Chapter
135
2006 -- H 7574
Enacted 06/16/06
A N A C T
RELATING
TO THE UNIFORM COMMERCIAL CODE
Introduced
By: Representative Arthur J. Corvese
Date
Introduced: February 16, 2006
It is enacted by the General Assembly as
follows:
SECTION 1. Section
6A-1-201 of the General Laws in Chapter 6A-1 entitled "General
Provisions" is hereby amended to read as
follows:
6A-1-201.
General definitions. -- Subject to additional definitions contained in
the
subsequent chapters of this title which are
applicable to specific chapters thereof, and unless the
context otherwise requires, in this title:
(1)
"Action" in the sense of a judicial proceeding includes recoupment,
counterclaim,
set-off, suit in equity, and any other proceedings
in which rights are determined.
(2)
"Aggrieved party" means a party entitled to resort to a remedy.
(3)
"Agreement" means the bargain of the parties in fact as found in
their language or by
implication from other circumstances including
course of dealing or usage of trade or course of
performance as provided in this title (sections
6A-1-205, 6A-1-208 and 6A-2.1-207). Whether an
agreement has legal consequences is determined
by the provisions of this title, if applicable;
otherwise by the law of contracts (section
6A-1-103). (Compare "Contract".)
(4)
"Bank" means any person engaged in the business of banking.
(5)
"Bearer" means the a person in control of a negotiable
electronic document of title or
a person in possession of an instrument, a
negotiable, tangible document of title, or certificated
security payable to bearer or indorsed in blank.
(6) "Bill of
lading" means a document of title evidencing the receipt of goods
for
shipment issued by a person engaged in the
business of directly or indirectly transporting or
forwarding goods, and includes an airbill.
"Airbill" means a document serving for air
transportation as a bill of lading does for
marine or rail transportation, and includes an air
consignment note or air waybill. The term does not
include a warehouse receipt.
(7)
"Branch" includes a separately incorporated foreign branch of a bank.
(8) "Burden
of establishing" a fact means the burden of persuading the triers of fact
that
the existence of the fact is more probable than
its nonexistence.
(9) "Buyer
in ordinary course of business" means a person that buys goods in good
faith,
without knowledge that the sale violates the
rights of another person in the goods, and in the
ordinary course from a person, other than a
pawnbroker, in the business of selling goods of that
kind. A person buys goods in the ordinary course
if the sale to the person comports with the usual
or customary practices in the kind of business
in which the seller is engaged or with the seller's
own usual or customary practices. A person that
sells oil, gas, or other minerals at the wellhead or
minehead is a person in the business of selling
goods of that kind. A buyer in ordinary course of
business may buy for cash, by exchange of other
property, or on secured or unsecured credit, and
may acquire goods or documents of title under a
pre-existing contract for sale. Only a buyer that
takes possession of the goods or has a right to
recover the goods from the seller under chapter 2
may be a buyer in ordinary course of business. A
person that acquires goods in a transfer in bulk
or as security for or in total or partial
satisfaction of a money debt is not a buyer in ordinary
course of business.
(10)
"Conspicuous": A term or clause is conspicuous when it is so
written that a
reasonable person against whom it is to operate
ought to have noticed it. A printed heading in
capitals (as: NONNEGOTIABLE BILL OF LADING) is
conspicuous. Language in the body of a
form is "conspicuous" if it is in
larger or other contrasting type or color. But in a telegram any
stated term is "conspicuous". Whether
a term or clause is "conspicuous" or not is for decision by
the court. , with reference to a term, means so
written, displayed or presented that a reasonable
person against which it is to operate ought to
have noticed it. Whether a term is "conspicuous" or
not is a decision for the court. Conspicuous
terms include the following:
(a) a heading
in capitals equal to or greater in size than the surrounding text, or in
contrasting type, font or color to the
surrounding text of the same or lesser size; and
(b) language in
the body of a record or display in larger type than the surrounding text, or
in contrasting text, or in contrasting type,
font, or color to the surrounding text of the same size,
or set off from surrounding text of the same
size by symbols or other marks that call attention to
the language.
(11)
"Contract" means the total legal obligation which results from the
parties' agreement
as affected by this title and any other
applicable rules of law. (Compare "Agreement".)
(12)
"Creditor" includes a general creditor, a secured creditor, a lien
creditor, and any
representative of creditors, including an
assignee for the benefit of creditors, a trustee in
bankruptcy, a receiver in equity, and an
executor or administrator of an insolvent debtor's or
assignor's estate.
(13)
"Defendant" includes a person in the position of defendant in a
cross-action or
counterclaim.
(14)
"Delivery" with respect to an electronic document of title means
voluntary transfer
of control and with respect to instruments, tangible
documents of title, chattel paper, or
certificated securities means voluntary transfer
of possession.
(15)
"Document of title" includes bill of lading, dock warrant, dock
receipt, warehouse
receipt, or order for the delivery of goods, and
also any other document which means a record: (i)
that in the regular course of business or financing
is treated as adequately evidencing that the
person in possession or control of it
the record is entitled to receive, control, hold, and dispose of
the document record and the goods it
the record covers. To be a document of title a document
must purport to be issued by or addressed to a
bailee and purport to cover goods in the bailee's
possession which are either identified or are
fungible portions of an identified mass. ; and (ii) that
purports to be issued by or addressed to a
bailee and to cover goods in the bailee's possession
which are either identified or are fungible
portions of an identified mass. The term includes a bill
of lading, transport document, dock warrant,
dock receipt, warehouse receipt, and order for
delivery of goods. An electronic document of
title means a document of title evidenced by a
record consisting of information stored in an
electronic medium. A tangible document of title
means a document of title evidenced by a record
consisting of information that is inscribed on a
tangible medium.
(16)
"Fault" means wrongful act, omission, or breach.
(17)
"Fungible" with respect to goods or securities means goods or
securities of which
any unit is, by nature or usage of trade, the
equivalent of any other like unit. Goods which are not
fungible shall be deemed fungible for the
purposes of this title to the extent that under a particular
agreement or document unlike units are treated
as equivalents.
(18)
"Genuine" means free of forgery or counterfeiting.
(19) "Good
faith" means honesty in fact in the conduct or transaction concerned.
(20)
"Holder" with respect to a negotiable instrument, means the person
in possession if
the instrument is payable to bearer or, in the
case of an instrument payable to an identified person,
if the identified person is in possession.
"Holder" with respect to a document of title means the
person in possession if the goods are
deliverable to bearer or to the order of the person in
possession. means:
(a) the person
in possession of a negotiable instrument that is payable either to bearer or
to an identified person that is the person in
possession;
(b) the person
in possession of a negotiable tangible document of title if the goods are
deliverable either to bearer or to the order of
the person in possession; or
(c) the person
in control of a negotiable electronic document of title.
(21) To
"honor" is to pay or to accept and pay, or where a credit so engages
to purchase
or discount a draft complying with the terms of
the credit.
(22)
"Insolvency proceedings" includes any assignment for the benefit of
creditors or
other proceedings intended to liquidate or
rehabilitate the estate of the person involved.
(23) A person is
"insolvent" who either has ceased to pay his or her debts in the
ordinary
course of business or cannot pay his or her
debts as they become due or is insolvent within the
meaning of the federal bankruptcy law.
(24)
"Money" means a medium of exchange authorized or adopted by a
domestic or
foreign government and includes a monetary unit
of account established by an intergovernmental
organization or by agreement between two or more
nations.
(25) A Subject
to subsection (27), a person has "notice" of a fact when if
the person:
(i) He or she
has actual knowledge of it; or
(ii) He or she
has received a notice or notification of it; or
(iii) From all
the facts and circumstances known to him or her at the time in question he
or she has reason to know that it exists.
A person
"knows" or has "knowledge" of a fact when he or she the
person has actual
knowledge of it. "Discover" or
"learn" or a word or phrase of similar import refers to knowledge
rather than to reason to know. The time and
circumstances under which a notice or notification
may cease to be effective are not determined by
this title.
(26) A person
"notifies" or "gives" a notice or notification to another person
by taking
such steps as may be reasonably required to
inform the other person in ordinary course, whether
or not such other the other person
actually comes to know of it. A Subject to subsection (27), a
person "receives" a notice or
notification when
(i) It comes to his
or her that person's attention; or
(ii) It is duly
delivered in a form reasonable under the circumstances at the place of
business through which the contract was made or
at any other place another location held out by
him or her that person as the place for
receipt of such communications.
(27) Notice,
knowledge, or a notice or notification received by an organization is
effective for a particular transaction from the
time when it is brought to the attention of the
individual conducting that transaction, and in
any event from the time when it would have been
brought to his or her the individual's
attention if the organization had exercised due diligence. An
organization exercises due diligence if it
maintains reasonable routines for communicating
significant information to the person conducting
the transaction and there is reasonable
compliance with the routines. Due diligence does
not require an individual acting for the
organization to communicate information unless
such communication is part of the individual's
regular duties or the individual has reason to
know of the transaction and that the transaction
would be materially affected by the information.
(28)
"Organization" includes a corporation, government or governmental
subdivision or
agency, business trust, estate, trust,
partnership, or association, two (2) or more persons having a
joint or common interest, or any other legal or
commercial entity.
(29)
"Party", as distinct from "third party", means a person who
has engaged in a
transaction or made an agreement within this
title.
(30)
"Person" includes an individual or an organization (see section
6A-1-102).
(31)
"Presumption" or "presumed" means that the trier of fact
must find the existence of
the fact presumed unless and until evidence is
introduced which would support a finding of its
nonexistence.
(32)
"Purchase" includes taking by sale, discount, negotiation, mortgage,
pledge, lien,
security interest, issue or re-issue, gift, or
any other voluntary transaction creating an interest in
property.
(33)
"Purchaser" means a person who takes by purchase.
(34)
"Remedy" means any remedial right to which an aggrieved party is
entitled with or
without resort to a tribunal.
(35)
"Representative" includes an agent, an officer of a corporation or
association, and a
trustee, executor or administrator of an estate,
or any other person empowered to act for another.
(36)
"Rights" includes remedies.
(37)
"Security interest" means an interest in personal property or
fixtures which secures
payment or performance of an obligation. The
term also includes any interest of a consignor and a
buyer of accounts, chattel paper, a payment
intangible, or a promissory note in a transaction that
is subject to chapter 9. The special property
interest of a buyer of goods on identification of those
goods to a contract for sale under section
6A-2-401 is not a "security interest," but a buyer may
also acquire a "security interest" by
complying with chapter 9. Except as otherwise provided in
section 6A-2-505, the right of a seller or
lessor of goods under chapter 2 or 2.1 of this title to
retain or acquire possession of the goods is not
a "security interest," but a seller or lessor may also
acquire a "security interest" by
complying with chapter 9. The retention or reservation of title by
a seller of goods notwithstanding shipment or
delivery to the buyer (section 6A-2-401) is limited
in effect to a reservation of a "security
interest."
(i) Whether a
transaction creates a lease or security interest is determined by the facts of
each case; however, a transaction creates a
security interest if the consideration the lessee is to
pay the lessor for the right to possession and
use of the goods is an obligation for the term of the
lease not subject to termination by the lessee,
and
(A) The original
term of the lease is equal to or greater than the remaining economic life
of the goods;
(B) The lessee is
bound to renew the lease for the remaining economic life of the goods
or is bound to become the owner of the goods;
(C) The lessee
has an option to renew the lease for the remaining economic life of the
goods for no additional consideration or nominal
additional consideration upon compliance with
the lease agreement; or
(D) The lessee
has an option to become the owner of the goods for no additional
consideration or nominal additional
consideration upon compliance with the lease agreement.
(ii) A
transaction does not create a security interest merely because it provides
that:
(A) The present
value of the consideration the lessee is obligated to pay the lessor for the
right to possession and use of the goods is
substantially equal to or is greater than the fair market
value of the goods at the time the lease is
entered into;
(B) The lessee
assumes risk of loss of the goods, or agrees to pay taxes, insurance, filing,
recording, or registration fees, or service or
maintenance costs with respect to the goods;
(C) The lessee
has an option to renew the lease or to become the owner of the goods;
(D) The lessee
has an option to renew the lease for a fixed rent that is equal to or greater
than the reasonably predictable fair market rent
for the use of the goods for the term of the
renewal at the time the option is to be
performed; or
(E) The lessee
has an option to become the owner of the goods for a fixed price that is
equal to or greater than the reasonably
predictable fair market value of the goods at the time the
option is to be performed.
(iii) For
purposes of this subsection (37):
(A) Additional
consideration is not nominal if (i) when the option to renew the lease is
granted to the lessee the rent is stated to be
the fair market rent for the use of the goods for the
term of the renewal determined at the time the option
is to be performed, or (ii) when the option
to become the owner of the goods is granted to
the lessee the price is stated to be the fair market
value of the goods determined at the time the
option is to be performed. Additional consideration
is nominal if it is less than the lessee's
reasonably predictable cost of performing under the lease
agreement if the option is not exercised;
(B)
"Reasonably predictable" and "remaining economic life of the
goods" are to be
determined with reference to the facts and
circumstances at the time the transaction is entered
into; and
(C) "Present
value" means the amount as of a date certain of one or more sums payable
in the future, discounted to the date certain.
The discount is determined by the interest rate
specified by the parties if the rate is not
manifestly unreasonable at the time the transaction is
entered into; otherwise, the discount is
determined by a commercially reasonable rate that takes
into account the facts and circumstances of each
case at the time the transaction was entered into.
(38)
"Send" in connection with any writing or notice means to deposit
in the mail or
deliver for transmission by any other usual
means of communication with postage or cost of
transmission provided for and properly
addressed, and, in the case of an instrument to an address
specified thereon or otherwise agreed, or if
there be none to any address reasonable under the
circumstances. The receipt of any writing or
notice within the time at which it would have arrived
if properly sent has the effect of a proper
sending.
in connection with a writing, record, or notice
means:
(a) to deposit
in the mail or deliver for transmission by any other usual means of
communication with postage or cost of
transmission provided for and properly addressed and, in
the case of an instrument, to an address
specified thereon or otherwise agreed, or if there be none
to any address reasonable under the
circumstances; or
(b) in any other
way to cause to be received any record or notice within the time it would
have arrived if properly sent.
(39)
"Signed" includes any symbol executed or adopted by a party with
present intention
to authenticate a writing.
(40)
"Surety" includes guarantor.
(41)
"Telegram" includes a message transmitted by radio, teletype, cable,
any
mechanical method of transmission, or the like.
(42)
"Term" means that portion of an agreement which relates to a
particular matter.
(43) "Unauthorized"
signature means one made without actual, implied, or apparent
authority and includes a forgery.
(44)
"Value". Except as otherwise provided with respect to negotiable
instruments and
bank collections (sections 6A-3-303, 6A-4-210,
and 6A-4-211), a person gives "value" for rights
if he or she acquires them:
(i) In return for
a binding commitment to extend credit or for the extension of
immediately available credit, whether or not
drawn upon and whether or not a charge-back is
provided for in the event of difficulties in
collection; or
(ii) As security
for or in total or partial satisfaction of a pre-existing claim; or
(iii) By
accepting delivery pursuant to a pre-existing contract for purchase; or
(iv) Generally,
in return for any consideration sufficient to support a simple contract.
(45)
"Warehouse receipt" means a receipt document of title
issued by a person engaged
in the business of storing goods for hire.
(46)
"Written" or "writing" includes printing, typewriting, or
any other intentional
reduction to tangible form.
SECTION 2.
Sections 6A-2-103, 6A-2-104, 6A-2-310, 6A-2-323, 6A-2-401, 6A-2-503,
6A-2-505, 6A-2-506, 6A-2-509, 6A-2-605 and
6A-2-705 of the General Laws in Chapter 6A-2
entitled "Sales" are hereby amended to
read as follows:
6A-2-103.
Definitions and index of definitions. -- (1) In this chapter unless the
context
otherwise requires
(a)
"Buyer" means a person who buys or contracts to buy goods.
(b) "Good
faith" in the case of a merchant means honesty in fact and the observance
of
reasonable commercial standards of fair dealing
in the trade.
(c)
"Receipt" of goods means taking physical possession of them.
(d)
"Seller" means a person who sells or contracts to sell goods.
(2) Other
definitions applying to this chapter or to specified parts thereof, and the
sections in which they appear are:
"Acceptance". section 6A-2-606.
"Banker's
credit". section 6A-2-325.
"Between
merchants". section 6A-2-104.
"Cancellation". section 6A-2-106(4).
"Commercial
unit". section 6A-2-105.
"Confirmed
credit". section 6A-2-325.
"Conforming
to contract". section 6A-2-106.
"Contract
for sale". section 6A-2-106.
"Cover".
section 6A-2-712.
"Entrusting". section 6A-2-403.
"Financing
agency". section 6A-2-104.
"Future
goods". section 6A-2-105.
"Goods". section 6A-2-105.
"Identification". section 6A-2-501.
"Installment
contract". section 6A-2-612.
"Letter of
credit". section 6A-2-325.
"Lot".
section 6A-2-105.
"Merchant". section 6A-2-104.
"Overseas". section 6A-2-323.
"Person in
position of seller". section 6A-2-707.
"Present
sale". section 6A-2-106.
"Sale".
section 6A-2-106.
"Sale on
approval". section 6A-2-326.
"Sale or
return". section 6A-2-326.
"Termination". section 6A-2-106.
(3) The "Control"
as provided in section 6A-7-106 and the following definitions in
other chapters apply to this chapter:
"Check". section 6A-3-104.
"Consignee". section 6A-7-102.
"Consignor". section 6A-7-102.
"Consumer
goods". section 6A-9-102.
"Dishonor". section 6A-3-502.
"Draft". section 6A-3-104.
(4) In addition
chapter 1 of title 6A contains general definitions and principles of
construction and interpretation applicable
throughout this chapter.
6A-2-104.
Definitions -- "Merchant" -- "Between merchants" --
"Financing
agency". -- (1) "Merchant"
means a person who deals in goods of the kind or otherwise by his or
her occupation holds him or herself out as
having knowledge or skill peculiar to the practices or
goods involved in the transaction or to whom
such knowledge or skill may be attributed by his or
her employment of an agent or broker or other
intermediary who by his or her occupation holds
him or herself out as having such knowledge or
skill.
(2)
"Financing agency" means a bank, finance company, or other person who
in the
ordinary course of business makes advances
against goods or documents of title or who by
arrangement with either the seller or the buyer
intervenes in ordinary course to make or collect
payment due or claimed under the contract for
sale, as by purchasing or paying the seller's draft
or making advances against it or by merely
taking it for collection whether or not documents of
title accompany or are associated with
the draft. "Financing agency" includes also a bank or other
person who similarly intervenes between persons
who are in the position of seller and buyer in
respect to the goods (section 6A-2-707).
(3) "Between
merchants" means in any transaction with respect to which both parties are
chargeable with the knowledge or skill of
merchants.
6A-2-310.
Open time for payment or running of credit -- Authority to ship under
reservation. -- Unless otherwise
agreed,
(a) Payment is
due at the time and place at which the buyer is to receive the goods even
though the place of shipment is the place of
delivery; and
(b) If the seller
is authorized to send the goods he or she may ship them under
reservation, and may tender the documents of
title, but the buyer may inspect the goods after their
arrival before payment is due unless such
inspection is inconsistent with the terms of the contract
(section 6A-2-513); and
(c) If delivery
is authorized and made by way of documents of title otherwise than by
subsection (b) then payment is due regardless
of where the goods are to be received: (i) at the
time and place at which the buyer is to receive delivery
of the tangible documents regardless of
where the goods are to be received; or (ii) at the time
the buyer is to receive the electronic
documents and at the seller's place of business
or if none, the seller's residence; and
(d) Where the
seller is required or authorized to ship the goods on credit the credit period
runs from the time of shipment, but postdating
the invoice or delaying its dispatch will
correspondingly delay the starting of the credit
period.
6A-2-323.
Form of bill of lading required in overseas shipment -- "Overseas".
-- (1)
Where the contract contemplates overseas
shipment and contains a term C.I.F. or C. & F. or
F.O.B. vessel, the seller, unless otherwise
agreed, must obtain a negotiable bill of lading stating
that the goods have been loaded on board or, in
the case of a term C.I.F. or C. & F., received for
shipment.
(2) Where in a
case within subsection (1) a tangible bill of lading has been issued in
a set
of parts, unless otherwise agreed, if the
documents are not to be sent from abroad the buyer may
demand tender of the full set; otherwise only
one part of the bill of lading need be tendered. Even
if the agreement expressly requires a full set,
(a) Due tender of
a single part is acceptable within the provisions of this chapter on cure
of improper delivery (section 6A-2-508(1)); and
(b) Even though
the full set is demanded, if the documents are sent from abroad the
person tendering an incomplete set may
nevertheless require payment upon furnishing an
indemnity which the buyer in good faith deems
adequate.
(3) A shipment by
water or by air or a contract contemplating such shipment is
"overseas" insofar as by usage of
trade or agreement it is subject to the commercial, financing, or
shipping practices characteristic of
international deep water commerce.
6A-2-401.
Passing of title -- Reservation for security -- Limited application of this
section. -- Each provision of this
chapter with regard to the rights, obligations and remedies of the
seller, the buyer, purchasers, or other third
parties applies irrespective of title to the goods except
where the provision refers to such title.
Insofar as situations are not covered by the other
provisions of this chapter and matters
concerning title become material the following rules apply:
(1) Title to
goods cannot pass under a contract for sale prior to their identification to
the
contract (section 6A-2-501), and unless
otherwise explicitly agreed the buyer acquires by their
identification a special property as limited by
this title. Any retention or reservation by the seller
of the title (property) in goods shipped or
delivered to the buyer is limited in effect to a
reservation of a security interest. Subject to
these provisions and to the provisions of the chapter
on secured transactions (chapter 9), title to
goods passes from the seller to the buyer in any
manner and on any conditions explicitly agreed
on by the parties.
(2) Unless
otherwise explicitly agreed, title passes to the buyer at the time and place at
which the seller completes his or her
performance with reference to the physical delivery of the
goods, despite any reservation of a security
interest and even though a document of title is to be
delivered at a different time or place; and in
particular and despite any reservation of a security
interest by the bill of lading
(a) If the
contract requires or authorizes the seller to send the goods to the buyer but
does
not require him or her to deliver them at
destination, title passes to the buyer at the time and place
of shipment; but
(b) If the
contract requires delivery at destination, title passes on tender there.
(3) Unless
otherwise explicitly agreed, where delivery is to be made without moving the
goods,
(a) If the seller
is to deliver a tangible document of title, title passes at the time when
and
the place where he or she delivers such
documents and if the seller is to deliver an electronic
document of title, title passes when the seller
delivers the document;
or
(b) If the goods
are at the time of contracting already identified and no documents are to
be delivered, title passes at the time and place
of contracting.
(4) A rejection
or other refusal by the buyer to receive or retain the goods, whether or not
justified, or a justified revocation of
acceptance revests title to the goods in the seller. Such
revesting occurs by operation of law and is not
a "sale".
6A-2-503.
Manner of seller's tender of delivery. -- (1) Tender of delivery
requires that
the seller put and hold conforming goods at the
buyer's disposition and give the buyer any
notification reasonably necessary to enable him
or her to take delivery. The manner, time, and
place for tender are determined by the agreement
and this chapter, and, in particular,
(a) Tender must
be at a reasonable hour, and if it is of goods they must be kept available
for the period reasonably necessary to enable
the buyer to take possession; but
(b) Unless
otherwise agreed the buyer must furnish facilities reasonably suited to the
receipt of the goods.
(2) Where the
case is within the next section respecting shipment, tender requires that the
seller comply with its provisions.
(3) Where the
seller is required to deliver at a particular destination tender requires that
he or she comply with subsection (1), and also
in any appropriate case tender documents as
described in subsections (4) and (5) of this
section.
(4) Where goods
are in the possession of a bailee and are to be delivered without being
moved,
(a) Tender
requires that the seller either tender a negotiable document of title covering
such goods or procure acknowledgment by the
bailee of the buyer's right to possession of the
goods; but
(b) Tender to the
buyer of a nonnegotiable document of title or of a written direction to
record directing the bailee to deliver
is sufficient tender unless the buyer seasonably objects, and
except as otherwise provided in chapter 9 receipt by the bailee
of notification of the buyer's rights
fixes those rights as against the bailee and all
third persons; but risk of loss of the goods and any
failure by the bailee to honor the nonnegotiable
document of title or to obey the direction remains
on the seller until the buyer has had a
reasonable time to present the document or direction, and a
refusal by the bailee to honor the document or
to obey the direction defeats the tender.
(5) Where the
contract requires the seller to deliver documents,
(a) He or she
must tender all such documents in correct form, except as provided in this
chapter with respect to bills of lading in a set
(section 6A-2-323(2)); and
(b) Tender
through customary banking channels is sufficient and dishonor of a draft
accompanying or associated with the
documents constitutes nonacceptance or rejection.
6A-2-505.
Seller's shipment under reservation. -- (1) Where the seller has
identified
goods to the contract by or before shipment:
(a) The seller's
procurement of a negotiable bill of lading to his or her own order or
otherwise reserves in him or her a security
interest in the goods. The seller's procurement of the
bill to the order of a financing agency or of
the buyer indicates in addition only the seller's
expectation of transferring that interest to the
person named.
(b) A
nonnegotiable bill of lading to the seller or his or her nominee reserves
possession
of the goods as security but, except in a case
of conditional delivery (section 6A-2-507(2)), a
nonnegotiable bill of lading naming the buyer as
consignee reserves no security interest even
though the seller retains possession or
control of the bill of lading.
(2) When shipment
by the seller with reservation of a security interest is in violation of
the contract for sale it constitutes an improper
contract for transportation within the preceding
section, but impairs neither the rights given to
the buyer by shipment and identification of the
goods to the contract nor the seller's powers as
a holder of a negotiable document.
6A-2-506.
Rights of financing agency. -- (1) A financing agency by paying or
purchasing for value a draft which relates to a
shipment of goods acquires, to the extent of the
payment or purchase and in addition to its own
rights under the draft and any document of title
securing it, any rights of the shipper in the
goods including the right to stop delivery and the
shipper's right to have the draft honored by the
buyer.
(2) The right to
reimbursement of a financing agency which has in good faith honored or
purchased the draft under commitment to or
authority from the buyer is not impaired by
subsequent discovery of defects with reference
to any relevant document which was apparently
regular on its face.
6A-2-509.
Risk of loss in the absence of breach. -- (1) Where the contract
requires or
authorizes the seller to ship the goods by
carrier,
(a) If it does
not require him or her to deliver them at a particular destination, the risk of
loss passes to the buyer when the goods are duly
delivered to the carrier even though the
shipment is under reservation (section
6A-2-505); but
(b) If it does
require him or her to deliver them at a particular destination and the goods
are there duly tendered while in the possession
of the carrier, the risk of loss passes to the buyer
when the goods are there duly so tendered as to
enable the buyer to take delivery.
(2) Where the
goods are held by a bailee to be delivered without being moved, the risk of
loss passes to the buyer:
(a) On his or her
receipt of a negotiable document of title covering the goods; or
(b) On
acknowledgment by the bailee of the buyer's right to possession of the goods;
or
(c) After his or
her receipt of possession or control of a nonnegotiable document of
title
or other written direction to deliver in
a record, as provided in section 6A-2-503(4)(b).
(3) In any case
not within subsection (1) or (2), the risk of loss passes to the buyer on his
or her receipt of the goods if the seller is a
merchant; otherwise the risk passes to the buyer on
tender of delivery.
(4) The
provisions of this section are subject to contrary agreement of the parties and
to
the provisions of this chapter on sale on
approval (section 6A-2-327) and on effect of breach on
risk of loss (section 6A-2-510).
6A-2-605.
Waiver of buyer's objections by failure to particularize. -- (1) The
buyer's
failure to state in connection with rejection a
particular defect which is ascertainable by
reasonable inspection precludes him or her from
relying on the unstated defect to justify rejection
or to establish breach,
(a) Where the
seller could have cured it if stated seasonably; or
(b) Between
merchants when the seller has after rejection made a request in writing for a
full and final written statement of all defects
on which the buyer proposes to rely.
(2) Payment
against documents made without reservation of rights precludes recovery of
the payment for defects apparent on the face
of in the documents.
6A-2-705.
Seller's stoppage of delivery in transit or otherwise. -- (1) The
seller may
stop delivery of goods in the possession of a
carrier or other bailee when he or she discovers the
buyer to be insolvent (section 6A-2-702) and may
stop delivery of carload, truckload, planeload,
or larger shipments of express or freight when
the buyer repudiates or fails to make a payment
due before delivery or if for any other reason
the seller has a right to withhold or reclaim the
goods.
(2) As against
such buyer the seller may stop delivery until:
(a) Receipt of
the goods by the buyer; or
(b)
Acknowledgment to the buyer by any bailee of the goods except a carrier that
the
bailee holds the goods for the buyer; or
(c) Such
acknowledgment to the buyer by a carrier by reshipment or as
warehouseperson; or
(d) Negotiation
to the buyer of any negotiable document of title covering the goods.
(3) (a) To stop
delivery the seller must so notify as to enable the bailee by reasonable
diligence to prevent delivery of the goods.
(b) After such
notification the bailee must hold and deliver the goods according to the
directions of the seller but the seller is
liable to the bailee for any ensuing charges or damages.
(c) If a
negotiable document of title has been issued for goods the bailee is not
obliged to
obey a notification to stop until surrender of possession
or control of the document.
(d) A carrier who
has issued a nonnegotiable bill of lading is not obliged to obey a
notification to stop received from a person
other than the consignor.
SECTION 3.
Sections 6A-2.1-103, 6A-2.1-514 and 6A-2.1-526 of the General Laws in
Chapter 6A-2.1 entitled "Leases" are
hereby amended to read as follows:
6A-2.1-103.
Definitions and index of definitions. -- (1) In this chapter unless the
context otherwise requires:
(a) "Buyer
in ordinary course of business" means a person who in good faith and
without
knowledge that the sale to him or her is in
violation of the ownership rights or security interest or
leasehold interest of a third party in the goods
buys in ordinary course from a person in the
business of selling goods of that kind but does
not include a pawnbroker. "Buying" may be for
cash or by exchange of other property or on
secured or unsecured credit and includes receiving
acquiring goods or documents of title under a preexisting
contract for sale but does not include a
transfer in bulk or as security for or in total
or partial satisfaction of a money debt.
(b)
"Cancellation" occurs when either party puts an end to the lease
contract for default
by the other party.
(c)
"Commercial unit" means such a unit of goods as by commercial usage
is a single
whole for purposes of lease and division of
which materially impairs its character or value on the
market or in use. A commercial unit may be a
single chapter, as a machine, or a set of chapters, as
a suite of furniture or a line of machinery, or
a quantity, as a gross or carload, or any other unit
treated in use or in the relevant market as a
single whole.
(d)
"Conforming" goods or performance under a lease contract means goods
or
performance that are in accordance with the obligations
under the lease contract.
(e)
"Consumer lease" means a lease that a lessor regularly engaged in the
business of
leasing or selling makes to a lessee who is an
individual and who takes under the lease primarily
for a personal, family, or household purpose.
(f)
"Fault" means wrongful act, omission, breach, or default.
(g) "Finance
lease" means a lease with respect to which:
(i) The lessor
does not select, manufacture, or supply the goods;
(ii) The lessor
acquires the goods or the right to possession and use of the goods in
connection with the lease; and
(iii) One of the
following occurs:
(A) The lessee
receives a copy of the contract by which the lessor acquired the goods or
the right to possession and use of the goods
before signing the lease contract;
(B) The lessee's
approval of the contract by which the lessor acquired the goods or the
right to possession and use of the goods is a
condition to effectiveness of the lease contract;
(C) The lessee,
before signing the lease contract, receives an accurate and complete
statement designating the promises and
warranties, and any disclaimers of warranties, limitations
or modifications of remedies, or liquidated
damages, including those of a third party, such as the
manufacturer of the goods, provided to the
lessor by the person supplying the goods in connection
with or as part of the contract by which the
lessor acquired the goods or the right to possession
and use of the goods; or
(D) If the lease
is not a consumer lease, the lessor, before the lessee signs the lease
contract, informs the lessee in writing (a) of
the identity of the person supplying the goods to the
lessor, unless the lessee has selected that
person and directed the lessor to acquire the goods or the
right to possession and use of the goods from
that person, (b) that the lessee is entitled under this
chapter to the promises and warranties,
including those of any third party, provided to the lessor
by the person supplying the goods in connection
with or as part of the contract by which the
lessor acquired the goods or the right to
possession and use of the goods, and (c) that the lessee
may communicate with the person supplying the
goods to the lessor and receive an accurate and
complete statement of those promises and
warranties, including any disclaimers and limitations of
them or of remedies.
(h)
"Goods" means all things that are movable at the time of
identification to the lease
contract, or are fixtures (section 6A-2.1-309),
but the term does not include money, documents,
instruments, accounts, chattel paper, general
intangibles, or minerals or the like, including oil and
gas, before extraction. The term also includes
the unborn young of animals.
(i)
"Installment lease contract" means a lease contract that authorizes
or requires the
delivery of goods in separate lots to be
separately accepted, even though the lease contract
contains a clause "each delivery is a
separate lease" or its equivalent.
(j)
"Lease" means a transfer of the right to possession and use of goods
for a term in
return for consideration, but a sale, including
a sale on approval or a sale or return, or retention or
creation of a security interest is not a lease.
Unless the context clearly indicates otherwise, the
term includes a sublease.
(k) "Lease
agreement" means the bargain, with respect to the lease, of the lessor and
the
lessee in fact as found in their language or by
implication from other circumstances including
course of dealing or usage of trade or course of
performance as provided in this chapter. Unless
the context clearly indicates otherwise, the
term includes a sublease agreement.
(l) "Lease
contract" means the total legal obligation that results from the lease
agreement
as affected by this chapter and any other
applicable rules of law. Unless the context clearly
indicates otherwise, the term includes a
sublease contract.
(m)
"Leasehold interest" means the interest of the lessor or the lessee
under a lease
contract.
(n)
"Lessee" means a person who acquires the right to possession and use
of goods under
a lease. Unless the context clearly indicates
otherwise, the term includes a sublessee.
(o) "Lessee
in ordinary course of business" means a person who in good faith and
without knowledge that the lease to him or her
is in violation of the ownership rights or security
interest or leasehold interest of a third party
in the goods leases in ordinary course from a person
in the business of selling or leasing goods of
that kind but does not include a pawnbroker.
"Leasing" may be for cash or by
exchange of other property or on secured or unsecured credit and
includes receiving acquiring goods
or documents of title under a preexisting lease contract but
does not include a transfer in bulk or as
security for or in total or partial satisfaction of a money
debt.
(p)
"Lessor" means a person who transfers the right to possession and use
of goods under
a lease. Unless the context clearly indicates
otherwise, the term includes a sublessor.
(q)
"Lessor's residual interest" means the lessor's interest in the goods
after expiration,
termination, or cancellation of the lease
contract.
(r)
"Lien" means a charge against or interest in goods to secure payment
of a debt or
performance of an obligation, but the term does
not include a security interest.
(s)
"Lot" means a parcel or a single chapter that is the subject matter
of a separate lease
or delivery, whether or not it is sufficient to
perform the lease contract.
(t)
"Merchant lessee" means a lessee that is a merchant with respect to
goods of the kind
subject to the lease.
(u) "Present
value" means the amount as of a date certain of one or more sums payable
in
the future, discounted to the date certain. The
discount is determined by the interest rate specified
by the parties if the rate was not manifestly
unreasonable at the time the transaction was entered
into; otherwise, the discount is determined by a
commercially reasonable rate that takes into
account the facts and circumstances of each case
at the time the transaction was entered into.
(v)
"Purchase" includes taking by sale, lease, mortgage, security
interest, pledge, gift, or
any other voluntary transaction creating an
interest in goods.
(w)
"Sublease" means a lease of goods the right to possession and use of
which was
acquired by the lessor as a lessee under an
existing lease.
(x)
"Supplier" means a person from whom a lessor buys or leases goods to
be leased
under a finance lease.
(y) "Supply
contract" means a contract under which a lessor buys or leases goods to be
leased.
(z)
"Termination" occurs when either party pursuant to a power created by
agreement or
law puts an end to the lease contract otherwise
than for default.
(2) Other
definitions applying to this chapter and the sections in which they appear are:
"Accessions". section 6A-2.1-310(1).
"Construction mortgage". section 6A-2.1-309(1)(d).
"Encumbrance". section 6A-2.1-309(1)(e).
"Fixtures". section 6A-2.1-309(1)(a).
"Fixture
filing". section 6A-2.1-309(1)(b).
"Purchase
money lease". section 6A-2.1-309(1)(c).
(3) The following
definitions in other chapters apply to this Chapter:
"Account". section 6A-9-102(a)(2).
"Between
merchants". section 6A-2-104(3).
"Buyer". section 6A-2-103(1)(a).
"Chattel
paper". section 6A-9-102(a)(11).
"Consumer
goods". section 6A-9-102(a)(23).
"Document". section 6A-9-102(a)(30).
"Entrusting". section 6A-2-403(3).
"General
intangibles". section 6A-9-102(a)(42).
"Good
faith". section 6A-2-103(1)(b).
"Instrument". section 6A-9-102(2)(47).
"Merchant".
section 6A-2-104(1).
"Mortgage". section 6A-9-102(a)(55).
"Pursuant to
commitment". section 6A-9-102(a)(68).
"Receipt". section 6A-2-103(1)(c).
"Sale".
section 6A-2-106(1).
"Sale on
approval". section 6A-2-326.
"Sale or
return". section 6A-2-326.
"Seller". section 6A-2-103(1)(d).
(4) In addition,
chapter 1 of this title contains general definitions and principles of
construction and interpretation applicable
throughout this chapter.
6A-2.1-514.
Waiver of lessee's objections. -- (1) In rejecting goods, a lessee's
failure to
state a particular defect that is ascertainable
by reasonable inspection precludes the lessee from
relying on the defect to justify rejection or to
establish default:
(a) If, stated
seasonably, the lessor or the supplier could have cured it (section 6A-2.1-
513); or
(b) Between
merchants if the lessor or the supplier after rejection has made a request in
writing for a full and final written statement
of all defects on which the lessee proposes to rely.
(2) A lessee's
failure to reserve rights when paying rent or other consideration against
documents precludes recovery of the payment for
defects apparent on the face of in the
documents.
6A-2.1-526.
Lessor's stoppage of delivery in transit or otherwise. -- (1) A lessor
may
stop delivery of goods in the possession of a
carrier or other bailee if the lessor discovers the
lessee to be insolvent and may stop delivery of
carload, truckload, planeload, or larger shipments
of express or freight if the lessee repudiates
or fails to make a payment due before delivery,
whether for rent, security, or otherwise under
the lease contract, or for any other reason the lessor
has a right to withhold or take possession of
the goods.
(2) In pursuing
its remedies under subsection (1), the lessor may stop delivery until:
(a) Receipt of
the goods by the lessee;
(b)
Acknowledgment to the lessee by any bailee of the goods, except a carrier, that
the
bailee holds the goods for the lessee; or
(c) Such an
acknowledgment to the lessee by a carrier via reshipment or as a
warehouseperson.
(3) (a) To stop
delivery, a lessor shall so notify as to enable the bailee by reasonable
diligence to prevent delivery of the goods.
(b) After
notification, the bailee shall hold and deliver the goods according to the
directions of the lessor, but the lessor is
liable to the bailee for any ensuing charges or damages.
(c) A carrier who
has issued a nonnegotiable bill of lading is not obliged to obey a
notification to stop received from a person
other than the consignor.
SECTION 4.
Sections 6A-4-104 and 6A-4-210 of the General Laws in Chapter 6A-4
entitled "Bank Deposits And Collections"
are hereby amended to read as follows:
6A-4-104.
Definitions and index of definitions. -- (a) In this chapter, unless
the context
otherwise requires:
(1)
"Account" means any deposit or credit account with a bank, including
a demand,
time, savings, passbook, share draft, or like
account, other than an account evidenced by a
certificate of deposit;
(2)
"Afternoon" means the period of a day between noon and midnight;
(3) "Banking
day" means the part of a day on which a bank is open to the public for
carrying on substantially all of its banking
functions;
(4) "Clearing
house" means an association of banks or other payors regularly clearing
items;
(5)
"Customer" means a person having an account with a bank or for whom a
bank has
agreed to collect items, including a bank that
maintains an account at another bank;
(6)
"Documentary draft" means a draft to be presented for acceptance or
payment if
specified documents, certificated securities
(section 6A-8-102) or instructions for uncertificated
securities (section 6A-8-102), or other
certificates, statements, or the like are to be received by the
drawee or other payor before acceptance or
payment of the draft;
(7)
"Draft" means a draft as defined in section 6A-3-104 or an item,
other than an
instrument, that is an order;
(8)
"Drawee" means a person ordered in a draft to make payment;
(9)
"Item" means an instrument or a promise or order to pay money handled
by a bank for
collection or payment. The term does not include
a payment order governed by chapter 4.1 of this
title or a credit or debit card slip;
(10)
"Midnight deadline" with respect to a bank is midnight on its next
banking day
following the banking day on which it receives
the relevant item or notice or from which the time
for taking action commences to run, whichever is
later;
(11)
"Settle" means to pay in cash, by clearing-house settlement, in a
charge or credit or
by remittance, or otherwise as agreed. A
settlement may be either provisional or final;
(12)
"Suspends payments" with respect to a bank means that it has been
closed by order
of the supervisory authorities, that a public
officer has been appointed to take it over, or that it
ceases or refuses to make payments in the
ordinary course of business.
(b) Other
definitions applying to this chapter and the sections in which they appear are:
"Agreement
for electronic presentment" section 6A-4-110.
"Bank"
section 6A-4-105.
"Collecting
bank" section 6A-4-105.
"Depositary
bank" section 6A-4-105.
"Intermediary
bank" section 6A-4-105.
"Payor
bank" section 6A-4-105.
"Presenting
bank" section 6A-4-105.
"Presentment
notice" section 6A-4-110.
(c) The "Control"
as provided in section 6A-7-106 and the following definitions in
other chapters apply to this chapter:
"Acceptance"
section 6A-3-409.
"Alteration"
section 6A-3-407.
"Cashier's
check" section 6A-3-104.
"Certificate
of deposit" section 6A-3-104.
"Certified
check" section 6A-3-409.
"Check"
section 6A-3-104.
"Good
faith" section 6A-3-103.
"Holder in
due course" section 6A-3-302.
"Instrument"
section 6A-3-104.
"Notice of
dishonor" section 6A-3-503.
"Order"
section 6A-3-103.
"Ordinary
care" section 6A-3-103.
"Person
entitled to enforce" section 6A-3-301.
"Presentment"
section 6A-3-501.
"Promise"
section 6A-3-103.
"Prove"
section 6A-3-103.
"Teller's
check" section 6A-3-104.
"Unauthorized
signature" section 6A-3-403.
(d) In addition,
chapter 1 of this title contains general definitions and principles of
construction and interpretation applicable
throughout this chapter.
6A-4-210.
Security interest of collecting bank in items, accompanying documents
and proceeds. -- (a) A collecting bank
has a security interest in an item and any accompanying
documents or the proceeds of either:
(1) In case of an
item deposited in an account, to the extent to which credit given for the
item has been withdrawn or applied;
(2) In case of an
item for which it has given credit available for withdrawal as of right, to
the extent of the credit given, whether or not
the credit is drawn upon or there is a right of charge-
back; or
(3) If it makes
an advance on or against the item.
(b) If credit
given for several items received at one time or pursuant to a single
agreement is withdrawn or applied in part, the
security interest remains upon all the items, any
accompanying documents or the proceeds of
either. For the purpose of this section, credits first
given are first withdrawn.
(c) Receipt by a
collecting bank of a final settlement for an item is a realization on its
security interest in the item, accompanying
documents, and proceeds. So long as the bank does
not receive final settlement for the item or
give up possession of the item or possession or control
of the accompanying documents for purposes other than
collection, the security interest continues
to that extent and is subject to chapter 9 of
this title, but:
(1) No security
agreement is necessary to make the security interest enforceable (section
6A-9-203(b)(3)(i));
(2) No filing is
required to perfect the security interest; and
(3) The security
interest has priority over conflicting perfected security interests in the
item, accompanying documents, or proceeds.
SECTION 5. Chapter
6A-7 of the General Laws entitled "Warehouse Receipts, Bills of
Lading and Other Documents of Title" is
hereby repealed in its entirety.
CHAPTER
6A-7
Warehouse Receipts,
Bills of Lading and Other Documents of Title
6A-7-101.
Short title. -- This chapter shall be known and may be cited as
Uniform
Commercial Code -- Documents of Title.
6A-7-102.
Definitions and index of definitions. -- (1) In this chapter,
unless the context
otherwise requires: (a) "Bailee" means
the person who by a warehouse receipt, bill of lading or
other document of title acknowledges possession
of goods and contracts to deliver them. (b)
"Consignee" means the person named in
a bill to whom or to whose order the bill promises
delivery. (c) "Consignor" means the
person named in a bill as the person from whom the goods
have been received for shipment. (d)
"Delivery order" means a written order to deliver goods
directed to a warehouseperson, carrier, or other
person who in the ordinary course of business
issues warehouse receipts or bills of lading.
(e) "Document" means document of title as defined
in the general definitions in chapter 1 of this
title (section 6A-1-201). (f) "Goods" means all
things which are treated as movable for the
purposes of a contract of storage or transportation.
(g) "Issuer" means a bailee who issues
a document except that in relation to an unaccepted
delivery order it means the person who orders
the possessor of goods to deliver. Issuer includes
any person for whom an agent or employee
purports to act in issuing a document if the agent or
employee has real or apparent authority to issue
documents, notwithstanding that the issuer
received no goods or that the goods were
misdescribed or that in any other respect the agent or
employee violated his or her instructions. (h)
"Warehouseperson" is a person engaged in the
business of storing goods for hire. (2) Other
definitions applying to this chapter or to specified
parts thereof, and the sections in which they
appear are:
"Duly
negotiate". section 6A-7-501.
"Person
entitled under the document". section 6A-7-403(4).
(3) Definitions
in other chapters applying to this chapter and the sections in which they
appear are:
"Contract
for sale". section 6A-2-106.
"Overseas".
section 6A-2-323.
"Receipt"
of goods. section 6A-2-103.
(4) In
addition, chapter 1 of this title contains general definitions and principles
of
construction and interpretation applicable
throughout this chapter.
6A-7-103.
Relation of chapter to treaty, statute, tariff, classification, or regulation.
--
To the extent that any treaty or statute of the
United States, regulatory statute of this state or tariff,
classification, or regulation filed or issued
pursuant thereto is applicable, the provisions of this
chapter are subject thereto.
6A-7-104.
Negotiable and nonnegotiable warehouse receipt, bill of lading, or other
document of title. -- (1) A warehouse
receipt, bill of lading, or other document of title is
negotiable:
(a) If by its
terms the goods are to be delivered to bearer or to the order of a named
person; or
(b) Where
recognized in overseas trade, if it runs to a named person or assigns.
(2) Any other
document is nonnegotiable. A bill of lading in which it is stated that the
goods are consigned to a named person is not
made negotiable by a provision that the goods are
to be delivered only against a written order
signed by the same or another named person.
6A-7-105.
Construction against negative implication. -- The omission from
either part
2 or part 3 of this chapter of a provision
corresponding to a provision made in the other part does
not imply that a corresponding rule of law is
not applicable.
6A-7-106.
Effect of chapter. -- This chapter does not repeal or modify any
laws
prescribing the form or contents of documents of
title or the services or facilities to be afforded
by bailees, or otherwise regulating bailees'
businesses in respects not specifically dealt with
herein; but the fact that such laws are violated
does not affect the status of a document of title
which otherwise complies with the definition of
a document of title (section 6A-1-201).
6A-7-201.
Who may issue a warehouse receipt -- Storage under government bond. --
(1) A warehouse receipt may be issued by any
warehouseperson.
(2) Where
goods including distilled spirits and agricultural commodities are stored under
a statute requiring a bond against withdrawal or
a license for the issuance of receipts in the nature
of warehouse receipts, a receipt issued for the
goods has like effect as a warehouse receipt even
though issued by a person who is the owner of
the goods and is not a warehouseperson.
6A-7-202.
Form of warehouse receipt -- Essential terms -- Optional terms. --
(1) A
warehouse receipt need not be in any particular
form.
(2) Unless a
warehouse receipt embodies within its written or printed terms each of the
following, the warehouseperson is liable for
damages caused by the omission to a person injured
thereby:
(a) The
location of the warehouse where the goods are stored;
(b) The date
of issue of the receipt;
(c) The
consecutive number of the receipt;
(d) A
statement whether the goods received will be delivered to the bearer, to a
specified
person, or to a specified person or his or her
order;
(e) The rate
of storage and handling charges, except that where goods are stored under a
field warehousing arrangement a statement of
that fact is sufficient on a nonnegotiable receipt;
(f) A
description of the goods or of the packages containing them;
(g) The
signature of the warehouseperson, which may be made by his or her authorized
agent;
(h) If the
receipt is issued for goods of which the warehouseperson is owner, either
solely or jointly or in common with others, the
fact of such ownership; and
(i) A
statement of the amount of advances made and of liabilities incurred for which
the
warehouseperson claims a lien or security
interest (section 6A-7-209). If the precise amount of
such advances made or of such liabilities
incurred is, at the time of the issue of the receipt,
unknown to the warehouseperson or to his or her
agent who issues it, a statement of the fact that
advances have been made or liabilities incurred
and the purpose thereof is sufficient.
(3) A
warehouseperson may insert in his or her receipt any other terms which are not
contrary to the provisions of this title and do
not impair his or her obligation of delivery (section
6A-7-403) or his or her duty of care (section
6A-7-204). Any contrary provisions shall be
ineffective.
6A-7-203.
Liability for nonreceipt or misdescription. -- A party to or
purchaser for
value in good faith of a document of title other
than a bill of lading relying in either case upon the
description therein of the goods may recover
from the issuer damages caused by the nonreceipt or
misdescription of the goods, except to the
extent that the document conspicuously indicates that
the issuer does not know whether any part or all
of the goods in fact were received or conform to
the description, as where the description is in terms
of marks or labels or kind, quantity, or
condition, or the receipt or description is
qualified by "contents, condition, and quality unknown",
"said to contain", or the like if such
indication be true, or the party or purchaser otherwise has
notice.
6A-7-204.
Duty of care -- Contractual limitation of warehouseperson's liability. --
(1)
A warehouseperson is liable for damages for loss
of or injury to the goods caused by his or her
failure to exercise such care in regard to them
as a reasonably careful person would exercise
under like circumstances but unless otherwise
agreed he or she is not liable for damages which
could not have been avoided by the exercise of
such care.
(2) Damages
may be limited by a term in the warehouse receipt or storage agreement
limiting the amount of liability in case of loss
or damage, and setting forth a specific liability per
article or item, or value per unit of weight,
beyond which the warehouseperson shall not be liable;
provided, however, that the liability may on
written request of the bailor at the time of signing the
storage agreement or within a reasonable time
after receipt of the warehouse receipt be increased
on part or all of the goods thereunder, in which
event increased rates may be charged based on the
increased valuation, but that no increase shall
be permitted contrary to a lawful limitation of
liability contained in the warehouseperson's
tariff, if any. No such limitation is effective with
respect to the warehouseperson's liability for
conversion to his or her own use.
(3) Reasonable
provisions as to the time and manner of presenting claims and instituting
actions based on the bailment may be included in
the warehouse receipt or tariff.
6A-7-205.
Title under warehouse receipt defeated in certain cases. -- A
buyer in the
ordinary course of business of fungible goods
sold and delivered by a warehouseperson who is
also in the business of buying and selling such
goods takes free of any claim under a warehouse
receipt even though it has been duly negotiated.
6A-7-206.
Termination of storage at warehouseperson's option. -- (1) A
warehouseperson may on notifying the person on
whose account the goods are held and any other
person known to claim an interest in the goods
require payment of any charges and removal of
the goods from the warehouse at the termination
of the period of storage fixed by the document,
or, if no period is fixed, within a stated
period not less than thirty (30) days after the notification.
If the goods are not removed before the date
specified in the notification, the warehouseperson
may sell them in accordance with the provisions
of the section on enforcement of a
warehouseperson's lien (section 6A-7-210).
(2) If a
warehouseperson in good faith believes that the goods are about to deteriorate
or
decline in value to less than the amount of his
or her lien within the time prescribed in subsection
(1) for notification, advertisement, and sale,
the warehouseperson may specify in the notification
any reasonable shorter time for removal of the
goods and in case the goods are not removed, may
sell them at public sale held not less than one
week after a single advertisement or posting.
(3) If as a
result of a quality or condition of the goods of which the warehouseperson had
no notice at the time of deposit the goods are a
hazard to other property or to the warehouse or to
persons, the warehouseperson may sell the goods
at public or private sale without advertisement
on reasonable notification to all persons known
to claim an interest in the goods. If the
warehouseperson after a reasonable effort is
unable to sell the goods, he or she may dispose of
them in any lawful manner and shall incur no liability
by reason of such disposition.
(4) The
warehouseperson must deliver the goods to any person entitled to them under
this chapter upon due demand made at any time
prior to sale or other disposition under this
section.
(5) The warehouseperson
may satisfy his or her lien from the proceeds of any sale or
disposition under this section but must hold the
balance for delivery on the demand of any person
to whom he or she would have been bound to
deliver the goods.
6A-7-207.
Goods must be kept separate -- Fungible goods. -- (1) Unless the
warehouse
receipt otherwise provides, a warehouseperson
must keep separate the goods covered by each
receipt so as to permit at all times
identification and delivery of those goods except that different
lots of fungible goods may be comingled.
(2) Fungible
goods so commingled are owned in common by the persons entitled thereto
and the warehouseperson is severally liable to
each owner for that owner's share. Where because
of overissue a mass of fungible goods is
insufficient to meet all the receipts which the
warehouseperson has issued against it, the
persons entitled include all holders to whom
overissued receipts have been duly negotiated.
6A-7-208.
Altered warehouse receipts. -- Where a blank in a negotiable
warehouse
receipt has been filled in without authority, a
purchaser for value and without notice of the want
of authority may treat the insertion as
authorized. Any other unauthorized alteration leaves any
receipt enforceable against the issuer according
to its original tenor.
6A-7-209.
Lien of warehouseperson. -- (1) A warehouseperson has a lien
against the
bailor on the goods covered by a warehouse
receipt or on the proceeds thereof in his or her
possession for charges for storage or
transportation (including demurrage and terminal charges),
insurance, labor, or charges present or future
in relation to the goods, and for expenses necessary
for preservation of the goods or reasonably
incurred in their sale pursuant to law. If the person on
whose account the goods are held is liable for
like charges or expenses in relation to other goods
whenever deposited and it is stated in the
receipt that a lien is claimed for charges and expenses in
relation to other goods, the warehouseperson
also has a lien against him or her for such charges
and expenses whether or not the other goods have
been delivered by the warehouseperson. But
against a person to whom a negotiable warehouse
receipt is duly negotiated a warehouseperson's
lien is limited to charges in an amount or at a
rate specified on the receipt or, if no charges are so
specified, then to a reasonable charge for
storage of the goods covered by the receipt subsequent
to the date of the receipt.
(2) The
warehouseperson may also reserve a security interest against the bailor for a
maximum amount specified on the receipt for
charges other than those specified in subsection (1),
such as for money advanced and interest. Such a
security interest is governed by the chapter on
secured transactions (chapter 9 of this title).
(3) A
warehouseperson's lien for charges and expenses under subsection (1) or a
security
interest under subsection (2) is also effective
against any person who so entrusted the bailor with
possession of the goods that a pledge of them by
him or her to a good faith purchaser for value
would have been valid, but is not effective
against a person as to whom the document confers no
right in the goods covered by it under section
6A-7-503.
(4) A
warehouseperson loses his lien on any goods which he or she voluntarily
delivers
or which he or she unjustifiably refuses to
deliver.
6A-7-210.
Enforcement of warehouseperson's lien. -- (1) Except as provided
in
subsection (2), a warehouseperson's lien may be
enforced by public or private sale of the goods in
bloc or in parcels, at any time or place and on
any terms which are commercially reasonable, after
notifying all persons known to claim an interest
in the goods. Such notification must include a
statement of the amount due, the nature of the
proposed sale and the time and place of any public
sale. The fact that a better price could have
been obtained by a sale at a different time or in a
different method from that selected by the
warehouseperson is not of itself sufficient to establish
that the sale was not made in a commercially
reasonable manner. If the warehouseperson either
sells the goods in the usual manner in any recognized
market therefor, or if he or she sells at the
price current in such market at the time of his
or her sale, or if he or she has otherwise sold in
conformity with commercially reasonable
practices among dealers in the type of goods sold, he or
she has sold in a commercially reasonable
manner. A sale of more goods than apparently
necessary to be offered to insure satisfaction
of the obligation is not commercially reasonable
except in cases covered by the preceding
sentence.
(2) A warehouseperson's
lien on goods other than goods stored by a merchant in the
course of his business may be enforced only as
follows:
(a) All
persons known to claim an interest in the goods must be notified.
(b) The
notification must be delivered in person or sent by registered letter to the
last
known address of any person to be notified.
(c) The
notification must include an itemized statement of the claim, a description of
the
goods subject to the lien, a demand for payment
within a specified time not less than ten (10)
days after receipt of the notification, and a
conspicuous statement that unless the claim is paid
within that time the goods will be advertised
for sale and sold by auction at a specified time and
place.
(d) The sale
must conform to the terms of the notification.
(e) The sale
must be held at the nearest suitable place to that where the goods are held or
stored.
(f) After the
expiration of the time given in the notification, an advertisement of the sale
must be published once a week for two (2) weeks
consecutively in a newspaper of general
circulation where the sale is to be held. The
advertisement must include a description of the
goods, the name of the person on whose account
they are being held, and the time and place of
the sale. The sale must take place at least
fifteen (15) days after the first publication. If there is no
newspaper of general circulation where the sale
is to be held, the advertisement must be posted at
least ten (10) days before the sale in not less
than six (6) conspicuous places in the neighborhood
of the proposed sale.
(3) Before any
sale pursuant to this section any person claiming a right in the goods may
pay the amount necessary to satisfy the lien and
the reasonable expenses incurred under this
section. In that event the goods must not be
sold, but must be retained by the warehouseperson
subject to the terms of the receipt and this
chapter.
(4) The warehouseperson
may buy at any public sale pursuant to this section.
(5) A
purchaser in good faith of goods sold to enforce a warehouseperson's lien takes
the
goods free of any rights of persons against whom
the lien was valid, despite noncompliance by
the warehouseperson with the requirements of
this section.
(6) The
warehouseperson may satisfy his or her lien from the proceeds of any sale
pursuant to this section but must hold the
balance, if any, for delivery on demand to any person to
whom he or she would have been bound to deliver
the goods.
(7) The rights
provided by this section shall be in addition to all other rights allowed by
law to a creditor against his or her debtor.
(8) Where a
lien is on goods stored by a merchant in the course of his or her business the
lien may be enforced in accordance with either
subsection (1) or (2).
(9) The
warehouseperson is liable for damages caused by failure to comply with the
requirements for sale under this section and in
case of willful violation is liable for conversion.
6A-7-301.
Liability for nonreceipt or misdescription -- "Said to contain" --
"Shipper's load and count" -- Improper
handling. -- (1) A consignee of a nonnegotiable bill
who has given value in good faith or a holder to
whom a negotiable bill has been duly negotiated
relying in either case upon the description
therein of the goods, or upon the date therein shown,
may recover from the issuer damages caused by
the misdating of the bill or the nonreceipt or
misdescription of the goods, except to the
extent that the document indicates that the issuer does
not know whether any part or all of the goods in
fact were received or conform to the description,
as where the description is in terms of marks or
labels or kind, quantity, or condition or the
receipt or description is qualified by
"contents or condition of contents of packages unknown",
"said to contain", "shipper's
weight, load and count" or the like, if such indication be true.
(2) When goods
are loaded by an issuer who is a common carrier, the issuer must count
the packages of goods if package freight and
ascertain the kind and quantity if bulk freight. In
such cases "shipper's weight, load and
count" or other words indicating that the description was
made by the shipper are ineffective except as to
freight concealed by packages.
(3) When bulk
freight is loaded by a shipper who makes available to the issuer adequate
facilities for weighing such freight, an issuer who
is a common carrier must ascertain the kind and
quantity within a reasonable time after
receiving the written request of the shipper to do so. In
such cases "shipper's weight" or other
words of like purport are ineffective.
(4) The issuer
may by inserting in the bill the words "shipper's weight, load and
count"
or other words of like purport indicate that the
goods were loaded by the shipper; and if such
statement be true the issuer shall not be liable
for damages caused by the improper loading. But
their omission does not imply liability for such
damages.
(5) The
shipper shall be deemed to have guaranteed to the issuer the accuracy at the
time
of shipment of the description, marks, labels,
number, kind, quantity, condition, and weight as
furnished by him or her; and the shipper shall
indemnify the issuer against damage caused by
inaccuracies in such particulars. The right of
the issuer to such indemnity shall in no way limit his
responsibility and liability under the contract
of carriage to any person other than the shipper.
6A-7-302.
Through bills of lading and similar documents. -- (1) The issuer
of a
through bill of lading or other document
embodying an undertaking to be performed in part by
persons acting as its agents or by connecting
carriers is liable to anyone entitled to recover on the
document for any breach by such other persons or
by a connecting carrier of its obligation under
the document but to the extent that the bill
covers an undertaking to be performed overseas or in
territory not contiguous to the continental
United States or an undertaking including matters other
than transportation this liability may be varied
by agreement of the parties.
(2) Where
goods covered by a through bill of lading or other document embodying an
undertaking to be performed in part by persons
other than the issuer are received by any such
person, he or she is subject with respect to his
or her own performance while the goods are in his
or her possession to the obligation of the
issuer. His or her obligation is discharged by delivery of
the goods to another such person pursuant to the
document, and does not include liability for
breach by any other such persons or by the
issuer.
(3) The issuer
of such through bill of lading or other document shall be entitled to
recover from the connecting carrier of such
other person in possession of the goods when the
breach of the obligation under the document occurred,
the amount it may be required to pay to
anyone entitled to recover on the document
therefor, as may be evidenced by any receipt,
judgment, or transcript thereof, and the amount
of any expense reasonably incurred by it in
defending any action brought by anyone entitled
to recover on the document therefor.
6A-7-303.
Diversion -- Reconsignment -- Change of instructions. -- (1)
Unless the bill
of lading otherwise provides, the carrier may
deliver the goods to a person or destination other
than that stated in the bill or may otherwise
dispose of the goods on instructions from:
(a) The holder
of a negotiable bill; or
(b) The
consignor on a nonnegotiable bill notwithstanding contrary instructions from
the
consignee; or
(c) The
consignee on a nonnegotiable bill in the absence of contrary instructions from
the consignor, if the goods have arrived at the
billed destination or if the consignee is in
possession of the bill; or
(d) The
consignee on a nonnegotiable bill if he or she is entitled as against the
consignor
to dispose of them.
(2) Unless
such instructions are noted on a negotiable bill of lading, a person to whom
the bill is duly negotiated can hold the bailee
according to the original terms.
6A-7-304.
Bills of lading in a set. -- (1) Except where customary in
overseas
transportation, a bill of lading must not be
issued in a set of parts. The issuer is liable for damages
caused by violation of this subsection.
(2) Where a
bill of lading is lawfully drawn in a set of parts, each of which is numbered
and expressed to be valid only if the goods have
not been delivered against any other part, the
whole of the parts constitute one bill.
(3) Where a
bill of lading is lawfully issued in a set of parts and different parts are
negotiated to different persons, the title of
the holder to whom the first due negotiation is made
prevails as to both the document and the goods
even though any later holder may have received
the goods from the carrier in good faith and
discharged the carrier's obligation by surrender of his
or her part.
(4) Any person
who negotiates or transfers a single part of a bill of lading drawn in a set
is liable to holders of that part as if it were
the whole set.
(5) The bailee
is obliged to deliver in accordance with part 4 of this chapter against the
first presented part of a bill of lading
lawfully drawn in a set. Such delivery discharges the
bailee's obligation on the whole bill.
6A-7-305.
Destination bills. -- (1) Instead of issuing a bill of lading to
the consignor at
the place of shipment a carrier may at the
request of the consignor procure the bill to be issued at
destination or at any other place designated in
the request.
(2) Upon
request of anyone entitled as against the carrier to control the goods while in
transit and on surrender of any outstanding bill
of lading or other receipt covering such goods, the
issuer may procure a substitute bill to be
issued at any place designated in the request.
6A-7-306.
Altered bills of lading. -- An unauthorized alteration or
filling in of a blank in
a bill of lading leaves the bill enforceable
according to its original tenor.
6A-7-307.
Lien of carrier. -- (1) A carrier has a lien on the goods
covered by a bill of
lading for charges subsequent to the date of its
receipt of the goods for storage or transportation
(including demurrage and terminal charges) and
for expenses necessary for preservation of the
goods incident to their transportation or
reasonably incurred in their sale pursuant to law. But
against a purchaser for value of a negotiable
bill of lading, a carrier's lien is limited to charges
stated in the bill or the applicable tariffs, or
if no charges are stated then to a reasonable charge.
(2) A lien for
charges and expenses under subsection (1) on goods which the carrier was
required by law to receive for transportation is
effective against the consignor or any person
entitled to the goods unless the carrier had
notice that the consignor lacked authority to subject
the goods to such charges and expenses. Any
other lien under subsection (1) is effective against
the consignor and any person who permitted the
bailor to have control or possession of the goods
unless the carrier had notice that the bailor
lacked such authority.
(3) A carrier
loses his or her lien on any goods which he or she voluntarily delivers or
which he or she unjustifiably refuses to
deliver.
6A-7-308.
Enforcement of carrier's lien. -- (1) A carrier's lien may be
enforced by
public or private sale of the goods, in bloc or
in parcels, at any time or place and on any terms
which are commercially reasonable, after
notifying all persons known to claim an interest in the
goods. Such notification must include a
statement of the amount due, the nature of the proposed
sale, and the time and place of any public sale.
The fact that a better price could have been
obtained by a sale at a different time or in a
different method from that selected by the carrier is
not of itself sufficient to establish that the
sale was not made in a commercially reasonable
manner. If the carrier either sells the goods in
the usual manner in any recognized market therefor
or if he or she sells at the price current in
such market at the time of his or her sale or if he or she
has otherwise sold in conformity with
commercially reasonable practices among dealers in the
type of goods sold he or she has sold in a
commercially reasonable manner. A sale of more goods
than apparently necessary to be offered to
ensure satisfaction of the obligation is not
commercially reasonable except in cases covered by
the preceding sentence.
(2) Before any
sale pursuant to this section any person claiming a right in the goods may
pay the amount necessary to satisfy the lien and
the reasonable expenses incurred under this
section. In that event the goods must not be
sold, but must be retained by the carrier subject to the
terms of the bill and this chapter.
(3) The
carrier may buy at any public sale pursuant to this section.
(4) A
purchaser in good faith of goods sold to enforce a carrier's lien takes the
goods free
of any rights of persons against whom the lien
was valid, despite noncompliance by the carrier
with the requirements of this section.
(5) The
carrier may satisfy his or her lien from the proceeds of any sale pursuant to
this
section but must hold the balance, if any, for
delivery on demand to any person to whom he or
she would have been bound to deliver the goods.
(6) The rights
provided by this section shall be in addition to all other rights allowed by
law to a creditor against his or her debtor.
(7) A
carrier's lien may be enforced in accordance with either subsection (1) or the
procedure set forth in section 6A-7-210(2).
(8) The carrier
is liable for damages caused by failure to comply with the requirements
for sale under this section and in case of
willful violation is liable for conversion.
6A-7-309.
Duty of care -- Contractual limitation of carrier's liability. --
(1) A carrier
who issues a bill of lading whether negotiable
or nonnegotiable must exercise the degree of care
in relation to the goods which a reasonably
careful person would exercise under like
circumstances. This subsection does not repeal
or change any law or rule of law which imposes
liability upon a common carrier for damages not
caused by its negligence.
(2) Damages
may be limited by a provision that the carrier's liability shall not exceed a
value stated in the document if the carrier's
rates are dependent upon value and the consignor by
the carrier's tariff is afforded an opportunity
to declare a higher value or a value as lawfully
provided in the tariff, or where no tariff is
filed he or she is otherwise advised of such
opportunity; but no such limitation is effective
with respect to the carrier's liability for conversion
to its own use.
(3) Reasonable
provisions as to the time and manner of presenting claims and instituting
actions based on the shipment may be included in
a bill of lading or tariff.
6A-7-401.
Irregularities in issue of receipt or bill or conduct of issuer. --
The
obligations imposed by this chapter on an issuer
apply to a document of title regardless of the fact
that:
(a) The
document may not comply with the requirements of this chapter or of any other
law or regulation regarding its issue, form, or
content; or
(b) The issuer
may have violated laws regulating the conduct of his or her business; or
(c) The goods
covered by the document were owned by the bailee at the time the
document was issued; or
(d) The person
issuing the document does not come within the definition of
warehouseperson if it purports to be a warehouse
receipt.
6A-7-402.
Duplicate receipt or bill -- Overissue. -- Neither a duplicate
nor any other
document of title purporting to cover goods
already represented by an outstanding document of
the same issuer confers any right in the goods,
except as provided in the case of bills in a set,
overissue of documents for fungible goods, and
substitutes for lost, stolen, or destroyed
documents. But the issuer is liable for damages
caused by his or her overissue or failure to
identify a duplicate document as such by
conspicuous notation on its face.
6A-7-403.
Obligation of warehouseperson or carrier to deliver -- Excuse. --
(1) The
bailee must deliver the goods to a person
entitled under the document who complies with
subsections (2) and (3), unless and to the
extent that the bailee establishes any of the following:
(a) Delivery
of the goods to a person whose receipt was rightful as against the claimant;
(b) Damage to
or delay, loss, or destruction of the goods for which the bailee is not
liable.
(c) Previous
sale or other disposition of the goods in lawful enforcement of a lien or on
warehouseperson's lawful termination of storage;
(d) The
exercise by a seller of his or her right to stop delivery pursuant to the
provisions
of the chapter on sales (section 6A-2-705);
(e) A
diversion, reconsignment or other disposition pursuant to the provisions of
this
chapter (section 6A-7-303) or tariff regulating
such right;
(f) Release,
satisfaction or any other fact affording a personal defense against the
claimant;
(g) Any other
lawful excuse.
(2) A person
claiming goods covered by a document of title must satisfy the bailee's lien
where the bailee so requests or where the bailee
is prohibited by law from delivering the goods
until the charges are paid.
(3) Unless the
person claiming is one against whom the document confers no right under
section 6A-7-503(1), he or she must surrender
for cancellation or notation of partial deliveries
any outstanding negotiable document covering the
goods, and the bailee must cancel the
document or conspicuously note the partial
delivery thereon or be liable to any person to whom
the document is duly negotiated.
(4)
"Person entitled under the document" means holder in the case of a negotiable
document, or the person to whom delivery is to
be made by the terms of or pursuant to written
instructions under a nonnegotiable document.
6A-7-404.
No liability for good faith delivery pursuant to receipt or bill. --
A bailee
who in good faith, including observance of
reasonable commercial standards, has received goods
and delivered or otherwise disposed of them
according to the terms of the document of title or
pursuant to this chapter is not liable therefor.
This rule applies even though the person from
whom he or she received the goods had no
authority to procure the document or to dispose of the
goods and even though the person to whom he
delivered the goods had no authority to receive
them.
6A-7-501.
Form of negotiation and requirements of "due negotiation". --
(1) A
negotiable document of title running to the
order of a named person is negotiated by his or her
indorsement and delivery. After his or her
indorsement in blank or to bearer any person can
negotiate it by delivery alone.
(2) (a) A
negotiable document of title is also negotiated by delivery alone when by its
original terms it runs to bearer;
(b) When a
document running to the order of a named person is delivered to him or her
the effect is the same as if the document had
been negotiated.
(3)
Negotiation of a negotiable document of title after it has been indorsed to a
specified
person requires indorsement by the special
indorsee as well as delivery.
(4) A negotiable
document of title is "duly negotiated" when it is negotiated in the
manner stated in this section to a holder who
purchases it in good faith without notice of any
defense against or claim to it on the part of
any person and for value, unless it is established that
the negotiation is not in the regular course of
business or financing or involves receiving the
document in settlement or payment of a money
obligation.
(5)
Indorsement of a nonnegotiable document neither makes it negotiable nor adds to
the
transferor's rights.
(6) The naming
in a negotiable bill of a person to be notified of the arrival of the goods
does not limit the negotiability of the bill nor
constitute notice to a purchaser thereof of any
interest of such person in the goods.
6A-7-502.
Rights acquired by due negotiation. -- (1) Subject to the
following section
and to the provisions of section 6A-7-205 on
fungible goods, a holder to whom a negotiable
document of title has been duly negotiated
acquires thereby:
(a) Title to
the document;
(b) Title to
the goods;
(c) All rights
accruing under the law of agency or estoppel, including rights to goods
delivered to the bailee after the document was
issued; and
(d) The direct
obligation of the issuer to hold or deliver the goods according to the terms
of the document free of any defense or claim by
him or her except those arising under the terms
of the document or under this chapter. In the
case of a delivery order the bailee's obligation
accrues only upon acceptance and the obligation
acquired by the holder is that the issuer and any
indorser will procure the acceptance of the
bailee.
(2) Subject to
the following section, title and rights so acquired are not defeated by any
stoppage of the goods represented by the
document or by surrender of such goods by the bailee,
and are not impaired even though the negotiation
or any prior negotiation constituted a breach of
duty or even though any person has been deprived
of possession of the document by
misrepresentation, fraud, accident, mistake,
duress, loss, theft, or conversion, or even though a
previous sale or other transfer of the goods or
document has been made to a third person.
6A-7-503.
Document of title to goods defeated in certain cases.. -- (1) A
document of
title confers no right in goods against a person
who before issuance of the document had a legal
interest or a perfected security interest in
them and who neither:
(a) Delivered
or entrusted them or any document of title covering them to the bailor or
his or her nominee with actual or apparent
authority to ship, store or sell or with power to obtain
delivery under this chapter (section 6A-7-403)
or with power of disposition under this title
(sections 6A-2-403 and 6A-9-320) or other
statute or rule of law; nor
(b) Acquiesced
in the procurement by the bailor or his or her nominee of any document
of title.
(2) Title to
goods based upon an unaccepted delivery order is subject to the rights of
anyone to whom a negotiable warehouse receipt or
bill of lading covering the goods has been
duly negotiated. Such a title may be defeated
under the next section to the same extent as the
rights of the issuer or a transferee from the
issuer.
(3) Title to
goods based upon a bill of lading issued to a freight forwarder is subject to
the rights of anyone to whom a bill issued by
the freight forwarder is duly negotiated; but
delivery by the carrier in accordance with part
4 of this chapter pursuant to its own bill of lading
discharges the carrier's obligation to deliver.
6A-7-504.
Rights acquired in the absence of due negotiation -- Effect of diversion --
Seller's stoppage of delivery. -- (1) A transferee of a
document, whether negotiable or
nonnegotiable, to whom the document has been
delivered but not duly negotiated, acquires the
title and rights which his or her transferor had
or had actual authority to convey.
(2) In the
case of a nonnegotiable document, until but not after the bailee receives
notification of the transfer, the rights of the
transferee may be defeated:
(a) By those
creditors of the transferor who could treat the sale as void under section 6A-
2-402; or
(b) By a buyer
from the transferor in ordinary course of business if the bailee has
delivered the goods to the buyer or received
notification of his or her rights; or
(c) As against
the bailee by good faith dealings of the bailee with the transferor.
(3) A
diversion or other change of shipping instructions by the consignor in a
nonnegotiable bill of lading which causes the
bailee not to deliver to the consignee defeats the
consignee's title to the goods if they have been
delivered to a buyer in ordinary course of business
and, in any event, defeats the consignee's
rights against the bailee.
(4) Delivery
pursuant to a nonnegotiable document may be stopped by a seller under
section 6A-2-705, and subject to the requirement
of due notification there provided. A bailee
honoring the seller's instructions is entitled
to be indemnified by the seller against any resulting
loss or expense.
6A-7-505.
Indorser not a guarantor for other parties. -- The indorsement
of a
document of title issued by a bailee does not
make the indorser liable for any default by the bailee
or by previous indorsers.
6A-7-506.
Delivery without indorsement -- Right to compel indorsement. --
The
transferee of a negotiable document of title has
a specifically enforceable right to have his or her
transferor supply any necessary indorsement, but
the transfer becomes a negotiation only as of the
time the indorsement is supplied.
6A-7-507.
Warranties on negotiation or transfer of receipt or bill. --
Where a person
negotiates or transfers a document of title for
value otherwise than as a mere intermediary under
the next following section, then unless
otherwise agreed, he or she warrants to his or her
immediate purchaser only in addition to any
warranty made in selling the goods:
(a) That the
document is genuine; and
(b) That he or
she has no knowledge of any fact which would impair its validity or
worth; and
(c) That his or
her negotiation or transfer is rightful and fully effective with respect to the
title to the document and the goods it
represents.
6A-7-508.
Warranties of collecting bank as to documents. -- A collecting
bank or
other intermediary known to be entrusted with
documents on behalf of another or with collection
of a draft or other claim against delivery of
documents warrants by such delivery of the
documents only its own good faith and authority.
This rule applies even though the intermediary
has purchased or made advances against the claim
or draft to be collected.
6A-7-509.
Receipt or bill -- When adequate compliance with commercial contract. --
The question whether a document is adequate to
fulfill the obligations of a contract for sale or the
conditions of a credit is governed by the
chapters on sales (chapter 2 of this title) and on letters of
credit (chapter 5 of this title).
6A-7-601.
Lost and missing documents. -- (1) If a document has been lost,
stolen, or
destroyed, a court may order delivery of the
goods or issuance of a substitute document and the
bailee may without liability to any person
comply with such order. If the document was
negotiable the claimant must post security
approved by the court to indemnify any person who
may suffer loss as a result of non-surrender of
the document. If the document was not negotiable,
such security may be required at the discretion
of the court. The court may also in its discretion
order payment of the bailee's reasonable costs
and counsel fees.
(2) A bailee
who, without court order, delivers goods to a person claiming under a
missing negotiable document is liable to any
person injured thereby, and if the delivery is not in
good faith becomes liable for conversion.
Delivery in good faith is not conversion if made in
accordance with a filed classification or tariff
or, where no classification or tariff is filed, if the
claimant posts security with the bailee in an
amount at least double the value of the goods at the
time of posting to indemnify any person injured
by the delivery who files a notice of claim within
one year after the delivery.
6A-7-602.
Attachment of goods covered by a negotiable document. -- Except
where
the document was originally issued upon delivery
of the goods by a person who had no power to
dispose of them, no lien attaches by virtue of
any judicial process to goods in the possession of a
bailee for which a negotiable document of title
is outstanding unless the document be first
surrendered to the bailee or its negotiation
enjoined, and the bailee shall not be compelled to
deliver the goods pursuant to process until the
document is surrendered to him or her or
impounded by the court. One who purchases the
document for value without notice of the process
or injunction takes free of the lien imposed by
judicial process.
6A-7-603.
Conflicting claims -- Interpleader. -- If more than one person
claims title or
possession of the goods, the bailee is excused
from delivery until he or she has had a reasonable
time to ascertain the validity of the adverse
claims or to bring an action to compel all claimants to
interplead and may compel such interpleader,
either in defending an action for nondelivery of the
goods, or by original action, whichever is
appropriate.
SECTION 6. Title
6A of the General Laws entitled "UNIFORM COMMERCIAL
CODE" is hereby amended by adding thereto
the following chapter:
CHAPTER 7
DOCUMENTS OF TITLE
PART 1 GENERAL
6A-7-101.
Short title. -- This chapter may be cited as "Uniform
Commercial Code-
Documents of Title."
6A-7-102.
Definitions and index of definitions. -- (a) In this chapter, unless
the
context otherwise requires:
(1)
"Bailee" means a person that by a warehouse receipt, bill of lading,
or other document
of title acknowledges possession of goods and
contracts to deliver them.
(2)
"Carrier" means a person that issues a bill of lading.
(3)
"Consignee" means a person named in a bill of lading to which or to
whose order the
bill promises delivery.
(4)
"Consignor" means a person named in a bill of lading as the person
from which the
goods have been received for shipment.
(5)
"Delivery order" means a record that contains an order to deliver
goods directed to a
warehouse, carrier, or other person that in the
ordinary course of business issues warehouse
receipts or bills of lading.
(6) "Good
faith" means honesty in fact and the observance of reasonable commercial
standards of fair dealing.
(7)
"Goods" means all things that are treated as movable for the purposes
of a contract for
storage or transportation.
(8)
"Issuer" means a bailee that issues a document of title or, in the
case of an unaccepted
delivery order, the person that orders the
possessor of goods to deliver. The term includes a
person for which an agent or employee purports
to act in issuing a document if the agent or
employee has real or apparent authority to issue
documents, even if the issuer did not receive any
goods, the goods were misdescribed, or in any
other respect the agent or employee violated the
issuer's instructions.
(9)
"Person entitled under the document" means the holder, in the case of
a negotiable
document of title, or the person to which
delivery of the goods is to be made by the terms of, or
pursuant to instructions in a record under, a
nonnegotiable document of title.
(10)
"Record" means information that is inscribed on a tangible medium or
that is stored
in an electronic or other medium and is
retrievable in perceivable form.
(11)
"Sign" means, with present intent to authenticate or adopt a record:
(A) to execute
or adopt a tangible symbol; or
(B) to attach
to or logically associate with the record an electronic sound, symbol, or
process.
(12)
"Shipper" means a person that enters into a contract of
transportation with a carrier.
(13)
"Warehouse" means a person engaged in the business of storing goods
for hire.
(b) Definitions
in other chapters applying to this chapter and the sections in which they
appear are:
(1)
"Contract for sale," section 2-106.
(2)
"Lessee in the ordinary course of business," section 2.1-103.
(3)
"Receipt" of goods, section 2-103.
(c) In
addition, chapter 1 contains general definitions and principles of construction
and
interpretation applicable throughout this
chapter.
6A-7-103.
Relation of chapter to treaty or statute. -- (a) This chapter is
subject to
any treaty or statute of the United States or
regulatory statute of this state to the extent the treaty,
statute, or regulatory statute is applicable.
(b) This
chapter does not modify or repeal any law prescribing the form or content of a
document of title or the services or facilities
to be afforded by a bailee, or otherwise regulating a
bailee's business in respects not specifically
treated in this chapter. However, violation of such a
law does not affect the status of a document of
title that otherwise is within the definition of a
document of title.
(c) This
chapter modifies, limits, and supersedes the federal Electronic Signatures in
Global and National Commerce Act (15 U.S.C. Section
7001, et. seq.) but does not modify, limit,
or supersede Section 101(c) of that act (15
U.S.C. Section 7001(c)) or authorize electronic
delivery of any of the notices described in
Section 103(b) of that act (15 U.S.C. Section 7003(b)).
(d) To the
extent there is a conflict between R.I. Gen. Laws sections 42-127.1-1 to 20
(the Uniform Electronic Transactions Act) and
this chapter, this chapter governs.
6A-7-104.
Negotiable and nonnegotiable document of title. -- (a) Except as
otherwise provided in subsection (c), a document
of title is negotiable if by its terms the goods are
to be delivered to the bearer or to the order of
a named person.
(b) A document
of title other than one described in subsection (a) is nonnegotiable. A
bill of lading that states that the goods are
consigned to a named person is not made negotiable by
a provision that the goods are to be delivered
only against an order in a record signed by the same
or another named person.
(c) A document
of title is nonnegotiable if, at the time it is issued, the document has a
conspicuous legend, however expressed, that it
is nonnegotiable.
6A-7-105.
Reissuance in alternative medium. -- (a) Upon request of a person
entitled
under an electronic document of title, the
issuer of the electronic document may issue a tangible
document of title as a substitute for the
electronic document if:
(1) the person
entitled under the electronic document surrenders control of the document
to the issuer; and
(2) the tangible
document when issued contains a statement that it is issued in substitution
for the electronic document.
(b) Upon
issuance of a tangible document of title in substitution for an electronic
document of title in accordance with subsection
(a):
(1) the
electronic document ceases to have any effect or validity; and
(2) the person
that procured issuance of the tangible document warrants to all subsequent
persons entitled under the tangible document
that the warrantor was a person entitled under the
electronic document when the warrantor
surrendered control of the electronic document to the
issuer.
(c) Upon
request of a person entitled under a tangible document of title, the issuer of
the
tangible document may issue an electronic
document of title as a substitute for the tangible
document if:
(1) the person
entitled under the tangible document surrenders possession of the
document to the issuer; and
(2) the
electronic document when issued contains a statement that it is issued in
substitution for the tangible document.
(d) Upon
issuance of an electronic document of title in substitution for a tangible
document of title in accordance with subsection
(c):
(1) the
tangible document ceases to have any effect or validity; and
(2) the person
that procured issuance of the electronic document warrants to all
subsequent persons entitled under the electronic
document that the warrantor was a person
entitled under the tangible document when the
warrantor surrendered possession of the tangible
document to the issuer.
6A-7-106.
Control of electronic document of title. -- (a) A person has control
of an
electronic document of title if a system
employed for evidencing the transfer of interests in the
electronic document reliably establishes that
person as the person to which the electronic
document was issued or transferred.
(b) A system
satisfies subsection (a), and a person is deemed to have control of an
electronic document of title, if the document is
created, stored, and assigned in such a manner
that:
(1) a single
authoritative copy of the document exists which is unique, identifiable, and,
except as otherwise provided in paragraphs (4),
(5), and (6), unalterable;
(2) the
authoritative copy identifies the person asserting control as:
(A) the person
to which the document was issued; or
(B) if the
authoritative copy indicates that the document has been transferred, the person
to which the document was most recently
transferred;
(3) the
authoritative copy is communicated to and maintained by the person asserting
control or its designated custodian;
(4) copies or amendments
that add or change an identified assignee of the authoritative
copy can be made only with the consent of the
person asserting control;
(5) each copy
of the authoritative copy and any copy of a copy is readily identifiable as a
copy that is not the authoritative copy; and
(6) any
amendment of the authoritative copy is readily identifiable as authorized or
unauthorized.
PART 2 WAREHOUSE
RECEIPTS: SPECIAL PROVISIONS
6A-7-201.
Person that may issue a warehouse receipt – Storage under bond. -- (a)
A warehouse receipt may be issued by any
warehouse.
(b) If goods,
including distilled spirits and agricultural commodities, are stored under a
statute requiring a bond against withdrawal or a
license for the issuance of receipts in the nature
of warehouse receipts, a receipt issued for the
goods is deemed to be a warehouse receipt even if
issued by a person that is the owner of the
goods and is not a warehouse.
6A-7-202.
Form of warehouse receipt – Effect of omission. -- (a) A warehouse
receipt need not be in any particular form.
(b) Unless a
warehouse receipt provides for each of the following, the warehouse is liable
for damages caused to a person injured by its
omission:
(1) a statement
of the location of the warehouse facility where the goods are stored;
(2) the date of
issue of the receipt;
(3) the unique
identification code of the receipt;
(4) a statement
whether the goods received will be delivered to the bearer, to a named
person, or to a named person or its order;
(5) the rate of
storage and handling charges, unless goods are stored under a field
warehousing arrangement, in which case a
statement of that fact is sufficient on a nonnegotiable
receipt;
(6) a
description of the goods or the packages containing them;
(7) the
signature of the warehouse or its agent;
(8) if the
receipt is issued for goods that the warehouse owns, either solely, jointly, or
in
common with others, a statement of the fact of
that ownership; and
(9) a statement
of the amount of advances made and of liabilities incurred for which the
warehouse claims a lien or security interest,
unless the precise amount of advances made or
liabilities incurred, at the time of the issue
of the receipt, is unknown to the warehouse or to its
agent that issued the receipt, in which case a
statement of the fact that advances have been made
or liabilities incurred and the purpose of the
advances or liabilities is sufficient.
(c) A warehouse
may insert in its receipt any terms that are not contrary to the Uniform
Commercial Code and do not impair its obligation
of delivery under section 6A-7-403 or its
duty of care under section 6A-7-204. Any
contrary provision is ineffective.
6A-7-203.
Liability for nonreceipt or misdescription. -- A party to or
purchaser for
value in good faith of a document of title,
other than a bill of lading, that relies upon the
description of the goods in the document may
recover from the issuer damages caused by the
nonreceipt or misdescription of the goods,
except to the extent that:
(1) the
document conspicuously indicates that the issuer does not know whether all or
part of the goods in fact were received or
conform to the description, such as a case in which the
description is in terms of marks or labels or
kind, quantity, or condition, or the receipt or
description is qualified by "contents,
condition, and quality unknown", "said to contain", or words
of similar import, if the indication is true; or
(2) the party
or purchaser otherwise has notice of the nonreceipt or misdescription.
6A-7-204.
Duty of care – Contractual limitation of warehouse's
liability. --
(a) A
warehouse is liable for damages for loss of or
injury to the goods caused by its failure to exercise
care with regard to the goods that a reasonably
careful person would exercise under similar
circumstances. Unless otherwise agreed, the
warehouse is not liable for damages that could not
have been avoided by the exercise of that care.
(b) Damages may
be limited by a term in the warehouse receipt or storage agreement
limiting the amount of liability in case of loss
or damage beyond which the warehouse is not
liable. Such a limitation is not effective with
respect to the warehouse's liability for conversion to
its own use. On request of the bailor in a
record at the time of signing the storage agreement or
within a reasonable time after receipt of the
warehouse receipt, the warehouse's liability may be
increased on part or all of the goods covered by
the storage agreement or the warehouse receipt.
In this event, increased rates may be charged
based on an increased valuation of the goods.
(c) Reasonable
provisions as to the time and manner of presenting claims and
commencing actions based on the bailment may be
included in the warehouse receipt or storage
agreement.
6A-7-205.
Title under warehouse receipt defeated in certain cases. -- A buyer
in
ordinary course of business of fungible goods
sold and delivered by a warehouse that is also in
the business of buying and selling such goods
takes the goods free of any claim under a
warehouse receipt even if the receipt is
negotiable and has been duly negotiated.
6A-7-206.
Termination of storage at warehouse's option. -- (a) A warehouse, by
giving notice to the person on whose account the
goods are held and any other person known to
claim an interest in the goods, may require
payment of any charges and removal of the goods
from the warehouse at the termination of the
period of storage fixed by the document of title or, if
a period is not fixed, within a stated period
not less than thirty (30) days after the warehouse gives
notice. If the goods are not removed before the
date specified in the notice, the warehouse may
sell them pursuant to section 6A-7-210.
(b) If a
warehouse in good faith believes that goods are about to deteriorate or decline
in
value to less than the amount of its lien within
the time provided in subsection (a) and section 6A-
7.1-210, the warehouse may specify in the notice
given under subsection (a) any reasonable
shorter time for removal of the goods and, if
the goods are not removed, may sell them at public
sale held not less than one week after a single
advertisement or posting.
(c) If, as a
result of a quality or condition of the goods of which the warehouse did not
have notice at the time of deposit, the goods
are a hazard to other property, the warehouse
facilities, or other persons, the warehouse may
sell the goods at public or private sale without
advertisement or posting on reasonable
notification to all persons known to claim an interest in
the goods. If the warehouse, after a reasonable effort,
is unable to sell the goods, it may dispose
of them in any lawful manner and does not incur
liability by reason of that disposition.
(d) A warehouse
shall deliver the goods to any person entitled to them under this chapter
upon due demand made at any time before sale or
other disposition under this section.
(e) A warehouse
may satisfy its lien from the proceeds of any sale or disposition under
this section but shall hold the balance for
delivery on the demand of any person to which the
warehouse would have been bound to deliver the
goods.
6A-7-207.
Goods must be kept separate – Fungible goods. -- (a) Unless the
warehouse receipt provides otherwise, a
warehouse shall keep separate the goods covered by each
receipt so as to permit at all times
identification and delivery of those goods. However, different
lots of fungible goods may be commingled.
(b) If
different lots of fungible goods are commingled, the goods are owned in common
by the persons entitled thereto and the
warehouse is severally liable to each owner for that
owner's share. If, because of overissue, a mass
of fungible goods is insufficient to meet all the
receipts the warehouse has issued against it,
the persons entitled include all holders to which
overissued receipts have been duly negotiated.
6A-7-208.
Altered warehouse receipts. -- If a blank in a negotiable tangible
warehouse receipt has been filled in without
authority, a good-faith purchaser for value and
without notice of the lack of authority may
treat the insertion as authorized. Any other
unauthorized alteration leaves any tangible or
electronic warehouse receipt enforceable against
the issuer according to its original tenor.
6A-7-209.
Lien of warehouse. -- (a) A warehouse has a lien against the bailor
on the
goods covered by a warehouse receipt or storage
agreement or on the proceeds thereof in its
possession for charges for storage or
transportation, including demurrage and terminal charges,
insurance, labor, or other charges, present or
future, in relation to the goods, and for expenses
necessary for preservation of the goods or
reasonably incurred in their sale pursuant to law. If the
person on whose account the goods are held is
liable for similar charges or expenses in relation to
other goods whenever deposited and it is stated
in the warehouse receipt or storage agreement
that a lien is claimed for charges and expenses
in relation to other goods, the warehouse also has a
lien against the goods covered by the warehouse
receipt or storage agreement or on the proceeds
thereof in its possession for those charges and
expenses, whether or not the other goods have been
delivered by the warehouse. However, as against
a person to which a negotiable warehouse
receipt is duly negotiated, a warehouse's lien
is limited to charges in an amount or at a rate
specified in the warehouse receipt or, if no
charges are so specified, to a reasonable charge for
storage of the specific goods covered by the
receipt subsequent to the date of the receipt.
(b) A warehouse
may also reserve a security interest against the bailor for the maximum
amount specified on the receipt for charges
other than those specified in subsection (a), such as
for money advanced and interest. The security
interest is governed by chapter 6A-9.
(c) A
warehouse's lien for charges and expenses under subsection (a) or a security
interest
under subsection (b) is also effective against
any person that so entrusted the bailor with
possession of the goods that a pledge of them by
the bailor to a good-faith purchaser for value
would have been valid. However, the lien or
security interest is not effective against a person
that before issuance of a document of title had
a legal interest or a perfected security interest in
the goods and that did not:
(1) deliver or
entrust the goods or any document of title covering the goods to the bailor
or the bailor's nominee with:
(A) actual or apparent
authority to ship, store, or sell;
(B) power to
obtain delivery under section 6A-7-403; or
(C) power of
disposition under section 2-403, subsection 2.1-304(2), subsection 2.1-
305(2), section 9-320, or subsection 9-321(c) or
other statute or rule of law; or
(2) acquiesce
in the procurement by the bailor or its nominee of any document.
(d) A
warehouse's lien on household goods for charges and expenses in relation to the
goods under subsection (a) is also effective
against all persons if the depositor was the legal
possessor of the goods at the time of deposit.
In this subsection, "household goods" means
furniture, furnishings, or personal effects used
by the depositor in a dwelling.
(e) A warehouse
loses its lien on any goods that it voluntarily delivers or unjustifiably
refuses to deliver.
6A-7-210.
Enforcement of warehouse's liens. -- (a) Except as otherwise
provided in
subsection (b), a warehouse's lien may be
enforced by public or private sale of the goods, in bulk
or in packages, at any time or place and on any
terms that are commercially reasonable, after
notifying all persons known to claim an interest
in the goods. The notification must include a
statement of the amount due, the nature of the
proposed sale, and the time and place of any public
sale. The fact that a better price could have
been obtained by a sale at a different time or in a
method different from that selected by the
warehouse is not of itself sufficient to establish that the
sale was not made in a commercially reasonable
manner. The warehouse sells in a commercially
reasonable manner if the warehouse sells the
goods in the usual manner in any recognized market
therefore, sells at the price current in that
market at the time of the sale, or otherwise sells in
conformity with commercially reasonable
practices among dealers in the type of goods sold. A
sale of more goods than apparently necessary to
be offered to ensure satisfaction of the obligation
is not commercially reasonable, except in cases
covered by the preceding sentence.
(b) A warehouse
may enforce its lien on goods, other than goods stored by a merchant in
the course of its business, only if the
following requirements are satisfied:
(1) All persons
known to claim an interest in the goods must be notified.
(2) The
notification must include an itemized statement of the claim, a description of
the
goods subject to the lien, a demand for payment
within a specified time not less than ten (10)
days after receipt of the notification, and a
conspicuous statement that unless the claim is paid
within that time the goods will be advertised
for sale and sold by auction at a specified time and
place.
(3) The sale
must conform to the terms of the notification.
(4) The sale
must be held at the nearest suitable place to where the goods are held or
stored.
(5) After the
expiration of the time given in the notification, an advertisement of the sale
must be published once a week for two weeks
consecutively in a newspaper of general circulation
where the sale is to be held. The advertisement
must include a description of the goods, the name
of the person on whose account the goods are
being held, and the time and place of the sale. The
sale must take place at least fifteen (15) days
after the first publication. If there is no newspaper
of general circulation where the sale is to be
held, the advertisement must be posted at least ten
(10) days before the sale in not fewer than six
(6) conspicuous places in the neighborhood of the
proposed sale.
(c) Before any
sale pursuant to this section, any person claiming a right in the goods may
pay the amount necessary to satisfy the lien and
the reasonable expenses incurred in complying
with this section. In that event, the goods may
not be sold but must be retained by the warehouse
subject to the terms of the receipt and this
chapter.
(d) A warehouse
may buy at any public sale held pursuant to this section.
(e) A purchaser
in good faith of goods sold to enforce a warehouse's lien takes the goods
free of any rights of persons against which the
lien was valid, despite the warehouse's
noncompliance with this section.
(f) A warehouse
may satisfy its lien from the proceeds of any sale pursuant to this section
but shall hold the balance, if any, for delivery
on demand to any person to which the warehouse
would have been bound to deliver the goods.
(g) The rights
provided by this section are in addition to all other rights allowed by law to
a creditor against a debtor.
(h) If a lien
is on goods stored by a merchant in the course of its business, the lien may be
enforced in accordance with subsection (a) or
(b).
(i) A warehouse
is liable for damages caused by failure to comply with the requirements
for sale under this section and, in case of
willful violation, is liable for conversion.
PART 3 BILLS OF LADING:
SPECIAL PROVISIONS
6A-7-301.
Liability for nonreceipt or misdescription –"Said to
contain" –
"Shipper's weight, load and count" – Improper handling. -- (a) A consignee of a
nonnegotiable bill of lading which has given
value in good faith, or a holder to which a negotiable
bill has been duly negotiated, relying upon the
description of the goods in the bill or upon the date
shown in the bill, may recover from the issuer
damages caused by the misdating of the bill or the
nonreceipt or misdescription of the goods,
except to the extent that the bill indicates that the
issuer does not know whether any part or all of
the goods in fact were received or conform to the
description, such as in a case in which the
description is in terms of marks or labels or kind,
quantity, or condition or the receipt or
description is qualified by "contents or condition of
contents of packages unknown," "said
to contain," "shipper's weight, load, and count," or words
of similar import, if that indication is true.
(b) If goods
are loaded by the issuer of a bill of lading;
(1) the issuer
shall count the packages of goods if shipped in packages and ascertain the
kind and quantity if shipped in bulk; and
(2) words such
as "shipper's weight, load, and count," or words of similar import
indicating that the description was made by the
shipper are ineffective except as to goods
concealed in packages.
(c) If bulk
goods are loaded by a shipper that makes available to the issuer of a bill of
lading adequate facilities for weighing those
goods, the issuer shall ascertain the kind and
quantity within a reasonable time after
receiving the shipper's request in a record to do so. In that
case, "shipper's weight" or words of
similar import are ineffective.
(d) The issuer
of a bill of lading, by including in the bill the words "shipper's weight,
load, and count," or words of similar
import, may indicate that the goods were loaded by the
shipper, and, if that statement is true, the
issuer is not liable for damages caused by the improper
loading. However, omission of such words does
not imply liability for damages caused by
improper loading.
(e) A shipper
guarantees to an issuer the accuracy at the time of shipment of the
description, marks, labels, number, kind,
quantity, condition, and weight, as furnished by the
shipper, and the shipper shall indemnify the
issuer against damage caused by inaccuracies in
those particulars. This right of indemnity does
not limit the issuer's responsibility or liability
under the contract of carriage to any person
other than the shipper.
6A-7-302.
Through bills of lading and similar documents of title. -- (a) The
issuer of
a through bill of lading, or other document of
title embodying an undertaking to be performed in
part by a person acting as its agent or by a
performing carrier, is liable to any person entitled to
recover on the bill or other document for any
breach by the other person or the performing carrier
of its obligation under the bill or other
document. However, to the extent that the bill or other
document covers an undertaking to be performed
overseas or in territory not contiguous to the
continental United States or an undertaking
including matters other than transportation, this
liability for breach by the other person or the
performing carrier may be varied by agreement of
the parties.
(b) If goods
covered by a through bill of lading or other document of title embodying an
undertaking to be performed in part by a person
other than the issuer are received by that person,
the person is subject, with respect to its own
performance while the goods are in its possession, to
the obligation of the issuer. The person's
obligation is discharged by delivery of the goods to
another person pursuant to the bill or other
document and does not include liability for breach by
any other person or by the issuer.
(c) The issuer
of a through bill of lading or other document of title described in
subsection (a) is entitled to recover from the
performing carrier, or other person in possession of
the goods when the breach of the obligation
under the bill or other document occurred:
(1) the amount
it may be required to pay to any person entitled to recover on the bill or
other document for the breach, as may be
evidenced by any receipt, judgment, or transcript of
judgment; and
(2) the amount
of any expense reasonably incurred by the issuer in defending any action
commenced by any person entitled to recover on
the bill or other document for the breach.
6A-7-303.
Diversion – Reconsignment – Change of instructions.
-- (a)
Unless the
bill of lading otherwise provides, a carrier may
deliver the goods to a person or destination other
than that stated in the bill or may otherwise
dispose of the goods, without liability for
misdelivery, on instructions from:
(1) the holder
of a negotiable bill;
(2) the
consignor on a nonnegotiable bill, even if the consignee has given contrary
instructions;
(3) the
consignee on a nonnegotiable bill in the absence of contrary instructions from
the
consignor, if the goods have arrived at the
billed destination or if the consignee is in possession of
the tangible bill or in control of the
electronic bill; or
(4) the
consignee on a nonnegotiable bill, if the consignee is entitled as against the
consignor to dispose of the goods.
(b) Unless
instructions described in subsection (a) are included in a negotiable bill of
lading, a person to which the bill is duly
negotiated may hold the bailee according to the original
terms.
6A-7-304.
Tangible bills of lading in a set. -- (a) Except as customary in
international
transportation, a tangible bill of lading may
not be issued in a set of parts. The issuer is liable for
damages caused by violation of this subsection.
(b) If a
tangible bill of lading is lawfully issued in a set of parts, each of which
contains
an identification code and is expressed to be
valid only if the goods have not been delivered
against any other part, the whole of the parts
constitutes one bill.
(c) If a
tangible negotiable bill of lading is lawfully issued in a set of parts and
different
parts are negotiated to different persons, the
title of the holder to which the first due negotiation is
made prevails as to both the document of title
and the goods even if any later holder may have
received the goods from the carrier in good
faith and discharged the carrier's obligation by
surrendering its part.
(d) A person
that negotiates or transfers a single part of a tangible bill of lading issued
in
a set is liable to holders of that part as if it
were the whole set.
(e) The bailee
shall deliver in accordance with Part 4 against the first presented part of a
tangible bill of lading lawfully issued in a
set. Delivery in this manner discharges the bailee's
obligation on the whole bill.
6A-7-305.
Destination of bills. -- (a) Instead of issuing a bill of lading to
the consignor
at the place of shipment, a carrier, at the
request of the consignor, may procure the bill to be
issued at destination or at any other place
designated in the request.
(b) Upon
request of any person entitled as against a carrier to control the goods while
in
transit and on surrender of possession or
control of any outstanding bill of lading or other receipt
covering the goods, the issuer, subject to
section 6A-7-105, may procure a substitute bill to be
issued at any place designated in the request.
6A-7-306.
Altered bills of lading. -- An unauthorized alteration or filling in
of a blank
in a bill of lading leaves the bill enforceable
according to its original tenor.
6A-7-307.
Lien of carrier. -- (a) A carrier has a lien on the goods covered by
a bill of
lading or on the proceeds thereof in its
possession for charges after the date of the carrier's receipt
of the goods for storage or transportation,
including demurrage and terminal charges, and for
expenses necessary for preservation of the goods
incident to their transportation or reasonably
incurred in their sale pursuant to law. However,
against a purchaser for value of a negotiable bill
of lading, a carrier's lien is limited to
charges stated in the bill or the applicable tariffs or, if no
charges are stated, a reasonable charge.
(b) A lien for
charges and expenses under subsection (a) on goods that the carrier was
required by law to receive for transportation is
effective against the consignor or any person
entitled to the goods unless the carrier had
notice that the consignor lacked authority to subject
the goods to those charges and expenses. Any
other lien under subsection (a) is effective against
the consignor and any person that permitted the
bailor to have control or possession of the goods
unless the carrier had notice that the bailor
lacked authority.
(c) A carrier
loses its lien on any goods that it voluntarily delivers or unjustifiably
refuses
to deliver.
6A-7-308.
Enforcement of carrier's lien. -- (a) A carrier's lien on goods may
be
enforced by public or private sale of the goods,
in bulk or in packages, at any time or place and on
any terms that are commercially reasonable,
after notifying all persons known to claim an interest
in the goods. The notification must include a
statement of the amount due, the nature of the
proposed sale, and the time and place of any
public sale. The fact that a better price could have
been obtained by a sale at a different time or
in a method different from that selected by the
carrier is not of itself sufficient to establish
that the sale was not made in a commercially
reasonable manner. The carrier sells goods in a
commercially reasonable manner if the carrier
sells the goods in the usual manner in any
recognized market therefor, sells at the price current in
that market at the time of the sale, or
otherwise sells in conformity with commercially reasonable
practices among dealers in the type of goods
sold. A sale of more goods than apparently
necessary to be offered to ensure satisfaction
of the obligation is not commercially reasonable,
except in cases covered by the preceding
sentence.
(b) Before any
sale pursuant to this section, any person claiming a right in the goods may
pay the amount necessary to satisfy the lien and
the reasonable expenses incurred in complying
with this section. In that event, the goods may
not be sold but must be retained by the carrier,
subject to the terms of the bill of lading and
this chapter.
(c) A carrier
may buy at any public sale pursuant to this section.
(d) A purchaser
in good faith of goods sold to enforce a carrier's lien takes the goods free
of any rights of persons against which the lien
was valid, despite the carrier's noncompliance with
this section.
(e) A carrier
may satisfy its lien from the proceeds of any sale pursuant to this section but
shall hold the balance, if any, for delivery on
demand to any person to which the carrier would
have been bound to deliver the goods.
(f) The rights
provided by this section are in addition to all other rights allowed by law to
a creditor against a debtor.
(g) A carrier's
lien may be enforced pursuant to either subsection (a) or the procedure set
forth in subsection 6A-7-210(b).
(h) A carrier
is liable for damages caused by failure to comply with the requirements for
sale under this section and, in case of willful
violation, is liable for conversion.
6A-7-309.
Duty of care – Contractual limitation of carrier's liability.
-- (a)
A carrier
that issues a bill of lading, whether negotiable
or nonnegotiable, shall exercise the degree of care
in relation to the goods which a reasonably
careful person would exercise under similar
circumstances. This subsection does not affect
any statute, regulation, or rule of law that imposes
liability upon a common carrier for damages not
caused by its negligence.
(b) Damages may
be limited by a term in the bill of lading or in a transportation
agreement that the carrier's liability may not
exceed a value stated in the bill or transportation
agreement if the carrier's rates are dependent
upon value and the consignor is afforded an
opportunity to declare a higher value and the
consignor is advised of the opportunity. However,
such a limitation is not effective with respect
to the carrier's liability for conversion to its own
use.
(c) Reasonable
provisions as to the time and manner of presenting claims and
commencing actions based on the shipment may be
included in a bill of lading or a transportation
agreement.
PART 4 WAREHOUSE
RECEIPTS AND BILLS OF LADING: GENERAL
OBLIGATIONS
6A-7-401.
Irregularities in issue of receipt or bill or conduct of issuer. -- The
obligations imposed by this chapter on an issuer
apply to a document of title even if:
(1) the
document does not comply with the requirements of this chapter or of any other
statute, rule, or regulation regarding its
issuance, form, or content;
(2) the issuer
violated laws regulating the conduct of its business;
(3) the goods
covered by the document were owned by the bailee when the document was
issued; or
(4) the person
issuing the document is not a warehouse but the document purports to be a
warehouse receipt.
6A-7-402.
Duplicate document of title -- Overissue. -- A duplicate or any
other
document of title purporting to cover goods
already represented by an outstanding document of
the same issuer does not confer any right in the
goods, except as provided in the case of tangible
bills of lading in a set of parts, overissue of
documents for fungible goods, substitutes for lost,
stolen, or destroyed documents, or substitute
documents issued pursuant to section 6A-7-105.
The issuer is liable for damages caused by its
overissue or failure to identify a duplicate document
by a conspicuous notation.
6A-7-403.
Obligation of bailee to deliver -- Excuse. -- (a) A bailee shall
deliver the
goods to a person entitled under a document of
title if the person complies with subsections (b)
and (c), unless and to the extent that the
bailee establishes any of the following:
(1) delivery of
the goods to a person whose receipt was rightful as against the claimant;
(2) damage to
or delay, loss, or destruction of the goods for which the bailee is not liable;
(3) previous sale
or other disposition of the goods in lawful enforcement of a lien or on a
warehouse's lawful termination of storage;
(4) the
exercise by a seller of its right to stop delivery pursuant to section 6A-2-705
or by
a lessor of its right to stop delivery pursuant
to section 6A-2.1-526;
(5) a
diversion, reconsignment, or other disposition pursuant to section 6A-7-303;
(6) release,
satisfaction, or any other personal defense against the claimant; or
(7) any other
lawful excuse.
(b) A person
claiming goods covered by a document of title shall satisfy the bailee's lien
if the bailee so requests or if the bailee is
prohibited by law from delivering the goods until the
charges are paid.
(c) Unless a
person claiming the goods is a person against which the document of title
does not confer a right under subsection
6A-7.1-503(a):
(1) the person
claiming under a document shall surrender possession or control of any
outstanding negotiable document covering the
goods for cancellation or indication of partial
deliveries; and
(2) the bailee
shall cancel the document or conspicuously indicate in the document the
partial delivery or the bailee is liable to any
person to which the document is duly negotiated.
6A-7-404. No
liability for good-faith delivery pursuant to document of title. -- A
bailee that in good faith has received goods and
delivered or otherwise disposed of the goods
according to the terms of a document of title or
pursuant to this chapter is not liable for the goods
even if:
(1) the person
from which the bailee received the goods did not have authority to procure
the document or to dispose of the goods; or
(2) the person
to which the bailee delivered the goods did not have authority to receive
the goods.
PART 5 WAREHOUSE
RECEIPTS AND BILLS OF LADING: NEGOTIATION
AND TRANSFER
6A-7-501.
Form of negotiation and requirements of due negotiation. -- (a) The
following rules apply to a negotiable tangible
document of title:
(1) If the document's
original terms run to the order of a named person, the document is
negotiated by the named person's indorsement and
delivery. After the named person's
indorsement in blank or to bearer, any person
may negotiate the document by delivery alone.
(2) If the
document's original terms run to bearer, it is negotiated by delivery alone.
(3) If the
document's original terms run to the order of a named person and it is
delivered
to the named person, the effect is the same as
if the document had been negotiated.
(4) Negotiation
of the document after it has been indorsed to a named person requires
indorsement by the named person and delivery.
(5) A document
is duly negotiated if it is negotiated in the manner stated in this
subsection to a holder that purchases it in good
faith, without notice of any defense against or
claim to it on the part of any person, and for
value, unless it is established that the negotiation is
not in the regular course of business or
financing or involves receiving the document in
settlement or payment of a monetary obligation.
(b) The
following rules apply to a negotiable electronic document of title:
(1) If the
document's original terms run to the order of a named person or to bearer, the
document is negotiated by delivery of the
document to another person. Indorsement by the
named person is not required to negotiate the
document.
(2) If the
document's original terms run to the order of a named person and the named
person has control of the document, the effect
is the same as if the document had been negotiated.
(3) A document
is duly negotiated if it is negotiated in the manner stated in this
subsection to a holder that purchases it in good
faith, without notice of any defense against or
claim to it on the part of any person, and for
value, unless it is established that the negotiation is
not in the regular course of business or
financing or involves taking delivery of the document in
settlement or payment of a monetary obligation.
(c) Indorsement
of a nonnegotiable document of title neither makes it negotiable nor adds
to the transferee's rights.
(d) The naming
in a negotiable bill of lading of a person to be notified of the arrival of
the goods does not limit the negotiability of
the bill or constitute notice to a purchaser of the bill
of any interest of that person in the goods.
6A-7-502.
Rights acquired by due negotiation. -- (a) Subject to sections 6A-7-205
and 6A-7-503, a holder to which a negotiable
document of title has been duly negotiated
acquires thereby:
(1) title to
the document;
(2) title to
the goods;
(3) all rights
accruing under the law of agency or estoppel, including rights to goods
delivered to the bailee after the document was
issued; and
(4) the direct
obligation of the issuer to hold or deliver the goods according to the terms
of the document free of any defense or claim by
the issuer except those arising under the terms of
the document or under this chapter, but in the
case of a delivery order, the bailee's obligation
accrues only upon the bailee's acceptance of the
delivery order and the obligation acquired by the
holder is that the issuer and any indorser will
procure the acceptance of the bailee.
(b) Subject to
section 6A-7-503, title and rights acquired by due negotiation are not
defeated by any stoppage of the goods
represented by the document of title or by surrender of the
goods by the bailee and are not impaired even
if:
(1) the due
negotiation or any prior due negotiation constituted a breach of duty;
(2) any person
has been deprived of possession of a negotiable tangible document or
control of a negotiable electronic document by
misrepresentation, fraud, accident, mistake,
duress, loss, theft, or conversion; or
(3) a previous
sale or other transfer of the goods or document has been made to a third
person.
6A-7-503.
Document of title to goods defeated in certain cases. -- (a) A
document of
title confers no right in goods against a person
that before issuance of the document had a legal
interest or a perfected security interest in the
goods and that did not:
(1) Deliver or
entrust the goods or any document of title covering the goods to the bailor
or the bailor's nominee with:
(A) actual or
apparent authority to ship, store, or sell;
(B) power to
obtain delivery under section 6A-7-403; or
(C) power of
disposition under section 6A-2-403, 6A-2.1-304(2), 6A-2.1-305(2), 6A-9-
320, or 6A-9-321(c) or other statute or rule of
law.
(2) Acquiesce
in the procurement by the bailor or its nominee of any document.
(b) Title to
goods based upon an unaccepted delivery order is subject to the rights of any
person to which a negotiable warehouse receipt
or bill of lading covering the goods has been duly
negotiated. That title may be defeated under
section 6A-7-504 to the same extent as the rights
of the issuer or a transferee from the issuer.
(c) Title to
goods based upon a bill of lading issued to a freight forwarder is subject to
the
rights of any person to which a bill issued by
the freight forwarder is duly negotiated. However,
delivery by the carrier in accordance with Part
4 pursuant to its own bill of lading discharges the
carrier's obligation to deliver.
6A-7-504.
Rights acquired in absence of due negotiation – Effect of diversion –
Stoppage of delivery. -- (a) A transferee of
a document of title, whether negotiable or
nonnegotiable, to which the document has been
delivered but not duly negotiated, acquires the
title and rights that its transferor had or had
actual authority to convey.
(b) In the case
of a transfer of a nonnegotiable document of title, until but not after the
bailee receives notice of the transfer, the
rights of the transferee may be defeated:
(1) by those
creditors of the transferor which could treat the transfer as void under
section
6A-2-402 or 6A-2.1-308 ;
(2) by a buyer
from the transferor in ordinary course of business if the bailee has
delivered the goods to the buyer or received
notification of the buyer's rights;
(3) by a lessee
from the transferor in ordinary course of business if the bailee has
delivered the goods to the lessee or received
notification of the lessee's rights; or
(4) as against
the bailee, by good-faith dealings of the bailee with the transferor.
(c) A diversion
or other change of shipping instructions by the consignor in a
nonnegotiable bill of lading which causes the
bailee not to deliver the goods to the consignee
defeats the consignee's title to the goods if
the goods have been delivered to a buyer in ordinary
course of business or a lessee in ordinary
course of business and, in any event, defeats the
consignee's rights against the bailee.
(d) Delivery of
the goods pursuant to a nonnegotiable document of title may be stopped
by a seller under section 6A-2-705 or a lessor
under section 6A-2.1-526, subject to the
requirements of due notification in those
sections. A bailee that honors the seller's or lessor's
instructions is entitled to be indemnified by
the seller or lessor against any resulting loss or
expense.
6A-7-505.
Indorser not guarantor for other parties. -- The indorsement of a
tangible
document of title issued by a bailee does not
make the indorser liable for any default by the bailee
or previous indorsers.
6A-7-506.
Delivery without indorsement – Right to compel
indorsement. --
The
transferee of a negotiable tangible document of
title has a specifically enforceable right to have its
transferor supply any necessary indorsement, but
the transfer becomes a negotiation only as of the
time the indorsement is supplied.
6A-7-507.
Warranties on negotiation or delivery of document of title. -- If a
person
negotiates or delivers a document of title for
value, otherwise than as a mere intermediary under
section 6A-7-508, unless otherwise agreed, the
transferor, in addition to any warranty made in
selling or leasing the goods, warrants to its
immediate purchaser only that:
(1) the
document is genuine;
(2) the
transferor does not have knowledge of any fact that would impair the document's
validity or worth; and
(3) the
negotiation or delivery is rightful and fully effective with respect to the
title to the
document and the goods it represents.
6A-7-508.
Warranties of collecting bank as to documents of title. -- A
collecting
bank or other intermediary known to be entrusted
with documents of title on behalf of another or
with collection of a draft or other claim
against delivery of documents warrants by the delivery of
the documents only its own good faith and
authority even if the collecting bank or other
intermediary has purchased or made advances
against the claim or draft to be collected.
6A-7-509.
Adequate compliance with commercial contract. -- Whether a document
of title is adequate to fulfill the obligations
of a contract for sale, a contract for lease, or the
conditions of a letter of credit is determined
by chapter 6A-2, 6A-2.1, or 6A-5.
PART 6 WAREHOUSE RECEIPTS
AND BILLS OF LADING:
MISCELLANEOUS PROVISIONS
6A-7-601.
Lost, stolen or destroyed documents of title. -- (a) If a document
of title is
lost, stolen, or destroyed, a court may order
delivery of the goods or issuance of a substitute
document and the bailee may without liability to
any person comply with the order. If the
document was negotiable, a court may not order
delivery of the goods or issuance of a substitute
document without the claimant's posting security
unless it finds that any person that may suffer
loss as a result of nonsurrender of possession
or control of the document is adequately protected
against the loss. If the document was
nonnegotiable, the court may require security. The court
may also order payment of the bailee's reasonable
costs and attorneys' fees in any action under
this subsection.
(b) A bailee
that, without a court order, delivers goods to a person claiming under a
missing negotiable document of title is liable
to any person injured thereby. If the delivery is not
in good faith, the bailee is liable for
conversion. Delivery in good faith is not conversion if the
claimant posts security with the bailee in an
amount at least double the value of the goods at the
time of posting to indemnify any person injured
by the delivery which files a notice of claim
within one year after the delivery.
6A-7-602.
Judicial process against goods covered by negotiable document of title. -
- Unless a document of title was originally
issued upon delivery of the goods by a person that did
not have power to dispose of them, a lien does
not attach by virtue of any judicial process to
goods in the possession of a bailee for which a
negotiable document of title is outstanding unless
possession or control of the document is first
surrendered to the bailee or the document's
negotiation is enjoined. The bailee may not be
compelled to deliver the goods pursuant to
process until possession or control of the
document is surrendered to the bailee or to the court.
A purchaser of the document for value without
notice of the process or injunction takes free of
the lien imposed by judicial process.
6A-7-603.
Conflicting claims -- Interpleader. -- If more than one person
claims title
to or possession of the goods, the bailee is
excused from delivery until the bailee has a reasonable
time to ascertain the validity of the adverse
claims or to commence an action for interpleader.
The bailee may assert an interpleader either in
defending an action for nondelivery of the goods
or by original action.
PART 7 MISCELLANEOUS
PROVISIONS
6A-7-701.
Effective date. – This chapter shall take effect on July 1, 2006.
6A-7-702.
[reserved]. – [reserved]
6A-7-703.
Applicability. -- This chapter applies to a document of title that
is issued or
a bailment that arises on or after the effective
date of this chapter. This chapter does not apply to
a document of title that is issued or a bailment
that arises before the effective date of this chapter
even if the document of title or bailment would
be subject to this chapter if the document of title
had been issued or bailment had arisen on or
after the effective date of this chapter. This chapter
does not apply to a right of action that has
accrued before the effective date of this chapter.
6A-7-704.
Savings clause. -- A document of title issued or a bailment that
arises before
the effective date of this chapter and the
rights, obligations, and interests flowing from that
document or bailment are governed by any statute
or other rule amended or repealed by this
chapter as if amendment or repeal had not
occurred and may be terminated, completed,
consummated, or enforced under that statute or
other rule.
6A-7-705.
Official comments. -- It is the intention of the general assembly
that the
official comments to this chapter represent the
express legislative intent of the general assembly
and shall be used as a guide for interpretation
of this chapter.
SECTION 7. Section
6A-8-103 of the General Laws in Chapter 6A-8 entitled
"Investment Securities" is hereby
amended to read as follows:
6A-8-103.
Rules for determining whether certain obligations and interests are
securities or financial assets. -- (a) A share or similar
equity interest issued by a corporation,
business trust, joint stock company, or similar
entity is a security.
(b) An
"investment company security" is a security. "Investment company
security"
means a share or similar equity interest issued
by an entity that is registered as an investment
company under the federal investment company
laws, an interest in a unit investment trust that is
so registered, or a face-amount certificate
issued by a face-amount certificate company that is so
registered. Investment company security does not
include an insurance policy or endowment
policy or annuity contract issued by an
insurance company.
(c) An interest
in a partnership or limited liability company is not a security unless it is
dealt in or traded on securities exchanges or in
securities markets, its terms expressly provide that
it is a security governed by this chapter, or it
is an investment company security. However, an
interest in a partnership or limited liability
company is a financial asset if it is held in a securities
account.
(d) A writing
that is a security certificate is governed by this chapter and not by chapter 3
of this title, even though it also meets the
requirements of that chapter. However, a negotiable
instrument governed by chapter 3 of this title
is a financial asset if it is held in a securities
account.
(e) An option or
similar obligation issued by a clearing corporation to its participants is
not a security, but is a financial asset.
(f) A commodity
contract, as defined in section 6A-9-102(a)(15), is not a security or a
financial asset.
(g) A document
of title is not a financial asset unless subsection 6A-8-102(a)(9)(iii)
applies.
SECTION 8. Sections
6A-9-102, 6A-9-203, 6A-9-207, 6A-9-208, 6A-9-301, 6A-9-310,
6A-9-312, 6A-9-313, 6A-9-314, 6A-9-317, 6A-9-338
and 6A-9-601 of the General Laws in
Chapter 6A-9 entitled "Secured
Transactions" are hereby amended to read as follows:
6A-9-102. Definitions.
-- (a) Chapter 9 definitions. - In this chapter:
(1)
"Accession" means goods that are physically united with other goods
in such a
manner that the identity of the original goods
is not lost.
(2)
"Account", except as used in "account for", means a right
to payment of a monetary
obligation, whether or not earned by
performance, (i) for property that has been or is to be sold,
leased, licensed, assigned, or otherwise
disposed of, (ii) for services rendered or to be rendered,
(iii) for a policy of insurance issued or to be
issued, (iv) for a secondary obligation incurred or to
be incurred, (v) for energy provided or to be
provided, (vi) for the use or hire of a vessel under a
charter or other contract, (vii) arising out of
the use of a credit or charge card or information
contained on or for use with the card, or (viii)
as winnings in a lottery or other game of chance
operated or sponsored by a State, governmental
unit of a State, or person licensed or authorized to
operate the game by a State or governmental unit
of a State. The term includes health-care-
insurance receivables. The term does not include
(i) rights to payment evidenced by chattel paper
or an instrument, (ii) commercial tort claims,
(iii) deposit accounts, (iv) investment property, (v)
letter-of-credit rights or letters of credit, or
(vi) rights to payment for money or funds advanced or
sold, other than rights arising out of the use
of a credit or charge card or information contained on
or for use with the card.
(3) "Account
debtor" means a person obligated on an account, chattel paper, or general
intangible. The term does not include persons
obligated to pay a negotiable instrument, even if
the instrument constitutes part of chattel
paper.
(4)
"Accounting", except as used in "accounting for", means a
record:
(i) authenticated
by a secured party;
(ii) indicating
the aggregate unpaid secured obligations as of a date not more than 35
days earlier or 35 days later than the date of
the record; and
(iii) identifying
the components of the obligations in reasonable detail.
(5)
"Agricultural lien" means an interest in farm products:
(i) which secures
payment or performance of an obligation for:
(A) goods or services
furnished in connection with a debtor's farming operation; or
(B) rent on real
property leased by a debtor in connection with its farming operation;
(ii) which is
created by statute in favor of a person that:
(A) in the
ordinary course of its business furnished goods or services to a debtor in
connection with a debtor's farming operation; or
(B) leased real
property to a debtor in connection with the debtor's farming operation;
and
(iii) whose
effectiveness does not depend on the person's possession of the personal
property.
(6)
"As-extracted collateral" means:
(i) oil, gas, or
other minerals that are subject to a security interest that:
(A) is created by
a debtor having an interest in the minerals before extraction; and
(B) attaches to
the minerals as extracted; or
(ii) accounts
arising out of the sale at the wellhead or minehead of oil, gas, or other
minerals in which the debtor had an interest
before extraction.
(7)
"Authenticate" means:
(i) to sign; or
(ii) to execute
or otherwise adopt a symbol, or encrypt or similarly process a record in
whole or in part, with the present intent of the
authenticating person to identify the person and
adopt or accept a record.
(8)
"Bank" means an organization that is engaged in the business of
banking. The term
includes savings banks, savings and loan
associations, credit unions, and trust companies.
(9) "Cash
proceeds" means proceeds that are money, checks, deposit accounts, or the
like.
(10)
"Certificate of title" means a certificate of title with respect to
which a statute
provides for the security interest in question
to be indicated on the certificate as a condition or
result of the security interest's obtaining
priority over the rights of a lien creditor with respect to
the collateral.
(11)
"Chattel paper" means a record or records that evidence both a
monetary obligation
and a security interest in specific goods, a
security interest in specific goods and software used in
the goods, a security interest in specific goods
and license of software used in the goods, a lease
of specific goods, or a lease of specific goods
and license of software used in the goods. In this
paragraph, "monetary obligation" means
a monetary obligation secured by the goods or owed
under a lease of the goods and includes a
monetary obligation with respect to software used in the
goods. The term does not include (i) charters or
other contracts involving the use or hire of a
vessel or (ii) records that evidence a right to
payment arising out of the use of a credit or charge
card or information contained on or for use with
the card. If a transaction is evidenced by records
that include an instrument or series of
instruments, the group of records taken together constitutes
chattel paper.
(12)
"Collateral" means the property subject to a security interest or
agricultural lien. The
term includes:
(i) proceeds to which
a security interest attaches;
(ii) accounts,
chattel paper, payment intangibles, and promissory notes that have been
sold; and
(iii) goods that
are the subject of a consignment.
(13)
"Commercial tort claim" means a claim arising in tort with respect to
which:
(i) the claimant
is an organization; or
(ii) the claimant
is an individual and the claim:
(A) arose in the
course of the claimant's business or profession; and
(B) does not
include damages arising out of personal injury to or the death of an
individual.
(14)
"Commodity account" means an account maintained by a commodity
intermediary
in which a commodity contract is carried for a
commodity customer.
(15)
"Commodity contract" means a commodity futures contract, an option on
a
commodity futures contract, a commodity option,
or another contract if the contract or option is:
(i) traded on or
subject to the rules of a board of trade that has been designated as a
contract market for such a contract pursuant to
federal commodities laws; or
(ii) traded on a
foreign commodity board of trade, exchange, or market, and is carried on
the books of a commodity intermediary for a
commodity customer.
(16)
"Commodity customer" means a person for which a commodity
intermediary carries
a commodity contract on its books.
(17)
"Commodity intermediary" means a person that:
(i) is registered
as a futures commission merchant under federal commodities law; or
(ii) in the
ordinary course of its business provides clearance or settlement services for a
board of trade that has been designated as a
contract market pursuant to federal commodities law.
(18)
"Communicate" means:
(i) to send a
written or other tangible record;
(ii) to transmit
a record by any means agreed upon by the persons sending and receiving
the record; or
(iii) in the case
of transmission of a record to or by a filing office, to transmit a record by
any means prescribed by filing-office rule.
(19)
"Consignee" means a merchant to which goods are delivered in a
consignment.
(20)
"Consignment" means a transaction, regardless of its form, in which a
person
delivers goods to a merchant for the purpose of
sale and:
(i) the merchant:
(A) deals in
goods of that kind under a name other than the name of the person making
delivery;
(B) is not an
auctioneer; and
(C) is not
generally known by its creditors to be substantially engaged in selling the
goods of others;
(ii) with respect
to each delivery, the aggregate value of the goods is $1,000 or more at
the time of delivery;
(iii) the goods
are not consumer goods immediately before delivery; and
(iv) the
transaction does not create a security interest that secures an obligation.
(21)
"Consignor" means a person that delivers goods to a consignee in a
consignment.
(22)
"Consumer debtor" means a debtor in a consumer transaction.
(23)
"Consumer goods" means goods that are used or bought for use
primarily for
personal, family, or household purposes.
(24)
"Consumer-goods transaction" means a consumer transaction in which:
(i) an individual
incurs an obligation primarily for personal, family, or household
purposes; and
(ii) a security
interest in consumer goods secures the obligation.
(25)
"Consumer obligor" means an obligor who is an individual and who
incurred the
obligation as part of a transaction entered into
primarily for personal, family, or household
purposes.
(26)
"Consumer transaction" means a transaction in which (i) an individual
incurs an
obligation primarily for personal, family, or
household purposes, (ii) a security interest secures
the obligation, and (iii) the collateral is held
or acquired primarily for personal, family, or
household purposes. The term includes
consumer-goods transactions.
(27)
"Continuation statement" means an amendment of a financing statement
which:
(i) identifies,
by its file number, the initial financing statement to which it relates; and
(ii) indicates
that it is a continuation statement for, or that it is filed to continue the
effectiveness of, the identified financing
statement.
(28)
"Debtor" means:
(i) a person
having an interest, other than a security interest or other lien, in the
collateral, whether or not the person is an
obligor;
(ii) a seller of
accounts, chattel paper, payment intangibles, or promissory notes; or
(iii) a consignee.
(29)
"Deposit account" means a demand, time, savings, passbook, or similar
account
maintained with a bank. The term does not
include investment property or accounts evidenced by
an instrument.
(30)
"Document" means a document of title or a receipt of the type
described in
subsection 6A-7-201(2) 6A-7-201(b).
(31)
"Electronic chattel paper" means chattel paper evidenced by a record
or records
consisting of information stored in an
electronic medium.
(32)
"Encumbrance" means a right, other than an ownership interest, in
real property.
The term includes mortgages and other liens on
real property.
(33)
"Equipment" means goods other than inventory, farm products, or
consumer goods.
(34) "Farm
products" means goods, other than standing timber, with respect to which
the
debtor is engaged in a farming operation and
which are:
(i) crops grown,
growing, or to be grown, including:
(A) crops
produced on trees, vines, and bushes; and
(B) aquatic
goods, including seaweeds, produced in aquacultural operations;
(ii) livestock,
born or unborn, including fish, shellfish and other aquatic goods produced
in aquacultural operations;
(iii) supplies
used or produced in a farming operation; or
(iv) products of
crops or livestock in their unmanufactured states.
(35)
"Farming operation" means raising, cultivating, propagating,
fattening, grazing, or
any other farming, livestock, or aquacultural
operation.
(36) "File
number" means the number assigned to an initial financing statement
pursuant
to section 6A-9-519(a).
(37) "Filing
office" means an office designated in section 6A-9-501 as the place to
file a
financing statement.
(38)
"Filing-office rule" means a rule adopted pursuant to section
6A-9-526.
(39)
"Financing statement" means a record or records composed of an
initial financing
statement and any filed record relating to the
initial financing statement.
(40)
"Fixture filing" means the filing of a financing statement covering
goods that are or
are to become fixtures and satisfying section
6A-9-502(a) and (b). The term includes the filing of
a financing statement covering goods of a
transmitting utility which are or are to become fixtures.
(41)
"Fixtures" means goods that have become so related to particular real
property that
an interest in them arises under real property
law.
(42)
"General intangible" means any personal property, including things in
action, other
than accounts, chattel paper, commercial tort
claims, deposit accounts, documents, goods,
instruments, investment property,
letter-of-credit rights, letters of credit, money, and oil, gas, or
other minerals before extraction. The term
includes payment intangibles and software.
(43) "Good
faith" means honesty in fact and the observance of reasonable commercial
standards of fair dealing.
(44)
"Goods" means all things that are movable when a security interest
attaches. The
term includes (i) fixtures, (ii) standing timber
that is to be cut and removed under a conveyance or
contract for sale, (iii) the unborn young of
animals, (iv) crops grown, growing, or to be grown,
even if the crops are produced on trees, vines,
or bushes, and (v) manufactured homes. The term
also includes a computer program embedded in
goods and any supporting information provided
in connection with a transaction relating to the
program if (i) the program is associated with the
goods in such a manner that it customarily is
considered part of the goods, or (ii) by becoming the
owner of the goods, a person acquires a right to
use the program in connection with the goods.
The term does not include a computer program
embedded in goods that consist solely of the
medium in which the program is embedded. The
term also does not include accounts, chattel
paper, commercial tort claims, deposit accounts,
documents, general intangibles, instruments,
investment property, letter-of-credit rights,
letters of credit, money, or oil, gas, or other minerals
before extraction.
(45)
"Governmental unit" means a subdivision, agency, department, county,
parish,
municipality, or other unit of the government of
the United States, a State, or a foreign country.
The term includes an organization having a
separate corporate existence if the organization is
eligible to issue debt on which interest is
exempt from income taxation under the laws of the
United States.
(46)
"Health-care-insurance receivable" means an interest in or claim
under a policy of
insurance which is a right to payment of a
monetary obligation for health-care goods or services
provided or to be provided.
(47)
"Instrument" means a negotiable instrument or any other writing that
evidences a
right to the payment of a monetary obligation,
is not itself a security agreement or lease, and is of
a type that in ordinary course of business is
transferred by delivery with any necessary
indorsement or assignment. The term does not
include (i) investment property, (ii) letters of
credit, or (iii) writings that evidence a right
to payment arising out of the use of a credit or charge
card or information contained on or for use with
the card.
(48)
"Inventory" means goods, other than farm products, which:
(i) are leased by
a person as lessor;
(ii) are held by
a person for sale or lease or to be furnished under a contract of service;
(iii) are
furnished by a person under a contract of service; or
(iv) consist of
raw materials, work in process, or materials used or consumed in a
business.
(49)
"Investment property" means a security, whether certificated or
uncertificated,
security entitlement, securities account,
commodity contract, or commodity account.
(50)
"Jurisdiction of organization", with respect to a registered
organization, means the
jurisdiction under whose law the organization is
organized.
(51)
"Letter-of-credit right" means a right to payment or performance
under a letter of
credit, whether or not the beneficiary has
demanded or is at the time entitled to demand payment
or performance. The term does not include the
right of a beneficiary to demand payment or
performance under a letter of credit.
(52) "Lien
creditor" means:
(i) a creditor
that has acquired a lien on the property involved by attachment, levy, or the
like;
(ii) an assignee
for benefit of creditors from the time of assignment;
(iii) a trustee
in bankruptcy from the date of the filing of the petition; or
(iv) a receiver
in equity from the time of appointment.
(53)
"Manufactured home" means a structure, transportable in one or more
sections,
which, in the traveling mode, is eight body feet
or more in width or 40 body feet or more in
length, or, when erected on site, is 320 or more
square feet, and which is built on a permanent
chassis and designed to be used as a dwelling
with or without a permanent foundation when
connected to the required utilities, and
includes the plumbing, heating, air-conditioning, and
electrical systems contained therein. The term
includes any structure that meets all of the
requirements of this paragraph except the size
requirements and with respect to which the
manufacturer voluntarily files a certification
required by the United States Secretary of Housing
and Urban Development and complies with the
standards established under Title 42 of the United
States Code.
(54)
"Manufactured-home transaction" means a secured transaction:
(i) that creates
a purchase-money security interest in a manufactured home, other than a
manufactured home held as inventory; or
(ii) in which a
manufactured home, other than a manufactured home held as inventory, is
the primary collateral.
(55) "Mortgage"
means a consensual interest in real property, including fixtures, which
secures payment or performance of an obligation.
(56) "New
debtor" means a person that becomes bound as debtor under section 6A-9-
203(d) by a security agreement previously
entered into by another person.
(57) "New
value" means (i) money, (ii) money's worth in property, services, or new
credit, or (iii) release by a transferee of an
interest in property previously transferred to the
transferee. The term does not include an
obligation substituted for another obligation.
(58)
"Noncash proceeds" means proceeds other than cash proceeds.
(59)
"Obligor" means a person that, with respect to an obligation secured
by a security
interest in or an agricultural lien on the
collateral, (i) owes payment or other performance of the
obligation, (ii) has provided property other
than the collateral to secure payment or other
performance of the obligation, or (iii) is
otherwise accountable in whole or in part for payment or
other performance of the obligation. The term
does not include issuers or nominated persons
under a letter of credit.
(60)
"Original debtor," except as used in section 6A-9-310(c), means a
person that, as
debtor, entered into a security agreement to
which a new debtor has become bound under section
6A-9-203(d).
(61)
"Payment intangible" means a general intangible under which the
account debtor's
principal obligation is a monetary obligation.
(62) "Person
related to", with respect to an individual, means:
(i) the spouse of
the individual;
(ii) a brother,
brother-in-law, sister, or sister-in-law of the individual;
(iii) an ancestor
or lineal descendant of the individual or the individual's spouse; or
(iv) any other
relative, by blood or marriage, of the individual or the individual's spouse
who shares the same home with the individual.
(63) "Person
related to", with respect to an organization, means:
(i) a person directly
or indirectly controlling, controlled by, or under common control
with the organization;
(ii) an officer
or director of, or a person performing similar functions with respect to, the
organization;
(iii) an officer
or director of, or a person performing similar functions with respect to, a
person described in subparagraph (i);
(iv) the spouse
of an individual described in subparagraph (i), (ii), or (iii); or
(v) an individual
who is related by blood or marriage to an individual described in
subparagraph (i), (ii), (iii), or (iv) and
shares the same home with the individual.
(64)
"Proceeds," except as used in section 6A-9-609(b), means the
following property:
(i) whatever is acquired
upon the sale, lease, license, exchange, or other disposition of
collateral;
(ii) whatever is
collected on, or distributed on account of, collateral;
(iii) rights
arising out of collateral;
(iv) to the
extent of the value of collateral, claims arising out of the loss,
nonconformity,
or interference with the use of, defects or
infringement of rights in, or damage to, the collateral; or
(v) to the extent
of the value of collateral and to the extent payable to the debtor or the
secured party, insurance payable by reason of
the loss or nonconformity of, defects or
infringement of rights in, or damage to, the
collateral.
(65)
"Promissory note" means an instrument that evidences a promise to pay
a monetary
obligation, does not evidence an order to pay,
and does not contain an acknowledgment by a bank
that the bank has received for deposit a sum of
money or funds.
(66)
"Proposal" means a record authenticated by a secured party which
includes the
terms on which the secured party is willing to
accept collateral in full or partial satisfaction of the
obligation it secures pursuant to sections
6A-9-620, 6A-9-621, and 6A-9-622.
(67)
"Public-finance transaction" means a secured transaction in
connection with which:
(i) debt
securities are issued;
(ii) all or a
portion of the securities issued have an initial stated maturity of at least 20
years; and
(iii) the debtor,
obligor, secured party, account debtor or other person obligated on
collateral, assignor or assignee of a secured
obligation, or assignor or assignee of a security
interest is a State or a governmental unit of a
State.
(68)
"Pursuant to commitment", with respect to an advance made or other
value given by
a secured party, means pursuant to the secured
party's obligation, whether or not a subsequent
event of default or other event not within the
secured party's control has relieved or may relieve
the secured party from its obligation.
(69)
"Record", except as used in "for record", "of
record", "record or legal title", and
"record owner", means information that
is inscribed on a tangible medium or which is stored in
an electronic or other medium and is retrievable
in perceivable form.
(70)
"Registered organization" means an organization organized solely
under the law of
a single State or the United States and as to
which the State or the United States must maintain a
public record showing the organization to have
been organized.
(71)
"Secondary obligor" means an obligor to the extent that:
(i) the obligor's
obligation is secondary; or
(ii) the obligor
has a right of recourse with respect to an obligation secured by collateral
against the debtor, another obligor, or property
of either.
(72) "Secured
party" means:
(i) a person in
whose favor a security interest is created or provided for under a security
agreement, whether or not any obligation to be
secured is outstanding;
(ii) a person
that holds an agricultural lien;
(iii) a
consignor;
(iv) a person to
which accounts, chattel paper, payment intangibles, or promissory notes
have been sold;
(v) a trustee,
indenture trustee, agent, collateral agent, or other representative in whose
favor a security interest or agricultural lien
is created or provided for; or
(vi) a person
that holds a security interest arising under section 6A-2-401, 6A-2-505, 6A-
2-711(3), 6A-2.1-508(5), 6A-4-210, or 6A-5-118.
(73)
"Security agreement" means an agreement that creates or provides for
a security
interest.
(74)
"Send", in connection with a record or notification, means:
(i) to deposit in
the mail, deliver for transmission, or transmit by any other usual means
of communication, with postage or cost of
transmission provided for, addressed to any address
reasonable under the circumstances; or
(ii) to cause the
record or notification to be received within the time that it would have
been received if properly sent under
subparagraph (i).
(75) "Software"
means a computer program and any supporting information provided in
connection with a transaction relating to the
program. The term does not include a computer
program that is included in the definition of
goods.
(76)
"State" means a State of the United States, the District of Columbia,
Puerto Rico,
the United States Virgin Islands, or any
territory or insular possession subject to the jurisdiction
of the United States.
(77)
"Supporting obligation" means a letter-of-credit right or secondary
obligation that
supports the payment or performance of an
account, chattel paper, a document, a general
intangible, an instrument, or investment
property.
(78)
"Tangible chattel paper" means chattel paper evidenced by a record or
records
consisting of information that is inscribed on a
tangible medium.
(79)
"Termination statement" means an amendment of a financing statement
which:
(i) identifies,
by its file number, the initial financing statement to which it relates; and
(ii) indicates
either that it is a termination statement or that the identified financing
statement is no longer effective.
(80)
"Transmitting utility" means a person primarily engaged in the
business of:
(i) operating a
railroad, subway, street railway, or trolley bus;
(ii) transmitting
communications electrically, electromagnetically, or by light;
(iii)
transmitting goods by pipeline or sewer; or
(iv) transmitting
or producing and transmitting electricity, steam, gas, or water.
(b) Definitions
in other chapters. - The "Control" as provided in section 6A-7-206
and
the following definitions in other chapters apply
to this chapter:
"Applicant" section 6A-5-102.
"Beneficiary"
section 6A-5-102.
"Broker"
section 6A-8-102.
"Certificated
security" section 6A-8-102.
"Check"
section 6A-3-104.
"Clearing
corporation" section 6A-8-102.
"Contract for
sale" section 6A-2-106.
"Customer"
section 6A-4-104.
"Entitlement holder"
section 6A-8-102.
"Financial
asset" section 6A-8-102.
"Holder in
due course" section 6A-3-302.
"Issuer"
(with respect to a letter of section 6A-5-102.
credit or
letter-of-credit right)
"Issuer"
(with respect to a security) section 6A-8-201.
"Issuer"
(with respect to documents of title) section 6A-7.1-102.
"Lease"
section 6A-2.1-103.
"Lease
agreement" section 6A-2.1-103.
"Lease
contract" section 6A-2.1-103.
"Leasehold
interest" section 6A-2.1-103.
"Lessee"
section 6A-2.1-103.
"Lessee in
ordinary course of business" section 6A-2.1-103.
"Lessor"
section 6A-2.1-103.
"Lessor's
residual interest" section 6A-2.1-103.
"Letter of
credit" section 6A-5-102.
"Merchant"
section 6A-2-104.
"Negotiable
instrument" section 6A-3-104.
"Nominated
person" section 6A-5-102.
"Note"
section 6A-3-104.
"Proceeds of
a letter of credit" section 6A-5-114.
"Prove"
section 6A-3-103.
"Sale"
section 6A-2-106.
"Securities
account" section 6A-8-501.
"Securities
intermediary" section 6A-8-102.
"Security"
section 6A-8-102.
"Security
certificate" section 6A-8-102.
"Security
entitlement" section 6A-8-102.
"Uncertificated
security" section 6A-8-102.
(c) Chapter 1
definitions and principles. - Chapter 1 of this title contains general
definitions and principles of construction and
interpretation applicable throughout this chapter.
6A-9-203. Attachment
and enforceability of security interest; proceeds; supporting
obligations; formal requisites. -- (a) Attachment. - A
security interest attaches to collateral when
it becomes enforceable against the debtor with
respect to the collateral, unless an agreement
expressly postpones the time of attachment.
(b)
Enforceability. - Except as otherwise provided in subsections (c) through (i),
a
security interest is enforceable against the
debtor and third parties with respect to the collateral
only if:
(1) Value has
been given;
(2) The debtor
has rights in the collateral or the power to transfer rights in the collateral
to a secured party; and
(3) One of the
following conditions is met:
(i) The debtor
has authenticated a security agreement that provides a description of the
collateral and, if the security interest covers
timber to be cut, a description of the land concerned;
(ii) The
collateral is not a certificated security and is in the possession of the
secured
party under section 6A-9-313 pursuant to the
debtor's security agreement;
(iii) The
collateral is a certificated security in registered form and the security
certificate
has been delivered to the secured party under
section 6A-8-301 pursuant to the debtor's security
agreement; or
(iv) The
collateral is deposit accounts, electronic chattel paper, investment property,
or
letter-of-credit rights, or electronic
documents, and the secured party has control under sections
6A-7-106, 6A-9-104, 6A-9-105, 6A-9-106, or 6A-9-107
pursuant to the debtor's security
agreement.
(c) Other UCC
provisions. - Subsection (b) is subject to section 6A-4-210 on the security
interest of a collecting bank, section 6A-5-118
on the security interest of a letter-of-credit issuer
or nominated person, section 6A-9-110 on a
security interest arising under chapter 2 or 2.1, and
section 6A-9-206 on security interests in
investment property.
(d) When person becomes
bound by another person's security agreement. - A person
becomes bound as debtor by a security agreement
entered into by another person if, by operation
of law other than this chapter or by contract:
(1) The security
agreement becomes effective to create a security interest in the person's
property; or
(2) The person
becomes generally obligated for the obligations of the other person,
including the obligation secured under the
security agreement, and acquires or succeeds to all or
substantially all of the assets of the other
person.
(e) Effect of new
debtor becoming bound. - If a new debtor becomes bound as debtor by
a security agreement entered into by another
person:
(1) The agreement
satisfies subsection (b)(3) with respect to existing or after-acquired
property of the new debtor to the extent the
property is described in the agreement; and
(2) Another
agreement is not necessary to make a security interest in the property
enforceable.
(f) Proceeds and
supporting obligations. - The attachment of a security interest in
collateral gives the secured party the rights to
proceeds provided by section 6A-9-315 and is also
attachment of a security interest in a
supporting obligation for the collateral.
(g) Lien securing
right to payment. - The attachment of a security interest in a right to
payment or performance secured by a security
interest or other lien on personal or real property is
also attachment of a security interest in the
security interest, mortgage, or other lien.
(h) Security
entitlement carried in securities account. - The attachment of a security
interest in a securities account is also
attachment of a security interest in the security entitlements
carried in the securities account.
(i) Commodity
contracts carried in commodity account. - The attachment of a security
interest in a commodity account is also
attachment of a security interest in the commodity
contracts carried in the commodity account.
6A-9-207.
Rights and duties of secured party having possession or control of
collateral. -- (a) Duty of care when
secured party in possession. - Except as otherwise provided in
subsection (d), a secured party shall use
reasonable care in the custody and preservation of
collateral in the secured party's possession. In
the case of chattel paper or an instrument,
reasonable care includes taking necessary steps
to preserve rights against prior parties unless
otherwise agreed.
(b) Expenses,
risks, duties, and rights when secured party in possession. - Except as
otherwise provided in subsection (d), if a
secured party has possession of collateral:
(1) Reasonable
expenses, including the cost of insurance and payment of taxes or other
charges, incurred in the custody, preservation,
use, or operation of the collateral are chargeable to
the debtor and are secured by the collateral;
(2) The risk of
accidental loss or damage is on the debtor to the extent of a deficiency in
any effective insurance coverage;
(3) The secured
party shall keep the collateral identifiable, but fungible collateral may be
commingled; and
(4) The secured
party may use or operate the collateral:
(i) For the
purpose of preserving the collateral or its value;
(ii) As permitted
by an order of a court having competent jurisdiction; or
(iii) Except in
the case of consumer goods, in the manner and to the extent agreed by the
debtor.
(c) Duties and
rights when secured party in possession or control. - Except as otherwise
provided in subsection (d), a secured party
having possession of collateral or control of collateral
under sections 6A-7-106, 6A-9-104,
6A-9-105, 6A-9-106, or 6A-9-107:
(1) May hold as
additional security any proceeds, except money or funds, received from
the collateral;
(2) Shall apply
money or funds received from the collateral to reduce the secured
obligation, unless remitted to the debtor; and
(3) May create a
security interest in the collateral.
(d) Buyer of certain
rights to payment. - If the secured party is a buyer of accounts,
chattel paper, payment intangibles, or
promissory notes or a consignor:
(1) Subsection
(a) does not apply unless the secured party is entitled under an agreement:
(i) To charge
back uncollected collateral; or
(ii) Otherwise to
full or limited recourse against the debtor or a secondary obligor based
on the nonpayment or other default of an account
debtor or other obligor on the collateral; and
(2) Subsections
(b) and (c) do not apply.
6A-9-208.
Additional duties of secured party having control of collateral. -- (a)
Applicability of section. - This section applies
to cases in which there is no outstanding secured
obligation and the secured party is not
committed to make advances, incur obligations, or
otherwise give value.
(b) Duties of
secured party after receiving demand from debtor. - Within 10 days after
receiving an authenticated demand by the debtor:
(1) A secured
party having control of a deposit account under section 6A-9-104(a)(2)
shall send to the bank with which the deposit
account is maintained an authenticated statement
that releases the bank from any further
obligation to comply with instructions originated by the
secured party;
(2) A secured
party having control of a deposit account under section 6A-9-104(a)(3)
shall:
(i) Pay the
debtor the balance on deposit in the deposit account; or
(ii) Transfer the
balance on deposit into a deposit account in the debtor's name;
(3) A secured
party, other than a buyer, having control of electronic chattel paper under
section 6A-9-105 shall:
(i) Communicate
the authoritative copy of the electronic chattel paper to the debtor or its
designated custodian;
(ii) If the
debtor designates a custodian that is the designated custodian with which the
authoritative copy of the electronic chattel
paper is maintained for the secured party,
communicate to the custodian an authenticated
record releasing the designated custodian from
any further obligation to comply with
instructions originated by the secured party and instructing
the custodian to comply with instructions
originated by the debtor; and
(iii) Take
appropriate action to enable the debtor or its designated custodian to make
copies of or revisions to the authoritative copy
which add or change an identified assignee of the
authoritative copy without the consent of the
secured party;
(4) A secured party
having control of investment property under section 6A-8-106(d)(2)
or 6A-9-106(b) shall send to the securities
intermediary or commodity intermediary with which
the security entitlement or commodity contract
is maintained an authenticated record that releases
the securities intermediary or commodity
intermediary from any further obligation to comply
with entitlement orders or directions originated
by the secured party; and
(5) A secured
party having control of a letter-of-credit right under section 6A-9-107 shall
send to each person having an unfulfilled
obligation to pay or deliver proceeds of the letter of
credit to the secured party an authenticated
release from any further obligation to pay or deliver
proceeds of the letter of credit to the secured
party.; and
(6) A secured
party having control of an electronic document shall:
(a) give
control of the electronic document to the debtor or its designated custodian;
(b) if the
debtor designates a custodian that is the designated custodian with which the
authoritative copy of the electronic document is
maintaining for the secured party, communicate
to the custodian an authenticated record
releasing the designated custodian from any further
obligation to comply with instructions
originated by the secured party and instructing the
custodian to comply with instructions originated
by the debtor; and
(c) take
appropriate action to enable the debtor or its designated custodian to make
copies
of or revisions to the authoritative copy which
add or change an identified assignee of the
authoritative copy without the consent of the
secured party.
6A-9-301.
Law governing perfection and priority of security interests. -- Except
as
otherwise provided in sections 6A-9-303 through
6A-9-306, the following rules determine the
law governing perfection, the effect of
perfection or nonperfection, and the priority of a security
interest in collateral:
(1) Except as
otherwise provided in this section, while a debtor is located in a
jurisdiction, the local law of that jurisdiction
governs perfection, the effect of perfection or
nonperfection, and the priority of a security
interest in collateral.
(2) While collateral
is located in a jurisdiction, the local law of that jurisdiction governs
perfection, the effect of perfection or
nonperfection, and the priority of a possessory security
interest in that collateral.
(3) Except as
otherwise provided in paragraph (4), while tangible negotiable
documents,
goods, instruments, money, or tangible chattel
paper is located in a jurisdiction, the local law of
that jurisdiction governs:
(i) Perfection of
a security interest in the goods by filing a fixture filing;
(ii) Perfection
of a security interest in timber to be cut; and
(iii) The effect
of perfection or nonperfection and the priority of a nonpossessory
security interest in the collateral.
(4) The local law
of the jurisdiction in which the wellhead or minehead is located
governs perfection, the effect of perfection or
nonperfection, and the priority of a security interest
in as-extracted collateral.
6A-9-310.
When filing required to perfect security interest or agricultural lien;
security interests and agricultural liens to
which filing provisions do not apply. -- (a) General
rule: perfection by filing. - Except as
otherwise provided in subsection (b) and section 6A-9-
312(b), a financing statement must be filed to
perfect all security interests and agricultural liens.
(b) Exceptions:
filing not necessary. - The filing of a financing statement is not necessary
to perfect a security interest:
(1) That is
perfected under section 6A-9-308(d), (e), (f), or (g);
(2) That is
perfected under section 6A-9-309 when it attaches;
(3) In property
subject to a statute, regulation, or treaty described in section 6A-9-311(a);
(4) In goods in
possession of a bailee which is perfected under section 6A-9-312(d)(1) or
(2);
(5) In
certificated securities, documents, goods, or instruments which is perfected
without filing, control or possession
under section 6A-9-312(e), (f), or (g);
(6) In collateral
in the secured party's possession under section 6A-9-313;
(7) In a
certificated security which is perfected by delivery of the security
certificate to
the secured party under section 6A-9-313;
(8) In deposit
accounts, electronic chattel paper, electronic documents, investment
property, or letter-of-credit rights which is
perfected by control under section 6A-9-314;
(9) In proceeds
which is perfected under section 6A-9-315; or
(10) That is
perfected under section 6A-9-316.
(c) Assignment of
perfected security interest. - If a secured party assigns a perfected
security interest or agricultural lien, a filing
under this chapter is not required to continue the
perfected status of the security interest
against creditors of and transferees from the original
debtor.
6A-9-312.
Perfection of security interests in chattel paper, deposit accounts,
documents, goods covered by documents,
instruments, investment property, letter-of-credit
rights, and money; perfection by permissive
filing; temporary perfection without filing or
transfer of possession. -- (a) Perfection by
filing permitted. - A security interest in chattel paper,
negotiable documents, instruments, or investment
property may be perfected by filing.
(b) Control or
possession of certain collateral. - Except as otherwise provided in section
6A-9-315(c) and (d) for proceeds:
(1) A security
interest in a deposit account may be perfected only by control under
section 6A-9-314;
(2) And except as
otherwise provided in section 6A-9-308(d), a security interest in a
letter-of-credit right may be perfected only by
control under section 6A-9-314; and
(3) A security
interest in money may be perfected only by the secured party's taking
possession under section 6A-9-313.
(c) Goods covered
by negotiable document. - While goods are in the possession of a
bailee that has issued a negotiable document
covering the goods:
(1) A security
interest in the goods may be perfected by perfecting a security interest in
the document; and
(2) A security
interest perfected in the document has priority over any security interest
that becomes perfected in the goods by another
method during that time.
(d) Goods covered
by nonnegotiable document. - While goods are in the possession of a
bailee that has issued a nonnegotiable document
covering the goods, a security interest in the
goods may be perfected by:
(1) Issuance of a
document in the name of the secured party;
(2) The bailee's
receipt of notification of the secured party's interest; or
(3) Filing as to
the goods.
(e) Temporary
perfection: new value. - A security interest in certificated securities,
negotiable documents, or instruments is perfected
without filing or the taking of possession or
control for a period of 20 days from the time it
attaches to the extent that it arises for new value
given under an authenticated security agreement.
(f) Temporary
perfection: goods or documents made available to debtor. - A perfected
security interest in a negotiable document or
goods in possession of a bailee, other than one that
has issued a negotiable document for the goods,
remains perfected for 20 days without filing if
the secured party makes available to the debtor
the goods or documents representing the goods
for the purpose of:
(1) Ultimate sale
or exchange; or
(2) Loading,
unloading, storing, shipping, transshipping, manufacturing, processing, or
otherwise dealing with them in a manner
preliminary to their sale or exchange.
(g) Temporary
perfection: delivery of security certificate or instrument to debtor. - A
perfected security interest in a certificated
security or instrument remains perfected for 20 days
without filing if the secured party delivers the
security certificate or instrument to the debtor for
the purpose of:
(1) Ultimate sale
or exchange; or
(2) Presentation,
collection, enforcement, renewal, or registration of transfer.
(h) Expiration of
temporary perfection. - After the 20-day period specified in subsection
(e), (f), or (g) expires, perfection depends
upon compliance with this chapter.
6A-9-313.
When possession by or delivery to secured party perfects security interest
without filing. -- (a) Perfection by
possession or delivery. - Except as otherwise provided in
subsection (b), a secured party may perfect a
security interest in tangible negotiable documents,
goods, instruments, money, or tangible chattel paper
by taking possession of the collateral. A
secured party may perfect a security interest in
certificated securities by taking delivery of the
certificated securities under section 6A-8-301.
(b) Goods covered
by certificate of title. - With respect to goods covered by a certificate
of title issued by this State, a secured party
may perfect a security interest in the goods by taking
possession of the goods only in the
circumstances described in section 6A-9-316(d).
(c) Collateral in
possession of person other than debtor. - With respect to collateral other
than certificated securities and goods covered
by a document, a secured party takes possession of
collateral in the possession of a person other
than the debtor, the secured party, or a lessee of the
collateral from the debtor in the ordinary
course of the debtor's business, when:
(1) The person in
possession authenticates a record acknowledging that it holds
possession of the collateral for the secured
party's benefit; or
(2) The person
takes possession of the collateral after having authenticated a record
acknowledging that it will hold possession of
collateral for the secured party's benefit.
(d) Time of
perfection by possession; continuation of perfection. - If perfection of a
security interest depends upon possession of the
collateral by a secured party, perfection occurs
no earlier than the time the secured party takes
possession and continues only while the secured
party retains possession.
(e) Time of
perfection by delivery; continuation of perfection. - A security interest in a
certificated security in registered form is
perfected by delivery when delivery of the certificated
security occurs under section 6A-8-301 and
remains perfected by delivery until the debtor obtains
possession of the security certificate.
(f)
Acknowledgment not required. - A person in possession of collateral is not
required
to acknowledge that it holds possession for a
secured party's benefit.
(g) Effectiveness
of acknowledgment; no duties or confirmation. - If a person
acknowledges that it holds possession for the
secured party's benefit:
(1) The
acknowledgment is effective under subsection (c) or section 6A-8-301(a), even
if
the acknowledgment violates the rights of a
debtor; and
(2) Unless the
person otherwise agrees or law other than this chapter otherwise provides,
the person does not owe any duty to the secured
party and is not required to confirm the
acknowledgment to another person.
(h) Secured
party's delivery to person other than debtor. - A secured party having
possession of collateral does not relinquish
possession by delivering the collateral to a person
other than the debtor or a lessee of the
collateral from the debtor in the ordinary course of the
debtor's business if the person was instructed
before the delivery or is instructed
contemporaneously with the delivery:
(1) To hold
possession of the collateral for the secured party's benefit; or
(2) To redeliver
the collateral to the secured party.
(i) Effect of
delivery under subsection (h); no duties or confirmation. - A secured party
does not relinquish possession, even if a
delivery under subsection (h) violates the rights of a
debtor. A person to which collateral is
delivered under subsection (h) does not owe any duty to
the secured party and is not required to confirm
the delivery to another person unless the person
otherwise agrees or law other than this chapter
otherwise provides.
6A-9-314.
Perfection by control. -- (a) Perfection by control. - A security
interest in
investment property, deposit accounts,
letter-of-credit rights, or electronic chattel paper or
electronic documents may be perfected by
control of the collateral under sections 6A-7-106,
6A-9-104, 6A-9-105, 6A-9-106, or 6A-9-107.
(b) Specified
collateral: time of perfection by control; continuation of perfection. - A
security interest in deposit accounts,
electronic chattel paper, or letter-of-credit rights or
electronic documents is perfected by control
under sections 6A-7-106, 6A-9-104, 6A-9-105, or
6A-9-107 when the secured party obtains control
and remains perfected by control only while the
secured party retains control.
(c) Investment
property: time of perfection by control; continuation of perfection. - A
security interest in investment property is
perfected by control under section 6A-9-106 from the
time the secured party obtains control and
remains perfected by control until:
(1) The secured
party does not have control; and
(2) One of the
following occurs:
(i) If the
collateral is a certificated security, the debtor has or acquires possession of
the
security certificate;
(ii) If the collateral
is an uncertificated security, the issuer has registered or registers the
debtor as the registered owner; or
(iii) If the
collateral is a security entitlement, the debtor is or becomes the entitlement
holder.
6A-9-317.
Interests that take priority over or take free of security interest or
agricultural lien. -- (a) Conflicting
security interests and rights of lien creditors. - A security
interest or agricultural lien is subordinate to
the rights of:
(1) A person
entitled to priority under section 6A-9-322; and
(2) Except as
otherwise provided in subsection (e), a person that becomes a lien creditor
before the earlier of the time: (i) the security
interest or agricultural lien is perfected; or (ii) one of
the conditions specified in section
6A-9-203(b)(3) is met and a financing statement covering the
collateral is filed.
(b) Buyers that
receive delivery. - Except as otherwise provided in subsection (e), a
buyer, other than a secured party, of tangible
chattel paper, tangible documents, goods,
instruments, or a security certificate takes
free of a security interest or agricultural lien if the
buyer gives value and receives delivery of the
collateral without knowledge of the security
interest or agricultural lien and before it is
perfected.
(c) Lessees that
receive delivery. - Except as otherwise provided in subsection (e), a
lessee of goods takes free of a security
interest or agricultural lien if the lessee gives value and
receives delivery of the collateral without
knowledge of the security interest or agricultural lien
and before it is perfected.
(d) Licensees and
buyers of certain collateral. - A licensee of a general intangible or a
buyer, other than a secured party, of accounts,
electronic chattel paper, electronic documents,
general intangibles, or investment property
other than a certificated security takes free of a
security interest if the licensee or buyer gives
value without knowledge of the security interest
and before it is perfected.
(e)
Purchase-money security interest. - Except as otherwise provided in sections
6A-9-
320 and 6A-9-321, if a person files a financing
statement with respect to a purchase-money
security interest before or within 20 days after
the debtor receives delivery of the collateral, the
security interest takes priority over the rights
of a buyer, lessee, or lien creditor which arise
between the time the security interest attaches
and the time of filing.
6A-9-338.
Priority of security interest or agricultural lien perfected by filed
financing statement providing certain incorrect
information. --
If a security interest or
agricultural lien is perfected by a filed
financing statement providing information described in
section 6A-9-516(b)(5) which is incorrect at the
time the financing statement is filed:
(1) The security
interest or agricultural lien is subordinate to a conflicting perfected
security interest in the collateral to the
extent that the holder of the conflicting security interest
gives value in reasonable reliance upon the
incorrect information; and
(2) A purchaser,
other than a secured party, of the collateral takes free of the security
interest or agricultural lien to the extent
that, in reasonable reliance upon the incorrect
information, the purchaser gives value and, in
the case of tangible chattel paper, tangible
documents, goods, instruments, or a security
certificate, receives delivery of the collateral.
6A-9-601.
Rights after default; judicial enforcement; consignor or buyer of
accounts, chattel paper, payment intangibles, or
promissory notes. -- (a) Rights of secured
party after default. - After default, a secured
party has the rights provided in this part and, except
as otherwise provided in section 6A-9-602, those
provided by agreement of the parties. A secured
party:
(1) May reduce a
claim to judgment, foreclose, or otherwise enforce the claim, security
interest, or agricultural lien by any available
judicial procedure; and
(2) If the
collateral is documents, may proceed either as to the documents or as to the
goods they cover.
(b) Rights and
duties of secured party in possession or control. - A secured party in
possession of collateral or control of collateral
under section 6A-7-106, 6A-9-104, 6A-9-105,
6A-9-106, or 6A-9-107 has the rights and duties
provided in section 6A-9-207.
(c) Rights
cumulative; simultaneous exercise. - The rights under subsections (a) and (b)
are cumulative and may be exercised
simultaneously.
(d) Rights of
debtor and obligor. - Except as otherwise provided in subsection (g) and
section 6A-9-605, after default, a debtor and an
obligor have the rights provided in this part and
by agreement of the parties.
(e) Lien of levy
after judgment. - If a secured party has reduced its claim to judgment,
the lien of any levy that may be made upon the
collateral by virtue of an execution based upon the
judgment relates back to the earliest of:
(1) The date of
perfection of the security interest or agricultural lien in the collateral;
(2) The date of
filing a financing statement covering the collateral; or
(3) Any date
specified in a statute under which the agricultural lien was created.
(f) Execution
sale. - A sale pursuant to an execution is a foreclosure of the security
interest or agricultural lien by judicial
procedure within the meaning of this section. A secured
party may purchase at the sale and thereafter
hold the collateral free of any other requirements of
this chapter.
(g) Consignor or
buyer of certain rights to payment. - Except as otherwise provided in
section 6A-9-607(c), this part imposes no duties
upon a secured party that is a consignor or is a
buyer of accounts, chattel paper, payment
intangibles, or promissory notes.
SECTION 9. This
act shall take effect upon passage.
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LC02424
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