Chapter 135

2006 -- H 7574

Enacted 06/16/06

A N A C T

RELATING TO THE UNIFORM COMMERCIAL CODE

Introduced By: Representative Arthur J. Corvese

Date Introduced: February 16, 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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LC02424

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