Rhode Island 2023 Regular Session

Rhode Island Senate Bill S0820 Compare Versions

Only one version of the bill is available at this time.

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7	7	LC001903
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9	9	S TATE OF RHODE IS LAND
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2023
12	12	____________
13	13
14	14	A N A C T
15	15	RELATING TO THE UNIFORM COMMERCIAL CODE
16	16	Introduced By: Senators F. Lombardi, and Euer
17	17	Date Introduced: March 23, 2023
18	18	Referred To: Senate Judiciary
19	19
20	20
21	21	It is enacted by the General Assembly as follows:
22	22	SECTION 1. Sections 6A-1-201, 6A-1-204, 6A-1-301 and 6A-1-306 of the General Laws 1
23	23	in Chapter 6A-1 entitled "General Provisions" are hereby amended to read as follows: 2
24	24	6A-1-201. General definitions. 3
25	25	(a) Unless the context otherwise requires, words or phrases defined in this section, or in 4
26	26	the additional definitions contained in other chapters of title 6A that apply to particular chapters or 5
27	27	parts thereof, have the meanings stated. 6
28	28	(b) Subject to definitions contained in other chapters of title 6A that apply to particular 7
29	29	chapters or parts thereof: 8
30	30	(1) “Action”, in the sense of a judicial proceeding, includes recoupment, counterclaim, set-9
31	31	off, suit in equity, and any other proceeding in which rights are determined. 10
32	32	(2) “Aggrieved party” means a party entitled to pursue a remedy. 11
33	33	(3) “Agreement”, as distinguished from “contract”, means the bargain of the parties in fact, 12
34	34	as found in their language or inferred from other circumstances, including course of performance, 13
35	35	course of dealing, or usage of trade as provided in § 6A-1-303. 14
36	36	(4) “Bank” means a person engaged in the business of banking and includes a savings bank, 15
37	37	savings and loan association, credit union, and trust company. 16
38	38	(5) “Bearer” means a person in control of a negotiable electronic document of title or a 17
39	39	person in possession of a negotiable instrument, negotiable tangible document of title, or 18
40	40	certificated security that is payable to bearer or indorsed in blank. 19
41	41
42	42
43	43	LC001903 - Page 2 of 113
44	44	(6) “Bill of lading” means a document of title evidencing the receipt of goods for shipment 1
45	45	issued by a person engaged in the business of directly or indirectly transporting or forwarding 2
46	46	goods. This term does not include a warehouse receipt. 3
47	47	(7) “Branch” includes a separately incorporated foreign branch of a bank. 4
48	48	(8) “Burden of establishing” a fact means the burden of persuading the trier of fact that the 5
49	49	existence of the fact is more probable than its nonexistence. 6
50	50	(9) “Buyer in ordinary course of business” means a person that buys goods in good faith, 7
51	51	without knowledge that the sale violates the rights of another person in the goods, and in the 8
52	52	ordinary course from a person, other than a pawnbroker, in the business of selling goods of that 9
53	53	kind. A person buys goods in the ordinary course if the sale to the person comports with the usual 10
54	54	or customary practices in the kind of business in which the seller is engaged or with the seller’s 11
55	55	own usual or customary practices. A person that sells oil, gas, or other minerals at the wellhead or 12
56	56	minehead is a person in the business of selling goods of that kind. A buyer in ordinary course of 13
57	57	business may buy for cash, by exchange of other property, or on secured or unsecured credit, and 14
58	58	may acquire goods or documents of title under a preexisting contract for sale. Only a buyer that 15
59	59	takes possession of the goods or has a right to recover the goods from the seller under Chapter 2 16
60	60	may be a buyer in ordinary course of business. “Buyer in ordinary course of business” does not 17
61	61	include a person that acquires goods in a transfer in bulk or as security for or in total or partial 18
62	62	satisfaction of a money debt. 19
63	63	(10) “Conspicuous”, with reference to a term, means so written, displayed, or presented 20
64	64	that, based on the totality of the circumstances, a reasonable person against which it is to operate 21
65	65	ought to have noticed it. Whether a term is “conspicuous” or not is a decision for the court. 22
66	66	Conspicuous terms include the following: 23
67	67	(A) A heading in capitals equal to or greater in size than the surrounding text, or in 24
68	68	contrasting type, font, or color to the surrounding text of the same or lesser size; and 25
69	69	(B) Language in the body of a record or display in larger type than the surrounding text, or 26
70	70	in contrasting type, font, or color to the surrounding text of the same size, or set off from 27
71	71	surrounding text of the same size by symbols or other marks that call attention to the language. 28
72	72	(11) “Consumer” means an individual who enters into a transaction primarily for personal, 29
73	73	family, or household purposes. 30
74	74	(12) “Contract”, as distinguished from “agreement”, means the total legal obligation that 31
75	75	results from the parties’ agreement as determined by title 6A as supplemented by any other 32
76	76	applicable laws. 33
77	77	(13) “Creditor” includes a general creditor, a secured creditor, a lien creditor, and any 34
78	78
79	79
80	80	LC001903 - Page 3 of 113
81	81	representative of creditors, including an assignee for the benefit of creditors, a trustee in 1
82	82	bankruptcy, a receiver in equity, and an executor or administrator of an insolvent debtor’s or 2
83	83	assignor’s estate. 3
84	84	(14) “Defendant” includes a person in the position of defendant in a counterclaim, cross-4
85	85	claim, or third-party claim. 5
86	86	(15) “Delivery”, with respect to an electronic document of title means voluntary transfer 6
87	87	of control and with respect to an instrument, a tangible document of title, or an authoritative tangible 7
88	88	copy of a record evidencing chattel paper, means voluntary transfer of possession. 8
89	89	(16) “Document of title” means a record: 9
90	90	(i) That in the regular course of business or financing is treated as adequately evidencing 10
91	91	that the person in possession or control of the record is entitled to receive, control, hold, and dispose 11
92	92	of the record and the goods the record covers; and 12
93	93	(ii) That purports to be issued by or addressed to a bailee and to cover goods in the bailee’s 13
94	94	possession which are either identified or are fungible portions of an identified mass. The term 14
95	95	includes a bill of lading, transport document, dock warrant, dock receipt, warehouse receipt, and 15
96	96	order for delivery of goods. 16
97	97	An electronic document of title means a document of title evidenced by a record consisting 17
98	98	of information stored in an electronic medium. A tangible document of title means a document of 18
99	99	title evidenced by a record consisting of information that is inscribed on a tangible medium. 19
100	100	(16.1) "Electronic" means relating to technology having electrical, digital, magnetic, 20
101	101	wireless, optical, electromagnetic, or similar capabilities. 21
102	102	(17) “Fault” means a default, breach, or wrongful act or omission. 22
103	103	(18) “Fungible goods” means: 23
104	104	(A) Goods of which any unit, by nature or usage of trade, is the equivalent of any other like 24
105	105	unit; or 25
106	106	(B) Goods that by agreement are treated as equivalent. 26
107	107	(19) “Genuine” means free of forgery or counterfeiting. 27
108	108	(20) “Good faith” means honesty in fact in the conduct or transaction concerned. 28
109	109	(21) “Holder” means: 29
110	110	(A) The person in possession of a negotiable instrument that is payable either to bearer or 30
111	111	to an identified person that is the person in possession; 31
112	112	(B) The person in possession of a negotiable tangible document of title if the goods are 32
113	113	deliverable either to bearer or to the order of the person in possession; or 33
114	114	(C) The person in control other than pursuant to § 6A-7-106(g) of a negotiable electronic 34
115	115
116	116
117	117	LC001903 - Page 4 of 113
118	118	document of title. 1
119	119	(22) “Insolvency proceeding” includes an assignment for the benefit of creditors or other 2
120	120	proceeding intended to liquidate or rehabilitate the estate of the person involved. 3
121	121	(23) “Insolvent” means: 4
122	122	(A) Having generally ceased to pay debts in the ordinary course of business other than as 5
123	123	a result of bona fide dispute; 6
124	124	(B) Being unable to pay debts as they become due; or 7
125	125	(C) Being insolvent within the meaning of federal bankruptcy law. 8
126	126	(24) “Money” means a medium of exchange that is currently authorized or adopted by a 9
127	127	domestic or foreign government. The term includes a monetary unit of account established by an 10
128	128	intergovernmental organization or by agreement between two (2) or more countries. The term 11
129	129	"money" does not include an electronic record that is a medium of exchange recorded and 12
130	130	transferable in a system that existed and operated for the medium of exchange before the medium 13
131	131	of exchange was authorized or adopted by the government. 14
132	132	(25) “Organization” means a person other than an individual. 15
133	133	(26) “Party”, as distinguished from “third-party”, means a person that has engaged in a 16
134	134	transaction or made an agreement subject to title 6A. 17
135	135	(27) “Person” means an individual, corporation, business trust, estate, trust, partnership, 18
136	136	limited liability company, association, joint venture, government, governmental subdivision, 19
137	137	agency, or instrumentality, public corporation, or any other legal or commercial entity. The term 20
138	138	"person" includes a protected series, however denominated, of an entity if the protected series is 21
139	139	established under law other than this title that limits, or limits if conditions specified under the law 22
140	140	are satisfied, the ability of a creditor of the entity or of any other protected series of the entity to 23
141	141	satisfy a claim from assets of the protected series. 24
142	142	(28) “Present value” means the amount as of a date certain of one or more sums payable in 25
143	143	the future, discounted to the date certain by use of either an interest rate specified by the parties if 26
144	144	that rate is not manifestly unreasonable at the time the transaction is entered into or, if an interest 27
145	145	rate is not so specified, a commercially reasonable rate that takes into account the facts and 28
146	146	circumstances at the time the transaction is entered into. 29
147	147	(29) “Purchase” means taking by sale, lease, discount, negotiation, mortgage, pledge, lien, 30
148	148	security interest, issue or reissue, gift, or any other voluntary transaction creating an interest in 31
149	149	property. 32
150	150	(30) “Purchaser” means a person that takes by purchase. 33
151	151	(31) “Record” means information that is inscribed on a tangible medium or that is stored 34
152	152
153	153
154	154	LC001903 - Page 5 of 113
155	155	in an electronic or other medium and is retrievable in perceivable form. 1
156	156	(32) “Remedy” means any remedial right to which an aggrieved party is entitled with or 2
157	157	without resort to a tribunal. 3
158	158	(33) “Representative” means a person empowered to act for another, including an agent, 4
159	159	an officer of a corporation or association, and a trustee, executor, or administrator of an estate. 5
160	160	(34) “Right” includes remedy. 6
161	161	(35) “Security interest” means an interest in personal property or fixtures which secures 7
162	162	payment or performance of an obligation. “Security interest” includes any interest of a consignor 8
163	163	and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction 9
164	164	that is subject to Chapter 9. “Security interest” does not include the special property interest of a 10
165	165	buyer of goods on identification of those goods to a contract for sale under § 6A-2-401, but a buyer 11
166	166	may also acquire a “security interest” by complying with Chapter 9. Except as otherwise provided 12
167	167	in § 6A-2-505, the right of a seller or lessor of goods under Chapter 2 or 2.1 to retain or acquire 13
168	168	possession of the goods is not a “security interest”, but a seller or lessor may also acquire a “security 14
169	169	interest” by complying with Chapter 9. The retention or reservation of title by a seller of goods 15
170	170	notwithstanding shipment or delivery to the buyer under § 6A-2-401 is limited in effect to a 16
171	171	reservation of a “security interest.” Whether a transaction in the form of a lease creates a “security 17
172	172	interest” is determined pursuant to § 6A-1-203. 18
173	173	(36) “Send” in connection with a writing, record, or notice record or notification means: 19
174	174	(A) To deposit in the mail, or deliver for transmission, or transmit by any other usual means 20
175	175	of communication with postage or cost of transmission provided for, and properly addressed and, 21
176	176	in the case of an instrument, to an address specified thereon or otherwise agreed, or if there be none 22
177	177	addressed to any address reasonable under the circumstances; or 23
178	178	(B) In any other way to cause to be received any record or notice within the time it would 24
179	179	have arrived if properly sent. To cause the record or notification to be received within the time it 25
180	180	would have been received if properly sent under subsection (b)(36)(A) of this section. 26
181	181	(37) “Signed” includes using any symbol executed or adopted with present intention to 27
182	182	adopt or accept a writing. "Sign" means, with present intent to authenticate or adopt a record: 28
183	183	(i) Execute or adopt a tangible symbol; or 29
184	184	(ii) Attach to or logically associate with the record an electronic symbol, sound, or process. 30
185	185	"Signed", "signing". And "signature" have corresponding meanings. 31
186	186	(38) “State” means a State of the United States, the District of Columbia, Puerto Rico, the 32
187	187	United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the 33
188	188	United States. 34
189	189
190	190
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192	192	(39) “Surety” includes a guarantor or other secondary obligor. 1
193	193	(40) “Term” means a portion of an agreement that relates to a particular matter. 2
194	194	(41) “Unauthorized signature” means a signature made without actual, implied, or apparent 3
195	195	authority. The term includes a forgery. 4
196	196	(42) “Warehouse receipt” means a document of title issued by a person engaged in the 5
197	197	business of storing goods for hire. The term does not include a bill of lading. 6
198	198	(43) “Writing” includes printing, typewriting, or any other intentional reduction to tangible 7
199	199	form. “Written” has a corresponding meaning. 8
200	200	6A-1-204. Value. 9
201	201	Except as otherwise provided in chapters 3, 4, and 5, and 12 of this title, a person gives 10
202	202	value for rights if the person acquires them: 11
203	203	(1) In return for a binding commitment to extend credit or for the extension of immediately 12
204	204	available credit, whether or not drawn upon and whether or not a charge-back is provided for in the 13
205	205	event of difficulties in collection; 14
206	206	(2) As security for, or in total or partial satisfaction of, a preexisting claim; 15
207	207	(3) By accepting delivery under a preexisting contract for purchase; or 16
208	208	(4) In return for any consideration sufficient to support a simple contract. 17
209	209	6A-1-301. Territorial applicability — Parties’ power to choose applicable law. 18
210	210	(a) Except as otherwise provided in this section, when a transaction bears a reasonable 19
211	211	relation to this state and also to another state or nation, the parties may agree that the law either of 20
212	212	this state or of such other state or nation shall govern their rights and duties. 21
213	213	(b) In the absence of an agreement effective under subsection (a), and except as provided 22
214	214	in subsection (c), the Uniform Commercial Code applies to transactions bearing an appropriate 23
215	215	relation to this state. 24
216	216	(c) If one of the following provisions of title 6A specifies the applicable law, that provision 25
217	217	governs and a contrary agreement is effective only to the extent permitted by the law so specified: 26
218	218	(1) Section 6A-2-402; 27
219	219	(2) Sections 6A-2.1-105 and 6A-2.1-106; 28
220	220	(3) Section 6A-4-102; 29
221	221	(4) Section 6A-4.1-507; 30
222	222	(5) Section 6A-5-116; 31
223	223	(6) [RESERVED] 32
224	224	(7) Section 6A-8-110; 33
225	225	(8) Sections 6A-9-301 through 6A-9-307. 34
226	226
227	227
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229	229	(9) Section 6A-12-107. 1
230	230	6A-1-306. Waiver or renunciation of claim or right after breach. 2
231	231	A claim or right arising out of an alleged breach may be discharged in whole or in part 3
232	232	without consideration by agreement of the aggrieved party in an authenticated a signed record. 4
233	233	SECTION 2. Sections 6A-2-102, 6A-2-106, 6A-2-201, 6A-2-202, 6A-2-203, 6A-2-205 5
234	234	and 6A-2-209 of the General Laws in Chapter 6A-2 entitled "Sales" are hereby amended to read as 6
235	235	follows: 7
236	236	6A-2-102. Scope — Certain security and other transactions excluded from this 8
237	237	chapter. 9
238	238	Unless the context otherwise requires, this chapter applies to transactions in goods; it does 10
239	239	not apply to any transaction which, although in the form of an unconditional contract to sell or 11
240	240	present sale, is intended to operate only as a security transaction, nor does this chapter impair or 12
241	241	repeal any statute regulating sales to consumers, farmers, or other specified classes of buyers. 13
242	242	(1) Unless the context otherwise requires, and except as provided in subsection (3) of this 14
243	243	section, this chapter applies to transactions in goods and, in the case of a hybrid transaction, it 15
244	244	applies to the extent provided in subsection (2) of this section. 16
245	245	(2) In a hybrid transaction: 17
246	246	(a) If the sale-of-goods aspects do not predominate, only the provisions of this chapter 18
247	247	which relate primarily to the sale-of-goods aspects of the transaction apply, and the provisions that 19
248	248	relate primarily to the transaction as a whole do not apply. 20
249	249	(b) If the sale-of-goods aspects predominate, this chapter applies to the transaction but does 21
250	250	not preclude application in appropriate circumstances of other law to aspects of the transaction 22
251	251	which do not relate to the sale of goods. 23
252	252	(3) This chapter does not: 24
253	253	(a) Apply to a transaction that, even though in the form of an unconditional contract to sell 25
254	254	or present sale, operates only to create a security interest; or 26
255	255	(b) Impair or repeal a statute regulating sales to consumers, farmers, or other specified 27
256	256	classes of buyers. 28
257	257	6A-2-106. Definitions — “Contract” — “Agreement” — “Contract for sale” — “Sale” 29
258	258	— “Present sale” — “Conforming” to contract — “Termination” — “Cancellation”. 30
259	259	Definitions — “Contract” — “Agreement” — “Contract for sale” — “Sale” — “Present sale” 31
260	260	— “Conforming” to contract — “Termination” — “Cancellation” – “Hybrid Transaction”. 32
261	261	(1) In this chapter unless the context otherwise requires “contract” and “agreement” are 33
262	262	limited to those relating to the present or future sale of goods. “Contract for sale” includes both a 34
263	263
264	264
265	265	LC001903 - Page 8 of 113
266	266	present sale of goods and a contract to sell goods at a future time. A “sale” consists in the passing 1
267	267	of title from the seller to the buyer for a price (§ 6A-2-401). A “present sale” means a sale which 2
268	268	is accomplished by the making of the contract. 3
269	269	(2) Goods or conduct including any part of a performance are “conforming” or conform to 4
270	270	the contract when they are in accordance with the obligations under the contract. 5
271	271	(3) “Termination” occurs when either party pursuant to a power created by agreement or 6
272	272	law puts an end to the contract otherwise than for its breach. On “termination” all obligations which 7
273	273	are still executory on both sides are discharged but any right based on prior breach or performance 8
274	274	survives. 9
275	275	(4) “Cancellation” occurs when either party puts an end to the contract for breach by the 10
276	276	other and its effect is the same as that of “termination” except that the cancelling party also retains 11
277	277	any remedy for breach of the whole contract or any unperformed balance. 12
278	278	(5) “Hybrid transaction” means a single transaction involving a sale of goods and: 13
279	279	(i) The provision of services; 14
280	280	(ii) A lease of other goods; or 15
281	281	(iii) A sale, lease, or license of property other than goods. 16
282	282	6A-2-201. Formal requirements — Statute of frauds. 17
283	283	(1) Except as otherwise provided in this section, a contract for the sale of goods for the 18
284	284	price of five hundred dollars ($500) or more is not enforceable by way of action or defense unless 19
285	285	there is some writing a record sufficient to indicate that a contract for sale has been made between 20
286	286	the parties and signed by the party against whom enforcement is sought or by his or her the party's 21
287	287	authorized agent or broker. A writing record is not insufficient because it omits or incorrectly states 22
288	288	a term agreed upon but the contract is not enforceable under this paragraph subsection beyond the 23
289	289	quantity of goods shown in such writing the record. 24
290	290	(2) Between merchants if within a reasonable time a writing record in confirmation of the 25
291	291	contract and sufficient against the sender is received and the party receiving it has reason to know 26
292	292	its contents, it satisfies the requirements of subsection (1) against such the party unless written 27
293	293	notice in a record of objection to its contents is given within ten (10) days after it is received. 28
294	294	(3) A contract which does not satisfy the requirements of subsection (1) but which is valid 29
295	295	in other respects is enforceable, 30
296	296	(a) If the goods are to be specially manufactured for the buyer and are not suitable for sale 31
297	297	to others in the ordinary course of the seller’s business and the seller, before notice of repudiation 32
298	298	is received and under circumstances which reasonably indicate that the goods are for the buyer, has 33
299	299	made either a substantial beginning of their manufacture or commitments for their procurement; or 34
300	300
301	301
302	302	LC001903 - Page 9 of 113
303	303	(b) If the party against whom enforcement is sought admits in his or her pleading, testimony 1
304	304	or otherwise in court that a contract for sale was made, but the contract is not enforceable under 2
305	305	this provision beyond the quantity of goods admitted; or 3
306	306	(c) With respect to goods for which payment has been made and accepted or which have 4
307	307	been received and accepted (§ 6A-2-606). 5
308	308	6A-2-202. Final written expression — Parol or extrinsic evidence. 6
309	309	Terms with respect to which the confirmatory memoranda of the parties agree or which are 7
310	310	otherwise set forth in a writing record intended by the parties as a final expression of their 8
311	311	agreement with respect to such terms as are included therein may not be contradicted by evidence 9
312	312	of any prior agreement or of a contemporaneous oral agreement but may be explained or 10
313	313	supplemented, 11
314	314	(a) By course of performance, course of dealing, or usage of trade (§ 6A-1-303); and 12
315	315	(b) By evidence of consistent additional terms unless the court finds the writing record to 13
316	316	have been intended also as a complete and exclusive statement of the terms of the agreement. 14
317	317	6A-2-203. Seals inoperative. 15
318	318	The affixing of a seal to a writing record evidencing a contract for sale or an offer to buy 16
319	319	or sell goods does not constitute the writing record a sealed instrument and the law with respect to 17
320	320	sealed instruments does not apply to such a contract or offer. 18
321	321	6A-2-205. Firm offers. 19
322	322	An offer by a merchant to buy or sell goods in a signed writing record which by its terms 20
323	323	gives assurance that it will be held open is not revocable, for lack of consideration, during the time 21
324	324	stated, or if no time is stated for a reasonable time, but in no event may such period of irrevocability 22
325	325	exceed three (3) months; but any such term of assurance on a form supplied by the offeree must be 23
326	326	separately signed by the offeror. 24
327	327	6A-2-209. Modification, rescission, and waiver. 25
328	328	(1) An agreement modifying a contract within this chapter needs no consideration to be 26
329	329	binding. 27
330	330	(2) A signed agreement which excludes modification or rescission except by a signed 28
331	331	writing or other signed record cannot be otherwise modified or rescinded, but except as between 29
332	332	merchants such a requirement on a form supplied by the merchant must be separately signed by the 30
333	333	other party. 31
334	334	(3) The requirements of the statute of frauds section of this chapter (§ 6A-2-201) must be 32
335	335	satisfied if the contract as modified is within its provisions. 33
336	336	(4) Although an attempt at modification or rescission does not satisfy the requirements of 34
337	337
338	338
339	339	LC001903 - Page 10 of 113
340	340	subsection (2) or (3) it can operate as a waiver. 1
341	341	(5) A party who has made a waiver affecting an executory portion of the contract may 2
342	342	retract the waiver by reasonable notification received by the other party that strict performance will 3
343	343	be required of any term waived, unless the retraction would be unjust in view of a material change 4
344	344	of position in reliance on the waiver. 5
345	345	SECTION 3. Sections 6A- 2.1-102, 6A-2.1-103, 6A-2.1-107, 6A-2.1-201, 6A-2.1-202, 6
346	346	6A-2.1-203, 6A-2.1-205 and 6A-2.1-208 of the General Laws in Chapter 6A-2.1 entitled "Leases" 7
347	347	are hereby amended to read as follows: 8
348	348	6A-2.1-102. Scope. 9
349	349	(1) This chapter applies to any transaction, regardless of form, that creates a lease and, in 10
350	350	the case of a hybrid lease, it applies to the extent provided in subsection (b) of this section. 11
351	351	(2) In a hybrid lease; 12
352	352	(a) If the lease-of goods aspects do not predominate; 13
353	353	(i) Only the provisions of this chapter which relate primarily to the lease-of-goods aspects 14
354	354	of the transaction apply, and the provisions that relate primarily to the transaction as a whole do 15
355	355	not apply; 16
356	356	(ii) Section 6A-2.1-209 applies if the lease is a finance lease; and 17
357	357	(iii) Section 6A-2.1-407 applies to the promises of the of the lessee in a finance lease to the 18
358	358	extent the promises are consideration for the right to possession and use of the leased goods. 19
359	359	(b) If the lease-of-goods aspects predominate, this chapter applies to the transaction, but 20
360	360	does not preclude application in appropriate circumstances of other law to aspects of the lease 21
361	361	which do not relate to the lease of goods. 22
362	362	6A-2.1-103. Definitions and index of definitions. 23
363	363	(1) In this chapter unless the context otherwise requires: 24
364	364	(a) “Buyer in ordinary course of business” means a person who in good faith and without 25
365	365	knowledge that the sale to him or her is in violation of the ownership rights or security interest or 26
366	366	leasehold interest of a third party in the goods buys in ordinary course from a person in the business 27
367	367	of selling goods of that kind but does not include a pawnbroker. “Buying” may be for cash or by 28
368	368	exchange of other property or on secured or unsecured credit and includes acquiring goods or 29
369	369	documents of title under a preexisting contract for sale but does not include a transfer in bulk or as 30
370	370	security for or in total or partial satisfaction of a money debt. 31
371	371	(b) “Cancellation” occurs when either party puts an end to the lease contract for default by 32
372	372	the other party. 33
373	373	(c) “Commercial unit” means such a unit of goods as by commercial usage is a single whole 34
374	374
375	375
376	376	LC001903 - Page 11 of 113
377	377	for purposes of lease and division of which materially impairs its character or value on the market 1
378	378	or in use. A commercial unit may be a single chapter, as a machine, or a set of chapters, as a suite 2
379	379	of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in 3
380	380	use or in the relevant market as a single whole. 4
381	381	(d) “Conforming” goods or performance under a lease contract means goods or 5
382	382	performance that are in accordance with the obligations under the lease contract. 6
383	383	(e) “Consumer lease” means a lease that a lessor regularly engaged in the business of 7
384	384	leasing or selling makes to a lessee who is an individual and who takes under the lease primarily 8
385	385	for a personal, family, or household purpose. 9
386	386	(f) “Fault” means wrongful act, omission, breach, or default. 10
387	387	(g) “Finance lease” means a lease with respect to which: 11
388	388	(i) The lessor does not select, manufacture, or supply the goods; 12
389	389	(ii) The lessor acquires the goods or the right to possession and use of the goods in 13
390	390	connection with the lease; and 14
391	391	(iii) One of the following occurs: 15
392	392	(A) The lessee receives a copy of the contract by which the lessor acquired the goods or 16
393	393	the right to possession and use of the goods before signing the lease contract; 17
394	394	(B) The lessee’s approval of the contract by which the lessor acquired the goods or the 18
395	395	right to possession and use of the goods is a condition to effectiveness of the lease contract; 19
396	396	(C) The lessee, before signing the lease contract, receives an accurate and complete 20
397	397	statement designating the promises and warranties, and any disclaimers of warranties, limitations 21
398	398	or modifications of remedies, or liquidated damages, including those of a third party, such as the 22
399	399	manufacturer of the goods, provided to the lessor by the person supplying the goods in connection 23
400	400	with or as part of the contract by which the lessor acquired the goods or the right to possession and 24
401	401	use of the goods; or 25
402	402	(D) If the lease is not a consumer lease, the lessor, before the lessee signs the lease contract, 26
403	403	informs the lessee in writing (a) of the identity of the person supplying the goods to the lessor, 27
404	404	unless the lessee has selected that person and directed the lessor to acquire the goods or the right to 28
405	405	possession and use of the goods from that person, (b) that the lessee is entitled under this chapter 29
406	406	to the promises and warranties, including those of any third party, provided to the lessor by the 30
407	407	person supplying the goods in connection with or as part of the contract by which the lessor 31
408	408	acquired the goods or the right to possession and use of the goods, and (c) that the lessee may 32
409	409	communicate with the person supplying the goods to the lessor and receive an accurate and 33
410	410	complete statement of those promises and warranties, including any disclaimers and limitations of 34
411	411
412	412
413	413	LC001903 - Page 12 of 113
414	414	them or of remedies. 1
415	415	(h) “Goods” means all things that are movable at the time of identification to the lease 2
416	416	contract, or are fixtures (§ 6A-2.1-309), but the term does not include money, documents, 3
417	417	instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and 4
418	418	gas, before extraction. The term also includes the unborn young of animals. 5
419	419	(h.1) "Hybrid lease" means a single transaction involving a lease of goods and; 6
420	420	(1) The provision of services; 7
421	421	(2) A sale of other goods; or 8
422	422	(3) A sale, lease, or license of property other than goods. 9
423	423	(i) “Installment lease contract” means a lease contract that authorizes or requires the 10
424	424	delivery of goods in separate lots to be separately accepted, even though the lease contract contains 11
425	425	a clause “each delivery is a separate lease” or its equivalent. 12
426	426	(j) “Lease” means a transfer of the right to possession and use of goods for a term in return 13
427	427	for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation 14
428	428	of a security interest is not a lease. Unless the context clearly indicates otherwise, the term includes 15
429	429	a sublease. 16
430	430	(k) “Lease agreement” means the bargain, with respect to the lease, of the lessor and the 17
431	431	lessee in fact as found in their language or by implication from other circumstances including 18
432	432	course of dealing or usage of trade or course of performance as provided in this chapter. Unless the 19
433	433	context clearly indicates otherwise, the term includes a sublease agreement. 20
434	434	(l) “Lease contract” means the total legal obligation that results from the lease agreement 21
435	435	as affected by this chapter and any other applicable rules of law. Unless the context clearly indicates 22
436	436	otherwise, the term includes a sublease contract. 23
437	437	(m) “Leasehold interest” means the interest of the lessor or the lessee under a lease contract. 24
438	438	(n) “Lessee” means a person who acquires the right to possession and use of goods under 25
439	439	a lease. Unless the context clearly indicates otherwise, the term includes a sublessee. 26
440	440	(o) “Lessee in ordinary course of business” means a person who in good faith and without 27
441	441	knowledge that the lease to him or her is in violation of the ownership rights or security interest or 28
442	442	leasehold interest of a third party in the goods leases in ordinary course from a person in the 29
443	443	business of selling or leasing goods of that kind but does not include a pawnbroker. “Leasing” may 30
444	444	be for cash or by exchange of other property or on secured or unsecured credit and includes 31
445	445	acquiring goods or documents of title under a preexisting lease contract but does not include a 32
446	446	transfer in bulk or as security for or in total or partial satisfaction of a money debt. 33
447	447	(p) “Lessor” means a person who transfers the right to possession and use of goods under 34
448	448
449	449
450	450	LC001903 - Page 13 of 113
451	451	a lease. Unless the context clearly indicates otherwise, the term includes a sublessor. 1
452	452	(q) “Lessor’s residual interest” means the lessor’s interest in the goods after expiration, 2
453	453	termination, or cancellation of the lease contract. 3
454	454	(r) “Lien” means a charge against or interest in goods to secure payment of a debt or 4
455	455	performance of an obligation, but the term does not include a security interest. 5
456	456	(s) “Lot” means a parcel or a single chapter that is the subject matter of a separate lease or 6
457	457	delivery, whether or not it is sufficient to perform the lease contract. 7
458	458	(t) “Merchant lessee” means a lessee that is a merchant with respect to goods of the kind 8
459	459	subject to the lease. 9
460	460	(u) “Present value” means the amount as of a date certain of one or more sums payable in 10
461	461	the future, discounted to the date certain. The discount is determined by the interest rate specified 11
462	462	by the parties if the rate was not manifestly unreasonable at the time the transaction was entered 12
463	463	into; otherwise, the discount is determined by a commercially reasonable rate that takes into 13
464	464	account the facts and circumstances of each case at the time the transaction was entered into. 14
465	465	(v) “Purchase” includes taking by sale, lease, mortgage, security interest, pledge, gift, or 15
466	466	any other voluntary transaction creating an interest in goods. 16
467	467	(w) “Sublease” means a lease of goods the right to possession and use of which was 17
468	468	acquired by the lessor as a lessee under an existing lease. 18
469	469	(x) “Supplier” means a person from whom a lessor buys or leases goods to be leased under 19
470	470	a finance lease. 20
471	471	(y) “Supply contract” means a contract under which a lessor buys or leases goods to be 21
472	472	leased. 22
473	473	(z) “Termination” occurs when either party pursuant to a power created by agreement or 23
474	474	law puts an end to the lease contract otherwise than for default. 24
475	475	(2) Other definitions applying to this chapter and the sections in which they appear are: 25
476	476	“Accessions”. § 6A-2.1-310(1). 26
477	477	“Construction mortgage”. § 6A-2.1-309(1)(d). 27
478	478	“Encumbrance”. § 6A-2.1-309(1)(e). 28
479	479	“Fixtures”. § 6A-2.1-309(1)(a). 29
480	480	“Fixture filing”. § 6A-2.1-309(1)(b). 30
481	481	“Purchase money lease”. § 6A-2.1-309(1)(c). 31
482	482	(3) The following definitions in other chapters apply to this Chapter: 32
483	483	“Account”. § 6A-9-102(a)(2). 33
484	484	“Between merchants”. § 6A-2-104(3). 34
485	485
486	486
487	487	LC001903 - Page 14 of 113
488	488	“Buyer”. § 6A-2-103(1)(a). 1
489	489	“Chattel paper”. § 6A-9-102(a)(11). 2
490	490	“Consumer goods”. § 6A-9-102(a)(23). 3
491	491	“Document”. § 6A-9-102(a)(30). 4
492	492	“Entrusting”. § 6A-2-403(3). 5
493	493	“General intangibles”. § 6A-9-102(a)(42). 6
494	494	“Good faith”. § 6A-2-103(1)(b). 7
495	495	“Instrument”. § 6A-9-102(a)(47). 8
496	496	“Merchant”. § 6A-2-104(1). 9
497	497	“Mortgage”. § 6A-9-102(a)(55). 10
498	498	“Pursuant to commitment”. § 6A-9-102(a)(69). 11
499	499	“Receipt”. § 6A-2-103(1)(c). 12
500	500	“Sale”. § 6A-2-106(1). 13
501	501	“Sale on approval”. § 6A-2-326. 14
502	502	“Sale or return”. § 6A-2-326. 15
503	503	“Seller”. § 6A-2-103(1)(d). 16
504	504	(4) In addition, chapter 1 of this title contains general definitions and principles of 17
505	505	construction and interpretation applicable throughout this chapter. 18
506	506	6A-2.1-107. Waiver or renunciation of claim or right after default. 19
507	507	Any claim or right arising out of an alleged default or breach of warranty may be discharged 20
508	508	in whole or in part without consideration by a written waiver or renunciation signed and in a signed 21
509	509	record delivered by the aggrieved party. 22
510	510	6A-2.1-201. Statute of frauds. 23
511	511	(1) A lease contract is not enforceable by way of action or defense unless: 24
512	512	(a) The total payments to be made under the lease contract, excluding payments for options 25
513	513	to renew or buy, are less than $ 1,000; or 26
514	514	(b) There is a writing record, signed by the party against whom enforcement is sought or 27
515	515	by that party’s authorized agent, sufficient to indicate that a lease contract has been made between 28
516	516	the parties and to describe the goods leased and the lease term. 29
517	517	(2) Any description of leased goods or of the lease term is sufficient and satisfies subsection 30
518	518	(1)(b), whether or not it is specific, if it reasonably identifies what is described. 31
519	519	(3) A writing record is not insufficient because it omits or incorrectly states a term agreed 32
520	520	upon, but the lease contract is not enforceable under subsection (1)(b) beyond the lease term and 33
521	521	the quantity of goods shown in the writing record. 34
522	522
523	523
524	524	LC001903 - Page 15 of 113
525	525	(4) A lease contract that does not satisfy the requirements of subsection (1), but which is 1
526	526	valid in other respects, is enforceable: 2
527	527	(a) If the goods are to be specially manufactured or obtained for the lessee and are not 3
528	528	suitable for lease or sale to others in the ordinary course of the lessor’s business, and the lessor, 4
529	529	before notice of repudiation is received and under circumstances that reasonably indicate that the 5
530	530	goods are for the lessee, has made either a substantial beginning of their manufacture or 6
531	531	commitments for their procurement; 7
532	532	(b) If the party against whom enforcement is sought admits in that party’s pleading, 8
533	533	testimony or otherwise in court that a lease contract was made, but the lease contract is not 9
534	534	enforceable under this provision beyond the quantity of goods admitted; or 10
535	535	(c) With respect to goods that have been received and accepted by the lessee. 11
536	536	(5) The lease term under a lease contract referred to in subsection (4) is: 12
537	537	(a) If there is a writing record signed by the party against whom enforcement is sought or 13
538	538	by that party’s authorized agent specifying the lease term, the term so specified; 14
539	539	(b) If the party against whom enforcement is sought admits in that party’s pleading, 15
540	540	testimony, or otherwise in court a lease term, the term so admitted; or 16
541	541	(c) A reasonable lease term. 17
542	542	6A-2.1-202. Final written expression: parol or extrinsic evidence. Final expression: 18
543	543	Parol or extrinsic evidence. 19
544	544	Terms with respect to which the confirmatory memoranda of the parties agree or which are 20
545	545	otherwise set forth in a writing record intended by the parties as a final expression of their 21
546	546	agreement with respect to such terms as are included therein may not be contradicted by evidence 22
547	547	of any prior agreement or of a contemporaneous oral agreement but may be explained or 23
548	548	supplemented: 24
549	549	(a) By course of dealing or usage of trade or by course of performance; and 25
550	550	(b) By evidence of consistent additional terms unless the court finds the writing record to 26
551	551	have been intended also as a complete and exclusive statement of the terms of the agreement. 27
552	552	6A-2.1-203. Seals inoperative. 28
553	553	The affixing of a seal to a writing record evidencing a lease contract or an offer to enter 29
554	554	into a lease contract does not render the writing record a sealed instrument, and the law with respect 30
555	555	to sealed instruments does not apply to the lease contract or offer. 31
556	556	6A-2.1-205. Firm offers. 32
557	557	An offer by a merchant to lease goods to or from another person in a signed writing record 33
558	558	that by its terms gives assurance it will be held open is not revocable, for lack of consideration, 34
559	559
560	560
561	561	LC001903 - Page 16 of 113
562	562	during the time stated or, if no time is stated, for a reasonable time, but in no event may the period 1
563	563	of irrevocability exceed 3 months. Any such term of assurance on a form supplied by the offeree 2
564	564	must be separately signed by the offeror. 3
565	565	6A-2.1-208. Modification, rescission, and waiver. 4
566	566	(1) An agreement modifying a lease contract needs no consideration to be binding. 5
567	567	(2) A signed lease agreement that excludes modification or rescission except by a signed 6
568	568	writing record may not be otherwise modified or rescinded, but, except as between merchants, such 7
569	569	a requirement on a form supplied by a merchant must be separately signed by the other party. 8
570	570	(3) Although an attempt at modification or rescission does not satisfy the requirements of 9
571	571	subsection (2), it may operate as a waiver. 10
572	572	(4) A party who has made a waiver affecting an executory portion of a lease contract may 11
573	573	retract the waiver by reasonable notification received by the other party that strict performance will 12
574	574	be required of any term waived, unless the retraction would be unjust in view of a material change 13
575	575	of position in reliance on the waiver. 14
576	576	SECTION 4. Sections 6A-3-104, 6A-3-105, 6A-3-401 and 6A-3-604 of the General Laws 15
577	577	in Chapter 6A-3 entitled "Negotiable Instruments" are hereby amended to read as follows: 16
578	578	6A-3-104. Negotiable instrument. 17
579	579	(a) Except as provided in subsections (c) and (d), “negotiable instrument” means an 18
580	580	unconditional promise or order to pay a fixed amount of money, with or without interest or other 19
581	581	charges described in the promise or order, if it: 20
582	582	(1) Is payable to bearer or to order at the time it is issued or first comes into possession of 21
583	583	a holder; 22
584	584	(2) Is payable on demand or at a definite time; and 23
585	585	(3) Does not state any other undertaking or instruction by the person promising or ordering 24
586	586	payment to do any act in addition to the payment of money, but the promise or order may contain 25
587	587	(i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an 26
588	588	authorization or power to the holder to confess judgment or realize on or dispose of collateral, or 27
589	589	(iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor (iv) a 28
590	590	term that specifies the law that governs the promise or order, or (v) an undertaking to resolve, in a 29
591	591	specified forum, a dispute concerning the promise or order. 30
592	592	(b) “Instrument” means a negotiable instrument. 31
593	593	(c) An order that meets all of the requirements of subsection (a), except paragraph (1), and 32
594	594	otherwise falls within the definition of “check” in subsection (f) is a negotiable instrument and a 33
595	595	check. 34
596	596
597	597
598	598	LC001903 - Page 17 of 113
599	599	(d) A promise or order other than a check is not an instrument if, at the time it is issued or 1
600	600	first comes into possession of a holder, it contains a conspicuous statement, however expressed, to 2
601	601	the effect that the promise or order is not negotiable or is not an instrument governed by this chapter. 3
602	602	(e) An instrument is a “note” if it is a promise and is a “draft” if it is an order. If an 4
603	603	instrument falls within the definition of both “note” and “draft,” a person entitled to enforce the 5
604	604	instrument may treat it as either. 6
605	605	(f) “Check” means (i) a draft, other than a documentary draft, payable on demand and 7
606	606	drawn on a bank or (ii) a cashier’s check or teller’s check. An instrument may be a check even 8
607	607	though it is described on its face by another term, such as “money order.” 9
608	608	(g) “Cashier’s check” means a draft with respect to which the drawer and drawee are the 10
609	609	same bank or branches of the same bank. 11
610	610	(h) “Teller’s check” means a draft drawn by a bank (i) on another bank, or (ii) payable at 12
611	611	or through a bank. 13
612	612	(i) “Traveler’s check” means an instrument that (i) is payable on demand, (ii) is drawn on 14
613	613	or payable at or through a bank, (iii) is designated by the term “traveler’s check” or by a 15
614	614	substantially similar term, and (iv) requires, as a condition to payment, a countersignature by a 16
615	615	person whose specimen signature appears on the instrument. 17
616	616	(j) “Certificate of deposit” means an instrument containing an acknowledgment by a bank 18
617	617	that a sum of money has been received by the bank and a promise by the bank to repay the sum of 19
618	618	money. A certificate of deposit is a note of the bank. 20
619	619	6A-3-105. Issue of instrument. 21
620	620	(a) “Issue” means: 22
621	621	the (1) The first delivery of an instrument by the maker or drawer, whether to a holder or 23
622	622	nonholder, for the purpose of giving rights on the instrument to any person.; or 24
623	623	(2) If agreed by the payee, the first transmission by the drawer to the payee of an image of 25
624	624	an item and information derived from the item that enables the depositary bank to collect the item 26
625	625	by transferring or presenting under federal law an electronic check. 27
626	626	(b) An unissued instrument, or an unissued incomplete instrument that is completed, is 28
627	627	binding on the maker or drawer, but nonissuance is a defense. An instrument that is conditionally 29
628	628	issued or is issued for a special purpose is binding on the maker or drawer, but failure of the 30
629	629	condition or special purpose to be fulfilled is a defense. 31
630	630	(c) “Issuer” applies to issued and unissued instruments and means a maker or drawer of an 32
631	631	instrument. 33
632	632	6A-3-401. Signature. 34
633	633
634	634
635	635	LC001903 - Page 18 of 113
636	636	(a) A person is not liable on an instrument unless (i) the person signed the instrument, or 1
637	637	(ii) the person is represented by an agent or representative who signed the instrument and the 2
638	638	signature is binding on the represented person under § 6A-3-402. 3
639	639	(b) A signature may be made (i) manually or by means of a device or machine, and (ii) by 4
640	640	the use of any name, including a trade or assumed name, or by a word, mark, or symbol executed 5
641	641	or adopted by a person with present intention to authenticate a writing. 6
642	642	6A-3-604. Discharge by cancellation or renunciation. 7
643	643	(a) A person entitled to enforce an instrument, with or without consideration, may 8
644	644	discharge the obligation of a party to pay the instrument (i) by an intentional voluntary act, such as 9
645	645	surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, 10
646	646	cancellation or striking out of the party’s signature, or the addition of words to the instrument 11
647	647	indicating discharge, or (ii) by agreeing not to sue or otherwise renouncing rights against the party 12
648	648	by a signed writing record. The obligation of a party to pay a check is not discharged solely by 13
649	649	destruction of the check in connection with a process in which information is extracted from the 14
650	650	check and an image of the check is made and, subsequently, the information and image are 15
651	651	transmitted for payment. 16
652	652	(b) Cancellation or striking out of an indorsement pursuant to subsection (a) does not affect 17
653	653	the status and rights of a party derived from the indorsement. 18
654	654	SECTION 5. Sections 6A-4.1-103, 6A-4.1-201, 6A-4.1-202, 6A-4.1-203, 6A-4.1-207, 6A-19
655	655	4.1-208, 6A-4.1-210, 6A-4.1-211 and 6A-4.1-305 of the General Laws in Chapter 6A-4.1 entitled 20
656	656	"Funds Transfers" are hereby amended to read as follows: 21
657	657	6A-4.1-103. Payment order — Definitions. 22
658	658	(a) In this chapter: 23
659	659	(1) “Payment order” means an instruction of a sender to a receiving bank, transmitted 24
660	660	orally, electronically, or in writing or in a record, to pay, or to cause another bank to pay, a fixed 25
661	661	or determinable amount of money to a beneficiary if: 26
662	662	(i) The instruction does not state a condition to payment to the beneficiary other than time 27
663	663	of payment; 28
664	664	(ii) The receiving bank is to be reimbursed by debiting an account of, or otherwise receiving 29
665	665	payment from, the sender; and 30
666	666	(iii) The instruction is transmitted by the sender directly to the receiving bank or to an 31
667	667	agent, funds-transfer system, or communication system for transmittal to the receiving bank. 32
668	668	(2) “Beneficiary” means the person to be paid by the beneficiary’s bank. 33
669	669	(3) “Beneficiary’s bank” means the bank identified in a payment order in which an account 34
670	670
671	671
672	672	LC001903 - Page 19 of 113
673	673	of the beneficiary is to be credited pursuant to the order or which otherwise is to make payment to 1
674	674	the beneficiary if the order does not provide for payment to an account. 2
675	675	(4) “Receiving bank” means the bank to which the sender’s instruction is addressed. 3
676	676	(5) “Sender” means the person giving the instruction to the receiving bank. 4
677	677	(b) If an instruction complying with subsection (a)(1) is to make more than one payment 5
678	678	to a beneficiary, the instruction is a separate payment order with respect to each payment. 6
679	679	(c) A payment order is issued when it is sent to the receiving bank. 7
680	680	6A-4.1-201. Security procedure. 8
681	681	“Security procedure” means a procedure established by agreement of a customer and a 9
682	682	receiving bank for the purpose of (i) verifying that a payment order or communication amending 10
683	683	or cancelling a payment order is that of the customer, or (ii) detecting error in the transmission or 11
684	684	the content of the payment order or communication. A security procedure may impose an obligation 12
685	685	on the receiving bank or the customer and may require the use of algorithms or other codes, 13
686	686	identifying words or, numbers, symbols, sounds, biometrics, encryption, callback procedures, or 14
687	687	similar security devices. Comparison of a signature on a payment order or communication with an 15
688	688	authorized specimen signature of the customer or requiring a payment order to be sent from a 16
689	689	known email address, IP address, or telephone number is not by itself a security procedure. 17
690	690	6A-4.1-202. Authorized and verified payment orders. 18
691	691	(a) A payment order received by the receiving bank is the authorized order of the person 19
692	692	identified as sender if that person authorized the order or is otherwise bound by it under the law of 20
693	693	agency. 21
694	694	(b) If a bank and its customer have agreed that the authenticity of payment orders issued to 22
695	695	the bank in the name of the customer as sender will be verified pursuant to a security procedure, a 23
696	696	payment order received by the receiving bank is effective as the order of the customer whether or 24
697	697	not authorized, if (i) the security procedure is a commercially reasonable method of providing 25
698	698	security against unauthorized payment orders, and (ii) the bank provides that it accepted the 26
699	699	payment order in good faith and in compliance with the bank's obligations under the security 27
700	700	procedure and any written agreement or instruction of the customer evidenced by a record 28
701	701	restricting acceptance of payment orders issued in the name of the customer. The bank is not 29
702	702	required to follow an instruction that violates a written an agreement with the customer, evidenced 30
703	703	by a record, or notice of which is not received at a time and in a manner affording the bank a 31
704	704	reasonable opportunity to act on it before the payment order is accepted. 32
705	705	(c) Commercial reasonableness of a security procedure is a question of law to be 33
706	706	determined by considering the wishes of the customer expressed to the bank, the circumstances of 34
707	707
708	708
709	709	LC001903 - Page 20 of 113
710	710	the customer known to the bank, including the mix, type, and frequency of payment orders normally 1
711	711	issued by the customer to the bank, alternative security procedures offered to the customer, and 2
712	712	security procedures in general use by customers and receiving banks similarly situated. A security 3
713	713	procedure is deemed to be commercially reasonable if (i) the security procedure was chosen by the 4
714	714	customer after the bank offered, and the customer refused, a security procedure that was 5
715	715	commercially reasonable for that customer, and (ii) the customer expressly agreed in writing a 6
716	716	record to be bound by any payment order, whether or not authorized, issued in its name and 7
717	717	accepted by the bank in compliance with the bank's obligations under the security procedure chosen 8
718	718	by the customer. 9
719	719	(d) The term “sender” in this chapter includes the customer in whose name a payment order 10
720	720	is issued if the order is the authorized order of the customer under subsection (a), or it is effective 11
721	721	as the order of the customer under subsection (b). 12
722	722	(e) This section applies to amendments and cancellations of payment orders to the same 13
723	723	extent it applies to payment orders. 14
724	724	(f) Except as provided in this section and in § 6A-4.1-203(a)(1), rights and obligations 15
725	725	arising under this section and § 6A-4.1-203 may not be varied by agreement. 16
726	726	6A-4.1-203. Unenforceability of certain verified payment orders. 17
727	727	(a) If an accepted payment order is not, under § 6A-4.1-202(a), an authorized order of a 18
728	728	customer identified as sender, but is effective as an order of the customer pursuant to § 6A-4.1-19
729	729	202(b), the following rules apply: 20
730	730	(1) By express written agreement evidenced by a record, the receiving bank may limit the 21
731	731	extent to which it is entitled to enforce or retain payment of the payment order. 22
732	732	(2) The receiving bank is not entitled to enforce or retain payment of the payment order if 23
733	733	the customer proves that the order was not caused, directly or indirectly, by a person (i) entrusted 24
734	734	at any time with duties to act for the customer with respect to payment orders or the security 25
735	735	procedure, or (ii) who obtained access to transmitting facilities of the customer or who obtained, 26
736	736	from a source controlled by the customer and without authority of the receiving bank, information 27
737	737	facilitating breach of the security procedures, regardless of how the information was obtained or 28
738	738	whether the customer was at fault. Information includes any access device, computer software, or 29
739	739	the like. 30
740	740	(b) This section applies to amendments of payment orders to the same extent it applies to 31
741	741	payment orders. 32
742	742	6A-4.1-207. Misdescription of beneficiary. 33
743	743	(a) Subject to subsection (b), if, in a payment order received by the beneficiary’s bank, the 34
744	744
745	745
746	746	LC001903 - Page 21 of 113
747	747	name, bank account number, or other identification of the beneficiary refers to a nonexistent or 1
748	748	unidentifiable person or account, no person has rights as a beneficiary of the order and acceptance 2
749	749	of the order cannot occur. 3
750	750	(b) If a payment order received by the beneficiary’s bank identifies the beneficiary both by 4
751	751	name and by an identifying or bank account number and the name and number identify different 5
752	752	persons, the following rules apply: 6
753	753	(1) Except as otherwise provided in subsection (c), if the beneficiary’s bank does not know 7
754	754	that the name and number refer to different persons, it may rely on the number as the proper 8
755	755	identification of the beneficiary of the order. The beneficiary’s bank need not determine whether 9
756	756	the name and number refer to the same person. 10
757	757	(2) If the beneficiary’s bank pays the person identified by name or knows that the name 11
758	758	and number identify different persons, no person has rights as beneficiary except the person paid 12
759	759	by the beneficiary’s bank if that person was entitled to receive payment from the originator of the 13
760	760	funds transfer. If no person has rights as beneficiary, acceptance of the order cannot occur. 14
761	761	(c) If (i) a payment order described in subsection (b) is accepted, (ii) the originator’s 15
762	762	payment order described the beneficiary inconsistently by name and number, and (iii) the 16
763	763	beneficiary’s bank pays the person identified by number as permitted by subsection (b)(1), the 17
764	764	following rules apply: 18
765	765	(1) If the originator is a bank, the originator is obliged to pay its order. 19
766	766	(2) If the originator is not a bank and proves that the person identified by number was not 20
767	767	entitled to receive payment from the originator, the originator is not obliged to pay its order unless 21
768	768	the originator’s bank proves that the originator, before acceptance of the originator’s order, had 22
769	769	notice that payment of a payment order issued by the originator might be made by the beneficiary’s 23
770	770	bank on the basis of an identifying or bank account number even if it identifies a person different 24
771	771	from the named beneficiary. Proof of notice may be made by any admissible evidence. The 25
772	772	originator’s bank satisfies the burden of proof if it proves that the originator, before the payment 26
773	773	order was accepted, signed a writing record stating the information to which the notice relates. 27
774	774	(d) In a case governed by subsection (b)(1), if the beneficiary’s bank rightfully pays the 28
775	775	person identified by number and that person was not entitled to receive payment from the 29
776	776	originator, the amount paid may be recovered from that person to the extent allowed by the law 30
777	777	governing mistake and restitution as follows: 31
778	778	(1) If the originator is obliged to pay its payment order as stated in subsection (c), the 32
779	779	originator has the right to recover. 33
780	780	(2) If the originator is not a bank and is not obliged to pay its payment order, the originator’s 34
781	781
782	782
783	783	LC001903 - Page 22 of 113
784	784	bank has the right to recover. 1
785	785	6A-4.1-208. Misdescription of intermediary bank or beneficiary’s bank. 2
786	786	(a) This subsection applies to a payment order identifying an intermediary bank or the 3
787	787	beneficiary’s bank only by an identifying number. 4
788	788	(1) The receiving bank may rely on the number as the proper identification of the 5
789	789	intermediary or beneficiary’s bank and need not determine whether the number identifies a bank. 6
790	790	(2) The sender is obliged to compensate the receiving bank for any loss and expenses 7
791	791	incurred by the receiving bank as a result of its reliance on the number in executing or attempting 8
792	792	to execute the order. 9
793	793	(b) This subsection applies to a payment order identifying an intermediary bank or the 10
794	794	beneficiary’s bank both by name and an identifying number if the name and number identify 11
795	795	different persons. 12
796	796	(1) If the sender is a bank, the receiving bank may rely on the number as the proper 13
797	797	identification of the intermediary or beneficiary’s bank if the receiving bank, when it executes the 14
798	798	sender’s order, does not know that the name and number identify different persons. The receiving 15
799	799	bank need not determine whether the name and number refer to the same person or whether the 16
800	800	number refers to a bank. The sender is obliged to compensate the receiving bank for any loss and 17
801	801	expenses incurred by the receiving bank as a result of its reliance on the number in executing or 18
802	802	attempting to execute the order. 19
803	803	(2) If the sender is not a bank and the receiving bank proves that the sender, before the 20
804	804	payment order was accepted, had notice that the receiving bank might rely on the number as the 21
805	805	proper identification of the intermediary or beneficiary’s bank even if it identifies a person different 22
806	806	from the bank identified by name, the rights and obligations of the sender and the receiving bank 23
807	807	are governed by subsection (b)(1), as though the sender were a bank. Proof of notice may be made 24
808	808	by any admissible evidence. The receiving bank satisfies the burden of proof if it proves that the 25
809	809	sender, before the payment order was accepted, signed a writing record stating the information to 26
810	810	which the notice relates. 27
811	811	(3) Regardless of whether the sender is a bank, the receiving bank may rely on the same as 28
812	812	the proper identification of the intermediary or beneficiary’s bank if the receiving bank, at the time 29
813	813	it executes the sender’s order, does not know that the name and number identify different persons. 30
814	814	The receiving bank need not determine whether the name and number refer to the same person. 31
815	815	(4) If the receiving bank knows that the name and number identify different persons, 32
816	816	reliance on either the name or the number in executing the sender’s payment order is a breach of 33
817	817	the obligation stated in § 6A-4.1-302(a)(1). 34
818	818
819	819
820	820	LC001903 - Page 23 of 113
821	821	6A-4.1-210. Rejection of payment order. 1
822	822	(a) A payment order is rejected by the receiving bank by a notice of rejection transmitted 2
823	823	to the sender orally, electronically, or in writing or in a record. A notice of rejection need not use 3
824	824	any particular words and is sufficient if it indicates that the receiving bank is rejecting the order or 4
825	825	will not execute or pay the order. Rejection is effective when the notice is given if transmission is 5
826	826	by a means that is reasonable in the circumstances. If notice of rejection is given by a means that 6
827	827	is not reasonable, rejection is effective when the notice is received. If an agreement of the sender 7
828	828	and receiving bank establishes the means to be used to reject a payment order, (i) any means 8
829	829	complying with the agreement is reasonable and (ii) any means not complying is not reasonable 9
830	830	unless no significant delay in receipt of the notice resulted from the use of the noncomplying means. 10
831	831	(b) This subsection applies if a receiving bank other than the beneficiary’s bank fails to 11
832	832	execute a payment order despite the existence on the execution date of a withdrawable credit 12
833	833	balance in an authorized account of the sender sufficient to cover the order. If the sender does not 13
834	834	receive notice of rejection of the order on the execution date and the authorized account of the 14
835	835	sender does not bear interest, the bank is obliged to pay interest to the sender on the amount of the 15
836	836	order for the number of days elapsing after the execution date to the earlier of the day the order is 16
837	837	canceled pursuant to § 6A-4.1-211(d) or the day the sender receives notice or learns that the order 17
838	838	was not executed, counting the final day of the period as an elapsed day. If the withdrawable credit 18
839	839	balance during that period falls below the amount of the order, the amount of interest is reduced 19
840	840	accordingly. 20
841	841	(c) If a receiving bank suspends payments, all unaccepted payment orders issued to it are 21
842	842	deemed rejected at the time the bank suspends payments. 22
843	843	(d) Acceptance of a payment order precludes a later rejection of the order. Rejection of a 23
844	844	payment order precludes a later acceptance of the order. 24
845	845	6A-4.1-211. Cancellation and amendment of payment order. 25
846	846	(a) A communication of the sender of a payment order cancelling or amending the order 26
847	847	may be transmitted to the receiving bank orally, electronically, or in writing or in a record. If a 27
848	848	security procedure is in effect between the sender and the receiving bank, the communication is not 28
849	849	effective to cancel or amend the order unless the communication is verified pursuant to the security 29
850	850	procedure or the bank agrees to the cancellation or amendment. 30
851	851	(b) Subject to subsection (a), a communication by the sender cancelling or amending a 31
852	852	payment order is effective to cancel or amend the order if notice of the communication is received 32
853	853	at a time and in a manner affording the receiving bank a reasonable opportunity to act on the 33
854	854	communication before the bank accepts the payment order. 34
855	855
856	856
857	857	LC001903 - Page 24 of 113
858	858	(c) After a payment order has been accepted, cancellation or amendment of the order is not 1
859	859	effective unless the receiving bank agrees or a funds transfer system rule allows cancellation or 2
860	860	amendment without agreement of the bank. 3
861	861	(1) With respect to a payment order accepted by a receiving bank other than the 4
862	862	beneficiary’s bank, cancellation or amendment is not effective unless a conforming cancellation or 5
863	863	amendment of the payment order issued by the receiving bank is also made. 6
864	864	(2) With respect to a payment order accepted by the beneficiary’s bank, cancellation or 7
865	865	amendment is not effective unless the order was issued in execution of an unauthorized payment 8
866	866	order, or because of a mistake by a sender in the funds transfer which resulted in the issuance of a 9
867	867	payment order (i) that is a duplicate of a payment order previously issued by the sender, (ii) that 10
868	868	orders payment to a beneficiary not entitled to receive payment from the originator, or (iii) that 11
869	869	orders payment in an amount greater than the amount the beneficiary was entitled to receive from 12
870	870	the originator. If the payment order is canceled or amended, the beneficiary’s bank is entitled to 13
871	871	recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law 14
872	872	governing mistake and restitution. 15
873	873	(d) An unaccepted payment order is canceled by operation of law at the close of the fifth 16
874	874	funds transfer business day of the receiving bank after the execution date or payment date of the 17
875	875	order. 18
876	876	(e) A canceled payment order cannot be accepted. If an accepted payment order is canceled, 19
877	877	the acceptance is nullified and no person has any right or obligation based on the acceptance. 20
878	878	Amendment of the payment order is deemed to be cancellation of the original order at the time of 21
879	879	amendment and issue of a new payment order in the amended form at the same time. 22
880	880	(f) Unless otherwise provided in an agreement of the parties or in a funds transfer system 23
881	881	rule, if the receiving bank, after accepting a payment order, agrees to cancellation or amendment 24
882	882	of the order by the sender or is bound by a funds transfer system rule allowing cancellation or 25
883	883	amendment without the bank’s agreement, the sender, whether or not cancellation or amendment 26
884	884	is effective, is liable to the bank for any loss and expenses, including reasonable attorney’s fees, 27
885	885	incurred by the bank as a result of the cancellation or amendment or attempted cancellation or 28
886	886	amendment. 29
887	887	(g) A payment order is not revoked by the death or legal incapacity of the sender unless 30
888	888	the receiving bank knows of the death or of an adjudication of incapacity by a court of competent 31
889	889	jurisdiction and has reasonable opportunity to act before acceptance of the order. 32
890	890	(h) A funds transfer system rule is not effective to the extent it conflicts with subsection 33
891	891	(c)(2). 34
892	892
893	893
894	894	LC001903 - Page 25 of 113
895	895	6A-4.1-305. Liability for late or improper execution or failure to execute payment 1
896	896	order. 2
897	897	(a) If a funds transfer is completed but execution of a payment order by the receiving bank 3
898	898	in breach of § 6A-4.1-302 results in delay in payment to the beneficiary, the bank is obliged to pay 4
899	899	interest to either the originator or the beneficiary of the funds transfer for the period of delay caused 5
900	900	by the improper execution. Except as provided in subsection (c), additional damages are not 6
901	901	recoverable. 7
902	902	(b) If execution of a payment order by a receiving bank in breach of § 6A-4.1-302 results 8
903	903	in (i) noncompletion of the funds transfer, (ii) failure to use an intermediary bank designated by the 9
904	904	originator, or (iii) issuance of a payment order that does not comply with the terms of the payment 10
905	905	order of the originator, the bank is liable to the originator for its expenses in the funds transfer and 11
906	906	for incidental expenses and interest losses, to the extent not covered by subsection (a), resulting 12
907	907	from the improper execution. Except as provided in subsection (c), additional damages are not 13
908	908	recoverable. 14
909	909	(c) In addition to the amounts payable under subsections (a) and (b), damages, including 15
910	910	consequential damages, are recoverable to the extent provided in an express written agreement of 16
911	911	the receiving bank evidenced by a record. 17
912	912	(d) If a receiving bank fails to execute a payment order it was obliged by express agreement 18
913	913	to execute, the receiving bank is liable to the sender for its expenses in the transaction and for 19
914	914	incidental expenses and interest losses resulting from the failure to execute. Additional damages, 20
915	915	including consequential damages, are recoverable to the extent provided in an express written 21
916	916	agreement of the receiving bank, evidenced by a record, but are not otherwise recoverable. 22
917	917	(e) Reasonable attorney’s fees are recoverable if demand for compensation under 23
918	918	subsection (a) or (b) is made and refused before an action is brought on the claim. If a claim is 24
919	919	made for breach of an agreement under subsection (d) and the agreement does not provide for 25
920	920	damages, reasonable attorney’s fees are recoverable if demand for compensation under subsection 26
921	921	(d) is made and refused before an action is brought on the claim. 27
922	922	(f) Except as stated in this section, the liability of a receiving bank under subsections (a) 28
923	923	and (b) may not be varied by agreement. 29
924	924	SECTION 6. Sections 6A-5-104 and 6A-5-116 of the General Laws in Chapter 6A-5 30
925	925	entitled "Letters of Credit" are hereby amended to read as follows: 31
926	926	6A-5-104. Formal requirements. 32
927	927	A letter of credit, confirmation, advice, transfer, amendment, or cancellation may be issued 33
928	928	in any form that is a signed record and is authenticated (1) by a signature or (2) in accordance with 34
929	929
930	930
931	931	LC001903 - Page 26 of 113
932	932	the agreement of the parties or the standard practice referred to in § 6A-5-108(e). 1
933	933	6A-5-116. Choice of law and forum. 2
934	934	(a) The liability of an issuer, nominated person, or adviser for action or omission is 3
935	935	governed by the law of the jurisdiction chosen by an agreement in the form of a record signed or 4
936	936	otherwise authenticated by the affected parties in the manner provided in § 6A-5-104 or by a 5
937	937	provision in the person’s letter of credit, confirmation, or other undertaking. The jurisdiction whose 6
938	938	law is chosen need not bear any relation to the transaction. 7
939	939	(b) Unless subsection (a) applies, the liability of an issuer, nominated person, or adviser 8
940	940	for action or omission is governed by the law of the jurisdiction in which the person is located. The 9
941	941	person is considered to be located at the address indicated in the person’s undertaking. If more than 10
942	942	one address is indicated, the person is considered to be located at the address from which the 11
943	943	person’s undertaking was issued. 12
944	944	(c) For the purpose of jurisdiction, choice of law, and recognition of interbranch letters of 13
945	945	credit, but not enforcement of a judgment, all branches of a bank are considered separate juridical 14
946	946	entities and a bank is considered to be located at the place where its relevant branch is considered 15
947	947	to be located under this subsection (d) of this section. 16
948	948	(d) A branch of a bank is considered to be located at the address indicated in the branch's 17
949	949	undertaking. If more than one address is indicated, the branch is considered to be located at the 18
950	950	address from which the undertaking was issued. 19
951	951	(c)(e) Except as otherwise provided in this subsection, the liability of an issuer, nominated 20
952	952	person, or adviser is governed by any rules of custom or practice, such as the Uniform Customs 21
953	953	and Practice for Documentary Credits, to which the letter of credit, confirmation, or other 22
954	954	undertaking is expressly made subject. If (1) this chapter would govern the liability of an issuer, 23
955	955	nominated person, or adviser under subsection (a) or (b), (2) the relevant undertaking incorporates 24
956	956	rules of custom or practice, and (3) there is conflict between this chapter and those rules as applied 25
957	957	to that undertaking, those rules govern except to the extent of any conflict with the nonvariable 26
958	958	provisions specified in § 6A-5-103(c). 27
959	959	(d)(f) If there is conflict between this chapter and chapters 3, 4, 4.1 or 9 of this title, this 28
960	960	chapter governs. 29
961	961	(e)(g) The forum for settling disputes arising out of an undertaking within this chapter may 30
962	962	be chosen in the manner and with the binding effect that governing law may be chosen in 31
963	963	accordance with subsection (a). 32
964	964	SECTION 7. Sections 6A-7-102 and 6A-7-106 of the General Laws in Chapter 6A-7 33
965	965	entitled "Documents of Title" are hereby amended to read as follows: 34
966	966
967	967
968	968	LC001903 - Page 27 of 113
969	969	6A-7-102. Definitions and index of definitions. 1
970	970	(a) In this chapter, unless the context otherwise requires: 2
971	971	(1) “Bailee” means a person that by a warehouse receipt, bill of lading, or other document 3
972	972	of title acknowledges possession of goods and contracts to deliver them. 4
973	973	(2) “Carrier” means a person that issues a bill of lading. 5
974	974	(3) “Consignee” means a person named in a bill of lading to which or to whose order the 6
975	975	bill promises delivery. 7
976	976	(4) “Consignor” means a person named in a bill of lading as the person from which the 8
977	977	goods have been received for shipment. 9
978	978	(5) “Delivery order” means a record that contains an order to deliver goods directed to a 10
979	979	warehouse, carrier, or other person that in the ordinary course of business issues warehouse receipts 11
980	980	or bills of lading. 12
981	981	(6) “Good faith” means honesty in fact and the observance of reasonable commercial 13
982	982	standards of fair dealing. 14
983	983	(7) “Goods” means all things that are treated as movable for the purposes of a contract for 15
984	984	storage or transportation. 16
985	985	(8) “Issuer” means a bailee that issues a document of title or, in the case of an unaccepted 17
986	986	delivery order, the person that orders the possessor of goods to deliver. The term includes a person 18
987	987	for which an agent or employee purports to act in issuing a document if the agent or employee has 19
988	988	real or apparent authority to issue documents, even if the issuer did not receive any goods, the goods 20
989	989	were misdescribed, or in any other respect the agent or employee violated the issuer’s instructions. 21
990	990	(9) “Person entitled under the document” means the holder, in the case of a negotiable 22
991	991	document of title, or the person to which delivery of the goods is to be made by the terms of, or 23
992	992	pursuant to instructions in a record under, a nonnegotiable document of title. 24
993	993	(10) “Record” means information that is inscribed on a tangible medium or that is stored 25
994	994	in an electronic or other medium and is retrievable in perceivable form. 26
995	995	(11) “Sign” means, with present intent to authenticate or adopt a record: 27
996	996	(A) To execute or adopt a tangible symbol; or 28
997	997	(B) To attach to or logically associate with the record an electronic sound, symbol, or 29
998	998	process. 30
999	999	(12) “Shipper” means a person that enters into a contract of transportation with a carrier. 31
1000	1000	(13) “Warehouse” means a person engaged in the business of storing goods for hire. 32
1001	1001	(b) Definitions in other chapters applying to this chapter and the sections in which they 33
1002	1002	appear are: 34
1003	1003
1004	1004
1005	1005	LC001903 - Page 28 of 113
1006	1006	(1) "Contract for sale," § 6A-2-106. 1
1007	1007	(2) "Lessee in the ordinary course of business," § 6A-2.1-103. 2
1008	1008	(3) "Receipt" of goods, § 6A-2-103. 3
1009	1009	(c) In addition, chapter 1 contains general definitions and principles of construction and 4
1010	1010	interpretation applicable throughout this chapter. 5
1011	1011	6A-7-106. Control of electronic document of title. 6
1012	1012	(a) A person has control of an electronic document of title if a system employed for 7
1013	1013	evidencing the transfer of interests in the electronic document reliably establishes that person as 8
1014	1014	the person to which the electronic document was issued or transferred. 9
1015	1015	(b) A system satisfies subsection (a), and a person is deemed to have has control of an 10
1016	1016	electronic document of title, if the document is created, stored, and assigned transferred in such a 11
1017	1017	manner that: 12
1018	1018	(1) A single authoritative copy of the document exists which is unique, identifiable, and, 13
1019	1019	except as otherwise provided in paragraphs (4), (5), and (6), unalterable; 14
1020	1020	(2) The authoritative copy identifies the person asserting control as: 15
1021	1021	(A) The person to which the document was issued; or 16
1022	1022	(B) If the authoritative copy indicates that the document has been transferred, the person 17
1023	1023	to which the document was most recently transferred; 18
1024	1024	(3) The authoritative copy is communicated to and maintained by the person asserting 19
1025	1025	control or its designated custodian; 20
1026	1026	(4) Copies or amendments that add or change an identified assignee transferee of the 21
1027	1027	authoritative copy can be made only with the consent of the person asserting control; 22
1028	1028	(5) Each copy of the authoritative copy and any copy of a copy is readily identifiable as a 23
1029	1029	copy that is not the authoritative copy; and 24
1030	1030	(6) Any amendment of the authoritative copy is readily identifiable as authorized or 25
1031	1031	unauthorized. 26
1032	1032	(c) A system satisfies subsection (a) of this section, and a person has control of an electronic 27
1033	1033	document of title, if an authoritative electronic copy of the document, a record attached to or 28
1034	1034	logically associated with the electronic copy, or a system in which the electronic copy is recorded: 29
1035	1035	(1) Enables the person readily to identify each electronic copy as either an authoritative 30
1036	1036	copy or a nonauthoritative copy; 31
1037	1037	(2) Enables the person readily to identify itself in any way, including by name, identifying 32
1038	1038	number, cryptographic key, office, or account number, as the person to which each authoritative 33
1039	1039	electronic copy was issued or transferred; and 34
1040	1040
1041	1041
1042	1042	LC001903 - Page 29 of 113
1043	1043	(3) Gives the person exclusive power, subject to subsection (d) of this section, to: 1
1044	1044	(i) Prevent others from adding or changing the person to which each authoritative electronic 2
1045	1045	copy has been issued or transferred; and 3
1046	1046	(ii) Transfer control of each authoritative electronic copy. 4
1047	1047	(d) Subject to subsection (e) of this section, a power is exclusive under subsections (c)(3)(i) 5
1048	1048	and (ii) of this section even if: 6
1049	1049	(1) The authoritative electronic copy, a record attached to or logically associated with the 7
1050	1050	authoritative electronic copy, or a system in which the authoritative electronic copy is recorded 8
1051	1051	limits the use of the document of title or has a protocol that is programmed to cause a change, 9
1052	1052	including a transfer or loss of control; or 10
1053	1053	(2) The power is shared with another person. 11
1054	1054	(e) A power of a person is not shared with another person under subsection (d)(2) of this 12
1055	1055	section and the person’s power is not exclusive if: 13
1056	1056	(1) The person can exercise the power only if the power also is exercised by the other 14
1057	1057	person; and 15
1058	1058	(2) The other person: 16
1059	1059	(i) Can exercise the power without exercise of the power by the person; or 17
1060	1060	(ii) Is the transferor to the person of an interest in the document of title. 18
1061	1061	(f) If a person has the powers specified in subsection (c)(3)(i) and (ii) of this section, the 19
1062	1062	powers are presumed to be exclusive. 20
1063	1063	(g) A person has control of an electronic document of title if another person, other than the 21
1064	1064	transferor to the person of an interest in the document: 22
1065	1065	(1) Has control of the document and acknowledges that it has control on behalf of the 23
1066	1066	person; or 24
1067	1067	(2) Obtains control of the document after having acknowledged that it will obtain control 25
1068	1068	of the document on behalf of the person. 26
1069	1069	(h) A person that has control under this section is not required to acknowledge that it has 27
1070	1070	control on behalf of another person. 28
1071	1071	(i) If a person acknowledges that it has or will obtain control on behalf of another person, 29
1072	1072	unless the person otherwise agrees or law other than this chapter or chapter 6A-9 otherwise 30
1073	1073	provides, the person does not owe any duty to the other person and is not required to confirm the 31
1074	1074	acknowledgment to any other person. 32
1075	1075	SECTION 8. Sections 6A-8-102, 6A-8-103, 6A-8-106, 6A-8-110 and 6A-8-303 of the 33
1076	1076	General Laws in Chapter 6A-8 entitled "Investment Securities" are hereby amended to read as 34
1077	1077
1078	1078
1079	1079	LC001903 - Page 30 of 113
1080	1080	follows: 1
1081	1081	6A-8-102. Definitions. 2
1082	1082	(a) In this chapter: 3
1083	1083	(1) “Adverse claim” means a claim that a claimant has a property interest in a financial 4
1084	1084	asset and that it is a violation of the rights of the claimant for another person to hold, transfer, or 5
1085	1085	deal with the financial asset. 6
1086	1086	(2) “Bearer form,” as applied to a certificated security, means a form in which the security 7
1087	1087	is payable to the bearer of the security certificate according to its terms but not by reason of an 8
1088	1088	indorsement. 9
1089	1089	(3) “Broker” means a person defined as a broker or dealer under the federal securities laws, 10
1090	1090	but without excluding a bank acting in that capacity. 11
1091	1091	(4) “Certificated security” means a security that is represented by a certificate. 12
1092	1092	(5) “Clearing corporation” means: 13
1093	1093	(i) a person that is registered as a “clearing agency” under the federal securities laws; 14
1094	1094	(ii) A federal reserve bank; or 15
1095	1095	(iii) Any other person that provides clearance or settlement services with respect to 16
1096	1096	financial assets that would require it to register as a clearing agency under the federal securities 17
1097	1097	laws but for an exclusion or exemption from the registration requirement, if its activities as a 18
1098	1098	clearing corporation, including promulgation of rules, are subject to regulation by a federal or state 19
1099	1099	governmental authority. 20
1100	1100	(6) “Communicate” means to: 21
1101	1101	(i) Send a signed writing record; or 22
1102	1102	(ii) Transmit information by any mechanism agreed upon by the persons transmitting and 23
1103	1103	receiving the information. 24
1104	1104	(7) “Entitlement holder” means a person identified in the records of a securities 25
1105	1105	intermediary as the person having a security entitlement against the securities intermediary. If a 26
1106	1106	person acquires a security entitlement by virtue of § 6A-8-501(b)(2) or (3), that person is the 27
1107	1107	entitlement holder. 28
1108	1108	(8) “Entitlement order” means a notification communicated to a securities intermediary 29
1109	1109	directing transfer or redemption of a financial asset to which the entitlement holder has a security 30
1110	1110	entitlement. 31
1111	1111	(9) “Financial asset,” except as otherwise provided in § 6A-8-103, means: 32
1112	1112	(i) A security; 33
1113	1113	(ii) An obligation of a person or a share, participation, or other interest in a person or in 34
1114	1114
1115	1115
1116	1116	LC001903 - Page 31 of 113
1117	1117	property or an enterprise of a person, which is, or is of a type, dealt in or traded on financial markets, 1
1118	1118	or which is recognized in any area in which it is issued or dealt in as a medium for investment; or 2
1119	1119	(iii) Any property that is held by a securities intermediary for another person in a securities 3
1120	1120	account if the securities intermediary has expressly agreed with the other person that the property 4
1121	1121	is to be treated as a financial asset under this chapter. 5
1122	1122	As context requires, the term means either the interest itself or the means by which a 6
1123	1123	person’s claim to it is evidenced, including a certificated or uncertificated security, a security 7
1124	1124	certificate, or a security entitlement. 8
1125	1125	(10) “Good faith,” for purposes of the obligation of good faith in the performance or 9
1126	1126	enforcement of contracts or duties within this chapter, means honesty in fact and the observance of 10
1127	1127	reasonable commercial standards of fair dealing. 11
1128	1128	(11) “Indorsement” means a signature that alone or accompanied by other words is made 12
1129	1129	on a security certificate in registered form or on a separate document for the purpose of assigning, 13
1130	1130	transferring, or redeeming the security or granting a power to assign, transfer, or redeem it. 14
1131	1131	(12) “Instruction” means a notification communicated to the issuer of an uncertificated 15
1132	1132	security which directs that the transfer of the security be registered or that the security be redeemed. 16
1133	1133	(13) “Registered form,” as applied to a certificated security, means a form in which: 17
1134	1134	(i) The security certificate specifies a person entitled to the security; and 18
1135	1135	(ii) A transfer of the security may be registered upon books maintained for that purpose by 19
1136	1136	or on behalf of the issuer, or the security certificate so states. 20
1137	1137	(14) “Securities intermediary” means: 21
1138	1138	(i) A clearing corporation; or 22
1139	1139	(ii) A person, including a bank or broker, that in the ordinary course of its business 23
1140	1140	maintains securities accounts for others and is acting in that capacity. 24
1141	1141	(15) “Security,” except as otherwise provided in § 6A-8-103, means an obligation of an 25
1142	1142	issuer or a share, participation, or other interest in an issuer or in property or an enterprise of an 26
1143	1143	issuer: 27
1144	1144	(i) Which is represented by a security certificate in bearer or registered form, or the transfer 28
1145	1145	of which may be registered upon books maintained for that purpose by or on behalf of the issuer; 29
1146	1146	(ii) Which is one of a class or series or by its terms is divisible into a class or series of 30
1147	1147	shares, participations, interests, or obligations; and 31
1148	1148	(iii) Which: 32
1149	1149	(A) Is, or is of a type, dealt in or traded on securities exchanges or securities markets; or 33
1150	1150	(B) Is a medium for investment and by its terms expressly provides that it is a security 34
1151	1151
1152	1152
1153	1153	LC001903 - Page 32 of 113
1154	1154	governed by this chapter. 1
1155	1155	(16) “Security certificate” means a certificate representing a security. 2
1156	1156	(17) “Security entitlement” means the rights and property interest of an entitlement holder 3
1157	1157	with respect to a financial asset specified in part 5 of this chapter. 4
1158	1158	(18) “Uncertificated security” means a security that is not represented by a certificate. 5
1159	1159	(b) Other The following definitions applying to in this chapter and the sections in which 6
1160	1160	they appear are other chapters of this title apply to this chapter: 7
1161	1161	Appropriate person § 6A-8-107 8
1162	1162	Control § 6A-8-106 9
1163	1163	Controllable account § 6A-9-102 10
1164	1164	Controllable electronic record § 6A-12-102 11
1165	1165	Controllable payment intangible § 6A-9-102 12
1166	1166	Delivery § 6A-8-301 13
1167	1167	Investment company security § 6A-8-103 14
1168	1168	Issuer § 6A-8-201 15
1169	1169	Overissue § 6A-8-210 16
1170	1170	Protected purchaser § 6A-8-303 17
1171	1171	Securities account § 6A-8-501 18
1172	1172	(c) In addition, chapter 1 of this title contains general definitions and principles of 19
1173	1173	construction and interpretation applicable throughout this chapter. 20
1174	1174	(d) The characterization of a person, business, or transaction for purposes of this chapter 21
1175	1175	does not determine the characterization of the person, business, or transaction for purposes of any 22
1176	1176	other law, regulation, or rule. 23
1177	1177	6A-8-103. Rules for determining whether certain obligations and interests are 24
1178	1178	securities or financial assets. 25
1179	1179	(a) A share or similar equity interest issued by a corporation, business trust, joint stock 26
1180	1180	company, or similar entity is a security. 27
1181	1181	(b) An “investment company security” is a security. “Investment company security” means 28
1182	1182	a share or similar equity interest issued by an entity that is registered as an investment company 29
1183	1183	under the federal investment company laws, an interest in a unit investment trust that is so 30
1184	1184	registered, or a face-amount certificate issued by a face-amount certificate company that is so 31
1185	1185	registered. Investment company security does not include an insurance policy or endowment policy 32
1186	1186	or annuity contract issued by an insurance company. 33
1187	1187	(c) An interest in a partnership or limited liability company is not a security unless it is 34
1188	1188
1189	1189
1190	1190	LC001903 - Page 33 of 113
1191	1191	dealt in or traded on securities exchanges or in securities markets, its terms expressly provide that 1
1192	1192	it is a security governed by this chapter, or it is an investment company security. However, an 2
1193	1193	interest in a partnership or limited liability company is a financial asset if it is held in a securities 3
1194	1194	account. 4
1195	1195	(d) A writing that is a security certificate is governed by this chapter and not by chapter 3 5
1196	1196	of this title, even though it also meets the requirements of that chapter. However, a negotiable 6
1197	1197	instrument governed by chapter 3 of this title is a financial asset if it is held in a securities account. 7
1198	1198	(e) An option or similar obligation issued by a clearing corporation to its participants is not 8
1199	1199	a security, but is a financial asset. 9
1200	1200	(f) A commodity contract, as defined in § 6A-9-102(a)(15), is not a security or a financial 10
1201	1201	asset. 11
1202	1202	(g) A document of title is not a financial asset unless subsection 6A-8-102(a)(9)(iii) applies. 12
1203	1203	(h) A controllable account, controllable electronic record, or controllable payment 13
1204	1204	intangible is not a financial asset unless § 6A-8-102(a)(9)(iii) applies. 14
1205	1205	6A-8-106. Control. 15
1206	1206	(a) A purchaser has “control” of a certificated security in bearer form if the certificated 16
1207	1207	security is delivered to the purchaser. 17
1208	1208	(b) A purchaser has “control” of a certificated security in registered form if the certificated 18
1209	1209	security is delivered to the purchaser, and: 19
1210	1210	(1) the certificate is indorsed to the purchaser or in blank by an effective indorsement; or 20
1211	1211	(2) the certificate is registered in the name of the purchaser, upon original issue or 21
1212	1212	registration of transfer by the issuer. 22
1213	1213	(c) A purchaser has “control” of an uncertificated security if: 23
1214	1214	(1) the uncertificated security is delivered to the purchaser; or 24
1215	1215	(2) the issuer has agreed that it will comply with instructions originated by the purchaser 25
1216	1216	without further consent by the registered owner. 26
1217	1217	(d) A purchaser has “control” of a security entitlement if: 27
1218	1218	(1) the purchaser becomes the entitlement holder; 28
1219	1219	(2) the securities intermediary has agreed that it will comply with entitlement orders 29
1220	1220	originated by the purchaser without further consent by the entitlement holder; or 30
1221	1221	(3) another person has control of the security entitlement on behalf of the purchaser or, 31
1222	1222	having previously acquired control of the security entitlement, acknowledges that it has control on 32
1223	1223	behalf of the purchaser person, other than the transferor to the purchaser of an interest in the security 33
1224	1224	entitlement: 34
1225	1225
1226	1226
1227	1227	LC001903 - Page 34 of 113
1228	1228	(i) has control of the security entitlement and acknowledges that it has control on behalf of 1
1229	1229	the purchaser; or 2
1230	1230	(ii) obtains control of the security entitlement after having acknowledged that it will obtain 3
1231	1231	control of the security entitlement on behalf of the purchaser. 4
1232	1232	(e) If an interest in a security entitlement is granted by the entitlement holder to the 5
1233	1233	entitlement holder’s own securities intermediary, the securities intermediary has control. 6
1234	1234	(f) A purchaser who has satisfied the requirements of subsection (c) or (d) has control even 7
1235	1235	if the registered owner in the case of subsection (c) or the entitlement holder in the case of 8
1236	1236	subsection (d) retains the right to make substitutions for the uncertificated security or security 9
1237	1237	entitlement, to originate instructions or entitlement orders to the issuer or securities intermediary, 10
1238	1238	or otherwise to deal with the uncertificated security or security entitlement. 11
1239	1239	(g) An issuer or a securities intermediary may not enter into an agreement of the kind 12
1240	1240	described in subsection (c)(2) or (d)(2) without the consent of the registered owner or entitlement 13
1241	1241	holder, but an issuer or a securities intermediary is not required to enter into such an agreement 14
1242	1242	even though the registered owner or entitlement holder so directs. An issuer or securities 15
1243	1243	intermediary that has entered into such an agreement is not required to confirm the existence of the 16
1244	1244	agreement to another party unless requested to do so by the registered owner or entitlement holder. 17
1245	1245	(h) A person that has control under this section is not required to acknowledge that it has 18
1246	1246	control on behalf of a purchaser. 19
1247	1247	(i) If a person acknowledges that it has or will obtain control on behalf of a purchaser, 20
1248	1248	unless the person otherwise agrees or law other than this chapter or chapter 6A-9 otherwise 21
1249	1249	provides, the person does not owe any duty to the purchaser and is not required to confirm the 22
1250	1250	acknowledgment to any other person. 23
1251	1251	6A-8-110. Applicability — Choice of law. 24
1252	1252	(a) The local law of the issuer’s jurisdiction, as specified in subsection (d), governs: 25
1253	1253	(1) the validity of a security; 26
1254	1254	(2) the rights and duties of the issuer with respect to registration of transfer; 27
1255	1255	(3) the effectiveness of registration of transfer by the issuer; 28
1256	1256	(4) whether the issuer owes any duties to an adverse claimant to a security; and 29
1257	1257	(5) whether an adverse claim can be asserted against a person to whom transfer of a 30
1258	1258	certificated or uncertificated security is registered or a person who obtains control of an 31
1259	1259	uncertificated security. 32
1260	1260	(b) The local law of the securities intermediary’s jurisdiction, as specified in subsection 33
1261	1261	(e), governs: 34
1262	1262
1263	1263
1264	1264	LC001903 - Page 35 of 113
1265	1265	(1) acquisition of a security entitlement from the securities intermediary; 1
1266	1266	(2) the rights and duties of the securities intermediary and entitlement holder arising out of 2
1267	1267	a security entitlement; 3
1268	1268	(3) whether the securities intermediary owes any duties to an adverse claimant to a security 4
1269	1269	entitlement; and 5
1270	1270	(4) whether an adverse claim can be asserted against a person who acquires a security 6
1271	1271	entitlement from the securities intermediary or a person who purchases a security entitlement or 7
1272	1272	interest therein from an entitlement holder. 8
1273	1273	(c) The local law of the jurisdiction in which a security certificate is located at the time of 9
1274	1274	delivery governs whether an adverse claim can be asserted against a person to whom the security 10
1275	1275	certificate is delivered. 11
1276	1276	(d) “Issuer’s jurisdiction” means the jurisdiction under which the issuer of the security is 12
1277	1277	organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified 13
1278	1278	by the issuer. An issuer organized under the law of this State may specify the law of another 14
1279	1279	jurisdiction as the law governing the matters specified in subsection (a)(2) through (5). 15
1280	1280	(e) The following rules determine a “securities intermediary’s jurisdiction” for purposes of 16
1281	1281	this section: 17
1282	1282	(1) If an agreement between the securities intermediary and its entitlement holder 18
1283	1283	governing the securities account expressly provides that a particular jurisdiction is the securities 19
1284	1284	intermediary’s jurisdiction for purposes of this part, this chapter, or this title, that jurisdiction is the 20
1285	1285	securities intermediary’s jurisdiction. 21
1286	1286	(2) If paragraph (1) does not apply and an agreement between the securities intermediary 22
1287	1287	and its entitlement holder governing the securities account expressly provides that the agreement 23
1288	1288	is governed by the law of a particular jurisdiction, that jurisdiction is the securities intermediary’s 24
1289	1289	jurisdiction. 25
1290	1290	(3) If neither paragraph (1) nor paragraph (2) applies and an agreement between the 26
1291	1291	securities intermediary and its entitlement holder governing the securities account expressly 27
1292	1292	provides that the securities account is maintained at an office in a particular jurisdiction, that 28
1293	1293	jurisdiction is the securities intermediary’s jurisdiction. 29
1294	1294	(4) If none of the preceding paragraphs applies, the securities intermediary’s jurisdiction is 30
1295	1295	the jurisdiction in which the office identified in an account statement as the office serving the 31
1296	1296	entitlement holder’s account is located. 32
1297	1297	(5) If none of the preceding paragraphs applies, the securities intermediary’s jurisdiction is 33
1298	1298	the jurisdiction in which the chief executive office of the securities intermediary is located. 34
1299	1299
1300	1300
1301	1301	LC001903 - Page 36 of 113
1302	1302	(f) A securities intermediary’s jurisdiction is not determined by the physical location of 1
1303	1303	certificates representing financial assets, or by the jurisdiction in which is organized the issuer of 2
1304	1304	the financial asset with respect to which an entitlement holder has a security entitlement, or by the 3
1305	1305	location of facilities for data processing or other record keeping concerning the account. 4
1306	1306	(g) The local law of the issuer’s jurisdiction or the securities intermediary’s jurisdiction 5
1307	1307	governs a matter or transaction specified in subsections (a) or (b) of this section even if the matter 6
1308	1308	or transaction does not bear any relation to the jurisdiction. 7
1309	1309	6A-8-303. Protected purchaser. 8
1310	1310	(a) “Protected purchaser” means a purchaser of a certificated or uncertificated security, or 9
1311	1311	of an interest therein, who: 10
1312	1312	(1) gives value; 11
1313	1313	(2) does not have notice of any adverse claim to the security; and 12
1314	1314	(3) obtains control of the certificated or uncertificated security. 13
1315	1315	(b) In addition to acquiring the rights of a purchaser, a A protected purchaser also acquires 14
1316	1316	its interest in the security free of any adverse claim. 15
1317	1317	SECTION 9. Sections 6A-9-102, 6A-9-104, 6A-9-105, 6A-9-203, 6A-9-204, 6A-9-207, 16
1318	1318	6A-9-208, 6A-9-209, 6A-9-210, 6A-9-301, 6A-9-304, 6A-9-305, 6A-9-310, 6A-9-312, 6A-9-313, 17
1319	1319	6A-9-314, 6A-9-316, 6A-9-317, 6A-9-323, 6A-9-324, 6A-9-330, 6A-9-331, 6A-9-332, 6A-9-334, 18
1320	1320	6A-9-341, 6A-9-404, 6A-9-406, 6A-9-408, 6A-9-509, 6A-9-513, 6A-9-601, 6A-9-605, 6A-9-608, 19
1321	1321	6A-9-611, 6A-9-613, 6A-9-614, 6A-9-615, 6A-9-616, 6A-9-619, 6A-9-620, 6A-9-621, 6A-9-624 20
1322	1322	and 6A-9-628 of the General Laws in Chapter 6A-9 entitled "Secured Transactions" are hereby 21
1323	1323	amended to read as follows: 22
1324	1324	6A-9-102. Definitions. 23
1325	1325	(a) Chapter 9 definitions. In this chapter: 24
1326	1326	(1) “Accession” means goods that are physically united with other goods in such a manner 25
1327	1327	that the identity of the original goods is not lost. 26
1328	1328	(2) “Account”, except as used in “account for”, "account statement", account to", 27
1329	1329	"commodity account in subsection (a)(14) of this section", "customer's account", "deposit account 28
1330	1330	in subsection (a)(29) of this section", "on account of", and "statement of account" means a right to 29
1331	1331	payment of a monetary obligation, whether or not earned by performance, (i) for property that has 30
1332	1332	been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered 31
1333	1333	or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation 32
1334	1334	incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a 33
1335	1335	vessel under a charter or other contract, (vii) arising out of the use of a credit or charge card or 34
1336	1336
1337	1337
1338	1338	LC001903 - Page 37 of 113
1339	1339	information contained on or for use with the card, or (viii) as winnings in a lottery or other game 1
1340	1340	of chance operated or sponsored by a State, governmental unit of a State, or person licensed or 2
1341	1341	authorized to operate the game by a State or governmental unit of a State. The term includes 3
1342	1342	controllable accounts and health-care-insurance receivables. The term does not include (i) rights to 4
1343	1343	payment evidenced by chattel paper or an instrument, (ii) commercial tort claims, (iii) deposit 5
1344	1344	accounts, (iv) investment property, (v) letter-of-credit rights or letters of credit, or (vi) rights to 6
1345	1345	payment for money or funds advanced or sold, other than rights arising out of the use of a credit or 7
1346	1346	charge card or information contained on or for use with the card, or (vii) rights to payment 8
1347	1347	evidenced by an instrument. 9
1348	1348	(3) “Account debtor” means a person obligated on an account, chattel paper, or general 10
1349	1349	intangible. The term does not include persons obligated to pay a negotiable instrument, even if the 11
1350	1350	negotiable instrument constitutes part of evidences chattel paper. 12
1351	1351	(4) “Accounting”, except as used in “accounting for”, means a record: 13
1352	1352	(i) Authenticated Signed by a secured party; 14
1353	1353	(ii) Indicating the aggregate unpaid secured obligations as of a date not more than 35 days 15
1354	1354	earlier or 35 days later than the date of the record; and 16
1355	1355	(iii) Identifying the components of the obligations in reasonable detail. 17
1356	1356	(5) “Agricultural lien” means an interest in farm products: 18
1357	1357	(i) Which secures payment or performance of an obligation for: 19
1358	1358	(A) Goods or services furnished in connection with a debtor’s farming operation; or 20
1359	1359	(B) Rent on real property leased by a debtor in connection with its farming operation; 21
1360	1360	(ii) Which is created by statute in favor of a person that: 22
1361	1361	(A) In the ordinary course of its business furnished goods or services to a debtor in 23
1362	1362	connection with a debtor’s farming operation; or 24
1363	1363	(B) Leased real property to a debtor in connection with the debtor’s farming operation; and 25
1364	1364	(iii) Whose effectiveness does not depend on the person’s possession of the personal 26
1365	1365	property. 27
1366	1366	(6) “As-extracted collateral” means: 28
1367	1367	(i) Oil, gas, or other minerals that are subject to a security interest that: 29
1368	1368	(A) Is created by a debtor having an interest in the minerals before extraction; and 30
1369	1369	(B) Attaches to the minerals as extracted; or 31
1370	1370	(ii) Accounts arising out of the sale at the wellhead or minehead of oil, gas, or other 32
1371	1371	minerals in which the debtor had an interest before extraction. 33
1372	1372	(7) “Authenticate” means: 34
1373	1373
1374	1374
1375	1375	LC001903 - Page 38 of 113
1376	1376	(i) To sign; or 1
1377	1377	(ii) With present intent to adopt or accept a record, to attach to or logically associate with 2
1378	1378	the record an electronic sound, symbol, or process. [RESERVED] 3
1379	1379	(7.1) “Assignee”, except as used in “assignee for benefit of creditors”, means a person (i) 4
1380	1380	in whose favor a security interest that secures an obligation is created or provided for under a 5
1381	1381	security agreement, whether or not the obligation is outstanding or (ii) to which an account, chattel 6
1382	1382	paper, payment intangible, or promissory note has been sold. The term includes a person to which 7
1383	1383	a security interest has been transferred by a secured party. 8
1384	1384	(7.2) “Assignor” means a person that (i) under a security agreement creates or provides for 9
1385	1385	a security interest that secures an obligation or (ii) sells an account, chattel paper, payment 10
1386	1386	intangible, or promissory note. The term includes a secured party that has transferred a security 11
1387	1387	interest to another person. 12
1388	1388	(8) “Bank” means an organization that is engaged in the business of banking. The term 13
1389	1389	includes savings banks, savings and loan associations, credit unions, and trust companies. 14
1390	1390	(9) “Cash proceeds” means proceeds that are money, checks, deposit accounts, or the like. 15
1391	1391	(10) “Certificate of title” means a certificate of title with respect to which a statute provides 16
1392	1392	for the security interest in question to be indicated on the certificate as a condition or result of the 17
1393	1393	security interest’s obtaining priority over the rights of a lien creditor with respect to the collateral. 18
1394	1394	The term includes another record maintained as an alternative to a certificate of title by the 19
1395	1395	governmental unit that issues certificates of title if a statute permits the security interest in question 20
1396	1396	to be indicated on the record as a condition or result of the security interest’s obtaining priority over 21
1397	1397	the rights of a lien creditor with respect to the collateral. 22
1398	1398	(11) “Chattel paper” means: a record or records that evidence both a monetary obligation 23
1399	1399	and a security interest in specific goods, a security interest in specific goods and software used in 24
1400	1400	the goods, a security interest in specific goods and license of software used in the goods, a lease of 25
1401	1401	specific goods, or a lease of specific goods and license of software used in the goods. In this 26
1402	1402	paragraph, “monetary obligation” means a monetary obligation secured by the goods or owed under 27
1403	1403	a lease of the goods and includes a monetary obligation with respect to software used in the goods. 28
1404	1404	The term does not include (i) charters or other contracts involving the use or hire of a vessel or (ii) 29
1405	1405	records that evidence a right to payment arising out of the use of a credit or charge card or 30
1406	1406	information contained on or for use with the card. If a transaction is evidenced by records that 31
1407	1407	include an instrument or series of instruments, the group of records taken together constitutes 32
1408	1408	chattel paper. 33
1409	1409	(i) a right to payment of a monetary obligation secured by specific goods, if the right to 34
1410	1410
1411	1411
1412	1412	LC001903 - Page 39 of 113
1413	1413	payment and security agreement are evidenced by a record; or 1
1414	1414	(ii) a right to payment of a monetary obligation owed by a lessee under a lease agreement 2
1415	1415	with respect to specific goods and a monetary obligation owed by the lessee in connection with the 3
1416	1416	transaction giving rise to the lease, if: 4
1417	1417	(A) the right to payment and lease agreement are evidenced by a record; and 5
1418	1418	(B) the predominant purpose of the transaction giving rise to the lease was to give the lessee 6
1419	1419	the right to possession and use of the goods. 7
1420	1420	The term "chattel paper" does not include a right to payment arising out of a charter or 8
1421	1421	other contract involving the use or hire of a vessel or a right to payment arising out of the use of a 9
1422	1422	credit or charge card or information contained on or for use with the card. 10
1423	1423	(12) “Collateral” means the property subject to a security interest or agricultural lien. The 11
1424	1424	term includes: 12
1425	1425	(i) Proceeds to which a security interest attaches; 13
1426	1426	(ii) Accounts, chattel paper, payment intangibles, and promissory notes that have been sold; 14
1427	1427	and 15
1428	1428	(iii) Goods that are the subject of a consignment. 16
1429	1429	(13) “Commercial tort claim” means a claim arising in tort with respect to which: 17
1430	1430	(i) The claimant is an organization; or 18
1431	1431	(ii) The claimant is an individual and the claim: 19
1432	1432	(A) Arose in the course of the claimant’s business or profession; and 20
1433	1433	(B) Does not include damages arising out of personal injury to or the death of an individua l. 21
1434	1434	(14) “Commodity account” means an account maintained by a commodity intermediary in 22
1435	1435	which a commodity contract is carried for a commodity customer. 23
1436	1436	(15) “Commodity contract” means a commodity futures contract, an option on a 24
1437	1437	commodity futures contract, a commodity option, or another contract if the contract or option is: 25
1438	1438	(i) Traded on or subject to the rules of a board of trade that has been designated as a contract 26
1439	1439	market for such a contract pursuant to federal commodities laws; or 27
1440	1440	(ii) Traded on a foreign commodity board of trade, exchange, or market, and is carried on 28
1441	1441	the books of a commodity intermediary for a commodity customer. 29
1442	1442	(16) “Commodity customer” means a person for which a commodity intermediary carries 30
1443	1443	a commodity contract on its books. 31
1444	1444	(17) “Commodity intermediary” means a person that: 32
1445	1445	(i) Is registered as a futures commission merchant under federal commodities law; or 33
1446	1446	(ii) In the ordinary course of its business provides clearance or settlement services for a 34
1447	1447
1448	1448
1449	1449	LC001903 - Page 40 of 113
1450	1450	board of trade that has been designated as a contract market pursuant to federal commodities law. 1
1451	1451	(18) “Communicate” means: 2
1452	1452	(i) To send a written or other tangible record; 3
1453	1453	(ii) To transmit a record by any means agreed upon by the persons sending and receiving 4
1454	1454	the record; or 5
1455	1455	(iii) In the case of transmission of a record to or by a filing office, to transmit a record by 6
1456	1456	any means prescribed by filing-office rule. 7
1457	1457	(19) “Consignee” means a merchant to which goods are delivered in a consignment. 8
1458	1458	(20) “Consignment” means a transaction, regardless of its form, in which a person delivers 9
1459	1459	goods to a merchant for the purpose of sale and: 10
1460	1460	(i) The merchant: 11
1461	1461	(A) Deals in goods of that kind under a name other than the name of the person making 12
1462	1462	delivery; 13
1463	1463	(B) Is not an auctioneer; and 14
1464	1464	(C) Is not generally known by its creditors to be substantially engaged in selling the goods 15
1465	1465	of others; 16
1466	1466	(ii) With respect to each delivery, the aggregate value of the goods is $1,000 or more at the 17
1467	1467	time of delivery; 18
1468	1468	(iii) The goods are not consumer goods immediately before delivery; and 19
1469	1469	(iv) The transaction does not create a security interest that secures an obligation. 20
1470	1470	(21) “Consignor” means a person that delivers goods to a consignee in a consignment. 21
1471	1471	(22) “Consumer debtor” means a debtor in a consumer transaction. 22
1472	1472	(23) “Consumer goods” means goods that are used or bought for use primarily for personal, 23
1473	1473	family, or household purposes. 24
1474	1474	(24) “Consumer-goods transaction” means a consumer transaction in which: 25
1475	1475	(i) An individual incurs an obligation primarily for personal, family, or household 26
1476	1476	purposes; and 27
1477	1477	(ii) A security interest in consumer goods secures the obligation. 28
1478	1478	(25) “Consumer obligor” means an obligor who is an individual and who incurred the 29
1479	1479	obligation as part of a transaction entered into primarily for personal, family, or household 30
1480	1480	purposes. 31
1481	1481	(26) “Consumer transaction” means a transaction in which (i) an individual incurs an 32
1482	1482	obligation primarily for personal, family, or household purposes, (ii) a security interest secures the 33
1483	1483	obligation, and (iii) the collateral is held or acquired primarily for personal, family, or household 34
1484	1484
1485	1485
1486	1486	LC001903 - Page 41 of 113
1487	1487	purposes. The term includes consumer-goods transactions. 1
1488	1488	(27) “Continuation statement” means an amendment of a financing statement which: 2
1489	1489	(i) Identifies, by its file number, the initial financing statement to which it relates; and 3
1490	1490	(ii) Indicates that it is a continuation statement for, or that it is filed to continue the 4
1491	1491	effectiveness of, the identified financing statement. 5
1492	1492	(27.1) “Controllable account” means an account evidenced by a controllable electronic 6
1493	1493	record that provides that the account debtor undertakes to pay the person that has control under § 7
1494	1494	6A-12-105 of the controllable electronic record. 8
1495	1495	(27.2) “Controllable payment intangible” means a payment intangible evidenced by a 9
1496	1496	controllable electronic record that provides that the account debtor undertakes to pay the person 10
1497	1497	that has control under § 6A-12-105 of the controllable electronic record. 11
1498	1498	(28) “Debtor” means: 12
1499	1499	(i) A person having an interest, other than a security interest or other lien, in the collateral, 13
1500	1500	whether or not the person is an obligor; 14
1501	1501	(ii) A seller of accounts, chattel paper, payment intangibles, or promissory notes; or 15
1502	1502	(iii) A consignee. 16
1503	1503	(29) “Deposit account” means a demand, time, savings, passbook, or similar account 17
1504	1504	maintained with a bank. The term does not include investment property or accounts evidenced by 18
1505	1505	an instrument. 19
1506	1506	(30) “Document” means a document of title or a receipt of the type described in § 6A-7-20
1507	1507	201(b). 21
1508	1508	(31) “Electronic chattel paper” means chattel paper evidenced by a record or records 22
1509	1509	consisting of information stored in an electronic medium. [RESERVED] 23
1510	1510	(31.1) “Electronic money” means money in an electronic form. 24
1511	1511	(32) “Encumbrance” means a right, other than an ownership interest, in real property. The 25
1512	1512	term includes mortgages and other liens on real property. 26
1513	1513	(33) “Equipment” means goods other than inventory, farm products, or consumer goods. 27
1514	1514	(34) “Farm products” means goods, other than standing timber, with respect to which the 28
1515	1515	debtor is engaged in a farming operation and which are: 29
1516	1516	(i) Crops grown, growing, or to be grown, including: 30
1517	1517	(A) Crops produced on trees, vines, and bushes; and 31
1518	1518	(B) Aquatic goods, including seaweeds, produced in aquacultural operations; 32
1519	1519	(ii) Livestock, born or unborn, including fish, shellfish and other aquatic goods produced 33
1520	1520	in aquacultural operations; 34
1521	1521
1522	1522
1523	1523	LC001903 - Page 42 of 113
1524	1524	(iii) Supplies used or produced in a farming operation; or 1
1525	1525	(iv) Products of crops or livestock in their unmanufactured states. 2
1526	1526	(35) “Farming operation” means raising, cultivating, propagating, fattening, grazing, or 3
1527	1527	any other farming, livestock, or aquacultural operation. 4
1528	1528	(36) “File number” means the number assigned to an initial financing statement pursuant 5
1529	1529	to § 6A-9-519(a). 6
1530	1530	(37) “Filing office” means an office designated in § 6A-9-501 as the place to file a 7
1531	1531	financing statement. 8
1532	1532	(38) “Filing-office rule” means a rule adopted pursuant to § 6A-9-526. 9
1533	1533	(39) “Financing statement” means a record or records composed of an initial financing 10
1534	1534	statement and any filed record relating to the initial financing statement. 11
1535	1535	(40) “Fixture filing” means the filing of a financing statement covering goods that are or 12
1536	1536	are to become fixtures and satisfying § 6A-9-502(a) and (b). The term includes the filing of a 13
1537	1537	financing statement covering goods of a transmitting utility which are or are to become fixtures. 14
1538	1538	(41) “Fixtures” means goods that have become so related to particular real property that an 15
1539	1539	interest in them arises under real property law. 16
1540	1540	(42) “General intangible” means any personal property, including things in action, other 17
1541	1541	than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, 18
1542	1542	instruments, investment property, letter-of-credit rights, letters of credit, money, and oil, gas, or 19
1543	1543	other minerals before extraction. The term includes controllable electronic records payment 20
1544	1544	intangibles and software. 21
1545	1545	(43) “Good faith” means honesty in fact and the observance of reasonable commercial 22
1546	1546	standards of fair dealing. 23
1547	1547	(44) “Goods” means all things that are movable when a security interest attaches. The term 24
1548	1548	includes (i) fixtures, (ii) standing timber that is to be cut and removed under a conveyance or 25
1549	1549	contract for sale, (iii) the unborn young of animals, (iv) crops grown, growing, or to be grown, even 26
1550	1550	if the crops are produced on trees, vines, or bushes, and (v) manufactured homes. The term also 27
1551	1551	includes a computer program embedded in goods and any supporting information provided in 28
1552	1552	connection with a transaction relating to the program if (i) the program is associated with the goods 29
1553	1553	in such a manner that it customarily is considered part of the goods, or (ii) by becoming the owner 30
1554	1554	of the goods, a person acquires a right to use the program in connection with the goods. The term 31
1555	1555	does not include a computer program embedded in goods that consist solely of the medium in which 32
1556	1556	the program is embedded. The term also does not include accounts, chattel paper, commercial tort 33
1557	1557	claims, deposit accounts, documents, general intangibles, instruments, investment property, letter-34
1558	1558
1559	1559
1560	1560	LC001903 - Page 43 of 113
1561	1561	of-credit rights, letters of credit, money, or oil, gas, or other minerals before extraction. 1
1562	1562	(45) “Governmental unit” means a subdivision, agency, department, county, parish, 2
1563	1563	municipality, or other unit of the government of the United States, a State, or a foreign country. 3
1564	1564	The term includes an organization having a separate corporate existence if the organization is 4
1565	1565	eligible to issue debt on which interest is exempt from income taxation under the laws of the United 5
1566	1566	States. 6
1567	1567	(46) “Health-care-insurance receivable” means an interest in or claim under a policy of 7
1568	1568	insurance which is a right to payment of a monetary obligation for health-care goods or services 8
1569	1569	provided or to be provided. 9
1570	1570	(47) “Instrument” means a negotiable instrument or any other writing that evidences a right 10
1571	1571	to the payment of a monetary obligation, is not itself a security agreement or lease, and is of a type 11
1572	1572	that in ordinary course of business is transferred by delivery with any necessary indorsement or 12
1573	1573	assignment. The term does not include (i) investment property, (ii) letters of credit, or (iii) writings 13
1574	1574	that evidence a right to payment arising out of the use of a credit or charge card or information 14
1575	1575	contained on or for use with the card, or (iv) writings that evidence chattel paper. 15
1576	1576	(48) “Inventory” means goods, other than farm products, which: 16
1577	1577	(i) Are leased by a person as lessor; 17
1578	1578	(ii) Are held by a person for sale or lease or to be furnished under a contract of service; 18
1579	1579	(iii) Are furnished by a person under a contract of service; or 19
1580	1580	(iv) Consist of raw materials, work in process, or materials used or consumed in a business. 20
1581	1581	(49) “Investment property” means a security, whether certificated or uncertificated, 21
1582	1582	security entitlement, securities account, commodity contract, or commodity account. 22
1583	1583	(50) “Jurisdiction of organization”, with respect to a registered organization, means the 23
1584	1584	jurisdiction under whose law the organization is formed or organized. 24
1585	1585	(51) “Letter-of-credit right” means a right to payment or performance under a letter of 25
1586	1586	credit, whether or not the beneficiary has demanded or is at the time entitled to demand payment 26
1587	1587	or performance. The term does not include the right of a beneficiary to demand payment or 27
1588	1588	performance under a letter of credit. 28
1589	1589	(52) “Lien creditor” means: 29
1590	1590	(i) A creditor that has acquired a lien on the property involved by attachment, levy, or the 30
1591	1591	like; 31
1592	1592	(ii) An assignee for benefit of creditors from the time of assignment; 32
1593	1593	(iii) A trustee in bankruptcy from the date of the filing of the petition; or 33
1594	1594	(iv) A receiver in equity from the time of appointment. 34
1595	1595
1596	1596
1597	1597	LC001903 - Page 44 of 113
1598	1598	(53) “Manufactured home” means a structure, transportable in one or more sections, which, 1
1599	1599	in the traveling mode, is eight body feet or more in width or 40 body feet or more in length, or, 2
1600	1600	when erected on site, is 320 or more square feet, and which is built on a permanent chassis and 3
1601	1601	designed to be used as a dwelling with or without a permanent foundation when connected to the 4
1602	1602	required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems 5
1603	1603	contained therein. The term includes any structure that meets all of the requirements of this 6
1604	1604	paragraph except the size requirements and with respect to which the manufacturer voluntarily files 7
1605	1605	a certification required by the United States Secretary of Housing and Urban Development and 8
1606	1606	complies with the standards established under Title 42 of the United States Code. 9
1607	1607	(54) “Manufactured-home transaction” means a secured transaction: 10
1608	1608	(i) That creates a purchase-money security interest in a manufactured home, other than a 11
1609	1609	manufactured home held as inventory; or 12
1610	1610	(ii) In which a manufactured home, other than a manufactured home held as inventory, is 13
1611	1611	the primary collateral. 14
1612	1612	(54.1) “Money” has the meaning in § 6A-1-201, but does not include (i) a deposit account 15
1613	1613	or (ii) money in an electronic form that cannot be subjected to control under § 6A-9-105.1. 16
1614	1614	(55) “Mortgage” means a consensual interest in real property, including fixtures, which 17
1615	1615	secures payment or performance of an obligation. 18
1616	1616	(56) “New debtor” means a person that becomes bound as debtor under § 6A-9-203(d) by 19
1617	1617	a security agreement previously entered into by another person. 20
1618	1618	(57) “New value” means (i) money, (ii) money’s worth in property, services, or new credit, 21
1619	1619	or (iii) release by a transferee of an interest in property previously transferred to the transferee. The 22
1620	1620	term does not include an obligation substituted for another obligation. 23
1621	1621	(58) “Noncash proceeds” means proceeds other than cash proceeds. 24
1622	1622	(59) “Obligor” means a person that, with respect to an obligation secured by a security 25
1623	1623	interest in or an agricultural lien on the collateral, (i) owes payment or other performance of the 26
1624	1624	obligation, (ii) has provided property other than the collateral to secure payment or other 27
1625	1625	performance of the obligation, or (iii) is otherwise accountable in whole or in part for payment or 28
1626	1626	other performance of the obligation. The term does not include issuers or nominated persons under 29
1627	1627	a letter of credit. 30
1628	1628	(60) “Original debtor”, except as used in § 6A-9-310(c), means a person that, as debtor, 31
1629	1629	entered into a security agreement to which a new debtor has become bound under § 6A-9-203(d). 32
1630	1630	(61) “Payment intangible” means a general intangible under which the account debtor’s 33
1631	1631	principal obligation is a monetary obligation. The term includes a controllable payment intangible. 34
1632	1632
1633	1633
1634	1634	LC001903 - Page 45 of 113
1635	1635	(62) “Person related to”, with respect to an individual, means: 1
1636	1636	(i) The spouse of the individual; 2
1637	1637	(ii) A brother, brother-in-law, sister, or sister-in-law of the individual; 3
1638	1638	(iii) An ancestor or lineal descendant of the individual or the individual’s spouse; or 4
1639	1639	(iv) Any other relative, by blood or marriage, of the individual or the individual’s spouse 5
1640	1640	who shares the same home with the individual. 6
1641	1641	(63) “Person related to”, with respect to an organization, means: 7
1642	1642	(i) A person directly or indirectly controlling, controlled by, or under common control with 8
1643	1643	the organization; 9
1644	1644	(ii) An officer or director of, or a person performing similar functions with respect to, the 10
1645	1645	organization; 11
1646	1646	(iii) An officer or director of, or a person performing similar functions with respect to, a 12
1647	1647	person described in subparagraph (i); 13
1648	1648	(iv) The spouse of an individual described in subparagraph (i), (ii), or (iii); or 14
1649	1649	(v) An individual who is related by blood or marriage to an individual described in 15
1650	1650	subparagraph (i), (ii), (iii), or (iv) and shares the same home with the individual. 16
1651	1651	(64) “Proceeds”, except as used in § 6A-9-609(b), means the following property: 17
1652	1652	(i) Whatever is acquired upon the sale, lease, license, exchange, or other disposition of 18
1653	1653	collateral; 19
1654	1654	(ii) Whatever is collected on, or distributed on account of, collateral; 20
1655	1655	(iii) Rights arising out of collateral; 21
1656	1656	(iv) To the extent of the value of collateral, claims arising out of the loss, nonconformity, 22
1657	1657	or interference with the use of, defects or infringement of rights in, or damage to, the collateral; or 23
1658	1658	(v) To the extent of the value of collateral and to the extent payable to the debtor or the 24
1659	1659	secured party, insurance payable by reason of the loss or nonconformity of, defects or infringement 25
1660	1660	of rights in, or damage to, the collateral. 26
1661	1661	(65) “Promissory note” means an instrument that evidences a promise to pay a monetary 27
1662	1662	obligation, does not evidence an order to pay, and does not contain an acknowledgment by a bank 28
1663	1663	that the bank has received for deposit a sum of money or funds. 29
1664	1664	(66) “Proposal” means a record authenticated signed by a secured party which includes the 30
1665	1665	terms on which the secured party is willing to accept collateral in full or partial satisfaction of the 31
1666	1666	obligation it secures pursuant to §§ 6A-9-620, 6A-9-621, and 6A-9-622. 32
1667	1667	(67) “Public-finance transaction” means a secured transaction in connection with which: 33
1668	1668	(i) Debt securities are issued; 34
1669	1669
1670	1670
1671	1671	LC001903 - Page 46 of 113
1672	1672	(ii) All or a portion of the securities issued have an initial stated maturity of at least 20 1
1673	1673	years; and 2
1674	1674	(iii) The debtor, obligor, secured party, account debtor or other person obligated on 3
1675	1675	collateral, assignor or assignee of a secured obligation, or assignor or assignee of a security interest 4
1676	1676	is a State or a governmental unit of a State. 5
1677	1677	(68) “Public organic record” means a record that is available to the public for inspection 6
1678	1678	and is: 7
1679	1679	(i) A record of consisting of the record initially filed with or issued by a state or the United 8
1680	1680	States to form or organize an organization and any record filed with or issued by the state of the 9
1681	1681	United States which amends or restates the initial record; 10
1682	1682	(ii) An organic record of a business trust consisting of the record initially filed with a state 11
1683	1683	and any record filed with the state which amends or restates the initial record, if a statute of the 12
1684	1684	state governing business trusts requires that the record be filed with the state; or 13
1685	1685	(iii) A record consisting of legislation enacted by the legislature of a state or the Congress 14
1686	1686	of the United States which forms or organizes an organization, any record amending the legislation, 15
1687	1687	and any record filed with or issued by the state or the United States which amends or restates the 16
1688	1688	name of the organization. 17
1689	1689	(69) “Pursuant to commitment”, with respect to an advance made or other value given by 18
1690	1690	a secured party, means pursuant to the secured party’s obligation, whether or not a subsequent event 19
1691	1691	of default or other event not within the secured party’s control has relieved or may relieve the 20
1692	1692	secured party from its obligation. 21
1693	1693	(70) “Record”, except as used in “for record”, “of record”, “record or legal title”, and 22
1694	1694	“record owner”, means information that is inscribed on a tangible medium or which is stored in an 23
1695	1695	electronic or other medium and is retrievable in perceivable form. 24
1696	1696	(71) “Registered organization” means an organization formed or organized solely under 25
1697	1697	the law of a single State or the United States by the filing of a public organic record with, the 26
1698	1698	issuance of a public organic record by, or the enactment of legislation by the state or United States. 27
1699	1699	The term includes a business trust that is formed or organized under the law of a single state if a 28
1700	1700	statute of the state governing business trusts requires that the business trust’s organic record be 29
1701	1701	filed with the state. 30
1702	1702	(72) “Secondary obligor” means an obligor to the extent that: 31
1703	1703	(i) The obligor’s obligation is secondary; or 32
1704	1704	(ii) The obligor has a right of recourse with respect to an obligation secured by collateral 33
1705	1705	against the debtor, another obligor, or property of either. 34
1706	1706
1707	1707
1708	1708	LC001903 - Page 47 of 113
1709	1709	(73) “Secured party” means: 1
1710	1710	(i) A person in whose favor a security interest is created or provided for under a security 2
1711	1711	agreement, whether or not any obligation to be secured is outstanding; 3
1712	1712	(ii) A person that holds an agricultural lien; 4
1713	1713	(iii) A consignor; 5
1714	1714	(iv) A person to which accounts, chattel paper, payment intangibles, or promissory notes 6
1715	1715	have been sold; 7
1716	1716	(v) A trustee, indenture trustee, agent, collateral agent, or other representative in whose 8
1717	1717	favor a security interest or agricultural lien is created or provided for; or 9
1718	1718	(vi) A person that holds a security interest arising under § 6A-2-401, 6A-2-505, 6A-2-10
1719	1719	711(3), 6A-2.1-508(5), 6A-4-210, or 6A-5-118. 11
1720	1720	(74) “Security agreement” means an agreement that creates or provides for a security 12
1721	1721	interest. 13
1722	1722	(75) “Send”, in connection with a record or notification, means: 14
1723	1723	(i) To deposit in the mail, deliver for transmission, or transmit by any other usual means of 15
1724	1724	communication, with postage or cost of transmission provided for, addressed to any address 16
1725	1725	reasonable under the circumstances; or 17
1726	1726	(ii) To cause the record or notification to be received within the time that it would have 18
1727	1727	been received if properly sent under subparagraph (i). [RESERVED] 19
1728	1728	(76) “Software” means a computer program and any supporting information provided in 20
1729	1729	connection with a transaction relating to the program. The term does not include a computer 21
1730	1730	program that is included in the definition of goods. 22
1731	1731	(77) “State” means a State of the United States, the District of Columbia, Puerto Rico, the 23
1732	1732	United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the 24
1733	1733	United States. 25
1734	1734	(78) “Supporting obligation” means a letter-of-credit right or secondary obligation that 26
1735	1735	supports the payment or performance of an account, chattel paper, a document, a general intangible, 27
1736	1736	an instrument, or investment property. 28
1737	1737	(79) “Tangible chattel paper” means chattel paper evidenced by a record or records 29
1738	1738	consisting of information that is inscribed on a tangible medium. [RESERVED] 30
1739	1739	(79.1) “Tangible money” means money in a tangible form. 31
1740	1740	(80) “Termination statement” means an amendment of a financing statement which: 32
1741	1741	(i) Identifies, by its file number, the initial financing statement to which it relates; and 33
1742	1742	(ii) Indicates either that it is a termination statement or that the identified financing 34
1743	1743
1744	1744
1745	1745	LC001903 - Page 48 of 113
1746	1746	statement is no longer effective. 1
1747	1747	(81) “Transmitting utility” means a person primarily engaged in the business of: 2
1748	1748	(i) Operating a railroad, subway, street railway, or trolley bus; 3
1749	1749	(ii) Transmitting communications electrically, electromagnetically, or by light; 4
1750	1750	(iii) Transmitting goods by pipeline or sewer; or 5
1751	1751	(iv) Transmitting or producing and transmitting electricity, steam, gas, or water. 6
1752	1752	(b) Definitions in other chapters. “Control” as provided in § 6A-7-106 and the following 7
1753	1753	definitions in other chapters apply to this chapter: 8
1754	1754	“Applicant”. § 6A-5-102. 9
1755	1755	“Beneficiary”. § 6A-5-102. 10
1756	1756	“Broker”. § 6A-8-102. 11
1757	1757	“Certificated security”. § 6A-8-102. 12
1758	1758	“Check”. § 6A-3-104. 13
1759	1759	“Clearing corporation”. § 6A-8-102. 14
1760	1760	“Contract for sale”. § 6A-2-106. 15
1761	1761	“Controllable electronic record” § 6A-12-102. 16
1762	1762	“Customer”. § 6A-4-104. 17
1763	1763	“Entitlement holder”. § 6A-8-102. 18
1764	1764	“Financial asset”. § 6A-8-102. 19
1765	1765	“Holder in due course”. § 6A-3-302. 20
1766	1766	“Issuer” (with respect to a letter of credit or letter-of-credit right). § 6A-5-102. 21
1767	1767	“Issuer” (with respect to a security). § 6A-8-201. 22
1768	1768	“Issuer” (with respect to documents of title). § 6A-7-102. 23
1769	1769	“Lease”. § 6A-2.1-103. 24
1770	1770	“Lease agreement”. § 6A-2.1-103. 25
1771	1771	“Lease contract”. § 6A-2.1-103. 26
1772	1772	“Leasehold interest”. § 6A-2.1-103. 27
1773	1773	“Lessee”. § 6A-2.1-103. 28
1774	1774	“Lessee in ordinary course of business”. § 6A-2.1-103. 29
1775	1775	“Lessor”. § 6A-2.1-103. 30
1776	1776	“Lessor’s residual interest”. § 6A-2.1-103. 31
1777	1777	“Letter of credit”. § 6A-5-102. 32
1778	1778	“Merchant”. § 6A-2-104. 33
1779	1779	“Negotiable instrument”. § 6A-3-104. 34
1780	1780
1781	1781
1782	1782	LC001903 - Page 49 of 113
1783	1783	“Nominated person”. § 6A-5-102. 1
1784	1784	“Note”. § 6A-3-104. 2
1785	1785	“Proceeds of a letter of credit”. § 6A-5-114. 3
1786	1786	“Protected purchaser” § 6A-8-303. 4
1787	1787	“Prove”. § 6A-3-103. 5
1788	1788	“Qualifying purchaser” § 6A-12-102. 6
1789	1789	“Sale”. § 6A-2-106. 7
1790	1790	“Securities account”. § 6A-8-501. 8
1791	1791	“Securities intermediary”. § 6A-8-102. 9
1792	1792	“Security”. § 6A-8-102. 10
1793	1793	“Security certificate”. § 6A-8-102. 11
1794	1794	“Security entitlement”. § 6A-8-102. 12
1795	1795	“Uncertificated security”. § 6A-8-102. 13
1796	1796	(c) Chapter 1 definitions and principles. Chapter 1 of this title contains general 14
1797	1797	definitions and principles of construction and interpretation applicable throughout this chapter. 15
1798	1798	6A-9-104. Control of deposit account. 16
1799	1799	(a) Requirements for control. A secured party has control of a deposit account if: 17
1800	1800	(1) the secured party is the bank with which the deposit account is maintained; 18
1801	1801	(2) the debtor, secured party, and bank have agreed in an authenticated a signed record that 19
1802	1802	the bank will comply with instructions originated by the secured party directing disposition of the 20
1803	1803	funds in the deposit account without further consent by the debtor; or 21
1804	1804	(3) the secured party becomes the bank’s customer with respect to the deposit account; or 22
1805	1805	(4) another person, other than the debtor: 23
1806	1806	(i) has control of the deposit account and acknowledges that it has control on behalf of the 24
1807	1807	secured party; or 25
1808	1808	(ii) obtains control of the deposit account after having acknowledged that it will obtain 26
1809	1809	control of the deposit account on behalf of the secured party. 27
1810	1810	(b) Debtor’s right to direct disposition. A secured party that has satisfied subsection (a) has 28
1811	1811	control, even if the debtor retains the right to direct the disposition of funds from the deposit 29
1812	1812	account. 30
1813	1813	6A-9-105. Control of electronic chattel paper Control of electronic copy of record 31
1814	1814	evidencing chattel paper. 32
1815	1815	(a) General rule: control of electronic chattel paper. A secured party has control of an 33
1816	1816	electronic chattel paper if a system employed for evidencing the transfer of interests in the chattel 34
1817	1817
1818	1818
1819	1819	LC001903 - Page 50 of 113
1820	1820	paper reliably establishes the secured party as the person to which the chattel paper was assigned. 1
1821	1821	electronic copy of record evidencing chattel paper. A purchaser has control of an authoritative 2
1822	1822	electronic copy of a record evidencing chattel paper if a system employed for evidencing the 3
1823	1823	assignment of interests in the chattel paper reliably establishes the purchaser as the person to which 4
1824	1824	the authoritative electronic copy was assigned. 5
1825	1825	(b) Specific facts giving control. A system satisfies subsection (a) if the record or records 6
1826	1826	comprising the chattel paper are created, stored, and assigned in such a manner that: 7
1827	1827	(1) A single authoritative copy of the record or records exists which is unique, identifiable 8
1828	1828	and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable; 9
1829	1829	(2) The authoritative copy identifies the secured party as the assignee of the record or 10
1830	1830	records; 11
1831	1831	(3) The authoritative copy is communicated to and maintained by the secured party or its 12
1832	1832	designated custodian; 13
1833	1833	(4) Copies or amendments that add or change an identified assignee of the authoritative 14
1834	1834	copy can be made only with the consent of the secured party; 15
1835	1835	(5) Each copy of the authoritative copy and any copy of a copy is readily identifiable as a 16
1836	1836	copy that is not the authoritative copy; and 17
1837	1837	(6) Any amendment of the authoritative copy is readily identifiable as authorized or 18
1838	1838	unauthorized. 19
1839	1839	(b) Single authoritative copy. A system satisfies subsection (a) of this section if the record 20
1840	1840	or records evidencing the chattel paper are created, stored, and assigned in a manner that: 21
1841	1841	(1) a single authoritative copy of the record or records exists which is unique, identifiable, 22
1842	1842	and, except as otherwise provided in subsections (b)(4), (b)(5), and (b)(6), unalterable; 23
1843	1843	(2) the authoritative copy identifies the purchaser as the assignee of the record or records; 24
1844	1844	(3) the authoritative copy is communicated to and maintained by the purchaser or its 25
1845	1845	designated custodian; 26
1846	1846	(4) copies or amendments that add or change an identified assignee of the authoritative 27
1847	1847	copy can be made only with the consent of the purchaser; 28
1848	1848	(5) each copy of the authoritative copy and any copy of a copy is readily identifiable as a 29
1849	1849	copy that is not the authoritative copy; and 30
1850	1850	(6) any amendment of the authoritative copy is readily identifiable as authorized or 31
1851	1851	unauthorized. 32
1852	1852	(c) One or more authoritative copies. A system satisfies subsection (a) of this section, and 33
1853	1853	a purchaser has control of an authoritative electronic copy of a record evidencing chattel paper, if 34
1854	1854
1855	1855
1856	1856	LC001903 - Page 51 of 113
1857	1857	the electronic copy, a record attached to or logically associated with the electronic copy, or a system 1
1858	1858	in which the electronic copy is recorded: 2
1859	1859	(1) enables the purchaser readily to identify each electronic copy as either an authoritative 3
1860	1860	copy or a nonauthoritative copy; 4
1861	1861	(2) enables the purchaser readily to identify itself in any way, including by name, 5
1862	1862	identifying number, cryptographic key, office, or account number, as the assignee of the 6
1863	1863	authoritative electronic copy; and 7
1864	1864	(3) gives the purchaser exclusive power, subject to subsection (d) of this section, to: 8
1865	1865	(i) prevent others from adding or changing an identified assignee of the authoritative 9
1866	1866	electronic copy; and 10
1867	1867	(ii) transfer control of the authoritative electronic copy. 11
1868	1868	(d) Meaning of exclusive. Subject to subsection (e) of this section, a power is exclusive 12
1869	1869	under subsection (c)(3)(i) and (ii) of this section even if: 13
1870	1870	(1) the authoritative electronic copy, a record attached to or logically associated with the 14
1871	1871	authoritative electronic copy, or a system in which the authoritative electronic copy is recorded 15
1872	1872	limits the use of the authoritative electronic copy or has a protocol programmed to cause a change, 16
1873	1873	including a transfer or loss of control; or 17
1874	1874	(2) the power is shared with another person. 18
1875	1875	(e) When power not shared with another person. A power of a purchaser is not shared with 19
1876	1876	another person under subsection (d)(2) of this section and the purchaser’s power is not exclusive 20
1877	1877	if: 21
1878	1878	(1) the purchaser can exercise the power only if the power also is exercised by the other 22
1879	1879	person; and 23
1880	1880	(2) the other person: 24
1881	1881	(i) can exercise the power without exercise of the power by the purchaser; or 25
1882	1882	(ii) is the transferor to the purchaser of an interest in the chattel paper. 26
1883	1883	(f) Presumption of exclusivity of certain powers. If a purchaser has the powers specified in 27
1884	1884	subsection (c)(3)(i) and (ii) of this section, the powers are presumed to be exclusive. 28
1885	1885	(g) Obtaining control through another person. A purchaser has control of an authoritative 29
1886	1886	electronic copy of a record evidencing chattel paper if another person, other than the transferor to 30
1887	1887	the purchaser of an interest in the chattel paper: 31
1888	1888	(1) has control of the authoritative electronic copy and acknowledges that it has control on 32
1889	1889	behalf of the purchaser; or 33
1890	1890	(2) obtains control of the authoritative electronic copy after having acknowledged that it 34
1891	1891
1892	1892
1893	1893	LC001903 - Page 52 of 113
1894	1894	will obtain control of the electronic copy on behalf of the purchaser. 1
1895	1895	6A-9-203. Attachment and enforceability of security interest; proceeds; supporting 2
1896	1896	obligations; formal requisites. 3
1897	1897	(a) Attachment. A security interest attaches to collateral when it becomes enforceable 4
1898	1898	against the debtor with respect to the collateral, unless an agreement expressly postpones the time 5
1899	1899	of attachment. 6
1900	1900	(b) Enforceability. Except as otherwise provided in subsections (c) through (i), a security 7
1901	1901	interest is enforceable against the debtor and third parties with respect to the collateral only if: 8
1902	1902	(1) Value has been given; 9
1903	1903	(2) The debtor has rights in the collateral or the power to transfer rights in the collateral to 10
1904	1904	a secured party; and 11
1905	1905	(3) One of the following conditions is met: 12
1906	1906	(i) The debtor has authenticated signed a security agreement that provides a description of 13
1907	1907	the collateral and, if the security interest covers timber to be cut, a description of the land concerned; 14
1908	1908	(ii) The collateral is not a certificated security and is in the possession of the secured party 15
1909	1909	under § 6A-9-313 pursuant to the debtor’s security agreement; 16
1910	1910	(iii) The collateral is a certificated security in registered form and the security certificate 17
1911	1911	has been delivered to the secured party under § 6A-8-301 pursuant to the debtor’s security 18
1912	1912	agreement; or 19
1913	1913	(iv) The collateral is controllable accounts, controllable electronic records, controllable 20
1914	1914	payment intangibles, deposit accounts, electronic chattel paper documents, electronic money, 21
1915	1915	investment property, or letter-of-credit rights, or electronic documents, and the secured party has 22
1916	1916	control under §§ 6A-7-106, 6A-9-104, 6A-9-105, 6A-9-105.1, 6A-9-106, or 6A-9-107, or 6A-9-23
1917	1917	107.1 pursuant to the debtor’s security agreement; or 24
1918	1918	(v) The collateral is chattel paper and the secured party has possession and control under § 25
1919	1919	6A-9-314.1 pursuant to the debtor’s security agreement. 26
1920	1920	(c) Other UCC provisions. Subsection (b) is subject to § 6A-4-210 on the security interest 27
1921	1921	of a collecting bank, § 6A-5-118 on the security interest of a letter-of-credit issuer or nominated 28
1922	1922	person, § 6A-9-110 on a security interest arising under chapter 2 or 2.1, and § 6A-9-206 on security 29
1923	1923	interests in investment property. 30
1924	1924	(d) When person becomes bound by another person’s security agreement. A person 31
1925	1925	becomes bound as debtor by a security agreement entered into by another person if, by operation 32
1926	1926	of law other than this chapter or by contract: 33
1927	1927	(1) The security agreement becomes effective to create a security interest in the person’s 34
1928	1928
1929	1929
1930	1930	LC001903 - Page 53 of 113
1931	1931	property; or 1
1932	1932	(2) The person becomes generally obligated for the obligations of the other person, 2
1933	1933	including the obligation secured under the security agreement, and acquires or succeeds to all or 3
1934	1934	substantially all of the assets of the other person. 4
1935	1935	(e) Effect of new debtor becoming bound. If a new debtor becomes bound as debtor by a 5
1936	1936	security agreement entered into by another person: 6
1937	1937	(1) The agreement satisfies subsection (b)(3) with respect to existing or after-acquired 7
1938	1938	property of the new debtor to the extent the property is described in the agreement; and 8
1939	1939	(2) Another agreement is not necessary to make a security interest in the property 9
1940	1940	enforceable. 10
1941	1941	(f) Proceeds and supporting obligations. The attachment of a security interest in collateral 11
1942	1942	gives the secured party the rights to proceeds provided by § 6A-9-315 and is also attachment of a 12
1943	1943	security interest in a supporting obligation for the collateral. 13
1944	1944	(g) Lien securing right to payment. The attachment of a security interest in a right to 14
1945	1945	payment or performance secured by a security interest or other lien on personal or real property is 15
1946	1946	also attachment of a security interest in the security interest, mortgage, or other lien. 16
1947	1947	(h) Security entitlement carried in securities account. The attachment of a security interest 17
1948	1948	in a securities account is also attachment of a security interest in the security entitlements carried 18
1949	1949	in the securities account. 19
1950	1950	(i) Commodity contracts carried in commodity account. The attachment of a security 20
1951	1951	interest in a commodity account is also attachment of a security interest in the commodity contracts 21
1952	1952	carried in the commodity account. 22
1953	1953	6A-9-204. After-acquired property; future advances. 23
1954	1954	(a) After-acquired collateral. Except as otherwise provided in subsection (b), a security 24
1955	1955	agreement may create or provide for a security interest in after-acquired collateral. 25
1956	1956	(b) When after-acquired property clause not effective. A Subject to subsection (c)(1) of 26
1957	1957	this section, a security interest does not attach under a term constituting an after-acquired property 27
1958	1958	clause to: 28
1959	1959	(1) Consumer goods, other than an accession when given as additional security, unless the 29
1960	1960	debtor acquires rights in them within 10 days after the secured party gives value; or 30
1961	1961	(2) A commercial tort claim. 31
1962	1962	(c) Limitation on subsection (b). Subsection (b) does not prevent a security interest from 32
1963	1963	attaching: 33
1964	1964	(1) to consumer goods as proceeds under § 6A-9-315(a) or commingled goods under § 6A-34
1965	1965
1966	1966
1967	1967	LC001903 - Page 54 of 113
1968	1968	9-336(c); 1
1969	1969	(2) to a commercial tort claim as proceeds under § 6A-9-315(a); or 2
1970	1970	(3) under an after-acquired property clause to property that is proceeds of consumer goods 3
1971	1971	or a commercial tort claim. 4
1972	1972	(c)(d) Future advances and other value. A security agreement may provide that collateral 5
1973	1973	secures, or that accounts, chattel paper, payment intangibles, or promissory notes are sold in 6
1974	1974	connection with, future advances or other value, whether or not the advances or value are given 7
1975	1975	pursuant to commitment. 8
1976	1976	6A-9-207. Rights and duties of secured party having possession or control of 9
1977	1977	collateral. 10
1978	1978	(a) Duty of care when secured party in possession. Except as otherwise provided in 11
1979	1979	subsection (d), a secured party shall use reasonable care in the custody and preservation of collateral 12
1980	1980	in the secured party’s possession. In the case of chattel paper or an instrument, reasonable care 13
1981	1981	includes taking necessary steps to preserve rights against prior parties unless otherwise agreed. 14
1982	1982	(b) Expenses, risks, duties, and rights when secured party in possession. Except as 15
1983	1983	otherwise provided in subsection (d), if a secured party has possession of collateral: 16
1984	1984	(1) Reasonable expenses, including the cost of insurance and payment of taxes or other 17
1985	1985	charges, incurred in the custody, preservation, use, or operation of the collateral are chargeable to 18
1986	1986	the debtor and are secured by the collateral; 19
1987	1987	(2) The risk of accidental loss or damage is on the debtor to the extent of a deficiency in 20
1988	1988	any effective insurance coverage; 21
1989	1989	(3) The secured party shall keep the collateral identifiable, but fungible collateral may be 22
1990	1990	commingled; and 23
1991	1991	(4) The secured party may use or operate the collateral: 24
1992	1992	(i) For the purpose of preserving the collateral or its value; 25
1993	1993	(ii) As permitted by an order of a court having competent jurisdiction; or 26
1994	1994	(iii) Except in the case of consumer goods, in the manner and to the extent agreed by the 27
1995	1995	debtor. 28
1996	1996	(c) Duties and rights when secured party in possession or control. Except as otherwise 29
1997	1997	provided in subsection (d), a secured party having possession of collateral or control of collateral 30
1998	1998	under §§ 6A-7-106, 6A-9-104, 6A-9-105, 6A-9-105.1, 6A-9-106, or 6A-9-107, or 6A-9-107.1: 31
1999	1999	(1) May hold as additional security any proceeds, except money or funds, received from 32
2000	2000	the collateral; 33
2001	2001	(2) Shall apply money or funds received from the collateral to reduce the secured 34
2002	2002
2003	2003
2004	2004	LC001903 - Page 55 of 113
2005	2005	obligation, unless remitted to the debtor; and 1
2006	2006	(3) May create a security interest in the collateral. 2
2007	2007	(d) Buyer of certain rights to payment. If the secured party is a buyer of accounts, chattel 3
2008	2008	paper, payment intangibles, or promissory notes or a consignor: 4
2009	2009	(1) Subsection (a) does not apply unless the secured party is entitled under an agreement: 5
2010	2010	(i) To charge back uncollected collateral; or 6
2011	2011	(ii) Otherwise to full or limited recourse against the debtor or a secondary obligor based on 7
2012	2012	the nonpayment or other default of an account debtor or other obligor on the collateral; and 8
2013	2013	(2) Subsections (b) and (c) do not apply. 9
2014	2014	6A-9-208. Additional duties of secured party having control of collateral. 10
2015	2015	(a) Applicability of section. This section applies to cases in which there is no outstanding 11
2016	2016	secured obligation and the secured party is not committed to make advances, incur obligations, or 12
2017	2017	otherwise give value. 13
2018	2018	(b) Duties of secured party after receiving demand from debtor. Within 10 days after 14
2019	2019	receiving an authenticated a signed demand by the debtor: 15
2020	2020	(1) A secured party having control of a deposit account under § 6A-9-104(a)(2) shall send 16
2021	2021	to the bank with which the deposit account is maintained an authenticated statement a signed record 17
2022	2022	that releases the bank from any further obligation to comply with instructions originated by the 18
2023	2023	secured party; 19
2024	2024	(2) A secured party having control of a deposit account under § 6A-9-104(a)(3) shall: 20
2025	2025	(i) Pay the debtor the balance on deposit in the deposit account; or 21
2026	2026	(ii) Transfer the balance on deposit into a deposit account in the debtor’s name; 22
2027	2027	(3) A secured party, other than a buyer, having control of electronic chattel paper under § 23
2028	2028	6A-9-105 shall: 24
2029	2029	(i) Communicate the authoritative copy of the electronic chattel paper to the debtor or its 25
2030	2030	designated custodian; 26
2031	2031	(ii) If the debtor designates a custodian that is the designated custodian with which the 27
2032	2032	authoritative copy of the electronic chattel paper is maintained for the secured party, communicate 28
2033	2033	to the custodian an authenticated record releasing the designated custodian from any further 29
2034	2034	obligation to comply with instructions originated by the secured party and instructing the custodian 30
2035	2035	to comply with instructions originated by the debtor; and 31
2036	2036	(iii) Take appropriate action to enable the debtor or its designated custodian to make copies 32
2037	2037	of or revisions to the authoritative copy which add or change an identified assignee of the 33
2038	2038	authoritative copy without the consent of the secured party; A secured party, other than a buyer, 34
2039	2039
2040	2040
2041	2041	LC001903 - Page 56 of 113
2042	2042	having control of electronic chattel paper under § 6A-9-105 of an authoritative electronic copy of 1
2043	2043	a record evidencing chattel paper shall transfer control of the electronic copy to the debtor or a 2
2044	2044	person designated by the debtor; 3
2045	2045	(4) A secured party having control of investment property under § 6A-8-106(d)(2) or 6A-4
2046	2046	9-106(b) shall send to the securities intermediary or commodity intermediary with which the 5
2047	2047	security entitlement or commodity contract is maintained an authenticated a signed record that 6
2048	2048	releases the securities intermediary or commodity intermediary from any further obligation to 7
2049	2049	comply with entitlement orders or directions originated by the secured party; 8
2050	2050	(5) A secured party having control of a letter-of-credit right under § 6A-9-107 shall send 9
2051	2051	to each person having an unfulfilled obligation to pay or deliver proceeds of the letter of credit to 10
2052	2052	the secured party an authenticated a signed release from any further obligation to pay or deliver 11
2053	2053	proceeds of the letter of credit to the secured party; and 12
2054	2054	(6) A secured party having control of an electronic document shall: 13
2055	2055	(a) Give control of the electronic document to the debtor or its designated custodian; 14
2056	2056	(b) If the debtor designates a custodian that is the designated custodian with which the 15
2057	2057	authoritative copy of the electronic document is maintaining for the secured party, communicate to 16
2058	2058	the custodian an authenticated record releasing the designated custodian from any further obligation 17
2059	2059	to comply with instructions originated by the secured party and instructing the custodian to comply 18
2060	2060	with instructions originated by the debtor; and 19
2061	2061	(c) Take appropriate action to enable the debtor or its designated custodian to make copies 20
2062	2062	of or revisions to the authoritative copy which add or change an identified assignee of the 21
2063	2063	authoritative copy without the consent of the secured party. A secured party having control under 22
2064	2064	§ 6A-7-106 of an authoritative electronic copy of an electronic document of title shall transfer 23
2065	2065	control of the electronic copy to the debtor or a person designated by the debtor; 24
2066	2066	(7) A secured party having control under § 6A-9-105.1 of electronic money shall transfer 25
2067	2067	control of the electronic money to the debtor or a person designated by the debtor; and 26
2068	2068	(8) A secured party having control under § 6A-12-105 of a controllable electronic record, 27
2069	2069	other than a buyer of a controllable account or controllable payment intangible evidenced by the 28
2070	2070	controllable electronic record, shall transfer control of the controllable electronic record to the 29
2071	2071	debtor or a person designated by the debtor. 30
2072	2072	6A-9-209. Duties of secured party if account debtor has been notified of assignment. 31
2073	2073	(a) Applicability of section. Except as otherwise provided in subsection (c), this section 32
2074	2074	applies if: 33
2075	2075	(1) There is no outstanding secured obligation; and 34
2076	2076
2077	2077
2078	2078	LC001903 - Page 57 of 113
2079	2079	(2) The secured party is not committed to make advances, incur obligations, or otherwise 1
2080	2080	give value. 2
2081	2081	(b) Duties of secured party after receiving demand from debtor. Within 10 days after 3
2082	2082	receiving an authenticated a signed demand by the debtor, a secured party shall send to an account 4
2083	2083	debtor that has received notification under §§ 6A-9-406(a) or 6A-12-106(b) of an assignment to 5
2084	2084	the secured party as assignee under § 6A-9-406(a) an authenticated a signed record that releases 6
2085	2085	the account debtor from any further obligation to the secured party. 7
2086	2086	(c) Inapplicability to sales. This section does not apply to an assignment constituting the 8
2087	2087	sale of an account, chattel paper, or payment intangible. 9
2088	2088	6A-9-210. Request for accounting; request regarding list of collateral or statement of 10
2089	2089	account. 11
2090	2090	(a) Definitions. In this section: 12
2091	2091	(1) “Request” means a record of a type described in paragraph (2), (3), or (4). 13
2092	2092	(2) “Request for an accounting” means a record authenticated signed by a debtor requesting 14
2093	2093	that the recipient provide an accounting of the unpaid obligations secured by collateral and 15
2094	2094	reasonably identifying the transaction or relationship that is the subject of the request. 16
2095	2095	(3) “Request regarding a list of collateral” means a record authenticated signed by a debtor 17
2096	2096	requesting that the recipient approve or correct a list of what the debtor believes to be the collateral 18
2097	2097	securing an obligation and reasonably identifying the transaction or relationship that is the subject 19
2098	2098	of the request. 20
2099	2099	(4) “Request regarding a statement of account” means a record authenticated signed by a 21
2100	2100	debtor requesting that the recipient approve or correct a statement indicating what the debtor 22
2101	2101	believes to be the aggregate amount of unpaid obligations secured by collateral as of a specified 23
2102	2102	date and reasonably identifying the transaction or relationship that is the subject of the request. 24
2103	2103	(b) Duty to respond to requests. Subject to subsections (c), (d), (e), and (f), a secured party, 25
2104	2104	other than a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a 26
2105	2105	consignor, shall comply with a request within 14 days after receipt: 27
2106	2106	(1) In the case of a request for an accounting, by authenticating signing and sending to the 28
2107	2107	debtor an accounting; and 29
2108	2108	(2) In the case of a request regarding a list of collateral or a request regarding a statement 30
2109	2109	of account, by authenticating signing and sending to the debtor an approval or correction. 31
2110	2110	(c) Request regarding list of collateral; statement concerning type of collateral. A secured 32
2111	2111	party that claims a security interest in all of a particular type of collateral owned by the debtor may 33
2112	2112	comply with a request regarding a list of collateral by sending to the debtor an authenticated a 34
2113	2113
2114	2114
2115	2115	LC001903 - Page 58 of 113
2116	2116	signed record including a statement to that effect within 14 days after receipt. 1
2117	2117	(d) Request regarding list of collateral; no interest claimed. A person that receives a request 2
2118	2118	regarding a list of collateral, claims no interest in the collateral when it receives the request, and 3
2119	2119	claimed an interest in the collateral at an earlier time shall comply with the request within 14 days 4
2120	2120	after receipt by sending to the debtor an authenticated a signed record: 5
2121	2121	(1) Disclaiming any interest in the collateral; and 6
2122	2122	(2) If known to the recipient, providing the name and mailing address of any assignee of 7
2123	2123	or successor to the recipient’s interest in the collateral. 8
2124	2124	(e) Request for accounting or regarding statement of account; no interest in obligation 9
2125	2125	claimed. A person that receives a request for an accounting or a request regarding a statement of 10
2126	2126	account, claims no interest in the obligations when it receives the request, and claimed an interest 11
2127	2127	in the obligations at an earlier time shall comply with the request within 14 days after receipt by 12
2128	2128	sending to the debtor an authenticated a signed record: 13
2129	2129	(1) Disclaiming any interest in the obligations; and 14
2130	2130	(2) If known to the recipient, providing the name and mailing address of any assignee of 15
2131	2131	or successor to the recipient’s interest in the obligations. 16
2132	2132	(f) Charges for responses. A debtor is entitled without charge to one response to a request 17
2133	2133	under this section during any six-month period. The secured party may require payment of a charge 18
2134	2134	not exceeding $ 25 for each additional response. 19
2135	2135	6A-9-301. Law governing perfection and priority of security interests. 20
2136	2136	Except as otherwise provided in §§ 6A-9-303 through 6A-9-306 6A-9-306.2, the following 21
2137	2137	rules determine the law governing perfection, the effect of perfection or nonperfection, and the 22
2138	2138	priority of a security interest in collateral: 23
2139	2139	(1) Except as otherwise provided in this section, while a debtor is located in a jurisdiction, 24
2140	2140	the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and 25
2141	2141	the priority of a security interest in collateral. 26
2142	2142	(2) While collateral is located in a jurisdiction, the local law of that jurisdiction governs 27
2143	2143	perfection, the effect of perfection or nonperfection, and the priority of a possessory security 28
2144	2144	interest in that collateral. 29
2145	2145	(3) Except as otherwise provided in paragraph (4), while tangible negotiable documents, 30
2146	2146	goods, instruments, money, or tangible chattel paper or tangible money is located in a jurisdiction, 31
2147	2147	the local law of that jurisdiction governs: 32
2148	2148	(i) Perfection of a security interest in the goods by filing a fixture filing; 33
2149	2149	(ii) Perfection of a security interest in timber to be cut; and 34
2150	2150
2151	2151
2152	2152	LC001903 - Page 59 of 113
2153	2153	(iii) The effect of perfection or nonperfection and the priority of a nonpossessory security 1
2154	2154	interest in the collateral. 2
2155	2155	(4) The local law of the jurisdiction in which the wellhead or minehead is located governs 3
2156	2156	perfection, the effect of perfection or nonperfection, and the priority of a security interest in as-4
2157	2157	extracted collateral. 5
2158	2158	6A-9-304. Law governing perfection and priority of security interests in deposit 6
2159	2159	accounts. 7
2160	2160	(a) Law of bank’s jurisdiction governs. The local law of a bank’s jurisdiction governs 8
2161	2161	perfection, the effect of perfection or nonperfection, and the priority of a security interest in a 9
2162	2162	deposit account maintained with that bank even if the transaction does not bear any relation to the 10
2163	2163	bank's jurisdiction. 11
2164	2164	(b) Bank’s jurisdiction. The following rules determine a bank’s jurisdiction for purposes 12
2165	2165	of this part: 13
2166	2166	(1) If an agreement between the bank and its customer governing the deposit account 14
2167	2167	expressly provides that a particular jurisdiction is the bank’s jurisdiction for purposes of this part, 15
2168	2168	this chapter, or the Uniform Commercial Code, that jurisdiction is the bank’s jurisdiction. 16
2169	2169	(2) If paragraph (1) does not apply and an agreement between the bank and its customer 17
2170	2170	governing the deposit account expressly provides that the agreement is governed by the law of a 18
2171	2171	particular jurisdiction, that jurisdiction is the bank’s jurisdiction. 19
2172	2172	(3) If neither paragraph (1) nor paragraph (2) applies and an agreement between the bank 20
2173	2173	and its customer governing the deposit account expressly provides that the deposit account is 21
2174	2174	maintained at an office in a particular jurisdiction, that jurisdiction is the bank’s jurisdiction. 22
2175	2175	(4) If none of the preceding paragraphs applies, the bank’s jurisdiction is the jurisdiction 23
2176	2176	in which the office identified in an account statement as the office serving the customer’s account 24
2177	2177	is located. 25
2178	2178	(5) If none of the preceding paragraphs applies, the bank’s jurisdiction is the jurisdiction 26
2179	2179	in which the chief executive office of the bank is located. 27
2180	2180	6A-9-305. Law governing perfection and priority of security interests in investment 28
2181	2181	property. 29
2182	2182	(a) Governing law: general rules. Except as otherwise provided in subsection (c), the 30
2183	2183	following rules apply: 31
2184	2184	(1) While a security certificate is located in a jurisdiction, the local law of that jurisdiction 32
2185	2185	governs perfection, the effect of perfection or nonperfection, and the priority of a security interest 33
2186	2186	in the certificated security represented thereby. 34
2187	2187
2188	2188
2189	2189	LC001903 - Page 60 of 113
2190	2190	(2) The local law of the issuer’s jurisdiction as specified in § 6A-8-110(d) governs 1
2191	2191	perfection, the effect of perfection or nonperfection, and the priority of a security interest in an 2
2192	2192	uncertificated security. 3
2193	2193	(3) The local law of the securities intermediary’s jurisdiction as specified in § 6A-8-110(e) 4
2194	2194	governs perfection, the effect of perfection or nonperfection, and the priority of a security interest 5
2195	2195	in a security entitlement or securities account. 6
2196	2196	(4) The local law of the commodity intermediary’s jurisdiction governs perfection, the 7
2197	2197	effect of perfection or nonperfection, and the priority of a security interest in a commodity contract 8
2198	2198	or commodity account. 9
2199	2199	(5) Subsections (a)(2), (a)(3) and (a)(4) of this section apply even if the transaction does 10
2200	2200	not bear any relation to the jurisdiction. 11
2201	2201	(b) Commodity intermediary’s jurisdiction. The following rules determine a commodity 12
2202	2202	intermediary’s jurisdiction for purposes of this part: 13
2203	2203	(1) If an agreement between the commodity intermediary and commodity customer 14
2204	2204	governing the commodity account expressly provides that a particular jurisdiction is the commodity 15
2205	2205	intermediary’s jurisdiction for purposes of this part, this chapter, or the Uniform Commercial Code, 16
2206	2206	that jurisdiction is the commodity intermediary’s jurisdiction. 17
2207	2207	(2) If paragraph (1) does not apply and an agreement between the commodity intermediary 18
2208	2208	and commodity customer governing the commodity account expressly provides that the agreement 19
2209	2209	is governed by the law of a particular jurisdiction, that jurisdiction is the commodity intermediary’s 20
2210	2210	jurisdiction. 21
2211	2211	(3) If neither paragraph (1) nor paragraph (2) applies and an agreement between the 22
2212	2212	commodity intermediary and commodity customer governing the commodity account expressly 23
2213	2213	provides that the commodity account is maintained at an office in a particular jurisdiction, that 24
2214	2214	jurisdiction is the commodity intermediary’s jurisdiction. 25
2215	2215	(4) If none of the preceding paragraphs applies, the commodity intermediary’s jurisdiction 26
2216	2216	is the jurisdiction in which the office identified in an account statement as the office serving the 27
2217	2217	commodity customer’s account is located. 28
2218	2218	(5) If none of the preceding paragraphs applies, the commodity intermediary’s jurisdiction 29
2219	2219	is the jurisdiction in which the chief executive office of the commodity intermediary is located. 30
2220	2220	(c) When perfection governed by law of jurisdiction where debtor located. The local law 31
2221	2221	of the jurisdiction in which the debtor is located governs: 32
2222	2222	(1) Perfection of a security interest in investment property by filing; 33
2223	2223	(2) Automatic perfection of a security interest in investment property created by a broker 34
2224	2224
2225	2225
2226	2226	LC001903 - Page 61 of 113
2227	2227	or securities intermediary; and 1
2228	2228	(3) Automatic perfection of a security interest in a commodity contract or commodity 2
2229	2229	account created by a commodity intermediary. 3
2230	2230	6A-9-310. When filing required to perfect security interest or agricultural lien; 4
2231	2231	security interests and agricultural liens to which filing provisions do not apply. 5
2232	2232	(a) General rule: perfection by filing. Except as otherwise provided in subsection (b) and § 6
2233	2233	6A-9-312(b), a financing statement must be filed to perfect all security interests and agricultural 7
2234	2234	liens. 8
2235	2235	(b) Exceptions: filing not necessary. The filing of a financing statement is not necessary to 9
2236	2236	perfect a security interest: 10
2237	2237	(1) That is perfected under § 6A-9-308(d), (e), (f), or (g); 11
2238	2238	(2) That is perfected under § 6A-9-309 when it attaches; 12
2239	2239	(3) In property subject to a statute, regulation, or treaty described in § 6A-9-311(a); 13
2240	2240	(4) In goods in possession of a bailee which is perfected under § 6A-9-312(d)(1) or (2); 14
2241	2241	(5) In certificated securities, documents, goods, or instruments which is perfected without 15
2242	2242	filing, control or possession under § 6A-9-312(e), (f), or (g); 16
2243	2243	(6) In collateral in the secured party’s possession under § 6A-9-313; 17
2244	2244	(7) In a certificated security which is perfected by delivery of the security certificate to the 18
2245	2245	secured party under § 6A-9-313; 19
2246	2246	(8) In controllable accounts, controllable electronic records, controllable payment 20
2247	2247	intangibles, deposit accounts, electronic chattel paper, electronic documents, investment property, 21
2248	2248	or letter-of-credit rights which is perfected by control under § 6A-9-314; 22
2249	2249	(9) In chattel paper which is perfected by possession and control under § 6A-9-314.1; 23
2250	2250	(9)(10) In proceeds which is perfected under § 6A-9-315; or 24
2251	2251	(10)(11) That is perfected under § 6A-9-316. 25
2252	2252	(c) Assignment of perfected security interest. If a secured party assigns a perfected security 26
2253	2253	interest or agricultural lien, a filing under this chapter is not required to continue the perfected status 27
2254	2254	of the security interest against creditors of and transferees from the original debtor. 28
2255	2255	6A-9-312. Perfection of security interests in chattel paper, deposit accounts, 29
2256	2256	documents, goods covered by documents, instruments, investment property, letter-of-credit 30
2257	2257	rights, and money; perfection by permissive filing; temporary perfection without filing or 31
2258	2258	transfer of possession Perfection of security interests in chattel paper, controllable accounts, 32
2259	2259	controllable electronic records, controllable payment intangibles, deposit accounts, 33
2260	2260	negotiable documents, goods covered by documents, instruments, investment property, 34
2261	2261
2262	2262
2263	2263	LC001903 - Page 62 of 113
2264	2264	letter-of-credit rights, and money; perfection by permissive filing; temporary perfection 1
2265	2265	without filing or transfer of possession. 2
2266	2266	(a) Perfection by filing permitted. A security interest in chattel paper, negotiable 3
2267	2267	documents, controllable accounts, controllable electronic records, controllable payment 4
2268	2268	intangibles, instruments, or investment property, or negotiable documents may be perfected by 5
2269	2269	filing. 6
2270	2270	(b) Control or possession of certain collateral. Except as otherwise provided in § 6A-9-7
2271	2271	315(c) and (d) for proceeds: 8
2272	2272	(1) A security interest in a deposit account may be perfected only by control under § 6A-9
2273	2273	9-314; 10
2274	2274	(2) And except as otherwise provided in § 6A-9-308(d), a security interest in a letter-of-11
2275	2275	credit right may be perfected only by control under § 6A-9-314; and 12
2276	2276	(3) A security interest in tangible money may be perfected only by the secured party’s 13
2277	2277	taking possession under § 6A-9-313; and 14
2278	2278	(4) A security interest in electronic money may be perfected only by control under § 6A-15
2279	2279	9-314. 16
2280	2280	(c) Goods covered by negotiable document. While goods are in the possession of a bailee 17
2281	2281	that has issued a negotiable document covering the goods: 18
2282	2282	(1) A security interest in the goods may be perfected by perfecting a security interest in the 19
2283	2283	document; and 20
2284	2284	(2) A security interest perfected in the document has priority over any security interest that 21
2285	2285	becomes perfected in the goods by another method during that time. 22
2286	2286	(d) Goods covered by nonnegotiable document. While goods are in the possession of a 23
2287	2287	bailee that has issued a nonnegotiable document covering the goods, a security interest in the goods 24
2288	2288	may be perfected by: 25
2289	2289	(1) Issuance of a document in the name of the secured party; 26
2290	2290	(2) The bailee’s receipt of notification of the secured party’s interest; or 27
2291	2291	(3) Filing as to the goods. 28
2292	2292	(e) Temporary perfection: new value. A security interest in certificated securities, 29
2293	2293	negotiable documents, or instruments is perfected without filing or the taking of possession or 30
2294	2294	control for a period of 20 days from the time it attaches to the extent that it arises for new value 31
2295	2295	given under an authenticated a signed security agreement. 32
2296	2296	(f) Temporary perfection: goods or documents made available to debtor. A perfected 33
2297	2297	security interest in a negotiable document or goods in possession of a bailee, other than one that 34
2298	2298
2299	2299
2300	2300	LC001903 - Page 63 of 113
2301	2301	has issued a negotiable document for the goods, remains perfected for 20 days without filing if the 1
2302	2302	secured party makes available to the debtor the goods or documents representing the goods for the 2
2303	2303	purpose of: 3
2304	2304	(1) Ultimate sale or exchange; or 4
2305	2305	(2) Loading, unloading, storing, shipping, transshipping, manufacturing, processing, or 5
2306	2306	otherwise dealing with them in a manner preliminary to their sale or exchange. 6
2307	2307	(g) Temporary perfection: delivery of security certificate or instrument to debtor. A 7
2308	2308	perfected security interest in a certificated security or instrument remains perfected for 20 days 8
2309	2309	without filing if the secured party delivers the security certificate or instrument to the debtor for the 9
2310	2310	purpose of: 10
2311	2311	(1) Ultimate sale or exchange; or 11
2312	2312	(2) Presentation, collection, enforcement, renewal, or registration of transfer. 12
2313	2313	(h) Expiration of temporary perfection. After the 20-day period specified in subsection (e), 13
2314	2314	(f), or (g) expires, perfection depends upon compliance with this chapter. 14
2315	2315	6A-9-313. When possession by or delivery to secured party perfects security interest 15
2316	2316	without filing. 16
2317	2317	(a) Perfection by possession or delivery. Except as otherwise provided in subsection (b), a 17
2318	2318	secured party may perfect a security interest in tangible negotiable documents, goods, instruments, 18
2319	2319	negotiable tangible documents or tangible money, or tangible chattel paper by taking possession of 19
2320	2320	the collateral. A secured party may perfect a security interest in certificated securities by taking 20
2321	2321	delivery of the certificated securities under § 6A-8-301. 21
2322	2322	(b) Goods covered by certificate of title. With respect to goods covered by a certificate of 22
2323	2323	title issued by this State, a secured party may perfect a security interest in the goods by taking 23
2324	2324	possession of the goods only in the circumstances described in § 6A-9-316(d). 24
2325	2325	(c) Collateral in possession of person other than debtor. With respect to collateral other 25
2326	2326	than certificated securities and goods covered by a document, a secured party takes possession of 26
2327	2327	collateral in the possession of a person other than the debtor, the secured party, or a lessee of the 27
2328	2328	collateral from the debtor in the ordinary course of the debtor’s business, when: 28
2329	2329	(1) The person in possession authenticates signs a record acknowledging that it holds 29
2330	2330	possession of the collateral for the secured party’s benefit; or 30
2331	2331	(2) The person takes possession of the collateral after having authenticated signed a record 31
2332	2332	acknowledging that it will hold possession of the collateral for the secured party’s benefit. 32
2333	2333	(d) Time of perfection by possession; continuation of perfection. If perfection of a security 33
2334	2334	interest depends upon possession of the collateral by a secured party, perfection occurs no not 34
2335	2335
2336	2336
2337	2337	LC001903 - Page 64 of 113
2338	2338	earlier than the time the secured party takes possession and continues only while the secured party 1
2339	2339	retains possession. 2
2340	2340	(e) Time of perfection by delivery; continuation of perfection. A security interest in a 3
2341	2341	certificated security in registered form is perfected by delivery when delivery of the certificated 4
2342	2342	security occurs under § 6A-8-301 and remains perfected by delivery until the debtor obtains 5
2343	2343	possession of the security certificate. 6
2344	2344	(f) Acknowledgment not required. A person in possession of collateral is not required to 7
2345	2345	acknowledge that it holds possession for a secured party’s benefit. 8
2346	2346	(g) Effectiveness of acknowledgment; no duties or confirmation. If a person acknowledges 9
2347	2347	that it holds possession for the secured party’s benefit: 10
2348	2348	(1) The acknowledgment is effective under subsection (c) or § 6A-8-301(a), even if the 11
2349	2349	acknowledgment violates the rights of a debtor; and 12
2350	2350	(2) Unless the person otherwise agrees or law other than this chapter otherwise provides, 13
2351	2351	the person does not owe any duty to the secured party and is not required to confirm the 14
2352	2352	acknowledgment to another person. 15
2353	2353	(h) Secured party’s delivery to person other than debtor. A secured party having possession 16
2354	2354	of collateral does not relinquish possession by delivering the collateral to a person other than the 17
2355	2355	debtor or a lessee of the collateral from the debtor in the ordinary course of the debtor’s business if 18
2356	2356	the person was instructed before the delivery or is instructed contemporaneously with the delivery: 19
2357	2357	(1) To hold possession of the collateral for the secured party’s benefit; or 20
2358	2358	(2) To redeliver the collateral to the secured party. 21
2359	2359	(i) Effect of delivery under subsection (h); no duties or confirmation. A secured party does 22
2360	2360	not relinquish possession, even if a delivery under subsection (h) violates the rights of a debtor. A 23
2361	2361	person to which collateral is delivered under subsection (h) does not owe any duty to the secured 24
2362	2362	party and is not required to confirm the delivery to another person unless the person otherwise 25
2363	2363	agrees or law other than this chapter otherwise provides. 26
2364	2364	6A-9-314. Perfection by control. 27
2365	2365	(a) Perfection by control. A security interest in investment property, deposit accounts, 28
2366	2366	letter-of-credit rights, electronic chattel paper or electronic documents controllable accounts, 29
2367	2367	controllable electronic records, controllable payment intangibles, deposit accounts, electronic 30
2368	2368	documents, electronic money, investment property, or letter-of-credit rights may be perfected by 31
2369	2369	control of the collateral under §§ 6A-7-106, 6A-9-104, 6A-9-105 6A-9-105.1, 6A-9-106, or 6A-9-32
2370	2370	107, or 6A-9-107.1. 33
2371	2371	(b) Specified collateral: time of perfection by control; continuation of perfection. A security 34
2372	2372
2373	2373
2374	2374	LC001903 - Page 65 of 113
2375	2375	interest in deposit accounts, electronic chattel paper, letter-of-credit rights or electronic documents 1
2376	2376	controllable accounts, controllable electronic records, controllable payment intangibles, deposit 2
2377	2377	accounts, electronic documents, electronic money, or letter-of-credit rights is perfected by control 3
2378	2378	under §§ 6A-7-106, 6A-9-104, 6A-9-105, 6A-9-105.1, or 6A-9-107 or 6A-9-107.1 when not earlier 4
2379	2379	than the time the secured party obtains control and remains perfected by control only while the 5
2380	2380	secured party retains control. 6
2381	2381	(c) Investment property: time of perfection by control; continuation of perfection. A 7
2382	2382	security interest in investment property is perfected by control under § 6A-9-106 from not earlier 8
2383	2383	than the time the secured party obtains control and remains perfected by control until: 9
2384	2384	(1) The secured party does not have control; and 10
2385	2385	(2) One of the following occurs: 11
2386	2386	(i) If the collateral is a certificated security, the debtor has or acquires possession of the 12
2387	2387	security certificate; 13
2388	2388	(ii) If the collateral is an uncertificated security, the issuer has registered or registers the 14
2389	2389	debtor as the registered owner; or 15
2390	2390	(iii) If the collateral is a security entitlement, the debtor is or becomes the entitlement 16
2391	2391	holder. 17
2392	2392	6A-9-316. Effect of change in governing law. 18
2393	2393	(a) General rule: effect on perfection of change in governing law. A security interest 19
2394	2394	perfected pursuant to the law of the jurisdiction designated in § §§ 6A-9-301(1), or 6A-9-305(c), 20
2395	2395	6A-9-306.1(d) or 6A-9-306.2(b) remains perfected until the earliest of: 21
2396	2396	(1) The time perfection would have ceased under the law of that jurisdiction; 22
2397	2397	(2) The expiration of four months after a change of the debtor’s location to another 23
2398	2398	jurisdiction; or 24
2399	2399	(3) The expiration of one year after a transfer of collateral to a person that thereby becomes 25
2400	2400	a debtor and is located in another jurisdiction. 26
2401	2401	(b) Security interest perfected or unperfected under law of new jurisdiction. If a security 27
2402	2402	interest described in subsection (a) becomes perfected under the law of the other jurisdiction before 28
2403	2403	the earliest time or event described in that subsection, it remains perfected thereafter. If the security 29
2404	2404	interest does not become perfected under the law of the other jurisdiction before the earliest time 30
2405	2405	or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser 31
2406	2406	of the collateral for value. 32
2407	2407	(c) Possessory security interest in collateral moved to new jurisdiction. A possessory 33
2408	2408	security interest in collateral, other than goods covered by a certificate of title and as-extracted 34
2409	2409
2410	2410
2411	2411	LC001903 - Page 66 of 113
2412	2412	collateral consisting of goods, remains continuously perfected if: 1
2413	2413	(1) The collateral is located in one jurisdiction and subject to a security interest perfected 2
2414	2414	under the law of that jurisdiction; 3
2415	2415	(2) Thereafter the collateral is brought into another jurisdiction; and 4
2416	2416	(3) Upon entry into the other jurisdiction, the security interest is perfected under the law of 5
2417	2417	the other jurisdiction. 6
2418	2418	(d) Goods covered by certificate of title from this state. Except as otherwise provided in 7
2419	2419	subsection (e), a security interest in goods covered by a certificate of title which is perfected by any 8
2420	2420	method under the law of another jurisdiction when the goods become covered by a certificate of 9
2421	2421	title from this State remains perfected until the security interest would have become unperfected 10
2422	2422	under the law of the other jurisdiction had the goods not become so covered. 11
2423	2423	(e) When subsection (d) security interest becomes unperfected against purchasers. A 12
2424	2424	security interest described in subsection (d) becomes unperfected as against a purchaser of the 13
2425	2425	goods for value and is deemed never to have been perfected as against a purchaser of the goods for 14
2426	2426	value if the applicable requirements for perfection under § 6A-9-311(b) or 6A-9-313 are not 15
2427	2427	satisfied before the earlier of: 16
2428	2428	(1) The time the security interest would have become unperfected under the law of the 17
2429	2429	other jurisdiction had the goods not become covered by a certificate of title from this State; or 18
2430	2430	(2) The expiration of four months after the goods had become so covered. 19
2431	2431	(f) Change in jurisdiction of chattel paper, controllable electronic record, bank, issuer, 20
2432	2432	nominated person, securities intermediary, or commodity intermediary. A security interest in 21
2433	2433	chattel paper, controllable accounts, controllable electronic records, controllable payment 22
2434	2434	intangibles, deposit accounts, letter-of-credit rights, or investment property which is perfected 23
2435	2435	under the law of the chattel paper's jurisdiction, the controllable electronic records jurisdiction the 24
2436	2436	bank’s jurisdiction, the issuer’s jurisdiction, a nominated person’s jurisdiction, the securities 25
2437	2437	intermediary’s jurisdiction, or the commodity intermediary’s jurisdiction, as applicable, remains 26
2438	2438	perfected until the earlier of: 27
2439	2439	(1) The time the security interest would have become unperfected under the law of that 28
2440	2440	jurisdiction; or 29
2441	2441	(2) The expiration of four months after a change of the applicable jurisdiction to another 30
2442	2442	jurisdiction. 31
2443	2443	(g) Subsection (f) security interest perfected or unperfected under law of new jurisdiction. 32
2444	2444	If a security interest described in subsection (f) becomes perfected under the law of the other 33
2445	2445	jurisdiction before the earlier of the time or the end of the period described in that subsection, it 34
2446	2446
2447	2447
2448	2448	LC001903 - Page 67 of 113
2449	2449	remains perfected thereafter. If the security interest does not become perfected under the law of the 1
2450	2450	other jurisdiction before the earlier of that time or the end of that period, it becomes unperfected 2
2451	2451	and is deemed never to have been perfected as against a purchaser of the collateral for value. 3
2452	2452	(h) Effect on filed financing statement of change in governing law. The following rules 4
2453	2453	apply to collateral to which a security interest attaches within four (4) months after the debtor 5
2454	2454	changes its location to another jurisdiction: 6
2455	2455	(1) A financing statement filed before the change pursuant to the law of the jurisdiction 7
2456	2456	designated in subdivision 6A-9-301(1) or subsection 6A-9-305(c) is effective to perfect a security 8
2457	2457	interest in the collateral if the financing statement would have been effective to perfect a security 9
2458	2458	interest in the collateral had the debtor not changed its location. 10
2459	2459	(2) If a security interest perfected by a financing statement that is effective under 11
2460	2460	subdivision (1) becomes perfected under the law of the other jurisdiction before the earlier of the 12
2461	2461	time the financing statement would have become ineffective under the law of the jurisdiction 13
2462	2462	designated in subdivision 6A-9-301(1) or subsection 6A-9-305(c) or the expiration of the four (4) 14
2463	2463	month period, it remains perfected thereafter. If the security interest does not become perfected 15
2464	2464	under the law of the other jurisdiction before the earlier time or event, it becomes unperfected and 16
2465	2465	is deemed never to have been perfected as against a purchaser of the collateral for value. 17
2466	2466	(i) Effect of change in governing law on financing statement filed against original debtor. 18
2467	2467	If a financing statement naming an original debtor is filed pursuant to the law of the jurisdiction 19
2468	2468	designated in subdivision 6A-9-301(1) or subsection 6A-9-305(c) and the new debtor is located in 20
2469	2469	another jurisdiction, the following rules apply: 21
2470	2470	(1) The financing statement is effective to perfect a security interest in collateral acquired 22
2471	2471	by the new debtor before, and within four (4) months after, the new debtor becomes bound under 23
2472	2472	subsection 6A-9-203(d), if the financing statement would have been effective to perfect a security 24
2473	2473	interest in the collateral had the collateral been acquired by the original debtor. 25
2474	2474	(2) A security interest perfected by the financing statement and which becomes perfected 26
2475	2475	under the law of the other jurisdiction before the earlier of the time the financing statement would 27
2476	2476	have become ineffective under the law of the jurisdiction designated in subdivision 6A-9-301(1) or 28
2477	2477	subsection 6A-9-305(c) or the expiration of the four (4) month period remains perfected thereafter. 29
2478	2478	A security interest that is perfected by the financing statement but which does not become perfected 30
2479	2479	under the law of the other jurisdiction before the earlier time or event becomes unperfected and is 31
2480	2480	deemed never to have been perfected as against a purchaser of the collateral for value. 32
2481	2481	6A-9-317. Interests that take priority over or take free of security interest or 33
2482	2482	agricultural lien. 34
2483	2483
2484	2484
2485	2485	LC001903 - Page 68 of 113
2486	2486	(a) Conflicting security interests and rights of lien creditors. A security interest or 1
2487	2487	agricultural lien is subordinate to the rights of: 2
2488	2488	(1) A person entitled to priority under § 6A-9-322; and 3
2489	2489	(2) Except as otherwise provided in subsection (e), a person that becomes a lien creditor 4
2490	2490	before the earlier of the time: (i) the security interest or agricultural lien is perfected; or (ii) one of 5
2491	2491	the conditions specified in § 6A-9-203(b)(3) is met and a financing statement covering the collateral 6
2492	2492	is filed. 7
2493	2493	(b) Buyers that receive delivery. Except as otherwise provided in subsection (e), a buyer, 8
2494	2494	other than a secured party, of tangible chattel paper, tangible documents, goods, instruments, 9
2495	2495	tangible documents, or a certificated security takes free of a security interest or agricultural lien if 10
2496	2496	the buyer gives value and receives delivery of the collateral without knowledge of the security 11
2497	2497	interest or agricultural lien and before it is perfected. 12
2498	2498	(c) Lessees that receive delivery. Except as otherwise provided in subsection (e), a lessee 13
2499	2499	of goods takes free of a security interest or agricultural lien if the lessee gives value and receives 14
2500	2500	delivery of the collateral without knowledge of the security interest or agricultural lien and before 15
2501	2501	it is perfected. 16
2502	2502	(d) Licensees and buyers of certain collateral. A Subject to subsection (f) through (i) of this 17
2503	2503	section, a licensee of a general intangible or a buyer, other than a secured party, of collateral other 18
2504	2504	than tangible chattel papers, tangible documents, electronic money, goods, instruments, tangible 19
2505	2505	documents, or a certificated security takes free of a security interest if the licensee or buyer gives 20
2506	2506	value without knowledge of the security interest and before it is perfected. 21
2507	2507	(e) Purchase-money security interest. Except as otherwise provided in §§ 6A-9-320 and 22
2508	2508	6A-9-321, if a person files a financing statement with respect to a purchase-money security interest 23
2509	2509	before or within 20 days after the debtor receives delivery of the collateral, the security interest 24
2510	2510	takes priority over the rights of a buyer, lessee, or lien creditor which arise between the time the 25
2511	2511	security interest attaches and the time of filing. 26
2512	2512	(f) Buyers of chattel paper. A buyer, other than a secured party, of chattel paper takes free 27
2513	2513	of a security interest if, without knowledge of the security interest and before it is perfected, the 28
2514	2514	buyer gives value and: 29
2515	2515	(1) receives delivery of each authoritative tangible copy of the record evidencing the chattel 30
2516	2516	paper; and 31
2517	2517	(2) if each authoritative electronic copy of the record evidencing the chattel paper can be 32
2518	2518	subjected to control under § 6A-9-105, obtains control of each authoritative electronic copy. 33
2519	2519	(g) Buyers of electronic documents. A buyer of an electronic document takes free of a 34
2520	2520
2521	2521
2522	2522	LC001903 - Page 69 of 113
2523	2523	security interest if, without knowledge of the security interest and before it is perfected, the buyer 1
2524	2524	gives value and, if each authoritative electronic copy of the document can be subjected to control 2
2525	2525	under § 6A-7-106, obtains control of each authoritative electronic copy. 3
2526	2526	(h) Buyers of controllable electronic records. A buyer of a controllable electronic record 4
2527	2527	takes free of a security interest if, without knowledge of the security interest and before it is 5
2528	2528	perfected, the buyer gives value and obtains control of the controllable electronic record. 6
2529	2529	(i) Buyers of controllable accounts and controllable payment intangibles. A buyer, other 7
2530	2530	than a secured party, of a controllable account or a controllable payment intangible takes free of a 8
2531	2531	security interest if, without knowledge of the security interest and before it is perfected, the buyer 9
2532	2532	gives value and obtains control of the controllable account or controllable payment intangible. 10
2533	2533	6A-9-323. Future advances. 11
2534	2534	(a) When priority based on time of advance. Except as otherwise provided in subsection 12
2535	2535	(c), for purposes of determining the priority of a perfected security interest under § 6A-9-322(a)(1), 13
2536	2536	perfection of the security interest dates from the time an advance is made to the extent that the 14
2537	2537	security interest secures an advance that: 15
2538	2538	(1) Is made while the security interest is perfected only: 16
2539	2539	(i) Under § 6A-9-309 when it attaches; or 17
2540	2540	(ii) Temporarily under § 6A-9-312(e), (f), or (g); and 18
2541	2541	(2) Is not made pursuant to a commitment entered into before or while the security interest 19
2542	2542	is perfected by a method other than under § 6A-9-309 or § 6A-9-312(e), (f), or (g). 20
2543	2543	(b) Lien creditor. Except as otherwise provided in subsection (c), a security interest is 21
2544	2544	subordinate to the rights of a person that becomes a lien creditor to the extent that the security 22
2545	2545	interest secures an advance made more than 45 days after the person becomes a lien creditor unless 23
2546	2546	the advance is made: 24
2547	2547	(1) Without knowledge of the lien; or 25
2548	2548	(2) Pursuant to a commitment entered into without knowledge of the lien. 26
2549	2549	(c) Buyer of receivables. Subsections (a) and (b) do not apply to a security interest held by 27
2550	2550	a secured party that is a buyer of accounts, chattel paper, payment intangibles, or promissory notes 28
2551	2551	or a consignor. 29
2552	2552	(d) Buyer of goods. Except as otherwise provided in subsection (e), a buyer of goods other 30
2553	2553	than a buyer in ordinary course of business takes free of a security interest to the extent that it 31
2554	2554	secures advances made after the earlier of: 32
2555	2555	(1) The time the secured party acquires knowledge of the buyer’s purchase; or 33
2556	2556	(2) 45 days after the purchase. 34
2557	2557
2558	2558
2559	2559	LC001903 - Page 70 of 113
2560	2560	(e) Advances made pursuant to commitment: priority of buyer of goods. Subsection (d) 1
2561	2561	does not apply if the advance is made pursuant to a commitment entered into without knowledge 2
2562	2562	of the buyer’s purchase and before the expiration of the 45-day period. 3
2563	2563	(f) Lessee of goods. Except as otherwise provided in subsection (g), a lessee of goods, other 4
2564	2564	than a lessee in ordinary course of business, takes the leasehold interest free of a security interest 5
2565	2565	to the extent that it secures advances made after the earlier of: 6
2566	2566	(1) The time the secured party acquires knowledge of the lease; or 7
2567	2567	(2) 45 days after the lease contract becomes enforceable. 8
2568	2568	(g) Advances made pursuant to commitment: priority of lessee of goods. Subsection (f) 9
2569	2569	does not apply if the advance is made pursuant to a commitment entered into without knowledge 10
2570	2570	of the lease and before the expiration of the 45-day period. 11
2571	2571	6A-9-324. Priority of purchase-money security interests. 12
2572	2572	(a) General rule: purchase-money priority. Except as otherwise provided in subsection (g), 13
2573	2573	a perfected purchase-money security interest in goods other than inventory or livestock has priority 14
2574	2574	over a conflicting security interest in the same goods, and, except as otherwise provided in § 6A-15
2575	2575	9-327, a perfected security interest in its identifiable proceeds also has priority, if the purchase-16
2576	2576	money security interest is perfected when the debtor receives possession of the collateral or within 17
2577	2577	20 days thereafter. 18
2578	2578	(b) Inventory purchase-money priority. Subject to subsection (c) and except as otherwise 19
2579	2579	provided in subsection (g), a perfected purchase-money security interest in inventory has priority 20
2580	2580	over a conflicting security interest in the same inventory, has priority over a conflicting security 21
2581	2581	interest in chattel paper or an instrument constituting proceeds of the inventory and in proceeds of 22
2582	2582	the chattel paper, if so provided in § 6A-9-330, and, except as otherwise provided in § 6A-9-327, 23
2583	2583	also has priority in identifiable cash proceeds of the inventory to the extent the identifiable cash 24
2584	2584	proceeds are received on or before the delivery of the inventory to a buyer, if: 25
2585	2585	(1) The purchase-money security interest is perfected when the debtor receives possession 26
2586	2586	of the inventory; 27
2587	2587	(2) The purchase-money secured party sends an authenticated a signed notification to the 28
2588	2588	holder of the conflicting security interest; 29
2589	2589	(3) The holder of the conflicting security interest receives the notification within five years 30
2590	2590	before the debtor receives possession of the inventory; and 31
2591	2591	(4) The notification states that the person sending the notification has or expects to acquire 32
2592	2592	a purchase-money security interest in inventory of the debtor and describes the inventory. 33
2593	2593	(c) Holders of conflicting inventory security interests to be notified. Subsections (b)(2) 34
2594	2594
2595	2595
2596	2596	LC001903 - Page 71 of 113
2597	2597	through (4) apply only if the holder of the conflicting security interest had filed a financing 1
2598	2598	statement covering the same types of inventory: 2
2599	2599	(1) If the purchase-money security interest is perfected by filing, before the date of the 3
2600	2600	filing; or 4
2601	2601	(2) If the purchase-money security interest is temporarily perfected without filing or 5
2602	2602	possession under § 6A-9-312(f), before the beginning of the 20-day period thereunder. 6
2603	2603	(d) Livestock purchase-money priority. Subject to subsection (e) and except as otherwise 7
2604	2604	provided in subsection (g), a perfected purchase-money security interest in livestock that are farm 8
2605	2605	products has priority over a conflicting security interest in the same livestock, and, except as 9
2606	2606	otherwise provided in § 6A-9-327, a perfected security interest in their identifiable proceeds and 10
2607	2607	identifiable products in their unmanufactured states also has priority, if: 11
2608	2608	(1) The purchase-money security interest is perfected when the debtor receives possession 12
2609	2609	of the livestock; 13
2610	2610	(2) The purchase-money secured party sends an authenticated a signed notification to the 14
2611	2611	holder of the conflicting security interest; 15
2612	2612	(3) The holder of the conflicting security interest receives the notification within six months 16
2613	2613	before the debtor receives possession of the livestock; and 17
2614	2614	(4) The notification states that the person sending the notification has or expects to acquire 18
2615	2615	a purchase-money security interest in livestock of the debtor and describes the livestock. 19
2616	2616	(e) Holders of conflicting livestock security interests to be notified. Subsections (d)(2) 20
2617	2617	through (4) apply only if the holder of the conflicting security interest had filed a financing 21
2618	2618	statement covering the same types of livestock: 22
2619	2619	(1) If the purchase-money security interest is perfected by filing, before the date of the 23
2620	2620	filing; or 24
2621	2621	(2) If the purchase-money security interest is temporarily perfected without filing or 25
2622	2622	possession under § 6A-9-312(f), before the beginning of the 20-day period thereunder. 26
2623	2623	(f) Software purchase-money priority. Except as otherwise provided in subsection (g), a 27
2624	2624	perfected purchase-money security interest in software has priority over a conflicting security 28
2625	2625	interest in the same collateral, and, except as otherwise provided in § 6A-9-327, a perfected security 29
2626	2626	interest in its identifiable proceeds also has priority, to the extent that the purchase-money security 30
2627	2627	interest in the goods in which the software was acquired for use has priority in the goods and 31
2628	2628	proceeds of the goods under this section. 32
2629	2629	(g) Conflicting purchase-money security interests. If more than one security interest 33
2630	2630	qualifies for priority in the same collateral under subsection (a), (b), (d), or (f): 34
2631	2631
2632	2632
2633	2633	LC001903 - Page 72 of 113
2634	2634	(1) A security interest securing an obligation incurred as all or part of the price of the 1
2635	2635	collateral has priority over a security interest securing an obligation incurred for value given to 2
2636	2636	enable the debtor to acquire rights in or the use of collateral; and 3
2637	2637	(2) In all other cases, § 6A-9-322(a) applies to the qualifying security interests. 4
2638	2638	6A-9-330. Priority of purchaser of chattel paper or instrument. 5
2639	2639	(a) Purchaser’s priority: security interest claimed merely as proceeds. A purchaser of 6
2640	2640	chattel paper has priority over a security interest in the chattel paper which is claimed merely as 7
2641	2641	proceeds of inventory subject to a security interest if: 8
2642	2642	(1) In good faith and in the ordinary course of the purchaser’s business, the purchaser gives 9
2643	2643	new value, and takes possession of each authoritative tangible copy of the record evidencing the 10
2644	2644	chattel paper or and obtains control of the chattel paper under § 6A-9-105 of each authoritative 11
2645	2645	electronic copy of the record evidencing the chattel paper; and 12
2646	2646	(2) The chattel paper does authoritative copies of the record evidencing the chattel paper 13
2647	2647	do not indicate that it the chattel paper has been assigned to an identified assignee other than the 14
2648	2648	purchaser. 15
2649	2649	(b) Purchaser’s priority: other security interests. A purchaser of chattel paper has priority 16
2650	2650	over a security interest in the chattel paper which is claimed other than merely as proceeds of 17
2651	2651	inventory subject to a security interest if the purchaser gives new value, and takes possession of 18
2652	2652	each authoritative tangible copy of the record evidencing the chattel paper, or and obtains control 19
2653	2653	of under § 6A-9-105 of each authoritative electronic copy of the record evidencing the chattel paper 20
2654	2654	under § 6A-9-105 in good faith, in the ordinary course of the purchaser’s business, and without 21
2655	2655	knowledge that the purchase violates the rights of the secured party. 22
2656	2656	(c) Chattel paper purchaser’s priority in proceeds. Except as otherwise provided in § 6A-23
2657	2657	9-327, a purchaser having priority in chattel paper under subsection (a) or (b) also has priority in 24
2658	2658	proceeds of the chattel paper to the extent that: 25
2659	2659	(1) Section 6A-9-322 provides for priority in the proceeds; or 26
2660	2660	(2) The proceeds consist of the specific goods covered by the chattel paper or cash proceeds 27
2661	2661	of the specific goods, even if the purchaser’s security interest in the proceeds is unperfected. 28
2662	2662	(d) Instrument purchaser’s priority. Except as otherwise provided in § 6A-9-331(a), a 29
2663	2663	purchaser of an instrument has priority over a security interest in the instrument perfected by a 30
2664	2664	method other than possession if the purchaser gives value and takes possession of the instrument 31
2665	2665	in good faith and without knowledge that the purchase violates the rights of the secured party. 32
2666	2666	(e) Holder of purchase-money security interest gives new value. For purposes of 33
2667	2667	subsections (a) and (b), the holder of a purchase-money security interest in inventory gives new 34
2668	2668
2669	2669
2670	2670	LC001903 - Page 73 of 113
2671	2671	value for chattel paper constituting proceeds of the inventory. 1
2672	2672	(f) Indication of assignment gives knowledge. For purposes of subsections (b) and (d), if 2
2673	2673	the authoritative copies of the record evidencing chattel paper or an instrument indicates indicate 3
2674	2674	that it the chattel paper or instrument has been assigned to an identified secured party other than 4
2675	2675	the purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase 5
2676	2676	violates the rights of the secured party. 6
2677	2677	6A-9-331. Priority of rights of purchasers of instruments, documents, and securities 7
2678	2678	under other chapters; priority of interests in financial assets and security entitlements under 8
2679	2679	chapter 8 Priority of rights of purchasers of controllable accounts, controllable electronic 9
2680	2680	records, controllable payment intangibles, documents, instruments and securities under 10
2681	2681	other chapters; priority of interests in financial assets and security entitlements and 11
2682	2682	protection against assertion of claim under chapters 8 and 12. 12
2683	2683	(a) Rights under chapters 3, 7, and 8, and 12 not limited. This chapter does not limit the 13
2684	2684	rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document 14
2685	2685	of title has been duly negotiated, or a protected purchaser of a security or a qualifying purchaser of 15
2686	2686	a controllable account, controllable electronic record, or controllable payment intangible. These 16
2687	2687	holders or purchasers take priority over an earlier security interest, even if perfected, to the extent 17
2688	2688	provided in chapters 3, 7, and 8, and 12. 18
2689	2689	(b) Protection under chapter chapters 8 and 12. This chapter does not limit the rights of or 19
2690	2690	impose liability on a person to the extent that the person is protected against the assertion of a claim 20
2691	2691	under chapter 8 or 12. 21
2692	2692	(c) Filing not notice. Filing under this chapter does not constitute notice of a claim or 22
2693	2693	defense to the holders, or purchasers, or persons described in subsections (a) and (b). 23
2694	2694	6A-9-332. Transfer of money; transfer of funds from deposit account Transfer of 24
2695	2695	tangible money; transfer of funds from deposit account. 25
2696	2696	(a) Transferee of tangible money. A transferee of tangible money takes the money free of 26
2697	2697	a security interest unless the transferee acts if the transferee receives the funds without acting in 27
2698	2698	collusion with the debtor in violating the rights of the secured party. 28
2699	2699	(b) Transferee of funds from deposit account. A transferee of funds from a deposit account 29
2700	2700	takes the funds free of a security interest in the deposit account unless the transferee acts if the 30
2701	2701	transferee receives the funds without acting in collusion with the debtor in violating the rights of 31
2702	2702	the secured party. 32
2703	2703	(c) Transferee of electronic money. A transferee of electronic money takes the money free 33
2704	2704	of a security interest if the transferee obtains control of the money without acting in collusion with 34
2705	2705
2706	2706
2707	2707	LC001903 - Page 74 of 113
2708	2708	the debtor in violating the rights of the secured party. 1
2709	2709	6A-9-334. Priority of security interests in fixtures and crops. 2
2710	2710	(a) Security interest in fixtures under this chapter. A security interest under this chapter 3
2711	2711	may be created in goods that are fixtures or may continue in goods that become fixtures. A security 4
2712	2712	interest does not exist under this chapter in ordinary building materials incorporated into an 5
2713	2713	improvement on land. 6
2714	2714	(b) Security interest in fixtures under real-property law. This chapter does not prevent 7
2715	2715	creation of an encumbrance upon fixtures under real property law. 8
2716	2716	(c) General rule: subordination of security interest in fixtures. In cases not governed by 9
2717	2717	subsections (d) through (h), a security interest in fixtures is subordinate to a conflicting interest of 10
2718	2718	an encumbrancer or owner of the related real property other than the debtor. 11
2719	2719	(d) Fixtures purchase-money priority. Except as otherwise provided in subsection (h), a 12
2720	2720	perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or 13
2721	2721	owner of the real property if the debtor has an interest of record in or is in possession of the real 14
2722	2722	property and: 15
2723	2723	(1) The security interest is a purchase-money security interest; 16
2724	2724	(2) The interest of the encumbrancer or owner arises before the goods become fixtures; and 17
2725	2725	(3) The security interest is perfected by a fixture filing before the goods become fixtures 18
2726	2726	or within 20 days thereafter. 19
2727	2727	(e) Priority of security interest in fixtures over interests in real property. A perfected 20
2728	2728	security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of 21
2729	2729	the real property if: 22
2730	2730	(1) The debtor has an interest of record in the real property or is in possession of the real 23
2731	2731	property and the security interest: 24
2732	2732	(i) Is perfected by a fixture filing before the interest of the encumbrancer or owner is of 25
2733	2733	record; and 26
2734	2734	(ii) Has priority over any conflicting interest of a predecessor in title of the encumbrancer 27
2735	2735	or owner; 28
2736	2736	(2) Before the goods become fixtures, the security interest is perfected by any method 29
2737	2737	permitted by this chapter and the fixtures are readily removable: 30
2738	2738	(i) Factory or office machines; 31
2739	2739	(ii) Equipment that is not primarily used or leased for use in the operation of the real 32
2740	2740	property; or 33
2741	2741	(iii) Replacements of domestic appliances that are consumer goods; 34
2742	2742
2743	2743
2744	2744	LC001903 - Page 75 of 113
2745	2745	(3) The conflicting interest is a lien on the real property obtained by legal or equitable 1
2746	2746	proceedings after the security interest was perfected by any method permitted by this chapter; or 2
2747	2747	(4) The security interest is: 3
2748	2748	(i) Created in a manufactured home in a manufactured-home transaction; and 4
2749	2749	(ii) Perfected pursuant to a statute described in § 6A-9-311(a)(2). 5
2750	2750	(f) Priority based on consent, disclaimer, or right to remove. A security interest in fixtures, 6
2751	2751	whether or not perfected, has priority over a conflicting interest of an encumbrancer or owner of 7
2752	2752	the real property if: 8
2753	2753	(1) The encumbrancer or owner has, in an authenticated a signed record, consented to the 9
2754	2754	security interest or disclaimed an interest in the goods as fixtures; or 10
2755	2755	(2) The debtor has a right to remove the goods as against the encumbrancer or owner. 11
2756	2756	(g) Continuation of paragraph (f)(2) priority. The priority of the security interest under 12
2757	2757	paragraph (f)(2) continues for a reasonable time if the debtor’s right to remove the goods as against 13
2758	2758	the encumbrancer or owner terminates. 14
2759	2759	(h) Priority of construction mortgage. A mortgage is a construction mortgage to the extent 15
2760	2760	that it secures an obligation incurred for the construction of an improvement on land, including the 16
2761	2761	acquisition cost of the land, if a recorded record of the mortgage so indicates. Except as otherwise 17
2762	2762	provided in subsections (e) and (f), a security interest in fixtures is subordinate to a construction 18
2763	2763	mortgage if a record of the mortgage is recorded before the goods become fixtures and the goods 19
2764	2764	become fixtures before the completion of the construction. A mortgage has this priority to the same 20
2765	2765	extent as a construction mortgage to the extent that it is given to refinance a construction mortgage. 21
2766	2766	(i) Priority of security interest in crops. A perfected security interest in crops growing on 22
2767	2767	real property has priority over a conflicting interest of an encumbrancer or owner of the real 23
2768	2768	property if the debtor has an interest of record in or is in possession of the real property. 24
2769	2769	6A-9-341. Bank’s rights and duties with respect to deposit account. 25
2770	2770	Except as otherwise provided in § 6A-9-340(c), and unless the bank otherwise agrees in an 26
2771	2771	authenticated a signed record, a bank’s rights and duties with respect to a deposit account 27
2772	2772	maintained with the bank are not terminated, suspended, or modified by: 28
2773	2773	(1) The creation, attachment, or perfection of a security interest in the deposit account; 29
2774	2774	(2) The bank’s knowledge of the security interest; or 30
2775	2775	(3) The bank’s receipt of instructions from the secured party. 31
2776	2776	6A-9-404. Rights acquired by assignee; claims and defenses against assignee. 32
2777	2777	(a) Assignee’s rights subject to terms, claims, and defenses; exceptions. Unless an account 33
2778	2778	debtor has made an enforceable agreement not to assert defenses or claims, and subject to 34
2779	2779
2780	2780
2781	2781	LC001903 - Page 76 of 113
2782	2782	subsections (b) through (e), the rights of an assignee are subject to: 1
2783	2783	(1) All terms of the agreement between the account debtor and assignor and any defense 2
2784	2784	or claim in recoupment arising from the transaction that gave rise to the contract; and 3
2785	2785	(2) Any other defense or claim of the account debtor against the assignor which accrues 4
2786	2786	before the account debtor receives a notification of the assignment authenticated signed by the 5
2787	2787	assignor or the assignee. 6
2788	2788	(b) Account debtor’s claim reduces amount owed to assignee. Subject to subsection (c) and 7
2789	2789	except as otherwise provided in subsection (d), the claim of an account debtor against an assignor 8
2790	2790	may be asserted against an assignee under subsection (a) only to reduce the amount the account 9
2791	2791	debtor owes. 10
2792	2792	(c) Rule for individual under other law. This section is subject to law other than this chapter 11
2793	2793	which establishes a different rule for an account debtor who is an individual and who incurred the 12
2794	2794	obligation primarily for personal, family, or household purposes. 13
2795	2795	(d) Omission of required statement in consumer transaction. In a consumer transaction, if 14
2796	2796	a record evidences the account debtor’s obligation, law other than this chapter requires that the 15
2797	2797	record include a statement to the effect that the account debtor’s recovery against an assignee with 16
2798	2798	respect to claims and defenses against the assignor may not exceed amounts paid by the account 17
2799	2799	debtor under the record, and the record does not include such a statement, the extent to which a 18
2800	2800	claim of an account debtor against the assignor may be asserted against an assignee is determined 19
2801	2801	as if the record included such a statement. 20
2802	2802	(e) Inapplicability to health-care-insurance receivable. This section does not apply to an 21
2803	2803	assignment of a health-care-insurance receivable. 22
2804	2804	6A-9-406. Discharge of account debtor; notification of assignment; identification and 23
2805	2805	proof of assignment; restrictions on assignment of accounts, chattel paper, payment 24
2806	2806	intangibles, and promissory notes ineffective. 25
2807	2807	(a) Discharge of account debtor; effect of notification. Subject to subsections (b) through 26
2808	2808	(i) and (l), an account debtor on an account, chattel paper, or a payment intangible may discharge 27
2809	2809	its obligation by paying the assignor until, but not after, the account debtor receives a notification, 28
2810	2810	authenticated signed by the assignor or the assignee, that the amount due or to become due has been 29
2811	2811	assigned and that payment is to be made to the assignee. After receipt of the notification, the 30
2812	2812	account debtor may discharge its obligation by paying the assignee and may not discharge the 31
2813	2813	obligation by paying the assignor. 32
2814	2814	(b) When notification ineffective. Subject to subsection subsections (h) and (l), notification 33
2815	2815	is ineffective under subsection (a): 34
2816	2816
2817	2817
2818	2818	LC001903 - Page 77 of 113
2819	2819	(1) If it does not reasonably identify the rights assigned; 1
2820	2820	(2) To the extent that an agreement between an account debtor and a seller of a payment 2
2821	2821	intangible limits the account debtor’s duty to pay a person other than the seller and the limitation 3
2822	2822	is effective under law other than this chapter; or 4
2823	2823	(3) At the option of an account debtor, if the notification notifies the account debtor to 5
2824	2824	make less than the full amount of any installment or other periodic payment to the assignee, even 6
2825	2825	if: 7
2826	2826	(i) Only a portion of the account, chattel paper, or payment intangible has been assigned to 8
2827	2827	that assignee; 9
2828	2828	(ii) A portion has been assigned to another assignee; or 10
2829	2829	(iii) The account debtor knows that the assignment to that assignee is limited. 11
2830	2830	(c) Proof of assignment. Subject to subsection subsections (h) and (l), if requested by the 12
2831	2831	account debtor, an assignee shall seasonably furnish reasonable proof that the assignment has been 13
2832	2832	made. Unless the assignee complies, the account debtor may discharge its obligation by paying the 14
2833	2833	assignor, even if the account debtor has received a notification under subsection (a). 15
2834	2834	(d) Term restricting assignment generally ineffective. In this subsection, "promissory note" 16
2835	2835	includes a negotiable instrument that evidences chattel paper. Except as otherwise provided in 17
2836	2836	subsection subsections (e) and (k) and § 6A-2.1-303 and § 6A-9-407, and subject to subsection (h), 18
2837	2837	a term in an agreement between an account debtor and an assignor or in a promissory note is 19
2838	2838	ineffective to the extent that it: 20
2839	2839	(1) Prohibits, restricts, or requires the consent of the account debtor or person obligated on 21
2840	2840	the promissory note to the assignment or transfer of, or the creation, attachment, perfection, or 22
2841	2841	enforcement of a security interest in, the account, chattel paper, payment intangible, or promissory 23
2842	2842	note; or 24
2843	2843	(2) Provides that the assignment or transfer or the creation, attachment, perfection, or 25
2844	2844	enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, 26
2845	2845	defense, termination, right of termination, or remedy under the account, chattel paper, payment 27
2846	2846	intangible, or promissory note. 28
2847	2847	(e) Inapplicability of subsection (d) to certain sales. Subsection (d) does not apply to the 29
2848	2848	sale of a payment intangible or promissory note, other than a sale pursuant to a disposition under § 30
2849	2849	6A-9-610 or an acceptance of collateral under § 6A-9-620. 31
2850	2850	(f) Legal restrictions on assignment generally ineffective. Except as otherwise provided in 32
2851	2851	subsection (k) and §§ 6A-2.1-303 and 6A-9-407 and subject to subsections (h) and (i), a rule of 33
2852	2852	law, statute, or regulation that prohibits, restricts, or requires the consent of a government, 34
2853	2853
2854	2854
2855	2855	LC001903 - Page 78 of 113
2856	2856	governmental body or official, or account debtor to the assignment or transfer of, or creation of a 1
2857	2857	security interest in, an account or chattel paper is ineffective to the extent that the rule of law, 2
2858	2858	statute, or regulation: 3
2859	2859	(1) Prohibits, restricts, or requires the consent of the government, governmental body or 4
2860	2860	official, or account debtor to the assignment or transfer of, or the creation, attachment, perfection, 5
2861	2861	or enforcement of a security interest in the account or chattel paper; or 6
2862	2862	(2) Provides that the assignment or transfer or the creation, attachment, perfection, or 7
2863	2863	enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, 8
2864	2864	defense, termination, right of termination, or remedy under the account or chattel paper. 9
2865	2865	(g) Subsection (b)(3) not waivable. Subject to subsection subsections (h) and (l), an account 10
2866	2866	debtor may not waive or vary its option under subsection (b)(3). 11
2867	2867	(h) Rule for individual under other law. This section is subject to law other than this chapter 12
2868	2868	which establishes a different rule for an account debtor who is an individual and who incurred the 13
2869	2869	obligation primarily for personal, family, or household purposes. 14
2870	2870	(i) Inapplicability to health-care-insurance receivable. This section does not apply to an 15
2871	2871	assignment of a health-care-insurance receivable. 16
2872	2872	(j) Section prevails over inconsistent law. This section prevails over any statutes, rules, and 17
2873	2873	regulations inconsistent with this section. 18
2874	2874	(k) Inapplicability to interests in certain entities. Subsections (d), (f), and (j) of this section 19
2875	2875	do not apply to a security interest in an ownership interest in a general partnership, limited 20
2876	2876	partnership, or limited liability company. 21
2877	2877	(l) Inapplicability of certain subsections. Subsections (a), (b), (c), and (g) of this section do 22
2878	2878	not apply to a controllable account or controllable payment intangible. 23
2879	2879	6A-9-408. Restrictions on assignment of promissory notes, health-care insurance 24
2880	2880	receivables, and certain general intangibles ineffective. 25
2881	2881	(a) Term restricting assignment generally ineffective. Except as otherwise provided in 26
2882	2882	subsection subsections (b) and (f), a term in a promissory note or in an agreement between an 27
2883	2883	account debtor and a debtor which relates to a health-care-insurance receivable or a general 28
2884	2884	intangible, including a contract, permit, license, or franchise, and which term prohibits, restricts, or 29
2885	2885	requires the consent of the person obligated on the promissory note or the account debtor to, the 30
2886	2886	assignment or transfer of, or creation, attachment, or perfection of a security interest in, the 31
2887	2887	promissory note, health-care-insurance receivable, or general intangible, is ineffective to the extent 32
2888	2888	that the term: 33
2889	2889	(1) Would impair the creation, attachment, or perfection of a security interest; or 34
2890	2890
2891	2891
2892	2892	LC001903 - Page 79 of 113
2893	2893	(2) Provides that the assignment or transfer or the creation, attachment, or perfection of the 1
2894	2894	security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, 2
2895	2895	right of termination, or remedy under the promissory note, health-care-insurance receivable, or 3
2896	2896	general intangible. 4
2897	2897	(b) Applicability of subsection (a) to sales of certain rights to payment. Subsection (a) 5
2898	2898	applies to a security interest in a payment intangible or promissory note only if the security interest 6
2899	2899	arises out of a sale of the payment intangible or promissory note, other than a sale pursuant to a 7
2900	2900	disposition under § 6A-9-610 or an acceptance of collateral under § 6A-9-620. 8
2901	2901	(c) Legal restrictions on assignment generally ineffective. A Except as otherwise provided 9
2902	2902	in subsection (f), of this section rule of law, statute, or regulation that prohibits, restricts, or requires 10
2903	2903	the consent of a government, governmental body or official, person obligated on a promissory note, 11
2904	2904	or account debtor to the assignment or transfer of, or creation of a security interest in, a promissory 12
2905	2905	note, health-care-insurance receivable, or general intangible, including a contract, permit, license, 13
2906	2906	or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law, 14
2907	2907	statute, or regulation: 15
2908	2908	(1) Would impair the creation, attachment, or perfection of a security interest; or 16
2909	2909	(2) Provides that the assignment or transfer or the creation, attachment, or perfection of the 17
2910	2910	security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, 18
2911	2911	right of termination, or remedy under the promissory note, health-care-insurance receivable, or 19
2912	2912	general intangible. 20
2913	2913	(d) Limitation on ineffectiveness under subsections (a) and (c). To the extent that a term in 21
2914	2914	a promissory note or in an agreement between an account debtor and a debtor which relates to a 22
2915	2915	health-care-insurance receivable or general intangible or a rule of law, statute, or regulation 23
2916	2916	described in subsection (c) would be effective under law other than this chapter but is ineffective 24
2917	2917	under subsection (a) or (c), the creation, attachment, or perfection of a security interest in the 25
2918	2918	promissory note, health-care-insurance receivable, or general intangible: 26
2919	2919	(1) Is not enforceable against the person obligated on the promissory note or the account 27
2920	2920	debtor; 28
2921	2921	(2) Does not impose a duty or obligation on the person obligated on the promissory note 29
2922	2922	or the account debtor; 30
2923	2923	(3) Does not require the person obligated on the promissory note or the account debtor to 31
2924	2924	recognize the security interest, pay or render performance to the secured party, or accept payment 32
2925	2925	or performance from the secured party; 33
2926	2926	(4) Does not entitle the secured party to use or assign the debtor’s rights under the 34
2927	2927
2928	2928
2929	2929	LC001903 - Page 80 of 113
2930	2930	promissory note, health-care-insurance receivable, or general intangible, including any related 1
2931	2931	information or materials furnished to the debtor in the transaction giving rise to the promissory 2
2932	2932	note, health-care-insurance receivable, or general intangible; 3
2933	2933	(5) Does not entitle the secured party to use, assign, possess, or have access to any trade 4
2934	2934	secrets or confidential information of the person obligated on the promissory note or the account 5
2935	2935	debtor; and 6
2936	2936	(6) Does not entitle the secured party to enforce the security interest in the promissory note, 7
2937	2937	health-care-insurance receivable, or general intangible. 8
2938	2938	(e) Section prevails over inconsistent law. This section prevails over any statutes, rules, 9
2939	2939	and regulations inconsistent with this section. 10
2940	2940	(f) Inapplicability to interests in certain entities. This section does not apply to a security 11
2941	2941	interest in an ownership interest in a general partnership, limited partnership, or limited liability 12
2942	2942	company. 13
2943	2943	(g) "Promissory note." In this section, "promissory note" includes a negotiable instrument 14
2944	2944	that evidences chattel paper. 15
2945	2945	6A-9-509. Persons entitled to file a record. 16
2946	2946	(a) Person entitled to file record. A person may file an initial financing statement, 17
2947	2947	amendment that adds collateral covered by a financing statement, or amendment that adds a debtor 18
2948	2948	to a financing statement only if: 19
2949	2949	(1) The debtor authorizes the filing in an authenticated a signed record or pursuant to 20
2950	2950	subsection (b) or (c); or 21
2951	2951	(2) The person holds an agricultural lien that has become effective at the time of filing and 22
2952	2952	the financing statement covers only collateral in which the person holds an agricultural lien. 23
2953	2953	(b) Security agreement as authorization. By authenticating signing or becoming bound as 24
2954	2954	debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing 25
2955	2955	statement, and an amendment, covering: 26
2956	2956	(1) The collateral described in the security agreement; and 27
2957	2957	(2) Property that becomes collateral under § 6A-9-315(a)(2), whether or not the security 28
2958	2958	agreement expressly covers proceeds. 29
2959	2959	(c) Acquisition of collateral as authorization. By acquiring collateral in which a security 30
2960	2960	interest or agricultural lien continues under § 6A-9-315(a)(1), a debtor authorizes the filing of an 31
2961	2961	initial financing statement, and an amendment, covering the collateral and property that becomes 32
2962	2962	collateral under § 6A-9-315(a)(2). 33
2963	2963	(d) Person entitled to file certain amendments. A person may file an amendment other than 34
2964	2964
2965	2965
2966	2966	LC001903 - Page 81 of 113
2967	2967	an amendment that adds collateral covered by a financing statement or an amendment that adds a 1
2968	2968	debtor to a financing statement only if: 2
2969	2969	(1) The secured party of record authorizes the filing; or 3
2970	2970	(2) The amendment is a termination statement for a financing statement as to which the 4
2971	2971	secured party of record has failed to file or send a termination statement as required by § 6A-9-5
2972	2972	513(a) or (c), the debtor authorizes the filing, and the termination statement indicates that the debtor 6
2973	2973	authorized it to be filed. 7
2974	2974	(e) Multiple secured parties of record. If there is more than one secured party of record for 8
2975	2975	a financing statement, each secured party of record may authorize the filing of an amendment under 9
2976	2976	subsection (d). 10
2977	2977	6A-9-513. Termination statement. 11
2978	2978	(a) Consumer goods. A secured party shall cause the secured party of record for a financing 12
2979	2979	statement to file a termination statement for the financing statement if the financing statement 13
2980	2980	covers consumer goods and: 14
2981	2981	(1) There is no obligation secured by the collateral covered by the financing statement and 15
2982	2982	no commitment to make an advance, incur an obligation, or otherwise give value; or 16
2983	2983	(2) The debtor did not authorize the filing of the initial financing statement. 17
2984	2984	(b) Time for compliance with subsection (a). To comply with subsection (a), a secured 18
2985	2985	party shall cause the secured party of record to file the termination statement: 19
2986	2986	(1) Within one month after there is no obligation secured by the collateral covered by the 20
2987	2987	financing statement and no commitment to make an advance, incur an obligation, or otherwise give 21
2988	2988	value; or 22
2989	2989	(2) If earlier, within twenty (20) days after the secured party receives an authenticated a 23
2990	2990	signed demand from a debtor. 24
2991	2991	(c) Other collateral. In cases not governed by subsection (a), within 20 days after a secured 25
2992	2992	party receives an authenticated a signed demand from a debtor, the secured party shall cause the 26
2993	2993	secured party of record for a financing statement to send to the debtor a termination statement for 27
2994	2994	the financing statement or file the termination statement in the filing office if: 28
2995	2995	(1) Except in the case of a financing statement covering accounts or chattel paper that has 29
2996	2996	been sold or goods that are the subject of a consignment, there is no obligation secured by the 30
2997	2997	collateral covered by the financing statement and no commitment to make an advance, incur an 31
2998	2998	obligation, or otherwise give value; 32
2999	2999	(2) The financing statement covers accounts or chattel paper that has been sold but as to 33
3000	3000	which the account debtor or other person obligated has discharged its obligation; 34
3001	3001
3002	3002
3003	3003	LC001903 - Page 82 of 113
3004	3004	(3) The financing statement covers goods that were the subject of a consignment to the 1
3005	3005	debtor but are not in the debtor’s possession; or 2
3006	3006	(4) The debtor did not authorize the filing of the initial financing statement. 3
3007	3007	(d) Effect of filing termination statement. Except as otherwise provided in § 6A-9-510, 4
3008	3008	upon the filing of a termination statement with the filing office, the financing statement to which 5
3009	3009	the termination statement relates ceases to be effective. Except as otherwise provided in § 6A-9-6
3010	3010	510, for purposes of §§ 6A-9-519(g), 6A-9-522(a), and 6A-9-523(c), the filing with the filing office 7
3011	3011	of a termination statement relating to a financing statement that indicates that the debtor is a 8
3012	3012	transmitting utility also causes the effectiveness of the financing statement to lapse. 9
3013	3013	6A-9-601. Rights after default; judicial enforcement; consignor or buyer of accounts, 10
3014	3014	chattel paper, payment intangibles, or promissory notes. 11
3015	3015	(a) Rights of secured party after default. After default, a secured party has the rights 12
3016	3016	provided in this part and, except as otherwise provided in § 6A-9-602, those provided by agreement 13
3017	3017	of the parties. A secured party: 14
3018	3018	(1) May reduce a claim to judgment, foreclose, or otherwise enforce the claim, security 15
3019	3019	interest, or agricultural lien by any available judicial procedure; and 16
3020	3020	(2) If the collateral is documents, may proceed either as to the documents or as to the goods 17
3021	3021	they cover. 18
3022	3022	(b) Rights and duties of secured party in possession or control. A secured party in 19
3023	3023	possession of collateral or control of collateral under § 6A-7-106, 6A-9-104, 6A-9-105, 6A-9-105.1 20
3024	3024	6A-9-106, or 6A-9-107 or 6A-9-107.1 has the rights and duties provided in § 6A-9-207. 21
3025	3025	(c) Rights cumulative; simultaneous exercise. The rights under subsections (a) and (b) are 22
3026	3026	cumulative and may be exercised simultaneously. 23
3027	3027	(d) Rights of debtor and obligor. Except as otherwise provided in subsection (g) and § 6A-24
3028	3028	9-605, after default, a debtor and an obligor have the rights provided in this part and by agreement 25
3029	3029	of the parties. 26
3030	3030	(e) Lien of levy after judgment. If a secured party has reduced its claim to judgment, the 27
3031	3031	lien of any levy that may be made upon the collateral by virtue of an execution based upon the 28
3032	3032	judgment relates back to the earliest of: 29
3033	3033	(1) The date of perfection of the security interest or agricultural lien in the collateral; 30
3034	3034	(2) The date of filing a financing statement covering the collateral; or 31
3035	3035	(3) Any date specified in a statute under which the agricultural lien was created. 32
3036	3036	(f) Execution sale. A sale pursuant to an execution is a foreclosure of the security interest 33
3037	3037	or agricultural lien by judicial procedure within the meaning of this section. A secured party may 34
3038	3038
3039	3039
3040	3040	LC001903 - Page 83 of 113
3041	3041	purchase at the sale and thereafter hold the collateral free of any other requirements of this chapter. 1
3042	3042	(g) Consignor or buyer of certain rights to payment. Except as otherwise provided in § 6A-2
3043	3043	9-607(c), this part imposes no duties upon a secured party that is a consignor or is a buyer of 3
3044	3044	accounts, chattel paper, payment intangibles, or promissory notes. 4
3045	3045	6A-9-605. Unknown debtor or secondary obligor. 5
3046	3046	A(a) In general: No duty owed by secured party. Except as provided in subsection (b), of 6
3047	3047	this section a secured party does not owe a duty based on its status as secured party: 7
3048	3048	(1) To a person that is a debtor or obligor, unless the secured party knows: 8
3049	3049	(i) That the person is a debtor or obligor; 9
3050	3050	(ii) The identity of the person; and 10
3051	3051	(iii) How to communicate with the person; or 11
3052	3052	(2) To a secured party or lienholder that has filed a financing statement against a person, 12
3053	3053	unless the secured party knows: 13
3054	3054	(i) That the person is a debtor; and 14
3055	3055	(ii) The identity of the person. 15
3056	3056	(b) Exception: Secured party owes duty to debtor or obligor. A secured party owes a duty 16
3057	3057	based on its status as a secured party to a person if, at the time the secured party obtains control of 17
3058	3058	collateral that is a controllable account, controllable electronic record, or controllable payment 18
3059	3059	intangible or at the time the security interest attaches to the collateral, whichever is later: 19
3060	3060	(1) the person is a debtor or obligor; and 20
3061	3061	(2) the secured party knows that the information in subsection (a)(1)(i), (ii), or (iii) of this 21
3062	3062	section relating to the person is not provided by the collateral, a record attached to or logically 22
3063	3063	associated with the collateral, or the system in which the collateral is recorded. 23
3064	3064	6A-9-608. Application of proceeds of collection or enforcement; liability for deficiency 24
3065	3065	and right to surplus. 25
3066	3066	(a) Application of proceeds, surplus, and deficiency if obligation secured. If a security 26
3067	3067	interest or agricultural lien secures payment or performance of an obligation, the following rules 27
3068	3068	apply: 28
3069	3069	(1) A secured party shall apply or pay over for application the cash proceeds of collection 29
3070	3070	or enforcement under § 6A-9-607 in the following order to: 30
3071	3071	(i) The reasonable expenses of collection and enforcement and, to the extent provided for 31
3072	3072	by agreement and not prohibited by law, reasonable attorney’s fees and legal expenses incurred by 32
3073	3073	the secured party; 33
3074	3074	(ii) The satisfaction of obligations secured by the security interest or agricultural lien under 34
3075	3075
3076	3076
3077	3077	LC001903 - Page 84 of 113
3078	3078	which the collection or enforcement is made; and 1
3079	3079	(iii) The satisfaction of obligations secured by any subordinate security interest in or other 2
3080	3080	lien on the collateral subject to the security interest or agricultural lien under which the collection 3
3081	3081	or enforcement is made if the secured party receives an authenticated a signed demand for proceeds 4
3082	3082	before distribution of the proceeds is completed. 5
3083	3083	(2) If requested by a secured party, a holder of a subordinate security interest or other lien 6
3084	3084	shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder 7
3085	3085	complies, the secured party need not comply with the holder’s demand under paragraph (1)(iii). 8
3086	3086	(3) A secured party need not apply or pay over for application noncash proceeds of 9
3087	3087	collection and enforcement under § 6A-9-607 unless the failure to do so would be commercially 10
3088	3088	unreasonable. A secured party that applies or pays over for application noncash proceeds shall do 11
3089	3089	so in a commercially reasonable manner. 12
3090	3090	(4) A secured party shall account to and pay a debtor for any surplus, and the obligor is 13
3091	3091	liable for any deficiency. 14
3092	3092	(b) No surplus or deficiency in sales of certain rights to payment. If the underlying 15
3093	3093	transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes, the debtor 16
3094	3094	is not entitled to any surplus, and the obligor is not liable for any deficiency. 17
3095	3095	6A-9-611. Notification before disposition of collateral. 18
3096	3096	(a) “Notification date.” In this section, “notification date” means the earlier of the date on 19
3097	3097	which: 20
3098	3098	(1) A secured party sends to the debtor and any secondary obligor an authenticated a signed 21
3099	3099	notification of disposition; or 22
3100	3100	(2) The debtor and any secondary obligor waive the right to notification. 23
3101	3101	(b) Notification of disposition required. Except as otherwise provided in subsection (d), a 24
3102	3102	secured party that disposes of collateral under § 6A-9-610 shall send to the persons specified in 25
3103	3103	subsection (c) a reasonable authenticated signed notification of disposition. 26
3104	3104	(c) Persons to be notified. To comply with subsection (b), the secured party shall send an 27
3105	3105	authenticated a signed notification of disposition to: 28
3106	3106	(1) The debtor; 29
3107	3107	(2) Any secondary obligor; and 30
3108	3108	(3) If the collateral is other than consumer goods: 31
3109	3109	(i) Any other person from which the secured party has received, before the notification 32
3110	3110	date, an authenticated a signed notification of a claim of an interest in the collateral; 33
3111	3111	(ii) Any other secured party or lienholder that, 10 days before the notification date, held a 34
3112	3112
3113	3113
3114	3114	LC001903 - Page 85 of 113
3115	3115	security interest in or other lien on the collateral perfected by the filing of a financing statement 1
3116	3116	that: 2
3117	3117	(A) Identified the collateral; 3
3118	3118	(B) Was indexed under the debtor’s name as of that date; and 4
3119	3119	(C) Was filed in the office in which to file a financing statement against the debtor covering 5
3120	3120	the collateral as of that date; and 6
3121	3121	(iii) Any other secured party that, 10 days before the notification date, held a security 7
3122	3122	interest in the collateral perfected by compliance with a statute, regulation, or treaty described in § 8
3123	3123	6A-9-311(a). 9
3124	3124	(d) Subsection (b) inapplicable: perishable collateral; recognized market. Subsection (b) 10
3125	3125	does not apply if the collateral is perishable or threatens to decline speedily in value or is of a type 11
3126	3126	customarily sold on a recognized market. 12
3127	3127	(e) Compliance with subsection (c)(3)(ii). A secured party complies with the requirement 13
3128	3128	for notification prescribed by subsection (c)(3)(ii) if: 14
3129	3129	(1) Not later than 20 days or earlier than 30 days before the notification date, the secured 15
3130	3130	party requests, in a commercially reasonable manner, information concerning financing statements 16
3131	3131	indexed under the debtor’s name in the office indicated in subsection (c)(3)(ii); and 17
3132	3132	(2) Before the notification date, the secured party: 18
3133	3133	(i) Did not receive a response to the request for information; or 19
3134	3134	(ii) Received a response to the request for information and sent an authenticated a signed 20
3135	3135	notification of disposition to each secured party or other lienholder named in that response whose 21
3136	3136	financing statement covered the collateral. 22
3137	3137	6A-9-613. Contents and form of notification before disposition of collateral — 23
3138	3138	General. 24
3139	3139	(a) Contents and form of notification. Except in a consumer-goods transaction, the 25
3140	3140	following rules apply: 26
3141	3141	(1) The contents of a notification of disposition are sufficient if the notification: 27
3142	3142	(i) Describes the debtor and the secured party; 28
3143	3143	(ii) Describes the collateral that is the subject of the intended disposition; 29
3144	3144	(iii) States the method of intended disposition; 30
3145	3145	(iv) States that the debtor is entitled to an accounting of the unpaid indebtedness and states 31
3146	3146	the charge, if any, for an accounting; and 32
3147	3147	(v) States the time and place of a public disposition or the time after which any other 33
3148	3148	disposition is to be made. 34
3149	3149
3150	3150
3151	3151	LC001903 - Page 86 of 113
3152	3152	(2) Whether the contents of a notification that lacks any of the information specified in 1
3153	3153	paragraph (1) are nevertheless sufficient is a question of fact. 2
3154	3154	(3) The contents of a notification providing substantially the information specified in 3
3155	3155	paragraph (1) are sufficient, even if the notification includes: 4
3156	3156	(i) Information not specified by that paragraph; or 5
3157	3157	(ii) Minor errors that are not seriously misleading. 6
3158	3158	(4) A particular phrasing of the notification is not required. 7
3159	3159	(5) The following form of notification and the form appearing in § 6A-9-614(3) 6A-9-8
3160	3160	614(a)(3), when completed in accordance with the instructions in subsection (b) of this section and 9
3161	3161	§ 6A-9-614(b), each provides sufficient information: 10
3162	3162	NOTIFICATION OF DISPOSITION OF COLLATERAL 11
3163	3163	To: [Name of debtor, obligor, or other person to which the notification is sent] 12
3164	3164	From: [Name, address, and telephone number of secured party] 13
3165	3165	Name of Debtor(s): [Include only if debtor(s) are not an addressee] 14
3166	3166	[For a public disposition:] 15
3167	3167	We will sell [or lease or license, as applicable] the [describe collateral] [to the highest qualified 16
3168	3168	bidder] in public as follows: 17
3169	3169	Day and Date: 18
3170	3170	Time: 19
3171	3171	Place: 20
3172	3172	[For a private disposition:] 21
3173	3173	We will sell [or lease or license, as applicable] the [describe collateral] privately sometime 22
3174	3174	after [day and date]. 23
3175	3175	You are entitled to an accounting of the unpaid indebtedness secured by the property that 24
3176	3176	we intend to sell [or lease or license, as applicable] [for a charge of $ ]. You may request 25
3177	3177	an accounting by calling us at [telephone number] 26
3178	3178	End of Form 27
3179	3179	(Date) 28
3180	3180	NOTIFICATION OF DISPOSITION OF COLLATERAL 29
3181	3181	To: (Name of debtor, obligor, or other person to which the notification is sent) 30
3182	3182	From: (Name, address, and telephone number of secured party) 31
3183	3183	(1) Name of any debtor that is not an addressee: (Name of each debtor) 32
3184	3184	(2) We will sell (describe collateral) (to the highest qualified bidder) at public sale. A sale 33
3185	3185	could include a lease or license. The sale will be held as follows: 34
3186	3186
3187	3187
3188	3188	LC001903 - Page 87 of 113
3189	3189	(Date) 1
3190	3190	(Time) 2
3191	3191	(Place) 3
3192	3192	(3) We will sell (describe collateral) at private sale sometime after (date). A sale could 4
3193	3193	include a lease or license. 5
3194	3194	(4) You are entitled to an accounting of the unpaid indebtedness secured by the property 6
3195	3195	that we intend to sell or, as applicable, lease or license. 7
3196	3196	(5) If you request an accounting you must pay a charge of $ (amount). 8
3197	3197	(6) You may request an accounting by calling us at (telephone number). 9
3198	3198	[End of Form] 10
3199	3199	(b) Instructions for form of notification. The following instructions apply to the form of 11
3200	3200	notification in subsection (a)(5) of this section: 12
3201	3201	(1) The instructions in this subsection refer to the numbers in braces before items in the 13
3202	3202	form of notification in subsection (a)(5) of this section. Do not include the numbers or braces in the 14
3203	3203	notification. The numbers and braces are used only for the purpose of these instructions. 15
3204	3204	(2) Include and complete item (1) only if there is a debtor that is not an addressee of the 16
3205	3205	notification and list the name or names. 17
3206	3206	(3) Include and complete either item (2), if the notification relates to a public disposition 18
3207	3207	of the collateral, or item (3), if the notification relates to a private disposition of the collateral. If 19
3208	3208	item (2) is included, include the words “to the highest qualified bidder” only if applicable. 20
3209	3209	(4) Include and complete items (4) and (6). 21
3210	3210	(5) Include and complete item (5) only if the sender will charge the recipient for an 22
3211	3211	accounting. 23
3212	3212	6A-9-614. Contents and form of notification before disposition of collateral — 24
3213	3213	Consumer-goods transaction. 25
3214	3214	(a) Contents and form of notification. In a consumer-goods transaction, the following rules 26
3215	3215	apply: 27
3216	3216	(1) A notification of disposition must provide the following information: 28
3217	3217	(i) The information specified in § 6A-9-613(1) 6A-9-613(a)(1); 29
3218	3218	(ii) A description of any liability for a deficiency of the person to which the notification is 30
3219	3219	sent; 31
3220	3220	(iii) A telephone number from which the amount that must be paid to the secured party to 32
3221	3221	redeem the collateral under § 6A-9-623 is available; and 33
3222	3222	(iv) A telephone number or mailing address from which additional information concerning 34
3223	3223
3224	3224
3225	3225	LC001903 - Page 88 of 113
3226	3226	the disposition and the obligation secured is available. 1
3227	3227	(2) A particular phrasing of the notification is not required. 2
3228	3228	(3) The following form of notification, when completed in accordance with the instructions 3
3229	3229	in subsection (b) of this section, provides sufficient information: 4
3230	3230	[Name and address of secured party] 5
3231	3231	[Date] 6
3232	3232	NOTICE OF OUR PLAN TO SELL PROPERTY 7
3233	3233	[Name and address of any obligor who is also a debtor] 8
3234	3234	Subject: [Identification of Transaction] 9
3235	3235	We have your [describe collateral], because you broke promises in our agreement. 10
3236	3236	[For a public disposition:] 11
3237	3237	We will sell [describe collateral] at public sale. A sale could include a lease or 12
3238	3238	license. The sale will be held as follows: 13
3239	3239	Date: 14
3240	3240	Time: 15
3241	3241	Place: 16
3242	3242	You may attend the sale and bring bidders if you want. 17
3243	3243	[For a private disposition:] 18
3244	3244	We will sell [describe collateral] at private sale sometime after [date]. A sale could include 19
3245	3245	a lease or license. 20
3246	3246	The money that we get from the sale (after paying our costs) will reduce the amount you 21
3247	3247	owe. If we get less money than you owe, you [will or will not, as applicable] still owe us the 22
3248	3248	difference. If we get more money than you owe, you will get the extra money, unless we must pay 23
3249	3249	it to someone else. 24
3250	3250	You can get the property back at any time before we sell it by paying us the full amount 25
3251	3251	you owe (not just the past due payments), including our expenses. To learn the exact amount you 26
3252	3252	must pay, call us at [telephone number]. 27
3253	3253	If you want us to explain to you in writing how we have figured the amount that you owe 28
3254	3254	us, you may call us at [telephone number] [or write us at [secured party’s address] ] and request a 29
3255	3255	written explanation. [We will charge you $ for the explanation if we sent you another written 30
3256	3256	explanation of the amount you owe us within the last six months.] 31
3257	3257	If you need more information about the sale call us at [telephone number] [or write us at 32
3258	3258	[secured party’s address] ]. 33
3259	3259	We are sending this notice to the following other people who have an interest in [describe 34
3260	3260
3261	3261
3262	3262	LC001903 - Page 89 of 113
3263	3263	collateral] or who owe money under your agreement: 1
3264	3264	[Names of all other debtors and obligors, if any] 2
3265	3265	[End of Form] 3
3266	3266	(Name and address of secured party) 4
3267	3267	(Date) 5
3268	3268	NOTICE OF OUR PLAN TO SELL PROPERTY 6
3269	3269	(Name and address of any obligor who is also a debtor) 7
3270	3270	Subject: (Identify transaction) 8
3271	3271	We have your (describe collateral), because you broke promises in our agreement. 9
3272	3272	(1) We will sell (describe collateral) at public sale. A sale could include a lease or license. 10
3273	3273	The sale will be held as follows: 11
3274	3274	(Date) 12
3275	3275	(Time) 13
3276	3276	(Place) 14
3277	3277	You may attend the sale and bring bidders if you want. 15
3278	3278	(2) We will sell (describe collateral) at private sale sometime after (date). A sale could 16
3279	3279	include a lease or license. 17
3280	3280	(3) The money that we get from the sale, after paying our costs, will reduce the amount 18
3281	3281	you owe. If we get less money than you owe, you (will or will not, as applicable) still owe us the 19
3282	3282	difference. If we get more money than you owe, you will get the extra money, unless we must pay 20
3283	3283	it to someone else. 21
3284	3284	(4) You can get the property back at any time before we sell it by paying us the full amount 22
3285	3285	you owe, not just the past due payments, including our expenses. To learn the exact amount you 23
3286	3286	must pay, call us at (telephone number). 24
3287	3287	(5) If you want us to explain to you in (writing) (writing or in (description of electronic 25
3288	3288	record) (description of electronic record) how we have figured the amount that you owe us, (6) call 26
3289	3289	us at (telephone number) (or) (write us at (secured party’s address)) (or contact us by (description 27
3290	3290	of electronic communication method)) (7) and request (a written explanation) (a written 28
3291	3291	explanation or an explanation in (description of electronic record)) (an explanation in (description 29
3292	3292	of electronic record)). 30
3293	3293	(8) We will charge you $ (amount) for the explanation if we sent you another written 31
3294	3294	explanation of the amount you owe us within the last six months. 32
3295	3295	(9) If you need more information about the sale (call us at (telephone number)) (or) (write 33
3296	3296	us at (secured party’s address)) (or contact us by (description of electronic communication 34
3297	3297
3298	3298
3299	3299	LC001903 - Page 90 of 113
3300	3300	method)). 1
3301	3301	(10) We are sending this notice to the following other people who have an interest in 2
3302	3302	(describe collateral) or who owe money under your agreement: 3
3303	3303	(Names of all other debtors and obligors, if any) 4
3304	3304	[End of Form] 5
3305	3305	(b) Instructions for form of notification. The following instructions apply to the form of 6
3306	3306	notification in subsection (a)(3) of this section: 7
3307	3307	(1) The instructions in this subsection refer to the numbers in braces before items in the 8
3308	3308	form of notification in subsection (a)(3) of this section. Do not include the numbers or braces in the 9
3309	3309	notification. The numbers and braces are used only for the purpose of these instructions. 10
3310	3310	(2) Include and complete either item (1), if the notification relates to a public disposition 11
3311	3311	of the collateral, or item (2), if the notification relates to a private disposition of the collateral. 12
3312	3312	(3) Include and complete items (3), (4), (5), (6), and (7). 13
3313	3313	(4) In item (5), include and complete any one of the three alternative methods for the 14
3314	3314	explanation writing, writing or electronic record, or electronic record. 15
3315	3315	(5) In item (6), include the telephone number. In addition, the sender may include and 16
3316	3316	complete either or both of the two additional alternative methods of communication writing or 17
3317	3317	electronic communication for the recipient of the notification to communicate with the sender. 18
3318	3318	Neither of the two additional methods of communication is required to be included. 19
3319	3319	(6) In item (7), include and complete the method or methods for the explanation writing, 20
3320	3320	writing or electronic record, or electronic record included in item (5). 21
3321	3321	(7) Include and complete item (8) only if a written explanation is included in item (5) as a 22
3322	3322	method for communicating the explanation and the sender will charge the recipient for another 23
3323	3323	written explanation. 24
3324	3324	(8) In item (9), include either the telephone number or the address or both the telephone 25
3325	3325	number and the address. In addition, the sender may include and complete the additional method 26
3326	3326	of communication electronic communication for the recipient of the notification to communicate 27
3327	3327	with the sender. The additional method of electronic communication is not required to be included. 28
3328	3328	(9) If item (10) does not apply, insert “None” after “agreement:”. 29
3329	3329	(4) A notification in the form of paragraph (3) is sufficient, even if additional information 30
3330	3330	appears at the end of the form. 31
3331	3331	(5) A notification in the form of paragraph (3) is sufficient, even if it includes errors in 32
3332	3332	information not required by paragraph (1), unless the error is misleading with respect to rights 33
3333	3333	arising under this chapter. 34
3334	3334
3335	3335
3336	3336	LC001903 - Page 91 of 113
3337	3337	(6) If a notification under this section is not in the form of paragraph (3), law other than 1
3338	3338	this chapter determines the effect of including information not required by paragraph (1). 2
3339	3339	6A-9-615. Application of proceeds of disposition; liability for deficiency and right to 3
3340	3340	surplus. 4
3341	3341	(a) Application of proceeds. A secured party shall apply or pay over for application the 5
3342	3342	cash proceeds of disposition under § 6A-9-610 in the following order to: 6
3343	3343	(1) The reasonable expenses of retaking, holding, preparing for disposition, processing, 7
3344	3344	and disposing, and, to the extent provided for by agreement and not prohibited by law, reasonable 8
3345	3345	attorney’s fees and legal expenses incurred by the secured party; 9
3346	3346	(2) The satisfaction of obligations secured by the security interest or agricultural lien under 10
3347	3347	which the disposition is made; 11
3348	3348	(3) The satisfaction of obligations secured by any subordinate security interest in or other 12
3349	3349	subordinate lien on the collateral if: 13
3350	3350	(i) The secured party receives from the holder of the subordinate security interest or other 14
3351	3351	lien an authenticated a signed demand for proceeds before distribution of the proceeds is completed; 15
3352	3352	and 16
3353	3353	(ii) In a case in which a consignor has an interest in the collateral, the subordinate security 17
3354	3354	interest or other lien is senior to the interest of the consignor; and 18
3355	3355	(4) A secured party that is a consignor of the collateral if the secured party receives from 19
3356	3356	the consignor an authenticated a signed demand for proceeds before distribution of the proceeds is 20
3357	3357	completed. 21
3358	3358	(b) Proof of subordinate interest. If requested by a secured party, a holder of a subordinate 22
3359	3359	security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable 23
3360	3360	time. Unless the holder does so, the secured party need not comply with the holder’s demand under 24
3361	3361	subsection (a)(3). 25
3362	3362	(c) Application of noncash proceeds. A secured party need not apply or pay over for 26
3363	3363	application noncash proceeds of disposition under § 6A-9-610 unless the failure to do so would be 27
3364	3364	commercially unreasonable. A secured party that applies or pays over for application noncash 28
3365	3365	proceeds shall do so in a commercially reasonable manner. 29
3366	3366	(d) Surplus or deficiency if obligation secured. If the security interest under which a 30
3367	3367	disposition is made secures payment or performance of an obligation, after making the payments 31
3368	3368	and applications required by subsection (a) and permitted by subsection (c): 32
3369	3369	(1) Unless subsection (a)(4) requires the secured party to apply or pay over cash proceeds 33
3370	3370	to a consignor, the secured party shall account to and pay a debtor for any surplus; and 34
3371	3371
3372	3372
3373	3373	LC001903 - Page 92 of 113
3374	3374	(2) The obligor is liable for any deficiency. 1
3375	3375	(e) No surplus or deficiency in sales of certain rights to payment. If the underlying 2
3376	3376	transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes: 3
3377	3377	(1) The debtor is not entitled to any surplus; and 4
3378	3378	(2) The obligor is not liable for any deficiency. 5
3379	3379	(f) Calculation of surplus or deficiency in disposition to person related to secured party. 6
3380	3380	The surplus or deficiency following a disposition is calculated based on the amount of proceeds 7
3381	3381	that would have been realized in a disposition complying with this part to a transferee other than 8
3382	3382	the secured party, a person related to the secured party, or a secondary obligor if: 9
3383	3383	(1) The transferee in the disposition is the secured party, a person related to the secured 10
3384	3384	party, or a secondary obligor; and 11
3385	3385	(2) The amount of proceeds of the disposition is significantly below the range of proceeds 12
3386	3386	that a complying disposition to a person other than the secured party, a person related to the secured 13
3387	3387	party, or a secondary obligor would have brought. 14
3388	3388	(g) Cash proceeds received by junior secured party. A secured party that receives cash 15
3389	3389	proceeds of a disposition in good faith and without knowledge that the receipt violates the rights of 16
3390	3390	the holder of a security interest or other lien that is not subordinate to the security interest or 17
3391	3391	agricultural lien under which the disposition is made: 18
3392	3392	(1) Takes the cash proceeds free of the security interest or other lien; 19
3393	3393	(2) Is not obligated to apply the proceeds of the disposition to the satisfaction of obligations 20
3394	3394	secured by the security interest or other lien; and 21
3395	3395	(3) Is not obligated to account to or pay the holder of the security interest or other lien for 22
3396	3396	any surplus. 23
3397	3397	6A-9-616. Explanation of calculation of surplus or deficiency. 24
3398	3398	(a) Definitions. In this section: 25
3399	3399	(1) “Explanation” means a writing record that: 26
3400	3400	(i) States the amount of the surplus or deficiency; 27
3401	3401	(ii) Provides an explanation in accordance with subsection (c) of how the secured party 28
3402	3402	calculated the surplus or deficiency; 29
3403	3403	(iii) States, if applicable, that future debits, credits, charges, including additional credit 30
3404	3404	service charges or interest, rebates, and expenses may affect the amount of the surplus or 31
3405	3405	deficiency; and 32
3406	3406	(iv) Provides a telephone number or mailing address from which additional information 33
3407	3407	concerning the transaction is available. 34
3408	3408
3409	3409
3410	3410	LC001903 - Page 93 of 113
3411	3411	(2) “Request” means a record: 1
3412	3412	(i) Authenticated Signed by a debtor or consumer obligor; 2
3413	3413	(ii) Requesting that the recipient provide an explanation; and 3
3414	3414	(iii) Sent after disposition of the collateral under § 6A-9-610. 4
3415	3415	(b) Explanation of calculation. In a consumer-goods transaction in which the debtor is 5
3416	3416	entitled to a surplus or a consumer obligor is liable for a deficiency under § 6A-9-615, the secured 6
3417	3417	party shall: 7
3418	3418	(1) Send an explanation to the debtor or consumer obligor, as applicable, after the 8
3419	3419	disposition and: 9
3420	3420	(i) Before or when the secured party accounts to the debtor and pays any surplus or first 10
3421	3421	makes written demand in a record on the consumer obligor after the disposition for payment of the 11
3422	3422	deficiency; and 12
3423	3423	(ii) Within 14 days after receipt of a request; or 13
3424	3424	(2) In the case of a consumer obligor who is liable for a deficiency, within 14 days after 14
3425	3425	receipt of a request, send to the consumer obligor a record waiving the secured party’s right to a 15
3426	3426	deficiency. 16
3427	3427	(c) Required information. To comply with subsection (a)(1)(ii), a writing an explanation 17
3428	3428	must provide the following information in the following order: 18
3429	3429	(1) The aggregate amount of obligations secured by the security interest under which the 19
3430	3430	disposition was made, and, if the amount reflects a rebate of unearned interest or credit service 20
3431	3431	charge, an indication of that fact, calculated as of a specified date: 21
3432	3432	(i) If the secured party takes or receives possession of the collateral after default, not more 22
3433	3433	than 35 days before the secured party takes or receives possession; or 23
3434	3434	(ii) If the secured party takes or receives possession of the collateral before default or does 24
3435	3435	not take possession of the collateral, not more than 35 days before the disposition; 25
3436	3436	(2) The amount of proceeds of the disposition; 26
3437	3437	(3) The aggregate amount of the obligations after deducting the amount of proceeds; 27
3438	3438	(4) The amount, in the aggregate or by type, and types of expenses, including expenses of 28
3439	3439	retaking, holding, preparing for disposition, processing, and disposing of the collateral, and 29
3440	3440	attorney’s fees secured by the collateral which are known to the secured party and relate to the 30
3441	3441	current disposition; 31
3442	3442	(5) The amount, in the aggregate or by type, and types of credits, including rebates of 32
3443	3443	interest or credit service charges, to which the obligor is known to be entitled and which are not 33
3444	3444	reflected in the amount in paragraph (1); and 34
3445	3445
3446	3446
3447	3447	LC001903 - Page 94 of 113
3448	3448	(6) The amount of the surplus or deficiency. 1
3449	3449	(d) Substantial compliance. A particular phrasing of the explanation is not required. An 2
3450	3450	explanation complying substantially with the requirements of subsection (a) is sufficient, even if it 3
3451	3451	includes minor errors that are not seriously misleading. 4
3452	3452	(e) Charges for responses. A debtor or consumer obligor is entitled without charge to one 5
3453	3453	response to a request under this section during any six-month period in which the secured party did 6
3454	3454	not send to the debtor or consumer obligor an explanation pursuant to subsection (b)(1). The 7
3455	3455	secured party may require payment of a charge not exceeding $ 25 for each additional response. 8
3456	3456	6A-9-619. Transfer of record or legal title. 9
3457	3457	(a) “Transfer statement.” In this section, “transfer statement” means a record authenticated 10
3458	3458	signed by a secured party stating: 11
3459	3459	(1) That the debtor has defaulted in connection with an obligation secured by specified 12
3460	3460	collateral; 13
3461	3461	(2) That the secured party has exercised its post-default remedies with respect to the 14
3462	3462	collateral; 15
3463	3463	(3) That, by reason of the exercise, a transferee has acquired the rights of the debtor in the 16
3464	3464	collateral; and 17
3465	3465	(4) The name and mailing address of the secured party, debtor, and transferee. 18
3466	3466	(b) Effect of transfer statement. A transfer statement entitles the transferee to the transfer 19
3467	3467	of record of all rights of the debtor in the collateral specified in the statement in any official filing, 20
3468	3468	recording, registration, or certificate-of-title system covering the collateral. If a transfer statement 21
3469	3469	is presented with the applicable fee and request form to the official or office responsible for 22
3470	3470	maintaining the system, the official or office shall: 23
3471	3471	(1) Accept the transfer statement; 24
3472	3472	(2) Promptly amend its records to reflect the transfer; and 25
3473	3473	(3) If applicable, issue a new appropriate certificate of title in the name of the transferee. 26
3474	3474	(c) Transfer not a disposition; no relief of secured party’s duties. A transfer of the record 27
3475	3475	or legal title to collateral to a secured party under subsection (b) or otherwise is not of itself a 28
3476	3476	disposition of collateral under this chapter and does not of itself relieve the secured party of its 29
3477	3477	duties under this chapter. 30
3478	3478	6A-9-620. Acceptance of collateral in full or partial satisfaction of obligation; 31
3479	3479	compulsory disposition of collateral. 32
3480	3480	(a) Conditions to acceptance in satisfaction. Except as otherwise provided in subsection 33
3481	3481	(g), a secured party may accept collateral in full or partial satisfaction of the obligation it secures 34
3482	3482
3483	3483
3484	3484	LC001903 - Page 95 of 113
3485	3485	only if: 1
3486	3486	(1) The debtor consents to the acceptance under subsection (c); 2
3487	3487	(2) The secured party does not receive, within the time set forth in subsection (d), a 3
3488	3488	notification of objection to the proposal authenticated signed by: 4
3489	3489	(i) A person to which the secured party was required to send a proposal under § 6A-9-621; 5
3490	3490	or 6
3491	3491	(ii) Any other person, other than the debtor, holding an interest in the collateral subordinate 7
3492	3492	to the security interest that is the subject of the proposal; 8
3493	3493	(3) If the collateral is consumer goods, the collateral is not in the possession of the debtor 9
3494	3494	when the debtor consents to the acceptance; and 10
3495	3495	(4) Subsection (e) does not require the secured party to dispose of the collateral or the 11
3496	3496	debtor waives the requirement pursuant to § 6A-9-624. 12
3497	3497	(b) Purported acceptance ineffective. A purported or apparent acceptance of collateral 13
3498	3498	under this section is ineffective unless: 14
3499	3499	(1) The secured party consents to the acceptance in an authenticated a signed record or 15
3500	3500	sends a proposal to the debtor; and 16
3501	3501	(2) The conditions of subsection (a) are met. 17
3502	3502	(c) Debtor’s consent. For purposes of this section: 18
3503	3503	(1) A debtor consents to an acceptance of collateral in partial satisfaction of the obligation 19
3504	3504	it secures only if the debtor agrees to the terms of the acceptance in a record authenticated signed 20
3505	3505	after default; and 21
3506	3506	(2) A debtor consents to an acceptance of collateral in full satisfaction of the obligation it 22
3507	3507	secures only if the debtor agrees to the terms of the acceptance in a record authenticated signed 23
3508	3508	after default or the secured party: 24
3509	3509	(i) Sends to the debtor after default a proposal that is unconditional or subject only to a 25
3510	3510	condition that collateral not in the possession of the secured party be preserved or maintained; 26
3511	3511	(ii) In the proposal, proposes to accept collateral in full satisfaction of the obligation it 27
3512	3512	secures; and 28
3513	3513	(iii) Does not receive a notification of objection authenticated signed by the debtor within 29
3514	3514	20 days after the proposal is sent. 30
3515	3515	(d) Effectiveness of notification. To be effective under subsection (a)(2), a notification of 31
3516	3516	objection must be received by the secured party: 32
3517	3517	(1) In the case of a person to which the proposal was sent pursuant to § 6A-9-621, within 33
3518	3518	20 days after notification was sent to that person; and 34
3519	3519
3520	3520
3521	3521	LC001903 - Page 96 of 113
3522	3522	(2) In other cases: 1
3523	3523	(i) Within 20 days after the last notification was sent pursuant to § 6A-9-621; or 2
3524	3524	(ii) If a notification was not sent, before the debtor consents to the acceptance under 3
3525	3525	subsection (c). 4
3526	3526	(e) Mandatory disposition of consumer goods. A secured party that has taken possession 5
3527	3527	of collateral shall dispose of the collateral pursuant to § 6A-9-610 within the time specified in 6
3528	3528	subsection (f) if: 7
3529	3529	(1) 60 percent of the cash price has been paid in the case of a purchase-money security 8
3530	3530	interest in consumer goods; or 9
3531	3531	(2) 60 percent of the principal amount of the obligation secured has been paid in the case 10
3532	3532	of a non-purchase-money security interest in consumer goods. 11
3533	3533	(f) Compliance with mandatory disposition requirement. To comply with subsection (e), 12
3534	3534	the secured party shall dispose of the collateral: 13
3535	3535	(1) Within 90 days after taking possession; or 14
3536	3536	(2) Within any longer period to which the debtor and all secondary obligors have agreed in 15
3537	3537	an agreement to that effect entered into and authenticated signed after default. 16
3538	3538	(g) No partial satisfaction in consumer transaction. In a consumer transaction, a secured 17
3539	3539	party may not accept collateral in partial satisfaction of the obligation it secures. 18
3540	3540	6A-9-621. Notification of proposal to accept collateral. 19
3541	3541	(a) Persons to which proposal to be sent. A secured party that desires to accept collateral 20
3542	3542	in full or partial satisfaction of the obligation it secures shall send its proposal to: 21
3543	3543	(1) Any person from which the secured party has received, before the debtor consented to 22
3544	3544	the acceptance, an authenticated a signed notification of a claim of an interest in the collateral; 23
3545	3545	(2) Any other secured party or lienholder that, 10 days before the debtor consented to the 24
3546	3546	acceptance, held a security interest in or other lien on the collateral perfected by the filing of a 25
3547	3547	financing statement that: 26
3548	3548	(i) Identified the collateral; 27
3549	3549	(ii) Was indexed under the debtor’s name as of that date; and 28
3550	3550	(iii) Was filed in the office or offices in which to file a financing statement against the 29
3551	3551	debtor covering the collateral as of that date; and 30
3552	3552	(3) Any other secured party that, 10 days before the debtor consented to the acceptance, 31
3553	3553	held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty 32
3554	3554	described in § 6A-9-311(a). 33
3555	3555	(b) Proposal to be sent to secondary obligor in partial satisfaction. A secured party that 34
3556	3556
3557	3557
3558	3558	LC001903 - Page 97 of 113
3559	3559	desires to accept collateral in partial satisfaction of the obligation it secures shall send its proposal 1
3560	3560	to any secondary obligor in addition to the persons described in subsection (a). 2
3561	3561	6A-9-624. Waiver. 3
3562	3562	(a) Waiver of disposition notification. A debtor or secondary obligor may waive the right 4
3563	3563	to notification of disposition of collateral under § 6A-9-611 only by an agreement to that effect 5
3564	3564	entered into and authenticated signed after default. 6
3565	3565	(b) Waiver of mandatory disposition. A debtor may waive the right to require disposition 7
3566	3566	of collateral under § 6A-9-620(e) only by an agreement to that effect entered into and authenticated 8
3567	3567	signed after default. 9
3568	3568	(c) Waiver of redemption right. Except in a consumer-goods transaction, a debtor or 10
3569	3569	secondary obligor may waive the right to redeem collateral under § 6A-9-623 only by an agreement 11
3570	3570	to that effect entered into and authenticated signed after default. 12
3571	3571	6A-9-628. Nonliability and limitation on liability of secured party; liability of 13
3572	3572	secondary obligor. 14
3573	3573	(a) Limitation of liability of secured party for noncompliance with chapter. Unless Subject 15
3574	3574	to subsection (f) of this section, unless a secured party knows that a person is a debtor or obligor, 16
3575	3575	knows the identity of the person, and knows how to communicate with the person: 17
3576	3576	(1) The secured party is not liable to the person, or to a secured party or lienholder that has 18
3577	3577	filed a financing statement against the person, for failure to comply with this chapter; and 19
3578	3578	(2) The secured party’s failure to comply with this chapter does not affect the liability of 20
3579	3579	the person for a deficiency. 21
3580	3580	(b) Limitation of liability based on status as secured party. A Subject to subsection (f), of 22
3581	3581	this section, a secured party is not liable because of its status as secured party: 23
3582	3582	(1) To a person that is a debtor or obligor, unless the secured party knows: 24
3583	3583	(i) That the person is a debtor or obligor; 25
3584	3584	(ii) The identity of the person; and 26
3585	3585	(iii) How to communicate with the person; or 27
3586	3586	(2) To a secured party or lienholder that has filed a financing statement against a person, 28
3587	3587	unless the secured party knows: 29
3588	3588	(i) That the person is a debtor; and 30
3589	3589	(ii) The identity of the person. 31
3590	3590	(c) Limitation of liability if reasonable belief that transaction not a consumer-goods 32
3591	3591	transaction or consumer transaction. A secured party is not liable to any person, and a person’s 33
3592	3592	liability for a deficiency is not affected, because of any act or omission arising out of the secured 34
3593	3593
3594	3594
3595	3595	LC001903 - Page 98 of 113
3596	3596	party’s reasonable belief that a transaction is not a consumer-goods transaction or a consumer 1
3597	3597	transaction or that goods are not consumer goods, if the secured party’s belief is based on its 2
3598	3598	reasonable reliance on: 3
3599	3599	(1) A debtor’s representation concerning the purpose for which collateral was to be used, 4
3600	3600	acquired, or held; or 5
3601	3601	(2) An obligor’s representation concerning the purpose for which a secured obligation was 6
3602	3602	incurred. 7
3603	3603	(d) Limitation of liability for statutory damages. A secured party is not liable to any person 8
3604	3604	under § 6A-9-625(c)(2) for its failure to comply with § 6A-9-616. 9
3605	3605	(e) Limitation of multiple liability for statutory damages. A secured party is not liable under 10
3606	3606	§ 6A-9-625(c)(2) more than once with respect to any one secured obligation. 11
3607	3607	(f) Exception: Limitation of liability under subsections (a) and (b) of this section does not 12
3608	3608	apply. Subsections (a) and (b) of this section do not apply to limit the liability of a secured party to 13
3609	3609	a person if, at the time the secured party obtains control of collateral that is a controllable account, 14
3610	3610	controllable electronic record, or controllable payment intangible or at the time the security interest 15
3611	3611	attaches to the collateral, whichever is later: 16
3612	3612	(1) The person is a debtor or obligor; and 17
3613	3613	(2) The secured party knows that the information in subsection (b)(1)(i), (ii), or (iii) of this 18
3614	3614	section relating to the person is not provided by the collateral, a record attached to or logically 19
3615	3615	associated with the collateral, or the system in which the collateral is recorded. 20
3616	3616	SECTION 10. Chapter 6A-9 of the General Laws entitled "Secured Transactions" is hereby 21
3617	3617	amended by adding thereto the following sections: 22
3618	3618	6A-9-105.1 Control of electronic money. 23
3619	3619	(a) General rule: control of electronic money. A person has control of electronic money if: 24
3620	3620	(1) The electronic money, a record attached to or logically associated with the electronic 25
3621	3621	money, or a system in which the electronic money is recorded gives the person: 26
3622	3622	(i) Power to avail itself of substantially all the benefit from the electronic money; and 27
3623	3623	(ii) Exclusive power, subject to subsection (b) of this section, to: 28
3624	3624	(A) Prevent others from availing themselves of substantially all the benefit from the 29
3625	3625	electronic money; and 30
3626	3626	(B) Transfer control of the electronic money to another person or cause another person to 31
3627	3627	obtain control of other electronic money as a result of the transfer of the electronic money; and 32
3628	3628	(2) The electronic money, a record attached to or logically associated with the electronic 33
3629	3629	money, or a system in which the electronic money is recorded enables the person readily to identify 34
3630	3630
3631	3631
3632	3632	LC001903 - Page 99 of 113
3633	3633	itself in any way, including by name, identifying number, cryptographic key, office, or account 1
3634	3634	number, as having the powers under subsection (a)(1) of this section. 2
3635	3635	(b) Meaning of exclusive. Subject to subsection (c), a power is exclusive under subsections 3
3636	3636	(a)(1)(ii)(A) and (B) of this section even if: 4
3637	3637	(1) The electronic money, a record attached to or logically associated with the electronic 5
3638	3638	money, or a system in which the electronic money is recorded limits the use of the electronic money 6
3639	3639	or has a protocol programmed to cause a change, including a transfer or loss of control; or 7
3640	3640	(2) The power is shared with another person. 8
3641	3641	(c) When power not shared with another person. A power of a person is not shared with 9
3642	3642	another person under subsection (b)(2) of this section and the person’s power is not exclusive if: 10
3643	3643	(1) The person can exercise the power only if the power also is exercised by the other 11
3644	3644	person; and 12
3645	3645	(2) The other person: 13
3646	3646	(i) Can exercise the power without exercise of the power by the person; or 14
3647	3647	(ii) Is the transferor to the person of an interest in the electronic money. 15
3648	3648	(d) Presumption of exclusivity of certain powers. If a person has the powers specified in 16
3649	3649	subsections (a)(1)(ii)(A) and (B) of this section, the powers are presumed to be exclusive. 17
3650	3650	(e) Control through another person. A person has control of electronic money if another 18
3651	3651	person, other than the transferor to the person of an interest in the electronic money: 19
3652	3652	(1) Has control of the electronic money and acknowledges that it has control on behalf of 20
3653	3653	the person; or 21
3654	3654	(2) Obtains control of the electronic money after having acknowledged that it will obtain 22
3655	3655	control of the electronic money on behalf of the person. 23
3656	3656	6A-9-107.1. Control of Controllable Electronic record, controllable account, or 24
3657	3657	controllable payment intangible. 25
3658	3658	(a) Control under § 6A-12-105. A secured party has control of a controllable electronic 26
3659	3659	record as provided in § 6A-12-105. 27
3660	3660	(b) Control of controllable account and controllable payment intangible. A secured party 28
3661	3661	has control of a controllable account or controllable payment intangible if the secured party has 29
3662	3662	control of the controllable electronic record that evidences the controllable account or controllable 30
3663	3663	payment intangible. 31
3664	3664	6A-9-107.2. No requirement to acknowledge or confirm; No duties. 32
3665	3665	(a) No requirement to acknowledge. A person that has control under § 6A-9-104, § 6A-9-33
3666	3666	105, or § 6A-9-105.1 is not required to acknowledge that it has control on behalf of another person. 34
3667	3667
3668	3668
3669	3669	LC001903 - Page 100 of 113
3670	3670	(b) No duties or confirmation. If a person acknowledges that it has or will obtain control 1
3671	3671	on behalf of another person, unless the person otherwise agrees or law other than this chapter 2
3672	3672	otherwise provides, the person does not owe any duty to the other person and is not required to 3
3673	3673	confirm the acknowledgment to any other person. 4
3674	3674	6A-9-306.1. Law Governing Perfection and Priority of security interests in chattel 5
3675	3675	paper. 6
3676	3676	(a) Chattel paper evidenced by authoritative electronic copy. Except as provided in 7
3677	3677	subsection (d), if chattel paper is evidenced only by an authoritative electronic copy of the chattel 8
3678	3678	paper or is evidenced by an authoritative electronic copy and an authoritative tangible copy, the 9
3679	3679	local law of the chattel paper’s jurisdiction governs perfection, the effect of perfection or 10
3680	3680	nonperfection, and the priority of a security interest in the chattel paper, even if the transaction does 11
3681	3681	not bear any relation to the chattel paper’s jurisdiction. 12
3682	3682	(b) Chattel paper’s jurisdiction. The following rules determine the chattel paper’s 13
3683	3683	jurisdiction under this section: 14
3684	3684	(1) If the authoritative electronic copy of the record evidencing chattel paper, or a record 15
3685	3685	attached to or logically associated with the electronic copy and readily available for review, 16
3686	3686	expressly provides that a particular jurisdiction is the chattel paper’s jurisdiction for purposes of 17
3687	3687	this part, this chapter, or this title, that jurisdiction is the chattel paper’s jurisdiction. 18
3688	3688	(2) If subsection (b)(1) of this section does not apply and the rules of the system in which 19
3689	3689	the authoritative electronic copy is recorded are readily available for review and expressly provide 20
3690	3690	that a particular jurisdiction is the chattel paper’s jurisdiction for purposes of this part, this chapter, 21
3691	3691	or this title, that jurisdiction is the chattel paper’s jurisdiction. 22
3692	3692	(3) If subsection (b)(1) and (b)(2) of this section do not apply and the authoritative 23
3693	3693	electronic copy, or a record attached to or logically associated with the electronic copy and readily 24
3694	3694	available for review, expressly provides that the chattel paper is governed by the law of a particular 25
3695	3695	jurisdiction, that jurisdiction is the chattel paper’s jurisdiction. 26
3696	3696	(4) If subsections (b)(1), (b)(2), and (b)(3) of this section do not apply and the rules of the 27
3697	3697	system in which the authoritative electronic copy is recorded are readily available for review and 28
3698	3698	expressly provide that the chattel paper or the system is governed by the law of a particular 29
3699	3699	jurisdiction, that jurisdiction is the chattel paper’s jurisdiction. 30
3700	3700	(5) If subsections (b)(1) through (b)(4) of this section do not apply, the chattel paper’s 31
3701	3701	jurisdiction is the jurisdiction in which the debtor is located. 32
3702	3702	(c) Chattel paper evidenced by authoritative tangible copy. If an authoritative tangible copy 33
3703	3703	of a record evidences chattel paper and the chattel paper is not evidenced by an authoritative 34
3704	3704
3705	3705
3706	3706	LC001903 - Page 101 of 113
3707	3707	electronic copy, while the authoritative tangible copy of the record evidencing chattel paper is 1
3708	3708	located in a jurisdiction, the local law of that jurisdiction governs: 2
3709	3709	(1) perfection of a security interest in the chattel paper by possession under § 6A-9-314.1; 3
3710	3710	and 4
3711	3711	(2) the effect of perfection or nonperfection and the priority of a security interest in the 5
3712	3712	chattel paper. 6
3713	3713	(d) When perfection governed by law of jurisdiction where debtor located. The local law 7
3714	3714	of the jurisdiction in which the debtor is located governs perfection of a security interest in chattel 8
3715	3715	paper by filing. 9
3716	3716	6A-9-306.2. Law governing perfection and priority of security interests in controllable 10
3717	3717	accounts, controllable electronic records, and controllable payment intangibles. 11
3718	3718	(a) Governing law: general rules. Except as provided in subsection (b) of this section, the 12
3719	3719	local law of the controllable electronic record’s jurisdiction specified in § 6A-10-107(c) and (d) 13
3720	3720	governs perfection, the effect of perfection or nonperfection, and the priority of a security interest 14
3721	3721	in a controllable electronic record and a security interest in a controllable account or controllable 15
3722	3722	payment intangible evidenced by the controllable electronic record. 16
3723	3723	(b) When perfection governed by law of jurisdiction where debtor located. The local law 17
3724	3724	of the jurisdiction in which the debtor is located governs: 18
3725	3725	(1) perfection of a security interest in a controllable account, controllable electronic record, 19
3726	3726	or controllable payment intangible by filing; and 20
3727	3727	(2) automatic perfection of a security interest in a controllable payment intangible created 21
3728	3728	by a sale of the controllable payment intangible. 22
3729	3729	6A-9-314.1. Perfection by possession and control of chattel paper. 23
3730	3730	(a) Perfection by possession and control. A secured party may perfect a security interest in 24
3731	3731	chattel paper by taking possession of each authoritative tangible copy of the record evidencing the 25
3732	3732	chattel paper and obtaining control of each authoritative electronic copy of the electronic record 26
3733	3733	evidencing the chattel paper. 27
3734	3734	(b) Time of perfection; continuation of perfection. A security interest is perfected under 28
3735	3735	subsection (a) of this section not earlier than the time the secured party takes possession and obtains 29
3736	3736	control and remains perfected under subsection (a) of this section only while the secured party 30
3737	3737	retains possession and control. 31
3738	3738	(c) Application of § 6A-9-313 to perfection by possession of chattel paper. § 6A-9-313(c) 32
3739	3739	and (f) through (i) applies to perfection by possession of an authoritative tangible copy of a record 33
3740	3740	evidencing chattel paper. 34
3741	3741
3742	3742
3743	3743	LC001903 - Page 102 of 113
3744	3744	6A-9-326.1. Priority of security interest in controllable account, controllable 1
3745	3745	electronic record, and controllable payment intangible. 2
3746	3746	A security interest in a controllable account, controllable electronic record, or controllable 3
3747	3747	payment intangible held by a secured party having control of the account, electronic record, or 4
3748	3748	payment intangible has priority over a conflicting security interest held by a secured party that does 5
3749	3749	not have control. 6
3750	3750	SECTION 11. Title 6A of the General Laws entitled "UNIFORM COMMERCIAL CODE" 7
3751	3751	is hereby amended by adding thereto the following chapter: 8
3752	3752	CHAPTER 12 9
3753	3753	CONTROLLABLE ELECTRO NIC RECORDS 10
3754	3754	6A-12-101. Short title. 11
3755	3755	This chapter shall be known and may be cited as "Uniform Commercial Code-Controllable 12
3756	3756	Electronic Records." 13
3757	3757	6A-12-102. Definitions. 14
3758	3758	(a) Chapter 12 of title 6A definitions. In this chapter: 15
3759	3759	(1) “Controllable electronic record” means a record stored in an electronic medium that 16
3760	3760	can be subjected to control under § 6A-12-105. The term does not include a controllable account, 17
3761	3761	a controllable payment intangible, a deposit account, an electronic copy of a record evidencing 18
3762	3762	chattel paper, an electronic document of title, electronic money, investment property, or a 19
3763	3763	transferable record. 20
3764	3764	(2) “Qualifying purchaser” means a purchaser of a controllable electronic record or an 21
3765	3765	interest in a controllable electronic record that obtains control of the controllable electronic record 22
3766	3766	for value, in good faith, and without notice of a claim of a property right in the controllable 23
3767	3767	electronic record. 24
3768	3768	(3) “Transferable record” has the meaning provided for that term in: 25
3769	3769	(i) Section 201(a)(1) of the Electronic Signatures in Global and National Commerce Act, 26
3770	3770	15 U.S.C. Section 7021(a)(1); or 27
3771	3771	(ii) Section 42-127.1-16(a) of the Uniform Electronic Transactions Act. 28
3772	3772	(4) “Value” has the meaning provided in § 6A-3-303(a), as if references in that subsection 29
3773	3773	to an “instrument” were references to a controllable account, controllable electronic record, or 30
3774	3774	controllable payment intangible. 31
3775	3775	(b) Definitions in chapter 6A-9. The definitions in chapter 6A-9 of “account debtor”, 32
3776	3776	“controllable account”, “controllable payment intangible”, “chattel paper”, “deposit account”, 33
3777	3777	“electronic money”, and “investment property” apply to this chapter. 34
3778	3778
3779	3779
3780	3780	LC001903 - Page 103 of 113
3781	3781	(c) Chapter 6A-1 definitions and principles. Chapter 6A-1 contains general definitions and 1
3782	3782	principles of construction and interpretation applicable throughout this chapter. 2
3783	3783	6A-12-103. Relation to chapter 9 and consumer laws. 3
3784	3784	(a) Chapter 6A-9 governs in case of conflict. If there is conflict between this chapter and 4
3785	3785	Chapter 6A-9, Chapter 6A-9 governs. 5
3786	3786	(b) Applicable consumer law and other laws. A transaction subject to this chapter is subject 6
3787	3787	to: (1) any applicable rule of law that establishes a different rule for consumers, (2) any other statute 7
3788	3788	or regulation that regulates the rates, charges, agreements, and practices for loans, credit sales, or 8
3789	3789	other extensions of credit, and (3) any consumer-protection statute or regulation. 9
3790	3790	6A-12-104. Rights in controllable account, controllable electronic record, and 10
3791	3791	controllable payment intangible. 11
3792	3792	(a) Applicability of section to controllable account and controllable payment intangible. 12
3793	3793	This section applies to the acquisition and purchase of rights in a controllable account or 13
3794	3794	controllable payment intangible, including the rights and benefits under subsections (c), (d), (e), 14
3795	3795	(g), and (h) of this section of a purchaser and qualifying purchaser, in the same manner this section 15
3796	3796	applies to a controllable electronic record. 16
3797	3797	(b) Control of controllable account and controllable payment intangible. To determine 17
3798	3798	whether a purchaser of a controllable account or a controllable payment intangible is a qualifying 18
3799	3799	purchaser, the purchaser obtains control of the account or payment intangible if it obtains control 19
3800	3800	of the controllable electronic record that evidences the account or payment intangible. 20
3801	3801	(c) Applicability of other law to acquisition of rights. Except as provided in this section, 21
3802	3802	law other than this chapter determines whether a person acquires a right in a controllable electronic 22
3803	3803	record and the right the person acquires. 23
3804	3804	(d) Shelter principle and purchase of limited interest. A purchaser of a controllable 24
3805	3805	electronic record acquires all rights in the controllable electronic record that the transferor had or 25
3806	3806	had power to transfer, except that a purchaser of a limited interest in a controllable electronic record 26
3807	3807	acquires rights only to the extent of the interest purchased. 27
3808	3808	(e) Rights of qualifying purchaser. A qualifying purchaser acquires its rights in the 28
3809	3809	controllable electronic record free of a claim of a property right in the controllable electronic record. 29
3810	3810	(f) Limitation of rights of qualifying purchaser in other property. Except as provided in 30
3811	3811	subsections (a) and (e) of this section for a controllable account and a controllable payment 31
3812	3812	intangible or law other than this chapter, a qualifying purchaser takes a right to payment, right to 32
3813	3813	performance, or other interest in property evidenced by the controllable electronic record subject 33
3814	3814	to a claim of a property right in the right to payment, right to performance, or other interest in 34
3815	3815
3816	3816
3817	3817	LC001903 - Page 104 of 113
3818	3818	property. 1
3819	3819	(g) No-action protection for qualifying purchaser. An action may not be asserted against a 2
3820	3820	qualifying purchaser based on both a purchase by the qualifying purchaser of a controllable 3
3821	3821	electronic record and a claim of a property right in another controllable electronic record, whether 4
3822	3822	the action is framed in conversion, replevin, constructive trust, equitable lien, or other theory. 5
3823	3823	(h) Filing not notice. Filing of a financing statement under chapter 6A-9 is not notice of a 6
3824	3824	claim of a property right in a controllable electronic record. 7
3825	3825	6A-12-105. Control of controllable electronic record. 8
3826	3826	(a) General rule: control of controllable electronic record. A person has control of a 9
3827	3827	controllable electronic record if the electronic record, a record attached to or logically associated 10
3828	3828	with the electronic record, or a system in which the electronic record is recorded: 11
3829	3829	(1) gives the person: 12
3830	3830	(i) power to avail itself of substantially all the benefit from the electronic record; and 13
3831	3831	(ii) exclusive power, subject to subsection (b) of this section, to: 14
3832	3832	(A) prevent others from availing themselves of substantially all the benefit from the 15
3833	3833	electronic record; and 16
3834	3834	(B) transfer control of the electronic record to another person or cause another person to 17
3835	3835	obtain control of another controllable electronic record as a result of the transfer of the electronic 18
3836	3836	record; and 19
3837	3837	(2) enables the person readily to identify itself in any way, including by name, identifying 20
3838	3838	number, cryptographic key, office, or account number, as having the powers specified in paragraph 21
3839	3839	(1). 22
3840	3840	(b) Meaning of exclusive. Subject to subsection (c) of this section, a power is exclusive 23
3841	3841	under subsection (a)(1)(ii)(A) and (B) of this section even if: 24
3842	3842	(1) the controllable electronic record, a record attached to or logically associated with the 25
3843	3843	electronic record, or a system in which the electronic record is recorded limits the use of the 26
3844	3844	electronic record or has a protocol programmed to cause a change, including a transfer or loss of 27
3845	3845	control or a modification of benefits afforded by the electronic record; or 28
3846	3846	(2) the power is shared with another person. 29
3847	3847	(c) When power not shared with another person. A power of a person is not shared with 30
3848	3848	another person under subsection (b)(2) of this section and the person’s power is not exclusive if: 31
3849	3849	(1) the person can exercise the power only if the power also is exercised by the other 32
3850	3850	person; and 33
3851	3851	(2) the other person: 34
3852	3852
3853	3853
3854	3854	LC001903 - Page 105 of 113
3855	3855	(i) can exercise the power without exercise of the power by the person; or 1
3856	3856	(ii) is the transferor to the person of an interest in the controllable electronic record or a 2
3857	3857	controllable account or controllable payment intangible evidenced by the controllable electronic 3
3858	3858	record. 4
3859	3859	(d) Presumption of exclusivity of certain powers. If a person has the powers specified in 5
3860	3860	subsection (a)(1)(ii)(A) and (B) of this section, the powers are presumed to be exclusive. 6
3861	3861	(e) Control through another person. A person has control of a controllable electronic record 7
3862	3862	if another person, other than the transferor to the person of an interest in the controllable electronic 8
3863	3863	record or a controllable account or controllable payment intangible evidenced by the controllable 9
3864	3864	electronic record: 10
3865	3865	(1) has control of the electronic record and acknowledges that it has control on behalf of 11
3866	3866	the person; or 12
3867	3867	(2) obtains control of the electronic record after having acknowledged that it will obtain 13
3868	3868	control of the electronic record on behalf of the person. 14
3869	3869	(f) No requirement to acknowledge. A person that has control under this section is not 15
3870	3870	required to acknowledge that it has control on behalf of another person. 16
3871	3871	(g) No duties or confirmation. If a person acknowledges that it has or will obtain control 17
3872	3872	on behalf of another person, unless the person otherwise agrees or law other than this chapter or 18
3873	3873	chapter 6A-9 otherwise provides, the person does not owe any duty to the other person and is not 19
3874	3874	required to confirm the acknowledgment to any other person. 20
3875	3875	6A-12-106. Discharge of account debtor on controllable account or controllable 21
3876	3876	payment intangible. 22
3877	3877	(a) Discharge of account debtor. An account debtor on a controllable account or 23
3878	3878	controllable payment intangible may discharge its obligation by paying: 24
3879	3879	(1) the person having control of the controllable electronic record that evidences the 25
3880	3880	controllable account or controllable payment intangible; or 26
3881	3881	(2) except as provided in subsection (b) of this section, a person that formerly had control 27
3882	3882	of the controllable electronic record. 28
3883	3883	(b) Content and effect of notification. Subject to subsection (d) of this section, the account 29
3884	3884	debtor may not discharge its obligation by paying a person that formerly had control of the 30
3885	3885	controllable electronic record if the account debtor receives a notification that: 31
3886	3886	(1) is signed by a person that formerly had control or the person to which control was 32
3887	3887	transferred; 33
3888	3888	(2) reasonably identifies the controllable account or controllable payment intangible; 34
3889	3889
3890	3890
3891	3891	LC001903 - Page 106 of 113
3892	3892	(3) notifies the account debtor that control of the controllable electronic record that 1
3893	3893	evidences the controllable account or controllable payment intangible was transferred; 2
3894	3894	(4) identifies the transferee, in any reasonable way, including by name, identifying number, 3
3895	3895	cryptographic key, office, or account number; and 4
3896	3896	(5) provides a commercially reasonable method by which the account debtor is to pay the 5
3897	3897	transferee. 6
3898	3898	(c) Discharge following effective notification. After receipt of a notification that complies 7
3899	3899	with subsection (b), the account debtor may discharge its obligation by paying in accordance with 8
3900	3900	the notification and may not discharge the obligation by paying a person that formerly had control. 9
3901	3901	(d) When notification ineffective. Subject to subsection (h) of this section, notification is 10
3902	3902	ineffective under subsection (b): 11
3903	3903	(1) unless, before the notification is sent, the account debtor and the person that, at that 12
3904	3904	time, had control of the controllable electronic record that evidences the controllable account or 13
3905	3905	controllable payment intangible agree in a signed record to a commercially reasonable method by 14
3906	3906	which a person may furnish reasonable proof that control has been transferred; 15
3907	3907	(2) to the extent an agreement between the account debtor and seller of a payment 16
3908	3908	intangible limits the account debtor’s duty to pay a person other than the seller and the limitation 17
3909	3909	is effective under law other than this chapter; or 18
3910	3910	(3) at the option of the account debtor, if the notification notifies the account debtor to: 19
3911	3911	(i) divide a payment; 20
3912	3912	(ii) make less than the full amount of an installment or other periodic payment; or 21
3913	3913	(iii) pay any part of a payment by more than one method or to more than one person. 22
3914	3914	(e) Proof of transfer of control. Subject to subsection (h) of this section, if requested by the 23
3915	3915	account debtor, the person giving the notification under subsection (b) of this section seasonably 24
3916	3916	shall furnish reasonable proof, using the method in the agreement referred to in subsection (d)(1) 25
3917	3917	of this section, that control of the controllable electronic record has been transferred. Unless the 26
3918	3918	person complies with the request, the account debtor may discharge its obligation by paying a 27
3919	3919	person that formerly had control, even if the account debtor has received a notification under 28
3920	3920	subsection (b) of this section. 29
3921	3921	(f) What constitutes reasonable proof. A person furnishes reasonable proof under 30
3922	3922	subsection (e) that control has been transferred if the person demonstrates, using the method in the 31
3923	3923	agreement referred to in subsection (d)(1) of this section, that the transferee has the power to: 32
3924	3924	(1) avail itself of substantially all the benefit from the controllable electronic record; 33
3925	3925	(2) prevent others from availing themselves of substantially all the benefit from the 34
3926	3926
3927	3927
3928	3928	LC001903 - Page 107 of 113
3929	3929	controllable electronic record; and 1
3930	3930	(3) transfer the powers specified in subsections (f)(1) and (f)(2) of this section to another 2
3931	3931	person. 3
3932	3932	(g) Rights not waivable. Subject to subsection (h) of this section, an account debtor may 4
3933	3933	not waive or vary its rights under subsections (d)(1) and (e) of this section or its option under 5
3934	3934	subsection (d)(3) of this section. 6
3935	3935	(h) Rule for individual under other law. This section is subject to law other than this chapter 7
3936	3936	which establishes a different rule for an account debtor who is an individual and who incurred the 8
3937	3937	obligation primarily for personal, family, or household purposes. 9
3938	3938	6A-12-107. Governing law. 10
3939	3939	(a) Governing law: general rule. Except as provided in subsection (b), the local law of a 11
3940	3940	controllable electronic record’s jurisdiction governs a matter covered by this chapter. 12
3941	3941	(b) Governing law: § 6A-12-106. For a controllable electronic record that evidences a 13
3942	3942	controllable account or controllable payment intangible, the local law of the controllable electronic 14
3943	3943	record’s jurisdiction governs a matter covered by § 6A-12-106 unless an effective agreement 15
3944	3944	determines that the local law of another jurisdiction governs. 16
3945	3945	(c) Controllable electronic record’s jurisdiction. The following rules determine a 17
3946	3946	controllable electronic record’s jurisdiction under this section: 18
3947	3947	(1) If the controllable electronic record, or a record attached to or logically associated with 19
3948	3948	the controllable electronic record and readily available for review, expressly provides that a 20
3949	3949	particular jurisdiction is the controllable electronic record’s jurisdiction for purposes of this chapter 21
3950	3950	or this title, that jurisdiction is the controllable electronic record’s jurisdiction. 22
3951	3951	(2) If subsection (c)(1) of this section does not apply and the rules of the system in which 23
3952	3952	the controllable electronic record is recorded are readily available for review and expressly provide 24
3953	3953	that a particular jurisdiction is the controllable electronic record’s jurisdiction for purposes of this 25
3954	3954	chapter or this title, that jurisdiction is the controllable electronic record’s jurisdiction. 26
3955	3955	(3) If subsections (c)(1) and (c)(2) of this section do not apply and the controllable 27
3956	3956	electronic record, or a record attached to or logically associated with the controllable electronic 28
3957	3957	record and readily available for review, expressly provides that the controllable electronic record 29
3958	3958	is governed by the law of a particular jurisdiction, that jurisdiction is the controllable electronic 30
3959	3959	record’s jurisdiction. 31
3960	3960	(4) If subsections (c)(1), (c)(2) and (c)(3) of this section do not apply and the rules of the 32
3961	3961	system in which the controllable electronic record is recorded are readily available for review and 33
3962	3962	expressly provide that the controllable electronic record or the system is governed by the law of a 34
3963	3963
3964	3964
3965	3965	LC001903 - Page 108 of 113
3966	3966	particular jurisdiction, that jurisdiction is the controllable electronic record’s jurisdiction. 1
3967	3967	(5) If subsections (c)(1) through (c)(4) of this section do not apply, the controllable 2
3968	3968	electronic record’s jurisdiction is the District of Columbia. 3
3969	3969	(d) Applicability of chapter 12. If subsection (c)(5) of this section applies and chapter 12 4
3970	3970	or title 6A is not in effect in the District of Columbia without material modification, the governing 5
3971	3971	law for a matter covered by this chapter is the law of the District of Columbia as though chapter 12 6
3972	3972	of title 6A were in effect in the District of Columbia without material modification. In this 7
3973	3973	subsection, “Chapter 12” means Article 12 of Uniform Commercial Code Amendments (2022). 8
3974	3974	(e) Relation of matter or transaction to controllable electronic record’s jurisdiction not 9
3975	3975	necessary. To the extent subsections (a) and (b) of this section provide that the local law of the 10
3976	3976	controllable electronic record’s jurisdiction governs a matter covered by this chapter, that law 11
3977	3977	governs even if the matter or a transaction to which the matter relates does not bear any relation to 12
3978	3978	the controllable electronic record’s jurisdiction. 13
3979	3979	(f) Rights of purchasers determined at time of purchase. The rights acquired under § 6A-14
3980	3980	12-104 by a purchaser or qualifying purchaser are governed by the law applicable under this section 15
3981	3981	at the time of purchase. 16
3982	3982	SECTION 12. Title 6A of the General Laws entitled "UNIFORM COMMERCIAL CODE" 17
3983	3983	is hereby amended by adding thereto the following chapter: 18
3984	3984	CHAPTER 11 19
3985	3985	TRANSITIONAL PROVISIONS FOR UNIFO RM COMMERCIAL CODE AMENDMENTS 20
3986	3986	(2022) 21
3987	3987	PART 1 22
3988	3988	GENERAL PROVISIONS AND DEFINITIONS 23
3989	3989	6A-11-101. Short title. 24
3990	3990	This chapter may shall be known and may be cited as "Transitional Provisions for Uniform 25
3991	3991	Commercial Code Amendments (2022)". 26
3992	3992	6A-11-102. Definitions. 27
3993	3993	(a) Chapter 11 of title 6A definitions. In this chapter: 28
3994	3994	(1) “Adjustment date” means July 1, 2025. 29
3995	3995	(2) “Amendatory act” means the public law by which this chapter is added to this title. 30
3996	3996	(3) “Chapter 12” means chapter 12 of this title. 31
3997	3997	(4) “Chapter 12 property” means a controllable account, controllable electronic record, or 32
3998	3998	controllable payment intangible. 33
3999	3999	(b) Definitions in other chapters. The following definitions in other chapters of this title 34
4000	4000
4001	4001
4002	4002	LC001903 - Page 109 of 113
4003	4003	apply to this chapter. 1
4004	4004	“Controllable account” § 6A-9-102. 2
4005	4005	“Controllable electronic record” § 6A-12-102. 3
4006	4006	“Controllable payment intangible” § 6A-9-102. 4
4007	4007	“Electronic money” § 6A-9-102. 5
4008	4008	“Financing statement” § 6A-9-102. 6
4009	4009	(c) Chapter 1 of title 6A definitions and principles. Chapter 1 of title 6A contains general 7
4010	4010	definitions and principles of construction and interpretation applicable throughout this chapter. 8
4011	4011	PART 2 9
4012	4012	GENERAL TRANSITIONAL PROVISIONS 10
4013	4013	6A-11-201. Saving Clause. 11
4014	4014	Except as provided in Part 3 of this chapter, a transaction validly entered into before 12
4015	4015	January 1, 2024 and the rights, duties, and interests flowing from the transaction remain valid 13
4016	4016	thereafter and may be terminated, completed, consummated, or enforced as required or permitted 14
4017	4017	by law other than this title or, if applicable, this title, as though the amendatory act had not taken 15
4018	4018	effect. 16
4019	4019	PART 3 17
4020	4020	TRANSITIONAL PROVISIONS FOR CHAPTER 9 AND 10 18
4021	4021	6A-11-301. Saving Clause. 19
4022	4022	(a) Pre-effective-date transaction, lien, or interest. Except as provided in this part, chapter 20
4023	4023	9 as amended by the amendatory act and chapter 12 apply to a transaction, lien, or other interest in 21
4024	4024	property, even if the transaction, lien, or interest was entered into, created, or acquired before 22
4025	4025	January 1, 2024. 23
4026	4026	(b) Continuing validity. Except as provided in subsection (c) of this section and § 6A-11-24
4027	4027	301 through § 6A-11-306: 25
4028	4028	(1) A transaction, lien, or interest in property that was validly entered into, created, or 26
4029	4029	transferred before January 1, 2024 and was not governed by this title, but would be subject to 27
4030	4030	chapter 9 of title 6A as amended by the amendatory act or chapter 12 of title 6A if it had been 28
4031	4031	entered into, created, or transferred on or after January 1, 2024, including the rights, duties, and 29
4032	4032	interests flowing from the transaction, lien, or interest, remains valid on and after January 1, 2024; 30
4033	4033	and 31
4034	4034	(2) the transaction, lien, or interest may be terminated, completed, consummated, and 32
4035	4035	enforced as required or permitted by the amendatory act or by the law that would apply if the 33
4036	4036	amendatory act had not taken effect. 34
4037	4037
4038	4038
4039	4039	LC001903 - Page 110 of 113
4040	4040	(c) Pre-effective-date proceeding. The amendatory act does not affect an action, case, or 1
4041	4041	proceeding commenced before January 1, 2024. 2
4042	4042	6A-11-302. Security interest perfected before effective date. 3
4043	4043	(a) Continuing perfection: perfection requirements satisfied. A security interest that is 4
4044	4044	enforceable and perfected immediately before January 1, 2024 is a perfected security interest under 5
4045	4045	the amendatory act if, on January 1, 2024, the requirements for enforceability and perfection under 6
4046	4046	the amendatory act are satisfied without further action. 7
4047	4047	(b) Continuing perfection: enforceability or perfection requirements not satisfied. If a 8
4048	4048	security interest is enforceable and perfected immediately before January 1, 2024, but the 9
4049	4049	requirements for enforceability or perfection under the amendatory act are not satisfied on January 10
4050	4050	1, 2024, the security interest: 11
4051	4051	(1) is a perfected security interest until the earlier of the time perfection would have ceased 12
4052	4052	under the law in effect immediately before January 1, 2024 or the adjustment date; 13
4053	4053	(2) remains enforceable thereafter only if the security interest satisfies the requirements for 14
4054	4054	enforceability under § 6A-9-203, as amended by the amendatory act, before the adjustment date; 15
4055	4055	and 16
4056	4056	(3) remains perfected thereafter only if the requirements for perfection under the 17
4057	4057	amendatory act are satisfied before the time specified in subsection (b)(1) of this section. 18
4058	4058	6A-11-303. Security interest unperfected before effective date. 19
4059	4059	A security interest that is enforceable immediately before January 1, 2024 but is 20
4060	4060	unperfected at that time: 21
4061	4061	(1) remains an enforceable security interest until the adjustment date; 22
4062	4062	(2) remains enforceable thereafter if the security interest becomes enforceable under § 6A-23
4063	4063	9-203, as amended by the amendatory act, on January 1, 2024 or before the adjustment date; and 24
4064	4064	(3) becomes perfected: 25
4065	4065	(i) without further action, on January 1, 2024 if the requirements for perfection under the 26
4066	4066	amendatory act are satisfied before or at that time; or 27
4067	4067	(ii) when the requirements for perfection are satisfied if the requirements are satisfied after 28
4068	4068	that time. 29
4069	4069	6A-11-304. Effectiveness of actions taken before effective date. 30
4070	4070	(a) Pre-effective-date action; attachment and perfection before adjustment date. If action, 31
4071	4071	other than the filing of a financing statement, is taken before January 1, 2024 and the action would 32
4072	4072	have resulted in perfection of the security interest had the security interest become enforceable 33
4073	4073	before January 1, 2024, the action is effective to perfect a security interest that attaches under the 34
4074	4074
4075	4075
4076	4076	LC001903 - Page 111 of 113
4077	4077	amendatory act before the adjustment date. An attached security interest becomes unperfected on 1
4078	4078	the adjustment date unless the security interest becomes a perfected security interest under the 2
4079	4079	amendatory act before the adjustment date. 3
4080	4080	(b) Pre-effective-date filing. The filing of a financing statement before January 1, 2024 is 4
4081	4081	effective to perfect a security interest on January 1, 2024 to the extent the filing would satisfy the 5
4082	4082	requirements for perfection under the amendatory act. 6
4083	4083	(c) Pre-effective-date enforceability action. The taking of an action before January 1, 2024 7
4084	4084	is sufficient for the enforceability of a security interest on January 1, 2024 if the action would 8
4085	4085	satisfy the requirements for enforceability under the amendatory act. 9
4086	4086	6A-11-305. Priority. 10
4087	4087	(a) Determination of priority. Subject to subsections (b) and (c) of this section, the 11
4088	4088	amendatory act determines the priority of conflicting claims to collateral. 12
4089	4089	(b) Established priorities. Subject to subsection (c) of this section, if the priorities of claims 13
4090	4090	to collateral were established before January 1, 2024, chapter 9 of title 6A as in effect before 14
4091	4091	January 1, 2024 determines priority. 15
4092	4092	(c) Determination of certain priorities on adjustment date. On the adjustment date, to the 16
4093	4093	extent the priorities determined by chapter 9 of title 6A as amended by the amendatory act modify 17
4094	4094	the priorities established before January 1, 2024, the priorities of claims to chapter 12 of title 6A 18
4095	4095	property and electronic money established before January 1, 2024 cease to apply. 19
4096	4096	6A-11-306. Priority of claims when priority rules of chapter 9 do not apply. 20
4097	4097	(a) Determination of priority. Subject to subsections (b) and (c) of this section, chapter 12 21
4098	4098	of title 6A determines the priority of conflicting claims to chapter 12 of title 6A property when the 22
4099	4099	priority rules of chapter 9 of title 6A as amended by the amendatory act do not apply. 23
4100	4100	(b) Established priorities. Subject to subsection (c) of this section, when the priority rules 24
4101	4101	of chapter 9 of title 6A as amended by the amendatory act do not apply and the priorities of claims 25
4102	4102	to chapter 12 of title 6A property were established before January 1, 2024, law other than chapter 26
4103	4103	12 of title 6A determines priority. 27
4104	4104	(c) Determination of certain priorities on adjustment date. When the priority rules of 28
4105	4105	chapter 9 of title 6 A as amended by the amendatory act do not apply, to the extent the priorities 29
4106	4106	determined by the amendatory act modify the priorities established before January 1, 2024, the 30
4107	4107	priorities of claims to Chapter 12 of title 6A property established before January 1, 2024 cease to 31
4108	4108	apply on the adjustment date. 32
4109	4109	PART 4 33
4110	4110	OFFICIAL COMMENTS 34
4111	4111
4112	4112
4113	4113	LC001903 - Page 112 of 113
4114	4114	6A-11-401. Official comments. 1
4115	4115	It is the intention of the general assembly that the official comments to the Uniform 2
4116	4116	Commercial Code Amendments (2022) as approved and recommended for enactment in all the 3
4117	4117	States by the National Conference of Commissioners on Uniform State Laws in 2022 represent the 4
4118	4118	express legislative intent of the general assembly and shall be used as a guide for interpretation of 5
4119	4119	the provisions of this title. 6
4120	4120	SECTION 13. This act shall take effect on January 1, 2024. 7
4121	4121	========
4122	4122	LC001903
4123	4123	========
4124	4124
4125	4125
4126	4126	LC001903 - Page 113 of 113
4127	4127	EXPLANATION
4128	4128	BY THE LEGISLATIVE COUNCIL
4129	4129	OF
4130	4130	A N A C T
4131	4131	RELATING TO THE UNIFORM COMMERCIAL CODE
4132	4132	***
4133	4133	This act would provide amendments to the Uniform Commercial Code for emerging 1
4134	4134	technologies. 2
4135	4135	This act would take effect on January 1, 2024. 3
4136	4136	========
4137	4137	LC001903
4138	4138	========
4139	4139