S T A T E O F N E W Y O R K
________________________________________________________________________
7244
2023-2024 Regular Sessions
I N S E N A T E
May 19, 2023
___________
Introduced by Sen. HOYLMAN-SIGAL -- read twice and ordered printed, and
when printed to be committed to the Committee on Judiciary
AN ACT to amend the uniform commercial code, in relation to controllable
electronic records
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The uniform commercial code is amended by adding a new
article 12 to read as follows:
ARTICLE 12
CONTROLLABLE ELECTRONIC RECORDS
PART 1
GENERAL PROVISIONS AND DEFINITIONS.
SECTION 12--101. SHORT TITLE.
THIS ARTICLE MAY BE CITED AS UNIFORM COMMERCIAL CODE--CONTROLLABLE
ELECTRONIC RECORDS.
SECTION 12--102. DEFINITIONS.
(A) IN THIS ARTICLE, UNLESS THE CONTEXT OTHERWISE REQUIRES:
(1) "CONTROLLABLE ELECTRONIC RECORD" MEANS A RECORD STORED IN AN ELEC-
TRONIC MEDIUM THAT CAN BE SUBJECTED TO CONTROL UNDER SECTION 12-105. 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 ELEC-
TRONIC 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 CONTROL-
LABLE ELECTRONIC RECORD. IN THE CASE OF A CONTROLLABLE ELECTRONIC RECORD
THAT WOULD BE A "DRAFT" OR A "NOTE", AS THOSE TERMS ARE DEFINED IN
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11556-01-3
S. 7244 2
SECTION 3--104, IF THE CONTROLLABLE ELECTRONIC RECORD WERE A SIGNED
WRITING, SECTION 3--304(7) APPLIES TO THE DETERMINATION OF WHETHER A
PURCHASER OBTAINS CONTROL OF THE CONTROLLABLE ELECTRONIC RECORD WITHOUT
NOTICE OF A CLAIM OF A PROPERTY RIGHT IN IT AS IF THE REFERENCE IN THAT
SUBSECTION TO "THE INSTRUMENT" REFERRED TO THE CONTROLLABLE ELECTRONIC
RECORD. THE PRECEDING SENTENCE APPLIES EVEN IF THE CONTROLLABLE ELEC-
TRONIC RECORD CONTAINS A TERM BY WHICH AN OBLIGOR OR ACCOUNT DEBTOR ON
THE CONTROLLABLE ACCOUNT OR CONTROLLABLE PAYMENT INTANGIBLE EVIDENCED BY
THE CONTROLLABLE ELECTRONIC RECORD WAIVES OR AGREES NOT TO ASSERT
AGAINST AN ASSIGNEE OF THE CONTROLLABLE ELECTRONIC RECORD ANY CLAIM OR
DEFENSE THAT THE OBLIGOR OR ACCOUNT DEBTOR MAY HAVE AGAINST THE ASSIG-
NOR.
(3) "TRANSFERABLE RECORD" MEANS AN ELECTRONIC RECORD THAT EITHER:
(A) IS A "TRANSFERABLE RECORD" UNDER SECTION 201(A)(1) OF THE ELEC-
TRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT, 15 U.S.C.
SECTION 7021(A)(1), AS AMENDED; OR,
(B) IS GOVERNED BY THE LAW OF ANY STATE THAT HAS ENACTED OR ADOPTED
THE UNIFORM ELECTRONIC TRANSACTIONS ACT SUBSTANTIALLY AS APPROVED AND
RECOMMENDED FOR ENACTMENT IN ALL THE STATES BY THE NATIONAL CONFERENCE
OF COMMISSIONERS ON UNIFORM STATE LAWS IN 1999 AND IS A "TRANSFERABLE
RECORD" UNDER SECTION 16(A) OF THAT ACT.
(4) "VALUE" HAS THE MEANING PROVIDED IN SECTION 3-303(A), AS IF REFER-
ENCES IN THAT SUBSECTION TO AN "INSTRUMENT" WERE REFERENCES TO A
CONTROLLABLE ACCOUNT, CONTROLLABLE ELECTRONIC RECORD, OR CONTROLLABLE
PAYMENT INTANGIBLE.
(B) DEFINITIONS IN OTHER ARTICLES. THE FOLLOWING DEFINITIONS IN OTHER
ARTICLES APPLY TO THIS ARTICLE:
(1) THE DEFINITIONS IN ARTICLE 9 APPLY TO THIS ARTICLE.
(2) ARTICLE 1 CONTAINS GENERAL DEFINITIONS AND PRINCIPLES OF
CONSTRUCTION AND INTERPRETATION APPLICABLE THROUGHOUT THIS ARTICLE.
SECTION 12--103. RELATION TO ARTICLE 9 AND CONSUMER LAWS.
(A) ARTICLE 9 GOVERNS IN CASE OF CONFLICT. IF THERE IS CONFLICT
BETWEEN THIS ARTICLE AND ARTICLE 9, ARTICLE 9 GOVERNS.
(B) APPLICABLE CONSUMER LAW AND OTHER LAWS. A TRANSACTION SUBJECT TO
THIS ARTICLE IS SUBJECT TO ANY APPLICABLE RULE OF LAW THAT ESTABLISHES A
DIFFERENT RULE FOR CONSUMERS.
(C) IF AN ELECTRONIC RECORD IS A CONTROLLABLE ELECTRONIC RECORD UNDER
THIS ARTICLE, SECTION 307.2 OF THE ELECTRONIC SIGNATURES AND RECORDS ACT
(STATE TECHNOLOGY LAW 301 ET SEQ.) SHALL NOT IMPAIR THE ENFORCEABILITY
OR EFFECTIVENESS OF SUCH ELECTRONIC RECORD UNDER THIS ARTICLE NOR SHALL
SUCH ACT CAUSE SUCH CONTROLLABLE ELECTRONIC RECORD TO BE GOVERNED BY
ARTICLE 3 RATHER THAN THIS ARTICLE, EXCEPT TO THE EXTENT THE ELECTRONIC
RECORD EXPRESSLY PROVIDES OTHERWISE OR WAS CREATED PRIOR TO THE EFFEC-
TIVE DATE OF THIS ARTICLE.
PART 2
TITLE AND DEFINITIONS.
SECTION 12--104. RIGHTS IN CONTROLLABLE ACCOUNT, CONTROLLABLE ELECTRONIC
RECORD, AND CONTROLLABLE PAYMENT INTANGIBLE.
(A) APPLICABILITY OF SECTION TO CONTROLLABLE ACCOUNT AND CONTROLLABLE
PAYMENT INTANGIBLE. 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.
S. 7244 3
(B) CONTROL OF CONTROLLABLE ACCOUNT AND CONTROLLABLE PAYMENT INTANGI-
BLE. 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) APPLICABILITY OF OTHER LAW TO ACQUISITION OF RIGHTS. EXCEPT AS
PROVIDED IN THIS SECTION, LAW OTHER THAN THIS ARTICLE DETERMINES WHETHER
A PERSON ACQUIRES A RIGHT IN A CONTROLLABLE ELECTRONIC RECORD AND THE
RIGHT THE PERSON ACQUIRES.
(D) SHELTER PRINCIPLE AND PURCHASE OF LIMITED INTEREST. 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 ELEC-
TRONIC RECORD ACQUIRES RIGHTS ONLY TO THE EXTENT OF THE INTEREST
PURCHASED.
(E) RIGHTS OF QUALIFYING PURCHASER. 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) LIMITATION OF RIGHTS OF QUALIFYING PURCHASER IN OTHER PROPERTY.
EXCEPT AS PROVIDED IN SUBSECTIONS (A) AND (E) FOR A CONTROLLABLE ACCOUNT
AND A CONTROLLABLE PAYMENT INTANGIBLE OR LAW OTHER THAN THIS ARTICLE, 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) NO-ACTION PROTECTION FOR QUALIFYING PURCHASER. 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, EQUI-
TABLE LIEN, OR OTHER THEORY.
(H) FILING NOT NOTICE. FILING OF A FINANCING STATEMENT UNDER ARTICLE 9
IS NOT NOTICE OF A CLAIM OF A PROPERTY RIGHT IN A CONTROLLABLE ELECTRON-
IC RECORD.
SECTION 12--105. CONTROL OF CONTROLLABLE ELECTRONIC RECORD.
(A) GENERAL RULE: CONTROL OF CONTROLLABLE ELECTRONIC RECORD. 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 ELECTRON-
IC RECORD AS A RESULT OF THE TRANSFER OF THE ELECTRONIC RECORD; AND
(2) ENABLES THE PERSON READILY TO IDENTIFY ITSELF IN ANY WAY, INCLUD-
ING BY NAME, IDENTIFYING NUMBER, CRYPTOGRAPHIC KEY, OFFICE, OR ACCOUNT
NUMBER, AS HAVING THE POWERS SPECIFIED IN PARAGRAPH (1).
(B) MEANING OF EXCLUSIVE. SUBJECT TO SUBSECTION (C), A POWER IS EXCLU-
SIVE UNDER SUBSECTION (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
S. 7244 4
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) WHEN POWER NOT SHARED WITH ANOTHER PERSON. 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 EXER-
CISED 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) PRESUMPTION OF EXCLUSIVITY OF CERTAIN POWERS. IF A PERSON HAS THE
POWERS SPECIFIED IN SUBSECTION (A)(1)(B)(I) AND (II), THE POWERS ARE
PRESUMED TO BE EXCLUSIVE.
(E) CONTROL THROUGH ANOTHER PERSON. A PERSON HAS CONTROL OF A CONTROL-
LABLE 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) NO REQUIREMENT TO ACKNOWLEDGE. A PERSON THAT HAS CONTROL UNDER
THIS SECTION IS NOT REQUIRED TO ACKNOWLEDGE THAT IT HAS CONTROL ON
BEHALF OF ANOTHER PERSON.
(G) NO DUTIES OR CONFIRMATION. 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 ARTICLE OR ARTICLE 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.
SECTION 12--106. DISCHARGE OF ACCOUNT DEBTOR ON CONTROLLABLE ACCOUNT OR
CONTROLLABLE PAYMENT INTANGIBLE.
(A) DISCHARGE OF ACCOUNT DEBTOR. 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 INTANGI-
BLE; OR
(2) EXCEPT AS PROVIDED IN SUBSECTION (B), A PERSON THAT FORMERLY HAD
CONTROL OF THE CONTROLLABLE ELECTRONIC RECORD.
(B) CONTENT AND EFFECT OF NOTIFICATION. 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;
S. 7244 5
(3) NOTIFIES THE ACCOUNT DEBTOR THAT CONTROL OF THE CONTROLLABLE ELEC-
TRONIC 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) DISCHARGE FOLLOWING EFFECTIVE NOTIFICATION. 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) WHEN NOTIFICATION INEFFECTIVE. SUBJECT TO SUBSECTION (H), NOTIFI-
CATION 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 ELECTRON-
IC 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 ARTICLE; 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) PROOF OF TRANSFER OF CONTROL. 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) WHAT CONSTITUTES REASONABLE PROOF. 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 CONTROLLA-
BLE 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 PARAGRAPHS (1) AND (2) TO ANOTHER
PERSON.
(G) RIGHTS NOT WAIVABLE. 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) RULE FOR INDIVIDUAL UNDER OTHER LAW. THIS SECTION IS SUBJECT TO
LAW OTHER THAN THIS ARTICLE WHICH ESTABLISHES A DIFFERENT RULE FOR AN
S. 7244 6
ACCOUNT DEBTOR WHO IS AN INDIVIDUAL AND WHO INCURRED THE OBLIGATION
PRIMARILY FOR PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES.
SECTION 12--107. GOVERNING LAW.
(A) GOVERNING LAW: GENERAL RULE. EXCEPT AS PROVIDED IN SUBSECTION (B),
THE LOCAL LAW OF A CONTROLLABLE ELECTRONIC RECORD'S JURISDICTION GOVERNS
A MATTER COVERED BY THIS ARTICLE.
(B) GOVERNING LAW: SECTION 12--106. FOR A CONTROLLABLE ELECTRONIC
RECORD THAT EVIDENCES A CONTROLLABLE ACCOUNT OR CONTROLLABLE PAYMENT
INTANGIBLE, THE LOCAL LAW OF THE CONTROLLABLE ELECTRONIC RECORD'S JURIS-
DICTION GOVERNS A MATTER COVERED BY SECTION 12--106 UNLESS AN EFFECTIVE
AGREEMENT DETERMINES THAT THE LOCAL LAW OF ANOTHER JURISDICTION GOVERNS.
(C) CONTROLLABLE ELECTRONIC RECORD'S JURISDICTION. 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 ARTICLE OR THIS ACT, THAT JURISDICTION IS THE CONTROLLABLE ELEC-
TRONIC RECORD'S JURISDICTION.
(2) IF PARAGRAPH (1) DOES NOT APPLY AND THE RULES OF THE SYSTEM IN
WHICH THE CONTROLLABLE ELECTRONIC RECORD IS RECORDED ARE READILY AVAIL-
ABLE FOR REVIEW AND EXPRESSLY PROVIDE THAT A PARTICULAR JURISDICTION IS
THE CONTROLLABLE ELECTRONIC RECORD'S JURISDICTION FOR PURPOSES OF THIS
ARTICLE OR THIS ACT, THAT JURISDICTION IS THE CONTROLLABLE ELECTRONIC
RECORD'S JURISDICTION.
(3) IF PARAGRAPHS (1) AND (2) DO NOT APPLY AND THE CONTROLLABLE ELEC-
TRONIC 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 PARAGRAPHS (1), (2), AND (3) DO NOT APPLY AND THE RULES OF THE
SYSTEM IN WHICH THE CONTROLLABLE ELECTRONIC RECORD IS RECORDED ARE READ-
ILY 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 PARAGRAPHS (1) THROUGH (4) DO NOT APPLY, THE CONTROLLABLE ELEC-
TRONIC RECORD'S JURISDICTION IS THE DISTRICT OF COLUMBIA.
(D) APPLICABILITY OF ARTICLE 12. IF SUBSECTION (C)(5) APPLIES AND
ARTICLE 12 IS NOT IN EFFECT IN THE DISTRICT OF COLUMBIA WITHOUT MATERIAL
MODIFICATION, THE GOVERNING LAW FOR A MATTER COVERED BY THIS ARTICLE IS
THE LAW OF THE DISTRICT OF COLUMBIA AS THOUGH ARTICLE 12 WERE IN EFFECT
IN THE DISTRICT OF COLUMBIA WITHOUT MATERIAL MODIFICATION. IN THIS
SUBSECTION, "ARTICLE 12" MEANS ARTICLE 12 OF UNIFORM COMMERCIAL CODE
AMENDMENTS (2022).
(E) RELATION OF MATTER OR TRANSACTION TO CONTROLLABLE ELECTRONIC
RECORD'S JURISDICTION NOT NECESSARY. 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 ARTICLE, 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.
(F) RIGHTS OF PURCHASERS DETERMINED AT TIME OF PURCHASE. THE RIGHTS
ACQUIRED UNDER SECTION 12--104 BY A PURCHASER OR QUALIFYING PURCHASER
S. 7244 7
ARE GOVERNED BY THE LAW APPLICABLE UNDER THIS SECTION AT THE TIME OF
PURCHASE.
§ 2. This act shall take effect immediately.