originated by the secured party; and
(5) A secured party having control of a letter-of-credit 
right under section 1309.107 of the Revised Code shall send to 
each person having an unfulfilled obligation to pay or deliver 
proceeds of the letter of credit to the secured party an 
authenticated a signed release from any further obligation to 
pay or deliver proceeds of the letter of credit to the secured 
party.;
(6) A secured party having control under section 1307.106 
of the Revised Code of an authoritative electronic copy of an 
electronic document shall :
(a) Give control of the electronic document to the debtor 
or its designated custodian;
(b) If the debtor designates a custodian that is the 
designated custodian with which the authoritative copy of the 
electronic document is maintained for the secured party, 
communicate to the custodian an authenticated record releasing 
the designated custodian from any further obligation to comply 
with instructions originated by the secured party and 
instructing the custodian to comply with instructions originated 
by the debtor; and
(c) Take appropriate action to enable the debtor or its 
designated custodian to make copies of or revisions to the 
authoritative copy which add or change an identified assignee of 
the authoritative copy without the consent of the secured party 
transfer control of the electronic copy to the debtor or a 
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2994 H. B. No. 195 Page 108
As Introduced
person designated by the debtor;
(7) A secured party having control under section 1309.111 
of the Revised Code of electronic money shall transfer control 
of the electronic money to the debtor or a person designated by 
the debtor; and
(8) A secured party having control under section 1314.105 
of the Revised Code of a controllable electronic record, other 
than a buyer of a controllable account or a controllable payment 
intangible evidenced by the controllable electronic record, 
shall transfer control of the controllable electronic record to 
the debtor or a person designated by the debtor .
Sec. 1309.209. Duties of secured party if account debtor 
has been notified of assignment [UCC 9-209]
(A) Except as otherwise provided in division (C) of this 
section, this section applies if:
(1) There is no outstanding secured obligation; and
(2) The secured party is not committed to make advances, 
incur obligations, or otherwise give value.
(B) Within ten days after receiving an authenticated a 
signed demand by the debtor, a secured party shall send to an 
account debtor that has received notification under section 
1309.406 or 1314.106 of the Revised Code of an assignment to the 
secured party as assignee under division (A) of section 1309.406 
of the Revised Code an authenticated a signed record that 
releases the account debtor from any further obligation to the 
secured party.
(C) This section does not apply to an assignment 
constituting the sale of an account, chattel paper, or payment 
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3022 H. B. No. 195 Page 109
As Introduced
intangible.
Sec. 1309.210. Request for accounting; request regarding 
list of collateral or statement of account [UCC 9-210]
(A) As used in this section:
(1) "Request" means a record of a type described in 
division (A)(2), (3), or (4) of this section.
(2) "Request for an accounting" means a record 
authenticated signed by a debtor requesting that the recipient 
provide an accounting of the unpaid obligations secured by 
collateral and reasonably identifying the transaction or 
relationship that is the subject of the request.
(3) "Request regarding a list of collateral" means a 
record authenticated signed by a debtor requesting that the 
recipient approve or correct a list of what the debtor believes 
to be the collateral securing an obligation and reasonably 
identifying the transaction or relationship that is the subject 
of the request.
(4) "Request regarding a statement of account" means a 
record authenticated signed by a debtor requesting that the 
recipient approve or correct a statement indicating what the 
debtor believes to be the aggregate amount of unpaid obligations 
secured by collateral as of a specified date and reasonably 
identifying the transaction or relationship that is the subject 
of the request.
(B) Subject to divisions (C), (D), (E), and (F) of this 
section, a secured party, other than a buyer of accounts, 
chattel paper, payment intangibles, or promissory notes or a 
consignor, shall comply with a request within fourteen days 
after receipt:
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3051 H. B. No. 195 Page 110
As Introduced
(1) In the case of a request for an accounting, by 
authenticating signing and sending to the debtor an accounting; 
and
(2) In the case of a request regarding a list of 
collateral or a request regarding a statement of account, by 
authenticating signing and sending to the debtor an approval or 
correction.
(C) A secured party that claims a security interest in all 
of a particular type of collateral owned by the debtor may 
comply with a request regarding a list of collateral by sending 
to the debtor an authenticated a signed record including a 
statement to that effect within fourteen days after receipt.
(D) A person that receives a request regarding a list of 
collateral, claims no interest in the collateral when it 
receives the request, and claimed an interest in the collateral 
at an earlier time shall comply with the request within fourteen 
days after receipt by sending to the debtor an authenticated a 
signed record:
(1) Disclaiming any interest in the collateral; and
(2) If known to the recipient, providing the name and 
mailing address of any assignee of or successor to the 
recipient's interest in the collateral.
(E) A person that receives a request for an accounting or 
a request regarding a statement of account, claims no interest 
in the obligations when it receives the request, and claimed an 
interest in the obligations at an earlier time shall comply with 
the request within fourteen days after receipt by sending to the 
debtor an authenticated a signed record:
(1) Disclaiming any interest in the obligations; and
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3080 H. B. No. 195 Page 111
As Introduced
(2) If known to the recipient, providing the name and 
mailing address of any assignee of or successor to the 
recipient's interest in the obligations.
(F) A debtor is entitled without charge to one response to 
a request under this section during any six-month period. The 
secured party may require payment of a charge not exceeding 
twenty-five dollars for each additional response.
Sec. 1309.301. Law governing perfection and priority of 
security interests [UCC 9-301]
Except as otherwise provided in sections 1309.303 to 
1309.306 and section 1309.344 of the Revised Code, the following 
rules determine the law governing perfection, the effect of 
perfection or nonperfection, and the priority of a security 
interest in collateral: 
(A) Except as otherwise provided in this section, while a 
debtor is located in a jurisdiction, the local law of that 
jurisdiction governs perfection, the effect of perfection or 
nonperfection, and the priority of a security interest in 
collateral.
(B) While collateral is located in a jurisdiction, the 
local law of that jurisdiction governs perfection, the effect of 
perfection or nonperfection, and the priority of a possessory 
security interest in that collateral.
(C) Except as otherwise provided in division (D) of this 
section, while tangible negotiable tangible documents, goods, 
instruments, or tangible money, or tangible chattel paper is 
located in a jurisdiction, the local law of that jurisdiction 
governs:
(1) Perfection of a security interest in the goods by 
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3109 H. B. No. 195 Page 112
As Introduced
filing a fixture filing;
(2) Perfection of a security interest in timber to be cut; 
and
(3) The effect of perfection or nonperfection and the 
priority of a nonpossessory security interest in the collateral.
(D) The local law of the jurisdiction in which the 
wellhead or minehead is located governs perfection, the effect 
of perfection or nonperfection, and the priority of a security 
interest in as-extracted collateral.
Sec. 1309.304. Law governing perfection and priority of 
security interests in deposit accounts [UCC 9-304]
(A) The local law of a bank's jurisdiction governs 
perfection, the effect of perfection or nonperfection, and the 
priority of a security interest in a deposit account maintained 
with that bank even if the transaction does not bear any 
relation to the bank's jurisdiction .
(B) The following rules determine a bank's jurisdiction 
for purposes of this section:
(1) If an agreement between the bank and the debtor 
governing the deposit account expressly provides that a 
particular jurisdiction is the bank's jurisdiction for purposes 
of this chapter or Chapters 1301. to 1305. and 1307. to 1310. of 
the Revised Code, that jurisdiction is the bank's jurisdiction.
(2) If division (B)(1) of this section does not apply and 
an agreement between the bank and its customer governing the 
deposit account expressly provides that the agreement is 
governed by the law of a particular jurisdiction, that 
jurisdiction is the bank's jurisdiction.
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3137 H. B. No. 195 Page 113
As Introduced
(3) If neither division (B)(1) nor (2) of this section 
applies and an agreement between the bank and its customer 
governing the deposit account expressly provides that the 
deposit account is maintained at an office in a particular 
jurisdiction, that jurisdiction is the bank's jurisdiction.
(4) If neither division (B)(1), (2), nor (3) of this 
section applies, the bank's jurisdiction is the jurisdiction in 
which the office identified in an account statement as the 
office serving the customer's account is located.
(5) If neither division (B)(1), (2), (3), nor (4) of this 
section applies, the bank's jurisdiction is the jurisdiction in 
which the chief executive office of the bank is located.
Sec. 1309.305. Law governing perfection and priority of 
security interests in investment property [UCC 9-305]
(A) Except as otherwise provided in division (C) of this 
section, the following rules apply:
(1) While a security certificate is located in a 
jurisdiction, the local law of that jurisdiction governs 
perfection, the effect of perfection or nonperfection, and the 
priority of a security interest in the certificated security 
represented thereby.
(2) The local law of the issuer's jurisdiction as 
specified in division (D) of section 1308.05 of the Revised Code 
governs perfection, the effect of perfection or nonperfection, 
and the priority of a security interest in an uncertificated 
security.
(3) The local law of the securities intermediary's 
jurisdiction as specified in division (E) of section 1308.05 of 
the Revised Code governs perfection, the effect of perfection or 
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3166 H. B. No. 195 Page 114
As Introduced
nonperfection, and the priority of a security interest in a 
security entitlement or securities account.
(4) The local law of the commodity intermediary's 
jurisdiction governs perfection, the effect of perfection or 
nonperfection, and the priority of a security interest in a 
commodity contract or commodity account.
(5) Divisions (A)(2), (3), and (4) of this section apply 
even if the transaction does not bear any relation to the 
jurisdiction.
(B) The following rules determine a commodity 
intermediary's jurisdiction for purposes of sections 1309.301 to 
1309.342 of the Revised Code:
(1) If an agreement between the commodity intermediary and 
commodity customer governing the commodity account expressly 
provides that a particular jurisdiction is the commodity 
intermediary's jurisdiction for purposes of sections 1309.301 to 
1309.342 of the Revised Code, this chapter, or Chapters 1301., 
1302., 1303., 1304., 1305., 1307., 1308., 1309., and 1310. of 
the Revised Code, that jurisdiction is the commodity 
intermediary's jurisdiction.
(2) If division (B)(1) of this section does not apply and 
an agreement between the commodity intermediary and commodity 
customer governing the commodity account expressly provides that 
the agreement is governed by the law of a particular 
jurisdiction, that jurisdiction is the commodity intermediary's 
jurisdiction.
(3) If neither division (B)(1) nor (2) of this section 
applies and an agreement between the commodity intermediary and 
commodity customer governing the commodity account expressly 
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3195 H. B. No. 195 Page 115
As Introduced
provides that the commodity account is maintained at an office 
in a particular jurisdiction, that jurisdiction is the commodity 
intermediary's jurisdiction.
(4) If neither division (B)(1), (2), nor (3) of this 
section applies, the commodity intermediary's jurisdiction is 
the jurisdiction in which the office identified in an account 
statement as the office serving the commodity customer's account 
is located.
(5) If neither division (B)(1), (2), (3), nor (4) of this 
section applies, the commodity intermediary's jurisdiction is 
the jurisdiction in which the chief executive office of the 
commodity intermediary is located.
(C) The local law of the jurisdiction in which the debtor 
is located governs:
(1) Perfection of a security interest in investment 
property by filing;
(2) Automatic perfection of a security interest in 
investment property created by a broker or securities 
intermediary; and
(3) Automatic perfection of a security interest in a 
commodity contract or commodity account created by a commodity 
intermediary.
Sec. 1309.310. When filing required to perfect security 
interest or agricultural lien; security interests and 
agricultural liens to which filing provisions do not apply [UCC 
9-310]
(A) Except as otherwise provided in division (B) of this 
section and division (B) of section 1309.312 of the Revised 
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3198
3199
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3223 H. B. No. 195 Page 116
As Introduced
Code, a financing statement must be filed to perfect all 
security interests and agricultural liens. 
(B) The filing of a financing statement is not necessary 
to perfect a security interest:
(1) That is perfected under division (D), (E), (F), or (G) 
of section 1309.308 of the Revised Code;
(2) That is perfected under section 1309.309 of the 
Revised Code when it attaches;
(3) In property subject to a statute, regulation, or 
treaty described in division (A) of section 1309.311 of the 
Revised Code;
(4) In goods in possession of a bailee which is perfected 
under division (D)(1) or (2) of section 1309.312 of the Revised 
Code;
(5) In certificated securities, documents, goods, or 
instruments which is perfected without filing, control, or 
possession under division (E), (F), or (G) of section 1309.312 
of the Revised Code;
(6) In collateral in the secured party's possession under 
section 1309.313 of the Revised Code;
(7) In a certificated security perfected by delivery of 
the security certificate to the secured party under section 
1309.313 of the Revised Code;
(8) (8)(a) In controllable accounts, controllable 
electronic records, controllable payment intangibles, deposit 
accounts, electronic chattel paper, electronic documents, 
investment property, or letter-of-credit rights perfected by 
control under section 1309.314 of the Revised Code;
3224
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3251 H. B. No. 195 Page 117
As Introduced
(b) In chattel paper which is perfected by possession and 
control under section 1309.345 of the Revised Code.
(9) In proceeds which is perfected under section 1309.315 
of the Revised Code; or
(10) That is perfected under section 1309.316 of the 
Revised Code.
(C) If a secured party assigns a perfected security 
interest or agricultural lien, a filing under this chapter is 
not required to continue the perfected status of the security 
interest against creditors of and transferees from the original 
debtor.
Sec. 1309.312. Perfection of security interests in chattel 
paper, controllable accounts, controllable electronic records, 
controllable payment intangibles, deposit accounts, negotiable 
documents, goods covered by documents, instruments, investment 
property, letter-of-credit rights, and money; perfection by 
permissive filing; temporary perfection without filing or 
transfer of possession [UCC 9-312]
(A) A security interest in chattel paper, negotiable 
documentscontrollable accounts, controllable electronic records, 
controllable payment intangibles , instruments, or investment 
property, or negotiable documents may be perfected by filing. 
(B) Except as otherwise provided in divisions (C) and (D) 
of section 1309.315 of the Revised Code for proceeds:
(1) A security interest in a deposit account may be 
perfected only by control under section 1309.314 of the Revised 
Code;
(2) And except Except as otherwise provided in division 
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3279 H. B. No. 195 Page 118
As Introduced
(D) of section 1309.308 of the Revised Code, a security interest 
in a letter-of-credit right may be perfected only by control 
under section 1309.314 of the Revised Code; and
(3) A security interest in tangible money may be perfected 
only by the secured party's taking possession under section 
1309.313 of the Revised Code ;
(4) A security interest in electronic money may be 
perfected only by control under section 1309.314 of the Revised 
Code.
(C) While goods are in the possession of a bailee that has 
issued a negotiable document covering the goods:
(1) A security interest in the goods may be perfected by 
perfecting a security interest in the document; and
(2) A security interest perfected in the document has 
priority over any security interest that becomes perfected in 
the goods by another method during that time.
(D) While goods are in the possession of a bailee that has 
issued a non-negotiable document covering the goods, a security 
interest in the goods may be perfected by:
(1) Issuance of a document in the name of the secured 
party;
(2) The bailee's receipt of notification of the secured 
party's interest; or
(3) Filing as to the goods.
(E) A security interest in certificated securities, or 
negotiable documents, or instruments is perfected without filing 
or the taking of possession or control for a period of twenty 
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3306 H. B. No. 195 Page 119
As Introduced
days from the time it attaches to the extent that it arises for 
new value given under an authenticated a signed security 
agreement.
(F) A perfected security interest in a negotiable document 
or goods in possession of a bailee, other than one that has 
issued a negotiable document for the goods, remains perfected 
for a period of twenty days without filing if the secured party 
makes available to the debtor the goods or documents 
representing the goods for the purpose of:
(1) Ultimate sale or exchange; or
(2) Loading, unloading, storing, shipping, trans-shipping, 
manufacturing, processing, or otherwise dealing with them in a 
manner preliminary to their sale or exchange.
(G) A perfected security interest in an instrument or 
certificated security remains perfected for twenty days without 
filing if the secured party delivers the security certificate or 
instrument to the debtor for the purpose of:
(1) Ultimate sale or exchange; or
(2) Presentation, collection, enforcement, renewal, or 
registration of transfer.
(H) After the twenty-day period specified in divisions 
(E), (F), or (G) of this section expires, perfection depends 
upon compliance with this chapter.
Sec. 1309.313. When possession by or delivery to secured 
party perfects security interest without filing [UCC 9-313]
(A) Except as otherwise provided in division (B) of this 
section, a secured party may perfect a security interest in 
tangible negotiable documents, goods, instruments, negotiable 
3307
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3309
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3334 H. B. No. 195 Page 120
As Introduced
tangible documents, or tangible money, or tangible chattel paper 
by taking possession of the collateral. A secured party may 
perfect a security interest in certificated securities by taking 
delivery of the certificated securities under section 1308.27 of 
the Revised Code. 
(B) With respect to goods covered by a certificate of 
title issued by this state, a secured party may perfect a 
security interest in the goods by taking possession of the goods 
only in the circumstances described in division (D) of section 
1309.316 of the Revised Code.
(C) With respect to collateral other than certificated 
securities and goods covered by a document, a secured party 
takes possession of collateral in the possession of a person 
other than the debtor, the secured party, or a lessee of the 
collateral from the debtor in the ordinary course of the 
debtor's business, when:
(1) The person in possession authenticates signs a record 
acknowledging that the person holds possession of the collateral 
for the secured party's benefit; or
(2) The person takes possession of the collateral after 
having authenticated signed a record acknowledging that the 
person will hold possession of the collateral for the secured 
party's benefit.
(D) If perfection of a security interest depends upon 
possession of the collateral by a secured party, perfection 
occurs no not earlier than the time the secured party takes 
possession and continues only while the secured party retains 
possession.
(E) A security interest in a certificated security in 
3335
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3363 H. B. No. 195 Page 121
As Introduced
registered form is perfected by delivery when delivery of the 
certificated security occurs under section 1308.27 of the 
Revised Code and remains perfected by delivery until the debtor 
obtains possession of the security certificate.
(F) A person in possession of collateral is not required 
to acknowledge that the person holds possession for a secured 
party's benefit.
(G) If a person acknowledges that the person holds 
possession for the secured party's benefit:
(1) The acknowledgment is effective under division (C) of 
this section or division (A) of section 1308.27 of the Revised 
Code, even if the acknowledgment violates the rights of a 
debtor; and
(2) Unless the person otherwise agrees or law other than 
this chapter otherwise provides, the person does not owe any 
duty to the secured party and is not required to confirm the 
acknowledgment to another person.
(H) A secured party having possession of collateral does 
not relinquish possession by delivering the collateral to a 
person other than the debtor or a lessee of the collateral from 
the debtor in the ordinary course of the debtor's business if 
the person was instructed before the delivery or is instructed 
contemporaneously with the delivery:
(1) To hold possession of the collateral for the secured 
party's benefit; or
(2) To redeliver the collateral to the secured party.
(I) A secured party does not relinquish possession, even 
if a delivery under division (H) of this section violates the 
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3391 H. B. No. 195 Page 122
As Introduced
rights of a debtor. A person to whom collateral is delivered 
under division (H) of this section does not owe any duty to the 
secured party and is not required to confirm the delivery to 
another person unless the person otherwise agrees or law other 
than this chapter otherwise provides.
Sec. 1309.314. Perfection by control [UCC 9-314]
(A) A security interest in investment property, deposit 
accounts, letter-of-credit rights, electronic chattel paper, or 
electronic documents controllable accounts, controllable 
electronic records, controllable payment intangibles, deposit 
accounts, electronic documents, electronic money, investment 
property, or letter-of-credit rights may be perfected by control 
of the collateral under section 1307.106, 1309.104, 1309.105, 
1309.106, or 1309.107, 1309.111, or 1309.112 of the Revised 
Code. 
(B) A security interest in deposit accounts, electronic 
chattel paper, letter-of-credit rights, or electronic documents 
controllable accounts, controllable electronic records, 
controllable payment intangibles, deposit accounts, electronic 
documents, electronic money, or letter-of-credit rights is 
perfected by control under section 1307.106, 1309.104, 1309.105, 
or 1309.107, 1309.111, or 1309.112 of the Revised Code when not 
earlier than the time the secured party obtains control and 
remains perfected by control only while the secured party 
retains control.
(C) A security interest in investment property is 
perfected by control under section 1309.106 of the Revised Code 
from not earlier than the time the secured party obtains control 
and remains perfected by control until:
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3420 H. B. No. 195 Page 123
As Introduced
(1) The secured party does not have control; and
(2) One of the following occurs:
(a) If the collateral is a certificated security, the 
debtor has or acquires possession of the security certificate;
(b) If the collateral is an uncertificated security, the 
issuer has registered or registers the debtor as the registered 
owner; or
(c) If the collateral is a security entitlement, the 
debtor is or becomes the entitlement holder.
Sec. 1309.316. Continued perfection of security interest 
following change in governing law [UCC 9-316]
(A) A security interest perfected pursuant to the law of 
the jurisdiction designated in division (A) of section 1309.301 
or , division (C) of section 1309.305 , division (D) of section 
1309.343, or division (B) of section 1309.344 of the Revised 
Code remains perfected until the earliest of: 
(1) The time perfection would have ceased under the law of 
that jurisdiction;
(2) The expiration of four months after a change of the 
debtor's location to another jurisdiction; or
(3) The expiration of one year after a transfer of 
collateral to a person that thereby becomes a debtor and is 
located in another jurisdiction.
(B) If a security interest described in division (A) of 
this section becomes perfected under the law of the other 
jurisdiction before the earliest time or event described in that 
division, it remains perfected thereafter. If the security 
3421
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3447 H. B. No. 195 Page 124
As Introduced
interest does not become perfected under the law of the other 
jurisdiction before that earliest time or event, it becomes 
unperfected and is deemed never to have been perfected as 
against a purchaser of the collateral for value.
(C) A possessory security interest in collateral, other 
than goods covered by a certificate of title and as-extracted 
collateral consisting of goods, remains continuously perfected 
if:
(1) The collateral is located in one jurisdiction and 
subject to a security interest perfected under the law of that 
jurisdiction;
(2) Thereafter, the collateral is brought into another 
jurisdiction; and
(3) Upon entry into the other jurisdiction, the security 
interest is perfected under the law of the other jurisdiction.
(D) Except as otherwise provided in division (E) of this 
section, a security interest in goods covered by a certificate 
of title that is perfected by any method under the law of 
another jurisdiction when the goods become covered by a 
certificate of title from this state remains perfected until the 
security interest would have become unperfected under the law of 
the other jurisdiction had the goods not become so covered.
(E) A security interest described in division (D) of this 
section becomes unperfected as against a purchaser of the goods 
for value and is deemed never to have been perfected as against 
a purchaser of the goods for value if the applicable 
requirements for perfection under division (B) of section 
1309.311 or section 1309.313 of the Revised Code are not 
satisfied before the earlier of:
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3476 H. B. No. 195 Page 125
As Introduced
(1) The time the security interest would have become 
unperfected under the law of the other jurisdiction had the 
goods not become covered by a certificate of title from this 
state; or
(2) The expiration of four months after the goods had 
become so covered.
(F) A security interest in chattel paper, controllable 
accounts, controllable electronic records, controllable payment 
intangibles, deposit accounts, letter-of-credit rights, or 
investment property that is perfected under the law of the 
chattel paper's jurisdiction, the controllable electronic 
record's jurisdiction, the bank's jurisdiction, the issuer's 
jurisdiction, a nominated person's jurisdiction, the securities 
intermediary's jurisdiction, or the commodity intermediary's 
jurisdiction, as applicable, remains perfected until the earlier 
of:
(1) The time the security interest would have become 
unperfected under the law of that jurisdiction; or
(2) The expiration of four months after a change of the 
applicable jurisdiction to another jurisdiction.
(G) If a security interest described in division (F) of 
this section becomes perfected under the law of the other 
jurisdiction before the earlier of the time or the end of the 
period described in that division, it remains perfected 
thereafter. If the security interest does not become perfected 
under the law of the other jurisdiction before the earlier of 
that time or the end of that period, it becomes unperfected and 
is deemed never to have been perfected as against a purchaser of 
the collateral for value.
3477
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3505 H. B. No. 195 Page 126
As Introduced
(H) The following rules apply to collateral to which a 
security interest attaches within four months after the debtor 
changes its location to another jurisdiction:
(1) A financing statement filed before the change pursuant 
to the law of the jurisdiction designated in division (A) of 
section 1309.301 or division (C) of section 1309.305 of the 
Revised Code is effective to perfect a security interest in the 
collateral if the financing statement would have been effective 
to perfect a security interest in the collateral had the debtor 
not changed its location.
(2) If a security interest perfected by a financing 
statement that is effective under division (H)(1) of this 
section becomes perfected under the law of the other 
jurisdiction before the earlier of the time the financing 
statement would have become ineffective under the law of the 
jurisdiction designated in division (A) of section 1309.301 or 
division (C) of section 1309.305 of the Revised Code or the 
expiration of the four-month period, it remains perfected 
thereafter. If the security interest does not become perfected 
under the law of the other jurisdiction before the earlier time 
or event, it becomes unperfected and is deemed never to have 
been perfected as against a purchaser of the collateral for 
value.
(I) If a financing statement naming an original debtor is 
filed pursuant to the law of the jurisdiction designated in 
division (A) of section 1309.301 or division (C) of section 
1309.305 of the Revised Code and the new debtor is located in 
another jurisdiction, the following rules apply:
(1) The financing statement is effective to perfect a 
security interest in collateral acquired by the new debtor 
3506
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3535 H. B. No. 195 Page 127
As Introduced
before, and within four months after, the new debtor becomes 
bound under division (D) of section 1309.203 of the Revised 
Code, if the financing statement would have been effective to 
perfect a security interest in the collateral had the collateral 
been acquired by the original debtor.
(2) A security interest perfected by the financing 
statement and that becomes perfected under the law of the other 
jurisdiction before the earlier of the time the financing 
statement would have become ineffective under the law of the 
jurisdiction designated in division (A) of section 1309.301 or 
division (C) of section 1309.305 of the Revised Code or the 
expiration of the four-month period remains perfected 
thereafter. A security interest that is perfected by the 
financing statement but that does not become perfected under the 
law of the other jurisdiction before the earlier time or event 
becomes unperfected and is deemed never to have been perfected 
as against a purchaser of the collateral for value.
Sec. 1309.317. Interests that take priority over or take 
free of security interest or agricultural lien [UCC 9-317]
(A) A security interest or agricultural lien is 
subordinate to the rights of: 
(1) A person entitled to priority under section 1309.322 
of the Revised Code; and
(2) Except as otherwise provided in division (E) of this 
section, a person who becomes a lien creditor before the earlier 
of the time:
(a) The security interest or agricultural lien is 
perfected; or
(b) One of the conditions specified in division (B)(3) of 
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3564 H. B. No. 195 Page 128
As Introduced
section 1309.203 of the Revised Code is met and a financing 
statement covering the collateral is filed.
(B) Except as otherwise provided in division (E) of this 
section, a buyer, other than a secured party, of tangible 
chattel paper, tangible documents, goods, instruments, tangible 
documents, or a certificated security takes free of a security 
interest or agricultural lien if the buyer gives value and 
receives delivery of the collateral without knowledge of the 
security interest or agricultural lien and before it is 
perfected.
(C) Except as otherwise provided in division (E) of this 
section, a lessee of goods takes free of a security interest or 
agricultural lien if the lessee gives value and receives 
delivery of the collateral without knowledge of the security 
interest or agricultural lien and before it is perfected.
(D) A Subject to divisions (F) to (I) of this section, a 
licensee of a general intangible or a buyer, other than a 
secured party, of collateral other than tangible chattel 
paperelectronic money, tangible documents, goods, instruments, 
tangible documents, or a certificated security takes free of a 
security interest if the licensee or buyer gives value without 
knowledge of the security interest and before it is perfected.
(E) Except as otherwise provided in sections 1309.320 and 
1309.321 of the Revised Code, if a person files a financing 
statement with respect to a purchase money security interest 
before or within twenty days after the debtor receives delivery 
of the collateral, the security interest takes priority over the 
rights of a buyer, lessee, or lien creditor that arise between 
the time the security interest attaches and the time of filing.
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3593 H. B. No. 195 Page 129
As Introduced
(F) A buyer, other than a secured party, of chattel paper 
takes free of a security interest if, without knowledge of the 
security interest and before it is perfected, the buyer gives 
value and:
(1) Receives delivery of each authoritative copy of the 
record evidencing the chattel paper; and
(2) If each authoritative electronic copy of the record 
evidencing the chattel paper can be subjected to control under 
section 1309.105 of the Revised Code, obtains control of each 
authoritative electronic copy.
(G) A buyer of an electronic document takes free of a 
security interest if, without knowledge of the security interest 
and before it is perfected, the buyer gives value and, if each 
authoritative electronic copy of the document can be subjected 
to control under section 1307.106 of the Revised Code, obtains 
control of each authoritative electronic copy.
(H) A buyer of a controllable electronic record takes free 
of a security interest if, without knowledge of the security 
interest and before it is perfected, the buyer gives value and 
obtains control of the controllable electronic record.
(I) A buyer, other than a secured party, of a controllable 
account or a controllable payment intangible takes free of a 
security interest if, without knowledge of the security interest 
and before it is perfected, the buyer gives value and obtains 
control of the controllable account or controllable payment 
intangible.
Sec. 1309.323. Future advances [UCC 9-323]
(A) Except as otherwise provided in division (C) of this 
section, for purposes of determining the priority of a perfected 
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3622 H. B. No. 195 Page 130
As Introduced
security interest under division (A)(1) of section 1309.322 of 
the Revised Code, perfection of the security interest dates from 
the time an advance is made to the extent that the security 
interest secures an advance that:
(1) Is made while the security interest is perfected only:
(a) Under section 1309.309 of the Revised Code when it 
attaches; or
(b) Temporarily under division (E), (F), or (G) of section 
1309.312 of the Revised Code.
(2) Is not made pursuant to a commitment entered into 
before or while the security interest is perfected by a method 
other than under section 1309.309 or division (E), (F), or (G) 
of section 1309.312 of the Revised Code.
(B) Except as otherwise provided in division (C) of this 
section, a security interest is subordinate to the rights of a 
person that becomes a lien creditor to the extent that the 
security interest secures advances made more than forty-five 
days after the person becomes a lien creditor unless the advance 
is made:
(1) Without knowledge of the lien; or
(2) Pursuant to a commitment entered into without 
knowledge of the lien.
(C) Divisions (A) and (B) of this section do not apply to 
a security interest held by a secured party that is a buyer of 
accounts, chattel paper, payment intangibles, or promissory 
notes or a consignor.
(D) Except as otherwise provided in division (E) of this 
section, a buyer of goods other than a buyer in ordinary course 
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3650 H. B. No. 195 Page 131
As Introduced
of business takes free of a security interest to the extent that 
it secures advances made after the earlier of:
(1) The time the secured party acquires knowledge of the 
buyer's purchase; or
(2) Forty-five days after the purchase.
(E) Division (D) of this section does not apply if the 
advance is made pursuant to a commitment entered into without 
knowledge of the buyer's purchase and before the expiration of 
the forty-five-day period.
(F) Except as otherwise provided in division (G) of this 
section, a lessee of goods , other than a lessee in ordinary 
course of business, takes the leasehold interest free of a 
security interest to the extent that it secures advances made 
after the earlier of:
(1) The time the secured party acquires knowledge of the 
lease; or
(2) Forty-five days after the lease contract becomes 
enforceable.
(G) Division (F) of this section does not apply if the 
advance is made pursuant to a commitment entered into without 
knowledge of the lease and before the expiration of the forty-
five-day period.
Sec. 1309.324. Priority of purchase-money security 
interests [UCC 9-324]
(A) Except as otherwise provided in division (G) of this 
section, a perfected purchase money security interest in goods 
other than inventory or livestock has priority over a 
conflicting security interest in the same goods, and, except as 
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3678 H. B. No. 195 Page 132
As Introduced
otherwise provided in section 1309.327 of the Revised Code, a 
perfected security interest in its identifiable proceeds also 
has priority, if the purchase money security interest is 
perfected when the debtor receives possession of the collateral 
or within twenty days thereafter.
(B) Subject to division (C) of this section and except as 
otherwise provided in division (G) of this section, a perfected 
purchase money security interest in inventory has priority over 
a conflicting security interest in the same inventory, has 
priority over a conflicting security in chattel paper or an 
instrument constituting proceeds of the inventory and in 
proceeds of the chattel paper, if provided in section 1309.330 
of the Revised Code, and, except as otherwise provided in 
section 1309.327 of the Revised Code, also has priority in 
identifiable cash proceeds of the inventory to the extent the 
identifiable cash proceeds are received on or before the 
delivery of the inventory to a buyer if:
(1) The purchase money security interest is perfected when 
the debtor receives possession of the inventory;
(2) The purchase money secured party sends an 
authenticated a signed notification to the holder of the 
conflicting security interest;
(3) The holder of the conflicting security interest 
receives the notification within five years before the debtor 
receives possession of the inventory; and
(4) The notification states that the person sending the 
notification has or expects to acquire a purchase money security 
interest in inventory of the debtor and describes the inventory.
(C) Divisions (B)(2), (3), and (4) of this section apply 
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3707 H. B. No. 195 Page 133
As Introduced
only if the holder of the conflicting security interest filed a 
financing statement covering the same types of inventory:
(1) If the purchase money security interest is perfected 
by filing, before the date of the filing; or
(2) If the purchase money security interest is temporarily 
perfected without filing or possession under division (F) of 
section 1309.312 of the Revised Code, before the beginning of 
the twenty-day period.
(D) Subject to division (E) of this section and except as 
otherwise provided in division (G) of this section, a perfected 
purchase money security interest in livestock that are farm 
products has priority over a conflicting security interest in 
the same livestock, and, except as otherwise provided in section 
1309.327 of the Revised Code, a perfected security interest in 
their identifiable proceeds and identifiable products in their 
unmanufactured states also has priority, if:
(1) The purchase money security interest is perfected when 
the debtor receives possession of the livestock;
(2) The purchase money secured party sends an 
authenticated a signed notification to the holder of the 
conflicting security interest;
(3) The holder of the conflicting security interest 
receives the notification within six months before the debtor 
receives possession of the livestock; and
(4) The notification states that the person sending the 
notification has or expects to acquire a purchase money security 
interest in livestock of the debtor and describes the livestock.
(E) Divisions (D)(2), (3), and (4) of this section apply 
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3735 H. B. No. 195 Page 134
As Introduced
only if the holder of the conflicting security interest had 
filed a financing statement covering the same types of 
livestock:
(1) If the purchase money security interest is perfected 
by filing, before the date of the filing; or
(2) If the purchase money security interest is temporarily 
perfected without filing or possession under division (F) of 
section 1309.312 of the Revised Code, before the beginning of 
the twenty-day period.
(F) Except as otherwise provided in division (G) of this 
section, a perfected purchase money security interest in 
software has priority over a conflicting security interest in 
the same collateral, and, except as otherwise provided in 
section 1309.327 of the Revised Code, a perfected security 
interest in its identifiable proceeds also has priority, to the 
extent that the purchase money security interest in the goods in 
which the software was acquired for use has priority in the 
goods and proceeds of the goods under this section.
(G) If more than one security interest qualifies for 
priority in the same collateral under division (A), (B), (D), or 
(F) of this section:
(1) A security interest securing an obligation incurred as 
all or part of the price of the collateral has priority over a 
security interest securing an obligation incurred for value 
given to enable the debtor to acquire rights in or the use of 
collateral; and
(2) In all other cases, division (A) of section 1309.322 
of the Revised Code applies to the qualifying security 
interests.
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3764 H. B. No. 195 Page 135
As Introduced
Sec. 1309.330. Priority of purchaser of chattel paper or 
instrument [UCC 9-330]
(A) A purchaser of chattel paper has priority over a 
security interest in the chattel paper that is claimed merely as 
proceeds of inventory subject to a security interest if:
(1) In good faith and in the ordinary course of the 
purchaser's business, the purchaser gives new value and , takes 
possession of each authoritative tangible copy of the record 
evidencing the chattel paper or , and obtains control of the 
chattel paper under section 1309.105 of the Revised Code of each 
authoritative electronic copy of the record evidencing the 
chattel paper; and
(2) The authoritative copies of the record evidencing the 
chattel paper does do not indicate that it the chattel paper has 
been assigned to an identified assignee other than the 
purchaser.
(B) A purchaser of chattel paper has priority over a 
security interest in the chattel paper that is claimed other 
than merely as proceeds of inventory subject to a security 
interest if the purchaser gives new value and , takes possession 
of each authoritative tangible copy of the record evidencing the 
chattel paper or , and obtains control of the chattel paper 
under section 1309.105 of the Revised Code of each authoritative 
electronic copy of the record evidencing the chattel paper in 
good faith, in the ordinary course of the purchaser's business, 
and without knowledge that the purchase violates the rights of 
the secured party.
(C) Except as otherwise provided in section 1309.327 of 
the Revised Code, a purchaser having priority in chattel paper 
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3793 H. B. No. 195 Page 136
As Introduced
under division (A) or (B) of this section also has priority in 
proceeds of the chattel paper to the extent that:
(1) Section 1309.322 of the Revised Code provides for 
priority in the proceeds; or
(2) The proceeds consist of the specific goods covered by 
the chattel paper or cash proceeds of the specific goods, even 
if the purchaser's security interest in the proceeds is 
unperfected.
(D) Except as otherwise provided in division (A) of 
section 1309.331 of the Revised Code, a purchaser of an 
instrument has priority over a security interest in the 
instrument perfected by a method other than possession if the 
purchaser gives value and takes possession of the instrument in 
good faith and without knowledge that the purchase violates the 
rights of the secured party.
(E) For purposes of divisions (A) and (B) of this section, 
the holder of a purchase money security interest in inventory 
gives new value for chattel paper constituting proceeds of the 
inventory.
(F) For purposes of divisions (B) and (D) of this section, 
if the authoritative copies of the record evidencing chattel 
paper or an instrument indicates indicate that it the chattel 
paper or instrument has been assigned to an identified secured 
party other than the purchaser, a purchaser of the chattel paper 
or instrument has knowledge that the purchase violates the 
rights of the secured party.
Sec. 1309.331. Priority of rights of purchasers of 
controllable accounts, controllable electronic records, 
controllable payment intangibles, documents, instruments, and 
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3822 H. B. No. 195 Page 137
As Introduced
securities under other chapters; priority of interests in 
financial assets and security entitlements and protection 
against assertion of claim under Chapters 1303., 1307., 1308., 
and 1314. of the Revised Code [UCC 9-331]
(A) This chapter does not limit the rights of a holder in 
due course of a negotiable instrument, as defined in section 
1303.32 of the Revised Code, or a holder to whom a negotiable 
document of title has been duly negotiated under section 
1307.501 of the Revised Code, or a protected purchaser of a 
security under section 1308.17 of the Revised Code , or a 
qualifying purchaser of a controllable account, controllable 
electronic record, or controllable payment intangible . These 
holders or purchasers take priority over an earlier security 
interest, even though perfected, to the extent provided in 
Chapters 1303., 1307., and 1308., and 1314. of the Revised Code. 
(B) This chapter does not limit the rights of or impose 
liability on a person to the extent that the person is protected 
against the assertion of a claim under Chapter Chapters 1308. 
and 1314. of the Revised Code.
(C) Filing under this chapter does not constitute notice 
of a claim or defense to the holders, purchasers, or persons 
described in divisions (A) and (B) of this section.
Sec. 1309.332. Transfer of money; transfer of funds from 
deposit account [UCC 9-332]
(A) A transferee of tangible money takes the money free of 
a security interest unless if the transferee acts receives 
possession of the money without acting in collusion with the 
debtor in violating the rights of the secured party.
(B) A transferee of funds from a deposit account takes the 
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3851 H. B. No. 195 Page 138
As Introduced
funds free of a security interest in the deposit account unless 
if the transferee acts receives the funds without acting in 
collusion with the debtor in violating the rights of the secured 
party.
(C) A transferee of electronic money takes the money free 
of a security interest if the transferee obtains control of the 
money without acting in collusion with the debtor in violating 
the rights of the secured party.
Sec. 1309.334. Priority of security interests in fixtures 
and crops [UCC 9-334]
(A) A security interest under this chapter may be created 
in goods that are fixtures or may continue in goods that become 
fixtures. A security interest does not exist under this chapter 
in ordinary building materials incorporated into an improvement 
on land.
(B) This chapter does not prevent creation of an 
encumbrance upon fixtures pursuant to real property law.
(C) In cases not governed by divisions (D) to (H) of this 
section, a security interest in fixtures is subordinate to a 
conflicting interest of an encumbrancer or owner of the related 
real property other than the debtor.
(D) Except as otherwise provided in division (H) of this 
section, a perfected security interest in fixtures has priority 
over a conflicting interest of an encumbrancer or owner of the 
real property if the debtor has an interest of record in or is 
in possession of the real property and:
(1) The security interest is a purchase money security 
interest;
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3879 H. B. No. 195 Page 139
As Introduced
(2) The interest of the encumbrancer or owner arises 
before the goods become fixtures; and
(3) The security interest is perfected by a fixture filing 
before the goods become fixtures or within twenty days 
thereafter.
(E) A perfected security interest in fixtures has priority 
over a conflicting interest of an encumbrancer or owner of the 
real property if:
(1) The debtor has an interest of record in the real 
property or is in possession of the real property, and the 
security interest:
(a) Is perfected by a fixture filing before the interest 
of the encumbrancer or owner is of record; and
(b) Has priority over any conflicting interest of a 
predecessor in title of the encumbrancer or owner;
(2) Before the goods became fixtures, the security 
interest is perfected by any method permitted by this chapter, 
and the fixtures are readily removable:
(a) Factory or office machines;
(b) Equipment that is not primarily used or leased for use 
in the operation of the real property; or
(c) Replacements of domestic appliances that are consumer 
goods;
(3) The conflicting interest is a lien on the real 
property obtained by legal or equitable proceedings after the 
security interest was perfected by any method permitted by this 
chapter; or
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3906 H. B. No. 195 Page 140
As Introduced
(4) The security interest is:
(a) Created in a manufactured home in a manufactured home 
transaction; and
(b) Perfected pursuant to a section listed in division (A)
(2) of section 1309.311 of the Revised Code.
(F) A security interest in fixtures, whether or not 
perfected, has priority over the conflicting interest of an 
encumbrancer or owner of the real property if:
(1) The encumbrancer or owner has, in an authenticated a 
signed record, consented to the security interest or disclaimed 
an interest in the goods as fixtures; or
(2) The debtor has a right to remove the goods as against 
the encumbrancer or owner.
(G) The priority of the security interest under division 
(F)(2) of this section continues for a reasonable time if the 
debtor's right to remove the goods as against the encumbrancer 
or owner terminates.
(H) A mortgage is a construction mortgage to the extent 
that it secures an obligation incurred for the construction of 
an improvement on land, including the acquisition cost of the 
land, if a recorded record of the mortgage so indicates. Except 
as otherwise provided in divisions (E) and (F) of this section, 
a security interest in fixtures is subordinate to a construction 
mortgage if a record of the mortgage is recorded before the 
goods become fixtures and the goods become fixtures before the 
completion of the construction. A mortgage has this priority to 
the same extent as a construction mortgage to the extent that it 
is given to refinance a construction mortgage.
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3934 H. B. No. 195 Page 141
As Introduced
(I) A perfected security interest in crops growing on real 
property has priority over a conflicting interest of an 
encumbrancer or owner of the real property if the debtor has an 
interest of record in or is in possession of the real property.
(J) Division (I) of this section prevails over any 
inconsistent statutes not specifically enumerated under division 
(D)(2) of section 1309.109 of the Revised Code and applicable by 
their terms.
Sec. 1309.341. Bank's rights and duties with respect to 
deposit account [UCC 9-341]
Except as otherwise provided in division (C) of section 
1309.340 of the Revised Code, and unless the bank otherwise 
agrees in an authenticated a signed record, a bank's rights and 
duties with respect to a deposit account maintained with the 
bank are not terminated, suspended, or modified by:
(A) The creation, attachment, or perfection of a security 
interest in the deposit account;
(B) The bank's knowledge of the security interest; or
(C) The bank's receipt of instructions from the secured 
party.
Sec. 1309.343.  	Law governing perfection and priority of  
security interests in chattel paper [UCC 9-306A]
(A) Except as provided in division (D) of this section, if 
chattel paper is evidenced only by an authoritative electronic 
copy of the chattel paper or is evidenced by an authoritative 
electronic copy and an authoritative tangible copy, the local 
law of the chattel paper's jurisdiction governs perfection, the 
effect of perfection or nonperfection, and the priority of a 
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3962 H. B. No. 195 Page 142
As Introduced
security interest in the chattel paper, even if the transaction 
does not bear any relation to the chattel paper's jurisdiction.
(B) The following rules determine the chattel paper's 
jurisdiction under this section:
(1) If the authoritative electronic copy of a recording 
evidencing chattel paper, or a record attached to or logically 
associated with the electronic copy and readily available for 
review, expressly provides that a particular jurisdiction is the 
chattel paper's jurisdiction for purposes of this section, this 
chapter, or Chapters 1301., 1302., 1303., 1304., 1305., 1307., 
1308., 1309., 1310., and 1314. of the Revised Code, that 
jurisdiction is the chattel paper's jurisdiction.
(2) If division (B)(1) of this section does not apply and 
the rules of the system in which the authoritative electronic 
copy is recorded are readily available for review and expressly 
provide that a particular jurisdiction is the chattel paper's 
jurisdiction for purposes of this section, this chapter, or 
Chapters 1301., 1302., 1303., 1304., 1305., 1307., 1308., 1309., 
1310., and 1314. of the Revised Code, that jurisdiction is the 
chattel paper's jurisdiction.
(3) If divisions (B)(1) and (2) of this section do not 
apply and the authoritative electronic copy, or a record 
attached to or logically associated with the electronic copy and 
readily available for review, expressly provides that the 
chattel paper is governed by the law of a particular 
jurisdiction, that jurisdiction is the chattel paper's 
jurisdiction.
(4) If divisions (B)(1), (2), and (3) of this section do 
not apply and the rules of the system in which the authoritative 
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3991 H. B. No. 195 Page 143
As Introduced
electronic copy is recorded are readily available for review and 
expressly provide that the chattel paper or the system is 
governed by the law of a particular jurisdiction, that 
jurisdiction is the chattel paper's jurisdiction.
(5) If divisions (B)(1) to (4) of this section do not 
apply, the chattel paper's jurisdiction is the jurisdiction in 
which the debtor is located.
(C) If an authoritative tangible copy of a record 
evidences chattel paper and the chattel paper is not evidenced 
by an authoritative electronic copy, while the authoritative 
tangible copy of the record is located in a jurisdiction, the 
local law of that jurisdiction governs both of the following:
(1) Perfection of a security interest in the chattel paper 
by possession under section 1309.314 of the Revised Code;
(2) The effect of perfection and nonperfection and the 
priority of a security interest in the chattel paper.
(D) The local law of the jurisdiction in which the debtor 
is located governs perfection of a security interest in the 
chattel paper by filing.
Sec. 1309.344.  	Law governing perfection and priority of  
security interests in controllable accounts, controllable 
electronic records, and controllable payment intangibles [UCC 9-
306B]
(A) Except as provided in division (B) of this section, 
the local law of the controllable electronic record's 
jurisdiction specified in divisions (C) and (D) of section 
1314.107 of the Revised Code governs perfection, the effect of 
perfection or nonperfection, and the priority of a security 
interest in a controllable electronic record and a security 
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4020 H. B. No. 195 Page 144
As Introduced
interest in a controllable account or controllable payment 
intangible governed by the controllable electronic record.
(B) The local law of the jurisdiction in which the debtor 
is located governs both of the following:
(1) Perfection of a security interest in a controllable 
account, controllable electronic record, or controllable payment 
intangible by filing;
(2) Automatic perfection of a security interest in a 
controllable payment intangible created by the sale of the 
controllable payment intangible.
Sec. 1309.345.  	Perfection by possession and control of  
chattel paper [UCC 9-314A]
(A) A secured party may perfect a security interest in 
chattel paper by taking possession of each authoritative 
tangible copy of the record evidencing the chattel paper and 
obtaining control of each authoritative electronic copy of the 
electronic record evidencing the chattel paper.
(B) A security interest is perfected under division (A) of 
this section not earlier than the time the secured party takes 
possession and obtains control and remains perfected under 
division (A) of this section only while the secured party 
retains possession and control.
(C) Divisions (C), (F), (G), (H), and (I) of section 
1309.313 of the Revised Code apply to perfection by possession 
of an authoritative tangible copy of a record evidencing chattel 
paper.
Sec. 1309.346.  	Priority of security interest in  
controllable account, controllable electronic record, and 
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4048 H. B. No. 195 Page 145
As Introduced
controllable payment intangible [UCC 9-326A]
A security interest in a controllable account, 
controllable electronic record, or controllable payment 
intangible held by a secured party having control of the 
account, electronic record, or payment intangible has priority 
over a conflicting security interest held by a secured party 
that does not have control.
Sec. 1309.404. Rights acquired by assignee; claims and 
defenses against assignee [UCC 9-404]
(A) Unless an account debtor has made an enforceable 
agreement not to assert defenses or claims, and subject to 
divisions (B) to (E) of this section, the rights of an assignee 
are subject to:
(1) All terms of the agreement between the account debtor 
and assignor and any defense or claim in recoupment arising from 
the transaction that gave rise to the contract; and
(2) Any other defense or claim of the account debtor 
against the assignor that accrues before the account debtor 
receives a notification of the assignment authenticated signed 
by the assignor or the assignee.
(B) Subject to division (C) of this section and except as 
provided in division (D) of this section, the claim of an 
account debtor against an assignor may be asserted against an 
assignee under division (A) of this section only to reduce the 
amount the account debtor owes.
(C) This section is subject to law other than this chapter 
that establishes a different rule for an account debtor who is 
an individual and who incurred the obligation primarily for 
personal, family, or household purposes.
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4077 H. B. No. 195 Page 146
As Introduced
(D) In a consumer transaction, if a record evidences the 
account debtor's obligation, if law other than this chapter 
requires that the record include a statement to the effect that 
the account debtor's recovery against an assignee with respect 
to claims and defenses against the assignor may not exceed 
amounts paid by the account debtor under the record, and if the 
record does not include the required statement, the extent to 
which a claim of an account debtor against the assignor may be 
asserted against an assignee is determined as if the record 
included the required statement.
(E) This section does not apply to an assignment of a 
health-care-insurance receivable.
Sec. 1309.406. Discharge of account debtor; notification 
of assignment; identification and proof of assignment; 
restrictions on assignment of accounts, chattel paper, payment 
intangibles, and promissory notes ineffective [UCC 9-406]
(A) Subject to divisions (B) to (I) and division (L) of 
this section, an account debtor on an account, chattel paper, or 
payment intangible may discharge its obligation by paying the 
assignor until, but not after, the account debtor receives a 
notification, authenticated signed by the assignor or the 
assignee, that the amount due or to become due has been assigned 
and that payment is to be made to the assignee. After receipt of 
the notification, the account debtor may discharge its 
obligation by paying the assignee and may not discharge the 
obligation by paying the assignor. 
(B) Subject to division divisions (H) and (L) of this 
section, notification under division (A) of this section is not 
effective:
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4106 H. B. No. 195 Page 147
As Introduced
(1) If the notification does not reasonably identify the 
rights assigned;
(2) To the extent that an agreement between an account 
debtor and a seller of a payment intangible limits the account 
debtor's duty to pay a person other than the seller and the 
limitation is effective under law other than this chapter; or
(3) At the option of an account debtor, if the 
notification notifies the account debtor to make less than the 
full amount of any installment or other periodic payment to the 
assignee, even if:
(a) Only a portion of the account, chattel paper, or 
payment intangible has been assigned to that assignee;
(b) A portion has been assigned to another assignee; or
(c) The account debtor knows that the assignment to that 
assignee is limited.
(C) Subject to division divisions (H) and (L) of this 
section, if requested by the account debtor, an assignee shall 
seasonably furnish reasonable proof that the assignment has been 
made. Unless the assignee complies, the account debtor may 
discharge its obligation by paying the assignor, even if the 
account debtor has received a notification under division (A) of 
this section.
(D) As used in this division, "promissory note" includes a 
negotiable instrument that evidences chattel paper. Except as 
otherwise provided in division (E) of this section and sections 
1309.407 and 1310.31 of the Revised Code, and subject to 
division (H) of this section, a term in an agreement between an 
account debtor and an assignor or in a promissory note is 
ineffective to the extent that it:
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4135 H. B. No. 195 Page 148
As Introduced
(1) Prohibits, restricts, or requires the consent of the 
account debtor or person obligated on the promissory note to the 
assignment or transfer of, or the creation, attachment, 
perfection, or enforcement of a security interest in, the 
account, chattel paper, payment intangible, or promissory note; 
or
(2) Provides that the assignment or transfer or the 
creation, attachment, perfection, or enforcement of the security 
interest may give rise to a default, breach, right of 
recoupment, claim, defense, termination, right of termination, 
or remedy under the account, chattel paper, payment intangible, 
or promissory note.
(E) Division (D) of this section does not apply to the 
sale of a payment intangible or promissory note, other than a 
sale pursuant to a disposition under section 1309.610 of the 
Revised Code or an acceptance of collateral under section 
1309.620 of the Revised Code.
(F) Except as provided in sections 1309.407 and 1310.31 of 
the Revised Code and subject to divisions (H) and (I) of this 
section, a rule of law, statute, or regulation that prohibits, 
restricts, or requires the consent of a government, governmental 
body or official, or account debtor to the assignment or 
transfer of, or creation of a security interest in, an account 
or chattel paper is not effective to the extent that the rule of 
law, statute, or regulation:
(1) Prohibits, restricts, or requires the consent of the 
government, governmental body or official, or account debtor to 
the assignment or transfer of, or the creation, attachment, 
perfection, or enforcement of a security interest in the account 
or chattel paper; or
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4165 H. B. No. 195 Page 149
As Introduced
(2) Provides that the assignment or transfer or the 
creation, attachment, perfection, or enforcement of the security 
interest may give rise to a default, breach, right of 
recoupment, claim, defense, termination, right of termination, 
or remedy under the account or chattel paper.
(G) Subject to division divisions (H) and (L) of this 
section, an account debtor may not waive or vary its option 
under division (B)(3) of this section.
(H) This section is subject to law other than this chapter 
that establishes a different rule for an account debtor who is 
an individual and who incurred the obligation primarily for 
personal, family, or household purposes.
(I) This section does not apply to an assignment of a 
health-care-insurance receivable.
(J) Divisions (D) and (F) of this section do not apply to:
(1) A claim or right to receive compensation for injuries 
or sickness as described in section 104(a)(1) or (2) of the 
Internal Revenue Code, as amended; or
(2) A claim or right to receive benefits under a special 
needs trust as described in the "Omnibus Budget Reconciliation 
Act of 1993," 107 Stat. 312, 42 U.S.C. 1396p(d)(4), as amended.
(K) Divisions (D), (F), and (J) of this section apply only 
to a security interest created on or after July 1, 2001. Nothing 
in this section shall supersede the provisions of sections 
2323.58 to 2323.587 of the Revised Code. This section shall be 
interpreted consistently with sections 2323.58 to 2323.587 of 
the Revised Code.
(L) Divisions (A), (B), (C), and (G) of this section do 
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4193 H. B. No. 195 Page 150
As Introduced
not apply to a controllable account or controllable payment 
intangible.
Sec. 1309.408. Restrictions on assignment of promissory 
notes, heath-care-insurance receivables, and certain general 
intangibles ineffective [UCC 9-408]
(A) Except as otherwise provided in division (B) of this 
section, a term in a promissory note or in an agreement between 
an account debtor and a debtor that relates to a health-care-
insurance receivable or a general intangible, including a 
contract, permit, license, or franchise, and which term 
prohibits, restricts, or requires the consent of the person 
obligated on the promissory note or the account debtor to, the 
assignment or transfer of, or creation, attachment, or 
perfection of a security interest in, the promissory note, 
health-care-insurance receivable, or general intangible, is not 
effective to the extent that the term: 
(1) Would impair the creation, attachment, or perfection 
of a security interest; or
(2) Provides that the assignment or transfer or the 
creation, attachment, or perfection of the security interest may 
give rise to a default, breach, right of recoupment, claim, 
defense, termination, right of termination, or remedy under the 
promissory note, health-care-insurance receivable, or general 
intangible.
(B) Division (A) applies to a security interest in a 
payment intangible or promissory note only if the security 
interest arises out of a sale of the payment intangible or 
promissory note, other than a sale pursuant to a disposition 
under section 1309.610 of the Revised Code or an acceptance of 
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4222 H. B. No. 195 Page 151
As Introduced
collateral under section 1309.620 of the Revised Code.
(C) A rule of law, statute, or regulation that prohibits, 
restricts, or requires the consent of a government, governmental 
body or official, person obligated on a promissory note, or 
account debtor to the assignment or transfer of, or creation of 
a security interest in, a promissory note, health-care-insurance 
receivable, or general intangible, including a contract, permit, 
license, or franchise between an account debtor and a debtor, is 
not effective to the extent that the rule of law, statute, or 
regulation:
(1) Would impair the creation, attachment, or perfection 
of a security interest; or
(2) Provides that the assignment or transfer or the 
creation, attachment, or perfection of the security interest may 
give rise to a default, breach, right of recoupment, claim, 
defense, termination, right of termination, or remedy under the 
promissory note, health-care-insurance receivable, or general 
intangible.
(D) To the extent that a term in a promissory note or in 
an agreement between an account debtor and a debtor that relates 
to a health-care-insurance receivable or general intangible or a 
rule of law, statute, or regulation described in division (C) of 
this section would be effective under law other than this 
chapter but is ineffective under division (A) or (C) of this 
section, the creation, attachment, or perfection of a security 
interest in the promissory note, health-care-insurance 
receivable, or general intangible:
(1) Is not enforceable against the person obligated on the 
promissory note or the account debtor;
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4251 H. B. No. 195 Page 152
As Introduced
(2) Does not impose a duty or obligation on the person 
obligated on the promissory note or the account debtor;
(3) Does not require the person obligated on the 
promissory note or the account debtor to recognize the security 
interest, pay or render performance to the secured party, or 
accept payment or performance from the secured party;
(4) Does not entitle the secured party to use or assign 
the debtor's rights under the promissory note, health-care-
insurance receivable, or general intangible, including any 
related information or materials furnished to the debtor in the 
transaction giving rise to the promissory note, health-care-
insurance receivable, or general intangible;
(5) Does not entitle the secured party to use, assign, 
possess, or have access to any trade secrets or confidential 
information of the person obligated on the promissory note or 
the account debtor; and
(6) Does not entitle the secured party to enforce the 
security interest in the promissory note, health-care-insurance 
receivable, or general intangible.
(E) Divisions (A) and (C) of this section do not apply to:
(1) A claim or right to receive compensation for injuries 
or sickness as described in section 104(a)(1) or (2) of the 
Internal Revenue Code as amended; or
(2) A claim or right to receive benefits under a special 
needs trust as described in the "Omnibus Budget Reconciliation 
Act of 1993," 107 Stat. 312, 42 U.S.C. 1396p(d)(4), as amended.
(F) Divisions (A), (C), and (E) of this section apply only 
to a security interest created on or after July 1, 2001. Nothing 
4252
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4279 H. B. No. 195 Page 153
As Introduced
in this section shall supersede the provisions of sections 
2323.58 to 2323.587 of the Revised Code. This section shall be 
interpreted consistently with sections 2323.58 to 2323.587 of 
the Revised Code.
(G) As used in this section, "promissory note" includes a 
negotiable instrument that evidences chattel paper.
Sec. 1309.509. Persons entitled to file a record [UCC 9-
509]
(A) A person may file an initial financing statement, 
amendment that adds collateral covered by a financing statement, 
or amendment that adds a debtor to a financing statement only 
if:
(1) The debtor authorizes the filing in an authenticated a 
signed record or pursuant to division (B) or (C) of this 
section; or
(2) The person holds an agricultural lien that has become 
effective at the time of filing, and the financing statement 
covers only collateral in which the person holds an agricultural 
lien.
(B) By authenticating signing or becoming bound as debtor 
by a security agreement, a debtor or new debtor authorizes the 
filing of an initial financing statement, and an amendment, 
covering:
(1) The collateral described in the security agreement; 
and
(2) Property that becomes collateral under division (A)(2) 
of section 1309.315 of the Revised Code, whether or not the 
security agreement expressly covers proceeds.
4280
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4307 H. B. No. 195 Page 154
As Introduced
(C) By acquiring collateral in which a security interest 
or agricultural lien continues under division (A)(1) of section 
1309.315 of the Revised Code, a debtor authorizes the filing of 
an initial financing statement, and an amendment, covering the 
collateral and property that becomes collateral under division 
(A)(2) of section 1309.315 of the Revised Code.
(D) A person may file an amendment other than an amendment 
that adds collateral covered by a financing statement or an 
amendment that adds a debtor to a financing statement only if:
(1) The secured party of record authorizes the filing; or
(2) The amendment is a termination statement for a 
financing statement as to which the secured party of record has 
failed to file or send a termination statement as required by 
division (A) or (C) of section 1309.513 of the Revised Code, the 
debtor authorizes the filing, and the termination statement 
indicates that the debtor authorized it to be filed.
(E) If there is more than one secured party of record for 
a financing statement, each secured party of record may 
authorize the filing of an amendment under division (D) of this 
section.
Sec. 1309.513. Termination statement [UCC 9-513]
(A) A secured party shall cause the secured party of 
record for a financing statement to file a termination statement 
for the financing statement if the financing statement covers 
consumer goods and:
(1) There is no obligation secured by the collateral 
covered by the financing statement, and no commitment to make an 
advance, incur an obligation, or otherwise give value; or
4308
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4335 H. B. No. 195 Page 155
As Introduced
(2) The debtor did not authorize the filing of the initial 
financing statement.
(B) To comply with division (A) of this section, a secured 
party shall cause the secured party of record to file the 
termination statement:
(1) Within one month after there is no obligation secured 
by the collateral covered by the financing statement and no 
commitment to make an advance, incur an obligation, or otherwise 
give value; or
(2) If earlier, within twenty days after the secured party 
receives an authenticated a signed demand from a debtor.
(C) In cases not governed by division (A) of this section, 
within twenty days after a secured party receives an 
authenticated a signed demand from a debtor, the secured party 
shall cause the secured party of record for a financing 
statement to send to the debtor a termination statement for the 
financing statement or file the termination statement in the 
filing office if:
(1) Except in the case of a financing statement covering 
accounts or chattel paper that has been sold or goods that are 
the subject of a consignment, there is no obligation secured by 
the collateral covered by the financing statement and no 
commitment to make an advance, incur an obligation, or otherwise 
give value;
(2) The financing statement covers accounts or chattel 
paper that have been sold but as to which the account debtor or 
other person obligated has discharged its obligation;
(3) The financing statement covers goods that were the 
subject of a consignment to the debtor but are not in the 
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4364 H. B. No. 195 Page 156
As Introduced
debtor's possession; or
(4) The debtor did not authorize the filing of the initial 
financing statement.
(D) Except as provided in section 1309.510 of the Revised 
Code, upon the filing of a termination statement with the filing 
office, the financing statement to which the termination 
statement relates ceases to be effective. Except as provided in 
section 1309.510 of the Revised Code, for purposes of division 
(G) of section 1309.519, division (A) of section 1309.522, and 
division (C) of section 1309.523 of the Revised Code, the filing 
with the filing office of a termination statement relating to a 
financing statement that indicates that the debtor is a 
transmitting utility also causes the effectiveness of the 
financing statement to lapse.
Sec. 1309.601. Rights after default; judicial enforcement; 
consignor or buyer of accounts, chattel paper, payment 
intangibles, or promissory notes [UCC 9-601]
(A) After default, a secured party has the rights provided 
in sections 1309.601 to 1309.628 of the Revised Code and, except 
as otherwise provided in section 1309.602 of the Revised Code, 
those provided by agreement of the parties. A secured party: 
(1) May reduce a claim to judgment, foreclose, or 
otherwise enforce the claim, security interest, or agricultural 
lien by any available judicial procedure; and
(2) If the collateral is documents, proceed either as to 
the documents or as to the goods they cover.
(B) A secured party in possession of collateral or control 
of collateral under section 1307.106, 1309.104, 1309.105, 
1309.106, or 1309.107, 1309.111, or 1309.112 of the Revised Code 
4365
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4393 H. B. No. 195 Page 157
As Introduced
has the rights and duties provided in section 1309.207 of the 
Revised Code.
(C) The rights under divisions (A) and (B) of this section 
are cumulative and may be exercised simultaneously.
(D) Except as otherwise provided in division (G) of this 
section and section 1309.605 of the Revised Code, after default, 
a debtor and an obligor have the rights provided in sections 
1309.601 to 1309.628 of the Revised Code and by agreement of the 
parties.
(E) If a secured party has reduced its claim to judgment, 
the lien of any levy that may be made upon the collateral by 
virtue of an execution based upon the judgment relates back to 
the earliest of:
(1) The date of perfection of the security interest or 
agricultural lien in the collateral;
(2) The date of filing a financing statement covering the 
collateral; or
(3) Any date specified in a statute under which the 
agricultural lien was created.
(F) A sale pursuant to an execution is a foreclosure of 
the security interest or agricultural lien by judicial procedure 
within the meaning of this section. A secured party may purchase 
at the sale and after the sale may hold the collateral free of 
any other requirements of this chapter.
(G) Except as provided in division (C) of section 1309.607 
of the Revised Code, sections 1309.601 to 1309.628 of the 
Revised Code do not impose any duties upon a secured party who 
is a consignor or a buyer of accounts, chattel paper, payment 
4394
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4421 H. B. No. 195 Page 158
As Introduced
intangibles, or promissory notes.
Sec. 1309.605. A Unknown debtor or secondary obligor [UCC 
9-605]
(A) Except as otherwise provided in division (B) of this 
section, a secured party does not owe a duty based on its status 
as secured party:
(A) (1) To a person who is a debtor or obligor, unless the 
secured party knows:
(1) (a) That the person is a debtor or obligor;
(2) (b) The identity of the person; and
(3) (c) How to communicate with the person; or
(B) (2) To a secured party or lienholder who has filed a 
financing statement against a person, unless the secured party 
knows:
(1) (a) That the person is a debtor; and
(2) (b) The identity of the person.
(B) A secured party owes a duty based on its status as a 
secured party to a person if, at the time the secured party 
obtains control of collateral that is a controllable account, 
controllable electronic record, or controllable payment 
intangible or at a time the security interest attaches to the 
collateral, whichever is later:
(1) The person is a debtor or obligor; and
(2) The secured party knows that the information in 
division (A)(1)(a), (b), or (c) of this section relating to the 
person is not provided by the collateral, a record attached to 
or logically associated with the collateral, or the system in 
4422
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4448 H. B. No. 195 Page 159
As Introduced
which the collateral is recorded.
Sec. 1309.608. Application of proceeds of collection or 
enforcement; liability for deficiency and right to surplus [UCC 
9-608]
(A) If a security interest or agricultural lien secures 
payment or performance of an obligation, the following rules 
apply:
(1) A secured party shall apply or pay over for 
application the cash proceeds of collection or enforcement under 
section 1309.607 of the Revised Code in the following order:
(a) The reasonable expenses of collection and enforcement 
and, to the extent provided for by agreement and not prohibited 
by law, reasonable attorney's fees and legal expenses incurred 
by the secured party;
(b) The satisfaction of obligations secured by the 
security interest or agricultural lien under which the 
collection or enforcement is made; and
(c) The satisfaction of obligations secured by any 
subordinate security interest in or other lien on the collateral 
subject to the security interest or agricultural lien under 
which the collection or enforcement is made if the secured party 
receives an authenticated a signed demand for proceeds before 
distribution of the proceeds is completed.
(2) If requested by a secured party, a holder of a 
subordinate security interest or other lien shall furnish 
reasonable proof of the interest or lien within a reasonable 
time. Unless the holder complies, the secured party is not 
required to comply with the holder's demand made under division 
(A)(1)(c) of this section.
4449
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4451
4452
4453
4454
4455
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4457
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4459
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4477 H. B. No. 195 Page 160
As Introduced
(3) A secured party is not required to apply or pay over 
for application noncash proceeds of collection and enforcement 
under section 1309.607 of the Revised Code unless the failure to 
do so would be commercially unreasonable. A secured party who 
applies or pays over for application noncash proceeds shall do 
so in a commercially reasonable manner.
(4) A secured party shall account to and pay a debtor for 
any surplus, and the obligor is liable for any deficiency.
(B) If the underlying transaction is a sale of accounts, 
chattel paper, payment intangibles, or promissory notes, the 
debtor is not entitled to any surplus, and the obligor is not 
liable for any deficiency.
Sec. 1309.611. Notification before disposition of 
collateral [UCC 9-611]
(A) As used in this section, "notification date" means the 
earlier of the date on which:
(1) A secured party sends to the debtor and any secondary 
obligor an authenticated a signed notification of disposition .; 
or
(2) The debtor and any secondary obligor waive the right 
to notification.
(B) Except as provided in division (D) of this section, a 
secured party who disposes of collateral under section 1309.610 
of the Revised Code shall send a reasonable authenticated signed 
notification of disposition to the persons specified in division 
(C) of this section.
(C) To comply with division (B) of this section, the 
secured party shall send an authenticated a signed notification 
4478
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4505 H. B. No. 195 Page 161
As Introduced
of disposition to:
(1) The debtor;
(2) Any secondary obligor; and
(3) If the collateral is other than consumer goods:
(a) Any other person from whom the secured party has 
received, before the notification date, an authenticated a 
signed notification of a claim of an interest in the collateral;
(b) Any other secured party or lienholder who, ten days 
before the notification date, held a security interest in or 
other lien on the collateral perfected by the filing of a 
financing statement that:
(i) Identified the collateral;
(ii) Was indexed under the debtor's name as of that date; 
and
(iii) Was filed in the office in which to file a financing 
statement against the debtor covering the collateral as of that 
date; and
(c) Any other secured party who, ten days before the 
notification date, held a security interest in the collateral 
perfected by compliance with a statute, rule, or treaty 
described in division (A) of section 1309.311 of the Revised 
Code.
(D) Division (B) of this section does not apply if the 
collateral is perishable or threatens to decline speedily in 
value or is of a type customarily sold on a recognized market.
(E) A secured party complies with the requirement for 
notification prescribed by division (C)(3)(b) of this section 
4506
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4532 H. B. No. 195 Page 162
As Introduced
if:
(1) Not later than twenty days nor earlier than thirty 
days before the notification date, the secured party requests, 
in a commercially reasonable manner, information concerning 
financing statements indexed under the debtor's name in the 
office indicated in division (C)(3)(b) of this section; and
(2) Before the notification date, the secured party:
(a) Did not receive a response to the request for 
information; or
(b) Received a response to the request for information and 
sent an authenticated a signed notification of disposition to 
each secured party or other lienholder named in that response 
whose financing statement covered the collateral.
Sec. 1309.613. Contents and form of notification before 
disposition of collateral: general [UCC 9-613]
(A) Except in a consumer-goods transaction, all of the 
following rules apply to a notification of disposition of 
collateral and to a disposition of collateral:
(1) The contents of a notification of disposition are 
sufficient if the notification:
(a) Describes the debtor and the secured party;
(b) Describes the collateral that is the subject of the 
intended disposition;
(c) States the method of intended disposition;
(d) States that the debtor is entitled to an accounting of 
the unpaid indebtedness and states the charge, if any, for an 
accounting; and
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4559 H. B. No. 195 Page 163
As Introduced
(e) States the time and place, by identifying the place of 
business or address or by providing other information that, in 
each case, reasonably describes the location, of a public 
disposition or the time after which any other disposition is to 
be made.
(2) Whether the contents of a notification that lacks any 
of the information specified in division (A)(1) of this section 
are nevertheless sufficient is a question of fact.
(3) The contents of a notification providing substantially 
the information specified in division (A)(1) of this section are 
sufficient, even if the notification includes:
(a) Information not specified by that division; or
(b) Minor errors that are not seriously misleading.
(4) A particular phrasing of the notification is not 
required.
(B) The following form of notification and the form 
appearing in division (B) of section 1309.614 of the Revised 
Code, when completed in accordance with the instructions in 
division (C) of this section and in division (F) of section 
1309.614 of the Revised Code , each provides sufficient 
information:
"NOTIFICATION OF DISPOSITION OF COLLATERAL
To: (Name of debtor, obligor, or other person to whom the 
notification is sent)
From: (Name, address, and telephone number of secured 
party)
(1) Name of Debtor(s): (Include only if debtor(s) are not 
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4586 H. B. No. 195 Page 164
As Introduced
an addressee)
(FOR A PUBLIC DISPOSITION:) any debtor that is not an 
addressee: (Name of each debtor)
(2) We will sell (or lease or license, as applicable) the 
(describe collateral) (to the highest qualified bidder ) in at a 
public sale. A sale could include a lease or license. The sale 
will be held as follows:
Day and Date:_____________
Time:_____________________
Place:____________________
(FOR A PRIVATE DISPOSITION:)
(3) We will sell (or lease or license, as applicable) the 
(describe collateral) privately at a private sale sometime after 
(day and date). A sale could include a lease or license.
(4) You are entitled to an accounting of the unpaid 
indebtedness secured by the property that we intend to sell (or, 
as applicable, lease or license, as applicable) .
(5) If you request an accounting, you must pay (for a 
charge of $_________ ). 
(6) You may request an accounting by calling us at 
(telephone number)."
(C) The following instructions apply to the form of 
notification in division (B) of this section:
(1) The instructions in division (C) of this section refer 
to the items in the form of notification described in division 
(B) of this section. Do not include the references to division 
(B) of this section in the notification. The division references 
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4613 H. B. No. 195 Page 165
As Introduced
are used only for the purpose of these instructions.
(2) Include and complete division (B)(1) of this section 
only if there is a debtor that is not an addressee of the 
notification and list the name or names.
(3) Include and complete either division (B)(2) of this 
section, if the notification relates to a public disposition of 
the collateral, or division (B)(3) of this section, if the 
notification relates to a private disposition of the collateral. 
If division (B)(2) of this section is included, include the 
words "to the highest qualified bidder" only if applicable.
(4) Include and complete divisions (B)(4) and (6) of this 
section.
(5) Include and complete division (B)(5) of this section 
only if the sender will charge the recipient for an accounting.
Sec. 1309.614. Contents and form of notification before 
disposition of collateral; consumer-goods transaction [UCC 9-
614]
(A) In a consumer-goods transaction, the following rules 
apply:
(1) A notification of disposition must provide all of the 
following information:
(a) The information specified in division (A)(1) of 
section 1309.613 of the Revised Code;
(b) A description of any liability for a deficiency of the 
person to whom the notification is sent;
(c) A telephone number from which the amount that must be 
paid to the secured party to redeem the collateral under section 
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4640 H. B. No. 195 Page 166
As Introduced
1309.623 of the Revised Code is available; and
(d) A telephone number or mailing address from which 
additional information concerning the disposition and the 
obligation secured is available.
(2) A particular phrasing of the notification is not 
required.
(B) The following form of notification of disposition, 
when completed in accordance with the instructions in division 
(F) of this section, provides sufficient information:
"(Name and address of secured party)
(Date)
NOTICE OF OUR PLAN TO SELL PROPERTY
(Name and address of any obligor who is also a debtor)
Subject: (Identification of Identify Transaction)
We have your (describe collateral), because you broke 
promises in our agreement.
(For a public disposition)
(1) We will sell your (describe collateral) at public 
sale. A sale could include a lease or license. The sale will be 
held as follows:
Day and date:_______________
Time:_______________________
Place:______________________
You may attend the sale and bring bidders if you want.
(For a private disposition)
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4665 H. B. No. 195 Page 167
As Introduced
(2) We will sell (describe collateral) at private sale 
sometime after (date). A sale could include a lease or license.
(3) The money that we get from the sale (, after paying 
our costs), will reduce the amount you owe. If we get less money 
than you owe, you (will or will not, as applicable) still owe us 
the difference. If we get more money than you owe, you will get 
the extra money, unless we must pay it to someone else. 
(4) You can get the property back at any time before we 
sell it by paying us the full amount you owe (not just the past 
due payments), including our expenses. To learn the exact amount 
you must pay, call us at (telephone number).
(5) If you want us to explain to you in writing how we 
have figured the amount that you owe us, you may call do both of 
the following:
(a) Call us at (telephone number) (or ) (write us at 
(secured party's address)) and request (or contact us by 
(description of electronic communication method));
(b) Request (a written explanation )(a written explanation 
or an explanation in (description of electronic record))(an 
explanation in (description of electronic record)) . (We 
(6) We will charge you $________ for the explanation if we 
sent you another written explanation of the amount you owe us 
within the last six months. )
(7) If you need more information about the sale, (call us 
at (telephone number) ) (or) (write us at (secured party's 
address)) (or contact us by (description of electronic 
communication method)) .
(8) We are sending this notice to the following other 
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4693 H. B. No. 195 Page 168
As Introduced
people who have an interest in (describe collateral) or who owe 
money under your agreement:
(Names of all other debtors and obligors, if any)."
(C) A notification in , the form contained in division (B) 
of this section is sufficient, even if additional information 
appears at the end of the form.
(D) A notification in the form of division (B) of this 
section is sufficient, even if it includes errors in information 
not required by division (A)(1) of this section, unless the 
error is misleading with respect to rights arising under this 
chapter.
(E) If a notification under this section is not in the 
form contained in division (B) of this section, law other than 
this chapter determines the effect of including information not 
required by division (A)(1) of this section.
(F) The following instructions apply to the form of 
notification in division (B) of this section:
(1) The instructions in division (F) of this section refer 
to the items in the form of notification described in division 
(B) of this section. Do not include the references to division 
(B) of this section in the notification. The division references 
are used only for the purposes of these instructions.
(2) Include and complete either division (B)(1) of this 
section, if the notification relates to a public disposition of 
the collateral, or division (B)(2) of this section, if the 
notification relates to a private disposition of the collateral.
(3) Include and complete divisions (B)(3), (4), and (5) of 
this section.
4694
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4721 H. B. No. 195 Page 169
As Introduced
(4) In division (B)(5) of this section, include and 
complete any one of the three alternative methods for the 
explanation: writing, writing or electronic record, or 
electronic record.
(5) In division (B)(5)(a) of this section, include the 
telephone number. In addition, the sender may include and 
complete either or both of the two alternative methods of 
communication, writing or electronic communication, for the 
recipient of the notification to communicate with the sender. 
Neither of the two additional methods of communication is 
required to be included.
(6) In division (B)(5)(b) of this section, include and 
complete the method for the explanation: writing, writing or 
electronic record, or electronic record, included in division 
(B)(5) of this section.
(7) Include and complete division (B)(6) of this section 
only if a written explanation is included in division (B)(5) of 
this section as a method for communicating the explanation and 
the sender will charge the recipient for another written 
explanation.
(8) In division (B)(7) of this section, include either the 
telephone number or the address or both the telephone number and 
address. In addition, the sender may include and complete the 
additional method of communication, electronic communication, 
for the recipient of the notification to communicate with the 
sender. The additional method of electronic communication is not 
required to be included.
(9) If division (B)(8) of this section does not apply, 
insert "none" after "agreement:".
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4750 H. B. No. 195 Page 170
As Introduced
Sec. 1309.615. Application of proceeds of disposition; 
liability for deficiency and right to surplus [UCC 9-615]
(A) A secured party shall apply or pay over for 
application the cash proceeds of disposition under section 
1309.610 of the Revised Code in the following order to:
(1) The reasonable expenses of retaking, holding, 
preparing for disposition, processing, and disposing, and, to 
the extent provided for by agreement and not prohibited by law, 
reasonable attorney's fees and legal expenses incurred by the 
secured party;
(2) The satisfaction of obligations secured by the 
security interest or agricultural lien under which the 
disposition is made;
(3) The satisfaction of obligations secured by any 
subordinate security interest in or other subordinate lien on 
the collateral if:
(a) The secured party receives from the holder of the 
subordinate security interest or other lien an authenticated a 
signed demand for proceeds before distribution of the proceeds 
is completed; and
(b) In a case in which a consignor has an interest in the 
collateral, the subordinate security interest or other lien is 
senior to the interest of the consignor; and
(4) A secured party who is a consignor of the collateral 
if the secured party receives from the consignor an 
authenticated a signed demand for proceeds before distribution 
of the proceeds is completed.
(B) If a secured party so requests, a holder of a 
4751
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4778 H. B. No. 195 Page 171
As Introduced
subordinate security interest or other lien shall furnish 
reasonable proof of the interest or lien within a reasonable 
time. Unless the holder does so, the secured party is not 
required to comply with the holder's demand under division (A)
(3) of this section.
(C) A secured party is not required to apply or pay over 
for application noncash proceeds of disposition under section 
1309.610 unless the failure to do so would be commercially 
unreasonable. A secured party who applies or pays over for 
application noncash proceeds shall do so in a commercially 
reasonable manner.
(D) If the security interest under which a disposition is 
made secures payment or performance of an obligation, after 
making the payments and applications required by division (A) of 
this section and permitted by division (C) of this section:
(1) Unless division (A)(4) of this section requires the 
secured party to apply or pay over cash proceeds to a consignor, 
the secured party shall account to and pay a debtor for any 
surplus; and
(2) The obligor is liable for any deficiency.
(E) If the underlying transaction is a sale of accounts, 
chattel paper, payment intangibles, or promissory notes, the 
debtor is not entitled to any surplus, and the obligor is not 
liable for any deficiency.
(F) The surplus or deficiency following a disposition is 
calculated based on the amount of proceeds that would have been 
realized in a disposition complying with sections 1309.601 to 
1309.628 of the Revised Code to a transferee other than the 
secured party, a person related to the secured party, or a 
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4807 H. B. No. 195 Page 172
As Introduced
secondary obligor if:
(1) The transferee in the disposition is the secured 
party, a person related to the secured party, or a secondary 
obligor; and
(2) The amount of proceeds of the disposition is 
significantly below the range of proceeds that a complying 
disposition to a person other than the secured party, a person 
related to the secured party, or a secondary obligor would have 
brought.
(G) A secured party who receives cash proceeds of a 
disposition in good faith and without knowledge that the receipt 
violates the rights of the holder of a security interest or 
other lien that is not subordinate to the security interest or 
agricultural lien under which the disposition is made:
(1) Takes the cash proceeds free of the security interest 
or other lien;
(2) Is not obligated to apply the proceeds of the 
disposition to the satisfaction of obligations secured by the 
security interest or other lien; and
(3) Is not obligated to account to or pay the holder of 
the security interest or other lien for any surplus.
Sec. 1309.616. Explanation of calculation of surplus or 
deficiency [UCC 9-616]
(A) As used in this section:
(1) "Explanation" means a writing record that:
(a) States the amount of the surplus or deficiency;
(b) Provides an explanation in accordance with division 
4808
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4834 H. B. No. 195 Page 173
As Introduced
(C) of this section of how the secured party calculated the 
surplus or deficiency;
(c) States, if applicable, that future debits, credits, 
charges, including additional credit service charges or 
interest, rebates, and expenses may affect the amount of the 
surplus or deficiency; and
(d) Provides a telephone number or mailing address from 
which additional information concerning the transaction is 
available.
(2) "Request" means a record:
(a) Authenticated Signed by a debtor or consumer obligor;
(b) Requests that the recipient provide an explanation; 
and
(c) Sent after disposition of the collateral under section 
1309.610 of the Revised Code.
(B) In a consumer-goods transaction in which the debtor is 
entitled to a surplus or a consumer obligor is liable for a 
deficiency under section 1309.615 of the Revised Code, the 
secured party shall:
(1) Send an explanation to the debtor or consumer obligor, 
as applicable, after the disposition and:
(a) Before or when the secured party accounts to the 
debtor and pays any surplus or first makes written demand in a 
record on the consumer obligor after the disposition for payment 
of the deficiency; and
(b) Within fourteen days after receipt of a request; or
(2) In the case of a consumer obligor who is liable for a 
4835
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4861 H. B. No. 195 Page 174
As Introduced
deficiency, within fourteen days after receipt of a request, 
send to the consumer obligor a record waiving the secured 
party's right to a deficiency.
(C) To comply with division (A)(1)(b) of this section, a 
writing an explanation must provide all of the following 
information in the following order:
(1) The aggregate amount of obligations secured by the 
security interest under which the disposition was made, and, if 
the amount reflects a rebate of unearned interest or credit 
service charge, an indication of that fact, calculated as of a 
specified date:
(a) If the secured party takes or receives possession of 
the collateral after default, not more than thirty-five days 
before the secured party takes or receives possession; or
(b) If the secured party takes or receives possession of 
the collateral before default or does not take possession of the 
collateral, not more than thirty-five days before the 
disposition;
(2) The amount of proceeds of the disposition;
(3) The aggregate amount of the obligations after 
deducting the amount of proceeds;
(4) The amount, in the aggregate or by type, and types of 
expenses, including expenses of retaking, holding, preparing for 
disposition, processing, and disposing of the collateral, and 
attorney's fees secured by the collateral that are known to the 
secured party and relate to the current disposition;
(5) The amount, in the aggregate or by type, and types of 
credits, including rebates of interest or credit service 
4862
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4889 H. B. No. 195 Page 175
As Introduced
charges, to which the obligor is known to be entitled and that 
are not reflected in the amount in division (C)(1) of this 
section; and
(6) The amount of the surplus or deficiency.
(D) A particular phrasing of the explanation is not 
required. An explanation that complies substantially with the 
requirements of division (A) of this section is sufficient, even 
if it includes minor errors that are not seriously misleading.
(E) A debtor or consumer obligor is entitled without 
charge to one response to a request under this section during 
any six-month period in which the secured party did not send to 
the debtor or consumer obligor an explanation pursuant to 
division (B)(1) of this section. The secured party may require 
payment of a charge not exceeding twenty-five dollars for each 
additional response.
Sec. 1309.619. Transfer of record or legal title [UCC 9-
619]
(A) As used in this section, "transfer statement" means a 
record authenticated signed by a secured party that states:
(1) The debtor has defaulted in connection with an 
obligation secured by specified collateral;
(2) The secured party has exercised its post-default 
remedies with respect to the collateral;
(3) By reason of the exercise, a transferee has acquired 
the rights of the debtor in the collateral; and
(4) The name and mailing address of the secured party, 
debtor, and transferee.
4890
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4916 H. B. No. 195 Page 176
As Introduced
(B) A transfer statement entitles the transferee to the 
transfer of record of all rights of the debtor in the collateral 
specified in the statement in any official filing, recording, 
registration, or certificate of title system covering the 
collateral. If a transfer statement is presented with the 
applicable fee and request form to the official or office 
responsible for maintaining the system, the official or office 
shall:
(1) Accept the transfer statement;
(2) Promptly amend its records to reflect the transfer; 
and
(3) If applicable, issue a new appropriate certificate of 
title in the name of the transferee.
(C) A transfer of the record or legal title to collateral 
to a secured party under division (B) of this section or 
otherwise is not of itself a disposition of collateral under 
this chapter and does not of itself relieve the secured party of 
its duties under this chapter.
Sec. 1309.620. Acceptance of collateral in full or partial 
satisfaction of obligation; compulsory disposition of collateral 
[UCC 9-620]
(A) Except as otherwise provided in division (G) of this 
section, a secured party may accept collateral in full or 
partial satisfaction of the obligation it secures only if:
(1) The debtor consents to the acceptance under division 
(C) of this section;
(2) The secured party, within the time prescribed in 
division (D) of this section, does not receive a notification of 
4917
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4944 H. B. No. 195 Page 177
As Introduced
objection to the proposal authenticated signed by:
(a) A person to whom the secured party was required to 
send a proposal under section 1309.621 of the Revised Code; or
(b) Any other person, other than the debtor, holding an 
interest in the collateral subordinate to the security interest 
that is the subject of the proposal.
(3) If the collateral is consumer goods, the collateral is 
not in the possession of the debtor when the debtor consents to 
the acceptance; and
(4) Division (E) of this section does not require the 
secured party to dispose of the collateral, or the debtor waives 
the requirement pursuant to section 1309.624 of the Revised 
Code.
(B) A purported or apparent acceptance of collateral under 
this section is not effective unless:
(1) The secured party consents to the acceptance in an 
authenticated a signed record or sends a proposal to the debtor; 
and
(2) The conditions of division (A) of this section are 
met.
(C) For purposes of this section:
(1) A debtor consents to an acceptance of collateral in 
partial satisfaction of the obligation it secures only if the 
debtor agrees to the terms of the acceptance in a record 
authenticated signed after default; and
(2) A debtor consents to an acceptance of collateral in 
full satisfaction of the obligation it secures only if the 
4945
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4971 H. B. No. 195 Page 178
As Introduced
debtor agrees to the terms of the acceptance in a record 
authenticated after default or the secured party:
(a) Sends to the debtor after default a proposal that is 
unconditional or subject only to a condition that collateral not 
in the possession of the secured party be preserved or 
maintained;
(b) In the proposal, proposes to accept collateral in full 
satisfaction of the obligation it secures; and
(c) Does not receive a notification of objection 
authenticated signed by the debtor within twenty days after the 
proposal is sent.
(D) To be effective under division (A)(2) of this section, 
a notification of objection must be received by the secured 
party:
(1) In the case of a person to whom the proposal was sent 
pursuant to section 1309.621 of the Revised Code, within twenty 
days after notification was sent to that person; and
(2) In the case of persons other than those described in 
division (D)(1) of this section:
(a) Within twenty days after the last notification was 
sent pursuant to section 1309.621 of the Revised Code; or
(b) If a notification was not sent, before the debtor 
consents to the acceptance under division (C) of this section.
(E) A secured party who has taken possession of collateral 
shall dispose of the collateral pursuant to section 1309.610 of 
the Revised Code within the time specified in division (F) of 
this section if:
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4998 H. B. No. 195 Page 179
As Introduced
(1) Sixty per cent of the cash price has been paid in the 
case of a purchase-money security interest in consumer goods; or
(2) Sixty per cent of the principal amount of the 
obligation secured has been paid in the case of a non-purchase-
money security interest in consumer goods.
(F) To comply with division (E) of this section, the 
secured party shall dispose of the collateral:
(1) Within ninety days after taking possession; or
(2) Within any longer period to which the debtor and all 
secondary obligors have agreed in an agreement to that effect 
entered into and authenticated signed after default.
(G) In a consumer transaction, a secured party may not 
accept collateral in partial satisfaction of the obligation it 
secures.
Sec. 1309.621. Notification of proposal to accept 
collateral [UCC 9-621]
(A) A secured party who desires to accept collateral in 
full or partial satisfaction of the obligation it secures shall 
send its proposal to:
(1) Any person from whom the secured party has received, 
before the debtor consented to the acceptance, an authenticated 
a signed notification of a claim of an interest in the 
collateral;
(2) Any other secured party or lienholder who, ten days 
before the debtor consented to the acceptance, held a security 
interest in or other lien on the collateral perfected by the 
filing of a financing statement that:
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5025 H. B. No. 195 Page 180
As Introduced
(a) Identified the collateral;
(b) Was indexed under the debtor's name as of that date;
(c) Was filed in the office or offices in which to file a 
financing statement against the debtor covering the collateral 
as of that date; and
(3) Any other secured party who, ten days before the 
debtor consented to the acceptance, held a security interest in 
the collateral perfected by compliance with a statute, 
regulation, or treaty described in division (A) of section 
1309.311 of the Revised Code.
(B) A secured party who desires to accept collateral in 
partial satisfaction of the obligation it secures shall send its 
proposal to any secondary obligor in addition to the persons 
described in division (A) of this section.
Sec. 1309.624. Waiver [UCC 9-624]
(A) A debtor or secondary obligor may waive the right to 
notification of disposition of collateral under section 1309.611 
of the Revised Code only by an agreement to that effect entered 
into and authenticated signed after default.
(B) A debtor may waive the right to require disposition of 
collateral under division (E) of section 1309.620 of the Revised 
Code only by an agreement to that effect entered into and 
authenticated signed after default.
(C) Except in a consumer-goods transaction, a debtor or 
secondary obligor may waive the right to redeem collateral under 
section 1309.623 of the Revised Code only by an agreement to 
that effect entered into and authenticated signed after default.
Sec. 1309.628. Nonliability and limitation on liability of 
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5053 H. B. No. 195 Page 181
As Introduced
secured party; liability of secondary obligor [UCC 9-628]
(A) Unless Subject to division (F) of this section, unless 
a secured party knows that a person is a debtor or obligor, 
knows the identity of the person, and knows how to communicate 
with the person:
(1) The secured party is not liable to the person, or to a 
secured party or lienholder that has filed a financing statement 
against the person, for failure to comply with this chapter; and
(2) The failure of the secured party to comply with this 
chapter does not affect the liability of the person for a 
deficiency.
(B) A Subject to division (F) of this section, a secured 
party is not liable because of its status as secured party:
(1) To a person that is a debtor or obligor, unless the 
secured party knows;
(a) That the person is a debtor or obligor;
(b) The identity of the person; and
(c) How to communicate with the person; or
(2) To a secured party or lienholder that has filed a 
financing statement against a person, unless the secured party 
knows:
(a) That the person is a debtor; and
(b) The identity of the person.
(C) A secured party is not liable to any person, and a 
person's liability for a deficiency is not affected, because of 
any act or omission arising out of the secured party's 
reasonable belief that a transaction is not a consumer-goods 
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5080 H. B. No. 195 Page 182
As Introduced
transaction or a consumer transaction or that goods are not 
consumer goods, if the secured party's belief is based on its 
reasonable reliance on:
(1) A debtor's representation concerning the purpose for 
which collateral was to be used, acquired, or held; or
(2) An obligor's representation concerning the purpose for 
which a secured obligation was incurred.
(D) A secured party is not liable to any person under 
division (C)(2) of section 1309.625 of the Revised Code for its 
failure to comply with section 1309.616 of the Revised Code.
(E) A secured party is not liable under division (C)(2) of 
section 1309.625 of the Revised Code more than once with respect 
to any one secured obligation.
(F) Divisions (A) and (B) of this section do not apply to 
limit the liability of a secured party to a person if, at the 
time the secured party obtains control of collateral that is a 
controllable account, controllable electronic record, or 
controllable payment intangible or at the time the security 
interest attaches to the collateral, whichever is later:
(1) The person is a debtor or obligor; or
(2) The secured party knows that the information in 
division (B)(1)(a), (b), or (c) of this section relating to the 
person is not provided by the collateral, a record attached to 
or logically associated with the collateral, or the system in 
which the collateral is recorded.
Sec. 1310.01. Definitions and index of definitions [UCC 
2A-103]
(A) As used in sections 1310.01 to 1310.78 of the Revised 
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5108 H. B. No. 195 Page 183
As Introduced
Code, unless the context otherwise requires: 
(1) "Buyer in ordinary course of business" means a person 
who in good faith and without knowledge that the sale to the 
person is in violation of the ownership rights or security 
interest or leasehold interest of a third party in the goods 
buys in ordinary course from a person in the business of selling 
goods of that kind. "Buyer in ordinary course of business" does 
not include a pawnbroker. "Buying" may be for cash, by exchange 
of other property, or on secured or unsecured credit and 
includes acquiring goods or documents of title under a 
preexisting contract for sale. "Buying" does not include a 
transfer in bulk or as security for or in total or partial 
satisfaction of a money debt.
(2) "Cancellation" occurs when either party puts an end to 
the lease contract for default by the other party.
(3) "Commercial unit" means a unit of goods that by 
commercial usage is a single whole for purposes of lease and 
division of which materially impairs its character or value on 
the market or in use. A "commercial unit" may be a single 
article, including a machine; a set of articles, including a 
suite of furniture or a line of machinery; a quantity, including 
a gross or carload; or any other unit treated in use or in the 
relevant market as a single whole.
(4) "Conforming" goods or performance under a lease 
contract means goods or performance that are in accordance with 
the obligations under the lease contract.
(5) "Consumer lease" means a lease that a lessor regularly 
engaged in the business of leasing or selling makes to a lessee 
who is an individual and who takes under the lease primarily for 
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5137 H. B. No. 195 Page 184
As Introduced
a personal, family, or household purpose.
(6) "Fault" means wrongful act, omission, breach, or 
default.
(7) "Finance lease" means a lease with respect to which 
all of the following apply:
(a) The lessor does not select, manufacture, or supply the 
goods;
(b) The lessor acquires the goods or the right to 
possession and use of the goods in connection with the lease;
(c) One of the following occurs:
(i) The lessee receives a copy of the contract by which 
the lessor acquired the goods or the right to possession and use 
of the goods before signing the lease contract;
(ii) The lessee's approval of the contract by which the 
lessor acquired the goods or the right to possession and use of 
the goods is a condition to effectiveness of the lease contract;
(iii) Before signing the lease contract, the lessee 
receives an accurate and complete statement designating the 
promises and warranties, disclaimers of warranties, limitations 
or modifications of remedies, or liquidated damages of the 
manufacturer of the goods and of any other third party that were 
provided to the lessor by the person supplying the goods in 
connection with or as part of the contract by which the lessor 
acquired the goods or the right to possession and use of the 
goods;
(iv) If the lease is not a consumer lease, before the 
lessee signs the lease contract, the lessor informs the lessee 
in writing of the identity of the person supplying the goods to 
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5165 H. B. No. 195 Page 185
As Introduced
the lessor, unless the lessee has selected that person and 
directed the lessor to acquire the goods or the right to 
possession and use of the goods from that person; that the 
lessee is entitled under sections 1310.01 to 1310.78 of the 
Revised Code to the promises and warranties, including those of 
any third party, provided to the lessor by the person supplying 
the goods in connection with or as part of the contract by which 
the lessor acquired the goods or the right to possession and use 
of the goods; and that the lessee may communicate with the 
person supplying the goods to the lessor and receive an accurate 
and complete statement of those promises and warranties, 
including any disclaimers and limitations of them or of 
remedies.
(8)(8)(a) "Goods" means all things that are movable at the 
time of identification to the lease contract or that are 
fixtures, as defined in section 1310.37 of the Revised Code. 
"Goods" does not include money, documents, instruments, 
accounts, chattel paper, general intangibles, or minerals or the 
like, including oil and gas, before extraction. "Goods" includes 
the unborn young of animals.
(b) "Hybrid lease" means a single transaction involving a 
lease of goods and one or more of the following:
(i) The provision of services;
(ii) A sale of other goods;
(iii) A sale, lease, or license of property other than 
goods.
(9) "Installment lease contract" means a lease contract 
that authorizes or requires the delivery of goods in separate 
lots to be separately accepted, even though the lease contract 
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5194 H. B. No. 195 Page 186
As Introduced
contains a clause "each delivery is a separate lease" or its 
equivalent.
(10) "Lease" means a transfer of the right to possession 
and use of goods for a term in return for consideration. A sale, 
including a sale on approval or a sale or return, or retention 
or creation of a security interest, is not a lease. Unless the 
context clearly indicates otherwise, "lease" includes a 
sublease.
(11) "Lease agreement" means the bargain, with respect to 
the lease, of the lessor and the lessee in fact as found in 
their language or by implication from other circumstances, 
including course of dealing, usage of trade, or course of 
performance as provided in sections 1310.01 to 1310.78 of the 
Revised Code. Unless the context clearly indicates otherwise, 
"lease agreement" includes a sublease agreement.
(12) "Lease contract" means the total legal obligation 
that results from the lease agreement as affected by sections 
1310.01 to 1310.78 of the Revised Code and any other applicable 
rules of law. Unless the context clearly indicates otherwise, 
"lease contract" includes a sublease contract.
(13) "Leasehold interest" means the interest of the lessor 
or the lessee under a lease contract.
(14) "Lessee" means a person who acquires the right to 
possession and use of goods under a lease. Unless the context 
clearly indicates otherwise, "lessee" includes a sublessee.
(15) "Lessee in ordinary course of business" means a 
person who in good faith and without knowledge that the lease to 
the person is in violation of the ownership rights or security 
interest or leasehold interest of a third party in the goods 
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5223 H. B. No. 195 Page 187
As Introduced
leases in ordinary course from a person in the business of 
selling or leasing goods of that kind. "Lessee in ordinary 
course of business" does not include a pawnbroker. "Leasing" may 
be for cash, by exchange of other property, or on secured or 
unsecured credit and includes acquiring goods or documents of 
title under a preexisting lease contract. "Leasing" does not 
include a transfer in bulk or as security for or in total or 
partial satisfaction of a money debt.
(16) "Lessor" means a person who transfers the right to 
possession and use of goods under a lease. Unless the context 
clearly indicates otherwise, "lessor" includes a sublessor.
(17) "Lessor's residual interest" means the lessor's 
interest in the goods after expiration, termination, or 
cancellation of the lease contract.
(18) "Lien" means a charge against or interest in goods to 
secure payment of a debt or performance of an obligation but 
does not include a security interest.
(19) "Lot" means a parcel or a single article that is the 
subject matter of a separate lease or delivery, whether or not 
it is sufficient to perform the lease contract.
(20) "Merchant lessee" means a lessee that is a merchant 
with respect to goods of the kind subject to the lease.
(21) "Present value" means the amount as of a date certain 
of one or more sums payable in the future, discounted to the 
date certain. The discount is determined by the interest rate 
specified by the parties if the rate was not manifestly 
unreasonable at the time the parties entered into the 
transaction. The discount otherwise is determined by a 
commercially reasonable rate that takes into account the facts 
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5252 H. B. No. 195 Page 188
As Introduced
and circumstances of each case at the time the parties entered 
into the transaction.
(22) "Purchase" includes taking by sale, lease, mortgage, 
security interest, pledge, gift, or any other voluntary 
transaction creating an interest in goods.
(23) "Sublease" means a lease of goods the right to 
possession and use of which was acquired by the lessor as a 
lessee under an existing lease.
(24) "Supplier" means a person from whom a lessor buys or 
leases goods to be leased under a finance lease.
(25) "Supply contract" means a contract under which a 
lessor buys or leases goods to be leased.
(26) "Termination" occurs when either party pursuant to a 
power created by agreement or law puts an end to the lease 
contract otherwise than for default.
(B) The following definitions also apply to sections 
1310.01 to 1310.78 of the Revised Code:
(1) "Accessions," as defined in section 1310.38 of the 
Revised Code;
(2) "Construction mortgage," "encumbrance," "fixtures," 
"fixture filing," and "purchase money lease" as defined in 
section 1310.37 of the Revised Code.
(C) As used in sections 1310.01 to 1310.78 of the Revised 
Code:
(1) "Account," "chattel paper," "document," "general 
intangible," "instrument," "mortgage," and "pursuant to 
commitment" have the same meanings as in section 1309.102 of the 
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5279 H. B. No. 195 Page 189
As Introduced
Revised Code.
(2) "Between merchants," "buyer," "merchant," "receipt," 
"sale," and "seller" have the same meanings as in section 
1302.01 of the Revised Code.
(3) "Consumer goods" has the same meaning as in section 
1309.07 of the Revised Code.
(4) "Entrusting" has the same meaning as in section 
1302.44 of the Revised Code.
(5) "Good faith" has the same meaning as in section 
1301.201 of the Revised Code.
(6) "Sale on approval" and "sale or return" have the same 
meanings as in section 1302.39 of the Revised Code.
(D) In addition, Chapter 1301. of the Revised Code 
contains general definitions and principles of construction and 
interpretation applicable throughout this chapter.
Sec. 1310.02. (A) Scope [UCC 2A-102]
(A)(1) Sections 1310.01 to 1310.78 of the Revised Code 
apply to any transaction, regardless of form, that creates a 
lease and, in the case of a hybrid lease, it applies to the 
extent provided in division (A)(2) of this section .
(2) In a hybrid lease:
(a) If the lease-of-goods aspects do not predominate:
(i) Only the provisions of sections 1310.01 to 1310.78 of 
the Revised Code which relate primarily to the lease-of-goods 
aspects of the transaction apply, and the provisions that relate 
primarily to the transaction as a whole do not apply;
(ii) Section 1310.16 of the Revised Code applies if the 
5280
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5306 H. B. No. 195 Page 190
As Introduced
lease is a finance lease; and
(iii) Section 1310.46 of the Revised Code applies to the 
promises of the lessee in a finance lease to the extent the 
promises are consideration for the right to possession and use 
of the leased good; and
(b) If the lease-of-goods aspects predominate, sections 
1310.01 to 1310.78 of the Revised Code apply to the transaction, 
but do not preclude application in appropriate circumstances of 
other law to aspects of the lease which do not relate to the 
lease of goods.
(B)(1) A lease, although subject to sections 1310.01 to 
1310.78 of the Revised Code, is also subject to Chapter 1548., 
4505., or 4585. of the Revised Code, any applicable certificate 
of title statute of another jurisdiction as provided in section 
1310.03 of the Revised Code, and Chapter 1345., 1349., or 1351. 
of the Revised Code.
(2) If there is a conflict between the provisions of 
sections 1310.01 to 1310.78 of the Revised Code, other than 
section 1310.03, division (C) of section 1310.32, and division 
(C) of section 1310.33 of the Revised Code, and any statute 
referred to in division (B)(1) of this section, the provisions 
of that statute control.
(3) A failure to comply with any applicable statute has 
only the effect specified in that statute.
Sec. 1310.05. Waiver or renunciation of claim or right 
after default [UCC 2A-107]
Any claim or right arising out of an alleged default or 
breach of warranty may be discharged in whole or in part without 
consideration by a written waiver or renunciation in a signed 
5307
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5335 H. B. No. 195 Page 191
As Introduced
and record delivered by the aggrieved party.
Sec. 1310.08. Statute of frauds [UCC 2A-201]
(A) A lease contract is not enforceable by way of action 
or defense unless one of the following applies:
(1) The total payments to be made under the lease 
contract, excluding payments for options to renew or buy, are 
less than one thousand dollars;
(2) There is a writingrecord, signed by the party against 
whom enforcement is sought or by that party's authorized agent, 
sufficient to indicate that a lease contract has been made 
between the parties and to describe the goods leased and the 
lease term.
(B) Any description of leased goods or of the lease term 
is sufficient and satisfies division (A)(2) of this section, 
whether or not it is specific, if it reasonably identifies what 
is described.
(C) A writing record is not insufficient because it omits 
or incorrectly states a term agreed upon, but the lease contract 
is not enforceable under division (A)(2) of this section beyond 
the lease term and the quantity of goods shown in the 
writingrecord.
(D) A lease contract that does not satisfy the 
requirements of division (A) of this section but that is valid 
in other respects is enforceable as follows:
(1) If the goods are to be specially manufactured or 
obtained for the lessee and are not suitable for lease or sale 
to others in the ordinary course of the lessor's business, and 
the lessor, before notice of repudiation is received and under 
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5363 H. B. No. 195 Page 192
As Introduced
circumstances that reasonably indicate that the goods are for 
the lessee, has made either a substantial beginning of their 
manufacture or commitments for their procurement;
(2) If the party against whom enforcement is sought admits 
in that party's pleading, in testimony, or otherwise in court 
that a lease contract was made. The lease contract is not 
enforceable under division (D)(2) of this section beyond the 
quantity of goods admitted.
(3) With respect to goods that have been received and 
accepted by the lessee.
(E) The lease term under a lease contract referred to in 
division (D) of this section is one of the following:
(1) If there is a writing record signed by the party 
against whom enforcement is sought or by that party's authorized 
agent specifying the lease term, the term so specified;
(2) If the party against whom enforcement is sought admits 
in that party's pleading, in testimony, or otherwise in court a 
lease term, the term so admitted;
(3) A reasonable lease term.
Sec. 1310.09. Final expression: parol or extrinsic 
evidence [UCC 2A-202]
Terms with respect to which the confirmatory memoranda of 
the parties agree or that otherwise are set forth in a writing 
record intended by the parties as a final expression of their 
agreement with respect to the terms that are included in their 
agreement may not be contradicted by evidence of any prior 
agreement or of a contemporaneous oral agreement but may be 
explained or supplemented by both of the following:
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5391 H. B. No. 195 Page 193
As Introduced
(A) Course of dealing, usage of trade, or course of 
performance;
(B) Evidence of consistent additional terms, unless the 
court finds the writing record to have been intended also as a 
complete and exclusive statement of the terms of the agreement.
Sec. 1310.10. Seals inoperative [UCC 2A-203]
The affixing of a seal to a writing record evidencing a 
lease contract or an offer to enter into a lease contract does 
not render the writing record a sealed instrument, and the law 
with respect to sealed instruments does not apply to a lease 
contract or offer to which a seal has been affixed.
Sec. 1310.12. Firm offers [UCC 2A-205]
An offer by a merchant to lease goods to or from another 
person in a signed writing record that by its terms gives 
assurance it will be held open is not revocable, for lack of 
consideration, during the time stated or, if no time is stated, 
for a reasonable time, but in no event may the period of 
irrevocability exceed three months. Any such term of assurance 
on a form supplied by the offeree shall be separately signed by 
the offeror.
Sec. 1310.15. Modification, rescission, and waiver [UCC 
2A-208]
(A) An agreement modifying a lease contract needs no 
consideration to be binding.
(B) A signed lease agreement that excludes modification or 
rescission except by a signed writing record may not be 
otherwise modified or rescinded, but, except as between 
merchants, a provision that excludes modification or rescission 
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5419 H. B. No. 195 Page 194
As Introduced
except by a signed writing record and that is on a form supplied 
by a merchant shall be separately signed by the other party.
(C) Although an attempt at modification or rescission does 
not satisfy the requirements of division (B) of this section, it 
may operate as a waiver.
(D) A party who has made a waiver affecting an executory 
portion of a lease contract may retract the waiver by reasonable 
notification received by the other party that strict performance 
will be required of any term waived, unless the retraction would 
be unjust in view of a material change of position in reliance 
on the waiver.
Sec. 1311.55. (A) As used in this section: 
(1) "Agricultural product" means all fruit and vegetable 
crops, meat and meat products, milk and dairy products, poultry 
and poultry products, wool, and all seeds harvested by a 
producer for sale, except that it does not include any grain 
crop that is subject to the fee that the director of agriculture 
may require to be remitted under section 926.16 of the Revised 
Code. "Agricultural product" also includes an algacultural 
product as defined in section 901.511 of the Revised Code.
(2) "Agricultural product handling" means engaging in or 
participating in the business of buying, selling, exchanging, or 
negotiating or soliciting a purchase, sale, resale, exchange, or 
transfer of an agricultural product.
(3) "Agricultural product handler" or "handler" means any 
person who is engaged in the business of agricultural product 
handling, except that a person who sells only those agricultural 
products that the person has produced, or buys agricultural 
products for the person's own use, is not an agricultural 
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5448 H. B. No. 195 Page 195
As Introduced
product handler.
(4) "Agricultural producer" or "producer" means any person 
who grows, raises, or produces an agricultural product on land 
that the person owns or leases.
(5) "Proceeds" has the same meaning as in division (A)(64) 
of section 1309.102 of the Revised Code.
(B) An agricultural producer who delivers an agricultural 
product under an express or implied contract to an agricultural 
product handler, or an agricultural product handler who delivers 
an agricultural product under an express or implied contract to 
another agricultural product handler, has a lien to secure the 
payment for all of the agricultural product delivered under that 
contract. The lien attaches to the product, whether in a raw or 
processed condition, while in the possession of the agricultural 
product handler, and to the proceeds of the sale of the 
agricultural product. The lien attaches from the date of 
delivery of the agricultural product to the handler, or if there 
is a series of deliveries under the contract, from the date of 
the first delivery. The lien is contingent until the producer or 
handler complies with section 1311.56 of the Revised Code.
(C) The lien on an agricultural product covers the 
contract price agreed upon, or when there is no agreed price at 
the time of delivery, the value of the agricultural product as 
determined by the "market news service" of the Ohio department 
of agriculture on the date the agricultural producer or handler 
files the affidavit permitted under section 1311.56 of the 
Revised Code.
(D) Any waiver by a producer or handler of the producer's 
or handler's right to an agricultural product lien is void as 
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5477 H. B. No. 195 Page 196
As Introduced
being contrary to public policy.
Sec. 1314.101.  	Title [UCC 12-101] 
This chapter may be cited as "Uniform Commercial Code, 
controllable electronic records."
Sec. 1314.102.  	Definitions [UCC 12-102] 
As used in this chapter:
(A) "Controllable electronic record" means a record stored 
in an electronic medium that can be subjected to control under 
section 1314.105 of the Revised Code. "Controllable electronic 
record" does not include a controllable account, a controllable 
payment intangible, a deposit account, an electronic copy of a 
record evidencing chattel paper, an electronic document of 
title, electronic money, investment property, or a transferable 
record.
(B) "Qualifying purchaser" means a purchaser of a 
controllable electronic record or an interest in a controllable 
electronic record that obtains control of the controllable 
electronic record for value, in good faith, and without notice 
of a claim of a property right in the controllable electronic 
record.
(C) "Transferable record" means both of the following:
(1) A "transferable record," as defined in section 1306.15 
of the Revised Code;
(2) A "transferable record," as defined in the "Electronic 
Signatures in Global and National Commerce Act," 15 U.S.C 
7021(a)(1).
(D) "Value" has the same meaning as in section 1303.33 of 
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5504 H. B. No. 195 Page 197
As Introduced
the Revised Code, as if references in that section to an 
"instrument" were references to a controllable account, 
controllable electronic record, or controllable payment 
intangible.
(E) "Account debtor," "controllable account," 
"controllable payment intangible," "chattel paper," "deposit 
account," "electronic money," and "investment property" have the 
same meanings as in section 1309.102 of the Revised Code.
Sec. 1314.103.  	Relation to Chapter 1309. of the Revised  
Code and consumer laws [UCC 12-103]
(A) If there is a conflict between this chapter and 
Chapter 1309. of the Revised Code, Chapter 1309. of the Revised 
Code governs.
(B) A transaction subject to this chapter is subject to 
any applicable rule of law that establishes a different rule for 
consumers.
Sec. 1314.104.  	Rights in controllable account,  
controllable electronic record, and controllable payment 
intangible [UCC 12-104]
(A) This section applies to the acquisition and purchase 
of rights in a controllable account or a controllable payment 
intangible, including the rights and benefits under divisions 
(C), (D), (E), (G), and (H) of this section of a purchaser and 
qualifying purchaser, in the same manner this section applies to 
a controllable electronic record.
(B) To determine whether the purchaser of a controllable 
account or a controllable payment intangible is a qualifying 
purchaser, the purchaser obtains control of the account or 
payment intangible if it obtains control of the controllable 
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5533 H. B. No. 195 Page 198
As Introduced
electronic record that evidences the account or payment 
intangible.
(C) Except as provided in this section, law other than 
this chapter determines whether a person acquires a right in a 
controllable electronic record and the right the person 
acquires.
(D) A purchaser of a controllable electronic record 
acquires all rights in the controllable electronic record that 
the transferor had or had power to transfer, except that a 
purchaser of a limited interest in a controllable electronic 
record acquires rights only to the extent of the interest 
purchased.
(E) A qualifying purchaser acquires its rights in the 
controllable electronic record free of a claim of a property 
right in the controllable electronic record.
(F) Except as otherwise provided in divisions (A) and (E) 
of this section for a controllable account and a controllable 
payment intangible, or law other than this chapter, a qualifying 
purchaser takes a right to payment, right to performance, or 
other interest in property evidenced by the controllable 
electronic record subject to a claim of a property right in the 
right of payment, right to performance, or other interest in the 
property.
(G) An action shall not be asserted against a qualifying 
purchaser based on both a purchase by the qualifying purchaser 
of a controllable electronic record and a claim of a property 
right in another controllable electronic record, whether the 
action is framed in conversion, replevin, constructive trust, 
equitable lien, or other theory.
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5562 H. B. No. 195 Page 199
As Introduced
(H) Filing of a financing statement under Chapter 1309. of 
the Revised Code is not notice of a claim of a property right in 
a controllable electronic record.
Sec. 1314.105.  	Control of controllable electronic record  
[UCC 12-105]
(A) A person has control of a controllable electronic 
record if the electronic record, a record attached to or 
logically associated with the electronic record, or a system in 
which the electronic record is recorded:
(1) Gives the person both of the following:
(a) Power to avail itself of substantially all the 
benefits from the electronic record;
(b) Exclusive power, subject to division (B) of this 
section, to do both of the following:
(i) Prevent others from availing themselves of 
substantially all the benefits from the electronic record;
(ii) Transfer control of the electronic record to another 
person or cause another person to obtain control of another 
controllable electronic record as a result of the transfer of 
the electronic record.
(2) Enables the person to readily identify itself in any 
way, including by name, identifying number, cryptographic key, 
office, or account number, as having the powers specified in 
division (A)(1) of this section.
(B) Subject to division (C) of this section, a power is 
exclusive under divisions (A)(1)(b)(i) and (ii) of the Revised 
Code even if either or both of the following apply:
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5589 H. B. No. 195 Page 200
As Introduced
(1) The controllable electronic record, a record attached 
to or logically associated with the electronic record, or a 
system in which the electronic record is recorded limits the use 
of the electronic record or has a protocol programmed to cause a 
change, including a transfer or loss of control or a 
modification of benefits afforded by the electronic record;
(2) The power is shared with another person.
(C) A power of a person is not shared with another person 
under division (B)(2) of this section and the person's power is 
not exclusive if both of the following apply:
(1) The person can exercise the power only if the power is 
also exercised by the same person;
(2) The other person either:
(a) Can exercise the power without exercise of the power 
by the person;
(b) Is the transferor to the person of an interest in the 
controllable electronic record or a controllable account or 
controllable payment intangible evidenced by the controllable 
electronic record.
(D) If a person has the powers specified in divisions (A)
(1)(b)(i) and (ii) of this section, the powers are presumed to 
be exclusive.
(E) A person has control of a controllable electronic 
record if another person, other than the transferor to the 
person of an interest in the controllable electronic record or a 
controllable account or controllable payment intangible 
evidenced by the controllable electronic record either:
(1) Has control of the electronic record and acknowledges 
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5617 H. B. No. 195 Page 201
As Introduced
that it has control on behalf of the person;
(2) Obtains control of the electronic record after having 
acknowledged that it will obtain control of the electronic 
record on behalf of the person.
(F) A person that has control under this section is not 
required to acknowledge that it has control on behalf of another 
person.
(G) If a person acknowledges that it has or will obtain 
control on behalf of another person, unless the person otherwise 
agrees or law other than this chapter or Chapter 1309. of the 
Revised Code provides otherwise, the person does not owe any 
duty to the other person and is not required to confirm the 
acknowledgment to any other person.
Sec. 1314.106.  	Discharge of account debtor on controllable  
account or controllable payment intangible [UCC 12-106]
(A) An account debtor on a controllable account or 
controllable payment intangible may discharge its obligation by 
paying either:
(1) The person having control of the controllable 
electronic record that evidences the controllable account or 
controllable payment intangible;
(2) Except as provided in division (B) of this section, a 
person that formerly had control of the controllable electronic 
record.
(B) Subject to division (D) of this section, the account 
debtor may not discharge its obligation by paying a person that 
formerly had control of the controllable electronic record if 
the account debtor receives a notification that complies with 
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5645 H. B. No. 195 Page 202
As Introduced
all of the following:
(1) Is signed by a person that formerly had control or the 
person to which control was transferred;
(2) Reasonably identifies the controllable account or 
controllable payment intangible;
(3) Notifies the account debtor that control of the 
controllable electronic record that evidences the controllable 
account or controllable payment intangible was transferred;
(4) Identifies the transferee in any reasonably way, 
including by name, identifying number, cryptographic key, 
office, or account number;
(5) Provides a commercially reasonable method by which the 
account debtor is to pay the transferee.
(C) After receipt of a notification that complies with 
division (B) of this section, the account debtor may discharge 
its obligation by paying in accordance with the notification and 
may not discharge the obligation by paying a person that 
formerly had control.
(D) Subject to division (H) of this section, notification 
is ineffective under division (B) of this section if any of the 
following apply:
(1) Unless, before the notification is sent, the account 
debtor and the person that, at that time, had control of the 
controllable electronic record that evidences the controllable 
account or controllable payment intangible agree in a signed 
record to a commercially reasonable method by which a person may 
furnish reasonable proof that control has been transferred;
(2) To the extent an agreement between the account debtor 
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5673 H. B. No. 195 Page 203
As Introduced
and seller of a payment intangible limits the account debtor's 
duty to pay a person other than the seller and the limitation is 
effective under law other than this chapter;
(3) At the option of the account debtor, if the 
notification notifies the account debtor to do any of the 
following:
(a) Divide a payment;
(b) Make less than the full amount of an installment or 
other periodic payment;
(c) Pay any part of a payment by more than one method or 
to more than one person.
(E) Subject to division (H) of this section, if requested 
by the account debtor, the person giving the notification under 
division (B) of this section seasonably shall furnish reasonable 
proof, using the method in the agreement referred to in division 
(D)(1) of this section, that control of the controllable 
electronic record has been transferred. Unless the person 
complies with the request, the account debtor may discharge its 
obligations by paying a person that formerly had control, even 
if the account debtor has received a notification under division 
(B) of this section.
(F) A person furnishes reasonable proof under division (E) 
of this section that control has been transferred if the person 
demonstrates, using the method in the agreement referred to in 
division (D)(1) of this section, that the transferee has the 
power to do all of the following:
(1) Avail itself of substantially all the benefit from the 
controllable electronic record;
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5701 H. B. No. 195 Page 204
As Introduced
(2) Prevent others from availing themselves of 
substantially all the benefit from the controllable electronic 
record;
(3) Transfer the powers specified in divisions (F)(1) and 
(2) of this section to another person.
(G) Subject to division (H) of this section, an account 
debtor may not waive or vary its rights under divisions (D)(1) 
and (E) of this section, or its option under division (D)(3) of 
this section.
(H) This section is subject to law other than this chapter 
which establishes a different rule for an account debtor who is 
an individual and who incurred the obligation primarily for 
personal, family, or household purposes.
Sec. 1314.107.  	Governing law [UCC 12-107] 
(A) Except as otherwise provided in division (B) of this 
section, the local law of a controllable electronic record's 
jurisdiction governs a matter covered by this chapter.
(B) For a controllable electronic record that evidences a 
controllable account or controllable payment intangible, the 
local law of the controllable electronic record's jurisdiction 
governs a matter covered by section 1314.106 of the Revised Code 
unless an effective agreement determines that the local law of 
another jurisdiction governs.
(C) The following rules determine a controllable 
electronic record's jurisdiction under this section:
(1) If the controllable electronic record, or a record 
attached to or logically associated with the controllable 
electronic record and readily available for review, expressly 
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5729 H. B. No. 195 Page 205
As Introduced
provides that a particular jurisdiction is the controllable 
electronic record's jurisdiction for purposes of this chapter or 
Chapters 1301., 1302., 1303., 1304., 1305., 1307., 1308., 1309., 
or 1310. of the Revised Code, that jurisdiction is the 
controllable electronic record's jurisdiction.
(2) If division (C)(1) of this section does not apply and 
the rules of the system in which the controllable electronic 
record is recorded are readily available for review and 
expressly provide that a particular jurisdiction is the 
controllable electronic record's jurisdiction for purposes of 
this chapter or Chapters 1301., 1302., 1303., 1304., 1305., 
1307., 1308., 1309., or 1310. of the Revised Code, that 
jurisdiction is the controllable electronic record's 
jurisdiction.
(3) If divisions (C)(1) and (2) of this section do not 
apply and the controllable electronic record, or a record 
attached to or logically associated with the controllable 
electronic record and readily available for review, expressly 
provides that the controllable electronic record is governed by 
the law of a particular jurisdiction, that jurisdiction is the 
controllable electronic record's jurisdiction.
(4) If divisions (C)(1), (2), and (3) of this section do 
not apply and the rules of the system in which the controllable 
electronic record is recorded are readily accessible for review 
and expressly provide that the controllable electronic record or 
the system is governed by the law of a particular jurisdiction, 
that jurisdiction is the controllable electronic record's 
jurisdiction.
(5) If divisions (C)(1), (2), (3), and (4) of this section 
do not apply, the controllable electronic record's jurisdiction 
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5759 H. B. No. 195 Page 206
As Introduced
is the District of Columbia.
(D) If division (C)(5) of this section applies and article 
twelve is not in effect in the District of Columbia without 
material modification, the governing law for a matter covered by 
this chapter is the law of the District of Columbia as though 
article twelve were in effect in the District of Columbia 
without material modification. In this division, "article 
twelve" means article twelve of the uniform commercial code.
(E) To the extent divisions (A) and (B) of this section 
provide that the local law of the controllable electronic 
record's jurisdiction governs a matter covered by this chapter, 
that law governs even if the matter or transaction to which the 
matter relates does not bear any relation to the controllable 
electronic record's jurisdiction.
(F) The rights acquired under section 1314.104 of the 
Revised Code by a purchaser or qualifying purchaser are governed 
by the law applicable under this section at the time of 
purchase.
Sec. 1316.101.  	Title [UCC A-101] 
This chapter may be cited as "transitional provisions for 
Uniform Commercial Code amendments (2022)."
Sec. 1316.102.  	Definitions [A-102] 
(A) As used in this chapter:
(1) "Adjustment date" means July 1, 2025, or the date that 
is one year after the effective date of this section, whichever 
is later.
(2) "Article 12" means Chapter 1314. of the Revised Code.
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5786 H. B. No. 195 Page 207
As Introduced
(3) "Article 12 property" means a controllable account, 
controllable electronic record, or controllable payment 
intangible.
(4) "Uniform Commercial Code" means Chapters 1301., 1302., 
1303., 1304., 1305., 1307., 1308., 1309., 1310., and 1314. of 
the Revised Code.
(B) The following definitions in other chapters of the 
Revised Code apply to this chapter:
(1) "Controllable account," has the same meaning as in 
section 1309.102 of the Revised Code;
(2) "Controllable electronic record," has the same meaning 
as in section 1314.102 of the Revised Code;
(3) "Controllable payment intangible" has the same meaning 
as in section 1309.102 of the Revised Code;
(4) "Electronic money" has the same meaning as in section 
1309.102 of the Revised Code;
(5) "Financing statement" has the same meaning as in 
section 1309.102 of the Revised Code.
(C) Chapter 1301. of the Revised Code contains general 
definitions and principles of construction and interpretation 
applicable throughout this chapter.
Sec. 1316.201.  	Except as provided in sections 1316.301 to  
1316.306 of the Revised Code, a transaction validly entered into 
before the effective date of this section and the rights, 
duties, and interests following from the transaction remain 
valid thereafter and may be terminated, completed, consummated, 
or enforced as required or permitted by law other than the 
Uniform Commercial Code or, if applicable, the Uniform 
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5814 H. B. No. 195 Page 208
As Introduced
Commercial Code as it existed before the effective date of this 
section.
Sec. 1316.301.  	Saving clause [UCC A-301] 
(A) Except as provided in sections 1316.301 to 1316.306 of 
the Revised Code, the version of Chapter 1309. of the Revised 
Code that applies on the effective date of this section, and 
Article 12 apply to a transaction, lien, or other interest in 
property, even if the transaction lien, or interest was entered 
into, created, or acquired before the effective date of this 
section.
(B) Except as provided in division (C) of this section and 
sections 1316.302 to 1316.306 of the Revised Code:
(1) A transaction, lien, or interest in property that was 
validly entered into, created, or transferred before the 
effective date of this section and was not governed by the 
Uniform Commercial Code, but would be subject to Chapter 1309. 
of the Revised Code or Article 12 if it had been entered into, 
created, or transferred on or after the effective date of this 
section, including the rights, duties, and interests flowing 
from the transaction, lien, or interest, remains valid on and 
after the effective date of this section; and
(2) The transaction, lien, or interest may be terminated, 
completed, consummated, and enforced as required or permitted by 
the Uniform Commercial Code, as it exists on the effective date 
of this section, or by the law that applied before that date.
(C) The amendments to the Uniform Commercial Code that 
apply on the effective date of this section do not affect an 
action, case, or other proceeding commenced before the effective 
date of this section.
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5843 H. B. No. 195 Page 209
As Introduced
Sec. 1316.302.  	Security interest perfected before  
effective date [UCC A-302]
(A) A security interest that is enforceable and perfected 
immediately before the effective date of this section is a 
perfected security interest under the Uniform Commercial Code, 
as it exists on the effective date of this section, if the 
requirements for enforceability and perfection under the Uniform 
Commercial Code, as it exists on the effective date of this 
section, are satisfied without further action.
(B) If a security interest is enforceable and perfected 
immediately before the effective date of this section, but the 
requirements for enforceability or perfection under the Uniform 
Commercial Code, as it exists on the effective date of this 
section, are not satisfied on the effective date of this 
section, the security interest:
(1) Is a perfected security interest until the earlier of 
the time perfection would have ceased under the law in effect 
immediately before the effective date of this section or the 
adjustment date;
(2) Remains enforceable thereafter only if the security 
interest satisfies the requirements for enforceability under 
section 1309.203 of the Revised Code, as it exists on the 
effective date of this section, before the adjustment date; and
(3) Remains perfected thereafter only if the requirements 
for perfection under the Uniform Commercial Code, as it exists 
on the effective date of this section, are satisfied before the 
time specified in division (B)(1) of this section.
Sec. 1316.303.  	Security interest unperfected before  
effective date [UCC A-303]
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5872 H. B. No. 195 Page 210
As Introduced
A security interest that is enforceable immediately before 
the effective date of this section but is unperfected at that 
time:
(A) Remains an enforceable security interest until the 
adjustment date;
(B) Remains enforceable thereafter if the security 
interest becomes enforceable under section 1309.203 of the 
Revised Code, as amended by this act, on the effective date of 
this section or before the adjustment date; and
(C) Becomes perfected:
(1) Without further action, on the effective date of this 
section if the requirements for perfection the Uniform 
Commercial Code, as it exists on the effective date of this 
section, are satisfied before or at that time; or
(2) When the requirements for perfection are satisfied if 
the requirements are satisfied after that time.
Sec. 1316.304.  	Effectiveness of actions taken before  
effective date [UCC A-304]
(A) If action, other than the filing of a financing 
statement, is taken before the effective date of this section 
and the action would have resulted in perfection of the security 
interest had the security interest become enforceable before the 
effective date of this section, the action is effective to 
perfect a security interest that attaches under the Uniform 
Commercial Code, as it exists on the effective date of this 
section, before the adjustment date. An attached security 
interest becomes unperfected on the adjustment date unless the 
security interest becomes a perfected security interest under 
the Uniform Commercial Code, as it exists on the effective date 
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5901 H. B. No. 195 Page 211
As Introduced
of this section, before the adjustment date.
(B) The filing of a financing statement before the 
effective date of this section is effective to perfect a 
security interest on the effective date of this section to the 
extent that the filing would satisfy the requirements for 
perfection under the Uniform Commercial Code, as it exists on 
the effective date of this section.
(C) The taking of an action before the effective date of 
this section is sufficient for the enforceability of a security 
interest on the effective date of this section if the action 
would satisfy the requirements for enforceability under the 
Uniform Commercial Code, as it exists on the effective date of 
this section.
Sec. 1316.305.  	Priority [UCC A-305] 
(A) Subject to divisions (B) and (C) of this section, the 
Uniform Commercial Code, as it exists on the effective date of 
this section, determines the priority of conflicting claims to 
collateral.
(B) Subject to division (C) of this section, if the 
priorities of claims to collateral were established before the 
effective date of this section, Chapter 1309. of the Revised 
Code, as it existed before the effective date of this section, 
determines priority.
(C) On the adjustment date, to the extent the priorities 
determined by Chapter 1309. of the Revised Code, as it exists on 
the effective date of this section, modify the priorities 
established before the effective date of this section, 
priorities of claims to Article 12 property and electronic money 
established before the effective date of this section cease to 
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As Introduced
apply.
Sec. 1316.306.  	Priority of claims when priority rules of  
Chapter 1309. of the Revised Code do not apply [UCC A-306]
(A) Subject to divisions (B) and (C) of this section, 
Article 12 determines the priorities of conflicting claims to 
Article 12 property when priority rules of Chapter 1309. of the 
Revised Code, as it exists on the effective date of this 
section, do not apply.
(B) Subject to division (C) of this section, when the 
priority rules of Chapter 1309. of the Revised Code, as it 
exists on the effective date of this section, do not apply and 
the priorities of claims to Article 12 property were established 
before the effective date of this section, law other than 
Article 12 determines priority.
(C) When the priority rules of Chapter 1309. of the 
Revised Code, as it exists on the effective date of this 
section, do not apply, to the extent priorities determined by 
the Uniform Commercial Code, as it exists on the effective date 
of this section, modify the priorities established before the 
effective date of this section, the priorities of claims to 
Article 12 property established before the effective date of 
this section cease to apply on the adjustment date.
Section 2. That existing sections 1301.101, 1301.102, 
1301.103, 1301.104, 1301.105, 1301.106, 1301.201, 1301.204, 
1301.205, 1301.206, 1301.301, 1301.302, 1301.304, 1301.305, 
1301.306, 1302.01, 1302.02, 1302.04, 1302.05, 1302.06, 1302.08, 
1302.12, 1303.01, 1303.03, 1303.41, 1303.69, 1304.51, 1304.56, 
1304.57, 1304.58, 1304.62, 1304.63, 1304.65, 1304.66, 1304.72, 
1305.03, 1305.15, 1307.102, 1307.106, 1308.01, 1308.02, 1308.05, 
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5959 H. B. No. 195 Page 213
As Introduced
1308.17, 1308.24, 1309.102, 1309.104, 1309.105, 1309.203, 
1309.204, 1309.207, 1309.208, 1309.209, 1309.210, 1309.301, 
1309.304, 1309.305, 1309.310, 1309.312, 1309.313, 1309.314, 
1309.316, 1309.317, 1309.323, 1309.324, 1309.330, 1309.331, 
1309.332, 1309.334, 1309.341, 1309.404, 1309.406, 1309.408, 
1309.509, 1309.513, 1309.601, 1309.605, 1309.608, 1309.611, 
1309.613, 1309.614, 1309.615, 1309.616, 1309.619, 1309.620, 
1309.621, 1309.624, 1309.628, 1310.01, 1310.02, 1310.05, 
1310.08, 1310.09, 1310.10, 1310.12, 1310.15, and 1311.55 of the 
Revised Code are hereby repealed.
Section 3. Section 1309.102 of the Revised Code is 
presented in this act as a composite of the section as amended 
by both H.B. 276 and S.B. 208 of the 129th General Assembly. The 
General Assembly, applying the principle stated in division (B) 
of section 1.52 of the Revised Code that amendments are to be 
harmonized if reasonably capable of simultaneous operation, 
finds that the composite is the resulting version of the section 
in effect prior to the effective date of the section as 
presented in this act. 
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