88R6131 SRA-F
By: Capriglione H.B. No. 5011
A BILL TO BE ENTITLED
AN ACT
relating to amendments to the Uniform Commercial Code, including
amendments concerning certain intangible assets and the perfection
of security interests in those assets.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. GENERAL PROVISIONS
SECTION 1.01. Section 1.201(b), Business & Commerce Code,
is amended by amending Subdivisions (10), (15), (21), (24), (27),
(33), (36), and (37) and adding Subdivision (16-a) to read as
follows:
(10) "Conspicuous," with reference to a term, means so
written, displayed, or presented that, based on the totality of the
circumstances, a reasonable person against which it is to operate
ought to have noticed it. Whether a term is "conspicuous" or not is
a decision for the court. [Conspicuous terms include the
following:
[(A) a heading in capitals equal to or greater in
size than the surrounding text, or in contrasting type, font, or
color to the surrounding text of the same or lesser size; and
[(B) language in the body of a record or display
in larger type than the surrounding text, or in contrasting type,
font, or color to the surrounding text of the same size, or set off
from surrounding text of the same size by symbols or other marks
that call attention to the language.]
(15) "Delivery," with respect to an electronic
document of title, means voluntary transfer of control, and with
respect to an instrument, a tangible document of title, or an
authoritative tangible copy of a record evidencing chattel paper,
means voluntary transfer of possession.
(16-a) "Electronic" means relating to technology
having electrical, digital, magnetic, wireless, optical,
electromagnetic, or similar capabilities.
(21) "Holder" means:
(A) the person in possession of a negotiable
instrument that is payable either to bearer or to an identified
person that is the person in possession;
(B) the person in possession of a negotiable
tangible document of title if the goods are deliverable either to
bearer or to the order of the person in possession; or
(C) a person in control, other than pursuant to
Section 7.106(g), of a negotiable electronic document of title.
(24) "Money" means a medium of exchange that is
currently authorized or adopted by a domestic or foreign
government. The term includes a monetary unit of account
established by an intergovernmental organization, or pursuant to an
[by] agreement between two or more countries. The term does not
include an electronic record that is a medium of exchange recorded
and transferable in a system that existed and operated for the
medium of exchange before the medium of exchange was authorized or
adopted by the government.
(27) "Person" means an individual, corporation,
business trust, estate, trust, partnership, limited liability
company, association, joint venture, government, governmental
subdivision, agency, or instrumentality, or [public corporation,]
any other legal or commercial entity[, or a protected series or
registered series of a for-profit entity]. The term includes a
protected series or registered series, however denominated, of an
entity if the protected series or registered series is established
under law other than this title that limits, or limits if conditions
specified under the law are satisfied, the ability of a creditor of
the entity or of any other protected series or registered series of
the entity to satisfy a claim from assets of the protected series or
registered series.
(33) "Representative" means a person empowered to act
for another, including an agent, an officer of an organization [a
corporation or association], and a trustee, executor, or
administrator of an estate.
(36) "Send," in connection with a [writing,] record[,]
or notification, [notice] means:
(A) to deposit in the mail, [or] deliver for
transmission, or transmit by any other usual means of
communication, with postage or cost of transmission provided for,
[and properly] addressed [and, in the case of an instrument, to an
address specified thereon or otherwise agreed, or if there be none]
to any address reasonable under the circumstances; or
(B) to [in any other way] cause the record or
notification to be received [any record or notice] within the time
[at which] it would have been received [arrived] if properly sent
under Paragraph (A).
(37) "Sign" means, with present intent to authenticate
or adopt a record:
(A) execute or adopt a tangible symbol; or
(B) attach to or logically associate with the
record an electronic symbol, sound, or process.
"Signed," "signing," and "signature" have corresponding meanings
[includes using any symbol executed or adopted with present
intention to adopt or accept a writing].
SECTION 1.02. Section 1.204, Business & Commerce Code, is
amended to read as follows:
Sec. 1.204. VALUE. Except as otherwise provided in
Chapters 3, 4, [and] 5, and 12A, a person gives value for rights if
the person acquires them:
(1) in return for a binding commitment to extend
credit or for the extension of immediately available credit,
whether or not drawn upon and whether or not a charge-back is
provided for in the event of difficulties in collection;
(2) as security for, or in total or partial
satisfaction of, a preexisting claim;
(3) by accepting delivery under a preexisting contract
for purchase; or
(4) in return for any consideration sufficient to
support a simple contract.
SECTION 1.03. Section 1.301(b), Business & Commerce Code,
is amended to read as follows:
(b) Where one of the following provisions of this title
specifies the applicable law, that provision governs and a contrary
agreement is effective only to the extent permitted by the law
(including the conflict of laws rules) so specified:
Rights of creditors against sold goods. Section 2.402.
Applicability of the chapter on Leases. Sections 2A.105 and
2A.106.
Applicability of the chapter on Bank Deposits and
Collections. Section 4.102.
Governing law in the chapter on Funds Transfers. Section
4A.507.
Letters of Credit. Section 5.116.
Applicability of the chapter on Investment Securities.
Section 8.110.
Law governing perfection, the effect of perfection or
nonperfection, and the priority of security interests and
agricultural liens. Sections 9.301-9.307.
Controllable electronic record. Section 12A.107.
SECTION 1.04. Section 1.306, Business & Commerce Code, is
amended to read as follows:
Sec. 1.306. WAIVER OF RENUNCIATION OF CLAIM OR RIGHT AFTER
BREACH. A claim or right arising out of an alleged breach may be
discharged in whole or in part without consideration by agreement
of the aggrieved party in a signed [an authenticated] record.
ARTICLE 2. SALES
SECTION 2.01. Section 2.102, Business & Commerce Code, is
amended to read as follows:
Sec. 2.102. SCOPE; CERTAIN SECURITY AND OTHER TRANSACTIONS
EXCLUDED FROM THIS CHAPTER. (a) Unless the context otherwise
requires, and except as provided in Subsection (c), this chapter
applies to transactions in goods and, in the case of a hybrid
transaction, it applies to the extent provided in Subsection (b).
(b) In a hybrid transaction:
(1) if the sale-of-goods aspects do not predominate,
only the provisions of this chapter which relate primarily to the
sale-of-goods aspects of the transaction apply, and the provisions
that relate primarily to the transaction as a whole do not apply; or
(2) if the sale-of-goods aspects predominate, this
chapter applies to the transaction but does not preclude
application in appropriate circumstances of other law to aspects of
the transaction which do not relate to the sale of goods.
(c) This chapter [; it] does not:
(1) apply to a [any] transaction that, even though
[which although] in the form of an unconditional contract to sell or
present sale, operates only to create a security interest; or
(2) [is intended to operate only as a security
transaction nor does this chapter] impair or repeal any statute
regulating sales to consumers, farmers, or other specified classes
of buyers.
SECTION 2.02. The heading to Section 2.106, Business &
Commerce Code, is amended to read as follows:
Sec. 2.106. DEFINITIONS: "CONTRACT"; "AGREEMENT";
"CONTRACT FOR SALE"; "SALE"; "PRESENT SALE"; "CONFORMING" TO
CONTRACT; "TERMINATION"; "CANCELLATION"; "HYBRID TRANSACTION".
SECTION 2.03. Section 2.106, Business & Commerce Code, is
amended by adding Subsection (e) to read as follows:
(e) "Hybrid transaction" means a single transaction
involving a sale of goods and:
(1) the provision of services;
(2) a lease of other goods; or
(3) a sale, lease, or license of property other than
goods.
SECTION 2.04. Sections 2.201(a) and (b), Business &
Commerce Code, are amended to read as follows:
(a) Except as otherwise provided in this section a contract
for the sale of goods for the price of $500 or more is not
enforceable by way of action or defense unless there is a record
[some writing] sufficient to indicate that a contract for sale has
been made between the parties and signed by the party against whom
enforcement is sought or by the party's [his] authorized agent or
broker. A record [writing] is not insufficient because it omits or
incorrectly states a term agreed upon but the contract is not
enforceable under this subsection [paragraph] beyond the quantity
of goods shown in the record [such writing].
(b) Between merchants if within a reasonable time a record
[writing] in confirmation of the contract and sufficient against
the sender is received and the party receiving it has reason to know
its contents, it satisfies the requirements of Subsection (a)
against the [such] party unless [written] notice in a record of
objection to its contents is given within ten days after it is
received.
SECTION 2.05. Section 2.202, Business & Commerce Code, is
amended to read as follows:
Sec. 2.202. FINAL [WRITTEN] EXPRESSION: PAROL OR EXTRINSIC
EVIDENCE. Terms with respect to which the confirmatory memoranda
of the parties agree or which are otherwise set forth in a record
[writing] intended by the parties as a final expression of their
agreement with respect to such terms as are included therein may not
be contradicted by evidence of any prior agreement or of a
contemporaneous oral agreement but may be explained or
supplemented:
(1) by course of performance, course of dealing, or
usage of trade (Section 1.303); and
(2) by evidence of consistent additional terms unless
the court finds the record [writing] to have been intended also as a
complete and exclusive statement of the terms of the agreement.
SECTION 2.06. Section 2.203, Business & Commerce Code, is
amended to read as follows:
Sec. 2.203. SEALS INOPERATIVE. The affixing of a seal to a
record [writing] evidencing a contract for sale or an offer to buy
or sell goods does not constitute the record [writing] a sealed
instrument and the law with respect to sealed instruments does not
apply to such a contract or offer.
SECTION 2.07. Section 2.205, Business & Commerce Code, is
amended to read as follows:
Sec. 2.205. FIRM OFFERS. An offer by a merchant to buy or
sell goods in a signed record [writing] which by its terms gives
assurance that it will be held open is not revocable, for lack of
consideration, during the time stated or if no time is stated for a
reasonable time, but in no event may such period of irrevocability
exceed three months; but any such term of assurance on a form
supplied by the offeree must be separately signed by the offeror.
SECTION 2.08. Section 2.209(b), Business & Commerce Code,
is amended to read as follows:
(b) A signed agreement which excludes modification or
rescission except by a signed writing or other signed record cannot
be otherwise modified or rescinded, but except as between merchants
such a requirement on a form supplied by the merchant must be
separately signed by the other party.
ARTICLE 3. LEASES
SECTION 3.01. Section 2A.102, Business & Commerce Code, is
amended to read as follows:
Sec. 2A.102. SCOPE. (a) This chapter applies to any
transaction, regardless of form, that creates a lease of goods and,
in the case of a hybrid lease, it applies to the extent provided in
Subsection (b). This chapter does not apply to a transaction that
creates an interest in or lease of real estate, except to the extent
that provision is made for leases of fixtures by Section 2A.309.
(b) In a hybrid lease:
(1) if the lease-of-goods aspects do not predominate:
(A) only the provisions of this chapter which
relate primarily to the lease-of-goods aspects of the transaction
apply, and the provisions that relate primarily to the transaction
as a whole do not apply;
(B) Section 2A.209 applies if the lease is a
finance lease; and
(C) Section 2A.407 applies to the promises of the
lessee in a finance lease to the extent the promises are
consideration for the right to possession and use of the leased
goods; and
(2) if the lease-of-goods aspects predominate, this
chapter applies to the transaction, but does not preclude
application in appropriate circumstances of other law to aspects of
the lease which do not relate to the lease of goods.
SECTION 3.02. Section 2A.103(a), Business & Commerce Code,
is amended by adding Subdivision (8-a) to read as follows:
(8-a) "Hybrid lease" means a single transaction
involving a lease of goods and:
(A) the provision of services;
(B) the sale of other goods; or
(C) subject to the second sentence of Section
2A.102(a), a sale, lease, or license of property other than goods.
SECTION 3.03. Section 2A.107, Business & Commerce Code, is
amended to read as follows:
Sec. 2A.107. WAIVER OR RENUNCIATION OF CLAIM OR RIGHT AFTER
DEFAULT. A claim or right arising out of an alleged default or
breach of warranty may be discharged in whole or in part without
consideration by a [written] waiver or renunciation in a signed
record [and] delivered by the aggrieved party.
SECTION 3.04. Sections 2A.201(a), (c), and (e), Business &
Commerce Code, are amended to read as follows:
(a) A lease contract is not enforceable by way of action or
defense unless:
(1) the total payments to be made under the lease
contract, excluding payments for options to renew or buy, are less
than $1,000; or
(2) there is a record [writing], signed by the party
against whom enforcement is sought or by that party's authorized
agent, sufficient to indicate that a lease contract has been made
between the parties and to describe the goods leased and the lease
term.
(c) A record [writing] is not insufficient because it omits
or incorrectly states a term agreed upon, but the lease contract is
not enforceable under Subsection (a)(2) beyond the lease term and
the quantity of goods shown in the record [writing].
(e) The lease term under a lease contract referred to in
Subsection (d) is:
(1) if there is a record [writing] signed by the party
against whom enforcement is sought or by that party's authorized
agent specifying the lease term, the term so specified;
(2) if the party against whom enforcement is sought
admits in that party's pleading, testimony, or otherwise in court a
lease term, the term so admitted; or
(3) a reasonable lease term.
SECTION 3.05. Section 2A.202, Business & Commerce Code, is
amended to read as follows:
Sec. 2A.202. FINAL [WRITTEN] EXPRESSION; PAROL OR
EXTRINSIC EVIDENCE. Terms with respect to which the confirmatory
memoranda of the parties agree or which are otherwise set forth in a
record [writing] intended by the parties as a final expression of
their agreement with respect to such terms as are included therein
may not be contradicted by evidence of a prior agreement or of a
contemporaneous oral agreement but may be explained or
supplemented:
(1) by course of dealing or usage of trade or by course
of performance; and
(2) by evidence of consistent additional terms unless
the court finds the record [writing] to have been intended also as a
complete and exclusive statement of the terms of the agreement.
SECTION 3.06. Section 2A.203, Business & Commerce Code, is
amended to read as follows:
Sec. 2A.203. SEALS INOPERATIVE. The affixing of a seal to a
record [writing] evidencing a lease contract or an offer to enter
into a lease contract does not render the record [writing] a sealed
instrument and the law with respect to sealed instruments does not
apply to the lease contract or offer.
SECTION 3.07. Section 2A.205, Business & Commerce Code, is
amended to read as follows:
Sec. 2A.205. FIRM OFFERS. An offer by a merchant to lease
goods to or from another person in a signed record [writing] that by
its terms gives assurance it will be held open is not revocable, for
lack of consideration, during the time stated or, if no time is
stated, for a reasonable time, but in no event may the period of
irrevocability exceed three months. Any such term of assurance on a
form supplied by the offeree must be separately signed by the
offeror.
SECTION 3.08. The heading of Section 2A.208, Business &
Commerce Code, is amended to read as follows:
Sec. 2A.208. MODIFICATION, RESCISSION, AND WAIVER.
SECTION 3.09. Section 2A.208(b), Business & Commerce Code,
is amended to read as follows:
(b) A signed lease agreement that excludes modification or
rescission except by a signed record [writing] may not be otherwise
modified or rescinded, but, except as between merchants, such a
requirement on a form supplied by a merchant must be separately
signed by the other party.
ARTICLE 4. NEGOTIABLE INSTRUMENTS
SECTION 4.01. Section 3.104(a), Business & Commerce Code,
is amended to read as follows:
(a) Except as provided in Subsections (c) and (d),
"negotiable instrument" means an unconditional promise or order to
pay a fixed amount of money, with or without interest or other
charges described in the promise or order, if it:
(1) is payable to bearer or to order at the time it is
issued or first comes into possession of a holder;
(2) is payable on demand or at a definite time; and
(3) does not state any other undertaking or
instruction by the person promising or ordering payment to do any
act in addition to the payment of money, but the promise or order
may contain:
(A) an undertaking or power to give, maintain, or
protect collateral to secure payment;
(B) an authorization or power to the holder to
confess judgment or realize on or dispose of collateral; [or]
(C) a waiver of the benefit of any law intended
for the advantage or protection of an obligor;
(D) a term that specifies the law that governs
the promise or order; or
(E) an undertaking to resolve in a specified
forum a dispute concerning the promise or order.
SECTION 4.02. Section 3.105(a), Business & Commerce Code,
is amended to read as follows:
(a) "Issue" means:
(1) the first delivery of an instrument by the maker or
drawer, whether to a holder or nonholder, for the purpose of giving
rights on the instrument to any person; or
(2) if agreed by the payee, the first transmission by
the drawer to the payee of an image of an item and information
derived from the item that enables the depositary bank to collect
the item by transferring or presenting under federal law an
electronic check.
SECTION 4.03. Section 3.401, Business & Commerce Code, is
amended to read as follows:
Sec. 3.401. SIGNATURE NECESSARY FOR LIABILITY ON
INSTRUMENT. [(a)] A person is not liable on an instrument unless
the person:
(1) signed the instrument; or
(2) is represented by an agent or representative who
signed the instrument and the signature is binding on the
represented person under Section 3.402.
[(b) A signature may be made (i) manually or by means of a
device or machine, and (ii) by the use of any name, including a
trade or assumed name, or by a word, mark, or symbol executed or
adopted by a person with present intention to authenticate a
writing.]
SECTION 4.04. Section 3.604, Business & Commerce Code, is
amended to read as follows:
Sec. 3.604. DISCHARGE BY CANCELLATION OR RENUNCIATION. (a)
A person entitled to enforce an instrument, with or without
consideration, may discharge the obligation of a party to pay the
instrument:
(1) by an intentional voluntary act, such as surrender
of the instrument to the party, destruction, mutilation, or
cancellation of the instrument, cancellation or striking out of the
party's signature, or the addition of words to the instrument
indicating discharge; or
(2) by agreeing not to sue or otherwise renouncing
rights against the party by a signed record.
(b) The obligation of a party to pay a check is not
discharged solely by destruction of the check in connection with a
process in which information is extracted from the check and an
image of the check is made and, subsequently, the information and
image are transmitted for payment.
(c) Cancellation or striking out of an indorsement pursuant
to Subsection (a) does not affect the status and rights of a party
derived from the indorsement.
[(c) In this section, "signed," with respect to a record
that is not a writing, includes the attachment to or logical
association with the record of an electronic symbol, sound, or
process with the present intent to adopt or accept the record.]
ARTICLE 5. FUNDS TRANSFERS
SECTION 5.01. Section 4A.103(a)(1), Business & Commerce
Code, is amended to read as follows:
(1) "Payment order" means an instruction of a sender
to a receiving bank, transmitted orally or in a record,
[electronically, or in writing,] to pay, or to cause another bank to
pay, a fixed or determinable amount of money to a beneficiary if:
(A) the instruction does not state a condition of
payment to the beneficiary other than the time of payment;
(B) the receiving bank is to be reimbursed by
debiting an account of, or otherwise receiving payment from, the
sender; and
(C) the instruction is transmitted by the sender
directly to the receiving bank or to an agent, funds transfer
system, or communication system for transmittal to the receiving
bank.
SECTION 5.02. Section 4A.201, Business & Commerce Code, is
amended to read as follows:
Sec. 4A.201. SECURITY PROCEDURE. "Security procedure"
means a procedure established by an agreement between a customer
and a receiving bank for the purpose of (i) verifying that a payment
order or communication amending or cancelling a payment order is
that of the customer, or (ii) detecting error in the transmission or
the content of the payment order or communication. A security
procedure may impose an obligation on the receiving bank or the
customer and may require the use of algorithms or other codes,
identifying words, [or] numbers, symbols, sounds, biometrics,
encryption, callback procedures, or similar security devices.
Comparison of a signature on a payment order or communication with
an authorized specimen signature of the customer or requiring a
payment order to be sent from a known e-mail address, IP address, or
telephone number is not by itself a security procedure.
SECTION 5.03. Sections 4A.202(b) and (c), Business &
Commerce Code, are amended to read as follows:
(b) If a bank and its customer have agreed that the
authenticity of payment orders issued to the bank in the name of the
customer as sender will be verified pursuant to a security
procedure, a payment order received by the receiving bank is
effective as the order of the customer, whether or not authorized,
if (i) the security procedure is a commercially reasonable method
of providing security against unauthorized payment orders, and (ii)
the bank proves that it accepted the payment order in good faith and
in compliance with the bank's obligations under the security
procedure and any [written] agreement or instruction of the
customer, evidenced by a record, restricting acceptance of payment
orders issued in the name of the customer. The bank is not required
to follow an instruction that violates an [a written] agreement
with the customer evidenced by a record, or notice of which is not
received at a time and in a manner affording the bank a reasonable
opportunity to act on it before the payment order is accepted.
(c) Commercial reasonableness of a security procedure is a
question of law to be determined by considering the wishes of the
customer expressed to the bank, the circumstances of the customer
known to the bank, including the size, type, and frequency of
payment orders normally issued by the customer to the bank,
alternative security procedures offered to the customer, and
security procedures in general use by customers and receiving banks
similarly situated. A security procedure is deemed to be
commercially reasonable if:
(1) the security procedure was chosen by the customer
after the bank offered, and the customer refused, a security
procedure that was commercially reasonable for the customer; and
(2) the customer expressly agreed in a record
[writing] to be bound by any payment order, whether or not
authorized, issued in its name and accepted by the bank in
compliance with the bank's obligations under the security procedure
chosen by the customer.
SECTION 5.04. Section 4A.203(a), Business & Commerce Code,
is amended to read as follows:
(a) If an accepted payment order is not, under Section
4A.202(a), an authorized order of a customer identified as sender,
but is effective as an order of the customer pursuant to Section
4A.202(b), the following rules apply:
(1) By express [written] agreement evidenced by a
record, the receiving bank may limit the extent to which it is
entitled to enforce or retain payment of the payment order.
(2) The receiving bank is not entitled to enforce or
retain payment of the payment order if the customer proves that the
order was not caused, directly or indirectly, by a person:
(A) entrusted at any time with duties to act for
the customer with respect to payment orders or the security
procedure; or
(B) who obtained access to transmitting
facilities of the customer or who obtained, from a source
controlled by the customer and without authority of the receiving
bank, information facilitating breach of the security procedure,
regardless of how the information was obtained or whether the
customer was at fault. Information includes any access device,
computer software, or the like.
SECTION 5.05. Section 4A.207(c), Business & Commerce Code,
is amended to read as follows:
(c) If (i) a payment order described in Subsection (b) is
accepted, (ii) the originator's payment order described the
beneficiary inconsistently by name and number, and (iii) the
beneficiary's bank pays the person identified by number as
permitted by Subsection (b)(1), the following rules apply:
(1) If the originator is a bank, the originator is
obliged to pay its order.
(2) If the originator is not a bank and proves that the
person identified by number was not entitled to receive payment
from the originator, the originator is not obliged to pay its order
unless the originator's bank proves that the originator, before
acceptance of the originator's order, had notice that payment of a
payment order issued by the originator might be made by the
beneficiary's bank on the basis of an identifying or bank account
number even if it identifies a person different from the named
beneficiary. Proof of notice may be made by any admissible
evidence. The originator's bank satisfies the burden of proof if it
proves that the originator, before the payment order was accepted,
signed a record [writing] stating the information to which the
notice relates.
SECTION 5.06. Section 4A.208(b), Business & Commerce Code,
is amended to read as follows:
(b) This subsection applies to a payment order identifying
an intermediary bank or the beneficiary's bank both by name and an
identifying number if the name and number identify different
persons.
(1) If the sender is a bank, the receiving bank may
rely on the number as the proper identification of the intermediary
or beneficiary's bank if the receiving bank, when it executes the
sender's order, does not know that the name and number identify
different persons. The receiving bank need not determine whether
the name and number refer to the same person or whether the number
refers to a bank. The sender is obliged to compensate the receiving
bank for any loss and expenses incurred by the receiving bank as a
result of its reliance on the number in executing or attempting to
execute the order.
(2) If the sender is not a bank and the receiving bank
proves that the sender, before the payment order was accepted, had
notice that the receiving bank might rely on the number as the
proper identification of the intermediary or beneficiary's bank
even if it identifies a person different from the bank identified by
name, the rights and obligations of the sender and the receiving
bank are governed by Subsection (b)(1), as though the sender were a
bank. Proof of notice may be made by any admissible evidence. The
receiving bank satisfies the burden of proof if it proves that the
sender, before the payment order was accepted, signed a record
[writing] stating the information to which the notice relates.
(3) Regardless of whether the sender is a bank, the
receiving bank may rely on the name as the proper identification of
the intermediary or beneficiary's bank if the receiving bank, at
the time it executes the sender's order, does not know that the name
and number identify different persons. The receiving bank need not
determine whether the name and number refer to the same person.
(4) If the receiving bank knows that the name and
number identify different persons, reliance on either the name or
the number in executing the sender's payment order is a breach of
the obligation stated in Section 4A.302(a)(1).
SECTION 5.07. Section 4A.210(a), Business & Commerce Code,
is amended to read as follows:
(a) A payment order is rejected by the receiving bank by a
notice of rejection transmitted to the sender orally[,
electronically,] or in a record [writing]. A notice of rejection
need not use any particular words and is sufficient if it indicates
that the receiving bank is rejecting the order or will not execute
or pay the order. Rejection is effective when the notice is given
if transmission is by a means that is reasonable under the
circumstances. If notice of rejection is given by a means that is
not reasonable, rejection is effective when the notice is received.
If an agreement of the sender and receiving bank establishes the
means to be used to reject a payment order:
(1) any means complying with the agreement is
reasonable; and
(2) any means not complying is not reasonable unless
no significant delay in receipt of the notice resulted from the use
of the noncomplying means.
SECTION 5.08. Section 4A.211(a), Business & Commerce Code,
is amended to read as follows:
(a) A communication of the sender of a payment order
cancelling or amending the order may be transmitted to the
receiving bank orally[, electronically,] or in a record [writing].
If a security procedure is in effect between the sender and the
receiving bank, the communication is not effective to cancel or
amend the order unless the communication is verified pursuant to
the security procedure or the bank agrees to the cancellation or
amendment.
SECTION 5.09. Sections 4A.305(c) and (d), Business &
Commerce Code, are amended to read as follows:
(c) In addition to the amounts payable under Subsections (a)
and (b), damages, including consequential damages, are recoverable
to the extent provided in an express [written] agreement of the
receiving bank, evidenced by a record.
(d) If a receiving bank fails to execute a payment order it
was obliged by express agreement to execute, the receiving bank is
liable to the sender for its expenses in the transaction and for
incidental expenses and interest losses resulting from the failure
to execute. Additional damages, including consequential damages,
are recoverable to the extent provided in an express [written]
agreement of the receiving bank, evidenced by a record, but are not
otherwise recoverable.
ARTICLE 6. LETTERS OF CREDIT
SECTION 6.01. Section 5.104, Business & Commerce Code, is
amended to read as follows:
Sec. 5.104. FORMAL REQUIREMENTS. A letter of credit,
confirmation, advice, transfer, amendment, or cancellation may be
issued in any form that is a signed record [and is authenticated:
[(1) by a signature; or
[(2) in accordance with the agreement of the parties
or the standard practice referred to in Section 5.108(e)].
SECTION 6.02. Section 5.116, Business & Commerce Code, is
amended to read as follows:
Sec. 5.116. CHOICE OF LAW AND FORUM. (a) The liability of
an issuer, nominated person, or adviser for action or omission is
governed by the law of the jurisdiction chosen by an agreement in
the form of a record signed [or otherwise authenticated] by the
affected parties [in the manner provided in Section 5.104] or by a
provision in the person's letter of credit, confirmation, or other
undertaking. The jurisdiction whose law is chosen need not bear any
relation to the transaction.
(b) Unless Subsection (a) applies, the liability of an
issuer, nominated person, or adviser for action or omission is
governed by the law of the jurisdiction in which the person is
located. The person is considered to be located at the address
indicated in the person's undertaking. If more than one address is
indicated, the person is considered to be located at the address
from which the person's undertaking was issued.
(c) For the purpose of jurisdiction, choice of law, and
recognition of interbranch letters of credit, but not enforcement
of a judgment, all branches of a bank are considered separate
juridical entities, and a bank is considered to be located at the
place where its relevant branch is considered to be located under
Subsection (d) [this subsection].
(d) A branch of a bank is considered to be located at the
address indicated in the branch's undertaking. If more than one
address is indicated, the branch is considered to be located at the
address from which the undertaking was issued.
(e) [(c)] Except as otherwise provided in this subsection,
the liability of an issuer, nominated person, or adviser is
governed by any rules of custom or practice, such as the Uniform
Customs and Practice for Documentary Credits, to which the letter
of credit, confirmation, or other undertaking is expressly made
subject. If (i) this chapter would govern the liability of an
issuer, nominated person, or adviser under Subsection (a) or (b),
(ii) the relevant undertaking incorporates rules of custom or
practice, and (iii) there is conflict between this chapter and
those rules as applied to that undertaking, those rules govern
except to the extent of any conflict with the nonvariable
provisions specified in Section 5.103(c).
(f) [(d)] If there is conflict between this chapter and
Chapter 3, 4, 4A, or 9, this chapter governs.
(g) [(e)] The forum for settling disputes arising out of an
undertaking within this chapter may be chosen in the manner and with
the binding effect that governing law may be chosen in accordance
with Subsection (a).
ARTICLE 7. DOCUMENTS OF TITLE
SECTION 7.01. Section 7.106, Business & Commerce Code, is
amended by amending Subsection (b) and adding Subsections (c), (d),
(e), (f), (g), (h), and (i) to read as follows:
(b) A system satisfies Subsection (a), and a person has [is
deemed to have] control of an electronic document of title, if the
document is created, stored, and transferred [assigned] in [such] a
manner that:
(1) a single authoritative copy of the document exists
which is unique, identifiable, and, except as otherwise provided in
Subdivisions (4), (5), and (6), unalterable;
(2) the authoritative copy identifies the person
asserting control as:
(A) the person to which the document was issued;
or
(B) if the authoritative copy indicates that the
document has been transferred, the person to which the document was
most recently transferred;
(3) the authoritative copy is communicated to and
maintained by the person asserting control or its designated
custodian;
(4) copies or amendments that add or change an
identified transferee [assignee] of the authoritative copy can be
made only with the consent of the person asserting control;
(5) each copy of the authoritative copy and any copy of
a copy is readily identifiable as a copy that is not the
authoritative copy; and
(6) any amendment of the authoritative copy is readily
identifiable as authorized or unauthorized.
(c) A system satisfies Subsection (a), and a person has
control of an electronic document of title, if an authoritative
electronic copy of the document, a record attached to or logically
associated with the electronic copy, or a system in which the
electronic copy is recorded:
(1) enables the person readily to identify each
electronic copy as either an authoritative copy or a
nonauthoritative copy;
(2) enables the person readily to identify itself in
any way, including by name, identifying number, cryptographic key,
office, or account number, as the person to which each
authoritative electronic copy was issued or transferred; and
(3) gives the person exclusive power, subject to
Subsection (d), to:
(A) prevent others from adding or changing the
person to which each authoritative electronic copy has been issued
or transferred; and
(B) transfer control of each authoritative
electronic copy.
(d) Subject to Subsection (e), a power is exclusive under
Subsections (c)(3)(A) and (B), even if:
(1) the authoritative electronic copy, a record
attached to or logically associated with the authoritative
electronic copy, or a system in which the authoritative electronic
copy is recorded limits the use of the document of title or has a
protocol that is programmed to cause a change, including a transfer
or loss of control; or
(2) the power is shared with another person.
(e) A power of a person is not shared with another person
under Subsection (d)(2) and the person's power is not exclusive if:
(1) the person can exercise the power only if the power
also is exercised by the other person; and
(2) the other person:
(A) can exercise the power without exercise of
the power by the person; or
(B) is the transferor to the person of an
interest in the document of title.
(f) If a person has the powers specified in Subsections
(c)(3)(A) and (B), the powers are presumed to be exclusive.
(g) A person has control of an electronic document of title
if another person, other than the transferor to the person of an
interest in the document:
(1) has control of the document and acknowledges that
it has control on behalf of the person; or
(2) obtains control of the document after having
acknowledged that it will obtain control of the document on behalf
of the person.
(h) A person that has control under this section is not
required to acknowledge that it has control on behalf of another
person.
(i) If a person acknowledges that it has or will obtain
control on behalf of another person, unless the person otherwise
agrees or law other than this chapter or Chapter 9 otherwise
provides, the person does not owe any duty to the other person and
is not required to confirm the acknowledgment to any other person.
ARTICLE 8. INVESTMENT SECURITIES
SECTION 8.01. Section 8.102(a)(6), Business & Commerce
Code, is amended to read as follows:
(6) "Communicate" means to:
(A) send a signed record [writing]; or
(B) transmit information by any mechanism agreed
on by the persons transmitting and receiving the information.
SECTION 8.02. Section 8.102(b), Business & Commerce Code,
is amended to read as follows:
(b) The following [Other] definitions in [applying to] this
chapter and other chapters apply to this chapter [the sections in
which they appear are]:
Appropriate person Section 8.107 Appropriate person Section 8.107
Appropriate person Section 8.107
Control Section 8.106 Control Section 8.106
Control Section 8.106
Controllable account Section 9.102 Controllable account Section 9.102
Controllable account Section 9.102
Controllable electronic record Section 12A.102 Controllable electronic record Section 12A.102
Controllable electronic record Section 12A.102
Controllable payment intangible Section 9.102 Controllable payment intangible Section 9.102
Controllable payment intangible Section 9.102
Delivery Section 8.301 Delivery Section 8.301
Delivery Section 8.301
Investment company security Section 8.103 Investment company security Section 8.103
Investment company security Section 8.103
Issuer Section 8.201 Issuer Section 8.201
Issuer Section 8.201
Overissue Section 8.210 Overissue Section 8.210
Overissue Section 8.210
Protected purchaser Section 8.303 Protected purchaser Section 8.303
Protected purchaser Section 8.303
Securities account Section 8.501 Securities account Section 8.501
Securities account Section 8.501
SECTION 8.03. Section 8.103, Business & Commerce Code, is
amended by adding Subsection (h) to read as follows:
(h) A controllable account, controllable electronic record,
or controllable payment intangible is not a financial asset unless
Section 8.102(a)(9)(C) applies.
SECTION 8.04. Section 8.106, Business & Commerce Code, is
amended by amending Subsection (d) and adding Subsections (h) and
(i) to read as follows:
(d) A purchaser has control of a security entitlement if:
(1) the purchaser becomes the entitlement holder;
(2) the securities intermediary has agreed that it
will comply with entitlement orders originated by the purchaser
without further consent by the entitlement holder; or
(3) another person, other than the transferor to the
purchaser of an interest in the security entitlement:
(A) has control of the security entitlement and
[on behalf of the purchaser or, having previously acquired control
of the security entitlement,] acknowledges that it has control on
behalf of the purchaser; or
(B) obtains control of the security entitlement
after having acknowledged that it will obtain control of the
security entitlement on behalf of the purchaser.
(h) A person that has control under this section is not
required to acknowledge that it has control on behalf of a
purchaser.
(i) If a person acknowledges that it has or will obtain
control on behalf of a purchaser, unless the person otherwise
agrees or law other than this chapter or Chapter 9 otherwise
provides, the person does not owe any duty to the purchaser and is
not required to confirm the acknowledgment to any other person.
SECTION 8.05. Section 8.110, Business & Commerce Code, is
amended by adding Subsection (g) to read as follows:
(g) The local law of the issuer's jurisdiction or the
securities intermediary's jurisdiction governs a matter or
transaction specified in Subsection (a) or (b) even if the matter or
transaction does not bear any relation to the jurisdiction.
SECTION 8.06. Section 8.303(b), Business & Commerce Code,
is amended to read as follows:
(b) A [In addition to acquiring the rights of a purchaser,
a] protected purchaser [also] acquires its interest in the security
free of any adverse claim.
ARTICLE 9. SECURED TRANSACTIONS
SECTION 9.01. Section 9.102(a), Business & Commerce Code,
is amended by amending Subdivisions (2), (3), (4), (11), (42),
(47), (62), and (67) and adding Subdivisions (7-a), (7-b), (27-a),
(27-b), (31-a), (54-a), and (79-a) to read as follows:
(2) "Account," except as used in "account for,"
"account statement," "account to," the definition of "commodity
account" in Subdivision (14), "customer's account," the definition
of "deposit account" in Subdivision (29), "on account of," and
"statement of account," means a right to payment of a monetary
obligation, whether or not earned by performance, (i) for property
that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of, (ii) for services rendered or to be
rendered, (iii) for a policy of insurance issued or to be issued,
(iv) for a secondary obligation incurred or to be incurred, (v) for
energy provided or to be provided, (vi) for the use or hire of a
vessel under a charter or other contract, (vii) arising out of the
use of a credit or charge card or information contained on or for
use with the card, or (viii) as winnings in a lottery or other game
of chance operated or sponsored by a state, governmental unit of a
state, or person licensed or authorized to operate the game by a
state or governmental unit of a state. The term includes
controllable accounts and health-care-insurance receivables. The
term does not include (i) chattel paper [rights to payment
evidenced by chattel paper or an instrument], (ii) commercial tort
claims, (iii) deposit accounts, (iv) investment property, (v)
letter-of-credit rights or letters of credit, [or] (vi) rights to
payment for money or funds advanced or sold, other than rights
arising out of the use of a credit or charge card or information
contained on or for use with the card, or (vii) rights to payment
evidenced by an instrument.
(3) "Account debtor" means a person obligated on an
account, chattel paper, or general intangible. The term does not
include persons obligated to pay a negotiable instrument, even if
the negotiable instrument evidences [constitutes part of] chattel
paper.
(4) "Accounting," except as used in "accounting for,"
means a record:
(A) signed [authenticated] by a secured party;
(B) indicating the aggregate unpaid secured
obligations as of a date not more than 35 days earlier or 35 days
later than the date of the record; and
(C) identifying the components of the
obligations in reasonable detail.
(7-a) "Assignee," except as used in "assignee for
benefit of creditors," means a person (i) in whose favor a security
interest that secures an obligation is created or provided for
under a security agreement, whether or not the obligation is
outstanding or (ii) to which an account, chattel paper, payment
intangible, or promissory note has been sold. The term includes a
person to which a security interest has been transferred by a
secured party.
(7-b) "Assignor" means a person that (i) under a
security agreement creates or provides for a security interest that
secures an obligation or (ii) sells an account, chattel paper,
payment intangible, or promissory note. The term includes a
secured party that has transferred a security interest to another
person.
(11) "Chattel paper" means:
(A) a right to payment of a monetary obligation
secured by specific goods, if the right to payment and security
agreement are evidenced by a record; or
(B) a right to payment of a monetary obligation
owed by a lessee under a lease agreement with respect to specific
goods and a monetary obligation owed by the lessee in connection
with the transaction giving rise to the lease, if:
(i) the right to payment and lease
agreement are evidenced by a record; and
(ii) the predominant purpose of the
transaction giving rise to the lease was to give the lessee the
right to possession and use of the goods. The term does not include
a right to payment arising out of a charter or other contract
involving the use or hire of a vessel or a right to payment arising
out of the use of a credit or charge card or information contained
on or for use with the card [a record or records that evidence both a
monetary obligation and a security interest in specific goods, a
security interest in specific goods and software used in the goods,
a security interest in specific goods and license of software used
in the goods, a lease of specific goods, or a lease of specific
goods and license of software used in the goods. In this
subdivision, "monetary obligation" means a monetary obligation
secured by the goods or owed under a lease of the goods and includes
a monetary obligation with respect to software used in the goods.
The term does not include (i) charters or other contracts involving
the use or hire of a vessel or (ii) records that evidence a right to
payment arising out of the use of a credit or charge card or
information contained on or for use with the card. If a transaction
is evidenced by records that include an instrument or series of
instruments, the group of records taken together constitutes
chattel paper].
(27-a) "Controllable account" means an account
evidenced by a controllable electronic record that provides that
the account debtor undertakes to pay the person that has control
under Section 12A.105 of the controllable electronic record.
(27-b) "Controllable payment intangible" means a
payment intangible evidenced by a controllable electronic record
that provides that the account debtor undertakes to pay the person
that has control under Section 12A.105 of the controllable
electronic record.
(31-a) "Electronic money" means money in an electronic
form.
(42) "General intangible" means any personal
property, including things in action, other than accounts, chattel
paper, commercial tort claims, deposit accounts, documents, goods,
instruments, investment property, letter-of-credit rights, letters
of credit, money, and oil, gas, or other minerals before
extraction. The term includes controllable electronic records,
payment intangibles, and software.
(47) "Instrument" means a negotiable instrument or any
other writing that evidences a right to the payment of a monetary
obligation, is not itself a security agreement or lease, and is of a
type that in ordinary course of business is transferred by delivery
with any necessary indorsement or assignment. The term does not
include (i) investment property, (ii) letters of credit, (iii)
writings that evidence a right to payment arising out of the use of
a credit or charge card or information contained on or for use with
the card, [or] (iv) nonnegotiable certificates of deposit, or (v)
writings that evidence chattel paper.
(54-a) "Money" has the meaning in Section
1.201(b)(24), but does not include (i) a deposit account or (ii)
money in an electronic form that cannot be subjected to control
under Section 9.1051.
(62) "Payment intangible" means a general intangible
under which the account debtor's principal obligation is a monetary
obligation. The term includes a controllable payment intangible.
(67) "Proposal" means a record signed [authenticated]
by a secured party that includes the terms on which the secured
party is willing to accept collateral in full or partial
satisfaction of the obligation it secures pursuant to Sections
9.620, 9.621, and 9.622.
(79-a) "Tangible money" means money in a tangible
form.
SECTION 9.02. Section 9.102(b), Business & Commerce Code,
is amended to read as follows:
(b) "Control" as provided in Section 7.106 and the [The]
following definitions in other chapters apply to this chapter:
"Applicant" Section 5.102. "Applicant" Section 5.102.
"Applicant" Section 5.102.
"Beneficiary" Section 5.102. "Beneficiary" Section 5.102.
"Beneficiary" Section 5.102.
"Broker" Section 8.102. "Broker" Section 8.102.
"Broker" Section 8.102.
"Certificated security" Section 8.102. "Certificated security" Section 8.102.
"Certificated security" Section 8.102.
"Check" Section 3.104. "Check" Section 3.104.
"Check" Section 3.104.
"Clearing corporation" Section 8.102. "Clearing corporation" Section 8.102.
"Clearing corporation" Section 8.102.
"Contract for sale" Section 2.106. "Contract for sale" Section 2.106.
"Contract for sale" Section 2.106.
["Control" (with respect to a ] [Section 7.106.] ["Control" (with respect to a ] [Section 7.106.]
["Control" (with respect to a ] [Section 7.106.]
[] [Section 7.106.] [] [Section 7.106.]
[] [Section 7.106.]
"Controllable electronic record" Section 12A.102. "Controllable electronic record" Section 12A.102.
"Controllable electronic record" Section 12A.102.
"Customer" Section 4.104. "Customer" Section 4.104.
"Customer" Section 4.104.
"Entitlement holder" Section 8.102. "Entitlement holder" Section 8.102.
"Entitlement holder" Section 8.102.
"Financial asset" Section 8.102. "Financial asset" Section 8.102.
"Financial asset" Section 8.102.
"Holder in due course" Section 3.302. "Holder in due course" Section 3.302.
"Holder in due course" Section 3.302.
"Issuer" (with respect to a letter of credit "Issuer" (with respect to a letter of credit
"Issuer" (with respect to a letter of credit
"Issuer" (with respect to a letter of credit "Issuer" (with respect to a letter of credit
"Issuer" (with respect to a letter of credit
or letter-of-credit right) Section 5.102. or letter-of-credit right) Section 5.102.
or letter-of-credit right) Section 5.102.
"Issuer" (with respect to a security) Section 8.201. "Issuer" (with respect to a security) Section 8.201.
"Issuer" (with respect to a security) Section 8.201.
"Issuer" (with respect to a security) Section 8.201. "Issuer" (with respect to a security) Section 8.201.
"Issuer" (with respect to a security) Section 8.201.
"Lease" Section 2A.103. "Lease" Section 2A.103.
"Lease" Section 2A.103.
"Lease agreement" Section 2A.103. "Lease agreement" Section 2A.103.
"Lease agreement" Section 2A.103.
"Lease contract" Section 2A.103. "Lease contract" Section 2A.103.
"Lease contract" Section 2A.103.
"Leasehold interest" Section 2A.103. "Leasehold interest" Section 2A.103.
"Leasehold interest" Section 2A.103.
"Lessee" Section 2A.103. "Lessee" Section 2A.103.
"Lessee" Section 2A.103.
"Lessee in ordinary course of business" Section 2A.103. "Lessee in ordinary course of business" Section 2A.103.
"Lessee in ordinary course of business" Section 2A.103.
"Lessee in ordinary course of business" Section 2A.103. "Lessee in ordinary course of business" Section 2A.103.
"Lessee in ordinary course of business" Section 2A.103.
"Lessor" Section 2A.103. "Lessor" Section 2A.103.
"Lessor" Section 2A.103.
"Lessor's residual interest" Section 2A.103. "Lessor's residual interest" Section 2A.103.
"Lessor's residual interest" Section 2A.103.
"Letter of credit" Section 5.102. "Letter of credit" Section 5.102.
"Letter of credit" Section 5.102.
"Merchant" Section 2.104. "Merchant" Section 2.104.
"Merchant" Section 2.104.
"Negotiable instrument" Section 3.104. "Negotiable instrument" Section 3.104.
"Negotiable instrument" Section 3.104.
"Nominated person" Section 5.102. "Nominated person" Section 5.102.
"Nominated person" Section 5.102.
"Note" Section 3.104. "Note" Section 3.104.
"Note" Section 3.104.
"Proceeds of a letter of credit" Section 5.114. "Proceeds of a letter of credit" Section 5.114.
"Proceeds of a letter of credit" Section 5.114.
"Protected purchaser" Section 8.303. "Protected purchaser" Section 8.303.
"Protected purchaser" Section 8.303.
"Prove" Section 3.103. "Prove" Section 3.103.
"Prove" Section 3.103.
"Qualifying purchaser" Section 12A.102. "Qualifying purchaser" Section 12A.102.
"Qualifying purchaser" Section 12A.102.
"Sale" Section 2.106. "Sale" Section 2.106.
"Sale" Section 2.106.
"Securities account" Section 8.501. "Securities account" Section 8.501.
"Securities account" Section 8.501.
"Securities intermediary" Section 8.102. "Securities intermediary" Section 8.102.
"Securities intermediary" Section 8.102.
"Security" Section 8.102. "Security" Section 8.102.
"Security" Section 8.102.
"Security certificate" Section 8.102. "Security certificate" Section 8.102.
"Security certificate" Section 8.102.
"Security entitlement" Section 8.102. "Security entitlement" Section 8.102.
"Security entitlement" Section 8.102.
"Uncertificated security" Section 8.102. "Uncertificated security" Section 8.102.
"Uncertificated security" Section 8.102.
["Virtual currency"] [Section 12.001.] ["Virtual currency"] [Section 12.001.]
["Virtual currency"] [Section 12.001.]
SECTION 9.03. Section 9.104(a), Business & Commerce Code,
is amended to read as follows:
(a) A secured party has control of a deposit account if:
(1) the secured party is the bank with which the
deposit account is maintained;
(2) the debtor, secured party, and bank have agreed in
a signed [an authenticated] record that the bank will comply with
instructions originated by the secured party directing disposition
of the funds in the deposit account without further consent by the
debtor; [or]
(3) the secured party becomes the bank's customer with
respect to the deposit account; or
(4) another person, other than the debtor:
(A) has control of the deposit account and
acknowledges that it has control on behalf of the secured party; or
(B) obtains control of the deposit account after
having acknowledged that it will obtain control of the deposit
account on behalf of the secured party.
SECTION 9.04. Section 9.105, Business & Commerce Code, is
amended to read as follows:
Sec. 9.105. CONTROL OF ELECTRONIC COPY OF RECORD EVIDENCING
CHATTEL PAPER. (a) A purchaser [secured party] has control of an
authoritative electronic copy of a record evidencing chattel paper
if a system employed for evidencing the assignment [transfer] of
interests in the chattel paper reliably establishes the purchaser
[secured party] as the person to which the authoritative electronic
copy [chattel paper] was assigned.
(b) A system satisfies Subsection (a)[, and a secured party
has control of electronic chattel paper,] if the record or records
evidencing [comprising] the chattel paper are created, stored, and
assigned in [such] a manner that:
(1) a single authoritative copy of the record or
records exists which [that] is unique, identifiable, and, except as
otherwise provided in Subdivisions (4), (5), and (6), unalterable;
(2) the authoritative copy identifies the purchaser
[secured party] as the assignee of the record or records;
(3) the authoritative copy is communicated to and
maintained by the purchaser [secured party] or its designated
custodian;
(4) copies or amendments that add or change an
identified assignee of the authoritative copy can be made only with
the consent of the purchaser [secured party];
(5) each copy of the authoritative copy and any copy of
a copy is readily identifiable as a copy that is not the
authoritative copy; and
(6) any amendment of the authoritative copy is readily
identifiable as authorized or unauthorized.
(c) A system satisfies Subsection (a), and a purchaser has
control of an authoritative electronic copy of a record evidencing
chattel paper, if the electronic copy, a record attached to or
logically associated with the electronic copy, or a system in which
the electronic copy is recorded:
(1) enables the purchaser readily to identify each
electronic copy as an authoritative copy or a nonauthoritative
copy;
(2) enables the purchaser readily to identify itself
in any way, including by name, identifying number, cryptographic
key, office, or account number, as the assignee of the
authoritative electronic copy; and
(3) gives the purchaser exclusive power, subject to
Subsection (d), to:
(A) prevent others from adding or changing an
identified assignee of the authoritative electronic copy; and
(B) transfer control of the authoritative
electronic copy.
(d) Subject to Subsection (e), a power is exclusive under
Subsections (c)(3)(A) and (B) even if:
(1) the authoritative electronic copy, a record
attached to or logically associated with the authoritative
electronic copy, or a system in which the authoritative electronic
copy is recorded limits the use of the authoritative electronic
copy or has a protocol programmed to cause a change, including a
transfer or loss of control; or
(2) the power is shared with another person.
(e) A power of a purchaser is not shared with another person
under Subsection (d)(2) and the purchaser's power is not exclusive
if:
(1) the purchaser can exercise the power only if the
power also is exercised by the other person; and
(2) the other person:
(A) can exercise the power without exercise of
the power by the purchaser; or
(B) is the transferor to the purchaser of an
interest in the chattel paper.
(f) If a purchaser has the powers specified in Subsections
(c)(3)(A) and (B), the powers are presumed to be exclusive.
(g) A purchaser has control of an authoritative electronic
copy of a record evidencing chattel paper if another person, other
than the transferor to the purchaser of an interest in the chattel
paper:
(1) has control of the authoritative electronic copy
and acknowledges that it has control on behalf of the purchaser; or
(2) obtains control of the authoritative electronic
copy after having acknowledged that it will obtain control of the
electronic copy on behalf of the purchaser.
SECTION 9.05. Subchapter A, Chapter 9, Business & Commerce
Code, is amended by adding Section 9.1051 to read as follows:
Sec. 9.1051. CONTROL OF ELECTRONIC MONEY. (a) A person has
control of electronic money if:
(1) the electronic money, a record attached to or
logically associated with the electronic money, or a system in
which the electronic money is recorded gives the person:
(A) power to avail itself of substantially all
the benefit from the electronic money; and
(B) exclusive power, subject to Subsection (b),
to:
(i) prevent others from availing themselves
of substantially all the benefit from the electronic money; and
(ii) transfer control of the electronic
money to another person or cause another person to obtain control of
other electronic money as a result of the transfer of the electronic
money; and
(2) the electronic money, a record attached to or
logically associated with the electronic money, or a system in
which the electronic money is recorded enables the person readily
to identify itself in any way, including by name, identifying
number, cryptographic key, office, or account number, as having the
powers under Subdivision (1).
(b) Subject to Subsection (c), a power is exclusive under
Subsections (a)(1)(B)(i) and (ii) even if:
(1) the electronic money, a record attached to or
logically associated with the electronic money, or a system in
which the electronic money is recorded limits the use of the
electronic money or has a protocol programmed to cause a change,
including a transfer or loss of control; or
(2) the power is shared with another person.
(c) A power of a person is not shared with another person
under Subsection (b)(2) and the person's power is not exclusive if:
(1) the person can exercise the power only if the power
also is exercised by the other person; and
(2) the other person:
(A) can exercise the power without exercise of
the power by the person; or
(B) is the transferor to the person of an
interest in the electronic money.
(d) If a person has the powers specified in Subsections
(a)(1)(B)(i) and (ii), the powers are presumed to be exclusive.
(e) A person has control of electronic money if another
person, other than the transferor to the person of an interest in
the electronic money:
(1) has control of the electronic money and
acknowledges that it has control on behalf of the person; or
(2) obtains control of the electronic money after
having acknowledged that it will obtain control of the electronic
money on behalf of the person.
SECTION 9.06. Subchapter A, Chapter 9, Business & Commerce
Code, is amended by adding Sections 9.1072 and 9.1073 to read as
follows:
Sec. 9.1072. CONTROL OF CONTROLLABLE ELECTRONIC RECORD,
CONTROLLABLE ACCOUNT, OR CONTROLLABLE PAYMENT INTANGIBLE. (a) A
secured party has control of a controllable electronic record as
provided in Section 12A.105.
(b) A secured party has control of a controllable account or
controllable payment intangible if the secured party has control of
the controllable electronic record that evidences the controllable
account or controllable payment intangible.
Sec. 9.1073. NO REQUIREMENT TO ACKNOWLEDGE OR CONFIRM; NO
DUTIES. (a) A person that has control under Section 9.104, 9.105,
or 9.1051 is not required to acknowledge that it has control on
behalf of another person.
(b) If a person acknowledges that it has or will obtain
control on behalf of another person, unless the person otherwise
agrees or law other than this chapter otherwise provides, the
person does not owe any duty to the other person and is not required
to confirm the acknowledgment to any other person.
SECTION 9.07. Section 9.203(b), Business & Commerce Code,
is amended to read as follows:
(b) Except as otherwise provided in Subsections (c)-(j), a
security interest is enforceable against the debtor and third
parties with respect to the collateral only if:
(1) value has been given;
(2) the debtor has rights in the collateral or the
power to transfer rights in the collateral to a secured party; and
(3) one of the following conditions is met:
(A) the debtor has signed [authenticated] a
security agreement that provides a description of the collateral
and, if the security interest covers timber to be cut, a description
of the land concerned;
(B) the collateral is not a certificated security
and is in the possession of the secured party under Section 9.313
pursuant to the debtor's security agreement;
(C) the collateral is a certificated security in
registered form and the security certificate has been delivered to
the secured party under Section 8.301 pursuant to the debtor's
security agreement; [or]
(D) the collateral is controllable accounts,
controllable electronic records, controllable payment intangibles,
deposit accounts, electronic documents, electronic money,
[electronic chattel paper,] investment property, or
letter-of-credit rights, [or electronic documents,] and the
secured party has control under Section 7.106, 9.104, 9.1051
[9.105], 9.106, [or] 9.107, or 9.1072 pursuant to the debtor's
security agreement; or
(E) the collateral is chattel paper and the
secured party has possession and control under Section 9.3141
pursuant to the debtor's security agreement.
SECTION 9.08. Section 9.204, Business & Commerce Code, is
amended by amending Subsection (b) and adding Subsection (b-1) to
read as follows:
(b) Subject to Subsection (b-1), a [A] security interest
does not attach under a term constituting an after-acquired
property clause to:
(1) consumer goods, other than an accession when given
as additional security, unless the debtor acquires rights in them
within 10 days after the secured party gives value; or
(2) a commercial tort claim.
(b-1) Subsection (b) does not prevent a security interest
from attaching:
(1) to consumer goods as proceeds under Section
9.315(a) or commingled goods under Section 9.336(c);
(2) to a commercial tort claim as proceeds under
Section 9.315(a); or
(3) under an after-acquired property clause to
property that is proceeds of consumer goods or a commercial tort
claim.
SECTION 9.09. Section 9.207(c), Business & Commerce Code,
is amended to read as follows:
(c) Except as otherwise provided in Subsection (d), a
secured party having possession of collateral or control of
collateral under Section 7.106, 9.104, 9.105, 9.1051, 9.106, [or]
9.107, or 9.1072:
(1) may hold as additional security any proceeds,
except money or funds, received from the collateral;
(2) shall apply money or funds received from the
collateral to reduce the secured obligation, unless remitted to the
debtor; and
(3) may create a security interest in the collateral.
SECTION 9.10. Section 9.208(b), Business & Commerce Code,
is amended to read as follows:
(b) Within 10 days after receiving a signed [an
authenticated] demand by the debtor:
(1) a secured party having control of a deposit
account under Section 9.104(a)(2) shall send to the bank with which
the deposit account is maintained a signed record [an authenticated
statement] that releases the bank from any further obligation to
comply with instructions originated by the secured party;
(2) a secured party having control of a deposit
account under Section 9.104(a)(3) shall:
(A) pay the debtor the balance on deposit in the
deposit account; or
(B) transfer the balance on deposit into a
deposit account in the debtor's name;
(3) a secured party, other than a buyer, having
control [of electronic chattel paper] under Section 9.105 of an
authoritative electronic copy of a record evidencing chattel paper
shall transfer control of the electronic copy to the debtor or a
person designated by the debtor [:
[(A) communicate the authoritative copy of the
electronic chattel paper to the debtor or its designated custodian;
[(B) if the debtor designates a custodian that is
the designated custodian with which the authoritative copy of the
electronic chattel paper is maintained for the secured party,
communicate to the custodian an authenticated record releasing the
designated custodian from any further obligation to comply with
instructions originated by the secured party and instructing the
custodian to comply with instructions originated by the debtor; and
[(C) take appropriate action to enable the debtor
or its designated custodian to make copies of or revisions to the
authoritative copy that add or change an identified assignee of the
authoritative copy without the consent of the secured party];
(4) a secured party having control of investment
property under Section 8.106(d)(2) or 9.106(b) shall send to the
securities intermediary or commodity intermediary with which the
security entitlement or commodity contract is maintained a signed
[an authenticated] record that releases the securities
intermediary or commodity intermediary from any further obligation
to comply with entitlement orders or directions originated by the
secured party;
(5) a secured party having control of a
letter-of-credit right under Section 9.107 shall send to each
person having an unfulfilled obligation to pay or deliver proceeds
of the letter of credit to the secured party a signed [an
authenticated] release from any further obligation to pay or
deliver proceeds of the letter of credit to the secured party; [and]
(6) a secured party having control under Section 7.106
of an authoritative copy of an electronic document of title [of an
electronic document] shall transfer control of the electronic copy
to the debtor or a person designated by the debtor;
(7) a secured party having control under Section
9.1051 of electronic money shall transfer control of the electronic
money to the debtor or a person designated by the debtor; and
(8) a secured party having control under Section
12A.105 of a controllable electronic record, other than a buyer of a
controllable account or controllable payment intangible evidenced
by the controllable electronic record, shall transfer control of
the controllable electronic record to the debtor or a person
designated by the debtor [:
[(A) give control of the electronic document to
the debtor or its designated custodian;
[(B) if the debtor designates a custodian that is
the designated custodian with which the authoritative copy of the
electronic document is maintained for the secured party,
communicate to the custodian an authenticated record releasing the
designated custodian from any further obligation to comply with
instructions originated by the secured party and instructing the
custodian to comply with instructions originated by the debtor; and
[(C) take appropriate action to enable the debtor
or its designated custodian to make copies of or revisions to the
authoritative copy which add or change an identified assignee of
the authoritative copy without the consent of the secured party].
SECTION 9.11. Section 9.209(b), Business & Commerce Code,
is amended to read as follows:
(b) Within 10 days after receiving a signed [an
authenticated] demand by the debtor, a secured party shall send to
an account debtor that has received notification under Section
9.406(a) or 12A.106(b) of an assignment to the secured party as
assignee a signed [under Section 9.406(a) an authenticated] record
that releases the account debtor from any further obligation to the
secured party.
SECTION 9.12. Sections 9.210(a), (b), (c), (d), and (e),
Business & Commerce Code, are amended to read as follows:
(a) In this section:
(1) "Request" means a record of a type described in
Subdivision (2), (3), or (4).
(2) "Request for an accounting" means a record signed
[authenticated] by a debtor requesting that the recipient provide
an accounting of the unpaid obligations secured by collateral and
reasonably identifying the transaction or relationship that is the
subject of the request.
(3) "Request regarding a list of collateral" means a
record signed [authenticated] by a debtor requesting that the
recipient approve or correct a list of what the debtor believes to
be the collateral securing an obligation and reasonably identifying
the transaction or relationship that is the subject of the request.
(4) "Request regarding a statement of account" means a
record signed [authenticated] by a debtor requesting that the
recipient approve or correct a statement indicating what the debtor
believes to be the aggregate amount of unpaid obligations secured
by collateral as of a specified date and reasonably identifying the
transaction or relationship that is the subject of the request.
(b) Subject to Subsections (c), (d), (e), and (f), a secured
party, other than a buyer of accounts, chattel paper, payment
intangibles, or promissory notes or a consignor, shall comply with
a request within 14 days after receipt:
(1) in the case of a request for an accounting, by
signing [authenticating] and sending to the debtor an accounting;
and
(2) in the case of a request regarding a list of
collateral or a request regarding a statement of account, by
signing [authenticating] and sending to the debtor an approval or
correction.
(c) A secured party that claims a security interest in all
of a particular type of collateral owned by the debtor may comply
with a request regarding a list of collateral by sending to the
debtor a signed [an authenticated] record including a statement to
that effect within 14 days after receipt.
(d) A person that receives a request regarding a list of
collateral, claims no interest in the collateral when it receives
the request, and claimed an interest in the collateral at an earlier
time shall comply with the request within 14 days after receipt by
sending to the debtor a signed [an authenticated] record:
(1) disclaiming any interest in the collateral; and
(2) if known to the recipient, providing the name and
mailing address of any assignee of or successor to the recipient's
interest in the collateral.
(e) A person that receives a request for an accounting or a
request regarding a statement of account, claims no interest in the
obligations when it receives the request, and claimed an interest
in the obligations at an earlier time shall comply with the request
within 14 days after receipt by sending to the debtor a signed [an
authenticated] record:
(1) disclaiming any interest in the obligations; and
(2) if known to the recipient, providing the name and
mailing address of any assignee of or successor to the recipient's
interest in the obligations.
SECTION 9.13. Section 9.301, Business & Commerce Code, is
amended to read as follows:
Sec. 9.301. LAW GOVERNING PERFECTION AND PRIORITY OF
SECURITY INTERESTS. Except as otherwise provided in Sections 9.303
through 9.3062 [9.306], the following rules determine the law
governing perfection, the effect of perfection or nonperfection,
and the priority of a security interest in collateral:
(1) Except as otherwise provided in this section,
while a debtor is located in a jurisdiction, the local law of that
jurisdiction governs perfection, the effect of perfection or
nonperfection, and the priority of a security interest in
collateral.
(2) While collateral is located in a jurisdiction, the
local law of that jurisdiction governs perfection, the effect of
perfection or nonperfection, and the priority of a possessory
security interest in that collateral.
(3) Except as otherwise provided in Subdivision (4),
while [tangible] negotiable tangible documents, goods,
instruments, or tangible money[, or tangible chattel paper] is
located in a jurisdiction, the local law of that jurisdiction
governs:
(A) perfection of a security interest in the
goods by filing a fixture filing;
(B) perfection of a security interest in timber
to be cut; and
(C) the effect of perfection or nonperfection and
the priority of a nonpossessory security interest in the
collateral.
(4) The local law of the jurisdiction in which the
wellhead or minehead is located governs perfection, the effect of
perfection or nonperfection, and the priority of a security
interest in as-extracted collateral.
SECTION 9.14. Section 9.304(a), Business & Commerce Code,
is amended to read as follows:
(a) The local law of a bank's jurisdiction governs
perfection, the effect of perfection or nonperfection, and the
priority of a security interest in a deposit account maintained
with that bank even if the transaction does not bear any relation to
the bank's jurisdiction.
SECTION 9.15. Section 9.305(a), Business & Commerce Code,
is amended to read as follows:
(a) Except as otherwise provided in Subsection (c), the
following rules apply:
(1) While a security certificate is located in a
jurisdiction, the local law of that jurisdiction governs
perfection, the effect of perfection or nonperfection, and the
priority of a security interest in the certificated security
represented thereby.
(2) The local law of the issuer's jurisdiction as
specified in Section 8.110(d) governs perfection, the effect of
perfection or nonperfection, and the priority of a security
interest in an uncertificated security.
(3) The local law of the securities intermediary's
jurisdiction as specified in Section 8.110(e) governs perfection,
the effect of perfection or nonperfection, and the priority of a
security interest in a security entitlement or securities account.
(4) The local law of the commodity intermediary's
jurisdiction governs perfection, the effect of perfection or
nonperfection, and the priority of a security interest in a
commodity contract or commodity account.
(5) Subdivisions (2), (3), and (4) apply even if the
transaction does not bear any relation to the jurisdiction.
SECTION 9.16. Subchapter C, Chapter 9, Business & Commerce
Code, is amended by adding Sections 9.3061 and 9.3062 to read as
follows:
Sec. 9.3061. LAW GOVERNING PERFECTION AND PRIORITY OF
SECURITY INTERESTS IN CHATTEL PAPER. (a) Except as provided in
Subsection (d), if chattel paper is evidenced only by an
authoritative electronic copy of the chattel paper or is evidenced
by an authoritative electronic copy and an authoritative tangible
copy, the local law of the chattel paper's jurisdiction governs
perfection, the effect of perfection or nonperfection, and the
priority of a security interest in the chattel paper, even if the
transaction does not bear any relation to the chattel paper's
jurisdiction.
(b) The following rules determine the chattel paper's
jurisdiction under this section:
(1) If the authoritative electronic copy of the record
evidencing chattel paper, or a record attached to or logically
associated with the electronic copy and readily available for
review, expressly provides that a particular jurisdiction is the
chattel paper's jurisdiction for purposes of this subchapter, this
chapter, or this title, that jurisdiction is the chattel paper's
jurisdiction.
(2) If Subdivision (1) does not apply and the rules of
the system in which the authoritative electronic copy is recorded
are readily available for review and expressly provide that a
particular jurisdiction is the chattel paper's jurisdiction for
purposes of this subchapter, this chapter, or this title, that
jurisdiction is the chattel paper's jurisdiction.
(3) If Subdivisions (1) and (2) do not apply and the
authoritative electronic copy, or a record attached to or logically
associated with the electronic copy and readily available for
review, expressly provides that the chattel paper is governed by
the law of a particular jurisdiction, that jurisdiction is the
chattel paper's jurisdiction.
(4) If Subdivisions (1), (2), and (3) do not apply and
the rules of the system in which the authoritative electronic copy
is recorded are readily available for review and expressly provide
that the chattel paper or the system is governed by the law of a
particular jurisdiction, that jurisdiction is the chattel paper's
jurisdiction.
(5) If Subdivisions (1) through (4) do not apply, the
chattel paper's jurisdiction is the jurisdiction in which the
debtor is located.
(c) If an authoritative tangible copy of a record evidences
chattel paper and the chattel paper is not evidenced by an
authoritative electronic copy, while the authoritative tangible
copy of the record evidencing chattel paper is located in a
jurisdiction, the local law of that jurisdiction governs:
(1) perfection of a security interest in the chattel
paper by possession under Section 9.3141; and
(2) the effect of perfection or nonperfection and the
priority of a security interest in the chattel paper.
(d) The local law of the jurisdiction in which the debtor is
located governs perfection of a security interest in chattel paper
by filing.
Sec. 9.3062. LAW GOVERNING PERFECTION AND PRIORITY OF
SECURITY INTERESTS IN CONTROLLABLE ACCOUNTS, CONTROLLABLE
ELECTRONIC RECORDS, AND CONTROLLABLE PAYMENT INTANGIBLES. (a)
Except as provided in Subsection (b), the local law of the
controllable electronic record's jurisdiction specified in
Sections 12A.107(c) and (d) governs perfection, the effect of
perfection or nonperfection, and the priority of a security
interest in a controllable electronic record and a security
interest in a controllable account or controllable payment
intangible evidenced by the controllable electronic record.
(b) The local law of the jurisdiction in which the debtor is
located governs:
(1) perfection of a security interest in a
controllable account, controllable electronic record, or
controllable payment intangible by filing; and
(2) automatic perfection of a security interest in a
controllable payment intangible created by a sale of the
controllable payment intangible.
SECTION 9.17. Section 9.310(b), Business & Commerce Code,
is amended to read as follows:
(b) The filing of a financing statement is not necessary to
perfect a security interest:
(1) that is perfected under Section 9.308(d), (e),
(f), or (g);
(2) that is perfected under Section 9.309 when it
attaches;
(3) in property subject to a statute, regulation, or
treaty described in Section 9.311(a);
(4) in goods in possession of a bailee that is
perfected under Section 9.312(d)(1) or (2);
(5) in certificated securities, documents, goods, or
instruments which is perfected without filing, control or
possession under Section 9.312(e), (f), or (g);
(6) in collateral in the secured party's possession
under Section 9.313;
(7) in a certificated security that is perfected by
delivery of the security certificate to the secured party under
Section 9.313;
(8) in controllable accounts, controllable electronic
records, controllable payment intangibles, deposit accounts,
[electronic chattel paper,] electronic documents, investment
property, [virtual currencies,] or letter-of-credit rights that is
perfected by control under Section 9.314;
(8-a) in chattel paper which is perfected by
possession and control under Section 9.3141;
(9) in proceeds that is perfected under Section 9.315;
or
(10) that is perfected under Section 9.316.
SECTION 9.18. The heading to Section 9.312, Business &
Commerce Code, is amended to read as follows:
Sec. 9.312. PERFECTION OF SECURITY INTERESTS IN CHATTEL
PAPER, CONTROLLABLE ACCOUNTS, CONTROLLABLE ELECTRONIC RECORDS,
CONTROLLABLE PAYMENT INTANGIBLES, DEPOSIT ACCOUNTS, DOCUMENTS, AND
GOODS COVERED BY DOCUMENTS, INSTRUMENTS, INVESTMENT PROPERTY,
[VIRTUAL CURRENCIES,] LETTER-OF-CREDIT RIGHTS, AND MONEY;
PERFECTION BY PERMISSIVE FILING; TEMPORARY PERFECTION WITHOUT
FILING OR TRANSFER OF POSSESSION.
SECTION 9.19. Sections 9.312(a), (b), and (e), Business &
Commerce Code, are amended to read as follows:
(a) A security interest in chattel paper, controllable
accounts, controllable electronic records, controllable payment
intangibles, [negotiable documents,] instruments, investment
property, or negotiable documents [and virtual currencies] may be
perfected by filing.
(b) Except as otherwise provided in Sections 9.315(c) and
(d) for proceeds:
(1) a security interest in a deposit account may be
perfected only by control under Section 9.314;
(2) and except as otherwise provided in Section
9.308(d), a security interest in a letter-of-credit right may be
perfected only by control under Section 9.314; [and]
(3) a security interest in tangible money may be
perfected only by the secured party's taking possession under
Section 9.313; and
(4) a security interest in electronic money may be
perfected only by control under Section 9.314.
(e) A security interest in certificated securities,
negotiable documents, or instruments is perfected without filing or
the taking of possession or control for a period of 20 days from the
time it attaches to the extent that it arises for new value given
under a signed [an authenticated] security agreement.
SECTION 9.20. Sections 9.313(a), (c), and (d), Business &
Commerce Code, are amended to read as follows:
(a) Except as otherwise provided in Subsection (b), a
secured party may perfect a security interest in [tangible
negotiable documents,] goods, instruments, negotiable tangible
documents, or tangible money[, or tangible chattel paper] by taking
possession of the collateral. A secured party may perfect a
security interest in certificated securities by taking delivery of
the certificated securities under Section 8.301.
(c) With respect to collateral other than certificated
securities and goods covered by a document, a secured party takes
possession of collateral in the possession of a person other than
the debtor, the secured party, or a lessee of the collateral from
the debtor in the ordinary course of the debtor's business when:
(1) the person in possession signs [authenticates] a
record acknowledging that it holds possession of the collateral for
the secured party's benefit; or
(2) the person takes possession of the collateral
after having signed [authenticated] a record acknowledging that it
will hold possession of the collateral for the secured party's
benefit.
(d) If perfection of a security interest depends upon
possession of the collateral by a secured party, perfection occurs
not [no] earlier than the time the secured party takes possession
and continues only while the secured party retains possession.
SECTION 9.21. Sections 9.314(a), (b), and (c), Business &
Commerce Code, are amended to read as follows:
(a) A security interest in controllable accounts,
controllable electronic records, controllable payment intangibles,
deposit accounts, electronic documents, electronic money,
investment property, or letter-of-credit rights [investment
property, deposit accounts, letter-of-credit rights, virtual
currencies, electronic chattel paper, or electronic documents] may
be perfected by control of the collateral under Section 7.106,
9.104, 9.1051, [9.105,] 9.106, 9.107, or 9.1072 [9.1071].
(b) A security interest in controllable accounts,
controllable electronic records, controllable payment intangibles,
deposit accounts, electronic documents, electronic money, or
letter-of-credit rights [deposit accounts, electronic chattel
paper, virtual currencies, letter-of-credit rights, or electronic
documents] is perfected by control under Section 7.106, 9.104,
9.1051, [9.105,] 9.107, or 9.1072 not earlier than the time [9.1071
when] the secured party obtains control and remains perfected by
control only while the secured party retains control.
(c) A security interest in investment property is perfected
by control under Section 9.106 not earlier than [from] the time the
secured party obtains control and remains perfected by control
until:
(1) the secured party does not have control; and
(2) one of the following occurs:
(A) if the collateral is a certificated security,
the debtor has or acquires possession of the security certificate;
(B) if the collateral is an uncertificated
security, the issuer has registered or registers the debtor as the
registered owner; or
(C) if the collateral is a security entitlement,
the debtor is or becomes the entitlement holder.
SECTION 9.22. Subchapter C, Chapter 9, Business & Commerce
Code, is amended by adding Section 9.3141 to read as follows:
Sec. 9.3141. PERFECTION BY POSSESSION AND CONTROL OF
CHATTEL PAPER. (a) A secured party may perfect a security interest
in chattel paper by taking possession of each authoritative
tangible copy of the record evidencing the chattel paper and
obtaining control of each authoritative electronic copy of the
electronic record evidencing the chattel paper.
(b) A security interest is perfected under Subsection (a)
not earlier than the time the secured party takes possession and
obtains control and remains perfected under Subsection (a) only
while the secured party retains possession and control.
(c) Sections 9.313(c) and (f) through (i) apply to
perfection by possession of an authoritative tangible copy of a
record evidencing chattel paper.
SECTION 9.23. Sections 9.316(a) and (f), Business &
Commerce Code, are amended to read as follows:
(a) A security interest perfected pursuant to the law of the
jurisdiction designated in Section 9.301(1), [or] 9.305(c),
9.3061(d), or 9.3062(b) remains perfected until the earliest of:
(1) the time perfection would have ceased under the
law of that jurisdiction;
(2) the expiration of four months after a change of the
debtor's location to another jurisdiction; or
(3) the expiration of one year after a transfer of
collateral to a person that thereby becomes a debtor and is located
in another jurisdiction.
(f) A security interest in chattel paper, controllable
accounts, controllable electronic records, controllable payment
intangibles, deposit accounts, letter-of-credit rights, or
investment property that is perfected under the law of the chattel
paper's jurisdiction, the controllable electronic record's
jurisdiction, the bank's jurisdiction, the issuer's jurisdiction, a
nominated person's jurisdiction, the securities intermediary's
jurisdiction, or the commodity intermediary's jurisdiction, as
applicable, remains perfected until the earlier of:
(1) the time the security interest would have become
unperfected under the law of that jurisdiction; or
(2) the expiration of four months after a change of the
applicable jurisdiction to another jurisdiction.
SECTION 9.24. Section 9.317, Business & Commerce Code, is
amended by amending Subsections (b) and (d) and adding Subsections
(f), (g), (h), and (i) to read as follows:
(b) Except as otherwise provided in Subsection (e), a buyer,
other than a secured party, of [tangible chattel paper, tangible
documents,] goods, instruments, tangible documents, or a
certificated security takes free of a security interest or
agricultural lien if the buyer gives value and receives delivery of
the collateral without knowledge of the security interest or
agricultural lien and before it is perfected.
(d) Subject to Subsections (f) through (i), a [A] licensee
of a general intangible or a buyer, other than a secured party, of
collateral other than electric money, [tangible chattel paper,]
tangible documents, goods, instruments, or a certificated security
takes free of a security interest if the licensee or buyer gives
value without knowledge of the security interest and before it is
perfected.
(f) A buyer, other than a secured party, of chattel paper
takes free of a security interest if, without knowledge of the
security interest and before it is perfected, the buyer gives value
and:
(1) receives delivery of each authoritative tangible
copy of the record evidencing the chattel paper; and
(2) if each authoritative electronic copy of the
record evidencing the chattel paper can be subjected to control
under Section 9.105, obtains control of each authoritative
electronic copy.
(g) A buyer of an electronic document takes free of a
security interest if, without knowledge of the security interest
and before it is perfected, the buyer gives value and, if each
authoritative electronic copy of the document can be subjected to
control under Section 7.106, obtains control of each authoritative
electronic copy.
(h) A buyer of a controllable electronic record takes free
of a security interest if, without knowledge of the security
interest and before it is perfected, the buyer gives value and
obtains control of the controllable electronic record.
(i) A buyer, other than a secured party, of a controllable
account or a controllable payment intangible takes free of a
security interest if, without knowledge of the security interest
and before it is perfected, the buyer gives value and obtains
control of the controllable account or controllable payment
intangible.
SECTION 9.25. Sections 9.323(d) and (f), Business &
Commerce Code, are amended to read as follows:
(d) Except as otherwise provided in Subsection (e), a buyer
of goods [other than a buyer in ordinary course of business] takes
free of a security interest to the extent that it secures advances
made after the earlier of:
(1) the time the secured party acquires knowledge of
the buyer's purchase; or
(2) 45 days after the purchase.
(f) Except as otherwise provided in Subsection (g), a lessee
of goods[, other than a lessee in ordinary course of business,]
takes the leasehold interest free of a security interest to the
extent that it secures advances made after the earlier of:
(1) the time the secured party acquires knowledge of
the lease; or
(2) 45 days after the lease contract becomes
enforceable.
SECTION 9.26. Sections 9.324(b) and (d), Business &
Commerce Code, are amended to read as follows:
(b) Subject to Subsection (c) and except as otherwise
provided in Subsection (g), a perfected purchase-money security
interest in inventory has priority over a conflicting security
interest in the same inventory, has priority over a conflicting
security interest in chattel paper or an instrument constituting
proceeds of the inventory and in proceeds of the chattel paper, if
so provided in Section 9.330, and, except as otherwise provided in
Section 9.327, also has priority in identifiable cash proceeds of
the inventory to the extent the identifiable cash proceeds are
received on or before the delivery of the inventory to a buyer, if:
(1) the purchase-money security interest is perfected
when the debtor receives possession of the inventory;
(2) the purchase-money secured party sends a signed
[an authenticated] notification to the holder of the conflicting
security interest;
(3) the holder of the conflicting security interest
receives any required notification within five years before the
debtor receives possession of the inventory; and
(4) the notification states that the person sending
the notification has or expects to acquire a purchase-money
security interest in inventory of the debtor and describes the
inventory.
(d) Subject to Subsection (e) and except as otherwise
provided in Subsection (g), a perfected purchase-money security
interest in livestock that are farm products has priority over a
conflicting security interest in the same livestock, and, except as
otherwise provided in Section 9.327, a perfected security interest
in their identifiable proceeds and identifiable products in their
unmanufactured states also has priority, if:
(1) the purchase-money security interest is perfected
when the debtor receives possession of the livestock;
(2) the purchase-money secured party sends a signed
[an authenticated] notification to the holder of the conflicting
security interest;
(3) the holder of the conflicting security interest
receives the notification within six months before the debtor
receives possession of the livestock; and
(4) the notification states that the person sending
the notification has or expects to acquire a purchase-money
security interest in livestock of the debtor and describes the
livestock.
SECTION 9.27. Subchapter C, Chapter 9, Business & Commerce
Code, is amended by adding Section 9.3261 to read as follows:
Sec. 9.3261. PRIORITY OF SECURITY INTEREST IN CONTROLLABLE
ACCOUNT, CONTROLLABLE ELECTRONIC RECORD, AND CONTROLLABLE PAYMENT
INTANGIBLE. A security interest in a controllable account,
controllable electronic record, or controllable payment intangible
held by a secured party having control of the account, electronic
record, or payment intangible has priority over a conflicting
security interest held by a secured party that does not have
control.
SECTION 9.28. Sections 9.330(a), (b), and (f), Business &
Commerce Code, are amended to read as follows:
(a) A purchaser of chattel paper has priority over a
security interest in the chattel paper that is claimed merely as
proceeds of inventory subject to a security interest if:
(1) in good faith and in the ordinary course of the
purchaser's business, the purchaser gives new value and takes
possession of each authoritative tangible copy of the record
evidencing the chattel paper, and [or] obtains control under
Section 9.105 of each authoritative electronic copy of the record
evidencing [of] the chattel paper [under Section 9.105]; and
(2) the authoritative copies of the record evidencing
the chattel paper do [chattel paper does] not indicate that the
chattel paper [it] has been assigned to an identified assignee
other than the purchaser.
(b) A purchaser of chattel paper has priority over a
security interest in the chattel paper that is claimed other than
merely as proceeds of inventory subject to a security interest if
the purchaser gives new value, [and] takes possession of each
authoritative tangible copy of the record evidencing the chattel
paper, and [or] obtains control under Section 9.105 of each
authoritative electronic copy of the record evidencing [of] the
chattel paper [under Section 9.105] in good faith, in the ordinary
course of the purchaser's business, and without knowledge that the
purchase violates the rights of the secured party.
(f) For purposes of Subsections (b) and (d), if the
authoritative copies of the record evidencing chattel paper or an
instrument indicate [indicates] that the chattel paper or
instrument [it] has been assigned to an identified secured party
other than the purchaser, a purchaser of the chattel paper or
instrument has knowledge that the purchase violates the rights of
the secured party.
SECTION 9.29. The heading to Section 9.331, Business &
Commerce Code, is amended to read as follows:
Sec. 9.331. PRIORITY OF RIGHTS OF PURCHASERS OF
CONTROLLABLE ACCOUNTS, CONTROLLABLE ELECTRONIC RECORDS,
CONTROLLABLE PAYMENT INTANGIBLES, [INSTRUMENTS,] DOCUMENTS,
INSTRUMENTS, AND SECURITIES[, AND VIRTUAL CURRENCIES] UNDER OTHER
CHAPTERS; PRIORITY OF INTERESTS IN FINANCIAL ASSETS AND SECURITY
ENTITLEMENTS AND PROTECTION AGAINST ASSERTION OF CLAIM UNDER
CHAPTERS [CHAPTER] 8 AND 12A [VIRTUAL CURRENCIES UNDER CHAPTER 12].
SECTION 9.30. Sections 9.331(a) and (b), Business &
Commerce Code, are amended to read as follows:
(a) This chapter does not limit the rights of a holder in due
course of a negotiable instrument, a holder to which a negotiable
document of title has been duly negotiated, a protected purchaser
of a security, or a qualifying purchaser of a controllable account,
controllable electronic record, or controllable payment intangible
[virtual currency]. These holders or purchasers take priority over
an earlier security interest, even if perfected, to the extent
provided in Chapters 3, 7, 8, and 12A [12].
(b) This chapter does not limit the rights of or impose
liability on a person to the extent that the person is protected
against the assertion of a claim under Chapter 8 or 12A [12].
SECTION 9.31. Section 9.332, Business & Commerce Code, is
amended to read as follows:
Sec. 9.332. TRANSFER OF MONEY; TRANSFER OF FUNDS FROM
DEPOSIT ACCOUNT. (a) A transferee of tangible money takes the
money free of a security interest if the transferee receives
possession of the money without acting [unless the transferee acts]
in collusion with the debtor in violating the rights of the secured
party.
(b) A transferee of funds from a deposit account takes the
funds free of a security interest in the deposit account if the
transferee receives the funds without acting [unless the transferee
acts] in collusion with the debtor in violating the rights of the
secured party.
(c) A transferee of electronic money takes the money free of
a security interest if the transferee obtains control of the money
without acting in collusion with the debtor in violating the rights
of the secured party.
SECTION 9.32. Section 9.334(f), Business & Commerce Code,
is amended to read as follows:
(f) A security interest in fixtures, whether or not
perfected, has priority over the conflicting interest of an
encumbrancer or owner of the real property if:
(1) the encumbrancer or owner has, in a signed [an
authenticated] record, consented to the security interest or
disclaimed an interest in the goods as fixtures; or
(2) the debtor has a right to remove the goods as
against the encumbrancer or owner.
SECTION 9.33. Section 9.341, Business & Commerce Code, is
amended to read as follows:
Sec. 9.341. BANK'S RIGHTS AND DUTIES WITH RESPECT TO
DEPOSIT ACCOUNT. Except as otherwise provided in Section 9.340(c),
and unless the bank otherwise agrees in a signed [an authenticated]
record, a bank's rights and duties with respect to a deposit account
maintained with the bank are not terminated, suspended, or modified
by:
(1) the creation, attachment, or perfection of a
security interest in the deposit account;
(2) the bank's knowledge of the security interest; or
(3) the bank's receipt of instructions from the
secured party.
SECTION 9.34. Section 9.404(a), Business & Commerce Code,
is amended to read as follows:
(a) Unless an account debtor has made an enforceable
agreement not to assert defenses or claims, and subject to
Subsections (b)-(e), the rights of an assignee are subject to:
(1) all terms of the agreement between the account
debtor and assignor and any defense or claim in recoupment arising
from the transaction that gave rise to the contract; and
(2) any other defense or claim of the account debtor
against the assignor that accrues before the account debtor
receives a notification of the assignment signed [authenticated] by
the assignor or the assignee.
SECTION 9.35. Section 9.406, Business & Commerce Code, is
amended by amending Subsections (a), (b), (c), (d), and (g) and
adding Subsection (l) to read as follows:
(a) Subject to Subsections (b)-(i) and Subsection (l), an
account debtor on an account, chattel paper, or a payment
intangible may discharge its obligation by paying the assignor
until, but not after, the account debtor receives a notification,
signed [authenticated] by the assignor or the assignee, that the
amount due or to become due has been assigned and that payment is to
be made to the assignee. After receipt of the notification, the
account debtor may discharge its obligation by paying the assignee
and may not discharge the obligation by paying the assignor.
(b) Subject to Subsections [Subsection] (h) and (l),
notification is ineffective under Subsection (a):
(1) if it does not reasonably identify the rights
assigned;
(2) to the extent that an agreement between an account
debtor and a seller of a payment intangible limits the account
debtor's duty to pay a person other than the seller and the
limitation is effective under law other than this chapter; or
(3) at the option of an account debtor, if the
notification notifies the account debtor to make less than the full
amount of any installment or other periodic payment to the
assignee, even if:
(A) only a portion of the account, chattel paper,
or payment intangible has been assigned to that assignee;
(B) a portion has been assigned to another
assignee; or
(C) the account debtor knows that the assignment
to that assignee is limited.
(c) Subject to Subsections [Subsection] (h) and (l), if
requested by the account debtor, an assignee shall seasonably
furnish reasonable proof that the assignment has been made. Unless
the assignee complies, the account debtor may discharge its
obligation by paying the assignor, even if the account debtor has
received a notification under Subsection (a).
(d) In this subsection, "promissory note" includes a
negotiable instrument that evidences chattel paper. Except as
otherwise provided in Subsection (e) and Sections 2A.303 and 9.407,
and subject to Subsection (h), a term in an agreement between an
account debtor and an assignor or in a promissory note is
ineffective to the extent that it:
(1) prohibits, restricts, or requires the consent of
the account debtor or person obligated on the promissory note to the
assignment or transfer of, or the creation, attachment, perfection,
or enforcement of a security interest in, the account, chattel
paper, payment intangible, or promissory note; or
(2) provides that the assignment or transfer or the
creation, attachment, perfection, or enforcement of the security
interest may give rise to a default, breach, right of recoupment,
claim, defense, termination, right of termination, or remedy under
the account, chattel paper, payment intangible, or promissory note.
(g) Subject to Subsections [Subsection] (h) and (l), an
account debtor may not waive or vary its option under Subsection
(b)(3).
(l) Subsections (a), (b), (c), and (g) do not apply to a
controllable account or controllable payment intangible.
SECTION 9.36. Section 9.408, Business & Commerce Code, is
amended by adding Subsection (f) to read as follows:
(f) In this section, "promissory note" includes a
negotiable instrument that evidences chattel paper.
SECTION 9.37. Sections 9.509(a) and (b), Business &
Commerce Code, are amended to read as follows:
(a) A person may file an initial financing statement,
amendment that adds collateral covered by a financing statement, or
amendment that adds a debtor to a financing statement only if:
(1) the debtor authorizes the filing in a signed [an
authenticated] record or pursuant to Subsection (b) or (c); or
(2) the person holds an agricultural lien that has
become effective at the time of filing and the financing statement
covers only collateral in which the person holds an agricultural
lien.
(b) By signing [authenticating] or becoming bound as debtor
by a security agreement, a debtor or new debtor authorizes the
filing of an initial financing statement, and an amendment,
covering:
(1) the collateral described in the security
agreement; and
(2) property that becomes collateral under Section
9.315(a)(2), whether or not the security agreement expressly covers
proceeds.
SECTION 9.38. Sections 9.513(b) and (c), Business &
Commerce Code, are amended to read as follows:
(b) To comply with Subsection (a), a secured party shall
cause the secured party of record to file the termination
statement:
(1) within one month after there is no obligation
secured by the collateral covered by the financing statement and no
commitment to make advances, incur an obligation, or otherwise give
value; or
(2) if earlier, within 20 days after the secured party
receives a signed [an authenticated] demand from a debtor.
(c) In cases not governed by Subsection (a), within 20 days
after a secured party receives a signed [an authenticated] demand
from a debtor, the secured party shall cause the secured party of
record for a financing statement to send the debtor a termination
statement for the financing statement or file the termination
statement in the filing office if:
(1) except in the case of a financing statement
covering accounts or chattel paper that has been sold or goods that
are the subject of a consignment, there is no obligation secured by
the collateral covered by the financing statement and no commitment
to make an advance, incur an obligation, or otherwise give value;
(2) the financing statement covers accounts or chattel
paper that has been sold but as to which the account debtor or other
person obligated has discharged its obligation;
(3) the financing statement covers goods that were the
subject of a consignment to the debtor but are not in the debtor's
possession; or
(4) the debtor did not authorize the filing of the
initial financing statement.
SECTION 9.39. Section 9.601(b), Business & Commerce Code,
is amended to read as follows:
(b) A secured party in possession of collateral or control
of collateral under Section 7.106, 9.104, 9.105, 9.1051, 9.106,
[or] 9.107, or 9.1072 has the rights and duties provided in Section
9.207.
SECTION 9.40. Section 9.605, Business & Commerce Code, is
amended to read as follows:
Sec. 9.605. UNKNOWN DEBTOR OR SECONDARY OBLIGOR. (a)
Except as provided in Subsection (b), a [A] secured party does not
owe a duty based on its status as secured party:
(1) to a person that is a debtor or obligor, unless the
secured party knows:
(A) that the person is a debtor or obligor;
(B) the identity of the person; and
(C) how to communicate with the person; or
(2) to a secured party or lienholder that has filed a
financing statement against a person, unless the secured party
knows:
(A) that the person is a debtor; and
(B) the identity of the person.
(b) A secured party owes a duty based on its status as a
secured party to a person if, at the time the secured party obtains
control of collateral that is a controllable account, controllable
electronic record, or controllable payment intangible or at the
time the security interest attaches to the collateral, whichever is
later:
(1) the person is a debtor or obligor; and
(2) the secured party knows that the information in
Subsection (a)(1)(A), (B), or (C) relating to the person is not
provided by the collateral, a record attached to or logically
associated with the collateral, or the system in which the
collateral is recorded.
SECTION 9.41. Section 9.608(a), Business & Commerce Code,
is amended to read as follows:
(a) If a security interest or agricultural lien secures
payment or performance of an obligation, the following rules apply:
(1) A secured party shall apply or pay over for
application the cash proceeds of collection or enforcement under
Section 9.607 in the following order to:
(A) the reasonable expenses of collection and
enforcement and, to the extent provided for by agreement and not
prohibited by law, reasonable attorney's fees and legal expenses
incurred by the secured party;
(B) the satisfaction of obligations secured by
the security interest or agricultural lien under which the
collection or enforcement is made; and
(C) the satisfaction of obligations secured by
any subordinate security interest in or other lien on the
collateral subject to the security interest or agricultural lien
under which the collection or enforcement is made if the secured
party receives a signed [an authenticated] demand for proceeds
before distribution of the proceeds is completed.
(2) If requested by a secured party, a holder of a
subordinate security interest or other lien shall furnish
reasonable proof of the interest or lien within a reasonable time.
Unless the holder complies, the secured party need not comply with
the holder's demand under Subdivision (1)(C).
(3) A secured party need not apply or pay over for
application noncash proceeds of collection and enforcement under
Section 9.607 unless the failure to do so would be commercially
unreasonable. A secured party that applies or pays over for
application noncash proceeds shall do so in a commercially
reasonable manner.
(4) A secured party shall account to and pay a debtor
for any surplus, and the obligor is liable for any deficiency.
SECTION 9.42. Sections 9.611(a), (b), (c), and (e),
Business & Commerce Code, are amended to read as follows:
(a) In this section, "notification date" means the earlier
of the date on which:
(1) a secured party sends to the debtor and any
secondary obligor a signed [an authenticated] notification of
disposition; or
(2) the debtor and any secondary obligor waive the
right to notification.
(b) Except as otherwise provided in Subsection (d), a
secured party that disposes of collateral under Section 9.610 shall
send to the persons specified in Subsection (c) a reasonable signed
[authenticated] notification of disposition.
(c) To comply with Subsection (b), the secured party shall
send a signed [an authenticated] notification of disposition to:
(1) the debtor;
(2) any secondary obligor; and
(3) if the collateral is other than consumer goods:
(A) any other person from which the secured party
has received, before the notification date, a signed [an
authenticated] notification of a claim of an interest in the
collateral;
(B) any other secured party or lienholder that,
10 days before the notification date, held a security interest in or
other lien on the collateral perfected by the filing of a financing
statement that:
(i) identified the collateral;
(ii) was indexed under the debtor's name as
of that date; and
(iii) was filed in the office in which to
file a financing statement against the debtor covering the
collateral as of that date; and
(C) any other secured party that, 10 days before
the notification date, held a security interest in the collateral
perfected by compliance with a statute, regulation, or treaty
described in Section 9.311(a).
(e) A secured party complies with the requirement for
notification prescribed by Subsection (c)(3)(B) if:
(1) not later than 20 days or earlier than 30 days
before the notification date, the secured party requests, in a
commercially reasonable manner, information concerning financing
statements indexed under the debtor's name in the office indicated
in Subsection (c)(3)(B); and
(2) before the notification date, the secured party:
(A) did not receive a response to the request for
information; or
(B) received a response to the request for
information and sent a signed [an authenticated] notification of
disposition to each secured party or other lienholder named in that
response whose financing statement covered the collateral.
SECTION 9.43. Section 9.613, Business & Commerce Code, is
amended to read as follows:
Sec. 9.613. CONTENTS AND FORM OF NOTIFICATION BEFORE
DISPOSITION OF COLLATERAL: GENERAL. (a) Except in a
consumer-goods transaction, the following rules apply:
(1) The contents of a notification of disposition are
sufficient if the notification:
(A) describes the debtor and the secured party;
(B) describes the collateral that is the subject
of the intended disposition;
(C) states the method of intended disposition;
(D) states that the debtor is entitled to an
accounting of the unpaid indebtedness and states the charge, if
any, for an accounting; and
(E) states the time and place of a public
disposition or the time after which any other disposition is to be
made.
(2) Whether the contents of a notification that lacks
any of the information specified in Subdivision (1) are
nevertheless sufficient is a question of fact.
(3) The contents of a notification providing
substantially the information specified in Subdivision (1) are
sufficient, even if the notification includes:
(A) information not specified by that
subdivision; or
(B) minor errors that are not seriously
misleading.
(4) A particular phrasing of the notification is not
required.
(5) The following form of notification and the form
appearing in Section 9.614(a)(3) [9.614(3)], when completed in
accordance with the instructions in Subsection (b) and Section
9.614(b), each provide sufficient information:
NOTIFICATION OF DISPOSITION OF COLLATERAL
To: (Name of debtor, obligor, or other person to which the
notification is sent)
From: (Name, address, and telephone number of secured party)
{1} Name of any debtor that is not an addressee: (Name of each
debtor)
{2} We will sell (describe collateral) (to the highest qualified
bidder) at public sale. A sale could include a lease or license. The
sale will be held as follows:
(Date)
(Time)
(Place)
{3} We will sell (describe collateral) at private sale sometime
after (date). A sale could include a lease or license.
{4} You are entitled to an accounting of the unpaid indebtedness
secured by the property that we intend to sell or, as applicable,
lease or license.
{5} If you request an accounting you must pay a charge of $
(amount).
{6} You may request an accounting by calling us at (telephone
number).
(b) The following instructions apply to the form of
notification in Subsection (a)(5):
(1) The instructions in this subsection refer to the
numbers in braces before items in the form of notification in
Subsection (a)(5). Do not include the numbers or braces in the
notification. The numbers and braces are used only for the purpose
of these instructions.
(2) Include and complete item {1} only if there is a
debtor that is not an addressee of the notification and list the
name or names.
(3) Include and complete either item {2}, if the
notification relates to a public disposition of the collateral, or
item {3}, if the notification relates to a private disposition of
the collateral. If item {2} is included, include the words "to the
highest qualified bidder" only if applicable.
(4) Include and complete items {4} and {6}.
(5) Include and complete item {5} only if the sender
will charge the recipient for an accounting.
[NOTIFICATION OF DISPOSITION OF COLLATERAL
[To: __________________[Name of debtor, obligor, or other person to
which the notification is sent]
[From: ________[Name, address, and telephone number of secured
party]
[Name of Debtor(s): ________________ [Include only if debtor(s) are
not an addressee]
[[For a public disposition:]
[We will sell [or lease or license, as applicable] the [describe
collateral] [to the highest qualified bidder] in public as follows:
[Day and Date: ______ Time: _____ Place: _______[For a private
disposition:]
[We will sell [or lease or license, as applicable] the _________
[describe collateral] privately sometime after _____ [day and
date].
[You are entitled to an accounting of the unpaid indebtedness
secured by the property that we intend to sell [or lease or license,
as applicable] [for a charge of $____]. You may request an
accounting by calling us at ______ [telephone number].]
SECTION 9.44. Section 9.614, Business & Commerce Code, is
amended to read as follows:
Sec. 9.614. CONTENTS AND FORM OF NOTIFICATION BEFORE
DISPOSITION OF COLLATERAL: CONSUMER-GOODS TRANSACTION. (a) In a
consumer-goods transaction, the following rules apply:
(1) A notification of disposition must provide the
following information:
(A) the information specified in Section
9.613(a)(1) [9.613(1)];
(B) a description of any liability for a
deficiency of the person to which the notification is sent;
(C) a telephone number from which the amount that
must be paid to the secured party to redeem the collateral under
Section 9.623 is available; and
(D) a telephone number or mailing address from
which additional information concerning the disposition and the
obligation secured is available.
(2) A particular phrasing of the notification is not
required.
(3) The following form of notification, when completed
in accordance with the instructions in Subsection (b), provides
sufficient information:
(Name and address of secured party)
(Date)
NOTICE OF OUR PLAN TO SELL PROPERTY
(Name and address of any obligor who is also a debtor)
Subject: (Identify transaction)
We have your (describe collateral), because you broke promises in
our agreement.
{1} We will sell (describe collateral) at public sale. A sale could
include a lease or license. The sale will be held as follows:
(Date)
(Time)
(Place)
You may attend the sale and bring bidders if you want.
{2} We will sell (describe collateral) at private sale sometime
after (date). A sale could include a lease or license.
{3} The money that we get from the sale, after paying our costs,
will reduce the amount you owe. If we get less money than you owe,
you (will or will not, as applicable) still owe us the difference.
If we get more money than you owe, you will get the extra money,
unless we must pay it to someone else.
{4} You can get the property back at any time before we sell it by
paying us the full amount you owe, not just the past due payments,
including our expenses. To learn the exact amount you must pay, call
us at (telephone number).
{5} If you want us to explain to you in (writing) (writing or in
(description of electronic record)) (description of electronic
record) how we have figured the amount that you owe us,
{6} call us at (telephone number) (or) (write us at (secured
party's address)) (or contact us by (description of electronic
communication method))
{7} and request (a written explanation) (a written explanation or
an explanation in (description of electronic record)) (an
explanation in (description of electronic record)).
{8} We will charge you $ (amount) for the explanation if we sent you
another written explanation of the amount you owe us within the last
six months.
{9} If you need more information about the sale (call us at
(telephone number)) (or) (write us at (secured party's address))
(or contact us by (description of electronic communication
method)).
{10} We are sending this notice to the following other people who
have an interest in (describe collateral) or who owe money under
your agreement:
(Names of all other debtors and obligors, if any)
[________________ [Name and address of secured party]
[________________ [Date]
[NOTICE OF OUR PLAN TO SELL PROPERTY
[________________ [Name and address of any obligor who is also a
debtor]
[Subject: ___________ [Identification of Transaction]
[We have your _________[describe collateral], because you broke
promises in our agreement.
[[For a public disposition:]
[We will sell _________[describe collateral] at public sale. A
sale could include a lease or license. The sale will be held as
follows:
[Date:_______________________________________
[Time:_______________________________________
[Place:______________________________________
[You may attend the sale and bring bidders if you want.
[[For a private disposition:]
[We will sell ___________[describe collateral] at private sale
sometime after ________[date]. A sale could include a lease or
license.
[The money that we get from the sale (after paying our costs) will
reduce the amount you owe. If we get less money than you owe, you
________[will or will not, as applicable] still owe us the
difference. If we get more money than you owe, you will get the
extra money, unless we must pay it to someone else.
[You can get the property back at any time before we sell it by
paying us the full amount you owe (not just the past due payments),
including our expenses. To learn the exact amount you must pay,
call us at __________[telephone number].
[If you want us to explain to you in writing how we have figured the
amount that you owe us, you may call us at ______[telephone number]
[or write us at _______[secured party's address] ___________] and
request a written explanation. [We will charge you $________ for
the explanation if we sent you another written explanation of the
amount you owe us within the last six months.]
[If you need more information about the sale call us at _________
[telephone number] [or write us at ______ [secured party's address]
_______________].
[We are sending this notice to the following other people who have
an interest in _______________[describe collateral] or who owe
money under your agreement:
[______________________________________ [Names of all other
debtors and obligors, if any]]
(4) A notification in the form of Subdivision (3) is
sufficient, even if additional information appears at the end of
the form.
(5) A notification in the form of Subdivision (3) is
sufficient, even if it includes errors in information not required
by Subdivision (1), unless the error is misleading with respect to
rights arising under this chapter.
(6) If a notification under this section is not in the
form of Subdivision (3), law other than this chapter determines the
effect of including information not required by Subdivision (1).
(b) The following instructions apply to the form of
notification in Subsection (a)(3):
(1) The instructions in this subsection refer to the
numbers in braces before items in the form of notification in
Subsection (a)(3). Do not include the numbers or braces in the
notification. The numbers and braces are used only for the purpose
of these instructions.
(2) Include and complete either item {1}, if the
notification relates to a public disposition of the collateral, or
item {2}, if the notification relates to a private disposition of
the collateral.
(3) Include and complete items {3}, {4}, {5}, {6}, and
{7}.
(4) In item {5}, include and complete any one of the
three alternative methods for the explanation-writing, writing or
electronic record, or electronic record.
(5) In item {6}, include the telephone number. In
addition, the sender may include and complete either or both of the
two additional alternative methods of communication-writing or
electronic communication-for the recipient of the notification to
communicate with the sender. Neither of the two additional methods
of communication is required to be included.
(6) In item {7}, include and complete the method or
methods for the explanation-writing, writing or electronic record,
or electronic record-included in item {5}.
(7) Include and complete item {8} only if a written
explanation is included in item {5} as a method for communicating
the explanation and the sender will charge the recipient for
another written explanation.
(8) In item {9}, include either the telephone number
or the address or both the telephone number and the address. In
addition, the sender may include and complete the additional method
of communication-electronic communication-for the recipient of the
notification to communicate with the sender. The additional method
of electronic communication is not required to be included.
(9) If item {10} does not apply, insert "None" after
"agreement:".
SECTION 9.45. Section 9.615(a), Business & Commerce Code,
is amended to read as follows:
(a) A secured party shall apply or pay over for application
the cash proceeds of disposition under Section 9.610 in the
following order to:
(1) the reasonable expenses of retaking, holding,
preparing for disposition, processing, and disposing and, to the
extent provided for by agreement and not prohibited by law,
reasonable attorney's fees and legal expenses incurred by the
secured party;
(2) the satisfaction of obligations secured by the
security interest or agricultural lien under which the disposition
is made;
(3) the satisfaction of obligations secured by any
subordinate security interest in or other subordinate lien on the
collateral if:
(A) the secured party receives from the holder of
the subordinate security interest or other lien a signed [an
authenticated] demand for proceeds before distribution of the
proceeds is completed; and
(B) in a case in which a consignor has an interest
in the collateral, the subordinate security interest or other lien
is senior to the interest of the consignor; and
(4) a secured party that is a consignor of the
collateral if the secured party receives from the consignor a
signed [an authenticated] demand for proceeds before distribution
of the proceeds is completed.
SECTION 9.46. Sections 9.616(a), (b), and (c), Business &
Commerce Code, are amended to read as follows:
(a) In this section:
(1) "Explanation" means a record [writing] that:
(A) states the amount of the surplus or
deficiency;
(B) provides an explanation in accordance with
Subsection (c) of how the secured party calculated the surplus or
deficiency;
(C) states, if applicable, that future debits,
credits, charges, including additional credit service charges or
interest, rebates, and expenses may affect the amount of the
surplus or deficiency; and
(D) provides a telephone number or mailing
address from which additional information concerning the
transaction is available.
(2) "Request" means a record:
(A) signed [authenticated] by a debtor or
consumer obligor;
(B) requesting that the recipient provide an
explanation; and
(C) sent after disposition of the collateral
under Section 9.610.
(b) In a consumer-goods transaction in which the debtor is
entitled to a surplus or a consumer obligor is liable for a
deficiency under Section 9.615, the secured party shall:
(1) send an explanation to the debtor or consumer
obligor, as applicable, after the disposition and:
(A) before or when the secured party accounts to
the debtor and pays any surplus or first makes [written] demand in a
record on the consumer obligor after the disposition for payment of
the deficiency; and
(B) within 14 days after receipt of a request; or
(2) in the case of a consumer obligor who is liable for
a deficiency, within 14 days after receipt of a request, send to the
consumer obligor a record waiving the secured party's right to a
deficiency.
(c) To comply with Subsection (a)(1)(B), an explanation [a
writing] must provide the following information in the following
order:
(1) the aggregate amount of obligations secured by the
security interest under which the disposition was made and, if the
amount reflects a rebate of unearned interest or credit service
charge, an indication of that fact, calculated as of a specified
date:
(A) if the secured party takes or receives
possession of the collateral after default, not more than 35 days
before the secured party takes or receives possession; or
(B) if the secured party takes or receives
possession of the collateral before default or does not take
possession of the collateral, not more than 35 days before the
disposition;
(2) the amount of proceeds of the disposition;
(3) the aggregate amount of the obligations after
deducting the amount of proceeds;
(4) the amount, in the aggregate or by type, and types
of expenses, including expenses of retaking, holding, preparing for
disposition, processing, and disposing of the collateral, and
attorney's fees secured by the collateral which are known to the
secured party and relate to the current disposition;
(5) the amount, in the aggregate or by type, and types
of credits, including rebates of interest or credit service
charges, to which the obligor is known to be entitled and which are
not reflected in the amount in Subdivision (1); and
(6) the amount of the surplus or deficiency.
SECTION 9.47. Section 9.619(a), Business & Commerce Code,
is amended to read as follows:
(a) In this section, "transfer statement" means a record
signed [authenticated] by a secured party stating:
(1) that the debtor has defaulted in connection with
an obligation secured by specified collateral;
(2) that the secured party has exercised its
post-default remedies with respect to the collateral;
(3) that, by reason of the exercise, a transferee has
acquired the rights of the debtor in the collateral; and
(4) the name and mailing address of the secured party,
debtor, and transferee.
SECTION 9.48. Sections 9.620(a), (b), (c), and (f),
Business & Commerce Code, are amended to read as follows:
(a) Except as otherwise provided in Subsection (g), a
secured party may accept collateral in full or partial satisfaction
of the obligation it secures only if:
(1) the debtor consents to the acceptance under
Subsection (c);
(2) the secured party does not receive, within the
time set forth in Subsection (d), a notification of objection to the
proposal signed [authenticated] by:
(A) a person to which the secured party was
required to send a proposal under Section 9.621; or
(B) any other person, other than the debtor,
holding an interest in the collateral subordinate to the security
interest that is the subject of the proposal;
(3) if the collateral is consumer goods, the
collateral is not in the possession of the debtor when the debtor
consents to the acceptance; and
(4) Subsection (e) does not require the secured party
to dispose of the collateral or the debtor waives the requirement
pursuant to Section 9.624.
(b) A purported or apparent acceptance of collateral under
this section is ineffective unless:
(1) the secured party consents to the acceptance in a
signed [an authenticated] record or sends a proposal to the debtor;
and
(2) the conditions of Subsection (a) are met.
(c) For purposes of this section:
(1) a debtor consents to an acceptance of collateral
in partial satisfaction of the obligation it secures only if the
debtor agrees to the terms of the acceptance in a record signed
[authenticated] after default; and
(2) a debtor consents to an acceptance of collateral
in full satisfaction of the obligation it secures only if the debtor
agrees to the terms of the acceptance in a record signed
[authenticated] after default or the secured party:
(A) sends to the debtor after default a proposal
that is unconditional or subject only to a condition that
collateral not in the possession of the secured party be preserved
or maintained;
(B) in the proposal, proposes to accept
collateral in full satisfaction of the obligation it secures; and
(C) does not receive a notification of objection
signed [authenticated] by the debtor within 20 days after the
proposal is sent.
(f) To comply with Subsection (e), the secured party shall
dispose of the collateral:
(1) within 90 days after taking possession; or
(2) within any longer period to which the debtor and
all secondary obligors have agreed in an agreement to that effect
entered into and signed [authenticated] after default.
SECTION 9.49. Section 9.621(a), Business & Commerce Code,
is amended to read as follows:
(a) A secured party that desires to accept collateral in
full or partial satisfaction of the obligation it secures shall
send its proposal to:
(1) any person from which the secured party has
received, before the debtor consented to the acceptance, a signed
[an authenticated] notification of a claim of an interest in the
collateral;
(2) any other secured party or lienholder that, 10
days before the debtor consented to the acceptance, held a security
interest in or other lien on the collateral perfected by the filing
of a financing statement that:
(A) identified the collateral;
(B) was indexed under the debtor's name as of
that date; and
(C) was filed in the office or offices in which to
file a financing statement against the debtor covering the
collateral as of that date; and
(3) any other secured party that, 10 days before the
debtor consented to the acceptance, held a security interest in the
collateral perfected by compliance with a statute, regulation, or
treaty described in Section 9.311(a).
SECTION 9.50. Section 9.624, Business & Commerce Code, is
amended to read as follows:
Sec. 9.624. WAIVER. (a) A debtor or secondary obligor may
waive the right to notification of disposition of collateral under
Section 9.611 only by an agreement to that effect entered into and
signed [authenticated] after default.
(b) A debtor may waive the right to require disposition of
collateral under Section 9.620(e) only by an agreement to that
effect entered into and signed [authenticated] after default.
(c) Except in a consumer-goods transaction, a debtor or
secondary obligor may waive the right to redeem collateral under
Section 9.623 only by an agreement to that effect entered into and
signed [authenticated] after default.
SECTION 9.51. Section 9.628, Business & Commerce Code, is
amended by amending Subsections (a) and (b) and adding Subsection
(f) to read as follows:
(a) Subject to Subsection (f), unless [Unless] a secured
party knows that a person is a debtor or obligor, knows the identity
of the person, and knows how to communicate with the person:
(1) the secured party is not liable to the person, or
to a secured party or lienholder that has filed a financing
statement against the person, for failure to comply with this
chapter; and
(2) the secured party's failure to comply with this
chapter does not affect the liability of the person for a
deficiency.
(b) Subject to Subsection (f), a [A] secured party is not
liable because of its status as secured party:
(1) to a person that is a debtor or obligor, unless the
secured party knows:
(A) that the person is a debtor or obligor;
(B) the identity of the person; and
(C) how to communicate with the person; or
(2) to a secured party or lienholder that has filed a
financing statement against a person, unless the secured party
knows:
(A) that the person is a debtor; and
(B) the identity of the person.
(f) Subsections (a) and (b) do not apply to limit the
liability of a secured party to a person if, at the time the secured
party obtains control of collateral that is a controllable account,
controllable electronic record, or controllable payment intangible
or at the time the security interest attaches to the collateral,
whichever is later:
(1) the person is a debtor or obligor; and
(2) the secured party knows that the information in
Subsection (b)(1)(A), (B), or (C) relating to the person is not
provided by the collateral, a record attached to or logically
associated with the collateral, or the system in which the
collateral is recorded.
ARTICLE 10. CONTROLLABLE ELECTRONIC RECORDS
SECTION 10.01. Title 1, Business & Commerce Code, is
amended by adding Chapters 12A and 12B to read as follows:
CHAPTER 12A. CONTROLLABLE ELECTRONIC RECORDS
Sec. 12A.101. TITLE. This chapter may be cited as Uniform
Commercial Code - Controllable Electronic Records.
Sec. 12A.102. DEFINITIONS. (a) In this chapter:
(1) "Controllable electronic record" means a record
stored in an electronic medium that can be subjected to control
under Section 12A.105. The term does not include a controllable
account, a controllable payment intangible, a deposit account, an
electronic copy of a record evidencing chattel paper, an electronic
document of title, electronic money, investment property, or a
transferable record.
(2) "Qualifying purchaser" means a purchaser of a
controllable electronic record or an interest in a controllable
electronic record that obtains control of the controllable
electronic record for value, in good faith, and without notice of a
claim of a property right in the controllable electronic record.
(3) "Transferable record" has the meaning provided for
that term in:
(A) Section 201(a)(1) of the Electronic
Signatures in Global and National Commerce Act, 15 U.S.C. Section
7021(a)(1), as amended; or
(B) Section 322.016(a) of this code.
(4) "Value" has the meaning provided in Section
3.303(a), as if references in that subsection to an "instrument"
were references to a controllable account, controllable electronic
record, or controllable payment intangible.
(b) The definitions in Chapter 9 of "account debtor,"
"controllable account," "controllable payment intangible,"
"chattel paper," "deposit account," "electronic money," and
"investment property" apply to this chapter.
(c) Chapter 1 contains general definitions and principles
of construction and interpretation applicable throughout this
chapter.
Sec. 12A.103. RELATION TO CHAPTER 9 AND CONSUMER LAWS. (a)
If there is conflict between this chapter and Chapter 9, Chapter 9
governs.
(b) A transaction subject to this chapter is subject to any
applicable rule of law that establishes a different rule for
consumers and to:
(1) Title 4, Finance Code; and
(2) Subchapter E, Chapter 17, of this code.
Sec. 12A.104. RIGHTS IN CONTROLLABLE ACCOUNT, CONTROLLABLE
ELECTRONIC RECORD, AND CONTROLLABLE PAYMENT INTANGIBLE. (a) This
section applies to the acquisition and purchase of rights in a
controllable account or controllable payment intangible, including
the rights and benefits under Subsections (c), (d), (e), (g), and
(h) of a purchaser and qualifying purchaser, in the same manner this
section applies to a controllable electronic record.
(b) To determine whether a purchaser of a controllable
account or a controllable payment intangible is a qualifying
purchaser, the purchaser obtains control of the account or payment
intangible if it obtains control of the controllable electronic
record that evidences the account or payment intangible.
(c) Except as provided in this section, law other than this
chapter determines whether a person acquires a right in a
controllable electronic record and the right the person acquires.
(d) A purchaser of a controllable electronic record
acquires all rights in the controllable electronic record that the
transferor had or had power to transfer, except that a purchaser of
a limited interest in a controllable electronic record acquires
rights only to the extent of the interest purchased.
(e) A qualifying purchaser acquires its rights in the
controllable electronic record free of a claim of a property right
in the controllable electronic record.
(f) Except as provided in Subsections (a) and (e) for a
controllable account and a controllable payment intangible or law
other than this chapter, a qualifying purchaser takes a right to
payment, right to performance, or other interest in property
evidenced by the controllable electronic record subject to a claim
of a property right in the right to payment, right to performance,
or other interest in property.
(g) An action may not be asserted against a qualifying
purchaser based on both a purchase by the qualifying purchaser of a
controllable electronic record and a claim of a property right in
another controllable electronic record, whether the action is
framed in conversion, replevin, constructive trust, equitable
lien, or other theory.
(h) Filing of a financing statement under Chapter 9 is not
notice of a claim of a property right in a controllable electronic
record.
Sec. 12A.105. CONTROL OF CONTROLLABLE ELECTRONIC RECORD.
(a) A person has control of a controllable electronic record if the
electronic record, a record attached to or logically associated
with the electronic record, or a system in which the electronic
record is recorded:
(1) gives the person:
(A) power to avail itself of substantially all
the benefit from the electronic record; and
(B) exclusive power, subject to Subsection (b),
to:
(i) prevent others from availing themselves
of substantially all the benefit from the electronic record; and
(ii) transfer control of the electronic
record to another person or cause another person to obtain control
of another controllable electronic record as a result of the
transfer of the electronic record; and
(2) enables the person readily to identify itself in
any way, including by name, identifying number, cryptographic key,
office, or account number, as having the powers specified in
Subdivision (1).
(b) Subject to Subsection (c), a power is exclusive under
Subsections (a)(1)(B)(i) and (ii) even if:
(1) the controllable electronic record, a record
attached to or logically associated with the electronic record, or
a system in which the electronic record is recorded limits the use
of the electronic record or has a protocol programmed to cause a
change, including a transfer or loss of control or a modification of
benefits afforded by the electronic record; or
(2) the power is shared with another person.
(c) A power of a person is not shared with another person
under Subsection (b)(2) and the person's power is not exclusive if:
(1) the person can exercise the power only if the power
also is exercised by the other person; and
(2) the other person:
(A) can exercise the power without exercise of
the power by the person; or
(B) is the transferor to the person of an
interest in the controllable electronic record or a controllable
account or controllable payment intangible evidenced by the
controllable electronic record.
(d) If a person has the powers specified in Subsections
(a)(1)(B)(i) and (ii), the powers are presumed to be exclusive.
(e) A person has control of a controllable electronic record
if another person, other than the transferor to the person of an
interest in the controllable electronic record or a controllable
account or controllable payment intangible evidenced by the
controllable electronic record:
(1) has control of the electronic record and
acknowledges that it has control on behalf of the person; or
(2) obtains control of the electronic record after
having acknowledged that it will obtain control of the electronic
record on behalf of the person.
(f) A person that has control under this section is not
required to acknowledge that it has control on behalf of another
person.
(g) If a person acknowledges that it has or will obtain
control on behalf of another person, unless the person otherwise
agrees or law other than this chapter or Chapter 9 otherwise
provides, the person does not owe any duty to the other person and
is not required to confirm the acknowledgment to any other person.
Sec. 12A.106. DISCHARGE OF ACCOUNT DEBTOR ON CONTROLLABLE
ACCOUNT OR CONTROLLABLE PAYMENT INTANGIBLE. (a) An account debtor
on a controllable account or controllable payment intangible may
discharge its obligation by paying:
(1) the person having control of the controllable
electronic record that evidences the controllable account or
controllable payment intangible; or
(2) except as provided in Subsection (b), a person
that formerly had control of the controllable electronic record.
(b) Subject to Subsection (d), the account debtor may not
discharge its obligation by paying a person that formerly had
control of the controllable electronic record if the account debtor
receives a notification that:
(1) is signed by a person that formerly had control or
the person to which control was transferred;
(2) reasonably identifies the controllable account or
controllable payment intangible;
(3) notifies the account debtor that control of the
controllable electronic record that evidences the controllable
account or controllable payment intangible was transferred;
(4) identifies the transferee, in any reasonable way,
including by name, identifying number, cryptographic key, office,
or account number; and
(5) provides a commercially reasonable method by which
the account debtor is to pay the transferee.
(c) After receipt of a notification that complies with
Subsection (b), the account debtor may discharge its obligation by
paying in accordance with the notification and may not discharge
the obligation by paying a person that formerly had control.
(d) Subject to Subsection (h), notification is ineffective
under Subsection (b):
(1) unless, before the notification is sent, the
account debtor and the person that, at that time, had control of the
controllable electronic record that evidences the controllable
account or controllable payment intangible agree in a signed record
to a commercially reasonable method by which a person may furnish
reasonable proof that control has been transferred;
(2) to the extent an agreement between the account
debtor and seller of a payment intangible limits the account
debtor's duty to pay a person other than the seller and the
limitation is effective under law other than this chapter; or
(3) at the option of the account debtor, if the
notification notifies the account debtor to:
(A) divide a payment;
(B) make less than the full amount of an
installment or other periodic payment; or
(C) pay any part of a payment by more than one
method or to more than one person.
(e) Subject to Subsection (h), if requested by the account
debtor, the person giving the notification under Subsection (b)
seasonably shall furnish reasonable proof, using the method in the
agreement referred to in Subsection (d)(1), that control of the
controllable electronic record has been transferred. Unless the
person complies with the request, the account debtor may discharge
its obligation by paying a person that formerly had control, even if
the account debtor has received a notification under Subsection
(b).
(f) A person furnishes reasonable proof under Subsection
(e) that control has been transferred if the person demonstrates,
using the method in the agreement referred to in Subsection (d)(1),
that the transferee has the power to:
(1) avail itself of substantially all the benefit from
the controllable electronic record;
(2) prevent others from availing themselves of
substantially all the benefit from the controllable electronic
record; and
(3) transfer the powers specified in Subdivisions (1)
and (2) to another person.
(g) Subject to Subsection (h), an account debtor may not
waive or vary its rights under Subsections (d)(1) and (e) or its
option under Subsection (d)(3).
(h) This section is subject to law other than this chapter
which establishes a different rule for an account debtor who is an
individual and who incurred the obligation primarily for personal,
family, or household purposes.
Sec. 12A.107. GOVERNING LAW. (a) Except as provided in
Subsection (b), the local law of a controllable electronic record's
jurisdiction governs a matter covered by this chapter.
(b) For a controllable electronic record that evidences a
controllable account or controllable payment intangible, the local
law of the controllable electronic record's jurisdiction governs a
matter covered by Section 12A.106 unless an effective agreement
determines that the local law of another jurisdiction governs.
(c) The following rules determine a controllable electronic
record's jurisdiction under this section:
(1) If the controllable electronic record, or a record
attached to or logically associated with the controllable
electronic record and readily available for review, expressly
provides that a particular jurisdiction is the controllable
electronic record's jurisdiction for purposes of this chapter or
this title, that jurisdiction is the controllable electronic
record's jurisdiction.
(2) If Subdivision (1) does not apply and the rules of
the system in which the controllable electronic record is recorded
are readily available for review and expressly provide that a
particular jurisdiction is the controllable electronic record's
jurisdiction for purposes of this chapter or this title, that
jurisdiction is the controllable electronic record's jurisdiction.
(3) If Subdivisions (1) and (2) do not apply and the
controllable electronic record, or a record attached to or
logically associated with the controllable electronic record and
readily available for review, expressly provides that the
controllable electronic record is governed by the law of a
particular jurisdiction, that jurisdiction is the controllable
electronic record's jurisdiction.
(4) If Subdivisions (1), (2), and (3) do not apply and
the rules of the system in which the controllable electronic record
is recorded are readily available for review and expressly provide
that the controllable electronic record or the system is governed
by the law of a particular jurisdiction, that jurisdiction is the
controllable electronic record's jurisdiction.
(5) If Subdivisions (1) through (4) do not apply, the
controllable electronic record's jurisdiction is the District of
Columbia.
(d) If Subsection (c)(5) applies and Chapter 12 is not in
effect in the District of Columbia without material modification,
the governing law for a matter covered by this chapter is the law of
the District of Columbia as though Chapter 12 were in effect in the
District of Columbia without material modification. In this
subsection, "Chapter 12" means Chapter 12 of Uniform Commercial
Code Amendments (2022).
(e) To the extent Subsections (a) and (b) provide that the
local law of the controllable electronic record's jurisdiction
governs a matter covered by this chapter, that law governs even if
the matter or a transaction to which the matter relates does not
bear any relation to the controllable electronic record's
jurisdiction.
CHAPTER 12B. TRANSITIONAL PROVISIONS FOR UNIFORM COMMERCIAL CODE
AMENDMENTS (2022)
SUBCHAPTER A. GENERAL PROVISIONS AND DEFINITIONS
Sec. 12B.101. TITLE. This chapter may be cited as
Transitional Provisions for Uniform Commercial Code Amendments
(2022).
Sec. 12B.102. DEFINITIONS. (a) In this chapter:
(1) "Adjustment date" means July 1, 2025.
(2) "Amending act" means the Act of the 88th
Legislature, Regular Session, 2023, that enacted this chapter.
(3) "Chapter 12A property" means a controllable
account, controllable electronic record, or controllable payment
intangible.
(4) "Repealed Chapter 12" means former Chapter 12 as
that chapter existed immediately before repeal by the amending act.
(b) The following definitions in other chapters of this
title apply to this chapter.
"Controllable account"Section 9.102.
"Controllable electronic record"Section 12A.102.
"Controllable payment intangible"Section 9.102.
"Electronic money"Section 9.102.
"Financing statement"Section 9.102.
(c) Chapter 1 contains general definitions and principles
of construction and interpretation applicable throughout this
chapter.
SUBCHAPTER B. GENERAL TRANSITIONAL PROVISION
Sec. 12B.201. SAVING CLAUSE. Except as provided in
Subchapter C, a transaction validly entered into before September
1, 2023, and the rights, duties, and interests flowing from the
transaction remain valid thereafter and may be terminated,
completed, consummated, or enforced as required or permitted by law
other than this title or, if applicable, this title, as though the
amending act had not taken effect.
SUBCHAPTER C. TRANSITIONAL PROVISIONS FOR CHAPTERS 9, 12, and 12A
Sec. 12B.301. SAVING CLAUSE. (a) Except as provided in
this subchapter, Chapter 9, as amended by the amending act, and
Chapter 12A, as added by the amending act, apply to a transaction,
lien, or other interest in property, even if the transaction, lien,
or interest was entered into, created, or acquired before September
1, 2023.
(b) Except as provided in Subsection (c) and Sections
12B.302 through 12B.306:
(1) a transaction, lien, or interest in property that
was validly entered into, created, or transferred before September
1, 2023, and was not governed by this title, but would be subject to
Chapter 9, as amended by the amending act, or Chapter 12A, as added
by the amending act, if it had been entered into, created, or
transferred on or after September 1, 2023, including the rights,
duties, and interests flowing from the transaction, lien, or
interest, remains valid on and after September 1, 2023; and
(2) the transaction, lien, or interest in property may
be terminated, completed, consummated, and enforced as required or
permitted by the amending act or by the law that would apply if the
amending act had not taken effect.
(c) Notwithstanding any other provision of this chapter:
(1) virtual currency under repealed Chapter 12 and
Chapter 9, as that chapter existed before its amendment by the
amending act, constitutes a controllable electronic record under
Chapter 9, as amended by the amending act, and Chapter 12A, as added
by the amending act; and
(2) control of a virtual currency accomplished under
repealed Chapter 12 constitutes control of a controllable
electronic record under Chapter 9, as amended by the amending act,
and Chapter 12A, as added by the amending act.
(d) The amending act does not affect an action, case, or
proceeding commenced before September 1, 2023.
Sec. 12B.302. SECURITY INTEREST PERFECTED BEFORE EFFECTIVE
DATE. (a) A security interest that is enforceable and perfected
immediately before September 1, 2023, is a perfected security
interest under this title, as amended by the amending act, if, on
September 1, 2023, the requirements for enforceability and
perfection under this title, as amended by the amending act, are
satisfied without further action.
(b) If a security interest is enforceable and perfected
immediately before September 1, 2023, but the requirements for
enforceability or perfection under this title, as amended by the
amending act, are not satisfied on September 1, 2023, the security
interest:
(1) is a perfected security interest until the earlier
of the time perfection would have ceased under the law in effect
immediately before September 1, 2023, or the adjustment date;
(2) remains enforceable thereafter only if the
security interest satisfies the requirements for enforceability
under Section 9.203, as amended by the amending act, before the
adjustment date; and
(3) remains perfected thereafter only if the
requirements for perfection under the title, as amended by the
amending act, are satisfied before the time specified in
Subdivision (1).
Sec. 12B.303. SECURITY INTEREST UNPERFECTED BEFORE
EFFECTIVE DATE. A security interest that is enforceable
immediately before September 1, 2023, but is unperfected at that
time:
(1) remains an enforceable security interest until the
adjustment date;
(2) remains enforceable thereafter if the security
interest becomes enforceable under Section 9.203, as amended by the
amending act, on September 1, 2023, or before the adjustment date;
and
(3) becomes perfected:
(A) without further action, on September 1, 2023,
if the requirements for perfection under this title, as amended by
the amending act, are satisfied before or at that time; or
(B) when the requirements for perfection are
satisfied if the requirements are satisfied after that time.
Sec. 12B.304. EFFECTIVENESS OF ACTION TAKEN BEFORE
EFFECTIVE DATE. (a) If action, other than the filing of a
financing statement, is taken before September 1, 2023, and the
action would have resulted in perfection of the security interest
had the security interest become enforceable before September 1,
2023, the action is effective to perfect a security interest that
attaches under this title, as amended by the amending act, before
the adjustment date. An attached security interest becomes
unperfected on the adjustment date unless the security interest
becomes a perfected security interest under this title, as amended
by the amending act, before the adjustment date.
(b) The filing of a financing statement before September 1,
2023, is effective to perfect a security interest on September 1,
2023, to the extent the filing would satisfy the requirements for
perfection under this title, as amended by the amending act.
(c) The taking of an action before September 1, 2023, is
sufficient for the enforceability of a security interest on
September 1, 2023, if the action would satisfy the requirements for
enforceability under this title, as amended by the amending act.
Sec. 12B.305. PRIORITY. (a) Subject to Subsections (b) and
(c), this title, as amended by the amending act, determines the
priority of conflicting claims to collateral.
(b) Subject to Subsection (c), if the priorities of claims
to collateral were established before September 1, 2023, Chapter 9,
as in effect immediately before September 1, 2023, determines
priority.
(c) On the adjustment date, to the extent the priorities
determined by Chapter 9, as amended by the amending act, modify the
priorities established before September 1, 2023, the priorities of
claims to Chapter 12A property and electronic money established
before September 1, 2023, cease to apply.
Sec. 12B.306. PRIORITY OF CLAIMS WHEN PRIORITY RULES OF
CHAPTER 9 DO NOT APPLY. (a) Subject to Subsections (b) and (c),
Chapter 12A determines the priority of conflicting claims to
Chapter 12A property when the priority rules of Chapter 9, as
amended by the amending act, do not apply.
(b) Subject to Subsection (c), when the priority rules of
Chapter 9, as amended by the amending act, do not apply and the
priorities of claims to Chapter 12A property were established
before September 1, 2023, law other than Chapter 12A determines
priority.
(c) When the priority rules of Chapter 9, as amended by the
amending act, do not apply, to the extent the priorities determined
by this title, as amended by the amending act, modify the priorities
established before September 1, 2023, the priorities of claims to
Chapter 12A property established before September 1, 2023, cease to
apply on the adjustment date.
ARTICLE 11. REPEALERS
SECTION 11.01. The following provisions of Title 1,
Business & Commerce Code, are repealed:
(1) Section 7.102(a)(12);
(2) Sections 9.102(a)(7), (31), (75), and (79);
(3) Section 9.1071; and
(4) Chapter 12.
ARTICLE 12. EFFECTIVE DATE
SECTION 12.01. This Act takes effect September 1, 2023.
Appropriate person Section 8.107
Control Section 8.106
Controllable account Section 9.102
Controllable electronic record Section 12A.102
Controllable payment intangible Section 9.102
Delivery Section 8.301
Investment company security Section 8.103
Issuer Section 8.201
Overissue Section 8.210
Protected purchaser Section 8.303
Securities account Section 8.501
"Applicant" Section 5.102.
"Beneficiary" Section 5.102.
"Broker" Section 8.102.
"Certificated security" Section 8.102.
"Check" Section 3.104.
"Clearing corporation" Section 8.102.
"Contract for sale" Section 2.106.
["Control" (with respect to a ] [Section 7.106.]
[] [Section 7.106.]
"Controllable electronic record" Section 12A.102.
"Customer" Section 4.104.
"Entitlement holder" Section 8.102.
"Financial asset" Section 8.102.
"Holder in due course" Section 3.302.
"Issuer" (with respect to a letter of credit
"Issuer" (with respect to a letter of credit
or letter-of-credit right) Section 5.102.
"Issuer" (with respect to a security) Section 8.201.
"Issuer" (with respect to a security) Section 8.201.
"Lease" Section 2A.103.
"Lease agreement" Section 2A.103.
"Lease contract" Section 2A.103.
"Leasehold interest" Section 2A.103.
"Lessee" Section 2A.103.
"Lessee in ordinary course of business" Section 2A.103.
"Lessee in ordinary course of business" Section 2A.103.
"Lessor" Section 2A.103.
"Lessor's residual interest" Section 2A.103.
"Letter of credit" Section 5.102.
"Merchant" Section 2.104.
"Negotiable instrument" Section 3.104.
"Nominated person" Section 5.102.
"Note" Section 3.104.
"Proceeds of a letter of credit" Section 5.114.
"Protected purchaser" Section 8.303.
"Prove" Section 3.103.
"Qualifying purchaser" Section 12A.102.
"Sale" Section 2.106.
"Securities account" Section 8.501.
"Securities intermediary" Section 8.102.
"Security" Section 8.102.
"Security certificate" Section 8.102.
"Security entitlement" Section 8.102.
"Uncertificated security" Section 8.102.
["Virtual currency"] [Section 12.001.]