S. 1840--A 2
(C) the 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 organiza-
tion or by agreement between two or more countries. THE TERM DOES NOT
INCLUDE AN ELECTRONIC RECORD THAT IS A MEDIUM OF EXCHANGE RECORDED AND
TRANSFERABLE IN A SYSTEM THAT EXISTED AND OPERATED FOR THE MEDIUM OF
EXCHANGE BEFORE THE MEDIUM OF EXCHANGE WAS AUTHORIZED OR ADOPTED BY THE
GOVERNMENT.
(27) "Person" means an individual, corporation, business trust,
estate, trust, partnership, limited liability company, association,
joint venture, government, governmental subdivision, agency, [or instru-
mentality, public corporation,] or any other legal or commercial entity.
THE TERM INCLUDES A PROTECTED SERIES, HOWEVER DENOMINATED, OF AN ENTITY
IF THE PROTECTED SERIES IS ESTABLISHED UNDER LAW OTHER THAN THIS ACT
THAT LIMITS, OR LIMITS IF CONDITIONS SPECIFIED UNDER THE LAW ARE SATIS-
FIED, THE ABILITY OF A CREDITOR OF THE ENTITY OR OF ANY OTHER PROTECTED
SERIES OF THE ENTITY TO SATISFY A CLAIM FROM ASSETS OF THE PROTECTED
SERIES.
(36) "Send", in connection with a [writing,] record[, or notice] OR
NOTIFICATION means:
(A) to deposit in the mail [or], deliver for transmission, OR TRANSMIT
by any other usual means of communication with postage or cost of trans-
mission 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) [in any other way] to cause THE RECORD OR NOTIFICATION to be
received [any record or notice] within the time it would have [arrived]
BEEN RECEIVED if properly sent PURSUANT TO SUBPARAGRAPH (A).
(37) ["Signed" includes using any symbol executed or adopted with
present intention to adopt or accept a writing.] "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.
§ 2. Section 1--204 of the uniform commercial code, as added by chap-
ter 505 of the laws of 2014, is amended to read as follows:
Section 1--204. Value.
Except as otherwise provided in articles 3, 4, [and] 5, AND 12 OF THIS
ACT a person gives value for rights if the person acquires them:
(a) in return for a binding commitment to extend credit or for the
extension of immediately available credit, whether or not drawn upon and
whether or not a charge-back is provided for in the event of difficul-
ties in collection;
(b) as security for, or in total or partial satisfaction of, a preex-
isting claim;
(c) by accepting delivery under a preexisting contract for purchase;
or
(d) in return for any consideration sufficient to support a simple
contract.
§ 3. Subsection (c) of section 1--301 of the uniform commercial code,
as added by chapter 505 of the laws of 2014, is amended to read as
follows:
S. 1840--A 3
(c) If one of the following provisions of this act specifies the
applicable law, that provision governs and a contrary agreement is
effective only to the extent permitted by the law so specified:
(1) Section 2--402;
(2) Sections 2-A--105 and 2-A--106;
(3) Section 4--102;
(4) Section 4-A--507;
(5) Section 5--116;
(6) Section 8--110; [and]
(7) Sections 9--301 through 9--307; AND
(8) SECTION 12--107.
§ 4. Section 1--306 of the uniform commercial code, as added by chap-
ter 505 of the laws of 2014, is amended to read as follows:
Section 1--306. Waiver or 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 [an authenticated] A SIGNED record.
§ 5. Section 2--102 of the uniform commercial code is amended to read
as follows:
Section 2--102. Scope; Certain Security and Other Transactions Excluded
From This Article.
(1) Unless the context otherwise requires, AND EXCEPT AS PROVIDED IN
SUBSECTION (3), this Article applies to transactions in goods[; it does
not apply to any transaction which although in the form of an uncondi-
tional contract to sell or present sale is intended to operate only as a
security transaction nor does this Article impair or repeal any statute
regulating sales to consumers, farmers or other specified classes of
buyers] AND, IN THE CASE OF A HYBRID TRANSACTION, IT APPLIES TO THE
EXTENT PROVIDED IN SUBSECTION (2).
(2) IN A HYBRID TRANSACTION:
(A) IF THE SALE-OF-GOODS ASPECTS DO NOT PREDOMINATE, ONLY THE
PROVISIONS OF THIS ARTICLE WHICH RELATE PRIMARILY TO THE SALE-OF-GOODS
ASPECTS OF THE TRANSACTION APPLY, AND THE PROVISIONS THAT RELATE PRIMA-
RILY TO THE TRANSACTION AS A WHOLE DO NOT APPLY.
(B) IF THE SALE-OF-GOODS ASPECTS PREDOMINATE, THIS ARTICLE APPLIES TO
THE TRANSACTION BUT DOES NOT PRECLUDE APPLICATION IN APPROPRIATE CIRCUM-
STANCES OF OTHER LAW TO ASPECTS OF THE TRANSACTION WHICH DO NOT RELATE
TO THE SALE OF GOODS.
(3) THIS ARTICLE DOES NOT:
(A) APPLY TO A TRANSACTION THAT, EVEN THOUGH IN THE FORM OF AN UNCON-
DITIONAL CONTRACT TO SELL OR PRESENT SALE, OPERATES ONLY TO CREATE A
SECURITY INTEREST; OR
(B) IMPAIR OR REPEAL A STATUTE REGULATING SALES TO CONSUMERS, FARMERS,
OR OTHER SPECIFIED CLASSES OF BUYERS.
§ 6. Section 2--106 of the uniform commercial code is amended to read
as follows:
Section 2--106. Definitions. "Contract"; "Agreement"; "Contract for
Sale"; "Sale"; "Present Sale"; "Conforming" to
Contract; "Termination"; "Cancellation"; "HYBRID TRAN-
SACTION".
(1) In this Article, unless the context otherwise requires, "contract"
and "agreement" are limited to those relating to the present or future
sale of goods. "Contract for sale" includes both a present sale of goods
and a contract to sell goods at a future time. A "sale" consists in the
passing of title from the seller to the buyer for a price (Section
S. 1840--A 4
2--401). A "present sale" means a sale which is accomplished by the
making of the contract.
(2) Goods or conduct including any part of a performance are "conform-
ing" or conform to the contract when they are in accordance with the
obligations under the contract.
(3) "Termination" occurs when either party pursuant to a power created
by agreement or law puts an end to the contract otherwise than for its
breach. On "termination" all obligations which are still executory on
both sides are discharged but any right based on prior breach or
performance survives.
(4) "Cancellation" occurs when either party puts an end to the
contract for breach by the other and its effect is the same as that of
"termination" except that the cancelling party also retains any remedy
for breach of the whole contract or any unperformed balance.
(5) "HYBRID TRANSACTION" MEANS A SINGLE TRANSACTION INVOLVING A SALE
OF GOODS AND:
(A) THE PROVISION OF SERVICES;
(B) A LEASE OF OTHER GOODS; OR
(C) A SALE, LEASE, OR LICENSE OF PROPERTY OTHER THAN GOODS.
§ 7. Subsections 1 and 2 of section 2--201 of the uniform commercial
code are amended to read as follows:
(1) 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 [some writing] A RECORD sufficient to
indicate that a contract for sale has been made between the parties and
signed by the party against whom enforcement is sought or by [his] THE
PARTY'S authorized agent or broker. A [writing] RECORD is not insuffi-
cient because it omits or incorrectly states a term agreed upon but the
contract is not enforceable under this [paragraph] SUBSECTION beyond the
quantity of goods shown in [such writing] THE RECORD.
(2) Between merchants if within a reasonable time a [writing] RECORD
in confirmation of the contract and sufficient against the sender is
received and the party receiving it has reason to know its contents, it
satisfies the requirements of subsection (1) against [such] THE party
unless [written] notice IN A RECORD of objection to its contents is
given within ten days after it is received.
§ 8. Section 2--202 of the uniform commercial code, as amended by
chapter 505 of the laws of 2014, is amended to read as follows:
Section 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 [writing] RECORD intended by
the parties as a final expression of their agreement with respect to
such terms as are included therein may not be contradicted by evidence
of any prior agreement or of a contemporaneous oral agreement but may be
explained or supplemented
(a) by course of performance, course of dealing, or usage of trade
(Section 1--303); and
(b) by evidence of consistent additional terms unless the court finds
the [writing] RECORD to have been intended also as a complete and exclu-
sive statement of the terms of the agreement.
§ 9. Section 2--203 of the uniform commercial code is amended to read
as follows:
Section 2--203. Seals Inoperative.
The affixing of a seal to a [writing] RECORD evidencing a contract for
sale or an offer to buy or sell goods does not constitute the [writing]
S. 1840--A 5
RECORD a sealed instrument and the law with respect to sealed instru-
ments does not apply to such a contract or offer.
§ 10. Section 2--205 of the uniform commercial code is amended to read
as follows:
Section 2--205. Firm Offers.
An offer by a merchant to buy or sell goods in a signed [writing]
RECORD which by its terms gives assurance that it will be held open is
not revocable, for lack of consideration, during the time stated or if
no time is stated for a reasonable time, but in no event may such period
of irrevocability exceed three months; but any such term of assurance on
a form supplied by the offeree must be separately signed by the offeror.
§ 11. Subsection 2 of section 2--209 of the uniform commercial code is
amended to read as follows:
(2) 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 require-
ment on a form supplied by the merchant must be separately signed by the
other party.
§ 12. Section 2-A-102 of the uniform commercial code, as added by
chapter 114 of the laws of 1994, is amended to read as follows:
Section 2-A-102. Scope.
(1) This Article applies to any transaction, regardless of form, that
creates a lease AND, IN THE CASE OF A HYBRID LEASE, IT APPLIES TO THE
EXTENT PROVIDED IN SUBSECTION (2).
(2) IN A HYBRID LEASE:
(A) IF THE LEASE-OF-GOODS ASPECTS DO NOT PREDOMINATE:
(I) ONLY THE PROVISIONS OF THIS ARTICLE WHICH RELATE PRIMARILY TO THE
LEASE-OF-GOODS ASPECTS OF THE TRANSACTION APPLY, AND THE PROVISIONS THAT
RELATE PRIMARILY TO THE TRANSACTION AS A WHOLE DO NOT APPLY;
(II) SECTION 2-A-209 APPLIES IF THE LEASE IS A FINANCE LEASE; AND
(III) SECTION 2-A-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
(B) IF THE LEASE-OF-GOODS ASPECTS PREDOMINATE, THIS ARTICLE 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.
§ 13. Subsection 1 of section 2-A-103 of the uniform commercial code
is amended by adding a new paragraph (h-1) to read as follows:
(H-1) "HYBRID LEASE" MEANS A SINGLE TRANSACTION INVOLVING A LEASE OF
GOODS AND:
(I) THE PROVISION OF SERVICES;
(II) A SALE OF OTHER GOODS; OR
(III) A SALE, LEASE, OR LICENSE OF PROPERTY OTHER THAN GOODS.
§ 14. Section 2-A-107 of the uniform commercial code, as added by
chapter 114 of the laws of 1994, is amended to read as follows:
Section 2-A-107. Waiver or Renunciation of Claim or Right After Default.
Any claim or right arising out of an alleged default or breach of
warranty may be discharged in whole or in part without consideration by
a [written] waiver or renunciation IN A signed [and] RECORD delivered by
the aggrieved party.
§ 15. Subsections 1, 3 and 5 of section 2-A-201 of the uniform commer-
cial code, as added by chapter 114 of the laws of 1994, are amended to
read as follows:
(1) A lease contract is not enforceable by way of action or defense
unless:
S. 1840--A 6
(a) the total payments to be made under the lease contract,
excluding payments for options to renew or buy, are less than
$1,000; or
(b) there is a [writing] RECORD, 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.
(3) A [writing] RECORD is not insufficient because it omits or incor-
rectly states a term agreed upon, but the lease contract is not enforce-
able under subsection (1)(b) beyond the lease term and the quantity of
goods shown in the [writing] RECORD.
(5) The lease term under a lease contract referred to in subsection
(4) is:
(a) if there is a [writing] RECORD signed by the party against
whom enforcement is sought or by that party's authorized
agent specifying the lease term, the term so specified;
(b) 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
(c) a reasonable lease term.
§ 16. Section 2-A-202 of the uniform commercial code, as added by
chapter 114 of the laws of 1994, is amended to read as follows:
Section 2-A-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 [writing] RECORD intended by
the parties as a final expression of their agreement with respect to
such terms as are included therein may not be contradicted by evidence
of any prior agreement or of a contemporaneous oral agreement but may be
explained or supplemented:
(a) by course of dealing or usage of trade or by course of
performance; and
(b) by evidence of consistent additional terms unless the court
finds the [writing] RECORD to have been intended also as a
complete and exclusive statement of the terms of the agree-
ment.
§ 17. Section 2-A-203 of the uniform commercial code, as added by
chapter 114 of the laws of 1994, is amended to read as follows:
Section 2-A-203. Seals Inoperative.
The affixing of a seal to a [writing] RECORD evidencing a lease
contract or an offer to enter into a lease contract does not render the
[writing] RECORD a sealed instrument and the law with respect to sealed
instruments does not apply to the lease contract or offer.
§ 18. Section 2-A-205 of the uniform commercial code, as added by
chapter 114 of the laws of 1994, is amended to read as follows:
Section 2-A-205. Firm Offers.
An offer by a merchant to lease goods to or from another person in a
signed [writing] RECORD that by its terms gives assurance it will be
held open is not revocable, for lack of consideration, during the time
stated or, if no time is stated, for a reasonable time, but in no event
may the period of irrevocability exceed three months. Any such term of
assurance on a form supplied by the offeree must be separately signed by
the offeror.
§ 19. Subsection 2 of section 2-A-208 of the uniform commercial code,
as added by chapter 114 of the laws of 1994, is amended to read as
follows:
S. 1840--A 7
(2) A signed lease agreement that excludes modification or rescission
except by a signed [writing] RECORD may not be otherwise modified or
rescinded, but, except as between merchants, such a requirement on a
form supplied by a merchant must be separately signed by the other
party.
§ 20. Paragraph (a) of subsection 1 of section 3--102 of the uniform
commercial code is amended to read as follows:
(a) "Issue" means:
(I) the first delivery of an instrument to a holder or a
remitter; OR
(II) 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.
§ 21. Paragraph (g) of subsection 1 of section 3--112 of the uniform
commercial code is amended and two new paragraphs (h) and (i) are added
to read as follows:
(g) a statement in a draft drawn in a set of parts (Section
3--801) to the effect that the order is effective only if no
other part has been honored[.]; OR
(H) A TERM THAT SPECIFIES THE LAW THAT GOVERNS THE PROMISE OR
ORDER; OR
(I) AN UNDERTAKING TO RESOLVE IN A SPECIFIED FORUM A DISPUTE
CONCERNING THE PROMISE OR ORDER.
§ 22. Section 3--605 of the uniform commercial code is amended by
adding a new subsection 3 to read as follows:
(3) 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 INFOR-
MATION IS EXTRACTED FROM THE CHECK AND AN IMAGE OF THE CHECK IS MADE
AND, SUBSEQUENTLY, THE INFORMATION AND IMAGE ARE TRANSMITTED FOR
PAYMENT.
§ 23. Paragraph (a) of subsection 1 of section 4-A-103 of the uniform
commercial code, as added by chapter 208 of the laws of 1990, is amended
to read as follows:
(a) "Payment order" means an instruction of a sender to a receiv-
ing bank, transmitted orally[, electronically,] or in [writ-
ing] A RECORD, to pay, or to cause another bank to pay, a
fixed or determinable amount of money to a beneficiary if:
(i) the instruction does not state a condition to payment to
the beneficiary other than time of payment,
(ii) the receiving bank is to be reimbursed by debiting an
account of, or otherwise receiving payment from, the
sender, and
(iii) the instruction is transmitted by the sender directly to
the receiving bank or to an agent, funds transfer system,
or communication system for transmittal to the receiving
bank.
§ 24. Section 4-A-201 of the uniform commercial code, as added by
chapter 208 of the laws of 1990, is amended to read as follows:
Section 4-A-201. Security Procedure.
"Security procedure" means a procedure established by agreement of a
customer and a receiving bank for the purpose of (1) verifying that a
payment order or communication amending or cancelling a payment order is
that of the customer, or (2) detecting error in the transmission or the
content of the payment order or communication. A security procedure may
S. 1840--A 8
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 EMAIL
ADDRESS, IP ADDRESS, OR TELEPHONE NUMBER is not by itself a security
procedure.
§ 25. Subsections 2 and 3 of section 4-A-202 of the uniform commercial
code, as added by chapter 208 of the laws of 1990, are amended to read
as follows:
(2) 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 custom-
er, whether or not authorized, if (a) the security procedure is a
commercially reasonable method of providing security against unauthor-
ized payment orders, and (b) the bank proves that it accepted the
payment order in good faith and in compliance with the BANK'S OBLI-
GATIONS UNDER THE security procedure and any [written] agreement or
instruction of the customer, EVIDENCED BY A RECORD, restricting accept-
ance of payment orders issued in the name of the customer. The bank is
not required to follow an instruction that violates [a written] AN
agreement with the customer, EVIDENCED BY A RECORD, or notice of which
is not received at a time and in a manner affording the bank a reason-
able opportunity to act on it before the payment order is accepted.
(3) 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 (a) the security procedure
was chosen by the customer after the bank offered, and the customer
refused, a security procedure that was commercially reasonable for that
customer, and (b) the customer expressly agreed in [writing] A RECORD to
be bound by any payment order, whether or not authorized, issued in its
name and accepted by the bank in compliance with the BANK'S OBLIGATIONS
UNDER THE security procedure chosen by the customer.
§ 26. Subsection 1 of section 4-A-203 of the uniform commercial code,
as added by chapter 208 of the laws of 1990, is amended to read as
follows:
(1) If an accepted payment order is not, under subsection (1) of
Section 4-A-202, an authorized order of a customer identified as sender,
but is effective as an order of the customer pursuant to subsection (2)
of Section 4-A-202, the following rules apply:
(a) 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.
(b) 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 (i)
entrusted at any time with duties to act for the customer
with respect to payment orders or the security procedure, or
(ii) who obtained access to transmitting facilities of the
S. 1840--A 9
customer or who obtained, from a source controlled by the
customer and without authority of the receiving bank, infor-
mation facilitating breach of the security procedure, regard-
less of how the information was obtained or whether the
customer was at fault. Information includes any access
device, computer software, or the like.
§ 27. Subsection 3 of section 4-A-207 of the uniform commercial code,
as added by chapter 208 of the laws of 1990, is amended to read as
follows:
(3) If (i) a payment order described in subsection (2) is accepted,
(ii) the originator's payment order described the beneficiary inconsist-
ently by name and number, and (iii) the beneficiary's bank pays the
person identified by number as permitted by paragraph (a) of subsection
(2), the following rules apply:
(a) If the originator is a bank, the originator is obliged to pay
its order.
(b) 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 origina-
tor, 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 origina-
tor, before the payment order was accepted, signed a [writ-
ing] RECORD stating the information to which the notice
relates.
§ 28. Paragraph (b) of subsection 2 of section 4-A-208 of the uniform
commercial code, as added by chapter 208 of the laws of 1990, is amended
to read as follows:
(b) 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 benefici-
ary'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 paragraph (a)
of subsection (2), 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
[writing] RECORD stating the information to which the notice
relates.
§ 29. Subsection 1 of section 4-A-210 of the uniform commercial code,
as added by chapter 208 of the laws of 1990, is amended to read as
follows:
(1) A payment order is rejected by the receiving bank by a notice of
rejection transmitted to the sender orally, [electronically,] or in
[writing] A RECORD. A notice of rejection need not use any particular
words and is sufficient if it indicates that the receiving bank is
rejecting the order or will not execute or pay the order. Rejection is
effective when the notice is given if transmission is by a means that is
reasonable in the circumstances. If notice of rejection is given by a
S. 1840--A 10
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, (i) any means complying
with the agreement is reasonable and (ii) any means not complying is not
reasonable unless no significant delay in receipt of the notice resulted
from the use of the noncomplying means.
§ 30. Subsection 1 of section 4-A-211 of the uniform commercial code,
as added by chapter 208 of the laws of 1990, is amended to read as
follows:
(1) 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 [writing] A RECORD. If a security procedure is in
effect between the sender and the receiving bank, the communication is
not effective to cancel or amend the order unless the communication is
verified pursuant to the security procedure or the bank agrees to the
cancellation or amendment.
§ 31. Subsections 3 and 4 of section 4-A-305 of the uniform commercial
code, as added by chapter 208 of the laws of 1990, are amended to read
as follows:
(3) In addition to the amounts payable under subsections (1) and (2),
damages, including consequential damages, are recoverable to the extent
provided in an express [written] agreement of the receiving bank,
EVIDENCED BY A RECORD.
(4) 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.
§ 32. Section 5--104 of the uniform commercial code, as added by chap-
ter 471 of the laws of 2000, is amended to read as follows:
Section 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:
(a) by a signature, or
(b) in accordance with the agreement of the parties or the standard
practice referred to in subsection (e) of section 5--108].
§ 33. Section 5--116 of the uniform commercial code, as added by chap-
ter 471 of the laws of 2000, is amended to read as follows:
Section 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) of this section 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. For the purpose of jurisdiction, choice of law,
S. 1840--A 11
and recognition of interbranch letters of credit, but not enforcement of
a [judgement] JUDGMENT, all branches of a bank are considered separate
juridical entities and a bank is considered to be located at the place
where its relevant branch is considered to be located under [this]
subsection (C).
(c) 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.
(D) 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 docu-
mentary credits, to which the letter of credit, confirmation, or other
undertaking is expressly made subject. If (1) this article would govern
the liability of an issuer, nominated person, or adviser under
subsection (a) or (b) of this section, (2) the relevant undertaking
incorporates rules of custom or practice, and (3) there is conflict
between this article and those rules as applied to that undertaking,
those rules govern except to the extent of any conflict with the nonvar-
iable provisions specified in subsection (c) of section 5--103.
[(d)] (E) If there is conflict between this article and article 3, 4,
4-A or 9, this article governs.
[(e)] (F) The forum for settling disputes arising out of an undertak-
ing within this article may be chosen in the manner and with the binding
effect that governing law may be chosen in accordance with subsection
(a) of this section.
§ 34. Paragraph 11 of subsection (a) of section 7--102 of the uniform
commercial code, as added by chapter 505 of the laws of 2014, is amended
to read as follows:
(11) ["Sign" means, with present intent to authenticate or adopt a
record:
(A) to execute or adopt a tangible symbol; or
(B) to attach to or logically associate with the record an electronic
sound, symbol, or process] RESERVED.
§ 35. Section 7--106 of the uniform commercial code, as added by chap-
ter 505 of the laws of 2014, is amended to read as follows:
Section 7--106. Control of Electronic Document of Title.
(a) A person has control of an electronic document of title if a
system employed for evidencing the transfer of interests in the elec-
tronic document reliably establishes that person as the person to which
the electronic document was issued or transferred.
(b) A system satisfies subsection (a), and a person [is deemed to
have] HAS control of an electronic document of title, if the document is
created, stored and [assigned] TRANSFERRED in [such] a manner that:
(1) a single authoritative copy of the document exists which is
unique, identifiable, and, except as otherwise provided in paragraphs
(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 trans-
ferred;
(3) the authoritative copy is communicated to and maintained by the
person asserting control or its designated custodian;
S. 1840--A 12
(4) copies or amendments that add or change an identified [assignee]
TRANSFEREE of the authoritative copy can be made only with the consent
of the person asserting control;
(5) each copy of the authoritative copy and any copy of a copy is
readily identifiable as a copy that is not the authoritative copy; and
(6) any amendment of the authoritative copy is readily identifiable as
authorized or unauthorized.
(C) A SYSTEM SATISFIES 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 ELEC-
TRONIC 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, INCLUD-
ING 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 SUBSECTION
(C) (3) (A) 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 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 DOCUMENT OF
TITLE.
(F) IF A PERSON HAS THE POWERS SPECIFIED IN SUBSECTION (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 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.
S. 1840--A 13
§ 36. Paragraph 6 of subsection (a) of section 8--102 of the uniform
commercial code, as added by chapter 566 of the laws of 1997, is amended
to read as follows:
(6) "Communicate" means to:
(i) send a signed [writing] RECORD; or
(ii) transmit information by any mechanism agreed upon by
the persons transmitting and receiving the information.
§ 37. Subsections (b) and (e) of section 8--102 of the uniform commer-
cial code, subsection (b) as added by chapter 566 of the laws of 1997
and subsection (e) as added by chapter 84 of the laws of 2001, are
amended to read as follows:
(b) Other definitions applying to this Article and the sections in
which they appear are:
"Appropriate person". Section 8--107.
"Control". Section 8--106.
"CONTROLLABLE ACCOUNT". SECTION 9--102.
"CONTROLLABLE ELECTRONIC RECORD". SECTION 12--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.
(e) The following definitions in Article 9 apply to this article:
Cooperative interest Section [9--102(a)(27-b)]
9--102(A)(27-D)
Cooperative organization Section [9--102(a)(27-c)]
9--102(A)(27-E)
Cooperative record Section [9--102(a)(27-e)]
9--102(A)(27-G)
§ 38. Section 8--103 of the uniform commercial code is amended by
adding a new subsection (i) to read as follows:
(I) A CONTROLLABLE ACCOUNT, CONTROLLABLE ELECTRONIC RECORD, OR
CONTROLLABLE PAYMENT INTANGIBLE IS NOT A FINANCIAL ASSET UNLESS SECTION
8--102(A)(9)(III) APPLIES.
§ 39. Subsection (d) of section 8--106 of the uniform commercial code,
as amended by chapter 84 of the laws of 2001, is amended and two new
subsections (j) and (k) are added 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:
[has control of the security entitlement on behalf of the
purchaser or, having previously acquired control of the secu-
rity entitlement, acknowledges that it has control on behalf
of the purchaser.]
(A) HAS CONTROL OF THE SECURITY ENTITLEMENT AND ACKNOWLEDGES THAT
IT HAS CONTROL ON BEHALF OF THE PURCHASER; OR
(B) OBTAINS CONTROL OF THE SECURITY ENTITLEMENT AFTER HAVING
ACKNOWLEDGED THAT IT WILL OBTAIN CONTROL OF THE SECURITY
ENTITLEMENT ON BEHALF OF THE PURCHASER.
S. 1840--A 14
(J) A PERSON THAT HAS CONTROL UNDER THIS SECTION IS NOT REQUIRED TO
ACKNOWLEDGE THAT IT HAS CONTROL ON BEHALF OF A PURCHASER.
(K) 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 ARTICLE OR ARTICLE 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.
§ 40. Section 8--110 of the uniform commercial code is amended by
adding a new 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.
§ 41. Subsection (b) of section 8--303 of the uniform commercial code,
as added by chapter 566 of the laws of 1997, is amended to read as
follows:
(b) [In addition to acquiring the rights of a purchaser, a] A
protected purchaser also acquires its interest in the security free of
any adverse claim.
§ 42. Paragraphs 2, 3, 4, 7, 11, 27-a, 27-b, 27-c, 27-d, 27-e, 27-f,
31, 42, 47, 61, 66, 66-a, 75 and 79 of subsection (a) of section 9--102
of the uniform commercial code, as amended by chapter 505 of the laws of
2014, are amended, and five new paragraphs 7-a, 7-b, 31-a, 54-a and 79-a
are added to read as follows:
(2) "Account", except as used in "account for", "ACCOUNT STATE-
MENT", "ACCOUNT TO", "COMMODITY ACCOUNT" IN PARAGRAPH (14),
"CUSTOMER ACCOUNT", "DEPOSIT ACCOUNT" IN PARAGRAPH (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) [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 EVIDENCES 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 instrument [constitutes part of] EVIDENCES chat-
tel paper.
S. 1840--A 15
(4) "Accounting", except as used in "accounting for", means a
record:
(A) [authenticated] SIGNED by a secured party;
(B) indicating the aggregate unpaid secured obligations as of
a date not more than 35 days earlier or 35 days later
than the date of the record; and
(C) identifying the components of the obligations in reason-
able detail.
(7) ["Authenticate" means:
(A) to sign; or
(B) with present intent to adopt or accept a record, to
attach to or logically associate with the record an elec-
tronic sound, symbol, or process] RESERVED.
(7-A) "ASSIGNEE", EXCEPT AS USED IN "ASSIGNEE FOR BENEFIT OF
CREDITORS", MEANS A PERSON (A) IN WHOSE FAVOR A SECURI-
TY INTEREST THAT SECURES AN OBLIGATION IS CREATED OR
PROVIDED FOR UNDER A SECURITY AGREEMENT, WHETHER OR NOT
THE OBLIGATION IS OUTSTANDING OR (B) 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 (A) UNDER A SECURITY
AGREEMENT CREATES OR PROVIDES FOR A SECURITY INTEREST THAT
SECURES AN OBLIGATION OR (B) 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 record or records that evidence
both a monetary obligation and a security interest in specif-
ic 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 paragraph, "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 tran-
saction is evidenced by records that include an instrument or
series of instruments, the group of records taken together
constitutes chattel paper.]:
(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
S. 1840--A 16
(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; BUT
(C) 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.
(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 12--105 OF THE CONTROLLABLE ELEC-
TRONIC RECORD.
(27-B) "CONTROLLABLE PAYMENT INTANGIBLE" MEANS A PAYMENT INTANGI-
BLE EVIDENCED BY A CONTROLLABLE ELECTRONIC RECORD THAT
PROVIDES THAT THE ACCOUNT DEBTOR UNDERTAKES TO PAY THE
PERSON THAT HAS CONTROL UNDER SECTION 12--105 OF THE
CONTROLLABLE ELECTRONIC RECORD.
(27-C) "Cooperative addendum" means a record that satisfies
Section 9--502(e).
[(27-b)] (27-D) "Cooperative interest" means an ownership inter-
est in a cooperative organization, which interest, when
created, is coupled with possessory rights of a proprie-
tary nature in identified physical space belonging to the
cooperative organization. A subsequent termination of the
possessory rights shall not cause an ownership interest to
cease being a cooperative interest.
[(27-c)] (27-E) "Cooperative organization" means an organization
which has as its principal asset an interest in real prop-
erty in this state and in which organization all ownership
interests are cooperative interests.
[(27-d)] (27-F) "Cooperative organization security interest"
means a security interest which is in a cooperative inter-
est, is in favor of the cooperative organization, is
created by the cooperative record, and secures only obli-
gations incident to ownership of that cooperative inter-
est.
[(27-e)] (27-G) "Cooperative record" means those records which,
as a whole, evidence cooperative interests and define the
mutual rights and obligations of the owners of the cooper-
ative interests and the cooperative organization.
[(27-f)] (27-H) "Cooperative unit" means the physical space asso-
ciated with a cooperative interest.
(31) ["Electronic chattel paper" means chattel paper evidenced by
a record or records consisting of information stored in an
electronic medium.] RESERVED.
(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
S. 1840--A 17
obligation, is not itself a security agreement or lease, and
is of a type that in ordinary course of business is trans-
ferred by delivery with any necessary indorsement or assign-
ment. The term does not include (i) investment property,
(ii) letters of credit, [or] (iii) writings that evidence a
right to payment arising out of the use of a credit or
charge card or information contained on or for use with the
card, OR (IV) WRITINGS THAT EVIDENCE CHATTEL PAPER.
(54-A) "MONEY" HAS THE SAME MEANING AS IN SECTION 1--201(B)(24),
BUT DOES NOT INCLUDE (A) A DEPOSIT ACCOUNT OR (B) MONEY IN
AN ELECTRONIC FORM THAT CANNOT BE SUBJECTED TO CONTROL UNDER
SECTION 9-105A.
(61) "Payment intangible" means a general intangible under which
the account debtor's principal obligation is a monetary
obligation. THE TERM INCLUDES A CONTROLLABLE PAYMENT INTAN-
GIBLE.
(66) "Proposal" means a record [authenticated] SIGNED by a
secured party which 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.
(66-a) "Prove" with respect to a fact means to meet the burden of
establishing the fact (Section [1-201(8)] 1--201(B)(8)).
(75) ["Send", in connection with a record or notification,
means:
(A) to deposit in the mail, deliver for transmission, or
transmit by any other usual means of communication, with
postage or cost of transmission provided for, addressed
to any address reasonable under the circumstances; or
(B) to cause the record or notification to be received within
the time that it would have been received if properly
sent under subparagraph (A).] RESERVED.
(79) ["Tangible chattel paper" means chattel paper evidenced by
a record or records consisting of information that is
inscribed on a tangible medium.] RESERVED.
(79-A) "TANGIBLE MONEY" MEANS MONEY IN A TANGIBLE FORM.
§ 43. Subsection (b) of section 9--102 of the uniform commercial code
is amended by adding three new definitions Controllable electronic
record, Protected purchaser and Qualifying purchaser in alphabetical
order to read as follows:
"CONTROLLABLE ELECTRONIC RECORD" SECTION 12--102.
"PROTECTED PURCHASER" SECTION 8--303.
"QUALIFYING PURCHASER" SECTION 12--102.
§ 44. Paragraphs 2 and 5 of subsection (a) of section 9--104 of the
uniform commercial code, as amended by chapter 505 of the laws of 2014,
are amended to read as follows:
(2) the debtor, secured party, and bank have agreed in [an
authenticated] A SIGNED record that the bank will comply with
instructions originated by the secured party directing dispo-
sition of the funds in the deposit account without further
consent by the debtor;
(5) another person, OTHER THAN THE DEBTOR:
S. 1840--A 18
(A) has control of the deposit account AND ACKNOWLEDGES THAT IT HAS
CONTROL on behalf of the secured party [or, having previously acquired];
OR
(B) OBTAINS control of the deposit account[, acknowledges] AFTER
HAVING ACKNOWLEDGED that it [has] WILL OBTAIN control OF THE DEPOSIT
ACCOUNT on behalf of the secured party.
§ 45. Section 9--105 of the uniform commercial code, as added by chap-
ter 84 of the laws of 2001, is amended to read as follows:
Section 9--105. Control of Electronic COPY OF RECORD EVIDENCING Chattel
Paper.
[A secured party has control of electronic chattel paper if the record
or records comprising the chattel paper are created, stored, and
assigned in such a manner that:]
(A) GENERAL RULE: CONTROL OF ELECTRONIC COPY OF RECORD EVIDENCING
CHATTEL PAPER. A PURCHASER HAS CONTROL OF AN AUTHORITATIVE ELECTRONIC
COPY OF A RECORD EVIDENCING CHATTEL PAPER IF A SYSTEM EMPLOYED FOR
EVIDENCING THE ASSIGNMENT OF INTERESTS IN THE CHATTEL PAPER RELIABLY
ESTABLISHES THE PURCHASER AS THE PERSON TO WHICH THE AUTHORITATIVE ELEC-
TRONIC COPY WAS ASSIGNED.
(B) SINGLE AUTHORITATIVE COPY. A SYSTEM SATISFIES SUBSECTION (A) IF
THE RECORD OR RECORDS EVIDENCING THE CHATTEL PAPER ARE CREATED, STORED,
AND ASSIGNED IN A MANNER THAT:
(1) a single authoritative copy of the record or records exists
which is unique, identifiable and, except as otherwise
provided in paragraphs (4), (5), and (6), unalterable;
(2) the authoritative copy identifies the secured party as the
assignee of the record or records;
(3) the authoritative copy is communicated to and maintained by
the secured party or its designated custodian;
(4) copies or revisions that add or change an identified assignee
of the authoritative copy can be made only with the partic-
ipation of the 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 revision of the authoritative copy is readily identifi-
able as an authorized or unauthorized revision.
(C) ONE OR MORE AUTHORITATIVE COPIES. 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
EITHER 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) MEANING OF EXCLUSIVE. SUBJECT TO SUBSECTION (E), A POWER IS EXCLU-
SIVE UNDER SUBSECTION (C)(3)(A) AND (B) EVEN IF:
S. 1840--A 19
(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) WHEN POWER NOT SHARED WITH ANOTHER PERSON. 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) PRESUMPTION OF EXCLUSIVITY OF CERTAIN POWERS. IF A PURCHASER HAS
THE POWERS SPECIFIED IN SUBSECTION (C)(3)(A) AND (B), THE POWERS ARE
PRESUMED TO BE EXCLUSIVE.
(G) OBTAINING CONTROL THROUGH ANOTHER PERSON. 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.
§ 46. The uniform commercial code is amended by adding three new
sections 9--105A, 9--107A and 9--107B to read as follows:
SECTION 9--105A. CONTROL OF ELECTRONIC MONEY.
(A) GENERAL RULE: CONTROL OF ELECTRONIC MONEY. 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 PARAGRAPH (1).
(B) MEANING OF EXCLUSIVE. SUBJECT TO SUBSECTION (C), A POWER IS
EXCLUSIVE UNDER SUBSECTION (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
S. 1840--A 20
(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 ELECTRONIC
MONEY.
(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 ELECTRON-
IC 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--107A. CONTROL OF CONTROLLABLE ELECTRONIC RECORD, CONTROLLABLE
ACCOUNT, OR CONTROLLABLE PAYMENT INTANGIBLE.
(A) CONTROL UNDER SECTION 12--105. A SECURED PARTY HAS CONTROL OF A
CONTROLLABLE ELECTRONIC RECORD AS PROVIDED IN SECTION 12--105.
(B) CONTROL OF CONTROLLABLE ACCOUNT AND CONTROLLABLE PAYMENT INTANGI-
BLE. A SECURED PARTY HAS CONTROL OF A CONTROLLABLE ACCOUNT OR CONTROL-
LABLE PAYMENT INTANGIBLE IF THE SECURED PARTY HAS CONTROL OF THE
CONTROLLABLE ELECTRONIC RECORD THAT EVIDENCES THE CONTROLLABLE ACCOUNT
OR CONTROLLABLE PAYMENT INTANGIBLE.
SECTION 9--107B. NO REQUIREMENT TO ACKNOWLEDGE OR CONFIRM; NO DUTIES.
(A) NO REQUIREMENT TO ACKNOWLEDGE. A PERSON THAT HAS CONTROL UNDER
SECTION 9--104, 9--105, OR 9--105A IS NOT REQUIRED TO ACKNOWLEDGE THAT
IT HAS CONTROL ON BEHALF OF ANOTHER PERSON.
(B) 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 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.
§ 47. Subsection (b) of section 9--203 of the uniform commercial code,
as added by chapter 84 of the laws of 2001 and subparagraph (D) of para-
graph 3 as amended by chapter 505 of the laws of 2014, is amended to
read as follows:
(b) Enforceability. Except as otherwise provided in subsections (c)
through (i), a security interest is enforceable against the debtor and
third parties with respect to the collateral only if:
(1) value has been given;
(2) the debtor has rights in the collateral or the power to
transfer rights in the collateral to a secured party; and
(3) one of the following conditions is met:
(A) the debtor has [authenticated] SIGNED a security agree-
ment that provides a description of the collateral and,
if the security interest covers timber to be cut, a
description of the land concerned;
S. 1840--A 21
(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 [chattel paper] DOCUMENTS,
ELECTRONIC MONEY, investment property[,] OR letter-of-
credit rights, [or electronic documents,] and the secured
party has control under Section 7--106, 9--104, 9--105,
9--105A, 9--106, [or] 9--107, OR 9--107A 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--314A PURSUANT TO
THE DEBTOR'S SECURITY AGREEMENT.
§ 48. Subsection (b) of section 9--204 of the uniform commercial code,
as added by chapter 84 of the laws of 2001, is amended and a new
subsection (b-1) is added to read as follows:
(b) When after-acquired property clause not effective. [A] SUBJECT TO
SUBSECTION (B-1), 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 addi-
tional 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) LIMITATION ON SUBSECTION (B). 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.
§ 49. Subsection (c) of section 9--207 of the uniform commercial code,
as amended by chapter 505 of the laws of 2014, is amended to read as
follows:
(c) Duties and rights when secured party in possession or control.
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--105A, 9--106, [or] 9--107, OR 9--107A:
(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.
§ 50. Subsection (b) of section 9--208 of the uniform commercial code,
as added by chapter 84 of the laws of 2001, paragraphs 4 and 5 as
amended and paragraph 6 as added by chapter 505 of the laws of 2014, is
amended to read as follows:
(b) Duties of secured party after receiving demand from debtor. Within
10 days after receiving [an authenticated] A SIGNED demand by the
debtor:
S. 1840--A 22
(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 [an authenticated statement] A
SIGNED RECORD that releases the bank from any further obli-
gation 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 elec-
tronic chattel paper] under Section 9--105 [shall:
(A) communicate the authoritative copy of the electronic
chattel paper to the debtor or its designated custodian;
(B) if the debtor designates a custodian that is the desig-
nated 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 which add or change an identified
assignee of the authoritative copy without the consent of
the secured party] OF AN AUTHORITATIVE ELECTRONIC COPY OF
A RECORD EVIDENCING CHATTEL PAPER SHALL TRANSFER CONTROL
OF THE ELECTRONIC COPY TO DEBTOR OR A PERSON DESIGNATED
BY THE DEBTOR;
(4) a secured party having control of investment property under
Section 8--106(d)(2) or 9--106(b) shall send to the securi-
ties intermediary or commodity intermediary with which the
security entitlement or commodity contract is maintained [an
authenticated] A SIGNED record that releases the securities
intermediary or commodity intermediary from any further obli-
gation to comply with entitlement orders or directions origi-
nated 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 [an authenticated] A
SIGNED 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 [of an electronic document
shall:
(A) give control of the electronic document to the debtor or
its designated custodian;
(B) if the debtor designates a custodian that is the desig-
nated 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 obli-
gation to comply with instructions originated by the
S. 1840--A 23
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] UNDER SECTION 7--106 OF AN AUTHORI-
TATIVE ELECTRONIC COPY OF AN ELECTRONIC DOCUMENT OF TITLE
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--105A 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 12--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.
§ 51. Subsection (b) of section 9--209 of the uniform commercial code,
as added by chapter 84 of the laws of 2001, is amended to read as
follows:
(b) Duties of secured party after receiving demand from debtor. Within
10 days after receiving [an authenticated] A SIGNED demand by the
debtor, a secured party shall send to an account debtor that has
received notification UNDER SECTION 9--406(A) OR 12--106(B) of an
assignment to the secured party as assignee [under Section 9--406(a) an
authenticated] A SIGNED record that releases the account debtor from any
further obligation to the secured party.
§ 52. Section 9--210 of the uniform commercial code, as added by chap-
ter 84 of the laws of 2001, is amended to read as follows:
Section 9--210. Request for Accounting; Request Regarding List of Colla-
teral or Statement of Account.
(a) Definitions in this section:
(1) "Request" means a record of a type described in paragraph
(2), (3), or (4).
(2) "Request for an accounting" means a record [authenticated]
SIGNED by a debtor requesting that the recipient provide an
accounting of the unpaid obligations secured by collateral
and reasonably identifying the transaction or relationship
that is the subject of the request.
(3) "Request regarding a list of collateral" means a record
[authenticated] SIGNED by a debtor requesting that the recip-
ient approve or correct a list of what the debtor believes to
be the collateral securing an obligation and reasonably iden-
tifying the transaction or relationship that is the subject
of the request.
(4) "Request regarding a statement of account" means a record
[authenticated] SIGNED by a debtor requesting that the recip-
ient approve or correct a statement indicating what the
debtor believes to be the aggregate amount of unpaid obli-
gations secured by collateral as of a specified date and
reasonably identifying the transaction or relationship that
is the subject of the request.
S. 1840--A 24
(b) Duty to respond to requests. 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 [authenticat-
ing] SIGNING and sending to the debtor an accounting; and
(2) in the case of a request regarding a list of collateral or a
request regarding a statement of account, by [authenticating]
SIGNING and sending to the debtor an approval or correction.
(c) Request regarding list of collateral; statement concerning type of
collateral. A secured party that claims a security interest in all of a
particular type of collateral owned by the debtor may comply with a
request regarding a list of collateral by sending to the debtor [an
authenticated] A SIGNED record including a statement to that effect
within 14 days after receipt.
(d) Request regarding list of collateral; no interest claimed. 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 [an
authenticated] A SIGNED record:
(1) disclaiming any interest in the collateral; and
(2) if known to the recipient, providing the name and mailing
address of any assignee of or successor to the recipient's
interest in the collateral.
(e) Request for accounting or regarding statement of account; no
interest in obligation claimed. 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 [an
authenticated] A SIGNED 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.
(f) Charges for responses. A debtor is entitled without charge to one
response to a request under this section during any six-month period.
The secured party may require payment of a charge not exceeding $25 for
each additional response.
§ 53. The opening paragraph and subsection (c) of section 9--301 of
the uniform commercial code, the opening paragraph as added by chapter
84 of the laws of 2001 and subsection (c) as amended by chapter 505 of
the laws of 2014, are amended to read as follows:
Except as otherwise provided in Sections 9--303 through [9--306]
9-306B, the following rules determine the law governing perfection, the
effect of perfection or nonperfection, and the priority of a security
interest in collateral:
(c) Except as otherwise provided in subsection (d), while [tangible]
negotiable TANGIBLE documents, goods, instruments, [money,] or tangible
[chattel paper] MONEY is located in a jurisdiction, the local law of
that jurisdiction governs:
(1) perfection of a security interest in the goods by filing a
fixture filing;
(2) perfection of a security interest in timber to be cut; and
S. 1840--A 25
(3) the effect of perfection or nonperfection and the priority of
a nonpossessory security interest in the collateral.
§ 54. Subsection (a) of section 9--304 of the uniform commercial code,
as added by chapter 84 of the laws of 2001, is amended to read as
follows:
(a) Law of bank's jurisdiction governs. The local law of a bank's
jurisdiction governs perfection, the effect of perfection or nonper-
fection, 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.
§ 55. Subsection (a) of section 9--305 of the uniform commercial code
is amended by adding a new paragraph 5 to read as follows:
(5) PARAGRAPHS (2), (3), AND (4) APPLY EVEN IF THE TRANSACTION DOES
NOT BEAR ANY RELATION TO THE JURISDICTION.
§ 56. The uniform commercial code is amended by adding two new
sections 9-306A and 9-306B to read as follows:
SECTION 9-306A. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTER-
ESTS IN CHATTEL PAPER.
(A) CHATTEL PAPER EVIDENCED BY AUTHORITATIVE ELECTRONIC COPY. 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) CHATTEL PAPER'S JURISDICTION. 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 PART, THIS ARTICLE, OR THIS CODE, THAT JURISDICTION IS
THE CHATTEL PAPER'S JURISDICTION.
(2) IF PARAGRAPH (1) DOES NOT APPLY AND THE RULES OF THE SYSTEM IN
WHICH THE AUTHORITATIVE ELECTRONIC COPY IS RECORDED ARE READILY AVAIL-
ABLE FOR REVIEW AND EXPRESSLY PROVIDE THAT A PARTICULAR JURISDICTION IS
THE CHATTEL PAPER'S JURISDICTION FOR PURPOSES OF THIS PART, THIS ARTI-
CLE, OR THIS CODE, THAT JURISDICTION IS THE CHATTEL PAPER'S JURISDIC-
TION.
(3) IF PARAGRAPHS (1) AND (2) DO NOT APPLY AND THE AUTHORITATIVE ELEC-
TRONIC 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 JURISDIC-
TION, THAT JURISDICTION IS THE CHATTEL PAPER'S JURISDICTION.
(4) IF PARAGRAPHS (1), (2) AND (3) DO NOT APPLY AND THE RULES OF THE
SYSTEM IN WHICH THE AUTHORITATIVE ELECTRONIC COPY IS RECORDED ARE READI-
LY 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 PARAGRAPHS (1) THROUGH (4) DO NOT APPLY, THE CHATTEL PAPER'S
JURISDICTION IS THE JURISDICTION IN WHICH THE DEBTOR IS LOCATED.
(C) CHATTEL PAPER EVIDENCED BY AUTHORITATIVE TANGIBLE COPY. 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
S. 1840--A 26
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--314A; AND
(2) THE EFFECT OF PERFECTION OR NONPERFECTION AND THE PRIORITY OF A
SECURITY INTEREST IN THE CHATTEL PAPER.
(D) WHEN PERFECTION GOVERNED BY LAW OF JURISDICTION WHERE DEBTOR
LOCATED. THE LOCAL LAW OF THE JURISDICTION IN WHICH THE DEBTOR IS
LOCATED GOVERNS PERFECTION OF A SECURITY INTEREST IN CHATTEL PAPER BY
FILING.
SECTION 9-306B. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTER-
ESTS IN CONTROLLABLE ACCOUNTS, CONTROLLABLE ELECTRON-
IC RECORDS, AND CONTROLLABLE PAYMENT INTANGIBLES.
(A) GOVERNING LAW: GENERAL RULES. EXCEPT AS PROVIDED IN SUBSECTION
(B), THE LOCAL LAW OF THE CONTROLLABLE ELECTRONIC RECORD'S JURISDICTION
SPECIFIED IN SECTION 12--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) WHEN PERFECTION GOVERNED BY LAW OF JURISDICTION WHERE DEBTOR
LOCATED. 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 INTAN-
GIBLE.
§ 57. Paragraph 8 of subsection (b) of section 9--310 of the uniform
commercial code, as amended by chapter 505 of the laws of 2014, is
amended and a new paragraph 8-a is added to read as follows:
(8) in CONTROLLABLE ACCOUNTS, CONTROLLABLE ELECTRONIC RECORDS,
CONTROLLABLE PAYMENT INTANGIBLES, deposit accounts, [elec-
tronic chattel paper,] electronic documents, investment prop-
erty, or letter-of-credit rights which is perfected by
control under Section 9--314;
(8-A) IN CHATTEL PAPER WHICH IS PERFECTED BY POSSESSION AND
CONTROL UNDER SECTION 9--314A;
§ 58. The section heading and subsections (a), (b) and (e) of section
9--312 of the uniform commercial code, the section heading and
subsections (a) and (b) as added by chapter 84 of the laws of 2001, and
subsection (e) as amended by chapter 505 of the laws of 2014, are
amended to read as follows:
Perfection of Security Interests in Chattel Paper, CONTROLLABLE
ACCOUNTS, CONTROLLABLE ELECTRONIC RECORDS, CONTROLLA-
BLE PAYMENT INTANGIBLES, Deposit Accounts, Documents,
Goods Covered by Documents, Instruments, Investment
Property, Letter-of-credit Rights, and Money;
Perfection by Permissive Filing; Temporary Perfection
Without Filing or Transfer of Possession.
(a) Perfection by filing permitted. A security interest in chattel
paper, [negotiable documents,] CONTROLLABLE ACCOUNTS, CONTROLLABLE ELEC-
TRONIC RECORDS, CONTROLLABLE PAYMENT INTANGIBLES, instruments, [or]
investment property, OR NEGOTIABLE DOCUMENTS may be perfected by filing.
S. 1840--A 27
(b) Control or possession of certain collateral. Except as otherwise
provided in Section 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) Temporary perfection: new value. A security interest in certif-
icated 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 [an authenticated] A SIGNED security agreement.
§ 59. Subsections (a), (c) and (d) of section 9--313 of the uniform
commercial code, subsection (a) as amended by chapter 505 of the laws of
2014, and subsections (c) and (d) as added by chapter 84 of the laws of
2001, are amended to read as follows:
(a) Perfection by possession or delivery. Except as otherwise provided
in subsection (b), a secured party may perfect a security interest in
[tangible] GOODS, INSTRUMENTS, negotiable TANGIBLE documents, [goods,
instruments, money,] or tangible [chattel paper] MONEY by taking
possession of the collateral. A secured party may perfect a security
interest in certificated securities by taking delivery of the certif-
icated securities under Section 8--301.
(c) Collateral in possession of person other than debtor. With respect
to collateral other than certificated securities and goods covered by a
document, a secured party takes possession of collateral in the
possession of a person other than the debtor, the secured party, or a
lessee of the collateral from the debtor in the ordinary course of the
debtor's business, when:
(1) the person in possession [authenticates] SIGNS a record
acknowledging that it holds possession of the collateral for
the secured party's benefit; or
(2) the person takes possession of the collateral after having
[authenticated] SIGNED a record acknowledging that it will
hold possession of THE collateral for the secured party's
benefit.
(d) Time of perfection by possession; continuation of perfection. If
perfection of a security interest depends upon possession of the collat-
eral by a secured party, perfection occurs [no] NOT earlier than the
time the secured party takes possession and continues only while the
secured party retains possession.
§ 60. Section 9--314 of the uniform commercial code, as added by chap-
ter 84 of the laws of 2001, subsections (a) and (b) as amended by chap-
ter 505 of the laws of 2014, is amended to read as follows:
Section 9--314. Perfection by Control.
(a) Perfection by control. A security interest in CONTROLLABLE
ACCOUNTS, CONTROLLABLE ELECTRONIC RECORDS, CONTROLLABLE PAYMENT INTANGI-
BLES, DEPOSIT ACCOUNTS, ELECTRONIC DOCUMENTS, ELECTRONIC MONEY, invest-
ment property, [deposit accounts,] OR letter-of-credit rights, [elec-
tronic chattel paper, or electronic documents] may be perfected by
S. 1840--A 28
control of the collateral under Section 7--106, 9--104, [9--105]
9--105A, 9--106, [or] 9--107 OR 9--107A.
(b) Specified collateral: time of perfection by control; continuation
of perfection. A security interest in CONTROLLABLE ACCOUNTS, CONTROLLA-
BLE ELECTRONIC RECORDS, CONTROLLABLE PAYMENT INTANGIBLES, deposit
accounts, electronic [chattel paper] DOCUMENTS, ELECTRONIC MONEY, OR
letter-of-credit rights[, or electronic documents] is perfected by
control under Section 7--106, 9--104, [9--105] 9--105A, [or] 9--107, OR
9--107A NOT EARLIER THAN THE TIME when the secured party obtains control
and remains perfected by control only while the secured party retains
control.
(c) Investment property: time of perfection by control; continuation
of perfection. A security interest in investment property is perfected
by control under Section 9--106 [from] NOT EARLIER THAN 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.
(d) Cooperative interests. Subsections (a) through (c) do not apply to
cooperative interests.
§ 61. The uniform commercial code is amended by adding a new section
9-314A to read as follows:
SECTION 9-314A. PERFECTION BY POSSESSION AND CONTROL OF CHATTEL PAPER.
(A) PERFECTION BY POSSESSION AND CONTROL. 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 ELEC-
TRONIC RECORD EVIDENCING THE CHATTEL PAPER.
(B) TIME OF PERFECTION; CONTINUATION OF PERFECTION. A SECURITY INTER-
EST 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) APPLICATION OF SECTION 9--313 TO PERFECTION BY POSSESSION OF CHAT-
TEL PAPER. SECTION 9--313(C) AND (F) THROUGH (I) APPLIES TO PERFECTION
BY POSSESSION OF AN AUTHORITATIVE TANGIBLE COPY OF A RECORD EVIDENCING
CHATTEL PAPER.
§ 62. Subsections (a) and (f) of section 9--316 of the uniform commer-
cial code, as added by chapter 84 of the laws of 2001, are amended to
read as follows:
(a) General rule: effect on perfection of change in governing law. A
security interest perfected pursuant to the law of the jurisdiction
designated in Section 9--301(a) [or], 9--305(c), 9-306A(D), OR 9-306B(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
S. 1840--A 29
(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) Change in jurisdiction of CHATTEL PAPER, CONTROLLABLE ELECTRONIC
RECORD, bank, issuer, nominated person, securities intermediary, or
commodity intermediary. A security interest in CHATTEL PAPER, CONTROLLA-
BLE ACCOUNTS, CONTROLLABLE ELECTRONIC RECORDS, CONTROLLABLE PAYMENT
INTANGIBLES, deposit accounts, letter-of-credit rights, or investment
property which is perfected under the law of THE CHATTEL PAPER'S JURIS-
DICTION, THE CONTROLLABLE ELECTRONIC RECORD'S JURISDICTION, the bank's
jurisdiction, the issuer's jurisdiction, a nominated person's jurisdic-
tion, 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 applica-
ble jurisdiction to another jurisdiction.
§ 63. Subsections (b) and (d) of section 9--317 of the uniform commer-
cial code, as amended by chapter 505 of the laws of 2014, are amended
and four new subsections (f), (g), (h) and (i) are added to read as
follows:
(b) Buyers that receive delivery. Except as otherwise provided in
subsection (e), a buyer, other than a secured party, of [tangible chat-
tel paper] GOODS, INSTRUMENTS, tangible documents, [goods, instruments,]
or a certificated security takes free of a security interest or agricul-
tural lien if the buyer gives value and receives delivery of the collat-
eral without knowledge of the security interest or agricultural lien and
before it is perfected.
(d) Licensees and buyers of certain collateral. [A] SUBJECT TO
SUBSECTIONS (F) THROUGH (I), A licensee of a general intangible or a
buyer, other than a secured party, of [accounts,] COLLATERAL OTHER THAN
electronic [chattel paper] MONEY, [electronic documents, general intan-
gibles, or investment property other than] GOODS, INSTRUMENTS, INTANGI-
BLE DOCUMENTS OR a certificated security takes free of a security inter-
est if the licensee or buyer gives value without knowledge of the
security interest and before it is perfected.
(F) BUYERS OF CHATTEL PAPER. 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) BUYERS OF ELECTRONIC DOCUMENTS. 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) BUYERS OF CONTROLLABLE ELECTRONIC RECORDS. A BUYER OF A CONTROL-
LABLE 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.
S. 1840--A 30
(I) BUYERS OF CONTROLLABLE ACCOUNTS AND CONTROLLABLE PAYMENT INTANGI-
BLES. 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.
§ 64. Subsections (d) and (f) of section 9--323 of the uniform commer-
cial code, as added by chapter 84 of the laws of 2001, are amended to
read as follows:
(d) Buyer of goods. 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) Lessee of goods. 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.
§ 65. Subsections (b) and (d) of section 9--324 of the uniform commer-
cial code, as added by chapter 84 of the laws of 2001, are amended to
read as follows:
(b) Inventory purchase-money priority. Subject to subsection (c) and
except as otherwise provided in subsection (g), a perfected purchase-mo-
ney security interest in inventory has priority over a conflicting secu-
rity 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 [an authenticated] A
SIGNED notification to the holder of the conflicting security
interest;
(3) the holder of the conflicting security interest receives the
notification within five years before the debtor receives
possession of the inventory; and
(4) the notification states that the person sending the notifica-
tion has or expects to acquire a purchase-money security
interest in inventory of the debtor and describes the inven-
tory.
(d) Livestock purchase-money priority. Subject to subsection (e) and
except as otherwise provided in subsection (g), a perfected purchase-mo-
ney 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 unman-
ufactured states also has priority, if:
S. 1840--A 31
(1) the purchase-money security interest is perfected when the
debtor receives possession of the livestock;
(2) the purchase-money secured party sends [an authenticated] A
SIGNED notification to the holder of the conflicting security
interest;
(3) the holder of the conflicting security interest receives the
notification within six months before the debtor receives
possession of the livestock; and
(4) the notification states that the person sending the notifica-
tion has or expects to acquire a purchase-money security
interest in livestock of the debtor and describes the live-
stock.
§ 66. The uniform commercial code is amended by adding a new section
9-326A to read as follows:
SECTION 9-326A. 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.
§ 67. Subsections (a), (b) and (f) of section 9--330 of the uniform
commercial code, as added by chapter 84 of the laws of 2001, are amended
to read as follows:
(a) Purchaser's priority: security interest claimed merely as
proceeds. A purchaser of chattel paper has priority over a security
interest in the chattel paper which 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 [the chattel paper or obtains control of] EACH
AUTHORITATIVE TANGIBLE COPY OF THE RECORD EVIDENCING the
chattel paper, AND OBTAINS CONTROL under Section 9--105 OF
EACH AUTHORITATIVE ELECTRONIC COPY OF THE RECORD EVIDENCING
THE CHATTEL PAPER; and
(2) THE AUTHORITATIVE COPIES OF THE RECORD EVIDENCING the chattel
paper [does] DO not indicate that [it] THE CHATTEL PAPER has
been assigned to an identified assignee other than the
purchaser.
(b) Purchaser's priority: other security interests. A purchaser of
chattel paper has priority over a security interest in the chattel paper
which is claimed other than merely as proceeds of inventory subject to a
security interest if the purchaser gives new value [and], takes
possession of EACH AUTHORITATIVE TANGIBLE COPY OF THE RECORD EVIDENCING
the chattel paper [or], AND obtains control [of the chattel paper] under
Section 9--105 OF EACH AUTHORITATIVE ELECTRONIC COPY OF THE RECORD
EVIDENCING THE CHATTEL PAPER in good faith, in the ordinary course of
the purchaser's business, and without knowledge that the purchase
violates the rights of the secured party.
(f) Indication of assignment gives knowledge. For purposes of
subsections (b) and (d), if THE AUTHORITATIVE COPIES OF THE RECORD
EVIDENCING chattel paper or an instrument [indicates] INDICATE that [it]
THE CHATTEL PAPER OR INSTRUMENT has been assigned to an identified
secured party other than the purchaser, a purchaser of the chattel paper
S. 1840--A 32
or instrument has knowledge that the purchase violates the rights of the
secured party.
§ 68. Section 9--331 of the uniform commercial code, as added by chap-
ter 84 of the laws of 2001, is amended to read as follows:
Section 9--331. Priority of Rights of Purchasers of CONTROLLABLE
ACCOUNTS, CONTROLLABLE ELECTRONIC RECORDS, CONTROLLA-
BLE PAYMENT INTANGIBLES, DOCUMENTS, Instruments,
[Documents,] and Securities under Other Articles;
Priority of Interests in Financial Assets and Security
Entitlements AND PROTECTION AGAINST ASSERTION OF CLAIM
under [Article] ARTICLES 8 AND 12.
(a) Rights under Articles 3, 7, [and] 8, AND 12 not limited. This
article does not limit the rights of a holder in due course of a negoti-
able instrument, a holder to which a negotiable document of title has
been duly negotiated, [or a] protected purchaser of a security, OR A
QUALIFYING PURCHASER OF A CONTROLLABLE ACCOUNT, CONTROLLABLE ELECTRONIC
RECORD, OR CONTROLLABLE PAYMENT INTANGIBLE. These holders or purchasers
take priority over an earlier security interest, even if perfected, to
the extent provided in Articles 3, 7, [and] 8, AND 12.
(b) Protection under [Article] ARTICLES 8 AND 12. This article 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
Article 8 OR 12.
(c) Filing not notice. Filing under this article does not constitute
notice of a claim or defense to the holders, or purchasers, or persons
described in subsections (a) and (b).
(d) Section not applicable to cooperative interests. Subsections (a),
(b), and (c) do not apply to cooperative interests.
§ 69. Section 9--332 of the uniform commercial code, as added by
chapter 84 of the laws of 2001, is amended to read as follows:
Section 9--332. Transfer of Money; Transfer of Funds from Deposit
Account.
(a) Transferee of TANGIBLE money. A transferee of TANGIBLE money
takes the money free of a security interest [unless] IF the transferee
[acts] RECEIVES POSSESSION OF THE MONEY WITHOUT ACTING in collusion with
the debtor in violating the rights of the secured party.
(b) Transferee of funds from deposit account. A transferee of funds
from a deposit account takes the funds free of a security interest in
the deposit account [unless] IF the transferee [acts] RECEIVES THE FUNDS
WITHOUT ACTING in collusion with the debtor in violating the rights of
the secured party.
(C) TRANSFEREE OF ELECTRONIC MONEY. 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.
§ 70. Subsection (f) of section 9--334 of the uniform commercial code,
as added by chapter 84 of the laws of 2001, is amended to read as
follows:
(f) Priority based on consent, disclaimer, or right to remove. A secu-
rity interest in fixtures, whether or not perfected, has priority over a
conflicting interest of an encumbrancer or owner of the real property
if:
(1) the encumbrancer or owner has, in [an authenticated] A SIGNED
record, consented to the security interest or disclaimed an
interest in the goods as fixtures; or
S. 1840--A 33
(2) the debtor has a right to remove the goods as against the
encumbrancer or owner.
§ 71. Section 9--341 of the uniform commercial code, as added by chap-
ter 84 of the laws of 2001, is amended to read as follows:
Section 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 [an authenticated] A SIGNED record, a bank's
rights and duties with respect to a deposit account maintained with the
bank are not terminated, suspended, or modified by:
(a) the creation, attachment, or perfection of a security inter-
est in the deposit account;
(b) the bank's knowledge of the security interest; or
(c) the bank's receipt of instructions from the secured party.
§ 72. Paragraph 2 of subsection (a) of section 9--404 of the uniform
commercial code, as added by chapter 84 of the laws of 2001, is amended
to read as follows:
(2) any other defense or claim of the account debtor against the
assignor which accrues before the account debtor receives a
notification of the assignment [authenticated] SIGNED by the
assignor or the assignee.
§ 73. Section 9--406 of the uniform commercial code, as added by chap-
ter 84 of the laws of 2001, is amended to read as follows:
Section 9--406. Discharge of Account Debtor; Notification of Assignment;
Identification and Proof of Assignment; Restrictions
on Assignment of Accounts, Chattel Paper, Payment
Intangibles, and Promissory Notes Ineffective.
(a) Discharge of account debtor; effect of notification. Subject to
subsections (b) through [(h)] (I), 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, [authenticated] SIGNED by the assignor or the assignee,
that the amount due or to become due has been assigned and that payment
is to be made to the assignee. After receipt of the notification, the
account debtor may discharge its obligation by paying the assignee and
may not discharge the obligation by paying the assignor.
(b) When notification ineffective. Subject to [subsection] SUBSECTIONS
(g) AND (I), 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 article; or
(3) at the option of an account debtor, if the notification noti-
fies 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) Proof of assignment. Subject to [subsection] SUBSECTIONS (g) AND
(I), 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
S. 1840--A 34
paying the assignor, even if the account debtor has received a notifica-
tion under subsection (a).
(d) Term restricting assignment generally ineffective. FOR PURPOSES OF
THIS SUBSECTION, "PROMISSORY NOTE" INCLUDES A NEGOTIABLE INSTRUMENT THAT
EVIDENCES CHATTEL PAPER. Except as otherwise provided in subsection (e)
and Sections 2-A-303 and 9--407, and subject to subsection (g), a term
in an agreement between an account debtor and an assignor or in a prom-
issory 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 inter-
est may give rise to a default, breach, right of recoupment,
claim, defense, termination, right of termination, or remedy
under the account, chattel paper, payment intangible, or
promissory note.
(e) Inapplicability of subsection (d) to certain sales. Subsection (d)
does not apply to the sale of a payment intangible or promissory note.
(f) Subsection (b)(3) not waivable. Subject to [subsection]
SUBSECTIONS (g) AND (I), an account debtor may not waive or vary its
option under subsection (b)(3).
(g) Rule for individual under other law. This section is subject to a
rule of law, statute, rule or regulation other than this article 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.
(h) Inapplicability. This section does not apply to:
(1) an assignment of a health care insurance receivable to the
extent such assignment conflicts with other law or the
parties have otherwise agreed in writing that such receivable
is non-assignable,
(2) a claim or right to receive compensation for injuries or
sickness as described in 26 U.S.C. § 104(a)(1) and (2), as
amended from time to time, or
(3) a claim or right to receive benefits under a special needs
trust as described in 42 U.S.C. § 1396p (d)(4), as amended
from time to time.
(I) INAPPLICABILITY OF CERTAIN SUBSECTIONS. SUBSECTIONS (A), (B), (C)
AND (F) DO NOT APPLY TO A CONTROLLABLE ACCOUNT OR CONTROLLABLE PAYMENT
INTANGIBLE.
§ 74. Section 9--408 of the uniform commercial code is amended by
adding a new subsection (e) to read as follows:
(E) "PROMISSORY NOTE". IN THIS SECTION, "PROMISSORY NOTE" INCLUDES A
NEGOTIABLE INSTRUMENT THAT EVIDENCES CHATTEL PAPER.
§ 75. Paragraph 1 of subsection (a) and the opening paragraph of
subsection (b) of section 9--509 of the uniform commercial code, as
added by chapter 84 of the laws of 2001, are amended to read as follows:
(1) the debtor authorizes the filing in [an authenticated] A
SIGNED record or pursuant to subsection (b) or (c); or A
SECURITY AGREEMENT AS AUTHORIZATION.
S. 1840--A 35
By [authenticating] SIGNING or becoming bound as debtor by a security
agreement, a debtor or new debtor authorizes the filing of an initial
financing statement, and an amendment, covering:
§ 76. Paragraph 2 of subsection (b) and the opening paragraph of
subsection (c) of section 9--513 of the uniform commercial code, as
added by chapter 84 of the laws of 2001, are amended to read as follows:
(2) if earlier, within 20 days after the secured party receives
[an authenticated] A SIGNED demand from a debtor.
In cases not governed by subsection (a), within 20 days after a
secured party receives [an authenticated] A SIGNED demand from a debtor,
the secured party shall cause the secured party of record for a financ-
ing statement to send to the debtor a termination statement for the
financing statement or file the termination statement in the filing
office if:
§ 77. Subsection (b) of section 9--601 of the uniform commercial code,
as amended by chapter 505 of the laws of 2014, is amended to read as
follows:
(b) Rights and duties of secured party in possession or control. A
secured party in possession of collateral or control of collateral under
Section 7--106, 9--104, 9--105, 9--105A, 9--106, [or] 9--107, OR 9--107A
has the rights and duties provided in Section 9--207.
§ 78. Section 9--605 of the uniform commercial code, as added by chap-
ter 84 of the laws of 2001, is amended to read as follows:
Section 9--605. Unknown Debtor or Secondary Obligor.
[A] (A) IN GENERAL: NO DUTY OWED BY SECURED PARTY. EXCEPT AS
PROVIDED IN SUBSECTION (B), A secured party does not owe a duty based on
its status as secured party:
[(a)] (1) to a person that is a debtor or obligor, unless the secured
party knows:
[(1)] (A) that the person is a debtor or obligor;
[(2)] (B) the identity of the person; and
[(3)] (C) how to communicate with the person; or
[(b)] (2) to a secured party or lienholder that has filed a financing
statement against a person, unless the secured party knows:
[(1)] (A) that the person is a debtor; and
[(2)] (B) the identity of the person.
(B) EXCEPTION: SECURED PARTY OWES DUTY TO DEBTOR OR OBLIGOR. 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 COLLA-
TERAL, OR THE SYSTEM IN WHICH THE COLLATERAL IS RECORDED.
§ 79. Subparagraph (C) of paragraph 1 of subsection (a) of section
9--608 of the uniform commercial code, as added by chapter 84 of the
laws of 2001, is amended to read as follows:
(C) the satisfaction of obligations secured by any subordi-
nate security interest in or other lien on the collateral
subject to the security interest or agricultural lien
under which the collection or enforcement is made if the
secured party receives [an authenticated] A SIGNED demand
S. 1840--A 36
for proceeds before distribution of the proceeds is
completed.
§ 80. Subsections (a), (b), (c) and (e) of section 9--611 of the
uniform commercial code, as added by chapter 84 of the laws of 2001, are
amended to read as follows:
(a) "Notification date." In this section, "notification date" means
the earlier of the date on which:
(1) a secured party sends to the debtor and any secondary obligor
[an authenticated] A SIGNED notification of disposition; or
(2) the debtor and any secondary obligor waive the right to
notification.
(b) Notification of disposition required. 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 [authenticated] SIGNED notification of disposition.
(c) Persons to be notified. To comply with subsection (b), the secured
party shall send [an authenticated] A SIGNED 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, [an authenticat-
ed] A SIGNED 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 financ-
ing statement against the debtor covering the
collateral as of that date; and
(C) any other secured party that, 10 days before the notifi-
cation date, held a security interest in the collateral
perfected by compliance with a statute, regulation, or
treaty described in Section 9--311(a).
(e) Compliance with subsection (c) (3) (B). A secured party complies
with the requirement for notification prescribed by subsection (c)
(3) (B) if:
(1) not later than twenty days or earlier than thirty days before
the notification date, the secured party requests, in a
commercially reasonable manner, information concerning
financing statements indexed under the debtor's name in the
office indicated in subsection (c) (3) (B); and
(2) before the notification date, the secured party:
(A) did not receive a response to the request for informa-
tion; or
(B) received a response to the request for information and
sent [an authenticated] A SIGNED notification of disposi-
tion to each secured party or other lienholder named in
that response whose financing statement covered the
collateral.
S. 1840--A 37
§ 81. Section 9--613 of the uniform commercial code, as added by chap-
ter 84 of the laws of 2001, is amended to read as follows:
Section 9--613. Contents and Form of Notification Before Disposition of
Collateral: General.
(A) CONTENTS AND FORM OF NOTIFICATION. Except in a consumer-goods
transaction, the following rules apply:
[(a)] (1) The contents of a notification of disposition are suffi-
cient if the notification:
[(1)] (A) describes the debtor and the secured party;
[(2)] (B) describes the collateral that is the subject of the
intended disposition;
[(3)] (C) states the method of intended disposition;
[(4)] (D) states that the debtor is entitled to an accounting of
the unpaid indebtedness and states the charge, if any, for an
accounting; and
[(5)] (E) states the time and place of a public disposition or
the time after which any other disposition is to be made.
[(b)] (2) Whether the contents of a notification that lacks any of
the information specified in subsection (a) are nevertheless sufficient
is a question of fact.
[(c)] (3) The contents of a notification providing substantially the
information specified in subsection (a) are sufficient, even if the
notification includes:
[(1)] (A) information not specified by subsection (a); or
[(2)] (B) minor errors that are not seriously misleading.
[(d)] (4) A particular phrasing of the notification is not required.
[(e)] (5) The following form of notification and the form appearing
in Section [9--614(c)] 9--614(A)(3), when completed IN ACCORDANCE WITH
THE INSTRUCTIONS IN SUBSECTION (B) AND SECTION 9--614(B), each provides
sufficient information:
NOTIFICATION OF DISPOSITION OF COLLATERAL
To: (Name of debtor, obligor, or other person to which the notifica-
tion 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 colla-
teral) (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 colla-
teral) 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 applica-
ble) (for a charge of $ ). You may request an accounting by calling us
at (telephone number).]
{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)
S. 1840--A 38
(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).
(END OF FORM)
(B) INSTRUCTIONS FOR FORM OF NOTIFICATION. 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 SUBSECTION (A)(5) 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 NOTIFICA-
TION 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.
§ 82. Section 9--614 of the uniform commercial code, as added by chap-
ter 84 of the laws of 2001, is amended to read as follows:
Section 9--614. Contents and Form of Notification Before Disposition of
Collateral: Consumer-goods Transaction.
(A) CONTENTS AND FORM OF NOTIFICATION. In a consumer-goods trans-
action, the following rules apply:
[(a)](1) A notification of disposition must provide the following
information:
[(1)](A) the information specified in Section 9--613(a);
[(2)](B) a description of any liability for a deficiency of the
person to which the notification is sent;
[(3)](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
[(4)](D) a telephone number or mailing address from which addi-
tional information concerning the disposition and the obli-
gation secured is available.
[(b)](2) A particular phrasing of the notification is not required.
[(c)](3) The following form of notification, when completed IN ACCORD-
ANCE WITH THE INSTRUCTIONS IN SUBSECTION (B), provides sufficient infor-
mation:
(Name and address of secured party)
(Date)
S. 1840--A 39
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:)]
{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.
[(For a private disposition:)]
{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 OR IN (DESCRIPTION OF
ELECTRONIC RECORD) (DESCRIPTION OF ELECTRONIC RECORD) how we have
figured the amount that you owe us, [you may] {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 writ-
ten 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 agree-
ment:
(Names of all other debtors and obligors, if any)
(END OF FORM)
[(d)](4) A notification in the form of [subsection (c)] PARAGRAPH (3)
is sufficient, even if additional information appears at the end of the
form.
[(e)](5) A notification in the form of [subsection (c)] PARAGRAPH (3)
is sufficient, even if it includes errors in information not required by
[subsection (a)] PARAGRAPH (3), unless the error is misleading with
respect to rights arising under this article.
[(f)](6) If a notification under this section is not in the form of
[subsection (c)] PARAGRAPH (3), law other than this article determines
the effect of including information not required by [subsection (a)]
PARAGRAPH (3).
S. 1840--A 40
(B) INSTRUCTIONS FOR FORM OF NOTIFICATION. 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 BRAC-
ES 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 NOTIFICA-
TION 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 ALTERNA-
TIVE 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:".
§ 83. Paragraphs 3 and 4 of subsection (a) of section 9--615 of the
uniform commercial code, as added by chapter 84 of the laws of 2001, are
amended to read as follows:
(3) the satisfaction of obligations secured by any subordinate
security interest in or other subordinate lien on the collat-
eral if:
(A) the secured party receives from the holder of the subor-
dinate security interest or other lien [an authenticated]
A SIGNED demand for proceeds before distribution of the
proceeds is completed; and
(B) in a case in which a consignor has an interest in the
collateral, the subordinate security interest or other
lien is senior to the interest of the consignor; and
(4) a secured party that is a consignor of the collateral if the
secured party receives from the consignor [an authenticated]
A SIGNED demand for proceeds before distribution of the
proceeds is completed.
§ 84. Subsections (a) and (b) and the opening paragraph of subsection
(c) of section 9--616 of the uniform commercial code, as added by chap-
ter 84 of the laws of 2001, are amended to read as follows:
(a) Definitions. In this section:
(1) "Explanation" means a [writing] RECORD that:
(A) states the amount of the surplus or deficiency;
S. 1840--A 41
(B) provides an explanation in accordance with subsection (c)
of how the secured party calculated the surplus or defi-
ciency;
(C) states, if applicable, that future debits, credits,
charges, including additional credit service charges or
interest, rebates, and expenses may affect the amount of
the surplus or deficiency; and
(D) provides a telephone number or mailing address from which
additional information concerning the transaction is
available.
(2) "Request" means a record:
(A) [authenticated] SIGNED by a debtor or consumer obligor;
(B) requesting that the recipient provide an explanation; and
(C) sent after disposition of the collateral under Section
9--610.
(b) Explanation of calculation. 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 fourteen days after receipt of a request; or
(2) in the case of a consumer obligor who is liable for a defi-
ciency, within fourteen days after receipt of a request, send
to the consumer obligor a record waiving the secured party's
right to a deficiency.
To comply with subsection (a)(1)(B), [a writing] AN EXPLANATION
must provide the following information in the following
order:
§ 85. The opening paragraph of subsection (a) of section 9--619 of the
uniform commercial code, as added by chapter 84 of the laws of 2001, is
amended to read as follows:
In this section, "transfer statement" means a record [authenticated]
SIGNED by a secured party stating:
§ 86. The uniform commercial code is amended by adding a new article
12 to read as follows:
ARTICLE 12
CONTROLLABLE ELECTRONIC RECORDS
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:
(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
S. 1840--A 42
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
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 OF "ACCOUNT DEBTOR", "CONTROLLABLE
ACCOUNT", "CONTROLLABLE PAYMENT INTANGIBLE", "CHATTEL PAPER", "DEPOSIT
ACCOUNT", "ELECTRONIC MONEY", AND "INVESTMENT PROPERTY" 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, INCLUDING ARTICLE 22-A OF THE GENERAL
BUSINESS LAW AND CHAPTER 5 OF TITLE 20 OF THE NEW YORK CITY ADMINISTRA-
TIVE CODE.
(C) ENFORCEABILITY OR EFFECTIVENESS. 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 EFFECTIVE DATE OF THIS ARTICLE.
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
S. 1840--A 43
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) 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).
S. 1840--A 44
(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
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:
S. 1840--A 45
(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 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.
S. 1840--A 46
(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
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, THAT JURISDICTION IS THE CONTROLLABLE ELECTRONIC 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, 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
S. 1840--A 47
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
ARE GOVERNED BY THE LAW APPLICABLE UNDER THIS SECTION AT THE TIME OF
PURCHASE.
§ 87. The uniform commercial code is amended by adding a new article
12-A to read as follows:
ARTICLE 12-A
TRANSITIONAL PROVISIONS FOR UNIFORM COMMERCIAL
CODE AMENDMENTS
PART 1
GENERAL PROVISIONS AND DEFINITIONS
SECTION 12-A-101. TITLE. THIS ARTICLE MAY BE CITED AS TRANSITIONAL
PROVISIONS FOR THE 2025 UNIFORM COMMERCIAL CODE
AMENDMENTS.
SECTION 12-A-102. DEFINITIONS.
(A) ARTICLE A DEFINITIONS. IN THIS ARTICLE:
(1) "ADJUSTMENT DATE" MEANS THE DATE THAT IS ONE YEAR AFTER THE EFFEC-
TIVE DATE.
(2) "ARTICLE 12" MEANS ARTICLE 12 OF THIS CODE.
(3) "ARTICLE 12 PROPERTY" MEANS A CONTROLLABLE ACCOUNT, CONTROLLABLE
ELECTRONIC RECORD, OR CONTROLLABLE PAYMENT INTANGIBLE.
(4) "EFFECTIVE DATE" MEANS THE DATE DETERMINED PURSUANT TO SECTION 88
OF THE UCC REVISION ACT.
(5) "REVISED UCC" MEANS THE UNIFORM COMMERCIAL CODE AS AMENDED BY THE
UCC REVISION ACT.
(6) "UCC REVISION ACT" MEANS THE CHAPTER OF THE LAWS OF TWO THOUSAND
TWENTY-FIVE THAT ADDED THIS ARTICLE AND ARTICLE 12 TO THE UNIFORM
COMMERCIAL CODE.
(B) DEFINITIONS IN OTHER ARTICLES. THE FOLLOWING DEFINITIONS IN OTHER
ARTICLES OF THIS CODE APPLY TO THIS ARTICLE.
"CONTROLLABLE ACCOUNT". SECTION 9--102.
"CONTROLLABLE ELECTRONIC RECORD". SECTION 12--102.
"CONTROLLABLE PAYMENT INTANGIBLE". SECTION 9--102.
"ELECTRONIC MONEY". SECTION 9--102.
"FINANCING STATEMENT". SECTION 9--102.
(C) ARTICLE 1 DEFINITIONS AND PRINCIPLES. ARTICLE 1 CONTAINS GENERAL
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION AND INTERPRETATION APPLICABLE
THROUGHOUT THIS ARTICLE.
PART 2
GENERAL TRANSITIONAL PROVISION
SECTION 12-A-201. SAVING CLAUSE.
EXCEPT AS PROVIDED IN PART 3, A TRANSACTION VALIDLY ENTERED INTO
BEFORE THE EFFECTIVE DATE OF THIS ARTICLE 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 THE UNIFORM COMMERCIAL CODE OR, IF APPLICA-
BLE, THE UNIFORM COMMERCIAL CODE AS THOUGH THE UCC REVISION ACT HAD NOT
TAKEN EFFECT.
PART 3
TRANSITIONAL PROVISIONS FOR ARTICLES 9 AND 12
S. 1840--A 48
SECTION 12-A-301. SAVING CLAUSE.
(A) PRE-EFFECTIVE-DATE TRANSACTION, LIEN, OR INTEREST. EXCEPT AS
PROVIDED IN THIS PART, ARTICLE 9 AS AMENDED BY THE UCC REVISION ACT AND
ARTICLE 12 APPLY TO A TRANSACTION, LIEN, OR OTHER INTEREST IN PROPERTY,
EVEN IF THE TRANSACTION, LIEN, OR INTEREST WAS ENTERED INTO, CREATED, OR
ACQUIRED BEFORE THE EFFECTIVE DATE.
(B) CONTINUING VALIDITY. EXCEPT AS PROVIDED IN SUBSECTION (C) AND
SECTIONS 12-A-302 THROUGH 12-A-306:
(1) A TRANSACTION, LIEN, OR INTEREST IN PROPERTY THAT WAS VALIDLY
ENTERED INTO, CREATED, OR TRANSFERRED BEFORE THE EFFECTIVE DATE OF THE
UCC REVISION ACT AND WAS NOT GOVERNED BY THE UNIFORM COMMERCIAL CODE,
BUT WOULD BE SUBJECT TO ARTICLE 9 AS AMENDED BY THE UCC REVISION ACT OR
ARTICLE 12 IF IT HAD BEEN ENTERED INTO, CREATED, OR TRANSFERRED ON OR
AFTER THE EFFECTIVE DATE, INCLUDING THE RIGHTS, DUTIES, AND INTERESTS
FLOWING FROM THE TRANSACTION, LIEN, OR INTEREST, REMAINS VALID ON AND
AFTER THE EFFECTIVE DATE OF THE UCC REVISION ACT; AND
(2) THE TRANSACTION, LIEN, OR INTEREST MAY BE TERMINATED, COMPLETED,
CONSUMMATED, AND ENFORCED AS REQUIRED OR PERMITTED BY THE REVISED UCC OR
BY THE LAW THAT WOULD APPLY IF THE UCC REVISION ACT HAD NOT TAKEN
EFFECT.
(C) PRE-EFFECTIVE-DATE PROCEEDING. THE UCC REVISION ACT DOES NOT
AFFECT AN ACTION, CASE, OR PROCEEDING COMMENCED BEFORE THE EFFECTIVE
DATE OF THE UCC REVISION ACT.
SECTION 12-A-302. SECURITY INTEREST PERFECTED BEFORE EFFECTIVE DATE.
(A) CONTINUING PERFECTION: PERFECTION REQUIREMENTS SATISFIED. A SECU-
RITY INTEREST THAT IS ENFORCEABLE AND PERFECTED IMMEDIATELY BEFORE THE
EFFECTIVE DATE OF THE UCC REVISION ACT IS A PERFECTED SECURITY INTEREST
UNDER THE REVISED UCC IF, ON THE EFFECTIVE DATE OF THE UCC REVISION ACT,
THE REQUIREMENTS FOR ENFORCEABILITY AND PERFECTION UNDER THE REVISED UCC
ARE SATISFIED WITHOUT FURTHER ACTION.
(B) CONTINUING PERFECTION: ENFORCEABILITY OR PERFECTION REQUIREMENTS
NOT SATISFIED. IF A SECURITY INTEREST IS ENFORCEABLE AND PERFECTED IMME-
DIATELY BEFORE THE EFFECTIVE DATE OF THE UCC REVISION ACT, BUT THE
REQUIREMENTS FOR ENFORCEABILITY OR PERFECTION UNDER THE REVISED UCC ARE
NOT SATISFIED ON THE EFFECTIVE DATE OF THE UCC REVISION ACT, THE SECURI-
TY INTEREST:
(1) IS A PERFECTED SECURITY INTEREST UNTIL THE EARLIER OF THE TIME
PERFECTION WOULD HAVE CEASED UNDER THE LAW IN EFFECT IMMEDIATELY BEFORE
THE EFFECTIVE DATE OF THE UCC REVISION ACT 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 UCC REVISION ACT; AND
(3) REMAINS PERFECTED THEREAFTER ONLY IF THE REQUIREMENTS FOR
PERFECTION UNDER THE REVISED UCC ARE SATISFIED BEFORE THE TIME SPECIFIED
IN PARAGRAPH (1).
SECTION 12-A-303. SECURITY INTEREST UNPERFECTED BEFORE EFFECTIVE DATE.
A SECURITY INTEREST THAT IS ENFORCEABLE IMMEDIATELY BEFORE THE EFFEC-
TIVE DATE OF THE UCC REVISION ACT 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 UCC REVISION ACT, ON
THE EFFECTIVE DATE OF THE UCC REVISION ACT OR BEFORE THE ADJUSTMENT
DATE; AND
(3) BECOMES PERFECTED:
S. 1840--A 49
(A) WITHOUT FURTHER ACTION, ON THE EFFECTIVE DATE OF THE UCC REVISION
ACT IF THE REQUIREMENTS FOR PERFECTION UNDER THE REVISED UCC ARE SATIS-
FIED BEFORE OR AT THAT TIME; OR
(B) WHEN THE REQUIREMENTS FOR PERFECTION ARE SATISFIED IF THE REQUIRE-
MENTS ARE SATISFIED AFTER THAT TIME.
SECTION 12-A-304. EFFECTIVENESS OF ACTIONS TAKEN BEFORE EFFECTIVE DATE.
(A) PRE-EFFECTIVE-DATE ACTION; ATTACHMENT AND PERFECTION BEFORE
ADJUSTMENT DATE. IF ACTION, OTHER THAN THE FILING OF A FINANCING STATE-
MENT, IS TAKEN BEFORE THE EFFECTIVE DATE OF THE UCC REVISION ACT AND THE
ACTION WOULD HAVE RESULTED IN PERFECTION OF THE SECURITY INTEREST HAD
THE SECURITY INTEREST BECOME ENFORCEABLE BEFORE THE EFFECTIVE DATE OF
THE UCC REVISION ACT, THE ACTION IS EFFECTIVE TO PERFECT A SECURITY
INTEREST THAT ATTACHES UNDER THE REVISED UCC BEFORE THE ADJUSTMENT DATE.
AN ATTACHED SECURITY INTEREST BECOMES UNPERFECTED ON THE ADJUSTMENT DATE
UNLESS THE SECURITY INTEREST BECOMES A PERFECTED SECURITY INTEREST UNDER
THE REVISED UCC BEFORE THE ADJUSTMENT DATE.
(B) PRE-EFFECTIVE-DATE FILING. THE FILING OF A FINANCING STATEMENT
BEFORE THE EFFECTIVE DATE OF THE UCC REVISION ACT IS EFFECTIVE TO
PERFECT A SECURITY INTEREST ON THE EFFECTIVE DATE OF THIS ARTICLE TO THE
EXTENT THE FILING WOULD SATISFY THE REQUIREMENTS FOR PERFECTION UNDER
THE REVISED UCC.
(C) PRE-EFFECTIVE-DATE ENFORCEABILITY ACTION. THE TAKING OF AN ACTION
BEFORE THE EFFECTIVE DATE OF THE UCC REVISION ACT IS SUFFICIENT FOR THE
ENFORCEABILITY OF A SECURITY INTEREST ON THE EFFECTIVE DATE OF THE UCC
REVISION ACT IF THE ACTION WOULD SATISFY THE REQUIREMENTS FOR ENFORCEA-
BILITY UNDER THE REVISED UCC.
SECTION 12-A-305. PRIORITY.
(A) DETERMINATION OF PRIORITY. SUBJECT TO SUBSECTIONS (B) AND (C), THE
REVISED UCC DETERMINES THE PRIORITY OF CONFLICTING CLAIMS TO COLLATERAL.
(B) ESTABLISHED PRIORITIES. SUBJECT TO SUBSECTION (C), IF THE PRIORI-
TIES OF CLAIMS TO COLLATERAL WERE ESTABLISHED BEFORE THE EFFECTIVE DATE
OF THE UCC REVISION ACT, ARTICLE 9 AS IN EFFECT BEFORE THE EFFECTIVE
DATE OF THE UCC REVISION ACT DETERMINES PRIORITY.
(C) DETERMINATION OF CERTAIN PRIORITIES ON ADJUSTMENT DATE. ON THE
ADJUSTMENT DATE, TO THE EXTENT THE PRIORITIES DETERMINED BY ARTICLE 9 AS
AMENDED BY THE UCC REVISION ACT MODIFY THE PRIORITIES ESTABLISHED BEFORE
THE EFFECTIVE DATE OF THE UCC REVISION ACT, THE PRIORITIES OF CLAIMS TO
ARTICLE 12 PROPERTY AND ELECTRONIC MONEY ESTABLISHED BEFORE THE EFFEC-
TIVE DATE OF THE UCC REVISION ACT CEASE TO APPLY.
SECTION 12-A-306. PRIORITY OF CLAIMS WHEN PRIORITY RULES OF ARTICLE 9 DO
NOT APPLY.
(A) DETERMINATION OF PRIORITY. SUBJECT TO SUBSECTIONS (B) AND (C),
ARTICLE 12 DETERMINES THE PRIORITY OF CONFLICTING CLAIMS TO ARTICLE 12
PROPERTY WHEN THE PRIORITY RULES OF ARTICLE 9 AS AMENDED BY THE UCC
REVISION ACT DO NOT APPLY.
(B) ESTABLISHED PRIORITIES. SUBJECT TO SUBSECTION (C), WHEN THE PRIOR-
ITY RULES OF ARTICLE 9 AS AMENDED BY THE UCC REVISION ACT DO NOT APPLY
AND THE PRIORITIES OF CLAIMS TO ARTICLE 12 PROPERTY WERE ESTABLISHED
BEFORE THE EFFECTIVE DATE OF THE UCC REVISION ACT, LAW OTHER THAN ARTI-
CLE 12 DETERMINES PRIORITY.
(C) DETERMINATION OF CERTAIN PRIORITIES ON ADJUSTMENT DATE. WHEN THE
PRIORITY RULES OF ARTICLE 9 AS AMENDED BY THE UCC REVISION ACT DO NOT
APPLY, TO THE EXTENT THE PRIORITIES DETERMINED BY THE REVISED UCC MODIFY
THE PRIORITIES ESTABLISHED BEFORE THE EFFECTIVE DATE OF THE UCC REVISION
ACT, THE PRIORITIES OF CLAIMS TO ARTICLE 12 PROPERTY ESTABLISHED BEFORE
S. 1840--A 50
THE EFFECTIVE DATE OF OF THE UCC REVISION ACT CEASE TO APPLY ON THE
ADJUSTMENT DATE.
§ 88. This act shall take effect on the one hundred eightieth day
after it shall have become a law.
