Bill Text: HI SB352 | 2024 | Regular Session | Amended
Bill Title: Relating To The Uniform Commercial Code.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2023-12-11 - Carried over to 2024 Regular Session. [SB352 Detail]
Download: Hawaii-2024-SB352-Amended.html
THE SENATE |
S.B.
NO. |
352 |
THIRTY-SECOND
LEGISLATURE, 2023 |
S.D. 2 |
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STATE OF
HAWAII |
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A BILL FOR AN
ACT
RELATING TO THE UNIFORM COMMERCIAL CODE.
BE IT ENACTED BY
THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1.
Chapter 490, Hawaii Revised Statutes, is amended as follows:
1. By
adding three new sections to part 1, subpart 1, of article 9 to be
appropriately designated and to read:
"§490:9-A Control of
electronic money. (a)
A person shall have control of electronic money if:
(1) The
electronic money; a record attached to, or logically associated with, the
electronic money; or a system in which the electronic money is recorded gives
the person:
(A) Power to avail itself of substantially all the benefit from the
electronic money; and
(B) Exclusive power, subject to subsection (b), to:
(i) Prevent others from availing themselves of substantially all the
benefit from the electronic money; and
(ii) Transfer control of the electronic money to another person or
cause another person to obtain control of other electronic money as a result of
the transfer of the electronic money; and
(2) The
electronic money; a record attached to, or logically associated with, the
electronic money; or a system in which the electronic money is recorded enables
the person to readily identify itself in any way, including by name,
identifying number, cryptographic key, office, or account number, as having the
powers under paragraph (1).
(b) Subject to subsection (c), a power is
exclusive under subsection (a)(1)(B) regardless of whether:
(1) The
electronic money; a record attached to, or logically associated with, the
electronic money; or a system in which the electronic money is recorded limits
the use of the electronic money or has a protocol programmed to cause a change,
including a transfer or loss of control; or
(2) The
power is shared with another person.
(c) A power of a person shall not be shared with
another person under subsection (b)(2) and the person's power shall not be
exclusive if:
(1) The
person may exercise the power only if the power is also exercised by the other
person; and
(2) The
other person:
(A) May exercise the power without exercise of the power by the
person; or
(B) Is the transferor to the person of an interest in the electronic
money.
(d) If a person has the powers specified in subsection
(a)(1)(B), the powers shall be presumed to be exclusive.
(e) A person shall have control of electronic
money if another person, other than the transferor to the person of an interest
in the electronic money:
(1) Has
control of the electronic money and acknowledges that it has control on behalf
of the person; or
(2) Obtains
control of the electronic money after having acknowledged that it will obtain
control of the electronic money on behalf of the person.
§490:9-B Control of controllable electronic record,
controllable account, or controllable payment intangible. (a)
A secured party shall have control of a controllable electronic record
as provided in section 490:A-105.
(b) A secured party shall have control of a
controllable account or controllable payment intangible if the secured party
has control of the controllable electronic record that evidences the
controllable account or controllable payment intangible.
§490:9-C No requirement to acknowledge or confirm;
no duties. (a) A person having control under sections
490:9-104, 490:9-105, or 490:9-A shall not be required to acknowledge that it
has control on behalf of another person.
(b) If a person acknowledges that it has or will
obtain control on behalf of another person, unless the person otherwise agrees
or law other than this article otherwise provides, the person shall not owe any
duty to the other person and shall not be required to confirm the
acknowledgment to any other person."
2. By
adding two new sections to part 3, subpart 1, of article 9 to be appropriately
designated and to read:
"§490:9-D Law governing perfection and priority of
security interests in chattel paper.
(a) Except as
provided in subsection (d), if chattel paper is evidenced only by an
authoritative electronic copy of the chattel paper or is evidenced by an
authoritative electronic copy and an authoritative tangible copy, the local law
of the chattel paper's jurisdiction shall govern perfection, the effect of
perfection or nonperfection, and the priority of a security interest in the
chattel paper, regardless of whether the transaction bears any relation to the
chattel paper's jurisdiction.
(b) The following rules shall determine the
chattel paper's jurisdiction under this section:
(1) If
the authoritative electronic copy of the record evidencing chattel paper, or a
record attached to, or logically associated with, the electronic copy and
readily available for review, expressly provides that a particular jurisdiction
shall be the chattel paper's jurisdiction for purposes of this part, article,
or chapter, that jurisdiction shall be the chattel paper's jurisdiction;
(2) If
paragraph (1) does not apply and the rules of the system in which the authoritative
electronic copy is recorded are readily available for review and expressly
provide that a particular jurisdiction shall be the chattel paper's
jurisdiction for purposes of this part, article, or chapter, that jurisdiction
shall be the chattel paper's jurisdiction;
(3) If
paragraphs (1) and (2) do not apply and the authoritative electronic copy, or a
record attached to, or logically associated with, the electronic copy and
readily available for review, expressly provides that the chattel paper shall be
governed by the law of a particular jurisdiction, that jurisdiction shall be
the chattel paper's jurisdiction;
(4) If
paragraphs (1), (2), and (3) do not apply and the rules of the system in which
the authoritative electronic copy is recorded are readily available for review
and expressly provide that the chattel paper or the system shall be governed by
the law of a particular jurisdiction, that jurisdiction shall be the chattel
paper's jurisdiction; and
(5) If
paragraphs (1) through (4) do not apply, the chattel paper's jurisdiction shall
be the jurisdiction in which the debtor is located.
(c) If an authoritative tangible copy of a record
evidences chattel paper and the chattel paper is not evidenced by an
authoritative electronic copy, while the authoritative tangible copy of the
record evidencing chattel paper is located in a jurisdiction, the local law of
that jurisdiction shall govern:
(1) Perfection
of a security interest in the chattel paper by possession under section
490:9-F; and
(2) The
effect of perfection or nonperfection and the priority of a security interest
in the chattel paper.
(d) The local law of the jurisdiction in which
the debtor is located shall govern perfection of a security interest in chattel
paper by filing.
§490:9-E Law governing perfection and priority of
security interests in controllable accounts, controllable electronic records,
and controllable payment intangibles.
(a) Except as
provided in subsection (b), the local law of the controllable electronic record's
jurisdiction specified in sections 490:A‑107(c) and (d) shall govern
perfection, the effect of perfection or nonperfection, and the priority of a
security interest in a controllable electronic record and a security interest
in a controllable account or controllable payment intangible evidenced by the
controllable electronic record.
(b) The local law of the jurisdiction in which
the debtor is located shall govern:
(1) Perfection
of a security interest in a controllable account, controllable electronic
record, or controllable payment intangible by filing; and
(2) Automatic
perfection of a security interest in a controllable payment intangible created
by a sale of the controllable payment intangible."
3. By
adding a new section to part 3, subpart 2, of article 9 to be appropriately
designated and to read:
"§490:9-F Perfection by
possession and control of chattel paper.
(a) A secured party may perfect a security
interest in chattel paper by taking possession of each authoritative tangible
copy of the record evidencing the chattel paper and obtaining control of each
authoritative electronic copy of the electronic record evidencing the chattel
paper.
(b) A security interest is perfected under
subsection (a) not earlier than the time the secured party takes possession and
obtains control and remains perfected under subsection (a) only while the
secured party retains possession and control.
(c) Sections 490:9-313(c) and 490:9-313(f)
through (i) shall apply to perfection by possession of an authoritative
tangible copy of a record evidencing chattel paper."
4. By
adding a new section to part 3, subpart 3, of article 9 to be appropriately
designated and to read:
"§490:9-G Priority of
security interest in controllable account, controllable electronic record, and
controllable payment intangible. A security interest in a controllable
account, controllable electronic record, or controllable payment intangible
held by a secured party having control of the account, electronic record, or
payment intangible shall have priority over a conflicting security interest
held by a secured party that does not have control."
5. By
adding two new articles to be appropriately designated and to read:
"ARTICLE A.
CONTROLLABLE ELECTRONIC RECORDS
§490:A-101 Short title. This article may be cited as Uniform
Commercial Code--Controllable Electronic Records.
§490:A-102 Definitions. (a) As
used in this article:
"Account debtor" shall have the
same meaning as in section 490:9-102(a).
"Chattel paper" shall have the
same meaning as in section 490:9-102(a).
"Controllable account" shall have
the same meaning as in section 490:9-102(a).
"Controllable electronic record"
means a record stored in an electronic medium that may be subjected to control
under section 490:A-105. The term does
not include a controllable account, a controllable payment intangible, a
deposit account, an electronic copy of a record evidencing chattel paper, an electronic
document of title, electronic money, investment property, or a transferable
record.
"Controllable payment intangible"
shall have the same meaning as in section 490:9-102(a).
"Deposit account" shall have the
same meaning as in section 490:9-102(a).
"Electronic money" shall have the
same meaning as in section 490:9-102(a).
"Investment property" shall have
the same meaning as in section 490:9-102(a).
"Qualifying purchaser" means a
purchaser of a controllable electronic record or an interest in a controllable
electronic record that obtains control of the controllable electronic record
for value, in good faith, and without notice of a claim of a property right in
the controllable electronic record.
"Transferable record" shall have
the same meaning as in:
(1) Section 201(a)(1) of the Electronic Signatures in Global and National Commerce Act, Title 15 United States Code section 7021(a)(1), as amended; or
(2) Section 489E-16(a).
"Value" shall have the same
meaning as in section 490:3‑303(a), as if references in that subsection
to an "instrument" were references to a controllable account,
controllable electronic record, or controllable payment intangible.
(b)
Article 1 contains general definitions and principles of construction
and interpretation applicable throughout this article.
§490:A-103 Relation to article 9 and consumer laws. (a) If
there is conflict between this article and article 9, article 9 shall
govern.
(b)
A transaction subject to this article shall be subject to any applicable
rule of law that establishes a different rule for consumers, including any
other statute or regulation that regulates the rates, charges, agreements, and
practices for loans, credit sales, or other extensions of credit and any
consumer protection statutes or regulations.
§490:A-104 Rights in controllable account, controllable
electronic record, and controllable payment intangible. (a)
This section shall apply to the acquisition and purchase of rights in a
controllable account or controllable payment intangible, including the rights
and benefits under subsections (c), (d), (e), (g), and (h) of a purchaser and
qualifying purchaser, in the same manner this section applies to a controllable
electronic record.
(b)
To determine whether a purchaser of a controllable account or a
controllable payment intangible is a qualifying purchaser, the purchaser shall
obtain control of the account or payment intangible if it obtains control of
the controllable electronic record that evidences the account or payment
intangible.
(c)
Except as provided in this section, laws other than this article shall
determine whether a person acquires a right in a controllable electronic record
and the right the person acquires.
(d)
A purchaser of a controllable electronic record shall acquire all rights
in the controllable electronic record that the transferor had or had power to
transfer, except that a purchaser of a limited interest in a controllable
electronic record shall acquire rights only to the extent of the interest
purchased.
(e)
A qualifying purchaser shall acquire its rights in the controllable
electronic record free of a claim of a property right in the controllable
electronic record.
(f)
Except as provided in subsections (a) and (e) for a controllable account
and a controllable payment intangible or law other than this article, a
qualifying purchaser shall take a right to payment, right to performance, or
other interest in property evidenced by the controllable electronic record
subject to a claim of a property right in the right to payment, right to
performance, or other interest in property.
(g)
An action shall not be asserted against a qualifying purchaser based on
both a purchase by the qualifying purchaser of a controllable electronic record
and a claim of a property right in another controllable electronic record,
whether the action is framed in conversion, replevin, constructive trust,
equitable lien, or other theory.
(h)
Filing of a financing statement under article 9 shall not be deemed to
be a notice of a claim of a property right in a controllable electronic record.
§490:A-105 Control of controllable electronic record. (a) A
person shall control a controllable electronic record if the electronic record;
a record attached to, or logically associated with, the electronic record; or a
system in which the electronic record is recorded:
(1) Gives the person:
(A) Power to avail itself of substantially all the benefit from the electronic record; and
(B) Exclusive power, subject to subsection (b), to:
(i) Prevent others from availing themselves of substantially all the benefit from the electronic record; and
(ii) Transfer control of the electronic record to another person or cause another person to obtain control of another controllable electronic record as a result of the transfer of the electronic record; and
(2) Enables the person to readily identify itself in any way, including by name, identifying number, cryptographic key, office, or account number, as having the powers specified in paragraph (1).
(b)
Subject to subsection (c), a power shall be exclusive under subsection
(a)(1)(B) regardless of whether:
(1) The controllable electronic record; a record attached to, or logically associated with, the electronic record; or a system in which the electronic record is recorded limits the use of the electronic record or has a protocol programmed to cause a change, including a transfer or loss of control or a modification of benefits afforded by the electronic record; or
(2) The power is shared with another person.
(c)
A power of a person shall not be shared with another person under
subsection (b)(2) and the person's power shall not be exclusive if:
(1) The person may exercise the power only if the power also is exercised by the other person; and
(2) The other person:
(A) May exercise the power without exercise of the power by the person; or
(B) Is the transferor to the person of an interest in the controllable electronic record or a controllable account or controllable payment intangible evidenced by the controllable electronic record.
(d)
If a person has the powers specified in subsection (a)(1)(B), the powers
shall be presumed to be exclusive.
(e)
A person shall control a controllable electronic record if another
person, other than the transferor to the person of an interest in the
controllable electronic record or a controllable account or controllable
payment intangible evidenced by the controllable electronic record:
(1) Has control of the electronic record and acknowledges that it has control on behalf of the person; or
(2) Obtains control of the electronic record after having acknowledged that it will obtain control of the electronic record on behalf of the person.
(f)
A person having control under this section shall not be required to
acknowledge that it has control on behalf of another person.
(g)
If a person acknowledges that it has or will obtain control on behalf of
another person, unless the person otherwise agrees or law other than this
article or article 9 otherwise provides, the person shall not owe any duty to
the other person and shall not be required to confirm the acknowledgment to any
other person.
§490:A-106 Discharge of account debtor on controllable
account or controllable payment intangible.
(a) An account debtor on a
controllable account or controllable payment intangible may discharge its
obligation by paying:
(1) The person having control of the controllable electronic record that evidences the controllable account or controllable payment intangible; or
(2) Except as provided in subsection (b), a person that formerly had control of the controllable electronic record.
(b) Subject to subsection (d), the account debtor shall not discharge its obligation by paying a person that formerly had control of the controllable electronic record if the account debtor receives a notification that:
(1) Is signed by a person that formerly had control or the person to which control was transferred;
(2) Reasonably identifies the controllable account or controllable payment intangible;
(3) Notifies the account debtor that control of the controllable electronic record that evidences the controllable account or controllable payment intangible was transferred;
(4) Identifies the transferee, in any reasonable way, including by name, identifying number, cryptographic key, office, or account number; and
(5) Provides a commercially reasonable method by which the account debtor shall pay the transferee.
(c)
After receipt of a notification that complies with subsection (b), the
account debtor may discharge its obligation by paying in accordance with the
notification and shall not discharge the obligation by paying a person that
formerly had control.
(d)
Subject to subsection (h), notification is ineffective under subsection
(b):
(1) Unless, before the notification is sent, the account debtor and the person that, at that time, had control of the controllable electronic record that evidences the controllable account or controllable payment intangible agree in a signed record to a commercially reasonable method by which a person may furnish reasonable proof that control has been transferred;
(2) To the extent an agreement between the account debtor and seller of a payment intangible limits the account debtor's duty to pay a person other than the seller and the limitation is effective under law other than this article; or
(3) At the option of the account debtor if the notification notifies the account debtor to:
(A) Divide a payment;
(B) Make less than the full amount of an installment or other periodic payment; or
(C) Pay any part of a payment by more than one method or to more than one person.
(e)
Subject to subsection (h), if requested by the account debtor, the
person giving the notification under subsection (b) shall seasonably furnish
reasonable proof, using the method in the agreement referred to in subsection
(d)(1), that control of the controllable electronic record has been
transferred. Unless the person complies with the request, the account debtor
may discharge its obligation by paying a person that formerly had control, even
if the account debtor has received a notification under subsection (b).
(f)
A person furnishes reasonable proof under subsection (e) that control
has been transferred if the person demonstrates, using the method in the
agreement referred to in subsection (d)(1), that the transferee has the power
to:
(1) Avail itself of substantially all the benefit from the controllable electronic record;
(2) Prevent others from availing themselves of substantially all the benefit from the controllable electronic record; and
(3) Transfer the powers specified in paragraphs (1) and (2) to another person.
(g)
Subject to subsection (h), an account debtor shall not waive or vary its
rights under subsections (d)(1) and (e) or its option under subsection (d)(3).
(h)
This section shall be subject to law other than this article that
establishes a different rule for an account debtor who is an individual and who
incurred the obligation primarily for personal, family, or household purposes.
§490:A-107 Governing law. (a)
Except as provided in subsection (b), the local law of a controllable
electronic record's jurisdiction shall govern a matter covered by this article.
(b)
For a controllable electronic record that evidences a controllable
account or controllable payment intangible, the local law of the controllable
electronic record's jurisdiction shall govern a matter covered by section
490:A-106 unless an effective agreement determines that the local law of
another jurisdiction shall govern.
(c)
The following rules shall determine a controllable electronic record's
jurisdiction under this section:
(1) If the controllable electronic record, or a record attached to, or logically associated with, the controllable electronic record and readily available for review, expressly provides that a particular jurisdiction shall be the controllable electronic record's jurisdiction for purposes of this article or chapter, that jurisdiction shall be the controllable electronic record's jurisdiction;
(2) If paragraph (1) does not apply and the rules of the system in which the controllable electronic record is recorded are readily available for review and expressly provide that a particular jurisdiction shall be the controllable electronic record's jurisdiction for purposes of this article or chapter, that jurisdiction shall be the controllable electronic record's jurisdiction;
(3) If paragraphs (1) and (2) do not apply and the controllable electronic record, or a record attached to, or logically associated with, the controllable electronic record and readily available for review, expressly provides that the controllable electronic record shall be governed by the law of a particular jurisdiction, that jurisdiction shall be the controllable electronic record's jurisdiction;
(4) If paragraphs (1), (2), and (3) do not apply and the rules of the system in which the controllable electronic record is recorded are readily available for review and expressly provide that the controllable electronic record or the system shall be governed by the law of a particular jurisdiction, that jurisdiction shall be the controllable electronic record's jurisdiction; and
(5) If paragraphs (1) through (4) do not apply, the controllable electronic record's jurisdiction shall be the District of Columbia.
(d)
If subsection (c)(5) applies and article 12 of the Uniform Commercial
Code Amendments (2022) is not in effect in the District of Columbia without
material modification, the governing law for a matter covered by this article
shall be the law of the District of Columbia as though article 12 of the
Uniform Commercial Code Amendments (2022) were in effect in the District of
Columbia without material modification.
(e)
To the extent subsections (a) and (b) provide that the local law of the
controllable electronic record's jurisdiction governs a matter covered by this
article, that law shall govern regardless of whether the matter or a
transaction to which the matter relates does not bear any relation to the
controllable electronic record's jurisdiction.
(f)
The rights acquired under section 490:A-104 by a purchaser or qualifying
purchaser shall be governed by the law applicable under this section at the
time of purchase.
ARTICLE B.
TRANSITIONAL PROVISIONS FOR UNIFORM COMMERCIAL CODE AMENDMENTS
(2022)
PART 1. GENERAL PROVISIONS AND DEFINITIONS
§490:B-101 Short title. This article may be cited as Transitional
Provisions for Uniform Commercial Code Amendments (2022).
§490:B-102 Definitions. (a) As
used in this article:
"Adjustment date" means July 1,
2025, or the date that is one year after the effective
date of this Act, whichever is later.
"Article A property" means a
controllable account, controllable electronic record, or controllable payment
intangible.
(b)
The following definitions in other articles of this chapter shall apply
to this article.
"Controllable account". Section 490:9-102.
"Controllable electronic
record". Section 490:A-102.
"Controllable payment
intangible". Section 490:9-102.
"Electronic money". Section 490:9-102.
"Financing statement". Section 490:9-102.
(c)
Article 1 contains general definitions and principles of construction
and interpretation applicable throughout this article.
PART 2. GENERAL TRANSITIONAL PROVISION
§490:B-201 Saving clause. Except as provided in part 3, a transaction
validly entered into before the effective date of this Act and the rights,
duties, and interests flowing from the transaction shall remain valid
thereafter and may be terminated, completed, consummated, or enforced as
required or permitted by law other than this chapter or, if applicable, this
chapter, as though this Act had not taken effect.
PART 3. TRANSITIONAL PROVISIONS FOR ARTICLES 9 AND A
§490:B-301 Saving clause. (a)
Except as provided in this part; article 9, as amended by this Act; and
article A, shall apply to a transaction, lien, or other interest in property,
regardless of whether the transaction, lien, or interest was entered into,
created, or acquired before the effective date of this Act.
(b)
Except as provided in subsection (c) and sections 490:B-302 through 490:B-306:
(1) A transaction, lien, or interest in property that was validly entered into, created, or transferred before the effective date of this Act and was not governed by this chapter, but would be subject to article 9, as amended by this Act, or article A if it had been entered into, created, or transferred on or after the effective date of this Act, including the rights, duties, and interests flowing from the transaction, lien, or interest, shall remain valid on and after the effective date of this Act; and
(2) The transaction, lien, or interest may be terminated, completed, consummated, and enforced as required or permitted by this chapter or by the law that would apply if this Act had not taken effect.
(c)
This Act shall not affect an action, case, or proceeding commenced
before the effective date of this Act.
§490:B-302 Security interest perfected before the
effective date of this Act. (a) A security interest that is enforceable and
perfected immediately before the effective date of this Act shall be a perfected
security interest under this chapter if, on the effective date of this Act, the requirements for
enforceability and perfection under this chapter are satisfied without further action.
(b)
If a security interest is enforceable and perfected immediately before
the effective date of this Act, but the requirements for enforceability or
perfection under this chapter are
not satisfied on the effective date of this Act, the security interest:
(1) Shall be a perfected security interest until the earlier of the time perfection would have ceased under the law in effect immediately before the effective date of this Act or the adjustment date;
(2) Shall remain enforceable thereafter only if the security interest satisfies the requirements for enforceability under section 490:9-203, as amended by this Act, before the adjustment date; and
(3) Shall remain perfected thereafter only if the requirements for perfection under this chapter are satisfied before the time specified in paragraph (1).
§490:B-303 Security interest unperfected before the
effective date of this Act. A
security interest that is enforceable immediately before the effective date of
this Act but is unperfected at that time:
(1) Shall remain an enforceable security interest until the adjustment date;
(2) Shall remain enforceable thereafter if the security interest becomes enforceable under section 490:9-203, as amended by this Act, on the effective date of this Act or before the adjustment date; and
(3) Shall become perfected:
(A) Without further action, on the effective date of this Act if the requirements for perfection under this chapter are satisfied before or at that time; or
(B) When the requirements for perfection are satisfied if the requirements are satisfied after that time.
§490:B-304 Effectiveness of actions taken before the
effective date of this Act. (a) If action, other than the filing of a
financing statement, is taken before the effective date of this Act and the
action would have resulted in perfection of the security interest had the
security interest become enforceable before the effective date of this Act, the
action shall be effective to perfect a security interest that attaches under
this chapter before the
adjustment date. An attached security interest shall become unperfected on the
adjustment date unless the security interest becomes a perfected security
interest under this chapter before
the adjustment date.
(b)
The filing of a financing statement before the effective date of this
Act shall be effective to perfect a security interest on the effective date of
this Act to the extent that the filing would satisfy the requirements for
perfection under this chapter.
(c)
The taking of an action before the effective date of this Act shall be
sufficient for the enforceability of a security interest on the effective date
of this Act if the action would satisfy the requirements for enforceability
under this chapter.
§490:B-305 Priority.
(a) Subject to subsections (b)
and (c), this chapter
shall determine the priority of conflicting claims to collateral.
(b)
Subject to subsection (c), if the priorities of claims to collateral
were established before the effective date of this Act, article 9, as in effect
before the effective date of this Act, shall determine priority.
(c)
On the adjustment date, to the extent the priorities determined by
article 9, as amended by this Act, modify the priorities established before the
effective date of this Act, the priorities of claims to article A property and
electronic money established before the effective date of this Act shall cease
to apply.
§490:B-306 Priority of claims when priority rules of
article 9 do not apply. (a) Subject to subsections (b) and (c), article A
shall determine the priority of conflicting claims to article A property when
the priority rules of article 9, as amended by this Act, do not apply.
(b)
Subject to subsection (c), when the priority rules of article 9, as
amended by this Act, do not apply and the priorities of claims to article A
property were established before the effective date of this Act, law other than
article A shall determine priority.
(c)
When the priority rules of article 9, as amended by this Act, do not
apply, to the extent the priorities determined by this Act modify the
priorities established before the effective date of this Act, the priorities of
claims to article A property established before the effective date of this Act shall
cease to apply on the adjustment date.
PART 4. EFFECTIVE DATE
§490:B-401 Effective date. This article shall take effect on the
effective date of this Act."
SECTION 2.
Section 490:1-201, Hawaii Revised Statutes, is amended by amending
subsection (b) as follows:
1. By adding a new definition to be
appropriately inserted and to read:
""Electronic" means
relating to technology having electrical, digital, magnetic, wireless, optical,
electromagnetic, or similar capabilities."
2. By
amending the definition of "conspicuous" to read:
""Conspicuous", with
reference to a term, means so written, displayed, or presented that, based
on the totality of the circumstances, a reasonable person against which it
is to operate ought to have noticed it.
Whether a term is "conspicuous" or not is a decision for the
court. [Conspicuous terms include the
following:
(1) 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
(2) 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.]"
3. By
amending the definition of "delivery" to read:
""Delivery", with respect to
an electronic document of title, means voluntary transfer of control,
and, with respect to an instrument, a tangible document of title, or an
authoritative tangible copy of a record evidencing chattel paper, means
voluntary transfer of possession."
4. By
amending the definition of "holder" to read:
""Holder" means:
(1) 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;
(2) 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
(3) The
person in control, other than pursuant to section 490:7-106(g), of a
negotiable electronic document of title."
5. By
amending the definition of "money" to read:
""Money" means a medium of
exchange that is currently authorized or adopted by a domestic or
foreign government. The term includes a
monetary unit of account established by an intergovernmental organization or by
agreement between two or more countries.
The term does not include an electronic record that is a medium of
exchange recorded and transferable in a system that existed and operated for
the medium of exchange before the medium of exchange was authorized or adopted
by the government."
6. By
amending the definition of "person" to read:
""Person" means an
individual, corporation, business trust, estate, trust, partnership, limited
liability company, association, joint venture, government, governmental
subdivision, agency, or instrumentality, [public corporation,] or any
other legal or commercial entity. The
term includes a protected series, however denominated, of an entity if the
protected series is established under any law other than this chapter that
limits, or limits if conditions specified under the law are satisfied, the
ability of a creditor of the entity or of any other protected series of the
entity to satisfy a claim from assets of the protected series."
7. By amending the definition of
"send" to read:
""Send", in
connection with a [writing,] record[,] or [notice] notification,
means:
(1) To
deposit in the mail [or], deliver for transmission, or
transmit by any other usual means of communication, with postage or
cost of transmission provided for [and properly addressed and, in the case
of an instrument, to an address specified thereon or otherwise agreed, or if
there be none], and addressed to any address reasonable under the
circumstances; or
(2) [In
any other way to cause to be received any record or notice within the time it
would have arrived if properly sent.] To cause the record or
notification to be received within the time it would have been received if
properly sent under paragraph (1)."
8. By
amending the definition of "signed" to read:
""Signed" [includes any
symbol executed or adopted with present intention to adopt or accept a writing.],
"sign", "signing", or "signature" means, with
present intent to authenticate or adopt a record:
(1) Execute
or adopt a tangible symbol; or
(2) Attach
to, or logically associate with, the record an electronic symbol, sound, or
process."
SECTION 3.
Section 490:1-204, Hawaii Revised Statutes, is amended to read as
follows:
"§490:1-204 Value. Except as otherwise provided in articles 3,
4, [and] 5, 6, and A, a person gives value for rights if the
person acquires them:
(1) In
return for a binding commitment to extend credit or for the extension of
immediately available credit, whether or not drawn upon and whether or not a
charge‑back is provided for in the event of difficulties in collection;
(2) As
security for, or in total or partial satisfaction of, a preexisting claim;
(3) By
accepting delivery under a preexisting contract for purchase; or
(4) In
return for any consideration sufficient to support a simple contract."
SECTION 4.
Section 490:1-301, Hawaii Revised Statutes, is amended by amending
subsection (c) to read as follows:
"(c)
If one of the following provisions of the Uniform Commercial Code
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
490:2-402;
(2) Sections
490:2A-105 and 490:2A-106;
(3) Section
490:4-102;
(4) Section
490:4A-507;
(5) Section
490:5-116;
(6) Section
490:8-110; [and]
(7) Sections
490:9-301 through 490:9-307[.]; and
(8) Section
490:A-107."
SECTION 5.
Section 490:1-306, Hawaii Revised Statutes, is amended to read as
follows:
"§490:1-306 Waiver or
renunciation of claim or right after breach. A claim or right arising out of an alleged
breach may be discharged in whole or in part without consideration by agreement
of the aggrieved party in [an authenticated] a signed
record."
SECTION 6.
Section 490:2-102, Hawaii Revised Statutes, is amended to read as
follows:
"§490:2-102 Scope; certain
security and other transactions excluded from this article. (1)
Unless the context otherwise requires, and except as provided in
subsection (3), this article applies to transactions in goods[; it does
not apply to any transaction which although in the form of an unconditional
contract to sell or present sale is intended to operate only as a security
transaction nor does this article impair or repeal any statute regulating sales
to consumers, farmers or other specified classes of buyers.] and, in the
case of a hybrid transaction, to the extent provided in subsection (2).
(2)
In a hybrid transaction:
(a) If
the sale-of-goods aspects do not predominate, only the provisions of this
article that relate primarily to the sale-of-goods aspects of the transaction
shall apply, and the provisions that relate primarily to the transaction as a
whole shall not apply; and
(b) If
the sale-of-goods aspects predominate, this article shall apply to the
transaction but shall not preclude application in appropriate circumstances of
other law to aspects of the transaction that do not relate to the sale of
goods.
(3)
This article shall not:
(a) Apply
to a transaction that, even though in the form of an unconditional contract to
sell or present sale, operates only to create a security interest; or
(b) Impair
or repeal any statute regulating sales to consumers, farmers, or other
specified classes of buyers."
SECTION 7.
Section 490:2-106, Hawaii Revised Statutes, is amended to read as
follows:
"§490:2-106 Definitions: "contract"; "agreement";
"contract for sale"; "sale"; "present sale";
"conforming" to contract; "termination";
"cancellation"[.]; "hybrid transaction". (1) In
this article unless the context otherwise requires "contract" and
"agreement" are limited to those relating to the present or future
sale of goods. "Contract for
sale" includes both a present sale of goods and a contract to sell goods
at a future time. A "sale"
consists in the passing of title from the seller to the buyer for a price
(section 490:2-401). A "present
sale" means a sale [which] that is accomplished by the
making of the contract.
(2)
Goods or conduct including any part of a performance are
"conforming" or conform to the contract when they are in accordance
with the obligations under the contract.
(3)
"Termination" occurs when either party pursuant to a power
created by agreement or law puts an end to the contract otherwise than for its
breach. On "termination" all
obligations [which] that are still executory on both sides are
discharged but any right based on prior breach or performance survives.
(4)
"Cancellation" occurs when either party puts an end to the
contract for breach by the other and its effect is the same as that of
"termination" except that the cancelling party also retains any
remedy for breach of the whole contract or any unperformed balance.
(5)
"Hybrid transaction" means a single transaction involving the
sale of goods and:
(a) The
provision of services;
(b) The
lease of other goods; or
(c) The
sale, lease, or license of property other than goods."
SECTION 8.
Section 490:2-201, Hawaii Revised Statutes, is amended to read as follows:
"§490:2-201 Formal requirements;
statute of frauds. (1) Except as otherwise provided in this section
a contract for the sale of goods for the price of $500 or more is not
enforceable by way of action or defense unless there is [some writing] a
record sufficient to indicate that a contract for sale has been made
between the parties and signed by the party against whom enforcement is sought
or by [his] the party's authorized agent or broker. A [writing] record is not
insufficient because it omits or incorrectly states a term agreed upon but the
contract is not enforceable under this [paragraph] subsection
beyond the quantity of goods shown in [such writing.] the record.
(2)
Between merchants if within a reasonable time a [writing] record
in confirmation of the contract and sufficient against the sender is received
and the party receiving it has reason to know its contents, it satisfies the
requirements of subsection (1) against [such] the party unless [written]
notice in a record of objection to its contents is given within ten days
after it is received.
(3)
A contract [which] that does not satisfy the requirements
of subsection (1) but [which] that is valid in other respects is
enforceable:
(a) If
the goods are to be specially manufactured for the buyer and are not suitable
for sale to others in the ordinary course of the seller's business and the
seller, before notice of repudiation is received and under circumstances [which]
that reasonably indicate that the goods are for the buyer, has made
either a substantial beginning of their manufacture or commitments for their
procurement; or
(b) If
the party against whom enforcement is sought admits in his pleading, testimony
or otherwise in court that a contract for sale was made, but the contract is
not enforceable under this provision beyond the quantity of goods admitted; or
(c) With
respect to goods for which payment has been made and accepted or [which]
that have been received and accepted (section 490:2-606)."
SECTION 9. Section 490:2-202, Hawaii Revised Statutes, is amended to read as follows:
"§490:2-202 Final [written] expression: parol or extrinsic evidence. Terms with respect to which the confirmatory
memoranda of the parties agree or that are otherwise set forth in a [writing]
record intended by the parties as a final expression of their agreement
with respect to [such] the 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 by:
(a) Course
of performance, course of dealing, or usage of trade (section 490:1-303); and
(b) Evidence
of consistent additional terms unless the court finds the [writing] record
to have been intended also as a complete and exclusive statement of the terms
of the agreement."
SECTION 10.
Section 490:2-209, Hawaii Revised Statutes, is amended by amending
subsection (2) to read as follows:
"(2)
A signed agreement [which] that excludes modification or
rescission except by a signed writing or other signed record cannot be
otherwise modified or rescinded, but except as between merchants [such a]
this type of requirement on a form supplied by the merchant [must]
shall be separately signed by the other party."
SECTION 11.
Section 490:2A-102, Hawaii Revised Statutes, is amended to read as
follows:
"§490:2A-102 Scope. (a)
This article applies to any transaction, regardless of form, that
creates a lease[.] and, in the case of a hybrid lease, this article
shall apply to the extent provided in subsection (b).
(b) In a hybrid lease:
(1) If
the lease-of-goods aspects do not predominate:
(A) Only
the provisions of this article that relate primarily to the lease-of-goods
aspects of the transaction shall apply, and the provisions that relate
primarily to the transaction as a whole shall not apply;
(B) Section
490:2A-209 shall apply if the lease is a finance lease; and
(C) Section
490:2A-407 shall apply to the promises of the lessee in a finance lease to the
extent that the promises are consideration for the right to possession and use
of the leased goods; and
(2) If
the lease-of-goods aspects predominate, this article shall apply to the
transaction, but shall not preclude the application, in appropriate
circumstances, of other law to aspects of the lease that do not relate to the
lease of goods."
SECTION 12.
Section 490:2A-103, Hawaii Revised Statutes, is amended by amending
subsection (a) to read as follows:
"(a)
In this article unless the context otherwise requires:
[(1)] "Buyer in ordinary course
of business" means a person who in good faith and without knowledge that
the sale to that person is in violation of the ownership rights or security
interest or leasehold interest of a third party in the goods, buys in ordinary
course from a person in the business of selling goods of that kind but does not
include a pawnbroker. "Buying"
may be for cash or by exchange of other property or on secured or unsecured
credit and includes acquiring goods or documents of title under a preexisting
contract for sale but does not include a transfer in bulk or as security for or
in total or partial satisfaction of a money debt.
[(2)] "Cancellation"
occurs when either party puts an end to the lease contract for default by the
other party.
[(3)] "Commercial unit"
means [such] a unit of goods that as by commercial usage is a
single whole for purposes of lease and division of which materially impairs its
character or value on the market or in use.
A commercial unit may be a single article, as a machine, or a set of
articles, as a suite of furniture or a line of machinery, or a quantity, as a
gross or carload, or any other unit treated in use or in the relevant market as
a single whole.
[(4)] "Conforming" goods
or performance under a lease contract means goods or performance that are in
accordance with the obligations under the lease contract.
[(5)] "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, if the total payments
to be made under the lease contract, excluding payments for options to renew or
buy, do not exceed $25,000.
[(6)] "Fault" means
wrongful act, omission, breach, or default.
[(7)] "Finance lease"
means a lease with respect to which:
[(i)] (1) The lessor does
not select, manufacture, or supply the goods;
[(ii)] (2) The lessor acquires the goods or the right to
possession and use of the goods in connection with the lease; and
[(iii)] (3) 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] including the
manufacturer of the goods, provided to the lessor by the person supplying the
goods in connection with or as part of the contract by which the lessor
acquired the goods or the right to possession and use of the goods; or
(D) If
the lease is not a consumer lease, the lessor, before the lessee signs the
lease contract, informs the lessee in writing: (a) of the identity of
the person supplying the goods to the lessor, unless the lessee has selected
that person and directed the lessor to acquire the goods or the right to
possession and use of the goods from that person, (b) that the lessee is
entitled under this article to the promises and warranties, including those of
any third party, provided to the lessor by the person supplying the goods in
connection with or as part of the contract by which the lessor acquired the
goods or the right to possession and use of the goods, and (c) that the lessee
may communicate with the person supplying the goods to the lessor and receive
an accurate and complete statement of those promises and warranties, including
any disclaimers and limitations of them or of remedies.
[(8)] "Goods" means all
things that are movable at the time of identification to the lease contract, or
are fixtures (section 490:2A-309), but the term does not include money,
documents, instruments, accounts, chattel paper, general intangibles, or minerals
or the like, including oil and gas, before extraction. The term also includes the unborn young of
animals.
[(9)] "Hybrid lease"
means a single transaction involving a lease of goods and:
(1) The
provision of services;
(2) The
sale of other goods; or
(3) The
sale, lease, or license of property other than goods.
"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.
[(10)] "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.
[(11)] "Lease agreement"
means the bargain, with respect to the lease, of the lessor and the lessee in
fact as found in their language or by implication from other circumstances
including course of dealing or usage of trade or course of performance as
provided in this article. Unless the
context clearly indicates otherwise, the term includes a sublease agreement.
[(12)] "Lease contract"
means the total legal obligation that results from the lease agreement as
affected by this article and any other applicable rules of law. Unless the context clearly indicates
otherwise, the term includes a sublease contract.
[(13)] "Leasehold interest"
means the interest of the lessor or the lessee under a lease contract.
[(14)] "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.
[(15)] "Lessee in ordinary
course of business" means a person who in good faith and without knowledge
that the lease to that person is in violation of the ownership rights or
security interest or leasehold interest of a third party in the goods leases in
ordinary course from a person in the business of selling or leasing goods of
that kind but does not include a pawnbroker.
"Leasing" may be for cash or by exchange of other property or
on secured or unsecured credit and includes acquiring goods or documents of
title under a preexisting lease contract but does not include a transfer in
bulk or as security for or in total or partial satisfaction of a money debt.
[(16)] "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.
[(17)] "Lessor's residual
interest" means the lessor's interest in the goods after expiration,
termination, or cancellation of the lease contract.
[(18)] "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.
[(19)] "Lot" means a
parcel or a single article that is the subject matter of a separate lease or
delivery, whether or not it is sufficient to perform the lease contract.
[(20)] "Merchant lessee"
means a lessee that is a merchant with respect to goods of the kind subject to
the lease.
[(21)] "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.
[(22)] "Purchase" includes
taking by sale, lease, mortgage, security interest, pledge, gift, or any other
voluntary transaction creating an interest in goods.
[(23)] "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.
[(24)] "Supplier" means a
person from whom a lessor buys or leases goods to be leased under a finance
lease.
[(25)] "Supply contract"
means a contract under which a lessor buys or leases goods to be leased.
[(26)] "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."
SECTION 13.
Section 490:2A-107, Hawaii Revised Statutes, is amended to read as
follows:
"§490:2A-107 Waiver or
renunciation of claim or right after default. Any claim or right arising out of an alleged
default or breach of warranty may be discharged in whole or in part without
consideration by a [written] waiver or renunciation in a signed [and]
record delivered by the aggrieved party."
SECTION 14.
Section 490:2A-202, Hawaii Revised Statutes, is amended to read as
follows:
"§490:2A-202 Final [written] expression: parol or extrinsic evidence. Terms with respect to which the confirmatory
memoranda of the parties agree or [which] that are otherwise set
forth in a [writing] record
intended by the parties as a final expression of their agreement with
respect to such terms as are included therein may not be contradicted by
evidence of any prior agreement or of a contemporaneous oral agreement but may
be explained or supplemented:
(1) By course of dealing or usage of trade or by course of performance; and
(2) By evidence of
consistent additional terms unless the court finds the [writing] record to have been intended also
as a complete and exclusive statement of the terms of the agreement."
SECTION 15.
Section 490:2A-208, Hawaii Revised Statutes, is amended as follows:
1. By
amending its title to read:
"§490:2A-208 Modification,
rescission, and waiver."
2. By
amending subsection (b) to read:
"(b) A signed lease agreement that excludes
modification or rescission except by a signed [writing] record may not be otherwise
modified or rescinded, but, except as between merchants, [such a] this
type of requirement on a form supplied by a merchant must be separately
signed by the other party."
SECTION 16.
Section 490:3-104, Hawaii Revised Statutes, is amended by amending
subsection (a) to read as follows:
"(a)
Except as provided in subsections (c) and (d), "negotiable
instrument" means an unconditional promise or order to pay a fixed amount
of money, with or without interest or other charges described in the promise or
order, if it:
(1) Is
payable to bearer or to order at the time it is issued or first comes into
possession of a holder;
(2) Is
payable on demand or at a definite time; and
(3) Does
not state any other undertaking or instruction by the person promising or
ordering payment to do any act in addition to the payment of money, but the
promise or order may contain:
(A) An
undertaking or power to give, maintain, or protect collateral to secure
payment;
(B) An
authorization or power to the holder to confess judgment or realize on or
dispose of collateral; [or]
(C) A
waiver of the benefit of any law intended for the advantage or protection of an
obligor[.];
(D) A term that specifies the law that governs the promise or order;
or
(E) An undertaking to resolve in a specified forum a dispute
concerning the promise or order."
SECTION 17.
Section 490:3-105, Hawaii Revised Statutes, is amended by amending
subsection (a) to read as follows:
"(a)
"Issue" means [the]:
(1) The
first delivery of an instrument by the maker or drawer, whether to a holder or
nonholder, for the purpose of giving rights on the instrument to any person[.];
or
(2) If
agreed to by the payee, the first transmission by the drawer to the payee of an
image of an item and information derived from the item that enables the
depositary bank to collect the item by transferring or presenting under federal
law an electronic check."
SECTION 18.
Section 490:3-401, Hawaii Revised Statutes, is amended to read as
follows:
"§490:3-401 Signature[.] necessary
for liability on instrument. [(a)] A person is not liable on an instrument
unless: (i) the person signed the instrument, or (ii) the person is
represented by an agent or representative who signed the instrument and the
signature is binding on the represented person under section 490:3-402.
[(b)
A signature may be made (i) manually or by means of a device or machine,
and (ii) by the use of any name, including a trade or assumed name, or by a
word, mark, or symbol executed or adopted by a person with present intention to
authenticate a writing.]"
SECTION 19.
Section 490:3-604, Hawaii Revised Statutes, is amended by amending
subsection (a) to read as follows:
"(a)
A person entitled to enforce an instrument, with or without
consideration, may discharge the obligation of a party to pay the instrument:
(i) by an intentional voluntary act, [such as] including
surrender of the instrument to the party, destruction, mutilation, or
cancellation of the instrument, cancellation or striking out of the party's
signature, or the addition of words to the instrument indicating discharge, or
(ii) by agreeing not to sue or otherwise renouncing rights against the party by
a signed writing. The obligation of a
party to pay a check shall not be discharged solely by destruction of the check
in connection with a process in which information is extracted from the check
and an image of the check is made and, subsequently, the information and image
are transmitted for payment."
SECTION 20.
Section 490:4A-103, Hawaii Revised Statutes, is amended by amending
subsections (a) and (b) to read as follows:
"(a)
In this article:
[(1) "Payment
order" means an instruction of a sender to a receiving bank, transmitted
orally, electronically, or in writing, to pay, or to cause another bank to pay,
a fixed or determinable amount of money to a beneficiary if:
(i) The
instruction does not state a condition to payment to the beneficiary other than
time of payment;
(ii) The
receiving bank is to be reimbursed by debiting an account of, or otherwise
receiving payment from, the sender; and
(iii) The
instruction is transmitted by the sender directly to the receiving bank or to
an agent, funds-transfer system, or communication system for transmittal to the
receiving bank.]
[(2)] "Beneficiary" means
the person to be paid by the beneficiary's bank.
[(3)] "Beneficiary's bank"
means the bank identified in a payment order in which an account of the
beneficiary is to be credited pursuant to the order or [which] that
otherwise is to make payment to the beneficiary if the order does not provide
for payment to an account.
"Payment order" means an
instruction of a sender to a receiving bank, transmitted orally or in a record,
to pay, or to cause another bank to pay, a fixed or determinable amount of
money to a beneficiary if:
(1) The
instruction does not state a condition to payment to the beneficiary other than
time of payment;
(2) The
receiving bank is to be reimbursed by debiting an account of, or otherwise
receiving payment from, the sender; and
(3) The
instruction is transmitted by the sender directly to the receiving bank or to
an agent, funds-transfer system, or communication system for transmittal to the
receiving bank.
[(4)] "Receiving bank"
means the bank to which the sender's instruction is addressed.
[(5)] "Sender" means the
person giving the instruction to the receiving bank.
(b)
If an instruction complying with subsection [(a)(1)] (a)
is to make more than one payment to a beneficiary, the instruction is a
separate payment order with respect to each payment."
SECTION 21.
Section 490:4A-201, Hawaii Revised Statutes, is amended to read as
follows:
"§490:4A-201 Security procedure. "Security procedure" means a
procedure established by agreement of a customer and a receiving bank for the
purpose of: (i) verifying that a payment order or communication amending
or canceling a payment order is that of the customer, or (ii) detecting error
in the transmission or the content of the payment order or communication. A security procedure may impose an obligation
on the receiving bank or the customer and require the use of algorithms or
other codes, identifying words [or], numbers, symbols, sounds,
biometrics, encryption, callback procedures, or similar security
devices. Comparison of a signature on a
payment order or communication with an authorized specimen signature of the
customer or requiring a payment order to be sent from a known email address,
internet protocol address, or telephone number is not by itself a security
procedure."
SECTION 22.
Section 490:4A-202, Hawaii Revised Statutes, is amended by amending
subsections (b) and (c) to read as follows:
"(b)
If a bank and its customer have agreed that the authenticity of payment
orders issued to the bank in the name of the customer as sender will be verified
pursuant to a security procedure, a payment order received by the receiving
bank is effective as the order of the customer, whether or not authorized, if:
(i) the security procedure is a commercially reasonable method of providing
security against unauthorized payment orders, and (ii) the bank proves that it
accepted the payment order in good faith and in compliance with the bank's
obligations under the security procedure and any [written] agreement
or instruction of the customer, evidenced by a record, restricting
acceptance of payment orders issued in the name of the customer. The bank is not required to follow an
instruction that violates [a written] an agreement with the
customer, evidenced by a record, or notice of which is not received at a
time and in a manner affording the bank a reasonable opportunity to act on it
before the payment order is accepted.
(c)
Commercial reasonableness of a security procedure is a question of law
to be determined by considering the wishes of the customer expressed to the
bank, the circumstances of the customer known to the bank, including the size,
type, and frequency of payment orders normally issued by the customer to the
bank, alternative security procedures offered to the customer, and security
procedures in general use by customers and receiving banks similarly
situated. A security procedure is deemed
to be commercially reasonable if: (i) the security procedure was chosen
by the customer after the bank offered, and the customer refused, a security
procedure that was commercially reasonable for that customer, and (ii) the
customer expressly agreed in [writing] a record to be bound by
any payment order, whether or not authorized, issued in its name and accepted
by the bank in compliance with the bank's obligations under the security
procedure chosen by the customer."
SECTION 23.
Section 490:4A-203, Hawaii Revised Statutes, is amended by amending
subsection (a) to read as follows:
"(a)
If an accepted payment order is not, under section 490:4A-202(a), an
authorized order of a customer identified as sender, but is effective as an
order of the customer pursuant to section 490:4A-202(b), the following rules
apply:
(1) By
express [written] agreement, evidenced by a record, the receiving
bank may limit the extent to which it is entitled to enforce or retain payment
of the payment order.
(2) The
receiving bank is not entitled to enforce or retain payment of the payment
order if the customer proves that the order was not caused, directly or
indirectly, by a person: (i) entrusted at any time with duties to act
for the customer with respect to payment orders or the security procedure, or
(ii) who obtained access to transmitting facilities of the customer or who
obtained, from a source controlled by the customer and without authority of the
receiving bank, information facilitating breach of the security procedure,
regardless of how the information was obtained or whether the customer was at
fault. Information includes any access
device, computer software, or the like."
SECTION 24.
Section 490:4A-210, Hawaii Revised Statutes, is amended by amending
subsection (a) to read as follows:
"(a)
A payment order is rejected by the receiving bank by a notice of
rejection transmitted to the sender orally[, electronically,] or in [writing.]
a record. A notice of rejection
need not use any particular words and is sufficient if it indicates that the
receiving bank is rejecting the order or will not execute or pay the
order. Rejection is effective when the
notice is given if transmission is by a means that is reasonable in the
circumstances. If notice of rejection is
given by a means that is not reasonable, rejection is effective when the notice
is received. If an agreement of the
sender and receiving bank establishes the means to be used to reject a payment
order, (i) any means complying with the agreement is reasonable and (ii) any
means not complying is not reasonable unless no significant delay in receipt of
the notice resulted from the use of the noncomplying means."
SECTION 25.
Section 490:4A-211, Hawaii Revised Statutes, is amended by amending
subsection (a) to read as follows:
"(a)
A communication of the sender of a payment order canceling or amending
the order may be transmitted to the receiving bank orally[, electronically,]
or in [writing.] a record.
If a security procedure is in effect between the sender and the
receiving bank, the communication is not effective to cancel or amend the order
unless the communication is verified pursuant to the security procedure or the
bank agrees to the cancellation or amendment."
SECTION 26.
Section 490:4A-305, Hawaii Revised Statutes, is amended by amending
subsections (c) and (d) to read as follows:
"(c)
In addition to the amounts payable under subsections (a) and (b),
damages, including consequential damages, are recoverable to the extent
provided in an express [written] agreement of the receiving bank[.],
as evidenced by a record.
(d)
If a receiving bank fails to execute a payment order it was obliged by
express agreement to execute, the receiving bank is liable to the sender for
its expenses in the transaction and for incidental expenses and interest losses
resulting from the failure to execute.
Additional damages, including consequential damages, are recoverable to
the extent provided in an express [written] agreement of the receiving
bank, but are not otherwise recoverable[.], as evidenced by a record."
SECTION 27.
Section 490:5-104, Hawaii Revised Statutes, is amended to read as
follows:
"§490:5-104 Formal requirements. A letter of credit, confirmation, advice,
transfer, amendment, or cancellation may be issued in any form that is a signed
record [and is authenticated (i) by a signature, or (ii) in accordance with
the agreement of the parties or the standard practice referred to in section
490:5-108(e)]."
SECTION 28.
Section 490:5-116, Hawaii Revised Statutes, is amended to read as
follows:
"§490:5-116 Choice of law and
forum. (a) The liability of an issuer, nominated person,
or adviser for action or omission is governed by the law of the jurisdiction
chosen by an agreement in the form of a record signed [or otherwise
authenticated] by the affected parties [in the manner provided in
section 490:5-104] or by a provision in the person's letter of credit,
confirmation, or other undertaking. The
jurisdiction whose law is chosen need not bear any relation to the transaction.
(b)
Unless subsection (a) applies, the liability of an issuer, nominated
person, or adviser for action or omission is governed by the law of the
jurisdiction in which the person is located.
The person is considered to be located at the address indicated in the
person's undertaking. If more than one
address is indicated, the person is considered to be located at the address
from which the person's undertaking was issued.
(c)
For the purpose of jurisdiction, choice of law, and recognition of
interbranch letters of credit, but not enforcement of a judgment, all branches
of a bank are considered separate juridical entities and a bank is considered
to be located at the place where its relevant branch is considered to be
located under [this] subsection[.] (d).
[(c)] (d) A branch of a bank shall be considered to be
located at the address indicated in the branch's undertaking; provided that if
more than one address is indicated, the branch shall be considered to be
located at the address from which the undertaking was issued.
(e)
Except as otherwise provided in this subsection, the liability of an
issuer, nominated person, or adviser is governed by any rules of custom or
practice, [such as] including the Uniform Customs and Practice
for Documentary Credits, to which the letter of credit, confirmation, or other
undertaking is expressly made subject.
If (i) this article would govern the liability of an issuer, nominated
person, or adviser under subsection (a) or (b), (ii) the relevant undertaking
incorporates rules of custom or practice, and (iii) there is conflict between
this article and those rules as applied to that undertaking, those rules govern
except to the extent of any conflict with the nonvariable provisions specified
in section 490:5-103(c).
[(d)] (f) If there is conflict between this article and
article 3, 4, 4A, or 9, this article governs.
[(e)] (g) The forum for settling disputes arising out
of an undertaking within this article may be chosen in the manner and with the
binding effect that governing law may be chosen in accordance with subsection
(a)."
SECTION 29.
Section 490:7-102, Hawaii Revised Statutes, is amended by amending
subsection (a) to read as follows:
"(a)
In this article, 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)] "Shipper" means a
person that enters into a contract of transportation with a carrier.
[(12) "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.
(13)] "Warehouse" means a
person engaged in the business of storing goods for hire."
SECTION 30.
Section 490:7-106, Hawaii Revised Statutes, is amended to read as
follows:
"§490:7-106 Control of electronic
document of title. (a) A person has control of an electronic
document of title if a system employed for evidencing the transfer of interests
in the electronic document reliably establishes that person as the person to
which the electronic document was issued or transferred.
(b)
A system satisfies subsection (a), and a person [is deemed to have]
has control of an electronic document of title, if the document is
created, stored, and [assigned] transferred in [such] a
manner that:
(1) A
single authoritative copy of the document exists that is unique, identifiable,
and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable;
(2) The
authoritative copy identifies the person asserting control as:
(A) The
person to which the document was issued; or
(B) If
the authoritative copy indicates that the document has been transferred, the
person to which the document was most recently transferred;
(3) The
authoritative copy is communicated to and maintained by the person asserting
control or its designated custodian;
(4) Copies
or amendments that add or change an identified [assignee] transferee
of the authoritative copy can be made only with the consent of the person
asserting control;
(5) Each
copy of the authoritative copy and any copy of a copy is readily identifiable
as a copy that is not the authoritative copy; and
(6) Any
amendment of the authoritative copy is readily identifiable as authorized or
unauthorized.
(c)
A system satisfies subsection (a), and a person has control of an
electronic document of title, if an authoritative electronic copy of the
document; a record attached to, or logically associated with, the electronic
copy; or a system in which the electronic copy is recorded:
(1) Enables
the person to readily identify each electronic copy as either an authoritative
copy or a nonauthoritative copy;
(2) Enables
the person to be readily identified in any way, including by name, identifying
number, cryptographic key, office, or account number, as the person to which
each authoritative electronic copy was issued or transferred; and
(3) Gives
the person exclusive power, subject to subsection (d), to:
(A) Prevent others from adding or changing the person to which each
authoritative electronic copy has been issued or transferred; and
(B) Transfer control of each authoritative electronic copy.
(d)
Subject to subsection (e), a power is exclusive under subsection (c)(3)
regardless of whether:
(1) The
authoritative electronic copy; a record attached to, or logically associated
with, the authoritative electronic copy; or a system in which the authoritative
electronic copy is recorded limits the use of the document of title or has a
protocol that is programmed to cause a change, including a transfer or loss of
control; or
(2) The
power is shared with another person.
(e)
A power of a person shall not be shared with another person under
subsection (d)(2) and the person's power shall not be exclusive if:
(1) The
person may only exercise the power if the power is also exercised by the other
person; and
(2) The
other person:
(A) May exercise the power without exercise of the power by the
person; or
(B) Is the transferor to the person of an interest in the document
of title.
(f)
If a person has the powers specified in subsection (c)(3), the powers
shall be presumed to be exclusive.
(g)
A person has control of an electronic document of title if another
person, other than the transferor to the person of an interest in the document:
(1) Has
control of the document and acknowledges that it has control on behalf of the
person; or
(2) Obtains
control of the document after having acknowledged that it will obtain control
of the document on behalf of the person.
(h)
A person that has control under this section shall not be required to
acknowledge that it has control on behalf of another person.
(i)
If a person acknowledges that it has or will obtain control on behalf of
another person, unless the person otherwise agrees or any law other than this
article or article 9 otherwise provides, the person shall not owe any duty to
the other person and shall not be required to confirm the acknowledgment to any
other person."
SECTION 31. Section 490:8-102, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:
"(a) In this article:
"Adverse claim" means a claim
that a claimant has a property interest in a financial asset and that it is a
violation of the rights of the claimant for another person to hold, transfer,
or deal with the financial asset.
"Bearer form", as applied to a
certificated security, means a form in which the security is payable to the
bearer of the security certificate according to its terms but not by reason of
an indorsement.
"Broker" means a person defined
as a broker or dealer under the federal securities laws, but without excluding
a bank acting in that capacity.
"Certificated security" means a
security that is represented by a certificate.
"Clearing corporation" means:
(1) A
person that is registered as a "clearing agency" under the federal
securities laws;
(2) A
federal reserve bank; or
(3) Any
other person that provides clearance or settlement services with respect to
financial assets that would require it to register as a clearing agency under
the federal securities laws but for an exclusion or exemption from the
registration requirement, if its activities as a clearing corporation,
including promulgation of rules, are subject to regulation by a federal or
state governmental authority.
"Communicate" means to:
(1) Send
a signed [writing;] record; or
(2) Transmit
information by any mechanism agreed upon by the persons transmitting and
receiving the information.
"Entitlement holder" means a
person identified in the records of a securities intermediary as the person
having a security entitlement against the securities intermediary. If a person acquires a security entitlement
by virtue of section 490:8-501(b)(2) or (3), that person is the entitlement
holder.
"Entitlement order" means a
notification communicated to a securities intermediary directing transfer or redemption
of a financial asset to which the entitlement holder has a security
entitlement.
"Financial asset", except as
otherwise provided in section 490:8-103, means:
(1) A
security;
(2) An
obligation of a person or a share, participation, or other interest in a person
or in property or an enterprise of a person, [which] that is, or
is of a type, dealt in or traded on financial markets, or [which] that
is recognized in any area in which it is issued or dealt in as a medium for
investment; or
(3) Any
property that is held by a securities intermediary for another person in a
securities account if the securities intermediary has expressly agreed with the
other person that the property is to be treated as a financial asset under this
article.
As the context requires, the term means
either the interest itself or the means by which a person's claim to it is
evidenced, including a certificated or uncertificated security, a security
certificate, or a security entitlement.
"Good faith", for purposes of the
obligation of good faith in the performance or enforcement of contracts or
duties within this article, means honesty in fact and the observance of
reasonable commercial standards of fair dealing.
"Indorsement" means a signature
that alone or accompanied by other words is made on a security certificate in
registered form or on a separate document for the purpose of assigning,
transferring, or redeeming the security or granting a power to assign,
transfer, or redeem it.
"Instruction" means a
notification communicated to the issuer of an uncertificated security [which]
that directs that the transfer of the security be registered or that the
security be redeemed.
"Registered form", as applied to
a certificated security, means a form in which:
(1) The
security certificate specifies a person entitled to the security; and
(2) A
transfer of the security may be registered upon books maintained for that
purpose by or on behalf of the issuer, or the security certificate so states.
"Securities intermediary" means:
(1) A
clearing corporation; or
(2) A
person, including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.
"Security", except as otherwise
provided in section 490:8‑103, means an obligation of an issuer or a
share, participation, or other interest in an issuer or in property or an
enterprise of an issuer:
(1) [Which]
That is represented by a security certificate in bearer or registered
form, or the transfer of which may be registered upon books maintained for that
purpose by or on behalf of the issuer;
(2) [Which]
That is one of a class or series or by its terms is divisible into a
class or series of shares, participations, interests, or obligations; and
(3) [Which:] That:
(A) Is,
or is of a type, dealt in or traded on securities exchanges or securities
markets; or
(B) Is
a medium for investment and by its terms expressly provides that it is a
security governed by this article.
"Security certificate" means a
certificate representing a security.
"Security entitlement" means the
rights and property interest of an entitlement holder with respect to a
financial asset specified in part 5.
"Uncertificated security" means a
security that is not represented by a certificate.
(b)
[Other] The following definitions [applying to] in
this article and [the sections in which they appear are:] other
articles apply to this article:
"Appropriate person". Section 490:8-107.
"Control". Section 490:8-106.
"Controllable account". Section 490:9-102.
"Controllable electronic
record". Section 490:A-102.
"Controllable payment
intangible". Section 490:9-102.
"Delivery". Section 490:8-301.
"Investment company
security". Section 490:8-103.
"Issuer". Section 490:8-201.
"Overissue". Section 490:8-210.
"Protected purchaser". Section 490:8-303.
"Securities account". Section 490:8-501."
SECTION 32.
Section 490:8-103, Hawaii Revised Statutes, is amended to read as
follows:
"§490:8-103 Rules for determining
whether certain obligations and interests are securities or financial assets. (a) A
share or similar equity interest issued by a corporation, business trust, joint
stock company, or similar entity is a security.
(b)
An "investment company security" is a security. "Investment company security" means
a share or similar equity interest issued by an entity that is registered as an
investment company under the federal investment company laws, an interest in a
unit investment trust that is so registered, or a face-amount certificate
issued by a face-amount certificate company that is so registered. Investment company security does not include
an insurance policy or endowment policy or annuity contract issued by an
insurance company.
(c)
An interest in a partnership or limited liability company is not a
security unless it is dealt in or traded on securities exchanges or in
securities markets, its terms expressly provide that it is a security governed
by this article, or it is an investment company security. However, an interest in a partnership or
limited liability company is a financial asset if it is held in a securities
account.
(d)
A writing that is a security certificate is governed by this article and
not by article 3, even though it also meets the requirements of that
article. However, a negotiable
instrument governed by article 3 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 490:9‑102(a), is not a
security or a financial asset.
(g)
A controllable account, controllable electronic record, or controllable
payment intangible is not a financial asset unless the controllable account,
controllable electronic record, or controllable payment intangible is a
property that is held by a securities intermediary for another person in a
securities account and the securities intermediary has expressly agreed with
the other person that the property is to be treated as a financial asset under
this article."
SECTION 33.
Section 490:8-106, Hawaii Revised Statutes, is amended to read as
follows:
"§490:8-106 Control. (a) A
purchaser has "control" of a certificated security in bearer form if
the certificated security is delivered to the purchaser.
(b)
A purchaser has "control" of a certificated security in
registered form if the certificated security is delivered to the purchaser,
and:
(1) The
certificate is indorsed to the purchaser or in blank by an effective
indorsement; or
(2) The
certificate is registered in the name of the purchaser, upon original issue or registration
of transfer by the issuer.
(c)
A purchaser has "control" of an uncertificated security if:
(1) The
uncertificated security is delivered to the purchaser; or
(2) The
issuer has agreed that it will comply with instructions originated by the
purchaser without further consent by the registered owner.
(d)
A purchaser has "control" of a security entitlement if:
(1) The
purchaser becomes the entitlement holder;
(2) The
securities intermediary has agreed that it will comply with entitlement orders
originated by the purchaser without further consent by the entitlement holder;
or
(3) Another
person [has control of the security entitlement on behalf of the purchaser
or, having previously acquired control of the security entitlement,
acknowledges that it has control on behalf of the purchaser.], other
than the transferor to the purchaser of an interest in the security
entitlement:
(A) Has control of the security entitlement and acknowledges that it
has control on behalf of the purchaser; or
(B) Obtains control of the security entitlement after having
acknowledged that it will obtain control of the security entitlement on behalf
of the purchaser.
(e)
If an interest in a security entitlement is granted by the entitlement
holder to the entitlement holder's own securities intermediary, the securities
intermediary has control.
(f)
A purchaser who has satisfied the requirements of subsection (c) or (d)
has control, even if the registered owner in the case of subsection (c) or the
entitlement holder in the case of subsection (d) retains the right to make
substitutions for the uncertificated security or security entitlement, to
originate instructions or entitlement orders to the issuer or securities
intermediary, or otherwise to deal with the uncertificated security or security
entitlement.
(g)
An issuer or a securities intermediary may not enter into an agreement
of the kind described in subsection (c)(2) or (d)(2) without the consent of the
registered owner or entitlement holder, but an issuer or a securities
intermediary is not required to enter into [such] an agreement of the
kind described in subsection (c)(2) or (d)(2) even though the registered
owner or entitlement holder so directs.
An issuer or securities intermediary that has entered into [such]
an agreement of the kind described in subsection (c)(2) or (d)(2) is not
required to confirm the existence of the agreement to another party unless
requested to do so by the registered owner or entitlement holder.
(h) A person that has control under this section
shall not be required to acknowledge that it has control on behalf of a
purchaser.
(i)
If a person acknowledges that it has or will obtain control on behalf of
a purchaser, unless the person otherwise agrees or law other than this article
or article 9 otherwise provides, the person shall not owe any duty to the
purchaser and shall not be required to confirm the acknowledgment to any other
person."
SECTION 34.
Section 490:8-110, Hawaii Revised Statutes, is amended to read as
follows:
"§490:8-110 Applicability; choice
of law. (a) The local law of the issuer's jurisdiction,
as specified in subsection (d), governs:
(1) The
validity of a security;
(2) The
rights and duties of the issuer with respect to registration of transfer;
(3) The
effectiveness of registration of transfer by the issuer;
(4) Whether
the issuer owes any duties to an adverse claimant to a security; and
(5) Whether
an adverse claim can be asserted against a person to whom transfer of a
certificated or uncertificated security is registered or a person who obtains
control of an uncertificated security.
(b)
The local law of the securities intermediary's jurisdiction, as
specified in subsection (e), governs:
(1) Acquisition
of a security entitlement from the securities intermediary;
(2) The
rights and duties of the securities intermediary and entitlement holder arising
out of a security entitlement;
(3) Whether
the securities intermediary owes any duties to an adverse claimant to a security
entitlement; and
(4) Whether
an adverse claim can be asserted against a person who acquires a security
entitlement from the securities intermediary or a person who purchases a
security entitlement or interest therein from an entitlement holder.
(c)
The local law of the jurisdiction in which a security certificate is
located at the time of delivery governs whether an adverse claim can be
asserted against a person to whom the security certificate is delivered.
(d)
"Issuer's jurisdiction" means the jurisdiction under which the
issuer of the security is organized or, if permitted by the law of that
jurisdiction, the law of another jurisdiction specified by the issuer. An issuer organized under the law of this
State may specify the law of another jurisdiction as the law governing the
matters specified in subsection (a)(2) to (5).
(e)
The following rules determine a "securities intermediary's
jurisdiction" for purposes of this section:
(1) If
an agreement between the securities intermediary and its entitlement holder
governing the securities account expressly provides that a particular
jurisdiction is the securities intermediary's jurisdiction for purposes of this
part, this article, or this chapter, that jurisdiction is the securities
intermediary's jurisdiction.
(2) If
paragraph (1) does not apply and an agreement between the securities
intermediary and its entitlement holder governing the securities account
expressly provides that the agreement is governed by the law of a particular jurisdiction,
that jurisdiction is the securities intermediary's jurisdiction.
(3) If
neither paragraph (1) nor paragraph (2) applies and an agreement between the
securities intermediary and its entitlement holder governing the securities
account expressly provides that the securities account is maintained at an
office in a particular jurisdiction, that jurisdiction is the securities
intermediary's jurisdiction.
(4) If
none of the preceding paragraphs applies, the securities intermediary's
jurisdiction is the jurisdiction in which the office identified in an account
statement as the office serving the entitlement holder's account is located.
(5) If
none of the preceding paragraphs applies, the securities intermediary's
jurisdiction is the jurisdiction in which the chief executive office of the
securities intermediary is located.
(f)
A securities intermediary's jurisdiction is not determined by the
physical location of certificates representing financial assets, or by the
jurisdiction in which is organized the issuer of the financial asset with
respect to which an entitlement holder has a security entitlement, or by the
location of facilities for data processing or other recordkeeping concerning
the account.
(g) The local law of the issuer's jurisdiction or
the securities intermediary's jurisdiction shall govern a matter or transaction
specified in subsection (a) or (b) regardless of whether the matter or
transaction bears any relation to the jurisdiction."
SECTION 35.
Section 490:8-303, Hawaii Revised Statutes, is amended by amending
subsection (b) to read as follows:
"(b)
[In addition to acquiring the rights of a purchaser, a] A
protected purchaser also acquires its interest in the security free of any
adverse claim."
SECTION 36.
Section 490:9-102, Hawaii Revised Statutes, is amended by amending
subsections (a) and (b) to read as follows:
"(a)
In this [[]article[]]:
"Accession" means goods that are
physically united with other goods in [such] a manner [that] in
which the identity of the original goods is not lost.
"Account", except as used in
"account for"[:], "account statement",
"account to", "customer's account", "on account
of", "statement of account", and the definitions of
"commodity account" and "deposit account" provided in this
subsection:
(1) Means
a right to payment of a monetary obligation, whether or not earned by
performance:
(A) For
property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of;
(B) For
services rendered or to be rendered;
(C) For
a policy of insurance issued or to be issued;
(D) For
a secondary obligation incurred or to be incurred;
(E) For
energy provided or to be provided;
(F) For
the use or hire of a vessel under a charter or other contract;
(G) Arising
out of the use of a credit or charge card or information contained on or for
use with the card; or
(H) 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];
(2) Includes
controllable accounts and health-care-insurance receivables[.];
and
[(2)] (3) Does not include:
(A) [Rights
to payment evidenced by chattel paper or an instrument;] Chattel paper;
(B) Commercial
tort claims;
(C) Deposit
accounts;
(D) Investment
property;
(E) Letter-of-credit
rights or letters of credit; [or]
(F) Rights
to payment for money or funds advanced or sold, other than rights arising out
of the use of a credit or charge card or information contained on or for use
with the card[.]; or
(G) Rights to payment evidenced by an instrument.
"Account debtor" means a person
obligated on an account, chattel paper, or general intangible. The term does not include persons obligated
to pay a negotiable instrument, even if the negotiable instrument [constitutes
part of] evidences chattel paper.
"Accounting", except as used in
"accounting for", means a record:
(1) [Authenticated]
Signed by a secured party;
(2) Indicating
the aggregate unpaid secured obligations as of a date not more than thirty-five
days earlier or thirty-five days later than the date of the record; and
(3) Identifying
the components of the obligations in reasonable detail.
"Agricultural lien" means an
interest in farm products:
(1) [Which]
That 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;
(2) [Which]
That 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
(3) Whose
effectiveness does not depend on the person's possession of the personal
property.
"As-extracted collateral" means:
(1) 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
(2) 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.
["Authenticate" means:
(1) To
sign; or
(2) With
present intent to adopt or accept a record, to attach or to logically associate
with the record an electronic sound, symbol, or process.]
"Assignee", except as used in
"assignee for benefit of creditors", means a person:
(1) In
whose favor a security interest that secures an obligation is created or
provided for under a security agreement, regardless of whether the obligation
is outstanding; or
(2) To
whom an account, chattel paper, payment intangible, or promissory note has been
sold.
The
term includes a person to whom a security interest has been transferred by a
secured party.
"Assignor" means a person
that:
(1) Under
a security agreement creates or provides for a security interest that secures
an obligation; or
(2) Sells
an account, chattel paper, payment intangible, or promissory note.
The
term includes a secured party that has transferred a security interest to
another person.
"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.
"Cash proceeds" means proceeds
that are money, checks, deposit accounts, or the like.
"Certificate of title" means a
certificate of title with respect to which a statute provides for the security
interest in question to be indicated on the certificate as a condition or
result of the security interest's obtaining priority over the rights of a lien
creditor with respect to the collateral.
The term includes another record maintained as an alternative to a
certificate of title by the governmental unit that issues certificates of title
if a statute permits the security interest in question to be indicated on the
record as a condition or result of the security interest's obtaining priority
over the rights of a lien creditor with respect to the collateral.
"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.] a right to payment of a monetary obligation
that is either:
(1) Secured
by specific goods, if the right to payment and security agreement are evidenced
by a record; or
(2) Owed
by a lessee under a lease agreement with respect to specific goods and a
monetary obligation owed by the lessee in connection with the transaction
giving rise to the lease, if:
(A) The right to payment and lease agreement are evidenced by a
record; and
(B) The predominant purpose of the transaction giving rise to the
lease was to give the lessee the right to possession and use of the goods.
The
term does not include[:
(1) Charters
or other contracts involving the use or hire of a vessel; or
(2) Records
that evidence] a right to payment arising out of a charter or other contract
involving the use or hire of a vessel or a right to payment arising out of
the use of a credit or charge card or information contained on or for use with
the card. [If a transaction is
evidenced by records that include an instrument or series of instruments, the
group of records taken together constitutes chattel paper.]
"Collateral" means the property
subject to a security interest or agricultural lien. The term includes:
(1) Proceeds
to which a security interest attaches;
(2) Accounts,
chattel paper, payment intangibles, and promissory notes that have been sold;
and
(3) Goods
that are the subject of a consignment.
"Commercial tort claim" means a
claim arising in tort with respect to which:
(1) The
claimant is an organization; or
(2) 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.
"Commodity account" means an
account maintained by a commodity intermediary in which a commodity contract is
carried for a commodity customer.
"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:
(1) Traded
on or subject to the rules of a board of trade that has been designated as a
contract market for [such a contract] these types of contracts
pursuant to federal commodities laws; or
(2) 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.
"Commodity customer" means a
person for which a commodity intermediary carries a commodity contract on its
books.
"Commodity intermediary" means a
person that:
(1) Is
registered as a futures commission merchant under federal commodities law; or
(2) 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.
"Communicate" means:
(1) To
send a written or other tangible record;
(2) To
transmit a record by any means agreed upon by the persons sending and receiving
the record; or
(3) 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.
"Consignee" means a merchant to
which goods are delivered in a consignment.
"Consignment" means a
transaction, regardless of its form, in which a person delivers goods to a
merchant for the purpose of sale and:
(1) 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;
(2) With
respect to each delivery, the aggregate value of the goods is $1,000 or more at
the time of delivery;
(3) The
goods are not consumer goods immediately before delivery; and
(4) The
transaction does not create a security interest that secures an obligation.
"Consignor" means a person that
delivers goods to a consignee in a consignment.
"Consumer debtor" means a debtor
in a consumer transaction.
"Consumer goods" means goods that
are used or bought for use primarily for personal, family, or household
purposes.
"Consumer-goods transaction"
means a consumer transaction in which:
(1) An
individual incurs an obligation primarily for personal, family, or household
purposes; and
(2) A
security interest in consumer goods secures the obligation.
"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.
"Consumer transaction" means a
transaction in which:
(1) An
individual incurs an obligation primarily for personal, family, or household
purposes,
(2) A
security interest secures the obligation, and
(3) The
collateral is held or acquired primarily for personal, family, or household
purposes.
The
term includes consumer-goods transactions.
"Continuation statement" means an
amendment of a financing statement which:
(1) Identifies,
by its file number, the initial financing statement to which it relates; and
(2) Indicates
that it is a continuation statement for, or that it is filed to continue the
effectiveness of, the identified financing statement.
"Controllable account" means
an account evidenced by a controllable electronic record that provides that the
account debtor undertakes to pay the person that has control under section
490:A-105 of the controllable electronic record.
"Controllable payment
intangible" means a payment intangible evidenced by a controllable
electronic record that provides that the account debtor undertakes to pay the
person that has control under section 490:A-105 of the controllable electronic
record.
"Debtor" means:
(1) A
person having an interest, other than a security interest or other lien, in the
collateral, whether or not the person is an obligor;
(2) A
seller of accounts, chattel paper, payment intangibles, or promissory notes; or
(3) A
consignee.
"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.
"Document" means a document of
title or a receipt of the type described in section 490:7-201(b).
"Electronic [chattel paper"
means chattel paper evidenced by a record or records consisting of information
stored in an electronic medium.] money" means money in an
electronic form.
"Encumbrance" means a right,
other than an ownership interest, in real property. The term includes mortgages and other liens
on real property.
"Equipment" means goods other
than inventory, farm products, or consumer goods.
"Farming operation" means
raising, cultivating, propagating, fattening, grazing, or any other farming,
livestock, or aquacultural operation.
"Farm products" means goods,
other than standing timber, with respect to which the debtor is engaged in a
farming operation and [which] that are:
(1) Crops
grown, growing, or to be grown, including:
(A) Crops
produced on trees, vines, and bushes; and
(B) Aquatic
goods produced in aquacultural operations;
(2) Livestock,
born or unborn, including aquatic goods produced in aquacultural operations;
(3) Supplies
used or produced in a farming operation; or
(4) Products
of crops or livestock in their unmanufactured states.
"File number" means the number
assigned to an initial financing statement pursuant to section 490:9-519(a).
"Filing office" means an office
designated in section 490:9-501 as the place to file a financing statement.
"Filing-office rule" means a rule
adopted pursuant to section 490:9-526.
"Financing statement" means a
record or records composed of an initial financing statement and any filed
record relating to the initial financing statement.
"Fixture filing" means the filing
of a financing statement covering goods that are or are to become fixtures and
satisfying section 490:9-502(a) and (b).
The term includes the filing of a financing statement covering goods of
a transmitting utility [which] that are or are to become
fixtures.
"Fixtures" means goods that have
become so related to particular real property that an interest in them arises
under real property law.
"General intangible" means any
personal property, including things in action, other than accounts, chattel
paper, commercial tort claims, deposit accounts, documents, goods, instruments,
investment property, letter-of-credit rights, letters of credit, money, and
oil, gas, or other minerals before extraction.
The term includes controllable electronic records, payment
intangibles, and software.
"Good faith" means honesty in
fact and the observance of reasonable commercial standards of fair dealing.
"Goods" means all things that are
movable when a security interest attaches.
The term includes:
(1) Fixtures,
(2) Standing
timber that is to be cut and removed under a conveyance or contract for sale,
(3) The
unborn young of animals,
(4) Crops
grown, growing, or to be grown, even if the crops are produced on trees, vines,
or bushes; and
(5) 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] is 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.
"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.
"Health-care-insurance
receivable" means an interest in or claim under a policy of insurance that
is a right to payment of a monetary obligation for health-care goods or
services provided or to be provided.
"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:
(1) Investment
property;
(2) Letters
of credit; [or]
(3) Writings
that evidence a right to payment arising out of the use of a credit or charge
card or information contained on or for use with the card[.]; or
(4) Writings
that evidence chattel paper.
"Inventory" means goods, other
than farm products, [which:] that:
(1) Are
leased by a person as lessor;
(2) Are
held by a person for sale or lease or to be furnished under a contract of
service;
(3) Are
furnished by a person under a contract of service; or
(4) Consist
of raw materials, work in process, or materials used or consumed in a business.
"Investment property" means a
security, whether certificated or uncertificated, security entitlement,
securities account, commodity contract, or commodity account.
"Jurisdiction of organization",
with respect to a registered organization, means the jurisdiction under whose
law the organization is formed or organized.
"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.
"Lien creditor" means:
(1) A
creditor that has acquired a lien on the property involved by attachment, levy,
or the like;
(2) An
assignee for benefit of creditors from the time of assignment;
(3) A
trustee in bankruptcy from the date of the filing of the petition; or
(4) A
receiver in equity from the time of appointment.
"Manufactured home" means a
structure, transportable in one or more sections, [which,] that
in the traveling mode, is eight body feet or more in width or forty body feet
or more in length, or, when erected on site, is three hundred twenty or more
square feet, and [which] that 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] title 42 of the United
States Code.
"Manufactured-home transaction"
means a secured transaction:
(1) That
creates a purchase-money security interest in a manufactured home, other than a
manufactured home held as inventory; or
(2) In
which a manufactured home, other than a manufactured home held as inventory, is
the primary collateral.
"Money" has the meaning as in
section 490:1-201(b), but does not include:
(1) A
deposit account; or
(2) Money
in an electronic form that cannot be subjected to control under section
490:9-A.
"Mortgage" means a consensual
interest in real property, including fixtures, which secures payment or
performance of an obligation.
"New debtor" means a person that
becomes bound as debtor under section 490:9-203(d) by a security agreement
previously entered into by another person.
"New value" means:
(1) Money;
(2) Money's
worth in property, services, or new credit; or
(3) 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.
"Noncash proceeds" means proceeds
other than cash proceeds.
"Obligor" means a person that,
with respect to an obligation secured by a security interest in or an
agricultural lien on the collateral:
(1) Owes
payment or other performance of the obligation;
(2) Has
provided property other than the collateral to secure payment or other performance
of the obligation; or
(3) 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.
"Original debtor", except as used
in section 490:9-310(c), means a person that, as debtor, entered into a
security agreement to which a new debtor has become bound under section
490:9-203(d).
"Payment intangible" means a
general intangible under which the account debtor's principal obligation is a
monetary obligation. The term
includes a controllable payment intangible.
"Person related to", with respect
to an individual, means:
(1) The
spouse of the individual;
(2) A
brother, brother-in-law, sister, or sister-in-law of the individual;
(3) An
ancestor or lineal descendant of the individual or the individual's spouse; or
(4) Any
other relative, by blood or marriage, of the individual or the individual's
spouse who shares the same home with the individual.
"Person related to", with respect
to an organization, means:
(1) A
person directly or indirectly controlling, controlled by, or under common
control with the organization;
(2) An
officer or director of, or a person performing similar functions with respect
to, the organization;
(3) An
officer or director of, or a person performing similar functions with respect
to, a person described in paragraph (1);
(4) The
spouse of an individual described in paragraph (1), (2), or (3); or
(5) An
individual who is related by blood or marriage to an individual described in
paragraph (1), (2), (3), or (4) and shares the same home with the individual.
"Proceeds", except as used in
section 490:9-609(b), means the following property:
(1) Whatever
is acquired upon the sale, lease, license, exchange, or other disposition of
collateral;
(2) Whatever
is collected on, or distributed on account of, collateral;
(3) Rights
arising out of collateral;
(4) 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
(5) 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.
"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.
"Proposal" means a record [authenticated]
signed by a secured party [which] that 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 490:9-620,
490:9-621, and 490:9-622.
"Public-finance transaction"
means a secured transaction in connection with which:
(1) Debt
securities are issued;
(2) All
or a portion of the securities issued have an initial stated maturity of at
least twenty years; and
(3) 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.
"Public organic record" means a
record that is available to the public for inspection and is:
(1) A
record consisting of the record initially filed with or issued by a state or
the United States to form or organize an organization and any record filed with
or issued by the state or the United States that amends or restates the initial
record;
(2) An
organic record of a business trust consisting of the record initially filed
with a state and any record filed with the state that amends or restates the
initial record, if a statute of the state governing business trusts requires
that the record be filed with the state; or
(3) A
record consisting of legislation enacted by the legislature of a state or the
Congress of the United States that forms or organizes an organization, any
record amending the legislation, and any record filed with or issued by the
state or the United States that amends or restates the name of the
organization.
"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.
"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] that is stored in an electronic
or other medium and is retrievable in perceivable form.
"Registered organization" means
an organization formed or organized solely under the law of a single state or
the United States by the filing of a public organic record with, the issuance
of a public organic record by, or the enactment of legislation by the state or
the United States. The term includes a
business trust that is formed or organized under the law of a single state if a
statute of the state governing business trusts requires that the business
trust's organic record be filed with the state.
"Secondary obligor" means an
obligor to the extent that:
(1) The
obligor's obligation is secondary; or
(2) The
obligor has a right of recourse with respect to an obligation secured by
collateral against the debtor, another obligor, or property of either.
"Secured party" means:
(1) 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;
(2) A
person that holds an agricultural lien;
(3) A
consignor;
(4) A
person to which accounts, chattel paper, payment intangibles, or promissory
notes have been sold;
(5) 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
(6) A
person that holds a security interest arising under section 490:2-401,
490:2-505, 490:2-711(3), 490:2A-508(e), 490:4-210, or 490:5-118.
"Security agreement" means an
agreement that creates or provides for a security interest.
["Send", in connection with a
record or notification, means:
(1) 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
(2) To
cause the record or notification to be received within the time that it would
have been received if properly sent under paragraph (1).]
"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.
"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.
"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.
"Tangible [chattel paper"
means chattel paper evidenced by a record or records consisting of information
that is inscribed on a tangible medium.] money" means money in a
tangible form.
"Termination statement" means an
amendment of a financing statement which:
(1) Identifies,
by its file number, the initial financing statement to which it relates; and
(2) Indicates
either that it is a termination statement or that the identified financing
statement is no longer effective.
"Transmitting utility" means a
person primarily engaged in the business of:
(1) Operating
a railroad, subway, street railway, or trolley bus;
(2) Transmitting
communications electrically, electromagnetically, or by light;
(3) Transmitting
goods by pipeline or sewer; or
(4) Transmitting
or producing and transmitting electricity, steam, gas, or water.
(b)
The following definitions in other articles apply to this article:
"Applicant". Section 490:5-102.
"Beneficiary". Section 490:5-102.
"Broker". Section 490:8-102.
"Certificated security". Section 490:8-102.
"Check". Section 490:3-104.
"Clearing corporation". Section 490:8-102.
"Contract for sale". Section 490:2-106.
"Control". Section 490:7-106.
"Controllable electronic
record". Section 490:A-102.
"Customer". Section 490:4-104.
"Entitlement holder". Section 490:8-102.
"Financial asset". Section 490:8-102.
"Holder in due course". Section 490:3-302.
"Issuer" (with respect to a
letter of credit or letter-of-credit right).
Section 490:5-102.
"Issuer" (with respect to a
security). Section 490:8-201.
"Issuer" (with respect to
documents of title). Section 490:7-102.
"Lease". Section 490:2A-103.
"Lease agreement". Section 490:2A-103.
"Lease contract". Section 490:2A-103.
"Leasehold interest". Section 490:2A-103.
"Lessee". Section 490:2A-103.
"Lessee in ordinary course of
business". Section 490:2A‑103.
"Lessor". Section 490:2A-103.
"Lessor's residual
interest". Section 490:2A-103.
"Letter of credit". Section 490:5-102.
"Merchant". Section 490:2-104.
"Negotiable instrument". Section 490:3-104.
"Nominated person". Section 490:5-102.
"Note". Section 490:3-104.
"Proceeds of a letter of
credit". Section 490:5-114.
"Protected purchaser". Section 490:8-303.
"Prove". Section 490:3-103.
"Qualifying purchaser". Section 490:A-102.
"Sale". Section 490:2-106.
"Securities account". Section 490:8-501.
"Securities intermediary". Section 490:8-102.
"Security". Section 490:8-102.
"Security certificate". Section 490:8-102.
"Security entitlement". Section 490:8-102.
"Uncertificated security". Section 490:8-102."
SECTION 37.
Section 490:9-104, Hawaii Revised Statutes, is amended by amending
subsection (a) to read as follows:
"(a)
A secured party has control of a deposit account if:
(1) The
secured party is the bank with which the deposit account is maintained;
(2) The
debtor, secured party, and bank have agreed in [an authenticated] a
signed record that the bank will comply with instructions originated by the
secured party directing disposition of the funds in the deposit account without
further consent by the debtor; [or]
(3) The
secured party becomes the bank's customer with respect to the deposit account[.];
or
(4) Another
person, other than the debtor:
(A) Has control of the deposit account and acknowledges that it has
control on behalf of the secured party; or
(B) Obtains control of the deposit account after having acknowledged
that it will obtain control of the deposit account on behalf of the secured
party."
SECTION 38.
Section 490:9-105, Hawaii Revised Statutes, is amended to read as
follows:
"§490:9-105 Control of electronic
copy of record evidencing chattel paper.
(a) A [secured party] purchaser
has control of [electronic] an authoritative electronic copy of a
record evidencing chattel paper if a system employed for evidencing the [transfer]
assignment of interests in the chattel paper reliably establishes the [secured
party] purchaser as the person to [which the chattel paper] whom
the authoritative electronic copy was assigned.
(b)
A system satisfies subsection (a) if the record or records [comprising]
evidencing the chattel paper are created, stored, and assigned in [such]
a manner that:
(1) A
single authoritative copy of the record or records exists which is unique,
identifiable, and, except as otherwise provided in paragraphs (4), (5),
and (6), unalterable;
(2) The
authoritative copy identifies the [secured party] purchaser as
the assignee of the record or records;
(3) The
authoritative copy is communicated to, and maintained by, the [secured
party] purchaser or its designated custodian;
(4) Copies
or amendments that add or change an identified assignee of the authoritative
copy can be made only with the consent of the [secured party;] purchaser;
(5) Each
copy of the authoritative copy and any copy of a copy is readily identifiable
as a copy that is not the authoritative copy; and
(6) Any
amendment of the authoritative copy is readily identifiable as authorized or
unauthorized.
(c)
A system satisfies subsection (a), and a purchaser has control of an
authoritative electronic copy of a record evidencing chattel paper, if the
electronic copy, a record attached to, or logically associated with, the
electronic copy, or a system in which the electronic copy is recorded:
(1) Enables
the purchaser to readily identify each electronic copy as either an
authoritative copy or a nonauthoritative copy;
(2) Enables
the purchaser to readily identify itself in any way, including by name,
identifying number, cryptographic key, office, or account number, as the
assignee of the authoritative electronic copy; and
(3) Gives
the purchaser exclusive power, subject to subsection (d), to:
(A) Prevent others from adding or changing an identified assignee of
the authoritative electronic copy; and
(B) Transfer control of the authoritative electronic copy.
(d)
Subject to subsection (e), a power is exclusive under subsection (c)(3),
regardless of whether:
(1) The
authoritative electronic copy, a record attached to, or logically associated
with, the authoritative electronic copy, or a system in which the authoritative
electronic copy is recorded limits the use of the authoritative electronic copy
or has a protocol programmed to cause a change, including a transfer or loss of
control; or
(2) The
power is shared with another person.
(e)
A power of a purchaser is not shared with another person under
subsection (d)(2) and the purchaser's power shall not be exclusive if:
(1) The
purchaser may exercise the power only if the power is also exercised by the
other person; and
(2) The
other person:
(A) May exercise the power without exercise of the power by the
purchaser; or
(B) Is the transferor to the purchaser of an interest in the chattel
paper.
(f)
If a purchaser has the powers specified in subsection (c)(3), the powers
shall be presumed to be exclusive.
(g)
A purchaser has control of an authoritative electronic copy of a record
evidencing chattel paper if another person, other than the transferor to the
purchaser of an interest in the chattel paper:
(1) Has
control of the authoritative electronic copy and acknowledges that it has
control on behalf of the purchaser; or
(2) Obtains
control of the authoritative electronic copy after having acknowledged that it
will obtain control of the electronic copy on behalf of the purchaser."
SECTION 39.
Section 490:9-203, Hawaii Revised Statutes, is amended by amending subsection
(b) to read as follows:
"(b)
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:
(A) The
debtor has [authenticated] signed a security agreement that
provides a description of the collateral and, if the security interest covers
timber to be cut, a description of the land concerned;
(B) The
collateral is not a certificated security and is in the possession of the
secured party under section 490:9-313 pursuant to the debtor's security
agreement;
(C) The
collateral is a certificated security in registered form and the security
certificate has been delivered to the secured party under section 490:8-301
pursuant to the debtor's security agreement; [or]
(D) The
collateral is controllable accounts, controllable electronic records,
controllable payment intangibles, deposit accounts, electronic [chattel
paper,] documents, electronic money, investment property, or
letter-of-credit rights, [or electronic documents,] and the secured
party has control under section 490:7-106, 490:9-104, [490:9-105,] 490:9-106,
[or] 490:9-107, 490:9-A, or 490:9-B pursuant to the
debtor's security agreement[.]; or
(E) The collateral is chattel paper and the secured party has
possession and control under section 490:9-F pursuant to the debtor's security
agreement."
SECTION 40.
Section 490:9-204, Hawaii Revised Statutes, is amended to read as
follows:
"§490:9-204 After-acquired
property; future advances. (a) Except as otherwise provided in subsection
(b), a security agreement may create or provide for a security interest in
after-acquired collateral.
(b)
[A] Subject to subsection (d), a security interest does
not attach under a term constituting an after-acquired property clause to:
(1) Consumer
goods, other than an accession when given as additional security, unless the
debtor acquires rights in them within ten days after the secured party gives
value; or
(2) A
commercial tort claim.
(c) A
security agreement may provide that collateral secures, or that accounts,
chattel paper, payment intangibles, or promissory notes are sold in connection
with, future advances or other value, whether or not the advances or value are
given pursuant to commitment.
(d)
Nothing in subsection (b) shall prevent a security interest from
attaching:
(1) To
consumer goods as proceeds under section 490:9‑315(a) or commingled goods
under section 490:9‑336(c);
(2) To
a commercial tort claim as proceeds under section 490:9-315(a); or
(3) Under
an after-acquired property clause to property that is proceeds of consumer
goods or a commercial tort claim."
SECTION 41.
Section 490:9-207, Hawaii Revised Statutes, is amended by amending
subsection (c) to read as follows:
"(c)
Except as otherwise provided in subsection (d), a secured party having
possession of collateral or control of collateral under section 490:7-106,
490:9-104, 490:9-105, 490:9-106, [or] 490:9-107[:], 490:9‑A,
or 490:9-B:
(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."
SECTION 42.
Section 490:9-208, Hawaii Revised Statutes, is amended by amending
subsection (b) to read as follows:
"(b)
Within ten days after receiving [an authenticated] a signed
demand by the debtor:
(1) A
secured party having control of a deposit account under section 490:9-104(a)(2)
shall send to the bank with which the deposit account is maintained [an
authenticated statement] a signed record that releases the bank from
any further obligation to comply with instructions originated by the secured
party;
(2) A
secured party having control of a deposit account under section 490:9-104(a)(3)
shall:
(A) Pay
the debtor the balance on deposit in the deposit account; or
(B) Transfer
the balance on deposit into a deposit account in the debtor's name;
(3) A
secured party, other than a buyer, having control [of electronic chattel
paper] under section 490:9-105 [shall:
(A) Communicate the] of an authoritative electronic
copy of [the electronic] a record evidencing chattel paper shall
transfer control of the electronic copy to the debtor or [its] a
person designated [custodian;
(B) If] by the debtor [designates a custodian that is
the designated custodian with which the authoritative copy of the electronic
chattel paper is maintained for the secured party, communicate to the custodian
an authenticated record releasing the designated custodian from any further
obligation to comply with instructions originated by the secured party and
instructing the custodian to comply with instructions originated by the debtor;
and
(C) Take appropriate action to enable the debtor or its designated
custodian to make copies of or revisions to the authoritative copy which add or
change an identified assignee of the authoritative copy without the consent of the
secured party];
(4) A
secured party having control of investment property under section
490:8-106(d)(2) or 490:9-106(b) shall send to the securities intermediary or
commodity intermediary with which the security entitlement or commodity
contract is maintained [an authenticated] a signed record that
releases the securities intermediary or commodity intermediary from any further
obligation to comply with entitlement orders or directions originated by the
secured party;
(5) A
secured party having control of a letter-of-credit right under section
490:9-107 shall send to each person having an unfulfilled obligation to pay or
deliver proceeds of the letter of credit to the secured party [an
authenticated] a signed release from any further obligation to pay or
deliver proceeds of the letter of credit to the secured party; [and]
(6) A
secured party having control under section 490:7-106 of an authoritative
electronic document of title shall[:
(A) Give] transfer control of the electronic [document]
copy to the debtor or [its] a person designated [custodian;
(B) If] by the debtor [designates a custodian that is
the designated custodian with which the authoritative copy of the electronic
document is maintained for the secured party, communicate to the custodian an
authenticated record releasing the designated custodian from any further
obligation to comply with instructions originated by the secured party and
instructing the custodian to comply with instructions originated by the debtor;
and
(C) Take appropriate action to enable the debtor or its designated
custodian to make copies of or revisions to the authoritative copy that add or
change an identified assignee of the authoritative copy without the consent of the
secured party.];
(7) A
secured party having control under section 490:9-A of electronic money shall
transfer control of the electronic money to the debtor or a person designated
by the debtor; and
(8) A
secured party having control under section 490:A-105 of a controllable
electronic record, other than a buyer of a controllable account or controllable
payment intangible evidenced by the controllable electronic record, shall
transfer control of the controllable electronic record to the debtor or a person
designated by the debtor."
SECTION 43.
Section 490:9-209, Hawaii Revised Statutes, is amended by amending
subsection (b) to read as follows:
"(b)
Within ten days after receiving [an authenticated] a signed
demand by the debtor, a secured party shall send to an account debtor that has
received notification under section 490:9-406(a) or 490:A-106(b) of an
assignment to the secured party as assignee [under section 490:9-406(a) an
authenticated] a signed record that releases the account debtor from
any further obligation to the secured party."
SECTION 44.
Section 490:9-301, Hawaii Revised Statutes, is amended to read as
follows:
"§490:9-301 Law governing
perfection and priority of security interests.
Except as otherwise provided in sections 490:9-303 through [490:9-306,]
490:9-E, 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 tangible
documents, goods, instruments, or tangible money[, or tangible
chattel paper] is located in a jurisdiction, the local law of that
jurisdiction governs:
(A) Perfection
of a security interest in the goods by filing a fixture filing;
(B) Perfection
of a security interest in timber to be cut; and
(C) The
effect of perfection or nonperfection and the priority of a nonpossessory
security interest in the collateral.
(4) The
local law of the jurisdiction in which the wellhead or minehead is located
governs perfection, the effect of perfection or nonperfection, and the priority
of a security interest in as-extracted collateral."
SECTION 45.
Section 490:9-304, Hawaii Revised Statutes, is amended by amending
subsection (a) to read as follows:
"(a)
The local law of a bank's jurisdiction governs perfection, the effect of
perfection or nonperfection, and the priority of a security interest in a
deposit account maintained with that bank[.] even if the transaction
does not bear any relation to the bank's jurisdiction."
SECTION 46.
Section 490:9-305, Hawaii Revised Statutes, is amended by amending
subsection (a) to read as follows:
"(a)
Except as otherwise provided in subsection (c), the following rules
apply:
(1) While
a security certificate is located in a jurisdiction, the local law of that
jurisdiction governs perfection, the effect of perfection or nonperfection, and
the priority of a security interest in the certificated security represented
thereby[.];
(2) The
local law of the issuer's jurisdiction as specified in section 490:8-110(d)
governs perfection, the effect of perfection or nonperfection, and the priority
of a security interest in an uncertificated security[.];
(3) The
local law of the securities intermediary's jurisdiction as specified in section
490:8-110(e) governs perfection, the effect of perfection or nonperfection, and
the priority of a security interest in a security entitlement or securities
account[.];
(4) The
local law of the commodity intermediary's jurisdiction governs perfection, the effect
of perfection or nonperfection, and the priority of a security interest in a
commodity contract or commodity account[.]; and
(5) Paragraphs
(2), (3), and (4) shall apply regardless of whether the transaction bears any
relation to the jurisdiction."
SECTION 47.
Section 490:9-310, Hawaii Revised Statutes, is amended by amending
subsection (b) to read as follows:
"(b)
The filing of a financing statement is not necessary to perfect a
security interest:
(1) That
is perfected under section 490:9-308(d), (e), (f), or (g);
(2) That
is perfected under section 490:9-309 when it attaches;
(3) In
property subject to a statute, regulation, or treaty described in section
490:9-311(a);
(4) In
goods in possession of a bailee [which is] perfected under section
490:9-312(d)(1) or (2);
(5) In
certificated securities, documents, goods, or instruments [which is]
perfected without filing, control, or possession under section 490:9-312(e),
(f), or (g);
(6) In
collateral in the secured party's possession under section 490:9-313;
(7) In
a certificated security [which is] perfected by delivery of the security
certificate to the secured party under section 490:9-313;
(8) In
controllable accounts, controllable electronic records, controllable payment
intangibles, deposit accounts, [electronic chattel paper,]
electronic documents, investment property, or letter-of-credit rights [which
is] perfected by control under section 490:9-314;
(9) In
chattel paper perfected by possession and control under section 490:9-F;
[(9)] (10)
In proceeds [which is] perfected
under section 490:9‑315; or
(11) That
is perfected under section 490:9-316."
SECTION 48.
Section 490:9-312, Hawaii Revised Statutes, is amended as follows:
1. By
amending its title and subsections (a) and (b) to read:
"§490:9-312 Perfection of
security interests in chattel paper, controllable accounts, controllable
electronic records, controllable payment intangibles, 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) A security interest in chattel paper, [negotiable
documents,] controllable accounts, controllable electronic records,
controllable payment intangibles, instruments, [or] investment
property, or negotiable documents may be perfected by filing.
(b)
Except as otherwise provided in [section] subsections
490:9-315(c) and (d) for proceeds:
(1) A
security interest in a deposit account may be perfected only by control under
section 490:9-314;
(2) And
except as otherwise provided in section 490:9‑308(d), a security interest
in a letter-of-credit right may be perfected only by control under section 490:9-314;
[and]
(3) A
security interest in tangible money may be perfected only by the secured
party's taking possession under section 490:9-313[.]; and
(4) A
security interest in electronic money may be perfected only by control under
section 490:9-314."
2. By
amending subsection (e) to read:
"(e)
A security interest in certificated securities, negotiable documents, or
instruments is perfected without filing or the taking of possession or control
for a period of twenty days from the time it attaches to the extent that it
arises for new value given under [an authenticated] a signed
security agreement."
SECTION 49.
Section 490:9-313, Hawaii Revised Statutes, is amended as follows:
1. By
amending subsection (a) to read:
"(a)
Except as otherwise provided in subsection (b), a secured party may
perfect a security interest in [tangible negotiable documents,] goods,
instruments, negotiable tangible documents, or tangible money[, or
tangible chattel paper] by taking possession of the collateral. A secured party may perfect a security
interest in certificated securities by taking delivery of the certificated
securities under section 490:8‑301."
2. By
amending subsections (c) and (d) to read:
"(c)
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] signs a record acknowledging
that it holds possession of the collateral for the secured party's benefit; or
(2) The
person takes possession of the collateral after having [authenticated] signed
a record acknowledging that it will hold possession of the collateral
for the secured party's benefit.
(d)
If perfection of a security interest depends upon possession of the
collateral by a secured party, perfection occurs [no] not earlier
than the time the secured party takes possession and continues only while the
secured party retains possession."
SECTION 50.
Section 490:9-314, Hawaii Revised Statutes, is amended to read as
follows:
"§490:9-314 Perfection by
control. (a) A security interest in [investment
property, deposit accounts, letter-of-credit rights, electronic chattel paper,
or electronic documents] controllable accounts, controllable electronic
records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, investment
property, or letter-of-credit rights may be perfected by control of the
collateral under section 490:7-106, 490:9-104, [490:9-105,] 490:9-106, [or]
490:9-107[.], 490:9-A, or 490:9-B.
(b)
A security interest in [deposit accounts, electronic chattel paper,
letter-of-credit rights, or electronic documents] controllable accounts,
controllable electronic records, controllable payment intangibles, deposit
accounts, electronic documents, electronic money, or letter-of-credit rights
is perfected by control under section 490:7-106, 490:9-104, [490:9‑105,
or] 490:9-107 [when], or 490:9-A, 490:9-B not earlier than the
time the secured party obtains control and remains perfected by control
only while the secured party retains control.
(c)
A security interest in investment property is perfected by control under
section 490:9-106 [from] not earlier than the time the secured
party obtains control and remains perfected by control until:
(1) The
secured party does not have control; and
(2) One
of the following occurs:
(A) If
the collateral is a certificated security, the debtor has or acquires
possession of the security certificate;
(B) If
the collateral is an uncertificated security, the issuer has registered or
registers the debtor as the registered owner; or
(C) If
the collateral is a security entitlement, the debtor is or becomes the
entitlement holder."
SECTION 51.
Section 490:9-316, Hawaii Revised Statutes, is amended as follows:
1. By
amending subsection (a) to read:
"(a) A security interest perfected pursuant to the
law of the jurisdiction designated in section 490:9-301(1) [or],
490:9‑305(c), 490:9-D(d), or 490:9-E(b) remains perfected until
the earliest of:
(1) The
time perfection would have ceased under the law of that jurisdiction;
(2) The
expiration of four months after a change of the debtor's location to another
jurisdiction; or
(3) The
expiration of one year after a transfer of collateral to a person that thereby
becomes a debtor and is located in another jurisdiction."
2. By
amending subsection (f) to read:
"(f)
A security interest in chattel paper, controllable accounts,
controllable electronic records, controllable payment intangibles, deposit
accounts, letter-of-credit rights, or investment property which is perfected
under the law of the chattel paper's jurisdiction, the controllable electronic
record's jurisdiction, the bank's jurisdiction, the issuer's jurisdiction,
a nominated person's jurisdiction, the securities intermediary's jurisdiction,
or the commodity intermediary's jurisdiction, as applicable, remains perfected
until the earlier of:
(1) The
time the security interest would have become unperfected under the law of that
jurisdiction; or
(2) The
expiration of four months after a change of the applicable jurisdiction to
another jurisdiction."
SECTION 52.
Section 490:9-317, Hawaii Revised Statutes, is amended to read as
follows:
"§490:9-317 Interests that take
priority over or take free of security interest or agricultural lien. (a)
A security interest or agricultural lien is subordinate to the rights
of:
(1) A
person entitled to priority under section 490:9-322; and
(2) Except
as otherwise provided in subsection (e), a person that becomes a lien creditor
before the earlier of the time:
(A) The
security interest or agricultural lien is perfected; or
(B) One
of the conditions specified in section 490:9‑203(b)(3) is met and a
financing statement covering the collateral is filed.
(b)
Except as otherwise provided in subsection (e), a buyer, other than a
secured party, of [tangible chattel paper, tangible documents,] goods,
instruments, tangible documents, or certificated security takes free of
a security interest or agricultural lien if the buyer gives value and receives
delivery of the collateral without knowledge of the security interest or
agricultural lien and before it is perfected.
(c)
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)
[A] Subject to subsections (f) through (i), a licensee of
a general intangible or a buyer, other than a secured party, of collateral
other than [tangible chattel paper, tangible documents,] electronic
money, goods, instruments, tangible documents, or a certificated
security takes free of a security interest if the licensee or buyer gives value
without knowledge of the security interest and before it is perfected.
(e)
Except as otherwise provided in sections 490:9-320 and 490:9-321, if a
person files a financing statement with respect to a purchase-money security
interest before or within twenty days after the debtor receives delivery of the
collateral, the security interest takes priority over the rights of a buyer,
lessee, or lien creditor [which] that arise between the time the
security interest attaches and the time of filing.
(f)
A buyer, other than a secured party, of chattel paper takes free of a
security interest if, without knowledge of the security interest and before it
is perfected, the buyer gives value and:
(1) Receives
delivery of each authoritative tangible copy of the record evidencing the
chattel paper; and
(2) If
each authoritative electronic copy of the record evidencing the chattel paper
may be subjected to control under section 490:9-105, obtains control of each
authoritative electronic copy.
(g) A buyer of an electronic document takes free
of a security interest if, without knowledge of the security interest and
before it is perfected, the buyer gives value and, if each authoritative
electronic copy of the document may be subjected to control under section
490:7-106, obtains control of each authoritative electronic copy.
(h) A buyer of a controllable electronic record
takes free of a security interest if, without knowledge of the security
interest and before it is perfected, the buyer gives value and obtains control
of the controllable electronic record.
(i)
A buyer, other than a secured party, of a controllable account or a controllable payment intangible takes
free of a security interest if, without knowledge of the security interest and
before it is perfected, the buyer gives value and obtains control of the controllable account or controllable payment
intangible."
SECTION 53.
Section 490:9-323, Hawaii Revised Statutes, is amended as follows:
1. By
amending subsection (d) to read:
"(d)
Except as otherwise provided in subsection (e), a buyer of goods [other
than a buyer in ordinary course of business] takes free of a security
interest to the extent that it secures advances made after the earlier of:
(1) The
time the secured party acquires knowledge of the buyer's purchase; or
(2) Forty-five
days after the purchase."
2. By
amending subsection (f) to read:
"(f)
Except as otherwise provided in subsection (g), a lessee of goods[,
other than a lessee in ordinary course of business,] takes the leasehold
interest free of a security interest to the extent that it secures advances
made after the earlier of:
(1) The
time the secured party acquires knowledge of the lease; or
(2) Forty-five
days after the lease contract becomes enforceable."
SECTION 54.
Section 490:9-330, Hawaii Revised Statutes, is amended as follows:
1. By
amending subsections (a) and (b) to read:
"(a)
A purchaser of chattel paper has priority over a security interest in
the chattel paper [which] that is claimed merely as proceeds of
inventory subject to a security interest if:
(1) In
good faith and in the ordinary course of the purchaser's business, the
purchaser gives new value [and], takes possession of each
authoritative tangible copy of the record evidencing the chattel paper [or],
and obtains control [of] under section 490:9-105 of each
authoritative electronic copy of the record evidencing the chattel paper [under
section 490:9‑105]; and
(2) The
[chattel paper does] authoritative copies of the record evidencing
the chattel paper do not indicate that [it] the chattel paper
has been assigned to an identified assignee other than the purchaser.
(b)
A purchaser of chattel paper has priority over a security interest in
the chattel paper [which] that is claimed other than merely as
proceeds of inventory subject to a security interest if the purchaser gives new
value [and], takes possession of each authoritative tangible
copy of the record evidencing the chattel paper [or], and
obtains control [of] under section 490:9-105 of each authoritative
electronic copy of the record evidencing the chattel paper [under
section 490:9‑105] in good faith, in the ordinary course of the
purchaser's business, and without knowledge that the purchase violates the
rights of the secured party."
2. By
amending subsection (f) to read:
"(f)
For purposes of subsections (b) and (d), if the authoritative copies
of the record evidencing chattel paper or an instrument [indicates] indicate
that [it] the chattel paper or instrument has been assigned to an
identified secured party other than the purchaser, a purchaser of the chattel
paper or instrument has knowledge that the purchase violates the rights of the
secured party."
SECTION 55.
Section 490:9-331, Hawaii Revised Statutes, is amended by amending its
title and subsections (a) and (b) to read as follows:
"§490:9-331 Priority of rights of
purchasers of [instruments,] controllable
accounts, controllable electronic records, controllable payment intangibles,
documents, instruments, and securities under other articles;
priority of interests in financial assets and security entitlements and
protection against assertion of claim under [article] articles
8[.] and A. (a)
This article does not limit the rights of a holder in due course of a
negotiable instrument, a holder to which a negotiable document of title has
been duly negotiated, [or] a protected purchaser of a security[.],
or a qualifying purchaser of a controllable account, controllable electronic
record, or controllable payment intangible.
These holders or purchasers take priority over an earlier security
interest, even if perfected, to the extent provided in articles 3, 7, [and]
8[.], and A.
(b)
This article does not limit the rights of or impose liability on a
person to the extent that the person is protected against the assertion of a
claim under article 8[.] or A."
SECTION 56.
Section 490:9-332, Hawaii Revised Statutes, is amended to read as
follows:
"§490:9-332 Transfer of money;
transfer of funds from deposit account.
(a) A transferee of tangible
money takes the money free of a security interest [unless the transferee
acts] if the transferee receives possession of the money without acting
in collusion with the debtor in violating the rights of the secured party.
(b)
A transferee of funds from a deposit account takes the funds free of a
security interest in the deposit account [unless the transferee acts] if the transferee receives the funds without acting in collusion with the debtor in violating the
rights of the secured party.
(c)
A transferee of electronic money takes the money free of a security
interest if the transferee obtains control of the money without acting in
collusion with the debtor in violating the rights of the secured party."
SECTION 57.
Section 490:9-406, Hawaii Revised Statutes, is amended to read as
follows:
"§490:9-406 Discharge of account
debtor; notification of assignment; identification and proof of assignment;
restrictions on assignment of accounts, chattel paper, payment intangibles, and
promissory notes ineffective.
(a) Subject to subsections (b)
through [(i),] (j), an account debtor on an account, chattel
paper, or a payment intangible may discharge its obligation by paying the
assignor until, but not after, the account debtor receives a notification, [authenticated]
signed by the assignor or the assignee, that the amount due or to become
due has been assigned and that payment is to be made to the assignee. After receipt of the notification, the
account debtor may discharge its obligation by paying the assignee and may not
discharge the obligation by paying the assignor.
(b)
Subject to [subsection] subsections (h)[,] and
(j), notification is ineffective under subsection (a):
(1) If
it does not reasonably identify the rights assigned;
(2) To
the extent that an agreement between an account debtor and a seller of a payment
intangible limits the account debtor's duty to pay a person other than the
seller and the limitation is effective under law other than this article; or
(3) At
the option of an account debtor, if the notification notifies the account
debtor to make less than the full amount of any installment or other periodic
payment to the assignee, even if:
(A) Only
a portion of the account, chattel paper, or payment intangible has been
assigned to that assignee;
(B) A
portion has been assigned to another assignee; or
(C) The
account debtor knows that the assignment to that assignee is limited.
(c)
Subject to [subsection] subsections (h)[,] and
(j), if requested by the account debtor, an assignee shall seasonably
furnish reasonable proof that the assignment has been made. Unless the assignee complies, the account
debtor may discharge its obligation by paying the assignor, even if the account
debtor has received a notification under subsection (a).
(d) As
used in this subsection, "promissory note" includes a negotiable
instrument that evidences chattel paper.
Except as otherwise provided in subsection (e) and sections 490:2A-303
and 490:9-407, and subject to subsection (h), a term in an agreement between an
account debtor and an assignor or in a promissory note is ineffective to the
extent that it:
(1) Prohibits,
restricts, or requires the consent of the account debtor or person obligated on
the promissory note to the assignment or transfer of, or the creation,
attachment, perfection, or enforcement of a security interest in, the account,
chattel paper, payment intangible, or promissory note; or
(2) Provides
that the assignment or transfer or the creation, attachment, perfection, or
enforcement of the security interest may give rise to a default, breach, right
of recoupment, claim, defense, termination, right of termination, or remedy
under the account, chattel paper, payment intangible, or promissory note.
(e) Subsection
(d) does not apply to the sale of a payment intangible or promissory note,
other than a sale pursuant to a disposition under section 490:9-610 or an
acceptance of collateral under section 490:9-620.
(f)
Except as otherwise provided in sections 490:2A-303 and 490:9-407, and
subject to subsections (h) and (i), a rule of law, statute, or regulation, that
prohibits, restricts, or requires the consent of a government, governmental
body or official, or account debtor to the assignment or transfer of, or
creation of a security interest in, an account or chattel paper is ineffective
to the extent that the rule of law, statute, or regulation:
(1) Prohibits,
restricts, or requires the consent of the government, governmental body or
official, or account debtor to the assignment or transfer of, or the creation,
attachment, perfection, or enforcement of a security interest in, the account
or chattel paper; or
(2) Provides
that the assignment or transfer or the creation, attachment, perfection, or
enforcement of the security interest may give rise to a default, breach, right
of recoupment, claim, defense, termination, right of termination, or remedy
under the account or chattel paper.
(g)
Subject to [subsection] subsections (h)[,] and
(j), an account debtor may not waive or vary its option under subsection
(b)(3).
(h)
This section is subject to law other than this article [which] that
establishes a different rule for an account debtor who is an individual and who
incurred the obligation primarily for personal, family, or household purposes.
(i)
This section does not apply to an assignment of a health-care-insurance
receivable.
(j)
Subsections (a), (b), (c), and (g) shall not apply to a controllable
account or controllable payment intangible."
SECTION 58.
Section 490:9-408, Hawaii Revised Statutes, is amended to read as
follows:
"§490:9-408 Restrictions on
assignment of promissory notes, health-care-insurance receivables, and certain
general intangibles ineffective.
(a) Except as otherwise provided
in subsection (b), a term in a promissory note or in an agreement between an
account debtor and a debtor [which] that relates to a
health-care-insurance receivable or a general intangible, including a contract,
permit, license, or franchise, [and which term] that prohibits,
restricts, or requires the consent of the person obligated on the promissory
note or the account debtor to, the assignment or transfer of, or creation,
attachment, or perfection of a security interest in, the promissory note,
health-care-insurance receivable, or general intangible, is ineffective to the
extent that the term:
(1) Would
impair the creation, attachment, or perfection of a security interest; or
(2) Provides
that the assignment or transfer or the creation, attachment, or perfection of
the security interest may give rise to a default, breach, right of recoupment,
claim, defense, termination, right of termination, or remedy under the
promissory note, health-care-insurance receivable, or general intangible.
(b)
Subsection (a) applies to a security interest in a payment intangible or
promissory note only if the security interest arises out of a sale of the
payment intangible or promissory note, other than a sale pursuant to a
disposition under section 490:9-610 or an acceptance of collateral under
section 490:9-620.
(c)
A rule of law, statute, or regulation, that prohibits, restricts, or
requires the consent of a government, governmental body or official, person
obligated on a promissory note, or account debtor to the assignment or transfer
of, or creation of a security interest in, a promissory note, health-care-insurance
receivable, or general intangible, including a contract, permit, license, or
franchise between an account debtor and a debtor, is ineffective to the extent
that the rule of law, statute, or regulation:
(1) Would
impair the creation, attachment, or perfection of a security interest; or
(2) Provides
that the assignment or transfer or the creation, attachment, or perfection of
the security interest may give rise to a default, breach, right of recoupment,
claim, defense, termination, right of termination, or remedy under the
promissory note, health-care-insurance receivable, or general intangible.
(d)
To the extent that a term in a promissory note or in an agreement
between an account debtor and a debtor [which] that relates to a
health-care-insurance receivable or general intangible or a rule of law,
statute, or regulation described in subsection (c) would be effective under law
other than this article but is ineffective under subsection (a) or (c), the
creation, attachment, or perfection of a security interest in the promissory
note, health-care-insurance receivable, or general intangible:
(1) Is
not enforceable against the person obligated on the promissory note or the
account debtor;
(2) Does
not impose a duty or obligation on the person obligated on the promissory note
or the account debtor;
(3) Does
not require the person obligated on the promissory note or the account debtor
to recognize the security interest, pay or render performance to the secured
party, or accept payment or performance from the secured party;
(4) Does
not entitle the secured party to use or assign the debtor's rights under the
promissory note, health-care-insurance receivable, or general intangible,
including any related information or materials furnished to the debtor in the
transaction giving rise to the promissory note, health-care-insurance
receivable, or general intangible;
(5) Does
not entitle the secured party to use, assign, possess, or have access to any
trade secrets or confidential information of the person obligated on the
promissory note or the account debtor; and
(6) Does
not entitle the secured party to enforce the security interest in the
promissory note, health-care-insurance receivable, or general intangible.
(e) As used in this section, "promissory
note" includes a negotiable instrument that evidences chattel paper."
SECTION 59.
Section 490:9-601, Hawaii Revised Statutes, is amended by amending
subsection (b) to read as follows:
"(b)
A secured party in possession of collateral or control of collateral
under section 490:7-106, 490:9-104, 490:9‑105, 490:9-106, [or]
490:9-107, 490:9-A, or 490:9-B has the rights and duties provided in
section 490:9-207."
SECTION 60.
Section 490:9-605, Hawaii Revised Statutes, is amended to read as
follows:
"§490:9-605 Unknown debtor or secondary obligor. [A] (a) Except as provided in subsection (b), a
secured party does not owe a duty based on its status as secured party:
(1) To
a person that is a debtor or obligor, unless the secured party knows:
(A) That
the person is a debtor or obligor;
(B) The
identity of the person; and
(C) How
to communicate with the person; or
(2) To
a secured party or lienholder that has filed a financing statement against a
person, unless the secured party knows:
(A) That
the person is a debtor; and
(B) The
identity of the person.
(b) A secured party owes a duty based on its
status as a secured party to a person if, at the time the secured party obtains
control of collateral that is a controllable account, controllable electronic
record, or controllable payment intangible or at the time the security interest
attaches to the collateral, whichever is later:
(1) The
person is a debtor or obligor; and
(2) The
secured party knows that the information in subsection (a)(1)(A), (B), or (C)
relating to the person is not provided by the collateral; a record attached to,
or logically associated with, the collateral; or the system in which the
collateral is recorded."
SECTION 61.
Section 490:9-613, Hawaii Revised Statutes, is amended to read as
follows:
"§490:9-613 Contents and form of
notification before disposition of collateral:
general. (a) Except in a consumer‑goods transaction,
the following rules apply:
(1) The
contents of a notification of disposition are sufficient if the notification:
(A) Describes
the debtor and the secured party;
(B) Describes
the collateral that is the subject of the intended disposition;
(C) States
the method of intended disposition;
(D) States
that the debtor is entitled to an accounting of the unpaid indebtedness and
states the charge, if any, for an accounting; and
(E) States
the time and place of a public disposition or the time after which any other
disposition is to be made.
(2) Whether
the contents of a notification that lacks any of the information specified in
paragraph (1) are nevertheless sufficient is a question of fact.
(3) The
contents of a notification providing substantially the information specified in
paragraph (1) are sufficient, even if the notification includes:
(A) Information
not specified by that paragraph; or
(B) Minor
errors that are not seriously misleading.
(4) A
particular phrasing of the notification is not required.
(5) The
following form of notification and the form appearing in section [490:9-614(3),]
490:9-614(a)(3), when completed[,] in accordance with the
instructions in subsection (b) and section 490:9-614(b), each provides
sufficient information:
[NOTIFICATION OF
DISPOSITION OF COLLATERAL
To: [Name
of debtor, obligor, or other person to which the notification is sent]
From: [Name,
address, and telephone number of secured party]
Name
of Debtor(s): [Include
only if debtor(s) are not an addressee]
[For
a public disposition:]
We
will sell [or lease or license, as applicable] the [describe
collateral] [to the highest qualified bidder]
in public as follows:
Day
and Date: ______________________________
Time: ______________________________
Place: ______________________________
[For
a private disposition:]
We
will sell [or lease or license, as applicable] the [describe
collateral] privately sometime after [day
and date] .
You
are entitled to an accounting of the unpaid indebtedness secured by the
property that we intend to sell [or lease or license, as applicable] [for a charge
of $ ]. You may request an accounting by calling us
at [telephone number] .]
NOTIFICATION
OF DISPOSITION OF COLLATERAL
To:
(Name of debtor, obligor, or other person to which the notification is
sent)
From: (Name, address, and
telephone number of secured party)
(1) Name of any debtor that is not an
addressee: (Name of each debtor)
(2) We will sell (describe collateral) (to
the highest qualified bidder) at public sale.
A sale could include a lease or license.
The sale will be held as follows:
(Date)
(Time)
(Place)
(3)
We will sell (describe collateral) at
private sale sometime after (date). A
sale could include a lease or license.
(4)
You are entitled to an accounting of the
unpaid indebtedness secured by the property that we intend to sell or, as
applicable, lease or license.
(5)
If you request an accounting you must
pay a charge of $ (amount).
(6)
You may request an accounting by calling
us at (telephone number).
(b) The following instructions shall apply to the
form of notification in subsection (a)(5):
(1) The
instructions in this subsection refer to the numbers in parentheses before
items in the form of notification in subsection (a)(5). Do not include the numbers or parentheses in
the notification. The numbers and parentheses
are used only for the purpose of these instructions;
(2) Include
and complete item (1) only if there is a debtor that is not an addressee of the
notification and list the name or names;
(3) Include
and complete either item (2), if the notification relates to a public
disposition of the collateral, or item (3), if the notification relates to a
private disposition of the collateral.
If item (2) is included, include the words "to the highest
qualified bidder" only if applicable;
(4) Include
and complete items (4) and (6); and
(5) Include
and complete item (5) only if the sender will charge the recipient for an
accounting."
SECTION 62.
Section 490:9-614, Hawaii Revised Statutes, is amended to read as
follows:
"§490:9-614 Contents and form of
notification before disposition of collateral:
consumer-goods transaction. (a) In a consumer-goods transaction, the
following rules apply:
(1) A
notification of disposition must provide the following information:
(A) The
information specified in section [490:9‑613(1);] 490:9-613(a)(1);
(B) A
description of any liability for a deficiency of the person to which the
notification is sent;
(C) A
telephone number from which the amount that must be paid to the secured party
to redeem the collateral under section 490:9-623 is available; and
(D) A
telephone number or mailing address from which additional information
concerning the disposition and the obligation secured is available.
(2) A
particular phrasing of the notification is not required.
(3) The
following form of notification, when completed[,] in accordance with
the instructions in subsection (b), provides sufficient information:
[ [Name
and address of secured party]
[Date]
NOTICE
OF OUR PLAN TO SELL PROPERTY
[Name
and address of any obligor who is also a debtor]
Subject: [Identification
of Transaction]
We
have your [describe
collateral] , because you broke promises in
our agreement.
[For a public disposition:]
We
will sell [describe
collateral] at public sale sometime after [date] . A sale could include a lease or license.
The sale will be held as
follows:
Day
and Date: _______________________________
Time: _______________________________
Place: _______________________________
You
may attend the sale and bring bidders if you want.
[For
a private disposition:]
We
will sell [describe
collateral] at private sale sometime after [date] . A sale could include a lease or license.
The
money that we get from the sale (after paying our costs) will reduce the amount
you owe. If we get less money than you
owe, you [will or will not, as
applicable] still owe us the difference. If we get more money than you owe, you will
get the extra money, unless we must pay it to someone else.
You
can get the property back at any time before we sell it by paying us the full
amount you owe (not just the past due payments), including our expenses. To learn the exact amount you must pay, call
us at [telephone
number] .
If
you want us to explain to you in writing how we have figured the amount that
you owe us, you may call us at [telephone
number] [or write us at [secured
party's address] ] and request a written
explanation. [We will charge you $
for the explanation if we sent you another written explanation of the amount
you owe us within the last six months.]
If
you need more information about the sale call us at [telephone
number] [or write us at [secured
party's address] ].
We
are sending this notice to the following other people who have an interest in [describe
collateral] or who owe money under your
agreement:
[Names
of all other debtors and obligors, if any] .]
(Name and address of secured party)
(Date)
NOTICE OF OUR PLAN TO SELL PROPERTY
(Name and address of any obligor
who is also a debtor)
Subject: (Identify transaction)
We
have your (describe collateral) because you broke promises in our agreement.
(1)
We will sell (describe collateral) at
public sale. A sale could include a
lease or license. The sale will be held
as follows:
(Date)
(Time)
(Place)
You
may attend the sale and bring bidders if you want.
(2)
We will sell (describe collateral) at
private sale sometime after (date).
A sale could include a lease or license.
(3)
The money that we get from the sale,
after paying our costs, will reduce the amount you owe. If we get less money than you owe, you (will
or will not, as applicable) still owe us the difference. If we get more money than you owe, you will
get the extra money, unless we must pay it to someone else.
(4)
You can get the property back at any
time before we sell it by paying us the full amount you owe, not just the past
due payments, including our expenses. To
learn the exact amount you must pay, call us at (telephone number).
(5)
If you want us to explain to you in
(writing) (writing or in (description of electronic record)) (description of
electronic record) how we have figured the amount that you owe us, (6) call us
at (telephone number) (or) (write us at (secured party's address)) (or contact
us by (description of electronic communication method)) (7) and request (a
written explanation) (a written explanation or an explanation in (description
of electronic record)) (an explanation in (description of electronic record)).
(8)
We will charge you $ (amount) for the
explanation if we sent you another written explanation of the amount you owe us
within the last six months.
(9)
If you need more information about the
sale (call us at (telephone number)) (or) (write us at (secured party's
address)) (or contact us by (description of electronic communication method)).
(10) We are sending this notice to the following
other people who have an interest in (describe collateral) or who owe money
under your agreement:
(Names of all other debtors and
obligors, if any).
(4) A
notification in the form of paragraph (3) is sufficient, even if additional
information appears at the end of the form.
(5) A
notification in the form of paragraph (3) is sufficient, even if it includes
errors in information not required by paragraph (1), unless the error is
misleading with respect to rights arising under this article.
(6) If
a notification under this section is not in the form of paragraph (3), law
other than this article determines the effect of including information not
required by paragraph (1).
(b) The following instructions shall apply to the
form of notification in subsection (a)(3):
(1) The
instructions in this subsection refer to the numbers in parentheses before items in
the form of notification in subsection (a)(3).
Do not include the numbers or parentheses in the notification. The numbers and parentheses are used only for
the purpose of these instructions;
(2) Include and
complete either item (1), if the notification relates to a public disposition
of the collateral, or item (2), if the notification relates to a private
disposition of the collateral;
(3) Include and
complete items (3), (4), (5), (6), and (7);
(4) In item (5),
include and complete any one of the three alternative methods for the
explanation--writing, writing or electronic record, or electronic record;
(5) In item (6),
include the telephone number. In
addition, the sender may include and complete either or both of the two
additional alternative methods of communication--writing or electronic
communication--for the recipient of the notification to communicate with the
sender. Neither of the two additional
methods of communication is required to be included;
(6) In item (7),
include and complete the method or methods for the explanation--writing,
writing or electronic record, or electronic record--included in item (5);
(7) Include and
complete item (8) only if a written explanation is included in item (5) as a
method for communicating the explanation and the sender shall charge the
recipient for another written explanation;
(8) In item (9),
include either the telephone number or the address or both the telephone number
and the address. In addition, the sender
may include and complete the additional method of communication--electronic
communication--for the recipient of the notification to communicate with the
sender. The additional method of
electronic communication is not required to be included; and
(9) If item (10)
does not apply, insert "None" after "agreement:"."
SECTION 63. Section 490:9-616, Hawaii Revised Statutes, is amended by amending subsections (a) through (c) to read as follows:
"(a) In this section:
(1) "Explanation"
means a [writing] record that:
(A) States
the amount of the surplus or deficiency;
(B) Provides
an explanation in accordance with subsection (c) of how the secured party
calculated the surplus or deficiency;
(C) States,
if applicable, that future debits, credits, charges, including additional
credit service charges or interest, rebates, and expenses may affect the amount
of the surplus or deficiency; and
(D) Provides
a telephone number or mailing address from which additional information
concerning the transaction is available.
(2) "Request"
means a record:
(A) [Authenticated]
Signed by a debtor or consumer obligor;
(B) Requesting
that the recipient provide an explanation; and
(C) Sent
after disposition of the collateral under section 490:9-610.
(b)
In a consumer-goods transaction in which the debtor is entitled to a
surplus or a consumer obligor is liable for a deficiency under section
490:9-615, the secured party shall:
(1) Send
an explanation to the debtor or consumer obligor, as applicable, after the
disposition and:
(A) Before
or when the secured party accounts to the debtor and pays any surplus or first
makes [written] a demand in a record on the consumer
obligor after the disposition for payment of the deficiency; and
(B) Within
fourteen days after receipt of a request; or
(2) In
the case of a consumer obligor who is liable for a deficiency, within fourteen
days after receipt of a request, send to the consumer obligor a record waiving
the secured party's right to a deficiency.
(c)
To comply with subsection (a)(1)(B), [a writing must] an
explanation shall provide the following information in the following order:
(1) The
aggregate amount of obligations secured by the security interest under which
the disposition was made, and, if the amount reflects a rebate of unearned
interest or credit service charge, an indication of that fact, calculated as of
a specified date:
(A) If
the secured party takes or receives possession of the collateral after default,
not more than thirty-five days before the secured party takes or receives
possession; or
(B) If
the secured party takes or receives possession of the collateral before default
or does not take possession of the collateral, not more than thirty-five days
before the disposition;
(2) The
amount of proceeds of the disposition;
(3) The
aggregate amount of the obligations after deducting the amount of proceeds;
(4) The
amount, in the aggregate or by type, and types of expenses, including expenses
of retaking, holding, preparing for disposition, processing, and disposing of
the collateral, and attorney's fees secured by the collateral [which] that
are known to the secured party and relate to the current disposition;
(5) The
amount, in the aggregate or by type, and types of credits, including rebates of
interest or credit service charges, to which the obligor is known to be
entitled and [which] that are not reflected in the amount in
paragraph (1); and
(6) The
amount of the surplus or deficiency."
SECTION 64. Section 490:9-628, Hawaii Revised Statutes, is amended to read as follows:
"§490:9-628 Nonliability and limitation on liability of
secured party; liability of secondary obligor.
(a) [Unless] Subject
to subsection (f), unless a
secured party knows that a person is a debtor or obligor, knows the identity of
the person, and knows how to communicate with the person:
(1) The
secured party is not liable to the person, or to a secured party or lienholder that
has filed a financing statement against the person, for failure to comply with
this article; and
(2) The
secured party's failure to comply with this article does not affect the
liability of the person for a deficiency.
(b)
[A] Subject to subsection (f), a secured party is not liable because
of its the status as secured party:
(1) To
a person that is a debtor or obligor, unless the secured party knows:
(A) That
the person is a debtor or obligor;
(B) The
identity of the person; and
(C) How
to communicate with the person; or
(2) To
a secured party or lienholder that has filed a financing statement against a
person, unless the secured party knows:
(A) That the person is a debtor; and
(B) The identity of the person.
(c)
A secured party is not liable to any person, and a person's liability
for a deficiency is not affected, because of any act or omission arising out of
the secured party's reasonable belief that a transaction is not a
consumer-goods transaction or a consumer transaction or that goods are not
consumer goods, if the secured party's belief is based on its the reasonable
reliance on:
(1) A
debtor's representation concerning the purpose for which collateral was to be
used, acquired, or held; or
(2) An
obligor's representation concerning the purpose for which a secured obligation
was incurred.
(d)
A secured party is not liable to any person under section
490:9-625(c)(2) for its failure to comply with section 490:9-616.
(e)
A secured party is not liable under section 490:9‑625(c)(2) more
than once with respect to any one secured obligation.
(f) Subsections (a) and (b) shall not apply to
limit the liability of a secured party to a person if, at the time the secured
party obtains control of collateral that is a controllable account,
controllable electronic record, or controllable payment intangible or at the
time the security interest attaches to the collateral, whichever is later:
(1) The person is a
debtor or obligor; and
(2) The secured
party knows that the information in subsection (b)(1) relating to the person is
not provided by the collateral; a record attached to, or logically associated
with, the collateral; or the system in which the collateral is recorded."
SECTION 65.
(a) Sections 490:2-203,
490:2-205, 490:2A‑201, 490:2A-203, 490:2A-205, 490:4A-207, and 490:4A-208,
Hawaii Revised Statutes, are amended by substituting the phrase
"record" wherever the phrase "writing" appears.
(b)
Sections 490:9-210, 490:9-324, 490:9-334, 490:9-341, 490:9-404,
490:9-509, 490:9-513, 490:9-608, 490:9-611, 490:9‑615, 490:9-619,
490:9-620, 490:9-621, 490:9-624, Hawaii Revised Statutes, are amended by
substituting the phrases "signed", "signing", or
"signs" wherever the phrase "authenticated",
"authenticating", or "authenticates" appears.
SECTION 66. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.
SECTION 67. In codifying the new articles and sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate article and section numbers for the letters used in designating the new articles and sections in this Act.
SECTION 68. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 69 This Act shall take effect upon its approval.
Report Title:
Uniform
Commercial Code
Description:
Implements
amendments to the Uniform Commercial Code set forth by the Uniform Law
Commission. (SD2)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.