law24066

Chapter 066

2024 -- S 2781
Enacted 06/10/2024

A N A C T

RELATING TO THE UNIFORM COMMERCIAL CODE

Introduced By: Senators F. Lombardi, Burke, Tikoian, Quezada, Bissaillon, LaMountain, Euer, and McKenney

Date Introduced: March 08, 2024

It is enacted by the General Assembly as follows:

SECTION 1. Sections 6A-1-201, 6A-1-204, 6A-1-301 and 6A-1-306 of the General Laws

in Chapter 6A-1 entitled "General Provisions" are hereby amended to read as follows:

6A-1-201. General definitions.

(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 § 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 control of a negotiable electronic document of title or a

person in possession of a negotiable instrument, negotiable tangible document of title, or

certificated security that is 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. This 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 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, based on the totality of the circumstances, 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 In

deciding whether a term is conspicuous, the court shall consider all relevant factors, including:

(A) The use of headings and text that contrast with the surrounding text;

(B) The placement of the term in the record;

of the hyperlink;:

(i) Whether there is language drawing attention to the hyperlink and describing its function;

(ii) The size and color of the text used for the hyperlink and any related language; and

(iii) Whether the text is accessible using assistive technology;

(D) The language of the heading, if any;

(E) The effort needed to access the term; and

(F) Whether the person against which the term is to operate must separately assent to or

acknowledge the term.

(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 electronic document of title means voluntary transfer

of control and with respect to an instrument, a tangible document of title, or an authoritative tangible

copy of a record evidencing chattel paper, means voluntary transfer of possession.

(16)

“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.

(16.1) "Electronic" means relating to technology having electrical, digital, magnetic,

wireless, optical, electromagnetic, or similar capabilities.

(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;

(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

document of title.

(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

(24) “Money” means a medium of exchange that is currently authorized or adopted by a

domestic or foreign government. The term includes a monetary unit of account established by an

intergovernmental organization or by agreement between two (2) or more countries. The term

"money" does not include an electronic record that is a medium of exchange recorded and

transferable in a system that existed and operated for the medium of exchange before the medium

of exchange was authorized or adopted by the government.

(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. The term

"person" includes a protected series, however denominated, of an entity if the protected series is

established under law other than this title that limits, or limits if conditions specified under the law

are satisfied, the ability of a creditor of the entity or of any other protected series of the entity to

satisfy a claim from assets of the protected series.

(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 § 6A-2-401, but a buyer

may also acquire a “security interest” by complying with Chapter 9. Except as otherwise provided

in § 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 § 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 § 6A-1-203.

(36) “Send” in connection with a writing, record, or notice record or notification means:

(A) To deposit in the mail, or deliver for transmission, or transmit by any other usual means

of communication with postage or cost of 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

addressed 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. To cause the record or notification to be received within the time it

would have been received if properly sent under subsection (b)(36)(A) of this section.

(37) “Signed” includes using any symbol executed or adopted with present intention to

adopt or accept a writing. "Sign" means, with present intent to authenticate or adopt a record:

(i) Execute or adopt a tangible symbol; or

(ii) Attach to or logically associate with the record an electronic symbol, sound, or process.

"Signed," "signing," and "signature" have corresponding meanings.

(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 document of title issued by a person engaged in the

business of storing goods for hire. The term does not include a bill of lading.

(43) “Writing” includes printing, typewriting, or any other intentional reduction to tangible

form. “Written” has a corresponding meaning.

6A-1-204. Value.

Except as otherwise provided in chapters 3, 4, and 5, and 12 of this title, 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-1-301. 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.

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 6A-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 6A-9-307.;

(9) Section 6A-12-107.

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 a signed record.

SECTION 2. Sections 6A-2-102, 6A-2-106, 6A-2-201, 6A-2-202, 6A-2-203, 6A-2-205

and 6A-2-209 of the General Laws in Chapter 6A-2 entitled "Sales" are hereby amended to read as

follows:

6A-2-102. Scope — Certain security and other transactions excluded from this

chapter.

Unless the context otherwise requires, this chapter applies to transactions in goods; it does

not apply to any transaction which, although in the form of an unconditional contract to sell or

present sale, is intended to operate only as a security transaction, nor does this chapter impair or

repeal any statute regulating sales to consumers, farmers, or other specified classes of buyers.

(1) Unless the context otherwise requires, and except as provided in subsection (3) of this

section, this chapter applies to transactions in goods and, in the case of a hybrid transaction, it

applies to the extent provided in subsection (2) of this section.

(2) In a hybrid transaction:

(i) If the sale-of-goods aspects do not predominate, only the provisions of this chapter

which relate primarily to the sale-of-goods aspects of the transaction apply, and the provisions that

relate primarily to the transaction as a whole do not apply.

(ii) If the sale-of-goods aspects predominate, this chapter applies to the transaction, but

does not preclude application in appropriate circumstances of other law to aspects of the transaction

which do not relate to the sale of goods.

(3) This chapter does not:

(i) Apply to a transaction that, even though in the form of an unconditional contract to sell

or present sale, operates only to create a security interest; or

(ii) Impair or repeal a statute regulating sales to consumers, farmers, or other specified

classes of buyers.

6A-2-106. Definitions — “Contract” — “Agreement” — “Contract for sale” — “Sale”

— “Present sale” — “Conforming” to contract — “Termination” — “Cancellation”.

Definitions — “Contract” — “Agreement” — “Contract for sale” — “Sale” — “Present sale”

— “Conforming” to contract — “Termination” — “Cancellation” – “Hybrid Transaction”.

(1) In this chapter unless the context otherwise requires “contract” and “agreement” are

limited to those relating to the present or future sale of goods. “Contract for sale” includes both a

present sale of goods and a contract to sell goods at a future time. A “sale” consists in the passing

of title from the seller to the buyer for a price (§ 6A-2-401). A “present sale” means a sale which

is accomplished by the making of the contract.

(2) Goods or conduct including any part of a performance are “conforming” or conform to

the contract when they are in accordance with the obligations under the contract.

(3) “Termination” occurs when either party pursuant to a power created by agreement or

law puts an end to the contract otherwise than for its breach. On “termination” all obligations which

are still executory on both sides are discharged but any right based on prior breach or performance

survives.

(4) “Cancellation” occurs when either party puts an end to the contract for breach by the

other and its effect is the same as that of “termination” except that the cancelling party also retains

any remedy for breach of the whole contract or any unperformed balance.

(5) “Hybrid transaction” means a single transaction involving a sale of goods and:

(i) The provision of services;

(ii) A lease of other goods; or

(iii) A sale, lease, or license of property other than goods.

6A-2-201. Formal requirements — Statute of frauds.

(1) Except as otherwise provided in this section, a contract for the sale of goods for the

price of five hundred dollars ($500) or more is not enforceable by way of action or defense unless

there is some writing a record sufficient to indicate that a contract for sale has been made between

the parties and signed by the party against whom enforcement is sought or by his or her the party's

authorized agent or broker. A writing record is not insufficient because it omits or incorrectly states

a term agreed upon but the contract is not enforceable under this paragraph subsection beyond the

quantity of goods shown in such writing the record.

(2) Between merchants if within a reasonable time a writing record in confirmation of the

contract and sufficient against the sender is received and the party receiving it has reason to know

its contents, it satisfies the requirements of subsection (1) against such the party unless written

notice in a record of objection to its contents is given within ten (10) days after it is received.

(3) A contract which does not satisfy the requirements of subsection (1) but which is valid

in other respects is enforceable,

(a) If the goods are to be specially manufactured for the buyer and are not suitable for sale

to others in the ordinary course of the seller’s business and the seller, before notice of repudiation

is received and under circumstances which reasonably indicate that the goods are for the buyer, has

made either a substantial beginning of their manufacture or commitments for their procurement; or

(b) If the party against whom enforcement is sought admits in his or her pleading, testimony

or otherwise in court that a contract for sale was made, but the contract is not enforceable under

this provision beyond the quantity of goods admitted; or

been received and accepted (§ 6A-2-606).

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 record intended by the parties as a final expression of their

agreement with respect to such terms as are included therein may not be contradicted by evidence

of any prior agreement or of a contemporaneous oral agreement but may be explained or

supplemented,:

(a) By course of performance, course of dealing, or usage of trade (§ 6A-1-303); and

(b) By evidence of consistent additional terms unless the court finds the writing record to

have been intended also as a complete and exclusive statement of the terms of the agreement.

6A-2-203. Seals inoperative.

The affixing of a seal to a writing record evidencing a contract for sale or an offer to buy

or sell goods does not constitute the writing record a sealed instrument and the law with respect to

sealed instruments does not apply to such a contract or offer.

6A-2-205. Firm offers.

An offer by a merchant to buy or sell goods in a signed writing record which by its terms

gives assurance that it will be held open is not revocable, for lack of consideration, during the time

stated, or if no time is stated for a reasonable time, but in no event may such period of irrevocability

exceed three (3) months; but any such term of assurance on a form supplied by the offeree must be

separately signed by the offeror.

6A-2-209. Modification, rescission, and waiver.

(1) An agreement modifying a contract within this chapter needs no consideration to be

binding.

(2) A signed agreement which excludes modification or rescission except by a signed

writing or other signed record cannot be otherwise modified or rescinded, but except as between

merchants such a requirement on a form supplied by the merchant must be separately signed by the

other party.

(3) The requirements of the statute of frauds section of this chapter (§ 6A-2-201) must be

satisfied if the contract as modified is within its provisions.

(4) Although an attempt at modification or rescission does not satisfy the requirements of

subsection (2) or (3) it can operate as a waiver.

(5) A party who has made a waiver affecting an executory portion of the contract may

retract the waiver by reasonable notification received by the other party that strict performance will

be required of any term waived, unless the retraction would be unjust in view of a material change

of position in reliance on the waiver.

SECTION 3. Sections 6A-2.1-102, 6A-2.1-103, 6A-2.1-107, 6A-2.1-201, 6A-2.1-202, 6A-

2.1-203, 6A-2.1-205 and 6A-2.1-208 of the General Laws in Chapter 6A-2.1 entitled "Leases" are

hereby amended to read as follows:

6A-2.1-102. Scope.

(1) This chapter applies to any transaction, regardless of form, that creates a lease and, in

the case of a hybrid lease, it applies to the extent provided in subsection (b2) of this section.

(2) In a hybrid lease;:

(a) If the lease-of goods aspects do not predominate;:

(i) Only the provisions of this chapter which relate primarily to the lease-of-goods aspects

of the transaction apply, and the provisions that relate primarily to the transaction as a whole do

not apply;

(ii) Section 6A-2.1-209 applies if the lease is a finance lease; and

(iii) Section 6A-2.1-407 applies to the promises of the lessee in a finance lease to the extent

the promises are consideration for the right to possession and use of the leased goods.

(b) If the lease-of-goods aspects predominate, this chapter applies to the transaction, but

does not preclude application in appropriate circumstances of other law to aspects of the lease

which do not relate to the lease of goods.

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 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.

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 chapterarticle, as a machine, or a set of

chaptersarticles, 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;

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 (§ 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.

(h.1) "Hybrid lease" means a single transaction involving a lease of goods and;:

(1) The provision of services;

(2) A sale of other goods; or

(3) A sale, lease, or license of property other than goods.

(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

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 chapterarticle 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”. § 6A-2.1-310(1).

“Construction mortgage”. § 6A-2.1-309(1)(d).

“Encumbrance”. § 6A-2.1-309(1)(e).

“Fixtures”. § 6A-2.1-309(1)(a).

“Fixture filing”. § 6A-2.1-309(1)(b).

“Purchase money lease”. § 6A-2.1-309(1)(c).

(3) The following definitions in other chapters apply to this Chapter:

“Account”. § 6A-9-102(a)(2).

“Between merchants”. § 6A-2-104(3).

“Buyer”. § 6A-2-103(1)(a).

“Chattel paper”. § 6A-9-102(a)(11).

“Consumer goods”. § 6A-9-102(a)(23).

“Document”. § 6A-9-102(a)(30).

“Entrusting”. § 6A-2-403(3).

“General intangibles”. § 6A-9-102(a)(42).

“Good faith”. § 6A-2-103(1)(b).

“Instrument”. § 6A-9-102(a)(47).

“Merchant”. § 6A-2-104(1).

“Mortgage”. § 6A-9-102(a)(55).

“Pursuant to commitment”. § 6A-9-102(a)(69).

“Receipt”. § 6A-2-103(1)(c).

“Sale”. § 6A-2-106(1).

“Sale on approval”. § 6A-2-326.

“Sale or return”. § 6A-2-326.

“Seller”. § 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-2.1-107. Waiver or renunciation of claim or right after default.

Any claim or right arising out of an alleged default or breach of warranty may be discharged

in whole or in part without consideration by a written waiver or renunciation signed and in a signed

record delivered by the aggrieved party.

6A-2.1-201. Statute of frauds.

(1) A lease contract is not enforceable by way of action or defense unless:

(a) The total payments to be made under the lease contract, excluding payments for options

to renew or buy, are less than $ 1,000; or

(b) There is a writing record, signed by the party against whom enforcement is sought or

by that party’s authorized agent, sufficient to indicate that a lease contract has been made between

the parties and to describe the goods leased and the lease term.

(2) Any description of leased goods or of the lease term is sufficient and satisfies subsection

(1)(b), whether or not it is specific, if it reasonably identifies what is described.

(3) A writing record is not insufficient because it omits or incorrectly states a term agreed

upon, but the lease contract is not enforceable under subsection (1)(b) beyond the lease term and

the quantity of goods shown in the writing record.

(4) A lease contract that does not satisfy the requirements of subsection (1), but which is

valid in other respects, is enforceable:

(a) If the goods are to be specially manufactured or obtained for the lessee and are not

suitable for lease or sale to others in the ordinary course of the lessor’s business, and the lessor,

before notice of repudiation is received and under circumstances that reasonably indicate that the

goods are for the lessee, has made either a substantial beginning of their manufacture or

commitments for their procurement;

(b) If the party against whom enforcement is sought admits in that party’s pleading,

testimony or otherwise in court that a lease contract was made, but the lease contract is not

enforceable under this provision beyond the quantity of goods admitted; or

(5) The lease term under a lease contract referred to in subsection (4) is:

(a) If there is a writing record signed by the party against whom enforcement is sought or

by that party’s authorized agent specifying the lease term, the term so specified;

(b) If the party against whom enforcement is sought admits in that party’s pleading,

testimony, or otherwise in court a lease term, the term so admitted; or

6A-2.1-202. Final written expression: parol or extrinsic evidence.Final expression:

Parol or extrinsic evidence.

Terms with respect to which the confirmatory memoranda of the parties agree or which are

otherwise set forth in a writing record intended by the parties as a final expression of their

agreement with respect to such terms as are included therein may not be contradicted by evidence

of any prior agreement or of a contemporaneous oral agreement but may be explained or

supplemented:

(a) By course of dealing or usage of trade or by course of performance; and

(b) By evidence of consistent additional terms unless the court finds the writing record to

have been intended also as a complete and exclusive statement of the terms of the agreement.

6A-2.1-203. Seals inoperative.

The affixing of a seal to a writing record evidencing a lease contract or an offer to enter

into a lease contract does not render the writing record a sealed instrument, and the law with respect

to sealed instruments does not apply to the lease contract or offer.

6A-2.1-205. Firm offers.

An offer by a merchant to lease goods to or from another person in a signed writing record

that by its terms gives assurance it will be held open is not revocable, for lack of consideration,

during the time stated or, if no time is stated, for a reasonable time, but in no event may the period

of irrevocability exceed 3 months. Any such term of assurance on a form supplied by the offeree

must be separately signed by the offeror.

6A-2.1-208. Modification, rescission, and waiver.

(1) An agreement modifying a lease contract needs no consideration to be binding.

(2) A signed lease agreement that excludes modification or rescission except by a signed

writing record may not be otherwise modified or rescinded, but, except as between merchants, such

a requirement on a form supplied by a merchant must be separately signed by the other party.

(3) Although an attempt at modification or rescission does not satisfy the requirements of

subsection (2), it may operate as a waiver.

(4) A party who has made a waiver affecting an executory portion of a lease contract may

retract the waiver by reasonable notification received by the other party that strict performance will

be required of any term waived, unless the retraction would be unjust in view of a material change

of position in reliance on the waiver.

SECTION 4. Sections 6A-3-104, 6A-3-105, 6A-3-401 and 6A-3-604 of the General Laws

in Chapter 6A-3 entitled "Negotiable Instruments" are hereby amended to read as follows:

6A-3-104. Negotiable instrument.

(a) Except as provided in subsections (c) and (d), “negotiable instrument” means an

unconditional promise or order to pay a fixed amount of money, with or without interest or other

charges described in the promise or order, if it:

(1) Is payable to bearer or to order at the time it is issued or first comes into possession of

a holder;

(2) Is payable on demand or at a definite time; and

(3) Does not state any other undertaking or instruction by the person promising or ordering

payment to do any act in addition to the payment of money, but the promise or order may contain

(i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an

authorization or power to the holder to confess judgment or realize on or dispose of collateral, or

(iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor; (iv)

a term that specifies the law that governs the promise or order; or (v) an undertaking to resolve, in

a specified forum, a dispute concerning the promise or order.

(b) “Instrument” means a negotiable instrument.

otherwise falls within the definition of “check” in subsection (f) is a negotiable instrument and a

check.

(d) A promise or order other than a check is not an instrument if, at the time it is issued or

first comes into possession of a holder, it contains a conspicuous statement, however expressed, to

the effect that the promise or order is not negotiable or is not an instrument governed by this chapter.

(e) An instrument is a “note” if it is a promise and is a “draft” if it is an order. If an

instrument falls within the definition of both “note” and “draft,” a person entitled to enforce the

instrument may treat it as either.

(f) “Check” means (i) a draft, other than a documentary draft, payable on demand and

drawn on a bank or (ii) a cashier’s check or teller’s check. An instrument may be a check even

though it is described on its face by another term, such as “money order.”

(g) “Cashier’s check” means a draft with respect to which the drawer and drawee are the

same bank or branches of the same bank.

(h) “Teller’s check” means a draft drawn by a bank (i) on another bank, or (ii) payable at

or through a bank.

(i) “Traveler’s check” means an instrument that (i) is payable on demand, (ii) is drawn on

or payable at or through a bank, (iii) is designated by the term “traveler’s check” or by a

substantially similar term, and (iv) requires, as a condition to payment, a countersignature by a

person whose specimen signature appears on the instrument.

(j) “Certificate of deposit” means an instrument containing an acknowledgment by a bank

that a sum of money has been received by the bank and a promise by the bank to repay the sum of

money. A certificate of deposit is a note of the bank.

6A-3-105. Issue of instrument.

“Issue” means:

The (1) The first delivery of an instrument by the maker or drawer, whether to a holder or

nonholder, for the purpose of giving rights on the instrument to any person.; or

(2) If agreed by the payee, the first transmission by the drawer to the payee of an image of

an item and information derived from the item that enables the depositary bank to collect the item

by transferring or presenting under federal law an electronic check.

(b) An unissued instrument, or an unissued incomplete instrument that is completed, is

binding on the maker or drawer, but nonissuance is a defense. An instrument that is conditionally

issued or is issued for a special purpose is binding on the maker or drawer, but failure of the

condition or special purpose to be fulfilled is a defense.

instrument.

6A-3-401. Signature Necessary for Liability on Instrument.

(a) A person is not liable on an instrument unless (i) the person signed the instrument, or

(ii) the person is represented by an agent or representative who signed the instrument and the

signature is binding on the represented person under § 6A-3-402.

(b) A signature may be made (i) manually or by means of a device or machine, and (ii) by

the use of any name, including a trade or assumed name, or by a word, mark, or symbol executed

or adopted by a person with present intention to authenticate a writing.

6A-3-604. Discharge by cancellation or renunciation.

(a) A person entitled to enforce an instrument, with or without consideration, may

discharge the obligation of a party to pay the instrument (i) by an intentional voluntary act, such as

surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument,

cancellation or striking out of the party’s signature, or the addition of words to the instrument

indicating discharge, or (ii) by agreeing not to sue or otherwise renouncing rights against the party

by a signed writing record. The obligation of a party to pay a check is not discharged solely by

destruction of the check in connection with a process in which information is extracted from the

check and an image of the check is made and, subsequently, the information and image are

transmitted for payment.

(b) Cancellation or striking out of an indorsement pursuant to subsection (a) does not affect

the status and rights of a party derived from the indorsement.

SECTION 5. Sections 6A-4.1-103, 6A-4.1-201, 6A-4.1-202, 6A-4.1-203, 6A-4.1-207, 6A-

4.1-208, 6A-4.1-210, 6A-4.1-211 and 6A-4.1-305 of the General Laws in Chapter 6A-4.1 entitled

"Funds Transfers" are hereby amended to read as follows:

6A-4.1-103. Payment order — Definitions.

(a) In this chapter:

(1) “Payment order” means an instruction of a sender to a receiving bank, transmitted

orally, electronically, or in writing or in a record, to pay, or to cause another bank to pay, a fixed

or determinable amount of money to a beneficiary if:

(i) The instruction does not state a condition to payment to the beneficiary other than time

of payment;

(ii) The receiving bank is to be reimbursed by debiting an account of, or otherwise receiving

payment from, the sender; and

(iii) The instruction is transmitted by the sender directly to the receiving bank or to an

agent, funds-transfer system, or communication system for transmittal to the receiving bank.

(2) “Beneficiary” means the person to be paid by the beneficiary’s bank.

(3) “Beneficiary’s bank” means the bank identified in a payment order in which an account

of the beneficiary is to be credited pursuant to the order or which otherwise is to make payment to

the beneficiary if the order does not provide for payment to an account.

(4) “Receiving bank” means the bank to which the sender’s instruction is addressed.

(5) “Sender” means the person giving the instruction to the receiving bank.

(b) If an instruction complying with subsection (a)(1) is to make more than one payment

to a beneficiary, the instruction is a separate payment order with respect to each payment.

6A-4.1-201. Security procedure.

“Security procedure” means a procedure established by agreement of a customer and a

receiving bank for the purpose of (i) verifying that a payment order or communication amending

or cancelling a payment order is that of the customer, or (ii) detecting error in the transmission or

the content of the payment order or communication. A security procedure may impose an obligation

on the receiving bank or the customer and may require the use of algorithms or other codes,

identifying words or, numbers, symbols, sounds, biometrics, encryption, callback procedures, or

similar security devices. Comparison of a signature on a payment order or communication with an

authorized specimen signature of the customer or requiring a payment order to be sent from a

known email address, IP address, or telephone number is not by itself a security procedure.

6A-4.1-202. Authorized and verified payment orders.

(a) A payment order received by the receiving bank is the authorized order of the person

identified as sender if that person authorized the order or is otherwise bound by it under the law of

agency.

(b) If a bank and its customer have agreed that the authenticity of payment orders issued to

the bank in the name of the customer as sender will be verified pursuant to a security procedure, a

payment order received by the receiving bank is effective as the order of the customer whether or

not authorized, if (i) the security procedure is a commercially reasonable method of providing

security against unauthorized payment orders, and (ii) the bank provides that it accepted the

payment order in good faith and in compliance with the bank's obligations under the security

procedure and any written agreement or instruction of the customer evidenced by a record

restricting acceptance of payment orders issued in the name of the customer. The bank is not

required to follow an instruction that violates a written an agreement with the customer, evidenced

by a record, or notice of which is not received at a time and in a manner affording the bank a

reasonable opportunity to act on it before the payment order is accepted.

determined by considering the wishes of the customer expressed to the bank, the circumstances of

the customer known to the bank, including the mix, type, and frequency of payment orders normally

issued by the customer to the bank, alternative security procedures offered to the customer, and

security procedures in general use by customers and receiving banks similarly situated. A security

procedure is deemed to be commercially reasonable if (i) the security procedure was chosen by the

customer after the bank offered, and the customer refused, a security procedure that was

commercially reasonable for that customer, and (ii) the customer expressly agreed in writing a

record to be bound by any payment order, whether or not authorized, issued in its name and

accepted by the bank in compliance with the bank's obligations under the security procedure chosen

by the customer.

(d) The term “sender” in this chapter includes the customer in whose name a payment order

is issued if the order is the authorized order of the customer under subsection (a), or it is effective

as the order of the customer under subsection (b).

(e) This section applies to amendments and cancellations of payment orders to the same

extent it applies to payment orders.

(f) Except as provided in this section and in § 6A-4.1-203(a)(1), rights and obligations

arising under this section and § 6A-4.1-203 may not be varied by agreement.

6A-4.1-203. Unenforceability of certain verified payment orders.

(a) If an accepted payment order is not, under § 6A-4.1-202(a), an authorized order of a

customer identified as sender, but is effective as an order of the customer pursuant to § 6A-4.1-

202(b), the following rules apply:

(1) By express written agreement evidenced by a record, the receiving bank may limit the

extent to which it is entitled to enforce or retain payment of the payment order.

(2) The receiving bank is not entitled to enforce or retain payment of the payment order if

the customer proves that the order was not caused, directly or indirectly, by a person (i) entrusted

at any time with duties to act for the customer with respect to payment orders or the security

procedure, or (ii) who obtained access to transmitting facilities of the customer or who obtained,

from a source controlled by the customer and without authority of the receiving bank, information

facilitating breach of the security procedures, regardless of how the information was obtained or

whether the customer was at fault. Information includes any access device, computer software, or

the like.

(b) This section applies to amendments of payment orders to the same extent it applies to

payment orders.

6A-4.1-207. Misdescription of beneficiary.

(a) Subject to subsection (b), if, in a payment order received by the beneficiary’s bank, the

name, bank account number, or other identification of the beneficiary refers to a nonexistent or

unidentifiable person or account, no person has rights as a beneficiary of the order and acceptance

of the order cannot occur.

(b) If a payment order received by the beneficiary’s bank identifies the beneficiary both by

name and by an identifying or bank account number and the name and number identify different

persons, the following rules apply:

(1) Except as otherwise provided in subsection (c), if the beneficiary’s bank does not know

that the name and number refer to different persons, it may rely on the number as the proper

identification of the beneficiary of the order. The beneficiary’s bank need not determine whether

the name and number refer to the same person.

(2) If the beneficiary’s bank pays the person identified by name or knows that the name

and number identify different persons, no person has rights as beneficiary except the person paid

by the beneficiary’s bank if that person was entitled to receive payment from the originator of the

funds transfer. If no person has rights as beneficiary, acceptance of the order cannot occur.

payment order described the beneficiary inconsistently by name and number, and (iii) the

beneficiary’s bank pays the person identified by number as permitted by subsection (b)(1), the

following rules apply:

(1) If the originator is a bank, the originator is obliged to pay its order.

(2) If the originator is not a bank and proves that the person identified by number was not

entitled to receive payment from the originator, the originator is not obliged to pay its order unless

the originator’s bank proves that the originator, before acceptance of the originator’s order, had

notice that payment of a payment order issued by the originator might be made by the beneficiary’s

bank on the basis of an identifying or bank account number even if it identifies a person different

from the named beneficiary. Proof of notice may be made by any admissible evidence. The

originator’s bank satisfies the burden of proof if it proves that the originator, before the payment

order was accepted, signed a writing record stating the information to which the notice relates.

(d) In a case governed by subsection (b)(1), if the beneficiary’s bank rightfully pays the

person identified by number and that person was not entitled to receive payment from the

originator, the amount paid may be recovered from that person to the extent allowed by the law

governing mistake and restitution as follows:

(1) If the originator is obliged to pay its payment order as stated in subsection (c), the

originator has the right to recover.

(2) If the originator is not a bank and is not obliged to pay its payment order, the originator’s

bank has the right to recover.

6A-4.1-208. Misdescription of intermediary bank or beneficiary’s bank.

(a) This subsection applies to a payment order identifying an intermediary bank or the

beneficiary’s bank only by an identifying number.

(1) The receiving bank may rely on the number as the proper identification of the

intermediary or beneficiary’s bank and need not determine whether the number identifies a bank.

(2) The sender is obliged to compensate the receiving bank for any loss and expenses

incurred by the receiving bank as a result of its reliance on the number in executing or attempting

to execute the order.

(b) This subsection applies to a payment order identifying an intermediary bank or the

beneficiary’s bank both by name and an identifying number if the name and number identify

different persons.

(1) If the sender is a bank, the receiving bank may rely on the number as the proper

identification of the intermediary or beneficiary’s bank if the receiving bank, when it executes the

sender’s order, does not know that the name and number identify different persons. The receiving

bank need not determine whether the name and number refer to the same person or whether the

number refers to a bank. The sender is obliged to compensate the receiving bank for any loss and

expenses incurred by the receiving bank as a result of its reliance on the number in executing or

attempting to execute the order.

(2) If the sender is not a bank and the receiving bank proves that the sender, before the

payment order was accepted, had notice that the receiving bank might rely on the number as the

proper identification of the intermediary or beneficiary’s bank even if it identifies a person different

from the bank identified by name, the rights and obligations of the sender and the receiving bank

are governed by subsection (b)(1), as though the sender were a bank. Proof of notice may be made

by any admissible evidence. The receiving bank satisfies the burden of proof if it proves that the

sender, before the payment order was accepted, signed a writing record stating the information to

which the notice relates.

(3) Regardless of whether the sender is a bank, the receiving bank may rely on the same as

the proper identification of the intermediary or beneficiary’s bank if the receiving bank, at the time

it executes the sender’s order, does not know that the name and number identify different persons.

The receiving bank need not determine whether the name and number refer to the same person.

(4) If the receiving bank knows that the name and number identify different persons,

reliance on either the name or the number in executing the sender’s payment order is a breach of

the obligation stated in § 6A-4.1-302(a)(1).

6A-4.1-210. Rejection of payment order.

(a) A payment order is rejected by the receiving bank by a notice of rejection transmitted

to the sender orally, electronically, or in writing or in a record. A notice of rejection need not use

any particular words and is sufficient if it indicates that the receiving bank is rejecting the order or

will not execute or pay the order. Rejection is effective when the notice is given if transmission is

by a means that is reasonable in the circumstances. If notice of rejection is given by a means that

is not reasonable, rejection is effective when the notice is received. If an agreement of the sender

and receiving bank establishes the means to be used to reject a payment order, (i) any means

complying with the agreement is reasonable and (ii) any means not complying is not reasonable

unless no significant delay in receipt of the notice resulted from the use of the noncomplying means.

(b) This subsection applies if a receiving bank other than the beneficiary’s bank fails to

execute a payment order despite the existence on the execution date of a withdrawable credit

balance in an authorized account of the sender sufficient to cover the order. If the sender does not

receive notice of rejection of the order on the execution date and the authorized account of the

sender does not bear interest, the bank is obliged to pay interest to the sender on the amount of the

order for the number of days elapsing after the execution date to the earlier of the day the order is

canceled pursuant to § 6A-4.1-211(d) or the day the sender receives notice or learns that the order

was not executed, counting the final day of the period as an elapsed day. If the withdrawable credit

balance during that period falls below the amount of the order, the amount of interest is reduced

accordingly.

deemed rejected at the time the bank suspends payments.

(d) Acceptance of a payment order precludes a later rejection of the order. Rejection of a

payment order precludes a later acceptance of the order.

6A-4.1-211. Cancellation and amendment of payment order.

(a) A communication of the sender of a payment order cancelling or amending the order

may be transmitted to the receiving bank orally, electronically, or in writing or in a record. If a

security procedure is in effect between the sender and the receiving bank, the communication is not

effective to cancel or amend the order unless the communication is verified pursuant to the security

procedure or the bank agrees to the cancellation or amendment.

(b) Subject to subsection (a), a communication by the sender cancelling or amending a

payment order is effective to cancel or amend the order if notice of the communication is received

at a time and in a manner affording the receiving bank a reasonable opportunity to act on the

communication before the bank accepts the payment order.

effective unless the receiving bank agrees or a funds transfer system rule allows cancellation or

amendment without agreement of the bank.

(1) With respect to a payment order accepted by a receiving bank other than the

beneficiary’s bank, cancellation or amendment is not effective unless a conforming cancellation or

amendment of the payment order issued by the receiving bank is also made.

(2) With respect to a payment order accepted by the beneficiary’s bank, cancellation or

amendment is not effective unless the order was issued in execution of an unauthorized payment

order, or because of a mistake by a sender in the funds transfer which resulted in the issuance of a

payment order (i) that is a duplicate of a payment order previously issued by the sender, (ii) that

orders payment to a beneficiary not entitled to receive payment from the originator, or (iii) that

orders payment in an amount greater than the amount the beneficiary was entitled to receive from

the originator. If the payment order is canceled or amended, the beneficiary’s bank is entitled to

recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law

governing mistake and restitution.

(d) An unaccepted payment order is canceled by operation of law at the close of the fifth

funds transfer business day of the receiving bank after the execution date or payment date of the

order.

(e) A canceled payment order cannot be accepted. If an accepted payment order is canceled,

the acceptance is nullified and no person has any right or obligation based on the acceptance.

Amendment of the payment order is deemed to be cancellation of the original order at the time of

amendment and issue of a new payment order in the amended form at the same time.

(f) Unless otherwise provided in an agreement of the parties or in a funds transfer system

rule, if the receiving bank, after accepting a payment order, agrees to cancellation or amendment

of the order by the sender or is bound by a funds transfer system rule allowing cancellation or

amendment without the bank’s agreement, the sender, whether or not cancellation or amendment

is effective, is liable to the bank for any loss and expenses, including reasonable attorney’s fees,

incurred by the bank as a result of the cancellation or amendment or attempted cancellation or

amendment.

(g) A payment order is not revoked by the death or legal incapacity of the sender unless

the receiving bank knows of the death or of an adjudication of incapacity by a court of competent

jurisdiction and has reasonable opportunity to act before acceptance of the order.

(h) A funds transfer system rule is not effective to the extent it conflicts with subsection

(c)(2).

6A-4.1-305. Liability for late or improper execution or failure to execute payment

order.

(a) If a funds transfer is completed but execution of a payment order by the receiving bank

in breach of § 6A-4.1-302 results in delay in payment to the beneficiary, the bank is obliged to pay

interest to either the originator or the beneficiary of the funds transfer for the period of delay caused

by the improper execution. Except as provided in subsection (c), additional damages are not

recoverable.

(b) If execution of a payment order by a receiving bank in breach of § 6A-4.1-302 results

in (i) noncompletion of the funds transfer, (ii) failure to use an intermediary bank designated by the

originator, or (iii) issuance of a payment order that does not comply with the terms of the payment

order of the originator, the bank is liable to the originator for its expenses in the funds transfer and

for incidental expenses and interest losses, to the extent not covered by subsection (a), resulting

from the improper execution. Except as provided in subsection (c), additional damages are not

recoverable.

consequential damages, are recoverable to the extent provided in an express writtenagreement of

the receiving bank evidenced by a record.

(d) If a receiving bank fails to execute a payment order it was obliged by express agreement

to execute, the receiving bank is liable to the sender for its expenses in the transaction and for

incidental expenses and interest losses resulting from the failure to execute. Additional damages,

including consequential damages, are recoverable to the extent provided in an express

writtenagreement of the receiving bank, evidenced by a record but are not otherwise recoverable.

(e) Reasonable attorney’s fees are recoverable if demand for compensation under

subsection (a) or (b) is made and refused before an action is brought on the claim. If a claim is

made for breach of an agreement under subsection (d) and the agreement does not provide for

damages, reasonable attorney’s fees are recoverable if demand for compensation under subsection

(d) is made and refused before an action is brought on the claim.

(f) Except as stated in this section, the liability of a receiving bank under subsections (a)

and (b) may not be varied by agreement.

SECTION 6. Sections 6A-5-104 and 6A-5-116 of the General Laws in Chapter 6A-5

entitled "Letters of Credit" are hereby amended to read as follows:

6A-5-104. Formal requirements.

A letter of credit, confirmation, advice, transfer, amendment, or cancellation may be issued

in any form that is a signed record and is authenticated (1) by a signature or (2) in accordance with

the agreement of the parties or the standard practice referred to in § 6A-5-108(e).

6A-5-116. Choice of law and forum.

(a) The liability of an issuer, nominated person, or adviser for action or omission is

governed by the law of the jurisdiction chosen by an agreement in the form of a record signed or

otherwise authenticated by the affected parties in the manner provided in § 6A-5-104 or by a

provision in the person’s letter of credit, confirmation, or other undertaking. The jurisdiction whose

law is chosen need not bear any relation to the transaction.

(b) Unless subsection (a) applies, the liability of an issuer, nominated person, or adviser

for action or omission is governed by the law of the jurisdiction in which the person is located. The

person is considered to be located at the address indicated in the person’s undertaking. If more than

one address is indicated, the person is considered to be located at the address from which the

person’s undertaking was issued.

credit, but not enforcement of a judgment, all branches of a bank are considered separate juridical

entities and a bank is considered to be located at the place where its relevant branch is considered

to be located under thissubsection (d) of this section.

(d) A branch of a bank is considered to be located at the address indicated in the branch's

undertaking. If more than one address is indicated, the branch is considered to be located at the

address from which the undertaking was issued.

(c)(e) Except as otherwise provided in this subsection, the liability of an issuer, nominated

person, or adviser is governed by any rules of custom or practice, such as the Uniform Customs

and Practice for Documentary Credits, to which the letter of credit, confirmation, or other

undertaking is expressly made subject. If (1) this chapter would govern the liability of an issuer,

nominated person, or adviser under subsection (a) or (b), (2) the relevant undertaking incorporates

rules of custom or practice, and (3) there is conflict between this chapter and those rules as applied

to that undertaking, those rules govern except to the extent of any conflict with the nonvariable

provisions specified in § 6A-5-103(c).

(d)(f) If there is conflict between this chapter and chapters 3, 4, 4.1 or 9 of this title, this

chapter governs.

(e)(g) The forum for settling disputes arising out of an undertaking within this chapter may

be chosen in the manner and with the binding effect that governing law may be chosen in

accordance with subsection (a).

SECTION 7. Sections 6A-7-102 and 6A-7-106 of the General Laws in Chapter 6A-7

entitled "Documents of Title" are hereby amended to read as follows:

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," § 6A-2-106.

(2) "Lessee in the ordinary course of business," § 6A-2.1-103.

(3) "Receipt" of goods, § 6A-2-103.

interpretation applicable throughout this chapter.

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 has control of an

electronic document of title, if the document is created, stored, and assigned transferred in such a

manner that:

(1) A single authoritative copy of the document exists which is unique, identifiable, and,

except as otherwise provided in paragraphs (4), (5), and (6), unalterable;

(2) The authoritative copy identifies the person asserting control as:

(A) The person to which the document was issued; or

(B) If the authoritative copy indicates that the document has been transferred, the person

to which the document was most recently 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 transferee of the

authoritative copy can be made only with the consent of the person asserting control;

(5) Each copy of the authoritative copy and any copy of a copy is readily identifiable as a

copy that is not the authoritative copy; and

(6) Any amendment of the authoritative copy is readily identifiable as authorized or

unauthorized.

document of title, if an authoritative electronic copy of the document, a record attached to or

logically associated with the electronic copy, or a system in which the electronic copy is recorded:

(1) Enables the person readily to identify each electronic copy as either an authoritative

copy or a nonauthoritative copy;

(2) Enables the person readily to identify itself in any way, including by name, identifying

number, cryptographic key, office, or account number, as the person to which each authoritative

electronic copy was issued or transferred; and

(3) Gives the person exclusive power, subject to subsection (d) of this section, to:

(i) Prevent others from adding or changing the person to which each authoritative electronic

copy has been issued or transferred; and

(ii) Transfer control of each authoritative electronic copy.

(d) Subject to subsection (e) of this section, a power is exclusive under subsections (c)(3)(i)

and (ii) of this section even if:

(1) The authoritative electronic copy, a record attached to, or logically associated with the

authoritative electronic copy, or a system in which the authoritative electronic copy is recorded

limits the use of the document of title or has a protocol that is programmed to cause a change,

including a transfer or loss of control; or

(2) The power is shared with another person.

(e) A power of a person is not shared with another person under subsection (d)(2) of this

section and the person’s power is not exclusive if:

(1) The person can exercise the power only if the power also is exercised by the other

person; and

(2) The other person:

(i) Can exercise the power without exercise of the power by the person; or

(ii) Is the transferor to the person of an interest in the document of title.

(f) If a person has the powers specified in subsections (c)(3)(i) and (ii) of this section, the

powers are presumed to be exclusive.

(g) A person has control of an electronic document of title if another person, other than the

transferor to the person of an interest in the document:

(1) Has control of the document and acknowledges that it has control on behalf of the

person; or

(2) Obtains control of the document after having acknowledged that it will obtain control

of the document on behalf of the person.

(h) A person that has control under this section is not required to acknowledge that it has

control on behalf of another person.

(i) If a person acknowledges that it has or will obtain control on behalf of another person,

unless the person otherwise agrees or law other than this chapter or chapter 6A-9 of this title

otherwise provides, the person does not owe any duty to the other person and is not required to

confirm the acknowledgment to any other person.

SECTION 8. Sections 6A-8-102, 6A-8-103, 6A-8-106, 6A-8-110 and 6A-8-303 of the

General Laws in Chapter 6A-8 entitled "Investment Securities" are hereby amended to read as

follows:

6A-8-102. Definitions.

(a) In this chapter:

(1) “Adverse claim” means a claim that a claimant has a property interest in a financial

asset and that it is a violation of the rights of the claimant for another person to hold, transfer, or

deal with the financial asset.

(2) “Bearer form,” as applied to a certificated security, means a form in which the security

is payable to the bearer of the security certificate according to its terms but not by reason of an

indorsement.

(3) “Broker” means a person defined as a broker or dealer under the federal securities laws,

but without excluding a bank acting in that capacity.

(4) “Certificated security” means a security that is represented by a certificate.

(5) “Clearing corporation” means:

(i) a person that is registered as a “clearing agency” under the federal securities laws;

(ii) A federal reserve bank; or

(iii) Any other person that provides clearance or settlement services with respect to

financial assets that would require it to register as a clearing agency under the federal securities

laws but for an exclusion or exemption from the registration requirement, if its activities as a

clearing corporation, including promulgation of rules, are subject to regulation by a federal or state

governmental authority.

(6) “Communicate” means to:

(i) Send a signed writing record; or

(ii) Transmit information by any mechanism agreed upon by the persons transmitting and

receiving the information.

(7) “Entitlement holder” means a person identified in the records of a securities

intermediary as the person having a security entitlement against the securities intermediary. If a

person acquires a security entitlement by virtue of § 6A-8-501(b)(2) or (3), that person is the

entitlement holder.

(8) “Entitlement order” means a notification communicated to a securities intermediary

directing transfer or redemption of a financial asset to which the entitlement holder has a security

entitlement.

(9) “Financial asset,” except as otherwise provided in § 6A-8-103, means:

(i) A security;

(ii) An obligation of a person or a share, participation, or other interest in a person or in

property or an enterprise of a person, which is, or is of a type, dealt in or traded on financial markets,

or which is recognized in any area in which it is issued or dealt in as a medium for investment; or

(iii) Any property that is held by a securities intermediary for another person in a securities

account if the securities intermediary has expressly agreed with the other person that the property

is to be treated as a financial asset under this chapter.

As context requires, the term means either the interest itself or the means by which a

person’s claim to it is evidenced, including a certificated or uncertificated security, a security

certificate, or a security entitlement.

(10) “Good faith,” for purposes of the obligation of good faith in the performance or

enforcement of contracts or duties within this chapter, means honesty in fact and the observance of

reasonable commercial standards of fair dealing.

(11) “Indorsement” means a signature that alone or accompanied by other words is made

on a security certificate in registered form or on a separate document for the purpose of assigning,

transferring, or redeeming the security or granting a power to assign, transfer, or redeem it.

(12) “Instruction” means a notification communicated to the issuer of an uncertificated

security which directs that the transfer of the security be registered or that the security be redeemed.

(13) “Registered form,” as applied to a certificated security, means a form in which:

(i) The security certificate specifies a person entitled to the security; and

(ii) A transfer of the security may be registered upon books maintained for that purpose by

or on behalf of the issuer, or the security certificate so states.

(14) “Securities intermediary” means:

(i) A clearing corporation; or

(ii) A person, including a bank or broker, that in the ordinary course of its business

maintains securities accounts for others and is acting in that capacity.

(15) “Security,” except as otherwise provided in § 6A-8-103, means an obligation of an

issuer or a share, participation, or other interest in an issuer or in property or an enterprise of an

issuer:

(i) Which is represented by a security certificate in bearer or registered form, or the transfer

of which may be registered upon books maintained for that purpose by or on behalf of the issuer;

(ii) Which is one of a class or series or by its terms is divisible into a class or series of

shares, participations, interests, or obligations; and

(iii) Which:

(A) Is, or is of a type, dealt in or traded on securities exchanges or securities markets; or

(B) Is a medium for investment and by its terms expressly provides that it is a security

governed by this chapter.

(16) “Security certificate” means a certificate representing a security.

(17) “Security entitlement” means the rights and property interest of an entitlement holder

with respect to a financial asset specified in part 5 of this chapter.

(18) “Uncertificated security” means a security that is not represented by a certificate.

(b) Other The following definitions applying to in this chapter and the sections in which

they appear are other chapters of this title apply to this chapter:

"Appropriate person". § 6A-8-107

"Control". § 6A-8-106

"Controllable account". § 6A-9-102

"Controllable electronic record". § 6A-12-102

"Controllable payment intangible". § 6A-9-102

"Delivery". § 6A-8-301

"Investment company security". § 6A-8-103

"Issuer". § 6A-8-201

"Overissue". § 6A-8-210

"Protected purchaser". § 6A-8-303

"Securities account". § 6A-8-501

construction and interpretation applicable throughout this chapter.

(d) The characterization of a person, business, or transaction for purposes of this chapter

does not determine the characterization of the person, business, or transaction for purposes of any

other law, regulation, or rule.

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.

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 § 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.

(h) A controllable account, controllable electronic record, or controllable payment

intangible is not a financial asset unless § 6A-8-102(a)(9)(iii) applies.

6A-8-106. Control.

(a) A purchaser has “control” of a certificated security in bearer form if the certificated

security is delivered to the purchaser.

(b) A purchaser has “control” of a certificated security in registered form if the certificated

security is delivered to the purchaser, and:

(1) the certificate is indorsed to the purchaser or in blank by an effective indorsement; or

(2) the certificate is registered in the name of the purchaser, upon original issue or

registration of transfer by the issuer.

(1) the uncertificated security is delivered to the purchaser; or

(2) the issuer has agreed that it will comply with instructions originated by the purchaser

without further consent by the registered owner.

(d) A purchaser has “control” of a security entitlement if:

(1) the purchaser becomes the entitlement holder;

(2) the securities intermediary has agreed that it will comply with entitlement orders

originated by the purchaser without further consent by the entitlement holder; or

(3) another person has control of the security entitlement on behalf of the purchaser or,

having previously acquired control of the security entitlement, acknowledges that it has control on

behalf of the purchaser person, other than the transferor to the purchaser of an interest in the security

entitlement:

(i) has control of the security entitlement and acknowledges that it has control on behalf of

the purchaser; or

(ii) obtains control of the security entitlement after having acknowledged that it will obtain

control of the security entitlement on behalf of the purchaser.

(e) If an interest in a security entitlement is granted by the entitlement holder to the

entitlement holder’s own securities intermediary, the securities intermediary has control.

(f) A purchaser who has satisfied the requirements of subsection (c) or (d) has control even

if the registered owner in the case of subsection (c) or the entitlement holder in the case of

subsection (d) retains the right to make substitutions for the uncertificated security or security

entitlement, to originate instructions or entitlement orders to the issuer or securities intermediary,

or otherwise to deal with the uncertificated security or security entitlement.

(g) An issuer or a securities intermediary may not enter into an agreement of the kind

described in subsection (c)(2) or (d)(2) without the consent of the registered owner or entitlement

holder, but an issuer or a securities intermediary is not required to enter into such an agreement

even though the registered owner or entitlement holder so directs. An issuer or securities

intermediary that has entered into such an agreement is not required to confirm the existence of the

agreement to another party unless requested to do so by the registered owner or entitlement holder.

(h) A person that has control under this section is not required to acknowledge that it has

control on behalf of a purchaser.

(i) If a person acknowledges that it has or will obtain control on behalf of a purchaser,

unless the person otherwise agrees or law other than this chapter or chapter 6A9 of this title

otherwise provides, the person does not owe any duty to the purchaser and is not required to confirm

the acknowledgment to any other person.

6A-8-110. Applicability — Choice of law.

(a) The local law of the issuer’s jurisdiction, as specified in subsection (d), governs:

(1) the validity of a security;

(2) the rights and duties of the issuer with respect to registration of transfer;

(3) the effectiveness of registration of transfer by the issuer;

(4) whether the issuer owes any duties to an adverse claimant to a security; and

(5) whether an adverse claim can be asserted against a person to whom transfer of a

certificated or uncertificated security is registered or a person who obtains control of an

uncertificated security.

(b) The local law of the securities intermediary’s jurisdiction, as specified in subsection

(e), governs:

(1) acquisition of a security entitlement from the securities intermediary;

(2) the rights and duties of the securities intermediary and entitlement holder arising out of

a security entitlement;

(3) whether the securities intermediary owes any duties to an adverse claimant to a security

entitlement; and

(4) whether an adverse claim can be asserted against a person who acquires a security

entitlement from the securities intermediary or a person who purchases a security entitlement or

interest therein from an entitlement holder.

delivery governs whether an adverse claim can be asserted against a person to whom the security

certificate is delivered.

(d) “Issuer’s jurisdiction” means the jurisdiction under which the issuer of the security is

organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified

by the issuer. An issuer organized under the law of this State may specify the law of another

jurisdiction as the law governing the matters specified in subsection (a)(2) through (5).

(e) The following rules determine a “securities intermediary’s jurisdiction” for purposes of

this section:

(1) If an agreement between the securities intermediary and its entitlement holder

governing the securities account expressly provides that a particular jurisdiction is the securities

intermediary’s jurisdiction for purposes of this part, this chapter, or this title, that jurisdiction is the

securities intermediary’s jurisdiction.

(2) If paragraph (1) does not apply and an agreement between the securities intermediary

and its entitlement holder governing the securities account expressly provides that the agreement

is governed by the law of a particular jurisdiction, that jurisdiction is the securities intermediary’s

jurisdiction.

(3) If neither paragraph (1) nor paragraph (2) applies and an agreement between the

securities intermediary and its entitlement holder governing the securities account expressly

provides that the securities account is maintained at an office in a particular jurisdiction, that

jurisdiction is the securities intermediary’s jurisdiction.

(4) If none of the preceding paragraphs applies, the securities intermediary’s jurisdiction is

the jurisdiction in which the office identified in an account statement as the office serving the

entitlement holder’s account is located.

(5) If none of the preceding paragraphs applies, the securities intermediary’s jurisdiction is

the jurisdiction in which the chief executive office of the securities intermediary is located.

(f) A securities intermediary’s jurisdiction is not determined by the physical location of

certificates representing financial assets, or by the jurisdiction in which is organized the issuer of

the financial asset with respect to which an entitlement holder has a security entitlement, or by the

location of facilities for data processing or other record keeping concerning the account.

(g) The local law of the issuer’s jurisdiction or the securities intermediary’s jurisdiction

governs a matter or transaction specified in subsectionssubsection (a) or (b) of this section even if

the matter or transaction does not bear any relation to the jurisdiction.

6A-8-303. Protected purchaser.

(a) “Protected purchaser” means a purchaser of a certificated or uncertificated security, or

of an interest therein, who:

(1) gives value;

(2) does not have notice of any adverse claim to the security; and

(3) obtains control of the certificated or uncertificated security.

(b) In addition to acquiring the rights of a purchaser, a A protected purchaser also acquires

its interest in the security free of any adverse claim.

SECTION 9. Sections 6A-9-102, 6A-9-104, 6A-9-105, 6A-9-203, 6A-9-204, 6A-9-207,

6A-9-208, 6A-9-209, 6A-9-210, 6A-9-301, 6A-9-304, 6A-9-305, 6A-9-310, 6A-9-312, 6A-9-313,

6A-9-314, 6A-9-316, 6A-9-317, 6A-9-323, 6A-9-324, 6A-9-330, 6A-9-331, 6A-9-332, 6A-9-334,

6A-9-341, 6A-9-404, 6A-9-406, 6A-9-408, 6A-9-509, 6A-9-513, 6A-9-601, 6A-9-605, 6A-9-608,

6A-9-611, 6A-9-613, 6A-9-614, 6A-9-615, 6A-9-616, 6A-9-619, 6A-9-620, 6A-9-621, 6A-9-624

and 6A-9-628 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”, "account statement", “account to",

"commodity account” in subsection (a)(14) of this section", "customer's account", "deposit

account” in subsection (a)(29) of this section", "on account of", and "statement of account", means

a right to payment of a monetary obligation, whether or not earned by performance, (i) for property

that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services

rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary

obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or

hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge

card or information contained on or for use with the card, or (viii) as winnings in a lottery or other

game of chance operated or sponsored by a State, governmental unit of a State, or person licensed

or authorized to operate the game by a State or governmental unit of a State. The term includes

controllable accounts and health-care-insurance receivables. The term does not include (i) rights to

payment evidenced by chattel paper or an instrument, (ii) commercial tort claims, (iii) deposit

accounts, (iv) investment property, (v) letter-of-credit rights or letters of credit, or (vi) rights to

payment for money or funds advanced or sold, other than rights arising out of the use of a credit or

charge card or information contained on or for use with the card, or (vii) rights to payment

evidenced by an instrument.

(3) “Account debtor” means a person obligated on an account, chattel paper, or general

intangible. The term does not include persons obligated to pay a negotiable instrument, even if the

negotiable instrument constitutes part of evidences chattel paper.

(4) “Accounting”, except as used in “accounting for”, means a record:

(i) Authenticated Signed 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) With present intent to adopt or accept a record, to attach to or logically associate with

the record an electronic sound, symbol, or process. [RESERVED]

(7.1) “Assignee” except as used in “assignee for benefit of creditors,” means a person:

(i) In whose favor a security interest that secures an obligation is created or provided for

under a security agreement, whether or not the obligation is outstanding; or

(ii) To which an account, chattel paper, payment intangible, or promissory note has been

sold. The term includes a person to which a security interest has been transferred by a secured party.

(7.2) “Assignor” means a person that:

(i) Under a security agreement creates or provides for a security interest that secures an

obligation; or

(ii) Sells an account, chattel paper, payment intangible, or promissory note. The term

includes a secured party that has transferred a security interest to another person.

(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.

The term includes another record maintained as an alternative to a certificate of title by the

governmental unit that issues certificates of title if a statute permits the security interest in question

to be indicated on the record 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.

(i) A right to payment of a monetary obligation secured by specific goods, if the right to

payment and security agreement are evidenced by a record; or

(ii) A right to payment of a monetary obligation owed by a lessee under a lease agreement

with respect to specific goods and a monetary obligation owed by the lessee in connection with the

transaction giving rise to the lease, if:

(A) The right to payment and lease agreement are evidenced by a record; and

(B) The predominant purpose of the transaction giving rise to the lease was to give the

lessee the right to possession and use of the goods.

The term "chattel paper" does not include a right to payment arising out of a charter or

other contract involving the use or hire of a vessel or a right to payment arising out of the use of a

credit or charge card or information contained on or for use with the card.

(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

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.

(27.1) “Controllable account” means an account evidenced by a controllable electronic

record that provides that the account debtor undertakes to pay the person that has control under §

6A-12-105 of the controllable electronic record.

(27.2) “Controllable payment intangible” means a payment intangible evidenced by a

controllable electronic record that provides that the account debtor undertakes to pay the person

that has control under § 6A-12-105 of the controllable electronic record.

(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 § 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. [RESERVED]

(31.1) “Electronic money” means money in an electronic form.

(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 § 6A-9-519(a).

(37) “Filing office” means an office designated in § 6A-9-501 as the place to file a

financing statement.

(38) “Filing-office rule” means a rule adopted pursuant to § 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 § 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 controllable electronic records, 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, or (iv) writings that evidence chattel paper.

(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 formed or 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.

(54.1) “Money” has the meaning in § 6A-1-201, but does not include:

(i) A deposit account; or

(ii) Money in an electronic form that cannot be subjected to control under § 6A-9-105.1.

(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 § 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 § 6A-9-310(c), means a person that, as debtor,

entered into a security agreement to which a new debtor has become bound under § 6A-9-203(d).

(61) “Payment intangible” means a general intangible under which the account debtor’s

principal obligation is a monetary obligation. The term includes a controllable payment intangible.

(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 § 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 signed by a secured party which includes the

terms on which the secured party is willing to accept collateral in full or partial satisfaction of the

obligation it secures pursuant to §§ 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) “Public organic record” means a record that is available to the public for inspection

and is:

(i) A record of consisting of the record initially filed with or issued by a state or the United

States to form or organize an organization and any record filed with or issued by the state of the

United States which amends or restates the initial record;

(ii) An organic record of a business trust consisting of the record initially filed with a state

and any record filed with the state which amends or restates the initial record, if a statute of the

state governing business trusts requires that the record be filed with the state; or

(iii) A record consisting of legislation enacted by the legislature of a state or the Congress

of the United States which forms or organizes an organization, any record amending the legislation,

and any record filed with or issued by the state or the United States which amends or restates the

name of the organization.

(69) “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.

(70) “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.

(71) “Registered organization” means an organization formed or organized solely under

the law of a single State or the United States by the filing of a public organic record with, the

issuance of a public organic record by, or the enactment of legislation by the state or United States.

The term includes a business trust that is formed or organized under the law of a single state if a

statute of the state governing business trusts requires that the business trust’s organic record be

filed with the state.

(72) “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.

(73) “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 § 6A-2-401, § 6A-2-505, § 6A-2-

711(3), § 6A-2.1-508(5), § 6A-4-210, or § 6A-5-118.

(74) “Security agreement” means an agreement that creates or provides for a security

interest.

(75) “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). [RESERVED]

(76) “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.

(77) “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.

(78) “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.

(79) “Tangible chattel paper” means chattel paper evidenced by a record or records

consisting of information that is inscribed on a tangible medium. [RESERVED]

(79.1) “Tangible money” means money in a tangible form.

(80) “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.

(81) “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. “Control” as provided in § 6A-7-106 and the following

definitions in other chapters apply to this chapter:

“Applicant”. § 6A-5-102.

“Beneficiary”. § 6A-5-102.

“Broker”. § 6A-8-102.

“Certificated security”. § 6A-8-102.

“Check”. § 6A-3-104.

“Clearing corporation”. § 6A-8-102.

“Contract for sale”. § 6A-2-106.

“Controllable electronic record” § 6A-12-102.

“Customer”. § 6A-4-104.

“Entitlement holder”. § 6A-8-102.

“Financial asset”. § 6A-8-102.

“Holder in due course”. § 6A-3-302.

“Issuer” (with respect to a letter of credit or letter-of-credit right). § 6A-5-102.

“Issuer” (with respect to a security). § 6A-8-201.

“Issuer” (with respect to documents of title). § 6A-7-102.

“Lease”. § 6A-2.1-103.

“Lease agreement”. § 6A-2.1-103.

“Lease contract”. § 6A-2.1-103.

“Leasehold interest”. § 6A-2.1-103.

“Lessee”. § 6A-2.1-103.

“Lessee in ordinary course of business”. § 6A-2.1-103.

“Lessor”. § 6A-2.1-103.

“Lessor’s residual interest”. § 6A-2.1-103.

“Letter of credit”. § 6A-5-102.

“Merchant”. § 6A-2-104.

“Negotiable instrument”. § 6A-3-104.

“Nominated person”. § 6A-5-102.

“Note”. § 6A-3-104.

“Proceeds of a letter of credit”. § 6A-5-114.

“Protected purchaser” § 6A-8-303.

“Prove”. § 6A-3-103.

“Qualifying purchaser” § 6A-12-102.

“Sale”. § 6A-2-106.

“Securities account”. § 6A-8-501.

“Securities intermediary”. § 6A-8-102.

“Security”. § 6A-8-102.

“Security certificate”. § 6A-8-102.

“Security entitlement”. § 6A-8-102.

“Uncertificated security”. § 6A-8-102.

definitions and principles of construction and interpretation applicable throughout this chapter.

6A-9-104. Control of deposit account.

(a) Requirements for control. A secured party has control of a deposit account if:

(1) the secured party is the bank with which the deposit account is maintained;

(2) the debtor, secured party, and bank have agreed in an authenticateda signed record that

the bank will comply with instructions originated by the secured party directing disposition of the

funds in the deposit account without further consent by the debtor; or

(3) the secured party becomes the bank’s customer with respect to the deposit account; or

(4) Another person, other than the debtor:

(i) Has control of the deposit account and acknowledges that it has control on behalf of the

secured party; or

(ii) Obtains control of the deposit account after having acknowledged that it will obtain

control of the deposit account on behalf of the secured party.

(b) Debtor’s right to direct disposition. A secured party that has satisfied subsection (a) has

control, even if the debtor retains the right to direct the disposition of funds from the deposit

account.

6A-9-105. Control of electronic chattel paper Control of electronic copy of record

evidencing chattel paper.

(a) General rule: control of electronic chattel paper. A secured party has control of an

electronic chattel paper if a system employed for evidencing the transfer of interests in the chattel

paper reliably establishes the secured party as the person to which the chattel paper was assigned.

electronic copy of record evidencing chattel paper. A purchaser has control of an authoritative

electronic copy of a record evidencing chattel paper if a system employed for evidencing the

assignment of interests in the chattel paper reliably establishes the purchaser as the person to which

the authoritative electronic copy was assigned.

(b) Specific facts giving control. A system satisfies subsection (a) if the record or records

comprising the chattel paper are created, stored, and assigned in such a manner that:

(1) A single authoritative copy of the record or records exists which is unique, identifiable

and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable;

(2) The authoritative copy identifies the secured party as the assignee of the record or

records;

(3) The authoritative copy is communicated to and maintained by the secured party or its

designated custodian;

(4) Copies or amendments that add or change an identified assignee of the authoritative

copy can be made only with the consent of the secured party;

(5) Each copy of the authoritative copy and any copy of a copy is readily identifiable as a

copy that is not the authoritative copy; and

(6) Any amendment of the authoritative copy is readily identifiable as authorized or

unauthorized.

(b) Single authoritative copy. A system satisfies subsection (a) of this section if the record

or records evidencing the chattel paper are created, stored, and assigned in a manner that:

(1) A single authoritative copy of the record or records exists which is unique, identifiable,

and, except as otherwise provided in subsections (b)(4), (b)(5), and (b)(6), of this section,

unalterable;

(2) The authoritative copy identifies the purchaser as the assignee of the record or records;

(3) The authoritative copy is communicated to and maintained by the purchaser 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 purchaser;

(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.

a purchaser has control of an authoritative electronic copy of a record evidencing chattel paper, if

the electronic copy, a record attached to or logically associated with the electronic copy, or a system

in which the electronic copy is recorded:

(1) Enables the purchaser readily to identify each electronic copy as either an authoritative

copy or a nonauthoritative copy;

(2) Enables the purchaser readily to identify itself in any way, including by name,

identifying number, cryptographic key, office, or account number, as the assignee of the

authoritative electronic copy; and

(3) Gives the purchaser exclusive power, subject to subsection (d) of this section, to:

(i) Prevent others from adding or changing an identified assignee of the authoritative

electronic copy; and

(ii) Transfer control of the authoritative electronic copy.

(d) Meaning of exclusive. Subject to subsection (e) of this section, a power is exclusive

under subsections (c)(3)(i) and (ii) of this section even if:

(1) The authoritative electronic copy, a record attached to or logically associated with the

authoritative electronic copy, or a system in which the authoritative electronic copy is recorded

limits the use of the authoritative electronic copy or has a protocol programmed to cause a change,

including a transfer or loss of control; or

(2) The power is shared with another person.

(e) When power not shared with another person. A power of a purchaser is not shared with

another person under subsection (d)(2) of this section and the purchaser’s power is not exclusive

if:

(1) The purchaser can exercise the power only if the power also is exercised by the other

person; and

(2) The other person:

(i) Can exercise the power without exercise of the power by the purchaser; or

(ii) Is the transferor to the purchaser of an interest in the chattel paper.

(f) Presumption of exclusivity of certain powers. If a purchaser has the powers specified in

subsections (c)(3)(i) and (ii) of this section, the powers are presumed to be exclusive.

(g) Obtaining control through another person. A purchaser has control of an authoritative

electronic copy of a record evidencing chattel paper if another person, other than the transferor to

the purchaser of an interest in the chattel paper:

(1) Has control of the authoritative electronic copy and acknowledges that it has control on

behalf of the purchaser; or

(2) Obtains control of the authoritative electronic copy after having acknowledged that it

will obtain control of the electronic copy on behalf of the purchaser.

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 signed 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 § 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 § 6A-8-301 pursuant to the debtor’s security

agreement; or

(iv) The collateral is controllable accounts, controllable electronic records, controllable

payment intangibles, deposit accounts, electronic chattel paper documents, electronic money,

investment property, or letter-of-credit rights, or electronic documents, and the secured party has

control under §§ 6A-7-106, § 6A-9-104, § 6A-9-105, § 6A-9-105.1, § 6A-9-106, or § 6A-9-107, or

§ 6A-9-107.1 pursuant to the debtor’s security agreement; or

(v) The collateral is chattel paper and the secured party has possession and control under §

6A-9-314.1 pursuant to the debtor’s security agreement.

of a collecting bank, § 6A-5-118 on the security interest of a letter-of-credit issuer or nominated

person, § 6A-9-110 on a security interest arising under chapter 2 or 2.1, and § 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 § 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-9-204. After-acquired property; future advances.

(a) After-acquired collateral. Except as otherwise provided in subsection (b), a security

agreement may create or provide for a security interest in after-acquired collateral.

(b) When after-acquired property clause not effective. A Subject to subsection (c)(1) of

this section, a security interest does not attach under a term constituting an after-acquired property

clause to:

(1) Consumer goods, other than an accession when given as additional security, unless the

debtor acquires rights in them within 10 days after the secured party gives value; or

(2) A commercial tort claim.

prevent a security interest from attaching:

(1) To consumer goods as proceeds under § 6A-9-315(a) or commingled goods under §

6A-9-336(c);

(2) To a commercial tort claim as proceeds under § 6A-9-315(a); or

(3) Under an after-acquired property clause to property that is proceeds of consumer goods

or a commercial tort claim.

(c)(d) Future advances and other value. A security agreement may provide that collateral

secures, or that accounts, chattel paper, payment intangibles, or promissory notes are sold in

connection with, future advances or other value, whether or not the advances or value are given

pursuant to commitment.

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.

provided in subsection (d), a secured party having possession of collateral or control of collateral

under §§ 6A-7-106, § 6A-9-104, § 6A-9-105, § 6A-9-105.1, § 6A-9-106, or § 6A-9-107, or § 6A-

9-107.1:

(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 a signed demand by the debtor:

(1) A secured party having control of a deposit account under § 6A-9-104(a)(2) shall send

to the bank with which the deposit account is maintained an authenticated statement a signed record

that releases the bank from any further obligation to comply with instructions originated by the

secured party;

(2) A secured party having control of a deposit account under § 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 §

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; A secured party, other than a buyer,

having control of electronic chattel paper under § 6A-9-105 of an authoritative electronic copy of

a record evidencing chattel paper shall transfer control of the electronic copy to the debtor or a

person designated by the debtor;

(4) A secured party having control of investment property under § 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 a signed 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;

(5) A secured party having control of a letter-of-credit right under § 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 a signed release from any further obligation to pay or deliver

proceeds of the letter of credit to the secured party; and

(6) A secured party having control of an electronic document shall:

(a) Give control of the electronic document to the debtor or its designated custodian;

(b) If the debtor designates a custodian that is the 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

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. A secured party having control under

§ 6A-7-106 of an authoritative electronic copy of an electronic document of title shall transfer

control of the electronic copy to the debtor or a person designated by the debtor;

(7) A secured party having control under § 6A-9-105.1 of electronic money shall transfer

control of the electronic money to the debtor or a person designated by the debtor; and

(8) A secured party having control under § 6A-12-105 of a controllable electronic record,

other than a buyer of a controllable account or controllable payment intangible evidenced by the

controllable electronic record, shall transfer control of the controllable electronic record to the

debtor or a person designated by the debtor.

6A-9-209. Duties of secured party if account debtor has been notified of assignment.

(a) Applicability of section. Except as otherwise provided in subsection (c), this section

applies if:

(1) There is no outstanding secured obligation; and

(2) 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 a signed demand by the debtor, a secured party shall send to an account

debtor that has received notification under §§ 6A-9-406(a) or § 6A-12-106(b) of an assignment to

the secured party as assignee under § 6A-9-406(a) an authenticated a signed record that releases

the account debtor from any further obligation to the secured party.

sale of an account, chattel paper, or payment intangible.

6A-9-210. Request for accounting; request regarding list of collateral or statement of

account.

(a) Definitions. In this section:

(1) “Request” means a record of a type described in paragraph (2), (3), or (4).

(2) “Request for an accounting” means a record authenticated signed by a debtor requesting

that the recipient provide an accounting of the unpaid obligations secured by collateral and

reasonably identifying the transaction or relationship that is the subject of the request.

(3) “Request regarding a list of collateral” means a record authenticated signed by a debtor

requesting that the recipient approve or correct a list of what the debtor believes to be the collateral

securing an obligation and reasonably identifying the transaction or relationship that is the subject

of the request.

(4) “Request regarding a statement of account” means a record authenticated signed by a

debtor requesting that the recipient approve or correct a statement indicating what the debtor

believes to be the aggregate amount of unpaid obligations secured by collateral as of a specified

date and reasonably identifying the transaction or relationship that is the subject of the request.

(b) Duty to respond to requests. Subject to subsections (c), (d), (e), and (f), a secured party,

other than a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a

consignor, shall comply with a request within 14 days after receipt:

(1) In the case of a request for an accounting, by authenticating signing and sending to the

debtor an accounting; and

(2) In the case of a request regarding a list of collateral or a request regarding a statement

of account, by authenticating signing and sending to the debtor an approval or correction.

party that claims a security interest in all of a particular type of collateral owned by the debtor may

comply with a request regarding a list of collateral by sending to the debtor an authenticated a

signed record including a statement to that effect within 14 days after receipt.

(d) Request regarding list of collateral; no interest claimed. A person that receives a request

regarding a list of collateral, claims no interest in the collateral when it receives the request, and

claimed an interest in the collateral at an earlier time shall comply with the request within 14 days

after receipt by sending to the debtor an authenticated a signed record:

(1) Disclaiming any interest in the collateral; and

(2) If known to the recipient, providing the name and mailing address of any assignee of

or successor to the recipient’s interest in the collateral.

(e) Request for accounting or regarding statement of account; no interest in obligation

claimed. A person that receives a request for an accounting or a request regarding a statement of

account, claims no interest in the obligations when it receives the request, and claimed an interest

in the obligations at an earlier time shall comply with the request within 14 days after receipt by

sending to the debtor an authenticated a signed record:

(1) Disclaiming any interest in the obligations; and

(2) If known to the recipient, providing the name and mailing address of any assignee of

or successor to the recipient’s interest in the obligations.

(f) Charges for responses. A debtor is entitled without charge to one response to a request

under this section during any six-month period. The secured party may require payment of a charge

not exceeding $ 25 for each additional response.

6A-9-301. Law governing perfection and priority of security interests.

Except as otherwise provided in §§ 6A-9-303 through 6A-9-306 6A-9-306.2, 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 tangiblenegotiable tangible

documents, goods, instruments, money, or tangible chattel paper or tangible money 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-9-304. Law governing perfection and priority of security interests in deposit

accounts.

(a) Law of bank’s jurisdiction governs. The local law of a bank’s jurisdiction governs

perfection, the effect of perfection or nonperfection, and the priority of a security interest in a

deposit account maintained with that bank even if the transaction does not bear any relation to the

bank's jurisdiction.

(b) Bank’s jurisdiction. The following rules determine a bank’s jurisdiction for purposes

of this part:

(1) If an agreement between the bank and its customer governing the deposit account

expressly provides that a particular jurisdiction is the bank’s jurisdiction for purposes of this part,

this chapter, or the Uniform Commercial Code, that jurisdiction is the bank’s jurisdiction.

(2) If paragraph (1) does not apply and an agreement between the bank and its customer

governing the deposit account expressly provides that the agreement is governed by the law of a

particular jurisdiction, that jurisdiction is the bank’s jurisdiction.

(3) If neither paragraph (1) nor paragraph (2) applies and an agreement between the bank

and its customer governing the deposit account expressly provides that the deposit account is

maintained at an office in a particular jurisdiction, that jurisdiction is the bank’s jurisdiction.

(4) If none of the preceding paragraphs applies, the bank’s jurisdiction is the jurisdiction

in which the office identified in an account statement as the office serving the customer’s account

is located.

(5) If none of the preceding paragraphs applies, the bank’s jurisdiction is the jurisdiction

in which the chief executive office of the bank is located.

6A-9-305. Law governing perfection and priority of security interests in investment

property.

(a) Governing law: general rules. Except as otherwise provided in subsection (c), the

following rules apply:

(1) While a security certificate 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 the certificated security represented thereby.

(2) The local law of the issuer’s jurisdiction as specified in § 6A-8-110(d) governs

perfection, the effect of perfection or nonperfection, and the priority of a security interest in an

uncertificated security.

(3) The local law of the securities intermediary’s jurisdiction as specified in § 6A-8-110(e)

governs perfection, the effect of perfection or nonperfection, and the priority of a security interest

in a security entitlement or securities account.

(4) The local law of the commodity intermediary’s jurisdiction governs perfection, the

effect of perfection or nonperfection, and the priority of a security interest in a commodity contract

or commodity account.

(5) Subsections (a)(2), (a)(3), and (a)(4) of this section apply even if the transaction does

not bear any relation to the jurisdiction.

(b) Commodity intermediary’s jurisdiction. The following rules determine a commodity

intermediary’s jurisdiction for purposes of this part:

(1) If an agreement between the commodity intermediary and commodity customer

governing the commodity account expressly provides that a particular jurisdiction is the commodity

intermediary’s jurisdiction for purposes of this part, this chapter, or the Uniform Commercial Code,

that jurisdiction is the commodity intermediary’s jurisdiction.

(2) If paragraph (1) does not apply and an agreement between the commodity intermediary

and commodity customer governing the commodity account expressly provides that the agreement

is governed by the law of a particular jurisdiction, that jurisdiction is the commodity intermediary’s

jurisdiction.

(3) If neither paragraph (1) nor paragraph (2) applies and an agreement between the

commodity intermediary and commodity customer governing the commodity account expressly

provides that the commodity account is maintained at an office in a particular jurisdiction, that

jurisdiction is the commodity intermediary’s jurisdiction.

(4) If none of the preceding paragraphs applies, the commodity intermediary’s jurisdiction

is the jurisdiction in which the office identified in an account statement as the office serving the

commodity customer’s account is located.

(5) If none of the preceding paragraphs applies, the commodity intermediary’s jurisdiction

is the jurisdiction in which the chief executive office of the commodity intermediary is located.

of the jurisdiction in which the debtor is located governs:

(1) Perfection of a security interest in investment property by filing;

(2) Automatic perfection of a security interest in investment property created by a broker

or securities intermediary; and

(3) Automatic perfection of a security interest in a commodity contract or commodity

account created by a commodity intermediary.

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 §

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 § 6A-9-308(d), (e), (f), or (g);

(2) That is perfected under § 6A-9-309 when it attaches;

(3) In property subject to a statute, regulation, or treaty described in § 6A-9-311(a);

(4) In goods in possession of a bailee which is perfected under § 6A-9-312(d)(1) or (2);

(5) In certificated securities, documents, goods, or instruments which is perfected without

filing, control or possession under § 6A-9-312(e), (f), or (g);

(6) In collateral in the secured party’s possession under § 6A-9-313;

(7) In a certificated security which is perfected by delivery of the security certificate to the

secured party under § 6A-9-313;

(8) In controllable accounts, controllable electronic records, controllable payment

intangibles, deposit accounts, electronic chattel paper, electronic documents, investment property,

or letter-of-credit rights which is perfected by control under § 6A-9-314;

(9) In chattel paper which is perfected by possession and control under § 6A-9-314.1;

(9)(10) In proceeds which is perfected under § 6A-9-315; or

(10)(11) That is perfected under § 6A-9-316.

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 Perfection of security interests in chattel paper, controllable accounts,

controllable electronic records, controllable payment intangibles, deposit accounts,

negotiable documents, goods covered by documents, instruments, investment property,

letter-of-credit rights, and money; perfection by permissive filing; temporary perfection

without filing or transfer of possession.

(a) Perfection by filing permitted. A security interest in chattel paper, negotiable

documents, controllable accounts, controllable electronic records, controllable payment

intangibles, instruments, or investment property, or negotiable documents may be perfected by

filing.

(b) Control or possession of certain collateral. Except as otherwise provided in § 6A-9-

315(c) and (d) for proceeds:

(1) A security interest in a deposit account may be perfected only by control under § 6A-

9-314;

(2) And exceptExcept as otherwise provided in § 6A-9-308(d), a security interest in a

letter-of-credit right may be perfected only by control under § 6A-9-314; and

(3) A security interest in tangible money may be perfected only by the secured party’s

taking possession under § 6A-9-313; and

(4) A security interest in electronic money may be perfected only by control under § 6A-

9-314.

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 a signed 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,

negotiable tangible documents, or tangible 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 § 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 § 6A-9-316(d).

than certificated securities and goods covered by a document, a secured party takes possession of

collateral in the possession of a person other than the debtor, the secured party, or a lessee of the

collateral from the debtor in the ordinary course of the debtor’s business, when:

(1) The person in possession authenticates signs a record acknowledging that it holds

possession of the collateral for the secured party’s benefit; or

(2) The person takes possession of the collateral after having authenticated signed a record

acknowledging that it will hold possession of the collateral for the secured party’s benefit.

(d) Time of perfection by possession; continuation of perfection. If perfection of a security

interest depends upon possession of the collateral by a secured party, perfection occurs no not

earlier than the time the secured party takes possession and continues only while the secured party

retains possession.

(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 § 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 § 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, electronic chattel paper or electronic documents controllable accounts,

controllable electronic records, controllable payment intangibles, deposit accounts, electronic

documents, electronic money, investment property, or letter-of-credit rights may be perfected by

control of the collateral under §§ 6A-7-106, § 6A-9-104, 6A-9-105 § 6A-9-105.1, § 6A-9-106, or

§ 6A-9-107, or § 6A-9-107.1.

(b) Specified collateral: time of perfection by control; continuation of perfection. A security

interest in deposit accounts, electronic chattel paper, letter-of-credit rights or electronic documents

controllable accounts, controllable electronic records, controllable payment intangibles, deposit

accounts, electronic documents, electronic money, or letter-of-credit rights is perfected by control

under §§ 6A-7-106, § 6A-9-104, § 6A-9-105, § 6A-9-105.1, or § 6A-9-107, or § 6A-9-107.1 when

not earlier than the time the secured party obtains control and remains perfected by control only

while the secured party retains control.

security interest in investment property is perfected by control under § 6A-9-106 from not earlier

than the time the secured party obtains control and remains perfected by control until:

(1) The secured party does not have control; and

(2) One of the following occurs:

(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-9-316. Effect of change in governing law.

(a) General rule: effect on perfection of change in governing law. A security interest

perfected pursuant to the law of the jurisdiction designated in §§§ 6A-9-301(1), or § 6A-9-305(c),

§ 6A-9-306.1(d), or § 6A-9-306.2(b) remains perfected until the earliest of:

(1) The time perfection would have ceased under the law of that jurisdiction;

(2) The expiration of four months after a change of the debtor’s location to another

jurisdiction; or

(3) The expiration of one year after a transfer of collateral to a person that thereby becomes

a debtor and is located in another jurisdiction.

(b) Security interest perfected or unperfected under law of new jurisdiction. If a security

interest described in subsection (a) becomes perfected under the law of the other jurisdiction before

the earliest time or event described in that subsection, it remains perfected thereafter. If the security

interest does not become perfected under the law of the other jurisdiction before the earliest time

or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser

of the collateral for value.

security interest in collateral, other than goods covered by a certificate of title and as-extracted

collateral consisting of goods, remains continuously perfected if:

(1) The collateral is located in one jurisdiction and subject to a security interest perfected

under the law of that jurisdiction;

(2) Thereafter the collateral is brought into another jurisdiction; and

(3) Upon entry into the other jurisdiction, the security interest is perfected under the law of

the other jurisdiction.

(d) Goods covered by certificate of title from this state. Except as otherwise provided in

subsection (e), a security interest in goods covered by a certificate of title which is perfected by any

method under the law of another jurisdiction when the goods become covered by a certificate of

title from this State remains perfected until the security interest would have become unperfected

under the law of the other jurisdiction had the goods not become so covered.

(e) When subsection (d) security interest becomes unperfected against purchasers. A

security interest described in subsection (d) becomes unperfected as against a purchaser of the

goods for value and is deemed never to have been perfected as against a purchaser of the goods for

value if the applicable requirements for perfection under § 6A-9-311(b) or § 6A-9-313 are not

satisfied before the earlier of:

(1) The time the security interest would have become unperfected under the law of the

other jurisdiction had the goods not become covered by a certificate of title from this State; or

(2) The expiration of four months after the goods had become so covered.

(f) Change in jurisdiction of chattel paper, controllable electronic record, bank, issuer,

nominated person, securities intermediary, or commodity intermediary. A security interest in

chattel paper, controllable accounts, controllable electronic records, controllable payment

intangibles, deposit accounts, letter-of-credit rights, or investment property which is perfected

under the law of the chattel paper's jurisdiction, the controllable electronic record's jurisdiction, the

bank’s jurisdiction, the issuer’s jurisdiction, a nominated person’s jurisdiction, the securities

intermediary’s jurisdiction, or the commodity intermediary’s jurisdiction, as applicable, remains

perfected until the earlier of:

(1) The time the security interest would have become unperfected under the law of that

jurisdiction; or

(2) The expiration of four months after a change of the applicable jurisdiction to another

jurisdiction.

(g) Subsection (f) security interest perfected or unperfected under law of new jurisdiction.

If a security interest described in subsection (f) becomes perfected under the law of the other

jurisdiction before the earlier of the time or the end of the period described in that subsection, it

remains perfected thereafter. If the security interest does not become perfected under the law of the

other jurisdiction before the earlier of that time or the end of that period, it becomes unperfected

and is deemed never to have been perfected as against a purchaser of the collateral for value.

(h) Effect on filed financing statement of change in governing law. The following rules

apply to collateral to which a security interest attaches within four (4) months after the debtor

changes its location to another jurisdiction:

(1) A financing statement filed before the change pursuant to the law of the jurisdiction

designated in subdivision§ 6A-9-301(1) or subsection§ 6A-9-305(c) is effective to perfect a

security interest in the collateral if the financing statement would have been effective to perfect a

security interest in the collateral had the debtor not changed its location.

(2) If a security interest perfected by a financing statement that is effective under

subdivision (1) becomes perfected under the law of the other jurisdiction before the earlier of the

time the financing statement would have become ineffective under the law of the jurisdiction

designated in subdivision§ 6A-9-301(1) or subsection§ 6A-9-305(c) or the expiration of the four

(4) month period, it remains perfected thereafter. If the security interest does not become perfected

under the law of the other jurisdiction before the earlier time or event, it becomes unperfected and

is deemed never to have been perfected as against a purchaser of the collateral for value.

(i) Effect of change in governing law on financing statement filed against original debtor.

If a financing statement naming an original debtor is filed pursuant to the law of the jurisdiction

designated in subdivision§ 6A-9-301(1) or subsection§ 6A-9-305(c) and the new debtor is located

in another jurisdiction, the following rules apply:

(1) The financing statement is effective to perfect a security interest in collateral acquired

by the new debtor before, and within four (4) months after, the new debtor becomes bound under

subsection§ 6A-9-203(d), if the financing statement would have been effective to perfect a security

interest in the collateral had the collateral been acquired by the original debtor.

(2) A security interest perfected by the financing statement and which becomes perfected

under the law of the other jurisdiction before the earlier of the time the financing statement would

have become ineffective under the law of the jurisdiction designated in subdivision§ 6A-9-301(1)

or subsection§ 6A-9-305(c) or the expiration of the four (4) month period remains perfected

thereafter. A security interest that is perfected by the financing statement but which does not

become perfected under the law of the other jurisdiction before the earlier time or event becomes

unperfected and is deemed never to have been perfected as against a purchaser of the collateral for

value.

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 § 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 § 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,

tangible documents, or a certificated security 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.

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 Subject to subsectionsubsections (f)

through (i) of this section, a licensee of a general intangible or a buyer, other than a secured party,

of collateral other than tangible chattel papers, tangible documents, electronic money, goods,

instruments, tangible documents, or 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 §§ 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.

(f) Buyers of chattel paper. A buyer, other than a secured party, of chattel paper takes free

of a security interest if, without knowledge of the security interest and before it is perfected, the

buyer gives value and:

(1) Receives delivery of each authoritative tangible copy of the record evidencing the

chattel paper; and

(2) If each authoritative electronic copy of the record evidencing the chattel paper can be

subjected to control under § 6A-9-105, obtains control of each authoritative electronic copy.

(g) Buyers of electronic documents. A buyer of an electronic document takes free of a

security interest if, without knowledge of the security interest and before it is perfected, the buyer

gives value and, if each authoritative electronic copy of the document can be subjected to control

under § 6A-7-106, obtains control of each authoritative electronic copy.

(h) Buyers of controllable electronic records. A buyer of a controllable electronic record

takes free of a security interest if, without knowledge of the security interest and before it is

perfected, the buyer gives value and obtains control of the controllable electronic record.

(i) Buyers of controllable accounts and controllable payment intangibles. A buyer, other

than a secured party, of a controllable account or a controllable payment intangible takes free of a

security interest if, without knowledge of the security interest and before it is perfected, the buyer

gives value and obtains control of the controllable account or controllable payment intangible.

6A-9-323. Future advances.

(a) When priority based on time of advance. Except as otherwise provided in subsection

(c), for purposes of determining the priority of a perfected security interest under § 6A-9-322(a)(1),

perfection of the security interest dates from the time an advance is made to the extent that the

security interest secures an advance that:

(1) Is made while the security interest is perfected only:

(i) Under § 6A-9-309 when it attaches; or

(ii) Temporarily under § 6A-9-312(e), (f), or (g); and

(2) Is not made pursuant to a commitment entered into before or while the security interest

is perfected by a method other than under § 6A-9-309 or § 6A-9-312(e), (f), or (g).

(b) Lien creditor. Except as otherwise provided in subsection (c), a security interest is

subordinate to the rights of a person that becomes a lien creditor to the extent that the security

interest secures an advance made more than 45 days after the person becomes a lien creditor unless

the advance is made:

(1) Without knowledge of the lien; or

(2) Pursuant to a commitment entered into without knowledge of the lien.

a secured party that is a buyer of accounts, chattel paper, payment intangibles, or promissory notes

or a consignor.

(d) Buyer of goods. Except as otherwise provided in subsection (e), a buyer of goods other

than a buyer in ordinary course of business takes free of a security interest to the extent that it

secures advances made after the earlier of:

(1) The time the secured party acquires knowledge of the buyer’s purchase; or

(2) 45 days after the purchase.

(e) Advances made pursuant to commitment: priority of buyer of goods. Subsection (d)

does not apply if the advance is made pursuant to a commitment entered into without knowledge

of the buyer’s purchase and before the expiration of the 45-day period.

(f) Lessee of goods. Except as otherwise provided in subsection (g), a lessee of goods, other

than a lessee in ordinary course of business, takes the leasehold interest free of a security interest

to the extent that it secures advances made after the earlier of:

(1) The time the secured party acquires knowledge of the lease; or

(2) 45 days after the lease contract becomes enforceable.

(g) Advances made pursuant to commitment: priority of lessee of goods. Subsection (f)

does not apply if the advance is made pursuant to a commitment entered into without knowledge

of the lease and before the expiration of the 45-day period.

6A-9-324. Priority of purchase-money security interests.

(a) General rule: purchase-money priority. Except as otherwise provided in subsection (g),

a perfected purchase-money security interest in goods other than inventory or livestock has priority

over a conflicting security interest in the same goods, and, except as otherwise provided in § 6A-

9-327, a perfected security interest in its identifiable proceeds also has priority, if the purchase-

money security interest is perfected when the debtor receives possession of the collateral or within

20 days thereafter.

(b) Inventory purchase-money priority. Subject to subsection (c) and except as otherwise

provided in subsection (g), a perfected purchase-money security interest in inventory has priority

over a conflicting security interest in the same inventory, has priority over a conflicting security

interest in chattel paper or an instrument constituting proceeds of the inventory and in proceeds of

the chattel paper, if so provided in § 6A-9-330, and, except as otherwise provided in § 6A-9-327,

also has priority in identifiable cash proceeds of the inventory to the extent the identifiable cash

proceeds are received on or before the delivery of the inventory to a buyer, if:

(1) The purchase-money security interest is perfected when the debtor receives possession

of the inventory;

(2) The purchase-money secured party sends an authenticated a signed notification to the

holder of the conflicting security interest;

(3) The holder of the conflicting security interest receives the notification within five years

before the debtor receives possession of the inventory; and

(4) The notification states that the person sending the notification has or expects to acquire

a purchase-money security interest in inventory of the debtor and describes the inventory.

through (4) apply only if the holder of the conflicting security interest had filed a financing

statement covering the same types of inventory:

(1) If the purchase-money security interest is perfected by filing, before the date of the

filing; or

(2) If the purchase-money security interest is temporarily perfected without filing or

possession under § 6A-9-312(f), before the beginning of the 20-day period thereunder.

(d) Livestock purchase-money priority. Subject to subsection (e) and except as otherwise

provided in subsection (g), a perfected purchase-money security interest in livestock that are farm

products has priority over a conflicting security interest in the same livestock, and, except as

otherwise provided in § 6A-9-327, a perfected security interest in their identifiable proceeds and

identifiable products in their unmanufactured states also has priority, if:

(1) The purchase-money security interest is perfected when the debtor receives possession

of the livestock;

(2) The purchase-money secured party sends an authenticated a signed notification to the

holder of the conflicting security interest;

(3) The holder of the conflicting security interest receives the notification within six months

before the debtor receives possession of the livestock; and

(4) The notification states that the person sending the notification has or expects to acquire

a purchase-money security interest in livestock of the debtor and describes the livestock.

(e) Holders of conflicting livestock security interests to be notified. Subsections (d)(2)

through (4) apply only if the holder of the conflicting security interest had filed a financing

statement covering the same types of livestock:

(1) If the purchase-money security interest is perfected by filing, before the date of the

filing; or

(2) If the purchase-money security interest is temporarily perfected without filing or

possession under § 6A-9-312(f), before the beginning of the 20-day period thereunder.

(f) Software purchase-money priority. Except as otherwise provided in subsection (g), a

perfected purchase-money security interest in software has priority over a conflicting security

interest in the same collateral, and, except as otherwise provided in § 6A-9-327, a perfected security

interest in its identifiable proceeds also has priority, to the extent that the purchase-money security

interest in the goods in which the software was acquired for use has priority in the goods and

proceeds of the goods under this section.

(g) Conflicting purchase-money security interests. If more than one security interest

qualifies for priority in the same collateral under subsection (a), (b), (d), or (f):

(1) A security interest securing an obligation incurred as all or part of the price of the

collateral has priority over a security interest securing an obligation incurred for value given to

enable the debtor to acquire rights in or the use of collateral; and

(2) In all other cases, § 6A-9-322(a) applies to the qualifying security interests.

6A-9-330. Priority of purchaser of chattel paper or instrument.

(a) Purchaser’s priority: security interest claimed merely as proceeds. A purchaser of

chattel paper has priority over a security interest in the chattel paper which is claimed merely as

proceeds of inventory subject to a security interest if:

(1) In good faith and in the ordinary course of the purchaser’s business, the purchaser gives

new value, and takes possession of each authoritative tangible copy of the record evidencing the

chattel paper, orand obtains control of the chattel paper under § 6A-9-105 of each authoritative

electronic copy of the record evidencing the chattel paper; and

(2) The chattel paper does authoritative copies of the record evidencing the chattel paper

do not indicate that it the chattel paper has been assigned to an identified assignee other than the

purchaser.

(b) Purchaser’s priority: other security interests. A purchaser of chattel paper has priority

over a security interest in the chattel paper which is claimed other than merely as proceeds of

inventory subject to a security interest if the purchaser gives new value, and takes possession of

each authoritative tangible copy of the record evidencing the chattel paper, or and obtains control

of under § 6A-9-105 of each authoritative electronic copy of the record evidencing the chattel paper

under § 6A-9-105 in good faith, in the ordinary course of the purchaser’s business, and without

knowledge that the purchase violates the rights of the secured party.

9-327, a purchaser having priority in chattel paper under subsection (a) or (b) also has priority in

proceeds of the chattel paper to the extent that:

(1) Section 6A-9-322 provides for priority in the proceeds; or

(2) The proceeds consist of the specific goods covered by the chattel paper or cash proceeds

of the specific goods, even if the purchaser’s security interest in the proceeds is unperfected.

(d) Instrument purchaser’s priority. Except as otherwise provided in § 6A-9-331(a), a

purchaser of an instrument has priority over a security interest in the instrument perfected by a

method other than possession if the purchaser gives value and takes possession of the instrument

in good faith and without knowledge that the purchase violates the rights of the secured party.

(e) Holder of purchase-money security interest gives new value. For purposes of

subsections (a) and (b), the holder of a purchase-money security interest in inventory gives new

value for chattel paper constituting proceeds of the inventory.

(f) Indication of assignment gives knowledge. For purposes of subsections (b) and (d), if

the authoritative copies of the record evidencing chattel paper or an instrument indicates indicate

that it the chattel paper or instrument has been assigned to an identified secured party other than

the purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase

violates the rights of the secured party.

6A-9-331. Priority of rights of purchasers of instruments, documents, and securities

under other chapters; priority of interests in financial assets and security entitlements under

chapter 8 Priority of rights of purchasers of controllable accounts, controllable electronic

records, controllable payment intangibles, documents, instruments and securities under

other chapters; priority of interests in financial assets and security entitlements and

protection against assertion of claim under chapters 8 and 12.

(a) Rights under chapters 3, 7, and 8, and 12 not limited. This chapter does not limit the

rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document

of title has been duly negotiated, ora protected purchaser of a security, or a qualifying purchaser of

a controllable account, controllable electronic record, or controllable payment intangible. These

holders or purchasers take priority over an earlier security interest, even if perfected, to the extent

provided in chapters 3, 7, and 8, and 12.

(b) Protection under chapter chapters 8 and 12. This chapter does not limit the rights of or

impose liability on a person to the extent that the person is protected against the assertion of a claim

under chapter 8 or 12.

defense to the holders, or purchasers, or persons described in subsections (a) and (b).

6A-9-332. Transfer of money; transfer of funds from deposit account Transfer of

tangible money; transfer of funds from deposit account.

(a) Transferee of tangible money. A transferee of tangible money takes the money free of

a security interest unless the transferee acts if the transferee receives the funds without acting in

collusion with the debtor in violating the rights of the secured party.

(b) Transferee of funds from deposit account. A transferee of funds from a deposit account

takes the funds free of a security interest in the deposit account unless the transferee acts if the

transferee receives the funds without acting in collusion with the debtor in violating the rights of

the secured party.

of a security interest if the transferee obtains control of the money without acting in collusion with

the debtor in violating the rights of the secured party.

6A-9-334. Priority of security interests in fixtures and crops.

(a) Security interest in fixtures under this chapter. A security interest under this chapter

may be created in goods that are fixtures or may continue in goods that become fixtures. A security

interest does not exist under this chapter in ordinary building materials incorporated into an

improvement on land.

(b) Security interest in fixtures under real-property law. This chapter does not prevent

creation of an encumbrance upon fixtures under real property law.

subsections (d) through (h), a security interest in fixtures is subordinate to a conflicting interest of

an encumbrancer or owner of the related real property other than the debtor.

(d) Fixtures purchase-money priority. Except as otherwise provided in subsection (h), a

perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or

owner of the real property if the debtor has an interest of record in or is in possession of the real

property and:

(1) The security interest is a purchase-money security interest;

(2) The interest of the encumbrancer or owner arises before the goods become fixtures; and

(3) The security interest is perfected by a fixture filing before the goods become fixtures

or within 20 days thereafter.

(e) Priority of security interest in fixtures over interests in real property. A perfected

security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of

the real property if:

(1) The debtor has an interest of record in the real property or is in possession of the real

property and the security interest:

(i) Is perfected by a fixture filing before the interest of the encumbrancer or owner is of

record; and

(ii) Has priority over any conflicting interest of a predecessor in title of the encumbrancer

or owner;

(2) Before the goods become fixtures, the security interest is perfected by any method

permitted by this chapter and the fixtures are readily removable:

(i) Factory or office machines;

(ii) Equipment that is not primarily used or leased for use in the operation of the real

property; or

(iii) Replacements of domestic appliances that are consumer goods;

(3) The conflicting interest is a lien on the real property obtained by legal or equitable

proceedings after the security interest was perfected by any method permitted by this chapter; or

(4) The security interest is:

(i) Created in a manufactured home in a manufactured-home transaction; and

(ii) Perfected pursuant to a statute described in § 6A-9-311(a)(2).

(f) Priority based on consent, disclaimer, or right to remove. A security interest in fixtures,

whether or not perfected, has priority over a conflicting interest of an encumbrancer or owner of

the real property if:

(1) The encumbrancer or owner has, in an authenticated a signed record, consented to the

security interest or disclaimed an interest in the goods as fixtures; or

(2) The debtor has a right to remove the goods as against the encumbrancer or owner.

(g) Continuation of paragraph (f)(2) priority. The priority of the security interest under

paragraph (f)(2) continues for a reasonable time if the debtor’s right to remove the goods as against

the encumbrancer or owner terminates.

(h) Priority of construction mortgage. A mortgage is a construction mortgage to the extent

that it secures an obligation incurred for the construction of an improvement on land, including the

acquisition cost of the land, if a recorded record of the mortgage so indicates. Except as otherwise

provided in subsections (e) and (f), a security interest in fixtures is subordinate to a construction

mortgage if a record of the mortgage is recorded before the goods become fixtures and the goods

become fixtures before the completion of the construction. A mortgage has this priority to the same

extent as a construction mortgage to the extent that it is given to refinance a construction mortgage.

(i) Priority of security interest in crops. A perfected security interest in crops growing on

real property has priority over a conflicting interest of an encumbrancer or owner of the real

property if the debtor has an interest of record in or is in possession of the real property.

6A-9-341. Bank’s rights and duties with respect to deposit account.

Except as otherwise provided in § 6A-9-340(c), and unless the bank otherwise agrees in an

authenticated a signed record, a bank’s rights and duties with respect to a deposit account

maintained with the bank are not terminated, suspended, or modified by:

(1) The creation, attachment, or perfection of a security interest in the deposit account;

(2) The bank’s knowledge of the security interest; or

(3) The bank’s receipt of instructions from the secured party.

6A-9-404. Rights acquired by assignee; claims and defenses against assignee.

(a) Assignee’s rights subject to terms, claims, and defenses; exceptions. Unless an account

debtor has made an enforceable agreement not to assert defenses or claims, and subject to

subsections (b) through (e), the rights of an assignee are subject to:

(1) All terms of the agreement between the account debtor and assignor and any defense

or claim in recoupment arising from the transaction that gave rise to the contract; and

(2) Any other defense or claim of the account debtor against the assignor which accrues

before the account debtor receives a notification of the assignment authenticated signed by the

assignor or the assignee.

(b) Account debtor’s claim reduces amount owed to assignee. Subject to subsection (c) and

except as otherwise provided in subsection (d), the claim of an account debtor against an assignor

may be asserted against an assignee under subsection (a) only to reduce the amount the account

debtor owes.

which establishes a different rule for an account debtor who is an individual and who incurred the

obligation primarily for personal, family, or household purposes.

(d) Omission of required statement in consumer transaction. In a consumer transaction, if

a record evidences the account debtor’s obligation, law other than this chapter requires that the

record include a statement to the effect that the account debtor’s recovery against an assignee with

respect to claims and defenses against the assignor may not exceed amounts paid by the account

debtor under the record, and the record does not include such a statement, the extent to which a

claim of an account debtor against the assignor may be asserted against an assignee is determined

as if the record included such a statement.

(e) Inapplicability to health-care-insurance receivable. This section does not apply to an

assignment of a health-care-insurance receivable.

6A-9-406. Discharge of account debtor; notification of assignment; identification and

proof of assignment; restrictions on assignment of accounts, chattel paper, payment

intangibles, and promissory notes ineffective.

(a) Discharge of account debtor; effect of notification. Subject to subsections (b) through

(i) and (l), an account debtor on an account, chattel paper, or a payment intangible may discharge

its obligation by paying the assignor until, but not after, the account debtor receives a notification,

authenticated signed by the assignor or the assignee, that the amount due or to become due has been

assigned and that payment is to be made to the assignee. After receipt of the notification, the

account debtor may discharge its obligation by paying the assignee and may not discharge the

obligation by paying the assignor.

(b) When notification ineffective. Subject to subsection subsections (h) and (l), notification

is ineffective under subsection (a):

(1) If it does not reasonably identify the rights assigned;

(2) To the extent that an agreement between an account debtor and a seller of a payment

intangible limits the account debtor’s duty to pay a person other than the seller and the limitation

is effective under law other than this chapter; or

(3) At the option of an account debtor, if the notification notifies the account debtor to

make less than the full amount of any installment or other periodic payment to the assignee, even

if:

(i) Only a portion of the account, chattel paper, or payment intangible has been assigned to

that assignee;

(ii) A portion has been assigned to another assignee; or

(iii) The account debtor knows that the assignment to that assignee is limited.

account debtor, an assignee shall seasonably furnish reasonable proof that the assignment has been

made. Unless the assignee complies, the account debtor may discharge its obligation by paying the

assignor, even if the account debtor has received a notification under subsection (a).

(d) Term restricting assignment generally ineffective. In this subsection, "promissory note"

includes a negotiable instrument that evidences chattel paper. Except as otherwise provided in

subsection subsections (e) and (k) and § 6A-2.1-303 and § 6A-9-407, and subject to subsection (h),

a term in an agreement between an account debtor and an assignor or in a promissory note is

ineffective to the extent that it:

(1) Prohibits, restricts, or requires the consent of the account debtor or person obligated on

the promissory note to the assignment or transfer of, or the creation, attachment, perfection, or

enforcement of a security interest in, the account, chattel paper, payment intangible, or promissory

note; or

(2) Provides that the assignment or transfer or the creation, attachment, perfection, or

enforcement of the security interest may give rise to a default, breach, right of recoupment, claim,

defense, termination, right of termination, or remedy under the account, chattel paper, payment

intangible, or promissory note.

(e) Inapplicability of subsection (d) to certain sales. Subsection (d) does not apply to the

sale of a payment intangible or promissory note, other than a sale pursuant to a disposition under §

6A-9-610 or an acceptance of collateral under § 6A-9-620.

(f) Legal restrictions on assignment generally ineffective. Except as otherwise provided in

subsection (k) and §§ 6A-2.1-303 and 6A-9-407 and subject to subsections (h) and (i), a rule of

law, statute, or regulation that prohibits, restricts, or requires the consent of a government,

governmental body or official, or account debtor to the assignment or transfer of, or creation of a

security interest in, an account or chattel paper is ineffective to the extent that the rule of law,

statute, or regulation:

(1) Prohibits, restricts, or requires the consent of the government, governmental body or

official, or account debtor to the assignment or transfer of, or the creation, attachment, perfection,

or enforcement of a security interest in the account or chattel paper; or

(2) Provides that the assignment or transfer or the creation, attachment, perfection, or

enforcement of the security interest may give rise to a default, breach, right of recoupment, claim,

defense, termination, right of termination, or remedy under the account or chattel paper.

(g) Subsection (b)(3) not waivable. Subject to subsection subsections (h) and (l) of this

section, an account debtor may not waive or vary its option under subsection (b)(3).

(h) Rule for individual under other law. This section is subject to law other than this chapter

which establishes a different rule for an account debtor who is an individual and who incurred the

obligation primarily for personal, family, or household purposes.

(i) Inapplicability to health-care-insurance receivable. This section does not apply to an

assignment of a health-care-insurance receivable.

(j) Section prevails over inconsistent law. This section prevails over any statutes, rules, and

regulations inconsistent with this section.

(k) Inapplicability to interests in certain entities. Subsections (d), (f), and (j) of this section

do not apply to a security interest in an ownership interest in a general partnership, limited

partnership, or limited liability company.

(l) Inapplicability of certain subsections. Subsections (a), (b), (c), and (g) of this section do

not apply to a controllable account or controllable payment intangible.

6A-9-408. Restrictions on assignment of promissory notes, health-care insurance

receivables, and certain general intangibles ineffective.

(a) Term restricting assignment generally ineffective. Except as otherwise provided in

subsection subsections (b) and (f), a term in a promissory note or in an agreement between an

account debtor and a debtor which relates to a health-care-insurance receivable or a general

intangible, including a contract, permit, license, or franchise, and which term prohibits, restricts, or

requires the consent of the person obligated on the promissory note or the account debtor to, the

assignment or transfer of, or creation, attachment, or perfection of a security interest in, the

promissory note, health-care-insurance receivable, or general intangible, is ineffective to the extent

that the term:

(1) Would impair the creation, attachment, or perfection of a security interest; or

(2) Provides that the assignment or transfer or the creation, attachment, or perfection of the

security interest may give rise to a default, breach, right of recoupment, claim, defense, termination,

right of termination, or remedy under the promissory note, health-care-insurance receivable, or

general intangible.

(b) Applicability of subsection (a) to sales of certain rights to payment. Subsection (a)

applies to a security interest in a payment intangible or promissory note only if the security interest

arises out of a sale of the payment intangible or promissory note, other than a sale pursuant to a

disposition under § 6A-9-610 or an acceptance of collateral under § 6A-9-620.

in subsection (f) of this section, a rule of law, statute, or regulation that prohibits, restricts, or

requires the consent of a government, governmental body or official, person obligated on a

promissory note, or account debtor to the assignment or transfer of, or creation of a security interest

in, a promissory note, health-care-insurance receivable, or general intangible, including a contract,

permit, license, or franchise between an account debtor and a debtor, is ineffective to the extent

that the rule of law, statute, or regulation:

(1) Would impair the creation, attachment, or perfection of a security interest; or

(2) Provides that the assignment or transfer or the creation, attachment, or perfection of the

security interest may give rise to a default, breach, right of recoupment, claim, defense, termination,

right of termination, or remedy under the promissory note, health-care-insurance receivable, or

general intangible.

(d) Limitation on ineffectiveness under subsections (a) and (c). To the extent that a term in

a promissory note or in an agreement between an account debtor and a debtor which relates to a

health-care-insurance receivable or general intangible or a rule of law, statute, or regulation

described in subsection (c) would be effective under law other than this chapter but is ineffective

under subsection (a) or (c), the creation, attachment, or perfection of a security interest in the

promissory note, health-care-insurance receivable, or general intangible:

(1) Is not enforceable against the person obligated on the promissory note or the account

debtor;

(2) Does not impose a duty or obligation on the person obligated on the promissory note

or the account debtor;

(3) Does not require the person obligated on the promissory note or the account debtor to

recognize the security interest, pay or render performance to the secured party, or accept payment

or performance from the secured party;

(4) Does not entitle the secured party to use or assign the debtor’s rights under the

promissory note, health-care-insurance receivable, or general intangible, including any related

information or materials furnished to the debtor in the transaction giving rise to the promissory

note, health-care-insurance receivable, or general intangible;

(5) Does not entitle the secured party to use, assign, possess, or have access to any trade

secrets or confidential information of the person obligated on the promissory note or the account

debtor; and

(6) Does not entitle the secured party to enforce the security interest in the promissory note,

health-care-insurance receivable, or general intangible.

(e) Section prevails over inconsistent law. This section prevails over any statutes, rules,

and regulations inconsistent with this section.

(f) Inapplicability to interests in certain entities. This section does not apply to a security

interest in an ownership interest in a general partnership, limited partnership, or limited liability

company.

(g) "Promissory note." In this section, "promissory note" includes a negotiable instrument

that evidences chattel paper.

6A-9-509. Persons entitled to file a record.

(a) Person entitled to file record. A person may file an initial financing statement,

amendment that adds collateral covered by a financing statement, or amendment that adds a debtor

to a financing statement only if:

(1) The debtor authorizes the filing in an authenticated a signed record or pursuant to

subsection (b) or (c); or

(2) The person holds an agricultural lien that has become effective at the time of filing and

the financing statement covers only collateral in which the person holds an agricultural lien.

(b) Security agreement as authorization. By authenticating signing or becoming bound as

debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing

statement, and an amendment, covering:

(1) The collateral described in the security agreement; and

(2) Property that becomes collateral under § 6A-9-315(a)(2), whether or not the security

agreement expressly covers proceeds.

interest or agricultural lien continues under § 6A-9-315(a)(1), a debtor authorizes the filing of an

initial financing statement, and an amendment, covering the collateral and property that becomes

collateral under § 6A-9-315(a)(2).

(d) Person entitled to file certain amendments. A person may file an amendment other than

an amendment that adds collateral covered by a financing statement or an amendment that adds a

debtor to a financing statement only if:

(1) The secured party of record authorizes the filing; or

(2) The amendment is a termination statement for a financing statement as to which the

secured party of record has failed to file or send a termination statement as required by § 6A-9-

513(a) or (c), the debtor authorizes the filing, and the termination statement indicates that the debtor

authorized it to be filed.

(e) Multiple secured parties of record. If there is more than one secured party of record for

a financing statement, each secured party of record may authorize the filing of an amendment under

subsection (d).

6A-9-513. Termination statement.

(a) Consumer goods. A secured party shall cause the secured party of record for a financing

statement to file a termination statement for the financing statement if the financing statement

covers consumer goods and:

(1) There is no obligation secured by the collateral covered by the financing statement and

no commitment to make an advance, incur an obligation, or otherwise give value; or

(2) The debtor did not authorize the filing of the initial financing statement.

(b) Time for compliance with subsection (a). To comply with subsection (a), a secured

party shall cause the secured party of record to file the termination statement:

(1) Within one month after there is no obligation secured by the collateral covered by the

financing statement and no commitment to make an advance, incur an obligation, or otherwise give

value; or

(2) If earlier, within twenty (20) days after the secured party receives an authenticated a

signed demand from a debtor.

party receives an authenticated a signed demand from a debtor, the secured party shall cause the

secured party of record for a financing statement to send to the debtor a termination statement for

the financing statement or file the termination statement in the filing office if:

(1) Except in the case of a financing statement covering accounts or chattel paper that has

been sold or goods that are the subject of a consignment, there is no obligation secured by the

collateral covered by the financing statement and no commitment to make an advance, incur an

obligation, or otherwise give value;

(2) The financing statement covers accounts or chattel paper that has been sold but as to

which the account debtor or other person obligated has discharged its obligation;

(3) The financing statement covers goods that were the subject of a consignment to the

debtor but are not in the debtor’s possession; or

(4) The debtor did not authorize the filing of the initial financing statement.

(d) Effect of filing termination statement. Except as otherwise provided in § 6A-9-510,

upon the filing of a termination statement with the filing office, the financing statement to which

the termination statement relates ceases to be effective. Except as otherwise provided in § 6A-9-

510, for purposes of §§ 6A-9-519(g), 6A-9-522(a), and 6A-9-523(c), the filing with the filing office

of a termination statement relating to a financing statement that indicates that the debtor is a

transmitting utility also causes the effectiveness of the financing statement to lapse.

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 § 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 § 6A-7-106, § 6A-9-104, § 6A-9-105, § 6A-

9-105.1, § 6A-9-106, or § 6A-9-107, or § 6A-9-107.1 has the rights and duties provided in § 6A-9-

207.

cumulative and may be exercised simultaneously.

(d) Rights of debtor and obligor. Except as otherwise provided in subsection (g) and § 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 § 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.

6A-9-605. Unknown debtor or secondary obligor.

A(a) In general: No duty owed by secured party. Except as provided in subsection (b) of

this section, a secured party does not owe a duty based on its status as secured party:

(1) To a person that is a debtor or obligor, unless the secured party knows:

(i) That the person is a debtor or obligor;

(ii) The identity of the person; and

(iii) How to communicate with the person; or

(2) To a secured party or lienholder that has filed a financing statement against a person,

unless the secured party knows:

(i) That the person is a debtor; and

(ii) The identity of the person.

(b) Exception: Secured party owes duty to debtor or obligor. A secured party owes a duty

based on its status as a secured party to a person if, at the time the secured party obtains control of

collateral that is a controllable account, controllable electronic record, or controllable payment

intangible or at the time the security interest attaches to the collateral, whichever is later:

(1) The person is a debtor or obligor; and

(2) The secured party knows that the information in subsection (a)(1)(i), (ii), or (iii) of this

section relating to the person is not provided by the collateral, a record attached to or logically

associated with the collateral, or the system in which the collateral is recorded.

6A-9-608. Application of proceeds of collection or enforcement; liability for deficiency

and right to surplus.

(a) Application of proceeds, surplus, and deficiency if obligation secured. If a security

interest or agricultural lien secures payment or performance of an obligation, the following rules

apply:

(1) A secured party shall apply or pay over for application the cash proceeds of collection

or enforcement under § 6A-9-607 in the following order to:

(i) The reasonable expenses of collection and enforcement and, to the extent provided for

by agreement and not prohibited by law, reasonable attorney’s fees and legal expenses incurred by

the secured party;

(ii) The satisfaction of obligations secured by the security interest or agricultural lien under

which the collection or enforcement is made; and

(iii) The satisfaction of obligations secured by any subordinate security interest in or other

lien on the collateral subject to the security interest or agricultural lien under which the collection

or enforcement is made if the secured party receives an authenticated a signed demand for proceeds

before distribution of the proceeds is completed.

(2) If requested by a secured party, a holder of a subordinate security interest or other lien

shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder

complies, the secured party need not comply with the holder’s demand under paragraph (1)(iii).

(3) A secured party need not apply or pay over for application noncash proceeds of

collection and enforcement under § 6A-9-607 unless the failure to do so would be commercially

unreasonable. A secured party that applies or pays over for application noncash proceeds shall do

so in a commercially reasonable manner.

(4) A secured party shall account to and pay a debtor for any surplus, and the obligor is

liable for any deficiency.

(b) No surplus or deficiency in sales of certain rights to payment. If the underlying

transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes, the debtor

is not entitled to any surplus, and the obligor is not liable for any deficiency.

6A-9-611. Notification before disposition of collateral.

(a) “Notification date.” In this section, “notification date” means the earlier of the date on

which:

(1) A secured party sends to the debtor and any secondary obligor an authenticated a signed

notification of disposition; or

(2) The debtor and any secondary obligor waive the right to notification.

(b) Notification of disposition required. Except as otherwise provided in subsection (d), a

secured party that disposes of collateral under § 6A-9-610 shall send to the persons specified in

subsection (c) a reasonable authenticated signed notification of disposition.

authenticated a signed notification of disposition to:

(1) The debtor;

(2) Any secondary obligor; and

(3) If the collateral is other than consumer goods:

(i) Any other person from which the secured party has received, before the notification

date, an authenticated a signed notification of a claim of an interest in the collateral;

(ii) Any other secured party or lienholder that, 10 days before the notification date, held a

security interest in or other lien on the collateral perfected by the filing of a financing statement

that:

(A) Identified the collateral;

(B) Was indexed under the debtor’s name as of that date; and

the collateral as of that date; and

(iii) Any other secured party that, 10 days before the notification date, held a security

interest in the collateral perfected by compliance with a statute, regulation, or treaty described in §

6A-9-311(a).

(d) Subsection (b) inapplicable: perishable collateral; recognized market. Subsection (b)

does not apply if the collateral is perishable or threatens to decline speedily in value or is of a type

customarily sold on a recognized market.

(e) Compliance with subsection (c)(3)(ii). A secured party complies with the requirement

for notification prescribed by subsection (c)(3)(ii) if:

(1) Not later than 20 days or earlier than 30 days before the notification date, the secured

party requests, in a commercially reasonable manner, information concerning financing statements

indexed under the debtor’s name in the office indicated in subsection (c)(3)(ii); and

(2) Before the notification date, the secured party:

(i) Did not receive a response to the request for information; or

(ii) Received a response to the request for information and sent an authenticated a signed

notification of disposition to each secured party or other lienholder named in that response whose

financing statement covered the collateral.

6A-9-613. Contents and form of notification before disposition of collateral —

General.

(a) Contents and form of notification. Except in a consumer-goods transaction, the

following rules apply:

(1) The contents of a notification of disposition are sufficient if the notification:

(i) Describes the debtor and the secured party;

(ii) Describes the collateral that is the subject of the intended disposition;

(iii) States the method of intended disposition;

(iv) States that the debtor is entitled to an accounting of the unpaid indebtedness and states

the charge, if any, for an accounting; and

(v) States the time and place of a public disposition or the time after which any other

disposition is to be made.

(2) Whether the contents of a notification that lacks any of the information specified in

paragraph (1) are nevertheless sufficient is a question of fact.

(3) The contents of a notification providing substantially the information specified in

paragraph (1) are sufficient, even if the notification includes:

(i) Information not specified by that paragraph; or

(ii) Minor errors that are not seriously misleading.

(4) A particular phrasing of the notification is not required.

(5) The following form of notification and the form appearing in § 6A-9-614(3) 6A-9-

614(a)(3), when completed in accordance with the instructions in subsection (b) of this section and

§ 6A-9-614(b), each provides sufficient information:

NOTIFICATION OF DISPOSITION OF COLLATERAL

To: [Name of debtor, obligor, or other person to which the notification is sent]

From: [Name, address, and telephone number of secured party]

Name of Debtor(s): [Include only if debtor(s) are not an addressee]

[For a public disposition:]

We will sell [or lease or license, as applicable] the [describe collateral] [to the highest qualified

bidder] in public as follows:

Day and Date:

Time:

Place:

[For a private disposition:]

We will sell [or lease or license, as applicable] the [describe collateral] privately sometime

after [day and date].

You are entitled to an accounting of the unpaid indebtedness secured by the property that

we intend to sell [or lease or license, as applicable] [for a charge of $ ]. You may request

an accounting by calling us at [telephone number]

End of Form

(Date)

NOTIFICATION OF DISPOSITION OF COLLATERAL

To: (Name of debtor, obligor, or other person to which the notification is sent)

From: (Name, address, and telephone number of secured party)

(1){1} Name of any debtor that is not an addressee: (Name of each debtor)

(2){2} We will sell (describe collateral) (to the highest qualified bidder) at public sale. A

sale could include a lease or license. The sale will be held as follows:

(Date)

(Time)

(Place)

(3){3} We will sell (describe collateral) at private sale sometime after (date). A sale could

include a lease or license.

(4){4} You are entitled to an accounting of the unpaid indebtedness secured by the property

that we intend to sell or, as applicable, lease or license.

(5){5} If you request an accounting you must pay a charge of $ (amount).

(6){6} You may request an accounting by calling us at (telephone number).

[End of Form]

(b) Instructions for form of notification. The following instructions apply to the form of

notification in subsection (a)(5) of this section:

(1) The instructions in this subsection refer to the numbers in braces before items in the

form of notification in subsection (a)(5) of this section. Do not include the numbers or braces in the

notification. The numbers and braces are used only for the purpose of these instructions.

(2) Include and complete item (1){1} only if there is a debtor that is not an addressee of the

notification and list the name or names.

(3) Include and complete either item (2){2}, if the notification relates to a public disposition

of the collateral, or item (3){3}, if the notification relates to a private disposition of the collateral.

If item (2){2} is included, include the words “to the highest qualified bidder” only if applicable.

(4) Include and complete items (4){4} and (6){6}.

(5) Include and complete item (5){5} only if the sender will charge the recipient for an

accounting.

20236A-9-614. Contents and form of notification before disposition of collateral —

Consumer-goods transaction.

(a) Contents and form of notification. In a consumer-goods transaction, the following rules

apply:

(1) A notification of disposition must provide the following information:

(i) The information specified in § 6A-9-613(1) 6A-9-613(a)(1);

(ii) A description of any liability for a deficiency of the person to which the notification is

sent;

(iii) A telephone number from which the amount that must be paid to the secured party to

redeem the collateral under § 6A-9-623 is available; and

(iv) A telephone number or mailing address from which additional information concerning

the disposition and the obligation secured is available.

(2) A particular phrasing of the notification is not required.

(3) The following form of notification, when completed in accordance with the instructions

in subsection (b) of this section, provides sufficient information:

[Name and address of secured party]

[Date]

NOTICE OF OUR PLAN TO SELL PROPERTY

[Name and address of any obligor who is also a debtor]

Subject: [Identification of Transaction]

We have your [describe collateral], because you broke promises in our agreement.

[For a public disposition:]

We will sell [describe collateral] at public sale. A sale could include a lease or

license. The sale will be held as follows:

Date:

Time:

Place:

You may attend the sale and bring bidders if you want.

[For a private disposition:]

We will sell [describe collateral] at private sale sometime after [date]. A sale could include

a lease or license.

The money that we get from the sale (after paying our costs) will reduce the amount you

owe. If we get less money than you owe, you [will or will not, as applicable] still owe us the

difference. If we get more money than you owe, you will get the extra money, unless we must pay

it to someone else.

You can get the property back at any time before we sell it by paying us the full amount

you owe (not just the past due payments), including our expenses. To learn the exact amount you

must pay, call us at [telephone number].

If you want us to explain to you in writing how we have figured the amount that you owe

us, you may call us at [telephone number] [or write us at [secured party’s address] ] and request a

written explanation. [We will charge you $ for the explanation if we sent you another written

explanation of the amount you owe us within the last six months.]

If you need more information about the sale call us at [telephone number] [or write us at

[secured party’s address] ].

We are sending this notice to the following other people who have an interest in [describe

collateral] or who owe money under your agreement:

[Names of all other debtors and obligors, if any]

[End of Form]

(Name and address of secured party)

(Date)

NOTICE OF OUR PLAN TO SELL PROPERTY

(Name and address of any obligor who is also a debtor)

Subject: (Identify transaction)

We have your (describe collateral), because you broke promises in our agreement.

(1){1} We will sell (describe collateral) at public sale. A sale could include a lease or

license. The sale will be held as follows:

(Date)

(Time)

(Place)

You may attend the sale and bring bidders if you want.

(2){2} We will sell (describe collateral) at private sale sometime after (date). A sale could

include a lease or license.

(3){3} The money that we get from the sale, after paying our costs, will reduce the amount

you owe. If we get less money than you owe, you (will or will not, as applicable) still owe us the

difference. If we get more money than you owe, you will get the extra money, unless we must pay

it to someone else.

(4){4} You can get the property back at any time before we sell it by paying us the full

amount you owe, not just the past due payments, including our expenses. To learn the exact amount

you must pay, call us at (telephone number).

(5){5} If you want us to explain to you in (writing) (writing or in (description of electronic

record)) (description of electronic record) how we have figured the amount that you owe us, (6){6}

Call us at (telephone number) (or) (write us at (secured party’s address)) (or contact us by

(description of electronic communication method)) (7){7} and Request (a written explanation) (a

written explanation or an explanation in (description of electronic record)) (an explanation in

(description of electronic record)).

(8){8} We will charge you $ (amount) for the explanation if we sent you another written

explanation of the amount you owe us within the last six (6) months.

(9){9} If you need more information about the sale (call us at (telephone number)) (or)

(write us at (secured party’s address)) (or contact us by (description of electronic communication

method)).

(10){10} We are sending this notice to the following other people who have an interest in

(describe collateral) or who owe money under your agreement:

(Names of all other debtors and obligors, if any)

[End of Form]

(4) A notification in the form of paragraph (3) is sufficient, even if additional information

appears at the end of the form.

(5) A notification in the form of paragraph (3) is sufficient, even if it includes errors in

information not required by paragraph (1), unless the error is misleading with respect to rights

arising under this chapter.

(6) If a notification under this section is not in the form of paragraph (3), law other than

this chapter determines the effect of including information not required by paragraph (1).

(b) Instructions for form of notification. The following instructions apply to the form of

notification in subsection (a)(3) of this section:

(1) The instructions in this subsection refer to the numbers in braces before items in the

form of notification in subsection (a)(3) of this section. Do not include the numbers or braces in the

notification. The numbers and braces are used only for the purpose of these instructions.

(2) Include and complete either item (1){1}, if the notification relates to a public disposition

of the collateral, or item (2){2}, if the notification relates to a private disposition of the collateral.

(3) Include and complete items (3){3}, (4){4}, (5){5}, (6){6}, and (7){7}.

(4) In item (5){5}, include and complete any one of the three (3) alternative methods for

the explanation—writing, writing or electronic record, or electronic record.

(5) In item (6){6}, include the telephone number. In addition, the sender may include and

complete either or both of the two (2) additional alternative methods of communication—writing

or electronic communication—for the recipient of the notification to communicate with the sender.

Neither of the two additional methods of communication is required to be included.

(6) In item (7){7}, include and complete the method or methods for the explanation—

writing, writing or electronic record, or electronic record—included in item (5){5}.

(7) Include and complete item (8){8} only if a written explanation is included in item (5){5}

as a method for communicating the explanation and the sender will charge the recipient for another

written explanation.

(8) In item (9){9}, include either the telephone number or the address or both the telephone

number and the address. In addition, the sender may include and complete the additional method

of communication—electronic communication—for the recipient of the notification to

communicate with the sender. The additional method of electronic communication is not required

to be included.

(9) If item (10){10} does not apply, insert “None” after “agreement:”.

6A-9-615. Application of proceeds of disposition; liability for deficiency and right to

surplus.

(a) Application of proceeds. A secured party shall apply or pay over for application the

cash proceeds of disposition under § 6A-9-610 in the following order to:

(1) The reasonable expenses of retaking, holding, preparing for disposition, processing,

and disposing, and, to the extent provided for by agreement and not prohibited by law, reasonable

attorney’s fees and legal expenses incurred by the secured party;

(2) The satisfaction of obligations secured by the security interest or agricultural lien under

which the disposition is made;

(3) The satisfaction of obligations secured by any subordinate security interest in or other

subordinate lien on the collateral if:

(i) The secured party receives from the holder of the subordinate security interest or other

lien an authenticated a signed demand for proceeds before distribution of the proceeds is completed;

and

(ii) In a case in which a consignor has an interest in the collateral, the subordinate security

interest or other lien is senior to the interest of the consignor; and

(4) A secured party that is a consignor of the collateral if the secured party receives from

the consignor an authenticated a signed demand for proceeds before distribution of the proceeds is

completed.

(b) Proof of subordinate interest. If requested by a secured party, a holder of a subordinate

security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable

time. Unless the holder does so, the secured party need not comply with the holder’s demand under

subsection (a)(3).

application noncash proceeds of disposition under § 6A-9-610 unless the failure to do so would be

commercially unreasonable. A secured party that applies or pays over for application noncash

proceeds shall do so in a commercially reasonable manner.

(d) Surplus or deficiency if obligation secured. If the security interest under which a

disposition is made secures payment or performance of an obligation, after making the payments

and applications required by subsection (a) and permitted by subsection (c):

(1) Unless subsection (a)(4) requires the secured party to apply or pay over cash proceeds

to a consignor, the secured party shall account to and pay a debtor for any surplus; and

(2) The obligor is liable for any deficiency.

(e) No surplus or deficiency in sales of certain rights to payment. If the underlying

transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes:

(1) The debtor is not entitled to any surplus; and

(2) The obligor is not liable for any deficiency.

(f) Calculation of surplus or deficiency in disposition to person related to secured party.

The surplus or deficiency following a disposition is calculated based on the amount of proceeds

that would have been realized in a disposition complying with this part to a transferee other than

the secured party, a person related to the secured party, or a secondary obligor if:

(1) The transferee in the disposition is the secured party, a person related to the secured

party, or a secondary obligor; and

(2) The amount of proceeds of the disposition is significantly below the range of proceeds

that a complying disposition to a person other than the secured party, a person related to the secured

party, or a secondary obligor would have brought.

(g) Cash proceeds received by junior secured party. A secured party that receives cash

proceeds of a disposition in good faith and without knowledge that the receipt violates the rights of

the holder of a security interest or other lien that is not subordinate to the security interest or

agricultural lien under which the disposition is made:

(1) Takes the cash proceeds free of the security interest or other lien;

(2) Is not obligated to apply the proceeds of the disposition to the satisfaction of obligations

secured by the security interest or other lien; and

(3) Is not obligated to account to or pay the holder of the security interest or other lien for

any surplus.

6A-9-616. Explanation of calculation of surplus or deficiency.

(a) Definitions. In this section:

(1) “Explanation” means a writing record that:

(i) States the amount of the surplus or deficiency;

(ii) Provides an explanation in accordance with subsection (c) of how the secured party

calculated the surplus or deficiency;

(iii) States, if applicable, that future debits, credits, charges, including additional credit

service charges or interest, rebates, and expenses may affect the amount of the surplus or

deficiency; and

(iv) Provides a telephone number or mailing address from which additional information

concerning the transaction is available.

(2) “Request” means a record:

(i) Authenticated Signed by a debtor or consumer obligor;

(ii) Requesting that the recipient provide an explanation; and

(iii) Sent after disposition of the collateral under § 6A-9-610.

(b) Explanation of calculation. In a consumer-goods transaction in which the debtor is

entitled to a surplus or a consumer obligor is liable for a deficiency under § 6A-9-615, the secured

party shall:

(1) Send an explanation to the debtor or consumer obligor, as applicable, after the

disposition and:

(i) Before or when the secured party accounts to the debtor and pays any surplus or first

makes written demand in a record on the consumer obligor after the disposition for payment of the

deficiency; and

(ii) Within 14 days after receipt of a request; or

(2) In the case of a consumer obligor who is liable for a deficiency, within 14 days after

receipt of a request, send to the consumer obligor a record waiving the secured party’s right to a

deficiency.

must provide the following information in the following order:

(1) The aggregate amount of obligations secured by the security interest under which the

disposition was made, and, if the amount reflects a rebate of unearned interest or credit service

charge, an indication of that fact, calculated as of a specified date:

(i) If the secured party takes or receives possession of the collateral after default, not more

than 35 days before the secured party takes or receives possession; or

(ii) If the secured party takes or receives possession of the collateral before default or does

not take possession of the collateral, not more than 35 days before the disposition;

(2) The amount of proceeds of the disposition;

(3) The aggregate amount of the obligations after deducting the amount of proceeds;

(4) The amount, in the aggregate or by type, and types of expenses, including expenses of

retaking, holding, preparing for disposition, processing, and disposing of the collateral, and

attorney’s fees secured by the collateral which are known to the secured party and relate to the

current disposition;

(5) The amount, in the aggregate or by type, and types of credits, including rebates of

interest or credit service charges, to which the obligor is known to be entitled and which are not

reflected in the amount in paragraph (1); and

(6) The amount of the surplus or deficiency.

(d) Substantial compliance. A particular phrasing of the explanation is not required. An

explanation complying substantially with the requirements of subsection (a) is sufficient, even if it

includes minor errors that are not seriously misleading.

(e) Charges for responses. A debtor or consumer obligor is entitled without charge to one

response to a request under this section during any six-month period in which the secured party did

not send to the debtor or consumer obligor an explanation pursuant to subsection (b)(1). The

secured party may require payment of a charge not exceeding $ 25 for each additional response.

6A-9-619. Transfer of record or legal title.

(a) “Transfer statement.” In this section, “transfer statement” means a record authenticated

signed by a secured party stating:

(1) That the debtor has defaulted in connection with an obligation secured by specified

collateral;

(2) That the secured party has exercised its post-default remedies with respect to the

collateral;

(3) That, by reason of the exercise, a transferee has acquired the rights of the debtor in the

collateral; and

(4) The name and mailing address of the secured party, debtor, and transferee.

(b) Effect of transfer statement. A transfer statement entitles the transferee to the transfer

of record of all rights of the debtor in the collateral specified in the statement in any official filing,

recording, registration, or certificate-of-title system covering the collateral. If a transfer statement

is presented with the applicable fee and request form to the official or office responsible for

maintaining the system, the official or office shall:

(1) Accept the transfer statement;

(2) Promptly amend its records to reflect the transfer; and

(3) If applicable, issue a new appropriate certificate of title in the name of the transferee.

or legal title to collateral to a secured party under subsection (b) or otherwise is not of itself a

disposition of collateral under this chapter and does not of itself relieve the secured party of its

duties under this chapter.

6A-9-620. Acceptance of collateral in full or partial satisfaction of obligation;

compulsory disposition of collateral.

(a) Conditions to acceptance in satisfaction. Except as otherwise provided in subsection

(g), a secured party may accept collateral in full or partial satisfaction of the obligation it secures

only if:

(1) The debtor consents to the acceptance under subsection (c);

(2) The secured party does not receive, within the time set forth in subsection (d), a

notification of objection to the proposal authenticated signed by:

(i) A person to which the secured party was required to send a proposal under § 6A-9-621;

(ii) Any other person, other than the debtor, holding an interest in the collateral subordinate

to the security interest that is the subject of the proposal;

(3) If the collateral is consumer goods, the collateral is not in the possession of the debtor

when the debtor consents to the acceptance; and

(4) Subsection (e) does not require the secured party to dispose of the collateral or the

debtor waives the requirement pursuant to § 6A-9-624.

(b) Purported acceptance ineffective. A purported or apparent acceptance of collateral

under this section is ineffective unless:

(1) The secured party consents to the acceptance in an authenticateda signed record or

sends a proposal to the debtor; and

(2) The conditions of subsection (a) are met.

(1) A debtor consents to an acceptance of collateral in partial satisfaction of the obligation

it secures only if the debtor agrees to the terms of the acceptance in a record authenticated signed

after default; and

(2) A debtor consents to an acceptance of collateral in full satisfaction of the obligation it

secures only if the debtor agrees to the terms of the acceptance in a record authenticated signed

after default or the secured party:

(i) Sends to the debtor after default a proposal that is unconditional or subject only to a

condition that collateral not in the possession of the secured party be preserved or maintained;

(ii) In the proposal, proposes to accept collateral in full satisfaction of the obligation it

secures; and

(iii) Does not receive a notification of objection authenticated signed by the debtor within

20 days after the proposal is sent.

(d) Effectiveness of notification. To be effective under subsection (a)(2), a notification of

objection must be received by the secured party:

(1) In the case of a person to which the proposal was sent pursuant to § 6A-9-621, within

20 days after notification was sent to that person; and

(2) In other cases:

(i) Within 20 days after the last notification was sent pursuant to § 6A-9-621; or

(ii) If a notification was not sent, before the debtor consents to the acceptance under

subsection (c).

(e) Mandatory disposition of consumer goods. A secured party that has taken possession

of collateral shall dispose of the collateral pursuant to § 6A-9-610 within the time specified in

subsection (f) if:

(1) 60 percent of the cash price has been paid in the case of a purchase-money security

interest in consumer goods; or

(2) 60 percent of the principal amount of the obligation secured has been paid in the case

of a non-purchase-money security interest in consumer goods.

(f) Compliance with mandatory disposition requirement. To comply with subsection (e),

the secured party shall dispose of the collateral:

(1) Within 90 days after taking possession; or

(2) Within any longer period to which the debtor and all secondary obligors have agreed in

an agreement to that effect entered into and authenticated signed after default.

(g) No partial satisfaction in consumer transaction. In a consumer transaction, a secured

party may not accept collateral in partial satisfaction of the obligation it secures.

6A-9-621. Notification of proposal to accept collateral.

(a) Persons to which proposal to be sent. A secured party that desires to accept collateral

in full or partial satisfaction of the obligation it secures shall send its proposal to:

(1) Any person from which the secured party has received, before the debtor consented to

the acceptance, an authenticated a signed notification of a claim of an interest in the collateral;

(2) Any other secured party or lienholder that, 10 days before the debtor consented to the

acceptance, held a security interest in or other lien on the collateral perfected by the filing of a

financing statement that:

(i) Identified the collateral;

(ii) Was indexed under the debtor’s name as of that date; and

(iii) Was filed in the office or offices in which to file a financing statement against the

debtor covering the collateral as of that date; and

(3) Any other secured party that, 10 days before the debtor consented to the acceptance,

held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty

described in § 6A-9-311(a).

(b) Proposal to be sent to secondary obligor in partial satisfaction. A secured party that

desires to accept collateral in partial satisfaction of the obligation it secures shall send its proposal

to any secondary obligor in addition to the persons described in subsection (a).

6A-9-624. Waiver.

(a) Waiver of disposition notification. A debtor or secondary obligor may waive the right

to notification of disposition of collateral under § 6A-9-611 only by an agreement to that effect

entered into and authenticated signed after default.

(b) Waiver of mandatory disposition. A debtor may waive the right to require disposition

of collateral under § 6A-9-620(e) only by an agreement to that effect entered into and authenticated

signed after default.

secondary obligor may waive the right to redeem collateral under § 6A-9-623 only by an agreement

to that effect entered into and authenticated signed after default.

6A-9-628. Nonliability and limitation on liability of secured party; liability of

secondary obligor.

(a) Limitation of liability of secured party for noncompliance with chapter. Unless Subject

to subsection (f) of this section, unless a secured party knows that a person is a debtor or obligor,

knows the identity of the person, and knows how to communicate with the person:

(1) The secured party is not liable to the person, or to a secured party or lienholder that has

filed a financing statement against the person, for failure to comply with this chapter; and

(2) The secured party’s failure to comply with this chapter does not affect the liability of

the person for a deficiency.

(b) Limitation of liability based on status as secured party. A Subject to subsection (f) of

this section, a secured party is not liable because of its status as secured party:

(1) To a person that is a debtor or obligor, unless the secured party knows:

(i) That the person is a debtor or obligor;

(ii) The identity of the person; and

(iii) How to communicate with the person; or

(2) To a secured party or lienholder that has filed a financing statement against a person,

unless the secured party knows:

(i) That the person is a debtor; and

(ii) The identity of the person.

transaction or consumer transaction. A secured party is not liable to any person, and a person’s

liability for a deficiency is not affected, because of any act or omission arising out of the secured

party’s reasonable belief that a transaction is not a consumer-goods transaction or a consumer

transaction or that goods are not consumer goods, if the secured party’s belief is based on its

reasonable reliance on:

(1) A debtor’s representation concerning the purpose for which collateral was to be used,

acquired, or held; or

(2) An obligor’s representation concerning the purpose for which a secured obligation was

incurred.

(d) Limitation of liability for statutory damages. A secured party is not liable to any person

under § 6A-9-625(c)(2) for its failure to comply with § 6A-9-616.

(e) Limitation of multiple liability for statutory damages. A secured party is not liable under

§ 6A-9-625(c)(2) more than once with respect to any one secured obligation.

(f) Exception: Limitation of liability under subsections (a) and (b) of this section does not

apply. Subsections (a) and (b) of this section do not apply to limit the liability of a secured party to

a person if, at the time the secured party obtains control of collateral that is a controllable account,

controllable electronic record, or controllable payment intangible or at the time the security interest

attaches to the collateral, whichever is later:

(1) The person is a debtor or obligor; and

(2) The secured party knows that the information in subsection (b)(1)(i), (ii), or (iii) of this

section relating to the person is not provided by the collateral, a record attached to or logically

associated with the collateral, or the system in which the collateral is recorded.

SECTION 10. Chapter 6A-9 of the General Laws entitled "Secured Transactions" is hereby

amended by adding thereto the following sections:

6A-9-105.1. Control of electronic money.

(a) General rule: control of electronic money. A person has control of electronic money if:

(1) The electronic money, a record attached to or logically associated with the electronic

money, or a system in which the electronic money is recorded gives the person:

(i) Power to avail itself of substantially all the benefit from the electronic money; and

(ii) Exclusive power, subject to subsection (b) of this section, to:

(A) Prevent others from availing themselves of substantially all the benefit from the

electronic money; and

(B) Transfer control of the electronic money to another person or cause another person to

obtain control of other electronic money as a result of the transfer of the electronic money; and

(2) The electronic money, a record attached to or logically associated with the electronic

money, or a system in which the electronic money is recorded enables the person readily to identify

itself in any way, including by name, identifying number, cryptographic key, office, or account

number, as having the powers under subsection (a)(1) of this section.

(b) Meaning of exclusive. Subject to subsection (c) of this section, a power is exclusive

under subsections (a)(1)(ii)(A) and (B) of this section even if:

(1) The electronic money, a record attached to or logically associated with the electronic

money, or a system in which the electronic money is recorded limits the use of the electronic money

or has a protocol programmed to cause a change, including a transfer or loss of control; or

(2) The power is shared with another person.

another person under subsection (b)(2) of this section and the person’s power is not exclusive if:

(1) The person can exercise the power only if the power also is exercised by the other

person; and

(2) The other person:

(i) Can exercise the power without exercise of the power by the person; or

(ii) Is the transferor to the person of an interest in the electronic money.

(d) Presumption of exclusivity of certain powers. If a person has the powers specified in

subsections (a)(1)(ii)(A) and (B) of this section, the powers are presumed to be exclusive.

(e) Control through another person. A person has control of electronic money if another

person, other than the transferor to the person of an interest in the electronic money:

(1) Has control of the electronic money and acknowledges that it has control on behalf of

the person; or

(2) Obtains control of the electronic money after having acknowledged that it will obtain

control of the electronic money on behalf of the person.

6A-9-107.1. Control of controllable electronic record, controllable account, or

controllable payment intangible.

(a) Control under § 6A-12-105. A secured party has control of a controllable electronic

record as provided in § 6A-12-105.

(b) Control of controllable account and controllable payment intangible. A secured party

has control of a controllable account or controllable payment intangible if the secured party has

control of the controllable electronic record that evidences the controllable account or controllable

payment intangible.

6A-9-107.2. No requirement to acknowledge or confirm; No duties.

(a) No requirement to acknowledge. A person that has control under §§ 6A-9-104, § 6A-

9-105, or § 6A-9-105.1 is not required to acknowledge that it has control on behalf of another

person.

(b) No duties or confirmation. If a person acknowledges that it has or will obtain control

on behalf of another person, unless the person otherwise agrees or law other than this chapter

otherwise provides, the person does not owe any duty to the other person and is not required to

confirm the acknowledgment to any other person.

6A-9-306.1. Law governing perfection and priority of security interests in chattel

paper.

(a) Chattel paper evidenced by authoritative electronic copy. Except as provided in

subsection (d) of this section, if chattel paper is evidenced only by an authoritative electronic copy

of the chattel paper or is evidenced by an authoritative electronic copy and an authoritative tangible

copy, the local law of the chattel paper’s jurisdiction governs perfection, the effect of perfection or

nonperfection, and the priority of a security interest in the chattel paper, even if the transaction does

not bear any relation to the chattel paper’s jurisdiction.

(b) Chattel paper’s jurisdiction. The following rules determine the chattel paper’s

jurisdiction under this section:

(1) If the authoritative electronic copy of the record evidencing chattel paper, or a record

attached to or logically associated with the electronic copy and readily available for review,

expressly provides that a particular jurisdiction is the chattel paper’s jurisdiction for purposes of

this part, this chapter, or this title, that jurisdiction is the chattel paper’s jurisdiction.

(2) If subsection (b)(1) of this section does not apply and the rules of the system in which

the authoritative electronic copy is recorded are readily available for review and expressly provide

that a particular jurisdiction is the chattel paper’s jurisdiction for purposes of this part, this chapter,

or this title, that jurisdiction is the chattel paper’s jurisdiction.

(3) If subsectionsubsections (b)(1) and (b)(2) of this section do not apply and the

authoritative electronic copy, or a record attached to or logically associated with the electronic copy

and readily available for review, expressly provides that the chattel paper is governed by the law

of a particular jurisdiction, that jurisdiction is the chattel paper’s jurisdiction.

(4) If subsections (b)(1), (b)(2), and (b)(3) of this section do not apply and the rules of the

system in which the authoritative electronic copy is recorded are readily available for review and

expressly provide that the chattel paper or the system is governed by the law of a particular

jurisdiction, that jurisdiction is the chattel paper’s jurisdiction.

(5) If subsections (b)(1) through (b)(4) of this section do not apply, the chattel paper’s

jurisdiction is the jurisdiction in which the debtor is located.

of a record evidences chattel paper and the chattel paper is not evidenced by an authoritative

electronic copy, while the authoritative tangible copy of the record evidencing chattel paper is

located in a jurisdiction, the local law of that jurisdiction governs:

(1) Perfection of a security interest in the chattel paper by possession under § 6A-9-314.1;

and

(2) The effect of perfection or nonperfection and the priority of a security interest in the

chattel paper.

(d) When perfection governed by law of jurisdiction where debtor located. The local law

of the jurisdiction in which the debtor is located governs perfection of a security interest in chattel

paper by filing.

6A-9-306.2. Law governing perfection and priority of security interests in controllable

accounts, controllable electronic records, and controllable payment intangibles.

(a) Governing law: general rules. Except as provided in subsection (b) of this section, the

local law of the controllable electronic record’s jurisdiction specified in § 6A-12-107(c) and (d)

governs perfection, the effect of perfection or nonperfection, and the priority of a security interest

in a controllable electronic record and a security interest in a controllable account or controllable

payment intangible evidenced by the controllable electronic record.

(b) When perfection governed by law of jurisdiction where debtor located. The local law

of the jurisdiction in which the debtor is located governs:

(1) Perfection of a security interest in a controllable account, controllable electronic record,

or controllable payment intangible by filing; and

(2) Automatic perfection of a security interest in a controllable payment intangible created

by a sale of the controllable payment intangible.

6A-9-314.1. Perfection by possession and control of chattel paper.

(a) Perfection by possession and control. A secured party may perfect a security interest in

chattel paper by taking possession of each authoritative tangible copy of the record evidencing the

chattel paper and obtaining control of each authoritative electronic copy of the electronic record

evidencing the chattel paper.

(b) Time of perfection; continuation of perfection. A security interest is perfected under

subsection (a) of this section not earlier than the time the secured party takes possession and obtains

control and remains perfected under subsection (a) of this section only while the secured party

retains possession and control.

9-313(c) and (f) through (i) applies to perfection by possession of an authoritative tangible copy of

a record evidencing chattel paper.

6A-9-326.1. Priority of security interest in controllable account, controllable

electronic record, and controllable payment intangible.

A security interest in a controllable account, controllable electronic record, or controllable

payment intangible held by a secured party having control of the account, electronic record, or

payment intangible has priority over a conflicting security interest held by a secured party that does

not have control.

SECTION 11. Title 6A of the General Laws entitled "UNIFORM COMMERCIAL CODE"

is hereby amended by adding thereto the following chapter:

CHAPTER 12

CONTROLLABLE ELECTRONIC RECORDS

6A-12-101. Short title.

This chapter shall be known and may be cited as "Uniform Commercial Code-Controllable

Electronic Records."

6A-12-102. Definitions.

(a) Chapter 12 of title 6A definitions. In this chapter:

(1) “Controllable electronic record” means a record stored in an electronic medium that

can be subjected to control under § 6A-12-105. The term does not include a controllable account,

a controllable payment intangible, a deposit account, an electronic copy of a record evidencing

chattel paper, an electronic document of title, electronic money, investment property, or a

transferable record.

(2) “Qualifying purchaser” means a purchaser of a controllable electronic record or an

interest in a controllable electronic record that obtains control of the controllable electronic record

for value, in good faith, and without notice of a claim of a property right in the controllable

electronic record.

(3) “Transferable record” has the meaning provided for that term in:

(i) Section 201(a)(1) of the Electronic Signatures in Global and National Commerce Act,

15 U.S.C. Section 7021(a)(1); or

(ii) Section 42-127.1-16(a) of the Uniform Electronic Transactions Act.

(4) “Value” has the meaning provided in § 6A-3-303(a), as if references in that subsection

to an “instrument” were references to a controllable account, controllable electronic record, or

controllable payment intangible.

(b) Definitions in chapter 6A-9 of this title. The definitions in chapter 6A-9 of this title of

“account debtor”, “controllable account”, “controllable payment intangible”, “chattel paper”,

“deposit account”, “electronic money”, and “investment property” apply to this chapter.

general definitions and principles of construction and interpretation applicable throughout this

chapter.

6A-12-103. Relation to chapter 9 and consumer laws.

(a) Chapter 6A-9 of this title governs in case of conflict. If there is conflict between this

chapter and Chapter 6A-9 of this title, Chapter 6A-9 of this title governs.

(b) Applicable consumer law and other laws. A transaction subject to this chapter is subject

to:

(1) Any applicable rule of law that establishes a different rule for consumers;

(2) Any other statute or regulation that regulates the rates, charges, agreements, and

practices for loans, credit sales, or other extensions of credit; and

(3) Any consumer-protection statute or regulation.

6A-12-104. Rights in controllable account, controllable electronic record, and

controllable payment intangible.

(a) Applicability of section to controllable account and controllable payment intangible.

This section applies to the acquisition and purchase of rights in a controllable account or

controllable payment intangible, including the rights and benefits under subsections (c), (d), (e),

(g), and (h) of this section of a purchaser and qualifying purchaser, in the same manner this section

applies to a controllable electronic record.

(b) Control of controllable account and controllable payment intangible. To determine

whether a purchaser of a controllable account or a controllable payment intangible is a qualifying

purchaser, the purchaser obtains control of the account or payment intangible if it obtains control

of the controllable electronic record that evidences the account or payment intangible.

law other than this chapter determines whether a person acquires a right in a controllable electronic

record and the right the person acquires.

(d) Shelter principle and purchase of limited interest. A purchaser of a controllable

electronic record acquires all rights in the controllable electronic record that the transferor had or

had power to transfer, except that a purchaser of a limited interest in a controllable electronic record

acquires rights only to the extent of the interest purchased.

(e) Rights of qualifying purchaser. A qualifying purchaser acquires its rights in the

controllable electronic record free of a claim of a property right in the controllable electronic record.

(f) Limitation of rights of qualifying purchaser in other property. Except as provided in

subsections (a) and (e) of this section for a controllable account and a controllable payment

intangible or law other than this chapter, a qualifying purchaser takes a right to payment, right to

performance, or other interest in property evidenced by the controllable electronic record subject

to a claim of a property right in the right to payment, right to performance, or other interest in

property.

(g) No-action protection for qualifying purchaser. An action may not be asserted against a

qualifying purchaser based on both a purchase by the qualifying purchaser of a controllable

electronic record and a claim of a property right in another controllable electronic record, whether

the action is framed in conversion, replevin, constructive trust, equitable lien, or other theory.

(h) Filing not notice. Filing of a financing statement under chapter 6A-9 of this title is not

notice of a claim of a property right in a controllable electronic record.

6A-12-105. Control of controllable electronic record.

(a) General rule: control of controllable electronic record. A person has control of a

controllable electronic record if the electronic record, a record attached to or logically associated

with the electronic record, or a system in which the electronic record is recorded:

(1) Gives the person:

(i) Power to avail itself of substantially all the benefit from the electronic record; and

(ii) Exclusive power, subject to subsection (b) of this section, to:

(A) Prevent others from availing themselves of substantially all the benefit from the

electronic record; and

(B) Transfer control of the electronic record to another person or cause another person to

obtain control of another controllable electronic record as a result of the transfer of the electronic

record; and

(2) Enables the person readily to identify itself in any way, including by name, identifying

number, cryptographic key, office, or account number, as having the powers specified in subsection

(a)(1).

(b) Meaning of exclusive. Subject to subsection (c) of this section, a power is exclusive

under subsection (a)(1)(ii)(A) and (B) of this section even if:

(1) The controllable electronic record, a record attached to or logically associated with the

electronic record, or a system in which the electronic record is recorded, limits the use of the

electronic record or has a protocol programmed to cause a change, including a transfer or loss of

control or a modification of benefits afforded by the electronic record; or

(2) The power is shared with another person.

another person under subsection (b)(2) of this section and the person’s power is not exclusive if:

(1) The person can exercise the power only if the power also is exercised by the other

person; and

(2) The other person:

(i) Can exercise the power without exercise of the power by the person; or

(ii) Is the transferor to the person of an interest in the controllable electronic record or a

controllable account or controllable payment intangible evidenced by the controllable electronic

record.

(d) Presumption of exclusivity of certain powers. If a person has the powers specified in

subsection (a)(1)(ii)(A) and (B) of this section, the powers are presumed to be exclusive.

(e) Control through another person. A person has control of a controllable electronic record

if another person, other than the transferor to the person of an interest in the controllable electronic

record or a controllable account or controllable payment intangible evidenced by the controllable

electronic record:

(1) Has control of the electronic record and acknowledges that it has control on behalf of

the person; or

(2) Obtains control of the electronic record after having acknowledged that it will obtain

control of the electronic record on behalf of the person.

(f) No requirement to acknowledge. A person that has control under this section is not

required to acknowledge that it has control on behalf of another person.

(g) No duties or confirmation. If a person acknowledges that it has or will obtain control

on behalf of another person, unless the person otherwise agrees or law other than this chapter or

chapter 6A-9 of this title otherwise provides, the person does not owe any duty to the other person

and is not required to confirm the acknowledgment to any other person.

6A-12-106. Discharge of account debtor on controllable account or controllable

payment intangible.

(a) Discharge of account debtor. An account debtor on a controllable account or

controllable payment intangible may discharge its obligation by paying:

(1) The person having control of the controllable electronic record that evidences the

controllable account or controllable payment intangible; or

(2) Except as provided in subsection (b) of this section, a person that formerly had control

of the controllable electronic record.

(b) Content and effect of notification. Subject to subsection (d) of this section, the account

debtor may not discharge its obligation by paying a person that formerly had control of the

controllable electronic record if the account debtor receives a notification that:

(1) Is signed by a person that formerly had control or the person to which control was

transferred;

(2) Reasonably identifies the controllable account or controllable payment intangible;

(3) Notifies the account debtor that control of the controllable electronic record that

evidences the controllable account or controllable payment intangible was transferred;

(4) Identifies the transferee, in any reasonable way, including by name, identifying number,

cryptographic key, office, or account number; and

(5) Provides a commercially reasonable method by which the account debtor is to pay the

transferee.

with subsection (b) of this section, the account debtor may discharge its obligation by paying in

accordance with the notification and may not discharge the obligation by paying a person that

formerly had control.

(d) When notification ineffective. Subject to subsection (h) of this section, notification is

ineffective under subsection (b) of this section:

(1) Unless, before the notification is sent, the account debtor and the person that, at that

time, had control of the controllable electronic record that evidences the controllable account or

controllable payment intangible agree in a signed record to a commercially reasonable method by

which a person may furnish reasonable proof that control has been transferred;

(2) To the extent an agreement between the account debtor and seller of a payment

intangible limits the account debtor’s duty to pay a person other than the seller and the limitation

is effective under law other than this chapter; or

(3) At the option of the account debtor, if the notification notifies the account debtor to:

(i) Divide a payment;

(ii) Make less than the full amount of an installment or other periodic payment; or

(iii) Pay any part of a payment by more than one method or to more than one person.

(e) Proof of transfer of control. Subject to subsection (h) of this section, if requested by the

account debtor, the person giving the notification under subsection (b) of this section seasonably

shall furnish reasonable proof, using the method in the agreement referred to in subsection (d)(1)

of this section, that control of the controllable electronic record has been transferred. Unless the

person complies with the request, the account debtor may discharge its obligation by paying a

person that formerly had control, even if the account debtor has received a notification under

subsection (b) of this section.

(f) What constitutes reasonable proof. A person furnishes reasonable proof under

subsection (e) of this section that control has been transferred if the person demonstrates, using the

method in the agreement referred to in subsection (d)(1) of this section, that the transferee has the

power to:

(1) Avail itself of substantially all the benefit from the controllable electronic record;

(2) Prevent others from availing themselves of substantially all the benefit from the

controllable electronic record; and

(3) Transfer the powers specified in subsections (f)(1) and (f)(2) of this section to another

person.

(g) Rights not waivable. Subject to subsection (h) of this section, an account debtor may

not waive or vary its rights under subsections (d)(1) and (e) of this section or its option under

subsection (d)(3) of this section.

(h) Rule for individual under other law. This section is subject to law other than this chapter

which establishes a different rule for an account debtor who is an individual and who incurred the

obligation primarily for personal, family, or household purposes.

6A-12-107. Governing law.

(a) Governing law: general rule. Except as provided in subsection (b) of this section, the

local law of a controllable electronic record’s jurisdiction governs a matter covered by this chapter.

(b) Governing law: § 6A-12-106. For a controllable electronic record that evidences a

controllable account or controllable payment intangible, the local law of the controllable electronic

record’s jurisdiction governs a matter covered by § 6A-12-106 unless an effective agreement

determines that the local law of another jurisdiction governs.

controllable electronic record’s jurisdiction under this section:

(1) If the controllable electronic record, or a record attached to or logically associated with

the controllable electronic record and readily available for review, expressly provides that a

particular jurisdiction is the controllable electronic record’s jurisdiction for purposes of this chapter

or this title, that jurisdiction is the controllable electronic record’s jurisdiction.

(2) If subsection (c)(1) of this section does not apply and the rules of the system in which

the controllable electronic record is recorded are readily available for review and expressly provide

that a particular jurisdiction is the controllable electronic record’s jurisdiction for purposes of this

chapter or this title, that jurisdiction is the controllable electronic record’s jurisdiction.

(3) If subsections (c)(1) and (c)(2) of this section do not apply and the controllable

electronic record, or a record attached to or logically associated with the controllable electronic

record and readily available for review, expressly provides that the controllable electronic record

is governed by the law of a particular jurisdiction, that jurisdiction is the controllable electronic

record’s jurisdiction.

(4) If subsections (c)(1), (c)(2) and (c)(3) of this section do not apply and the rules of the

system in which the controllable electronic record is recorded are readily available for review and

expressly provide that the controllable electronic record or the system is governed by the law of a

particular jurisdiction, that jurisdiction is the controllable electronic record’s jurisdiction.

(5) If subsections (c)(1) through (c)(4) of this section do not apply, the controllable

electronic record’s jurisdiction is the District of Columbia.

(d) Applicability of chapter 12. If subsection (c)(5) of this section applies and chapter 12

of title 6A is not in effect in the District of Columbia without material modification, the governing

law for a matter covered by this chapter is the law of the District of Columbia as though chapter 12

of title 6A were in effect in the District of Columbia without material modification. In this

subsection, “Chapter 12” means Article 12 of Uniform Commercial Code Amendments (2022).

(e) Relation of matter or transaction to controllable electronic record’s jurisdiction not

necessary. To the extent subsections (a) and (b) of this section provide that the local law of the

controllable electronic record’s jurisdiction governs a matter covered by this chapter, that law

governs even if the matter or a transaction to which the matter relates does not bear any relation to

the controllable electronic record’s jurisdiction.

(f) Rights of purchasers determined at time of purchase. The rights acquired under § 6A-

12-104 by a purchaser or qualifying purchaser are governed by the law applicable under this section

at the time of purchase.

SECTION 12. Title 6A of the General Laws entitled "UNIFORM COMMERCIAL CODE"

is hereby amended by adding thereto the following chapter:

CHAPTER 11

TRANSITIONAL PROVISIONS FOR UNIFORM COMMERCIAL CODE AMENDMENTS

(2022)

PART 1

GENERAL PROVISIONS AND DEFINITIONS

6A-11-101. Short title.

This chapter shall be known and may be cited as "Transitional Provisions for Uniform

Commercial Code Amendments (2022)".

6A-11-102. Definitions.

(a) Chapter 11 of title 6A definitions. In this chapter:

(1) “Adjustment date” means July 1, 2025.

(2) “Amendatory act” means the public law by which this chapter is added to this title.

(3) “Chapter 12” means chapter 12 of this title.

(4) “Chapter 12 property” means a controllable account, controllable electronic record, or

controllable payment intangible.

(b) Definitions in other chapters. The following definitions in other chapters of this title

apply to this chapter:

“Controllable account” § 6A-9-102.

“Controllable electronic record” § 6A-12-102.

“Controllable payment intangible” § 6A-9-102.

“Electronic money” § 6A-9-102.

“Financing statement” § 6A-9-102.

general definitions and principles of construction and interpretation applicable throughout this

chapter.

PART 2

GENERAL TRANSITIONAL PROVISIONSPROVISION

6A-11-201. Saving Clause.

Except as provided in Part 3 of this chapter, a transaction validly entered into before

January 1, 2024 and the rights, duties, and interests flowing from the transaction remain valid

thereafter and may be terminated, completed, consummated, or enforced as required or permitted

by law other than this title or, if applicable, this title, as though the amendatory act had not taken

effect.

PART 3

TRANSITIONAL PROVISIONS FOR CHAPTERCHAPTERS 9 AND 12

6A-11-301. Saving Clause.

(a) Pre-effective-date transaction, lien, or interest. Except as provided in this part, chapter

9 of this title as amended by the amendatory act and chapter 12 of this title apply to a transaction,

lien, or other interest in property, even if the transaction, lien, or interest was entered into, created,

or acquired before January 1, 2024.

(b) Continuing validity. Except as provided in subsection (c) of this section and § 6A-11-

301302 through § 6A-11-306:

(1) A transaction, lien, or interest in property that was validly entered into, created, or

transferred before January 1, 2024 and was not governed by this title, but would be subject to

chapter 9 of this title 6Aas amended by the amendatory act or chapter 12 of this title 6Aif it had

been entered into, created, or transferred on or after January 1, 2024, including the rights, duties,

and interests flowing from the transaction, lien, or interest, remains valid on and after January 1,

2024; and

(2) The transaction, lien, or interest may be terminated, completed, consummated, and

enforced as required or permitted by the amendatory act or by the law that would apply if the

amendatory act had not taken effect.

proceeding commenced before January 1, 2024.

6A-11-302. Security interest perfected before effective date.

(a) Continuing perfection: perfection requirements satisfied. A security interest that is

enforceable and perfected immediately before January 1, 2024, is a perfected security interest under

the amendatory act if, on January 1, 2024, the requirements for enforceability and perfection under

the amendatory act are satisfied without further action.

(b) Continuing perfection: enforceability or perfection requirements not satisfied. If a

security interest is enforceable and perfected immediately before January 1, 2024, but the

requirements for enforceability or perfection under the amendatory act are not satisfied on January

1, 2024, the security interest:

(1) Is a perfected security interest until the earlier of the time perfection would have ceased

under the law in effect immediately before January 1, 2024 or the adjustment date;

(2) Remains enforceable thereafter only if the security interest satisfies the requirements

for enforceability under § 6A-9-203, as amended by the amendatory act, before the adjustment date;

and

(3) Remains perfected thereafter only if the requirements for perfection under the

amendatory act are satisfied before the time specified in subsection (b)(1) of this section.

6A-11-303. Security interest unperfected before effective date.

A security interest that is enforceable immediately before January 1, 2024, but is

unperfected at that time:

(1) Remains an enforceable security interest until the adjustment date;

(2) Remains enforceable thereafter if the security interest becomes enforceable under § 6A-

9-203, as amended by the amendatory act, on January 1, 2024, or before the adjustment date; and

(3) Becomes perfected:

(i) Without further action, on January 1, 2024, if the requirements for perfection under the

amendatory act are satisfied before or at that time; or

(ii) When the requirements for perfection are satisfied if the requirements are satisfied after

that time.

6A-11-304. Effectiveness of actions taken before effective date.

(a) Pre-effective-date action; attachment and perfection before adjustment date. If action,

other than the filing of a financing statement, is taken before January 1, 2024, and the action would

have resulted in perfection of the security interest had the security interest become enforceable

before January 1, 2024, the action is effective to perfect a security interest that attaches under the

amendatory act before the adjustment date. An attached security interest becomes unperfected on

the adjustment date unless the security interest becomes a perfected security interest under the

amendatory act before the adjustment date.

(b) Pre-effective-date filing. The filing of a financing statement before January 1, 2024, is

effective to perfect a security interest on January 1, 2024, to the extent the filing would satisfy the

requirements for perfection under the amendatory act.

is sufficient for the enforceability of a security interest on January 1, 2024, if the action would

satisfy the requirements for enforceability under the amendatory act.

6A-11-305. Priority.

(a) Determination of priority. Subject to subsections (b) and (c) of this section, the

amendatory act determines the priority of conflicting claims to collateral.

(b) Established priorities. Subject to subsection (c) of this section, if the priorities of claims

to collateral were established before January 1, 2024, chapter 9 of this title 6Aas in effect before

January 1, 2024, determines priority.

extent the priorities determined by chapter 9 of this title 6Aas amended by the amendatory act

modify the priorities established before January 1, 2024, the priorities of claims to chapter 12 of

this title 6Aproperty and electronic money established before January 1, 2024, cease to apply.

6A-11-306. Priority of claims when priority rules of chapter 9 do not apply.

(a) Determination of priority. Subject to subsections (b) and (c) of this section, chapter 12

of this title6A determines the priority of conflicting claims to chapter 12 of this title 6Aproperty

when the priority rules of chapter 9 of this title 6Aas amended by the amendatory act do not apply.

(b) Established priorities. Subject to subsection (c) of this section, when the priority rules

of chapter 9 of this title 6Aas amended by the amendatory act do not apply and the priorities of

claims to chapter 12 of this title 6Aproperty were established before January 1, 2024, law other

than chapter 12 of this title 6Adetermines priority.

chapter 9 of this title 6 Aas amended by the amendatory act do not apply, to the extent the priorities

determined by the amendatory act modify the priorities established before January 1, 2024, the

priorities of claims to Chapter 12 of this title 6Aproperty established before January 1, 2024, cease

to apply on the adjustment date.

PART 4

OFFICIAL COMMENTS

6A-11-401. Official comments.

It is the intention of the general assembly that the official comments to the Uniform

Commercial Code Amendments (2022) as approved and recommended for enactment in all the

States by the National Conference of Commissioners on Uniform State Laws in 2022 represent the

express legislative intent of the general assembly and shall be used as a guide for interpretation of

the provisions of this title.

SECTION 13. Nothing in this act may be construed to support, endorse, create, or

implement a national digital currency.

SECTION 14. This act shall take effect on the earlier of passage or July 1, 2024.

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LC004368

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