Chapter 019

2007 -- S 0105

Enacted 05/23/07

 

A N A C T

RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE GENERALLY -- THE UNIFORM COMMERCIAL CODE

          

     Introduced By: Senator William A. Walaska

     Date Introduced: January 24, 2007

 

It is enacted by the General Assembly as follows:

 

     SECTION 1. Section 9-1-4 of the General Laws in Chapter 9-1 entitled "Causes of

Action" is hereby amended to read as follows:

 

     9-1-4. Statute of frauds. -- No action shall be brought:

      (1) Whereby to charge any person upon any contract for the sale of lands, tenements, or

hereditaments, or the making of any lease thereof for a longer time than one year;

      (2) Whereby to charge any person upon any agreement made upon consideration of

marriage;

      (3) Whereby to charge any trustee under any express trust, or any executor or

administrator, upon his or her special promise to answer any debt or damage out of his or her own

estate;

      (4) Whereby to charge any person upon his or her special promise to answer for the debt,

default, or miscarriage of another person;

      (5) Whereby to charge any person upon any agreement which is not to be performed

within the space of one year from the making thereof;

      (6) Whereby to charge any person upon any agreement or promise to pay any

commission for or upon the sale of any interest in real estate,;

     (7) Except in cases to which the uniform commercial code (title 6A) applies, whereby to

charge any person upon any contract for the sale of personal property beyond five thousand

dollars ($5,000) in an amount or value of remedy,

      unless the promise or agreement upon which the action shall be brought, or some note or

memorandum thereof, shall be in writing, and signed by the party to be charged therewith, or by

some other person by him or her thereunto lawfully authorized.

 

     SECTION 2. Sections 6A-1-101, 6A-1-102, 6A-1-103, 6A-1-104, 6A-1-105, 6A-1-106,

6A-1-107, 6A-1-108, 6A-1-201, 6A-1-202, 6A-1-203, 6A-1-204, 6A-1-205 and 6A-1-206 of the

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

follows.

 

     6A-1-101. Short title Short titles. -- Title 6A shall be known and may be cited as the

Uniform Commercial Code.

     (a) Title 6A may be cited as the Uniform Commercial Code.

     (b) This chapter may be cited as Uniform Commercial Code – General Provisions.

 

     6A-1-102. Purposes -- Rules of construction -- Variation by agreement Scope of

Chapter. -- (1) Title 6A shall be liberally construed and applied to promote its underlying

purposes and policies.

      (2) Underlying purposes and policies of title 6A are:

      (a) To simplify, clarify, and modernize the law governing commercial transactions;

      (b) To permit the continued expansion of commercial practices through custom, usage,

and agreement of the parties;

      (c) To make uniform the law among the various jurisdictions.

      (3) The effect of provisions of title 6A may be varied by agreement, except as otherwise

provided in title 6A and except that the obligations of good faith, diligence, reasonableness, and

care prescribed by title 6A may not be disclaimed by agreement but the parties may by agreement

determine the standards by which the performance of such obligations is to be measured if such

standards are not manifestly unreasonable.

      (4) The presence in certain provisions of title 6A of the words "unless otherwise agreed"

or words of similar import does not imply that the effect of other provisions may not be varied by

agreement under subsection (3).

      (5) In title 6A, unless the context otherwise requires,

      (a) Words in the singular number include the plural, and in the plural include the

singular;

      (b) Words of the masculine gender include the feminine and the neuter, and when the

sense so indicates words of the neuter gender may refer to any gender.

     This chapter applies to a transaction to the extent that it is governed by another chapter of

Title 6A.

 

     6A-1-103. Supplementary general principles of law applicable Construction of

uniform commercial code to promote its purposes and policies -- Applicability of

supplemental principles of law. -- Unless displaced by the particular provisions of title 6A, the

principles of law and equity, including the law merchant and the law relative to capacity to

contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake,

bankruptcy, or other validating or invalidating cause shall supplement its provisions.

     (a) Title 6A must be liberally construed and applied to promote its underlying purposes

and policies, which are:

     (1) to simplify, clarify, and modernize the law governing commercial transactions;

     (2) to permit the continued expansion of commercial practices through custom, usage,

and agreement of the parties; and

     (3) to make uniform the law among the various jurisdictions.

     (b) Unless displaced by the particular provisions of title 6A, the principles of law and

equity, including the law merchant and the law relative to capacity to contract, principal and

agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other

validating or invalidating cause supplement its provisions.

 

     6A-1-104. Construction against implicit repeal Construction against implied repeal.

-- Title 6A being a general act intended as a unified coverage of its subject matter, no part of it

shall be deemed to be impliedly repealed by subsequent legislation if such construction can

reasonably be avoided.

 

     6A-1-105. Territorial application of title 6A -- Parties' power to choose applicable

law Severability. -- (1) Except as provided hereafter in this section, when a transaction bears a

reasonable relation to this state and also to another state or nation, the parties may agree that the

law either of this state or of such other state or nation shall govern their rights and duties. Failing

such agreement, title 6A applies to transactions bearing an appropriate relation to this state.

      (2) Where one of the following provisions of this title specifies the applicable law, that

provision governs and a contrary agreement is effective only to the extent permitted by the law

(including the conflict of laws rules) so specified:

      (a) Rights of creditors against sold goods. section 6A-2-402.

      (b) Applicability of the chapter on leases. sections 6A-2.1-105 and 6A-2.1-106.

      (c) Applicability of the chapter on bank deposits and collections. section 6A-4-102.

      (d) Applicability of the chapter on investment securities. section 6A-8-110.

      (e) Governing law in the article on funds transfers. section 6A-4.1-507.

      (f) Letters of credit. section 6A-5-116.

      (g) Law governing perfection, the effect of perfection or nonperfection, and the priority

of security interests and agricultural liens. sections 6A-9-301 through 6A-9-307.

     If any provision or clause of title 6A or its application to any person or circumstance is

held invalid, the invalidity does not affect other provisions or applications of title 6A which can

be given effect without the invalid provision or application, and to this end the provisions of title

6A are severable.

 

     6A-1-106. Remedies to be liberally administered Use of singular and plural --

Gender. -- (1) The remedies provided by title 6A shall be liberally administered to the end that

the aggrieved party may be put in as good a position as if the other party had fully performed, but

neither consequential or special nor penal damages may be had except as specifically provided in

title 6A or by other rule of law.

      (2) Any right or obligation declared by title 6A is enforceable by action unless the

provision declaring it specifies a different and limited effect.

     In title 6A, unless the statutory context otherwise requires:

     (1) words in the singular number include the plural, and those in the plural include

     the singular; and

     (2) words of any gender also refer to any other gender.

 

     6A-1-107. Waiver or renunciation of claim or right after breach Section captions. --

Any claim or right arising out of an alleged breach can be discharged in whole or in part without

consideration by a written waiver or renunciation signed and delivered by the aggrieved party.

     Section captions are part of title 6A.

 

     6A-1-108. Severability Relation to electronic signatures in global and national

commerce act. -- If any provision or clause of title 6A or application thereof to any person or

circumstances is held invalid, such invalidity shall not affect other provisions or applications of

title 6A which can be given effect without the invalid provision or application, and to this end the

provisions of title 6A are declared to be severable.

     This chapter modifies, limits, and supersedes the federal Electronic Signatures in Global

and National Commerce Act, 15 U.S.C. §§ 7001 et seq., except that nothing in this chapter

modifies, limits, or supersedes § 7001(c) of that act or authorizes electronic delivery of any of the

notices described in § 7003(b) of that act.

 

     6A-1-201. General definitions. -- Subject to additional definitions contained in the

subsequent chapters of this title which are applicable to specific chapters thereof, and unless the

context otherwise requires, in this title:

      (1) "Action" in the sense of a judicial proceeding includes recoupment, counterclaim,

set-off, suit in equity, and any other proceedings in which rights are determined.

      (2) "Aggrieved party" means a party entitled to resort to a remedy.

      (3) "Agreement" means the bargain of the parties in fact as found in their language or by

implication from other circumstances including course of dealing or usage of trade or course of

performance as provided in this title (sections 6A-1-205, 6A-1-208 and 6A-2.1-207). Whether an

agreement has legal consequences is determined by the provisions of this title, if applicable;

otherwise by the law of contracts (section 6A-1-103). (Compare "Contract".)

      (4) "Bank" means any person engaged in the business of banking.

      (5) "Bearer" means a person in control of a negotiable electronic document of title or a

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

security payable to bearer or indorsed in blank.

      (6) "Bill of lading" means a document of title evidencing the receipt of goods for

shipment issued by a person engaged in the business of directly or indirectly transporting or

forwarding goods. The term does not include a warehouse receipt.

      (7) "Branch" includes a separately incorporated foreign branch of a bank.

      (8) "Burden of establishing" a fact means the burden of persuading the triers of fact that

the existence of the fact is more probable than its nonexistence.

      (9) "Buyer in ordinary course of business" means a person that buys goods in good faith,

without knowledge that the sale violates the rights of another person in the goods, and in the

ordinary course from a person, other than a pawnbroker, in the business of selling goods of that

kind. A person buys goods in the ordinary course if the sale to the person comports with the usual

or customary practices in the kind of business in which the seller is engaged or with the seller's

own usual or customary practices. A person that sells oil, gas, or other minerals at the wellhead or

minehead is a person in the business of selling goods of that kind. A buyer in ordinary course of

business may buy for cash, by exchange of other property, or on secured or unsecured credit, and

may acquire goods or documents of title under a pre-existing contract for sale. Only a buyer that

takes possession of the goods or has a right to recover the goods from the seller under chapter 2

may be a buyer in ordinary course of business. A person that acquires goods in a transfer in bulk

or as security for or in total or partial satisfaction of a money debt is not a buyer in ordinary

course of business.

      (10) "Conspicuous", with reference to a term, means so written, displayed or presented

that a reasonable person against which it is to operate ought to have noticed it. Whether a term is

"conspicuous" or not is a decision for the court. Conspicuous terms include the following:

      (a) A heading in capitals equal to or greater in size than the surrounding text, or in

contrasting type, font or color to the surrounding text of the same or lesser size; and

      (b) Language in the body of a record or display in larger type than the surrounding text,

or in contrasting text, or in contrasting type, font, or color to the surrounding text of the same

size, or set off from surrounding text of the same size by symbols or other marks that call

attention to the language.

      (11) "Contract" means the total legal obligation which results from the parties' agreement

as affected by this title and any other applicable rules of law. (Compare "Agreement".)

      (12) "Creditor" includes a general creditor, a secured creditor, a lien creditor, and any

representative of creditors, including an assignee for the benefit of creditors, a trustee in

bankruptcy, a receiver in equity, and an executor or administrator of an insolvent debtor's or

assignor's estate.

      (13) "Defendant" includes a person in the position of defendant in a cross-action or

counterclaim.

      (14) "Delivery" with respect to an electronic document of title means voluntary transfer

of control and with respect to instruments, tangible documents of title, chattel paper, or

certificated securities means voluntary transfer of possession.

      (15) "Document of title" means a record: (i) that in the regular course of business or

financing is treated as adequately evidencing that the person in possession or control of the record

is entitled to receive, control, hold, and dispose of the record and the goods the record covers; and

(ii) that purports to be issued by or addressed to a bailee and to cover goods in the bailee's

possession which are either identified or are fungible portions of an identified mass. The term

includes a bill of lading, transport document, dock warrant, dock receipt, warehouse receipt, and

order for delivery of goods. An electronic document of title means a document of title evidenced

by a record consisting of information stored in an electronic medium. A tangible document of title

means a document of title evidenced by a record consisting of information that is inscribed on a

tangible medium.

      (16) "Fault" means wrongful act, omission, or breach.

      (17) "Fungible" with respect to goods or securities means goods or securities of which

any unit is, by nature or usage of trade, the equivalent of any other like unit. Goods which are not

fungible shall be deemed fungible for the purposes of this title to the extent that under a particular

agreement or document unlike units are treated as equivalents.

      (18) "Genuine" means free of forgery or counterfeiting.

      (19) "Good faith" means honesty in fact in the conduct or transaction concerned.

      (20) "Holder" means:

      (a) The person in possession of a negotiable instrument that is payable either to bearer or

to an identified person that is the person in possession;

      (b) The person in possession of a negotiable tangible document of title if the goods are

deliverable either to bearer or to the order of the person in possession; or

      (c) The person in control of a negotiable electronic document of title.

      (21) To "honor" is to pay or to accept and pay, or where a credit so engages to purchase

or discount a draft complying with the terms of the credit.

      (22) "Insolvency proceedings" includes any assignment for the benefit of creditors or

other proceedings intended to liquidate or rehabilitate the estate of the person involved.

      (23) A person is "insolvent" who either has ceased to pay his or her debts in the ordinary

course of business or cannot pay his or her debts as they become due or is insolvent within the

meaning of the federal bankruptcy law.

      (24) "Money" means a medium of exchange authorized or adopted by a domestic or

foreign government and includes a monetary unit of account established by an intergovernmental

organization or by agreement between two (2) or more nations.

      (25) Subject to subsection (27), a person has "notice" of a fact if the person:

      (i) Has actual knowledge of it; or

      (ii) Has received a notice or notification of it; or

      (iii) From all the facts and circumstances known to him or her at the time in question he

or she has reason to know that it exists.

      A person "knows" or has "knowledge" of a fact when the person has actual knowledge of

it. "Discover" or "learn" or a word or phrase of similar import refers to knowledge rather than to

reason to know. The time and circumstances under which a notice or notification may cease to be

effective are not determined by this title.

      (26) A person "notifies" or "gives" a notice or notification to another person by taking

such steps as may be reasonably required to inform the other person in ordinary course, whether

or not the other person actually comes to know of it. Subject to subsection (27), a person

"receives" a notice or notification when:

      (i) It comes to that person's attention; or

      (ii) It is duly delivered in a form reasonable under the circumstances at the place of

business through which the contract was made or at another location held out by that person as

the place for receipt of such communications.

      (27) Notice, knowledge, or a notice or notification received by an organization is

effective for a particular transaction from the time when it is brought to the attention of the

individual conducting that transaction, and in any event from the time when it would have been

brought to the individual's attention if the organization had exercised due diligence. An

organization exercises due diligence if it maintains reasonable routines for communicating

significant information to the person conducting the transaction and there is reasonable

compliance with the routines. Due diligence does not require an individual acting for the

organization to communicate information unless such communication is part of the individual's

regular duties or the individual has reason to know of the transaction and that the transaction

would be materially affected by the information.

      (28) "Organization" includes a corporation, government or governmental subdivision or

agency, business trust, estate, trust, partnership, or association, two (2) or more persons having a

joint or common interest, or any other legal or commercial entity.

      (29) "Party", as distinct from "third party", means a person who has engaged in a

transaction or made an agreement within this title.

      (30) "Person" includes an individual or an organization (see section 6A-1-102).

      (31) "Presumption" or "presumed" means that the trier of fact must find the existence of

the fact presumed unless and until evidence is introduced which would support a finding of its

nonexistence.

      (32) "Purchase" includes taking by sale, discount, negotiation, mortgage, pledge, lien,

security interest, issue or re-issue, gift, or any other voluntary transaction creating an interest in

property.

      (33) "Purchaser" means a person who takes by purchase.

      (34) "Remedy" means any remedial right to which an aggrieved party is entitled with or

without resort to a tribunal.

      (35) "Representative" includes an agent, an officer of a corporation or association, and a

trustee, executor or administrator of an estate, or any other person empowered to act for another.

      (36) "Rights" includes remedies.

      (37) "Security interest" means an interest in personal property or fixtures which secures

payment or performance of an obligation. The term also includes any interest of a consignor and a

buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction that

is subject to chapter 9 of this title. The special property interest of a buyer of goods on

identification of those goods to a contract for sale under section 6A-2-401 is not a "security

interest," but a buyer may also acquire a "security interest" by complying with chapter 9 of this

title. Except as otherwise provided in section 6A-2-505, the right of a seller or lessor of goods

under chapter 2 or 2.1 of this title to retain or acquire possession of the goods is not a "security

interest," but a seller or lessor may also acquire a "security interest" by complying with chapter 9

of this title. The retention or reservation of title by a seller of goods notwithstanding shipment or

delivery to the buyer (section 6A-2-401) is limited in effect to a reservation of a "security

interest."

      (i) Whether a transaction creates a lease or security interest is determined by the facts of

each case; however, a transaction creates a security interest if the consideration the lessee is to

pay the lessor for the right to possession and use of the goods is an obligation for the term of the

lease not subject to termination by the lessee, and

      (A) The original term of the lease is equal to or greater than the remaining economic life

of the goods;

      (B) The lessee is bound to renew the lease for the remaining economic life of the goods

or is bound to become the owner of the goods;

      (C) The lessee has an option to renew the lease for the remaining economic life of the

goods for no additional consideration or nominal additional consideration upon compliance with

the lease agreement; or

      (D) The lessee has an option to become the owner of the goods for no additional

consideration or nominal additional consideration upon compliance with the lease agreement.

      (ii) A transaction does not create a security interest merely because it provides that:

      (A) The present value of the consideration the lessee is obligated to pay the lessor for the

right to possession and use of the goods is substantially equal to or is greater than the fair market

value of the goods at the time the lease is entered into;

      (B) The lessee assumes risk of loss of the goods, or agrees to pay taxes, insurance, filing,

recording, or registration fees, or service or maintenance costs with respect to the goods;

      (C) The lessee has an option to renew the lease or to become the owner of the goods;

      (D) The lessee has an option to renew the lease for a fixed rent that is equal to or greater

than the reasonably predictable fair market rent for the use of the goods for the term of the

renewal at the time the option is to be performed; or

      (E) The lessee has an option to become the owner of the goods for a fixed price that is

equal to or greater than the reasonably predictable fair market value of the goods at the time the

option is to be performed.

      (iii) For purposes of this subsection (37):

      (A) Additional consideration is not nominal if (i) when the option to renew the lease is

granted to the lessee the rent is stated to be the fair market rent for the use of the goods for the

term of the renewal determined at the time the option is to be performed, or (ii) when the option

to become the owner of the goods is granted to the lessee the price is stated to be the fair market

value of the goods determined at the time the option is to be performed. Additional consideration

is nominal if it is less than the lessee's reasonably predictable cost of performing under the lease

agreement if the option is not exercised;

      (B) "Reasonably predictable" and "remaining economic life of the goods" are to be

determined with reference to the facts and circumstances at the time the transaction is entered

into; and

      (C) "Present value" means the amount as of a date certain of one or more sums payable

in the future, discounted to the date certain. The discount is determined by the interest rate

specified by the parties if the rate is not manifestly unreasonable at the time the transaction is

entered into; otherwise, the discount is determined by a commercially reasonable rate that takes

into account the facts and circumstances of each case at the time the transaction was entered into.

      (38) "Send" in connection with a writing, record, or notice means:

      (a) To deposit in the mail or deliver for transmission by any other usual means of

communication with postage or cost of transmission provided for and properly addressed and, in

the case of an instrument, to an address specified thereon or otherwise agreed, or if there be none

to any address reasonable under the circumstances; or

      (b) In any other way to cause to be received any record or notice within the time it would

have arrived if properly sent.

      (39) "Signed" includes any symbol executed or adopted by a party with present intention

to authenticate a writing.

      (40) "Surety" includes guarantor.

      (41) "Telegram" includes a message transmitted by radio, teletype, cable, any

mechanical method of transmission, or the like.

      (42) "Term" means that portion of an agreement which relates to a particular matter.

      (43) "Unauthorized" signature means one made without actual, implied, or apparent

authority and includes a forgery.

      (44) "Value". Except as otherwise provided with respect to negotiable instruments and

bank collections (sections 6A-3-303, 6A-4-210, and 6A-4-211), a person gives "value" for rights

if he or she acquires them:

      (i) In return for a binding commitment to extend credit or for the extension of

immediately available credit, whether or not drawn upon and whether or not a charge-back is

provided for in the event of difficulties in collection; or

      (ii) As security for or in total or partial satisfaction of a pre-existing claim; or

      (iii) By accepting delivery pursuant to a pre-existing contract for purchase; or

      (iv) Generally, in return for any consideration sufficient to support a simple contract.

      (45) "Warehouse receipt" means a document of title issued by a person engaged in the

business of storing goods for hire.

      (46) "Written" or "writing" includes printing, typewriting, or any other intentional

reduction to tangible form.

     (a) Unless the context otherwise requires, words or phrases defined in this section, or in

the additional definitions contained in other chapters of title 6A that apply to particular chapters

or parts thereof, have the meanings stated.

     (b) Subject to definitions contained in other chapters of title 6A that apply to particular

chapters or parts thereof:

     (1) “Action”, in the sense of a judicial proceeding, includes recoupment, counterclaim,

set-off, suit in equity, and any other proceeding in which rights are determined.

     (2) “Aggrieved party” means a party entitled to pursue a remedy.

     (3) “Agreement”, as distinguished from “contract”, means the bargain of the parties in

fact, as found in their language or inferred from other circumstances, including course of

performance, course of dealing, or usage of trade as provided in section 6A-1-303.

     (4) “Bank” means a person engaged in the business of banking and includes a savings

bank, savings and loan association, credit union, and trust company.

     (5) “Bearer” means a person in possession of a negotiable instrument, document of title,

or certificated security that is payable to bearer or indorsed in blank.

     (6) “Bill of lading” means a document evidencing the receipt of goods for shipment

issued by a person engaged in the business of transporting or forwarding goods.

     (7) “Branch” includes a separately incorporated foreign branch of a bank.

     (8) “Burden of establishing” a fact means the burden of persuading the trier of fact that

the existence of the fact is more probable than its nonexistence.

     (9) “Buyer in ordinary course of business” means a person that buys goods in good faith,

without knowledge that the sale violates the rights of another person in the goods, and in the

ordinary course from a person, other than a pawnbroker, in the business of selling goods of that

kind. A person buys goods in the ordinary course if the sale to the person comports with the usual

or customary practices in the kind of business in which the seller is engaged or with the seller’s

own usual or customary practices. A person that sells oil, gas, or other minerals at the wellhead or

minehead is a person in the business of selling goods of that kind. A buyer in ordinary course of

business may buy for cash, by exchange of other property, or on secured or unsecured credit, and

may acquire goods or documents of title under a preexisting contract for sale. Only a buyer that

takes possession of the goods or has a right to recover the goods from the seller under Chapter 2

may be a buyer in ordinary course of business. “Buyer in ordinary course of business” does not

include a person that acquires goods in a transfer in bulk or as security for or in total or partial

satisfaction of a money debt.

     (10) “Conspicuous”, with reference to a term, means so written, displayed, or presented

that a reasonable person against which it is to operate ought to have noticed it. Whether a term is

“conspicuous” or not is a decision for the court. Conspicuous terms include the following:

     (A) a heading in capitals equal to or greater in size than the surrounding text, or in

contrasting type, font, or color to the surrounding text of the same or lesser size; and

     (B) language in the body of a record or display in larger type than the surrounding text, or

in contrasting type, font, or color to the surrounding text of the same size, or set off from

surrounding text of the same size by symbols or other marks that call attention to the language.

     (11) “Consumer” means an individual who enters into a transaction primarily for

personal, family, or household purposes.

     (12) “Contract”, as distinguished from “agreement”, means the total legal obligation that

results from the parties’ agreement as determined by title 6A as supplemented by any other

applicable laws.

     (13) “Creditor” includes a general creditor, a secured creditor, a lien creditor, and any

representative of creditors, including an assignee for the benefit of creditors, a trustee in

bankruptcy, a receiver in equity, and an executor or administrator of an insolvent debtor’s or

assignor’s estate.

     (14) “Defendant” includes a person in the position of defendant in a counterclaim, cross-

claim, or third-party claim.

     (15) “Delivery”, with respect to an instrument, document of title, or chattel paper, means

voluntary transfer of possession.

     (16) “Document of title” includes bill of lading, dock warrant, dock receipt, warehouse

receipt or order for the delivery of goods, and also any other document which in the regular

course of business or financing is treated as adequately evidencing that the person in possession

of it is entitled to receive, hold, and dispose of the document and the goods it covers. To be a

document of title, a document must purport to be issued by or addressed to a bailee and purport to

cover goods in the bailee’s possession which are either identified or are fungible portions of an

identified mass.

     (17) “Fault” means a default, breach, or wrongful act or omission.

     (18) “Fungible goods” means:

     (A) goods of which any unit, by nature or usage of trade, is the equivalent of any other

like unit; or

     (B) goods that by agreement are treated as equivalent.

     (19) “Genuine” means free of forgery or counterfeiting.

     (20) “Good faith” means honesty in fact in the conduct or transaction concerned.

     (21) “Holder” means:

     (A) the person in possession of a negotiable instrument that is payable either to bearer or

to an identified person that is the person in possession; or

     (B) the person in possession of a document of title if the goods are deliverable either to

bearer or to the order of the person in possession.

     (22) “Insolvency proceeding” includes an assignment for the benefit of creditors or other

proceeding intended to liquidate or rehabilitate the estate of the person involved.

     (23) “Insolvent” means:

     (A) having generally ceased to pay debts in the ordinary course of business other than as

a result of bona fide dispute;

     (B) being unable to pay debts as they become due; or

     (C) being insolvent within the meaning of federal bankruptcy law.

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

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

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

     (25) “Organization” means a person other than an individual.

     (26) “Party”, as distinguished from “third-party”, means a person that has engaged in a

transaction or made an agreement subject to title 6A.

     (27) “Person” means an individual, corporation, business trust, estate, trust, partnership,

limited liability company, association, joint venture, government, governmental subdivision,

agency, or instrumentality, public corporation, or any other legal or commercial entity.

     (28) “Present value” means the amount as of a date certain of one or more sums payable

in the future, discounted to the date certain by use of either an interest rate specified by the parties

if that rate is not manifestly unreasonable at the time the transaction is entered into or, if an

interest rate is not so specified, a commercially reasonable rate that takes into account the facts

and circumstances at the time the transaction is entered into.

     (29) “Purchase” means taking by sale, lease, discount, negotiation, mortgage, pledge,

lien, security interest, issue or reissue, gift, or any other voluntary transaction creating an interest

in property.

     (30) “Purchaser” means a person that takes by purchase.

     (31) “Record” means information that is inscribed on a tangible medium or that is stored

in an electronic or other medium and is retrievable in perceivable form.

     (32) “Remedy” means any remedial right to which an aggrieved party is entitled with or

without resort to a tribunal.

     (33) “Representative” means a person empowered to act for another, including an agent,

an officer of a corporation or association, and a trustee, executor, or administrator of an estate.

     (34) “Right” includes remedy.

     (35) “Security interest” means an interest in personal property or fixtures which secures

payment or performance of an obligation. “Security interest” includes any interest of a consignor

and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction

that is subject to Chapter 9. “Security interest” does not include the special property interest of a

buyer of goods on identification of those goods to a contract for sale under section 6A-2- 401, but

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

provided in section 6A-2-505, the right of a seller or lessor of goods under Chapter 2 or 2.1 to

retain or acquire possession of the goods is not a “security interest”, but a seller or lessor may

also acquire a “security interest” by complying with Chapter 9. The retention or reservation of

title by a seller of goods notwithstanding shipment or delivery to the buyer under section 6A-2-

401 is limited in effect to a reservation of a “security interest.” Whether a transaction in the form

of a lease creates a “security interest” is determined pursuant to section 6A-1-203.

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

     (A) to deposit in the mail or deliver for transmission by any other usual means of

communication with postage or cost of transmission provided for and properly addressed and, in

the case of an instrument, to an address specified thereon or otherwise agreed, or if there be none

to any address reasonable under the circumstances; or

     (B) in any other way to cause to be received any record or notice within the time it would

have arrived if properly sent.

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

adopt or accept a writing.

     (38) “State” means a State of the United States, the District of Columbia, Puerto Rico, the

United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of

the United States.

     (39) “Surety” includes a guarantor or other secondary obligor.

     (40) “Term” means a portion of an agreement that relates to a particular matter.

     (41) “Unauthorized signature” means a signature made without actual, implied, or

apparent authority. The term includes a forgery.

     (42) “Warehouse receipt” means a receipt issued by a person engaged in the business of

storing goods for hire.

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

tangible form. “Written” has a corresponding meaning.

 

     6A-1-202. Prima facie evidence by third party documents Notice -- Knowledge. -- A

document in due form purporting to be a bill of lading, policy or certificate of insurance, official

weigher's or inspector's certificate, consular invoice, or any other document authorized or

required by the contract to be issued by a third party shall be prima facie evidence of its own

authenticity and genuineness and of the facts stated in the document by the third party.

     (a) Subject to subsection (f), a person has “notice” of a fact if the person:

     (1) has actual knowledge of it;

     (2) has received a notice or notification of it; or

     (3) from all the facts and circumstances known to the person at the time in question, has

reason to know that it exists.

     (b) “Knowledge” means actual knowledge. “Knows” has a corresponding meaning.

     (c) “Discover”, “learn”, or words of similar import refer to knowledge rather than to

reason to know.

     (d) A person “notifies” or “gives” a notice or notification to another person by taking

such steps as may be reasonably required to inform the other person in ordinary course, whether

or not the other person actually comes to know of it.

     (e) Subject to subsection (f), a person “receives” a notice or notification when:

     (1) it comes to that person’s attention; or

     (2) it is duly delivered in a form reasonable under the circumstances at the place of

business through which the contract was made or at another location held out by that person as

the place for receipt of such communications.

     (f) Notice, knowledge, or a notice or notification received by an organization is effective

for a particular transaction from the time it is brought to the attention of the individual conducting

that transaction and, in any event, from the time it would have been brought to the individual’s

attention if the organization had exercised due diligence. An organization exercises due diligence

if it maintains reasonable routines for communicating significant information to the person

conducting the transaction and there is reasonable compliance with the routines. Due diligence

does not require an individual acting for the organization to communicate information unless the

communication is part of the individual’s regular duties or the individual has reason to know of

the transaction and that the transaction would be materially affected by the information.

 

     6A-1-203. Obligation of good faith Lease distinguished from security interest. --

Every contract or duty within title 6A imposes an obligation of good faith in its performance or

enforcement.

     (a) Whether a transaction in the form of a lease creates a lease or security interest is

determined by the facts of each case.

     (b) A transaction in the form of a lease creates a security interest if the consideration that

the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for

the term of the lease and is not subject to termination by the lessee, and:

     (1) the original term of the lease is equal to or greater than the remaining economic life of

the goods;

     (2) the lessee is bound to renew the lease for the remaining economic life of the goods or

is bound to become the owner of the goods;

     (3) the lessee has an option to renew the lease for the remaining economic life of the

goods for no additional consideration or for nominal additional consideration upon compliance

with the lease agreement; or

     (4) the lessee has an option to become the owner of the goods for no additional

consideration or for nominal additional consideration upon compliance with the lease agreement.

     (c) A transaction in the form of a lease does not create a security interest merely because:

     (1) the present value of the consideration the lessee is obligated to pay the lessor for the

right to possession and use of the goods is substantially equal to or is greater than the fair market

value of the goods at the time the lease is entered into;

     (2) the lessee assumes risk of loss of the goods;

     (3) the lessee agrees to pay, with respect to the goods, taxes, insurance, filing, recording,

or registration fees, or service or maintenance costs;

     (4) the lessee has an option to renew the lease or to become the owner of the goods;

     (5) the lessee has an option to renew the lease for a fixed rent that is equal to or greater

than the reasonably predictable fair market rent for the use of the goods for the term of the

renewal at the time the option is to be performed; or

     (6) the lessee has an option to become the owner of the goods for a fixed price that is

equal to or greater than the reasonably predictable fair market value of the goods at the time the

option is to be performed.

     (d) Additional consideration is nominal if it is less than the lessee’s reasonably

predictable cost of performing under the lease agreement if the option is not exercised.

     Additional consideration is not nominal if:

     (1) when the option to renew the lease is granted to the lessee, the rent is stated to be the

fair market rent for the use of the goods for the term of the renewal determined at the time the

option is to be performed; or

     (2) when the option to become the owner of the goods is granted to the lessee, the price is

stated to be the fair market value of the goods determined at the time the option is to be

performed.

     (e) The “remaining economic life of the goods” and “reasonably predictable” fair market

rent, fair market value, or cost of performing under the lease agreement must be determined with

reference to the facts and circumstances at the time the transaction is entered into.

 

     6A-1-204. Time -- Reasonable time -- "Seasonably" Value. -- (1) Whenever title 6A

requires any action to be taken within a reasonable time, any time which is not manifestly

unreasonable may be fixed by agreement.

      (2) What is a reasonable time for taking any action depends on the nature, purpose, and

circumstances of such action.

      (3) An action is taken "seasonably" when it is taken at or within the time agreed or if no

time is agreed at or within a reasonable time.

     Except as otherwise provided in Chapters 3, 4, and 5, a person gives value for rights if the

person acquires them:

     (1) in return for a binding commitment to extend credit or for the extension of

immediately available credit, whether or not drawn upon and whether or not a charge-back is

provided for in the event of difficulties in collection;

     (2) as security for, or in total or partial satisfaction of, a preexisting claim;

     (3) by accepting delivery under a preexisting contract for purchase; or

     (4) in return for any consideration sufficient to support a simple contract.

 

     6A-1-205. Course of dealing and usage of trade Reasonable time -- Seasonableness. -

- (1) A course of dealing is a sequence of previous conduct between the parties to a particular

transaction which is fairly to be regarded as establishing a common basis of understanding for

interpreting their expressions and other conduct.

      (2) A usage of trade is any practice or method of dealing having such regularity of

observance in a place, vocation, or trade as to justify an expectation that it will be observed with

respect to the transaction in question. The existence and scope of such a usage are to be proved as

facts. If it is established that such a usage is embodied in a written trade code or similar writing

the interpretation of the writing is for the court.

      (3) A course of dealing between parties and any usage of trade in the vocation or trade in

which they are engaged or of which they are or should be aware give particular meaning to and

supplement or qualify terms of an agreement.

      (4) The express terms of an agreement and an applicable course of dealing or usage of

trade shall be construed wherever reasonable as consistent with each other; but when such

construction is unreasonable express terms control both course of dealing and usage of trade and

course of dealing controls usage of trade.

      (5) An applicable usage of trade in the place where any part of performance is to occur

shall be used in interpreting the agreement as to that part of the performance.

      (6) Evidence of a relevant usage of trade offered by one party is not admissible unless

and until he or she has given the other party such notice as the court finds sufficient to prevent

unfair surprise to the latter.

     (a) Whether a time for taking an action required by title 6A is reasonable depends on the

nature, purpose, and circumstances of the action.

     (b) An action is taken seasonably if it is taken at or within the time agreed or, if no time is

agreed, at or within a reasonable time.

 

     6A-1-206. Statute of frauds for kinds of personal property not otherwise covered

Presumptions. -- (1) Except in the cases described in subsection (2) of this section, a contract for

the sale of personal property is not enforceable by way of action or defense beyond five thousand

dollars ($5,000) in amount or value of remedy unless there is some writing which indicates that a

contract for sale has been made between the parties at a defined or stated price, reasonably

identifies the subject matter, and is signed by the party against whom enforcement is sought or by

his or her authorized agent.

      (2) Subsection (1) of this section does not apply to contract for the sale of goods (section

6A-2-201) nor of securities (section 6A-8-113) nor to security agreements (section 6A-9-203).

     Whenever title 6A creates a “presumption” with respect to a fact, or provides that a fact is

“presumed,” the trier of fact must find the existence of the fact unless and until evidence is

introduced that supports a finding of its nonexistence.

 

     SECTION 3. Sections 6A-1-109, 6A-1-207 and 6A-1-208 of the General Laws in

Chapter 6A-1 entitled "General Provisions" are hereby repealed.

 

     6A-1-109. Section captions. -- Section captions are parts of title 6A.

 

     6A-1-207. Performance or acceptance under reservation of rights. -- (1) A party who,

with explicit reservation of rights, performs or promises performance or assents to performance in

a manner demanded or offered by the other party does not thereby prejudice the rights reserved.

Such words as "without prejudice", "under protest", or the like are sufficient.

     (2) Subsection (1) does not apply to an accord and satisfaction.

 

     6A-1-208. Option to accelerate at will. -- A term providing that one party or his or her

successor in interest may accelerate payment or performance or require collateral or additional

collateral "at will" or "when he or she deems him or herself insecure" or in words of similar

import shall be construed to mean that he or she shall have power to do so only if he or she in

good faith believes that the prospect of payment or performance is impaired. The burden of

establishing lack of good faith is on the party against whom the power has been exercised.

 

     SECTION 4. Chapter 6A-1 of the General Laws entitled "General Provisions" is hereby

amended by adding thereto the following sections:

 

     Part 3

 

     Territorial Applicability and General Rules

 

     6A-1-301. Territorial applicability – Parties' power to choose applicable law. -- (a)

Except as otherwise provided in this section, when a transaction bears a reasonable relation to this

state and also to another state or nation the parties may agree that the law either of this state or of

such other state or nation shall govern their rights and duties.

     (b) In the absence of an agreement effective under subsection (a), and except as provided

in subsection (c), the Uniform Commercial Code applies to transactions bearing an appropriate

relation to this state.

     (c) If one of the following provisions of title 6A specifies the applicable law, that

provision governs and a contrary agreement is effective only to the extent permitted by the law so

specified:

     (1) Section 6A-2-402;

     (2) Sections 6A-2.1-105 and 2.1-106;

     (3) Section 6A-4-102;

     (4) Section 6A-4.1-507;

     (5) Section 6A-5-116;

     (6) [RESERVED]

     (7) Section 6A-8-110;

     (8) Sections 6A-9-301 through 9-307.

 

     6A-1-302. Variation by agreement. -- (a) Except as otherwise provided in subsection

(b) or elsewhere in title 6A, the effect of provisions of title 6A may be varied by agreement.

     (b) The obligations of good faith, diligence, reasonableness, and care prescribed by title

6A may not be disclaimed by agreement. The parties, by agreement, may determine the standards

by which the performance of those obligations is to be measured if those standards are not

manifestly unreasonable. Whenever title 6A requires an action to be taken within a reasonable

time, a time that is not manifestly unreasonable may be fixed by agreement.

     (c) The presence in certain provisions of title 6A of the phrase “unless otherwise agreed”,

or words of similar import, does not imply that the effect of other provisions may not be varied by

agreement under this section.

 

     6A-1-303. Course of performance, course of dealing and usage of trade. -- (a) A

“course of performance” is a sequence of conduct between the parties to a particular transaction

that exists if:

     (1) the agreement of the parties with respect to the transaction involves repeated

occasions for performance by a party; and

     (2) the other party, with knowledge of the nature of the performance and opportunity for

objection to it, accepts the performance or acquiesces in it without objection.

     (b) A “course of dealing” is a sequence of conduct concerning previous transactions

between the parties to a particular transaction that is fairly to be regarded as establishing a

common basis of understanding for interpreting their expressions and other conduct.

     (c) A “usage of trade” is any practice or method of dealing having such regularity of

observance in a place, vocation, or trade as to justify an expectation that it will be observed with

respect to the transaction in question. The existence and scope of such a usage must be proved as

facts. If it is established that such a usage is embodied in a trade code or similar record, the

interpretation of the record is a question of law.

     (d) A course of performance or course of dealing between the parties or usage of trade in

the vocation or trade in which they are engaged or of which they are or should be aware is

relevant in ascertaining the meaning of the parties’ agreement, may give particular meaning to

specific terms of the agreement, and may supplement or qualify the terms of the agreement. A

usage of trade applicable in the place in which part of the performance under the agreement is to

occur may be so utilized as to that part of the performance.

     (e) Except as otherwise provided in subsection (f), the express terms of an agreement and

any applicable course of performance, course of dealing, or usage of trade must be construed

whenever reasonable as consistent with each other. If such a construction is unreasonable:

     (1) express terms prevail over course of performance, course of dealing, and usage of

trade;

     (2) course of performance prevails over course of dealing and usage of trade; and

     (3) course of dealing prevails over usage of trade.

     (f) Subject to section 6A-2-209, a course of performance is relevant to show a waiver or

modification of any term inconsistent with the course of performance.

     (g) Evidence of a relevant usage of trade offered by one party is not admissible unless

that party has given the other party notice that the court finds sufficient to prevent unfair surprise

to the other party.

 

     6A-1-304. Obligation of good faith. -- Every contract or duty within title 6A imposes an

obligation of good faith in its performance and enforcement.

 

     6A-1-305. Remedies to be liberally administered. -- (a) The remedies provided by title

6A must be liberally administered to the end that the aggrieved party may be put in as good a

position as if the other party had fully performed but neither consequential or special damages nor

penal damages may be had except as specifically provided in title 6A or by other rule of law.

     (b) Any right or obligation declared by title 6A is enforceable by action unless the

provision declaring it specifies a different and limited effect.

 

     6A-1-306. Waiver or renunciation of claim or right after breach. -- A claim or right

arising out of an alleged breach may be discharged in whole or in part without consideration by

agreement of the aggrieved party in an authenticated record.

 

     6A-1-307. Prima facie evidence by third-party documents. -- A document in due form

purporting to be a bill of lading, policy or certificate of insurance, official weigher’s or

inspector’s certificate, consular invoice, or any other document authorized or required by the

contract to be issued by a third-party is prima facie evidence of its own authenticity and

genuineness and of the facts stated in the document by the third-party.

 

     6A-1-308. Performance or acceptance under reservation of rights. -- (a) A party that

with explicit reservation of rights performs or promises performance or assents to performance in

a manner demanded or offered by the other party does not thereby prejudice the rights reserved.

Such words as “without prejudice,” “under protest,” or the like are sufficient.

     (b) Subsection (a) does not apply to an accord and satisfaction.

 

     6A-1-309. Option to accelerate at will. -- A term providing that one party or that party’s

successor in interest may accelerate payment or performance or require collateral or additional

collateral “at will” or when the party “deems itself insecure,” or words of similar import, means

that the party has power to do so only if that party in good faith believes that the prospect of

payment or performance is impaired. The burden of establishing lack of good faith is on the party

against which the power has been exercised.

 

     6A-1-310. Subordinated obligations. -- An obligation may be issued as subordinated to

performance of another obligation of the person obligated, or a creditor may subordinate its right

to performance of an obligation by agreement with either the person obligated or another creditor

of the person obligated. Subordination does not create a security interest as against either the

common debtor or a subordinated creditor.

 

     SECTION 5. Section 6A-2-202 of the General Laws in Chapter 6A-2 entitled "Sales" is

hereby amended to read as follows:

 

     6A-2-202. Final written expression -- Parol or extrinsic evidence. -- Terms with

respect to which the confirmatory memoranda of the parties agree or which are otherwise set

forth in a writing intended by the parties as a final expression of their agreement with respect to

such terms as are included therein may not be contradicted by evidence of any prior agreement or

of a contemporaneous oral agreement but may be explained or supplemented,

      (a) By course of performance, course of dealing, or usage of trade (section 6A-1-205 6A-

1-303) or by course of performance (section 6A-2-208); and

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

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

 

     SECTION 6. Section 6A-2-208 of the General Laws in Chapter 6A-2 entitled "Sales" is

hereby repealed.

 

     6A-2-208. Course of performance or practical construction. -- (1) Where the contract

for sale involves repeated occasions for performance by either party with knowledge of the nature

of the performance and opportunity for objection to it by the other, any course of performance

accepted or acquiesced in without objection shall be relevant to determine the meaning of the

agreement.

      (2) The express terms of the agreement and any such course of performance, as well as

any course of dealing and usage of trade, shall be construed whenever reasonable as consistent

with each other; but when such construction is unreasonable, express terms shall control course of

performance and course of performance shall control both course of dealing and usage of trade

(section 6A-1-205.)

      (3) Subject to the provisions of the next section on modification and waiver, such course

of performance shall be relevant to show a waiver or modification of any term inconsistent with

such course of performance.

 

     SECTION 7. Sections 6A-2.1-207, 6A-2.1-501, 6A-2.1-518, 6A-2.1-519, 6A-2.1-527 and

6A-2.1-528 of the General Laws in Chapter 6A-2.1 entitled "Leases" are hereby amended to read

as follows:

 

     6A-2.1-207. Course of performance or practical construction [Reserved]. -- (1) If a

lease contract involves repeated occasions for performance by either party with knowledge of the

nature of the performance and opportunity for objection to it by the other, any course of

performance accepted or acquiesced in without objection is relevant to determine the meaning of

the lease agreement.

      (2) The express terms of a lease agreement and any course of performance, as well as

any course of dealing and usage of trade, must be construed whenever reasonable as consistent

with each other; but if that construction is unreasonable, express terms control course of

performance, course of performance controls both course of dealing and usage of trade, and

course of dealing controls usage of trade.

      (3) Subject to the provisions of section 6A-2.1-208 on modification and waiver, course

of performance is relevant to show a waiver or modification of any term inconsistent with the

course of performance.

 

     6A-2.1-501. Default: Procedure. -- (1) Whether the lessor or the lessee is in default

under a lease contract is determined by the lease agreement and this chapter.

      (2) If the lessor or the lessee is in default under the lease contract, the party seeking

enforcement has rights and remedies as provided in this chapter and, except as limited by this

chapter, as provided in the lease agreement.

      (3) If the lessor or the lessee is in default under the lease contract, the party seeking

enforcement may reduce the party's claim to judgment, or otherwise enforce the lease contract by

self help or any available judicial procedure or nonjudicial procedure, including administrative

proceeding, arbitration, or the like, in accordance with this chapter.

      (4) Except as otherwise provided in section 6A-1-106(1) 6A-1-305(a) or this chapter or

the lease agreement, the rights and remedies referred to in subsections (2) and (3) are cumulative.

      (5) If the lease agreement covers both real property and goods, the party seeking

enforcement may proceed under this part as to the goods, or under other applicable law as to both

the real property and the goods in accordance with that party's rights and remedies in respect of

the real property, in which case this part does not apply.

 

     6A-2.1-518. Cover -- Substitute goods. -- (1) After a default by a lessor under the lease

contract of the type described in section 6A-2.1-508(1), or, if agreed, after other default by the

lessor, the lessee may cover by making any purchase or lease of or contract to purchase or lease

goods in substitution for those due from the lessor.

      (2) Except as otherwise provided with respect to damages liquidated in the lease

agreement (section 6A-2.1-504) or otherwise determined pursuant to agreement of the parties

(sections 6A-1-102(3) 6A-1-302 and 6A-2.1-503), if a lessee's cover is by a lease agreement

substantially similar to the original lease agreement and the new lease agreement is made in good

faith and in a commercially reasonable manner, the lessee may recover from the lessor as

damages (i) the present value, as of the date of the commencement of the term of the new lease

agreement, of the rent under the new lease agreement applicable to that period of the new lease

term which is comparable to the then remaining term of the original lease agreement minus the

present value as of the same date of the total rent for the then remaining lease term of the original

lease agreement, and (ii) any incidental or consequential damages, less expenses saved in

consequence of the lessor's default.

      (3) If a lessee's cover is by lease agreement that for any reason does not qualify for

treatment under subsection (2), or is by purchase or otherwise, the lessee may recover from the

lessor as if the lessee had elected not to cover and section 6A-2.1-519 governs.

 

     6A-2.1-519. Lessee's damages for nondelivery, repudiation, default, and breach of

warranty in regard to accepted goods. -- (1) Except as otherwise provided with respect to

damages liquidated in the lease agreement (section 6A-2.1-504) or otherwise determined pursuant

to agreement of the parties (sections 6A-1-102(3) 6A-1-302 and 6A-2.1-503), if a lessee elects

not to cover or a lessee elects to cover and the cover is by lease agreement that for any reason

does not qualify for treatment under section 6A-2.1-518(2), or is by purchase or otherwise, the

measure of damages for nondelivery or repudiation by the lessor or for rejection or revocation of

acceptance by the lessee is the present value, as of the date of the default, of the then market rent

minus the present value as of the same date of the original rent, computed for the remaining lease

term of the original lease agreement, together with incidental and consequential damages, less

expenses saved in consequence of the lessor's default.

      (2) Market rent is to be determined as of the place for tender or, in cases of rejection

after arrival or revocation of acceptance, as of the place of arrival.

      (3) Except as otherwise agreed, if the lessee has accepted goods and given notification

(section 6A-2.1-516(3)), the measure of damages for nonconforming tender or delivery or other

default by a lessor is the loss resulting in the ordinary course of events from the lessor's default as

determined in any manner that is reasonable together with incidental and consequential damages,

less expenses saved in consequence of the lessor's default.

      (4) Except as otherwise agreed, the measure of damages for breach of warranty is the

present value at the time and place of acceptance of the difference between the value of the use of

the goods accepted and the value if they had been as warranted for the lease term, unless special

circumstances show proximate damages of a different amount, together with incidental and

consequential damages, less expenses saved in consequence of the lessor's default or breach of

warranty.

 

     6A-2.1-527. Lessor's rights to dispose of goods. -- (1) After a default by a lessee under

the lease contract of the type described in section 6A-2.1-523(1) or 6A-2.1-523(3)(a) or after the

lessor refuses to deliver or takes possession of goods (section 6A-2.1-525 or 6A-2.1-526), or, if

agreed, after other default by a lessee, the lessor may dispose of the goods concerned or the

undelivered balance thereof by lease, sale, or otherwise.

      (2) Except as otherwise provided with respect to damages liquidated in the lease

agreement (section 6A-2.1-504) or otherwise determined pursuant to agreement of the parties

(sections 6A-1-102(3) 6A-1-302 and 6A-2.1-503), if the disposition is by lease agreement

substantially similar to the original lease agreement and the new lease agreement is made in good

faith and in a commercially reasonable manner, the lessor may recover from the lessee as

damages (i) accrued and unpaid rent as of the date of the commencement of the term of the new

lease agreement, (ii) the present value, as of the same date, of the total rent for the then remaining

lease term of the original lease agreement minus the present value, as of the same date, of the rent

under the new lease agreement applicable to that period of the new lease term which is

comparable to the then remaining term of the original lease agreement, and (iii) any incidental

damages allowed under section 6A-2.1-530, less expenses saved in consequence of the lessee's

default.

      (3) If the lessor's disposition is by lease agreement that for any reason does not qualify

for treatment under subsection (2), or is by sale or otherwise, the lessor may recover from the

lessee as if the lessor had elected not to dispose of the goods and section 6A-2.1-528 governs.

      (4) A subsequent buyer or lessee who buys or leases from the lessor in good faith for

value as a result of a disposition under this section takes the goods free of the original lease

contract and any rights of the original lessee even though the lessor fails to comply with one or

more of the requirements of this chapter.

      (5) The lessor is not accountable to the lessee for any profit made on any disposition. A

lessee who has rightfully rejected or justifiably revoked acceptance shall account to the lessor for

any excess over the amount of the lessee's security interest (section 6A-2.1-508(5)).

 

     6A-2.1-528. Lessor's damages for nonacceptance, failure to pay, repudiation, or

other default. -- (1) Except as otherwise provided with respect to damages liquidated in the lease

agreement (section 6A-2.1-504) or otherwise determined pursuant to agreement of the parties

(sections 6A-1-102(3) 6A-1-302 and 6A-2.1-503), if a lessor elects to retain the goods or a lessor

elects to dispose of the goods and the disposition is by lease agreement that for any reason does

not qualify for treatment under section 6A-2.1-527(2), or is by sale or otherwise, the lessor may

recover from the lessee as damages for a default of the type described in section 6A-2.1-523(1) or

6A-2.1-523(3)(a), or, if agreed, for other default of the lessee, (i) accrued and unpaid rent as of

the date of default if the lessee has never taken possession of the goods, or, if the lessee has taken

possession of the goods, as of the date the lessor repossesses the goods or an earlier date on which

the lessee makes a tender of the goods to the lessor, (ii) the present value as of the date

determined under clause (i) of the total rent for the then remaining lease term of the original lease

agreement minus the present value as of the same date of the market rent at the place where the

goods are located computed for the same lease term, and (iii) any incidental damages allowed

under section 6A-2.1-530, less expenses saved in consequence of the lessee's default.

      (2) If the measure of damages provided in subsection (1) is inadequate to put a lessor in

as good a position as performance would have, the measure of damages is the present value of the

profit, including reasonable overhead, the lessor would have made from full performance by the

lessee, together with any incidental damages allowed under section 6A-2.1-530, due allowance

for costs reasonably incurred and due credit for payments or proceeds of disposition.

 

     SECTION 8. Sections 6A-4.1-106 and 6A-4.1-204 of the General Laws in Chapter 6A-

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

 

     6A-4.1-106. Time payment order is received. -- (a) The time of receipt of a payment

order or communication cancelling or amending a payment order is determined by the rules

applicable to receipt of a notice stated in section 6A-1-201(27) 6A-1-202. A receiving bank may

fix a cut-off time or times on a funds transfer business day for the receipt and processing of

payment orders and communications cancelling or amending payment orders. Different cut off

times may apply to payment orders, cancellations, or amendments, or to different categories of

payment orders, cancellations, or amendments. A cut off time may apply to senders generally or

different cut off times may apply to different senders or categories of payment orders. If a

payment order or communication cancelling or amending a payment order is received after the

close of a funds transfer business day or after the appropriate cut off time on a funds transfer

business day, the receiving bank may treat the payment order or communication as received at the

opening of the next funds transfer business day.

      (b) If this chapter refers to an execution date or payment date or states a day on which a

receiving bank is required to take action, and the date or day does not fall on a funds transfer

business day, the next day that is a funds transfer business day is treated as the date or day stated,

unless the contrary is stated in this chapter.

 

     6A-4.1-204. Refund of payment and duty of customer to report with respect to

unauthorized payment order. -- (a) If a receiving bank accepts a payment order issued in the

name of its customer as sender which is (i) not authorized and not effective as the order of the

customer under section 6A-4.1-202, or (ii) not enforceable, in whole or in part, against the

customer under section 6A-4.1-203, the bank shall refund any payment of the payment order

received from the customer to the extent the bank is not entitled to enforce payment and shall pay

interest on the refundable amount calculated from the date the bank received payment to the date

of the refund. However, the customer is not entitled to interest from the bank on the amount to be

refunded if the customer fails to exercise ordinary care to determine that the order was not

authorized by the customer and to notify the bank of the relevant facts within a reasonable time

not exceeding ninety (90) days after the date the customer received notification from the bank

that the order was accepted or that the customer's account was debited with respect to the order.

The bank is not entitled to any recovery from the customer on account of a failure by the

customer to give notification as stated in this section.

      (b) Reasonable time under subsection (a) may be fixed by agreement as stated in section

6A-1-204(1) 6A-1-302(b), but the obligation of a receiving bank to refund payment as stated in

subsection (a) may not otherwise be varied by agreement.

 

     SECTION 9. Section 6A-5-103 of the General Laws in Chapter 6A-5 entitled "Letters of

Credit" is hereby amended to read as follows:

 

     6A-5-103. Scope. -- (a) This chapter applies to letters of credit and to certain rights and

obligations arising out of transactions involving letters of credit.

      (b) The statement of a rule in this chapter does not by itself require, imply, or negate

application of the same or a different rule to a situation not provided for, or to a person not

specified, in this chapter.

      (c) With the exception of this subsection, subsections (a) and (d), sections 6A-5-

102(a)(9) and (10), 6A-5-106(d), and 6A-5-114(d), and except to the extent prohibited in sections

6A-1-102(3) 6A-1-302 and 6A-5-117(d), the effect of this chapter may be varied by agreement or

by a provision stated or incorporated by reference in an undertaking. A term in an agreement or

undertaking generally excusing liability or generally limiting remedies for failure to perform

obligations is not sufficient to vary obligations prescribed by this chapter.

      (d) Rights and obligations of an issuer to a beneficiary or a nominated person under a

letter of credit are independent of the existence, performance, or nonperformance of a contract or

arrangement out of which the letter of credit arises or which underlies it, including contracts or

arrangements between the issuer and the applicant and between the applicant and the beneficiary.

 

     SECTION 10. This act shall take effect upon passage.

     

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LC00564

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