Chapter
112
2006 -- S 2739
Enacted 06/16/06
A N A
C T
RELATING TO THE
UNIFORM COMMERCIAL CODE
Introduced By: Senator
William A. Walaska
Date Introduced: February
14, 2006
It is
enacted by the General Assembly as follows:
SECTION
1. Section 6A-1-201 of the General Laws in Chapter 6A-1 entitled "General
Provisions"
is hereby amended to read as follows:
6A-1-201.
General definitions. -- Subject to additional definitions contained in
the
subsequent
chapters of this title which are applicable to specific chapters thereof, and
unless the
context
otherwise requires, in this title:
(1) "Action" in the sense of a judicial proceeding includes
recoupment, counterclaim,
set-off,
suit in equity, and any other proceedings in which rights are determined.
(2) "Aggrieved party" means a party entitled to resort to a remedy.
(3) "Agreement" means the bargain of the parties in fact as found in
their language or by
implication
from other circumstances including course of dealing or usage of trade or
course of
performance
as provided in this title (sections 6A-1-205, 6A-1-208 and 6A-2.1-207). Whether
an
agreement
has legal consequences is determined by the provisions of this title, if
applicable;
otherwise
by the law of contracts (section 6A-1-103). (Compare "Contract".)
(4) "Bank" means any person engaged in the business of banking.
(5) "Bearer" means the a person in control of a negotiable
electronic document of title or
a person in possession of an instrument, a
negotiable, tangible document of title, or certificated
security
payable to bearer or indorsed in blank.
(6) "Bill of lading" means a document of title evidencing the
receipt of goods for
shipment
issued by a person engaged in the business of directly or indirectly
transporting or
forwarding
goods, and includes an airbill. "Airbill" means a document serving
for air
transportation
as a bill of lading does for marine or rail transportation, and includes an air
consignment
note or air waybill. The term does
not include a warehouse receipt.
(7) "Branch" includes a separately incorporated foreign branch of a
bank.
(8) "Burden of establishing" a fact means the burden of persuading
the triers of fact that
the
existence of the fact is more probable than its nonexistence.
(9) "Buyer in ordinary course of business" means a person that buys
goods in good faith,
without
knowledge that the sale violates the rights of another person in the goods, and
in the
ordinary
course from a person, other than a pawnbroker, in the business of selling goods
of that
kind. A
person buys goods in the ordinary course if the sale to the person comports
with the usual
or
customary practices in the kind of business in which the seller is engaged or
with the seller's
own
usual or customary practices. A person that sells oil, gas, or other minerals
at the wellhead or
minehead
is a person in the business of selling goods of that kind. A buyer in ordinary
course of
business
may buy for cash, by exchange of other property, or on secured or unsecured
credit, and
may
acquire goods or documents of title under a pre-existing contract for sale.
Only a buyer that
takes
possession of the goods or has a right to recover the goods from the seller under
chapter 2
may be a
buyer in ordinary course of business. A person that acquires goods in a
transfer in bulk
or as
security for or in total or partial satisfaction of a money debt is not a buyer
in ordinary
course
of business.
(10) "Conspicuous": A term or clause is conspicuous when it is so
written that a
reasonable
person against whom it is to operate ought to have noticed it. A printed
heading in
capitals
(as: NONNEGOTIABLE BILL OF LADING) is conspicuous. Language in the body of a
form
is "conspicuous" if it is in larger or other contrasting type or
color. But in a telegram any
stated
term is "conspicuous". Whether a term or clause is
"conspicuous" or not is for decision by
the
court. , with reference to a term,
means so written, displayed or presented that a reasonable
person
against which it is to operate ought to have noticed it. Whether a term is
"conspicuous" or
not
is a decision for the court. Conspicuous terms include the following:
(a)
a heading in capitals equal to or greater in size than the surrounding text, or
in
contrasting
type, font or color to the surrounding text of the same or lesser size; and
(b)
language in the body of a record or display in larger type than the surrounding
text, or
in
contrasting text, or in contrasting type, font, or color to the surrounding
text of the same size,
or
set off from surrounding text of the same size by symbols or other marks that
call attention to
the
language.
(11) "Contract" means the total legal obligation which results from
the parties' agreement
as
affected by this title and any other applicable rules of law. (Compare
"Agreement".)
(12) "Creditor" includes a general creditor, a secured creditor, a
lien creditor, and any
representative
of creditors, including an assignee for the benefit of creditors, a trustee in
bankruptcy,
a receiver in equity, and an executor or administrator of an insolvent debtor's
or
assignor's
estate.
(13) "Defendant" includes a person in the position of defendant in a
cross-action or
counterclaim.
(14) "Delivery" with respect to an electronic document of title
means voluntary transfer
of
control and with respect to
instruments, tangible documents of title, chattel paper, or
certificated
securities means voluntary transfer of possession.
(15) "Document of title" includes bill of lading, dock warrant,
dock receipt, warehouse
receipt,
or order for the delivery of goods, and also any other document which means a record: (i)
that in the regular course of business or financing is
treated as adequately evidencing that the
person
in possession or control of it the record is entitled to
receive, control, hold, and dispose of
the document
record and the goods it the record covers. To be a
document of title a document
must
purport to be issued by or addressed to a bailee and purport to cover goods in
the bailee's
possession
which are either identified or are fungible portions of an identified mass. ; and (ii) that
purports
to be issued by or addressed to a bailee and to cover goods in the bailee's
possession
which
are either identified or are fungible portions of an identified mass. The term
includes a bill
of
lading, transport document, dock warrant, dock receipt, warehouse receipt, and
order for
delivery
of goods. An electronic document of title means a document of title evidenced
by a
record
consisting of information stored in an electronic medium. A tangible document
of title
means
a document of title evidenced by a record consisting of information that is
inscribed on a
tangible
medium.
(16) "Fault" means wrongful act, omission, or breach.
(17) "Fungible" with respect to goods or securities means goods or
securities of which
any unit
is, by nature or usage of trade, the equivalent of any other like unit. Goods
which are not
fungible
shall be deemed fungible for the purposes of this title to the extent that
under a particular
agreement
or document unlike units are treated as equivalents.
(18) "Genuine" means free of forgery or counterfeiting.
(19) "Good faith" means honesty in fact in the conduct or transaction
concerned.
(20) "Holder" with respect to a negotiable instrument, means the
person in possession if
the
instrument is payable to bearer or, in the case of an instrument payable to an
identified person,
if
the identified person is in possession. "Holder" with respect to a
document of title means the
person
in possession if the goods are deliverable to bearer or to the order of the
person in
possession. means:
(a)
the person in possession of a negotiable instrument that is payable either to
bearer or
to an
identified person that is the person in possession;
(b)
the person in possession of a negotiable tangible document of title if the
goods are
deliverable
either to bearer or to the order of the person in possession; or
(c)
the person in control of a negotiable electronic document of title.
(21) To "honor" is to pay or to accept and pay, or where a credit so
engages to purchase
or
discount a draft complying with the terms of the credit.
(22) "Insolvency proceedings" includes any assignment for the benefit
of creditors or
other
proceedings intended to liquidate or rehabilitate the estate of the person
involved.
(23) A person is "insolvent" who either has ceased to pay his or her
debts in the ordinary
course
of business or cannot pay his or her debts as they become due or is insolvent
within the
meaning
of the federal bankruptcy law.
(24) "Money" means a medium of exchange authorized or adopted by a
domestic or
foreign
government and includes a monetary unit of account established by an
intergovernmental
organization
or by agreement between two or more nations.
(25) A Subject to subsection (27), a person has
"notice" of a fact when if the person:
(i) He or she has actual knowledge of it; or
(ii) He or she has received a notice or notification of it; or
(iii) From all the facts and circumstances known to him or her at the time in
question he
or she
has reason to know that it exists.
A person "knows" or has "knowledge" of a fact when he or
she the person has actual
knowledge
of it. "Discover" or "learn" or a word or phrase of similar
import refers to knowledge
rather
than to reason to know. The time and circumstances under which a notice or
notification
may
cease to be effective are not determined by this title.
(26) A person "notifies" or "gives" a notice or
notification to another person by taking
such
steps as may be reasonably required to inform the other person in
ordinary course, whether
or not such
other the other person actually comes to know of it. A Subject
to subsection (27), a
person
"receives" a notice or notification when
(i) It comes to his or her that person's attention; or
(ii) It is duly delivered in a form reasonable under the circumstances
at the place of
business
through which the contract was made or at any other place another
location held out by
him
or her that person as the place
for receipt of such communications.
(27) Notice, knowledge, or a notice or notification received by an organization
is
effective
for a particular transaction from the time when it is brought to the attention
of the
individual
conducting that transaction, and in any event from the time when it would have
been
brought
to his or her the individual's attention if the organization had
exercised due diligence. An
organization
exercises due diligence if it maintains reasonable routines for communicating
significant
information to the person conducting the transaction and there is reasonable
compliance
with the routines. Due diligence does not require an individual acting for the
organization
to communicate information unless such communication is part of the
individual's
regular
duties or the individual has reason to know of the transaction and that the
transaction
would
be materially affected by the information.
(28) "Organization" includes a corporation, government or
governmental subdivision or
agency,
business trust, estate, trust, partnership, or association, two (2) or more
persons having a
joint or
common interest, or any other legal or commercial entity.
(29) "Party", as distinct from "third party", means a
person who has engaged in a
transaction
or made an agreement within this title.
(30) "Person" includes an individual or an organization (see section
6A-1-102).
(31) "Presumption" or "presumed" means that the trier of
fact must find the existence of
the fact
presumed unless and until evidence is introduced which would support a finding
of its
nonexistence.
(32) "Purchase" includes taking by sale, discount, negotiation,
mortgage, pledge, lien,
security
interest, issue or re-issue, gift, or any other voluntary transaction creating
an interest in
property.
(33) "Purchaser" means a person who takes by purchase.
(34) "Remedy" means any remedial right to which an aggrieved party is
entitled with or
without
resort to a tribunal.
(35) "Representative" includes an agent, an officer of a corporation
or association, and a
trustee,
executor or administrator of an estate, or any other person empowered to act
for another.
(36) "Rights" includes remedies.
(37) "Security interest" means an interest in personal property or
fixtures which secures
payment
or performance of an obligation. The term also includes any interest of a
consignor and a
buyer of
accounts, chattel paper, a payment intangible, or a promissory note in a
transaction that
is
subject to chapter 9. The special property interest of a buyer of goods on
identification of those
goods to
a contract for sale under section 6A-2-401 is not a "security
interest," but a buyer may
also
acquire a "security interest" by complying with chapter 9. Except as
otherwise provided in
section
6A-2-505, the right of a seller or lessor of goods under chapter 2 or 2.1 of
this title to
retain
or acquire possession of the goods is not a "security interest," but
a seller or lessor may also
acquire
a "security interest" by complying with chapter 9. The retention or
reservation of title by
a seller
of goods notwithstanding shipment or delivery to the buyer (section 6A-2-401)
is limited
in effect
to a reservation of a "security interest."
(i) Whether a transaction creates a lease or security interest is determined by
the facts of
each
case; however, a transaction creates a security interest if the consideration
the lessee is to
pay the
lessor for the right to possession and use of the goods is an obligation for
the term of the
lease
not subject to termination by the lessee, and
(A) The original term of the lease is equal to or greater than the remaining
economic life
of the
goods;
(B) The lessee is bound to renew the lease for the remaining economic life of
the goods
or is
bound to become the owner of the goods;
(C) The lessee has an option to renew the lease for the remaining economic life
of the
goods
for no additional consideration or nominal additional consideration upon
compliance with
the
lease agreement; or
(D) The lessee has an option to become the owner of the goods for no additional
consideration
or nominal additional consideration upon compliance with the lease agreement.
(ii) A transaction does not create a security interest merely because it
provides that:
(A) The present value of the consideration the lessee is obligated to pay the
lessor for the
right to
possession and use of the goods is substantially equal to or is greater than
the fair market
value of
the goods at the time the lease is entered into;
(B) The lessee assumes risk of loss of the goods, or agrees to pay taxes,
insurance, filing,
recording,
or registration fees, or service or maintenance costs with respect to the
goods;
(C) The lessee has an option to renew the lease or to become the owner of the
goods;
(D) The lessee has an option to renew the lease for a fixed rent that is equal
to or greater
than the
reasonably predictable fair market rent for the use of the goods for the term
of the
renewal
at the time the option is to be performed; or
(E) The lessee has an option to become the owner of the goods for a fixed price
that is
equal to
or greater than the reasonably predictable fair market value of the goods at
the time the
option
is to be performed.
(iii) For purposes of this subsection (37):
(A) Additional consideration is not nominal if (i) when the option to renew the
lease is
granted
to the lessee the rent is stated to be the fair market rent for the use of the
goods for the
term of
the renewal determined at the time the option is to be performed, or (ii) when
the option
to
become the owner of the goods is granted to the lessee the price is stated to
be the fair market
value of
the goods determined at the time the option is to be performed. Additional
consideration
is
nominal if it is less than the lessee's reasonably predictable cost of
performing under the lease
agreement
if the option is not exercised;
(B) "Reasonably predictable" and "remaining economic life of the
goods" are to be
determined
with reference to the facts and circumstances at the time the transaction is
entered
into;
and
(C) "Present value" means the amount as of a date certain of one or
more sums payable
in the
future, discounted to the date certain. The discount is determined by the
interest rate
specified
by the parties if the rate is not manifestly unreasonable at the time the transaction
is
entered
into; otherwise, the discount is determined by a commercially reasonable rate
that takes
into
account the facts and circumstances of each case at the time the transaction
was entered into.
(38) "Send" in connection with any writing or notice means to
deposit in the mail or
deliver
for transmission by any other usual means of communication with postage or cost
of
transmission
provided for and properly addressed, and, in the case of an instrument to an
address
specified
thereon or otherwise agreed, or if there be none to any address reasonable
under the
circumstances.
The receipt of any writing or notice within the time at which it would have
arrived
if
properly sent has the effect of a proper sending. in connection with a writing, record, or notice
means:
(a)
to deposit in the mail or deliver for transmission by any other usual means of
communication
with postage or cost of transmission provided for and properly addressed and,
in
the
case of an instrument, to an address specified thereon or otherwise agreed, or
if there be none
to
any address reasonable under the circumstances; or
(b)
in any other way to cause to be received any record or notice within the time
it would
have
arrived if properly sent.
(39) "Signed" includes any symbol executed or adopted by a party with
present intention
to
authenticate a writing.
(40) "Surety" includes guarantor.
(41) "Telegram" includes a message transmitted by radio, teletype,
cable, any
mechanical
method of transmission, or the like.
(42) "Term" means that portion of an agreement which relates to a
particular matter.
(43) "Unauthorized" signature means one made without actual, implied,
or apparent
authority
and includes a forgery.
(44) "Value". Except as otherwise provided with respect to negotiable
instruments and
bank
collections (sections 6A-3-303, 6A-4-210, and 6A-4-211), a person gives
"value" for rights
if he or
she acquires them:
(i) In return for a binding commitment to extend credit or for the extension of
immediately
available credit, whether or not drawn upon and whether or not a charge-back is
provided
for in the event of difficulties in collection; or
(ii) As security for or in total or partial satisfaction of a pre-existing
claim; or
(iii) By accepting delivery pursuant to a pre-existing contract for purchase;
or
(iv) Generally, in return for any consideration sufficient to support a simple
contract.
(45) "Warehouse receipt" means a receipt document of title
issued by a person engaged
in the
business of storing goods for hire.
(46) "Written" or "writing" includes printing, typewriting,
or any other intentional
reduction
to tangible form.
SECTION
2. Sections 6A-2-103, 6A-2-104, 6A-2-310, 6A-2-323, 6A-2-401, 6A-2-503,
6A-2-505,
6A-2-506, 6A-2-509, 6A-2-605 and 6A-2-705 of the General Laws in Chapter 6A-2
entitled
"Sales" are hereby amended to read as follows:
6A-2-103.
Definitions and index of definitions. -- (1) In this chapter unless the
context
otherwise
requires
(a) "Buyer" means a person who buys or contracts to buy goods.
(b) "Good faith" in the case of a merchant means honesty in fact and
the observance of
reasonable
commercial standards of fair dealing in the trade.
(c) "Receipt" of goods means taking physical possession of them.
(d) "Seller" means a person who sells or contracts to sell goods.
(2) Other definitions applying to this chapter or to specified parts thereof, and
the
sections
in which they appear are:
"Acceptance". section 6A-2-606.
"Banker's credit". section 6A-2-325.
"Between merchants". section 6A-2-104.
"Cancellation". section 6A-2-106(4).
"Commercial unit". section 6A-2-105.
"Confirmed credit". section 6A-2-325.
"Conforming to contract". section 6A-2-106.
"Contract for sale". section 6A-2-106.
"Cover". section 6A-2-712.
"Entrusting". section 6A-2-403.
"Financing agency". section 6A-2-104.
"Future goods". section 6A-2-105.
"Goods". section 6A-2-105.
"Identification". section 6A-2-501.
"Installment contract". section 6A-2-612.
"Letter of credit". section 6A-2-325.
"Lot". section 6A-2-105.
"Merchant". section 6A-2-104.
"Overseas". section 6A-2-323.
"Person in position of seller". section 6A-2-707.
"Present sale". section 6A-2-106.
"Sale". section 6A-2-106.
"Sale on approval". section 6A-2-326.
"Sale or return". section 6A-2-326.
"Termination". section 6A-2-106.
(3) The "Control" as provided in section 6A-7-106 and the
following definitions in
other
chapters apply to this chapter:
"Check". section 6A-3-104.
"Consignee". section 6A-7-102.
"Consignor". section 6A-7-102.
"Consumer goods". section 6A-9-102.
"Dishonor". section 6A-3-502.
"Draft". section 6A-3-104.
(4) In addition chapter 1 of title 6A contains general definitions and
principles of
construction
and interpretation applicable throughout this chapter.
6A-2-104.
Definitions -- "Merchant" -- "Between merchants" --
"Financing
agency".
-- (1) "Merchant" means
a person who deals in goods of the kind or otherwise by his or
her
occupation holds him or herself out as having knowledge or skill peculiar to
the practices or
goods
involved in the transaction or to whom such knowledge or skill may be
attributed by his or
her
employment of an agent or broker or other intermediary who by his or her occupation
holds
him or
herself out as having such knowledge or skill.
(2) "Financing agency" means a bank, finance company, or other person
who in the
ordinary
course of business makes advances against goods or documents of title or who by
arrangement
with either the seller or the buyer intervenes in ordinary course to make or
collect
payment
due or claimed under the contract for sale, as by purchasing or paying the
seller's draft
or
making advances against it or by merely taking it for collection whether or not
documents of
title
accompany or are associated with the draft. "Financing agency"
includes also a bank or other
person
who similarly intervenes between persons who are in the position of seller and
buyer in
respect to
the goods (section 6A-2-707).
(3) "Between merchants" means in any transaction with respect to
which both parties are
chargeable
with the knowledge or skill of merchants.
6A-2-310.
Open time for payment or running of credit -- Authority to ship under
reservation.
-- Unless otherwise agreed,
(a) Payment is due at the time and place at which the buyer is to receive the
goods even
though
the place of shipment is the place of delivery; and
(b) If the seller is authorized to send the goods he or she may ship them under
reservation,
and may tender the documents of title, but the buyer may inspect the goods
after their
arrival
before payment is due unless such inspection is inconsistent with the terms of
the contract
(section
6A-2-513); and
(c) If delivery is authorized and made by way of documents of title otherwise
than by
subsection
(b) then payment is due regardless of where the goods are to be received:
(i) at the
time and
place at which the buyer is to receive delivery of the tangible
documents regardless of
where
the goods are to be received; or
(ii) at the time the buyer is to receive the electronic
documents
and at the seller's place of business or if none, the seller's residence; and
(d) Where the seller is required or authorized to ship the goods on credit the
credit period
runs
from the time of shipment, but postdating the invoice or delaying its dispatch
will
correspondingly
delay the starting of the credit period.
6A-2-323.
Form of bill of lading required in overseas shipment -- "Overseas".
-- (1)
Where
the contract contemplates overseas shipment and contains a term C.I.F. or C.
& F. or
F.O.B.
vessel, the seller, unless otherwise agreed, must obtain a negotiable bill of
lading stating
that the
goods have been loaded on board or, in the case of a term C.I.F. or C. &
F., received for
shipment.
(2) Where in a case within subsection (1) a tangible bill of lading has
been issued in a set
of
parts, unless otherwise agreed, if the documents are not to be sent from abroad
the buyer may
demand
tender of the full set; otherwise only one part of the bill of lading need be
tendered. Even
if the
agreement expressly requires a full set,
(a) Due tender of a single part is acceptable within the provisions of this
chapter on cure
of
improper delivery (section 6A-2-508(1)); and
(b) Even though the full set is demanded, if the documents are sent from abroad
the
person
tendering an incomplete set may nevertheless require payment upon furnishing an
indemnity
which the buyer in good faith deems adequate.
(3) A shipment by water or by air or a contract contemplating such shipment is
"overseas"
insofar as by usage of trade or agreement it is subject to the commercial,
financing, or
shipping
practices characteristic of international deep water commerce.
6A-2-401.
Passing of title -- Reservation for security -- Limited application of this
section.
-- Each provision of this chapter
with regard to the rights, obligations and remedies of the
seller,
the buyer, purchasers, or other third parties applies irrespective of title to
the goods except
where
the provision refers to such title. Insofar as situations are not covered by
the other
provisions
of this chapter and matters concerning title become material the following
rules apply:
(1) Title to goods cannot pass under a contract for sale prior to their
identification to the
contract
(section 6A-2-501), and unless otherwise explicitly agreed the buyer acquires
by their
identification
a special property as limited by this title. Any retention or reservation by
the seller
of the
title (property) in goods shipped or delivered to the buyer is limited in
effect to a
reservation
of a security interest. Subject to these provisions and to the provisions of
the chapter
on
secured transactions (chapter 9), title to goods passes from the seller to the
buyer in any
manner
and on any conditions explicitly agreed on by the parties.
(2) Unless otherwise explicitly agreed, title passes to the buyer at the time
and place at
which
the seller completes his or her performance with reference to the physical
delivery of the
goods,
despite any reservation of a security interest and even though a document of
title is to be
delivered
at a different time or place; and in particular and despite any reservation of
a security
interest
by the bill of lading
(a) If the contract requires or authorizes the seller to send the goods to the
buyer but does
not
require him or her to deliver them at destination, title passes to the buyer at
the time and place
of
shipment; but
(b) If the contract requires delivery at destination, title passes on tender
there.
(3) Unless otherwise explicitly agreed, where delivery is to be made without
moving the
goods,
(a) If the seller is to deliver a tangible document of title, title
passes at the time when and
the
place where he or she delivers such documents and if the seller is to
deliver an electronic
document
of title, title passes when the seller delivers the document; or
(b) If the goods are at the time of contracting already identified and no
documents are to
be
delivered, title passes at the time and place of contracting.
(4) A rejection or other refusal by the buyer to receive or retain the goods,
whether or not
justified,
or a justified revocation of acceptance revests title to the goods in the
seller. Such
revesting
occurs by operation of law and is not a "sale".
6A-2-503.
Manner of seller's tender of delivery. -- (1) Tender of delivery
requires that
the
seller put and hold conforming goods at the buyer's disposition and give the
buyer any
notification
reasonably necessary to enable him or her to take delivery. The manner, time,
and
place
for tender are determined by the agreement and this chapter, and, in
particular,
(a) Tender must be at a reasonable hour, and if it is of goods they must be
kept available
for the
period reasonably necessary to enable the buyer to take possession; but
(b) Unless otherwise agreed the buyer must furnish facilities reasonably suited
to the
receipt
of the goods.
(2) Where the case is within the next section respecting shipment, tender requires
that the
seller
comply with its provisions.
(3) Where the seller is required to deliver at a particular destination tender
requires that
he or
she comply with subsection (1), and also in any appropriate case tender
documents as
described
in subsections (4) and (5) of this section.
(4) Where goods are in the possession of a bailee and are to be delivered
without being
moved,
(a) Tender requires that the seller either tender a negotiable document of
title covering
such goods
or procure acknowledgment by the bailee of the buyer's right to possession of
the
goods;
but
(b) Tender to the buyer of a nonnegotiable document of title or of a written
direction to
record
directing the bailee to deliver is
sufficient tender unless the buyer seasonably objects, and
except
as otherwise provided in chapter 9
receipt by the bailee of notification of the buyer's rights
fixes
those rights as against the bailee and all third persons; but risk of loss of
the goods and any
failure
by the bailee to honor the nonnegotiable document of title or to obey the
direction remains
on the
seller until the buyer has had a reasonable time to present the document or
direction, and a
refusal
by the bailee to honor the document or to obey the direction defeats the
tender.
(5) Where the contract requires the seller to deliver documents,
(a) He or she must tender all such documents in correct form, except as
provided in this
chapter
with respect to bills of lading in a set (section 6A-2-323(2)); and
(b) Tender through customary banking channels is sufficient and dishonor of a
draft
accompanying
or associated with the documents constitutes nonacceptance or rejection.
6A-2-505.
Seller's shipment under reservation. -- (1) Where the seller has
identified
goods to
the contract by or before shipment:
(a) The seller's procurement of a negotiable bill of lading to his or her own
order or
otherwise
reserves in him or her a security interest in the goods. The seller's procurement
of the
bill to
the order of a financing agency or of the buyer indicates in addition only the
seller's
expectation
of transferring that interest to the person named.
(b) A nonnegotiable bill of lading to the seller or his or her nominee reserves
possession
of the
goods as security but, except in a case of conditional delivery (section
6A-2-507(2)), a
nonnegotiable
bill of lading naming the buyer as consignee reserves no security interest even
though
the seller retains possession or control of the bill of lading.
(2) When shipment by the seller with reservation of a security interest is in
violation of
the
contract for sale it constitutes an improper contract for transportation within
the preceding
section,
but impairs neither the rights given to the buyer by shipment and
identification of the
goods to
the contract nor the seller's powers as a holder of a negotiable document.
6A-2-506.
Rights of financing agency. -- (1) A financing agency by paying or
purchasing
for value a draft which relates to a shipment of goods acquires, to the extent
of the
payment
or purchase and in addition to its own rights under the draft and any document
of title
securing
it, any rights of the shipper in the goods including the right to stop delivery
and the
shipper's
right to have the draft honored by the buyer.
(2) The right to reimbursement of a financing agency which has in good faith
honored or
purchased
the draft under commitment to or authority from the buyer is not impaired by
subsequent
discovery of defects with reference to any relevant document which was
apparently
regular on
its face.
6A-2-509.
Risk of loss in the absence of breach. -- (1) Where the contract
requires or
authorizes
the seller to ship the goods by carrier,
(a) If it does not require him or her to deliver them at a particular
destination, the risk of
loss
passes to the buyer when the goods are duly delivered to the carrier even
though the
shipment
is under reservation (section 6A-2-505); but
(b) If it does require him or her to deliver them at a particular destination
and the goods
are
there duly tendered while in the possession of the carrier, the risk of loss
passes to the buyer
when the
goods are there duly so tendered as to enable the buyer to take delivery.
(2) Where the goods are held by a bailee to be delivered without being moved,
the risk of
loss
passes to the buyer:
(a) On his or her receipt of a negotiable document of title covering the goods;
or
(b) On acknowledgment by the bailee of the buyer's right to possession of the
goods; or
(c) After his or her receipt of possession or control of a nonnegotiable
document of title
or other
written direction to deliver in a record, as provided in section
6A-2-503(4)(b).
(3) In any case not within subsection (1) or (2), the risk of loss passes to
the buyer on his
or her
receipt of the goods if the seller is a merchant; otherwise the risk passes to
the buyer on
tender
of delivery.
(4) The provisions of this section are subject to contrary agreement of the
parties and to
the
provisions of this chapter on sale on approval (section 6A-2-327) and on effect
of breach on
risk of
loss (section 6A-2-510).
6A-2-605.
Waiver of buyer's objections by failure to particularize. -- (1) The
buyer's
failure
to state in connection with rejection a particular defect which is
ascertainable by
reasonable
inspection precludes him or her from relying on the unstated defect to justify
rejection
or to
establish breach,
(a) Where the seller could have cured it if stated seasonably; or
(b) Between merchants when the seller has after rejection made a request in
writing for a
full and
final written statement of all defects on which the buyer proposes to rely.
(2) Payment against documents made without reservation of rights precludes
recovery of
the
payment for defects apparent on the face of in the documents.
6A-2-705.
Seller's stoppage of delivery in transit or otherwise. -- (1) The
seller may
stop
delivery of goods in the possession of a carrier or other bailee when he or she
discovers the
buyer to
be insolvent (section 6A-2-702) and may stop delivery of carload, truckload,
planeload,
or
larger shipments of express or freight when the buyer repudiates or fails to
make a payment
due
before delivery or if for any other reason the seller has a right to withhold
or reclaim the
goods.
(2) As against such buyer the seller may stop delivery until:
(a) Receipt of the goods by the buyer; or
(b) Acknowledgment to the buyer by any bailee of the goods except a carrier
that the
bailee
holds the goods for the buyer; or
(c) Such acknowledgment to the buyer by a carrier by reshipment or as
warehouseperson;
or
(d) Negotiation to the buyer of any negotiable document of title covering the
goods.
(3) (a) To stop delivery the seller must so notify as to enable the bailee by
reasonable
diligence
to prevent delivery of the goods.
(b) After such notification the bailee must hold and deliver the goods
according to the
directions
of the seller but the seller is liable to the bailee for any ensuing charges or
damages.
(c) If a negotiable document of title has been issued for goods the bailee is
not obliged to
obey a
notification to stop until surrender of possession or control of the
document.
(d) A carrier who has issued a nonnegotiable bill of lading is not obliged to
obey a
notification
to stop received from a person other than the consignor.
SECTION
3. Sections 6A-2.1-103, 6A-2.1-514 and 6A-2.1-526 of the General Laws in
Chapter
6A-2.1 entitled "Leases" are hereby amended to read as follows:
6A-2.1-103.
Definitions and index of definitions. -- (1) In this chapter unless the
context
otherwise requires:
(a) "Buyer in ordinary course of business" means a person who in good
faith and without
knowledge
that the sale to him or her is in violation of the ownership rights or security
interest or
leasehold
interest of a third party in the goods buys in ordinary course from a person in
the
business
of selling goods of that kind but does not include a pawnbroker.
"Buying" may be for
cash or
by exchange of other property or on secured or unsecured credit and includes receiving
acquiring goods or documents of title under a preexisting
contract for sale but does not include a
transfer
in bulk or as security for or in total or partial satisfaction of a money debt.
(b) "Cancellation" occurs when either party puts an end to the lease
contract for default
by the
other party.
(c) "Commercial unit" means such a unit of goods as by commercial
usage is a single
whole
for purposes of lease and division of which materially impairs its character or
value on the
market
or in use. A commercial unit may be a single chapter, as a machine, or a set of
chapters, as
a suite
of furniture or a line of machinery, or a quantity, as a gross or carload, or
any other unit
treated
in use or in the relevant market as a single whole.
(d) "Conforming" goods or performance under a lease contract means
goods or
performance
that are in accordance with the obligations under the lease contract.
(e) "Consumer lease" means a lease that a lessor regularly engaged in
the business of
leasing
or selling makes to a lessee who is an individual and who takes under the lease
primarily
for a
personal, family, or household purpose.
(f) "Fault" means wrongful act, omission, breach, or default.
(g) "Finance lease" means a lease with respect to which:
(i) The lessor does not select, manufacture, or supply the goods;
(ii) The lessor acquires the goods or the right to possession and use of the
goods in
connection
with the lease; and
(iii) One of the following occurs:
(A) The lessee receives a copy of the contract by which the lessor acquired the
goods or
the
right to possession and use of the goods before signing the lease contract;
(B) The lessee's approval of the contract by which the lessor acquired the
goods or the
right to
possession and use of the goods is a condition to effectiveness of the lease
contract;
(C) The lessee, before signing the lease contract, receives an accurate and
complete
statement
designating the promises and warranties, and any disclaimers of warranties,
limitations
or
modifications of remedies, or liquidated damages, including those of a third
party, such as the
manufacturer
of the goods, provided to the lessor by the person supplying the goods in connection
with or
as part of the contract by which the lessor acquired the goods or the right to
possession
and use
of the goods; or
(D) If the lease is not a consumer lease, the lessor, before the lessee signs
the lease
contract,
informs the lessee in writing (a) of the identity of the person supplying the
goods to the
lessor,
unless the lessee has selected that person and directed the lessor to acquire
the goods or the
right to
possession and use of the goods from that person, (b) that the lessee is
entitled under this
chapter
to the promises and warranties, including those of any third party, provided to
the lessor
by the
person supplying the goods in connection with or as part of the contract by
which the
lessor
acquired the goods or the right to possession and use of the goods, and (c)
that the lessee
may
communicate with the person supplying the goods to the lessor and receive an
accurate and
complete
statement of those promises and warranties, including any disclaimers and
limitations of
them or
of remedies.
(h) "Goods" means all things that are movable at the time of
identification to the lease
contract,
or are fixtures (section 6A-2.1-309), but the term does not include money,
documents,
instruments,
accounts, chattel paper, general intangibles, or minerals or the like,
including oil and
gas,
before extraction. The term also includes the unborn young of animals.
(i) "Installment lease contract" means a lease contract that
authorizes or requires the
delivery
of goods in separate lots to be separately accepted, even though the lease
contract
contains
a clause "each delivery is a separate lease" or its equivalent.
(j) "Lease" means a transfer of the right to possession and use of
goods for a term in
return
for consideration, but a sale, including a sale on approval or a sale or
return, or retention or
creation
of a security interest is not a lease. Unless the context clearly indicates
otherwise, the
term
includes a sublease.
(k) "Lease agreement" means the bargain, with respect to the lease,
of the lessor and the
lessee
in fact as found in their language or by implication from other circumstances
including
course
of dealing or usage of trade or course of performance as provided in this
chapter. Unless
the
context clearly indicates otherwise, the term includes a sublease agreement.
(l) "Lease contract" means the total legal obligation that results
from the lease agreement
as
affected by this chapter and any other applicable rules of law. Unless the
context clearly
indicates
otherwise, the term includes a sublease contract.
(m) "Leasehold interest" means the interest of the lessor or the
lessee under a lease
contract.
(n) "Lessee" means a person who acquires the right to possession and
use of goods under
a lease.
Unless the context clearly indicates otherwise, the term includes a sublessee.
(o) "Lessee in ordinary course of business" means a person who in
good faith and
without
knowledge that the lease to him or her is in violation of the ownership rights
or security
interest
or leasehold interest of a third party in the goods leases in ordinary course
from a person
in the
business of selling or leasing goods of that kind but does not include a
pawnbroker.
"Leasing"
may be for cash or by exchange of other property or on secured or unsecured
credit and
includes
receiving acquiring goods or documents of title under a
preexisting lease contract but
does not
include a transfer in bulk or as security for or in total or partial
satisfaction of a money
debt.
(p) "Lessor" means a person who transfers the right to possession and
use of goods under
a lease.
Unless the context clearly indicates otherwise, the term includes a sublessor.
(q) "Lessor's residual interest" means the lessor's interest in the
goods after expiration,
termination,
or cancellation of the lease contract.
(r) "Lien" means a charge against or interest in goods to secure
payment of a debt or
performance
of an obligation, but the term does not include a security interest.
(s) "Lot" means a parcel or a single chapter that is the subject
matter of a separate lease
or
delivery, whether or not it is sufficient to perform the lease contract.
(t) "Merchant lessee" means a lessee that is a merchant with respect
to goods of the kind
subject
to the lease.
(u) "Present value" means the amount as of a date certain of one or
more sums payable in
the
future, discounted to the date certain. The discount is determined by the
interest rate specified
by the
parties if the rate was not manifestly unreasonable at the time the transaction
was entered
into;
otherwise, the discount is determined by a commercially reasonable rate that
takes into
account
the facts and circumstances of each case at the time the transaction was
entered into.
(v) "Purchase" includes taking by sale, lease, mortgage, security
interest, pledge, gift, or
any
other voluntary transaction creating an interest in goods.
(w) "Sublease" means a lease of goods the right to possession and use
of which was
acquired
by the lessor as a lessee under an existing lease.
(x) "Supplier" means a person from whom a lessor buys or leases goods
to be leased
under a
finance lease.
(y) "Supply contract" means a contract under which a lessor buys or
leases goods to be
leased.
(z) "Termination" occurs when either party pursuant to a power
created by agreement or
law puts
an end to the lease contract otherwise than for default.
(2) Other definitions applying to this chapter and the sections in which they
appear are:
"Accessions". section 6A-2.1-310(1).
"Construction mortgage". section 6A-2.1-309(1)(d).
"Encumbrance". section 6A-2.1-309(1)(e).
"Fixtures". section 6A-2.1-309(1)(a).
"Fixture filing". section 6A-2.1-309(1)(b).
"Purchase money lease". section 6A-2.1-309(1)(c).
(3) The following definitions in other chapters apply to this Chapter:
"Account". section 6A-9-102(a)(2).
"Between merchants". section 6A-2-104(3).
"Buyer". section 6A-2-103(1)(a).
"Chattel paper". section 6A-9-102(a)(11).
"Consumer goods". section 6A-9-102(a)(23).
"Document". section 6A-9-102(a)(30).
"Entrusting". section 6A-2-403(3).
"General intangibles". section 6A-9-102(a)(42).
"Good faith". section 6A-2-103(1)(b).
"Instrument". section 6A-9-102(2)(47).
"Merchant". section 6A-2-104(1).
"Mortgage". section 6A-9-102(a)(55).
"Pursuant to commitment". section 6A-9-102(a)(68).
"Receipt". section 6A-2-103(1)(c).
"Sale". section 6A-2-106(1).
"Sale on approval". section 6A-2-326.
"Sale or return". section 6A-2-326.
"Seller". section 6A-2-103(1)(d).
(4) In addition, chapter 1 of this title contains general definitions and
principles of
construction
and interpretation applicable throughout this chapter.
6A-2.1-514.
Waiver of lessee's objections. -- (1) In rejecting goods, a lessee's
failure to
state a
particular defect that is ascertainable by reasonable inspection precludes the
lessee from
relying
on the defect to justify rejection or to establish default:
(a) If, stated seasonably, the lessor or the supplier could have cured it
(section 6A-2.1-
513); or
(b) Between merchants if the lessor or the supplier after rejection has made a
request in
writing
for a full and final written statement of all defects on which the lessee
proposes to rely.
(2) A lessee's failure to reserve rights when paying rent or other
consideration against
documents
precludes recovery of the payment for defects apparent on the face of in
the
documents.
6A-2.1-526.
Lessor's stoppage of delivery in transit or otherwise. -- (1) A lessor
may
stop
delivery of goods in the possession of a carrier or other bailee if the lessor
discovers the
lessee
to be insolvent and may stop delivery of carload, truckload, planeload, or
larger shipments
of
express or freight if the lessee repudiates or fails to make a payment due
before delivery,
whether
for rent, security, or otherwise under the lease contract, or for any other
reason the lessor
has a
right to withhold or take possession of the goods.
(2) In pursuing its remedies under subsection (1), the lessor may stop delivery
until:
(a) Receipt of the goods by the lessee;
(b) Acknowledgment to the lessee by any bailee of the goods, except a carrier,
that the
bailee
holds the goods for the lessee; or
(c) Such an acknowledgment to the lessee by a carrier via reshipment or as a
warehouseperson.
(3) (a) To stop delivery, a lessor shall so notify as to enable the bailee by
reasonable
diligence
to prevent delivery of the goods.
(b) After notification, the bailee shall hold and deliver the goods according
to the
directions
of the lessor, but the lessor is liable to the bailee for any ensuing charges
or damages.
(c) A carrier who has issued a nonnegotiable bill of lading is not obliged to
obey a
notification
to stop received from a person other than the consignor.
SECTION
4. Sections 6A-4-104 and 6A-4-210 of the General Laws in Chapter 6A-4
entitled
"Bank Deposits And Collections" are hereby amended to read as
follows:
6A-4-104.
Definitions and index of definitions. -- (a) In this chapter, unless
the context
otherwise
requires:
(1)
"Account" means any deposit or credit account with a bank, including
a demand,
time,
savings, passbook, share draft, or like account, other than an account
evidenced by a
certificate
of deposit;
(2)
"Afternoon" means the period of a day between noon and midnight;
(3)
"Banking day" means the part of a day on which a bank is open to the
public for
carrying
on substantially all of its banking functions;
(4)
"Clearing house" means an association of banks or other payors
regularly clearing
items;
(5)
"Customer" means a person having an account with a bank or for whom a
bank has
agreed
to collect items, including a bank that maintains an account at another bank;
(6)
"Documentary draft" means a draft to be presented for acceptance or
payment if
specified
documents, certificated securities (section 6A-8-102) or instructions for
uncertificated
securities
(section 6A-8-102), or other certificates, statements, or the like are to be
received by the
drawee
or other payor before acceptance or payment of the draft;
(7)
"Draft" means a draft as defined in section 6A-3-104 or an item,
other than an
instrument,
that is an order;
(8)
"Drawee" means a person ordered in a draft to make payment;
(9)
"Item" means an instrument or a promise or order to pay money handled
by a bank for
collection
or payment. The term does not include a payment order governed by chapter 4.1
of this
title or
a credit or debit card slip;
(10)
"Midnight deadline" with respect to a bank is midnight on its next
banking day
following
the banking day on which it receives the relevant item or notice or from which
the time
for
taking action commences to run, whichever is later;
(11)
"Settle" means to pay in cash, by clearing-house settlement, in a
charge or credit or
by
remittance, or otherwise as agreed. A settlement may be either provisional or
final;
(12)
"Suspends payments" with respect to a bank means that it has been closed
by order
of the
supervisory authorities, that a public officer has been appointed to take it
over, or that it
ceases
or refuses to make payments in the ordinary course of business.
(b)
Other definitions applying to this chapter and the sections in which they
appear are:
"Agreement
for electronic presentment" section 6A-4-110.
"Bank"
section 6A-4-105.
"Collecting
bank" section 6A-4-105.
"Depositary
bank" section 6A-4-105.
"Intermediary
bank" section 6A-4-105.
"Payor
bank" section 6A-4-105.
"Presenting
bank" section 6A-4-105.
"Presentment
notice" section 6A-4-110.
(c) The "Control" as provided in section 6A-7-106 and the
following definitions in
other
chapters apply to this chapter:
"Acceptance"
section 6A-3-409.
"Alteration"
section 6A-3-407.
"Cashier's
check" section 6A-3-104.
"Certificate
of deposit" section 6A-3-104.
"Certified
check" section 6A-3-409.
"Check"
section 6A-3-104.
"Good
faith" section 6A-3-103.
"Holder
in due course" section 6A-3-302.
"Instrument"
section 6A-3-104.
"Notice
of dishonor" section 6A-3-503.
"Order"
section 6A-3-103.
"Ordinary
care" section 6A-3-103.
"Person
entitled to enforce" section 6A-3-301.
"Presentment"
section 6A-3-501.
"Promise"
section 6A-3-103.
"Prove"
section 6A-3-103.
"Teller's
check" section 6A-3-104.
"Unauthorized
signature" section 6A-3-403.
(d) In addition, chapter 1 of this title contains general definitions and
principles of
construction
and interpretation applicable throughout this chapter.
6A-4-210.
Security interest of collecting bank in items, accompanying documents
and
proceeds. -- (a) A collecting
bank has a security interest in an item and any accompanying
documents
or the proceeds of either:
(1) In case of an item deposited in an account, to the extent to which credit
given for the
item has
been withdrawn or applied;
(2) In case of an item for which it has given credit available for withdrawal
as of right, to
the
extent of the credit given, whether or not the credit is drawn upon or there is
a right of charge-
back; or
(3) If it makes an advance on or against the item.
(b) If credit given for several items received at one time or pursuant to a
single
agreement
is withdrawn or applied in part, the security interest remains upon all the
items, any
accompanying
documents or the proceeds of either. For the purpose of this section, credits
first
given
are first withdrawn.
(c) Receipt by a collecting bank of a final settlement for an item is a
realization on its
security
interest in the item, accompanying documents, and proceeds. So long as the bank
does
not
receive final settlement for the item or give up possession of the item or possession
or control
of
the accompanying documents for
purposes other than collection, the security interest continues
to that extent
and is subject to chapter 9 of this title, but:
(1) No security agreement is necessary to make the security interest
enforceable (section
6A-9-203(b)(3)(i));
(2) No filing is required to perfect the security interest; and
(3) The security interest has priority over conflicting perfected security
interests in the
item,
accompanying documents, or proceeds.
SECTION
5. Chapter 6A-7 of the General Laws entitled "Warehouse Receipts, Bills of
Lading
and Other Documents of Title" is hereby repealed in its entirety.
CHAPTER 6A-7
Warehouse Receipts, Bills of Lading and Other
Documents of Title
6A-7-101.
Short title. -- This chapter shall be known and may be cited as
Uniform
Commercial
Code -- Documents of Title.
6A-7-102.
Definitions and index of definitions. -- (1) In this chapter,
unless the context
otherwise
requires: (a) "Bailee" means the person who by a warehouse receipt,
bill of lading or
other
document of title acknowledges possession of goods and contracts to deliver
them. (b)
"Consignee"
means the person named in a bill to whom or to whose order the bill promises
delivery.
(c) "Consignor" means the person named in a bill as the person from
whom the goods
have
been received for shipment. (d) "Delivery order" means a written
order to deliver goods
directed
to a warehouseperson, carrier, or other person who in the ordinary course of
business
issues
warehouse receipts or bills of lading. (e) "Document" means document
of title as defined
in
the general definitions in chapter 1 of this title (section 6A-1-201). (f)
"Goods" means all
things
which are treated as movable for the purposes of a contract of storage or
transportation.
(g)
"Issuer" means a bailee who issues a document except that in relation
to an unaccepted
delivery
order it means the person who orders the possessor of goods to deliver. Issuer
includes
any
person for whom an agent or employee purports to act in issuing a document if
the agent or
employee
has real or apparent authority to issue documents, notwithstanding that the
issuer
received
no goods or that the goods were misdescribed or that in any other respect the
agent or
employee
violated his or her instructions. (h) "Warehouseperson" is a person
engaged in the
business
of storing goods for hire. (2) Other definitions applying to this chapter or to
specified
parts
thereof, and the sections in which they appear are:
"Duly
negotiate". section 6A-7-501.
"Person
entitled under the document". section 6A-7-403(4).
(3)
Definitions in other chapters applying to this chapter and the sections in
which they
appear
are:
"Contract
for sale". section 6A-2-106.
"Overseas".
section 6A-2-323.
"Receipt"
of goods. section 6A-2-103.
(4) In addition, chapter 1 of this title contains general definitions and
principles of
construction
and interpretation applicable throughout this chapter.
6A-7-103.
Relation of chapter to treaty, statute, tariff, classification, or regulation.
--
To
the extent that any treaty or statute of the United States, regulatory statute
of this state or tariff,
classification,
or regulation filed or issued pursuant thereto is applicable, the provisions of
this
chapter
are subject thereto.
6A-7-104.
Negotiable and nonnegotiable warehouse receipt, bill of lading, or other
document
of title. -- (1) A
warehouse receipt, bill of lading, or other document of title is
negotiable:
(a) If by its terms the goods are to be delivered to bearer or to the order of
a named
person;
or
(b) Where recognized in overseas trade, if it runs to a named person or
assigns.
(2) Any other document is nonnegotiable. A bill of lading in which it is stated
that the
goods
are consigned to a named person is not made negotiable by a provision that the
goods are
to be
delivered only against a written order signed by the same or another named
person.
6A-7-105.
Construction against negative implication. -- The omission from
either part
2 or
part 3 of this chapter of a provision corresponding to a provision made in the
other part does
not
imply that a corresponding rule of law is not applicable.
6A-7-106.
Effect of chapter. -- This chapter does not repeal or modify any
laws
prescribing
the form or contents of documents of title or the services or facilities to be
afforded
by
bailees, or otherwise regulating bailees' businesses in respects not
specifically dealt with
herein;
but the fact that such laws are violated does not affect the status of a
document of title
which
otherwise complies with the definition of a document of title (section
6A-1-201).
6A-7-201.
Who may issue a warehouse receipt -- Storage under government bond. --
(1) A
warehouse receipt may be issued by any warehouseperson.
(2) Where goods including distilled spirits and agricultural commodities are
stored under
a
statute requiring a bond against withdrawal or a license for the issuance of
receipts in the nature
of
warehouse receipts, a receipt issued for the goods has like effect as a
warehouse receipt even
though
issued by a person who is the owner of the goods and is not a warehouseperson.
6A-7-202.
Form of warehouse receipt -- Essential terms -- Optional terms. --
(1) A
warehouse
receipt need not be in any particular form.
(2) Unless a warehouse receipt embodies within its written or printed terms
each of the
following,
the warehouseperson is liable for damages caused by the omission to a person
injured
thereby:
(a) The location of the warehouse where the goods are stored;
(b) The date of issue of the receipt;
(c) The consecutive number of the receipt;
(d) A statement whether the goods received will be delivered to the bearer, to
a specified
person,
or to a specified person or his or her order;
(e) The rate of storage and handling charges, except that where goods are
stored under a
field
warehousing arrangement a statement of that fact is sufficient on a
nonnegotiable receipt;
(f) A description of the goods or of the packages containing them;
(g) The signature of the warehouseperson, which may be made by his or her
authorized
agent;
(h) If the receipt is issued for goods of which the warehouseperson is owner,
either
solely
or jointly or in common with others, the fact of such ownership; and
(i) A statement of the amount of advances made and of liabilities incurred for
which the
warehouseperson
claims a lien or security interest (section 6A-7-209). If the precise amount of
such
advances made or of such liabilities incurred is, at the time of the issue of
the receipt,
unknown
to the warehouseperson or to his or her agent who issues it, a statement of the
fact that
advances
have been made or liabilities incurred and the purpose thereof is sufficient.
(3) A warehouseperson may insert in his or her receipt any other terms which
are not
contrary
to the provisions of this title and do not impair his or her obligation of
delivery (section
6A-7-403)
or his or her duty of care (section 6A-7-204). Any contrary provisions shall be
ineffective.
6A-7-203.
Liability for nonreceipt or misdescription. -- A party to or
purchaser for
value
in good faith of a document of title other than a bill of lading relying in
either case upon the
description
therein of the goods may recover from the issuer damages caused by the
nonreceipt or
misdescription
of the goods, except to the extent that the document conspicuously indicates
that
the
issuer does not know whether any part or all of the goods in fact were received
or conform to
the
description, as where the description is in terms of marks or labels or kind,
quantity, or
condition,
or the receipt or description is qualified by "contents, condition, and
quality unknown",
"said
to contain", or the like if such indication be true, or the party or
purchaser otherwise has
notice.
6A-7-204.
Duty of care -- Contractual limitation of warehouseperson's liability. --
(1)
A
warehouseperson is liable for damages for loss of or injury to the goods caused
by his or her
failure
to exercise such care in regard to them as a reasonably careful person would
exercise
under
like circumstances but unless otherwise agreed he or she is not liable for
damages which
could
not have been avoided by the exercise of such care.
(2) Damages may be limited by a term in the warehouse receipt or storage
agreement
limiting
the amount of liability in case of loss or damage, and setting forth a specific
liability per
article
or item, or value per unit of weight, beyond which the warehouseperson shall
not be liable;
provided,
however, that the liability may on written request of the bailor at the time of
signing the
storage
agreement or within a reasonable time after receipt of the warehouse receipt be
increased
on
part or all of the goods thereunder, in which event increased rates may be
charged based on the
increased
valuation, but that no increase shall be permitted contrary to a lawful
limitation of
liability
contained in the warehouseperson's tariff, if any. No such limitation is
effective with
respect
to the warehouseperson's liability for conversion to his or her own use.
(3) Reasonable provisions as to the time and manner of presenting claims and
instituting
actions
based on the bailment may be included in the warehouse receipt or tariff.
6A-7-205.
Title under warehouse receipt defeated in certain cases. -- A
buyer in the
ordinary
course of business of fungible goods sold and delivered by a warehouseperson
who is
also
in the business of buying and selling such goods takes free of any claim under
a warehouse
receipt
even though it has been duly negotiated.
6A-7-206.
Termination of storage at warehouseperson's option. -- (1) A
warehouseperson
may on notifying the person on whose account the goods are held and any other
person
known to claim an interest in the goods require payment of any charges and
removal of
the
goods from the warehouse at the termination of the period of storage fixed by
the document,
or,
if no period is fixed, within a stated period not less than thirty (30) days
after the notification.
If
the goods are not removed before the date specified in the notification, the
warehouseperson
may
sell them in accordance with the provisions of the section on enforcement of a
warehouseperson's
lien (section 6A-7-210).
(2) If a warehouseperson in good faith believes that the goods are about to
deteriorate or
decline
in value to less than the amount of his or her lien within the time prescribed
in subsection
(1)
for notification, advertisement, and sale, the warehouseperson may specify in
the notification
any
reasonable shorter time for removal of the goods and in case the goods are not
removed, may
sell
them at public sale held not less than one week after a single advertisement or
posting.
(3) If as a result of a quality or condition of the goods of which the warehouseperson
had
no
notice at the time of deposit the goods are a hazard to other property or to
the warehouse or to
persons,
the warehouseperson may sell the goods at public or private sale without
advertisement
on
reasonable notification to all persons known to claim an interest in the goods.
If the
warehouseperson
after a reasonable effort is unable to sell the goods, he or she may dispose of
them
in any lawful manner and shall incur no liability by reason of such
disposition.
(4) The warehouseperson must deliver the goods to any person entitled to them
under
this
chapter upon due demand made at any time prior to sale or other disposition
under this
section.
(5) The warehouseperson may satisfy his or her lien from the proceeds of any
sale or
disposition
under this section but must hold the balance for delivery on the demand of any
person
to
whom he or she would have been bound to deliver the goods.
6A-7-207.
Goods must be kept separate -- Fungible goods. -- (1) Unless the
warehouse
receipt
otherwise provides, a warehouseperson must keep separate the goods covered by
each
receipt
so as to permit at all times identification and delivery of those goods except
that different
lots
of fungible goods may be comingled.
(2) Fungible goods so commingled are owned in common by the persons entitled
thereto
and
the warehouseperson is severally liable to each owner for that owner's share.
Where because
of
overissue a mass of fungible goods is insufficient to meet all the receipts
which the
warehouseperson
has issued against it, the persons entitled include all holders to whom
overissued
receipts have been duly negotiated.
6A-7-208.
Altered warehouse receipts. -- Where a blank in a negotiable
warehouse
receipt
has been filled in without authority, a purchaser for value and without notice
of the want
of
authority may treat the insertion as authorized. Any other unauthorized
alteration leaves any
receipt
enforceable against the issuer according to its original tenor.
6A-7-209.
Lien of warehouseperson. -- (1) A warehouseperson has a lien
against the
bailor
on the goods covered by a warehouse receipt or on the proceeds thereof in his
or her
possession
for charges for storage or transportation (including demurrage and terminal
charges),
insurance,
labor, or charges present or future in relation to the goods, and for expenses
necessary
for
preservation of the goods or reasonably incurred in their sale pursuant to law.
If the person on
whose
account the goods are held is liable for like charges or expenses in relation
to other goods
whenever
deposited and it is stated in the receipt that a lien is claimed for charges
and expenses in
relation
to other goods, the warehouseperson also has a lien against him or her for such
charges
and
expenses whether or not the other goods have been delivered by the
warehouseperson. But
against
a person to whom a negotiable warehouse receipt is duly negotiated a warehouseperson's
lien
is limited to charges in an amount or at a rate specified on the receipt or, if
no charges are so
specified,
then to a reasonable charge for storage of the goods covered by the receipt
subsequent
to
the date of the receipt.
(2) The warehouseperson may also reserve a security interest against the bailor
for a
maximum
amount specified on the receipt for charges other than those specified in
subsection (1),
such
as for money advanced and interest. Such a security interest is governed by the
chapter on
secured
transactions (chapter 9 of this title).
(3) A warehouseperson's lien for charges and expenses under subsection (1) or a
security
interest
under subsection (2) is also effective against any person who so entrusted the
bailor with
possession
of the goods that a pledge of them by him or her to a good faith purchaser for
value
would
have been valid, but is not effective against a person as to whom the document
confers no
right
in the goods covered by it under section 6A-7-503.
(4) A warehouseperson loses his lien on any goods which he or she voluntarily
delivers
or
which he or she unjustifiably refuses to deliver.
6A-7-210.
Enforcement of warehouseperson's lien. -- (1) Except as provided
in
subsection
(2), a warehouseperson's lien may be enforced by public or private sale of the
goods in
bloc
or in parcels, at any time or place and on any terms which are commercially
reasonable, after
notifying
all persons known to claim an interest in the goods. Such notification must
include a
statement
of the amount due, the nature of the proposed sale and the time and place of
any public
sale.
The fact that a better price could have been obtained by a sale at a different
time or in a
different
method from that selected by the warehouseperson is not of itself sufficient to
establish
that
the sale was not made in a commercially reasonable manner. If the
warehouseperson either
sells
the goods in the usual manner in any recognized market therefor, or if he or
she sells at the
price
current in such market at the time of his or her sale, or if he or she has
otherwise sold in
conformity
with commercially reasonable practices among dealers in the type of goods sold,
he or
she
has sold in a commercially reasonable manner. A sale of more goods than
apparently
necessary
to be offered to insure satisfaction of the obligation is not commercially
reasonable
except
in cases covered by the preceding sentence.
(2) A warehouseperson's lien on goods other than goods stored by a merchant in
the
course
of his business may be enforced only as follows:
(a) All persons known to claim an interest in the goods must be notified.
(b) The notification must be delivered in person or sent by registered letter
to the last
known
address of any person to be notified.
(c) The notification must include an itemized statement of the claim, a
description of the
goods
subject to the lien, a demand for payment within a specified time not less than
ten (10)
days
after receipt of the notification, and a conspicuous statement that unless the
claim is paid
within
that time the goods will be advertised for sale and sold by auction at a
specified time and
place.
(d) The sale must conform to the terms of the notification.
(e) The sale must be held at the nearest suitable place to that where the goods
are held or
stored.
(f) After the expiration of the time given in the notification, an
advertisement of the sale
must
be published once a week for two (2) weeks consecutively in a newspaper of
general
circulation
where the sale is to be held. The advertisement must include a description of
the
goods,
the name of the person on whose account they are being held, and the time and
place of
the
sale. The sale must take place at least fifteen (15) days after the first
publication. If there is no
newspaper
of general circulation where the sale is to be held, the advertisement must be
posted at
least
ten (10) days before the sale in not less than six (6) conspicuous places in
the neighborhood
of
the proposed sale.
(3) Before any sale pursuant to this section any person claiming a right in the
goods may
pay
the amount necessary to satisfy the lien and the reasonable expenses incurred
under this
section.
In that event the goods must not be sold, but must be retained by the
warehouseperson
subject
to the terms of the receipt and this chapter.
(4) The warehouseperson may buy at any public sale pursuant to this section.
(5) A purchaser in good faith of goods sold to enforce a warehouseperson's lien
takes the
goods
free of any rights of persons against whom the lien was valid, despite
noncompliance by
the
warehouseperson with the requirements of this section.
(6) The warehouseperson may satisfy his or her lien from the proceeds of any
sale
pursuant
to this section but must hold the balance, if any, for delivery on demand to
any person to
whom
he or she would have been bound to deliver the goods.
(7) The rights provided by this section shall be in addition to all other
rights allowed by
law
to a creditor against his or her debtor.
(8) Where a lien is on goods stored by a merchant in the course of his or her
business the
lien
may be enforced in accordance with either subsection (1) or (2).
(9) The warehouseperson is liable for damages caused by failure to comply with
the
requirements
for sale under this section and in case of willful violation is liable for
conversion.
6A-7-301.
Liability for nonreceipt or misdescription -- "Said to contain" --
"Shipper's
load and count" -- Improper handling. -- (1) A consignee of a nonnegotiable bill
who
has given value in good faith or a holder to whom a negotiable bill has been
duly negotiated
relying
in either case upon the description therein of the goods, or upon the date
therein shown,
may
recover from the issuer damages caused by the misdating of the bill or the
nonreceipt or
misdescription
of the goods, except to the extent that the document indicates that the issuer
does
not
know whether any part or all of the goods in fact were received or conform to
the description,
as
where the description is in terms of marks or labels or kind, quantity, or
condition or the
receipt
or description is qualified by "contents or condition of contents of
packages unknown",
"said
to contain", "shipper's weight, load and count" or the like, if
such indication be true.
(2) When goods are loaded by an issuer who is a common carrier, the issuer must
count
the
packages of goods if package freight and ascertain the kind and quantity if
bulk freight. In
such
cases "shipper's weight, load and count" or other words indicating
that the description was
made
by the shipper are ineffective except as to freight concealed by packages.
(3) When bulk freight is loaded by a shipper who makes available to the issuer
adequate
facilities
for weighing such freight, an issuer who is a common carrier must ascertain the
kind and
quantity
within a reasonable time after receiving the written request of the shipper to
do so. In
such
cases "shipper's weight" or other words of like purport are
ineffective.
(4) The issuer may by inserting in the bill the words "shipper's weight,
load and count"
or
other words of like purport indicate that the goods were loaded by the shipper;
and if such
statement
be true the issuer shall not be liable for damages caused by the improper
loading. But
their
omission does not imply liability for such damages.
(5) The shipper shall be deemed to have guaranteed to the issuer the accuracy
at the time
of
shipment of the description, marks, labels, number, kind, quantity, condition,
and weight as
furnished
by him or her; and the shipper shall indemnify the issuer against damage caused
by
inaccuracies
in such particulars. The right of the issuer to such indemnity shall in no way
limit his
responsibility
and liability under the contract of carriage to any person other than the
shipper.
6A-7-302.
Through bills of lading and similar documents. -- (1) The issuer
of a
through
bill of lading or other document embodying an undertaking to be performed in
part by
persons
acting as its agents or by connecting carriers is liable to anyone entitled to
recover on the
document
for any breach by such other persons or by a connecting carrier of its
obligation under
the
document but to the extent that the bill covers an undertaking to be performed
overseas or in
territory
not contiguous to the continental United States or an undertaking including
matters other
than
transportation this liability may be varied by agreement of the parties.
(2) Where goods covered by a through bill of lading or other document embodying
an
undertaking
to be performed in part by persons other than the issuer are received by any
such
person,
he or she is subject with respect to his or her own performance while the goods
are in his
or
her possession to the obligation of the issuer. His or her obligation is
discharged by delivery of
the
goods to another such person pursuant to the document, and does not include
liability for
breach
by any other such persons or by the issuer.
(3) The issuer of such through bill of lading or other document shall be
entitled to
recover
from the connecting carrier of such other person in possession of the goods
when the
breach
of the obligation under the document occurred, the amount it may be required to
pay to
anyone
entitled to recover on the document therefor, as may be evidenced by any
receipt,
judgment,
or transcript thereof, and the amount of any expense reasonably incurred by it
in
defending
any action brought by anyone entitled to recover on the document therefor.
6A-7-303.
Diversion -- Reconsignment -- Change of instructions. -- (1)
Unless the bill
of
lading otherwise provides, the carrier may deliver the goods to a person or
destination other
than
that stated in the bill or may otherwise dispose of the goods on instructions
from:
(a) The holder of a negotiable bill; or
(b) The consignor on a nonnegotiable bill notwithstanding contrary instructions
from the
consignee;
or
(c) The consignee on a nonnegotiable bill in the absence of contrary
instructions from
the
consignor, if the goods have arrived at the billed destination or if the
consignee is in
possession
of the bill; or
(d) The consignee on a nonnegotiable bill if he or she is entitled as against the
consignor
to
dispose of them.
(2) Unless such instructions are noted on a negotiable bill of lading, a person
to whom
the
bill is duly negotiated can hold the bailee according to the original terms.
6A-7-304.
Bills of lading in a set. -- (1) Except where customary in
overseas
transportation,
a bill of lading must not be issued in a set of parts. The issuer is liable for
damages
caused
by violation of this subsection.
(2) Where a bill of lading is lawfully drawn in a set of parts, each of which
is numbered
and
expressed to be valid only if the goods have not been delivered against any
other part, the
whole
of the parts constitute one bill.
(3) Where a bill of lading is lawfully issued in a set of parts and different
parts are
negotiated
to different persons, the title of the holder to whom the first due negotiation
is made
prevails
as to both the document and the goods even though any later holder may have
received
the
goods from the carrier in good faith and discharged the carrier's obligation by
surrender of his
or
her part.
(4) Any person who negotiates or transfers a single part of a bill of lading
drawn in a set
is
liable to holders of that part as if it were the whole set.
(5) The bailee is obliged to deliver in accordance with part 4 of this chapter
against the
first
presented part of a bill of lading lawfully drawn in a set. Such delivery
discharges the
bailee's
obligation on the whole bill.
6A-7-305.
Destination bills. -- (1) Instead of issuing a bill of lading to
the consignor at
the
place of shipment a carrier may at the request of the consignor procure the
bill to be issued at
destination
or at any other place designated in the request.
(2) Upon request of anyone entitled as against the carrier to control the goods
while in
transit
and on surrender of any outstanding bill of lading or other receipt covering
such goods, the
issuer
may procure a substitute bill to be issued at any place designated in the
request.
6A-7-306.
Altered bills of lading. -- An unauthorized alteration or
filling in of a blank in
a
bill of lading leaves the bill enforceable according to its original tenor.
6A-7-307.
Lien of carrier. -- (1) A carrier has a lien on the goods
covered by a bill of
lading
for charges subsequent to the date of its receipt of the goods for storage or
transportation
(including
demurrage and terminal charges) and for expenses necessary for preservation of
the
goods
incident to their transportation or reasonably incurred in their sale pursuant
to law. But
against
a purchaser for value of a negotiable bill of lading, a carrier's lien is
limited to charges
stated
in the bill or the applicable tariffs, or if no charges are stated then to a
reasonable charge.
(2) A lien for charges and expenses under subsection (1) on goods which the
carrier was
required
by law to receive for transportation is effective against the consignor or any
person
entitled
to the goods unless the carrier had notice that the consignor lacked authority
to subject
the
goods to such charges and expenses. Any other lien under subsection (1) is
effective against
the
consignor and any person who permitted the bailor to have control or possession
of the goods
unless
the carrier had notice that the bailor lacked such authority.
(3) A carrier loses his or her lien on any goods which he or she voluntarily
delivers or
which
he or she unjustifiably refuses to deliver.
6A-7-308.
Enforcement of carrier's lien. -- (1) A carrier's lien may be
enforced by
public
or private sale of the goods, in bloc or in parcels, at any time or place and
on any terms
which
are commercially reasonable, after notifying all persons known to claim an
interest in the
goods.
Such notification must include a statement of the amount due, the nature of the
proposed
sale,
and the time and place of any public sale. The fact that a better price could
have been
obtained
by a sale at a different time or in a different method from that selected by
the carrier is
not
of itself sufficient to establish that the sale was not made in a commercially
reasonable
manner.
If the carrier either sells the goods in the usual manner in any recognized
market therefor
or if
he or she sells at the price current in such market at the time of his or her
sale or if he or she
has
otherwise sold in conformity with commercially reasonable practices among
dealers in the
type
of goods sold he or she has sold in a commercially reasonable manner. A sale of
more goods
than
apparently necessary to be offered to ensure satisfaction of the obligation is
not
commercially
reasonable except in cases covered by the preceding sentence.
(2) Before any sale pursuant to this section any person claiming a right in the
goods may
pay
the amount necessary to satisfy the lien and the reasonable expenses incurred
under this
section.
In that event the goods must not be sold, but must be retained by the carrier
subject to the
terms
of the bill and this chapter.
(3) The carrier may buy at any public sale pursuant to this section.
(4) A purchaser in good faith of goods sold to enforce a carrier's lien takes
the goods free
of
any rights of persons against whom the lien was valid, despite noncompliance by
the carrier
with
the requirements of this section.
(5) The carrier may satisfy his or her lien from the proceeds of any sale
pursuant to this
section
but must hold the balance, if any, for delivery on demand to any person to whom
he or
she
would have been bound to deliver the goods.
(6) The rights provided by this section shall be in addition to all other
rights allowed by
law
to a creditor against his or her debtor.
(7) A carrier's lien may be enforced in accordance with either subsection (1)
or the
procedure
set forth in section 6A-7-210(2).
(8) The carrier is liable for damages caused by failure to comply with the
requirements
for
sale under this section and in case of willful violation is liable for
conversion.
6A-7-309.
Duty of care -- Contractual limitation of carrier's liability. --
(1) A carrier
who issues
a bill of lading whether negotiable or nonnegotiable must exercise the degree
of care
in
relation to the goods which a reasonably careful person would exercise under
like
circumstances.
This subsection does not repeal or change any law or rule of law which imposes
liability
upon a common carrier for damages not caused by its negligence.
(2) Damages may be limited by a provision that the carrier's liability shall
not exceed a
value
stated in the document if the carrier's rates are dependent upon value and the
consignor by
the
carrier's tariff is afforded an opportunity to declare a higher value or a
value as lawfully
provided
in the tariff, or where no tariff is filed he or she is otherwise advised of
such
opportunity;
but no such limitation is effective with respect to the carrier's liability for
conversion
to
its own use.
(3) Reasonable provisions as to the time and manner of presenting claims and
instituting
actions
based on the shipment may be included in a bill of lading or tariff.
6A-7-401.
Irregularities in issue of receipt or bill or conduct of issuer. --
The
obligations
imposed by this chapter on an issuer apply to a document of title regardless of
the fact
that:
(a) The document may not comply with the requirements of this chapter or of any
other
law
or regulation regarding its issue, form, or content; or
(b) The issuer may have violated laws regulating the conduct of his or her
business; or
(c) The goods covered by the document were owned by the bailee at the time the
document
was issued; or
(d) The person issuing the document does not come within the definition of
warehouseperson
if it purports to be a warehouse receipt.
6A-7-402.
Duplicate receipt or bill -- Overissue. -- Neither a duplicate
nor any other
document
of title purporting to cover goods already represented by an outstanding
document of
the
same issuer confers any right in the goods, except as provided in the case of
bills in a set,
overissue
of documents for fungible goods, and substitutes for lost, stolen, or destroyed
documents.
But the issuer is liable for damages caused by his or her overissue or failure
to
identify
a duplicate document as such by conspicuous notation on its face.
6A-7-403.
Obligation of warehouseperson or carrier to deliver -- Excuse. --
(1) The
bailee
must deliver the goods to a person entitled under the document who complies
with
subsections
(2) and (3), unless and to the extent that the bailee establishes any of the
following:
(a) Delivery of the goods to a person whose receipt was rightful as against the
claimant;
(b) Damage to or delay, loss, or destruction of the goods for which the bailee
is not
liable.
(c) Previous sale or other disposition of the goods in lawful enforcement of a
lien or on
warehouseperson's
lawful termination of storage;
(d) The exercise by a seller of his or her right to stop delivery pursuant to
the provisions
of
the chapter on sales (section 6A-2-705);
(e) A diversion, reconsignment or other disposition pursuant to the provisions
of this
chapter
(section 6A-7-303) or tariff regulating such right;
(f) Release, satisfaction or any other fact affording a personal defense against
the
claimant;
(g) Any other lawful excuse.
(2) A person claiming goods covered by a document of title must satisfy the
bailee's lien
where
the bailee so requests or where the bailee is prohibited by law from delivering
the goods
until
the charges are paid.
(3) Unless the person claiming is one against whom the document confers no
right under
section
6A-7-503(1), he or she must surrender for cancellation or notation of partial
deliveries
any
outstanding negotiable document covering the goods, and the bailee must cancel
the
document
or conspicuously note the partial delivery thereon or be liable to any person
to whom
the
document is duly negotiated.
(4) "Person entitled under the document" means holder in the case of a
negotiable
document,
or the person to whom delivery is to be made by the terms of or pursuant to
written
instructions
under a nonnegotiable document.
6A-7-404.
No liability for good faith delivery pursuant to receipt or bill. --
A bailee
who
in good faith, including observance of reasonable commercial standards, has
received goods
and
delivered or otherwise disposed of them according to the terms of the document
of title or
pursuant
to this chapter is not liable therefor. This rule applies even though the
person from
whom
he or she received the goods had no authority to procure the document or to
dispose of the
goods
and even though the person to whom he delivered the goods had no authority to
receive
them.
6A-7-501.
Form of negotiation and requirements of "due negotiation". --
(1) A
negotiable
document of title running to the order of a named person is negotiated by his
or her
indorsement
and delivery. After his or her indorsement in blank or to bearer any person can
negotiate
it by delivery alone.
(2) (a) A negotiable document of title is also negotiated by delivery alone
when by its
original
terms it runs to bearer;
(b) When a document running to the order of a named person is delivered to him
or her
the
effect is the same as if the document had been negotiated.
(3) Negotiation of a negotiable document of title after it has been indorsed to
a specified
person
requires indorsement by the special indorsee as well as delivery.
(4) A negotiable document of title is "duly negotiated" when it is
negotiated in the
manner
stated in this section to a holder who purchases it in good faith without
notice of any
defense
against or claim to it on the part of any person and for value, unless it is
established that
the negotiation
is not in the regular course of business or financing or involves receiving the
document
in settlement or payment of a money obligation.
(5) Indorsement of a nonnegotiable document neither makes it negotiable nor
adds to the
transferor's
rights.
(6) The naming in a negotiable bill of a person to be notified of the arrival
of the goods
does
not limit the negotiability of the bill nor constitute notice to a purchaser
thereof of any
interest
of such person in the goods.
6A-7-502.
Rights acquired by due negotiation. -- (1) Subject to the
following section
and
to the provisions of section 6A-7-205 on fungible goods, a holder to whom a
negotiable
document
of title has been duly negotiated acquires thereby:
(a) Title to the document;
(b) Title to the goods;
(c) All rights accruing under the law of agency or estoppel, including rights
to goods
delivered
to the bailee after the document was issued; and
(d) The direct obligation of the issuer to hold or deliver the goods according
to the terms
of
the document free of any defense or claim by him or her except those arising
under the terms
of
the document or under this chapter. In the case of a delivery order the
bailee's obligation
accrues
only upon acceptance and the obligation acquired by the holder is that the
issuer and any
indorser
will procure the acceptance of the bailee.
(2) Subject to the following section, title and rights so acquired are not
defeated by any
stoppage
of the goods represented by the document or by surrender of such goods by the
bailee,
and
are not impaired even though the negotiation or any prior negotiation
constituted a breach of
duty
or even though any person has been deprived of possession of the document by
misrepresentation,
fraud, accident, mistake, duress, loss, theft, or conversion, or even though a
previous
sale or other transfer of the goods or document has been made to a third
person.
6A-7-503.
Document of title to goods defeated in certain cases.. -- (1) A
document of
title
confers no right in goods against a person who before issuance of the document
had a legal
interest
or a perfected security interest in them and who neither:
(a) Delivered or entrusted them or any document of title covering them to the
bailor or
his
or her nominee with actual or apparent authority to ship, store or sell or with
power to obtain
delivery
under this chapter (section 6A-7-403) or with power of disposition under this
title
(sections
6A-2-403 and 6A-9-320) or other statute or rule of law; nor
(b) Acquiesced in the procurement by the bailor or his or her nominee of any
document
of
title.
(2) Title to goods based upon an unaccepted delivery order is subject to the
rights of
anyone
to whom a negotiable warehouse receipt or bill of lading covering the goods has
been
duly
negotiated. Such a title may be defeated under the next section to the same
extent as the
rights
of the issuer or a transferee from the issuer.
(3) Title to goods based upon a bill of lading issued to a freight forwarder is
subject to
the
rights of anyone to whom a bill issued by the freight forwarder is duly
negotiated; but
delivery
by the carrier in accordance with part 4 of this chapter pursuant to its own
bill of lading
discharges
the carrier's obligation to deliver.
6A-7-504.
Rights acquired in the absence of due negotiation -- Effect of diversion --
Seller's
stoppage of delivery. --
(1) A transferee of a document, whether negotiable or
nonnegotiable,
to whom the document has been delivered but not duly negotiated, acquires the
title
and rights which his or her transferor had or had actual authority to convey.
(2) In the case of a nonnegotiable document, until but not after the bailee
receives
notification
of the transfer, the rights of the transferee may be defeated:
(a) By those creditors of the transferor who could treat the sale as void under
section 6A-
2-402;
or
(b) By a buyer from the transferor in ordinary course of business if the bailee
has
delivered
the goods to the buyer or received notification of his or her rights; or
(c) As against the bailee by good faith dealings of the bailee with the
transferor.
(3) A diversion or other change of shipping instructions by the consignor in a
nonnegotiable
bill of lading which causes the bailee not to deliver to the consignee defeats
the
consignee's
title to the goods if they have been delivered to a buyer in ordinary course of
business
and,
in any event, defeats the consignee's rights against the bailee.
(4) Delivery pursuant to a nonnegotiable document may be stopped by a seller
under
section
6A-2-705, and subject to the requirement of due notification there provided. A
bailee
honoring
the seller's instructions is entitled to be indemnified by the seller against
any resulting
loss
or expense.
6A-7-505.
Indorser not a guarantor for other parties. -- The indorsement
of a
document
of title issued by a bailee does not make the indorser liable for any default
by the bailee
or by
previous indorsers.
6A-7-506.
Delivery without indorsement -- Right to compel indorsement. --
The
transferee
of a negotiable document of title has a specifically enforceable right to have
his or her
transferor
supply any necessary indorsement, but the transfer becomes a negotiation only
as of the
time
the indorsement is supplied.
6A-7-507.
Warranties on negotiation or transfer of receipt or bill. --
Where a person
negotiates
or transfers a document of title for value otherwise than as a mere
intermediary under
the
next following section, then unless otherwise agreed, he or she warrants to his
or her
immediate
purchaser only in addition to any warranty made in selling the goods:
(a) That the document is genuine; and
(b) That he or she has no knowledge of any fact which would impair its validity
or
worth;
and
(c) That his or her negotiation or transfer is rightful and fully effective
with respect to the
title
to the document and the goods it represents.
6A-7-508.
Warranties of collecting bank as to documents. -- A collecting
bank or
other
intermediary known to be entrusted with documents on behalf of another or with collection
of a
draft or other claim against delivery of documents warrants by such delivery of
the
documents
only its own good faith and authority. This rule applies even though the
intermediary
has
purchased or made advances against the claim or draft to be collected.
6A-7-509.
Receipt or bill -- When adequate compliance with commercial contract. --
The
question whether a document is adequate to fulfill the obligations of a
contract for sale or the
conditions
of a credit is governed by the chapters on sales (chapter 2 of this title) and
on letters of
credit
(chapter 5 of this title).
6A-7-601.
Lost and missing documents. -- (1) If a document has been lost,
stolen, or
destroyed,
a court may order delivery of the goods or issuance of a substitute document
and the
bailee
may without liability to any person comply with such order. If the document was
negotiable
the claimant must post security approved by the court to indemnify any person
who
may
suffer loss as a result of non-surrender of the document. If the document was
not negotiable,
such
security may be required at the discretion of the court. The court may also in
its discretion
order
payment of the bailee's reasonable costs and counsel fees.
(2) A bailee who, without court order, delivers goods to a person claiming
under a
missing
negotiable document is liable to any person injured thereby, and if the
delivery is not in
good
faith becomes liable for conversion. Delivery in good faith is not conversion
if made in
accordance
with a filed classification or tariff or, where no classification or tariff is
filed, if the
claimant
posts security with the bailee in an amount at least double the value of the
goods at the
time
of posting to indemnify any person injured by the delivery who files a notice
of claim within
one
year after the delivery.
6A-7-602.
Attachment of goods covered by a negotiable document. -- Except
where
the
document was originally issued upon delivery of the goods by a person who had
no power to
dispose
of them, no lien attaches by virtue of any judicial process to goods in the
possession of a
bailee
for which a negotiable document of title is outstanding unless the document be
first
surrendered
to the bailee or its negotiation enjoined, and the bailee shall not be
compelled to
deliver
the goods pursuant to process until the document is surrendered to him or her
or
impounded
by the court. One who purchases the document for value without notice of the
process
or
injunction takes free of the lien imposed by judicial process.
6A-7-603.
Conflicting claims -- Interpleader. -- If more than one person
claims title or
possession
of the goods, the bailee is excused from delivery until he or she has had a
reasonable
time
to ascertain the validity of the adverse claims or to bring an action to compel
all claimants to
interplead
and may compel such interpleader, either in defending an action for nondelivery
of the
goods,
or by original action, whichever is appropriate.
SECTION
6. Title 6A of the General Laws entitled "UNIFORM COMMERCIAL
CODE"
is hereby amended by adding thereto the following chapter:
CHAPTER 7
DOCUMENTS OF TITLE
PART 1 GENERAL
6A-7-101.
Short title. -- This chapter may be cited as "Uniform
Commercial Code-
Documents
of Title."
6A-7-102.
Definitions and index of definitions. -- (a) In this chapter, unless
the
context
otherwise requires:
(1)
"Bailee" means a person that by a warehouse receipt, bill of lading, or
other document
of
title acknowledges possession of goods and contracts to deliver them.
(2)
"Carrier" means a person that issues a bill of lading.
(3)
"Consignee" means a person named in a bill of lading to which or to
whose order the
bill promises
delivery.
(4)
"Consignor" means a person named in a bill of lading as the person
from which the
goods
have been received for shipment.
(5)
"Delivery order" means a record that contains an order to deliver
goods directed to a
warehouse,
carrier, or other person that in the ordinary course of business issues
warehouse
receipts
or bills of lading.
(6)
"Good faith" means honesty in fact and the observance of reasonable
commercial
standards
of fair dealing.
(7)
"Goods" means all things that are treated as movable for the purposes
of a contract for
storage
or transportation.
(8)
"Issuer" means a bailee that issues a document of title or, in the
case of an unaccepted
delivery
order, the person that orders the possessor of goods to deliver. The term
includes a
person
for which an agent or employee purports to act in issuing a document if the
agent or
employee
has real or apparent authority to issue documents, even if the issuer did not
receive any
goods,
the goods were misdescribed, or in any other respect the agent or employee
violated the
issuer's
instructions.
(9)
"Person entitled under the document" means the holder, in the case of
a negotiable
document
of title, or the person to which delivery of the goods is to be made by the
terms of, or
pursuant
to instructions in a record under, a nonnegotiable document of title.
(10)
"Record" means information that is inscribed on a tangible medium or
that is stored
in an
electronic or other medium and is retrievable in perceivable form.
(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.
(12)
"Shipper" means a person that enters into a contract of
transportation with a carrier.
(13)
"Warehouse" means a person engaged in the business of storing goods
for hire.
(b)
Definitions in other chapters applying to this chapter and the sections in
which they
appear
are:
(1)
"Contract for sale," section 2-106.
(2)
"Lessee in the ordinary course of business," section 2.1-103.
(3)
"Receipt" of goods, section 2-103.
(c)
In addition, chapter 1 contains general definitions and principles of
construction and
interpretation
applicable throughout this chapter.
6A-7-103.
Relation of chapter to treaty or statute. -- (a) This chapter is
subject to
any
treaty or statute of the United States or regulatory statute of this state to
the extent the treaty,
statute,
or regulatory statute is applicable.
(b)
This chapter does not modify or repeal any law prescribing the form or content
of a
document
of title or the services or facilities to be afforded by a bailee, or otherwise
regulating a
bailee's
business in respects not specifically treated in this chapter. However,
violation of such a
law
does not affect the status of a document of title that otherwise is within the
definition of a
document
of title.
(c)
This chapter modifies, limits, and supersedes the federal Electronic Signatures
in
Global
and National Commerce Act (15 U.S.C. Section 7001, et. seq.) but does not
modify, limit,
or
supersede Section 101(c) of that act (15 U.S.C. Section 7001(c)) or authorize
electronic
delivery
of any of the notices described in Section 103(b) of that act (15 U.S.C.
Section 7003(b)).
(d)
To the extent there is a conflict between R.I. Gen. Laws sections 42-127.1-1 to
20
(the
Uniform Electronic Transactions Act) and this chapter, this chapter governs.
6A-7-104.
Negotiable and nonnegotiable document of title. -- (a) Except as
otherwise
provided in subsection (c), a document of title is negotiable if by its terms
the goods are
to be
delivered to the bearer or to the order of a named person.
(b)
A document of title other than one described in subsection (a) is
nonnegotiable. A
bill
of lading that states that the goods are consigned to a named person is not
made negotiable by
a
provision that the goods are to be delivered only against an order in a record
signed by the same
or
another named person.
(c)
A document of title is nonnegotiable if, at the time it is issued, the document
has a
conspicuous
legend, however expressed, that it is nonnegotiable.
6A-7-105.
Reissuance in alternative medium. -- (a) Upon request of a person
entitled
under
an electronic document of title, the issuer of the electronic document may
issue a tangible
document
of title as a substitute for the electronic document if:
(1)
the person entitled under the electronic document surrenders control of the
document
to
the issuer; and
(2)
the tangible document when issued contains a statement that it is issued in substitution
for
the electronic document.
(b)
Upon issuance of a tangible document of title in substitution for an electronic
document
of title in accordance with subsection (a):
(1)
the electronic document ceases to have any effect or validity; and
(2)
the person that procured issuance of the tangible document warrants to all
subsequent
persons
entitled under the tangible document that the warrantor was a person entitled
under the
electronic
document when the warrantor surrendered control of the electronic document to
the
issuer.
(c)
Upon request of a person entitled under a tangible document of title, the
issuer of the
tangible
document may issue an electronic document of title as a substitute for the
tangible
document
if:
(1)
the person entitled under the tangible document surrenders possession of the
document
to the issuer; and
(2)
the electronic document when issued contains a statement that it is issued in
substitution
for the tangible document.
(d)
Upon issuance of an electronic document of title in substitution for a tangible
document
of title in accordance with subsection (c):
(1)
the tangible document ceases to have any effect or validity; and
(2)
the person that procured issuance of the electronic document warrants to all
subsequent
persons entitled under the electronic document that the warrantor was a person
entitled
under the tangible document when the warrantor surrendered possession of the
tangible
document
to the issuer.
6A-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
electronic
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 control of an
electronic
document of title, if the document is created, stored, and assigned in such a
manner
that:
(1)
a single authoritative copy of the document exists which is unique,
identifiable, and,
except
as otherwise provided in 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 transferred;
(3)
the authoritative copy is communicated to and maintained by the person
asserting
control
or its designated custodian;
(4)
copies or amendments that add or change an identified assignee of the
authoritative
copy
can be made only with the consent of the person asserting control;
(5)
each copy of the authoritative copy and any copy of a copy is readily
identifiable as a
copy
that is not the authoritative copy; and
(6)
any amendment of the authoritative copy is readily identifiable as authorized
or
unauthorized.
PART 2 WAREHOUSE RECEIPTS: SPECIAL PROVISIONS
6A-7-201.
Person that may issue a warehouse receipt – Storage under bond. -- (a)
A
warehouse receipt may be issued by any warehouse.
(b)
If goods, including distilled spirits and agricultural commodities, are stored
under a
statute
requiring a bond against withdrawal or a license for the issuance of receipts
in the nature
of
warehouse receipts, a receipt issued for the goods is deemed to be a warehouse
receipt even if
issued
by a person that is the owner of the goods and is not a warehouse.
6A-7-202.
Form of warehouse receipt – Effect of omission. -- (a) A warehouse
receipt
need not be in any particular form.
(b)
Unless a warehouse receipt provides for each of the following, the warehouse is
liable
for
damages caused to a person injured by its omission:
(1)
a statement of the location of the warehouse facility where the goods are
stored;
(2)
the date of issue of the receipt;
(3)
the unique identification code of the receipt;
(4)
a statement whether the goods received will be delivered to the bearer, to a
named
person,
or to a named person or its order;
(5)
the rate of storage and handling charges, unless goods are stored under a field
warehousing
arrangement, in which case a statement of that fact is sufficient on a
nonnegotiable
receipt;
(6)
a description of the goods or the packages containing them;
(7)
the signature of the warehouse or its agent;
(8)
if the receipt is issued for goods that the warehouse owns, either solely, jointly,
or in
common
with others, a statement of the fact of that ownership; and
(9)
a statement of the amount of advances made and of liabilities incurred for
which the
warehouse
claims a lien or security interest, unless the precise amount of advances made
or
liabilities
incurred, at the time of the issue of the receipt, is unknown to the warehouse
or to its
agent
that issued the receipt, in which case a statement of the fact that advances
have been made
or
liabilities incurred and the purpose of the advances or liabilities is
sufficient.
(c)
A warehouse may insert in its receipt any terms that are not contrary to the
Uniform
Commercial
Code and do not impair its obligation of delivery under section 6A-7-403 or its
duty
of care under section 6A-7-204. Any contrary provision is ineffective.
6A-7-203.
Liability for nonreceipt or misdescription. -- A party to or
purchaser for
value
in good faith of a document of title, other than a bill of lading, that relies
upon the
description
of the goods in the document may recover from the issuer damages caused by the
nonreceipt
or misdescription of the goods, except to the extent that:
(1)
the document conspicuously indicates that the issuer does not know whether all
or
part
of the goods in fact were received or conform to the description, such as a
case in which the
description
is in terms of marks or labels or kind, quantity, or condition, or the receipt
or
description
is qualified by "contents, condition, and quality unknown", "said
to contain", or words
of
similar import, if the indication is true; or
(2)
the party or purchaser otherwise has notice of the nonreceipt or
misdescription.
6A-7-204.
Duty of care – Contractual limitation of warehouse's liability. -- (a)
A
warehouse
is liable for damages for loss of or injury to the goods caused by its failure
to exercise
care
with regard to the goods that a reasonably careful person would exercise under
similar
circumstances.
Unless otherwise agreed, the warehouse is not liable for damages that could not
have
been avoided by the exercise of that care.
(b)
Damages may be limited by a term in the warehouse receipt or storage agreement
limiting
the amount of liability in case of loss or damage beyond which the warehouse is
not
liable.
Such a limitation is not effective with respect to the warehouse's liability
for conversion to
its
own use. On request of the bailor in a record at the time of signing the
storage agreement or
within
a reasonable time after receipt of the warehouse receipt, the warehouse's
liability may be
increased
on part or all of the goods covered by the storage agreement or the warehouse
receipt.
In
this event, increased rates may be charged based on an increased valuation of
the goods.
(c)
Reasonable provisions as to the time and manner of presenting claims and
commencing
actions based on the bailment may be included in the warehouse receipt or
storage
agreement.
6A-7-205.
Title under warehouse receipt defeated in certain cases. -- A buyer
in
ordinary
course of business of fungible goods sold and delivered by a warehouse that is
also in
the
business of buying and selling such goods takes the goods free of any claim
under a
warehouse
receipt even if the receipt is negotiable and has been duly negotiated.
6A-7-206.
Termination of storage at warehouse's option. -- (a) A warehouse, by
giving
notice to the person on whose account the goods are held and any other person
known to
claim
an interest in the goods, may require payment of any charges and removal of the
goods
from
the warehouse at the termination of the period of storage fixed by the document
of title or, if
a
period is not fixed, within a stated period not less than thirty (30) days
after the warehouse gives
notice.
If the goods are not removed before the date specified in the notice, the
warehouse may
sell
them pursuant to section 6A-7-210.
(b)
If a warehouse in good faith believes that goods are about to deteriorate or
decline in
value
to less than the amount of its lien within the time provided in subsection (a)
and section 6A-
7.1-210,
the warehouse may specify in the notice given under subsection (a) any
reasonable
shorter
time for removal of the goods and, if the goods are not removed, may sell them
at public
sale
held not less than one week after a single advertisement or posting.
(c)
If, as a result of a quality or condition of the goods of which the warehouse
did not
have
notice at the time of deposit, the goods are a hazard to other property, the
warehouse
facilities,
or other persons, the warehouse may sell the goods at public or private sale
without
advertisement
or posting on reasonable notification to all persons known to claim an interest
in
the
goods. If the warehouse, after a reasonable effort, is unable to sell the
goods, it may dispose
of
them in any lawful manner and does not incur liability by reason of that
disposition.
(d)
A warehouse shall deliver the goods to any person entitled to them under this
chapter
upon
due demand made at any time before sale or other disposition under this
section.
(e)
A warehouse may satisfy its lien from the proceeds of any sale or disposition
under
this
section but shall hold the balance for delivery on the demand of any person to
which the
warehouse
would have been bound to deliver the goods.
6A-7-207.
Goods must be kept separate – Fungible goods. -- (a) Unless the
warehouse
receipt provides otherwise, a warehouse shall keep separate the goods covered
by each
receipt
so as to permit at all times identification and delivery of those goods.
However, different
lots
of fungible goods may be commingled.
(b)
If different lots of fungible goods are commingled, the goods are owned in
common
by
the persons entitled thereto and the warehouse is severally liable to each
owner for that
owner's
share. If, because of overissue, a mass of fungible goods is insufficient to
meet all the
receipts
the warehouse has issued against it, the persons entitled include all holders
to which
overissued
receipts have been duly negotiated.
6A-7-208.
Altered warehouse receipts. -- If a blank in a negotiable tangible
warehouse
receipt has been filled in without authority, a good-faith purchaser for value
and
without
notice of the lack of authority may treat the insertion as authorized. Any
other
unauthorized
alteration leaves any tangible or electronic warehouse receipt enforceable
against
the
issuer according to its original tenor.
6A-7-209.
Lien of warehouse. -- (a) A warehouse has a lien against the bailor
on the
goods
covered by a warehouse receipt or storage agreement or on the proceeds thereof
in its
possession
for charges for storage or transportation, including demurrage and terminal
charges,
insurance,
labor, or other charges, present or future, in relation to the goods, and for
expenses
necessary
for preservation of the goods or reasonably incurred in their sale pursuant to
law. If the
person
on whose account the goods are held is liable for similar charges or expenses
in relation to
other
goods whenever deposited and it is stated in the warehouse receipt or storage
agreement
that
a lien is claimed for charges and expenses in relation to other goods, the
warehouse also has a
lien
against the goods covered by the warehouse receipt or storage agreement or on
the proceeds
thereof
in its possession for those charges and expenses, whether or not the other goods
have been
delivered
by the warehouse. However, as against a person to which a negotiable warehouse
receipt
is duly negotiated, a warehouse's lien is limited to charges in an amount or at
a rate
specified
in the warehouse receipt or, if no charges are so specified, to a reasonable
charge for
storage
of the specific goods covered by the receipt subsequent to the date of the
receipt.
(b)
A warehouse may also reserve a security interest against the bailor for the
maximum
amount
specified on the receipt for charges other than those specified in subsection
(a), such as
for
money advanced and interest. The security interest is governed by chapter 6A-9.
(c)
A warehouse's lien for charges and expenses under subsection (a) or a security
interest
under
subsection (b) is also effective against any person that so entrusted the
bailor with
possession
of the goods that a pledge of them by the bailor to a good-faith purchaser for
value
would
have been valid. However, the lien or security interest is not effective
against a person
that
before issuance of a document of title had a legal interest or a perfected
security interest in
the
goods and that did not:
(1)
deliver or entrust the goods or any document of title covering the goods to the
bailor
or
the bailor's nominee with:
(A)
actual or apparent authority to ship, store, or sell;
(B)
power to obtain delivery under section 6A-7-403; or
(C)
power of disposition under section 2-403, subsection 2.1-304(2), subsection
2.1-
305(2),
section 9-320, or subsection 9-321(c) or other statute or rule of law; or
(2)
acquiesce in the procurement by the bailor or its nominee of any document.
(d)
A warehouse's lien on household goods for charges and expenses in relation to
the
goods
under subsection (a) is also effective against all persons if the depositor was
the legal
possessor
of the goods at the time of deposit. In this subsection, "household
goods" means
furniture,
furnishings, or personal effects used by the depositor in a dwelling.
(e)
A warehouse loses its lien on any goods that it voluntarily delivers or
unjustifiably
refuses
to deliver.
6A-7-210.
Enforcement of warehouse's liens. -- (a) Except as otherwise
provided in
subsection
(b), a warehouse's lien may be enforced by public or private sale of the goods,
in bulk
or in
packages, at any time or place and on any terms that are commercially
reasonable, after
notifying
all persons known to claim an interest in the goods. The notification must
include a
statement
of the amount due, the nature of the proposed sale, and the time and place of
any public
sale.
The fact that a better price could have been obtained by a sale at a different
time or in a
method
different from that selected by the warehouse is not of itself sufficient to
establish that the
sale
was not made in a commercially reasonable manner. The warehouse sells in a
commercially
reasonable
manner if the warehouse sells the goods in the usual manner in any recognized
market
therefore,
sells at the price current in that market at the time of the sale, or otherwise
sells in
conformity
with commercially reasonable practices among dealers in the type of goods sold.
A
sale
of more goods than apparently necessary to be offered to ensure satisfaction of
the obligation
is
not commercially reasonable, except in cases covered by the preceding sentence.
(b)
A warehouse may enforce its lien on goods, other than goods stored by a
merchant in
the
course of its business, only if the following requirements are satisfied:
(1)
All persons known to claim an interest in the goods must be notified.
(2)
The notification must include an itemized statement of the claim, a description
of the
goods
subject to the lien, a demand for payment within a specified time not less than
ten (10)
days
after receipt of the notification, and a conspicuous statement that unless the
claim is paid
within
that time the goods will be advertised for sale and sold by auction at a
specified time and
place.
(3)
The sale must conform to the terms of the notification.
(4)
The sale must be held at the nearest suitable place to where the goods are held
or
stored.
(5)
After the expiration of the time given in the notification, an advertisement of
the sale
must
be published once a week for two weeks consecutively in a newspaper of general
circulation
where
the sale is to be held. The advertisement must include a description of the
goods, the name
of
the person on whose account the goods are being held, and the time and place of
the sale. The
sale
must take place at least fifteen (15) days after the first publication. If
there is no newspaper
of
general circulation where the sale is to be held, the advertisement must be
posted at least ten
(10)
days before the sale in not fewer than six (6) conspicuous places in the
neighborhood of the
proposed
sale.
(c)
Before any sale pursuant to this section, any person claiming a right in the
goods may
pay
the amount necessary to satisfy the lien and the reasonable expenses incurred
in complying
with
this section. In that event, the goods may not be sold but must be retained by
the warehouse
subject
to the terms of the receipt and this chapter.
(d)
A warehouse may buy at any public sale held pursuant to this section.
(e)
A purchaser in good faith of goods sold to enforce a warehouse's lien takes the
goods
free
of any rights of persons against which the lien was valid, despite the
warehouse's
noncompliance
with this section.
(f)
A warehouse may satisfy its lien from the proceeds of any sale pursuant to this
section
but
shall hold the balance, if any, for delivery on demand to any person to which
the warehouse
would
have been bound to deliver the goods.
(g)
The rights provided by this section are in addition to all other rights allowed
by law to
a
creditor against a debtor.
(h)
If a lien is on goods stored by a merchant in the course of its business, the
lien may be
enforced
in accordance with subsection (a) or (b).
(i)
A warehouse is liable for damages caused by failure to comply with the
requirements
for
sale under this section and, in case of willful violation, is liable for
conversion.
PART 3 BILLS OF LADING: SPECIAL PROVISIONS
6A-7-301.
Liability for nonreceipt or misdescription –"Said to contain" –
"Shipper's
weight, load and count" – Improper handling. -- (a) A consignee of a
nonnegotiable
bill of lading which has given value in good faith, or a holder to which a
negotiable
bill
has been duly negotiated, relying upon the description of the goods in the bill
or upon the date
shown
in the bill, may recover from the issuer damages caused by the misdating of the
bill or the
nonreceipt
or misdescription of the goods, except to the extent that the bill indicates
that the
issuer
does not know whether any part or all of the goods in fact were received or
conform to the
description,
such as in a case in which the description is in terms of marks or labels or
kind,
quantity,
or condition or the receipt or description is qualified by "contents or
condition of
contents
of packages unknown," "said to contain," "shipper's weight,
load, and count," or words
of
similar import, if that indication is true.
(b)
If goods are loaded by the issuer of a bill of lading;
(1)
the issuer shall count the packages of goods if shipped in packages and
ascertain the
kind
and quantity if shipped in bulk; and
(2)
words such as "shipper's weight, load, and count," or words of
similar import
indicating
that the description was made by the shipper are ineffective except as to goods
concealed
in packages.
(c)
If bulk goods are loaded by a shipper that makes available to the issuer of a
bill of
lading
adequate facilities for weighing those goods, the issuer shall ascertain the
kind and
quantity
within a reasonable time after receiving the shipper's request in a record to
do so. In that
case,
"shipper's weight" or words of similar import are ineffective.
(d)
The issuer of a bill of lading, by including in the bill the words
"shipper's weight,
load,
and count," or words of similar import, may indicate that the goods were
loaded by the
shipper,
and, if that statement is true, the issuer is not liable for damages caused by
the improper
loading.
However, omission of such words does not imply liability for damages caused by
improper
loading.
(e)
A shipper guarantees to an issuer the accuracy at the time of shipment of the
description,
marks, labels, number, kind, quantity, condition, and weight, as furnished by
the
shipper,
and the shipper shall indemnify the issuer against damage caused by
inaccuracies in
those
particulars. This right of indemnity does not limit the issuer's responsibility
or liability
under
the contract of carriage to any person other than the shipper.
6A-7-302.
Through bills of lading and similar documents of title. -- (a) The
issuer of
a
through bill of lading, or other document of title embodying an undertaking to
be performed in
part
by a person acting as its agent or by a performing carrier, is liable to any
person entitled to
recover
on the bill or other document for any breach by the other person or the
performing carrier
of
its obligation under the bill or other document. However, to the extent that
the bill or other
document
covers an undertaking to be performed overseas or in territory not contiguous
to the
continental
United States or an undertaking including matters other than transportation,
this
liability
for breach by the other person or the performing carrier may be varied by
agreement of
the
parties.
(b)
If goods covered by a through bill of lading or other document of title
embodying an
undertaking
to be performed in part by a person other than the issuer are received by that
person,
the
person is subject, with respect to its own performance while the goods are in
its possession, to
the
obligation of the issuer. The person's obligation is discharged by delivery of
the goods to
another
person pursuant to the bill or other document and does not include liability
for breach by
any
other person or by the issuer.
(c)
The issuer of a through bill of lading or other document of title described in
subsection
(a) is entitled to recover from the performing carrier, or other person in
possession of
the
goods when the breach of the obligation under the bill or other document
occurred:
(1)
the amount it may be required to pay to any person entitled to recover on the
bill or
other
document for the breach, as may be evidenced by any receipt, judgment, or
transcript of
judgment;
and
(2)
the amount of any expense reasonably incurred by the issuer in defending any
action
commenced
by any person entitled to recover on the bill or other document for the breach.
6A-7-303.
Diversion – Reconsignment – Change of instructions. -- (a) Unless
the
bill
of lading otherwise provides, a carrier may deliver the goods to a person or
destination other
than
that stated in the bill or may otherwise dispose of the goods, without
liability for
misdelivery,
on instructions from:
(1)
the holder of a negotiable bill;
(2)
the consignor on a nonnegotiable bill, even if the consignee has given contrary
instructions;
(3)
the consignee on a nonnegotiable bill in the absence of contrary instructions
from the
consignor,
if the goods have arrived at the billed destination or if the consignee is in
possession of
the
tangible bill or in control of the electronic bill; or
(4)
the consignee on a nonnegotiable bill, if the consignee is entitled as against
the
consignor
to dispose of the goods.
(b)
Unless instructions described in subsection (a) are included in a negotiable
bill of
lading,
a person to which the bill is duly negotiated may hold the bailee according to
the original
terms.
6A-7-304.
Tangible bills of lading in a set. -- (a) Except as customary in
international
transportation,
a tangible bill of lading may not be issued in a set of parts. The issuer is
liable for
damages
caused by violation of this subsection.
(b)
If a tangible bill of lading is lawfully issued in a set of parts, each of
which contains
an
identification code and is expressed to be valid only if the goods have not
been delivered
against
any other part, the whole of the parts constitutes one bill.
(c)
If a tangible negotiable bill of lading is lawfully issued in a set of parts
and different
parts
are negotiated to different persons, the title of the holder to which the first
due negotiation is
made
prevails as to both the document of title and the goods even if any later
holder may have
received
the goods from the carrier in good faith and discharged the carrier's
obligation by
surrendering
its part.
(d)
A person that negotiates or transfers a single part of a tangible bill of
lading issued in
a set
is liable to holders of that part as if it were the whole set.
(e)
The bailee shall deliver in accordance with Part 4 against the first presented
part of a
tangible
bill of lading lawfully issued in a set. Delivery in this manner discharges the
bailee's
obligation
on the whole bill.
6A-7-305.
Destination of bills. -- (a) Instead of issuing a bill of lading to
the consignor
at the
place of shipment, a carrier, at the request of the consignor, may procure the
bill to be
issued
at destination or at any other place designated in the request.
(b)
Upon request of any person entitled as against a carrier to control the goods
while in
transit
and on surrender of possession or control of any outstanding bill of lading or
other receipt
covering
the goods, the issuer, subject to section 6A-7-105, may procure a substitute
bill to be
issued
at any place designated in the request.
6A-7-306.
Altered bills of lading. -- An unauthorized alteration or filling in
of a blank
in a
bill of lading leaves the bill enforceable according to its original tenor.
6A-7-307.
Lien of carrier. -- (a) A carrier has a lien on the goods covered by
a bill of
lading
or on the proceeds thereof in its possession for charges after the date of the
carrier's receipt
of
the goods for storage or transportation, including demurrage and terminal
charges, and for
expenses
necessary for preservation of the goods incident to their transportation or
reasonably
incurred
in their sale pursuant to law. However, against a purchaser for value of a
negotiable bill
of
lading, a carrier's lien is limited to charges stated in the bill or the
applicable tariffs or, if no
charges
are stated, a reasonable charge.
(b)
A lien for charges and expenses under subsection (a) on goods that the carrier
was
required
by law to receive for transportation is effective against the consignor or any
person
entitled
to the goods unless the carrier had notice that the consignor lacked authority
to subject
the
goods to those charges and expenses. Any other lien under subsection (a) is
effective against
the
consignor and any person that permitted the bailor to have control or
possession of the goods
unless
the carrier had notice that the bailor lacked authority.
(c)
A carrier loses its lien on any goods that it voluntarily delivers or
unjustifiably refuses
to
deliver.
6A-7-308.
Enforcement of carrier's lien. -- (a) A carrier's lien on goods may
be
enforced
by public or private sale of the goods, in bulk or in packages, at any time or
place and on
any
terms that are commercially reasonable, after notifying all persons known to
claim an interest
in
the goods. The notification must include a statement of the amount due, the
nature of the
proposed
sale, and the time and place of any public sale. The fact that a better price
could have
been
obtained by a sale at a different time or in a method different from that
selected by the
carrier
is not of itself sufficient to establish that the sale was not made in a
commercially
reasonable
manner. The carrier sells goods in a commercially reasonable manner if the
carrier
sells
the goods in the usual manner in any recognized market therefor, sells at the
price current in
that
market at the time of the sale, or otherwise sells in conformity with
commercially reasonable
practices
among dealers in the type of goods sold. A sale of more goods than apparently
necessary
to be offered to ensure satisfaction of the obligation is not commercially
reasonable,
except
in cases covered by the preceding sentence.
(b)
Before any sale pursuant to this section, any person claiming a right in the
goods may
pay
the amount necessary to satisfy the lien and the reasonable expenses incurred
in complying
with
this section. In that event, the goods may not be sold but must be retained by
the carrier,
subject
to the terms of the bill of lading and this chapter.
(c)
A carrier may buy at any public sale pursuant to this section.
(d)
A purchaser in good faith of goods sold to enforce a carrier's lien takes the
goods free
of
any rights of persons against which the lien was valid, despite the carrier's
noncompliance with
this
section.
(e)
A carrier may satisfy its lien from the proceeds of any sale pursuant to this
section but
shall
hold the balance, if any, for delivery on demand to any person to which the
carrier would
have
been bound to deliver the goods.
(f)
The rights provided by this section are in addition to all other rights allowed
by law to
a
creditor against a debtor.
(g)
A carrier's lien may be enforced pursuant to either subsection (a) or the
procedure set
forth
in subsection 6A-7-210(b).
(h)
A carrier is liable for damages caused by failure to comply with the
requirements for
sale
under this section and, in case of willful violation, is liable for conversion.
6A-7-309.
Duty of care – Contractual limitation of carrier's liability. -- (a)
A carrier
that
issues a bill of lading, whether negotiable or nonnegotiable, shall exercise
the degree of care
in
relation to the goods which a reasonably careful person would exercise under
similar
circumstances.
This subsection does not affect any statute, regulation, or rule of law that
imposes
liability
upon a common carrier for damages not caused by its negligence.
(b)
Damages may be limited by a term in the bill of lading or in a transportation
agreement
that the carrier's liability may not exceed a value stated in the bill or
transportation
agreement
if the carrier's rates are dependent upon value and the consignor is afforded
an
opportunity
to declare a higher value and the consignor is advised of the opportunity.
However,
such
a limitation is not effective with respect to the carrier's liability for
conversion to its own
use.
(c)
Reasonable provisions as to the time and manner of presenting claims and
commencing
actions based on the shipment may be included in a bill of lading or a
transportation
agreement.
PART 4 WAREHOUSE RECEIPTS AND BILLS OF LADING: GENERAL
OBLIGATIONS
6A-7-401.
Irregularities in issue of receipt or bill or conduct of issuer. -- The
obligations
imposed by this chapter on an issuer apply to a document of title even if:
(1)
the document does not comply with the requirements of this chapter or of any
other
statute,
rule, or regulation regarding its issuance, form, or content;
(2)
the issuer violated laws regulating the conduct of its business;
(3)
the goods covered by the document were owned by the bailee when the document
was
issued;
or
(4)
the person issuing the document is not a warehouse but the document purports to
be a
warehouse
receipt.
6A-7-402.
Duplicate document of title -- Overissue. -- A duplicate or any
other
document
of title purporting to cover goods already represented by an outstanding
document of
the
same issuer does not confer any right in the goods, except as provided in the
case of tangible
bills
of lading in a set of parts, overissue of documents for fungible goods,
substitutes for lost,
stolen,
or destroyed documents, or substitute documents issued pursuant to section
6A-7-105.
The
issuer is liable for damages caused by its overissue or failure to identify a
duplicate document
by a
conspicuous notation.
6A-7-403.
Obligation of bailee to deliver -- Excuse. -- (a) A bailee shall
deliver the
goods
to a person entitled under a document of title if the person complies with
subsections (b)
and (c),
unless and to the extent that the bailee establishes any of the following:
(1)
delivery of the goods to a person whose receipt was rightful as against the
claimant;
(2)
damage to or delay, loss, or destruction of the goods for which the bailee is
not liable;
(3)
previous sale or other disposition of the goods in lawful enforcement of a lien
or on a
warehouse's
lawful termination of storage;
(4)
the exercise by a seller of its right to stop delivery pursuant to section
6A-2-705 or by
a
lessor of its right to stop delivery pursuant to section 6A-2.1-526;
(5)
a diversion, reconsignment, or other disposition pursuant to section 6A-7-303;
(6)
release, satisfaction, or any other personal defense against the claimant; or
(7)
any other lawful excuse.
(b)
A person claiming goods covered by a document of title shall satisfy the
bailee's lien
if
the bailee so requests or if the bailee is prohibited by law from delivering
the goods until the
charges
are paid.
(c)
Unless a person claiming the goods is a person against which the document of
title
does
not confer a right under subsection 6A-7.1-503(a):
(1)
the person claiming under a document shall surrender possession or control of
any
outstanding
negotiable document covering the goods for cancellation or indication of
partial
deliveries;
and
(2)
the bailee shall cancel the document or conspicuously indicate in the document
the
partial
delivery or the bailee is liable to any person to which the document is duly
negotiated.
6A-7-404.
No liability for good-faith delivery pursuant to document of title. -- A
bailee
that in good faith has received goods and delivered or otherwise disposed of
the goods
according
to the terms of a document of title or pursuant to this chapter is not liable
for the goods
even
if:
(1)
the person from which the bailee received the goods did not have authority to
procure
the
document or to dispose of the goods; or
(2)
the person to which the bailee delivered the goods did not have authority to
receive
the
goods.
PART 5 WAREHOUSE RECEIPTS AND BILLS OF LADING:
NEGOTIATION
AND TRANSFER
6A-7-501.
Form of negotiation and requirements of due negotiation. -- (a) The
following
rules apply to a negotiable tangible document of title:
(1)
If the document's original terms run to the order of a named person, the
document is
negotiated
by the named person's indorsement and delivery. After the named person's
indorsement
in blank or to bearer, any person may negotiate the document by delivery alone.
(2)
If the document's original terms run to bearer, it is negotiated by delivery
alone.
(3)
If the document's original terms run to the order of a named person and it is
delivered
to
the named person, the effect is the same as if the document had been
negotiated.
(4)
Negotiation of the document after it has been indorsed to a named person
requires
indorsement
by the named person and delivery.
(5)
A document is duly negotiated if it is negotiated in the manner stated in this
subsection
to a holder that purchases it in good faith, without notice of any defense
against or
claim
to it on the part of any person, and for value, unless it is established that
the negotiation is
not
in the regular course of business or financing or involves receiving the
document in
settlement
or payment of a monetary obligation.
(b)
The following rules apply to a negotiable electronic document of title:
(1)
If the document's original terms run to the order of a named person or to
bearer, the
document
is negotiated by delivery of the document to another person. Indorsement by the
named
person is not required to negotiate the document.
(2)
If the document's original terms run to the order of a named person and the
named
person
has control of the document, the effect is the same as if the document had been
negotiated.
(3)
A document is duly negotiated if it is negotiated in the manner stated in this
subsection
to a holder that purchases it in good faith, without notice of any defense
against or
claim
to it on the part of any person, and for value, unless it is established that
the negotiation is
not in
the regular course of business or financing or involves taking delivery of the
document in
settlement
or payment of a monetary obligation.
(c)
Indorsement of a nonnegotiable document of title neither makes it negotiable
nor adds
to
the transferee's rights.
(d)
The naming in a negotiable bill of lading of a person to be notified of the
arrival of
the
goods does not limit the negotiability of the bill or constitute notice to a
purchaser of the bill
of
any interest of that person in the goods.
6A-7-502.
Rights acquired by due negotiation. -- (a) Subject to sections
6A-7-205
and
6A-7-503, a holder to which a negotiable document of title has been duly
negotiated
acquires
thereby:
(1)
title to the document;
(2)
title to the goods;
(3)
all rights accruing under the law of agency or estoppel, including rights to
goods
delivered
to the bailee after the document was issued; and
(4)
the direct obligation of the issuer to hold or deliver the goods according to
the terms
of the
document free of any defense or claim by the issuer except those arising under
the terms of
the
document or under this chapter, but in the case of a delivery order, the
bailee's obligation
accrues
only upon the bailee's acceptance of the delivery order and the obligation
acquired by the
holder
is that the issuer and any indorser will procure the acceptance of the bailee.
(b)
Subject to section 6A-7-503, title and rights acquired by due negotiation are
not
defeated
by any stoppage of the goods represented by the document of title or by
surrender of the
goods
by the bailee and are not impaired even if:
(1)
the due negotiation or any prior due negotiation constituted a breach of duty;
(2)
any person has been deprived of possession of a negotiable tangible document or
control
of a negotiable electronic document by misrepresentation, fraud, accident,
mistake,
duress,
loss, theft, or conversion; or
(3)
a previous sale or other transfer of the goods or document has been made to a
third
person.
6A-7-503.
Document of title to goods defeated in certain cases. -- (a) A
document of
title
confers no right in goods against a person that before issuance of the document
had a legal
interest
or a perfected security interest in the goods and that did not:
(1)
Deliver or entrust the goods or any document of title covering the goods to the
bailor
or
the bailor's nominee with:
(A)
actual or apparent authority to ship, store, or sell;
(B)
power to obtain delivery under section 6A-7-403; or
(C)
power of disposition under section 6A-2-403, 6A-2.1-304(2), 6A-2.1-305(2),
6A-9-
320,
or 6A-9-321(c) or other statute or rule of law.
(2)
Acquiesce in the procurement by the bailor or its nominee of any document.
(b)
Title to goods based upon an unaccepted delivery order is subject to the rights
of any
person
to which a negotiable warehouse receipt or bill of lading covering the goods
has been duly
negotiated.
That title may be defeated under section 6A-7-504 to the same extent as the
rights
of
the issuer or a transferee from the issuer.
(c)
Title to goods based upon a bill of lading issued to a freight forwarder is
subject to the
rights
of any person to which a bill issued by the freight forwarder is duly
negotiated. However,
delivery
by the carrier in accordance with Part 4 pursuant to its own bill of lading
discharges the
carrier's
obligation to deliver.
6A-7-504.
Rights acquired in absence of due negotiation – Effect of diversion –
Stoppage
of delivery. -- (a) A
transferee of a document of title, whether negotiable or
nonnegotiable,
to which the document has been delivered but not duly negotiated, acquires the
title
and rights that its transferor had or had actual authority to convey.
(b)
In the case of a transfer of a nonnegotiable document of title, until but not
after the
bailee
receives notice of the transfer, the rights of the transferee may be defeated:
(1)
by those creditors of the transferor which could treat the transfer as void
under section
6A-2-402
or 6A-2.1-308 ;
(2)
by a buyer from the transferor in ordinary course of business if the bailee has
delivered
the goods to the buyer or received notification of the buyer's rights;
(3)
by a lessee from the transferor in ordinary course of business if the bailee
has
delivered
the goods to the lessee or received notification of the lessee's rights; or
(4)
as against the bailee, by good-faith dealings of the bailee with the transferor.
(c)
A diversion or other change of shipping instructions by the consignor in a
nonnegotiable
bill of lading which causes the bailee not to deliver the goods to the
consignee
defeats
the consignee's title to the goods if the goods have been delivered to a buyer
in ordinary
course
of business or a lessee in ordinary course of business and, in any event,
defeats the
consignee's
rights against the bailee.
(d)
Delivery of the goods pursuant to a nonnegotiable document of title may be
stopped
by a
seller under section 6A-2-705 or a lessor under section 6A-2.1-526, subject to
the
requirements
of due notification in those sections. A bailee that honors the seller's or
lessor's
instructions
is entitled to be indemnified by the seller or lessor against any resulting
loss or
expense.
6A-7-505.
Indorser not guarantor for other parties. -- The indorsement of a
tangible
document
of title issued by a bailee does not make the indorser liable for any default
by the bailee
or
previous indorsers.
6A-7-506.
Delivery without indorsement – Right to compel indorsement. -- The
transferee
of a negotiable tangible document of title has a specifically enforceable right
to have its
transferor
supply any necessary indorsement, but the transfer becomes a negotiation only
as of the
time
the indorsement is supplied.
6A-7-507.
Warranties on negotiation or delivery of document of title. -- If a
person
negotiates
or delivers a document of title for value, otherwise than as a mere
intermediary under
section
6A-7-508, unless otherwise agreed, the transferor, in addition to any warranty
made in
selling
or leasing the goods, warrants to its immediate purchaser only that:
(1)
the document is genuine;
(2)
the transferor does not have knowledge of any fact that would impair the
document's
validity
or worth; and
(3)
the negotiation or delivery is rightful and fully effective with respect to the
title to the
document
and the goods it represents.
6A-7-508.
Warranties of collecting bank as to documents of title. -- A
collecting
bank
or other intermediary known to be entrusted with documents of title on behalf
of another or
with
collection of a draft or other claim against delivery of documents warrants by
the delivery of
the
documents only its own good faith and authority even if the collecting bank or
other
intermediary
has purchased or made advances against the claim or draft to be collected.
6A-7-509.
Adequate compliance with commercial contract. -- Whether a document
of
title is adequate to fulfill the obligations of a contract for sale, a contract
for lease, or the
conditions
of a letter of credit is determined by chapter 6A-2, 6A-2.1, or 6A-5.
PART 6 WAREHOUSE RECEIPTS AND BILLS OF LADING:
MISCELLANEOUS PROVISIONS
6A-7-601.
Lost, stolen or destroyed documents of title. -- (a) If a document
of title is
lost,
stolen, or destroyed, a court may order delivery of the goods or issuance of a
substitute
document
and the bailee may without liability to any person comply with the order. If
the
document
was negotiable, a court may not order delivery of the goods or issuance of a
substitute
document
without the claimant's posting security unless it finds that any person that
may suffer
loss
as a result of nonsurrender of possession or control of the document is
adequately protected
against
the loss. If the document was nonnegotiable, the court may require security.
The court
may
also order payment of the bailee's reasonable costs and attorneys' fees in any
action under
this
subsection.
(b)
A bailee that, without a court order, delivers goods to a person claiming under
a
missing
negotiable document of title is liable to any person injured thereby. If the
delivery is not
in
good faith, the bailee is liable for conversion. Delivery in good faith is not
conversion if the
claimant
posts security with the bailee in an amount at least double the value of the
goods at the
time
of posting to indemnify any person injured by the delivery which files a notice
of claim
within
one year after the delivery.
6A-7-602.
Judicial process against goods covered by negotiable document of title. -
- Unless a document of title was originally issued
upon delivery of the goods by a person that did
not
have power to dispose of them, a lien does not attach by virtue of any judicial
process to
goods
in the possession of a bailee for which a negotiable document of title is
outstanding unless
possession
or control of the document is first surrendered to the bailee or the document's
negotiation
is enjoined. The bailee may not be compelled to deliver the goods pursuant to
process
until possession or control of the document is surrendered to the bailee or to
the court.
A
purchaser of the document for value without notice of the process or injunction
takes free of
the
lien imposed by judicial process.
6A-7-603.
Conflicting claims -- Interpleader. -- If more than one person
claims title
to or
possession of the goods, the bailee is excused from delivery until the bailee
has a reasonable
time
to ascertain the validity of the adverse claims or to commence an action for
interpleader.
The
bailee may assert an interpleader either in defending an action for nondelivery
of the goods
or by
original action.
PART 7 MISCELLANEOUS PROVISIONS
6A-7-701.
Effective date. – This chapter shall take effect on July 1, 2006.
6A-7-702.
[reserved]. – [reserved]
6A-7-703.
Applicability. -- This chapter applies to a document of title that
is issued or
a
bailment that arises on or after the effective date of this chapter. This
chapter does not apply to
a document
of title that is issued or a bailment that arises before the effective date of
this chapter
even
if the document of title or bailment would be subject to this chapter if the
document of title
had
been issued or bailment had arisen on or after the effective date of this
chapter. This chapter
does
not apply to a right of action that has accrued before the effective date of
this chapter.
6A-7-704.
Savings clause. -- A document of title issued or a bailment that
arises before
the
effective date of this chapter and the rights, obligations, and interests
flowing from that
document
or bailment are governed by any statute or other rule amended or repealed by
this
chapter
as if amendment or repeal had not occurred and may be terminated, completed,
consummated,
or enforced under that statute or other rule.
6A-7-705.
Official comments. -- It is the intention of the general assembly
that the
official
comments to this chapter represent the express legislative intent of the
general assembly
and
shall be used as a guide for interpretation of this chapter.
SECTION
7. Section 6A-8-103 of the General Laws in Chapter 6A-8 entitled
"Investment
Securities" is hereby amended to read as follows:
6A-8-103.
Rules for determining whether certain obligations and interests are
securities
or financial assets. -- (a) A
share or similar equity interest issued by a corporation,
business
trust, joint stock company, or similar entity is a security.
(b) An "investment company security" is a security. "Investment
company security"
means a
share or similar equity interest issued by an entity that is registered as an
investment
company
under the federal investment company laws, an interest in a unit investment
trust that is
so
registered, or a face-amount certificate issued by a face-amount certificate
company that is so
registered.
Investment company security does not include an insurance policy or endowment
policy
or annuity contract issued by an insurance company.
(c) An interest in a partnership or limited liability company is not a security
unless it is
dealt in
or traded on securities exchanges or in securities markets, its terms expressly
provide that
it is a
security governed by this chapter, or it is an investment company security.
However, an
interest
in a partnership or limited liability company is a financial asset if it is
held in a securities
account.
(d) A writing that is a security certificate is governed by this chapter and
not by chapter 3
of this
title, even though it also meets the requirements of that chapter. However, a
negotiable
instrument
governed by chapter 3 of this title is a financial asset if it is held in a
securities
account.
(e) An option or similar obligation issued by a clearing corporation to its
participants is
not a
security, but is a financial asset.
(f) A commodity contract, as defined in section 6A-9-102(a)(15), is not a
security or a
financial
asset.
(g)
A document of title is not a financial asset unless subsection
6A-8-102(a)(9)(iii)
applies.
SECTION
8. Sections 6A-9-102, 6A-9-203, 6A-9-207, 6A-9-208, 6A-9-301, 6A-9-310,
6A-9-312,
6A-9-313, 6A-9-314, 6A-9-317, 6A-9-338 and 6A-9-601 of the General Laws in
Chapter
6A-9 entitled "Secured Transactions" are hereby amended to read as
follows:
6A-9-102.
Definitions. -- (a) Chapter 9 definitions. - In this chapter:
(1) "Accession" means goods that are physically united with other
goods in such a
manner
that the identity of the original goods is not lost.
(2) "Account", except as used in "account for", 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
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.
(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 chattel paper.
(4) "Accounting", except as used in "accounting for", means
a record:
(i) authenticated by a secured party;
(ii) 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
(iii) identifying the components of the obligations in reasonable detail.
(5) "Agricultural lien" means an interest in farm products:
(i) which secures payment or performance of an obligation for:
(A) goods or services furnished in connection with a debtor's farming
operation; or
(B) rent on real property leased by a debtor in connection with its farming
operation;
(ii) which is created by statute in favor of a person that:
(A) in the ordinary course of its business furnished goods or services to a
debtor in
connection
with a debtor's farming operation; or
(B) leased real property to a debtor in connection with the debtor's farming
operation;
and
(iii) whose effectiveness does not depend on the person's possession of the
personal
property.
(6) "As-extracted collateral" means:
(i) oil, gas, or other minerals that are subject to a security interest that:
(A) is created by a debtor having an interest in the minerals before
extraction; and
(B) attaches to the minerals as extracted; or
(ii) accounts arising out of the sale at the wellhead or minehead of oil, gas,
or other
minerals
in which the debtor had an interest before extraction.
(7) "Authenticate" means:
(i) to sign; or
(ii) to execute or otherwise adopt a symbol, or encrypt or similarly process a
record in
whole or
in part, with the present intent of the authenticating person to identify the
person and
adopt or
accept a record.
(8) "Bank" means an organization that is engaged in the business of
banking. The term
includes
savings banks, savings and loan associations, credit unions, and trust
companies.
(9) "Cash proceeds" means proceeds that are money, checks, deposit
accounts, or the
like.
(10) "Certificate of title" means a certificate of title with respect
to which a statute
provides
for the security interest in question to be indicated on the certificate as a
condition or
result
of the security interest's obtaining priority over the rights of a lien
creditor with respect to
the
collateral.
(11) "Chattel paper" means a record or records that evidence both a
monetary obligation
and a
security interest in specific goods, a security interest in specific goods and
software used in
the
goods, a security interest in specific goods and license of software used in
the goods, a lease
of
specific goods, or a lease of specific goods and license of software used in
the goods. In this
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 transaction is
evidenced by records
that
include an instrument or series of instruments, the group of records taken
together constitutes
chattel
paper.
(12) "Collateral" means the property subject to a security interest
or agricultural lien. The
term
includes:
(i) proceeds to which a security interest attaches;
(ii) accounts, chattel paper, payment intangibles, and promissory notes that
have been
sold;
and
(iii) goods that are the subject of a consignment.
(13) "Commercial tort claim" means a claim arising in tort with
respect to which:
(i) the claimant is an organization; or
(ii) the claimant is an individual and the claim:
(A) arose in the course of the claimant's business or profession; and
(B) does not include damages arising out of personal injury to or the death of
an
individual.
(14) "Commodity account" means an account maintained by a commodity
intermediary
in which
a commodity contract is carried for a commodity customer.
(15) "Commodity contract" means a commodity futures contract, an
option on a
commodity
futures contract, a commodity option, or another contract if the contract or
option is:
(i) traded on or subject to the rules of a board of trade that has been
designated as a
contract
market for such a contract pursuant to federal commodities laws; or
(ii) traded on a foreign commodity board of trade, exchange, or market, and is
carried on
the
books of a commodity intermediary for a commodity customer.
(16) "Commodity customer" means a person for which a commodity
intermediary carries
a
commodity contract on its books.
(17) "Commodity intermediary" means a person that:
(i) is registered as a futures commission merchant under federal commodities
law; or
(ii) in the ordinary course of its business provides clearance or settlement
services for a
board of
trade that has been designated as a contract market pursuant to federal
commodities law.
(18) "Communicate" means:
(i) to send a written or other tangible record;
(ii) to transmit a record by any means agreed upon by the persons sending and
receiving
the
record; or
(iii) in the case of transmission of a record to or by a filing office, to
transmit a record by
any
means prescribed by filing-office rule.
(19) "Consignee" means a merchant to which goods are delivered in a
consignment.
(20) "Consignment" means a transaction, regardless of its form, in
which a person
delivers
goods to a merchant for the purpose of sale and:
(i) the merchant:
(A) deals in goods of that kind under a name other than the name of the person
making
delivery;
(B) is not an auctioneer; and
(C) is not generally known by its creditors to be substantially engaged in
selling the
goods of
others;
(ii) with respect to each delivery, the aggregate value of the goods is $1,000
or more at
the time
of delivery;
(iii) the goods are not consumer goods immediately before delivery; and
(iv) the transaction does not create a security interest that secures an
obligation.
(21) "Consignor" means a person that delivers goods to a consignee in
a consignment.
(22) "Consumer debtor" means a debtor in a consumer transaction.
(23) "Consumer goods" means goods that are used or bought for use
primarily for
personal,
family, or household purposes.
(24) "Consumer-goods transaction" means a consumer transaction in
which:
(i) an individual incurs an obligation primarily for personal, family, or
household
purposes;
and
(ii) a security interest in consumer goods secures the obligation.
(25) "Consumer obligor" means an obligor who is an individual and who
incurred the
obligation
as part of a transaction entered into primarily for personal, family, or
household
purposes.
(26) "Consumer transaction" means a transaction in which (i) an
individual incurs an
obligation
primarily for personal, family, or household purposes, (ii) a security interest
secures
the obligation,
and (iii) the collateral is held or acquired primarily for personal, family, or
household
purposes. The term includes consumer-goods transactions.
(27) "Continuation statement" means an amendment of a financing
statement which:
(i) identifies, by its file number, the initial financing statement to which it
relates; and
(ii) indicates that it is a continuation statement for, or that it is filed to
continue the
effectiveness
of, the identified financing statement.
(28) "Debtor" means:
(i) a person having an interest, other than a security interest or other lien,
in the
collateral,
whether or not the person is an obligor;
(ii) a seller of accounts, chattel paper, payment intangibles, or promissory
notes; or
(iii) a consignee.
(29) "Deposit account" means a demand, time, savings, passbook, or
similar account
maintained
with a bank. The term does not include investment property or accounts
evidenced by
an
instrument.
(30) "Document" means a document of title or a receipt of the type
described in
subsection 6A-7-201(2) 6A-7-201(b).
(31) "Electronic chattel paper" means chattel paper evidenced by a
record or records
consisting
of information stored in an electronic medium.
(32) "Encumbrance" means a right, other than an ownership interest,
in real property.
The term
includes mortgages and other liens on real property.
(33) "Equipment" means goods other than inventory, farm products, or
consumer goods.
(34) "Farm products" means goods, other than standing timber, with
respect to which the
debtor
is engaged in a farming operation and which are:
(i) crops grown, growing, or to be grown, including:
(A) crops produced on trees, vines, and bushes; and
(B) aquatic goods, including seaweeds, produced in aquacultural operations;
(ii) livestock, born or unborn, including fish, shellfish and other aquatic
goods produced
in
aquacultural operations;
(iii) supplies used or produced in a farming operation; or
(iv) products of crops or livestock in their unmanufactured states.
(35) "Farming operation" means raising, cultivating, propagating,
fattening, grazing, or
any
other farming, livestock, or aquacultural operation.
(36) "File number" means the number assigned to an initial financing
statement pursuant
to
section 6A-9-519(a).
(37) "Filing office" means an office designated in section 6A-9-501
as the place to file a
financing
statement.
(38) "Filing-office rule" means a rule adopted pursuant to section
6A-9-526.
(39) "Financing statement" means a record or records composed of an
initial financing
statement
and any filed record relating to the initial financing statement.
(40) "Fixture filing" means the filing of a financing statement
covering goods that are or
are to
become fixtures and satisfying section 6A-9-502(a) and (b). The term includes
the filing of
a
financing statement covering goods of a transmitting utility which are or are
to become fixtures.
(41) "Fixtures" means goods that have become so related to particular
real property that
an
interest in them arises under real property law.
(42) "General intangible" means any personal property, including
things in action, other
than
accounts, chattel paper, commercial tort claims, deposit accounts, documents,
goods,
instruments,
investment property, letter-of-credit rights, letters of credit, money, and
oil, gas, or
other
minerals before extraction. The term includes payment intangibles and software.
(43) "Good faith" means honesty in fact and the observance of
reasonable commercial
standards
of fair dealing.
(44) "Goods" means all things that are movable when a security
interest attaches. The
term
includes (i) fixtures, (ii) standing timber that is to be cut and removed under
a conveyance or
contract
for sale, (iii) the unborn young of animals, (iv) crops grown, growing, or to
be grown,
even if
the crops are produced on trees, vines, or bushes, and (v) manufactured homes.
The term
also
includes a computer program embedded in goods and any supporting information
provided
in
connection with a transaction relating to the program if (i) the program is
associated with the
goods in
such a manner that it customarily is considered part of the goods, or (ii) by
becoming the
owner of
the goods, a person acquires a right to use the program in connection with the
goods.
The term
does not include a computer program embedded in goods that consist solely of
the
medium
in which the program is embedded. The term also does not include accounts,
chattel
paper,
commercial tort claims, deposit accounts, documents, general intangibles,
instruments,
investment
property, letter-of-credit rights, letters of credit, money, or oil, gas, or
other minerals
before
extraction.
(45) "Governmental unit" means a subdivision, agency, department,
county, parish,
municipality,
or other unit of the government of the United States, a State, or a foreign
country.
The term
includes an organization having a separate corporate existence if the
organization is
eligible
to issue debt on which interest is exempt from income taxation under the laws
of the
United
States.
(46) "Health-care-insurance receivable" means an interest in or claim
under a policy of
insurance
which is a right to payment of a monetary obligation for health-care goods or
services
provided
or to be provided.
(47) "Instrument" means a negotiable instrument or any other writing
that evidences a
right to
the payment of a monetary obligation, is not itself a security agreement or
lease, and is of
a type
that in ordinary course of business is transferred by delivery with any
necessary
indorsement
or assignment. The term does not include (i) investment property, (ii) letters
of
credit,
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.
(48) "Inventory" means goods, other than farm products, which:
(i) are leased by a person as lessor;
(ii) are held by a person for sale or lease or to be furnished under a contract
of service;
(iii) are furnished by a person under a contract of service; or
(iv) consist of raw materials, work in process, or materials used or consumed
in a
business.
(49) "Investment property" means a security, whether certificated or
uncertificated,
security
entitlement, securities account, commodity contract, or commodity account.
(50) "Jurisdiction of organization", with respect to a registered
organization, means the
jurisdiction
under whose law the organization is organized.
(51) "Letter-of-credit right" means a right to payment or performance
under a letter of
credit,
whether or not the beneficiary has demanded or is at the time entitled to
demand payment
or
performance. The term does not include the right of a beneficiary to demand
payment or
performance
under a letter of credit.
(52) "Lien creditor" means:
(i) a creditor that has acquired a lien on the property involved by attachment,
levy, or the
like;
(ii) an assignee for benefit of creditors from the time of assignment;
(iii) a trustee in bankruptcy from the date of the filing of the petition; or
(iv) a receiver in equity from the time of appointment.
(53) "Manufactured home" means a structure, transportable in one or
more sections,
which,
in the traveling mode, is eight body feet or more in width or 40 body feet or
more in
length,
or, when erected on site, is 320 or more square feet, and which is built on a
permanent
chassis
and designed to be used as a dwelling with or without a permanent foundation
when
connected
to the required utilities, and includes the plumbing, heating,
air-conditioning, and
electrical
systems contained therein. The term includes any structure that meets all of
the
requirements
of this paragraph except the size requirements and with respect to which the
manufacturer
voluntarily files a certification required by the United States Secretary of
Housing
and
Urban Development and complies with the standards established under Title 42 of
the United
States
Code.
(54) "Manufactured-home transaction" means a secured transaction:
(i) that creates a purchase-money security interest in a manufactured home,
other than a
manufactured
home held as inventory; or
(ii) in which a manufactured home, other than a manufactured home held as
inventory, is
the
primary collateral.
(55) "Mortgage" means a consensual interest in real property,
including fixtures, which
secures
payment or performance of an obligation.
(56) "New debtor" means a person that becomes bound as debtor under
section 6A-9-
203(d) by
a security agreement previously entered into by another person.
(57) "New value" means (i) money, (ii) money's worth in property,
services, or new
credit,
or (iii) release by a transferee of an interest in property previously
transferred to the
transferee.
The term does not include an obligation substituted for another obligation.
(58) "Noncash proceeds" means proceeds other than cash proceeds.
(59) "Obligor" means a person that, with respect to an obligation
secured by a security
interest
in or an agricultural lien on the collateral, (i) owes payment or other
performance of the
obligation,
(ii) has provided property other than the collateral to secure payment or other
performance
of the obligation, or (iii) is otherwise accountable in whole or in part for
payment or
other
performance of the obligation. The term does not include issuers or nominated
persons
under a
letter of credit.
(60) "Original debtor," except as used in section 6A-9-310(c), means
a person that, as
debtor,
entered into a security agreement to which a new debtor has become bound under
section
6A-9-203(d).
(61) "Payment intangible" means a general intangible under which the
account debtor's
principal
obligation is a monetary obligation.
(62) "Person related to", with respect to an individual, means:
(i) the spouse of the individual;
(ii) a brother, brother-in-law, sister, or sister-in-law of the individual;
(iii) an ancestor or lineal descendant of the individual or the individual's
spouse; or
(iv) any other relative, by blood or marriage, of the individual or the
individual's spouse
who
shares the same home with the individual.
(63) "Person related to", with respect to an organization, means:
(i) a person directly or indirectly controlling, controlled by, or under common
control
with the
organization;
(ii) an officer or director of, or a person performing similar functions with
respect to, the
organization;
(iii) an officer or director of, or a person performing similar functions with
respect to, a
person
described in subparagraph (i);
(iv) the spouse of an individual described in subparagraph (i), (ii), or (iii);
or
(v) an individual who is related by blood or marriage to an individual
described in
subparagraph
(i), (ii), (iii), or (iv) and shares the same home with the individual.
(64) "Proceeds," except as used in section 6A-9-609(b), means the
following property:
(i) whatever is acquired upon the sale, lease, license, exchange, or other
disposition of
collateral;
(ii) whatever is collected on, or distributed on account of, collateral;
(iii) rights arising out of collateral;
(iv) to the extent of the value of collateral, claims arising out of the loss,
nonconformity,
or
interference with the use of, defects or infringement of rights in, or damage
to, the collateral; or
(v) to the extent of the value of collateral and to the extent payable to the
debtor or the
secured
party, insurance payable by reason of the loss or nonconformity of, defects or
infringement
of rights in, or damage to, the collateral.
(65) "Promissory note" means an instrument that evidences a promise
to pay a monetary
obligation,
does not evidence an order to pay, and does not contain an acknowledgment by a
bank
that the
bank has received for deposit a sum of money or funds.
(66) "Proposal" means a record authenticated 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 6A-9-620, 6A-9-621, and 6A-9-622.
(67) "Public-finance transaction" means a secured transaction in
connection with which:
(i) debt securities are issued;
(ii) all or a portion of the securities issued have an initial stated maturity
of at least 20
years;
and
(iii) the debtor, obligor, secured party, account debtor or other person
obligated on
collateral,
assignor or assignee of a secured obligation, or assignor or assignee of a
security
interest
is a State or a governmental unit of a State.
(68) "Pursuant to commitment", with respect to an advance made or
other value given by
a
secured party, means pursuant to the secured party's obligation, whether or not
a subsequent
event of
default or other event not within the secured party's control has relieved or
may relieve
the
secured party from its obligation.
(69) "Record", except as used in "for record", "of
record", "record or legal title", and
"record
owner", means information that is inscribed on a tangible medium or which
is stored in
an
electronic or other medium and is retrievable in perceivable form.
(70) "Registered organization" means an organization organized solely
under the law of
a single
State or the United States and as to which the State or the United States must
maintain a
public
record showing the organization to have been organized.
(71) "Secondary obligor" means an obligor to the extent that:
(i) the obligor's obligation is secondary; or
(ii) the obligor has a right of recourse with respect to an obligation secured
by collateral
against
the debtor, another obligor, or property of either.
(72) "Secured party" means:
(i) a person in whose favor a security interest is created or provided for
under a security
agreement,
whether or not any obligation to be secured is outstanding;
(ii) a person that holds an agricultural lien;
(iii) a consignor;
(iv) a person to which accounts, chattel paper, payment intangibles, or
promissory notes
have
been sold;
(v) a trustee, indenture trustee, agent, collateral agent, or other
representative in whose
favor a
security interest or agricultural lien is created or provided for; or
(vi) a person that holds a security interest arising under section 6A-2-401,
6A-2-505, 6A-
2-711(3),
6A-2.1-508(5), 6A-4-210, or 6A-5-118.
(73) "Security agreement" means an agreement that creates or provides
for a security
interest.
(74) "Send", in connection with a record or notification, means:
(i) 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
(ii) to cause the record or notification to be received within the time that it
would have
been received
if properly sent under subparagraph (i).
(75) "Software" means a computer program and any supporting
information provided in
connection
with a transaction relating to the program. The term does not include a
computer
program
that is included in the definition of goods.
(76) "State" means a State of the United States, the District of
Columbia, Puerto Rico,
the
United States Virgin Islands, or any territory or insular possession subject to
the jurisdiction
of the
United States.
(77) "Supporting obligation" means a letter-of-credit right or
secondary obligation that
supports
the payment or performance of an account, chattel paper, a document, a general
intangible,
an instrument, or investment property.
(78) "Tangible chattel paper" means chattel paper evidenced by a
record or records
consisting
of information that is inscribed on a tangible medium.
(79) "Termination statement" means an amendment of a financing
statement which:
(i) identifies, by its file number, the initial financing statement to which it
relates; and
(ii) indicates either that it is a termination statement or that the identified
financing
statement
is no longer effective.
(80) "Transmitting utility" means a person primarily engaged in the
business of:
(i) operating a railroad, subway, street railway, or trolley bus;
(ii) transmitting communications electrically, electromagnetically, or by
light;
(iii) transmitting goods by pipeline or sewer; or
(iv) transmitting or producing and transmitting electricity, steam, gas, or
water.
(b) Definitions in other chapters. - The "Control" as
provided in section 6A-7-206 and
the following definitions in other chapters apply to this
chapter:
"Applicant" section 6A-5-102.
"Beneficiary"
section 6A-5-102.
"Broker"
section 6A-8-102.
"Certificated
security" section 6A-8-102.
"Check"
section 6A-3-104.
"Clearing
corporation" section 6A-8-102.
"Contract
for sale" section 6A-2-106.
"Customer"
section 6A-4-104.
"Entitlement
holder" section 6A-8-102.
"Financial
asset" section 6A-8-102.
"Holder
in due course" section 6A-3-302.
"Issuer"
(with respect to a letter of section 6A-5-102.
credit
or letter-of-credit right)
"Issuer"
(with respect to a security) section 6A-8-201.
"Issuer"
(with respect to documents of title) section 6A-7.1-102.
"Lease"
section 6A-2.1-103.
"Lease
agreement" section 6A-2.1-103.
"Lease
contract" section 6A-2.1-103.
"Leasehold
interest" section 6A-2.1-103.
"Lessee"
section 6A-2.1-103.
"Lessee
in ordinary course of business" section 6A-2.1-103.
"Lessor"
section 6A-2.1-103.
"Lessor's
residual interest" section 6A-2.1-103.
"Letter
of credit" section 6A-5-102.
"Merchant"
section 6A-2-104.
"Negotiable
instrument" section 6A-3-104.
"Nominated
person" section 6A-5-102.
"Note"
section 6A-3-104.
"Proceeds
of a letter of credit" section 6A-5-114.
"Prove"
section 6A-3-103.
"Sale"
section 6A-2-106.
"Securities
account" section 6A-8-501.
"Securities
intermediary" section 6A-8-102.
"Security"
section 6A-8-102.
"Security
certificate" section 6A-8-102.
"Security
entitlement" section 6A-8-102.
"Uncertificated
security" section 6A-8-102.
(c) Chapter 1 definitions and principles. - Chapter 1 of this title contains
general
definitions
and principles of construction and interpretation applicable throughout this
chapter.
6A-9-203.
Attachment and enforceability of security interest; proceeds; supporting
obligations;
formal requisites. -- (a)
Attachment. - A security interest attaches to collateral when
it becomes
enforceable against the debtor with respect to the collateral, unless an
agreement
expressly
postpones the time of attachment.
(b) 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:
(i) The debtor has authenticated a security agreement that provides a
description of the
collateral
and, if the security interest covers timber to be cut, a description of the
land concerned;
(ii) The collateral is not a certificated security and is in the possession of
the secured
party
under section 6A-9-313 pursuant to the debtor's security agreement;
(iii) The collateral is a certificated security in registered form and the
security certificate
has been
delivered to the secured party under section 6A-8-301 pursuant to the debtor's
security
agreement;
or
(iv) The collateral is deposit accounts, electronic chattel paper, investment
property, or
letter-of-credit
rights, or electronic documents, and the secured party has control under
sections
6A-7-106, 6A-9-104, 6A-9-105, 6A-9-106, or 6A-9-107 pursuant to
the debtor's security
agreement.
(c) Other UCC provisions. - Subsection (b) is subject to section 6A-4-210 on
the security
interest
of a collecting bank, section 6A-5-118 on the security interest of a
letter-of-credit issuer
or
nominated person, section 6A-9-110 on a security interest arising under chapter
2 or 2.1, and
section
6A-9-206 on security interests in investment property.
(d) When person becomes bound by another person's security agreement. - A
person
becomes
bound as debtor by a security agreement entered into by another person if, by
operation
of law
other than this chapter or by contract:
(1) The security agreement becomes effective to create a security interest in
the person's
property;
or
(2) The person becomes generally obligated for the obligations of the other
person,
including
the obligation secured under the security agreement, and acquires or succeeds
to all or
substantially
all of the assets of the other person.
(e) Effect of new debtor becoming bound. - If a new debtor becomes bound as
debtor by
a
security agreement entered into by another person:
(1) The agreement satisfies subsection (b)(3) with respect to existing or
after-acquired
property
of the new debtor to the extent the property is described in the agreement; and
(2) Another agreement is not necessary to make a security interest in the
property
enforceable.
(f) Proceeds and supporting obligations. - The attachment of a security
interest in
collateral
gives the secured party the rights to proceeds provided by section 6A-9-315 and
is also
attachment
of a security interest in a supporting obligation for the collateral.
(g) Lien securing right to payment. - The attachment of a security interest in
a right to
payment
or performance secured by a security interest or other lien on personal or real
property is
also
attachment of a security interest in the security interest, mortgage, or other
lien.
(h) Security entitlement carried in securities account. - The attachment of a
security
interest
in a securities account is also attachment of a security interest in the
security entitlements
carried
in the securities account.
(i) Commodity contracts carried in commodity account. - The attachment of a
security
interest
in a commodity account is also attachment of a security interest in the
commodity
contracts
carried in the commodity account.
6A-9-207.
Rights and duties of secured party having possession or control of
collateral.
-- (a) Duty of care when secured
party in possession. - Except as otherwise provided in
subsection
(d), a secured party shall use reasonable care in the custody and preservation
of
collateral
in the secured party's possession. In the case of chattel paper or an
instrument,
reasonable
care includes taking necessary steps to preserve rights against prior parties
unless
otherwise
agreed.
(b) Expenses, risks, duties, and rights when secured party in possession. -
Except as
otherwise
provided in subsection (d), if a secured party has possession of collateral:
(1) Reasonable expenses, including the cost of insurance and payment of taxes
or other
charges,
incurred in the custody, preservation, use, or operation of the collateral are
chargeable to
the
debtor and are secured by the collateral;
(2) The risk of accidental loss or damage is on the debtor to the extent of a
deficiency in
any
effective insurance coverage;
(3) The secured party shall keep the collateral identifiable, but fungible
collateral may be
commingled;
and
(4) The secured party may use or operate the collateral:
(i) For the purpose of preserving the collateral or its value;
(ii) As permitted by an order of a court having competent jurisdiction; or
(iii) Except in the case of consumer goods, in the manner and to the extent
agreed by the
debtor.
(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
sections 6A-7-106, 6A-9-104, 6A-9-105, 6A-9-106, or 6A-9-107:
(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.
(d) Buyer of certain rights to payment. - If the secured party is a buyer of
accounts,
chattel
paper, payment intangibles, or promissory notes or a consignor:
(1) Subsection (a) does not apply unless the secured party is entitled under an
agreement:
(i) To charge back uncollected collateral; or
(ii) Otherwise to full or limited recourse against the debtor or a secondary
obligor based
on the
nonpayment or other default of an account debtor or other obligor on the
collateral; and
(2) Subsections (b) and (c) do not apply.
6A-9-208.
Additional duties of secured party having control of collateral. -- (a)
Applicability
of section. - This section applies to cases in which there is no outstanding
secured
obligation
and the secured party is not committed to make advances, incur obligations, or
otherwise
give value.
(b) Duties of secured party after receiving demand from debtor. - Within 10
days after
receiving
an authenticated demand by the debtor:
(1) A secured party having control of a deposit account under section
6A-9-104(a)(2)
shall
send to the bank with which the deposit account is maintained an authenticated
statement
that
releases the bank from any further obligation to comply with instructions
originated by the
secured
party;
(2) A secured party having control of a deposit account under section
6A-9-104(a)(3)
shall:
(i) Pay the debtor the balance on deposit in the deposit account; or
(ii) Transfer the balance on deposit into a deposit account in the debtor's
name;
(3) A secured party, other than a buyer, having control of electronic chattel
paper under
section
6A-9-105 shall:
(i) Communicate the authoritative copy of the electronic chattel paper to the
debtor or its
designated
custodian;
(ii) If the debtor designates a custodian that is the designated custodian with
which the
authoritative
copy of the electronic chattel paper is maintained for the secured party,
communicate
to the custodian an authenticated record releasing the designated custodian
from
any
further obligation to comply with instructions originated by the secured party
and instructing
the
custodian to comply with instructions originated by the debtor; and
(iii) 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;
(4) A secured party having control of investment property under section
6A-8-106(d)(2)
or
6A-9-106(b) shall send to the securities intermediary or commodity intermediary
with which
the
security entitlement or commodity contract is maintained an authenticated
record that releases
the
securities intermediary or commodity intermediary from any further obligation
to comply
with
entitlement orders or directions originated by the secured party; and
(5) A secured party having control of a letter-of-credit right under section
6A-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 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 designated custodian with
which the
authoritative
copy of the electronic document is maintaining 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.
6A-9-301.
Law governing perfection and priority of security interests. -- Except
as
otherwise
provided in sections 6A-9-303 through 6A-9-306, the following rules determine
the
law
governing perfection, the effect of perfection or nonperfection, and the
priority of a security
interest
in collateral:
(1) Except as otherwise provided in this section, while a debtor is located in
a
jurisdiction,
the local law of that jurisdiction governs perfection, the effect of perfection
or
nonperfection,
and the priority of a security interest in collateral.
(2) While collateral is located in a jurisdiction, the local law of that
jurisdiction governs
perfection,
the effect of perfection or nonperfection, and the priority of a possessory
security
interest
in that collateral.
(3) Except as otherwise provided in paragraph (4), while tangible
negotiable documents,
goods,
instruments, money, or tangible chattel paper is located in a jurisdiction, the
local law of
that
jurisdiction governs:
(i) Perfection of a security interest in the goods by filing a fixture filing;
(ii) Perfection of a security interest in timber to be cut; and
(iii) The effect of perfection or nonperfection and the priority of a
nonpossessory
security
interest in the collateral.
(4) The local law of the jurisdiction in which the wellhead or minehead is
located
governs
perfection, the effect of perfection or nonperfection, and the priority of a
security interest
in
as-extracted collateral.
6A-9-310.
When filing required to perfect security interest or agricultural lien;
security
interests and agricultural liens to which filing provisions do not apply. -- (a) General
rule:
perfection by filing. - Except as otherwise provided in subsection (b) and
section 6A-9-
312(b),
a financing statement must be filed to perfect all security interests and
agricultural liens.
(b) Exceptions: filing not necessary. - The filing of a financing statement is
not necessary
to
perfect a security interest:
(1) That is perfected under section 6A-9-308(d), (e), (f), or (g);
(2) That is perfected under section 6A-9-309 when it attaches;
(3) In property subject to a statute, regulation, or treaty described in
section 6A-9-311(a);
(4) In goods in possession of a bailee which is perfected under section 6A-9-312(d)(1)
or
(2);
(5) In certificated securities, documents, goods, or instruments which is
perfected
without
filing, control or possession under section 6A-9-312(e), (f), or (g);
(6) In collateral in the secured party's possession under section 6A-9-313;
(7) In a certificated security which is perfected by delivery of the security
certificate to
the
secured party under section 6A-9-313;
(8) In deposit accounts, electronic chattel paper, electronic documents,
investment
property,
or letter-of-credit rights which is perfected by control under section
6A-9-314;
(9) In proceeds which is perfected under section 6A-9-315; or
(10) That is perfected under section 6A-9-316.
(c) Assignment of perfected security interest. - If a secured party assigns a
perfected
security
interest or agricultural lien, a filing under this chapter is not required to
continue the
perfected
status of the security interest against creditors of and transferees from the
original
debtor.
6A-9-312.
Perfection of security interests in chattel paper, 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, instruments, or investment property may be perfected by filing.
(b) Control or possession of certain collateral. - Except as otherwise provided
in section
6A-9-315(c)
and (d) for proceeds:
(1) A security interest in a deposit account may be perfected only by control
under
section
6A-9-314;
(2) And except as otherwise provided in section 6A-9-308(d), a security
interest in a
letter-of-credit
right may be perfected only by control under section 6A-9-314; and
(3) A security interest in money may be perfected only by the secured party's
taking
possession
under section 6A-9-313.
(c) Goods covered by negotiable document. - While goods are in the possession
of a
bailee
that has issued a negotiable document covering the goods:
(1) A security interest in the goods may be perfected by perfecting a security
interest in
the
document; and
(2) A security interest perfected in the document has priority over any
security interest
that
becomes perfected in the goods by another method during that time.
(d) Goods covered by nonnegotiable document. - While goods are in the
possession of a
bailee
that has issued a nonnegotiable document covering the goods, a security
interest in the
goods
may be perfected by:
(1) Issuance of a document in the name of the secured party;
(2) The bailee's receipt of notification of the secured party's interest; or
(3) Filing as to the goods.
(e) Temporary perfection: new value. - A security interest in certificated
securities,
negotiable
documents, or instruments is perfected without filing or the taking of
possession or
control for a period of 20 days from the time it attaches to
the extent that it arises for new value
given
under an authenticated security agreement.
(f) Temporary perfection: goods or documents made available to debtor. - A
perfected
security
interest in a negotiable document or goods in possession of a bailee, other
than one that
has
issued a negotiable document for the goods, remains perfected for 20 days
without filing if
the
secured party makes available to the debtor the goods or documents representing
the goods
for the
purpose of:
(1) Ultimate sale or exchange; or
(2) Loading, unloading, storing, shipping, transshipping, manufacturing,
processing, or
otherwise
dealing with them in a manner preliminary to their sale or exchange.
(g) Temporary perfection: delivery of security certificate or instrument to
debtor. - A
perfected
security interest in a certificated security or instrument remains perfected for
20 days
without
filing if the secured party delivers the security certificate or instrument to
the debtor for
the
purpose of:
(1) Ultimate sale or exchange; or
(2) Presentation, collection, enforcement, renewal, or registration of transfer.
(h) Expiration of temporary perfection. - After the 20-day period specified in
subsection
(e),
(f), or (g) expires, perfection depends upon compliance with this chapter.
6A-9-313.
When possession by or delivery to secured party perfects security interest
without
filing. -- (a) Perfection by
possession or delivery. - Except as otherwise provided in
subsection
(b), a secured party may perfect a security interest in tangible
negotiable documents,
goods,
instruments, money, or tangible chattel paper by taking possession of the
collateral. A
secured
party may perfect a security interest in certificated securities by taking
delivery of the
certificated
securities under section 6A-8-301.
(b) Goods covered by certificate of title. - With respect to goods covered by a
certificate
of title
issued by this State, a secured party may perfect a security interest in the
goods by taking
possession
of the goods only in the circumstances described in section 6A-9-316(d).
(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 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 a
record
acknowledging
that it will hold possession of 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 collateral by a secured party,
perfection occurs
no
earlier than the time the secured party takes possession and continues only while
the secured
party
retains possession.
(e) Time of perfection by delivery; continuation of perfection. - A security
interest in a
certificated
security in registered form is perfected by delivery when delivery of the
certificated
security
occurs under section 6A-8-301 and remains perfected by delivery until the
debtor obtains
possession
of the security certificate.
(f) Acknowledgment not required. - A person in possession of collateral is not
required
to
acknowledge that it holds possession for a secured party's benefit.
(g) Effectiveness of acknowledgment; no duties or confirmation. - If a person
acknowledges
that it holds possession for the secured party's benefit:
(1) The acknowledgment is effective under subsection (c) or section
6A-8-301(a), even if
the
acknowledgment violates the rights of a debtor; and
(2) Unless the person otherwise agrees or law other than this chapter otherwise
provides,
the
person does not owe any duty to the secured party and is not required to
confirm the
acknowledgment
to another person.
(h) Secured party's delivery to person other than debtor. - A secured party
having
possession
of collateral does not relinquish possession by delivering the collateral to a
person
other
than the debtor or a lessee of the collateral from the debtor in the ordinary
course of the
debtor's
business if the person was instructed before the delivery or is instructed
contemporaneously
with the delivery:
(1) To hold possession of the collateral for the secured party's benefit; or
(2) To redeliver the collateral to the secured party.
(i) Effect of delivery under subsection (h); no duties or confirmation. - A
secured party
does not
relinquish possession, even if a delivery under subsection (h) violates the
rights of a
debtor.
A person to which collateral is delivered under subsection (h) does not owe any
duty to
the
secured party and is not required to confirm the delivery to another person
unless the person
otherwise
agrees or law other than this chapter otherwise provides.
6A-9-314.
Perfection by control. -- (a) Perfection by control. - A security
interest in
investment
property, deposit accounts, letter-of-credit rights, or electronic
chattel paper or
electronic
documents may be perfected by control
of the collateral under sections 6A-7-106,
6A-9-104,
6A-9-105, 6A-9-106, or 6A-9-107.
(b) Specified collateral: time of perfection by control; continuation of
perfection. - A
security
interest in deposit accounts, electronic chattel paper, or
letter-of-credit rights or
electronic
documents is perfected by control
under sections 6A-7-106, 6A-9-104, 6A-9-105, or
6A-9-107
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 6A-9-106 from
the
time the
secured party obtains control and remains perfected by control until:
(1) The secured party does not have control; and
(2) One of the following occurs:
(i) If the collateral is a certificated security, the debtor has or acquires
possession of the
security
certificate;
(ii) If the collateral is an uncertificated security, the issuer has registered
or registers the
debtor
as the registered owner; or
(iii) If the collateral is a security entitlement, the debtor is or becomes the
entitlement
holder.
6A-9-317.
Interests that take priority over or take free of security interest or
agricultural
lien. -- (a) Conflicting security
interests and rights of lien creditors. - A security
interest
or agricultural lien is subordinate to the rights of:
(1) A person entitled to priority under section 6A-9-322; and
(2) Except as otherwise provided in subsection (e), a person that becomes a
lien creditor
before
the earlier of the time: (i) the security interest or agricultural lien is
perfected; or (ii) one of
the
conditions specified in section 6A-9-203(b)(3) is met and a financing statement
covering the
collateral
is filed.
(b) Buyers that receive delivery. - Except as otherwise provided in subsection
(e), a
buyer,
other than a secured party, of tangible chattel paper, tangible
documents, goods,
instruments,
or a security certificate takes free of a security interest or agricultural
lien if the
buyer
gives value and receives delivery of the collateral without knowledge of the
security
interest
or agricultural lien and before it is perfected.
(c) Lessees that receive delivery. - Except as otherwise provided in subsection
(e), a
lessee
of goods takes free of a security interest or agricultural lien if the lessee
gives value and
receives
delivery of the collateral without knowledge of the security interest or
agricultural lien
and
before it is perfected.
(d) Licensees and buyers of certain collateral. - A licensee of a general
intangible or a
buyer,
other than a secured party, of accounts, electronic chattel paper, electronic
documents,
general
intangibles, or investment property other than a certificated security takes
free of a
security
interest if the licensee or buyer gives value without knowledge of the security
interest
and
before it is perfected.
(e) Purchase-money security interest. - Except as otherwise provided in
sections 6A-9-
320 and
6A-9-321, if a person files a financing statement with respect to a
purchase-money
security
interest before or within 20 days after the debtor receives delivery of the
collateral, the
security
interest takes priority over the rights of a buyer, lessee, or lien creditor
which arise
between the
time the security interest attaches and the time of filing.
6A-9-338.
Priority of security interest or agricultural lien perfected by filed
financing
statement providing certain incorrect information. -- If a security interest or
agricultural
lien is perfected by a filed financing statement providing information
described in
section
6A-9-516(b)(5) which is incorrect at the time the financing statement is filed:
(1) The security interest or agricultural lien is subordinate to a conflicting
perfected
security
interest in the collateral to the extent that the holder of the conflicting
security interest
gives
value in reasonable reliance upon the incorrect information; and
(2) A purchaser, other than a secured party, of the collateral takes free of
the security
interest
or agricultural lien to the extent that, in reasonable reliance upon the
incorrect
information,
the purchaser gives value and, in the case of tangible chattel paper, tangible
documents,
goods, instruments, or a security certificate, receives delivery of the
collateral.
6A-9-601.
Rights after default; judicial enforcement; consignor or buyer of
accounts,
chattel paper, payment intangibles, or promissory notes. -- (a) Rights of secured
party
after default. - After default, a secured party has the rights provided in this
part and, except
as
otherwise provided in section 6A-9-602, those provided by agreement of the
parties. A secured
party:
(1) May reduce a claim to judgment, foreclose, or otherwise enforce the claim,
security
interest,
or agricultural lien by any available judicial procedure; and
(2) If the collateral is documents, may proceed either as to the documents or
as to the
goods
they cover.
(b) Rights and duties of secured party in possession or control. - A secured
party in
possession
of collateral or control of collateral under section 6A-7-106, 6A-9-104,
6A-9-105,
6A-9-106,
or 6A-9-107 has the rights and duties provided in section 6A-9-207.
(c) Rights cumulative; simultaneous exercise. - The rights under subsections
(a) and (b)
are
cumulative and may be exercised simultaneously.
(d) Rights of debtor and obligor. - Except as otherwise provided in subsection
(g) and
section
6A-9-605, after default, a debtor and an obligor have the rights provided in
this part and
by
agreement of the parties.
(e) Lien of levy after judgment. - If a secured party has reduced its claim to
judgment,
the lien
of any levy that may be made upon the collateral by virtue of an execution
based upon the
judgment
relates back to the earliest of:
(1) The date of perfection of the security interest or agricultural lien in the
collateral;
(2) The date of filing a financing statement covering the collateral; or
(3) Any date specified in a statute under which the agricultural lien was
created.
(f) Execution sale. - A sale pursuant to an execution is a foreclosure of the
security
interest
or agricultural lien by judicial procedure within the meaning of this section.
A secured
party
may purchase at the sale and thereafter hold the collateral free of any other
requirements of
this
chapter.
(g) Consignor or buyer of certain rights to payment. - Except as otherwise
provided in
section
6A-9-607(c), this part imposes no duties upon a secured party that is a
consignor or is a
buyer of
accounts, chattel paper, payment intangibles, or promissory notes.
SECTION
9. This act shall take effect upon passage.
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LC01066
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