Senate Bill No. 683
(By Senators Unger and Dempsey)
____________
[Introduced March 21, 2005; referred to the Committee
on Interstate Cooperation; and then to the Committee on the
Judiciary.]
____________
A BILL to amend and reenact §46-1-201 of the Code of West Virginia,
1931, as amended; to amend and reenact §46-2-103, §46-2-104,
§46-2-310, §46-2-323, §46-2-401, §46-2-503, §46-2-505,
§46-2-506, §46-2-509, §46-2-605 and §46-2-705 of said code; to
amend and reenact §46-2A-103, §46-2A-514 and §46-2A-526 of
said code; to amend and reenact §46-4-104 and §46-4-210 of
said code; to amend and reenact §46-7-101, §46-7-102,
§46-7-103, §46-7-104, §46-7-105, §46-7-201, §46-7-202,
§46-7-203, §46-7-204, §46-7-205, §46-7-206, §46-7-207,
§46-7-208, §46-7-209, §46-7-210, §46-7-301, §46-7-302,
§46-7-303, §46-7-304, §46-7-305, §46-7-306, §46-7-307,
§46-7-308, §46-7-309, §46-7-401, §46-7-402, §46-7-403,
§46-7-404, §46-7-501, §46-7-502, §46-7-503, §46-7-504,
§46-7-505, §46-7-506, §46-7-507, §46-7-508, §46-7-509, §46-7-601, §46-7-602 and §46-7-603 of said code; to amend said
code by adding thereto seven new sections, designated §46-7-
106, §46-7-306, §46-7-307, §46-7-308, §46-7-309, §46-7-701 and
§46-7-702; to amend and reenact §46-8-103 of said code; and to
amend and reenact §46-9-102, §46-9-203, §46-9-207, §46-9-208,
§46-9-301, §46-9-310, §46-9-312, §46-9-313, §46-9-314,
§46-9-317, §46-9-338 and §46-9-601 of said code, all relating
to the Uniform Commercial Code documents of title.
Be it enacted by the Legislature of West Virginia:
That §46-1-201 of the Code of West Virginia, 1931, as amended,
be amended and reenacted; that §46-2-103, §46-2-104, §46-2-310,
§46-2-323, §46-2-401, §46-2-503, §46-2-505, §46-2-506, §46-2-509,
§46-2-605 and §46-2-705 of said code be amended and reenacted; that
§46-2A-103, §46-2A-514 and §46-2A-526 of said code be amended and
reenacted; that §46-4-104 and §46-4-210 of said code be amended and
reenacted; that §46-7-101, §46-7-102, §46-7-103, §46-7-104,
§46-7-105, §46-7-201, §46-7-202, §46-7-203, §46-7-204, §46-7-205,
§46-7-206, §46-7-207, §46-7-208, §46-7-209, §46-7-210, §46-7-301,
§46-7-302, §46-7-303, §46-7-304, §46-7-305, §46-7-306, §46-7-307,
§46-7-308, §46-7-309, §46-7-401, §46-7-402, §46-7-403, §46-7-404,
§46-7-501, §46-7-502, §46-7-503, §46-7-504, §46-7-505, §46-7-506,
§46-7-507, §46-7-508, §46-7-509, §46-7-601, §46-7-602 and §46-7-603
of said code be amended and reenacted; that said code be amended by
adding thereto seven new sections, designated §46-7-106, §46-7-306, §46-7-307, §46-7-308, §46-7-309, §46-7-701 and §46-7-702; that
§46-8-103 of said code be amended and reenacted; and that
§46-9-102, §46-9-203, §46-9-207, §46-9-208, §46-9-301, §46-9-310,
§46-9-312, §46-9-313, §46-9-314, §46-9-317, §46-9-338 and §46-9-601
of said code be amended and reenacted, all to read as follows:
CHAPTER 46. UNIFORM COMMERCIAL CODE.
PART 2. GENERAL DEFINITIONS AND
PRINCIPLES OF INTERPRETATION.
ARTICLE 1. GENERAL PROVISIONS.
§46-1-201. General definitions.
Subject to additional definitions contained in the subsequent
articles of this chapter which are applicable to specific articles
or parts thereof, and unless the context otherwise requires, in
this chapter:
(1) "Action" in the sense of a judicial proceeding includes
recoupment, counterclaim, setoff, suit in equity and any other
proceedings in which rights are determined.
(2) "Aggrieved party" means a party entitled to resort to a
remedy.
(3) "Agreement" means the bargain of the parties in fact as
found in their language or by implication from other circumstances
including course of dealing or usage of trade or course of
performance as provided in this chapter (sections 1-205 and 2-208).
Whether an agreement has legal consequences is determined by the provisions of this chapter, if applicable; otherwise by the law of
contracts (section 1-103). (Compare "Contract".)
(4) "Bank" means any person engaged in the business of
banking.
(5) "Bearer" means
a person in control of a negotiable
electronic document of title or a the person in possession of an
instrument,
a negotiable tangible document of title, or
certificated security payable to bearer or indorsed in blank.
(6) "Bill of lading" means a document
of title evidencing the
receipt of goods for shipment issued by a person engaged in the
business of
directly or indirectly transporting or forwarding
goods.
The term does not include a warehouse receipt. and
includes an airbill. "Airbill" means a document serving for air
transportation as a bill of lading for marine or rail
transportation and includes an air consignment note or air waybill
(7) "Branch" includes a separately incorporated foreign branch
of a bank.
(8) "Burden of establishing a fact" means the burden of
persuading the triers of fact that the existence of the fact is
more probable than its nonexistence.
(9) "Buyer in ordinary course of business" means a person that
buys goods in good faith, without knowledge that the sale violates
the rights of another person in the goods, and in the ordinary
course from a person, other than a pawnbroker, in the business of selling goods of that kind. A person buys goods in the ordinary
course if the sale to the person comports with the usual or
customary practices in the kind of business in which the seller is
engaged or with the seller's own usual or customary practices. A
person that sells oil, gas or other minerals at the wellhead or
minehead is a person in the business of selling goods of that kind.
A buyer in the 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 article
two may be a buyer in the ordinary course of business. A person
that acquires goods in a transfer in bulk or as security for or in
total or partial satisfaction of a money debt is not a buyer in
ordinary course of business.
(10) "Conspicuous",
means a term or clause is conspicuous when
it is so written that a reasonable person against whom it is to
operate ought to have noticed it. A printed heading in capitals
(as: NONNEGOTIABLE BILL OF LADING) is conspicuous. Language in
the body of a form is "conspicuous" if it is in larger or other
contrasting type or color. But in a telegram any stated term is
"conspicuous". Whether a term or clause is "conspicuous" or not is
for decision by the court with reference to a term, means so
written, displayed, or presented that a reasonable person against which it is to operate ought to have noticed it. Whether a term is
"conspicuous" or not is a decision for the court. Conspicuous
terms include the following:
(a) A heading in capitals equal to or greater in size than the
surrounding text, or in contrasting type, font or color to the
surrounding text of the same or lesser size; and
(b) Language in the body of a record or display in larger type
than the surrounding text, or in contrasting type, font or color to
the surrounding text of the same size, or set off from surrounding
text of the same size by symbols or other marks that call attention
to the language.
(11) "Contract" means the total legal obligation which results
from the parties' agreement as affected by this chapter and any
other applicable rules of law. (Compare "Agreement".)
(12) "Creditor" includes a general creditor, a secured
creditor, a lien creditor and any representative of creditors,
including an assignee for the benefit of creditors, a trustee in
bankruptcy, a receiver in equity and an executor or administrator
of an insolvent debtor's or assignor's estate.
(13) "Defendant" includes a person in the position of
defendant in a cross action or counterclaim.
(14) "Delivery" with respect
to an electronic document of
title means voluntary transfer of control and with respect to
instruments,
tangible documents of title, chattel paper or certificated securities means voluntary transfer of possession.
(15) "Document of title"
includes bill of lading, dock
warrant, dock receipt, warehouse receipt or order for the delivery
of goods, and also any other document which means a record: (i)
That in the regular course of business or financing is treated as
adequately evidencing that the person in possession
or control of
the record it is entitled to receive,
control, hold and dispose of
the
record document and the goods
it 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. To be a
document of title a document must purport to be issued by or
addressed to a bailee and purport to cover goods in the bailee's
possession which are either identified or are fungible portions of
an identified mass. An electronic document of title means a
document of title evidenced by a record consisting of information
stored in an electronic medium. A tangible document of title means
a document of title evidenced by a record consisting of information
that is inscribed on a tangible medium.
(16) "Fault" means wrongful act, omission or breach.
(17) "Fungible" with respect to goods or securities means
goods or securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit. Goods which are not
fungible shall be deemed fungible for the purposes of this chapter
to the extent that under a particular agreement or document unlike
units are treated as equivalents.
(18) "Genuine" means free of forgery or counterfeiting.
(19) "Good faith" means honesty in fact in the conduct or
transaction concerned.
(20) "Holder"
with respect to a negotiable instrument means
the person in possession if the instrument is payable to bearer or,
in the case of an instrument payable to an identified person, if
the identified person is in possession. "Holder" with respect to
a document of title means the person in possession if the goods are
deliverable to the bearer or to the order of the person in
possession means:
(a) The person in possession of a negotiable instrument that
is payable either to bearer or to an identified person that is the
person in possession;
(b) The person in possession of a negotiable tangible document
of title if the goods are deliverable either to bearer or to the
order of the person in possession; or
(c) The person in control of a negotiable electronic document
of title.
(21) To "honor" is to pay or to accept and pay, or where a
credit so engages to purchase or discount a draft complying with the terms of the credit.
(22) Insolvency proceedings" includes any assignment for the
benefit of creditors or other proceedings intended to liquidate or
rehabilitate the estate of the person involved.
(23) A person is "insolvent" who either has ceased to pay his
or her debts in the ordinary course of business or cannot pay his
or her debts as they become due or is insolvent within the meaning
of the Federal Bankruptcy Law.
(24) "Money" means a medium of exchange authorized or adopted
by a domestic or foreign government and includes a monetary unit of
account established by an intergovernmental organization or by
agreement between two or more nations.
(25)
Subject to subsection (27), a person has "notice" of a
fact
when if the person:
(a)
He Has actual knowledge of it;
or
(b)
He Has received a notice or notification of it; or
(c) From all the facts and circumstances known to him or her
at the time in question he or she has reason to know that it
exists. A person "knows" or has "knowledge" of a fact when he or
she has actual knowledge of it. "Discover" or "learn" or a word or
phrase of similar import refers to knowledge rather than to reason
to know. The time and circumstances under which a notice or
notification may cease to be effective are not determined by this
chapter.
(26) A person "notifies" or "gives" a notice or notification
to another by taking such steps as may be reasonably required to
inform the other
person in ordinary course whether or not
such
other the other person actually comes to know of it.
Subject to
subsection (27), a person "receives" a notice or notification when:
(a) It comes to his or her attention; or
(b) It is duly delivered
in a form reasonable under the
circumstances at the place of business through which the contract
was made or at
any other place another location held out by him or
her as the place for receipt of such communications.
(27) Notice, knowledge or a notice or notification received by
an organization is effective for a particular transaction from the
time when it is brought to the attention of the individual
conducting that transaction and in any event from the time when it
would have been brought to
his the individual's attention if the
organization had exercised due diligence. An organization
exercises due diligence if it maintains reasonable routines for
communicating significant information to the person conducting the
transaction and there is reasonable compliance with the routines.
Due diligence does not require an individual acting for the
organization to communicate information unless such communication
is part of his or her regular duties or unless he or she has reason
to know of the transaction and that the transaction would be
materially affected by the information.
(28) "Organization" includes a corporation, government or
governmental subdivision or agency, business trust, estate, trust,
partnership or association, two or more persons having a joint or
common interest, or any other legal or commercial entity.
(29) "Party," as distinct from "third party," means a person
who has engaged in a transaction or made an agreement within this
chapter.
(30) "Person" includes an individual or an organization (see
section 1-102).
(31) "Presumption" or "presumed" means that the trier of fact
must find the existence of the fact presumed unless and until
evidence is introduced which would support a finding of its
nonexistence.
(32) "Purchase" includes taking by sale, discount,
negotiation, mortgage, pledge, lien, security interest, issue or
reissue, gift or any other voluntary transaction creating an
interest in property.
(33) "Purchaser" means a person who takes by purchase.
(34) "Remedy" means any remedial right to which an aggrieved
party is entitled with or without resort to a tribunal.
(35) "Representative" includes an agent, an officer of a
corporation or association, and a trustee, executor or
administrator of an estate, or any other person empowered to act
for another.
(36) "Rights" includes remedies.
(37) "Security interest" means an interest in personal
property or fixtures which secures payment or performance of an
obligation. The term also includes any interest of consignor and
a buyer of accounts, chattel paper, a payment intangible or a
promissory note in a transaction that is subject to article nine.
The special property interest of a buyer of goods on identification
of those goods to a contract for sale under section 2-401 is not a
"security interest," but a buyer may also acquire a "security
interest" by complying with article nine. Except as otherwise
provided in section 2-505, the right of a seller or lessor of goods
under article two or two-a of this chapter 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
article nine of this chapter. The retention or reservation of
title by a seller of goods notwithstanding shipment or delivery to
the buyer (section 2-401) is limited in effect to a reservation of
a "security interest".
(a) Whether a transaction creates a lease or security interest
is determined by the facts of each case; however, a transaction
creates a security interest if the consideration the lessee is to
pay the lessor for the right to possession and use of the goods is
an obligation for the term of the lease not subject to termination
by the lessee, and:
(i) The original term of the lease is equal to or greater than
the remaining economic life of the goods;
(ii) The lessee is bound to renew the lease for the remaining
economic life of the goods or is bound to become the owner of the
goods;
(iii) The lessee has an option to renew the lease for the
remaining economic life of the goods for no additional
consideration or nominal additional consideration upon compliance
with the lease agreement; or
(iv) The lessee has an option to become the owner of the goods
for no additional consideration or nominal additional consideration
upon compliance with the lease agreement.
(b) A transaction does not create a security interest merely
because it provides that:
(i) The present value of the consideration the lessee is
obligated to pay the lessor for the right to possession and use of
the goods is substantially equal to or is greater than the fair
market value of the goods at the time the lease is entered into;
(ii) The lessee assumes risk of loss of the goods, or agrees
to pay taxes, insurance, filing, recording or registration fees, or
service or maintenance costs with respect to the goods;
(iii) The lessee has an option to renew the lease or to become
the owner of the goods;
(iv) The lessee has an option to renew the lease for a fixed rent that is equal to or greater than the reasonably predictable
fair market rent for the use of the goods for the term of the
renewal at the time the option is to be performed; or
(v) The lessee has an option to become the owner of the goods
for a fixed price that is equal to or greater than the reasonably
predictable fair market value of the goods at the time the option
is to be performed.
(c) For purposes of this subsection:
(i) Additional consideration is not nominal if: (i) When the
option to renew the lease is granted to the lessee the rent is
stated to be the fair market rent for the use of the goods for the
term of the renewal determined at the time the option is to be
performed; or (ii) when the option to become the owner of the goods
is granted to the lessee the price is stated to be the fair market
value of the goods determined at the time the option is to be
performed. Additional consideration is nominal if it is less than
the lessee's reasonably predictable cost of performing under the
lease agreement if the option is not exercised;
(ii) "Reasonably predictable" and "remaining economic life of
the goods" are to be determined with reference to the facts and
circumstances at the time the transaction is entered into; and
(iii) "Present value" means the amount as of a date certain of
one or more sums payable in the future, discounted to the date
certain. The discount is determined by the interest rate specified by the parties if the rate is not manifestly unreasonable at the
time the transaction is entered into; otherwise, the discount is
determined by a commercially reasonable rate that takes into
account the facts and circumstances of each case at the time the
transaction was entered into.
(38) "Send" in connection with a
ny writing,
record, or notice
means:
(a) To deposit in the mail or deliver for transmission by any
other usual means of communication with postage or cost of
transmission provided for and properly addressed and, in the case
of an instrument, to an address specified thereon or otherwise
agreed, or if there be none to any address reasonable under the
circumstances;
The receipt of any writing or notice within the time
at which it would have arrived if properly sent has the effect of
a proper sending or
(b) In any other way to cause to be received any record or
notice within the time it would have arrived if properly sent.
(39) "Signed" includes any symbol executed or adopted by a
party with present intention to authenticate a writing.
(40) "Surety" includes guarantor.
(41) "Telegram" includes a message transmitted by radio,
teletype, cable, any mechanical method of transmission, or the
like.
(42) "Term" means that portion of an agreement which relates to a particular matter.
(43) "Unauthorized signature" means one made without actual,
implied or apparent authority and includes a forgery.
(44) "Value". Except as otherwise provided with respect to
negotiable instruments and bank collections (sections 3-303, 4-208
and 4-209), a person gives "value" for rights if he acquires them:
(a) In return for a binding commitment to extend credit or for
the extension of immediately available credit whether or not drawn
upon and whether or not a chargeback is provided
for in the event
of difficulties in collection; or
(b) As security for or in total or partial satisfaction of a
preexisting claim; or
(c) By accepting delivery pursuant to a preexisting contract
for purchase; or
(d) Generally, in return for any consideration sufficient to
support a simple contract.
(45) "Warehouse receipt" means a
document of title receipt
issued by a person engaged in the business of storing goods for
hire.
(46) "Written" or "writing" includes printing, typewriting or
any other intentional reduction to tangible form.
ARTICLE 2. SALES.
§46-2-103. Definitions and index of definitions.
(1) In this article unless the context otherwise requires:
(a) "Buyer" means a person who buys or contracts to buy goods.
(b) "Good faith" in the case of a merchant means honesty in
fact and the observance of reasonable commercial standards of fair
dealing in the trade.
(c) "Receipt" of goods means taking physical possession of
them.
(d) "Seller" means a person who sells or contracts to sell
goods.
(2) Other definitions applying to this article or to specified
parts thereof, and the sections in which they appear are:
"Acceptance". Section 2-606.
"Banker's credit". Section 2-325.
"Between merchants". Section 2-104.
"Cancellation". Section 2-106 (4).
"Commercial unit". Section 2-105.
"Confirmed credit". Section 2-325.
"Conforming to contract". Section 2-106.
"Contract for sale". Section 2-106.
"Cover". Section 2-712.
"Entrusting". Section 2-403.
"Financing agency". Section 2-104.
"Future goods". Section 2-105.
"Goods". Section 2-105.
"Identification". Section 2-501.
"Installment contract". Section 2-612.
"Letter of credit". Section 2-325.
"Lot". Section 2-105.
"Merchant". Section 2-104.
"Overseas". Section 2-323.
"Person in position of seller". Section 2-707.
"Present sale". Section 2-106.
"Sale". Section 2-106.
"Sale on approval". Section 2-326.
"Sale or return". Section 2-326.
"Termination". Section 2-106.
(3)
"Control" as provided in Section 7-106 and the following
definitions in other articles of this chapter apply to this
article:
"Check." Section 3-104.
"Consignee." Section 7-102.
"Consignor." Section 7-102.
"Consumer goods." Section 9-102.
"Dishonor." Section 3-502.
"Draft." Section 3-104.
(4) In addition article one of this chapter contains general
definitions and principles of construction and interpretation
applicable throughout this article.
§46-2-104. Definitions: "Merchant"; "between merchants"; "financing agency".
(1) "Merchant" means a person who deals in goods of the kind
or otherwise by his
or her occupation holds himself
or herself out
as having knowledge or skill peculiar to the practices or goods
involved in the transaction or to whom such knowledge or skill may
be attributed by his
or her employment of an agent or broker or
other intermediary who by his
or her occupation holds himself
or
herself out as having such knowledge or skill.
(2) "Financing agency" means a bank, finance company or other
person who in the ordinary course of business makes advances
against goods or documents of title or who, by arrangement with
either the seller or the buyer, intervenes in ordinary course to
make or collect payment due or claimed under the contract for sale,
as by purchasing or paying the seller's draft or making advances
against it or by merely taking it for collection whether or not
documents of title accompany
or are associated with the draft.
"Financing agency" includes also a bank or other person who
similarly intervenes between persons who are in the position of
seller and buyer in respect to the goods (section 2-707).
(3) "Between merchants" means in any transaction with respect
to which both parties are chargeable with the knowledge or skill of
merchants.
§46-2-310. Open time for payment or running of credit; authority
to ship under reservation.
Unless otherwise agreed:
(a) Payment is due at the time and place at which the buyer is
to receive the goods even though the place of shipment is the place
of delivery; and
(b) If the seller is authorized to send the goods he
or she
may ship them under reservation, and may tender the documents of
title, but the buyer may inspect the goods after their arrival
before payment is due unless such inspection is inconsistent with
the terms of the contract (section 2-513); and
(c) If delivery is authorized and made by way of documents of
title otherwise than by subsection (b), then payment is due
regardless of where the goods are to be received (i) at the time
and place at which the buyer is to receive
delivery of the
tangible
documents
or (ii) at the time the buyer is to receive delivery of
the electronic documents and at the seller's place of business or
if none, the seller's residence regardless of where the goods are
to be received; and
(d) Where the seller is required or authorized to ship the
goods on credit the credit period runs from the time of shipment
but postdating the invoice or delaying its dispatch will
correspondingly delay the starting of the credit period.
§46-2-323. Form of bill of lading required in overseas shipment,
"overseas".
(1) Where the contract contemplates overseas shipment and contains a term C.I.F. or C.& F. or F.O.B. vessel, the seller
unless otherwise agreed, must obtain a negotiable bill of lading
stating that the goods have been loaded on board or, in the case of
a term C.I.F. or C.& F., received for shipment.
(2) Where, in a case within subsection (1), a
tangible bill of
lading has been issued in a set of parts, unless otherwise agreed
if the documents are not to be sent from abroad, the buyer may
demand tender of the full set, otherwise, only one part of the bill
of lading need be tendered. Even if the agreement expressly
requires a full set.
(a) Due tender of a single part is acceptable within the
provisions of this article on cure of improper delivery (subsection
(1) of section 2-508); and
(b) Even though the full set is demanded, if the documents are
sent from abroad the person tendering an incomplete set may
nevertheless require payment upon furnishing an indemnity which the
buyer in good faith deems adequate.
(3) A shipment by water or by air or a contract contemplating
such shipment is "overseas" insofar as by usage of trade or
agreement, it is subject to the commercial, financing or shipping
practices characteristic of international deep water commerce.
§46-2-401. Passing of title; reservation for security; limited
application of this section.
Each provision of this article with regard to the rights, obligations and remedies of the seller, the buyer, purchasers or
other third parties applies irrespective of title to the goods
except where the provision refers to such title. Insofar as
situations are not covered by the other provisions of this article
and matters concerning title become material, the following rules
apply:
(1) Title to goods cannot pass under a contract for sale prior
to their identification to the contract (section 2-501), and unless
otherwise explicitly agreed, the buyer acquires by their
identification a special property as limited by this chapter. Any
retention or reservation by the seller of the title (property) in
goods shipped or delivered to the buyer is limited in effect to a
reservation of a security interest. Subject to these provisions
and to the provisions of the article on secured transactions
(article 9), title to goods passes from the seller to the buyer in
any manner and on any conditions explicitly agreed on by the
parties.
(2) Unless otherwise explicitly agreed, title passes to the
buyer at the time and place at which the seller completes his
performance with reference to the physical delivery of the goods,
despite any reservation of a security interest and even though a
document of title is to be delivered at a different time or place;
and, in particular and despite any reservation of a security
interest, by the bill of lading.
(a) If the contract requires or authorizes the seller to send
the goods to the buyer but does not require him to deliver them at
destination, title passes to the buyer at the time and place of
shipment; but
(b) If the contract requires delivery at destination, title
passes on tender there.
(3) Unless otherwise explicitly agreed where delivery is to be
made without moving the goods.
(a) If the seller is to deliver a
tangible document of title,
title passes at the time when and the place where he delivers such
documents
and if the seller is to deliver an electronic document of
title, title passes when the seller delivers the document; or
(b) If the goods are at the time of contracting already
identified and no documents
of title are to be delivered, title
passes at the time and place of contracting.
(4) A rejection or other refusal by the buyer to receive or
retain the goods, whether or not justified, or a justified
revocation of acceptance revests title to the goods in the seller.
Such revesting occurs by operation of law and is not a "sale."
§46-2-503. Manner of seller's tender of delivery.
(1) Tender of delivery requires that the seller put and hold
conforming goods at the buyer's disposition and give the buyer any
notification reasonably necessary to enable him
or her to take
delivery. The manner, time and place for tender are determined by the agreement and this article, and in particular:
(a) Tender must be at a reasonable hour, and if it is of goods
they must be kept available for the period reasonably necessary to
enable the buyer to take possession; but
(b) Unless otherwise agreed, the buyer must furnish facilities
reasonably suited to the receipt of the goods.
(2) Where the case is within the next section respecting
shipment tender requires that the seller comply with its
provisions.
(3) Where the seller is required to deliver at a particular
destination, tender requires that he comply with subsection (1) and
also in any appropriate case tender documents as described in
subsections (4) and (5) of this section.
(4) Where goods are in the possession of a bailee and are to
be delivered without being moved:
(a) Tender requires that the seller either tender a negotiable
document of title covering such goods or procure acknowledgment by
the bailee of the buyer's right to possession of the goods; but
(b) Tender to the buyer of a nonnegotiable document of title
or of a
written direction to record directing the bailee to deliver
is sufficient tender unless the buyer seasonably objects, and
except as otherwise provided in Article 9 receipt by the bailee of
notification of the buyer's rights fixes those rights as against
the bailee and all third persons; but risk of loss of the goods and of any failure by the bailee to honor the nonnegotiable document of
title or to obey the direction remains on the seller until the
buyer has had a reasonable time to present the document or
direction, and a refusal by the bailee to honor the document or
obey the direction defeats the tender.
(5) Where the contract requires the seller to deliver
documents:
(a) He must tender all such documents in correct form, except
as provided in this article with respect to bills of lading in a
set (subsection (2) of section 2-323); and
(b) Tender through customary banking channels is sufficient
and dishonor of a draft accompanying
or associated with the
documents constitutes nonacceptance or rejection.
§46-2-505. Seller's shipment under reservation.
(1) Where the seller has identified goods to the contract by
or before shipment:
(a) His
or her procurement of a negotiable bill of lading to
his
or her own order or otherwise reserves in him
or her a security
interest in the goods. His
or her procurement of the bill to the
order of a financing agency or of the buyer indicates, in addition,
only the seller's expectation of transferring that interest to the
person named.
(b) A nonnegotiable bill of lading to himself
or herself or
his
or her nominee reserves possession of the goods as security but, except in a case of conditional delivery (subsection (2) of
section 2-507), a nonnegotiable bill of lading naming the buyer as
consignee reserves no security interest even though the seller
retains possession
or control of the bill of lading.
(2) When shipment by the seller with reservation of a security
interest is in violation of the contract for sale it constitutes an
improper contract for transportation within the preceding section
but impairs neither the rights given to the buyer by shipment and
identification of the goods to the contract nor the seller's powers
as a holder of a negotiable document
of title.
§46-2-506. Rights of financing agency.
(1) A financing agency by paying or purchasing for value a
draft which relates to a shipment of goods acquires to the extent
of the payment or purchase and in addition to its own rights under
the draft and any document of title securing it any rights of the
shipper in the goods including the right to stop delivery and the
shipper's right to have the draft honored by the buyer.
(2) The right to reimbursement of a financing agency which has
in good faith honored or purchased the draft under commitment to or
authority from the buyer is not impaired by subsequent discovery of
defects with reference to any relevant document which was
apparently regular.
on its face
§46-2-509. Risk of loss in the absence of breach.
(1) Where the contract requires or authorizes the seller to ship the goods by carrier:
(a) If it does not require him
or her to deliver them at a
particular destination, the risk of loss passes to the buyer when
the goods are duly delivered to the carrier even though the
shipment is under reservation (section 2-505); but
(b) If it does require him
or her to deliver them at a
particular destination and the goods are there duly tendered while
in the possession of the carrier, the risk of loss passes to the
buyer when the goods are there duly so tendered as to enable the
buyer to take delivery.
(2) Where the goods are held by a bailee to be delivered
without being moved, the risk of loss passes to the buyer:
(a) On his
or her receipt of
possession or control of a
negotiable document of title covering the goods; or
(b) On acknowledgment by the bailee of the buyer's right to
possession of the goods; or
(c) After his
or her receipt of
possession or control a
nonnegotiable document of title or other
written direction to
deliver
in a record, as provided in subsection (4) (b) of section
2-503.
(3) In any case not within subsection (1) or (2), the risk of
loss passes to the buyer on his
or her receipt of the goods if the
seller is a merchant; otherwise the risk passes to the buyer on
tender of delivery.
(4) The provisions of this section are subject to contrary
agreement of the parties and to the provisions of this article on
sale on approval (section 2-327) and on effect of breach on risk of
loss (section 2-510).
§46-2-605. Waiver of buyer's objections by failure to
particularize.
(1) The buyer's failure to state in connection with rejection
a particular defect which is ascertainable by reasonable inspection
precludes him
or her from relying on the unstated defect to justify
rejection or to establish breach:
(a) Where the seller could have cured it if stated seasonably;
or
(b) Between merchants when the seller has, after rejection
made a request in writing for a full and final written statement of
all defects on which the buyer proposes to rely.
(2) Payment against documents made without reservation of
rights precludes recovery of the payment for defects apparent
on
the face of in the documents.
§46-2-705. Seller's stoppage of delivery in transit or otherwise.
(1) The seller may stop delivery of goods in the possession
of a carrier or other bailee when he
or she discovers the buyer to
be insolvent (section 2-702) and may stop delivery of carload,
truckload, planeload or larger shipments of express or freight when
the buyer repudiates or fails to make a payment due before delivery or, if for any other reason, the seller has a right to withhold or
reclaim the goods.
(2) As against such buyer the seller may stop delivery until:
(a) Receipt of the goods by the buyer; or
(b) Acknowledgment to the buyer by any bailee of the goods
except a carrier that the bailee holds the goods for the buyer; or
(c) Such acknowledgment to the buyer by a carrier by
reshipment or as
a warehouseman warehouse; or
(d) Negotiation to the buyer of any negotiable document of
title covering the goods.
(3)(a) To stop delivery the seller must so notify as to enable
the bailee by reasonable diligence to prevent delivery of the
goods.
(b) After such notification the bailee must hold and deliver
the goods according to the directions of the seller but the seller
is liable to the bailee for any ensuing charges or damages.
(c) If a negotiable document of title has been issued for
goods, the bailee is not obliged to obey a notification to stop
until surrender
of possession or control of the document.
(d) A carrier who has issued a nonnegotiable bill of lading is
not obligated to obey a notification to stop received from a person
other than the consignor.
ARTICLE 2A. LEASES.
§46-2A-103. Definitions and index of definitions.
(1) In this article, unless the context otherwise requires:
(a) "Buyer in ordinary course of business" means a person who
in good faith and without knowledge that the sale to him or her is
in violation of the ownership rights or security interest or
leasehold interest of a third party in the goods, buys in ordinary
course from a person in the business of selling goods of that kind
but does not include a pawnbroker. "Buying" may be for cash or by
exchange of other property or on secured or unsecured credit and
includes
receiving acquiring goods or documents of title under a
preexisting contract for sale but does not include a transfer in
bulk or as security for or in total or partial satisfaction of a
money debt.
(b) "Cancellation" occurs when either party puts an end to the
lease contract for default by the other party.
(c) "Commercial unit" means such a unit of goods as by
commercial usage is a single whole for purposes of lease and
division of which materially impairs its character or value on the
market or in use. A commercial unit may be a single article, as a
machine, or a set of articles, 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" shall have the same meaning as that
ascribed to it in section one hundred two, article one, chapter
forty-six-a of this code.
(f) "Fault" means wrongful act, omission, breach or default.
(g) "Finance lease" means a lease with respect to which:
(i) The lessor does not select, manufacture or supply the
goods;
(ii) The lessor acquires the goods or the right to possession
and use of the goods in connection with the lease; and
(iii) One of the following occurs:
(A) The lessee receives a copy of the contract by which the
lessor acquired the goods or the right to possession and use of the
goods before signing the lease contract;
(B) The lessee's approval of the contract by which the lessor
acquired the goods or the right to possession and use of the goods
is a condition to effectiveness of the lease contract;
(C) The lessee, before signing the lease contract, receives an
accurate and complete statement designating the promises and
warranties, and any disclaimers of warranties, limitations or
modifications of remedies, or liquidated damages, including those
of a third party, such as the manufacturer of the goods, provided
to the lessor by the person supplying the goods in connection with,
or as part of the contract by which the lessor acquired the goods
or the right to possession and use of the goods; or
(D) If the lease is not a consumer lease, the lessor, before
the lessee signs the lease contract, informs the lessee in writing:
(a) Of the identity of the person supplying the goods to the
lessor, unless the lessee has selected that person and directed the
lessor to acquire the goods or the right to possession and use of
the goods from that person; (b) that the lessee is entitled under
this article to the promises and warranties, including those of any
third party, provided to the lessor by the person supplying the
goods in connection with or as part of the contract by which the
lessor acquired the goods or the right to possession and use of the
goods; and (c) that the lessee may communicate with the person
supplying the goods to the lessor and receive an accurate and
complete statement of those promises and warranties, including any
disclaimers and limitations of them or of remedies.
(h) "Goods" means all things that are movable at the time of
identification to the lease contract, or are fixtures (section
2A-309), but the term does not include money, documents,
instruments, accounts, chattel paper, general intangibles or
minerals or the like, including oil and gas, before extraction.
The term also includes the unborn young of animals.
(i) "Installment lease contract" means a lease contract that
authorizes or requires the delivery of goods in separate lots to be
separately accepted, even though the lease contract contains a
clause "each delivery is a separate lease" or its equivalent.
(j) "Lease" means a transfer of the right to possession and
use of goods for a term in return for consideration, but a sale,
including a sale on approval or a sale or return, or retention or
creation of a security interest is not a lease. Unless the context
clearly indicates otherwise, the term includes a sublease.
(k) "Lease agreement" means the bargain, with respect to the
lease, of the lessor and the lessee in fact as found in their
language or by implication from other circumstances including
course of dealing or usage of trade or course of performance as
provided in this article. 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 article and
any other applicable rules of law. Unless the context clearly
indicates otherwise, the term includes a sublease contract.
(m) "Leasehold interest" means the interest of the lessor or
the lessee under a lease contract.
(n) "Lessee" means a person who acquires the right to
possession and use of goods under a lease. Unless the context
clearly indicates otherwise, the term includes a sublessee.
(o) "Lessee in ordinary course of business" means a person who
in good faith and without knowledge that the lease to him or her is
in violation of the ownership rights or security interest or
leasehold interest of a third party in the goods leases, in ordinary course from a person in the business of selling or leasing
goods of that kind but does not include a pawnbroker. "Leasing"
may be for cash or by exchange of other property or on secured or
unsecured credit and includes
receiving acquiring goods or
documents of title under a preexisting lease contract but does not
include a transfer in bulk or as security for or in total or
partial satisfaction of a money debt.
(p) "Lessor" means a person who transfers the right to
possession and use of goods under a lease. Unless the context
clearly indicates otherwise, the term includes a sublessor.
(q) "Lessor's residual interest" means the lessor's interest
in the goods after expiration, termination or cancellation of the
lease contract.
(r) "Lien" means a charge against or interest in goods to
secure payment of a debt or performance of an obligation, but the
term does not include a security interest.
(s) "Lot" means a parcel or a single article 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 article and the
sections in which they appear are:
"Accessions".
Section 2A-310(1).
"Construction mortgage".
Section 2A-309(1)(d).
"Encumbrance". Section 2A-309(1)(e).
"Fixtures". Section 2A-309(1)(a).
"Fixture filing".
Section 2A-309(1)(b).
"Purchase money lease".
Section 2A-309(1)(c).
(3) The following definitions in other articles apply to this
article:
"Account".
Section 9-102(a)(2).
"Between merchants".
Section 2-104(3).
"Buyer".
Section 2-103(1)(a).
"Chattel paper".
Section 9-102(a)(11).
"Consumer goods".
Section 9-102(a)(23).
"Document".
Section 9-102(a)(30).
"Entrusting".
Section 2-403(3).
"General intangible".
Section 9-102(a)(42).
"Good faith".
Section 2-103(1)(b).
"Instrument".
Section 9-102(a)(47).
"Merchant".
Section 2-104(1).
"Mortgage".
Section 9-102(a)(55).
"Pursuant to commitment".
Section 9-102(a)(68).
"Receipt".
Section 2-103(1)(c).
"Sale".
Section 2-106(1).
"Sale on approval".
Section 2-326.
"Sale or return".
Section 2-326.
"Seller".
Section 2-103(1)(d).
(4) In addition, article one contains general definitions and
principles of construction and interpretation applicable throughout this article.
§46-2A-514. Waiver of lessee's objections.
(1) In rejecting goods, a lessee's failure to state a
particular defect that is ascertainable by reasonable inspection
precludes the lessee from relying on the defect to justify
rejection or to establish default:
(a) If, stated seasonably, the lessor or the supplier could
have cured it (section 2A-513); or
(b) Between merchants if the lessor or the supplier after
rejection has made a request in writing for a full and final
written statement of all defects on which the lessee proposes to
rely.
(2) A lessee's failure to reserve rights when paying rent or
other consideration against documents precludes recovery of the
payment for defects apparent
on the face of in the documents.
§46-2A-526. Lessor's stoppage of delivery in transit or otherwise.
(1) A lessor may stop delivery of goods in the possession of
a carrier or other bailee if the lessor discovers the lessee to be
insolvent and may stop delivery of carload, truckload, planeload or
larger shipments of express or freight if the lessee repudiates or
fails to make a payment due before delivery, whether for rent,
security or otherwise under the lease contract, or for any other
reason the lessor has a right to withhold or take possession of the
goods.
(2) In pursuing its remedies under subsection (1), the lessor
may stop delivery until:
(a) Receipt of the goods by the lessee;
(b) Acknowledgment to the lessee by any bailee of the goods,
except a carrier, that the bailee holds the goods for the lessee;
or
(c) Such an acknowledgment to the lessee by a carrier via
reshipment or as
a warehouseman warehouse.
(3)(a) To stop delivery, a lessor shall so notify as to enable
the bailee by reasonable diligence to prevent delivery of the
goods.
(b) After notification, the bailee shall hold and deliver the
goods according to the directions of the lessor, but the lessor is
liable to the bailee for any ensuing charges or damages.
(c) A carrier who has issued a nonnegotiable bill of lading is
not obliged to obey a notification to stop received from a person
other than the consignor.
ARTICLE 4. BANK DEPOSITS AND COLLECTIONS.
§46-4-104. Definitions and index of definitions.
(a) In this article unless the context otherwise requires:
(1) "Account" means any deposit or credit account with a bank,
including demand, time, savings, passbook, share draft, or like
account, other than an account evidenced by a certificate of
deposit;
(2) "Afternoon" means the period of a day between noon and
midnight;
(3) "Banking day" means the part of a day on which a bank is
open to the public for carrying on substantially all of its banking
functions;
(4) "Clearing house" means an association of banks or other
payors regularly clearing items;
(5) "Customer" means a person having an account with a bank or
for whom a bank has agreed to collect items, including a bank that
maintains an account at another bank;
(6) "Documentary draft" means a draft to be presented for
acceptance or payment if specified documents, certificated
securities (section 8-102) or instructions for uncertificated
securities (section 8-102), or other certificates, statements or
the like are to be received by the drawee or other payor before
acceptance or payment of the draft;
(7) "Draft" means a draft as defined in section 3-104 or an
item, other than an instrument, that is an order;
(8) "Drawee" means a person ordered in a draft to make
payment;
(9) "Item" means an instrument or a promise or order to pay
money handled by a bank for collection or payment. The term does
not include a payment order governed by article four-a or a credit
or debit card slip;
(10) "Midnight deadline" with respect to a bank is midnight on
its next banking day following the banking day on which it receives
the relevant item or notice or from which the time for taking
action commences to run, whichever is later;
(11) "Settle" means to pay in cash, by clearing-house
settlement, in a charge or credit or by remittance, or otherwise as
agreed. A settlement may be either provisional or final;
(12) "Suspends payments" with respect to a bank means that it
has been closed by order of the supervisory authorities, that a
public officer has been appointed to take it over or that it ceases
or refuses to make payments in the ordinary course of business.
(b) Other definitions applying to this article and the
sections in which they appear are:
"Agreement for electronic presentment" Section 4-110.
"Bank"
Section 4-105.
"Collecting bank"
Section 4-105.
"Depositary bank"
Section 4-105.
"Intermediary bank"
Section 4-105.
"Payor bank"
Section 4-105.
"Presenting bank"
Section 4-105.
"Presentment notice"
Section 4-110.
(c)
"Control" as provided in Section 7-106 and the following
definitions in other articles of this chapter apply to this
article:
"Acceptance"
Section 3-409.
"Alteration"
Section 3-407.
"Cashier's check"
Section 3-104.
"Certificate of deposit"
Section 3-104.
"Certified check"
Section 3-409.
"Check"
Section 3-104.
"Draft"
Section 3-104.
"Good faith"
Section 3-103.
"Holder in due course"
Section 3-302.
"Instrument"
Section 3-104.
"Notice of dishonor"
Section 3-503.
"Order"
Section 3-103.
"Ordinary care"
Section 3-103.
"Person entitled to enforce"
Section 3-301.
"Presentment"
Section 3-501.
"Promise"
Section 3-103.
"Prove"
Section 3-103.
"Teller's check"
Section 3-104.
"Unauthorized signature"
Section 3-403.
(d) In addition, article one contains general definitions and
principles of construction and interpretation applicable throughout
this article.
§46-4-210. Security interest of collecting bank in items,
accompanying documents and proceeds.
(a) A collecting bank has a security interest in an item and
any accompanying documents or the proceeds of either:
(1) In case of an item deposited in an account, to the extent
to which credit given for the item has been withdrawn or applied;
(2) In case of an item for which it has given credit available
for withdrawal as of right, to the extent of the credit given,
whether or not the credit is drawn upon or there is a right of
charge-back; or
(3) If it makes an advance on or against the item.
(b) If credit given for several items received at one time or
pursuant to a single agreement is withdrawn or applied in part, the
security interest remains upon all the items, any accompanying
documents or the proceeds of either. For the purpose of this
section, credits first given are first withdrawn.
(c) Receipt by a collecting bank of a final settlement for an
item is a realization on its security interest in the item,
accompanying documents and proceeds. So long as the bank does not
receive final settlement for the item or give up possession of the
item or
possession or control of the accompanying documents for
purposes other than collection, the security interest continues to
that extent and is subject to article nine but:
(1) No security agreement is necessary to make the security
interest enforceable (section 9-203(b)(3)(A));
(2) No filing is required to perfect the security interest; and
(3) The security interest has priority over conflicting
perfected security interests in the item, accompanying documents or
proceeds.
ARTICLE 7. WAREHOUSE RECEIPTS, BILL OF LADING AND OTHER DOCUMENTS
OF TITLE.
PART 1. GENERAL.
§46-7-101. Short title.
This article
shall be known and may be cited as Uniform
Commercial Code--Documents of Title.
§46-7-102. Definitions and index of definitions.
(1) (a) In this article, unless the context otherwise
requires:
(a) (1)"Bailee" means
the a person
who 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.
(b) (3) "Consignee" means
the a person named in a bill
of
lading to
whom which or to whose order the bill promises delivery.
(c) (4)"Consignor" means
the a person named in a bill
of
lading as the person from
whom which the goods have been received
for shipment.
(d) (5)"Delivery order" means a
written record that
contains an order to deliver goods directed to a
warehouseman warehouse, carrier, or other person
who that in the ordinary course
of business issues warehouse receipts or bills of lading.
(e) "Document" means document of title as defined in the
general definitions in article 1 (section 1-201).
(6) "Good faith" means honesty in fact and the observance of
reasonable commercial standards of fair dealing.
(f) (7) "Goods" means all things
which that are treated as
mov
eable for the purposes of a contract
of for storage or
transportation.
(g) (8)"Issuer" means a bailee
who that issues a document
except that of title or, in
relation to the case of an unaccepted
delivery order,
it means the person
who that orders the possessor
of goods to deliver.
Issuer The term includes a
ny person for
whom
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,
notwithstanding that even if the issuer
did not receive
d
no any goods,
or that the goods were misdescribed, or
that in any
other respect the agent or employee violated
his the issuer's
instructions.
(h) "Warehouseman" is (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.
(h) (13) "Warehouse" means a person engaged in the business of
storing goods for hire.
(2) Other definitions applying to this article or to specified
parts thereof, and the sections in which they appear are:
"Duly negotiate." Section 7-501.
"Person entitled under the document." Section 7-403(4).
(3) (b)Definitions in other articles
of this chapter
applying to this article and the sections in which they appear are:
"Contract (1) "Contract for
sale." sale", Section 2-106.
"Overseas." Section 2-323.
"Receipt" of goods.
(2) "Lessee in the ordinary course of business", Section
2A-103.
(3) "Receipt" of goods, Section 2-103.
(4) (c) In addition, Article 1
of this chapter contains
general definitions and principles of construction and
interpretation applicable throughout this article.
§46-7-103. Relation of article to treaty, or statute.
To the extent that (a) This article is subject to any treaty
or statute of the United States
or regulatory statute of this
state.
or tariff, classification or regulation filed or issued
pursuant thereto is applicable, the provisions of this article are
subject thereto to the extent the treaty, statute, or regulatory
statute is applicable.
(b) This article does not modify or repeal any law prescribing
the form or content of a document of title or the services or
facilities to be afforded by a bailee, or otherwise regulating a
bailee's business in respects not specifically treated in this
article. However, violation of such a law does not affect the
status of a document of title that otherwise is within the
definition of a document of title.
(c) This [act] modifies, limits, and supersedes the federal
Electronic Signatures in Global and National Commerce Act (15
U.S.C. Section 7001, et. seq.) but does not modify, limit, or
supersede Section 101(c) of that act (15 U.S.C. Section 7001(c)) or
authorize electronic delivery of any of the notices described in
Section 103(b) of that act (15 U.S.C. Section 7003(b)).
(d) To the extent there is a conflict between article one, chapter thirty-nine-a and this article, this article governs.
§46-7-104. Negotiable and nonnegotiable
document of title.
(1) (a)A warehouse receipt, bill of lading or other Except
as otherwise provided in subsection (c), a document of title is
negotiable:
(a) If by its terms the goods are to be delivered to bearer or
to the order of a named person.
or
(b) where recognized in overseas trade, if it runs to a named
person or assigns.
(2) Any other document
(b) A document of title other than one described in subsection
(a) is nonnegotiable. A bill of lading
in which it is that stated
states that the goods are consigned to a named person is not made
negotiable by a provision that the goods are to be delivered only
against
a written an order
in a record signed by the same or
another named person.
(c) A document of title is nonnegotiable if, at the time it is
issued, the document has a conspicuous legend, however expressed,
that it is nonnegotiable.
§46-7-105. Reissuance in alternative medium.
The omission from either part 2 or part 3 of this article of
a provision corresponding to a provision made in the other part
does not imply that a corresponding rule of law is not applicable.
(a) Upon request of a person entitled under an electronic document of title, the issuer of the electronic document may issue
a tangible document of title as a substitute for the electronic
document if:
(1) The person entitled under the electronic document
surrenders control of the document to the issuer; and
(2) The tangible document when issued contains a statement
that it is issued in substitution for the electronic document.
(b) Upon issuance of a tangible document of title in
substitution for an electronic document of title in accordance with
subsection (a):
(1) The electronic document ceases to have any effect or
validity; and
(2) The person that procured issuance of the tangible document
warrants to all subsequent persons entitled under the tangible
document that the warrantor was a person entitled under the
electronic document when the warrantor surrendered control of the
electronic document to the issuer.
(c) Upon request of a person entitled under a tangible
document of title, the issuer of the tangible document may issue an
electronic document of title as a substitute for the tangible
document if:
(1) The person entitled under the tangible document surrenders
possession of the document to the issuer; and
(2) The electronic document when issued contains a statement that it is issued in substitution for the tangible document.
(d) Upon issuance of an electronic document of title in
substitution for a tangible document of title in accordance with
subsection (c):
(1) The tangible document ceases to have any effect or
validity; and
(2) The person that procured issuance of the electronic
document warrants to all subsequent persons entitled under the
electronic document that the warrantor was a person entitled under
the tangible document when the warrantor surrendered possession of
the tangible document to the issuer.
§46-7-106. Control of electronic document of title.
(a) A person has control of an electronic document of title if
a system employed for evidencing the transfer of interests in the
electronic document reliably establishes that person as the person
to which the electronic document was issued or transferred.
(b) A system satisfies subsection (a), and a person is deemed
to have control of an electronic document of title, if the document
is created, stored, and assigned in such a manner that:
(1) A single authoritative copy of the document exists which
is unique, identifiable, and, except as otherwise provided in
paragraphs (4), (5) and (6), unalterable;
(2) The authoritative copy identifies the person asserting
control as:
(A) The person to which the document was issued; or
(B) If the authoritative copy indicates that the document has
been transferred, the person to which the document was most
recently transferred;
(3) The authoritative copy is communicated to and maintained
by the person asserting control or its designated custodian;
(4) Copies or amendments that add or change an identified
assignee of the authoritative copy can be made only with the
consent of the person asserting control;
(5) Each copy of the authoritative copy and any copy of a copy
is readily identifiable as a copy that is not the authoritative
copy; and
(6) Any amendment of the authoritative copy is readily
identifiable as authorized or unauthorized.
PART 2. WAREHOUSE RECEIPTS: SPECIAL PROVISIONS.
§46-7-201. Person that may issue a warehouse receipt; storage
under bond.
(1) (a)A warehouse receipt may be issued by any
warehouseman warehouse.
(2) (b)Where If goods, including distilled spirits and
agricultural commodities, are stored under a statute requiring a
bond against withdrawal or a license for the issuance of receipts
in the nature of warehouse receipts, a receipt issued for the goods
has like effect as is deemed to be a warehouse receipt even
though if issued by a person
who that is the owner of the goods and is not
a
warehouseman warehouse.
§46-7-202. Form of warehouse receipt; essential terms; optional
terms effect of omission.
(1) (a) A warehouse receipt need not be in any particular
form.
(2) (b)Unless a warehouse receipt
embodies within its
written or printed terms provides for each of the following, the
warehouseman warehouse is liable for damages caused
by the omission
to a person injured
thereby by its omission:
(a) (1) A statement of the location of the warehouse
facility
where the goods are stored;
(b) (2) The date of issue of the receipt;
(c) (3)The
consecutive number unique identification code of
the receipt;
(d) (4)A statement whether the goods received will be
delivered to the bearer, to a
specified named person, or to a
specified named person or
his its order;
(e) (5)The rate of storage and handling charges,
except
that where unless goods are stored under a field warehousing
arrangement,
in which case a statement of that fact is sufficient
on a nonnegotiable receipt;
(f) (6)A description of the goods or
of the packages
containing them;
(g) (7)The signature of the
warehouseman, which may be made
by his authorized warehouse or its agent;
(h) (8)If the receipt is issued for goods
of which that the
warehouseman is warehouse owners, either solely,
or jointly, or in
common with others,
a statement of the fact of
such that ownership;
and
(i) (9)A statement of the amount of advances made and of
liabilities incurred for which the
warehouseman warehouse claims a
lien or security interest,
(section 7-209). If unless the precise
amount of
such advances made or
of such liabilities incurred,
is at
the time of the issue of the receipt,
is unknown to the
warehouseman warehouse or to
his its agent
who issues it, that
issued the receipt, in which case a statement of the fact that
advances have been made or liabilities incurred and the purpose
thereof of the advances or liabilities is sufficient.
(3) (c)A
warehouseman warehouse may insert in
his its
receipt any
other terms
which that are not contrary to
[the
provisions of this chapter Uniform Commercial Code] and do not
impair
his its obligation of delivery
(section under Section 7-403
or
his its duty of care
(section under Section 7-204. Any contrary
provisions shall be provision is ineffective.
§46-7-203. Liability for nonreceipt or misdescription.
A party to or purchaser for value in good faith of a document
of title, other than a bill of lading
relying in either case, that relies upon the description
therein of the goods
in the document
may recover from the issuer damages caused by the nonreceipt or
misdescription of the goods, except to the extent that:
(1) The document conspicuously indicates that the issuer does
not know whether
any all or part
or all of the goods in fact were
received or conform to the description,
such as
where a case in
which the description is in terms of marks or labels or kind,
quantity, or condition, or the receipt or description is qualified
by "contents, condition, and quality unknown", "said to contain",
or
the like words of similar import, if
such the indication
be is
true; or
(2) The party or purchaser otherwise has notice
of the
nonreceipt or misdescription.
§46-7-204. Duty of care; contractual limitation of warehouse's
liability.
(1) (a)A
warehouseman warehouse is liable for damages for
loss of or injury to the goods caused by
his its failure to
exercise
such care
in with regard to
them as the goods that a
reasonably careful
man person would exercise under
like similar
circumstances
but unless otherwise agreed,
he the warehouse is not
liable for damages
which that could not have been avoided by the
exercise of
such that care.
(2) (b)Damages may be limited by a term in the warehouse
receipt or storage agreement limiting the amount of liability in case of loss or damage
and setting forth a specific liability per
article or item, or value per unit of weight, beyond which the
warehouseman shall warehouse is not
be liable.
Provided, however,
That such liability may on written Such a limitation is not
effective with respect to the warehouse's liability for conversion
to its own use. On request of the bailor
in a record at the time
of signing
such the storage agreement or within a reasonable time
after receipt of the warehouse receipt,
the warehouse's liability
may be increased on part or all of the goods
thereunder, covered by
the storage agreement or the warehouse receipt. In
which this
event, increased rates may be charged based on
such an increased
valuation.
but that no such increase shall be permitted contrary
to a lawful limitation of liability contained in the warehouseman's
tariff, if any. No such limitation is effective with respect to
the warehouseman's liability for conversion to his own use (3) of
the goods.
(c) Reasonable provisions as to the time and manner of
presenting claims and
instituting commencing actions based on the
bailment may be included in the warehouse receipt or
tariff storage
agreement.
§46-7-205. Title under warehouse receipt defeated in certain
cases.
A buyer in
the ordinary course of business of fungible goods
sold and delivered by a
warehouseman who warehouse that is also in the business of buying and selling such goods takes
the goods free
of any claim under a warehouse receipt even
though it if the
receipt is negotiable and has been duly negotiated.
§46-7-206. Termination of storage at warehouseman's warehouse's
option.
(1) (a)A
warehouseman may on notifying warehouse, by giving
notice to the person on whose account the goods are held and any
other person known to claim an interest in the goods,
may require
payment of any charges and removal of the goods from the warehouse
at the termination of the period of storage fixed by the document
of title, or, if
no a period is
not fixed, within a stated period
not less than thirty days after the
notification warehouse gives
notice. If the goods are not removed before the date specified in
the
notification notice, the
warehouseman may sell them in
accordance with the provisions of the section on enforcement of a
warehouseman's lien (section 7-210) warehouse may sell them
pursuant to Section 7-210.
(2) (b)If a
warehouseman warehouse in good faith believes
that
the goods are about to deteriorate or decline in value to less
than the amount of
his its lien within the time
prescribed provided
in subsection
(1) (a) for notification, advertisement and
sale
Section 7-210, the
warehouseman warehouse may specify in the
notification notice given under subsection (a) any reasonable
shorter time for removal of the goods and,
in case if the goods are not removed, may sell them at public sale held not less than one
week after a single advertisement or posting.
(3) (c)If, as a result of a quality or condition of the
goods of which the
warehouseman had no warehouse did not have
notice at the time of deposit the goods are a hazard to other
property,
or to the warehouse
facilities, or
to other persons, the
warehouseman warehouse may sell the goods at public or private sale
without advertisement
or posting on reasonable notification to all
persons known to claim an interest in the goods. If the
warehouseman warehouse, after a reasonable effort, is unable to
sell the goods,
he it may dispose of them in any lawful manner and
shall does not incur
no liability by reason of
such that
disposition.
(4) (d)The warehouseman must A warehouse shall deliver the
goods to any person entitled to them under this article upon due
demand made at any time
prior to before sale or other disposition
under this section.
(5) (e)The warehouseman A warehouse may satisfy
his its
lien from the proceeds of any sale or disposition under this
section but
must shall hold the balance for delivery on the demand
of any person to
whom he which the warehouse would have been bound
to deliver the goods.
§46-7-207. Goods must be kept separate; fungible goods.
(1) (a)Unless the warehouse receipt
provides otherwise
provides, a warehouseman must a warehouse shall keep separate the
goods covered by each receipt so as to permit at all times
identification and delivery of those goods.
except that However,
different lots of fungible goods may be commingled.
(2) (b) If different lots of fungible goods
so are commingled,
the goods are owned in common by the persons entitled thereto and
the
warehouseman warehouse is severally liable to each owner for
that owner's share.
Where If, because of overissue, a mass of
fungible goods is insufficient to meet all the receipts
which the
warehouseman warehouse has issued against it, the persons entitled
include all holders to
whom which overissued receipts have been
duly negotiated.
§46-7-208. Altered warehouse receipts.
Where If a blank in a negotiable
tangible warehouse receipt
has been filled in without authority, a
good-faith purchaser for
value and without notice of the
want lack of authority may treat
the insertion as authorized. Any other unauthorized alteration
leaves any
tangible or electronic warehouse receipt enforceable
against the issuer according to its original tenor.
§46-7-209. Lien of warehouse.
(1) (a)A
warehouseman warehouse has a lien against the
bailor on the goods covered by a warehouse receipt or
storage
agreement or on the proceeds thereof in
his its possession for
charges for storage or transportation, including demurrage and terminal charges), insurance, labor, or
other charges, present or
future, in relation to the goods, and for expenses necessary for
preservation of the goods or reasonably incurred in their sale
pursuant to law. If the person on whose account the goods are held
is liable for
like similar charges or expenses in relation to other
goods whenever deposited and it is stated in the
warehouse receipt
or storage agreement that a lien is claimed for charges and
expenses in relation to other goods, the
warehouseman warehouse
also has a lien against
him for such the goods covered by the
warehouse receipt or storage agreement or on the proceeds thereof
in its possession for those charges and expenses, whether or not
the other goods have been delivered by the
warehouseman warehouse.
But However, as against a person to
whom which a negotiable
warehouse receipt is duly negotiated, a
warehouseman's warehouse's
lien is limited to charges in an amount or at a rate specified
on
in the
warehouse receipt or, if no charges are so specified
then,
to a reasonable charge for storage of the
specific goods covered by
the receipt subsequent to the date of the receipt.
(2) (b)The warehouseman A warehouse may also reserve a
security interest against the bailor for
a the maximum amount
specified on the receipt for charges other than those specified in
subsection
(1) (a), such as for money advanced and interest.
Such
a The security interest is governed by
the article on secured
transactions (Article 9).
(3) (c)A
warehouseman's warehouse's lien for charges and
expenses under subsection
(1) (a) or a security interest under
subsection
(2) (b) is also effective against any person
who that so
entrusted the bailor with possession of the goods that a pledge of
them by
him the bailor to a good-faith purchaser for value would
have been valid.
but However, the lien or security interest is
not effective against a person.
as to whom the document confers no
right in the goods covered by it under section 7-503
(4) A warehouseman loses his that before issuance of a
document of title had a legal interest or a perfected security
interest in the goods and that did not:
(1) Deliver or entrust the goods or any document of title
covering the goods to the bailor or the bailor's nominee with:
(A) Actual or apparent authority to ship, store, or sell;
(B) Power to obtain delivery under Section 7-403; or
(C) Power of disposition under Sections 2-403, 2A-304(2),
2A-305(2), 9-320, or 9-321(c) or other statute or rule of law; or
(2) Acquiesce in the procurement by the bailor or its nominee
of any document.
(d) A warehouse's lien on household goods for charges and
expenses in relation to the goods under subsection (a) is also
effective against all persons if the depositor was the legal
possessor of the goods at the time of deposit. In this subsection,
"household goods" means furniture, furnishings, or personal effects used by the depositor in a dwelling.
(e) A warehouse loses its lien on any goods
which he that it
voluntarily delivers or
which he unjustifiably refuses to deliver.
§46-7-210. Enforcement of warehouse's lien.
(1) (a) Except as
otherwise provided in subsection
(2) (b),
warehouseman's warehouse's lien may be enforced by public or
private sale of the goods, in
bloc bulk or in
parcels packages, at
any time or place and on any terms
which that are commercially
reasonable, after notifying all persons known to claim an interest
in the goods.
Such The notification must include a statement of
the amount due, the nature of the proposed sale, and the time and
place of any public sale. The fact that a better price could have
been obtained by a sale at a different time or in a
method
different
method from that selected by the
warehouseman warehouse
is not of itself sufficient to establish that the sale was not made
in a commercially reasonable manner.
The warehouse sells in a
commercially reasonable manner if the
warehouseman either warehouse
sells the goods in the usual manner in any recognized market
therefore,
or if he sells at the price current in
such that market
at the time of
his the sale, or
if he has otherwise
sold sells in
conformity with commercially reasonable practices among dealers in
the type of goods sold.
he has sold in a commercially reasonable
manner A sale of more goods than apparently necessary to be
offered to
insure ensure satisfaction of the obligation is not commercially reasonable, except in cases covered by the preceding
sentence.
(2) (b)A
warehouseman's warehouse may enforce its lien on
goods, other than goods stored by a merchant in the course of
his
its business
may be enforced, only
as follows if the following
requirements are satisfied:
(a) (1)All persons known to claim an interest in the goods
must be notified.
(b) The notification must be delivered in person or sent by
registered or certified letter to the last-known address of any
person to be notified.
(c) (2) The notification must include an itemized statement of
the claim, a description of the goods subject to the lien, a demand
for payment within a specified time not less than ten days after
receipt of the notification, and a conspicuous statement that
unless the claim is paid within that time the goods will be
advertised for sale and sold by auction at a specified time and
place.
(d) (3)The sale must conform to the terms of the
notification.
(e) (4)The sale must be held at the nearest suitable place
to
that where the goods are held or stored.
(f) (5)After the expiration of the time given in the
notification, an advertisement of the sale must be published once a week for two weeks consecutively in a newspaper of general
circulation where the sale is to be held. The advertisement must
include a description of the goods, the name of the person on whose
account
they the goods are being held, and the time and place of
the sale. The sale must take place at least fifteen days after the
first publication. If there is no newspaper of general circulation
where the sale is to be held, the advertisement must be posted at
least ten days before the sale in not
less fewer than six
conspicuous places in the neighborhood of the proposed sale.
(3) (c)Before any sale pursuant to this section, any person
claiming a right in the goods may pay the amount necessary to
satisfy the lien and the reasonable expenses incurred
under in
complying with this section. In that event, the goods
must may not
be sold but must be retained by the
warehouseman warehouse subject
to the terms of the receipt and this article.
(4) (d)The warehouseman A warehouse may buy at any public
sale
held pursuant to this section.
(5) (e)A purchaser in good faith of goods sold to enforce
a
warehouseman's warehouse's lien takes the goods free of any
rights of persons against
whom which the lien was valid, despite
the warehouse's noncompliance
by the warehouseman with
the
requirements of this section.
(6) (f)The warehouseman A warehouse may satisfy
his its
lien from the proceeds of any sale pursuant to this section but
must shall hold the balance, if any, for delivery on demand to any
person to
whom he which the warehouse would have been bound to
deliver the goods.
(7) (g) The rights provided by this section
shall be are in
addition to all other rights allowed by law to a creditor against
his a debtor.
(8) (h) Where If a lien is on goods stored by a merchant in
the course of
his its business
, the lien may be enforced in
accordance with
either subsection
(1) (a) or
(2) (b).
(9) (i) The warehouseman A warehouse is liable for damages
caused by failure to comply with the requirements for sale under
this section and, in case of willful violation
, is liable for
conversion.
PART 3. BILLS OF LADING: SPECIAL PROVISIONS.
§46-7-301. Liability for nonreceipt or misdescription; "Said to
contain"; "Shipper's weight, load, and count";
improper handling.
(1) (a)A consignee of a nonnegotiable bill
who of lading
which has given value in good faith, or a holder to
whom which a
negotiable bill has been duly negotiated, relying
in either case
upon the description
therein of the goods,
in the bill or upon the
date
therein shown
in the bill, may recover from the issuer damages
caused by the misdating of the bill or the nonreceipt or
misdescription of the goods, except to the extent that the
document bill indicates that the issuer does not know whether any part or
all of the goods in fact were received or conform to the
description,
such as
where in a case in which the description is in
terms of marks or labels or kind, quantity, or condition or the
receipt or description is qualified by "contents or condition of
contents of packages unknown", "said to contain", "shipper's
weight, load, and count," or
the like words of similar import, if
such that indication
be is true.
(2) When (b) If goods are loaded by
an the issuer,
who is of
a
common carrier bill of lading;
(1) The issuer
must shall count the packages of goods if
package freight shipped in packages and ascertain the kind and
quantity if
shipped in bulk;
freight. In and
(2) Words such
cases as "shipper's weight, load, and count,"
or
other words
of similar import indicating that the description
was made by the shipper are ineffective except as to
freight goods
concealed
by in packages.
(3) (c)When If bulk
freight is goods are loaded by a
shipper
who that makes available to the issuer
of a bill of lading
adequate facilities for weighing
such freight those goods, an the
issuer
who is a common carrier must shall ascertain the kind and
quantity within a reasonable time after receiving the
written
shipper's request
of the shipper in a record to do so. In
such
cases that case, "shipper's weight" or
other words of
like purport similar import are ineffective.
(4) (d)The issuer
may of a bill of lading, by
inserting
including in the bill the words "shipper's weight, load, and
count," or
other words of
like purport similar import, may indicate
that the goods were loaded by the shipper; and, if
such that
statement
be is true, the issuer
shall is not
be liable for damages
caused by the improper loading.
But their However, omission
of
such words does not imply liability for
such damages
caused by
improper loading.
(5) (e)The A shipper
shall be deemed to have guaranteed
guarantees to
the an issuer the accuracy at the time of shipment of
the description, marks, labels, number, kind, quantity, condition,
and weight, as furnished by
him; the shipper, and the shipper shall
indemnify the issuer against damage caused by inaccuracies in
such
those particulars.
The This right of
indemnity does not limit the
issuer
to such indemnity shall in no way limit his responsibility
and or liability under the contract of carriage to any person other
than the shipper.
§46-7-302. Through bills of lading and similar documents of title.
(1) (a)The issuer of a through bill of lading, or other
document
of title embodying an undertaking to be performed in part
by
a persons acting as its
agents agent or by
connecting a
performing carrier carriers is liable to
anyone any person entitled
to recover on the
bill or other document for any breach by
such the other
persons person or
by a connecting the performing carrier of
its obligation under the
bill or other document.
but However, to
the extent that the bill
or other document covers an undertaking to
be performed overseas or in territory not contiguous to the
continental United States or an undertaking including matters other
than transportation, this liability
for breach by the other person
or the performing carrier may be varied by agreement of the
parties.
(2) (b)Where If goods covered by a through bill of lading
or other document
of title embodying an undertaking to be performed
in part by
a persons other than the issuer are received by
any such
that person,
he the person is subject, with respect to
his its own
performance while the goods are in
his its possession
, to the
obligation of the issuer.
His The person's obligation is
discharged by delivery of the goods to another
such person pursuant
to the
bill or other document, and does not include liability for
breach by any other
such persons or by the issuer.
(3) (c)The issuer of
such a through bill of lading or other
document
shall be of title described in subsection (a) is entitled
to recover from the
connecting performing carrier, or
such other
person in possession of the goods when the breach of the obligation
under the
bill or other document occurred:
(1) The amount it may be required to pay to
anyone any person
entitled to recover on the
bill or other document
therefor for the breach, as may be evidenced by any receipt, judgment, or transcript
thereof, of judgment; and
(2) The amount of any expense reasonably incurred by
it the
issuer in defending any action
brought commenced by
anyone any
person entitled to recover on the
bill or other document
therefor
for the breach.
§46-7-303. Diversion; reconsignment; change of instructions.
(1) (a)Unless the bill of lading otherwise provides,
the a
carrier may deliver the goods to a person or destination other than
that stated in the bill or may otherwise dispose of the goods,
without liability for misdelivery, on instructions from:
(a) (1) The holder of a negotiable bill;
or
(b) (2)The consignor on a nonnegotiable bill,
notwithstanding even if the consignee has given contrary
instructions
from the consignee; or
(c) (3)The consignee on a nonnegotiable bill in the absence
of contrary instructions from the consignor, if the goods have
arrived at the billed destination or if the consignee is in
possession of the
tangible bill or in control of the electronic
bill; or
(d) (4)The consignee on a nonnegotiable bill, if
he the
consignee is entitled as against the consignor to dispose of
them
the goods.
(2) (b)Unless
such instructions
described in subsection (a) are
noted on included in a negotiable bill of lading, a person to
whom which the bill is duly negotiated
can may hold the bailee
according to the original terms.
§46-7-304. Tangible bills of lading in a set.
(1) (a)Except
where as customary in
overseas international
transportation, a
tangible bill of lading
must may not be issued in
a set of parts. The issuer is liable for damages caused by
violation of this subsection.
(2) (b) Where If a
tangible bill of lading is lawfully
drawn
issued in a set of parts, each of which
is numbered contains an
identification code and
is expressed to be valid only if the goods
have not been delivered against any other part, the whole of the
parts
constitutes constitute one bill.
(3) (c)Where a If a tangible negotiable bill of lading is
lawfully issued in a set of parts and different parts are
negotiated to different persons, the title of the holder to
whom
which the first due negotiation is made prevails as to both the
document
of title and the goods even
though if any later holder may
have received the goods from the carrier in good faith and
discharged the carrier's obligation by
surrender of his
surrendering its part.
(4) (d) A person
who that negotiates or transfers a single
part of a
tangible bill of lading
drawn issued in a set is liable
to holders of that part as if it were the whole set.
(5) (e) The bailee
is obliged to shall deliver in accordance
with Part 4
of this article against the first presented part of a
tangible bill of lading lawfully
drawn issued in a set.
Such
Delivery
in this manner discharges the bailee's obligation on the
whole bill.
§46-7-305. Destination bills.
(1) (a)Instead of issuing a bill of lading to the consignor
at the place of shipment, a carrier,
may at the request of the
consignor,
may procure the bill to be issued at destination or at
any other place designated in the request.
(2) (b)Upon request of
anyone any person entitled as
against
the a carrier to control the goods while in transit and on
surrender of
possession or control of any outstanding bill of
lading or other receipt covering
such the goods, the issuer,
subject to Section 7-105, may procure a substitute bill to be
issued at any place designated in the request.
§46-7-306. Altered bills of lading.
An unauthorized alteration or filling in of a blank in a bill
of lading leaves the bill enforceable according to its original
tenor.
§46-7-307. Lien of carrier.
(1) (a)A carrier has a lien on the goods covered by a bill
of lading
for charges subsequent to the date of its or on the
proceeds thereof in its possession for charges after the date of the carrier's receipt of the goods for storage or transportation
(including demurrage and terminal charges) and for expenses
necessary for preservation of the goods incident to their
transportation or reasonably incurred in their sale pursuant to
law.
But However, against a purchaser for value of a negotiable
bill of lading, a carrier's lien is limited to charges stated in
the bill or the applicable tariffs or, if no charges are stated
then to, a reasonable charge.
(2) (b)A lien for charges and expenses under subsection
(1)
(a) on goods
which that the carrier was required by law to receive
for transportation is effective against the consignor or any person
entitled to the goods unless the carrier had notice that the
consignor lacked authority to subject the goods to
such those
charges and expenses. Any other lien under subsection
(1) (a) is
effective against the consignor and any person
who that permitted
the bailor to have control or possession of the goods unless the
carrier had notice that the bailor lacked
such authority.
(3) (c) A carrier loses
his its lien on any goods
which he
that it voluntarily delivers or
which he unjustifiably refuses to
deliver.
§46-7-308. Enforcement of carrier's lien.
(1) (a) A carrier's lien
on goods may be enforced by public or
private sale of the goods, in
bloc bulk or in
parcels packages, at
any time or place and on any terms
which that are commercially reasonable, after notifying all persons known to claim an interest
in the goods.
Such The notification must include a statement of
the amount due, the nature of the proposed sale, and the time and
place of any public sale. The fact that a better price could have
been obtained by a sale at a different time or in a
method
different
method from that selected by the carrier is not of itself
sufficient to establish that the sale was not made in a
commercially reasonable manner.
The carrier sells goods in a
commercially reasonable manner if the carrier
either sells the
goods in the usual manner in any recognized market therefor,
or if
he sells at the price current in
such that market at the time of
his the sale, or
if he has otherwise
sold sells in conformity with
commercially reasonable practices among dealers in the type of
goods sold.
he has sold in a commercially reasonable manner A
sale of more goods than apparently necessary to be offered to
ensure satisfaction of the obligation is not commercially
reasonable, except in cases covered by the preceding sentence.
(2) (b)Before any sale pursuant to this section, any person
claiming a right in the goods may pay the amount necessary to
satisfy the lien and the reasonable expenses incurred
under in
complying with this section. In that event, the goods
must may not
be sold but must be retained by the carrier, subject to the terms
of the bill
of lading and this article.
(3) (c)The A carrier may buy at any public sale pursuant to this section.
(4) (d)A purchaser in good faith of goods sold to enforce
a carrier's lien takes the goods free of any rights of persons
against
whom which the lien was valid, despite
the carrier's
noncompliance
by the carrier with
the requirements of this section.
(5) (e)The A carrier may satisfy
his its lien from the
proceeds of any sale pursuant to this section but
must shall hold
the balance, if any, for delivery on demand to any person to
whom
he which the carrier would have been bound to deliver the goods.
(6) (f) The rights provided by this section
shall be are in
addition to all other rights allowed by law to a creditor against
his a debtor.
(7) (g) A carrier's lien may be enforced
in accordance with
pursuant to either subsection (1)
(a) or the procedure set forth in
subsection (2) of Section 7-210
(b).
(8) (h) The A carrier is liable for damages caused by failure
to comply with the requirements for sale under this section and, in
case of willful violation, is liable for conversion.
§46-7-309. Duty of care; contractual limitation of carrier's
liability.
(1) (a) A carrier
who that issues a bill of lading, whether
negotiable or nonnegotiable
must,
shall exercise the degree of care
in relation to the goods which a reasonably careful
man person
would exercise under
like similar circumstances. This subsection does not
repeal or change affect any
law statute, regulation, or
rule of law
which that imposes liability upon a common carrier for
damages not caused by its negligence.
(2) (b) Damages may be limited by a
provision term in the bill
of lading or in a transportation agreement that the carrier's
liability
shall may not exceed a value stated in the
document bill
or transportation agreement if the carrier's rates are dependent
upon value and the consignor
by the carrier's tariff is afforded an
opportunity to declare a higher value
or a value as lawfully
provided in the tariff, or where no tariff is filed he is otherwise
advised of such opportunity; but no such limitation is and the
consignor is advised of the opportunity. However, such a
limitation is not effective with respect to the carrier's liability
for conversion to its own use.
(3) (c) Reasonable provisions as to the time and manner of
presenting claims and
instituting commencing actions based on the
shipment may be included in a bill of lading or
tariff a
transportation agreement.
Part 4. Warehouse Receipts and Bills of Lading:
General Obligations.
§46-7-401. Irregularities in issue of receipt or bill or conduct
of issuer.
The obligations imposed by this article on an issuer apply to
a document of title regardless of the fact that
even if:
(a) (1)The document may
does not comply with the
requirements of this article or of any other
law statute, rule, or
regulation regarding its
issue issuance, form, or content;
or
(b) (2)The issuer
may have violated laws regulating the
conduct of
his its business;
or
(c) (3)The goods covered by the document were owned by the
bailee
at the time when the document was issued; or
(d) (4)The person issuing the document
does is not
come
within the definition of a warehouseman if it warehouse but the
document purports to be a warehouse receipt.
§46-7-402. Duplicate document or title; overissue.
Neither A duplicate
nor or any other document of title
purporting to cover goods already represented by an outstanding
document of the same issuer
does not confers confer any right in
the goods, except as provided in the case of
tangible bills
of
lading in a set
of parts, overissue of documents for fungible goods
and, substitutes for lost, stolen, or destroyed documents,
or
substitute documents issued pursuant to Section 7-105. But The
issuer is liable for damages caused by
his its overissue or failure
to identify a duplicate document
as such by
a conspicuous notation.
on its face
§46-7-403. Obligation of warehouseman or carrier bailee to
deliver; excuse.
(1) (a)The A bailee
must shall deliver the goods to a person entitled under
the a document
who of title if the person
complies with subsections (2)
(b) and (3)
(c), unless and to the
extent that the bailee establishes any of the following:
(a) (1) Delivery of the goods to a person whose receipt was
rightful as against
a the claimant;
(b) (2) Damage to or delay, loss, or destruction of the goods
for which the bailee is not liable;
(c) (3) Previous sale or other disposition of the goods in
lawful enforcement of a lien or on
warehouseman's a warehouse's
lawful termination of storage;
(d) (4) The exercise by a seller of
his its right to stop
delivery pursuant to
the provisions of the article on sales
(section 2-705) Section 2-705 or by a lessor of its right to stop
delivery pursuant to Section 2A-526;
(e) (5) A diversion, reconsignment, or other disposition
pursuant to
the provisions of this article (section 7-303) or
tariff regulating such right Section 7-303;
(f) (6) Release, satisfaction, or any other
fact affording a
personal defense against the claimant;
or
(g) (7) Any other lawful excuse.
(2) (b) A person claiming goods covered by a document of title
must shall satisfy the bailee's lien
where if the bailee so
requests or
where if the bailee is prohibited by law from
delivering the goods until the charges are paid.
(3) (c)Unless
a person claiming the goods is a person
against which the document of title does not confer a right under
Section 7-503(a):
(1) The person claiming
is one against whom the document
confers no right under section 7-503 (1), he must surrender for
cancellation or notation of partial deliveries under a document
shall surrender possession or control of any outstanding negotiable
document covering the goods,
and the bailee must for cancellation
or indication of partial deliveries; and
(2) The bailee shall cancel the document or conspicuously
note
indicate in the document the partial delivery
thereon or be or the
bailee is liable to any person to
whom which the document is duly
negotiated.
(4) "Person entitled under the document" means holder in the
case of a negotiable document, or the person to whom delivery is to
be made by the terms of or pursuant to written instructions under
a nonnegotiable document.
§46-7-404. No liability for good-faith delivery pursuant to
document of title.
A bailee
who that in good faith
including observance of
reasonable commercial standards has received goods and delivered or
otherwise disposed of
them the goods according to the terms of
the
a document of title or pursuant to this article is not liable
therefor. This rule applies for the goods even
though if:
(1) The person from
whom he which the bailee received the
goods
had no did not have authority to procure the document or to
dispose of the goods;
and even though or
(2) The person to
whom he which the bailee delivered the goods
had no did not have authority to receive
them the goods.
PART 5. WAREHOUSE RECEIPTS AND BILLS OF LADING:
NEGOTIATION AND TRANSFER.
§46-7-501. Form of negotiation and requirements of "due
negotiation".
(1) (a) The following rules apply to a negotiable
tangible
document of title:
running
(1) If the document's original terms run to the order of a
named person,
the document is negotiated by
his the named person's
indorsement and delivery. After
his the named person's indorsement
in blank or to bearer, any person
can may negotiate
it the document
by delivery alone.
(2)
(a) A negotiable If the document of title' document's
original terms run to bearer, it is
also negotiated by delivery
alone.
when by its
(3) If the document's original terms.
it runs to bearer
(b) When a document running run to the order of a named person
and it is delivered to
him the named person, the effect is the same
as if the document had been negotiated.
(3) (4) Negotiation of
a negotiable the document
of title after it has been indorsed to a
specified named person requires
indorsement by the
special indorsee as well as delivery.
(4) A negotiable document of title is "duly negotiated" when
named person and delivery.
(5) A document is duly negotiated if it is negotiated in the
manner stated in this
section subsection to a holder
who that
purchases it in good faith, without notice of any defense against
or claim to it on the part of any person, and for value, unless it
is established that the negotiation is not in the regular course of
business or financing or involves receiving the document in
settlement or payment of a
money monetary obligation.
(5) (b) The following rules apply to a negotiable electronic
document of title:
(1) If the document's original terms run to the order of a
named person or to bearer, the document is negotiated by delivery
of the document to another person. Indorsement by the named person
is not required to negotiate the document.
(2) If the document's original terms run to the order of a
named person and the named person has control of the document, the
effect is the same as if the document had been negotiated.
(3) A document is duly negotiated if it is negotiated in the
manner stated in this subsection to a holder that purchases it in
good faith, without notice of any defense against or claim to it on
the part of any person, and for value, unless it is established that the negotiation is not in the regular course of business or
financing or involves taking delivery of the document in settlement
or payment of a monetary obligation.
(c) Indorsement of a nonnegotiable document
of title neither
makes it negotiable nor adds to the transferee's rights.
(6) (d) The naming in a negotiable bill
of lading of a person
to be notified of the arrival of the goods does not limit the
negotiability of the bill
nor or constitute notice to a purchaser
thereof of the bill of any interest of
such that person in the
goods.
§46-7-502. Rights acquired by due negotiation.
(1) (a)Subject to
the following section and to the
provisions of section 7-205 on fungible goods Sections 7-205 and 7-
503, a holder to
whomwhich a negotiable document of title has been
duly negotiated acquires thereby:
(a) (1) Title to the document;
(b) (2) Title to the goods;
(c) (3) All rights accruing under the law of agency or
estoppel, including rights to goods delivered to the bailee after
the document was issued; and
(d) (4) The direct obligation of the issuer to hold or deliver
the goods according to the terms of the document free of any
defense or claim by
him the issuer except those arising under the
terms of the document or under this article.
I, but in the case of a delivery order, the bailee's obligation accrues only upon
the
bailee's acceptance
of the delivery order and the obligation
acquired by the holder is that the issuer and any indorser will
procure the acceptance of the bailee.
(2) (b)Subject to
the following Section
7-503, title and
rights
so acquired
by due negotiation are not defeated by any
stoppage of the goods represented by the document
of title or by
surrender of
such the goods by the bailee, and are not impaired
even
though if:
(1) The
due negotiation or any prior
due negotiation
constituted a breach of duty;
or even though
(2) Any person has been deprived of possession of
the a
negotiable tangible document or control of a negotiable electronic
document by misrepresentation, fraud, accident, mistake, duress,
loss, theft, or conversion; or
even though
(3) A previous sale or other transfer of the goods or document
has been made to a third person.
§46-7-503. Document of title to goods defeated in certain cases.
(1) (a)A document of title confers no right in goods
against a person
who that before issuance of the document had a
legal interest or a perfected security interest in
them the goods
and
who neither that did not:
(a) (1)Delivered or entrusted them Deliver or entrust the
goods or any document of title covering
them the goods to the bailor or
his the bailor's nominee with:
(A) Actual or apparent authority to ship, store, or sell
or
with;
(B) Power to obtain delivery under
this article Section 7-403;
or
with
(C) Power of disposition under this chapter Sections 2-403
and,
2A-304(2), 2A-305(2), 9-320,
or 9-321(c) or other statute or
rule of law;
nor or
(b) (2)Acquiesced Acquiesce in the procurement by the
bailor or
his its nominee of any document.
of title
(2) (b)Title to goods based upon an unaccepted delivery
order is subject to the rights of
anyone any person to
whom which
a negotiable warehouse receipt or bill of lading covering the goods
has been duly negotiated.
Such a That title may be defeated under
the next Section
7-504 to the same extent as the rights of the
issuer or a transferee from the issuer.
(3) (c)Title to goods based upon a bill of lading issued to
a freight forwarder is subject to the rights of
anyone any person
to
whom which a bill issued by the freight forwarder is duly
negotiated.
but However, delivery by the carrier in accordance
with Part 4
of this article pursuant to its own bill of lading
discharges the carrier's obligation to deliver.
§46-7-504. Rights acquired in the absence of due negotiation;
effect of diversion; seller's stoppage of delivery.
(1) (a)A transferee of a document
of title, whether
negotiable or nonnegotiable, to
whom which the document has been
delivered but not duly negotiated, acquires the title and rights
which his that its transferor had or had actual authority to
convey.
(2) (b)In the case
of a transfer of a nonnegotiable
document
of title, until but not after the bailee receives
notification notice of the transfer, the rights of the transferee
may be defeated:
(a) (1)By those creditors of the transferor
who which could
treat the
sale transfer as void under Section 2-402; or
2A-308;
(b) (2)By a buyer from the transferor in ordinary course of
business if the bailee has delivered the goods to the buyer or
received notification of
his rights; or
(c) The buyer's rights;
(3) By a lessee from the transferor in ordinary course of
business if the bailee has delivered the goods to the lessee or
received notification of the lessee's rights; or
(4) As against the bailee, by good-faith dealings of the
bailee with the transferor.
(3) (c)A diversion or other change of shipping instructions
by the consignor in a nonnegotiable bill of lading which causes the
bailee not to deliver
the goods to the consignee defeats the
consignee's title to the goods if
they the goods have been delivered to a buyer in ordinary course of business
or a lessee in
ordinary course of business and, in any event, defeats the
consignee's rights against the bailee.
(4) (d)Delivery
of the goods pursuant to a nonnegotiable
document
of title may be stopped by a seller under Section 2-705,
and or a lessor under Section 2A-526, subject to the requirements
of due notification in
the rose provided those sections. A bailee
honoring that honors the seller's
or lessor's instructions is
entitled to be indemnified by the seller
or lessor against any
resulting loss or expense.
§46-7-505. Indorser not a guarantor for other parties.
The indorsement of a
tangible document of title issued by a
bailee does not make the indorser liable for any default by the
bailee or
by previous indorsers.
§46-7-506. Delivery without indorsement; right to compel
indorsement.
The transferee of a negotiable
tangible document of title has
a specifically enforceable right to have
his its transferor supply
any necessary indorsement, but the transfer becomes a negotiation
only as of the time the indorsement is supplied.
§46-7-507. Warranties on negotiation or delivery of document
title.
Where If a person negotiates or
transfers delivers a document
of title for value, otherwise than as a mere intermediary under
the next following Section
7-508, then unless otherwise agreed,
he
warrants to his immediate purchaser only the transferor, in
addition to any warranty made in selling
or leasing the goods:
(a) Warrants to its immediate purchaser only that:
(1) The document is genuine;
and
(b) (2)that he has no The transferor does not have
knowledge of any fact
which that would impair
it's the document's
validity or worth; and
(c) (3)that his The negotiation or
transfer delivery is
rightful and fully effective with respect to the title to the
document and the goods it represents.
§46-7-508. Warranties of collecting bank as to documents of title.
A collecting bank or other intermediary known to be entrusted
with documents
of title on behalf of another or with collection of
a draft or other claim against delivery of documents warrants by
such the delivery of the documents only its own good faith and
authority.
This rule applies even
though if the
collecting bank or
other intermediary has purchased or made advances against the claim
or draft to be collected.
§46-7-509. Adequate compliance with commercial contract
.
The question Whether a document
of title is adequate to
fulfill the obligations of a contract for sale,
a contract for
lease, or the conditions of a
credit is governed by the articles on
sales (article 2) and on letters letter of credit
(article 5) is determined by Article 2, 2A, or 5.
Part 6. Warehouse Receipts and Bills of Lading:
Miscellaneous Provisions.
§46-7-601. Lost, stolen, or destroyed documents of title.
(1) (a)If a document
has been of title is lost, stolen, or
destroyed, a court may order delivery of the goods or issuance of
a substitute document and the bailee may without liability to any
person comply with
such the order. If the document was negotiable,
a court may not order delivery of the goods or issuance of a
substitute document without the claimant
must post posting security
approved by the court to indemnify unless it finds that any person
who that may suffer loss as a result of nonsurrender of
possession
or control of the document
is adequately protected against the
loss. If the document was
not negotiable,
such the court may
require security
may be required at the discretion of the court.
The court may also
in its discretion order payment of the bailee's
reasonable costs and
counsel fees.
(2) A bailee who without court order attorney's fees in any
action under this subsection.
(b) A bailee that, without a court order, delivers goods to a
person claiming under a missing negotiable document
of title is
liable to any person injured thereby.
and If the delivery is not
in good faith,
becomes the bailee is liable for conversion.
Delivery in good faith is not conversion
if made in accordance with a filed classification or tariff or, where no classification or
tariff is filed, if the claimant posts security with the bailee in
an amount at least double the value of the goods at the time of
posting to indemnify any person injured by the delivery
who which
files a notice of claim within one year after the delivery.
§46-7-602. Judicial process against goods covered by a negotiable
document of title.
Except where the Unless a document
of title was originally
issued upon delivery of the goods by a person
who had no that did
not have power to dispose of them,
no a lien
does not attaches
attache by virtue of any judicial process to goods in the
possession of a bailee for which a negotiable document of title is
outstanding unless
possession or control of the document
be is
first surrendered to the bailee or
it's the document's negotiation
is enjoined.
and The bailee
shall may not be compelled to deliver
the goods pursuant to process until
possession or control of the
document is surrendered to
him the bailee or
impounded by to the
court.
One who purchases A purchaser of the document for value
without notice of the process or injunction takes free of the lien
imposed by judicial process.
§46-7-603. Conflicting claims; interpleader.
If more than one person claims title
to or possession of the
goods, the bailee is excused from delivery until
he the bailee has
had a reasonable time to ascertain the validity of the adverse claims or to
bring an action to compel all claimants to interplead
and may compel such interpleader,commence an action for
interpleader. The bailee may assert an interpleader either in
defending an action for nondelivery of the goods, or by original
action.
whichever is appropriate
PART 7. MISCELLANEOUS PROVISIONS.
§46-7-701. Applicability.
This article applies to a document of title that is issued or
a bailment that arises on or after the effective date of this
article. This article does not apply to a document of title that
is issued or a bailment that arises before the effective date of
this article even if the document of title or bailment would be
subject to this article if the document of title had been issued or
bailment had arisen on or after the effective date of this article.
This article does not apply to a right of action that has accrued
before the effective date of this article.
§46-7-702. Savings clause.
A document of title issued or a bailment that arises before
the effective date of this article and the rights, obligations, and
interests flowing from that document or bailment are governed by
any statute or other rule amended or repealed by this article as if
amendment or repeal had not occurred and may be terminated,
completed, consummated, or enforced under that statute or other
rule.
ARTICLE 8. INVESTMENT SECURITIES.
§46-8-103. Rules for determining whether certain obligations and
interests are securities or financial assets.
(a) A share or similar equity interest issued by a
corporation, business trust, joint stock company or similar entity
is a security.
(b) An "investment company security" is a security.
"Investment company security" means a share or similar equity
interest issued by an entity that is registered as an investment
company under the federal investment company laws, an interest in
a unit investment trust that is so registered or a face-amount
certificate issued by a face-amount certificate company that is so
registered. Investment company security does not include an
insurance policy or endowment policy or annuity contract issued by
an insurance company.
(c) An interest in a partnership or limited liability company
is not a security unless it is dealt in or traded on securities
exchanges or in securities markets, its terms expressly provide
that it is a security governed by this article 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 article and not by article three of this chapter, even though it also meets the requirements of that article. However, a
negotiable instrument governed by article three is a financial
asset if it is held in a securities account.
(e) An option or similar obligation issued by a clearing
corporation to its participants is not a security, but is a
financial asset.
(f) A commodity contract, as defined in section 9-102(a)(15),
is not a security or a financial asset.
(g) A document of title is not a financial asset unless
section 8-102(a)(9)(iii) applies.
ARTICLE 9. SECURED TRANSACTIONS.
§46-9-102. Definitions and index of definitions.
(a) Article 9 definitions. In this article:
(1) "Accession" means goods that are physically united with
other goods in such a manner that the identity of the original
goods is not lost.
(2) "Account", except as used in "account for", means a right
to payment of a monetary obligation, whether or not earned by
performance: (i) For property that has been or is to be sold,
leased, licensed, assigned or otherwise disposed of; (ii) for
services rendered or to be rendered; (iii) for a policy of
insurance issued or to be issued; (iv) for a secondary obligation
incurred or to be incurred; (v) for energy provided or to be
provided; (vi) for the use or hire of a vessel under a charter or other contract; (vii) arising out of the use of a credit or charge
card or information contained on or for use with the card; or
(viii) as winnings in a lottery or other game of chance operated or
sponsored by a state, governmental unit of a state or person
licensed or authorized to operate the game by a state or
governmental unit of a state. The term includes
health-care-insurance receivables. The term does not include: (1)
Rights to payment evidenced by chattel paper or an instrument;
(ii) commercial tort claims; (iii) deposit accounts; (iv)
investment property; (v) letter-of-credit rights or letters of
credit; or (vi) rights to payment for money or funds advanced or
sold, other than rights arising out of the use of a credit or
charge card or information contained on or for use with the card.
(3) "Account debtor" means a person obligated on an account,
chattel paper or general intangible. The term does not include
persons obligated to pay a negotiable instrument, even if the
instrument constitutes part of chattel paper.
(4) "Accounting", except as used in "accounting for", means a
record:
(A) Authenticated by a secured party;
(B) Indicating the aggregate unpaid secured obligations as of
a date not more than thirty-five days earlier or thirty-five days
later than the date of the record; and
(C) Identifying the components of the obligations in reasonable detail.
(5) "Agricultural lien" means an interest, other than a
security interest, in farm products:
(A) Which secures payment or performance of an obligation for:
(i) Goods or services furnished in connection with a debtor's
farming operation; or
(ii) Rent on real property leased by a debtor in connection
with its farming operation;
(B) Which is created by statute in favor of a person that:
(i) In the ordinary course of its business furnished goods or
services to a debtor in connection with a debtor's farming
operation; or
(ii) Leased real property to a debtor in connection with the
debtor's farming operation; and
(C) Whose effectiveness does not depend on the person's
possession of the personal property.
(6) "As-extracted collateral" means:
(A) Oil, gas or other minerals that are subject to a security
interest that:
(i) Is created by a debtor having an interest in the minerals
before extraction; and
(ii) Attaches to the minerals as extracted; or
(B) 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:
(A) To sign; or
(B) To execute or otherwise adopt a symbol, or encrypt or
similarly process a record, in whole or in part, with the present
intent of the authenticating person to identify the person and
adopt or accept a record.
(8) "Bank" means an organization that is engaged in the
business of banking. The term includes savings banks, savings and
loan associations, credit unions and trust companies.
(9) "Cash proceeds" means proceeds that are money, checks,
deposit accounts or the like.
(10) "Certificate of title" means a certificate of title with
respect to which a statute provides for the security interest in
question to be indicated on the certificate as a condition or
result of the security interest's obtaining priority over the
rights of a lien creditor with respect to the collateral.
(11) "Chattel paper" means a record or records that evidence
both a monetary obligation and a security interest in specific
goods, a security interest in specific goods and software used in
the goods, a security interest in specific goods and license of
software used in the goods, a lease of specific goods or a lease of
specific goods and license of software used in the goods. In this
paragraph, "monetary obligation" means a monetary obligation secured by the goods or owed under a lease of the goods and
includes a monetary obligation with respect to software used in the
goods. The term does not include: (i) Charters or other contracts
involving the use or hire of a vessel; or (ii) records that
evidence a right to payment arising out of the use of a credit or
charge card or information contained on or for use with the card.
If a transaction is evidenced by records that include an instrument
or series of instruments, the group of records taken together
constitutes chattel paper.
(12) "Collateral" means the property subject to a security
interest or agricultural lien. The term includes:
(A) Proceeds to which a security interest attaches;
(B) Accounts, chattel paper, payment intangibles and
promissory notes that have been sold; and
(C) Goods that are the subject of a consignment.
(13) "Commercial tort claim" means a claim arising in tort
with respect to which:
(A) The claimant is an organization; or
(B) The claimant is an individual and the claim:
(i) Arose in the course of the claimant's business or
profession; and
(ii) 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:
(A) 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
(B) 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:
(A) Is registered as a futures commission merchant under
federal commodities law; or
(B) 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:
(A) To send a written or other tangible record;
(B) To transmit a record by any means agreed upon by the
persons sending and receiving the record; or
(C) 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:
(A) The merchant:
(i) Deals in goods of that kind under a name other than the
name of the person making delivery;
(ii) Is not an auctioneer; and
(iii) Is not generally known by its creditors to be
substantially engaged in selling the goods of others;
(B) With respect to each delivery, the aggregate value of the
goods is one thousand dollars or more at the time of delivery;
(C) The goods are not consumer goods immediately before
delivery; and
(D) 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:
(A) An individual incurs an obligation primarily for personal,
family or household purposes; and
(B) 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:
(A) Identifies, by its file number, the initial financing
statement to which it relates; and
(B) Indicates that it is a continuation statement for, or that
it is filed to continue the effectiveness of, the identified
financing statement.
(28) "Debtor" means:
(A) A person having an interest, other than a security
interest or other lien, in the collateral, whether or not the
person is an obligor;
(B) A seller of accounts, chattel paper, payment intangibles
or promissory notes; or
(C) 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 section
7-201(2)7-201(b).
(31) "Electronic chattel paper" means chattel paper evidenced
by a record or records consisting of information stored in an
electronic medium.
(32) "Encumbrance" means a right, other than an ownership
interest, in real property. The term includes mortgages and other
liens on real property.
(33) "Equipment" means goods other than inventory, farm
products or consumer goods.
(34) "Farm products" means goods, other than standing timber,
with respect to which the debtor is engaged in a farming operation
and which are:
(A) Crops grown, growing or to be grown, including:
(i) Crops produced on trees, vines and bushes; and
(ii) Aquatic goods produced in aquacultural operations;
(B) Livestock, born or unborn, including aquatic goods
produced in aquacultural operations;
(C) Supplies used or produced in a farming operation; or
(D) Products of crops or livestock in their unmanufactured
states.
(35) "Farming operation" means raising, cultivating,
propagating, fattening, grazing or any other farming, livestock or
aquacultural operation.
(36) "File number" means the number assigned to an initial
financing statement pursuant to section 9-519(a).
(37) "Filing office" means an office designated in section
9-501 as the place to file a financing statement.
(38) "Filing-office rule" means a rule adopted pursuant to
section 9-526.
(39) "Financing statement" means a record or records composed
of an initial financing statement and any filed record relating to
the initial financing statement.
(40) "Fixture filing" means the filing of a financing
statement covering goods that are or are to become fixtures and
satisfying section 9-502(a) and (b). The term includes the filing
of a financing statement covering goods of a transmitting utility
which are or are to become fixtures.
(41) "Fixtures" means goods that have become so related to
particular real property that an interest in them arises under real
property law.
(42) "General intangible" means any personal property,
including things in action, other than accounts, chattel paper,
commercial tort claims, deposit accounts, documents, goods,
instruments, investment property, letter-of-credit rights, letters
of credit, money and oil, gas or other minerals before extraction.
The term includes payment intangibles and software.
(43) "Good faith" means honesty in fact and the observance of
reasonable commercial standards of fair dealing.
(44) "Goods" means all things that are movable when a security
interest attaches. The term includes: (i) Fixtures; (ii) standing
timber that is to be cut and removed under a conveyance or contract
for sale; (iii) the unborn young of animals; (iv) crops grown,
growing or to be grown, even if the crops are produced on trees,
vines or bushes; and (v) manufactured homes. The term also
includes a computer program embedded in goods and any supporting
information provided in connection with a transaction relating to
the program if: (i) The program is associated with the goods in
such a manner that it customarily is considered part of the goods;
or (ii) by becoming the owner of the goods, a person acquires a
right to use the program in connection with the goods. The term
does not include a computer program embedded in goods that consist solely of the medium in which the program is embedded. The term
also does not include accounts, chattel paper, commercial tort
claims, deposit accounts, documents, general intangibles,
instruments, investment property, letter-of-credit rights, letters
of credit, money or oil, gas, or other minerals before extraction.
(45) "Governmental unit" means a subdivision, agency,
department, county, parish, municipality or other unit of the
government of the United States, a state or a foreign country. The
term includes an organization having a separate corporate existence
if the organization is eligible to issue debt on which interest is
exempt from income taxation under the laws of the United States.
(46) "Health-care-insurance receivable" means an interest in
or claim under a policy of insurance which is a right to payment of
a monetary obligation for health-care goods or services provided.
(47) "Instrument" means a negotiable instrument or any other
writing that evidences a right to the payment of a monetary
obligation, is not itself a security agreement or lease, and is of
a type that in ordinary course of business is transferred by
delivery with any necessary indorsement or assignment. The term
does not include: (i) Investment property; (ii) letters of credit;
or (iii) writings that evidence a right to payment arising out of
the use of a credit or charge card or information contained on or
for use with the card.
(48) "Inventory" means goods, other than farm products, which:
(A) Are leased by a person as lessor;
(B) Are held by a person for sale or lease or to be furnished
under a contract of service;
(C) Are furnished by a person under a contract of service; or
(D) Consist of raw materials, work in process or materials
used or consumed in a business.
(49) "Investment property" means a security, whether
certificated or uncertificated, security entitlement, securities
account, commodity contract or commodity account.
(50) "Jurisdiction of organization", with respect to a
registered organization, means the jurisdiction under whose law the
organization is organized.
(51) "Letter-of-credit right" means a right to payment or
performance under a letter of credit, whether or not the
beneficiary has demanded or is at the time entitled to demand
payment or performance. The term does not include the right of a
beneficiary to demand payment or performance under a letter of
credit.
(52) "Lien creditor" means:
(A) A creditor that has acquired a lien on the property
involved by attachment, levy or the like;
(B) An assignee for benefit of creditors from the time of
assignment;
(C) A trustee in bankruptcy from the date of the filing of the petition; or
(D) 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 forty body feet or more in length, or,
when erected on site, is three hundred twenty 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:
(A) That creates a purchase-money security interest in a
manufactured home, other than a manufactured home held as
inventory; or
(B) In which a manufactured home, other than a manufactured
home held as inventory, is the primary collateral.
(55) "Mortgage" means a consensual interest in real property, including fixtures, which secures payment or performance of an
obligation.
(56) "New debtor" means a person that becomes bound as debtor
under section 9-203(d) by a security agreement previously entered
into by another person.
(57) "New value" means: (i) Money; (ii) money's worth in
property, services or new credit; or (iii) release by a transferee
of an interest in property previously transferred to the
transferee. The term does not include an obligation substituted
for another obligation.
(58) "Noncash proceeds" means proceeds other than cash
proceeds.
(59) "Obligor" means a person that, with respect to an
obligation secured by a security interest in or an agricultural
lien on the collateral: (i) Owes payment or other performance of
the obligation; (ii) has provided property other than the
collateral to secure payment or other performance of the
obligation; or (iii) is otherwise accountable, in whole or in part,
for payment or other performance of the obligation. The term does
not include issuers or nominated persons under a letter of credit.
(60) "Original debtor" except as used in section 9-310(c),
means a person that, as debtor, entered into a security agreement
to which a new debtor has become bound under section 9-203(d).
(61) "Payment intangible" means a general intangible under which the account debtor's principal obligation is a monetary
obligation.
(62) "Person related to", with respect to an individual,
means:
(A) The spouse of the individual;
(B) A brother, brother-in-law, sister or sister-in-law of the
individual;
(C) An ancestor or lineal descendant of the individual or the
individual's spouse; or
(D) 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:
(A) A person directly or indirectly controlling, controlled by
or under common control with the organization;
(B) An officer or director of, or a person performing similar
functions with respect to, the organization;
(C) An officer or director of, or a person performing similar
functions with respect to, a person described in subparagraph (A);
(D) The spouse of an individual described in subparagraph (A),
(B) or (C); or
(E) An individual who is related by blood or marriage to an
individual described in subparagraph (A), (B), (C) or (D) and shares the same home with the individual.
(64) "Proceeds", except as used in section 9-609(b), means the
following property:
(A) Whatever is acquired upon the sale, lease, license,
exchange or other disposition of collateral;
(B) Whatever is collected on, or distributed on account of,
collateral;
(C) Rights arising out of collateral;
(D) 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
(E) 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) "Production-money crops" means crops that secure a
production-money obligation incurred with respect to the production
of those crops.
(66) "Production-money obligation" means an obligation of an
obligor incurred for new value given to enable the debtor to
produce crops if the value is in fact used for the production of
the crops.
(67) "Production of crops" includes tilling and otherwise preparing land for growing, planting, cultivating, fertilizing,
irrigating, harvesting and gathering crops and protecting them from
damage or disease.
(68) "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.
(69) "Proposal" means a record authenticated by a secured
party which includes the terms on which the secured party is
willing to accept collateral in full or partial satisfaction of the
obligation it secures pursuant to sections 9-620, 9-621 and 9-622.
(70) "Public-finance transaction" means a secured transaction
in connection with which:
(A) Debt securities are issued;
(B) All or a portion of the securities issued have an initial
stated maturity of at least twenty years; and
(C) 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.
(71) "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.
(72) "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.
(73) "Registered organization" means an organization organized
solely under the law of a single state or the United States and as
to which the state or the United States must maintain a public
record showing the organization to have been organized.
(74) "Secondary obligor" means an obligor to the extent that:
(A) The obligor's obligation is secondary; or
(B) The obligor has a right of recourse with respect to an
obligation secured by collateral against the debtor, another
obligor or property of either.
(75) "Secured party" means:
(A) 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;
(B) A person that holds an agricultural lien;
(C) A consignor;
(D) A person to which accounts, chattel paper, payment
intangibles or promissory notes have been sold;
(E) 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
(F) A person that holds a security interest arising under
section 2-401, 2-505, 2-711(3), 2A-508(5), 4-210 or 5-118.
(76) "Security agreement" means an agreement that creates or
provides for a security interest.
(77) "Send", in connection with a record or notification,
means:
(A) To deposit in the mail, deliver for transmission, or
transmit by any other usual means of communication, with postage or
cost of transmission provided for, addressed to any address
reasonable under the circumstances; or
(B) To cause the record or notification to be received within
the time that it would have been received if properly sent under
paragraph (A).
(78) "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.
(79) "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.
(80) "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.
(81) "Tangible chattel paper" means chattel paper evidenced by
a record or records consisting of information that is inscribed on
a tangible medium.
(82) "Termination statement" means an amendment of a financing
statement which:
(A) Identifies, by its file number, the initial financing
statement to which it relates; and
(B) Indicates either that it is a termination statement or
that the identified financing statement is no longer effective.
(83) "Transmitting utility" means a person primarily engaged
in the business of:
(A) Operating a railroad, subway, street railway or trolley
bus;
(B) Transmitting communications electrically,
electromagnetically or by light;
(C) Transmitting goods by pipeline or sewer; or
(D) Transmitting or producing and transmitting electricity,
steam, gas, or water.
(b) Definitions in other articles.
"Control" as provided in
section 7-106 and the following definitions in other articles apply
to this article:
"Applicant"
Section 5-102.
"Beneficiary"
Section 5-102.
"Broker"
Section 8-102.
"Certificated security"
Section 8-102.
"Check"
Section 3-104.
"Clearing corporation"
Section 8-102.
"Contract for sale"
Section 2-106.
"Customer"
Section 4-104.
"Entitlement holder"
Section 8-102.
"Financial asset"
Section 8-102.
"Holder in due course"
Section 3-302.
"Issuer" (with respect to a letter
Section 5-102.
of credit or letter-of-credit right)
"Issuer" (with respect to a security)Section 8-201.
"Issuer" (with respect to documentsSection 7-102.
of title)
"Lease"
Section 2A-103.
"Lease agreement"
Section 2A-103.
"Lease contract"Section 2A-103.
"Leasehold interest"
Section 2A-103.
"Lessee"
Section 2A-103.
"Lessee in ordinary course of business"Section 2A-103.
"Lessor"
Section 2A-103.
"Lessor's residual interest"
Section 2A-103.
"Letter of credit"Section 5-102.
"Merchant"
Section 2-104.
"Negotiable instrument"
Section 3-104.
"Nominated person"
Section 5-102.
"Note"
Section 3-104.
"Proceeds of a letter of credit"
Section 5-114.
"Prove"
Section 3-103.
"Sale"
Section 2-106.
"Securities account"
Section 8-501.
"Securities intermediary"
Section 8-102.
"Security"
Section 8-102.
"Security certificate"
Section 8-102.
"Security entitlement"
Section 8-102.
"Uncertificated security"
Section 8-102.
(c) Article 1 definitions and principles. Article 1 contains
general definitions and principles of construction and
interpretation applicable throughout this article.
§46-9-203. 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), inclusive, of this section, a security interest is enforceable against the debtor and third parties with
respect to the collateral only if:
(1) Value has been given;
(2) The debtor has rights in the collateral or the power to
transfer rights in the collateral to a secured party; and
(3) One of the following conditions is met:
(A) The debtor has authenticated 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;
(B) The collateral is not a certificated security and is in
the possession of the secured party under section 9-313 pursuant to
the debtor's security agreement;
(C) The collateral is a certificated security in registered
form and the security certificate has been delivered to the secured
party under section 8-301 pursuant to the debtor's security
agreement; or
(D) The collateral is deposit accounts, electronic chattel
paper, investment property
or letter-of-credit rights,
or
electronic documents, and the secured party has control under
section
7-106, 9-104, 9-105, 9-106 or 9-107 pursuant to the
debtor's security agreement.
(c)
Other UCC provisions. -- Subsection (b) of this section is
subject to section 4-210 on the security interest of a collecting bank, section 5-118 on the security interest of a letter-of-credit
issuer or nominated person, section 9-110 on a security interest
arising under article two or two-a of this chapter and section
9-206 on security interests in investment property.
(d)
When person becomes bound by another person's security. --
A person becomes bound as debtor by a security agreement entered
into by another person if, by operation of law other than this
article 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) of this section
with respect to existing or after-acquired property of the new
debtor to the extent the property is described in the agreement;
and
(2) Another agreement is not necessary to make a security
interest in the property enforceable.
(f)
Proceeds and supporting obligations. -- The attachment of a security interest in collateral gives the secured party the
rights to proceeds provided by section 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.
§46-9-207. 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:
(A) For the purpose of preserving the collateral or its value;
(B) As permitted by an order of a court having competent
jurisdiction; or
(C) Except in the case of consumer goods, in the manner and to
the extent agreed by the debtor.
(c) Duties and rights when secured party in possession or
control. Except as otherwise provided in subsection (d) of this
section, a secured party having possession of collateral or control
of collateral under section
7-106, 9-104, 9-105, 9-106 or 9-107:
(1) May hold as additional security any proceeds, except money
or funds, received from the collateral;
(2) Shall apply money or funds received from the collateral to
reduce the secured obligation, unless remitted to the debtor; and
(3) May create a security interest in the collateral.
(d) Buyer of certain rights to payment. If the secured party
is a buyer of accounts, chattel paper, payment intangibles, or
promissory notes or a consignor:
(1) Subsection (a) of this section does not apply unless the
secured party is entitled under an agreement:
(A) To charge back uncollected collateral; or
(B) 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) of this section do not apply.
§46-9-208. 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 ten days after receiving an authenticated demand by
the debtor:
(1) A secured party having control of a deposit account under
section 9-104(a)(2) shall send to the bank with which the deposit account is maintained an authenticated statement that releases the
bank from any further obligation to comply with instructions
originated by the secured party;
(2) A secured party having control of a deposit account under
section 9-104(a)(3) shall:
(A) Pay the debtor the balance on deposit in the deposit
account; or
(B) Transfer the balance on deposit into a deposit account in
the debtor's name;
(3) A secured party, other than a buyer, having control of
electronic chattel paper under section 9-105 shall:
(A) Communicate the authoritative copy of the electronic
chattel paper to the debtor or its designated custodian;
(B) If the debtor designates a custodian that is the
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
(C) Take appropriate action to enable the debtor or its
designated custodian to make copies of or revisions to the
authoritative copy which add or change an identified assignee of
the authoritative copy without the consent of the secured party;
(4) A secured party having control of investment property
under section 8-106(d)(2) or 9-106(b) shall send to the securities
intermediary or commodity intermediary with which the security
entitlement or commodity contract is maintained an authenticated
record that releases the securities intermediary or commodity
intermediary from any further obligation to comply with entitlement
orders or directions originated by the secured party;
and
(5) A secured party having control of a letter-of-credit right
under section 9-107 shall send to each person having an unfulfilled
obligation to pay or deliver proceeds of the letter of credit to
the secured party an authenticated release from any further
obligation to pay or deliver proceeds of the letter of credit to
the secured party;
and
(6) A secured party having control of an electronic document
shall:
(A) Give control of the electronic document to the debtor or
its designated custodian;
(B) If the debtor designates a custodian that is the
designated custodian with which the authoritative copy of the
electronic document is maintained for the secured party,
communicate to the custodian an authenticated record releasing the
designated custodian from any further obligation to comply with
instructions originated by the secured party and instructing the
custodian to comply with instructions originated by the debtor; and
(C) Take appropriate action to enable the debtor or its
designated custodian to make copies of or revisions to the
authoritative copy which add or change an identified assignee of
the authoritative copy without the consent of the secured party.
§46-9-301. Law governing perfection and priority of security
interests.
Except as otherwise provided in sections 9-303 through 9-306,
the following rules determine the law governing perfection, the
effect of perfection or nonperfection and the priority of a
security interest in collateral:
(1) Except as otherwise provided in this section, while a
debtor is located in a jurisdiction, the local law of that
jurisdiction governs perfection, the effect of perfection or
nonperfection, and the priority of a security interest in
collateral.
(2) While collateral is located in a jurisdiction, the local
law of that jurisdiction governs perfection, the effect of
perfection or nonperfection, and the priority of a possessory
security interest in that collateral.
(3) Except as otherwise provided in paragraph (4) of this
section, while
tangible negotiable documents, goods, instruments,
money or tangible chattel paper is located in a jurisdiction, the
local law of that jurisdiction governs:
(A) Perfection of a security interest in the goods by filing a fixture filing;
(B) Perfection of a security interest in timber to be cut; and
(C) 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.
§46-9-310. 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) of this section and section 9-312(b), a
financing statement must be filed to perfect all security interests
and agricultural liens.
(b) Exceptions: filing not necessary. The filing of a
financing statement is not necessary to perfect a security
interest:
(1) That is perfected under section 9-308(d), (e), (f) or (g);
(2) That is perfected under section 9-309 when it attaches;
(3) In property subject to a statute, regulation or treaty
described in section 9-311(a);
(4) In goods in possession of a bailee which is perfected under section 9-312(d)(1) or (2);
(5) In certificated securities, documents, goods or
instruments which is perfected without filing,
control, or
possession under section 9-312(e), (f) or (g);
(6) In collateral in the secured party's possession under
section 9-313;
(7) In a certificated security which is perfected by delivery
of the security certificate to the secured party under section
9-313;
(8) In deposit accounts, electronic chattel paper,
electronic
documents, investment property or letter-of-credit rights which is
perfected by control under section 9-314;
(9) In proceeds which is perfected under section 9-315; or
(10) That is perfected under section 9-316.
(c) Assignment of perfected security interest. If a secured
party assigns a perfected security interest or agricultural lien,
a filing under this article is not required to continue the
perfected status of the security interest against creditors of and
transferees from the original debtor.
§46-9-312. Perfection of security interests in chattel paper,
deposit accounts, documents, goods covered by
documents, instruments, investment property,
letter-of-credit rights and money; perfection by
permissive filing; temporary perfection without filing or transfer of possession.
(a) Perfection by filing permitted. A security interest in
chattel paper, negotiable documents, instruments or investment
property may be perfected by filing.
(b) Control or possession of certain collateral. Except as
otherwise provided in section 9-315(c) and (d) for proceeds:
(1) A security interest in a deposit account may be perfected
only by control under section 9-314; and
(2) Except as otherwise provided in section 9-308(d), a
security interest in a letter-of-credit right may be perfected only
by control under section 9-314; and
(3) A security interest in money may be perfected only by the
secured party's taking possession under section 9-313.
(c) Goods covered by negotiable document. While goods are in
the possession of a bailee that has issued a negotiable document
covering the goods:
(1) A security interest in the goods may be perfected by
perfecting a security interest in the document; and
(2) A security interest perfected in the document has priority
over any security interest that becomes perfected in the goods by
another method during that time.
(d) Goods covered by nonnegotiable document. While goods are
in the possession of a bailee that has issued a nonnegotiable
document covering the goods, a security interest in the goods may be perfected by:
(1) Issuance of a document in the name of the secured party;
(2) The bailee's receipt of notification of the secured
party's interest; or
(3) Filing as to the goods.
(e) Temporary perfection: new value. A security interest in
certificated securities, negotiable documents or instruments is
perfected without filing or the taking of possession
or control for
a period of twenty days from the time it attaches to the extent
that it arises for new value given under an authenticated security
agreement.
(f) Temporary perfection: goods or documents made available
to debtor. A perfected security interest in a negotiable document
or goods in possession of a bailee, other than one that has issued
a negotiable document for the goods, remains perfected for twenty
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 twenty
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 twenty-day
period specified in subsection (e), (f) or (g) of this section
expires, perfection depends upon compliance with this article.
§46-9-313. 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) of this section, a secured party may
perfect a security interest in
tangible negotiable documents,
goods, instruments, money or tangible chattel paper by taking
possession of the collateral. A secured party may perfect a
security interest in certificated securities by taking delivery of
the certificated securities under section 8-301.
(b) Goods covered by certificate of title. With respect to
goods covered by a certificate of title issued by this state, a
secured party may perfect a security interest in the goods by
taking possession of the goods only in the circumstances described
in section 9-316(d).
(c) Collateral in possession of person other than debtor. With respect to collateral other than certificated securities and
goods covered by a document, a secured party takes possession of
collateral in the possession of a person other than the debtor, the
secured party or a lessee of the collateral from the debtor in the
ordinary course of the debtor's business, when:
(1) The person in possession authenticates a record
acknowledging that it holds possession of the collateral for the
secured party's benefit; or
(2) The person takes possession of the collateral after having
authenticated a record acknowledging that it will hold possession
of collateral for the secured party's benefit.
(d) Time of perfection by possession; continuation of
perfection. If perfection of a security interest depends upon
possession of the collateral by a secured party, perfection occurs
no earlier than the time the secured party takes possession and
continues only while the secured party retains possession.
(e) Time of perfection by delivery; continuation of
perfection. A security interest in a certificated security in
registered form is perfected by delivery when delivery of the
certificated security occurs under section 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) of
this section or section 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
article 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) Effect of delivery under subsection (h); no duties or
confirmation. To hold possession of the collateral for the secured
party's benefit; or
(2) To redeliver the collateral to the secured party.
(i) A secured party does not relinquish possession, even if a
delivery under subsection (h) of this section violates the rights of a debtor. A person to which collateral is delivered under
subsection (h) of this section 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 article
otherwise provides.
§46-9-314. Perfection by control.
(a) Perfection by control. A security interest in investment
property, deposit accounts, letter-of-credit rights,
or electronic
chattel paper,
or electronic documents may be perfected by control
of the collateral under section
7-106, 9-104, 9-105, 9-106 or
9-107.
(b) Specified collateral: time of perfection by control;
continuation of perfection. A security interest in deposit
accounts, electronic chattel paper,
or letter-of-credit rights,
or
electronic documents is perfected by control under section
7-106,
9-104, 9-105 or 9-107 when the secured party obtains control and
remains perfected by control only while the secured party retains
control.
(c) Investment property: time of perfection by control;
continuation of perfection. A security interest in investment
property is perfected by control under section 9-106 from the time
the secured party obtains control and remains perfected by control
until:
(1) The secured party does not have control; and
(2) One of the following occurs:
(A) If the collateral is a certificated security, the debtor
has or acquires possession of the security certificate;
(B) If the collateral is an uncertificated security, the
issuer has registered or registers the debtor as the registered
owner; or
(C) If the collateral is a security entitlement, the debtor is
or becomes the entitlement holder.
§46-9-317. Interests that take priority over or take free of
security interest or agricultural lien.
(a) Conflicting security interests and rights of lien
creditors. A security interest or agricultural lien is subordinate
to the rights of:
(1) A person entitled to priority under section 9-322; and
(2) Except as otherwise provided in subsection (e) of this
section, a person that becomes a lien creditor before the earlier
of the time: (A) The security interest or agricultural lien is
perfected; or (B) one of the conditions specified in section
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) of this section, a buyer, other than a
secured party, of tangible chattel paper,
tangible documents,
goods, instruments or a security certificate takes free of a security interest or agricultural lien if the buyer gives value and
receives delivery of the collateral without knowledge of the
security interest or agricultural lien and before it is perfected.
(c) Lessees that receive delivery. Except as otherwise
provided in subsection (e) of this section, a lessee of goods takes
free of a security interest or agricultural lien if the lessee
gives value and receives delivery of the collateral without
knowledge of the security interest or agricultural lien and before
it is perfected.
(d) Licensees and buyers of certain collateral. A licensee of
a general intangible or a buyer, other than a secured party, of
accounts, electronic chattel paper,
electronic documents, general
intangibles or investment property other than a certificated
security takes free of a security interest if the licensee or buyer
gives value without knowledge of the security interest and before
it is perfected.
(e) Purchase-money security interest. Except as otherwise
provided in sections 9-320 and 9-321, if a person files a financing
statement with respect to a purchase-money security interest before
or within twenty 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.
§46-9-338. Priority of security interest or agricultural lien perfected by filed financing statement providing
certain incorrect information.
If a security interest or agricultural lien is perfected by a
filed financing statement providing information described in
section 9-516(b)(5) which is incorrect at the time the financing
statement is filed:
(1) The security interest or agricultural lien is subordinate
to a conflicting perfected security interest in the collateral to
the extent that the holder of the conflicting security interest
gives value in reasonable reliance upon the incorrect information;
and
(2) A purchaser, other than a secured party, of the collateral
takes free of the security interest or agricultural lien to the
extent that, in reasonable reliance upon the incorrect information,
the purchaser gives value and, in the case of
tangible chattel
paper,
tangible documents, goods, instruments, or a security
certificate, receives delivery of the collateral.
§46-9-601. Rights after default; judicial enforcement; consignor
or buyer of accounts, chattel paper, payment
intangibles or promissory notes.
(a) Rights of secured party after default. After default, a
secured party has the rights provided in this part and, except as
otherwise provided in section 9-602, those provided by agreement of
the parties. A secured party:
(1) May reduce a claim to judgment, foreclose or otherwise
enforce the claim, security interest or agricultural lien by any
available judicial procedure; and
(2) If the collateral is documents, may proceed either as to
the documents or as to the goods they cover.
(b) Rights and duties of secured party in possession or
control. A secured party in possession of collateral or control of
collateral under section
7-106, 9-104, 9-105, 9-106 or 9-107 has
the rights and duties provided in section 9-207.
(c) Rights cumulative; simultaneous exercise. The rights
under subsections (a) and (b) of this section are cumulative and
may be exercised simultaneously.
(d) Rights of debtor and obligor. Except as otherwise
provided in subsection (g) of this section and section 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 article.
(g) Consignor or buyer of certain rights to payment. Except
as otherwise provided in section 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.
NOTE: This bill makes a number of changes to Article 7 of the
Uniform Commercial Code (UCC) on warehouse receipts, bills of
lading, and other documents of title. It allows electronic
documents of title and generally applies the same rules to them as
to tangible documents, but adds provisions on control of an
electronic document as the equivalent to possession and endorsement
of a tangible document of title. The bill also sets rules to allow
an electronic or paper document of title to be issued as a
substitute for the other. The bill also makes several technical
changes throughout.
This bill has been recommended for passage this session by the
Joint Committee on Interstate Cooperation.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
§46-7-106, 306, 307, 308, 309, 701 and 702 are new; therefore,
strike-throughs and underscoring have been omitted.