Read the full stored bill text
264
15-8-4
32B-14-102
46-4-403
70A-1a-201
70A-1a-204
70A-1a-301
70A-1a-306
70A-2-102
70A-2-106
70A-2-201
70A-2-202
70A-2-203
70A-2-205
70A-2-209
70A-2a-102
70A-2a-103
70A-2a-107
70A-2a-201
70A-2a-202
70A-2a-203
70A-2a-205
70A-2a-208
70A-3-104
70A-3-105
70A-3-401
70A-3-604
70A-4a-103
70A-4a-201
70A-4a-202
70A-4a-203
70A-4a-207
70A-4a-208
70A-4a-210
70A-4a-211
70A-4a-305
70A-5-104
70A-5-116
70A-7a-102
70A-7a-106
70A-8-101
70A-8-102
70A-8-105
70A-8-109
70A-8-303
70A-9a-102
70A-9a-102.1
70A-9a-104
70A-9a-105
70A-9a-105.1
70A-9a-107.1
70A-9a-107.2
70A-9a-203
70A-9a-204
70A-9a-207
70A-9a-208
70A-9a-209
70A-9a-210
70A-9a-301
70A-9a-304
70A-9a-305
70A-9a-306.1
70A-9a-306.2
70A-9a-310
70A-9a-312
70A-9a-313
70A-9a-314
70A-9a-314.1
70A-9a-316
70A-9a-317
70A-9a-323
70A-9a-324
70A-9a-326.1
70A-9a-330
70A-9a-331
70A-9a-332
70A-9a-334
70A-9a-341
70A-9a-404
70A-9a-406
70A-9a-408
70A-9a-509
70A-9a-513
70A-9a-601
70A-9a-605
70A-9a-608
70A-9a-611
70A-9a-613
70A-9a-614
70A-9a-615
70A-9a-616
70A-9a-619
70A-9a-620
70A-9a-621
70A-9a-624
70A-9a-628
70A-10-101
70A-10-102
70A-12-101
70A-12-102
70A-12-103
70A-12-104
70A-12-105
70A-12-106
70A-12-107
70A-12a-101
70A-12a-102
70A-12a-201
70A-12a-301
70A-12a-302
70A-12a-303
70A-12a-304
70A-12a-305
70A-12a-306
70A-13-101
70A-14-101
70A-15-101
70A-16-101
70A-17-101
70A-18-101
70A-19-101
70A-10-103
70A-10-104
70C-2-204
0
Uniform Commercial Code Modifications
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Anthony E. Loubet
Senate Sponsor: Kirk A. Cullimore
LONG TITLE
General Description:
This bill enacts provisions within Title 70A, Uniform Commercial Code.
Highlighted Provisions:
This bill:
defines terms;
amends the scope of Title 70A, Chapter 2, Uniform Commercial Code - Sales, and Title
70A, Chapter 2a, Uniform Commercial Code - Leases;
replaces certain references to "writing" with "record" in Title 70A, Uniform Commercial
Code;
amends provisions relating to a funds transfer;
amends provisions relating to hybrid transactions;
enacts provisions relating to the control of a controllable electronic record;
provides for the discharge of an account debtor's obligation on a controllable account or
controllable payment intangible;
establishes the governing law for a controllable electronic record;
provides where a branch of a bank is considered to be located for a choice of law
provision;
amends provisions relating to control of an electronic document of title;
provides what does not qualify as a financial asset;
amends provisions relating to a purchaser's control of a security entitlement;
amends provisions relating to the control of a deposit account;
amends provisions relating to the control of an electronic copy of a record evidencing
chattel paper;
provides the circumstances under which a secured party has control of a controllable
electronic record;
provides a limitation on when a security interest does not attach;
amends the duties of a secured party with control of collateral;
enacts provisions governing perfection and priority of security interests in chattel paper,
controllable accounts, controllable electronic records, and controllable payment
intangibles;
amends provisions relating to perfection by control;
enacts provisions governing perfection by possession and control of chattel paper;
amends the contents of a notification of disposition of collateral;
enacts transitional provisions for the Uniform Commercial Code Amendments (2022); and
makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
15-8-4
, as last amended by Laws of Utah 2014, Chapter 189
32B-14-102
, as enacted by Laws of Utah 2010, Chapter 276
46-4-403
, as last amended by Laws of Utah 2007, Chapter 272
70A-1a-201
, as last amended by Laws of Utah 2024, Chapter 129
70A-1a-204
, as enacted by Laws of Utah 2007, Chapter 272
70A-1a-301
, as enacted by Laws of Utah 2007, Chapter 272
70A-1a-306
, as enacted by Laws of Utah 2007, Chapter 272
70A-2-102
, as enacted by Laws of Utah 1965, Chapter 154
70A-2-106
, as enacted by Laws of Utah 1965, Chapter 154
70A-2-201
, as enacted by Laws of Utah 1965, Chapter 154
70A-2-202
, as last amended by Laws of Utah 2007, Chapter 272
70A-2-203
, as enacted by Laws of Utah 1965, Chapter 154
70A-2-205
, as enacted by Laws of Utah 1965, Chapter 154
70A-2-209
, as enacted by Laws of Utah 1965, Chapter 154
70A-2a-102
, as enacted by Laws of Utah 1990, Chapter 197
70A-2a-103
, as last amended by Laws of Utah 2013, Chapter 225
70A-2a-107
, as enacted by Laws of Utah 1990, Chapter 197
70A-2a-201
, as enacted by Laws of Utah 1990, Chapter 197
70A-2a-202
, as enacted by Laws of Utah 1990, Chapter 197
70A-2a-203
, as enacted by Laws of Utah 1990, Chapter 197
70A-2a-205
, as enacted by Laws of Utah 1990, Chapter 197
70A-2a-208
, as enacted by Laws of Utah 1990, Chapter 197
70A-3-104
, as last amended by Laws of Utah 1998, Chapter 60
70A-3-105
, as repealed and reenacted by Laws of Utah 1993, Chapter 237
70A-3-401
, as repealed and reenacted by Laws of Utah 1993, Chapter 237
70A-3-604
, as repealed and reenacted by Laws of Utah 1993, Chapter 237
70A-4a-103
, as last amended by Laws of Utah 1993, Chapter 237
70A-4a-201
, as enacted by Laws of Utah 1990, Chapter 294
70A-4a-202
, as enacted by Laws of Utah 1990, Chapter 294
70A-4a-203
, as enacted by Laws of Utah 1990, Chapter 294
70A-4a-207
, as last amended by Laws of Utah 2015, Chapter 258
70A-4a-208
, as last amended by Laws of Utah 1993, Chapter 237
70A-4a-210
, as last amended by Laws of Utah 1993, Chapter 237
70A-4a-211
, as last amended by Laws of Utah 1993, Chapter 237
70A-4a-305
, as last amended by Laws of Utah 1993, Chapter 237
70A-5-104
, as repealed and reenacted by Laws of Utah 1997, Chapter 241
70A-5-116
, as repealed and reenacted by Laws of Utah 1997, Chapter 241
70A-7a-102
, as last amended by Laws of Utah 2007, Chapter 272
70A-7a-106
, as enacted by Laws of Utah 2006, Chapter 42
70A-8-101
, as last amended by Laws of Utah 2012, Chapter 386
70A-8-102
, as last amended by Laws of Utah 2006, Chapter 42
70A-8-105
, as last amended by Laws of Utah 2000, Chapter 252
70A-8-109
, as last amended by Laws of Utah 2000, Chapter 252
70A-8-303
, as last amended by Laws of Utah 2016, Chapter 22
70A-9a-102
, as last amended by Laws of Utah 2013, Chapter 225
70A-9a-102.1
, as last amended by Laws of Utah 2007, Chapter 272
70A-9a-104
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-203
, as last amended by Laws of Utah 2006, Chapter 42
70A-9a-204
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-207
, as last amended by Laws of Utah 2006, Chapter 42
70A-9a-208
, as last amended by Laws of Utah 2006, Chapter 42
70A-9a-209
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-210
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-301
, as last amended by Laws of Utah 2006, Chapter 42
70A-9a-304
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-305
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-310
, as last amended by Laws of Utah 2006, Chapter 42
70A-9a-312
, as last amended by Laws of Utah 2006, Chapter 42
70A-9a-313
, as last amended by Laws of Utah 2006, Chapter 42
70A-9a-314
, as last amended by Laws of Utah 2006, Chapter 42
70A-9a-316
, as last amended by Laws of Utah 2013, Chapter 225
70A-9a-317
, as last amended by Laws of Utah 2013, Chapter 225
70A-9a-323
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-324
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-330
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-331
, as last amended by Laws of Utah 2006, Chapter 42
70A-9a-332
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-334
, as last amended by Laws of Utah 2001, Chapter 132
70A-9a-341
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-404
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-406
, as last amended by Laws of Utah 2013, Chapter 225
70A-9a-408
, as last amended by Laws of Utah 2013, Chapter 225
70A-9a-509
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-513
, as last amended by Laws of Utah 2024, Chapter 121
70A-9a-601
, as last amended by Laws of Utah 2006, Chapter 42
70A-9a-605
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-608
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-611
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-613
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-614
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-615
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-616
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-619
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-620
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-621
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-624
, as enacted by Laws of Utah 2000, Chapter 252
70A-9a-628
, as enacted by Laws of Utah 2000, Chapter 252
70C-2-204
, as last amended by Laws of Utah 2007, Chapter 272
ENACTS:
70A-9a-105.1
, Utah Code Annotated 1953
70A-9a-107.1
, Utah Code Annotated 1953
70A-9a-107.2
, Utah Code Annotated 1953
70A-9a-306.1
, Utah Code Annotated 1953
70A-9a-306.2
, Utah Code Annotated 1953
70A-9a-314.1
, Utah Code Annotated 1953
70A-9a-326.1
, Utah Code Annotated 1953
70A-12-101
, Utah Code Annotated 1953
70A-12-102
, Utah Code Annotated 1953
70A-12-103
, Utah Code Annotated 1953
70A-12-104
, Utah Code Annotated 1953
70A-12-105
, Utah Code Annotated 1953
70A-12-106
, Utah Code Annotated 1953
70A-12-107
, Utah Code Annotated 1953
70A-12a-101
, Utah Code Annotated 1953
70A-12a-102
, Utah Code Annotated 1953
70A-12a-201
, Utah Code Annotated 1953
70A-12a-301
, Utah Code Annotated 1953
70A-12a-302
, Utah Code Annotated 1953
70A-12a-303
, Utah Code Annotated 1953
70A-12a-304
, Utah Code Annotated 1953
70A-12a-305
, Utah Code Annotated 1953
70A-12a-306
, Utah Code Annotated 1953
70A-13-101
, Utah Code Annotated 1953
70A-14-101
, Utah Code Annotated 1953
70A-15-101
, Utah Code Annotated 1953
70A-16-101
, Utah Code Annotated 1953
70A-17-101
, Utah Code Annotated 1953
70A-18-101
, Utah Code Annotated 1953
70A-19-101
, Utah Code Annotated 1953
REPEALS AND REENACTS:
70A-9a-105
, as last amended by Laws of Utah 2013, Chapter 225
RENUMBERS AND AMENDS:
70A-20-101
, (Renumbered from 70A-10-103, as enacted by Laws of Utah 1965,
Chapter 154)
70A-20-102
, (Renumbered from 70A-10-104, as last amended by Laws of Utah 2007,
Chapter 272)
REPEALS:
70A-10-101
, as enacted by Laws of Utah 1965, Chapter 154
70A-10-102
, as last amended by Laws of Utah 2007, Chapter 306
Be it enacted by the Legislature of the state of Utah:
Section 1. Section
15-8-4
is amended to read:
15-8-4
. Inapplicability of other laws -- Exempted transactions.
(1)
Rental purchase agreements that comply with this chapter are not governed by the laws
relating to:
(a)
a security interest as
that term is
defined in
Subsection
70A-1a-201(2)(ii)
Section
70A-1a-201
; or
(b)
Title 70C, Utah Consumer Credit Code
, except that Sections
70C-7-102
through
70C-7-104
and
70C-2-205
shall apply to lessors as defined in this chapter to the same
extent as they apply to creditors under
Title 70C, Utah Consumer Credit Code
.
(2)
The chapter does not apply to the following:
(a)
rental purchase agreements primarily for business, commercial, or agricultural
purposes, or those made with governmental agencies or instrumentalities or with
organizations;
(b)
a lease of a safe deposit box;
(c)
a lease or bailment of personal property which is incidental to the lease of real
property and which provides that the consumer has no option to purchase the leased
property; or
(d)
a lease of a motor vehicle, as defined in Section
41-1a-102
.
Section 2. Section
32B-14-102
is amended to read:
32B-14-102
. Definitions.
As used in this chapter:
(1)
"Affected party" means a supplier or wholesaler who is a party to a distributorship
agreement that a terminating party seeks to terminate or not renew.
(2)
(a)
"Distributorship agreement" means a written agreement between a supplier and a
wholesaler pursuant to which the wholesaler has the right to purchase, resell, and
distribute in a designated geographical area any brand of beer manufactured,
imported, or distributed by the supplier.
(b)
For purposes of this chapter, a separate agreement between a supplier and a
wholesaler is considered to be part of a distributorship agreement if it relates to:
(i)
the relationship between the supplier and the wholesaler; or
(ii)
the duties of either the supplier or the wholesaler under a distributorship
agreement.
(3)
"Good cause" means the material failure by a supplier or a wholesaler to comply with an
essential, reasonable, and lawful requirement imposed by a distributorship agreement if
the failure occurs after the supplier or wholesaler acting in good faith provides notice of
deficiency and an opportunity to correct in accordance with
Part 2, Termination
.
(4)
"Good faith"
is as
means the same as that term is
defined in
Subsection
70A-1a-201(2)(t)
Section
70A-1a-201
.
(5)
"Retailer" means a beer retailer.
(6)
"Sales territory" means the geographic area of distribution and sale responsibility
designated by a distributorship agreement.
(7)
"Supplier," notwithstanding Section
32B-1-102
, means a brewer or other person who
sells beer to a wholesaler for resale in this state.
(8)
"Terminating party" means a supplier or wholesaler who:
(a)
is a party to a distributorship agreement; and
(b)
seeks to terminate or not renew the distributorship agreement.
Section 3. Section
46-4-403
is amended to read:
46-4-403
. Transferable records.
(1)
As used in this section, "transferable record" means an electronic record that:
(a)
would be a note under
Title 70A, Chapter 3, Uniform Commercial Code - Negotiable
Instruments
, or a document under
Title 70A, Chapter 7a, Uniform Commercial Code
- Documents of Title
, if the electronic record were in writing; and
(b)
the issuer of the electronic record expressly has agreed is a transferable record.
(2)
A person has control of a transferable record if a system employed for evidencing the
transfer of interests in the transferable record reliably establishes that person as the
person to which the transferable record was issued or transferred.
(3)
A system satisfies Subsection
(2)
, and a person is deemed to have control of a
transferable record, if the transferable record is created, stored, and assigned in such a
manner that:
(a)
a single authoritative copy of the transferable record exists that is unique,
identifiable, and, except as otherwise provided in Subsections
(3)(d)
,
(e)
, and
(f)
,
unalterable;
(b)
the authoritative copy identifies the person asserting control as:
(i)
the person to which the transferable record was issued; or
(ii)
if the authoritative copy indicates that the transferable record has been
transferred, the person to which the transferable record was most recently
transferred;
(c)
the authoritative copy is communicated to and maintained by the person asserting
control or its designated custodian;
(d)
copies or revisions that add or change an identified assignee of the authoritative copy
can be made only with the consent of the person asserting control;
(e)
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
(f)
any revision of the authoritative copy is readily identifiable as authorized or
unauthorized.
(4)
(a)
Except as otherwise agreed, a person having control of a transferable record is the
holder, as
that term is
defined in
Subsection
70A-1a-201(2)(u)
Section
70A-1a-201
,
of the transferable record and has the same rights and defenses as a holder of an
equivalent record or writing under
Title 70A, Uniform Commercial Code
, including,
if the applicable statutory requirements under Subsection
70A-3-302(1)
, Section
70A-7a-501
, or Section
70A-9a-308
are satisfied, the rights and defenses of a holder
in due course, a holder to which a negotiable document of title has been duly
negotiated, or a purchaser, respectively.
(b)
Delivery, possession, and indorsement are not required to obtain or exercise any of
the rights under Subsection
(4)(a)
.
(5)
Except as otherwise agreed, an obligor under a transferable record has the same rights
and defenses as an equivalent obligor under equivalent records or writings under
Title
70A, Uniform Commercial Code
.
(6)
(a)
If requested by a person against which enforcement is sought, the person seeking
to enforce the transferable record shall provide reasonable proof that the person is in
control of the transferable record.
(b)
Proof may include access to the authoritative copy of the transferable record and
related business records sufficient to review the terms of the transferable record and
to establish the identity of the person having control of the transferable record.
Section 4. Section
70A-1a-201
is amended to read:
70A-1a-201
. General definitions.
(1)
Unless the context otherwise requires, words or phrases defined in this section, or in the
additional definitions contained in other chapters of this title that apply to particular
chapters or parts thereof, have the meanings stated.
(2)
Subject to definitions contained in other chapters of this title that apply to particular
chapters or parts thereof:
(a)
"Action," in the sense of a judicial proceeding, includes recoupment, counterclaim,
set-off, suit in equity, and any other proceeding in which rights are determined.
(b)
"Aggrieved party" means a party entitled to pursue a remedy.
(c)
"Agreement," as distinguished from "contract," means the bargain of the parties in
fact, as found in their language or inferred from other circumstances, including
course of performance, course of dealing, or usage of trade as provided in Section
70A-1a-303
.
(d)
"Bank" means a person engaged in the business of banking and includes a savings
bank, savings and loan association, credit union, and trust company.
(e)
"Bearer" means a person in possession of a negotiable instrument, document of title,
or certificated security that is payable to bearer or indorsed in blank.
(f)
"Bill of lading" means a document evidencing the receipt of goods for shipment
issued by a person engaged in the business of transporting or forwarding goods.
(g)
"Branch" includes a separately incorporated foreign branch of a bank.
(h)
"Burden of establishing" a fact means the burden of persuading the trier of fact that
the existence of the fact is more probable than its nonexistence.
(i)
"Buyer in ordinary course of business" means a person that buys goods in good faith,
without knowledge that the sale violates the rights of another person in the goods,
and in the ordinary course from a person, other than a pawnbroker, in the business of
selling goods of that kind. A person buys goods in the ordinary course if the sale to
the person comports with the usual or customary practices in the kind of business in
which the seller is engaged or with the seller's own usual or customary practices. A
person that sells oil, gas, or other minerals at the wellhead or minehead is a person in
the business of selling goods of that kind. A buyer in ordinary course of business
may buy for cash, by exchange of other property, or on secured or unsecured credit,
and may acquire goods or documents of title under a preexisting contract for sale.
Only a buyer that takes possession of the goods or has a right to recover the goods
from the seller under Chapter 2, Uniform Commercial Code - Sales, may be a buyer
in ordinary course of business. "Buyer in ordinary course of business" does not
include a person that acquires goods in a transfer in bulk or as security for or in total
or partial satisfaction of a money debt.
(j)
"Central bank digital currency" means a digital currency, a digital medium of
exchange, or a digital monetary unit of account issued by the United States Federal
Reserve System, a federal agency, a foreign government, a foreign central bank, or a
foreign reserve system, that is:
(i)
made directly available to a consumer by such entities; or
(ii)
processed or validated directly by such entities.
(k)
"Conspicuous," with reference to a term, means so written, displayed, or presented
that
, based on the totality of the circumstances,
a reasonable person against which it
is to operate ought to have noticed it. Whether a term is conspicuous or not is a
decision for the court.
Conspicuous terms include the following:
(i)
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
(ii)
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.
(l)
"Consumer" means an individual who enters into a transaction primarily for personal,
family, or household purposes.
(m)
"Contract," as distinguished from "agreement," means the total legal obligation that
results from the parties' agreement as determined by this title as supplemented by any
other applicable laws.
(n)
"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.
(o)
"Defendant" includes a person in the position of defendant in a counterclaim,
cross-claim, or third-party claim.
(p)
"Delivery," with respect to an instrument, document of title, or
an authoritative
tangible copy of a record evidencing
chattel paper, means voluntary transfer of
possession.
(q)
"Document of title" includes bill of lading, dock warrant, dock receipt, warehouse
receipt or order for the delivery of goods, and also any other document which in the
regular course of business or financing is treated as adequately evidencing that the
person in possession of it is entitled to receive, hold, and dispose of the document and
the goods it covers. To be a document of title, a document must purport to be issued
by or addressed to a bailee and purport to cover goods in the bailee's possession
which are either identified or are fungible portions of an identified mass.
(r)
"Electronic" means relating to technology having electrical, digital, magnetic,
wireless, optical, electromagnetic, or similar capabilities.
(r)
(s)
"Fault" means a default, breach, or wrongful act or omission.
(s)
(t)
"Fungible goods" means:
(i)
goods of which any unit, by nature or usage of trade, is the equivalent of any other
like unit; or
(ii)
goods that by agreement are treated as equivalent.
(t)
(u)
"Genuine" means free of forgery or counterfeiting.
(u)
(v)
"Good faith" means honesty in fact in the conduct or transaction concerned.
(v)
(w)
"Holder" means:
(i)
the person in possession of a negotiable instrument that is payable either to bearer
or to an identified person that is the person in possession; or
(ii)
the person in possession of a document of title if the goods are deliverable either
to bearer or to the order of the person in possession.
(w)
(x)
"Insolvency proceeding" includes an assignment for the benefit of creditors or
other proceeding intended to liquidate or rehabilitate the estate of the person involved.
(x)
(y)
"Insolvent" means:
(i)
having generally ceased to pay debts in the ordinary course of business other than
as a result of bona fide dispute;
(ii)
being unable to pay debts as they become due; or
(iii)
being insolvent within the meaning of federal bankruptcy law.
(y)
(z)
(i)
"Money" means a medium of exchange
that is
currently authorized or
adopted by a domestic or foreign government.
(ii)
"Money" includes a monetary unit of account established by an
intergovernmental organization or by agreement between two or more countries.
(iii)
"Money" does not include
:
(A)
a central bank digital currency
.
; or
(B)
an electronic record that is a medium of exchange recorded and transferable in
a system that existed and operated for the medium of exchange before the
medium of exchange was authorized or adopted by the government.
(z)
(aa)
"Organization" means a person other than an individual.
(aa)
(bb)
"Party," as distinguished from "third party," means a person that has engaged
in a transaction or made an agreement subject to this title.
(bb)
(cc)
(i)
"Person" means an individual, corporation, business trust, estate, trust,
partnership, limited liability company, association, joint venture, government,
governmental subdivision, agency, instrumentality,
public corporation,
or any
other legal or commercial entity.
(ii)
"Person" includes a protected series, however denominated, of an entity if the
protected series is established under law other than this title that limits, or limits if
conditions specified under the law are satisfied, the ability of a creditor of the
entity or of any other protected series of the entity to satisfy a claim from assets of
the protected series.
(cc)
(dd)
"Present value" means the amount as of a date certain of one or more sums
payable in the future, discounted to the date certain by use of either an interest rate
specified by the parties if that rate is not manifestly unreasonable at the time the
transaction is entered into or, if an interest rate is not so specified, a commercially
reasonable rate that takes into account the facts and circumstances at the time the
transaction is entered into.
(dd)
(ee)
"Purchase" means taking by sale, lease, discount, negotiation, mortgage,
pledge, lien, security interest, issue or reissue, gift, or any other voluntary transaction
creating an interest in property.
(ee)
(ff)
"Purchaser" means a person that takes by purchase.
(ff)
(gg)
"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.
(gg)
(hh)
"Remedy" means any remedial right to which an aggrieved party is entitled
with or without resort to a tribunal.
(hh)
(ii)
"Representative" means a person empowered to act for another, including an
agent, an officer of a corporation or association, and a trustee, executor, or
administrator of an estate.
(ii)
(jj)
"Right" includes remedy.
(jj)
(kk)
(i)
"Security interest" means an interest in personal property or fixtures
which secures payment or performance of an obligation.
(ii)
"Security interest" includes any interest of a consignor and a buyer of
accounts, chattel paper, a payment intangible, or a promissory note in a
transaction that is subject to Chapter 9a, Uniform Commercial Code - Secured
Transactions.
(iii)
"Security interest" does not include the special property interest of a buyer of
goods on identification of those goods to a contract for sale under Section
70A-2-401
, but a buyer may also acquire a "security interest" by complying with
Chapter 9a, Uniform Commercial Code - Secured Transactions. Except as
otherwise provided in Section
70A-2-505
, the right of a seller or lessor of goods
under Chapter 2, Uniform Commercial Code - Sales, or Chapter 2a, Uniform
Commercial Code - Leases, to retain or acquire possession of the goods is not a
"security interest," but a seller or lessor may also acquire a "security interest" by
complying with Chapter 9a, Uniform Commercial Code - Secured Transactions.
(iv)
The retention or reservation of title by a seller of goods notwithstanding
shipment or delivery to the buyer under Section
70A-2-401
is limited in effect to a
reservation of a "security interest."
(v)
Whether a transaction in the form of a lease creates a "security interest" is
determined pursuant to Section
70A-1a-203
.
(kk)
(ll)
"Send" in connection with a
writing,
record
,
or
notice
notification,
means:
(i)
to deposit in the mail
or
,
deliver for transmission
, or transmit
by any other usual
means of communication with postage or cost of transmission provided for
and
properly addressed and, in the case of an instrument, to an address specified
thereon or otherwise agreed, or if there be none
, addressed
to any address
reasonable under the circumstances; or
(ii)
in any other way to cause to be received any record or notice within the time it
would have arrived if properly sent.
to cause the record or notification to be
received within the time the record or notification would have been received if
properly sent under Subsection
(2)(ll)(i)
.
(ll)
(mm)
(i)
"Signed" includes using any symbol executed or adopted with present
intention to adopt or accept a writing.
"Sign" means, with present intent to
authenticate or adopt a record:
(A)
execute or adopt a tangible symbol; or
(B)
attach to or logically associate with the record an electronic symbol, sound, or
process.
(ii)
"Signed," "signing," and "signature" have corresponding meanings.
(mm)
(nn)
"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.
(nn)
(oo)
"Surety" includes a guarantor or other secondary obligor.
(oo)
(pp)
"Term" means a portion of an agreement that relates to a particular matter.
(pp)
(qq)
"Unauthorized signature" means a signature made without actual, implied, or
apparent authority. The term includes a forgery.
(qq)
(rr)
"Warehouse receipt" means a receipt issued by a person engaged in the
business of storing goods for hire.
(rr)
(ss)
"Writing" includes printing, typewriting, or any other intentional reduction to
tangible form. "Written" has a corresponding meaning.
Section 5. Section
70A-1a-204
is amended to read:
70A-1a-204
. Value.
Except as otherwise provided in
Chapter 3, Uniform Commercial Code - Negotiable
Instruments
,
Chapter 4, Uniform Commercial Code - Bank Deposits and Collections
,
and
Chapter 5, Uniform Commercial Code - Letters of Credit
, and Chapter 12, Uniform
Commercial Code - Controllable Electronic Records
, a person gives value for rights if the
person acquires them:
(1)
in return for a binding commitment to extend credit or for the extension of immediately
available credit, whether or not drawn upon and whether or not a charge-back is
provided for in the event of difficulties in collection;
(2)
as security for, or in total or partial satisfaction of, a preexisting claim;
(3)
by accepting delivery under a preexisting contract for purchase; or
(4)
in return for any consideration sufficient to support a simple contract.
Section 6. Section
70A-1a-301
is amended to read:
70A-1a-301
. Territorial applicability -- Parties' power to choose applicable law.
(1)
Except as provided in this section, when a transaction bears a reasonable relation to this
state and also to another state or nation, the parties may agree that the law either of this
state or of such other state or nation shall govern their rights and duties. Failing such
agreement, this title applies to transactions bearing an appropriate relation to this state.
(2)
Where one of the following provisions of this title specifies the applicable law, that
provision governs and a contrary agreement is effective only to the extent permitted by
the law, including the conflict of laws rules, so specified:
(a)
rights of creditors against sold goods under Section
70A-2-402
;
(b)
applicability of the chapter on leases under Sections
70A-2a-105
and
70A-2a-106
;
(c)
applicability of the chapter on bank deposits and collections under Section
70A-4-102
;
(d)
applicability of the chapter on funds transfers under Section
70A-4a-507
;
(e)
applicability of the chapter on letters of credit under Section
70A-5-116
;
(f)
applicability of the chapter on investment securities under Section
70A-8-109
;
or
(g)
law governing perfection, the effect of perfection or nonperfection, and the priority
of security interests and agricultural liens under Sections
70A-9a-301
through
70A-9a-307
.
; or
(h)
Section
70A-12-107
.
Section 7. Section
70A-1a-306
is amended to read:
70A-1a-306
. Waiver or renunciation of claim or right after breach.
A claim or right arising out of an alleged breach may be discharged in whole or in part
without consideration by agreement of the aggrieved party in
an authenticated
a signed
record.
Section 8. Section
70A-2-102
is amended to read:
70A-2-102
. Scope -- Certain security and other transactions excluded from this
chapter.
Unless the context otherwise requires, this chapter applies to transactions in goods; it
does not apply to any transaction which although in the form of an unconditional contract to
sell or present sale is intended to operate only as a security transaction nor does this chapter
impair or repeal any statute regulating sales to consumers, farmers or other specified classes of
buyers.
(1)
Unless the context otherwise requires, and except as provided in Subsection
(3)
, this
chapter applies to transactions in goods and, in the case of a hybrid transaction, this
chapter applies to the extent provided in Subsection
(2)
.
(2)
In a hybrid transaction:
(a)
if the sale-of-goods aspects do not predominate, only the provisions of this chapter
which relate primarily to the sale-of-goods aspects of the transaction apply, and the
provisions that relate primarily to the transaction as a whole do not apply; or
(b)
if the sale-of-goods aspects predominate, this chapter applies to the transaction but
does not preclude application in appropriate circumstances of other law to aspects of
the transaction which do not relate to the sale of goods.
(3)
This chapter does not:
(a)
apply to a transaction that, even though in the form of an unconditional contract to
sell or present sale, operates only to create a security interest; or
(b)
impair or repeal a statute regulating sales to consumers, farmers, or other specified
classes of buyers.
Section 9. Section
70A-2-106
is amended to read:
70A-2-106
. Definitions -- "Contract" -- "Agreement" -- "Contract for sale" --
"Sale" -- "Present sale" -- "Conforming" to contract -- "Termination" -- "Cancellation"
-- "Hybrid transaction."
(1)
In this chapter unless the context otherwise requires "contract" and "agreement" are
limited to those relating to the present or future sale of goods. "Contract for sale"
includes both a present sale of goods and a contract to sell goods at a future time. A
"sale" consists in the passing of title from the seller to the buyer for a price (Section
70A-2-401
). A "present sale" means a sale which is accomplished by the making of the
contract.
(2)
Goods or conduct including any part of a performance are "conforming" or conform to
the contract when
they
the goods or conduct
are in accordance with the obligations
under the contract.
(3)
"Termination" occurs when either party pursuant to a power created by agreement or
law puts an end to the contract otherwise than for its breach. On "termination" all
obligations which are still executory on both sides are discharged but any right based on
prior breach or performance survives.
(4)
"Cancellation" occurs when either party puts an end to the contract for breach by the
other and its effect is the same as that of "termination" except that the canceling party
also retains any remedy for breach of the whole contract or any unperformed balance.
(5)
"Hybrid transaction" means a single transaction involving a sale of goods and:
(a)
the provision of services;
(b)
a lease of other goods; or
(c)
a sale, lease, or license of property other than goods.
Section 10. Section
70A-2-201
is amended to read:
70A-2-201
. Formal requirements -- Statute of frauds.
(1)
Except as otherwise provided in this section a contract for the sale of goods for the price
of $500 or more is not enforceable by way of action or defense unless there is
some
writing
a record
sufficient to indicate that a contract for sale has been made between the
parties and signed by the party against whom enforcement is sought or by
his
the party's
authorized agent or broker. A
writing
record
is not insufficient because it omits or
incorrectly states a term agreed upon but the contract is not enforceable under this
paragraph
Subsection
(1)
beyond the quantity of goods shown in
such writing
the record
.
(2)
Between merchants if within a reasonable time a
writing
record
in confirmation of the
contract and sufficient against the sender is received and the party receiving it has reason
to know its contents, it satisfies the requirements of Subsection
(1)
against
such
the
party unless
written
notice
in a record
of objection to its contents is given within 10
days after it is received.
(3)
A contract which does not satisfy the requirements of Subsection
(1)
but which is valid
in other respects is enforceable
:
(a)
if the goods are to be specially manufactured for the buyer and are not suitable for
sale to others in the ordinary course of the seller's business and the seller, before
notice of repudiation is received and under circumstances which reasonably indicate
that the goods are for the buyer, has made either a substantial beginning of their
manufacture or commitments for their procurement;
or
(b)
if the party against whom enforcement is sought admits in his pleading, testimony or
otherwise in court that a contract for sale was made, but the contract is not
enforceable under this provision beyond the quantity of goods admitted; or
(c)
with respect to goods for which payment has been made and accepted or which have
been received and accepted (Section
70A-2-606
).
Section 11. Section
70A-2-202
is amended to read:
70A-2-202
. Final expression -- Parol or extrinsic evidence.
Terms with respect to which the confirmatory memoranda of the parties agree or which
are otherwise set forth in a
writing
record
intended by the parties as a final expression of their
agreement with respect to such terms as are included therein may not be contradicted by
evidence of any prior agreement or of a contemporaneous oral agreement but may be
explained or supplemented:
(1)
by course of performance, course of dealing, or usage of trade (Section
70A-1a-303
) or
by course of performance (Section
70A-2-208
); and
(2)
by evidence of consistent additional terms unless the court finds the
writing
record
to
have been intended also as a complete and exclusive statement of the terms of the
agreement.
Section 12. Section
70A-2-203
is amended to read:
70A-2-203
. Seals inoperative.
The affixing of a seal to a
writing
record
evidencing a contract for sale or an offer to
buy or sell goods does not constitute the
writing
record
a sealed instrument and the law with
respect to sealed instruments does not apply to such a contract or offer.
Section 13. Section
70A-2-205
is amended to read:
70A-2-205
. Firm offers.
An offer by a merchant to buy or sell goods in a signed
writing
record
which by its
terms gives assurance that it will be held open is not revocable, for lack of consideration,
during the time stated or if no time is stated for a reasonable time, but in no event may such
period of irrevocability exceed three months; but any such term of assurance on a form
supplied by the offeree must be separately signed by the offeror.
Section 14. Section
70A-2-209
is amended to read:
70A-2-209
. Modification, rescission, and waiver.
(1)
An agreement modifying a contract within this chapter needs no consideration to be
binding.
(2)
A signed agreement which excludes modification or rescission except by a signed
writing
or other signed record
cannot be otherwise modified or rescinded, but except as
between merchants such a requirement on a form supplied by the merchant must be
separately signed by the other party.
(3)
The requirements of the statute of frauds section of this chapter (Section
70A-2-201
)
must be satisfied if the contract as modified is within its provisions.
(4)
Although an attempt at modification or rescission does not satisfy the requirements of
Subsection
(2)
or
(3)
it can operate as a waiver.
(5)
A party who has made a waiver affecting an executory portion of the contract may
retract the waiver by reasonable notification received by the other party that strict
performance will be required of any term waived, unless the retraction would be unjust
in view of a material change of position in reliance on the waiver.
Section 15. Section
70A-2a-102
is amended to read:
70A-2a-102
. Scope.
(1)
This chapter applies to any transaction, regardless of form, that creates a lease
and,
in the case of a hybrid lease, it applies to the extent provided in Subsection
(2)
.
(2)
In a hybrid lease:
(a)
if the lease-of-goods aspects do not predominate:
(i)
only the provisions of this chapter which relate primarily to the lease-of-goods
aspects of the transaction apply, and the provisions that relate primarily to the
transaction as a whole do not apply;
(ii)
Section
70A-2a-209
applies if the lease is a finance lease; and
(iii)
Section
70A-2a-407
applies to the promises of the lessee in a finance lease to the
extent the promises are consideration for the right to possession and use of the
leased goods; and
(b)
if the lease-of-goods aspects predominate, this chapter applies to the transaction, but
does not preclude application in appropriate circumstances of other law to aspects of
the lease which do not relate to the lease of goods.
Section 16. Section
70A-2a-103
is amended to read:
70A-2a-103
. Definitions -- Index of definitions.
(1)
In this chapter, unless the context otherwise requires:
(a)
"Buyer in ordinary course of business" means a person, who in good faith and
without knowledge that the sale to him is in violation of the ownership rights or
security interest or leasehold interest of a third party in the goods, buys in ordinary
course from a person in the business of selling goods of that kind, but does not
include a pawnbroker. "Buying" may be for cash or by exchange of other property or
on secured or unsecured credit and includes acquiring goods or documents of title
under a preexisting contract for sale, but does not include a transfer in bulk, or as
security for, or in total or partial satisfaction of a money debt.
(b)
"Cancellation" occurs when either party puts an end to the lease contract for default
by the other party.
(c)
"Commercial unit" means a unit of goods which by commercial usage is a single
whole for purposes of lease, and the division of which materially impairs its character
or value on the market or in use. A commercial unit may be a single article, such as a
machine, or a set of articles, such as a suite of furniture or a line of machinery, or a
quantity, such as a gross or carload, or any other unit treated in use or in the relevant
market as a single whole.
(d)
"Conforming goods or performance under a lease contract" means goods or
performance that are in accordance with the obligations under the lease contract.
(e)
"Consumer lease" means a lease that a lessor, regularly engaged in the business of
leasing or selling, makes to a lessee, who is an individual and who takes under the
lease primarily for a personal, family, or household purpose.
(f)
"Fault" means wrongful act, omission, breach, or default.
(g)
"Finance lease" means a lease in 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:
(I)
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;
(II)
that the lessee is entitled under this chapter to the promises and warranties,
including those of any third party, provided to the lessor by the person
supplying the goods in connection with or as part of the contract by which
the lessor acquired the goods or the right to possession and use of the goods;
and
(III)
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. 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)
"Hybrid lease" means a single transaction involving a lease of goods and:
(i)
the provision of services;
(ii)
a sale of other goods; or
(iii)
a sale, lease, or license of property other than goods.
(i)
(j)
"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 stating "each delivery is a separate lease" or its equivalent.
(j)
(k)
"Lease" means a transfer of the right to possession and use of goods for a term,
in return for consideration. Unless the context clearly indicates otherwise, the term
includes a sublease. 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.
(k)
(l)
"Lease agreement" with respect to the lease, means the bargain of the lessor and
the lessee in fact as found in their language or by implication from other
circumstances including course of dealing or usage of trade or course of performance
as provided in this chapter. Unless the context clearly indicates otherwise, the term
includes a sublease agreement.
(l)
(m)
"Lease contract" means the total legal obligation that results from the lease
agreement as affected by this chapter and any other applicable rules of law. Unless
the context clearly indicates otherwise, the term includes a sublease contract.
(m)
(n)
"Leasehold interest" means the interest of the lessor or the lessee under a lease
contract.
(n)
(o)
"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)
(p)
"Lessee in ordinary course of business" means a person who in good faith and
without knowledge that the lease to him is in violation of the ownership rights,
security interest, or leasehold interest of a third party in the goods, leases in ordinary
course from a person in the business of selling or leasing goods of that kind, but does
not include a pawnbroker. "Leasing" may be for cash or by exchange of other
property, or on secured or unsecured credit, and includes acquiring goods or
documents of title under a preexisting lease contract. "Leasing" does not include a
transfer in bulk or as security for or in total or partial satisfaction of a money debt.
(p)
(q)
"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)
(r)
"Lessor's residual interest" means the lessor's interest in the goods after
expiration, termination, or cancellation of the lease contract.
(r)
(s)
"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)
(t)
"Lot" means a parcel or 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)
(u)
"Merchant lessee" means a lessee that is a merchant with respect to goods of the
kind subject to the lease.
(u)
(v)
"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)
(w)
"Purchase" includes taking by sale, lease, mortgage, security interest, pledge,
gift, or any other voluntary transaction creating an interest in goods.
(w)
(x)
"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)
(y)
"Supplier" means a person from whom a lessor buys or leases goods to be leased
under a finance lease.
(y)
(z)
"Supply contract" means a contract under which a lessor buys or leases goods to
be leased.
(z)
(aa)
"Termination" occurs when either party, pursuant to a power created by
agreement or law, puts an end to the lease contract otherwise than for default.
(2)
Other definitions applying to this chapter and the sections in which they appear are:
(a)
"Accessions," Section
70A-2a-310
.
(b)
"Construction mortgage," Section
70A-2a-309
.
(c)
"Encumbrance," Section
70A-2a-309
.
(d)
"Fixtures," Section
70A-2a-309
.
(e)
"Fixture filing," Section
70A-2a-309
.
(f)
"Purchase money lease," Section
70A-2a-309
.
(3)
The following definitions in other chapters apply to this chapter:
(a)
"Account,"
Subsection
70A-9a-102(2)
Section
70A-9a-102
.
(b)
"Between merchants," Section
70A-2-104
.
(c)
"Buyer," Section
70A-2-103
.
(d)
"Chattel paper,"
Subsection
70A-9a-102(11)
Section
70A-9a-102
.
(e)
"Consumer goods,"
Subsection
70A-9a-102(23)
Section
70A-9a-102
.
(f)
"Document,"
Subsection
70A-9a-102(30)
Section
70A-9a-102
.
(g)
"Entrusting," Section
70A-2-403
.
(h)
"General intangible,"
Subsection
70A-9a-102(42)
Section
70A-9a-102
.
(i)
"Good faith," Section
70A-2-103
.
(j)
"Instrument,"
Subsection
70A-9a-102(47)
Section
70A-9a-102
.
(k)
"Merchant," Section
70A-2-104
.
(l)
"Mortgage,"
Subsection
70A-9a-102(55)
Section
70A-9a-102
.
(m)
"Pursuant to commitment,"
Subsection
70A-9a-102(69)
Section
70A-9a-102
.
(n)
"Receipt," Section
70A-2-103
.
(o)
"Sale," Section
70A-2-106
.
(p)
"Sale on approval," Section
70A-2-326
.
(q)
"Sale or return," Section
70A-2-326
.
(r)
"Seller," Section
70A-2-103
.
(4)
In addition,
Title 70A, Chapter 1a, Uniform Commercial Code - General Provisions
,
contains general definitions and principles of construction and interpretation applicable
throughout this chapter.
Section 17. Section
70A-2a-107
is amended to read:
70A-2a-107
. Waiver or renunciation of claim or right after default.
Any claim or right arising out of an alleged default or breach of warranty may be
discharged in whole or in part without consideration by a
written
waiver or renunciation
in a
signed
and
record
delivered by the aggrieved party.
Section 18. Section
70A-2a-201
is amended to read:
70A-2a-201
. Statute of frauds.
(1)
A lease contract is not enforceable by way of action or defense unless:
(a)
in a lease contract that is not a consumer lease, the total payments to be made under
the lease contract, excluding payments for options to renew or buy, are less than
$1,000; or
(b)
there is a
writing
record
, signed by the party against whom enforcement is sought or
by that party's authorized agent, sufficient to indicate that a lease contract has been
made between the parties and to describe the goods leased and the lease term.
(2)
Any description of leased goods or of the lease term is sufficient and satisfies
Subsection
(1)(b)
, whether or not it is specific, if it reasonably identifies what is
described.
(3)
A
writing
record
is not insufficient because it omits or incorrectly states a term agreed
upon, but the lease contract is not enforceable under Subsection
(1)(b)
beyond the lease
term and the quantity of goods shown in the
writing
record
.
(4)
A lease contract that does not satisfy the requirements of Subsection
(1)
, but which is
valid in other respects, is enforceable:
(a)
if the goods are to be specially manufactured or obtained for the lessee and are not
suitable for lease or sale to others in the ordinary course of the lessor's business, and
the lessor, before notice of repudiation is received and under circumstances that
reasonably indicate that the goods are for the lessee, has made either a substantial
beginning of their manufacture or commitments for their procurement;
(b)
if the party against whom enforcement is sought admits in that party's pleading,
testimony, or otherwise in court that a lease contract was made, but the lease contract
is not enforceable under this provision beyond the quantity of goods admitted; or
(c)
with respect to goods that have been received and accepted by the lessee.
(5)
The lease term under a lease contract referred to in Subsection
(4)
is enforceable:
(a)
if there is a
writing
record
signed by the party against whom enforcement is sought
or by that party's authorized agent specifying the lease term, the term so specified;
(b)
if the party against whom enforcement is sought admits in that party's pleading,
testimony, or otherwise in court a lease term, the term so admitted; or
(c)
if there is a reasonable lease term.
Section 19. Section
70A-2a-202
is amended to read:
70A-2a-202
. Final expression -- Parol or extrinsic evidence.
Terms with respect to which the confirmatory memoranda of the parties agree or which
are otherwise set forth in a
writing
record
intended by the parties as a final expression of their
agreement with respect to such terms as are included therein may not be contradicted by
evidence of any prior agreement or of a contemporaneous oral agreement, but may be
explained or supplemented:
(1)
by course of dealing or usage of trade or by course of performance; and
(2)
by evidence of consistent additional terms unless the court finds the
writing
record
to
have been intended also as a complete and exclusive statement of the terms of the
agreement.
Section 20. Section
70A-2a-203
is amended to read:
70A-2a-203
. Seals inoperative.
The affixing of a seal to a
writing
record
evidencing a lease contract or an offer to enter
into a lease contract does not render the
writing
record
a sealed instrument and the law with
respect to sealed instruments does not apply to the lease contract or offer.
Section 21. Section
70A-2a-205
is amended to read:
70A-2a-205
. Firm offers.
An offer by a merchant to lease goods to or from another person in a signed
writing
record
that by its terms gives assurance it will be held open is not revocable for lack of
consideration during the time stated or, if no time is stated, for a reasonable time, but in no
event may the period of irrevocability exceed three months. Any such term of assurance on a
form supplied by the offeree must be separately signed by the offeror.
Section 22. Section
70A-2a-208
is amended to read:
70A-2a-208
. Modification, rescission, and waiver.
(1)
An agreement modifying a lease contract needs no consideration to be binding.
(2)
A signed lease agreement that excludes modification or rescission except by a signed
writing
record
may not be otherwise modified or rescinded.
(3)
Although an attempt at modification or rescission does not satisfy the requirements of
Subsection
(2)
, it may operate as a waiver.
(4)
A party who has made a waiver affecting an executory portion of a lease contract may
retract the waiver by reasonable notification received by the other party that strict
performance will be required of any term waived, unless the retraction would be unjust
in view of a material change of position in reliance on the waiver.
Section 23. Section
70A-3-104
is amended to read:
70A-3-104
. Negotiable instrument.
(1)
Except as provided in Subsections
(3)
and
(4)
, "negotiable instrument" means an
unconditional promise or order to pay a fixed amount of money, with or without interest
or other charges described in the promise or order, if it:
(a)
is payable to bearer or to order at the time it is issued or first comes into possession
of a holder;
(b)
is payable on demand or at a definite time; and
(c)
does not state any other undertaking or instruction by the person promising or
ordering payment to do any act in addition to the payment of money, but the promise
or order may contain:
(i)
an undertaking or power to give, maintain, or protect collateral to secure payment;
(ii)
an authorization or power to the holder to confess judgment or realize on or
dispose of collateral;
or
(iii)
a waiver of the benefit of any law intended for the advantage or protection of an
obligor
.
;
(iv)
a term that specifies the law that governs the promise or order; or
(v)
an undertaking to resolve in a specified forum a dispute concerning the promise
or order.
(2)
"Instrument" means a negotiable instrument.
(3)
An order that meets all of the requirements of Subsection
(1)
, except Subsection
(1)(a)
,
and otherwise falls within the definition of "check" in Subsection
(6)
is a negotiable
instrument and a check.
(4)
A promise or order other than a check is not an instrument if, at the time it is issued or
first comes into possession of a holder, it contains a conspicuous statement, however
expressed, to the effect that the promise or order is not negotiable or is not an instrument
governed by this chapter.
(5)
An instrument is a "note" if it is a promise and is a "draft" if it is an order. If an
instrument falls within the definition of both "note" and "draft," a person entitled to
enforce the instrument may treat it as either.
(6)
(a)
"Check" means:
(i)
a draft, other than a documentary draft, payable on demand and drawn on a bank;
(ii)
a cashier's check or teller's check; or
(iii)
a demand draft.
(b)
An instrument may be a check even though it is described on its face by another
term, such as "money order."
(7)
"Cashier's check" means a draft with respect to which the drawer and drawee are the
same bank or branches of the same bank.
(8)
"Teller's check" means a draft drawn by a bank either on another bank, or payable at or
through a bank.
(9)
"Traveler's check" means an instrument that:
(a)
is payable on demand;
(b)
is drawn on or payable at or through a bank;
(c)
is designated by the term "traveler's check" or by a substantially similar term; and
(d)
requires, as a condition to payment, a countersignature by a person whose specimen
signature appears on the instrument.
(10)
"Certificate of deposit" means an instrument containing an acknowledgment by a bank
that a sum of money has been received by the bank and a promise by the bank to repay
the sum of money. A certificate of deposit is a note of the bank.
(11)
(a)
"Demand draft" means a writing not signed by a customer that is created by a
third party under the purported authority of the customer for the purpose of charging
the customer's account with a bank.
(b)
A demand draft:
(i)
shall contain the customer's account number;
(ii)
may contain any or all of the following:
(A)
the customer's printed or typewritten name;
(B)
a notation that the customer authorized the draft; or
(C)
the statement "No Signature Required" or words to that effect; and
(iii)
may not include a check purportedly drawn by and bearing the signature of a
fiduciary, as defined in Section
70A-3-307
.
Section 24. Section
70A-3-105
is amended to read:
70A-3-105
. Issue of instrument.
(1)
"Issue" means
:
(a)
the first delivery of an instrument by the maker or drawer, whether to a holder or
nonholder, for the purpose of giving rights on the instrument to any person
.
; or
(b)
if agreed by the payee, the first transmission by the drawer to the payee of an image
of an item and information derived from the item that enables the depositary bank to
collect the item by transferring or presenting under federal law an electronic check.
(2)
An unissued instrument, or an unissued incomplete instrument that is completed, is
binding on the maker or drawer, but nonissuance is a defense. An instrument that is
conditionally issued or is issued for a special purpose is binding on the maker or drawer,
but failure of the condition or special purpose to be fulfilled is a defense.
(3)
"Issuer" applies to issued and unissued instruments and means a maker or drawer of an
instrument.
Section 25. Section
70A-3-401
is amended to read:
70A-3-401
. Signature necessary for liability on instrument.
(1)
A person is not liable on an instrument unless:
(a)
(1)
the person signed the instrument; or
(b)
(2)
the person is represented by an agent or representative who signed the instrument
and the signature is binding on the represented person under Section
70A-3-402
.
(2)
A signature may be made:
(a)
manually or by means of a device or machine; and
(b)
by the use of any name, including a trade or assumed name, or by a word, mark, or
symbol executed or adopted by a person with present intention to authenticate a
writing.
Section 26. Section
70A-3-604
is amended to read:
70A-3-604
. Discharge by cancellation or renunciation.
(1)
(a)
A person entitled to enforce an instrument, with or without consideration, may
discharge the obligation of a party to pay the instrument by
:
(i)
an intentional voluntary act, such as surrender of the instrument to the party,
destruction, mutilation, or cancellation of the instrument, cancellation or striking
out of the party's signature, or the addition of words to the instrument indicating
discharge
,
;
or
(ii)
by agreeing not to sue or otherwise renouncing rights against the party by a
signed
writing
record
.
(b)
The obligation of a party to pay a check is not discharged solely by destruction of the
check in connection with a process in which information is extracted from the check
and an image of the check is made and, subsequently, the information and image are
transmitted for payment.
(2)
Cancellation or striking out of an indorsement pursuant to Subsection
(1)
does not affect
the status and rights of a party derived from the indorsement.
Section 27. Section
70A-4a-103
is amended to read:
70A-4a-103
. Payment order -- Definitions.
(1)
"Beneficiary" means the person to be paid by the beneficiary's bank.
(2)
"Beneficiary's bank" means the bank identified in a payment order in which an account
of the beneficiary is to be credited pursuant to the order or which otherwise is to make
payment to the beneficiary if the order does not provide for payment to an account.
(3)
"Payment order" means an instruction of a sender to a receiving bank, transmitted orally
,
electronically, or in writing,
or in a record
to pay, or to cause another bank to pay, a
fixed or determinable amount of money to a beneficiary if:
(a)
the instruction does not state a condition to payment to the beneficiary other than
time of payment;
(b)
the receiving bank is to be reimbursed by debiting an account of, or otherwise
receiving payment from, the sender; and
(c)
the instruction is transmitted by the sender directly to the receiving bank or to an
agent, funds transfer system, or communication system for transmittal to the
receiving bank.
(4)
"Receiving bank" means the bank to which the sender's instruction is addressed.
(5)
"Sender" means the person giving the instruction to the receiving bank.
(6)
If an instruction complying with Subsection
(3)
is to make more than one payment to a
beneficiary, the instruction is a separate payment order with respect to each of the
payments.
(7)
A payment order is issued when it is sent to the receiving bank.
Section 28. Section
70A-4a-201
is amended to read:
70A-4a-201
. Security procedure.
(1)
"Security procedure" means a procedure established by agreement of a customer and a
receiving bank for the purpose of:
(a)
verifying that a payment order or communication amending or canceling a payment
order is that of the customer; or
(b)
detecting error in the transmission or the content of the payment order or
communication.
(2)
A security procedure
may impose an obligation on the receiving bank or the customer
and
may require the use of algorithms or other codes, identifying words
or
,
numbers,
symbols, sounds, biometrics,
encryption, callback procedures, or similar security
devices. Comparison of a signature on a payment order or communication with an
authorized specimen signature of the customer
or requiring payment order to be sent
from a known email address, IP address, or telephone number
is not by itself a security
procedure.
Section 29. Section
70A-4a-202
is amended to read:
70A-4a-202
. Authorized and verified payment orders.
(1)
A payment order received by the receiving bank is the authorized order of the person
identified as sender if that person authorized the order or is otherwise bound by it under
the law of agency.
(2)
(a)
If a bank and its customer have agreed that the authenticity of payment orders
issued to the bank in the name of the customer as sender will be verified pursuant to a
security procedure, a payment order received by the receiving bank is effective as the
order of the customer, whether or not authorized, if:
(i)
the security procedure is a commercially reasonable method of providing security
against unauthorized payment orders; and
(ii)
the bank proves that it accepted the payment order in good faith and in
compliance with
the bank's obligations under
the security procedure and any
written
agreement or instruction of the customer
, evidenced by a record,
restricting acceptance of payment orders issued in the name of the customer.
(b)
The bank is not required to follow an instruction that violates
a written
an
agreement with the customer
, evidenced by a record,
or notice of which is not
received at a time and in a manner affording the bank a reasonable opportunity to act
on it before the payment order is accepted.
(3)
Commercial reasonableness of a security procedure is a question of law to be
determined by considering the wishes of the customer expressed to the bank, the
circumstances of the customer known to the bank, including the size, type, and
frequency of payment orders normally issued by the customer to the bank, alternative
security procedures offered to the customer, and security procedures in general use by
customers and receiving banks similarly situated. A security procedure is considered to
be commercially reasonable if:
(a)
the security procedure was chosen by the customer after the bank offered, and the
customer refused, a security procedure that was commercially reasonable for that
customer; and
(b)
the customer expressly agreed in
writing
a record
to be bound by any payment
order, whether or not authorized, issued in its name, and accepted by the bank in
compliance with the
bank's obligations under the
security procedure chosen by the
customer.
(4)
The term "sender" in this chapter includes the customer in whose name a payment order
is issued if the order is the authorized order of the customer under Subsection
(1)
, or it is
effective as the order of the customer under Subsection
(2)
.
(5)
This section applies to amendments and cancellations of payment orders to the same
extent it applies to payment orders.
(6)
Except as provided in this section and in Subsection
70A-4a-203(2)
, rights and
obligations arising under this section or Section
70A-4a-203
may not be varied by
agreement.
Section 30. Section
70A-4a-203
is amended to read:
70A-4a-203
. Unenforceability of certain verified payment orders.
(1)
This section applies to an accepted payment order that, pursuant to Subsection
70A-4a-202(1)
, is not an authorized order of a customer identified as sender, but which
is effective as the order of the customer pursuant to Subsection
70A-4a-202(2)
.
(2)
By express
written
agreement
evidenced by a record
, the receiving bank may limit the
extent to which it is entitled to enforce or retain payment of the payment order.
(3)
(a)
The receiving bank is not entitled to enforce or retain payment of the payment
order if the customer proves that the order was not caused, directly or indirectly, by:
(i)
a person entrusted at any time with duties to act for the customer with respect to
payment orders or the security procedure; or
(ii)
a person who obtained access to transmitting facilities of the customer or who
obtained, from a source controlled by the customer and without authority of the
receiving bank, information facilitating breach of the security procedure,
regardless of how the information was obtained or whether the customer was at
fault.
(b)
Information includes any access device, computer software or the like.
(4)
This section applies to amendments of payment orders to the same extent it applies to
payment orders.
Section 31. Section
70A-4a-207
is amended to read:
70A-4a-207
. Misdescription of beneficiary.
(1)
Subject to Subsection
(2)
, if, in a payment order received by the beneficiary's bank, the
name, bank account number, or other identification of the beneficiary refers to a
nonexistent or unidentifiable person or account, no person has rights as a beneficiary of
the order and acceptance of the order cannot occur.
(2)
If a payment order received by the beneficiary's bank identifies the beneficiary both by
name and by an identifying or bank account number and the name and number identify
different persons then the following rules apply:
(a)
Except as otherwise provided in Subsection
(3)
, the beneficiary's bank may treat the
person identified by number as the beneficiary of the order if the bank does not know
that the name and number refer to different persons, it may rely on the number as the
proper identification of the beneficiary of the order. The beneficiary's bank need not
determine whether the name and number refer to the same person.
(b)
If the beneficiary's bank pays the person identified by name or knows that the name
and number identify different persons, no person has rights as beneficiary except the
person paid by the beneficiary's bank if that person was entitled to receive payment
from the originator of the funds transfer. If no person has rights as beneficiary,
acceptance of the order cannot occur.
(3)
If the conditions listed in Subsections
(3)(a)
,
(b)
, and
(c)
are present, the rules listed in
Subsections
(4)
and
(5)
apply:
(a)
a payment order described in Subsection
(2)
is accepted;
(b)
the originator's payment order described the beneficiary inconsistently by name and
number; and
(c)
the beneficiary's bank pays the person identified by number as permitted by
Subsection
(2)(a)
.
(4)
If the originator is a bank, the originator is obliged to pay its order.
(5)
If the originator is not a bank and proves that the person identified by number was not
entitled to receive payment from the originator, the originator is not obliged to pay its
order unless the originator's bank proves that the originator, before acceptance of the
originator's order, had notice that payment of a payment order issued by the originator
might be made by the beneficiary's bank on the basis of an identifying or bank account
number even if it identifies a person different from the named beneficiary. Proof of
notice may be made by any admissible evidence. The originator's bank satisfies the
burden of proof it if proves that the originator, before the payment order was accepted,
signed a
writing
record
stating the information to which the notice relates.
(6)
In a case governed by Subsection
(2)(a)
, if the beneficiary's bank rightfully pays the
person identified by number and that person was not entitled to receive payment from
the originator, the amount paid may be recovered from that person to the extent allowed
by the law governing mistake and rescission as follows:
(a)
If the originator is obliged to pay its payment order as stated in Subsection
(3)
, the
originator has the right to recover.
(b)
If the originator is not a bank and is not obliged to pay its payment order, the
originator's bank has the right to recover.
Section 32. Section
70A-4a-208
is amended to read:
70A-4a-208
. Misdescription of intermediary bank or beneficiary's bank.
(1)
This subsection applies to a payment order identifying an intermediary bank or
beneficiary's bank by an identifying number.
(a)
The receiving bank may rely on the number as the proper identification of the
intermediary or beneficiary's bank and need not determine whether the number
identifies a bank.
(b)
The sender is obliged to compensate the receiving bank for any loss and expenses
incurred by the receiving bank as a result of its reliance on the number in executing
or attempting to execute the order.
(2)
This subsection applies to a payment order identifying an intermediary bank or
beneficiary's bank both by name and an identifying number if the name and number
identify different persons.
(a)
If the sender is a bank, the receiving bank may rely on the number as the proper
identification of the intermediary or beneficiary's bank if the receiving bank, when it
executes the sender's order, does not know that the name and number identify
different persons. The receiving bank need not determine whether the name and
number refer to the same person or whether the number refers to a bank. The sender
is obliged to compensate the receiving bank for any loss and expenses incurred by the
receiving bank as a result of its reliance on the number in executing or attempting to
execute the order.
(b)
If the sender is not a bank and the receiving bank proves that the sender, before the
payment order was accepted, had notice that the receiving bank might rely on the
number as the proper identification of the intermediary or beneficiary's bank even if it
identifies a person different from the bank identified by name, the rights and
obligations of the sender and the receiving bank are governed by Subsection
(2)(a)
,
as though the sender were a bank. Proof of notice may be made by any admissible
evidence. The receiving bank satisfies the burden of proof if it proves that the
sender, before the payment order was accepted, signed a
writing
record
stating the
information to which the notice relates.
(c)
Regardless of whether the sender is a bank, the receiving bank may rely on the name
as the proper identification of the intermediary or beneficiary's bank if the receiving
bank, at the time it executes the sender's order, does not know that the name and
number identify different persons. The receiving bank need not determine whether
the name and number refer to the same person.
(d)
If the receiving bank knows that the name and number identify different persons,
reliance on either the name or the number in executing the sender's payment order is
a breach of the obligation stated in Subsection
70A-4a-302(1)(a)
.
Section 33. Section
70A-4a-210
is amended to read:
70A-4a-210
. Rejection of payment order.
(1)
A payment order is rejected by the receiving bank by a notice of rejection transmitted to
the sender orally
, electronically,
or in
writing
a record
. A notice of rejection need not
use any particular words and is sufficient if it indicates that the receiving bank is
rejecting the order or will not execute or pay the order. Rejection is effective when the
notice is given if transmission is by a means that is reasonable in the circumstances. If
notice of rejection is given by a means that is not commercially reasonable, rejection is
effective when the notice is received. If an agreement of the sender and receiving bank
establishes the means to be used to reject a payment order:
(a)
any means complying with the agreement is commercially reasonable; and
(b)
any means not complying is not commercially reasonable unless no significant delay
in receipt of the notice resulted from the use of the noncomplying means.
(2)
This subsection applies if a receiving bank other than the beneficiary's bank fails to
execute a payment order despite the existence on the execution date of a withdrawable
credit balance in an authorized account of the sender sufficient to cover the order. If the
sender does not receive notice of rejection of the order on the execution date and the
authorized account of the sender does not bear interest, the bank is obliged to pay
interest to the sender on the amount of the order for the number of days elapsing after
the execution date to the earlier of the day the order is canceled pursuant to Section
70A-4a-211
or the day the sender receives notice or learns that the order was not
executed, counting the final day of the period as an elapsed day. If the withdrawable
credit balance during that period falls below the amount of the order, the amount of
interest is reduced accordingly.
(3)
If a receiving bank suspends payments, all unaccepted payment orders issued to the
bank are deemed rejected at the time the bank suspends payments.
(4)
Acceptance of a payment order precludes a later rejection of the order. Rejection of a
payment order precludes a later acceptance of the order.
Section 34. Section
70A-4a-211
is amended to read:
70A-4a-211
. Cancellation and amendment of payment order.
(1)
A communication of the sender of a payment order canceling or amending the order
may be transmitted to the receiving bank orally
, electronically,
or in
writing
a record
.
If a security procedure is in effect between the sender and the receiving bank, the
communication is not effective to cancel or amend the order unless the communication
is verified pursuant to the security procedure or the bank agrees to the cancellation or
amendment.
(2)
Subject to Subsection
(1)
, a communication by the sender canceling or amending a
payment order is effective to cancel or amend the order if notice of the communication
is received at a time and in a manner affording the receiving bank a reasonable
opportunity to act on the communication before the bank accepts the payment order.
(3)
After a payment order has been accepted, cancellation or amendment of the order is not
effective unless the receiving bank agrees or a funds transfer system rule allows
cancellation or amendment without agreement of the bank:
(a)
With respect to a payment order accepted by a receiving bank other than the
beneficiary's bank, cancellation or amendment is not effective unless a conforming
cancellation or amendment of the payment order issued by the receiving bank is also
made.
(b)
With respect to a payment order accepted by the beneficiary's bank, cancellation or
amendment is not effective unless the order was issued in execution of an
unauthorized payment order, or because of a mistake by a sender in the funds transfer
which resulted in the issuance of a payment order:
(i)
that is a duplicate of a payment order previously issued by the sender;
(ii)
that orders payment to a beneficiary not entitled to receive payment from the
originator; or
(iii)
that orders payment in an amount greater than the amount the beneficiary was
entitled to receive from the originator. If the payment order is canceled or
amended, the beneficiary's bank is entitled to recover from the beneficiary any
amount paid to the beneficiary to the extent allowed by the law governing mistake
and restitution.
(4)
An unaccepted payment order is canceled by operation of law at the close of the fifth
funds transfer business day of the receiving bank after the execution date or payment
date of the order.
(5)
A canceled payment order cannot be accepted. If an accepted payment order is
canceled, the acceptance is nullified and no person has any right or obligation based on
the acceptance. Amendment of a payment order is deemed to be cancellation of the
original order at the time of amendment and issue of a new payment order in the
amended form at the same time.
(6)
Unless otherwise provided in an agreement of the parties or in a funds transfer system
rule, if the receiving bank, after accepting a payment order, agrees to cancellation or
amendment of the order by the sender or is bound by a funds transfer system rule
allowing cancellation or amendment without the bank's agreement, the sender, whether
or not cancellation or amendment is effective, is liable to the bank for any loss and
expenses, including reasonable attorneys' fees, incurred by the bank as a result of the
cancellation or amendment or attempted cancellation or amendment.
(7)
A payment order is not revoked by death or legal incapacity of the sender unless the
receiving bank knows of the death or of an adjudication of incapacity by a court of
competent jurisdiction and has reasonable opportunity to act before acceptance of the
order.
(8)
A funds transfer system rule is not effective to the extent it conflicts with Subsection
(3)(b)
.
Section 35. Section
70A-4a-305
is amended to read:
70A-4a-305
. Liability for late or improper execution or failure to execute
payment order.
(1)
If a funds transfer is completed but execution of a payment order by the receiving bank
in breach of Section
70A-4a-302
results in delay in payment to the beneficiary, the bank
is obliged to pay interest to either the originator or the beneficiary of the funds transfer
for the period of delay caused by the improper execution. Except as provided in
Subsection
(3)
, additional damages are not recoverable.
(2)
(a)
If execution of a payment order by a receiving bank in breach of Section
70A-4a-302
results in noncompletion of the funds transfer, failure to use an
intermediary bank designated by the originator, or issuance of a payment order that
does not comply with the terms of the payment order of the originator, the bank is
liable to the originator for its expenses in the funds transfer and for incidental
expenses and interest losses, to the extent not covered by Subsection
(1)
, resulting
from the improper execution.
(b)
Except as provided in Subsection
(3)
, additional damages are not recoverable.
(3)
In addition to the amounts payable under Subsections
(1)
and
(2)
, damages, including
consequential damages, are recoverable to the extent provided in an express
written
agreement of the receiving bank
, evidenced by a record
.
(4)
If a receiving bank fails to execute a payment order it was obliged by express agreement
to execute, the receiving bank is obliged to compensate the sender for its expenses in the
transaction and for incidental expenses and interest losses resulting from the failure to
execute. Additional damages, including consequential damages, are recoverable to the
extent provided in an express
written
agreement of the receiving bank
, evidenced by a
record
, but are not otherwise recoverable.
(5)
Reasonable attorneys' fees are recoverable if demand for compensation under
Subsection
(1)
or
(2)
is made and refused before an action is brought on the claim. If a
claim is made for breach of the agreement under Subsection
(4)
and the agreement does
not provide for damages, reasonable attorneys' fees are recoverable if demand for
compensation under Subsection
(4)
is made and refused before an action is brought on
the claim.
(6)
Except as stated in this section, the liability of a receiving bank under Subsections
(1)
and
(2)
may not be varied by agreement.
Section 36. Section
70A-5-104
is amended to read:
70A-5-104
. Formal requirements.
A letter of credit, confirmation, advice, transfer, amendment, or cancellation may be
issued in any form that is a
signed
record
and is authenticated:
.
(1)
by a signature; or
(2)
in accordance with the agreement of the parties or the standard practice referred to in
Subsection
70A-5-108(5)
.
Section 37. Section
70A-5-116
is amended to read:
70A-5-116
. Choice of law and forum.
(1)
The liability of an issuer, nominated person, or adviser for action or omission is
governed by the law of the jurisdiction chosen by an agreement in the form of a record
signed
or otherwise authenticated
by the affected parties
in the manner provided in
Section
70A-5-104
or by a provision in the person's letter of credit, confirmation, or
other undertaking. The jurisdiction whose law is chosen need not bear any relation to
the transaction.
(2)
Unless Subsection
(1)
applies, the liability of an issuer, nominated person, or adviser for
action or omission is governed by the law of the jurisdiction in which the person is
located. The person is considered to be located at the address indicated in the person's
undertaking. If more than one address is indicated, the person is considered to be
located at the address from which the person's undertaking was issued.
(3)
For the purpose of jurisdiction, choice of law, and recognition of interbranch letters
of credit, but not enforcement of a judgment, all branches of a bank are considered
separate juridical entities and a bank is considered to be located at the place where its
relevant branch is considered to be located under
this
Subsection
(2)
(4)
.
(4)
A branch of a bank is considered to be located at the address indicated in the branch's
undertaking. If more than one address is indicated, the branch is considered to be located
at the address from which the undertaking was issued.
(3)
(5)
(a)
Except as otherwise provided in this Subsection
(3)(a)
(5)(a)
, the liability of
an issuer, nominated person, or adviser is governed by any rules of custom or
practice, such as the Uniform Customs and Practice for Documentary Credits, to
which the letter of credit, confirmation, or other undertaking is expressly made
subject.
(b)
If this chapter would govern the liability of an issuer, nominated person, or adviser
under Subsection
(1)
or
(2)
:
(i)
the relevant undertaking incorporates rules of custom or practice; and
(ii)
there is conflict between this chapter and those rules as applied to that
undertaking, those rules govern except to the extent of any conflict with the
nonvariable provisions specified in Subsection
70A-5-103(3)
.
(4)
(6)
If there is conflict between this chapter and
Title 70A, Chapter 3, Uniform
Commercial Code - Negotiable Instruments
,
Chapter 4, Uniform Commercial Code -
Bank Deposits and Collections
,
Chapter 4a, Uniform Commercial Code - Funds
Transfers
, or
Chapter 9a, Uniform Commercial Code - Secured Transactions
, this
chapter governs.
(5)
(7)
The forum for settling disputes arising out of an undertaking within this chapter
may be chosen in the manner and with the binding effect that governing law may be
chosen in accordance with Subsection
(1)
.
Section 38. Section
70A-7a-102
is amended to read:
70A-7a-102
. Definitions and index of definitions.
(1)
In this chapter, unless the context otherwise requires:
(a)
"Bailee" means a person that by a warehouse receipt, bill of lading, or other
document of title acknowledges possession of goods and contracts to deliver them.
(b)
"Carrier" means a person that issues a bill of lading.
(c)
"Consignee" means a person named in a bill of lading to which or to whose order the
bill promises delivery.
(d)
"Consignor" means a person named in a bill of lading as the person from which the
goods have been received for shipment.
(e)
"Delivery order" means a record that contains an order to deliver goods directed to a
warehouse, carrier, or other person that in the ordinary course of business issues
warehouse receipts or bills of lading.
(f)
"Good faith" means honesty in fact and the observance of reasonable commercial
standards of fair dealing.
(g)
"Goods" means all things that are treated as movable for the purposes of a contract
for storage or transportation.
(h)
"Issuer" means a bailee that issues a document of title or, in the case of an
unaccepted delivery order, the person that orders the possessor of goods to deliver.
The term includes a person for which an agent or employee purports to act in issuing
a document if the agent or employee has real or apparent authority to issue
documents, even if the issuer did not receive any goods, the goods were
misdescribed, or in any other respect the agent or employee violated the issuer's
instructions.
(i)
"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.
(j)
"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.
(k)
(j)
"Shipper" means a person that enters into a contract of transportation with a
carrier.
(l)
"Sign" means, with present intent to authenticate or adopt a record:
(i)
to execute or adopt a tangible symbol; or
(ii)
to attach to or logically associate with the record an electronic sound, symbol, or
process.
(m)
(k)
"Warehouse" means a person engaged in the business of storing goods for hire.
(2)
Definitions in other chapters applying to this chapter and the sections in which they
appear are:
(a)
"Contract for sale," Section
70A-2-106
.
(b)
"Lessee in the ordinary course of business," Section
70A-2a-103
.
(c)
"Receipt" of goods, Section
70A-2-103
.
(3)
In addition,
Chapter 1a, Uniform Commercial Code - General Provisions
, contains
general definitions and principles of construction and interpretation applicable
throughout this chapter.
Section 39. Section
70A-7a-106
is amended to read:
70A-7a-106
. Control of electronic document of title.
(1)
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.
(2)
A system satisfies Subsection
(1)
, and a person
is considered to have
has
control of an
electronic document of title, if the document is created, stored, and
assigned
transferred
in
such
a manner that:
(a)
a single authoritative copy of the document exists which is unique, identifiable, and,
except as otherwise provided in Subsections
(2)(d)
,
(e)
, and
(f)
, unalterable;
(b)
the authoritative copy identifies the person asserting control as:
(i)
the person to which the document was issued; or
(ii)
if the authoritative copy indicates that the document has been transferred, the
person to which the document was most recently transferred;
(c)
the authoritative copy is communicated to and maintained by the person asserting
control or its designated custodian;
(d)
copies or amendments that add or change an identified
assignee
transferee
of the
authoritative copy can be made only with the consent of the person asserting control;
(e)
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
(f)
any amendment of the authoritative copy is readily identifiable as authorized or
unauthorized.
(3)
A system satisfies Subsection
(1)
and a person has control of an electronic document of
title, if an authoritative electronic copy of the document, a record attached to or logically
associated with the electronic copy, or a system in which the electronic copy is recorded:
(a)
enables the person to readily identify each electronic copy as either an authoritative
copy or a nonauthoritative copy;
(b)
enables the person to readily identify itself in any way, including by name,
identifying number, cryptographic key, office, or account number, as the person to
which each authoritative electronic copy was issued or transferred; and
(c)
gives the person exclusive power, subject to Subsection
(4)
, to:
(i)
prevent others from adding or changing the person to which each authoritative
electronic copy has been issued or transferred; and
(ii)
transfer control of each authoritative electronic copy.
(4)
Subject to Subsection
(5)
, a power is exclusive under Subsections
(3)(c)(i)
and
(ii)
even
if:
(a)
the authoritative electronic copy, a record attached to or logically associated with the
authoritative electronic copy, or a system in which the authoritative electronic copy is
recorded limits the use of the document of title or has a protocol that is programmed
to cause a change, including a transfer or loss of control; or
(b)
the power is shared with another person.
(5)
A power of a person is not shared with another person under Subsection
(4)(b)
and the
person's power is not exclusive if:
(a)
the person can exercise the power only if the power also is exercised by the other
person; and
(b)
the other person:
(i)
can exercise the power without exercise of the power by the person; or
(ii)
is the transferor to the person of an interest in the document of title.
(6)
If a person has the powers specified in Subsections
(3)(c)(i)
and
(ii)
, the powers are
presumed to be exclusive.
(7)
A person has control of an electronic document of title if another person, other than the
transferor to the person of an interest in the document:
(a)
has control of the document and acknowledges that it has control on behalf of the
person; or
(b)
obtains control of the document after having acknowledged that it will obtain control
of the document on behalf of the person.
(8)
A person that has control under this section is not required to acknowledge that it has
control on behalf of another person.
(9)
If a person acknowledges that it has or will obtain control on behalf of another person,
unless the person otherwise agrees or law other than this chapter or Chapter 9a, Uniform
Commercial Code - Secured Transactions, otherwise provides, the person does not owe
any duty to the other person and is not required to confirm the acknowledgment to any
other person.
Section 40. Section
70A-8-101
is amended to read:
70A-8-101
. Definitions.
(1)
As used in this chapter:
(a)
"Adverse claim" means a claim that a claimant has a property interest in a financial
asset and that it is a violation of the rights of the claimant for another person to hold,
transfer, or deal with the financial asset.
(b)
"Bearer form," as applied to a certificated security, means a form in which the
security is payable to the bearer of the security certificate according to its terms but
not by reason of an indorsement.
(c)
"Broker" means a person defined as a broker or dealer under the federal securities
laws, but without excluding a bank acting in that capacity.
(d)
"Certificated security" means a security that is represented by a certificate.
(e)
"Clearing corporation" means:
(i)
a person that is registered as a "clearing agency" under the federal securities laws;
(ii)
a federal reserve bank; or
(iii)
any other person that provides clearance or settlement services with respect to
financial assets that would require it to register as a clearing agency under the
federal securities laws but for an exclusion or exemption from the registration
requirement, if its activities as a clearing corporation, including promulgation of
rules, are subject to regulation by a federal or state governmental authority.
(f)
"Communicate" means to:
(i)
send a signed
writing
record
; or
(ii)
transmit information by any mechanism agreed upon by the persons transmitting
and receiving the information.
(g)
"Entitlement holder" means a person identified in the records of a securities
intermediary as the person having a security entitlement against the securities
intermediary. If a person acquired a security entitlement by virtue of Subsection
70A-8-501(2)(b)
or
(c)
, that person is the entitlement holder.
(h)
"Entitlement order" means a notification communicated to a securities intermediary
directing transfer or redemption of a financial asset to which the entitlement holder
has a security entitlement.
(i)
(i)
"Financial asset," except as otherwise provided in Section
70A-8-102
, means:
(A)
a security;
(B)
an obligation of a person or a share, participation, or other interest in a person
or in property or an enterprise of a person, which is or is of a type, dealt in or
traded on financial markets, or which is recognized in any area in which it is
issued or dealt in as a medium for investment; or
(C)
any property that is held by a securities intermediary for another person in a
securities account if that securities intermediary has expressly agreed with the
other person that the property is to be treated as a financial asset under this
chapter.
(ii)
As context requires, "financial asset" means either the interest itself or the means
by which a person's claim to it is evidenced, including a certificated or
uncertificated security, a security certificate, or a security entitlement.
(j)
"Good faith," for purposes of the obligation of good faith in the performance or
enforcement of contracts or duties within this chapter, means honesty in fact and the
observance of reasonable commercial standards of fair dealing.
(k)
"Indorsement" means a signature that alone or accompanied by other words is made
on a security certificate in registered form or on a separate document for the purpose
of assigning, transferring, or redeeming the security or granting a power to assign,
transfer, or redeem it.
(l)
"Instruction" means a notification communicated to the issuer of an uncertificated
security which directs that the transfer of the security be registered or that the
security be redeemed.
(m)
"Land company" means a mutual benefit corporation, as defined in Section
16-6a-102
, that bases the use of the corporation's land on issued share ownership.
(n)
"Registered form," as applied to a certificated security, means a form in which:
(i)
the security certificate specifies a person entitled to the security; and
(ii)
a transfer of the security may be registered upon books maintained for that
purpose by or on behalf of the issuer, or the security certificate so states.
(o)
"Securities intermediary" means:
(i)
a clearing corporation; or
(ii)
a person, including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.
(p)
"Security," except as otherwise provided in Section
70A-8-102
, means an obligation
of an issuer or a share, participation, or other interest in an issuer or in property or an
enterprise of an issuer that:
(i)
is represented by a security certificate in bearer or registered form, or the transfer
of which may be registered upon books maintained for that purpose by or on
behalf of the issuer;
(ii)
is one of a class or series or by its terms is divisible into a class or series of
shares, participations, interests, or obligations; and
(iii)
(A)
is, or is of a type, dealt in or traded on securities exchanges or securities
markets; or
(B)
is a medium for investment and by its terms expressly provides that it is a
security governed by this chapter.
(q)
"Security certificate" means a certificate representing a security.
(r)
"Security entitlement" means the rights and property interest of an entitlement holder
with respect to a financial asset specified in
Part 5, Security Entitlements
.
(s)
"Uncertificated security" means a security that is not represented by a certificate.
(t)
"Water company" is as defined in Section
16-4-102
.
(2)
Other
The following
definitions
applying to
in
this chapter and
the sections in which
they appear are
other chapters apply to this chapter
:
(a)
"Appropriate person," Section
70A-8-106
.
(b)
"Control," Section
70A-8-105
.
(c)
"Controllable account," Section
70A-9a-102
.
(d)
"Controllable electronic record," Section
70A-12-102
.
(e)
"Controllable payment intangible," Section
70A-9a-102
.
(c)
(f)
"Delivery," Section
70A-8-301
.
(d)
(g)
"Investment company security," Section
70A-8-102
.
(e)
(h)
"Issuer," Section
70A-8-201
.
(f)
(i)
"Overissue," Section
70A-8-210
.
(g)
(j)
"Protected purchaser," Section
70A-8-303
.
(h)
(k)
"Securities account," Section
70A-8-501
.
(3)
In addition,
Chapter 1a, Uniform Commercial Code - General Provisions
, contains
general definitions and principles of construction and interpretation applicable
throughout this chapter.
(4)
The characterization of a person, business, or transaction for purposes of this chapter
does not determine the characterization of the person, business, or transaction for
purposes of any other law, regulation, or rule.
Section 41. Section
70A-8-102
is amended to read:
70A-8-102
. Rules for determining whether certain obligations and interests are
securities or financial assets.
(1)
A share or similar equity interest issued by a corporation, business trust, joint stock
company, or similar entity is a security.
(2)
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.
(3)
An interest in a partnership or limited liability company is not a security unless it is
dealt in or traded on securities exchanges or in securities markets, its terms expressly
provide that it is a security governed by this chapter, or it is an investment company
security. However, an interest in a partnership or limited liability company is a financial
asset if it is held in a securities account.
(4)
A writing that is a security certificate is governed by this chapter and not by
Chapter 3,
Uniform Commercial Code - Negotiable Instruments
, even though it also meets the
requirements of that chapter. However, a negotiable instrument governed by
Chapter 3,
Uniform Commercial Code - Negotiable Instruments
, is a financial asset if it is held in a
securities account.
(5)
An option or similar obligation issued by a clearing corporation to its participants is not
a security, but is a financial asset.
(6)
A commodity contract, as defined in
Subsection
70A-9a-102(15)
Section
70A-9a-102
,
is not a security or a financial asset.
(7)
A document of title is not a financial asset unless Subsection
70A-8-101(1)(i)(i)(C)
applies.
(8)
A controllable account, controllable electronic record, or controllable payment
intangible is not a financial asset unless Subsection
70A-8-101(1)(i)(i)(C)
applies.
Section 42. Section
70A-8-105
is amended to read:
70A-8-105
. Control.
(1)
A purchaser has "control" of a certificated security in bearer form if the certificated
security is delivered to the purchaser.
(2)
A purchaser has "control" of a certificated security in registered form if the certificated
security is delivered to the purchaser, and:
(a)
the certificate is indorsed to the purchaser or in blank by an effective indorsement; or
(b)
the certificate is registered in the name of the purchaser, upon original issue or
registration of transfer by the issuer.
(3)
A purchaser has "control" of an uncertificated security if:
(a)
the uncertificated security is delivered to the purchaser; or
(b)
the issuer has agreed that it will comply with instructions originated by the purchaser
without further consent by the registered owner.
(4)
A purchaser has "control" of a security entitlement if:
(a)
the purchaser becomes the entitlement holder;
(b)
the securities intermediary has agreed that it will comply with entitlement orders
originated by the purchaser without further consent by the entitlement holder; or
(c)
another person
has control of the security entitlement on behalf of the purchaser or,
having previously acquired control of the security entitlement, acknowledges that it
has control on behalf of the purchaser
, other than the transferor to the purchaser of
an interest in the security entitlement:
(i)
has control of the security entitlement and acknowledges that it has control on
behalf of the purchaser; or
(ii)
obtains control of the security entitlement after having acknowledged that it will
obtain control of the security entitlement on behalf of the purchaser
.
(5)
If an interest in a security entitlement is granted by the entitlement holder to the
entitlement holder's own securities intermediary, the securities intermediary has control.
(6)
A purchaser who has satisfied the requirements of Subsection
(3)(b)
or
(4)(b)
has
control even if the registered owner in the case of Subsection
(3)(b)
or the entitlement
holder in the case of Subsection
(4)(b)
retains the right to make substitutions for the
uncertificated security or security entitlement, to originate instructions or entitlement
orders to the issuer or securities intermediary, or otherwise to deal with the
uncertificated security or security entitlement.
(7)
An issuer or a securities intermediary may not enter into an agreement of the kind
described in Subsection
(3)(b)
or
(4)(b)
without the consent of the registered owner or
entitlement holder, but an issuer or a securities intermediary is not required to enter into
such an agreement even though the registered owner or entitlement holder so directs.
An issuer or securities intermediary that has entered into such an agreement is not
required to confirm the existence of the agreement to another party unless requested to
do so by the registered owner or entitlement holder.
(8)
A person that has control under this section is not required to acknowledge that it has
control on behalf of a purchaser.
(9)
If a person acknowledges that it has or will obtain control on behalf of a purchaser,
unless the person otherwise agrees or law other than this chapter or Chapter 9a, Uniform
Commercial Code - Secured Transactions, otherwise provides, the person does not owe
any duty to the purchaser and is not required to confirm the acknowledgment to any
other person.
Section 43. Section
70A-8-109
is amended to read:
70A-8-109
. Applicability -- Choice of law.
(1)
The local law of the issuer's jurisdiction, as specified in Subsection
(4)
, governs:
(a)
the validity of a security;
(b)
the rights and duties of the issuer with respect to registration of transfer;
(c)
the effectiveness of registration of transfer by the issuer;
(d)
whether the issuer owes any duties to an adverse claimant to a security; and
(e)
whether an adverse claim can be asserted against a person to whom transfer of a
certificated or uncertificated security is registered or a person who obtains control of
an uncertificated security.
(2)
The local law of the securities intermediary's jurisdiction, as specified in Subsection
(5)
,
governs:
(a)
acquisition of a security entitlement from the securities intermediary;
(b)
the rights and duties of the securities intermediary and entitlement holder arising out
of a security entitlement;
(c)
whether the securities intermediary owes any duties to an adverse claimant to a
security entitlement; and
(d)
whether an adverse claim can be asserted against a person who acquires a security
entitlement from the securities intermediary or a person who purchases a security
entitlement or interest therein from an entitlement holder.
(3)
The local law of the jurisdiction in which a security certificate is located at the time of
delivery governs whether an adverse claim can be asserted against a person to whom the
security certificate is delivered.
(4)
"Issuer's jurisdiction" means the jurisdiction under which the issuer of the security is
organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction
specified by the issuer. An issuer organized under the law of this state may specify the
law of another jurisdiction as the law governing the matters specified in Subsections
(1)(b)
through
(e)
.
(5)
The following rules determine a "securities intermediary's jurisdiction" for purposes of
this section:
(a)
If an agreement between the securities intermediary and its entitlement holder
governing the securities account expressly provides that a particular jurisdiction is the
securities intermediary's jurisdiction for purposes of this part, this chapter, or this
title, that jurisdiction is the securities intermediary's jurisdiction.
(b)
If Subsection
(5)(a)
does not apply and an agreement between the securities
intermediary and its entitlement holder governing the securities account expressly
provides that the agreement is governed by the law of a particular jurisdiction, that
jurisdiction is the securities intermediary's jurisdiction.
(c)
If neither Subsection
(5)(a)
nor Subsection
(5)(b)
applies and an agreement between
the securities intermediary and its entitlement holder governing the securities account
expressly provides that the securities account is maintained at an office in a particular
jurisdiction, that jurisdiction is the securities intermediary's jurisdiction.
(d)
If Subsections
(5)(a)
through
(c)
do not apply, the securities intermediary's
jurisdiction is the jurisdiction in which the office identified in an account statement as
the office serving the entitlement holder's account is located.
(e)
If Subsections
(5)(a)
through
(d)
do not apply, the securities intermediary's
jurisdiction is the jurisdiction in which the chief executive office of the securities
intermediary is located.
(6)
A securities intermediary's jurisdiction is not determined by the physical location of
certificates representing financial assets, or by the jurisdiction in which is organized the
issuer of the financial asset with respect to which an entitlement holder has a security
entitlement, or by the location of facilities for data processing or other record keeping
concerning the account.
(7)
The local law of the issuer's jurisdiction or the securities intermediary's jurisdiction
governs a matter or transaction specified in Subsection
(1)
or
(2)
even if the matter or
transaction does not bear any relation to the jurisdiction.
Section 44. Section
70A-8-303
is amended to read:
70A-8-303
. Protected purchaser.
(1)
"Protected purchaser" means a purchaser of a certificated or uncertificated security, or
of an interest in the security, who:
(a)
gives value;
(b)
does not have notice of an adverse claim to the security;
(c)
obtains control of the security; and
(d)
for a share of stock issued by a land company or a water company:
(i)
pays, or whose predecessors in interest paid, an assessment levied against the
share of stock for at least four of the immediate past seven years by the land
company or the water company; or
(ii)
has used, or whose predecessors in interest have used, either directly or indirectly,
the water available under the share of stock issued by a water company for at least
four of the immediate past seven years.
(2)
In addition to acquiring the rights of a purchaser, a
A
protected purchaser acquires the
purchaser's interest in the certificated or uncertificated security, share of stock in a land
company, or share of stock in a water company free of any adverse claim.
Section 45. Section
70A-9a-102
is amended to read:
70A-9a-102
. Definitions and index of definitions.
In this chapter:
(1)
"Accession" means goods that are physically united with other goods in such a manner
that the identity of the original goods is not lost.
(2)
(a)
"Account," except as used in "account for,"
"account to," "commodity account" in
Subsection
(15)
, "customer's account," "deposit account" in Subsection
(32)
, "on
account of," and "statement of account,"
means a right to payment of a monetary
obligation, whether or not earned by performance:
(i)
for property that has been or is to be sold, leased, licensed, assigned, or otherwise
disposed of;
(ii)
for services rendered or to be rendered;
(iii)
for a policy of insurance issued or to be issued;
(iv)
for a secondary obligation incurred or to be incurred;
(v)
for energy provided or to be provided;
(vi)
for the use or hire of a vessel under a charter or other contract;
(vii)
arising out of the use of a credit or charge card or information contained on or
for use with the card; or
(viii)
as winnings in a lottery or other game of chance operated or sponsored by a
state, governmental unit of a state, or person licensed or authorized to operate the
game by a state or governmental unit of a state.
(b)
"Account" includes
controllable account and
health-care-insurance receivables.
(c)
"Account" does not include:
(i)
rights to payment evidenced by chattel paper or an instrument
chattel paper
;
(ii)
commercial tort claims;
(iii)
deposit accounts;
(iv)
investment property;
(v)
letter-of-credit rights or letters of credit;
or
(vi)
rights to payment for money or funds advanced or sold, other than rights arising
out of the use of a credit or charge card or information contained on or for use
with the card
.
; or
(vii)
rights to payment evidenced by an instrument.
(3)
(a)
"Account debtor" means a person obligated on an account, chattel paper, or
general intangible.
(b)
"Account debtor" does not include persons obligated to pay a negotiable instrument,
even if the
negotiable
instrument
constitutes part of
evidences
chattel paper.
(4)
"Accounting," except as used in "accounting for," means a record:
(a)
authenticated
signed
by a secured party;
(b)
indicating the aggregate unpaid secured obligations as of a date not more than 35
days earlier or 35 days later than the date of the record; and
(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)
with present intent to adopt or accept a record, to attach to or logically associate
with the record an electronic sound, symbol, or process.
(7)
(a)
"Assignee," except as used in "assignee for benefit of creditors," means a person:
(i)
in whose favor a security interest that secures an obligation is created or provided
for under a security agreement, whether or not the obligation is outstanding; or
(ii)
to which an account, chattel paper, payment intangible, or promissory note has
been sold.
(b)
"Assignee" includes a person to which a security interest has been transferred by a
secured party.
(8)
(a)
"Assignor" means a person that:
(i)
under a security agreement creates or provides for a security interest that secures
an obligation; or
(ii)
sells an account, chattel paper, payment intangible, or promissory note.
(b)
"Assignor" includes a secured party that has transferred a security interest to another
person.
(8)
(9)
(a)
"Bank" means an organization that is engaged in the business of banking.
(b)
"Bank" includes:
(i)
a depository institution as defined in Section
7-1-103
; and
(ii)
a trust company.
(9)
(10)
"Cash proceeds" means proceeds that are money, checks, deposit accounts, or the
like.
(10)
(11)
(a)
"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.
(b)
"Certificate of title" includes another record maintained as an alternative to a
certificate of title by the governmental unit that issues certificates of title if a statute
permits the security interest in question to be indicated on the record as a condition or
result of the security interest's obtaining priority over the rights of a lien creditor with
respect to the collateral.
(11)
(a)
"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 Subsection
(11)
, "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.
(b)
"Chattel paper" 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 or for use with the card.
(c)
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)
(a)
"Chattel paper" means:
(i)
a right to payment of a monetary obligation secured by specific goods, if the right
to payment and security agreement are evidenced by a record; or
(ii)
a right to payment of a monetary obligation owed by a lessee under a lease
agreement with respect to specific goods and a monetary obligation owed by the
lessee in connection with the transaction giving rise to the lease, if:
(A)
the right to payment and lease agreement are evidenced by a record; and
(B)
the predominant purpose of the transaction giving rise to the lease was to give
the lessee the right to possession and use of the goods.
(b)
"Chattel paper" does not include a right to payment arising out of a charter or other
contract involving the use or hire of a vessel or a right to payment arising out of the
use of a credit or charge card or information contained on or for use with the card.
(12)
(13)
"Collateral" means the property subject to a security interest or agricultural lien.
"Collateral" 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)
(14)
"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)
(15)
"Commodity account" means an account maintained by a commodity
intermediary in which a commodity contract is carried for a commodity customer.
(15)
(16)
"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)
(17)
"Commodity customer" means a person for which a commodity intermediary
carries a commodity contract on its books.
(17)
(18)
"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)
(19)
"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)
(20)
"Consignee" means a merchant to which goods are delivered in a consignment.
(20)
(21)
"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 $1,000 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)
(22)
"Consignor" means a person that delivers goods to a consignee in a consignment.
(22)
(23)
"Consumer debtor" means a debtor in a consumer transaction.
(23)
(24)
"Consumer goods" means goods that are used or bought for use primarily for
personal, family, or household purposes.
(24)
(25)
"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)
(26)
"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)
(27)
(a)
"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.
(b)
"Consumer transaction" includes consumer-goods transactions.
(27)
(28)
"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.
(29)
"Controllable account" means an account evidenced by a controllable electronic record
that provides that the account debtor undertakes to pay the person that has control under
Section
70A-12-105
of the controllable electronic record.
(30)
"Controllable payment intangible" means a payment intangible evidenced by a
controllable electronic record that provides that the account debtor undertakes to pay the
person that has control under Section
70A-12-105
of the controllable electronic record.
(28)
(31)
"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)
(32)
(a)
"Deposit account" means a demand, time, savings, passbook, or similar
account maintained with a bank.
(b)
"Deposit account" does not include investment property or accounts evidenced by an
instrument.
(30)
(33)
"Document" means a document of title or a receipt of the type described in
Subsection
70A-7a-201(2)
.
(31)
"Electronic chattel paper" means chattel paper evidenced by a record or records
consisting of information stored in an electronic medium.
(34)
"Electronic money" means money in an electronic form.
(32)
(35)
"Encumbrance" means a right, other than an ownership interest, in real property.
"Encumbrance" includes mortgages and other liens on real property.
(33)
(36)
"Equipment" means goods other than inventory, farm products, or consumer
goods.
(34)
(37)
"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)
(38)
"Farming operation" means raising, cultivating, propagating, fattening, grazing,
or any other farming, livestock, or aquacultural operation.
(36)
(39)
"File number" means the number assigned to an initial financing statement
pursuant to Subsection
70A-9a-519(1)
.
(37)
(40)
"Filing office" means an office designated in Section
70A-9a-501
as the place to
file a financing statement.
(38)
(41)
"Filing-office rule" means a rule adopted pursuant to Section
70A-9a-526
.
(39)
(42)
"Financing statement" means a record or records composed of an initial
financing statement and any filed record relating to the initial financing statement.
(40)
(43)
(a)
"Fixture filing" means the filing of a financing statement covering goods
that are or are to become fixtures and satisfying Subsections
70A-9a-502(1)
and
(2)
.
(b)
"Fixture filing" includes the filing of a financing statement covering goods of a
transmitting utility which are or are to become fixtures.
(41)
(44)
"Fixtures" means goods that have become so related to particular real property
that an interest in them arises under real property law.
(42)
(45)
(a)
"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.
(b)
"General intangible" includes
controllable electronic records,
payment intangibles
,
and software.
(43)
(46)
"Good faith" means honesty in fact and the observance of reasonable commercial
standards of fair dealing.
(44)
(47)
(a)
"Goods" means all things that are movable when a security interest
attaches.
(b)
"Goods" 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.
(c)
"Goods" 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.
(d)
"Goods" does not include a computer program embedded in goods that consist solely
of the medium in which the program is embedded.
(e)
"Goods" 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)
(48)
(a)
"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.
(b)
"Governmental unit" 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)
(49)
"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)
(50)
(a)
"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.
(b)
"Instrument" does not include:
(i)
investment property;
(ii)
letters of credit;
or
(iii)
writings that evidence a right to payment arising out of the use of a credit or
charge card or information contained on or for use with the card
.
; or
(iv)
writings that evidence chattel paper.
(48)
(51)
"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)
(52)
"Investment property" means a security, whether certificated or uncertificated,
security entitlement, securities account, commodity contract, or commodity account.
(50)
(53)
"Jurisdiction of organization," with respect to a registered organization, means
the jurisdiction under whose law the organization is formed or organized.
(51)
(54)
(a)
"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.
(b)
"Letter-of-credit right" does not include the right of a beneficiary to demand payment
or performance under a letter of credit.
(52)
(55)
"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)
(56)
(a)
"Manufactured home" means a structure, transportable in one or more
sections, which, in the traveling mode, is eight body feet or more in width or 40 body
feet or more in length, or, when erected on site, is 320 or more square feet, and which
is built on a permanent chassis and designed to be used as a dwelling with or without
a permanent foundation when connected to the required utilities, and includes the
plumbing, heating, air-conditioning, and electrical systems contained therein.
(b)
"Manufactured home" includes any structure that meets all of the requirements of
this Subsection
(53)
(56)
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)
(57)
"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.
(58)
"Money" has the meaning in Section
70A-1a-201
, but does not include:
(a)
a deposit account; or
(b)
money in an electronic form that cannot be subjected to control under Section
70A-9a-105.1
.
(55)
(59)
"Mortgage" means a consensual interest in real property, including fixtures,
which secures payment or performance of an obligation.
(56)
(60)
"New debtor" means a person that becomes bound as debtor under Subsection
70A-9a-203(4)
by a security agreement previously entered into by another person.
(57)
(61)
(a)
"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.
(b)
"New value" does not include an obligation substituted for another obligation.
(58)
(62)
"Noncash proceeds" means proceeds other than cash proceeds.
(59)
(63)
(a)
"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.
(b)
"Obligor" does not include issuers or nominated persons under a letter of credit.
(60)
(64)
"Original debtor," except as used in Subsection
70A-9a-310(3)
, means a person
that, as debtor, entered into a security agreement to which a new debtor has become
bound under Subsection
70A-9a-203(4)
.
(61)
(65)
(a)
"Payment intangible" means a general intangible under which the account
debtor's principal obligation is a monetary obligation.
(b)
"Payment intangible" includes a controllable payment intangible.
(62)
(66)
"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)
(67)
"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 Subsection
(63)(a)
(67)(a)
;
(d)
the spouse of an individual described in Subsection
(63)(a)
(67)(a)
,
(b)
, or
(c)
; or
(e)
an individual who is related by blood or marriage to an individual described in
Subsection
(63)(a)
(67)(a)
,
(b)
,
(c)
, or
(d)
and shares the same home with the
individual.
(64)
(68)
"Proceeds," except as used in Subsection
70A-9a-609(2)
, 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)
(69)
"Promissory note" means an instrument that evidences a promise to pay a
monetary obligation, does not evidence an order to pay, and does not contain an
acknowledgment by a bank that the bank has received for deposit a sum of money or
funds.
(66)
(70)
"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
70A-9a-620
,
70A-9a-621
,
and
70A-9a-622
.
(67)
(71)
"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 20
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.
(68)
(72)
"Public organic record" means a record that is available to the public for
inspection and is:
(a)
a record consisting of the record initially filed with or issued by a state or the United
States to form or organize an organization and any record filed with or issued by the
state or the United States which amends or restates the initial record;
(b)
an organic record of a business trust consisting of the record initially filed with a
state and any record filed with the state which amends or restates the initial record, if
a statute of the state governing business trusts requires that the record be filed with
the state; or
(c)
a record consisting of legislation enacted by the legislature of a state or the Congress
of the United States which forms or organizes an organization, any record amending
the legislation, and any record filed with or issued by the state or the United States
which amends or restates the name of the organization.
(69)
(73)
"Pursuant to commitment," with respect to an advance made or other value given
by a secured party, means pursuant to the secured party's obligation, whether or not a
subsequent event of default or other event not within the secured party's control has
relieved or may relieve the secured party from its obligation.
(70)
(74)
"Record," except as used in "for record," "of record," "record or legal title," and
"record owner," means information that is inscribed on a tangible medium or which is
stored in an electronic or other medium and is retrievable in perceivable form.
(71)
(75)
(a)
"Registered organization" means an organization formed or organized
solely under the law of a single state or the United States by the filing of a public
organic record with, the issuance of a public organic record by, or the enactment of
legislation by the state or the United States.
(b)
"Registered organization" includes a business trust that is formed or organized under
the law of a single state if a statute of the state governing business trusts requires that
the business trust's organic record be filed with the state.
(72)
(76)
"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.
(73)
(77)
"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
70A-2-401
,
70A-2-505
,
70A-4-210
, or
70A-5-118
or Subsection
70A-2-711(3)
or
70A-2a-508(5)
.
(74)
(78)
"Security agreement" means an agreement that creates or provides for a security
interest.
(75)
"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 Subsection
(75)(a)
.
(76)
(79)
(a)
"Software" means a computer program and any supporting information
provided in connection with a transaction relating to the program.
(b)
"Software" does not include a computer program that is included in the definition of
goods.
(77)
(80)
"State" means a state of the United States, the District of Columbia, Puerto Rico,
the United States Virgin Islands, or any territory or insular possession subject to the
jurisdiction of the United States.
(78)
(81)
"Supporting obligation" means a letter-of-credit right or secondary obligation
that supports the payment or performance of an account, chattel paper, a document, a
general intangible, an instrument, or investment property.
(79)
"Tangible chattel paper" means chattel paper evidenced by a record or records
consisting of information that is inscribed on a tangible medium.
(82)
"Tangible money" means money in a tangible form.
(80)
(83)
"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.
(81)
(84)
"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.
Section 46. Section
70A-9a-102.1
is amended to read:
70A-9a-102.1
. Definitions from other chapters.
(1)
"Control" as provided in Section
70A-7a-106
and the following definitions in other
chapters of this title apply to this chapter:
(a)
(1)
"Applicant" Section
70A-5-102
.
(b)
(2)
"Beneficiary" Section
70A-5-102
.
(c)
(3)
"Broker" Section
70A-8-101
.
(d)
(4)
"Certificated security" Section
70A-8-101
.
(e)
(5)
"Check" Section
70A-3-104
.
(f)
(6)
"Clearing corporation" Section
70A-8-101
.
(g)
(7)
"Contract for sale" Section
70A-2-106
.
(8)
"Controllable electronic record" Section
70A-12-102
.
(h)
(9)
"Customer" Section
70A-4-104
.
(i)
(10)
"Entitlement holder" Section
70A-8-101
.
(j)
(11)
"Financial asset" Section
70A-8-101
.
(k)
(12)
"Holder in due course" Section
70A-3-302
.
(l)
(13)
(i)
(a)
"Issuer" (with respect to a letter of credit or letter-of-credit right) Section
70A-5-102
.
(ii)
(b)
"Issuer" (with respect to a security) Section
70A-8-201
.
(iii)
(c)
"Issuer" (with respect to documents of title) Section
70A-7a-102
.
(m)
(14)
"Lease" Section
70A-2a-103
.
(n)
(15)
"Lease agreement" Section
70A-2a-103
.
(o)
(16)
"Lease contract" Section
70A-2a-103
.
(p)
(17)
"Leasehold interest" Section
70A-2a-103
.
(q)
(18)
"Lessee" Section
70A-2a-103
.
(r)
(19)
"Lessee in ordinary course of business" Section
70A-2a-103
.
(s)
(20)
"Lessor" Section
70A-2a-103
.
(t)
(21)
"Lessor's residual interest" Section
70A-2a-103
.
(u)
(22)
"Letter of credit" Section
70A-5-102
.
(v)
(23)
"Merchant" Section
70A-2-104
.
(w)
(24)
"Negotiable instrument" Section
70A-3-104
.
(x)
(25)
"Nominated person" Section
70A-5-102
.
(y)
(26)
"Note" Section
70A-3-104
.
(z)
(27)
"Proceeds of a letter of credit" Section
70A-5-114
.
(28)
"Protected purchase" Section
70A-8-303
.
(aa)
(29)
"Prove" Section
70A-3-103
.
(30)
"Qualifying purchaser" Section
70A-12-102
.
(bb)
(31)
"Sale" Section
70A-2-106
.
(cc)
(32)
"Securities account" Section
70A-8-501
.
(dd)
(33)
"Securities intermediary" Section
70A-8-101
.
(ee)
(34)
"Security" Section
70A-8-101
.
(ff)
(35)
"Security certificate" Section
70A-8-101
.
(gg)
(36)
"Security entitlement" Section
70A-8-101
.
(hh)
(37)
"Uncertificated security" Section
70A-8-101
.
(2)
(38)
Chapter 1a, Uniform Commercial Code - General Provisions
, contains general
definitions and principles of construction and interpretation applicable throughout this
chapter.
Section 47. Section
70A-9a-104
is amended to read:
70A-9a-104
. Control of deposit account.
(1)
A secured party has control of a deposit account if:
(a)
the secured party is the bank with which the deposit account is maintained;
(b)
the debtor, secured party, and bank have agreed in
an authenticated
a signed
record
that the bank will comply with instructions originated by the secured party directing
disposition of the funds in the deposit account without further consent by the debtor;
or
(c)
the secured party becomes the bank's customer with respect to the deposit account
.
;
or
(d)
another person, other than the debtor:
(i)
has control of the deposit account and acknowledges that it has control on behalf
of the secured party; or
(ii)
obtains control of the deposit account after having acknowledged that it will
obtain control of the deposit account on behalf of the secured party.
(2)
A secured party that has satisfied Subsection
(1)
has control, even if the debtor retains
the right to direct the disposition of funds from the deposit account.
Section 48. Section
70A-9a-105
is repealed and reenacted to read:
70A-9a-105
. Control of electronic copy of record evidencing chattel paper.
(1)
A purchaser has control of an authoritative electronic copy of a record evidencing
chattel paper if a system employed for evidencing the assignment of interests in the
chattel paper reliably establishes the purchaser as the person to which the authoritative
electronic copy was assigned.
(2)
A system satisfies Subsection
(1)
if the record or records evidencing the chattel paper
are created, stored, and assigned in a manner that:
(a)
a single authoritative copy of the record or records exists which is unique,
identifiable, and except as otherwise provided in Subsections
(2)(d)
, (e), and (f),
unalterable;
(b)
the authoritative copy identifies the purchaser as the assignee of the record or records;
(c)
the authoritative copy is communicated to and maintained by the purchaser or its
designated custodian;
(d)
copies or amendments that add or change an identified assignee of the authoritative
copy can be made only with the consent of the purchaser;
(e)
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
(f)
any amendment to the authoritative copy is readily identifiable as authorized or
unauthorized.
(3)
A system satisfies Subsection
(1)
, and a purchaser has control of an authoritative
electronic copy of a record evidencing chattel paper, if the electronic copy, a record
attached to or logically associated with the electronic copy, or a system in which the
electronic copy is recorded:
(a)
enables the purchaser readily to identify each electronic copy as either an
authoritative copy or a nonauthoritative copy;
(b)
enables the purchaser readily to identify itself in any way, including by name,
identifying number, cryptographic key, office, or account number, as the assignee of
the authoritative electronic copy; and
(c)
gives the purchaser exclusive power, subject to Subsection
(4)
, to:
(i)
prevent others from adding or changing an identified assignee of the authoritative
electronic copy; and
(ii)
transfer control of the authoritative electronic copy.
(4)
Subject to Subsection
(5)
, a power is exclusive under Subsections
(3)(c)(i)
and
(ii)
even
if:
(a)
the authoritative electronic copy, a record attached to or logically associated with the
authoritative electronic copy, or a system in which the authoritative electronic copy is
recorded limits the use of the authoritative electronic copy or has a protocol
programmed to cause a change, including a transfer or loss of control; or
(b)
the power is shared with another person.
(5)
A power of a purchaser is not shared with another person under Subsection
(4)(a)
and
the purchaser's power is not exclusive if:
(a)
the purchaser can exercise the power only if the power also is exercised by the other
person; and
(b)
the other person:
(i)
can exercise the power without exercise of the power by the purchaser; or
(ii)
is the transferor to the purchaser of an interest in the chattel paper.
(6)
If a purchaser has the powers specified in Subsections
(3)(c)(i)
and
(ii)
, the powers are
presumed to be exclusive.
(7)
A purchaser has control of an authoritative electronic copy of a record evidencing
chattel paper if another person, other than the transferor to the purchaser of an interest in
the chattel paper:
(a)
has control of the authoritative electronic copy and acknowledges that it has control
on behalf of the purchaser; or
(b)
obtains control of the authoritative electronic copy after having acknowledged that it
will obtain control of the electronic copy on behalf of the purchaser.
Section 49. Section
70A-9a-105.1
is enacted to read:
70A-9a-105.1
. Control of electronic money.
(1)
A person has control of electronic money if:
(a)
the electronic money, a record attached to or logically associated with the electronic
money, or a system in which the electronic money is recorded gives the person:
(i)
power to avail itself of substantially all the benefit from the electronic money; and
(ii)
exclusive power, subject to Subsection
(2)
, to:
(A)
prevent others from availing themselves of substantially all the benefit from
the electronic money; and
(B)
transfer control of the electronic money to another person or cause another
person to obtain control of other electronic money as a result of the transfer of
the electronic money; and
(b)
the electronic money, a record attached to or logically associated with the electronic
money, or a system in which the electronic money is recorded enables the person
readily to identify itself in any way, including by name, identifying number,
cryptographic key, office, or account number, as having the powers under Subsection
(1)(a)
.
(2)
Subject to Subsection
(3)
, a power is exclusive under Subsections
(1)(a)(ii)(A)
and
(B)
even if:
(a)
the electronic money, a record attached to or logically associated with the electronic
money, or a system in which the electronic money is recorded limits the use of the
electronic money or has a protocol programmed to cause a change, including a
transfer or loss of control; or
(b)
the power is shared with another person.
(3)
A power of a person is not shared with another person under Subsection
(2)(b)
and the
person's power is not exclusive if:
(a)
the person can exercise the power only if the power also is exercised by the other
person; and
(b)
the other person:
(i)
can exercise the power without exercise of the power by the person; or
(ii)
is the transferor to the person of an interest in the electronic money.
(4)
If a person has the powers specified in Subsections
(1)(a)(ii)(A)
and
(B)
, the powers are
presumed to be exclusive.
(5)
A person has control of electronic money if another person, other than the transferor to
the person of an interest in the electronic money:
(a)
has control of the electronic money and acknowledges that it has control on behalf of
the person; or
(b)
obtains control of the electronic money after having acknowledged that it will obtain
control of the electronic money on behalf of the person.
Section 50. Section
70A-9a-107.1
is enacted to read:
70A-9a-107.1
. Control of controllable electronic record, controllable account, or
controllable payment intangible.
(1)
A secured party has control of a controllable electronic record as provided in Section
70A-12-105
.
(2)
A secured party has control of a controllable account or controllable payment intangible
if the secured party has control of the controllable electronic record that evidences the
controllable account or controllable payment intangible.
Section 51. Section
70A-9a-107.2
is enacted to read:
70A-9a-107.2
. No requirement to acknowledge or confirm -- No duties.
(1)
A person that has control under Section
70A-9a-104
,
70A-9a-105
, or
70A-9a-105.1
is
not required to acknowledge that it has control on behalf of another person.
(2)
If a person acknowledges that it has or will obtain control on behalf of another person,
unless the person otherwise agrees or law other than this article otherwise provides, the
person does not owe any duty to the other person and is not required to confirm the
acknowledgment to any other person.
Section 52. Section
70A-9a-203
is amended to read:
70A-9a-203
. Attachment and enforceability of security interest -- Proceeds --
Supporting obligations -- Formal requisites.
(1)
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.
(2)
Except as otherwise provided in Subsections
(3)
through
(9)
, a security interest is
enforceable against the debtor and third parties with respect to the collateral only if:
(a)
value has been given;
(b)
the debtor has rights in the collateral or the power to transfer rights in the collateral
to a secured party; and
(c)
one of the following conditions is met:
(i)
the debtor has
authenticated
signed
a security agreement that provides a
description of the collateral and, if the security interest covers timber to be cut, a
description of the land concerned;
(ii)
the collateral is not a certificated security and is in the possession of the secured
party under Section
70A-9a-313
pursuant to the debtor's security agreement;
(iii)
the collateral is a certificated security in registered form and the security
certificate has been delivered to the secured party under Section
70A-8-301
pursuant to the debtor's security agreement;
or
(iv)
the collateral is
controllable accounts, controllable electronic records,
controllable payment intangibles,
deposit accounts,
electronic chattel paper
electronic documents
,
electronic money,
investment property, or letter-of-credit
rights
, or electronic documents,
and the secured party has control under Section
70A-7a-106
,
70A-9a-104
,
70A-9a-105
,
70A-9a-106
,
or
70A-9a-107
, or
70A-9a-107.1
pursuant to the debtor's security agreement
.
; or
(v)
the collateral is chattel paper and the secured party has possession and control
under Section
70A-9a-314.1
pursuant to the debtor's security agreement.
(3)
Subsection
(2)
is subject to Section
70A-4-210
on the security interest of a collecting
bank, Section
70A-5-118
on the security interest of a letter-of-credit issuer or nominated
person, Section
70A-9a-110
on a security interest arising under
Chapter 2, Uniform
Commercial Code - Sales
or
Chapter 2a, Uniform Commercial Code - Leases
, and
Section
70A-9a-206
on security interests in investment property.
(4)
A person becomes bound as debtor by a security agreement entered into by another
person if, by operation of law other than this chapter or by contract:
(a)
the security agreement becomes effective to create a security interest in the person's
property; or
(b)
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.
(5)
If a new debtor becomes bound as debtor by a security agreement entered into by
another person:
(a)
the agreement satisfies Subsection
(2)(c)
with respect to existing or after-acquired
property of the new debtor to the extent the property is described in the agreement;
and
(b)
another agreement is not necessary to make a security interest in the property
enforceable.
(6)
The attachment of a security interest in collateral gives the secured party the rights to
proceeds provided by Section
70A-9a-315
and is also attachment of a security interest in
a supporting obligation for the collateral.
(7)
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.
(8)
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.
(9)
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.
Section 53. Section
70A-9a-204
is amended to read:
70A-9a-204
. After-acquired property -- Future advances.
(1)
Except as otherwise provided in Subsection
(2)
, a security agreement may create or
provide for a security interest in after-acquired collateral.
(2)
(a)
A
Subject to Subsection
(2)(b)
, a
security interest does not attach under a term
constituting an after-acquired property clause to:
(a)
(i)
consumer goods, other than an accession when given as additional security,
unless the debtor acquires rights in them within 10 days after the secured party
gives value; or
(b)
(ii)
a commercial tort claim.
(b)
Subsection
(2)(a)
does not prevent a security interest from attaching:
(i)
to consumer goods as proceeds under Subsection
70A-9a-315(a)
or commingled
goods under Section
70A-9a-336
;
(ii)
to a commercial tort claim as proceeds under Section
70A-9a-315
; or
(iii)
under an after-acquired property clause to property that is proceeds of consumer
goods or a commercial tort claim.
(3)
A security agreement may provide that collateral secures, or that accounts, chattel paper,
payment intangibles, or promissory notes are sold in connection with, future advances or
other value, whether or not the advances or value are given pursuant to commitment.
Section 54. Section
70A-9a-207
is amended to read:
70A-9a-207
. Rights and duties of secured party having possession or control of
collateral.
(1)
Except as otherwise provided in Subsection
(4)
, 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.
(2)
Except as otherwise provided in Subsection
(4)
, if a secured party has possession of
collateral:
(a)
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;
(b)
the risk of accidental loss or damage is on the debtor to the extent of a deficiency in
any effective insurance coverage;
(c)
the secured party shall keep the collateral identifiable, but fungible collateral may be
commingled; and
(d)
the secured party may use or operate the collateral:
(i)
for the purpose of preserving the collateral or its value;
(ii)
as permitted by an order of a court having competent jurisdiction; or
(iii)
except in the case of consumer goods, in the manner and to the extent agreed by
the debtor.
(3)
Except as otherwise provided in Subsection
(4)
, a secured party having possession of
collateral or control of collateral under Section
70A-7a-106
,
70A-9a-104
,
70A-9a-105
,
70A-9a-105.1
,
70A-9a-106
,
or
70A-9a-107
, or
70A-9a-107.1
:
(a)
may hold as additional security any proceeds, except money or funds, received from
the collateral;
(b)
shall apply money or funds received from the collateral to reduce the secured
obligation, unless remitted to the debtor; and
(c)
may create a security interest in the collateral.
(4)
If the secured party is a buyer of accounts, chattel paper, payment intangibles, or
promissory notes or a consignor:
(a)
Subsection
(1)
does not apply unless the secured party is entitled under an agreement:
(i)
to charge back uncollected collateral; or
(ii)
otherwise to full or limited recourse against the debtor or a secondary obligor
based on the nonpayment or other default of an account debtor or other obligor on
the collateral; and
(b)
Subsections
(2)
and
(3)
do not apply.
Section 55. Section
70A-9a-208
is amended to read:
70A-9a-208
. Additional duties of secured party having control of collateral.
(1)
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.
(2)
Within 10 days after receiving
an authenticated
a signed
demand by the debtor:
(a)
a secured party having control of a deposit account under Subsection
70A-9a-104(1)(b)
shall send to the bank with which the deposit account is
maintained
an authenticated statement
a signed record
that releases the bank from
any further obligation to comply with instructions originated by the secured party;
(b)
a secured party having control of a deposit account under Subsection
70A-9a-104(1)(c)
shall:
(i)
pay the debtor the balance on deposit in the deposit account; or
(ii)
transfer the balance on deposit into a deposit account in the debtor's name;
(c)
a secured party, other than a buyer, having control of electronic chattel paper under
Section
70A-9a-105
shall:
(i)
communicate the authoritative copy of the electronic chattel paper to the debtor
or its designated custodian;
(ii)
if the debtor designates a custodian that is the designated custodian with which
the authoritative copy of the electronic chattel paper is maintained for the secured
party, communicate to the custodian an authenticated record releasing the
designated custodian from any further obligation to comply with instructions
originated by the secured party and instructing the custodian to comply with
instructions originated by the debtor; and
(iii)
take appropriate action to enable the debtor or its designated custodian to make
copies of or revisions to the authoritative copy which add or change an identified
assignee of the authoritative copy without the consent of the secured party;
(c)
a secured party, other than a buyer, having control under Section
70A-9a-105
of an
authoritative electronic copy of a record evidencing chattel paper shall transfer
control of the electronic copy to the debtor or a person designated by the debtor;
(d)
a secured party having control of investment property under Subsection
70A-8-105(4)(b)
or
70A-9a-106(2)
shall send to the securities intermediary or
commodity intermediary with which the security entitlement or commodity contract
is maintained
an authenticated
a signed
record that releases the securities
intermediary or commodity intermediary from any further obligation to comply with
entitlement orders or directions originated by the secured party;
(e)
a secured party having control of a letter-of-credit right under Section
70A-9a-107
shall send to each person having an unfulfilled obligation to pay or deliver proceeds
of the
letter of credit
letter-of-credit
to the secured party
an authenticated
a signed
release from any further obligation to pay or deliver proceeds of the letter of credit to
the secured party;
and
(f)
a secured party having control under Section
70A-9a-105
of an authoritative
electronic copy of an electronic document shall transfer control of the electronic copy
to the debtor or a person designated by the debtor;
(g)
a secured party having control under Section
70A-9a-105.1
of electronic money shall
transfer control of the electronic money to the debtor or a person designated by the
debtor; and
(h)
a secured party having control under Section
70A-12-105
of a controllable electronic
record, other than a buyer of a controllable account or controllable payment
intangible evidenced by the controllable electronic record, shall transfer control of
the controllable electronic record to the debtor or a person designated by the debtor.
(f)
a secured party having control of an electronic document shall:
(i)
give control of the electronic document to the debtor or the debtor's designated
custodian;
(ii)
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
(iii)
take appropriate action to enable to the debtor or its designated custodian to
make copies of or revisions to the authoritative copy without the consent of the
secured party.
Section 56. Section
70A-9a-209
is amended to read:
70A-9a-209
. Duties of secured party if account debtor has been notified of
assignment.
(1)
Except as otherwise provided in Subsection
(3)
, this section applies if:
(a)
there is no outstanding secured obligation; and
(b)
the secured party is not committed to make advances, incur obligations, or otherwise
give value.
(2)
Within 10 days after receiving
an authenticated
a signed
demand by the debtor, a
secured party shall send to an account debtor that has received notification
under
Subsection
70A-9a-406(1)
or
70A-12-106(2)
of an assignment to the secured party as
assignee
under Subsection
70A-9a-406(1)
an authenticated
a signed
record that releases
the account debtor from any further obligation to the secured party.
(3)
This section does not apply to an assignment constituting the sale of an account, chattel
paper, or payment intangible.
Section 57. Section
70A-9a-210
is amended to read:
70A-9a-210
. Request for accounting -- Request regarding list of collateral or
statement of account.
(1)
In this section:
(a)
"Request" means a record of a type described in Subsection
(1)(b)
,
(c)
, or
(d)
.
(b)
"Request for an accounting" means a record
authenticated
signed
by a debtor
requesting that the recipient provide an accounting of the unpaid obligations secured
by collateral and reasonably identifying the transaction or relationship that is the
subject of the request.
(c)
"Request regarding a list of collateral" means a record
authenticated
signed
by a
debtor requesting that the recipient approve or correct a list of what the debtor
believes to be the collateral securing an obligation and reasonably identifying the
transaction or relationship that is the subject of the request.
(d)
"Request regarding a statement of account" means a record
authenticated
signed
by
a debtor requesting that the recipient approve or correct a statement indicating what
the debtor believes to be the aggregate amount of unpaid obligations secured by
collateral as of a specified date and reasonably identifying the transaction or
relationship that is the subject of the request.
(2)
Subject to Subsections
(3)
,
(4)
,
(5)
, and
(6)
, a secured party, other than a buyer of
accounts, chattel paper, payment intangibles, or promissory notes or a consignor, shall
comply with a request within 14 days after receipt:
(a)
in the case of a request for an accounting, by
authenticating
signing
and sending to
the debtor an accounting; and
(b)
in the case of a request regarding a list of collateral or a request regarding a statement
of account, by
authenticating
signing
and sending to the debtor an approval or
correction.
(3)
A secured party that claims a security interest in all of a particular type of collateral
owned by the debtor may comply with a request regarding a list of collateral by sending
to the debtor
an authenticated
a signed
record including a statement to that effect within
14 days after receipt.
(4)
A person that receives a request regarding a list of collateral, claims no interest in the
collateral when it receives the request, and claimed an interest in the collateral at an
earlier time shall comply with the request within 14 days after receipt by sending to the
debtor
an authenticated
a signed
record:
(a)
disclaiming any interest in the collateral; and
(b)
if known to the recipient, providing the name and mailing address of any assignee of
or successor to the recipient's interest in the collateral.
(5)
A person that receives a request for an accounting or a request regarding a statement of
account, claims no interest in the obligations when it receives the request, and claimed
an interest in the obligations at an earlier time shall comply with the request within 14
days after receipt by sending to the debtor
an authenticated
a signed
record:
(a)
disclaiming any interest in the obligations; and
(b)
if known to the recipient, providing the name and mailing address of any assignee of
or successor to the recipient's interest in the obligations.
(6)
A debtor is entitled without charge to one response to a request under this section during
any six-month period. The secured party may require payment of a charge not
exceeding $25 for each additional response.
Section 58. Section
70A-9a-301
is amended to read:
70A-9a-301
. Law governing perfection and priority of security interests.
Except as otherwise provided in Sections
70A-9a-303
through
70A-9a-306
70A-9a-306.2
, the following rules determine the law governing perfection, the effect of
perfection or nonperfection, and the priority of a security interest in collateral:
(1)
Except as otherwise provided in this section, while a debtor is located in a jurisdiction,
the local law of that jurisdiction governs perfection, the effect of perfection or
nonperfection, and the priority of a security interest in collateral.
(2)
While collateral is located in a jurisdiction, the local law of that jurisdiction governs
perfection, the effect of perfection or nonperfection, and the priority of a possessory
security interest in that collateral.
(3)
Except as otherwise provided in Subsection
(4)
, while
tangible
negotiable
tangible
documents, goods, instruments,
money,
or tangible
chattel paper
money
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.
Section 59. Section
70A-9a-304
is amended to read:
70A-9a-304
. Law governing perfection and priority of security interests in
deposit accounts.
(1)
The local law of a bank's jurisdiction governs perfection, the effect of perfection or
nonperfection, and the priority of a security interest in a deposit account maintained with
that bank
even if the transaction does not bear any relation to the bank's jurisdiction
.
(2)
The following rules determine a bank's jurisdiction for purposes of this part:
(a)
If an agreement between the bank and the debtor governing the deposit account
expressly provides that a particular jurisdiction is the bank's jurisdiction for purposes
of this part, this chapter, or this title, that jurisdiction is the bank's jurisdiction.
(b)
If Subsection
(2)(a)
does not apply and an agreement between the bank and its
customer governing the deposit account expressly provides that the agreement is
governed by the law of a particular jurisdiction, that jurisdiction is the bank's
jurisdiction.
(c)
If neither Subsection
(2)(a)
nor Subsection
(2)(b)
applies and an agreement between
the bank and its customer governing the deposit account expressly provides that the
deposit account is maintained at an office in a particular jurisdiction, that jurisdiction
is the bank's jurisdiction.
(d)
If none of the preceding subsections applies, the bank's jurisdiction is the jurisdiction
in which the office identified in an account statement as the office serving the
customer's account is located.
(e)
If none of the preceding subsections applies, the bank's jurisdiction is the jurisdiction
in which the chief executive office of the bank is located.
Section 60. Section
70A-9a-305
is amended to read:
70A-9a-305
. Law governing perfection and priority of security interests in
investment property.
(1)
Except as otherwise provided in Subsection
(3)
, the following rules apply:
(a)
While a security certificate is located in a jurisdiction, the local law of that
jurisdiction governs perfection, the effect of perfection or nonperfection, and the
priority of a security interest in the certificated security represented thereby.
(b)
The local law of the issuer's jurisdiction as specified in Subsection
70A-8-109(4)
governs perfection, the effect of perfection or nonperfection, and the priority of a
security interest in an uncertificated security.
(c)
The local law of the securities intermediary's jurisdiction as specified in Subsection
70A-8-109(5)
governs perfection, the effect of perfection or nonperfection, and the
priority of a security interest in a security entitlement or securities account.
(d)
The local law of the commodity intermediary's jurisdiction governs perfection, the
effect of perfection or nonperfection, and the priority of a security interest in a
commodity contract or commodity account.
(e)
Subsections
(1)(b)
, (c), and (d) apply even if the transaction does not bear any
relation to the jurisdiction.
(2)
The following rules determine a commodity intermediary's jurisdiction for purposes of
this part:
(a)
If an agreement between the commodity intermediary and commodity customer
governing the commodity account expressly provides that a particular jurisdiction is
the commodity intermediary's jurisdiction for purposes of this part, this chapter, or
this title, that jurisdiction is the commodity intermediary's jurisdiction.
(b)
If Subsection
(2)(a)
does not apply and an agreement between the commodity
intermediary and commodity customer governing the commodity account expressly
provides that the agreement is governed by the law of a particular jurisdiction, that
jurisdiction is the commodity intermediary's jurisdiction.
(c)
If neither Subsection
(2)(a)
nor Subsection
(2)(b)
applies and an agreement between
the commodity intermediary and commodity customer governing the commodity
account expressly provides that the commodity account is maintained at an office in a
particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.
(d)
If none of the Subsections
(2)(a)
through
(c)
applies, the commodity intermediary's
jurisdiction is the jurisdiction in which the office identified in an account statement as
the office serving the commodity customer's account is located.
(e)
If none of the Subsections
(2)(a)
through
(d)
applies, the commodity intermediary's
jurisdiction is the jurisdiction in which the chief executive office of the commodity
intermediary is located.
(3)
The local law of the jurisdiction in which the debtor is located governs:
(a)
perfection of a security interest in investment property by filing;
(b)
automatic perfection of a security interest in investment property created by a broker
or securities intermediary; and
(c)
automatic perfection of a security interest in a commodity contract or commodity
account created by a commodity intermediary.
Section 61. Section
70A-9a-306.1
is enacted to read:
70A-9a-306.1
. Law governing perfection and priority of security interests in
chattel paper.
(1)
Except as provided in Subsection
(4)
, if chattel paper is evidenced only by an
authoritative electronic copy of the chattel paper or is evidenced by an authoritative
electronic copy and an authoritative tangible copy, the local law of the chattel paper's
jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority
of a security interest in the chattel paper, even if the transaction does not bear any
relation to the chattel paper's jurisdiction.
(2)
The following rules determine the chattel paper's jurisdiction under this section:
(a)
If the authoritative electronic copy of the record evidencing chattel paper, or a record
attached to or logically associated with the electronic copy and readily available for
review, expressly provides that a particular jurisdiction is the chattel paper's
jurisdiction for purposes of this part, this chapter, or this title, that jurisdiction is the
chattel paper's jurisdiction.
(b)
If Subsection
(2)(b)
does not apply and the rules of the system in which the
authoritative electronic copy is recorded are readily available for review and
expressly provide that a particular jurisdiction is the chattel paper's jurisdiction for
purposes of this part, this chapter, or this title, that jurisdiction is the chattel paper's
jurisdiction.
(c)
If Subsections
(2)(a)
and
(b)
do not apply and the authoritative electronic copy, or a
record attached to or logically associated with the electronic copy and readily
available for review, expressly provides that the chattel paper is governed by the law
of a particular jurisdiction, that jurisdiction is the chattel paper's jurisdiction.
(d)
If Subsections
(2)(a)
, (b), and (c) do not apply and the rules of the system in which
the authoritative electronic copy is recorded are readily available for review and
expressly provide that the chattel paper or the system is governed by the law of a
particular jurisdiction, that jurisdiction is the chattel paper's jurisdiction.
(e)
If Subsections
(2)(a)
through
(d)
do not apply, the chattel paper's jurisdiction is the
jurisdiction in which the debtor is located.
(3)
If an authoritative tangible copy of a record evidences chattel paper and the chattel
paper is not evidenced by an authoritative electronic copy, while the authoritative
tangible copy of the record evidencing chattel paper is located in a jurisdiction, the local
law of that jurisdiction governs:
(a)
perfection of a security interest in the chattel paper by possession under Section
70A-9a-314.1
; and
(b)
the effect of perfection or nonperfection and the priority of a security interest in the
chattel paper.
(4)
The local law of the jurisdiction in which the debtor is located governs perfection of a
security interest in chattel paper by filing.
Section 62. Section
70A-9a-306.2
is enacted to read:
70A-9a-306.2
. Law governing perfection and priority of security interests in
controllable accounts, controllable electronic records, and controllable payment
intangibles.
(1)
Except as provided in Subsection
(2)
, the local law of the controllable electronic
record's jurisdiction specified in Subsections
70A-12-107(3)
and
(4)
governs perfection,
the effect of perfection or nonperfection, and the priority of a security interest in a
controllable electronic record and a security interest in a controllable account or
controllable payment intangible evidenced by the controllable electronic record.
(2)
The local law of the jurisdiction in which the debtor is located governs:
(a)
perfection of a security interest in a controllable account, controllable electronic
record, or controllable payment intangible by filing; and
(b)
automatic perfection of a security interest in a controllable payment intangible
created by a sale of the controllable payment intangible.
Section 63. Section
70A-9a-310
is amended to read:
70A-9a-310
. When filing required to perfect security interest or agricultural lien
-- Security interests and agricultural liens to which filing provisions do not apply.
(1)
Except as otherwise provided in Subsection
(2)
and Subsection
70A-9a-312(2)
, a
financing statement must be filed to perfect all security interests and agricultural liens.
(2)
The filing of a financing statement is not necessary to perfect a security interest:
(a)
that is perfected under Subsection
70A-9a-308(4)
,
(5)
,
(6)
, or
(7)
;
(b)
that is perfected under Section
70A-9a-309
when it attaches;
(c)
in property subject to a statute, regulation, or treaty described in Subsection
70A-9a-311(1)
;
(d)
in goods in possession of a bailee which is perfected under Subsection
70A-9a-312(4)(a)
or
(b)
;
(e)
in certificated securities, documents, goods, or instruments which is perfected
without filing, control, or possession under Subsection
70A-9a-312(5)
,
(6)
, or
(7)
;
(f)
in collateral in the secured party's possession under Section
70A-9a-313
;
(g)
in a certificated security which is perfected by delivery of the security certificate to
the secured party under Section
70A-9a-313
;
(h)
in
controllable accounts, controllable electronic records, controllable payment
intangibles,
deposit accounts,
electronic chattel paper,
electronic documents,
investment property, or letter-of-credit rights which is perfected by control under
Section
70A-9a-314
;
(i)
in chattel paper which is perfected by possession and control under Section
70A-9a-314.1
;
(i)
(j)
in proceeds which is perfected under Section
70A-9a-315
; or
(j)
(k)
that is perfected under Section
70A-9a-316
.
(3)
If a secured party assigns a perfected security interest or agricultural lien, a filing under
this chapter is not required to continue the perfected status of the security interest against
creditors of and transferees from the original debtor.
Section 64. Section
70A-9a-312
is amended to read:
70A-9a-312
. Perfection of security interests in chattel paper, controllable
accounts, controllable electronic records, controllable payment intangibles, deposit
accounts, negotiable documents, goods covered by documents, instruments, investment
property, letter-of-credit rights, and money -- Perfection by permissive filing --
Temporary perfection without filing or transfer of possession.
(1)
A security interest in chattel paper,
negotiable documents,
controllable accounts,
controllable electronic records, controllable payment intangibles,
instruments,
or
investment property
, or negotiable documents
may be perfected by filing.
(2)
Except as otherwise provided in Subsections
70A-9a-315(3)
and
(4)
for proceeds:
(a)
a security interest in a deposit account may be perfected only by control under
Section
70A-9a-314
;
(b)
and except as otherwise provided in Subsection
70A-9a-308(4)
, a security interest in
a letter-of-credit right may be perfected only by control under Section
70A-9a-314
;
and
(c)
a security interest in
tangible
money may be perfected only by the secured party's
taking possession under Section
70A-9a-313
.
; and
(d)
a security interest in electronic money may be perfected only by control under
Section
70A-9a-314
.
(3)
While goods are in the possession of a bailee that has issued a negotiable document
covering the goods:
(a)
a security interest in the goods may be perfected by perfecting a security interest in
the document; and
(b)
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.
(4)
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:
(a)
issuance of a document in the name of the secured party;
(b)
the bailee's receipt of notification of the secured party's interest; or
(c)
filing as to the goods.
(5)
A security interest in certificated securities, negotiable documents, or instruments is
perfected without filing or the taking of possession or control for a period of 20 days
from the time it attaches to the extent that it arises for new value given under
an
authenticated
a signed
security agreement.
(6)
A perfected security interest in a negotiable document or goods in possession of a
bailee, other than one that has issued a negotiable document for the goods, remains
perfected for 20 days without filing if the secured party makes available to the debtor the
goods or documents representing the goods for the purpose of:
(a)
ultimate sale or exchange; or
(b)
loading, unloading, storing, shipping, transshipping, manufacturing, processing, or
otherwise dealing with them in a manner preliminary to their sale or exchange.
(7)
A perfected security interest in a certificated security or instrument remains perfected
for 20 days without filing if the secured party delivers the security certificate or
instrument to the debtor for the purpose of:
(a)
ultimate sale or exchange; or
(b)
presentation, collection, enforcement, renewal, or registration of transfer.
(8)
After the 20-day period specified in Subsection
(5)
,
(6)
, or
(7)
expires, perfection
depends upon compliance with this chapter.
Section 65. Section
70A-9a-313
is amended to read:
70A-9a-313
. When possession by or delivery to secured party perfects security
interest without filing.
(1)
Except as otherwise provided in Subsection
(2)
, a secured party may perfect a security
interest in
tangible negotiable documents,
goods, instruments,
negotiable tangible
documents, or tangible
money
, or tangible chattel paper
by taking possession of the
collateral. A secured party may perfect a security interest in certificated securities by
taking delivery of the certificated securities under Section
70A-8-301
.
(2)
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 Subsection
70A-9a-316(4)
.
(3)
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:
(a)
the person in possession
authenticates
signs
a record acknowledging that it holds
possession of the collateral for the secured party's benefit; or
(b)
the person takes possession of the collateral after having
authenticated
signed
a
record acknowledging that it will hold possession of
the
collateral for the secured
party's benefit.
(4)
If perfection of a security interest depends upon possession of the collateral by a secured
party, perfection occurs
no
not
earlier than the time the secured party takes possession
and continues only while the secured party retains possession.
(5)
A security interest in a certificated security in registered form is perfected by delivery
when delivery of the certificated security occurs under Section
70A-8-301
and remains
perfected by delivery until the debtor obtains possession of the security certificate.
(6)
A person in possession of collateral is not required to acknowledge that it holds
possession for a secured party's benefit.
(7)
If a person acknowledges that it holds possession for the secured party's benefit:
(a)
the acknowledgment is effective under Subsection
(3)
or Subsection
70A-8-301(1)
,
even if the acknowledgment violates the rights of a debtor; and
(b)
unless the person otherwise agrees or law other than this chapter otherwise provides,
the person does not owe any duty to the secured party and is not required to confirm
the acknowledgment to another person.
(8)
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:
(a)
to hold possession of the collateral for the secured party's benefit; or
(b)
to redeliver the collateral to the secured party.
(9)
A secured party does not relinquish possession, even if a delivery under Subsection
(8)
violates the rights of a debtor. A person to which collateral is delivered under
Subsection
(8)
does not owe any duty to the secured party and is not required to confirm
the delivery to another person unless the person otherwise agrees or law other than this
chapter otherwise provides.
Section 66. Section
70A-9a-314
is amended to read:
70A-9a-314
. Perfection by control.
(1)
A security interest in
investment property, deposit accounts, letter-of-credit rights, or
electronic chattel paper, or electronic documents
controllable accounts, controllable
electronic records, controllable payment intangibles, deposit accounts, electronic
documents, electronic money, investment property, or letter-of-credit rights
may be
perfected by control of the collateral under Section
70A-7a-106
,
70A-9a-104
,
70A-9a-105
70A-9a-105.1
,
70A-9a-106
,
or
70A-9a-107
, or
70A-9a-107.1
.
(2)
A security interest in
deposit accounts, electronic chattel paper, or letter-of-credit
rights, or electronic documents
controllable accounts, controllable electronic records,
controllable payment intangibles, deposit accounts, electronic documents, electronic
money, or letter-of-credit rights
is perfected by control under Section
70A-7a-106
,
70A-9a-104
,
70A-9a-105
70A-9a-105.1
,
or
70A-9a-107
when
, or
70A-9a-107.1
not
earlier than the time
the secured party obtains control and remains perfected by control
only while the secured party retains control.
(3)
A security interest in investment property is perfected by control under Section
70A-9a-106
from
not earlier than
the time the secured party obtains control and
remains perfected by control until:
(a)
the secured party does not have control; and
(b)
one of the following occurs:
(i)
if the collateral is a certificated security, the debtor has or acquires possession of
the security certificate;
(ii)
if the collateral is an uncertificated security, the issuer has registered or registers
the debtor as the registered owner; or
(iii)
if the collateral is a security entitlement, the debtor is or becomes the entitlement
holder.
Section 67. Section
70A-9a-314.1
is enacted to read:
70A-9a-314.1
. Perfection by possession and control of chattel paper.
(1)
A secured party may perfect a security interest in chattel paper by taking possession of
each authoritative tangible copy of the record evidencing the chattel paper and obtaining
control of each authoritative electronic copy of the electronic record evidencing the
chattel paper.
(2)
A security interest is perfected under Subsection
(1)
not earlier than the time the secured
party takes possession and obtains control and remains perfected under Subsection
(1)
only while the secured party retains possession and control.
(3)
Subsections
70A-9a-313(3)
and
(6)
through (9) apply to perfection by possession of an
authoritative tangible copy of a record evidencing chattel paper.
Section 68. Section
70A-9a-316
is amended to read:
70A-9a-316
. Effect of change in governing law.
(1)
A security interest perfected pursuant to the law of the jurisdiction designated in
Subsection
70A-9a-301(1)
or
,
70A-9a-305(3)
,
70A-9a-306.1(4)
, or
70A-9a-306.2(2)
remains perfected until the earliest of:
(a)
the time perfection would have ceased under the law of that jurisdiction;
(b)
the expiration of four months after a change of the debtor's location to another
jurisdiction; or
(c)
the expiration of one year after a transfer of collateral to a person that thereby
becomes a debtor and is located in another jurisdiction.
(2)
If a security interest described in Subsection
(1)
becomes perfected under the law of the
other jurisdiction before the earliest time or event described in that subsection, it remains
perfected thereafter. If the security interest does not become perfected under the law of
the other jurisdiction before the earliest time or event, it becomes unperfected and is
deemed never to have been perfected as against a purchaser of the collateral for value.
(3)
A possessory security interest in collateral, other than goods covered by a certificate of
title and as-extracted collateral consisting of goods, remains continuously perfected if:
(a)
the collateral is located in one jurisdiction and subject to a security interest perfected
under the law of that jurisdiction;
(b)
thereafter the collateral is brought into another jurisdiction; and
(c)
upon entry into the other jurisdiction, the security interest is perfected under the law
of the other jurisdiction.
(4)
Except as otherwise provided in Subsection
(5)
, a security interest in goods covered by
a certificate of title which is perfected by any method under the law of another
jurisdiction when the goods become covered by a certificate of title from this state
remains perfected until the security interest would have become unperfected under the
law of the other jurisdiction had the goods not become so covered.
(5)
A security interest described in Subsection
(4)
becomes unperfected as against a
purchaser of the goods for value and is deemed never to have been perfected as against a
purchaser of the goods for value if the applicable requirements for perfection under
Subsection
70A-9a-311(2)
or Section
70A-9a-313
are not satisfied before the earlier of:
(a)
the time the security interest would have become unperfected under the law of the
other jurisdiction had the goods not become covered by a certificate of title from this
state; or
(b)
the expiration of four months after the goods had become so covered.
(6)
A security interest in
chattel paper, controllable accounts, controllable electronic
records, controllable payment intangibles,
deposit accounts, letter-of-credit rights, or
investment property which is perfected under the law of the
chattel paper's jurisdiction,
the controllable electronic record's jurisdiction, the
bank's jurisdiction, the issuer's
jurisdiction, a nominated person's jurisdiction, the securities intermediary's jurisdiction,
or the commodity intermediary's jurisdiction, as applicable, remains perfected until the
earlier of:
(a)
the time the security interest would have become unperfected under the law of that
jurisdiction; or
(b)
the expiration of four months after a change of the applicable jurisdiction to another
jurisdiction.
(7)
If a security interest described in Subsection
(6)
becomes perfected under the law of the
other jurisdiction before the earlier of the time or the end of the period described in that
subsection, it remains perfected thereafter. If the security interest does not become
perfected under the law of the other jurisdiction before the earlier of that time or the end
of that period, it becomes unperfected and is deemed never to have been perfected as
against a purchaser of the collateral for value.
(8)
The following rules apply to collateral to which a security interest attaches within four
months after the debtor changes its location to another jurisdiction:
(a)
A financing statement filed before the change pursuant to the law of the jurisdiction
designated in Subsection
70A-9a-301(1)
or
70A-9a-305(3)
is effective to perfect a
security interest in the collateral if the financing statement would have been effective
to perfect a security interest in the collateral had the debtor not changed its location.
(b)
If a security interest perfected by a financing statement that is effective under
Subsection
(8)(a)
becomes perfected under the law of the other jurisdiction before the
earlier of the time the financing statement would have been ineffective under the law
of the jurisdiction designated in Subsection
70A-9a-301(1)
or
70A-9a-305(3)
or the
expiration of the four-month period, it remains perfected thereafter. If the security
interest does not become perfected under the law of the other jurisdiction before the
earlier time or event, it becomes unperfected and is deemed never to have been
perfected as against a purchaser of the collateral for value.
(9)
If a financing statement naming an original debtor is filed pursuant to the law of the
jurisdiction designated in Subsection
70A-9a-301(1)
or
70A-9a-305(3)
and the new
debtor is located in another jurisdiction, the following rules apply:
(a)
The financing statement is effective to perfect a security interest in collateral
acquired by the new debtor before, and within four months after, the new debtor
becomes bound under Subsection
70A-9a-203(4)
, if the financing statement would
have been effective to perfect a security interest in the collateral had the collateral
been acquired by the original debtor.
(b)
A security interest perfected by the financing statement and which becomes
perfected under the law of the other jurisdiction before the earlier of the time the
financing statement would have been ineffective under the law of the jurisdiction
designated in Subsection
70A-9a-301(1)
or
70A-9a-305(3)
or the expiration of the
four-month period remains perfected thereafter. A security interest that is perfected
by the financing statement but which does not become perfected under the law of the
other jurisdiction before the earlier time or event becomes unperfected and is deemed
never to have been perfected as against a purchaser of the collateral for value.
Section 69. Section
70A-9a-317
is amended to read:
70A-9a-317
. Interests that take priority over or take free of security interest or
agricultural lien.
(1)
A security interest or agricultural lien is subordinate to the rights of:
(a)
a person entitled to priority under Section
70A-9a-322
; and
(b)
except as otherwise provided in Subsection
(5)
, a person that becomes a lien creditor
before the earlier of the time:
(i)
the security interest or agricultural lien is perfected; or
(ii)
one of the conditions specified in Subsection
70A-9a-203(2)(c)
is met and a
financing statement covering the collateral is filed.
(2)
Except as otherwise provided in Subsection
(5)
, a buyer, other than a secured party,
of
tangible chattel paper, tangible documents,
of
goods, instruments,
tangible documents,
or a certificated security takes free of a security interest or agricultural lien if the buyer
gives value and receives delivery of the collateral without knowledge of the security
interest or agricultural lien and before it is perfected.
(3)
Except as otherwise provided in Subsection
(5)
, 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.
(4)
A
Subject to Subsections
(6)
through
(9)
, a
licensee of a general intangible or a buyer,
other than a secured party, of collateral other than
tangible chattel paper
electronic
money
,
tangible documents,
goods, instruments,
tangible documents,
or a certificated
security takes free of a security interest if the licensee or buyer gives value without
knowledge of the security interest and before it is perfected.
(5)
Except as otherwise provided in Sections
70A-9a-320
and
70A-9a-321
, if a person files
a financing statement with respect to a purchase-money security interest before or within
20 days after the debtor receives delivery of the collateral, the security interest takes
priority over the rights of a buyer, lessee, or lien creditor which arise between the time
the security interest attaches and the time of filing.
(6)
A buyer, other than a secured party, of chattel paper takes free of a security interest if,
without knowledge of the security interest and before it is perfected, the buyer gives
value and:
(a)
receives delivery of each authoritative tangible copy of the record evidencing the
chattel paper; and
(b)
if each authoritative electronic copy of the record evidencing the chattel paper can be
subjected to control under Section
70A-9a-105
, obtains control of each authoritative
electronic copy.
(7)
A buyer of an electronic document takes free of a security interest if, without
knowledge of the security interest and before it is perfected, the buyer gives value and, if
each authoritative electronic copy of the document can be subjected to control under
Section
70A-12-105
, obtains control of each authoritative electronic copy.
(8)
A buyer of a controllable electronic record takes free of a security interest if, without
knowledge of the security interest and before it is perfected, the buyer gives value and
obtains control of the controllable electronic record.
(9)
A buyer, other than a secured party, of a controllable account or a controllable payment
intangible takes free of a security interest if, without knowledge of the security interest
and before it is perfected, the buyer gives value and obtains control of the controllable
account or controllable payment intangible.
Section 70. Section
70A-9a-323
is amended to read:
70A-9a-323
. Future advances.
(1)
Except as otherwise provided in Subsection
(3)
, for purposes of determining the priority
of a perfected security interest under Subsection
70A-9a-322(1)(a)
, perfection of the
security interest dates from the time an advance is made to the extent that the security
interest secures an advance that:
(a)
is made while the security interest is perfected only:
(i)
under Section
70A-9a-309
when it attaches; or
(ii)
temporarily under Subsection
70A-9a-312(5)
,
(6)
, or
(7)
; and
(b)
is not made pursuant to a commitment entered into before or while the security
interest is perfected by a method other than under Section
70A-9a-309
or Subsection
70A-9a-312(5)
,
(6)
, or
(7)
.
(2)
Except as otherwise provided in Subsection
(3)
, a security interest is subordinate to the
rights of a person that becomes a lien creditor to the extent that the security interest
secures an advance made more than 45 days after the person becomes a lien creditor
unless the advance is made:
(a)
without knowledge of the lien; or
(b)
pursuant to a commitment entered into without knowledge of the lien.
(3)
Subsections
(1)
and
(2)
do not apply to a security interest held by a secured party that is
a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a
consignor.
(4)
Except as otherwise provided in Subsection
(5)
, a buyer of goods
other than a buyer in
ordinary course of business
takes free of a security interest to the extent that it secures
advances made after the earlier of:
(a)
the time the secured party acquires knowledge of the buyer's purchase; or
(b)
45 days after the purchase.
(5)
Subsection
(4)
does not apply if the advance is made pursuant to a commitment entered
into without knowledge of the buyer's purchase and before the expiration of the 45-day
period.
(6)
Except as otherwise provided in Subsection
(7)
, a lessee of goods
, other than a lessee in
ordinary course of business,
takes the leasehold interest free of a security interest to the
extent that it secures advances made after the earlier of:
(a)
the time the secured party acquires knowledge of the lease; or
(b)
45 days after the lease contract becomes enforceable.
(7)
Subsection
(6)
does not apply if the advance is made pursuant to a commitment entered
into without knowledge of the lease and before the expiration of the 45-day period.
Section 71. Section
70A-9a-324
is amended to read:
70A-9a-324
. Priority of purchase-money security interests.
(1)
Except as otherwise provided in Subsection
(7)
, a perfected purchase-money security
interest in goods other than inventory or livestock has priority over a conflicting security
interest in the same goods, and, except as otherwise provided in Section
70A-9a-327
, a
perfected security interest in its identifiable proceeds also has priority, if the
purchase-money security interest is perfected when the debtor receives possession of the
collateral or within 20 days thereafter.
(2)
Subject to Subsection
(3)
and except as otherwise provided in Subsection
(7)
, a
perfected purchase-money security interest in inventory has priority over a conflicting
security interest in the same inventory, has priority over a conflicting security interest in
chattel paper or an instrument constituting proceeds of the inventory and in proceeds of
the chattel paper, if so provided in Section
70A-9a-330
, and, except as otherwise
provided in Section
70A-9a-327
, also has priority in identifiable cash proceeds of the
inventory to the extent the identifiable cash proceeds are received on or before the
delivery of the inventory to a buyer, if:
(a)
the purchase-money security interest is perfected when the debtor receives
possession of the inventory;
(b)
the purchase-money secured party sends
an authenticated
a signed
notification to
the holder of the conflicting security interest;
(c)
the holder of the conflicting security interest receives the notification within five
years before the debtor receives possession of the inventory; and
(d)
the notification states that the person sending the notification has or expects to
acquire a purchase-money security interest in inventory of the debtor and describes
the inventory.
(3)
Subsections
(2)(b)
through
(d)
apply only if the holder of the conflicting security
interest had filed a financing statement covering the same types of inventory:
(a)
if the purchase-money security interest is perfected by filing, before the date of the
filing; or
(b)
if the purchase-money security interest is temporarily perfected without filing or
possession under Subsection
70A-9a-312(6)
, before the beginning of the 20-day
period thereunder.
(4)
Subject to Subsection
(5)
and except as otherwise provided in Subsection
(7)
, a
perfected purchase-money security interest in livestock that are farm products has
priority over a conflicting security interest in the same livestock, and, except as
otherwise provided in Section
70A-9a-327
, a perfected security interest in their
identifiable proceeds and identifiable products in their unmanufactured states also has
priority, if:
(a)
the purchase-money security interest is perfected when the debtor receives
possession of the livestock;
(b)
the purchase-money secured party sends
an authenticated
a signed
notification to
the holder of the conflicting security interest;
(c)
the holder of the conflicting security interest receives the notification within six
months before the debtor receives possession of the livestock; and
(d)
the notification states that the person sending the notification has or expects to
acquire a purchase-money security interest in livestock of the debtor and describes
the livestock.
(5)
Subsections
(4)(b)
through
(d)
apply only if the holder of the conflicting security
interest had filed a financing statement covering the same types of livestock:
(a)
if the purchase-money security interest is perfected by filing, before the date of the
filing; or
(b)
if the purchase-money security interest is temporarily perfected without filing or
possession under Subsection
70A-9a-312(6)
, before the beginning of the 20-day
period thereunder.
(6)
Except as otherwise provided in Subsection
(7)
, a perfected purchase-money security
interest in software has priority over a conflicting security interest in the same collateral,
and, except as otherwise provided in Section
70A-9a-327
, a perfected security interest in
its identifiable proceeds also has priority, to the extent that the purchase-money security
interest in the goods in which the software was acquired for use has priority in the goods
and proceeds of the goods under this section.
(7)
If more than one security interest qualifies for priority in the same collateral under
Subsection
(1)
,
(2)
,
(4)
, or
(6)
:
(a)
a security interest securing an obligation incurred as all or part of the price of the
collateral has priority over a security interest securing an obligation incurred for
value given to enable the debtor to acquire rights in or the use of collateral; and
(b)
in all other cases, Subsection
70A-9a-322(1)
applies to the qualifying security
interests.
Section 72. Section
70A-9a-326.1
is enacted to read:
70A-9a-326.1
. Priority of security interest in controllable account, controllable
electronic record, and controllable payment intangible.
A security interest in a controllable account, controllable electronic record, or
controllable payment intangible held by a secured party having control of the account,
electronic record, or payment intangible has priority over a conflicting security interest held by
a secured party that does not have control.
Section 73. Section
70A-9a-330
is amended to read:
70A-9a-330
. Priority of purchaser of chattel paper or instrument.
(1)
A purchaser of chattel paper has priority over a security interest in the chattel paper
which is claimed merely as proceeds of inventory subject to a security interest if:
(a)
in good faith and in the ordinary course of the purchaser's business, the purchaser
gives new value
and
,
takes possession of
each authoritative tangible copy of the
record evidencing
the chattel paper
or
, and
obtains control
of
under Section
70A-9a-105
of each authoritative electronic copy of the record evidencing
the chattel
paper
under Section
70A-9a-105
; and
(b)
the
chattel paper does
authoritative copies of the record evidencing the chattel paper
do
not indicate that
it
the chattel paper
has been assigned to an identified assignee
other than the purchaser.
(2)
A purchaser of chattel paper has priority over a security interest in the chattel paper
which is claimed other than merely as proceeds of inventory subject to a security interest
if the purchaser gives new value
and
,
takes possession of
each authoritative tangible
copy of the record evidencing
the chattel paper
or
, and
obtains control
of the chattel
paper
under Section
70A-9a-105
of each authoritative electronic copy of the record
evidencing the chattel paper
in good faith, in the ordinary course of the purchaser's
business, and without knowledge that the purchase violates the rights of the secured
party.
(3)
Except as otherwise provided in Section
70A-9a-327
, a purchaser having priority in
chattel paper under Subsection
(1)
or
(2)
also has priority in proceeds of the chattel
paper to the extent that:
(a)
Section
70A-9a-322
provides for priority in the proceeds; or
(b)
the proceeds consist of the specific goods covered by the chattel paper or cash
proceeds of the specific goods, even if the purchaser's security interest in the
proceeds is unperfected.
(4)
Except as otherwise provided in Subsection
70A-9a-331(1)
, a purchaser of an
instrument has priority over a security interest in the instrument perfected by a method
other than possession if the purchaser gives value and takes possession of the instrument
in good faith and without knowledge that the purchase violates the rights of the secured
party.
(5)
For purposes of Subsections
(1)
and
(2)
, the holder of a purchase-money security
interest in inventory gives new value for chattel paper constituting proceeds of the
inventory.
(6)
For purposes of Subsections
(2)
and
(4)
, if
the authoritative copies of the record
evidencing
chattel paper or an instrument
indicates
indicate
that
it
the chattel paper or
instrument
has been assigned to an identified secured party other than the purchaser, a
purchaser of the chattel paper or instrument has knowledge that the purchase violates the
rights of the secured party.
Section 74. Section
70A-9a-331
is amended to read:
70A-9a-331
. Priority of rights of purchasers of controllable accounts,
controllable electronic records, controllable payment intangibles, documents,
instruments, and securities under other chapters -- Priority of interests in financial assets
and security entitlements and protection against assertion of claim under Chapter 8,
Uniform Commercial Code -- Investment Securities, and Chapter 12, Uniform
Commercial Code - Controllable Electronic Records.
(1)
This chapter does not limit the rights of a holder in due course of a negotiable
instrument, a holder to which a negotiable document of title has been duly negotiated,
or
a protected purchaser of a security
, or a qualifying purchaser of a controllable
account, controllable electronic record, or controllable payment intangible
. These
holders or purchasers take priority over an earlier security interest, even if perfected, to
the extent provided in
Chapter 3, Uniform Commercial Code - Negotiable Instruments
,
Chapter 7a, Uniform Commercial Code - Documents of Title
,
and
Chapter 8, Uniform
Commercial Code - Investment Securities
, and Chapter 12, Uniform Commercial Code -
Controllable Electronic Records
.
(2)
This chapter does not limit the rights of or impose liability on a person to the extent that
the person is protected against the assertion of a claim under
Chapter 8, Uniform
Commercial Code - Investment Securities
, or Chapter 12, Uniform Commercial Code -
Controllable Electronic Records
.
(3)
Filing under this chapter does not constitute notice of a claim or defense to the holders,
or purchasers, or persons described in Subsections
(1)
and
(2)
.
Section 75. Section
70A-9a-332
is amended to read:
70A-9a-332
. Transfer of money -- Transfer of funds from deposit account.
(1)
A transferee of
tangible
money takes the money free of a security interest
unless the
transferee acts
if the transferee receives possession of the money without acting
in
collusion with the debtor in violating the rights of the secured party.
(2)
A transferee of funds from a deposit account takes the funds free of a security interest in
the deposit account
unless the transferee acts
if the transferee receives the funds
without acting
in collusion with the debtor in violating the rights of the secured party.
(3)
A transferee of electronic money takes the money free of a security interest if the
transferee obtains control of the money without acting in collusion with the debtor in
violating the rights of the secured party.
Section 76. Section
70A-9a-334
is amended to read:
70A-9a-334
. Priority of security interests in fixtures and crops.
(1)
A security interest under this chapter may be created in goods that are fixtures or may
continue in goods that become fixtures. A security interest does not exist under this
chapter in ordinary building materials incorporated into an improvement on land.
(2)
This chapter does not prevent creation of an encumbrance upon fixtures under real
property law.
(3)
In cases not governed by Subsections
(4)
through
(8)
, a security interest in fixtures is
subordinate to a conflicting interest of an encumbrancer or owner of the related real
property other than the debtor.
(4)
Except as otherwise provided in Subsection
(8)
, a perfected security interest in fixtures
has priority over a conflicting interest of an encumbrancer or owner of the real property
if the debtor has an interest of record in or is in possession of the real property and:
(a)
the security interest is a purchase-money security interest;
(b)
the interest of the encumbrancer or owner arises before the goods become fixtures;
and
(c)
the security interest is perfected by a fixture filing before the goods become fixtures
or within 20 days thereafter.
(5)
A perfected security interest in fixtures has priority over a conflicting interest of an
encumbrancer or owner of the real property if:
(a)
the debtor has an interest of record in the real property or is in possession of the real
property and the security interest:
(i)
is perfected by a fixture filing before the interest of the encumbrancer or owner is
of record; and
(ii)
has priority over any conflicting interest of a predecessor in title of the
encumbrancer or owner;
(b)
before the goods become fixtures, the security interest is perfected by any method
permitted by this chapter and the fixtures are readily removable:
(i)
factory or office machines;
(ii)
equipment that is not primarily used or leased for use in the operation of the real
property; or
(iii)
replacements of domestic appliances that are consumer goods;
(c)
the conflicting interest is a lien on the real property obtained by legal or equitable
proceedings after the security interest was perfected by any method permitted by this
chapter; or
(d)
the security interest is:
(i)
created in a manufactured home in a manufactured-home transaction; and
(ii)
perfected pursuant to a statute described in Subsection
70A-9a-311(1)(b)
.
(6)
A security interest in fixtures, whether or not perfected, has priority over a conflicting
interest of an encumbrancer or owner of the real property if:
(a)
the encumbrancer or owner has, in
an authenticated
a signed
record, consented to
the security interest or disclaimed an interest in the goods as fixtures; or
(b)
the debtor has a right to remove the goods as against the encumbrancer or owner.
(7)
The priority of the security interest under Subsection
(6)(b)
continues for a reasonable
time if the debtor's right to remove the goods as against the encumbrancer or owner
terminates.
(8)
A mortgage is a construction mortgage to the extent that it secures an obligation
incurred for the construction of an improvement on land, including the acquisition cost
of the land, if a recorded record of the mortgage so indicates. Except as otherwise
provided in Subsections
(5)
and
(6)
, a security interest in fixtures is subordinate to a
construction mortgage if a record of the mortgage is recorded before the goods become
fixtures and the goods become fixtures before the completion of the construction. A
mortgage has this priority to the same extent as a construction mortgage to the extent
that it is given to refinance a construction mortgage.
(9)
A perfected security interest in crops growing on real property has priority over a
conflicting interest of an encumbrancer or owner of the real property if the debtor has an
interest of record in or is in possession of the real property.
Section 77. Section
70A-9a-341
is amended to read:
70A-9a-341
. Bank's rights and duties with respect to deposit account.
Except as otherwise provided in Subsection
70A-9a-340(3)
, and unless the bank
otherwise agrees in
an authenticated
a signed
record, a bank's rights and duties with respect to
a deposit account maintained with the bank are not terminated, suspended, or modified by:
(1)
the creation, attachment, or perfection of a security interest in the deposit account;
(2)
the bank's knowledge of the security interest; or
(3)
the bank's receipt of instructions from the secured party.
Section 78. Section
70A-9a-404
is amended to read:
70A-9a-404
. Rights acquired by assignee -- Claims and defenses against assignee.
(1)
Unless an account debtor has made an enforceable agreement not to assert defenses or
claims, and subject to Subsections
(2)
through
(5)
, the rights of an assignee are subject
to:
(a)
all terms of the agreement between the account debtor and assignor and any defense
or claim in recoupment arising from the transaction that gave rise to the contract; and
(b)
any other defense or claim of the account debtor against the assignor which accrues
before the account debtor receives a notification of the assignment
authenticated
signed
by the assignor or the assignee.
(2)
Subject to Subsection
(3)
and except as otherwise provided in Subsection
(4)
, the claim
of an account debtor against an assignor may be asserted against an assignee under
Subsection
(1)
only to reduce the amount the account debtor owes.
(3)
This section is subject to law other than this chapter which establishes a different rule
for an account debtor who is an individual and who incurred the obligation primarily for
personal, family, or household purposes.
(4)
In a consumer transaction, if a record evidences the account debtor's obligation, law
other than this chapter requires that the record include a statement to the effect that the
account debtor's recovery against an assignee with respect to claims and defenses against
the assignor may not exceed amounts paid by the account debtor under the record, and
the record does not include such a statement, the extent to which a claim of an account
debtor against the assignor may be asserted against an assignee is determined as if the
record included such a statement.
(5)
This section does not apply to an assignment of a health-care-insurance receivable.
Section 79. Section
70A-9a-406
is amended to read:
70A-9a-406
. Discharge of account debtor -- Notification of assignment --
Identification and proof of assignment -- Restrictions on assignment of accounts, chattel
paper, payment intangibles, and promissory notes ineffective.
(1)
Subject to Subsections
(2)
through
(9)
, an account debtor on an account, chattel paper,
or a payment intangible may discharge its obligation by paying the assignor until, but
not after, the account debtor receives a notification, authenticated by the assignor or the
assignee, that the amount due or to become due has been assigned and that payment is to
be made to the assignee. After receipt of the notification, the account debtor may
discharge its obligation by paying the assignee and may not discharge the obligation by
paying the assignor.
(2)
Subject to
Subsection
Subsections
(8)
and (10)
, notification is ineffective under
Subsection
(1)
:
(a)
if it does not reasonably identify the rights assigned;
(b)
to the extent that an agreement between an account debtor and a seller of a payment
intangible limits the account debtor's duty to pay a person other than the seller and
the limitation is effective under law other than this chapter; or
(c)
at the option of an account debtor, if the notification notifies the account debtor to
make less than the full amount of any installment or other periodic payment to the
assignee, even if:
(i)
only a portion of the account, chattel paper, or payment intangible has been
assigned to that assignee;
(ii)
a portion has been assigned to another assignee; or
(iii)
the account debtor knows that the assignment to that assignee is limited.
(3)
Subject to Subsection
(8)
, if requested by the account debtor, an assignee shall
seasonably furnish reasonable proof that the assignment has been made. Unless the
assignee complies, the account debtor may discharge its obligation by paying the
assignor, even if the account debtor has received a notification under Subsection
(1)
.
(4)
In this subsection, "promissory note" includes a negotiable instrument that evidences
chattel paper.
Except as otherwise provided in Subsection
(5)
and Sections
70A-2a-303
and
70A-9a-407
, and subject to Subsection
(8)
, a term in an agreement between an
account debtor and an assignor or in a promissory note is ineffective to the extent that it:
(a)
prohibits, restricts, or requires the consent of the account debtor or person obligated
on the promissory note to the assignment or transfer of, or the creation, attachment,
perfection, or enforcement of a security interest in, the account, chattel paper,
payment intangible, or promissory note; or
(b)
provides that the assignment or transfer or the creation, attachment, perfection, or
enforcement of the security interest may give rise to a default, breach, right of
recoupment, claim, defense, termination, right of termination, or remedy under the
account, chattel paper, payment intangible, or promissory note.
(5)
Subsection
(4)
does not apply to the sale of a payment intangible or promissory note,
other than a sale pursuant to a disposition under Section
70A-9a-610
or an acceptance of
collateral under Section
70A-9a-620
.
(6)
Except as otherwise provided in Sections
70A-2a-303
and
70A-9a-407
and subject to
Subsections
(8)
and
(9)
, a rule of law, statute, or regulation that prohibits, restricts, or
requires the consent of a government, governmental body or official, or account debtor
to the assignment or transfer of, or creation of a security interest in, an account or chattel
paper is ineffective to the extent that the rule of law, statute, or regulation:
(a)
prohibits, restricts, or requires the consent of the government, governmental body or
official, or account debtor to the assignment or transfer of, or the creation,
attachment, perfection, or enforcement of a security interest in the account or chattel
paper; or
(b)
provides that the assignment or transfer or the creation, attachment, perfection, or
enforcement of the security interest may give rise to a default, breach, right of
recoupment, claim, defense, termination, right of termination, or remedy under the
account or chattel paper.
(7)
Subject to
Subsection
Subsections
(8)
and (10)
, an account debtor may not waive or
vary its option under Subsection
(2)(c)
.
(8)
This section is subject to law other than this chapter which establishes a different rule
for an account debtor who is an individual and who incurred the obligation primarily for
personal, family, or household purposes.
(9)
This section does not apply to an assignment of a health-care-insurance receivable.
(10)
Subsections
(1)
through
(3)
and (7) do not apply to a controllable account or
controllable payment intangible.
Section 80. Section
70A-9a-408
is amended to read:
70A-9a-408
. Restrictions on assignment of promissory notes,
health-care-insurance receivables, and certain general intangibles ineffective.
(1)
Except as otherwise provided in Subsection
(2)
, a term in a promissory note or in an
agreement between an account debtor and a debtor which relates to a
health-care-insurance receivable or a general intangible, including a contract, permit,
license, or franchise, and which term prohibits, restricts, or requires the consent of the
person obligated on the promissory note or the account debtor to, the assignment or
transfer of, or creation, attachment, or perfection of a security interest in, the promissory
note, health-care-insurance receivable, or general intangible, is ineffective to the extent
that the term:
(a)
would impair the creation, attachment, or perfection of a security interest; or
(b)
provides that the assignment or transfer or the creation, attachment, or perfection of
the security interest may give rise to a default, breach, right of recoupment, claim,
defense, termination, right of termination, or remedy under the promissory note,
health-care-insurance receivable, or general intangible.
(2)
Subsection
(1)
applies to a security interest in a payment intangible or promissory note
only if the security interest arises out of a sale of the payment intangible or promissory
note, other than a sale pursuant to a disposition under Section
70A-9a-610
or an
acceptance of collateral under Section
70A-9a-620
.
(3)
A rule of law, statute, or regulation that prohibits, restricts, or requires the consent of a
government, governmental body or official, person obligated on a promissory note, or
account debtor to the assignment or transfer of, or creation of a security interest in, a
promissory note, health-care-insurance receivable, or general intangible, including a
contract, permit, license, or franchise between an account debtor and a debtor, is
ineffective to the extent that the rule of law, statute, or regulation:
(a)
would impair the creation, attachment, or perfection of a security interest; or
(b)
provides that the assignment or transfer or the creation, attachment, or perfection of
the security interest may give rise to a default, breach, right of recoupment, claim,
defense, termination, right of termination, or remedy under the promissory note,
health-care-insurance receivable, or general intangible.
(4)
To the extent that a term in a promissory note or in an agreement between an account
debtor and a debtor which relates to a health-care-insurance receivable or general
intangible or a rule of law, statute, or regulation described in Subsection
(3)
would be
effective under law other than this chapter but is ineffective under Subsection
(1)
or
(3)
,
the creation, attachment, or perfection of a security interest in the promissory note,
health-care-insurance receivable, or general intangible:
(a)
is not enforceable against the person obligated on the promissory note or the account
debtor;
(b)
does not impose a duty or obligation on the person obligated on the promissory note
or the account debtor;
(c)
does not require the person obligated on the promissory note or the account debtor to
recognize the security interest, pay or render performance to the secured party, or
accept payment or performance from the secured party;
(d)
does not entitle the secured party to use or assign the debtor's rights under the
promissory note, health-care-insurance receivable, or general intangible, including
any related information or materials furnished to the debtor in the transaction giving
rise to the promissory note, health-care-insurance receivable, or general intangible;
(e)
does not entitle the secured party to use, assign, possess, or have access to any trade
secrets or confidential information of the person obligated on the promissory note or
the account debtor; and
(f)
does not entitle the secured party to enforce the security interest in the promissory
note, health-care-insurance receivable, or general intangible.
(5)
In this section, "promissory note" includes a negotiable instrument that evidences
chattel paper.
Section 81. Section
70A-9a-509
is amended to read:
70A-9a-509
. Persons entitled to file a record.
(1)
A person may file an initial financing statement, amendment that adds collateral
covered by a financing statement, or amendment that adds a debtor to a financing
statement only if:
(a)
the debtor authorizes the filing in
an authenticated
a signed
record or pursuant to
Subsection
(2)
or
(3)
; or
(b)
the person holds an agricultural lien that has become effective at the time of filing
and the financing statement covers only collateral in which the person holds an
agricultural lien.
(2)
By
authenticating
signing
or becoming bound as debtor by a security agreement, a
debtor or new debtor authorizes the filing of an initial financing statement, and an
amendment, covering:
(a)
the collateral described in the security agreement; and
(b)
property that becomes collateral under Subsection
70A-9a-315(1)(b)
, whether or not
the security agreement expressly covers proceeds.
(3)
By acquiring collateral in which a security interest or agricultural lien continues under
Subsection
70A-9a-315(1)(a)
, a debtor authorizes the filing of an initial financing
statement, and an amendment, covering the collateral and property that becomes
collateral under Subsection
70A-9a-315(1)(b)
.
(4)
A person may file an amendment other than an amendment that adds collateral covered
by a financing statement or an amendment that adds a debtor to a financing statement
only if:
(a)
the secured party of record authorizes the filing; or
(b)
the amendment is a termination statement for a financing statement as to which the
secured party of record has failed to file or send a termination statement as required
by Subsection
70A-9a-513(1)
or
(3)
, the debtor authorizes the filing, and the
termination statement indicates that the debtor authorized it to be filed.
(5)
If there is more than one secured party of record for a financing statement, each secured
party of record may authorize the filing of an amendment under Subsection
(4)
.
Section 82. Section
70A-9a-513
is amended to read:
70A-9a-513
. Termination statement.
(1)
A secured party shall cause the secured party of record for a financing statement to file a
termination statement for the financing statement if the financing statement covers
consumer goods and:
(a)
there is no obligation secured by the collateral covered by the financing statement
and no commitment to make an advance, incur an obligation, or otherwise give value;
or
(b)
the debtor did not authorize the filing of the initial financing statement.
(2)
To comply with Subsection
(1)
, a secured party shall cause the secured party of record
to file the termination statement:
(a)
within one month after there is no obligation secured by the collateral covered by the
financing statement and no commitment to make an advance, incur an obligation, or
otherwise give value; or
(b)
if earlier, within 20 days after the secured party receives
an authenticated
a signed
demand from a debtor.
(3)
In cases not governed by Subsection
(1)
, within 20 days after a secured party receives
an authenticated
a signed
demand from a debtor, the secured party shall cause the
secured party of record for a financing statement to send to the debtor a termination
statement for the financing statement or file the termination statement in the filing office
if:
(a)
except in the case of a financing statement covering accounts or chattel paper that has
been sold or goods that are the subject of a consignment, there is no obligation
secured by the collateral covered by the financing statement and no commitment to
make an advance, incur an obligation, or otherwise give value;
(b)
the financing statement covers accounts or chattel paper that has been sold but as to
which the account debtor or other person obligated has discharged its obligation;
(c)
the financing statement covers goods that were the subject of a consignment to the
debtor but are not in the debtor's possession; or
(d)
the debtor did not authorize the filing of the initial financing statement.
(4)
Except as otherwise provided in Section
70A-9a-510
, upon the filing of a termination
statement with the filing office, the financing statement to which the termination
statement relates ceases to be effective. Except as otherwise provided in Section
70A-9a-510
, for purposes of Subsections
70A-9a-519(7)
,
70A-9a-522(1)
, and
70A-9a-525(3)
, the filing with the filing office of a termination statement relating to a
financing statement that indicates that the debtor is a transmitting utility also causes the
effectiveness of the financing statement to lapse.
(5)
(a)
If a debtor files a termination statement, the filing office shall send to the secured
party of record for the financing statement to which the termination statement relates,
a notice stating that the termination statement has been filed.
(b)
The filing office shall send notice described in Subsection
(5)(a)
:
(i)
(A)
by mail to the address provided for the secured party of record in the
financing statement; or
(B)
by electronic mail to the electronic mail address provided by the secured party
of record, if any; and
(ii)
no later than 14 days after the day on which the termination statement is filed.
Section 83. Section
70A-9a-601
is amended to read:
70A-9a-601
. Rights after default -- Judicial enforcement -- Consignor or buyer
of accounts, chattel paper, payment intangibles, or promissory notes.
(1)
After default, a secured party has the rights provided in this part and, except as
otherwise provided in Section
70A-9a-602
, those provided by agreement of the parties.
A secured party:
(a)
may reduce a claim to judgment, foreclose, or otherwise enforce the claim, security
interest, or agricultural lien by any available judicial procedure; and
(b)
if the collateral is documents, may proceed either as to the documents or as to the
goods they cover.
(2)
A secured party in possession of collateral or control of collateral under Section
70A-7a-106
,
70A-9a-104
,
70A-9a-105
,
70A-9a-105.1
,
70A-9a-106
,
or
70A-9a-107
, or
70A-9a-107.1
has the rights and duties provided in Section
70A-9a-207
.
(3)
The rights under Subsections
(1)
and
(2)
are cumulative and may be exercised
simultaneously.
(4)
Except as otherwise provided in Subsection
(7)
and Section
70A-9a-605
, after default, a
debtor and an obligor have the rights provided in this part and by agreement of the
parties.
(5)
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:
(a)
the date of perfection of the security interest or agricultural lien in the collateral;
(b)
the date of filing a financing statement covering the collateral; or
(c)
any date specified in a statute under which the agricultural lien was created.
(6)
A sale pursuant to an execution is a foreclosure of the security interest or agricultural
lien by judicial procedure within the meaning of this section. A secured party may
purchase at the sale and thereafter hold the collateral free of any other requirements of
this chapter.
(7)
Except as otherwise provided in Subsection
70A-9a-607(3)
, this part imposes no duties
upon a secured party that is a consignor or is a buyer of accounts, chattel paper, payment
intangibles, or promissory notes.
Section 84. Section
70A-9a-605
is amended to read:
70A-9a-605
. Unknown debtor or secondary obligor.
A
(1)
Except as provided in Subsection
(2)
, a
secured party does not owe a duty based on its
status as secured party:
(1)
(a)
to a person that is a debtor or obligor, unless the secured party knows:
(a)
(i)
that the person is a debtor or obligor;
(b)
(ii)
the identity of the person; and
(c)
(iii)
how to communicate with the person; or
(2)
(b)
to a secured party or lienholder that has filed a financing statement against a
person, unless the secured party knows:
(a)
(i)
that the person is a debtor; and
(b)
(ii)
the identity of the person.
(2)
A secured party owes a duty based on its status as a secured party to a person if, at the
time the secured party obtains control of collateral that is a controllable account,
controllable electronic record, or controllable payment intangible or at the time the
security interest attaches to the collateral, whichever is later:
(a)
the person is a debtor or obligor; and
(b)
the secured party knows that the information in Subsection
(1)(a)(i)
, (ii), or (iii)
relating to the person is not provided by the collateral, a record attached to or
logically associated with the collateral, or the system in which the collateral is
recorded.
Section 85. Section
70A-9a-608
is amended to read:
70A-9a-608
. Application of proceeds of collection or enforcement -- Liability for
deficiency and right to surplus.
(1)
If a security interest or agricultural lien secures payment or performance of an
obligation, the following rules apply:
(a)
A secured party shall apply or pay over for application the cash proceeds of
collection or enforcement under Section
70A-9a-607
in the following order to:
(i)
the reasonable expenses of collection and enforcement and, to the extent provided
for by agreement and not prohibited by law, reasonable attorney's fees and legal
expenses incurred by the secured party;
(ii)
the satisfaction of obligations secured by the security interest or agricultural lien
under which the collection or enforcement is made; and
(iii)
the satisfaction of obligations secured by any subordinate security interest in or
other lien on the collateral subject to the security interest or agricultural lien under
which the collection or enforcement is made if the secured party receives
an
authenticated
a signed
demand for proceeds before distribution of the proceeds is
completed.
(b)
If requested by a secured party, a holder of a subordinate security interest or other
lien shall furnish reasonable proof of the interest or lien within a reasonable time.
Unless the holder complies, the secured party need not comply with the holder's
demand under Subsection
(1)(a)(iii)
.
(c)
A secured party need not apply or pay over for application noncash proceeds of
collection and enforcement under Section
70A-9a-607
unless the failure to do so
would be commercially unreasonable. A secured party that applies or pays over for
application noncash proceeds shall do so in a commercially reasonable manner.
(d)
A secured party shall account to and pay a debtor for any surplus, and the obligor is
liable for any deficiency.
(2)
If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or
promissory notes, the debtor is not entitled to any surplus, and the obligor is not liable
for any deficiency.
Section 86. Section
70A-9a-611
is amended to read:
70A-9a-611
. Notification before disposition of collateral.
(1)
In this section, "notification date" means the earlier of the date on which:
(a)
a secured party sends to the debtor and any secondary obligor
an authenticated
a
signed
notification of disposition; or
(b)
the debtor and any secondary obligor waive the right to notification.
(2)
Except as otherwise provided in Subsection
(4)
, a secured party that disposes of
collateral under Section
70A-9a-610
shall send to the persons specified in Subsection
(3)
a reasonable
authenticated
signed
notification of disposition.
(3)
To comply with Subsection
(2)
, the secured party shall send
an authenticated
a signed
notification of disposition to:
(a)
the debtor;
(b)
any secondary obligor; and
(c)
if the collateral is other than consumer goods:
(i)
any other person from which the secured party has received, before the
notification date,
an authenticated
a signed
notification of a claim of an interest
in the collateral;
(ii)
any other secured party or lienholder that, 10 days before the notification date,
held a security interest in or other lien on the collateral perfected by the filing of a
financing statement that:
(A)
identified the collateral;
(B)
was indexed under the debtor's name as of that date; and
(C)
was filed in the office in which to file a financing statement against the debtor
covering the collateral as of that date; and
(iii)
any other secured party that, 10 days before the notification date, held a security
interest in the collateral perfected by compliance with a statute, regulation, or
treaty described in Subsection
70A-9a-311(1)
.
(4)
Subsection
(2)
does not apply if the collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market.
(5)
A secured party complies with the requirement for notification prescribed by Subsection
(3)(c)(ii)
if:
(a)
not later than 20 days or earlier than 30 days before the notification date, the secured
party requests, in a commercially reasonable manner, information concerning
financing statements indexed under the debtor's name in the office indicated in
Subsection
(3)(c)(ii)
; and
(b)
before the notification date, the secured party:
(i)
did not receive a response to the request for information; or
(ii)
received a response to the request for information and sent
an authenticated
a
signed
notification of disposition to each secured party or other lienholder named
in that response whose financing statement covered the collateral.
Section 87. Section
70A-9a-613
is amended to read:
70A-9a-613
. Contents and form of notification before disposition of collateral --
General.
(1)
Except in a consumer-goods transaction, the following rules apply:
(1)
(a)
The contents of a notification of disposition are sufficient if the notification:
(a)
(i)
describes the debtor and the secured party;
(b)
(ii)
describes the collateral that is the subject of the intended disposition;
(c)
(iii)
states the method of intended disposition;
(d)
(iv)
states that the debtor is entitled to an accounting of the unpaid indebtedness
and states the charge, if any, for an accounting; and
(e)
(v)
states the time and place of a public disposition or the time after which any
other disposition is to be made.
(2)
(b)
Whether the contents of a notification that lacks any of the information specified
in Subsection
(1)
are nevertheless sufficient is a question of fact.
(3)
(c)
The contents of a notification providing substantially the information specified
in Subsection
(1)
are sufficient, even if the notification includes:
(a)
(i)
information not specified by that subsection; or
(b)
(ii)
minor errors that are not seriously misleading.
(4)
(d)
A particular phrasing of the notification is not required.
(5)
(e)
The following form of notification and the form appearing in Subsection
70A-9a-614(3)
70A-9a-614(3
)
, when completed
in accordance with the instructions
in Subsection
(2)
and Subsection
70A-9a-104(2)
, each provides sufficient
information:
NOTIFICATION OF DISPOSITION OF COLLATERAL
To: [Name of debtor, obligor, or other person to which the notification is sent]
From: [Name, address, and telephone number of secured party]
Name of Debtor(s): [Include only if debtor(s) are not an addressee]
[For a public disposition:]
We will sell [or lease or license, as applicable] the [describe collateral] [to the
highest qualified bidder] in public as follows:
Day and Date: [Insert day and date]
Time: [Insert time]
Place: [Insert place]
[For a private disposition:]
We will sell [or lease or license, as applicable] the [describe collateral]
privately sometime after [day and date
]
.
You are entitled to an accounting of the unpaid indebtedness secured by the
property that we intend to sell [or lease or license, as applicable] [for a charge of
$[Insert amount] ]. You may request an accounting by calling us at [telephone
number].
NOTIFICATION OF DISPOSITION OF COLLATERAL
To: (Name of debtor, obligor, or other person to which the notification is sent)
From: (Name, address, and telephone number of secured party)
{1} Name of any debtor that is not an addressee: (Name of each debtor)
{2} We will sell (describe collateral) (to the highest qualified bidder) at public
sale. A sale could include a lease or license. The sale will be held as follows:
(Date)
(Time)
(Place)
{3} We will sell (describe collateral) at private sale sometime after (date). A sale
could include a lease or license.
{4} You are entitled to an accounting of the unpaid indebtedness secured by the
property that we intend to sell or, as applicable, lease or license.
{5} If you request an accounting you must pay a charge of $ (amount).
{6} You may request an accounting by calling us at (telephone number).
[End of Form]
(2)
The following instructions apply to the form of notification in Subsection
(1)(e)
:
(a)
The instructions in this subsection refer to the numbers in braces before items in the
form of notification in Subsection
(1)(e)
. Do not include the numbers or braces in the
notification. The numbers and braces are used only for the purpose of these
instructions.
(b)
Include and complete item {1} only if there is a debtor that is not an addressee of the
notification and list the name or names.
(c)
Include and complete either item {2}, if the notification relates to a public
disposition of the collateral, or item {3}, if the notification relates to a private
disposition of the collateral. If item {2} is included, include the words to the highest
qualified bidder only if applicable.
(d)
Include and complete items {4} and {6}.
(e)
Include and complete item {5} only if the sender will charge the recipient for an
accounting.
Section 88. Section
70A-9a-614
is amended to read:
70A-9a-614
. Contents and form of notification before disposition of collateral --
Consumer-goods transaction.
In a consumer-goods transaction, the following rules apply:
(1)
A notification of disposition must provide the following information:
(a)
the information specified in Subsection
70A-9a-613(1)
70A-9a-613(1)(a)
;
(b)
a description of any liability for a deficiency of the person to which the notification
is sent;
(c)
a telephone number from which the amount that must be paid to the secured party to
redeem the collateral under Section
70A-9a-623
is available; and
(d)
a telephone number or mailing address from which additional information
concerning the disposition and the obligation secured is available.
(2)
A particular phrasing of the notification is not required.
(3)
The following form of notification, when completed
in accordance with Subsection
(4)
,
provides sufficient information:
[Name and address of secured party]
[Date]
NOTICE OF OUR PLAN TO SELL PROPERTY
[Name and address of any obligor who is also a debtor]
Subject: [Identification of Transaction]
We have your [describe collateral], because you broke promises in our agreement.
[For a public disposition:]
We will sell [describe collateral] at public sale. A sale could include a lease or license.
The sale will be held as follows:
Date:
Time:
Place:
You may attend the sale and bring bidders if you want.
[For a private disposition:]
We will sell [describe collateral] at private sale sometime after [date]. A sale could
include a lease or license.
The money that we get from the sale (after paying our costs) will reduce the amount
you owe. If we get less money than you owe, you [will or will not, as applicable] still owe us
the difference. If we get more money than you owe, you will get the extra money, unless we
must pay it to someone else.
You can get the property back at any time before we sell it by paying us the full amount
you owe (not just the past due payments), including our expenses. To learn the exact amount
you must pay, call us at [telephone number].
If you want us to explain to you in writing how we have figured the amount that you
owe us, you may call us at [telephone number] [or write us at [secured party's address] ] and
request a written explanation. [We will charge you $[insert amount] for the explanation if we
sent you another written explanation of the amount you owe us within the last six months.]
If you need more information about the sale call us at [telephone number] [or write us
at [secured party's address]].
We are sending this notice to the following other people who have an interest in
[describe collateral] or who owe money under your agreement:
[Names of all other debtors and obligors, if any].
(Name and address of secured party)
(Date)
NOTICE OF OUR PLAN TO SELL PROPERTY
(Name and address of any obligor who is also a debtor)
Subject: (Identify transaction)
We have your (describe collateral), because you broke promises in our agreement.
{1} We will sell (describe collateral) at public sale. A sale could include a lease or license.
The sale will be held as follows:
(Date)
(Time)
(Place)
You may attend the sale and bring bidders if you want.
{2} We will sell (describe collateral) at private sale sometime after (date). A sale could
include a lease or license.
{3} The money that we get from the sale, after paying our costs, will reduce the amount
you owe. If we get less money than you owe, you (will or will not, as applicable) still owe us
the difference. If we get more money than you owe, you will get the extra money, unless we
must pay it to someone else.
{4} You can get the property back at any time before we sell it by paying us the full amount
you owe, not just the past due payments, including our expenses. To learn the exact amount
you must pay, call us at (telephone number).
{5} If you want us to explain to you in (writing) (writing or in (description of electronic
record)) (description of electronic record) how we have figured the amount that you owe us,
{6} call us at (telephone number) (or) (write us at (secured party's address)) (or contact us
by (description of electronic communication method))
{7} and request (a written explanation) (a written explanation or an explanation in
(description of electronic record)) (an explanation in (description of electronic record)).
{8} We will charge you $ (amount) for the explanation if we sent you another written
explanation of the amount you owe us within the last six months.
{9} If you need more information about the sale (call us at (telephone number)) (or) (write
us at (secured party's address)) (or contact us by (description of electronic communication
method)).
{10} We are sending this notice to the following other people who have an interest in
(describe collateral) or who owe money under your agreement:
(Names of all other debtors and obligors, if any)
[End of Form]
(4)
The following instructions apply to the form of notification in Subsection
(3)
:
(a)
The instructions in this Subsection (4) refer to the numbers in braces before items in
the form of notification in Subsection
(3)
. Do not include the numbers or braces in
the notification. The numbers and braces are used only for the purpose of these
instructions.
(b)
Include and complete either item {1}, if the notification relates to a public
disposition of the collateral, or item {2}, if the notification relates to a private
disposition of the collateral.
(c)
Include and complete items {3}, {4}, {5}, {6}, and {7}.
(d)
In item {5}, include and complete any one of the three alternative methods for the
explanation -- writing, writing or electronic record, or electronic record.
(e)
In item {6}, include the telephone number. In addition, the sender may include and
complete either or both of the two additional alternative methods of communication
-- writing or electronic communication -- for the recipient of the notification to
communicate with the sender. Neither of the two additional methods of
communication is required to be included.
(f)
In item {7}, include and complete the method or methods for the explanation --
writing, writing or electronic record, or electronic record -- included in item {5}.
(g)
Include and complete item {8} only if a written explanation is included in item {5}
as a method for communicating the explanation and the sender will charge the
recipient for another written explanation.
(h)
In item {9}, include either the telephone number or the address or both the telephone
number and the address. In addition, the sender may include and complete the
additional method of communication -- electronic communication -- for the recipient
of the notification to communicate with the sender. The additional method of
electronic communication is not required to be included.
(i)
If item {10} does not apply, insert "None" after "agreement:".
(4)
(5)
A notification in the form of Subsection
(3)
is sufficient, even if additional
information appears at the end of the form.
(5)
(6)
A notification in the form of Subsection
(3)
is sufficient, even if it includes errors in
information not required by Subsection
(1)
, unless the error is misleading with respect to
rights arising under this chapter.
(6)
(7)
If a notification under this section is not in the form of Subsection
(3)
, law other
than this chapter determines the effect of including information not required by
Subsection
(1)
.
Section 89. Section
70A-9a-615
is amended to read:
70A-9a-615
. Application of proceeds of disposition -- Liability for deficiency and
right to surplus.
(1)
A secured party shall apply or pay over for application the cash proceeds of disposition
under Section
70A-9a-610
in the following order to:
(a)
the reasonable expenses of retaking, holding, preparing for disposition, processing,
and disposing, and, to the extent provided for by agreement and not prohibited by
law, reasonable attorney's fees and legal expenses incurred by the secured party;
(b)
the satisfaction of obligations secured by the security interest or agricultural lien
under which the disposition is made;
(c)
the satisfaction of obligations secured by any subordinate security interest in or other
subordinate lien on the collateral if:
(i)
the secured party receives from the holder of the subordinate security interest or
other lien
an authenticated
a signed
demand for proceeds before distribution of
the proceeds is completed; and
(ii)
in a case in which a consignor has an interest in the collateral, the subordinate
security interest or other lien is senior to the interest of the consignor; and
(d)
a secured party that is a consignor of the collateral if the secured party receives from
the consignor
an authenticated
a signed
demand for proceeds before distribution of
the proceeds is completed.
(2)
If requested by a secured party, a holder of a subordinate security interest or other lien
shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the
holder does so, the secured party need not comply with the holder's demand under
Subsection
(1)(c)
.
(3)
A secured party need not apply or pay over for application noncash proceeds of
disposition under Section
70A-9a-610
unless the failure to do so would be commercially
unreasonable. A secured party that applies or pays over for application noncash
proceeds shall do so in a commercially reasonable manner.
(4)
If the security interest under which a disposition is made secures payment or
performance of an obligation, after making the payments and applications required by
Subsection
(1)
and permitted by Subsection
(3)
:
(a)
unless Subsection
(1)(d)
requires the secured party to apply or pay over cash
proceeds to a consignor, the secured party shall account to and pay a debtor for any
surplus; and
(b)
the obligor is liable for any deficiency.
(5)
If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or
promissory notes:
(a)
the debtor is not entitled to any surplus; and
(b)
the obligor is not liable for any deficiency.
(6)
The surplus or deficiency following a disposition is calculated based on the amount of
proceeds that would have been realized in a disposition complying with this part to a
transferee other than the secured party, a person related to the secured party, or a
secondary obligor if:
(a)
the transferee in the disposition is the secured party, a person related to the secured
party, or a secondary obligor; and
(b)
the amount of proceeds of the disposition is significantly below the range of
proceeds that a complying disposition to a person other than the secured party, a
person related to the secured party, or a secondary obligor would have brought.
(7)
A secured party that receives cash proceeds of a disposition in good faith and without
knowledge that the receipt violates the rights of the holder of a security interest or other
lien that is not subordinate to the security interest or agricultural lien under which the
disposition is made:
(a)
takes the cash proceeds free of the security interest or other lien;
(b)
is not obligated to apply the proceeds of the disposition to the satisfaction of
obligations secured by the security interest or other lien; and
(c)
is not obligated to account to or pay the holder of the security interest or other lien
for any surplus.
Section 90. Section
70A-9a-616
is amended to read:
70A-9a-616
. Explanation of calculation of surplus or deficiency.
(1)
In this section:
(a)
"Explanation" means a
writing
record
that:
(i)
states the amount of the surplus or deficiency;
(ii)
provides an explanation in accordance with Subsection
(3)
of how the secured
party calculated the surplus or deficiency;
(iii)
states, if applicable, that future debits, credits, charges, including additional
credit service charges or interest, rebates, and expenses may affect the amount of
the surplus or deficiency; and
(iv)
provides a telephone number or mailing address from which additional
information concerning the transaction is available.
(b)
"Request" means a record:
(i)
authenticated
signed
by a debtor or consumer obligor;
(ii)
requesting that the recipient provide an explanation; and
(iii)
sent after disposition of the collateral under Section
70A-9a-610
.
(2)
In a consumer-goods transaction in which the debtor is entitled to a surplus or a
consumer obligor is liable for a deficiency under Section
70A-9a-615
, the secured party
shall:
(a)
send an explanation to the debtor or consumer obligor, as applicable, after the
disposition and:
(i)
before or when the secured party accounts to the debtor and pays any surplus or
first makes
written
demand
in a record
on the consumer obligor after the
disposition for payment of the deficiency; and
(ii)
within 14 days after receipt of a request; or
(b)
in the case of a consumer obligor who is liable for a deficiency, within 14 days after
receipt of a request, send to the consumer obligor a record waiving the secured party's
right to a deficiency.
(3)
To comply with Subsection
(1)(a)(ii)
,
a writing
an explanation
must provide the
following information in the following order:
(a)
the aggregate amount of obligations secured by the security interest under which the
disposition was made, and, if the amount reflects a rebate of unearned interest or
credit service charge, an indication of that fact, calculated as of a specified date:
(i)
if the secured party takes or receives possession of the collateral after default, not
more than 35 days before the secured party takes or receives possession; or
(ii)
if the secured party takes or receives possession of the collateral before default or
does not take possession of the collateral, not more than 35 days before the
disposition;
(b)
the amount of proceeds of the disposition;
(c)
the aggregate amount of the obligations after deducting the amount of proceeds;
(d)
the amount, in the aggregate or by type, and types of expenses, including expenses of
retaking, holding, preparing for disposition, processing, and disposing of the
collateral, and attorney's fees secured by the collateral which are known to the
secured party and relate to the current disposition;
(e)
the amount, in the aggregate or by type, and types of credits, including rebates of
interest or credit service charges, to which the obligor is known to be entitled and
which are not reflected in the amount in Subsection
(3)(a)
; and
(f)
the amount of the surplus or deficiency.
(4)
A particular phrasing of the explanation is not required. An explanation complying
substantially with the requirements of Subsection
(1)
is sufficient, even if it includes
minor errors that are not seriously misleading.
(5)
A debtor or consumer obligor is entitled without charge to one response to a request
under this section during any six-month period in which the secured party did not send
to the debtor or consumer obligor an explanation pursuant to Subsection
(2)(a)
. The
secured party may require payment of a charge not exceeding $25 for each additional
response.
Section 91. Section
70A-9a-619
is amended to read:
70A-9a-619
. Transfer of record or legal title.
(1)
In this section, "transfer statement" means a record
authenticated
signed
by a secured
party stating:
(a)
that the debtor has defaulted in connection with an obligation secured by specified
collateral;
(b)
that the secured party has exercised its post-default remedies with respect to the
collateral;
(c)
that, by reason of the exercise, a transferee has acquired the rights of the debtor in the
collateral; and
(d)
the name and mailing address of the secured party, debtor, and transferee.
(2)
A transfer statement entitles the transferee to the transfer of record of all rights of the
debtor in the collateral specified in the statement in any official filing, recording,
registration, or certificate-of-title system covering the collateral. If a transfer statement
is presented with the applicable fee and request form to the official or office responsible
for maintaining the system, the official or office shall:
(a)
accept the transfer statement;
(b)
promptly amend its records to reflect the transfer; and
(c)
if applicable, issue a new appropriate certificate of title in the name of the transferee.
(3)
A transfer of the record or legal title to collateral to a secured party under Subsection
(2)
or otherwise is not of itself a disposition of collateral under this chapter and does not of
itself relieve the secured party of its duties under this chapter.
Section 92. Section
70A-9a-620
is amended to read:
70A-9a-620
. Acceptance of collateral in full or partial satisfaction of obligation --
Compulsory disposition of collateral.
(1)
Except as otherwise provided in Subsection
(7)
, a secured party may accept collateral in
full or partial satisfaction of the obligation it secures only if:
(a)
the debtor consents to the acceptance under Subsection
(3)
;
(b)
the secured party does not receive, within the time set forth in Subsection
(4)
, a
notification of objection to the proposal
authenticated
signed
by:
(i)
a person to which the secured party was required to send a proposal under Section
70A-9a-621
; or
(ii)
any other person, other than the debtor, holding an interest in the collateral
subordinate to the security interest that is the subject of the proposal;
(c)
if the collateral is consumer goods, the collateral is not in the possession of the
debtor when the debtor consents to the acceptance; and
(d)
Subsection
(5)
does not require the secured party to dispose of the collateral or the
debtor waives the requirement pursuant to Section
70A-9a-624
.
(2)
A purported or apparent acceptance of collateral under this section is ineffective unless:
(a)
the secured party consents to the acceptance in
an authenticated
a signed
record or
sends a proposal to the debtor; and
(b)
the conditions of Subsection
(1)
are met.
(3)
For purposes of this section:
(a)
a debtor consents to an acceptance of collateral in partial satisfaction of the
obligation it secures only if the debtor agrees to the terms of the acceptance in a
record
authenticated
signed
after default; and
(b)
a debtor consents to an acceptance of collateral in full satisfaction of the obligation it
secures only if the debtor agrees to the terms of the acceptance in a record
authenticated
signed
after default or the secured party:
(i)
sends to the debtor after default a proposal that is unconditional or subject only to
a condition that collateral not in the possession of the secured party be preserved
or maintained;
(ii)
in the proposal, proposes to accept collateral in full satisfaction of the obligation
it secures; and
(iii)
does not receive a notification of objection
authenticated
signed
by the debtor
within 20 days after the proposal is sent.
(4)
To be effective under Subsection
(1)(b)
, a notification of objection must be received by
the secured party:
(a)
in the case of a person to which the proposal was sent pursuant to Section
70A-9a-621
, within 20 days after notification was sent to that person; and
(b)
in other cases:
(i)
within 20 days after the last notification was sent pursuant to Section
70A-9a-621
;
or
(ii)
if a notification was not sent, before the debtor consents to the acceptance under
Subsection
(3)
.
(5)
A secured party that has taken possession of collateral shall dispose of the collateral
pursuant to Section
70A-9a-610
within the time specified in Subsection
(6)
if:
(a)
60% of the cash price has been paid in the case of a purchase-money security interest
in consumer goods; or
(b)
60% of the principal amount of the obligation secured has been paid in the case of a
non-purchase-money security interest in consumer goods.
(6)
To comply with Subsection
(5)
, the secured party shall dispose of the collateral:
(a)
within 90 days after taking possession; or
(b)
within any longer period to which the debtor and all secondary obligors have agreed
in an agreement to that effect entered into and
authenticated
signed
after default.
(7)
In a consumer transaction, a secured party may not accept collateral in partial
satisfaction of the obligation it secures.
Section 93. Section
70A-9a-621
is amended to read:
70A-9a-621
. Notification of proposal to accept collateral.
(1)
A secured party that desires to accept collateral in full or partial satisfaction of the
obligation it secures shall send its proposal to:
(a)
any person from which the secured party has received, before the debtor consented to
the acceptance,
an authenticated
a signed
notification of a claim of an interest in the
collateral;
(b)
any other secured party or lienholder that, 10 days before the debtor consented to the
acceptance, held a security interest in or other lien on the collateral perfected by the
filing of a financing statement that:
(i)
identified the collateral;
(ii)
was indexed under the debtor's name as of that date; and
(iii)
was filed in the office or offices in which to file a financing statement against the
debtor covering the collateral as of that date; and
(c)
any other secured party that, 10 days before the debtor consented to the acceptance,
held a security interest in the collateral perfected by compliance with a statute,
regulation, or treaty described in Subsection
70A-9a-311(1)
.
(2)
A secured party that desires to accept collateral in partial satisfaction of the obligation it
secures shall send its proposal to any secondary obligor in addition to the persons
described in Subsection
(1)
.
Section 94. Section
70A-9a-624
is amended to read:
70A-9a-624
. Waiver.
(1)
A debtor or secondary obligor may waive the right to notification of disposition of
collateral under Section
70A-9a-611
only by an agreement to that effect entered into and
authenticated
signed
after default.
(2)
A debtor may waive the right to require disposition of collateral under Subsection
70A-9a-620(5)
only by an agreement to that effect entered into and
authenticated
signed
after default.
(3)
Except in a consumer-goods transaction, a debtor or secondary obligor may waive the
right to redeem collateral under Section
70A-9a-623
only by an agreement to that effect
entered into and
authenticated
signed
after default.
Section 95. Section
70A-9a-628
is amended to read:
70A-9a-628
. Nonliability and limitation on liability of secured party -- Liability
of secondary obligor.
(1)
Unless
Subject to Subsection
(6)
, unless
a secured party knows that a person is a debtor
or obligor, knows the identity of the person, and knows how to communicate with the
person:
(a)
the secured party is not liable to the person, or to a secured party or lienholder that
has filed a financing statement against the person, for failure to comply with this
chapter; and
(b)
the secured party's failure to comply with this chapter does not affect the liability of
the person for a deficiency.
(2)
A
Subject to Subsection
(6)
, a
secured party is not liable because of its status as
secured party:
(a)
to a person that is a debtor or obligor, unless the secured party knows:
(i)
that the person is a debtor or obligor;
(ii)
the identity of the person; and
(iii)
how to communicate with the person; or
(b)
to a secured party or lienholder that has filed a financing statement against a person,
unless the secured party knows:
(i)
that the person is a debtor; and
(ii)
the identity of the person.
(3)
A secured party is not liable to any person, and a person's liability for a deficiency is not
affected, because of any act or omission arising out of the secured party's reasonable
belief that a transaction is not a consumer-goods transaction or a consumer transaction
or that goods are not consumer goods, if the secured party's belief is based on its
reasonable reliance on:
(a)
a debtor's representation concerning the purpose for which collateral was to be used,
acquired, or held; or
(b)
an obligor's representation concerning the purpose for which a secured obligation
was incurred.
(4)
A secured party is not liable to any person under Subsection
70A-9a-625(3)(b)
for its
failure to comply with Section
70A-9a-616
.
(5)
A secured party is not liable under Section
70A-9a-625(3)(b)
more than once with
respect to any one secured obligation.
(6)
Subsections
(1)
and
(2)
do not apply to limit the liability of a secured party to a person
if, at the time the secured party obtains control of collateral that is a controllable
account, controllable electronic record, or controllable payment intangible or at the time
the security interest attaches to the collateral, whichever is later:
(a)
the person is a debtor or obligor; and
(b)
the secured party knows that the information in Subsection
(2)(a)(i)
, (ii), or (iii)
relating to the person is not provided by the collateral, a record attached to or
logically associated with the collateral, or the system in which the collateral is
recorded.
Section 96. Section
70A-12-101
is enacted to read:
12. Uniform Commercial Code - Controllable Electronic Records
70A-12-101
. Title.
This chapter may be cited as Uniform Commercial Code - Controllable Electronic
Records.
Section 97. Section
70A-12-102
is enacted to read:
70A-12-102
. Definitions.
(1)
In this chapter:
(a)
(i)
"Controllable electronic record" means a record stored in an electronic medium
that can be subjected to control under Section
70A-12-105
.
(ii)
"Controllable electronic record" does not include a controllable account, a
controllable payment intangible, a deposit account, an electronic copy of a record
evidencing chattel paper, an electronic document of title, electronic money,
investment property, or a transferable record.
(b)
"Qualifying purchaser" means a purchaser of a controllable electronic record or an
interest in a controllable electronic record that obtains control of the controllable
electronic record for value, in good faith, and without notice of a claim of a property
right in the controllable electronic record.
(c)
"Transferable record" has the meaning provided for that term in:
(i)
Section 201(a)(1) of the Electronic Signatures in Global and National Commerce
Act, 15 U.S.C. Sec. 7021(a)(1); or
(ii)
Section
46-4-403
.
(d)
"Value" has the meaning provided in Subsection
70A-3-303(1)
, as if references in
that subsection to an instrument were references to a controllable account,
controllable electronic record, or controllable payment intangible.
(2)
The definitions in Chapter 9a, Uniform Commercial Code - Secured Transactions, of
"account debtor," "controllable account," "controllable payment intangible," "chattel
paper," "deposit account," "electronic money," and "investment property" apply to this
chapter.
(3)
Chapter 1a, Uniform Commercial Code - General Provisions, contains general
definitions and principles of construction and interpretation applicable throughout this
chapter.
Section 98. Section
70A-12-103
is enacted to read:
70A-12-103
. Relation to Chapter 9a, Uniform Commercial Code - Secured
Transactions and consumer laws.
(1)
If there is conflict between this chapter and Chapter 9a, Uniform Commercial Code -
Secured Transactions, Chapter 9a, Uniform Commercial Code - Secured Transactions,
governs.
(2)
A transaction subject to this chapter is subject to any applicable rule of law that
establishes a different rule for consumers and Title 70C, Utah Consumer Credit Code.
Section 99. Section
70A-12-104
is enacted to read:
70A-12-104
. Rights in controllable account, controllable electronic record, and
controllable payment intangible.
(1)
This section applies to the acquisition and purchase of rights in a controllable account or
controllable payment intangible, including the rights and benefits under Subsections
(3)
,
(4), (5), (7), and (8), of a purchaser and qualifying purchaser, in the same manner this
section applies to a controllable electronic record.
(2)
To determine whether a purchaser of a controllable account or a controllable payment
intangible is a qualifying purchaser, the purchaser obtains control of the account or
payment intangible if it obtains control of the controllable electronic record that
evidences the account or payment intangible.
(3)
Except as provided in this section, law other than this chapter determines whether a
person acquires a right in a controllable electronic record and the right the person
acquires.
(4)
A purchaser of a controllable electronic record acquires all rights in the controllable
electronic record that the transferor had or had power to transfer, except that a purchaser
of a limited interest in a controllable electronic record acquires rights only to the extent
of the interest purchased.
(5)
A qualifying purchaser acquires its rights in the controllable electronic record free of a
claim of a property right in the controllable electronic record.
(6)
Except as provided in Subsections
(1)
and
(5)
for a controllable account and a
controllable payment intangible or law other than this chapter, a qualifying purchaser
takes a right to payment, right to performance, or other interest in property evidenced by
the controllable electronic record subject to a claim of a property right in the right to
payment, right to performance, or other interest in property.
(7)
An action may not be asserted against a qualifying purchaser based on both a purchase
by the qualifying purchaser of a controllable electronic record and a claim of a property
right in another controllable electronic record, whether the action is framed in
conversion, replevin, constructive trust, equitable lien, or other theory.
(8)
Filing of a financing statement under Chapter 9a, Uniform Commercial Code - Secured
Transactions, is not notice of a claim of a property right in a controllable electronic
record.
Section 100. Section
70A-12-105
is enacted to read:
70A-12-105
. Control of controllable electronic record.
(1)
A person has control of a controllable electronic record if the electronic record, a record
attached to or logically associated with the electronic record, or a system in which the
electronic record is recorded:
(a)
gives the person:
(i)
power to avail itself of substantially all the benefit from the electronic record; and
(ii)
exclusive power, subject to Subsection
(2)
, to:
(A)
prevent others from availing themselves of substantially all the benefit from
the electronic record; and
(B)
transfer control of the electronic record to another person or cause another
person to obtain control of another controllable electronic record as a result of
the transfer of the electronic record; and
(b)
enables the person readily to identify itself in any way, including by name,
identifying number, cryptographic key, office, or account number, as having the
powers specified in Subsection
(1)(a)
.
(2)
Subject to Subsection
(3)
, a power is exclusive under Subsections
(1)(a)(ii)(A)
and
(B)
even if:
(a)
the controllable electronic record, a record attached to or logically associated with
the electronic record, or a system in which the electronic record is recorded limits the
use of the electronic record or has a protocol programmed to cause a change,
including a transfer or loss of control or a modification of benefits afforded by the
electronic record; or
(b)
the power is shared with another person.
(3)
A power of a person is not shared with another person under Subsection
(2)(b)
and the
person's power is not exclusive if:
(a)
the person can exercise the power only if the power also is exercised by the other
person; and
(b)
the other person:
(i)
can exercise the power without exercise of the power by the person; or
(ii)
is the transferor to the person of an interest in the controllable electronic record or
a controllable account or controllable payment intangible evidenced by the
controllable electronic record.
(4)
If a person has the powers specified in Subsections
(1)(a)(ii)(A)
and
(B)
, the powers are
presumed to be exclusive.
(5)
A person has control of a controllable electronic record if another person, other than the
transferor to the person of an interest in the controllable electronic record or a
controllable account or controllable payment intangible evidenced by the controllable
electronic record:
(a)
has control of the electronic record and acknowledges that it has control on behalf of
the person; or
(b)
obtains control of the electronic record after having acknowledged that it will obtain
control of the electronic record on behalf of the person.
(6)
A person that has control under this section is not required to acknowledge that it has
control on behalf of another person.
(7)
If a person acknowledges that it has or will obtain control on behalf of another person,
unless the person otherwise agrees or law other than this chapter or Chapter 9a, Uniform
Commercial Code - Secured Transactions, otherwise provides, the person does not owe
any duty to the other person and is not required to confirm the acknowledgment to any
other person.
Section 101. Section
70A-12-106
is enacted to read:
70A-12-106
. Discharge of account debtor on controllable account or controllable
payment intangible.
(1)
An account debtor on a controllable account or controllable payment intangible may
discharge its obligation by paying:
(a)
the person having control of the controllable electronic record that evidences the
controllable account or controllable payment intangible; or
(b)
except as provided in Subsection
(2)
, a person that formerly had control of the
controllable electronic record.
(2)
Subject to Subsection
(4)
, the account debtor may not discharge its obligation by paying
a person that formerly had control of the controllable electronic record if the account
debtor receives a notification that:
(a)
is signed by a person that formerly had control or the person to which control was
transferred;
(b)
reasonably identifies the controllable account or controllable payment intangible;
(c)
notifies the account debtor that control of the controllable electronic record that
evidences the controllable account or controllable payment intangible was transferred;
(d)
identifies the transferee, in any reasonable way, including by name, identifying
number, cryptographic key, office, or account number; and
(e)
provides a commercially reasonable method by which the account debtor is to pay
the transferee.
(3)
After receipt of a notification that complies with Subsection
(2)
, the account debtor may
discharge its obligation by paying in accordance with the notification and may not
discharge the obligation by paying a person that formerly had control.
(4)
Subject to Subsection
(8)
, notification is ineffective under Subsection
(2)
:
(a)
unless, before the notification is sent, the account debtor and the person that, at that
time, had control of the controllable electronic record that evidences the controllable
account or controllable payment intangible agree in a signed record to a
commercially reasonable method by which a person may furnish reasonable proof
that control has been transferred;
(b)
to the extent an agreement between the account debtor and seller of a payment
intangible limits the account debtor's duty to pay a person other than the seller and
the limitation is effective under law other than this article; or
(c)
at the option of the account debtor, if the notification notifies the account debtor to:
(i)
divide a payment;
(ii)
make less than the full amount of an installment or other periodic payment; or
(iii)
pay any part of a payment by more than one method or to more than one person.
(5)
Subject to Subsection
(8)
, if requested by the account debtor, the person giving the
notification under Subsection
(2)
seasonably shall furnish reasonable proof, using the
method in the agreement referred to in Subsection
(4)(a)
, that control of the controllable
electronic record has been transferred. Unless the person complies with the request, the
account debtor may discharge its obligation by paying a person that formerly had
control, even if the account debtor has received a notification under Subsection
(2)
.
(6)
A person furnishes reasonable proof under Subsection
(5)
that control has been
transferred if the person demonstrates, using the method in the agreement referred to in
Subsection
(4)(a)
, that the transferee has the power to:
(a)
avail itself of substantially all the benefit from the controllable electronic record;
(b)
prevent others from availing themselves of substantially all the benefit from the
controllable electronic record; and
(c)
transfer the powers specified in Subsection
(6)(a)
and
(b)
to another person.
(7)
Subject to Subsection
(8)
, an account debtor may not waive or vary its rights under
Subsections
(4)(a)
and
(5)
or its option under Subsection
(4)(c)
.
(8)
This section is subject to law other than this article which establishes a different rule for
an account debtor who is an individual and who incurred the obligation primarily for
personal, family, or household purposes.
Section 102. Section
70A-12-107
is enacted to read:
70A-12-107
. Governing law.
(1)
Except as provided in Subsection
(2)
, the local law of a controllable electronic records
jurisdiction governs a matter covered by this article.
(2)
For a controllable electronic record that evidences a controllable account or controllable
payment intangible, the local law of the controllable electronic records jurisdiction
governs a matter covered by Section
70A-9b-106
unless an effective agreement
determines that the local law of another jurisdiction governs.
(3)
The following rules determine a controllable electronic records jurisdiction under this
section:
(a)
If the controllable electronic record, or a record attached to or logically associated
with the controllable electronic record and readily available for review, expressly
provides that a particular jurisdiction is the controllable electronic records
jurisdiction for purposes of this chapter or title, that jurisdiction is the controllable
electronic records jurisdiction.
(b)
Subsection
(3)(a)
does not apply and the rules of the system in which the controllable
electronic record is recorded are readily available for review and expressly provide
that a particular jurisdiction is the controllable electronic records jurisdiction for
purposes of this chapter or title, that jurisdiction is the controllable electronic records
jurisdiction.
(c)
If Subsections
(3)(a)
and
(b)
do not apply and the controllable electronic record, or a
record attached to or logically associated with the controllable electronic record and
readily available for review, expressly provides that the controllable electronic record
is governed by the law of a particular jurisdiction, that jurisdiction is the controllable
electronic records jurisdiction.
(d)
If Subsections
(3)(a)
through
(c)
do not apply and the rules of the system in which
the controllable electronic record is recorded are readily available for review and
expressly provide that the controllable electronic record or the system is governed by
the law of a particular jurisdiction, that jurisdiction is the controllable electronic
records jurisdiction.
(e)
If Subsections
(3)(a)
through
(d)
do not apply, the controllable electronic records
jurisdiction is the District of Columbia.
(4)
If Subsection
(3)(e)
applies and Article 12 is not in effect in the District of Columbia
without material modification, the governing law for a matter covered by this article is
the law of the District of Columbia as though Article 12 were in effect in the District of
Columbia without material modification. In this subsection, "Article 12" means Article
12 of Uniform Commercial Code Amendments (2022).
(5)
To the extent Subsections
(1)
and
(2)
provide that the local law of the controllable
electronic records jurisdiction governs a matter covered by this article, that law governs
even if the matter or a transaction to which the matter relates does not bear any relation
to the controllable electronic records jurisdiction.
(6)
The rights acquired under Section
70A-12-104
by a purchaser or qualifying purchaser
are governed by the law applicable under this section at the time of purchase.
Section 103. Section
70A-12a-101
is enacted to read:
12a. Uniform Commercial Code - Transitional Provisions for Uniform
Commercial Code Amendments (2022)
1. General Provisions and Definitions
70A-12a-101
. Title.
This article may be cited as Transitional Provisions for Uniform Commercial Code
Amendments (2022).
Section 104. Section
70A-12a-102
is enacted to read:
70A-12a-102
. Definitions.
(1)
In this chapter:
(a)
"Adjustment date" means July 1, 2025, or the date that is one year after May 6, 2026,
whichever is later.
(b)
"Article 12" means Chapter 12, Uniform Commercial Code - Controllable Electronic
Records.
(c)
"Article 12 property" means a controllable account, controllable electronic record, or
controllable payment intangible.
(2)
The following definitions in other chapters of this title apply to this chapter:
(a)
"Controllable account," Section
70A-9a-102
.
(b)
"Controllable electronic record," Section
70A-12-102
.
(c)
"Controllable payment intangible," Section
70A-9a-102
.
(d)
"Electronic money," Section
70A-9a-102
.
(e)
"Financing statement," Section
70A-9a-102
.
(3)
Chapter 1a, Uniform Commercial Code - General Provisions, contains general
definitions and principles of construction and interpretation applicable throughout this
chapter.
Section 105. Section
70A-12a-201
is enacted to read:
2. General Transitional Provision
70A-12a-201
. Saving clause.
Except as provided in Part 3, Transitional Provisions for Chapter 9a, Uniform
Commercial Code - Secured Transactions, and Chapter 12, Uniform Commercial Code -
Controllable Electronic Records, a transaction validly entered into before May 6, 2026, and the
rights, duties, and interests flowing from the transaction remain valid thereafter and may be
terminated, completed, consummated, or enforced as required or permitted by law other than
this title or, if applicable, this title, as though this chapter had not taken effect.
Section 106. Section
70A-12a-301
is enacted to read:
3. Transitional Provisions for Chapter 9a, Uniform Commercial Code - Secured
Transactions and Chapter 12, Uniform Commercial Code - Controllable Electronic
Records
70A-12a-301
. Saving clause.
(1)
Except as provided in this part, Chapter 9a, Uniform Commercial Code - Secured
Transactions, as amended by this chapter and Chapter 12, Uniform Commercial Code -
Controllable Electronic Records, apply to a transaction, lien, or other interest in
property, even if the transaction, lien, or interest was entered into, created, or acquired
before May 6, 2026.
(2)
Except as provided in Subsection
(3)
and Sections
70A-12a-302
through 306:
(a)
a transaction, lien, or interest in property that was validly entered into, created, or
transferred before May 6, 2026, and was not governed by this title, but would be
subject to Chapter 9a, Uniform Commercial Code - Secured Transactions, as
amended by this chapter or Chapter 12, Uniform Commercial Code - Controllable
Electronic Records, if it had been entered into, created, or transferred on or after May
6, 2026, including the rights, duties, and interests flowing from the transaction, lien,
or interest, remains valid on and after May 6, 2026; and
(b)
the transaction, lien, or interest may be terminated, completed, consummated, and
enforced as required or permitted by this chapter or by the law that would apply if
this chapter had not taken effect.
(3)
This chapter does not affect an action, case, or proceeding commenced before May 6,
2026.
Section 107. Section
70A-12a-302
is enacted to read:
70A-12a-302
. Security interest perfected before effective date.
(1)
A security interest that is enforceable and perfected immediately before May 6, 2026, is
a perfected security interest under this chapter if, on May 6, 2026, the requirements for
enforceability and perfection under this chapter are satisfied without further action.
(2)
If a security interest is enforceable and perfected immediately before May 6, 2026, but
the requirements for enforceability or perfection under this chapter are not satisfied on
May 6, 2026, the security interest:
(a)
is a perfected security interest until the earlier of the time perfection would have
ceased under the law in effect immediately before May 6, 2026 or the adjustment
date;
(b)
remains enforceable thereafter only if the security interest satisfies the requirements
for enforceability under Section
70A-9a-203
, as amended by this chapter, before the
adjustment date; and
(c)
remains perfected thereafter only if the requirements for perfection under this chapter
are satisfied before the time specified in Subsection
(2)(a)
.
Section 108. Section
70A-12a-303
is enacted to read:
70A-12a-303
. Security interest unperfected before effective date.
A security interest that is enforceable immediately before May 6, 2026, but is
unperfected at that time:
(1)
remains an enforceable security interest until the adjustment date;
(2)
remains enforceable thereafter if the security interest becomes enforceable under
Section
70A-9a-203
, as amended by this chapter, on May 6, 2026, or before the
adjustment date; and
(3)
becomes perfected:
(a)
without further action, on May 6, 2026, if the requirements for perfection under this
chapter are satisfied before or at that time; or
(b)
when the requirements for perfection are satisfied if the requirements are satisfied
after that time.
Section 109. Section
70A-12a-304
is enacted to read:
70A-12a-304
. Effectiveness of actions taken before effective date.
(1)
If action, other than the filing of a financing statement, is taken before May 6, 2026, and
the action would have resulted in perfection of the security interest had the security
interest become enforceable before May 6, 2026, the action is effective to perfect a
security interest that attaches under this chapter before the adjustment date. An attached
security interest becomes unperfected on the adjustment date unless the security interest
becomes a perfected security interest under this chapter before the adjustment date.
(2)
The filing of a financing statement before May 6, 2026, is effective to perfect a security
interest on May 6, 2026, to the extent the filing would satisfy the requirements for
perfection under this chapter.
(3)
The taking of an action before May 6, 2026, is sufficient for the enforceability of a
security interest on May 6, 2026, if the action would satisfy the requirements for
enforceability under this chapter.
Section 110. Section
70A-12a-305
is enacted to read:
70A-12a-305
. Priority.
(1)
Subject to Subsections
(2)
and
(3)
, this chapter determines the priority of conflicting
claims to collateral.
(2)
Subject to Subsection
(3)
, if the priorities of claims to collateral were established before
May 6, 2026, Chapter 9a, Uniform Commercial Code - Secured Transactions, as in
effect before May 6, 2026, determines priority.
(3)
On the adjustment date, to the extent the priorities determined by Chapter 9a, Uniform
Commercial Code - Secured Transactions, as amended by this chapter modify the
priorities established before May 6, 2026, the priorities of claims to Article 12 property
and electronic money established before May 6, 2026, cease to apply.
Section 111. Section
70A-12a-306
is enacted to read:
70A-12a-306
. Priority of claims when priority rules of Chapter 9a, Uniform
Commercial Code - Secured Transactions, do not apply.
(1)
Subject to Subsections
(2)
and
(3)
, Chapter 12, Uniform Commercial Code -
Controllable Electronic Records, determines the priority of conflicting claims to Article
12 property when the priority rules of Chapter 9a, Uniform Commercial Code - Secured
Transactions, as amended by this chapter do not apply.
(2)
Subject to Subsection
(3)
, when the priority rules of Chapter 9a, Uniform Commercial
Code - Secured Transactions, as amended by this chapter do not apply and the priorities
of claims to Article 12 property were established before May 6, 2026, law other than
Chapter 12, Uniform Commercial Code - Controllable Electronic Records, determines
priority.
(3)
When the priority rules of Chapter 9a, Uniform Commercial Code - Secured
Transactions, as amended by this chapter do not apply, to the extent the priorities
determined by this chapter modify the priorities established before May 6, 2026, the
priorities of claims to Article 12 property established before May 6, 2026, cease to apply
on the adjustment date.
Section 112. Section
70A-13-101
is enacted to read:
13. Reserved
70A-13-101
. Reserved.
Reserved.
Section 113. Section
70A-14-101
is enacted to read:
14. Reserved
70A-14-101
. Reserved.
Reserved.
Section 114. Section
70A-15-101
is enacted to read:
15. Reserved
70A-15-101
. Reserved.
Reserved.
Section 115. Section
70A-16-101
is enacted to read:
16. Reserved
70A-16-101
. Reserved.
Reserved.
Section 116. Section
70A-17-101
is enacted to read:
17. Reserved
70A-17-101
. Reserved.
Reserved.
Section 117. Section
70A-18-101
is enacted to read:
18. Reserved
70A-18-101
. Reserved.
Reserved.
Section 118. Section
70A-19-101
is enacted to read:
19. Reserved
70A-19-101
. Reserved.
Reserved.
Section 119. Section
70A-20-101
, which is renumbered from Section 70A-10-103 is renumbered
and amended to read:
20. Repealer
70A-10-103
70A-20-101
. General repealer.
Except as provided in the following section, all acts and parts of acts inconsistent with
this act are hereby repealed.
Section 120. Section
70A-20-102
, which is renumbered from Section 70A-10-104 is renumbered
and amended to read:
70A-10-104
70A-20-102
. Laws not repealed.
Chapter 7a, Uniform Commercial Code - Documents of Title
, does not repeal or modify
any laws prescribing the form or contents of documents of title or the services or facilities to
be afforded by bailees, or otherwise regulating bailees' businesses in respects not specifically
dealt with herein; but the fact that such laws are violated does not affect the status of a
document of title which otherwise complies with the definition of a document of title as
defined in Section
70A-1a-201
.
Section 121. Section
70C-2-204
is amended to read:
70C-2-204
. Certain negotiable instruments prohibited.
(1)
With respect to a consumer credit sale not involving real property, the seller may
not take a negotiable instrument under Section
70A-3-104
other than a check as
evidence of the obligation of the buyer.
(2)
A holder is not in good faith
under Subsection
70A-1a-201(2)(t)
as that term is
defined in Section
70A-1a-201
if
he
the holder
takes a negotiable instrument with
notice that
it
the negotiable instrument
is issued in violation of this section.
(3)
A holder in due course under Section
70A-3-302
is not subject to the liabilities set forth
in the provisions on the effect of violations on rights of parties under Section
70C-7-201
.
Section 122.
Repealer.
Effective date.
Specific repealer -- Provision for transition.
Section 123.
Effective Date.
This bill takes effect on
May 6, 2026
.
3-10-26 11:00 AM