Chapter
019
2007 -- S 0105
Enacted 05/23/07
A N A C T
RELATING TO COURTS
AND CIVIL PROCEDURE -- PROCEDURE GENERALLY -- THE UNIFORM COMMERCIAL CODE
Introduced By: Senator William A. Walaska
Date Introduced: January
24, 2007
It is
enacted by the General Assembly as follows:
SECTION
1. Section 9-1-4 of the General Laws in Chapter 9-1 entitled "Causes of
Action"
is hereby amended to read as follows:
9-1-4.
Statute of frauds. -- No action shall be brought:
(1) Whereby to charge any person upon any contract for the sale of lands,
tenements, or
hereditaments,
or the making of any lease thereof for a longer time than one year;
(2) Whereby to charge any person upon any agreement made upon consideration of
marriage;
(3) Whereby to charge any trustee under any express trust, or any executor or
administrator,
upon his or her special promise to answer any debt or damage out of his or her
own
estate;
(4) Whereby to charge any person upon his or her special promise to answer for
the debt,
default,
or miscarriage of another person;
(5) Whereby to charge any person upon any agreement which is not to be
performed
within
the space of one year from the making thereof;
(6) Whereby to charge any person upon any agreement or promise to pay any
commission
for or upon the sale of any interest in real estate,;
(7)
Except in cases to which the uniform commercial code (title 6A) applies,
whereby to
charge
any person upon any contract for the sale of personal property beyond five
thousand
dollars
($5,000) in an amount or value of remedy,
unless the promise or agreement upon which the action shall be brought, or some
note or
memorandum
thereof, shall be in writing, and signed by the party to be charged therewith,
or by
some
other person by him or her thereunto lawfully authorized.
SECTION
2. Sections 6A-1-101, 6A-1-102, 6A-1-103, 6A-1-104, 6A-1-105, 6A-1-106,
6A-1-107,
6A-1-108, 6A-1-201, 6A-1-202, 6A-1-203, 6A-1-204, 6A-1-205 and 6A-1-206 of the
General
Laws in Chapter 6A-1 entitled "General Provisions" are hereby amended
to read as
follows.
6A-1-101.
Short title Short titles. -- Title 6A shall be known and may
be cited as the
Uniform
Commercial Code.
(a)
Title 6A may be cited as the Uniform Commercial Code.
(b)
This chapter may be cited as Uniform Commercial Code – General Provisions.
6A-1-102.
Purposes -- Rules of construction -- Variation by agreement Scope of
Chapter.
-- (1) Title 6A shall be
liberally construed and applied to promote its underlying
purposes
and policies.
(2) Underlying purposes and policies of title 6A are:
(a) To simplify, clarify, and modernize the law governing commercial
transactions;
(b) To permit the continued expansion of commercial practices through custom,
usage,
and
agreement of the parties;
(c) To make uniform the law among the various jurisdictions.
(3) The effect of provisions of title 6A may be varied by agreement, except as
otherwise
provided
in title 6A and except that the obligations of good faith, diligence,
reasonableness, and
care
prescribed by title 6A may not be disclaimed by agreement but the parties may
by agreement
determine
the standards by which the performance of such obligations is to be measured if
such
standards
are not manifestly unreasonable.
(4) The presence in certain provisions of title 6A of the words "unless
otherwise agreed"
or
words of similar import does not imply that the effect of other provisions may
not be varied by
agreement
under subsection (3).
(5) In title 6A, unless the context otherwise requires,
(a) Words in the singular number include the plural, and in the plural include
the
singular;
(b) Words of the masculine gender include the feminine and the neuter, and when
the
sense
so indicates words of the neuter gender may refer to any gender.
This
chapter applies to a transaction to the extent that it is governed by another
chapter of
Title
6A.
6A-1-103.
Supplementary general principles of law applicable Construction of
uniform
commercial code to promote its purposes and policies -- Applicability of
supplemental
principles of law. -- Unless
displaced by the particular provisions of title 6A, the
principles
of law and equity, including the law merchant and the law relative to capacity
to
contract,
principal and agent, estoppel, fraud, misrepresentation, duress, coercion,
mistake,
bankruptcy,
or other validating or invalidating cause shall supplement its provisions.
(a)
Title 6A must be liberally construed and applied to promote its underlying
purposes
and
policies, which are:
(1)
to simplify, clarify, and modernize the law governing commercial transactions;
(2)
to permit the continued expansion of commercial practices through custom,
usage,
and
agreement of the parties; and
(3)
to make uniform the law among the various jurisdictions.
(b)
Unless displaced by the particular provisions of title 6A, the principles of law
and
equity,
including the law merchant and the law relative to capacity to contract,
principal and
agent,
estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and
other
validating
or invalidating cause supplement its provisions.
6A-1-104.
Construction against implicit repeal Construction against implied
repeal.
-- Title 6A being a general act intended as a unified
coverage of its subject matter, no part of it
shall be
deemed to be impliedly repealed by subsequent legislation if such construction
can
reasonably
be avoided.
6A-1-105.
Territorial application of title 6A -- Parties' power to choose applicable
law Severability. -- (1) Except as provided hereafter in this section,
when a transaction bears a
reasonable
relation to this state and also to another state or nation, the parties may
agree that the
law
either of this state or of such other state or nation shall govern their rights
and duties. Failing
such
agreement, title 6A applies to transactions bearing an appropriate relation to
this state.
(2) Where one of the following provisions of this title specifies the
applicable law, that
provision
governs and a contrary agreement is effective only to the extent permitted by
the law
(including
the conflict of laws rules) so specified:
(a) Rights of creditors against sold goods. section 6A-2-402.
(b) Applicability of the chapter on leases. sections 6A-2.1-105 and 6A-2.1-106.
(c) Applicability of the chapter on bank deposits and collections. section
6A-4-102.
(d) Applicability of the chapter on investment securities. section 6A-8-110.
(e) Governing law in the article on funds transfers. section 6A-4.1-507.
(f) Letters of credit. section 6A-5-116.
(g) Law governing perfection, the effect of perfection or nonperfection, and
the priority
of
security interests and agricultural liens. sections 6A-9-301 through 6A-9-307.
If
any provision or clause of title 6A or its application to any person or
circumstance is
held
invalid, the invalidity does not affect other provisions or applications of
title 6A which can
be
given effect without the invalid provision or application, and to this end the
provisions of title
6A
are severable.
6A-1-106.
Remedies to be liberally administered Use of singular and plural --
Gender.
-- (1) The remedies provided
by title 6A shall be liberally administered to the end that
the
aggrieved party may be put in as good a position as if the other party had
fully performed, but
neither
consequential or special nor penal damages may be had except as specifically
provided in
title
6A or by other rule of law.
(2) Any right or obligation declared by title 6A is enforceable by action
unless the
provision
declaring it specifies a different and limited effect.
In
title 6A, unless the statutory context otherwise requires:
(1)
words in the singular number include the plural, and those in the plural
include
the
singular; and
(2)
words of any gender also refer to any other gender.
6A-1-107.
Waiver or renunciation of claim or right after breach Section captions.
--
Any
claim or right arising out of an alleged breach can be discharged in whole or
in part without
consideration
by a written waiver or renunciation signed and delivered by the aggrieved
party.
Section
captions are part of title 6A.
6A-1-108.
Severability Relation to electronic signatures in global and national
commerce
act. -- If any provision or
clause of title 6A or application thereof to any person or
circumstances
is held invalid, such invalidity shall not affect other provisions or
applications of
title
6A which can be given effect without the invalid provision or application, and
to this end the
provisions
of title 6A are declared to be severable.
This
chapter modifies, limits, and supersedes the federal Electronic Signatures in
Global
and
National Commerce Act, 15 U.S.C. §§ 7001 et seq., except that nothing in this
chapter
modifies,
limits, or supersedes § 7001(c) of that act or authorizes electronic delivery
of any of the
notices
described in § 7003(b) of that act.
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 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. 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", 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" 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
the record
is
entitled to receive, control, hold, and dispose of the record and the goods the
record covers; 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" 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 (2) or more nations.
(25) Subject to subsection (27), a person has "notice" of a fact if
the person:
(i) Has actual knowledge of it; or
(ii) 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 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 the other person actually comes to know of it. Subject to subsection (27),
a person
"receives"
a notice or notification when:
(i) It comes to 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 another location held out by 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 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 of this title. 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 of this
title.
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
of
this title. 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 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 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.
(a)
Unless the context otherwise requires, words or phrases defined in this
section, or in
the
additional definitions contained in other chapters of title 6A that apply to
particular chapters
or
parts thereof, have the meanings stated.
(b)
Subject to definitions contained in other chapters of title 6A that apply to
particular
chapters
or parts thereof:
(1)
“Action”, in the sense of a judicial proceeding, includes recoupment,
counterclaim,
set-off,
suit in equity, and any other proceeding in which rights are determined.
(2)
“Aggrieved party” means a party entitled to pursue a remedy.
(3)
“Agreement”, as distinguished from “contract”, means the bargain of the parties
in
fact,
as found in their language or inferred from other circumstances, including
course of
performance,
course of dealing, or usage of trade as provided in section 6A-1-303.
(4)
“Bank” means a person engaged in the business of banking and includes a savings
bank,
savings and loan association, credit union, and trust company.
(5)
“Bearer” means a person in possession of a negotiable instrument, document of
title,
or
certificated security that is payable to bearer or indorsed in blank.
(6)
“Bill of lading” means a document evidencing the receipt of goods for shipment
issued
by a person engaged in the business of transporting or forwarding goods.
(7)
“Branch” includes a separately incorporated foreign branch of a bank.
(8)
“Burden of establishing” a fact means the burden of persuading the trier 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 preexisting 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. “Buyer in ordinary course of
business” does not
include
a person that acquires goods in a transfer in bulk or as security for or in
total or partial
satisfaction
of a money debt.
(10)
“Conspicuous”, 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 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)
“Consumer” means an individual who enters into a transaction primarily for
personal,
family, or household purposes.
(12)
“Contract”, as distinguished from “agreement”, means the total legal obligation
that
results
from the parties’ agreement as determined by title 6A as supplemented by any
other
applicable
laws.
(13)
“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.
(14)
“Defendant” includes a person in the position of defendant in a counterclaim,
cross-
claim,
or third-party claim.
(15)
“Delivery”, with respect to an instrument, document of title, or chattel paper,
means
voluntary
transfer of possession.
(16)
“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 in the
regular
course
of business or financing is treated as adequately evidencing that the person in
possession
of it
is entitled to receive, hold, and dispose of the document and the goods it
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.
(17)
“Fault” means a default, breach, or wrongful act or omission.
(18)
“Fungible goods” means:
(A)
goods of which any unit, by nature or usage of trade, is the equivalent of any
other
like
unit; or
(B)
goods that by agreement are treated as equivalent.
(19)
“Genuine” means free of forgery or counterfeiting.
(20)
“Good faith” means honesty in fact in the conduct or transaction concerned.
(21)
“Holder” means:
(A)
the person in possession of a negotiable instrument that is payable either to
bearer or
to an
identified person that is the person in possession; or
(B)
the person in possession of a document of title if the goods are deliverable
either to
bearer
or to the order of the person in possession.
(22)
“Insolvency proceeding” includes an assignment for the benefit of creditors or
other
proceeding
intended to liquidate or rehabilitate the estate of the person involved.
(23)
“Insolvent” means:
(A)
having generally ceased to pay debts in the ordinary course of business other
than as
a
result of bona fide dispute;
(B)
being unable to pay debts as they become due; or
(C)
being insolvent within the meaning of federal bankruptcy law.
(24)
“Money” means a medium of exchange currently authorized or adopted by a
domestic
or foreign government. The term includes a monetary unit of account established
by an
intergovernmental
organization or by agreement between two (2) or more countries.
(25)
“Organization” means a person other than an individual.
(26)
“Party”, as distinguished from “third-party”, means a person that has engaged
in a
transaction
or made an agreement subject to title 6A.
(27)
“Person” means an individual, corporation, business trust, estate, trust,
partnership,
limited
liability company, association, joint venture, government, governmental
subdivision,
agency,
or instrumentality, public corporation, or any other legal or commercial
entity.
(28)
“Present value” means the amount as of a date certain of one or more sums
payable
in
the future, discounted to the date certain by use of either an interest rate
specified by the parties
if
that rate is not manifestly unreasonable at the time the transaction is entered
into or, if an
interest
rate is not so specified, a commercially reasonable rate that takes into
account the facts
and
circumstances at the time the transaction is entered into.
(29)
“Purchase” means taking by sale, lease, discount, negotiation, mortgage,
pledge,
lien,
security interest, issue or reissue, gift, or any other voluntary transaction
creating an interest
in
property.
(30)
“Purchaser” means a person that takes by purchase.
(31)
“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.
(32)
“Remedy” means any remedial right to which an aggrieved party is entitled with
or
without
resort to a tribunal.
(33)
“Representative” means a person empowered to act for another, including an
agent,
an
officer of a corporation or association, and a trustee, executor, or
administrator of an estate.
(34)
“Right” includes remedy.
(35)
“Security interest” means an interest in personal property or fixtures which
secures
payment
or performance of an obligation. “Security interest” 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. “Security interest” does not include the special
property interest of a
buyer
of goods on identification of those goods to a contract for sale under section
6A-2- 401, 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 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 under
section 6A-2-
401
is limited in effect to a reservation of a “security interest.” Whether a
transaction in the form
of a
lease creates a “security interest” is determined pursuant to section 6A-1-203.
(36)
“Send” 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.
(37)
“Signed” includes using any symbol executed or adopted with present intention
to
adopt
or accept a writing.
(38)
“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.
(39)
“Surety” includes a guarantor or other secondary obligor.
(40)
“Term” means a portion of an agreement that relates to a particular matter.
(41)
“Unauthorized signature” means a signature made without actual, implied, or
apparent
authority. The term includes a forgery.
(42)
“Warehouse receipt” means a receipt issued by a person engaged in the business
of
storing
goods for hire.
(43)
“Writing” includes printing, typewriting, or any other intentional reduction to
tangible
form. “Written” has a corresponding meaning.
6A-1-202.
Prima facie evidence by third party documents Notice -- Knowledge. --
A
document
in due form purporting to be a bill of lading, policy or certificate of
insurance, official
weigher's
or inspector's certificate, consular invoice, or any other document authorized
or
required
by the contract to be issued by a third party shall be prima facie evidence of
its own
authenticity
and genuineness and of the facts stated in the document by the third party.
(a)
Subject to subsection (f), a person has “notice” of a fact if the person:
(1)
has actual knowledge of it;
(2)
has received a notice or notification of it; or
(3)
from all the facts and circumstances known to the person at the time in
question, has
reason
to know that it exists.
(b)
“Knowledge” means actual knowledge. “Knows” has a corresponding meaning.
(c)
“Discover”, “learn”, or words of similar import refer to knowledge rather than
to
reason
to know.
(d)
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 the other person actually comes to know of it.
(e)
Subject to subsection (f), a person “receives” a notice or notification when:
(1)
it comes to that person’s attention; or
(2)
it is duly delivered in a form reasonable under the circumstances at the place
of
business
through which the contract was made or at another location held out by that
person as
the
place for receipt of such communications.
(f)
Notice, knowledge, or a notice or notification received by an organization is
effective
for a
particular transaction from the time it is brought to the attention of the
individual conducting
that
transaction and, in any event, from the time it would have been brought to 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 the
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.
6A-1-203.
Obligation of good faith Lease distinguished from security interest. --
Every
contract or duty within title 6A imposes an obligation of good faith in its
performance or
enforcement.
(a)
Whether a transaction in the form of a lease creates a lease or security
interest is
determined
by the facts of each case.
(b)
A transaction in the form of a lease creates a security interest if the
consideration that
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 and is not subject to termination by the lessee, and:
(1)
the original term of the lease is equal to or greater than the remaining
economic life of
the
goods;
(2)
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;
(3)
the lessee has an option to renew the lease for the remaining economic life of
the
goods
for no additional consideration or for nominal additional consideration upon
compliance
with
the lease agreement; or
(4)
the lessee has an option to become the owner of the goods for no additional
consideration
or for nominal additional consideration upon compliance with the lease
agreement.
(c)
A transaction in the form of a lease does not create a security interest merely
because:
(1)
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;
(2)
the lessee assumes risk of loss of the goods;
(3)
the lessee agrees to pay, with respect to the goods, taxes, insurance, filing,
recording,
or
registration fees, or service or maintenance costs;
(4)
the lessee has an option to renew the lease or to become the owner of the
goods;
(5)
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
(6)
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.
(d)
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.
Additional
consideration is not nominal if:
(1)
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
(2)
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.
(e)
The “remaining economic life of the goods” and “reasonably predictable” fair
market
rent,
fair market value, or cost of performing under the lease agreement must be
determined with
reference
to the facts and circumstances at the time the transaction is entered into.
6A-1-204.
Time -- Reasonable time -- "Seasonably" Value. -- (1)
Whenever title 6A
requires
any action to be taken within a reasonable time, any time which is not
manifestly
unreasonable
may be fixed by agreement.
(2) What is a reasonable time for taking any action depends on the nature,
purpose, and
circumstances
of such action.
(3) An action is taken "seasonably" when it is taken at or within the
time agreed or if no
time
is agreed at or within a reasonable time.
Except
as otherwise provided in Chapters 3, 4, and 5, a person gives value for rights
if the
person
acquires them:
(1)
in return for a binding commitment to extend credit or for the extension of
immediately
available credit, whether or not drawn upon and whether or not a charge-back is
provided
for in the event of difficulties in collection;
(2)
as security for, or in total or partial satisfaction of, a preexisting claim;
(3)
by accepting delivery under a preexisting contract for purchase; or
(4)
in return for any consideration sufficient to support a simple contract.
6A-1-205.
Course of dealing and usage of trade Reasonable time -- Seasonableness.
-
- (1) A course of dealing is a sequence of previous
conduct between the parties to a particular
transaction
which is fairly to be regarded as establishing a common basis of understanding
for
interpreting
their expressions and other conduct.
(2) A usage of trade is any practice or method of dealing having such
regularity of
observance
in a place, vocation, or trade as to justify an expectation that it will be
observed with
respect
to the transaction in question. The existence and scope of such a usage are to
be proved as
facts.
If it is established that such a usage is embodied in a written trade code or
similar writing
the
interpretation of the writing is for the court.
(3) A course of dealing between parties and any usage of trade in the vocation
or trade in
which
they are engaged or of which they are or should be aware give particular
meaning to and
supplement
or qualify terms of an agreement.
(4) The express terms of an agreement and an applicable course of dealing or
usage of
trade
shall be construed wherever reasonable as consistent with each other; but when
such
construction
is unreasonable express terms control both course of dealing and usage of trade
and
course
of dealing controls usage of trade.
(5) An applicable usage of trade in the place where any part of performance is
to occur
shall
be used in interpreting the agreement as to that part of the performance.
(6) Evidence of a relevant usage of trade offered by one party is not
admissible unless
and
until he or she has given the other party such notice as the court finds
sufficient to prevent
unfair
surprise to the latter.
(a)
Whether a time for taking an action required by title 6A is reasonable depends
on the
nature,
purpose, and circumstances of the action.
(b)
An action is taken seasonably if it is taken at or within the time agreed or,
if no time is
agreed,
at or within a reasonable time.
6A-1-206.
Statute of frauds for kinds of personal property not otherwise covered
Presumptions.
-- (1) Except in the cases
described in subsection (2) of this section, a contract for
the
sale of personal property is not enforceable by way of action or defense beyond
five thousand
dollars
($5,000) in amount or value of remedy unless there is some writing which
indicates that a
contract
for sale has been made between the parties at a defined or stated price,
reasonably
identifies
the subject matter, and is signed by the party against whom enforcement is
sought or by
his
or her authorized agent.
(2) Subsection (1) of this section does not apply to contract for the sale of
goods (section
6A-2-201)
nor of securities (section 6A-8-113) nor to security agreements (section
6A-9-203).
Whenever
title 6A creates a “presumption” with respect to a fact, or provides that a
fact is
“presumed,”
the trier of fact must find the existence of the fact unless and until evidence
is
introduced
that supports a finding of its nonexistence.
SECTION
3. Sections 6A-1-109, 6A-1-207 and 6A-1-208 of the General Laws in
Chapter
6A-1 entitled "General Provisions" are hereby repealed.
6A-1-109.
Section captions. -- Section captions are parts of title 6A.
6A-1-207.
Performance or acceptance under reservation of rights. -- (1) A
party who,
with
explicit reservation of rights, performs or promises performance or assents to
performance in
a
manner demanded or offered by the other party does not thereby prejudice the
rights reserved.
Such
words as "without prejudice", "under protest", or the like
are sufficient.
(2)
Subsection (1) does not apply to an accord and satisfaction.
6A-1-208.
Option to accelerate at will. -- A term providing that one party
or his or her
successor
in interest may accelerate payment or performance or require collateral or
additional
collateral
"at will" or "when he or she deems him or herself insecure"
or in words of similar
import
shall be construed to mean that he or she shall have power to do so only if he
or she in
good
faith believes that the prospect of payment or performance is impaired. The
burden of
establishing
lack of good faith is on the party against whom the power has been exercised.
SECTION
4. Chapter 6A-1 of the General Laws entitled "General Provisions" is
hereby
amended
by adding thereto the following sections:
Part
3
Territorial
Applicability and General Rules
6A-1-301.
Territorial applicability – Parties' power to choose applicable law. --
(a)
Except
as otherwise provided in this section, when a transaction bears a reasonable
relation to this
state
and also to another state or nation the parties may agree that the law either
of this state or of
such
other state or nation shall govern their rights and duties.
(b)
In the absence of an agreement effective under subsection (a), and except as
provided
in
subsection (c), the Uniform Commercial Code applies to transactions bearing an
appropriate
relation
to this state.
(c)
If one of the following provisions of title 6A specifies the applicable law,
that
provision
governs and a contrary agreement is effective only to the extent permitted by
the law so
specified:
(1)
Section 6A-2-402;
(2)
Sections 6A-2.1-105 and 2.1-106;
(3)
Section 6A-4-102;
(4)
Section 6A-4.1-507;
(5)
Section 6A-5-116;
(6)
[RESERVED]
(7)
Section 6A-8-110;
(8)
Sections 6A-9-301 through 9-307.
6A-1-302.
Variation by agreement. -- (a) Except as otherwise provided in
subsection
(b)
or elsewhere in title 6A, the effect of provisions of title 6A may be varied by
agreement.
(b)
The obligations of good faith, diligence, reasonableness, and care prescribed
by title
6A
may not be disclaimed by agreement. The parties, by agreement, may determine
the standards
by
which the performance of those obligations is to be measured if those standards
are not
manifestly
unreasonable. Whenever title 6A requires an action to be taken within a
reasonable
time,
a time that is not manifestly unreasonable may be fixed by agreement.
(c)
The presence in certain provisions of title 6A of the phrase “unless otherwise
agreed”,
or
words of similar import, does not imply that the effect of other provisions may
not be varied by
agreement
under this section.
6A-1-303.
Course of performance, course of dealing and usage of trade. -- (a)
A
“course
of performance” is a sequence of conduct between the parties to a particular
transaction
that
exists if:
(1)
the agreement of the parties with respect to the transaction involves repeated
occasions
for performance by a party; and
(2)
the other party, with knowledge of the nature of the performance and
opportunity for
objection
to it, accepts the performance or acquiesces in it without objection.
(b)
A “course of dealing” is a sequence of conduct concerning previous transactions
between
the parties to a particular transaction that is fairly to be regarded as
establishing a
common
basis of understanding for interpreting their expressions and other conduct.
(c)
A “usage of trade” is any practice or method of dealing having such regularity
of
observance
in a place, vocation, or trade as to justify an expectation that it will be
observed with
respect
to the transaction in question. The existence and scope of such a usage must be
proved as
facts.
If it is established that such a usage is embodied in a trade code or similar
record, the
interpretation
of the record is a question of law.
(d)
A course of performance or course of dealing between the parties or usage of
trade in
the
vocation or trade in which they are engaged or of which they are or should be
aware is
relevant
in ascertaining the meaning of the parties’ agreement, may give particular
meaning to
specific
terms of the agreement, and may supplement or qualify the terms of the
agreement. A
usage
of trade applicable in the place in which part of the performance under the
agreement is to
occur
may be so utilized as to that part of the performance.
(e)
Except as otherwise provided in subsection (f), the express terms of an
agreement and
any
applicable course of performance, course of dealing, or usage of trade must be
construed
whenever
reasonable as consistent with each other. If such a construction is
unreasonable:
(1)
express terms prevail over course of performance, course of dealing, and usage
of
trade;
(2)
course of performance prevails over course of dealing and usage of trade; and
(3)
course of dealing prevails over usage of trade.
(f)
Subject to section 6A-2-209, a course of performance is relevant to show a
waiver or
modification
of any term inconsistent with the course of performance.
(g)
Evidence of a relevant usage of trade offered by one party is not admissible
unless
that
party has given the other party notice that the court finds sufficient to
prevent unfair surprise
to
the other party.
6A-1-304.
Obligation of good faith. -- Every contract or duty within title 6A
imposes an
obligation
of good faith in its performance and enforcement.
6A-1-305.
Remedies to be liberally administered. -- (a) The remedies provided
by title
6A
must be liberally administered to the end that the aggrieved party may be put
in as good a
position
as if the other party had fully performed but neither consequential or special
damages nor
penal
damages may be had except as specifically provided in title 6A or by other rule
of law.
(b)
Any right or obligation declared by title 6A is enforceable by action unless
the
provision
declaring it specifies a different and limited effect.
6A-1-306.
Waiver or renunciation of claim or right after breach. -- A claim or
right
arising
out of an alleged breach may be discharged in whole or in part without
consideration by
agreement
of the aggrieved party in an authenticated record.
6A-1-307.
Prima facie evidence by third-party documents. -- A document in due
form
purporting
to be a bill of lading, policy or certificate of insurance, official weigher’s
or
inspector’s
certificate, consular invoice, or any other document authorized or required by
the
contract
to be issued by a third-party is prima facie evidence of its own authenticity
and
genuineness
and of the facts stated in the document by the third-party.
6A-1-308.
Performance or acceptance under reservation of rights. -- (a) A
party that
with
explicit reservation of rights performs or promises performance or assents to
performance in
a
manner demanded or offered by the other party does not thereby prejudice the
rights reserved.
Such
words as “without prejudice,” “under protest,” or the like are sufficient.
(b)
Subsection (a) does not apply to an accord and satisfaction.
6A-1-309.
Option to accelerate at will. -- A term providing that one party or
that party’s
successor
in interest may accelerate payment or performance or require collateral or
additional
collateral
“at will” or when the party “deems itself insecure,” or words of similar
import, means
that
the party has power to do so only if that party in good faith believes that the
prospect of
payment
or performance is impaired. The burden of establishing lack of good faith is on
the party
against
which the power has been exercised.
6A-1-310.
Subordinated obligations. -- An obligation may be issued as
subordinated to
performance
of another obligation of the person obligated, or a creditor may subordinate
its right
to
performance of an obligation by agreement with either the person obligated or
another creditor
of
the person obligated. Subordination does not create a security interest as
against either the
common
debtor or a subordinated creditor.
SECTION
5. Section 6A-2-202 of the General Laws in Chapter 6A-2 entitled
"Sales" is
hereby
amended to read as follows:
6A-2-202.
Final written expression -- Parol or extrinsic evidence. -- Terms with
respect
to which the confirmatory memoranda of the parties agree or which are otherwise
set
forth in
a writing intended by the parties as a final expression of their agreement with
respect to
such
terms as are included therein may not be contradicted by evidence of any prior
agreement or
of a
contemporaneous oral agreement but may be explained or supplemented,
(a) By course of performance, course of dealing, or usage of
trade (section 6A-1-205 6A-
1-303) or by course of performance (section 6A-2-208);
and
(b) By evidence of consistent additional terms unless the court finds the
writing to have
been
intended also as a complete and exclusive statement of the terms of the
agreement.
SECTION
6. Section 6A-2-208 of the General Laws in Chapter 6A-2 entitled
"Sales" is
hereby
repealed.
6A-2-208.
Course of performance or practical construction. -- (1) Where
the contract
for
sale involves repeated occasions for performance by either party with knowledge
of the nature
of
the performance and opportunity for objection to it by the other, any course of
performance
accepted
or acquiesced in without objection shall be relevant to determine the meaning
of the
agreement.
(2) The express terms of the agreement and any such course of performance, as
well as
any
course of dealing and usage of trade, shall be construed whenever reasonable as
consistent
with
each other; but when such construction is unreasonable, express terms shall
control course of
performance
and course of performance shall control both course of dealing and usage of
trade
(section
6A-1-205.)
(3) Subject to the provisions of the next section on modification and waiver,
such course
of
performance shall be relevant to show a waiver or modification of any term
inconsistent with
such
course of performance.
SECTION
7. Sections 6A-2.1-207, 6A-2.1-501, 6A-2.1-518, 6A-2.1-519, 6A-2.1-527 and
6A-2.1-528
of the General Laws in Chapter 6A-2.1 entitled "Leases" are hereby
amended to read
as follows:
6A-2.1-207.
Course of performance or practical construction [Reserved]. -- (1)
If a
lease
contract involves repeated occasions for performance by either party with
knowledge of the
nature
of the performance and opportunity for objection to it by the other, any course
of
performance
accepted or acquiesced in without objection is relevant to determine the
meaning of
the
lease agreement.
(2) The express terms of a lease agreement and any course of performance, as
well as
any
course of dealing and usage of trade, must be construed whenever reasonable as
consistent
with
each other; but if that construction is unreasonable, express terms control
course of
performance,
course of performance controls both course of dealing and usage of trade, and
course
of dealing controls usage of trade.
(3) Subject to the provisions of section 6A-2.1-208 on modification and waiver,
course
of
performance is relevant to show a waiver or modification of any term
inconsistent with the
course
of performance.
6A-2.1-501.
Default: Procedure. -- (1) Whether the lessor or the lessee is in
default
under a
lease contract is determined by the lease agreement and this chapter.
(2) If the lessor or the lessee is in default under the lease contract, the
party seeking
enforcement
has rights and remedies as provided in this chapter and, except as limited by
this
chapter,
as provided in the lease agreement.
(3) If the lessor or the lessee is in default under the lease contract, the
party seeking
enforcement
may reduce the party's claim to judgment, or otherwise enforce the lease
contract by
self
help or any available judicial procedure or nonjudicial procedure, including
administrative
proceeding,
arbitration, or the like, in accordance with this chapter.
(4) Except as otherwise provided in section 6A-1-106(1) 6A-1-305(a)
or this chapter or
the
lease agreement, the rights and remedies referred to in subsections (2) and (3)
are cumulative.
(5) If the lease agreement covers both real property and goods, the party
seeking
enforcement
may proceed under this part as to the goods, or under other applicable law as
to both
the real
property and the goods in accordance with that party's rights and remedies in
respect of
the real
property, in which case this part does not apply.
6A-2.1-518.
Cover -- Substitute goods. -- (1) After a default by a lessor under the
lease
contract
of the type described in section 6A-2.1-508(1), or, if agreed, after other
default by the
lessor,
the lessee may cover by making any purchase or lease of or contract to purchase
or lease
goods in
substitution for those due from the lessor.
(2) Except as otherwise provided with respect to damages liquidated in the
lease
agreement
(section 6A-2.1-504) or otherwise determined pursuant to agreement of the
parties
(sections
6A-1-102(3) 6A-1-302 and 6A-2.1-503), if a lessee's cover is by a
lease agreement
substantially
similar to the original lease agreement and the new lease agreement is made in
good
faith
and in a commercially reasonable manner, the lessee may recover from the lessor
as
damages
(i) the present value, as of the date of the commencement of the term of the
new lease
agreement,
of the rent under the new lease agreement applicable to that period of the new
lease
term
which is comparable to the then remaining term of the original lease agreement
minus the
present
value as of the same date of the total rent for the then remaining lease term
of the original
lease
agreement, and (ii) any incidental or consequential damages, less expenses
saved in
consequence
of the lessor's default.
(3) If a lessee's cover is by lease agreement that for any reason does not
qualify for
treatment
under subsection (2), or is by purchase or otherwise, the lessee may recover
from the
lessor
as if the lessee had elected not to cover and section 6A-2.1-519 governs.
6A-2.1-519.
Lessee's damages for nondelivery, repudiation, default, and breach of
warranty
in regard to accepted goods. --
(1) Except as otherwise provided with respect to
damages
liquidated in the lease agreement (section 6A-2.1-504) or otherwise determined
pursuant
to
agreement of the parties (sections 6A-1-102(3) 6A-1-302 and
6A-2.1-503), if a lessee elects
not to
cover or a lessee elects to cover and the cover is by lease agreement that for
any reason
does not
qualify for treatment under section 6A-2.1-518(2), or is by purchase or
otherwise, the
measure
of damages for nondelivery or repudiation by the lessor or for rejection or
revocation of
acceptance
by the lessee is the present value, as of the date of the default, of the then
market rent
minus
the present value as of the same date of the original rent, computed for the
remaining lease
term of
the original lease agreement, together with incidental and consequential
damages, less
expenses
saved in consequence of the lessor's default.
(2) Market rent is to be determined as of the place for tender or, in cases of
rejection
after
arrival or revocation of acceptance, as of the place of arrival.
(3) Except as otherwise agreed, if the lessee has accepted goods and given
notification
(section
6A-2.1-516(3)), the measure of damages for nonconforming tender or delivery or
other
default
by a lessor is the loss resulting in the ordinary course of events from the
lessor's default as
determined
in any manner that is reasonable together with incidental and consequential
damages,
less
expenses saved in consequence of the lessor's default.
(4) Except as otherwise agreed, the measure of damages for breach of warranty
is the
present
value at the time and place of acceptance of the difference between the value
of the use of
the
goods accepted and the value if they had been as warranted for the lease term,
unless special
circumstances
show proximate damages of a different amount, together with incidental and
consequential
damages, less expenses saved in consequence of the lessor's default or breach
of
warranty.
6A-2.1-527.
Lessor's rights to dispose of goods. -- (1) After a default by a lessee
under
the lease
contract of the type described in section 6A-2.1-523(1) or 6A-2.1-523(3)(a) or
after the
lessor
refuses to deliver or takes possession of goods (section 6A-2.1-525 or
6A-2.1-526), or, if
agreed,
after other default by a lessee, the lessor may dispose of the goods concerned
or the
undelivered
balance thereof by lease, sale, or otherwise.
(2) Except as otherwise provided with respect to damages liquidated in the
lease
agreement
(section 6A-2.1-504) or otherwise determined pursuant to agreement of the
parties
(sections
6A-1-102(3) 6A-1-302 and 6A-2.1-503), if the disposition is by
lease agreement
substantially
similar to the original lease agreement and the new lease agreement is made in
good
faith
and in a commercially reasonable manner, the lessor may recover from the lessee
as
damages
(i) accrued and unpaid rent as of the date of the commencement of the term of
the new
lease
agreement, (ii) the present value, as of the same date, of the total rent for
the then remaining
lease
term of the original lease agreement minus the present value, as of the same
date, of the rent
under
the new lease agreement applicable to that period of the new lease term which
is
comparable
to the then remaining term of the original lease agreement, and (iii) any
incidental
damages
allowed under section 6A-2.1-530, less expenses saved in consequence of the
lessee's
default.
(3) If the lessor's disposition is by lease agreement that for any reason does
not qualify
for
treatment under subsection (2), or is by sale or otherwise, the lessor may
recover from the
lessee
as if the lessor had elected not to dispose of the goods and section 6A-2.1-528
governs.
(4) A subsequent buyer or lessee who buys or leases from the lessor in good
faith for
value as
a result of a disposition under this section takes the goods free of the
original lease
contract
and any rights of the original lessee even though the lessor fails to comply
with one or
more of
the requirements of this chapter.
(5) The lessor is not accountable to the lessee for any profit made on any
disposition. A
lessee
who has rightfully rejected or justifiably revoked acceptance shall account to
the lessor for
any
excess over the amount of the lessee's security interest (section
6A-2.1-508(5)).
6A-2.1-528.
Lessor's damages for nonacceptance, failure to pay, repudiation, or
other
default. -- (1) Except as
otherwise provided with respect to damages liquidated in the lease
agreement
(section 6A-2.1-504) or otherwise determined pursuant to agreement of the
parties
(sections
6A-1-102(3) 6A-1-302 and 6A-2.1-503), if a lessor elects to
retain the goods or a lessor
elects
to dispose of the goods and the disposition is by lease agreement that for any
reason does
not
qualify for treatment under section 6A-2.1-527(2), or is by sale or otherwise,
the lessor may
recover
from the lessee as damages for a default of the type described in section
6A-2.1-523(1) or
6A-2.1-523(3)(a),
or, if agreed, for other default of the lessee, (i) accrued and unpaid rent as
of
the date
of default if the lessee has never taken possession of the goods, or, if the
lessee has taken
possession
of the goods, as of the date the lessor repossesses the goods or an earlier
date on which
the
lessee makes a tender of the goods to the lessor, (ii) the present value as of
the date
determined
under clause (i) of the total rent for the then remaining lease term of the
original lease
agreement
minus the present value as of the same date of the market rent at the place
where the
goods
are located computed for the same lease term, and (iii) any incidental damages
allowed
under
section 6A-2.1-530, less expenses saved in consequence of the lessee's default.
(2) If the measure of damages provided in subsection (1) is inadequate to put a
lessor in
as good
a position as performance would have, the measure of damages is the present
value of the
profit,
including reasonable overhead, the lessor would have made from full performance
by the
lessee,
together with any incidental damages allowed under section 6A-2.1-530, due
allowance
for
costs reasonably incurred and due credit for payments or proceeds of
disposition.
SECTION
8. Sections 6A-4.1-106 and 6A-4.1-204 of the General Laws in Chapter 6A-
4.1
entitled "Funds Transfers" are hereby amended to read as follows:
6A-4.1-106.
Time payment order is received. -- (a) The time of receipt of a payment
order or
communication cancelling or amending a payment order is determined by the rules
applicable
to receipt of a notice stated in section 6A-1-201(27) 6A-1-202. A
receiving bank may
fix a
cut-off time or times on a funds transfer business day for the receipt and
processing of
payment
orders and communications cancelling or amending payment orders. Different cut
off
times
may apply to payment orders, cancellations, or amendments, or to different
categories of
payment
orders, cancellations, or amendments. A cut off time may apply to senders
generally or
different
cut off times may apply to different senders or categories of payment orders.
If a
payment
order or communication cancelling or amending a payment order is received after
the
close of
a funds transfer business day or after the appropriate cut off time on a funds
transfer
business
day, the receiving bank may treat the payment order or communication as
received at the
opening
of the next funds transfer business day.
(b) If this chapter refers to an execution date or payment date or states a day
on which a
receiving
bank is required to take action, and the date or day does not fall on a funds
transfer
business
day, the next day that is a funds transfer business day is treated as the date
or day stated,
unless
the contrary is stated in this chapter.
6A-4.1-204.
Refund of payment and duty of customer to report with respect to
unauthorized
payment order. -- (a) If a
receiving bank accepts a payment order issued in the
name of
its customer as sender which is (i) not authorized and not effective as the
order of the
customer
under section 6A-4.1-202, or (ii) not enforceable, in whole or in part, against
the
customer
under section 6A-4.1-203, the bank shall refund any payment of the payment
order
received
from the customer to the extent the bank is not entitled to enforce payment and
shall pay
interest
on the refundable amount calculated from the date the bank received payment to
the date
of the
refund. However, the customer is not entitled to interest from the bank on the
amount to be
refunded
if the customer fails to exercise ordinary care to determine that the order was
not
authorized
by the customer and to notify the bank of the relevant facts within a
reasonable time
not
exceeding ninety (90) days after the date the customer received notification
from the bank
that the
order was accepted or that the customer's account was debited with respect to
the order.
The bank
is not entitled to any recovery from the customer on account of a failure by
the
customer
to give notification as stated in this section.
(b) Reasonable time under subsection (a) may be fixed by agreement as stated in
section
6A-1-204(1) 6A-1-302(b), but the obligation of a receiving
bank to refund payment as stated in
subsection
(a) may not otherwise be varied by agreement.
SECTION
9. Section 6A-5-103 of the General Laws in Chapter 6A-5 entitled "Letters
of
Credit"
is hereby amended to read as follows:
6A-5-103.
Scope. -- (a) This chapter applies to letters of credit and to certain
rights and
obligations
arising out of transactions involving letters of credit.
(b) The statement of a rule in this chapter does not by itself require, imply,
or negate
application
of the same or a different rule to a situation not provided for, or to a person
not
specified,
in this chapter.
(c) With the exception of this subsection, subsections (a) and (d), sections
6A-5-
102(a)(9)
and (10), 6A-5-106(d), and 6A-5-114(d), and except to the extent prohibited in
sections
6A-1-102(3) 6A-1-302 and 6A-5-117(d), the effect of this
chapter may be varied by agreement or
by a
provision stated or incorporated by reference in an undertaking. A term in an
agreement or
undertaking
generally excusing liability or generally limiting remedies for failure to
perform
obligations
is not sufficient to vary obligations prescribed by this chapter.
(d) Rights and obligations of an issuer to a beneficiary or a nominated person
under a
letter
of credit are independent of the existence, performance, or nonperformance of a
contract or
arrangement
out of which the letter of credit arises or which underlies it, including
contracts or
arrangements
between the issuer and the applicant and between the applicant and the
beneficiary.
SECTION
10. This act shall take effect upon passage.
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LC00564
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