Bill Text: IL SB3696 | 2023-2024 | 103rd General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Amends the Uniform Commercial Code to adopt changes recommended by the Uniform Law Commission with respect to the addition of a Controllable Electronic Records Article and transitional provisions and the amendment of other provisions of the Code. Makes other changes. Effective January 1, 2025.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Passed) 2024-08-09 - Public Act . . . . . . . . . 103-1036 [SB3696 Detail]

Download: Illinois-2023-SB3696-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB3696 Introduced 2/9/2024, by Sen. Michael W. Halpin SYNOPSIS AS INTRODUCED:
See Index
Amends the Uniform Commercial Code to adopt changes recommended by the Uniform Law Commission with respect to the addition of a Controllable Electronic Records Article and transitional provisions and the amendment of other provisions of the Code. Makes other changes. Effective January 1, 2025.
LRB103 37687 SPS 67814 b
A BILL FOR
SB3696 LRB103 37687 SPS 67814 b
AN ACT concerning commercial transactions.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 2. The Transmitters of Money Act is amended by
changing Section 5 as follows:
(205 ILCS 657/5)
Sec. 5. Definitions. As used in this Act, unless the
context otherwise requires, the words and phrases defined in
this Section have the meanings set forth in this Section.
"Authorized seller" means a person not an employee of a
licensee who engages in the business regulated by this Act on
behalf of a licensee under a contract between that person and
the licensee.
"Bill payment service" means the business of transmitting
money on behalf of an Illinois resident for the purpose of
paying the resident's bills.
"Controlling person" means a person owning or holding the
power to vote 25% or more of the outstanding voting securities
of a licensee or the power to vote the securities of another
controlling person of the licensee. For purposes of
determining the percentage of a licensee controlled by a
controlling person, the person's interest shall be combined
with the interest of any other person controlled, directly or

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indirectly, by that person or by a spouse, parent, or child of
that person.
"Department" means the Department of Financial
Institutions.
"Director" means the Director of Financial Institutions.
"Licensee" means a person licensed under this Act.
"Location" means a place of business at which activity
regulated by this Act occurs.
"Material litigation" means any litigation that, according
to generally accepted accounting principles, is deemed
significant to a licensee's financial health and would be
required to be referenced in a licensee's annual audited
financial statements, reports to shareholders, or similar
documents.
"Money" means a medium of exchange that is authorized or
adopted by a domestic or foreign government as a part of its
currency and that is customarily used and accepted as a medium
of exchange in the country of issuance. 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.
"Money transmitter" means a person who is located in or
doing business in this State and who directly or through
authorized sellers does any of the following in this State:
(1) Sells or issues payment instruments.

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(2) Engages in the business of receiving money for
transmission or transmitting money.
(3) Engages in the business of exchanging, for
compensation, money of the United States Government or a
foreign government to or from money of another government.
"Outstanding payment instrument" means, unless otherwise
treated by or accounted for under generally accepted
accounting principles on the books of the licensee, a payment
instrument issued by the licensee that has been sold in the
United States directly by the licensee or has been sold in the
United States by an authorized seller of the licensee and
reported to the licensee as having been sold, but has not been
paid by or for the licensee.
"Payment instrument" means a check, draft, money order,
traveler's check, stored value card, or other instrument or
memorandum, written order or written receipt for the
transmission or payment of money sold or issued to one or more
persons whether or not that instrument or order is negotiable.
Payment instrument does not include an instrument that is
redeemable by the issuer in merchandise or service, a credit
card voucher, or a letter of credit. A written order for the
transmission or payment of money that results in the issuance
of a check, draft, money order, traveler's check, or other
instrument or memorandum is not a payment instrument.
"Person" means an individual, partnership, association,
joint stock association, corporation, or any other form of

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business organization.
"Stored value card" means any magnetic stripe card or
other electronic payment instrument given in exchange for
money and other similar consideration, including but not
limited to checks, debit payments, money orders, drafts,
credit payments, and traveler's checks, where the card or
other electronic payment instrument represents a dollar value
that the consumer can either use or give to another
individual.
"Transmitting money" means the transmission of money by
any means, including transmissions to or from locations within
the United States or to and from locations outside of the
United States by payment instrument, facsimile or electronic
transfer, or otherwise, and includes bill payment services.
(Source: P.A. 92-400, eff. 1-1-02; 93-535, eff. 1-1-04.)
Section 5. The Uniform Commercial Code is amended by
renumbering and changing Article 12 as added by Public Act
85-997, by changing Sections 1-201, 1-204, 1-301, 1-306,
2-102, 2-106, 2-201, 2-202, 2-203, 2-205, 2-209, 2A-102,
2A-103, 2A-107, 2A-201, 2A-202, 2A-203, 2A-205, 2A-208, 3-104,
3-105, 3-401, 3-604, 4A-103, 4A-201, 4A-202, 4A-203, 4A-207,
4A-208, 4A-210, 4A-211, 4A-305, 5-104, 5-116, 7-102, 7-106,
8-102, 8-103, 8-106, 8-110, 8-303, 9-102, 9-104, 9-105, 9-203,
9-204, 9-207, 9-208, 9-209, 9-210, 9-301, 9-304, 9-305, 9-310,
9-312, 9-313, 9-314, 9-316, 9-317, 9-323, 9-324, 9-330, 9-331,

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9-332, 9-334, 9-341, 9-404, 9-406, 9-408, 9-509, 9-513, 9-601,
9-605, 9-608, 9-611, 9-613, 9-614, 9-615, 9-616, 9-619, 9-620,
9-621, 9-624, and 9-628, and by adding Articles 12 and 12A and
Sections 9-105A, 9-107A, 9-107B, 9-306A, 9-306B, 9-314A, and
9-326A as follows:
(810 ILCS 5/1-201) (from Ch. 26, par. 1-201)
Sec. 1-201. General Definitions.
(a) Unless the context otherwise requires, words or
phrases defined in this Section, or in the additional
definitions contained in other Articles of the Uniform
Commercial Code that apply to particular Articles or parts
thereof, have the meanings stated.
(b) Subject to definitions contained in other Articles of
the Uniform Commercial Code that apply to particular Articles
or parts thereof:
(1) "Action", in the sense of a judicial proceeding,
includes recoupment, counterclaim, set-off, suit in
equity, and any other proceeding in which rights are
determined.
(2) "Aggrieved party" means a party entitled to pursue
a remedy.
(3) "Agreement", as distinguished from "contract",
means the bargain of the parties in fact, as found in their
language or inferred from other circumstances, including
course of performance, course of dealing, or usage of

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trade as provided in Section 1-303.
(4) "Bank" means a person engaged in the business of
banking and includes a savings bank, savings and loan
association, credit union, and trust company.
(5) "Bearer" means a person in possession of a
negotiable instrument, document of title, or certificated
security that is payable to bearer or indorsed in blank.
(6) "Bill of lading" means a document evidencing the
receipt of goods for shipment issued by a person engaged
in the business of transporting or forwarding goods.
(7) "Branch" includes a separately incorporated
foreign branch of a bank.
(8) "Burden of establishing" a fact means the burden
of persuading the trier of fact that the existence of the
fact is more probable than its nonexistence.
(9) "Buyer in ordinary course of business" means a
person that buys goods in good faith, without knowledge
that the sale violates the rights of another person in the
goods, and in the ordinary course from a person, other
than a pawnbroker, in the business of selling goods of
that kind. A person buys goods in the ordinary course if
the sale to the person comports with the usual or
customary practices in the kind of business in which the
seller is engaged or with the seller's own usual or
customary practices. A person that sells oil, gas, or
other minerals at the wellhead or minehead is a person in

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the business of selling goods of that kind. A buyer in
ordinary course of business may buy for cash, by exchange
of other property, or on secured or unsecured credit, and
may acquire goods or documents of title under a
preexisting contract for sale. Only a buyer that takes
possession of the goods or has a right to recover the goods
from the seller under Article 2 may be a buyer in ordinary
course of business. "Buyer in ordinary course of business"
does not include a person that acquires goods in a
transfer in bulk or as security for or in total or partial
satisfaction of a money debt.
(10) "Conspicuous", with reference to a term, means so
written, displayed, or presented that, 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:
(A) a heading in capitals equal to or greater in
size than the surrounding text, or in contrasting
type, font, or color to the surrounding text of the
same or lesser size; and
(B) language in the body of a record or display in
larger type than the surrounding text, or in
contrasting type, font, or color to the surrounding
text of the same size, or set off from surrounding text
of the same size by symbols or other marks that call

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attention to the language.
(11) "Consumer" means an individual who enters into a
transaction primarily for personal, family, or household
purposes.
(12) "Contract", as distinguished from "agreement",
means the total legal obligation that results from the
parties' agreement as determined by the Uniform Commercial
Code as supplemented by any other applicable laws.
(13) "Creditor" includes a general creditor, a secured
creditor, a lien creditor, and any representative of
creditors, including an assignee for the benefit of
creditors, a trustee in bankruptcy, a receiver in equity,
and an executor or administrator of an insolvent debtor's
or assignor's estate.
(14) "Defendant" includes a person in the position of
defendant in a counterclaim, cross-claim, or third-party
claim.
(15) "Delivery", with respect to an electronic
document of title, means voluntary transfer of control
and, with respect to an instrument, document of title, or
an authoritative tangible copy of a record evidencing
chattel paper, means voluntary transfer of possession.
(16) "Document of title" includes bill of lading, dock
warrant, dock receipt, warehouse receipt or order for the
delivery of goods, and also any other document which in
the regular course of business or financing is treated as

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adequately evidencing that the person in possession of it
is entitled to receive, hold, and dispose of the document
and the goods it covers. To be a document of title, a
document must purport to be issued by or addressed to a
bailee and purport to cover goods in the bailee's
possession which are either identified or are fungible
portions of an identified mass.
(16A) "Electronic" means relating to technology having
electrical, digital, magnetic, wireless, optical,
electromagnetic, or similar capabilities.
(17) "Fault" means a default, breach, or wrongful act
or omission.
(18) "Fungible goods" means:
(A) goods of which any unit, by nature or usage of
trade, is the equivalent of any other like unit; or
(B) goods that by agreement are treated as
equivalent.
(19) "Genuine" means free of forgery or
counterfeiting.
(20) "Good faith" means honesty in fact in the conduct
or transaction concerned.
(21) "Holder" means:
(A) the person in possession of a negotiable
instrument that is payable either to bearer or to an
identified person that is the person in possession; or
(B) the person in possession of a document of

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title if the goods are deliverable either to bearer or
to the order of the person in possession; or .
(C) the person in control, other than pursuant to
Section 7-106(g), of a negotiable electronic document
of title.
(22) "Insolvency proceeding" includes an assignment
for the benefit of creditors or other proceeding intended
to liquidate or rehabilitate the estate of the person
involved.
(23) "Insolvent" means:
(A) having generally ceased to pay debts in the
ordinary course of business other than as a result of
bona fide dispute;
(B) being unable to pay debts as they become due;
or
(C) being insolvent within the meaning of federal
bankruptcy law.
(24) "Money" means a medium of exchange 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.

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(25) "Organization" means a person other than an
individual.
(26) "Party", as distinguished from "third party",
means a person that has engaged in a transaction or made an
agreement subject to the Uniform Commercial Code.
(27) "Person" means an individual, corporation,
business trust, estate, trust, partnership, limited
liability company, association, joint venture, government,
governmental subdivision, agency, or instrumentality,
public corporation, or any other legal or commercial
entity. The term includes a protected series, however
denominated, of an entity if the protected series is
established under law other than the Uniform Commercial
Code 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.
(28) "Present value" means the amount as of a date
certain of one or more sums payable in the future,
discounted to the date certain by use of either an
interest rate specified by the parties if that rate is not
manifestly unreasonable at the time the transaction is
entered into or, if an interest rate is not so specified, a
commercially reasonable rate that takes into account the
facts and circumstances at the time the transaction is
entered into.

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(29) "Purchase" means taking by sale, lease, discount,
negotiation, mortgage, pledge, lien, security interest,
issue or reissue, gift, or any other voluntary transaction
creating an interest in property.
(30) "Purchaser" means a person that takes by
purchase.
(31) "Record" means information that is inscribed on a
tangible medium or that is stored in an electronic or
other medium and is retrievable in perceivable form.
(32) "Remedy" means any remedial right to which an
aggrieved party is entitled with or without resort to a
tribunal.
(33) "Representative" means a person empowered to act
for another, including an agent, an officer of a
corporation or association, and a trustee, executor, or
administrator of an estate.
(34) "Right" includes remedy.
(35) "Security interest" means an interest in personal
property or fixtures which secures payment or performance
of an obligation. "Security interest" includes any
interest of a consignor and a buyer of accounts, chattel
paper, a payment intangible, or a promissory note in a
transaction that is subject to Article 9. "Security
interest" does not include the special property interest
of a buyer of goods on identification of those goods to a
contract for sale under Section 2-401, but a buyer may

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also acquire a "security interest" by complying with
Article 9. Except as otherwise provided in Section 2-505,
the right of a seller or lessor of goods under Article 2 or
2A to retain or acquire possession of the goods is not a
"security interest", but a seller or lessor may also
acquire a "security interest" by complying with Article 9.
The retention or reservation of title by a seller of goods
notwithstanding shipment or delivery to the buyer under
Section 2-401 is limited in effect to a reservation of a
"security interest". Whether a transaction in the form of
a lease creates a "security interest" is determined
pursuant to Section 1-203.
(36) "Send", in connection with a writing, record, or
notification, notice means:
(A) 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, addressed and properly addressed and, in
the case of an instrument, to an address specified
thereon or otherwise agreed, or if there be none to any
address reasonable under the circumstances; or
(B) to cause the record or notification to be
received within the time it would have been received
if properly sent under subparagraph (A) in any other
way to cause to be received any record or notice within
the time it would have arrived if properly sent.

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(37) "Sign" means, with present intent to authenticate
or adopt a record: "Signed" includes using any symbol
executed or adopted with present intention to adopt or
accept a writing.
(A) execute or adopt a tangible symbol; or
(B) attach to or logically associate with the
record an electronic symbol, sound, or process.
"Signed", "signing", and "signature" have
corresponding meanings.
(38) "State" means a State of the United States, the
District of Columbia, Puerto Rico, the United States
Virgin Islands, or any territory or insular possession
subject to the jurisdiction of the United States.
(39) "Surety" includes a guarantor or other secondary
obligor.
(40) "Term" means a portion of an agreement that
relates to a particular matter.
(41) "Unauthorized signature" means a signature made
without actual, implied, or apparent authority. The term
includes a forgery.
(42) "Warehouse receipt" means a receipt issued by a
person engaged in the business of storing goods for hire.
(43) "Writing" includes printing, typewriting, or any
other intentional reduction to tangible form. "Written"
has a corresponding meaning.
(Source: P.A. 95-895, eff. 1-1-09.)

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(810 ILCS 5/1-204) (from Ch. 26, par. 1-204)
Sec. 1-204. Value. Except as otherwise provided in
Articles 3, 4, 5, and 6, and 12, 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.
(Source: P.A. 95-895, eff. 1-1-09.)
(810 ILCS 5/1-301)
Sec. 1-301. Territorial applicability; parties' power to
choose applicable law.
(a) Except as otherwise provided in this Section, when a
transaction bears a reasonable relation to this State and also
to another state or nation the parties may agree that the law
either of this State or of such other state or nation shall
govern their rights and duties.

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(b) In the absence of an agreement effective under
subsection (a), and except as provided in subsection (c), the
Uniform Commercial Code applies to transactions bearing an
appropriate relation to this State.
(c) If one of the following provisions of 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 2-402;
(2) Sections 2A-105 and 2A-106;
(3) Section 4-102;
(4) Section 4A-507;
(5) Section 5-116;
(6) Section 8-110;
(7) Sections 9-301 through 9-307; .
(8) Section 12-107.
(Source: P.A. 95-895, eff. 1-1-09.)
(810 ILCS 5/1-306)
Sec. 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 a signed an authenticated
record.
(Source: P.A. 95-895, eff. 1-1-09.)

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(810 ILCS 5/2-102) (from Ch. 26, par. 2-102)
Sec. 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 and, in the case of a hybrid
transaction, it applies to the extent provided in subsection
(2).
(2) In a hybrid transaction:
(a) If the sale-of-goods aspects do not predominate,
only the provisions of this Article which relate primarily
to the sale-of-goods aspects of the transaction apply, and
the provisions that relate primarily to the transaction as
a whole do not apply.
(b) If the sale-of-goods aspects predominate, this
Article applies to the transaction but does 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 does not:
(a) apply to a transaction that, even though in the
form of an unconditional contract to sell or present sale,
operates only to create a security interest; or
(b) impair or repeal a statute regulating sales to
consumers, farmers, or other specified classes of buyers.
Unless the context otherwise requires, this Article

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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.
(Source: Laws 1961, p. 2101.)
(810 ILCS 5/2-106) (from Ch. 26, par. 2-106)
Sec. 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 2-401).
A "present sale" means a sale which is accomplished by the
making of the contract.
(2) Goods or conduct including any part of a performance
are "conforming" or conform to the contract when they 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

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otherwise than for its breach. On "termination" all
obligations which are still executory on both sides are
discharged but any right based on prior breach or performance
survives.
(4) "Cancellation" occurs when either party puts an end to
the contract for breach by the other and its effect is the same
as that of "termination" except that the cancelling party also
retains any remedy for breach of the whole contract or any
unperformed balance.
(5) "Hybrid transaction" means a single transaction
involving a sale of goods and:
(a) the provision of services;
(b) a lease of other goods; or
(c) a sale, lease, or license of property other than
goods.
(Source: Laws 1961, 1st SS., p. 7.)
(810 ILCS 5/2-201) (from Ch. 26, par. 2-201)
Sec. 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 a
record some writing 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 the party's his
authorized agent or broker. A record writing is not

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insufficient because it omits or incorrectly states a term
agreed upon but the contract is not enforceable under this
subsection paragraph beyond the quantity of goods shown in the
record such writing.
(2) Between merchants if within a reasonable time a record
writing 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 the such party unless written notice in a record of
objection to its contents is given within 10 days after it is
received.
(3) A contract which does not satisfy the requirements of
subsection (1) but which is valid in other respects is
enforceable
(a) if the goods are to be specially manufactured for
the buyer and are not suitable for sale to others in the
ordinary course of the seller's business and the seller,
before notice of repudiation is received and under
circumstances which reasonably indicate that the goods are
for the buyer, has made either a substantial beginning of
their manufacture or commitments for their procurement; or
(b) if the party against whom enforcement is sought
admits in his pleading, testimony or otherwise in court
that a contract for sale was made, but the contract is not
enforceable under this provision beyond the quantity of
goods admitted; or

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(c) with respect to goods for which payment has been
made and accepted or which have been received and accepted
(Section 2-606).
(Source: Laws 1961, 1st SS., p. 7.)
(810 ILCS 5/2-202) (from Ch. 26, par. 2-202)
Sec. 2-202. Final written expression: parol or extrinsic
evidence. Terms with respect to which the confirmatory
memoranda of the parties agree or which are otherwise set
forth in a record writing intended by the parties as a final
expression of their agreement with respect to such terms as
are included therein may not be contradicted by evidence of
any prior agreement or of a contemporaneous oral agreement but
may be explained or supplemented:
(a) by course of performance, course of dealing, or
usage of trade (Section 1-303); and
(b) by evidence of consistent additional terms unless
the court finds the record writing to have been intended
also as a complete and exclusive statement of the terms of
the agreement.
(Source: P.A. 95-895, eff. 1-1-09.)
(810 ILCS 5/2-203) (from Ch. 26, par. 2-203)
Sec. 2-203. Seals inoperative. The affixing of a seal to a
record writing evidencing a contract for sale or an offer to
buy or sell goods does not constitute the record writing a

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sealed instrument and the law with respect to sealed
instruments does not apply to such a contract or offer.
(Source: Laws 1961, p. 2101.)
(810 ILCS 5/2-205) (from Ch. 26, par. 2-205)
Sec. 2-205. Firm offers. An offer by a merchant to buy or
sell goods in a signed record writing which by its terms gives
assurance that it will be held open is not revocable, for lack
of consideration, during the time stated or if no time is
stated for a reasonable time, but in no event may such period
of irrevocability exceed 3 months; but any such term of
assurance on a form supplied by the offeree must be separately
signed by the offeror.
(Source: Laws 1961, 1st SS., p. 7.)
(810 ILCS 5/2-209) (from Ch. 26, par. 2-209)
Sec. 2-209. Modification, rescission, and waiver.
(1) An agreement modifying a contract within this Article
needs no consideration to be binding.
(2) A signed agreement which excludes modification or
rescission except by a signed writing or other signed record
cannot be otherwise modified or rescinded, but except as
between merchants such a requirement on a form supplied by the
merchant must be separately signed by the other party.
(3) The requirements of the statute of frauds section of
this Article (Section 2-201) must be satisfied if the contract

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as modified is within its provisions.
(4) Although an attempt at modification or rescission does
not satisfy the requirements of subsection (2) or (3) it can
operate as a waiver.
(5) A party who has made a waiver affecting an executory
portion of the contract may retract the waiver by reasonable
notification received by the other party that strict
performance will be required of any term waived, unless the
retraction would be unjust in view of a material change of
position in reliance on the waiver.
(Source: Laws 1961, 1st SS., p. 7.)
(810 ILCS 5/2A-102) (from Ch. 26, par. 2A-102)
Sec. 2A-102. Scope.
(1) This Article applies to any transaction, regardless of
form, that creates a lease and, in the case of a hybrid lease,
it applies to the extent provided in subsection (2).
(2) In a hybrid lease:
(a) if the lease-of-goods aspects do not predominate:
(i) only the provisions of this Article that
relate primarily to the lease-of-goods aspects of the
transaction apply, and the provisions that relate
primarily to the transaction as a whole do not apply;
(ii) Section 2A-209 applies if the lease is a
finance lease; and
(iii) Section 2A-407 applies to the promises of

SB3696 - 24 - LRB103 37687 SPS 67814 b
the lessee in a finance lease to the extent the
promises are consideration for the right to possession
and use of the leased goods; and
(b) if the lease-of-goods aspects predominate, this
Article applies to the transaction, but does not preclude
application in appropriate circumstances of other law to
aspects of the lease that do not relate to the lease of
goods.
(Source: P.A. 87-493.)
(810 ILCS 5/2A-103) (from Ch. 26, par. 2A-103)
Sec. 2A-103. Definitions and index of definitions.
(1) In this Article unless the context otherwise requires:
(a) "Buyer in ordinary course of business" means a
person who, in good faith and without knowledge that the
sale to him or her is in violation of the ownership rights
or security interest or leasehold interest of a third
party in the goods, buys in ordinary course from a person
in the business of selling goods of that kind but does not
include a pawnbroker. "Buying" may be for cash or by
exchange of other property or on secured or unsecured
credit and includes acquiring goods or documents of title
under a pre-existing contract for sale but does not
include a transfer in bulk or as security for or in total
or partial satisfaction of a money debt.
(b) "Cancellation" occurs when either party puts an

SB3696 - 25 - LRB103 37687 SPS 67814 b
end to the lease contract for default by the other party.
(c) "Commercial unit" means such a unit of goods as by
commercial usage is a single whole for purposes of lease
and division of which materially impairs its character or
value on the market or in use. A commercial unit may be a
single article, as a machine, or a set of articles, as a
suite of furniture or a line of machinery, or a quantity,
as a gross or carload, or any other unit treated in use or
in the relevant market as a single whole.
(d) "Conforming" goods or performance under a lease
contract means goods or performance that are in accordance
with the obligations under the lease contract.
(e) "Consumer lease" 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 $40,000.
(f) "Fault" means wrongful act, omission, breach, or
default.
(g) "Finance lease" means a lease with respect to
which:
(i) the lessor does not select, manufacture, or
supply the goods;
(ii) the lessor acquires the goods or the right to

SB3696 - 26 - LRB103 37687 SPS 67814 b
possession and use of the goods in connection with the
lease; and
(iii) one of the following occurs:
(A) the lessee receives a copy of the contract
by which the lessor acquired the goods or the
right to possession and use of the goods before
signing the lease contract;
(B) the lessee's approval of the contract by
which the lessor acquired the goods or the right
to possession and use of the goods is a condition
to effectiveness of the lease contract;
(C) the lessee, before signing the lease
contract, receives an accurate and complete
statement designating the promises and warranties,
and any disclaimers of warranties, limitations or
modifications of remedies, or liquidated damages,
including those of a third party, such as the
manufacturer of the goods, provided to the lessor
by the person supplying the goods in connection
with or as part of the contract by which the lessor
acquired the goods or the right to possession and
use of the goods; or
(D) if the lease is not a consumer lease, the
lessor, before the lessee signs the lease
contract, informs the lessee in writing (a) of the
identity of the person supplying the goods to the

SB3696 - 27 - LRB103 37687 SPS 67814 b
lessor, unless the lessee has selected that person
and directed the lessor to acquire the goods or
the right to possession and use of the goods from
that person, (b) that the lessee is entitled under
this Article to the promises and warranties,
including those of any third party, provided to
the lessor by the person supplying the goods in
connection with or as part of the contract by
which the lessor acquired the goods or the right
to possession and use of the goods, and (c) that
the lessee may communicate with the person
supplying the goods to the lessor and receive an
accurate and complete statement of those promises
and warranties, including any disclaimers and
limitations of them or of remedies.
(h) "Goods" means all things that are movable at the
time of identification to the lease contract, or are
fixtures (Section 2A-309), but the term does not include
money, documents, instruments, accounts, chattel paper,
general intangibles, or minerals or the like, including
oil and gas, before extraction. The term also includes the
unborn young of animals.
(h.1) "Hybrid lease" means a single transaction
involving a lease of goods and:
(i) the provision of services;
(ii) a sale of other goods; or

SB3696 - 28 - LRB103 37687 SPS 67814 b
(iii) a sale, lease, or license of property other
than goods.
(i) "Installment lease contract" means a lease
contract that authorizes or requires the delivery of goods
in separate lots to be separately accepted, even though
the lease contract contains a clause "each delivery is a
separate lease" or its equivalent.
(j) "Lease" means a transfer of the right to
possession and use of goods for a term in return for
consideration, but a sale, including a sale on approval or
a sale or return, or retention or creation of a security
interest is not a lease. Unless the context clearly
indicates otherwise, the term includes a sublease.
(k) "Lease agreement" means the bargain, with respect
to the lease, of the lessor and the lessee in fact as found
in their language or by implication from other
circumstances including course of dealing or usage of
trade or course of performance as provided in this
Article. Unless the context clearly indicates otherwise,
the term includes a sublease agreement.
(l) "Lease contract" means the total legal obligation
that results from the lease agreement as affected by this
Article and any other applicable rules of law. Unless the
context clearly indicates otherwise, the term includes a
sublease contract.
(m) "Leasehold interest" means the interest of the

SB3696 - 29 - LRB103 37687 SPS 67814 b
lessor or the lessee under a lease contract.
(n) "Lessee" means a person who acquires the right to
possession and use of goods under a lease. Unless the
context clearly indicates otherwise, the term includes a
sublessee.
(o) "Lessee in ordinary course of business" means a
person who in good faith and without knowledge that the
lease to him or her is in violation of the ownership rights
or security interest or leasehold interest of a third
party in the goods leases in ordinary course from a person
in the business of selling or leasing goods of that kind
but does not include a pawnbroker. "Leasing" may be for
cash or by exchange of other property or on secured or
unsecured credit and includes acquiring goods or documents
of title under a pre-existing lease contract but does not
include a transfer in bulk or as security for or in total
or partial satisfaction of a money debt.
(p) "Lessor" means a person who transfers the right to
possession and use of goods under a lease. Unless the
context clearly indicates otherwise, the term includes a
sublessor.
(q) "Lessor's residual interest" means the lessor's
interest in the goods after expiration, termination, or
cancellation of the lease contract.
(r) "Lien" means a charge against or interest in goods
to secure payment of a debt or performance of an

SB3696 - 30 - LRB103 37687 SPS 67814 b
obligation, but the term does not include a security
interest.
(s) "Lot" means a parcel or a single article that is
the subject matter of a separate lease or delivery,
whether or not it is sufficient to perform the lease
contract.
(t) "Merchant lessee" means a lessee that is a
merchant with respect to goods of the kind subject to the
lease.
(u) "Present value" means the amount as of a date
certain of one or more sums payable in the future,
discounted to the date certain. The discount is determined
by the interest rate specified by the parties if the rate
was not manifestly unreasonable at the time the
transaction was entered into; otherwise, the discount is
determined by a commercially reasonable rate that takes
into account the facts and circumstances of each case at
the time the transaction was entered into.
(v) "Purchase" includes taking by sale, lease,
mortgage, security interest, pledge, gift, or any other
voluntary transaction creating an interest in goods.
(w) "Sublease" means a lease of goods the right to
possession and use of which was acquired by the lessor as a
lessee under an existing lease.
(x) "Supplier" means a person from whom a lessor buys
or leases goods to be leased under a finance lease.

SB3696 - 31 - LRB103 37687 SPS 67814 b
(y) "Supply contract" means a contract under which a
lessor buys or leases goods to be leased.
(z) "Termination" occurs when either party pursuant to
a power created by agreement or law puts an end to the
lease contract otherwise than for default.
(2) Other definitions applying to this Article and the
Sections in which they appear are:
"Accessions". Section 2A-310(1).
"Construction mortgage". Section 2A-309(1)(d).
"Encumbrance". Section 2A-309(1)(e).
"Fixtures". Section 2A-309(1)(a).
"Fixture filing". Section 2A-309(1)(b).
"Purchase money lease". Section 2A-309(1)(c).
(3) The following definitions in other Articles apply to
this Article:
"Account". Section 9-102(a)(2).
"Between merchants". Section 2-104(3).
"Buyer". Section 2-103(1)(a).
"Chattel paper". Section 9-102(a)(11).
"Consumer goods". Section 9-102(a)(23).
"Document". Section 9-102(a)(30).
"Entrusting". Section 2-403(3).
"General intangible". Section 9-102(a)(42).
"Good faith". Section 2-103(1)(b).
"Instrument". Section 9-102(a)(47).
"Merchant". Section 2-104(1).

SB3696 - 32 - LRB103 37687 SPS 67814 b
"Mortgage". Section 9-102(a)(55).
"Pursuant to commitment". Section 9-102(a)(69).
"Receipt". Section 2-103(1)(c).
"Sale". Section 2-106(1).
"Sale on approval". Section 2-326.
"Sale or return". Section 2-326.
"Seller". Section 2-103(1)(d).
(4) In addition, Article 1 contains general definitions
and principles of construction and interpretation applicable
throughout this Article.
(Source: P.A. 97-1034, eff. 7-1-13.)
(810 ILCS 5/2A-107) (from Ch. 26, par. 2A-107)
Sec. 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 record and delivered by the aggrieved party.
(Source: P.A. 87-493.)
(810 ILCS 5/2A-201) (from Ch. 26, par. 2A-201)
Sec. 2A-201. Statute of frauds.
(1) A lease contract is not enforceable by way of action or
defense unless:
(a) the total payments to be made under the lease
contract, excluding payments for options to renew or buy,

SB3696 - 33 - LRB103 37687 SPS 67814 b
are less than $1,000; or
(b) there is a record writing, signed by the party
against whom enforcement is sought or by that party's
authorized agent, sufficient to indicate that a lease
contract has been made between the parties and to describe
the goods leased and the lease term.
(2) Any description of leased goods or of the lease term is
sufficient and satisfies subsection (1)(b), whether or not it
is specific, if it reasonably identifies what is described.
(3) A record writing is not insufficient because it omits
or incorrectly states a term agreed upon, but the lease
contract is not enforceable under subsection (1)(b) beyond the
lease term and the quantity of goods shown in the record
writing.
(4) A lease contract that does not satisfy the
requirements of subsection (1), but which is valid in other
respects, is enforceable:
(a) if the goods are to be specially manufactured or
obtained for the lessee and are not suitable for lease or
sale to others in the ordinary course of the lessor's
business, and the lessor, before notice of repudiation is
received and under circumstances that reasonably indicate
that the goods are for the lessee, has made either a
substantial beginning of their manufacture or commitments
for their procurement;
(b) if the party against whom enforcement is sought

SB3696 - 34 - LRB103 37687 SPS 67814 b
admits in that party's pleading, testimony, or otherwise
in court that a lease contract was made, but the lease
contract is not enforceable under this provision beyond
the quantity of goods admitted; or
(c) with respect to goods that have been received and
accepted by the lessee.
(5) The lease term under a lease contract referred to in
subsection (4) is:
(a) if there is a record writing signed by the party
against whom enforcement is sought or by that party's
authorized agent specifying the lease term, the term so
specified;
(b) if the party against whom enforcement is sought
admits in that party's pleading, testimony, or otherwise
in court a lease term, the term so admitted; or
(c) a reasonable lease term.
(Source: P.A. 87-493.)
(810 ILCS 5/2A-202) (from Ch. 26, par. 2A-202)
Sec. 2A-202. Final written expression; parol or extrinsic
evidence. Terms with respect to which the confirmatory
memoranda of the parties agree or which are otherwise set
forth in a record writing intended by the parties as a final
expression of their agreement with respect to such terms as
are included therein may not be contradicted by evidence of
any prior agreement or of a contemporaneous oral agreement but

SB3696 - 35 - LRB103 37687 SPS 67814 b
may be explained or supplemented:
(a) by course of dealing or usage of trade or by course
of performance; and
(b) by evidence of consistent additional terms unless
the court finds the record writing to have been intended
also as a complete and exclusive statement of the terms of
the agreement.
(Source: P.A. 87-493.)
(810 ILCS 5/2A-203) (from Ch. 26, par. 2A-203)
Sec. 2A-203. Seals inoperative. The affixing of a seal to
a record writing evidencing a lease contract or an offer to
enter into a lease contract does not render the record writing
a sealed instrument and the law with respect to sealed
instruments does not apply to the lease contract or offer.
(Source: P.A. 87-493.)
(810 ILCS 5/2A-205) (from Ch. 26, par. 2A-205)
Sec. 2A-205. Firm offers. An offer by a merchant to lease
goods to or from another person in a signed record writing that
by its terms gives assurance it will be held open is not
revocable, for lack of consideration, during the time stated
or, if no time is stated, for a reasonable time, but in no
event may the period of irrevocability exceed 3 months. Any
such term of assurance on a form supplied by the offeree must
be separately signed by the offeror.

SB3696 - 36 - LRB103 37687 SPS 67814 b
(Source: P.A. 87-493.)
(810 ILCS 5/2A-208) (from Ch. 26, par. 2A-208)
Sec. 2A-208. Modification, rescission, and waiver.
(1) An agreement modifying a lease contract needs no
consideration to be binding.
(2) A signed lease agreement that excludes modification or
rescission except by a signed record writing may not be
otherwise modified or rescinded, but, except as between
merchants, such a requirement on a form supplied by a merchant
must be separately signed by the other party.
(3) Although an attempt at modification or rescission does
not satisfy the requirements of subsection (2), it may operate
as a waiver.
(4) A party who has made a waiver affecting an executory
portion of a lease contract may retract the waiver by
reasonable notification received by the other party that
strict performance will be required of any term waived, unless
the retraction would be unjust in view of a material change of
position in reliance on the waiver.
(Source: P.A. 87-493.)
(810 ILCS 5/3-104) (from Ch. 26, par. 3-104)
Sec. 3-104. Negotiable instrument.
(a) Except as provided in subsections (c) and (d),
"negotiable instrument" means an unconditional promise or

SB3696 - 37 - LRB103 37687 SPS 67814 b
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 (i) an undertaking or power
to give, maintain, or protect collateral to secure
payment, (ii) an authorization or power to the holder to
confess judgment or realize on or dispose of collateral,
or (iii) a waiver of the benefit of any law intended for
the advantage or protection of any obligor, (iv) a term
that specifies the law that governs the promise or order,
or (v) an undertaking to resolve in a specified forum a
dispute concerning the promise or order.
(b) "Instrument" means a negotiable instrument.
(c) An order that meets all of the requirements of
subsection (a), except paragraph (1), and otherwise falls
within the definition of "check" in subsection (f) is a
negotiable instrument and a check.
(d) A promise or order other than a check is not an
instrument if, at the time it is issued or first comes into
possession of a holder, it contains a conspicuous statement,
however expressed, to the effect that the promise or order is

SB3696 - 38 - LRB103 37687 SPS 67814 b
not negotiable or is not an instrument governed by this
Article.
(e) An instrument is a "note" if it is a promise and is a
"draft" if it is an order. If an instrument falls within the
definition of both "note" and "draft", a person entitled to
enforce the instrument may treat it as either.
(f) "Check" means (i) a draft, other than a documentary
draft, payable on demand and drawn on a bank or (ii) a
cashier's check or teller's check. An instrument may be a
check even though it is described on its face by another term,
such as "money order".
(g) "Cashier's check" means a draft with respect to which
the drawer and drawee are the same bank or branches of the same
bank.
(h) "Teller's check" means a draft drawn by a bank (i) on
another bank, or (ii) payable at or through a bank.
(i) "Traveler's check" means an instrument that (i) is
payable on demand, (ii) is drawn on or payable at or through a
bank, (iii) is designated by the term "traveler's check" or by
a substantially similar term, and (iv) requires, as a
condition to payment, a countersignature by a person whose
specimen signature appears on the instrument.
(j) "Certificate of deposit" means an instrument
containing an acknowledgment by a bank that a sum of money has
been received by the bank and a promise by the bank to repay
the sum of money. A certificate of deposit is a note of the

SB3696 - 39 - LRB103 37687 SPS 67814 b
bank.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-105) (from Ch. 26, par. 3-105)
Sec. 3-105. Issue of instrument.
(a) "Issue" means:
(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 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.
(b) An unissued instrument, or an unissued incomplete
instrument that is completed, is binding on the maker or
drawer, but nonissuance is a defense. An instrument that is
conditionally issued or is issued for a special purpose is
binding on the maker or drawer, but failure of the condition or
special purpose to be fulfilled is a defense.
(c) "Issuer" applies to issued and unissued instruments
and means a maker or drawer of an instrument.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-401) (from Ch. 26, par. 3-401)

SB3696 - 40 - LRB103 37687 SPS 67814 b
Sec. 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 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
any trade or assumed name, or by a word, mark, or symbol
executed or adopted by a person with present intention to
authenticate a writing.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/3-604) (from Ch. 26, par. 3-604)
Sec. 3-604. Discharge by cancellation or renunciation.
(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 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 record writing. The obligation of a party to
pay a check is not discharged solely by destruction of the
check in connection with a process in which information is

SB3696 - 41 - LRB103 37687 SPS 67814 b
extracted from the check and an image of the check is made and,
subsequently, the information and image are transmitted for
payment.
(b) Cancellation or striking out of an indorsement
pursuant to subsection (a) does not affect the status and
rights of a party derived from the indorsement.
(Source: P.A. 87-582; 87-1135.)
(810 ILCS 5/4A-103) (from Ch. 26, par. 4A-103)
Sec. 4A-103. Payment order; definitions.
(a) In this Article:
(1) "Payment order" means an instruction of a sender
to a receiving bank, transmitted orally or in a record,
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

SB3696 - 42 - LRB103 37687 SPS 67814 b
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 otherwise is
to make payment to the beneficiary if the order does not
provide for payment to an account.
(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) is
to make more than one payment to a beneficiary, the
instruction is a separate payment order with respect to each
payment.
(c) A payment order is issued when it is sent to the
receiving bank.
(Source: P.A. 86-1291.)
(810 ILCS 5/4A-201) (from Ch. 26, par. 4A-201)
Sec. 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 cancelling 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

SB3696 - 43 - LRB103 37687 SPS 67814 b
on the receiving bank or the customer and may require the use
of algorithms or other codes, identifying words, or numbers,
symbols, sounds, biometrics, encryption, callback procedures,
or similar security devices. Comparison of a signature on a
payment order or communication with an authorized specimen
signature of the customer or requiring a payment order to be
sent from a known email address, IP address, or telephone
number is not by itself a security procedure.
(Source: P.A. 86-1291.)
(810 ILCS 5/4A-202) (from Ch. 26, par. 4A-202)
Sec. 4A-202. Authorized and verified payment orders.
(a) A payment order received by the receiving bank is the
authorized order of the person identified as sender if that
person authorized the order or is otherwise bound by it under
the law of agency.
(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

SB3696 - 44 - LRB103 37687 SPS 67814 b
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 an a written 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 a record writing 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.
(d) The term "sender" in this Article includes the

SB3696 - 45 - LRB103 37687 SPS 67814 b
customer in whose name a payment order is issued if the order
is the authorized order of the customer under subsection (a),
or it is effective as the order of the customer under
subsection (b).
(e) This Section applies to amendments and cancellations
of payment orders to the same extent it applies to payment
orders.
(f) Except as provided in this Section and in Section
4A-203(a)(1), rights and obligations arising under this
Section or Section 4A-203 may not be varied by agreement.
(Source: P.A. 86-1291.)
(810 ILCS 5/4A-203) (from Ch. 26, par. 4A-203)
Sec. 4A-203. Unenforceability of certain verified payment
orders.
(a) If an accepted payment order is not, under Section
4A-202(a), an authorized order of a customer identified as
sender, but is effective as an order of the customer pursuant
to Section 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

SB3696 - 46 - LRB103 37687 SPS 67814 b
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.
(b) This Section applies to amendments of payment orders
to the same extent it applies to payment orders.
(Source: P.A. 86-1291.)
(810 ILCS 5/4A-207) (from Ch. 26, par. 4A-207)
Sec. 4A-207. Misdescription of beneficiary.
(a) Subject to subsection (b), if, in a payment order
received by the beneficiary's bank, the name, bank account
number, or other identification of the beneficiary refers to a
nonexistent or unidentifiable person or account, no person has
rights as a beneficiary of the order and acceptance of the
order cannot occur.
(b) If a payment order received by the beneficiary's bank
identifies the beneficiary both by name and by an identifying
or bank account number and the name and number identify
different persons, the following rules apply:

SB3696 - 47 - LRB103 37687 SPS 67814 b
(1) Except as otherwise provided in subsection (c), if
the beneficiary's bank does not know that the name and
number refer to different persons, it may rely on the
number as the proper identification of the beneficiary of
the order. The beneficiary's bank need not determine
whether the name and number refer to the same person.
(2) If the beneficiary's bank pays the person
identified by name or knows that the name and number
identify different persons, no person has rights as
beneficiary except the person paid by the beneficiary's
bank if that person was entitled to receive payment from
the originator of the funds transfer. If no person has
rights as beneficiary, acceptance of the order cannot
occur.
(c) If (i) a payment order described in subsection (b) is
accepted, (ii) the originator's payment order described the
beneficiary inconsistently by name and number, and (iii) the
beneficiary's bank pays the person identified by number as
permitted by subsection (b)(1), the following rules apply:
(1) If the originator is a bank, the originator is
obligated to pay its order.
(2) If the originator is not a bank and proves that the
person identified by number was not entitled to receive
payment from the originator, the originator is not obliged
to pay its order unless the originator's bank proves that
the originator, before acceptance of the originator's

SB3696 - 48 - LRB103 37687 SPS 67814 b
order, had notice that payment of a payment order issued
by the originator might be made by the beneficiary's bank
on the basis of an identifying or bank account number
event if it identifies a person different from the named
beneficiary. Proof of notice may be made by any admissible
evidence. The originator's bank satisfies the burden of as
proof if it proves that the originator, before the payment
order was accepted, signed a record writing stating the
information to which the notice relates.
(d) In a case governed by subsection (b)(1), if the
beneficiary's bank rightfully pays the person identified by
number and that person was not entitled to receive payment
from the originator, the amount paid may be recovered from
that person to the extent allowed by the law governing mistake
and restitution as follows:
(1) If the originator is obligated to pay its payment
order as stated in subsection (c), the originator has the
right to recover.
(2) If the originator is not a bank and is not
obligated to pay its payment order, the originator's bank
has the right to recover.
(Source: P.A. 86-1291.)
(810 ILCS 5/4A-208) (from Ch. 26, par. 4A-208)
Sec. 4A-208. Misdescription of intermediary bank or
beneficiary's bank.

SB3696 - 49 - LRB103 37687 SPS 67814 b
(a) This subsection applies to a payment order identifying
an intermediary bank or the beneficiary's bank only by an
identifying number.
(1) The receiving bank may rely on the number as the
proper identification of the intermediary or beneficiary's
bank and need not determine whether the number identifies
a bank.
(2) The sender is obliged to compensate the receiving
bank for any loss and expenses incurred by the receiving
bank as a result of its reliance on the number in executing
or attempting to execute the order.
(b) This subsection applies to a payment order identifying
an intermediary bank or the beneficiary's bank both by name
and an identifying number if the name and number identify
different persons.
(1) If the sender is a bank, the receiving bank may
rely on the number as the proper identification of the
intermediary or beneficiary's bank if the receiving bank,
when it executes the sender's order, does not know that
the name and number identify different persons. The
receiving bank need not determine whether the name and
number refer to the same person or whether the number
refers to a bank. The sender is obliged to compensate the
receiving bank for any loss and expenses incurred by the
receiving bank as a result of its reliance on the number in
executing or attempting to execute the order.

SB3696 - 50 - LRB103 37687 SPS 67814 b
(2) If the sender is not a bank and the receiving bank
proves that the sender, before the payment order was
accepted, had notice that the receiving bank might rely on
the number as the proper identification of the
intermediary or beneficiary's bank even if it identifies a
person different from the bank identified by name, the
rights and obligations of the sender and the receiving
bank are governed by subsection (b)(1), as though the
sender were a bank. Proof of notice may be made by any
admissible evidence. The receiving bank satisfies the
burden of proof if it proves that the sender, before the
payment order was accepted, signed a record writing
stating the information to which the notice relates.
(3) Regardless of whether the sender is a bank, the
receiving bank may rely on the name as the proper
identification of the intermediary or beneficiary's bank
if the receiving bank, at the time it executes the
sender's order, does not know that the name and number
identify different persons. The receiving bank need not
determine whether the name and number refer to the same
person.
(4) If the receiving bank knows that the name and
number identify different persons, reliance on either the
name or the number in executing the sender's payment order
is a breach of the obligation stated in Section
4A-302(a)(1).

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(Source: P.A. 86-1291.)
(810 ILCS 5/4A-210) (from Ch. 26, par. 4A-210)
Sec. 4A-210. Rejection of payment order.
(a) A payment order is rejected by the receiving bank by a
notice of rejection transmitted to the sender orally,
electronically, or in a record writing. 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.
(b) This subsection applies if a receiving bank other than
the beneficiary's bank fails to execute a payment order
despite the existence on the execution date of a withdrawable
credit balance in an authorized account of the sender
sufficient to cover the order. If the sender does not receive
notice of rejection of the order on the execution date and the
authorized account of the sender does not bear interest, the

SB3696 - 52 - LRB103 37687 SPS 67814 b
bank is obliged to pay interest to the sender on the amount of
the order for the number of days elapsing after the execution
date to the earlier of the day the order is canceled pursuant
to Section 4A-211(d) or the day the sender receives notice or
learns that the order was not executed, counting the final day
of the period as an elapsed day. If the withdrawable credit
balance during that period falls below the amount of the
order, the amount of interest is reduced accordingly.
(c) If a receiving bank suspends payments, all unaccepted
payment orders issued to it are deemed rejected at the time the
bank suspends payments.
(d) Acceptance of a payment order precludes a later
rejection of the order. Rejection of a payment order precludes
a later acceptance of the order.
(Source: P.A. 86-1291.)
(810 ILCS 5/4A-211) (from Ch. 26, par. 4A-211)
Sec. 4A-211. Cancellation and amendment of payment order.
(a) A communication of the sender of a payment order
cancelling or amending the order may be transmitted to the
receiving bank orally, electronically, or in a record writing.
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.

SB3696 - 53 - LRB103 37687 SPS 67814 b
(b) Subject to subsection (a), a communication by the
sender cancelling or amending a payment order is effective to
cancel or amend the order if notice of the communication is
received at a time and in a manner affording the receiving bank
a reasonable opportunity to act on the communication before
the bank accepts the payment order.
(c) After a payment order has been accepted, cancellation
or amendment of the order is not effective unless the
receiving bank agrees or a funds transfer system rule allows
cancellation or amendment without agreement of the bank.
(1) With respect to a payment order accepted by a
receiving bank other than the beneficiary's bank,
cancellation or amendment is not effective unless a
conforming cancellation or amendment of the payment order
issued by the receiving bank is also made.
(2) With respect to a payment order accepted by the
beneficiary's bank, cancellation or amendment is not
effective unless the order was issued in execution of an
unauthorized payment order, or because of a mistake by a
sender in the funds transfer which resulted in the
issuance of a payment order (i) that is a duplicate of a
payment order previously issued by the sender, (ii) that
orders payment to a beneficiary not entitled to receive
payment from the originator, or (iii) that orders payment
in an amount greater than the amount the beneficiary was
entitled to receive from the originator. If the payment

SB3696 - 54 - LRB103 37687 SPS 67814 b
order is canceled or amended, the beneficiary's bank is
entitled to recover from the beneficiary any amount paid
to the beneficiary to the extent allowed by the law
governing mistake and restitution.
(d) An unaccepted payment order is canceled by operation
of law at the close of the fifth funds transfer business day of
the receiving bank after the execution date or payment date of
the order.
(e) A canceled payment order cannot be accepted. If an
accepted payment order is canceled, the acceptance is
nullified and no person has any right or obligation based on
the acceptance. Amendment of a payment order is deemed to be
cancellation of the original order at the time of amendment
and issue of a new payment order in the amended form at the
same time.
(f) Unless otherwise provided in an agreement of the
parties or in a funds transfer system rule, if the receiving
bank, after accepting a payment order, agrees to cancellation
or amendment of the order by the sender or is bound by a funds
transfer system rule allowing cancellation or amendment
without the bank's agreement, the sender, whether or not
cancellation or amendment is effective, is liable to the bank
for any loss and expenses, including reasonable attorney's
fees, incurred by the bank as a result of the cancellation or
amendment or attempted cancellation or amendment.
(g) A payment order is not revoked by the death or legal

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incapacity of the sender unless the receiving bank knows of
the death or of an adjudication of incapacity by a court of
competent jurisdiction and has reasonable opportunity to act
before acceptance of the order.
(h) A funds transfer system rule is not effective to the
extent it conflicts with subsection (c)(2).
(Source: P.A. 97-813, eff. 7-13-12.)
(810 ILCS 5/4A-305) (from Ch. 26, par. 4A-305)
Sec. 4A-305. Liability for late or improper execution or
failure to execute payment order.
(a) If a funds transfer is completed but execution of a
payment order by the receiving bank in breach of Section
4A-302 results in delay in payment to the beneficiary, the
bank is obliged to pay interest to either the originator or the
beneficiary of the funds transfer for the period of delay
caused by the improper execution. Except as provided in
subsection (c), additional damages are not recoverable.
(b) If execution of a payment order by a receiving bank in
breach of Section 4A-302 results in (i) noncompletion of the
funds transfer, (ii) failure to use an intermediary bank
designated by the originator, or (iii) issuance of a payment
order that does not comply with the terms of the payment order
of the originator, the bank is liable to the originator for its
expenses in the funds transfer and for incidental expenses and
interest losses, to the extent not covered by subsection (a),

SB3696 - 56 - LRB103 37687 SPS 67814 b
resulting from the improper execution. Except as provided in
subsection (c), additional damages are not recoverable.
(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, 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, evidenced by a record, but are not otherwise
recoverable.
(e) Reasonable attorney's fees are recoverable if demand
for compensation under subsection (a) or (b) is made and
refused before an action is brought on the claim. If a claim is
made for breach of an agreement under subsection (d) and the
agreement does not provide for damages, reasonable attorney's
fees are recoverable if demand for compensation under
subsection (d) is made and refused before an action is brought
on the claim.
(f) Except as stated in this Section, the liability of a
receiving bank under subsections (a) and (b) may not be varied
by agreement.

SB3696 - 57 - LRB103 37687 SPS 67814 b
(Source: P.A. 86-1291.)
(810 ILCS 5/5-104) (from Ch. 26, par. 5-104)
Sec. 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 5-108(e).
(Source: P.A. 89-534, eff. 1-1-97.)
(810 ILCS 5/5-116) (from Ch. 26, par. 5-116)
Sec. 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 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

SB3696 - 58 - LRB103 37687 SPS 67814 b
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).
(d) A branch of a bank is considered to be located at the
address indicated in the branch's undertaking. If more than
one address is indicated, the branch is considered to be
located at the address from which the undertaking was issued.
(e) (c) 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 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 5-103(c).
(f) (d) If there is conflict between this Article and

SB3696 - 59 - LRB103 37687 SPS 67814 b
Article 3, 4, 4A, or 9, this Article governs.
(g) (e) 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).
(Source: P.A. 89-534, eff. 1-1-97.)
(810 ILCS 5/7-102) (from Ch. 26, par. 7-102)
Sec. 7-102. Definitions and index of definitions.
(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

SB3696 - 60 - LRB103 37687 SPS 67814 b
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) (Reserved). "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) (Reserved). "Sign" means, with present intent to

SB3696 - 61 - LRB103 37687 SPS 67814 b
authenticate or adopt a record:
(A) to execute or adopt a tangible symbol; or
(B) to attach to or logically associate with the
record an electronic sound, symbol, or process.
(12) "Shipper" means a person that enters into a
contract of transportation with a carrier.
(13) "Warehouse" means a person engaged in the
business of storing goods for hire. The owner of a
self-service storage facility as defined in the
Self-Service Storage Facility Act is not a warehouse for
the purposes of this Article.
(b) Definitions in other Articles applying to this Article
and the Sections in which they appear are:
(1) "Contract for sale", Section 2-106.
(2) "Lessee in the ordinary course of business",
Section 2A-103.
(3) "Receipt" of goods, Section 2-103.
(c) In addition, Article 1 contains general definitions
and principles of construction and interpretation applicable
throughout this Article.
(Source: P.A. 95-895, eff. 1-1-09.)
(810 ILCS 5/7-106)
Sec. 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

SB3696 - 62 - LRB103 37687 SPS 67814 b
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 has is
deemed to have control of an electronic document of title, if
the document is created, stored, and transferred assigned in
such a manner that:
(1) a single authoritative copy of the document exists
which is unique, identifiable, and, except as otherwise
provided in paragraphs (4), (5), and (6), unalterable;
(2) the authoritative copy identifies the person
asserting control as:
(A) the person to which the document was issued;
or
(B) if the authoritative copy indicates that the
document has been transferred, the person to which the
document was most recently transferred;
(3) the authoritative copy is communicated to and
maintained by the person asserting control or its
designated custodian;
(4) copies or amendments that add or change an
identified transferee assignee of the authoritative copy
can be made only with the consent of the person asserting
control;
(5) each copy of the authoritative copy and any copy
of a copy is readily identifiable as a copy that is not the

SB3696 - 63 - LRB103 37687 SPS 67814 b
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 readily to identify each
electronic copy as either an authoritative copy or a
nonauthoritative copy;
(2) enables the person readily to identify itself in
any way, including by name, identifying number,
cryptographic key, office, or account number, as the
person to which each authoritative electronic copy was
issued or transferred; and
(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)(A) and (B) even if:
(1) the authoritative electronic copy, a record

SB3696 - 64 - LRB103 37687 SPS 67814 b
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 is not shared with another person
under subsection (d)(2) and the person's power is not
exclusive if:
(1) the person can exercise the power only if the
power also is exercised by the other person; and
(2) the other person:
(A) can 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)(A) and (B), the powers are 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.

SB3696 - 65 - LRB103 37687 SPS 67814 b
(h) A person that has control under this Section is not
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 law other than this Article or Article 9
otherwise provides, the person does not owe any duty to the
other person and is not required to confirm the acknowledgment
to any other person.
(Source: P.A. 95-895, eff. 1-1-09.)
(810 ILCS 5/8-102) (from Ch. 26, par. 8-102)
Sec. 8-102. Definitions.
(a) In this Article:
(1) "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.
(2) "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.
(3) "Broker" means a person defined as a broker or
dealer under the federal securities laws, but without
excluding a bank acting in that capacity.
(4) "Certificated security" means a security that is

SB3696 - 66 - LRB103 37687 SPS 67814 b
represented by a certificate.
(5) "Clearing corporation" means:
(i) a person that is registered as a "clearing
agency" under the federal securities laws;
(ii) a federal reserve bank; or
(iii) any other person that provides clearance or
settlement services with respect to financial assets
that would require it to register as a clearing agency
under the federal securities laws but for an exclusion
or exemption from the registration requirement, if its
activities as a clearing corporation, including
promulgation of rules, are subject to regulation by a
federal or state governmental authority.
(6) "Communicate" means to:
(i) send a signed record writing; or
(ii) transmit information by any mechanism agreed
upon by the persons transmitting and receiving the
information.
(7) "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 8-501(b)(2) or (3), that person is
the entitlement holder.
(8) "Entitlement order" means a notification
communicated to a securities intermediary directing

SB3696 - 67 - LRB103 37687 SPS 67814 b
transfer or redemption of a financial asset to which the
entitlement holder has a security entitlement.
(9) "Financial asset," except as otherwise provided in
Section 8-103, means:
(i) a security;
(ii) an obligation of a person or a share,
participation, or other interest in a person or in
property or an enterprise of a person, which is, or is
of a type, dealt in or traded on financial markets, or
which is recognized in any area in which it is issued
or dealt in as a medium for investment; or
(iii) 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
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.
(10) "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.

SB3696 - 68 - LRB103 37687 SPS 67814 b
(11) "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.
(12) "Instruction" means a notification communicated
to the issuer of an uncertificated security which directs
that the transfer of the security be registered or that
the security be redeemed.
(13) "Registered form," as applied to a certificated
security, means a form in which:
(i) the security certificate specifies a person
entitled to the security; and
(ii) a transfer of the security may be registered
upon books maintained for that purpose by or on behalf
of the issuer, or the security certificate so states.
(14) "Securities intermediary" means:
(i) a clearing corporation; or
(ii) a person, including a bank or broker, that in
the ordinary course of its business maintains
securities accounts for others and is acting in that
capacity.
(15) "Security," except as otherwise provided in
Section 8-103, means an obligation of an issuer or a
share, participation, or other interest in an issuer or in

SB3696 - 69 - LRB103 37687 SPS 67814 b
property or an enterprise of an issuer:
(i) which is represented by a security certificate
in bearer or registered form, or the transfer of which
may be registered upon books maintained for that
purpose by or on behalf of the issuer;
(ii) which is one of a class or series or by its
terms is divisible into a class or series of shares,
participations, interests, or obligations; and
(iii) which:
(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.
(16) "Security certificate" means a certificate
representing a security.
(17) "Security entitlement" means the rights and
property interest of an entitlement holder with respect to
a financial asset specified in Part 5.
(18) "Uncertificated security" means a security that
is not represented by a certificate.
(b) The following Other definitions in applying to this
Article and other Articles apply to this Article the Sections
in which they appear are:
Appropriate person Section 8-107

SB3696 - 70 - LRB103 37687 SPS 67814 b
Control Section 8-106
Controllable account Section 9-102
Controllable electronic
record Section 12-102
Controllable payment
intangible Section 9-102
Delivery Section 8-301
Investment company security Section 8-103
Issuer Section 8-201
Overissue Section 8-210
Protected purchaser Section 8-303
Securities account Section 8-501
(c) In addition, Article 1 contains general definitions
and principles of construction and interpretation applicable
throughout this Article.
(d) The characterization of a person, business, or
transaction for purposes of this Article does not determine
the characterization of the person, business, or transaction
for purposes of any other law, regulation, or rule.
(Source: P.A. 89-364, eff. 1-1-96.)
(810 ILCS 5/8-103) (from Ch. 26, par. 8-103)
Sec. 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

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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.

SB3696 - 72 - LRB103 37687 SPS 67814 b
(f) A commodity contract, as defined in Section
9-102(a)(15), is not a security or a financial asset.
(g) A document of title is not a financial asset unless
Section 8-102(a)(9)(iii) applies.
(h) A controllable account, controllable electronic
record, or controllable payment intangible is not a financial
asset unless Section 8-102(a)(9)(iii) applies.
(Source: P.A. 95-895, eff. 1-1-09.)
(810 ILCS 5/8-106) (from Ch. 26, par. 8-106)
Sec. 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

SB3696 - 73 - LRB103 37687 SPS 67814 b
(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, other than the transferor to the
purchaser of an interest in the security entitlement: 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.
(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

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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 even though the
registered owner or entitlement holder so directs. An issuer
or securities intermediary that has entered into such an
agreement is not required to confirm the existence of the
agreement to another party unless requested to do so by the
registered owner or entitlement holder.
(h) A person that has control under this Section is not
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 does not owe any duty to the purchaser and

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is not required to confirm the acknowledgment to any other
person.
(Source: P.A. 95-331, eff. 8-21-07.)
(810 ILCS 5/8-110)
Sec. 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;

SB3696 - 76 - LRB103 37687 SPS 67814 b
(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) through (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 Act, that

SB3696 - 77 - LRB103 37687 SPS 67814 b
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

SB3696 - 78 - LRB103 37687 SPS 67814 b
representing financial assets, or by the jurisdiction in which
is organized the issuer of the financial asset with respect to
which an entitlement holder has a security entitlement, or by
the location of facilities for data processing or other record
keeping concerning the account.
(g) The local law of the issuer's jurisdiction or the
securities intermediary's jurisdiction governs a matter or
transaction specified in subsection (a) or (b) even if the
matter or transaction does not bear any relation to the
jurisdiction.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/8-303) (from Ch. 26, par. 8-303)
Sec. 8-303. Protected purchaser.
(a) "Protected purchaser" means a purchaser of a
certificated or uncertificated security, or of an interest
therein, who:
(1) gives value;
(2) does not have notice of any adverse claim to the
security; and
(3) obtains control of the certificated or
uncertificated security.
(b) A In addition to acquiring the rights of a purchaser, a
protected purchaser also acquires its interest in the security
free of any adverse claim.
(Source: P.A. 89-364, eff. 1-1-96.)

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(810 ILCS 5/9-102) (from Ch. 26, par. 9-102)
Sec. 9-102. Definitions and index of definitions.
(a) Article 9 definitions. In this Article:
(1) "Accession" means goods that are physically united
with other goods in such a manner that the identity of the
original goods is not lost.
(2) "Account", except as used in "account for",
"account statement", "account to", "commodity account" in
paragraph (14), "customer's account", "deposit account" in
paragraph (29), "on account of", and "statement of
account", means a right to payment of a monetary
obligation, whether or not earned by performance, (i) for
property that has been or is to be sold, leased, licensed,
assigned, or otherwise disposed of, (ii) for services
rendered or to be rendered, (iii) for a policy of
insurance issued or to be issued, (iv) for a secondary
obligation incurred or to be incurred, (v) for energy
provided or to be provided, (vi) for the use or hire of a
vessel under a charter or other contract, (vii) arising
out of the use of a credit or charge card or information
contained on or for use with the card, or (viii) as
winnings in a lottery or other game of chance operated or
sponsored by a State, governmental unit of a State, or
person licensed or authorized to operate the game by a
State or governmental unit of a State. The term includes

SB3696 - 80 - LRB103 37687 SPS 67814 b
controllable accounts and health-care-insurance
receivables. The term does not include (i) rights to
payment evidenced by chattel paper or an instrument, (ii)
commercial tort claims, (iii) deposit accounts, (iv)
investment property, (v) letter-of-credit rights or
letters of credit, or (vi) rights to payment for money or
funds advanced or sold, other than rights arising out of
the use of a credit or charge card or information
contained on or for use with the card, or (vii) rights to
payment evidenced by an instrument.
(3) "Account debtor" means a person obligated on an
account, chattel paper, or general intangible. The term
does not include persons obligated to pay a negotiable
instrument, even if the negotiable instrument evidences
constitutes part of chattel paper.
(4) "Accounting", except as used in "accounting for",
means a record:
(A) signed authenticated by a secured party;
(B) indicating the aggregate unpaid secured
obligations as of a date not more than 35 days earlier
or 35 days later than the date of the record; and
(C) identifying the components of the obligations
in reasonable detail.
(5) "Agricultural lien" means an interest, other than
a security interest, in farm products:
(A) which secures payment or performance of an

SB3696 - 81 - LRB103 37687 SPS 67814 b
obligation for goods or services furnished in
connection with a debtor's farming operation;
(B) which is created by statute in favor of a
person that in the ordinary course of its business
furnished goods or services to a debtor in connection
with a debtor's farming operation; and
(C) whose effectiveness does not depend on the
person's possession of the personal property.
(6) "As-extracted collateral" means:
(A) oil, gas, or other minerals that are subject
to a security interest that:
(i) is created by a debtor having an interest
in the minerals before extraction; and
(ii) attaches to the minerals as extracted; or
(B) accounts arising out of the sale at the
wellhead or minehead of oil, gas, or other minerals in
which the debtor had an interest before extraction.
(7) (Reserved). "Authenticate" means:
(A) to sign; or
(B) with present intent to adopt or accept a
record, to attach to or logically associate with the
record an electronic sound, symbol, or process.
(7A) "Assignee", except as used in "assignee for
benefit of creditors", means a person (i) in whose favor a
security interest that secures an obligation is created or
provided for under a security agreement, whether or not

SB3696 - 82 - LRB103 37687 SPS 67814 b
the obligation is outstanding or (ii) to which an account,
chattel paper, payment intangible, or promissory note has
been sold. The term includes a person to which a security
interest has been transferred by a secured party.
(7B) "Assignor" means a person that (i) under a
security agreement creates or provides for a security
interest that secures an obligation or (ii) sells an
account, chattel paper, payment intangible, or promissory
note. The term includes a secured party that has
transferred a security interest to another person.
(8) "Bank" means an organization that is engaged in
the business of banking. The term includes savings banks,
savings and loan associations, credit unions, and trust
companies.
(9) "Cash proceeds" means proceeds that are money,
checks, deposit accounts, or the like.
(10) "Certificate of title" means a certificate of
title with respect to which a statute provides for the
security interest in question to be indicated on the
certificate as a condition or result of the security
interest's obtaining priority over the rights of a lien
creditor with respect to the collateral. 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

SB3696 - 83 - LRB103 37687 SPS 67814 b
condition or result of the security interest's obtaining
priority over the rights of a lien creditor with respect
to the collateral.
(11) "Chattel paper" means:
(A) a right to payment of a monetary obligation
secured by specific goods, if the right to payment and
security agreement are evidenced by a record; or
(B) a right to payment of a monetary obligation
owed by a lessee under a lease agreement with respect
to specific goods and a monetary obligation owed by
the lessee in connection with the transaction giving
rise to the lease, if:
(i) the right to payment and lease agreement
are evidenced by a record; and
(ii) 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 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.
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,

SB3696 - 84 - LRB103 37687 SPS 67814 b
a security interest in specific goods and license of
software used in the goods, a lease of specific goods, or a
lease of specified goods and a license of software used in
the goods. In this paragraph, "monetary obligation" means
a monetary obligation secured by the goods or owed under a
lease of the goods and includes a monetary obligation with
respect to software used in the goods. The term does not
include (i) charters or other contracts involving the use
or hire of a vessel or (ii) records that evidence a right
to payment arising out of the use of a credit or charge
card or information contained on or for use with the card.
If a transaction is evidenced by records that include an
instrument or series of instruments, the group of records
taken together constitutes chattel paper.
(12) "Collateral" means the property subject to a
security interest or agricultural lien. The term includes:
(A) proceeds to which a security interest
attaches;
(B) accounts, chattel paper, payment intangibles,
and promissory notes that have been sold; and
(C) goods that are the subject of a consignment.
(13) "Commercial tort claim" means a claim arising in
tort with respect to which:
(A) the claimant is an organization; or
(B) the claimant is an individual and the claim:
(i) arose in the course of the claimant's

SB3696 - 85 - LRB103 37687 SPS 67814 b
business or profession; and
(ii) does not include damages arising out of
personal injury to or the death of an individual.
(14) "Commodity account" means an account maintained
by a commodity intermediary in which a commodity contract
is carried for a commodity customer.
(15) "Commodity contract" means a commodity futures
contract, an option on a commodity futures contract, a
commodity option, or another contract if the contract or
option is:
(A) traded on or subject to the rules of a board of
trade that has been designated as a contract market
for such a contract pursuant to federal commodities
laws; or
(B) traded on a foreign commodity board of trade,
exchange, or market, and is carried on the books of a
commodity intermediary for a commodity customer.
(16) "Commodity customer" means a person for which a
commodity intermediary carries a commodity contract on its
books.
(17) "Commodity intermediary" means a person that:
(A) is registered as a futures commission merchant
under federal commodities law; or
(B) in the ordinary course of its business
provides clearance or settlement services for a board
of trade that has been designated as a contract market

SB3696 - 86 - LRB103 37687 SPS 67814 b
pursuant to federal commodities law.
(18) "Communicate" means:
(A) to send a written or other tangible record;
(B) to transmit a record by any means agreed upon
by the persons sending and receiving the record; or
(C) in the case of transmission of a record to or
by a filing office, to transmit a record by any means
prescribed by filing-office rule.
(19) "Consignee" means a merchant to which goods are
delivered in a consignment.
(20) "Consignment" means a transaction, regardless of
its form, in which a person delivers goods to a merchant
for the purpose of sale and:
(A) the merchant:
(i) deals in goods of that kind under a name
other than the name of the person making delivery;
(ii) is not an auctioneer; and
(iii) is not generally known by its creditors
to be substantially engaged in selling the goods
of others;
(B) with respect to each delivery, the aggregate
value of the goods is $1,000 or more at the time of
delivery;
(C) the goods are not consumer goods immediately
before delivery; and
(D) the transaction does not create a security

SB3696 - 87 - LRB103 37687 SPS 67814 b
interest that secures an obligation.
(21) "Consignor" means a person that delivers goods to
a consignee in a consignment.
(22) "Consumer debtor" means a debtor in a consumer
transaction.
(23) "Consumer goods" means goods that are used or
bought for use primarily for personal, family, or
household purposes.
(24) "Consumer-goods transaction" means a consumer
transaction in which:
(A) an individual incurs an obligation primarily
for personal, family, or household purposes; and
(B) a security interest in consumer goods secures
the obligation.
(25) "Consumer obligor" means an obligor who is an
individual and who incurred the obligation as part of a
transaction entered into primarily for personal, family,
or household purposes.
(26) "Consumer transaction" means a transaction in
which (i) an individual incurs an obligation primarily for
personal, family, or household purposes, (ii) a security
interest secures the obligation, and (iii) the collateral
is held or acquired primarily for personal, family, or
household purposes. The term includes consumer-goods
transactions.
(27) "Continuation statement" means an amendment of a

SB3696 - 88 - LRB103 37687 SPS 67814 b
financing statement which:
(A) identifies, by its file number, the initial
financing statement to which it relates; and
(B) indicates that it is a continuation statement
for, or that it is filed to continue the effectiveness
of, the identified financing statement.
(27A) "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 12-105 of the
controllable electronic record.
(27B) "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 12-105 of
the controllable electronic record.
(28) "Debtor" means:
(A) a person having an interest, other than a
security interest or other lien, in the collateral,
whether or not the person is an obligor;
(B) a seller of accounts, chattel paper, payment
intangibles, or promissory notes; or
(C) a consignee.
(29) "Deposit account" means a demand, time, savings,
passbook, nonnegotiable certificates of deposit,
uncertificated certificates of deposit, nontransferable

SB3696 - 89 - LRB103 37687 SPS 67814 b
nontransferrable certificates of deposit, or similar
account maintained with a bank. The term does not include
investment property or accounts evidenced by an
instrument.
(30) "Document" means a document of title or a receipt
of the type described in Section 7-201(b).
(31) (Reserved). "Electronic chattel paper" means
chattel paper evidenced by a record or records consisting
of information stored in an electronic medium.
(31A) "Electronic money" means money in an electronic
form.
(32) "Encumbrance" means a right, other than an
ownership interest, in real property. The term includes
mortgages and other liens on real property.
(33) "Equipment" means goods other than inventory,
farm products, or consumer goods.
(34) "Farm products" means goods, other than standing
timber, with respect to which the debtor is engaged in a
farming operation and which are:
(A) crops grown, growing, or to be grown,
including:
(i) crops produced on trees, vines, and
bushes; and
(ii) aquatic goods produced in aquacultural
operations;
(B) livestock, born or unborn, including aquatic

SB3696 - 90 - LRB103 37687 SPS 67814 b
goods produced in aquacultural operations;
(C) supplies used or produced in a farming
operation; or
(D) products of crops or livestock in their
unmanufactured states.
(35) "Farming operation" means raising, cultivating,
propagating, fattening, grazing, or any other farming,
livestock, or aquacultural operation.
(36) "File number" means the number assigned to an
initial financing statement pursuant to Section 9-519(a).
(37) "Filing office" means an office designated in
Section 9-501 as the place to file a financing statement.
(38) "Filing-office rule" means a rule adopted
pursuant to Section 9-526.
(39) "Financing statement" means a record or records
composed of an initial financing statement and any filed
record relating to the initial financing statement.
(40) "Fixture filing" means the filing of a financing
statement covering goods that are or are to become
fixtures and satisfying Section 9-502(a) and (b). The term
includes the filing of a financing statement covering
goods of a transmitting utility which are or are to become
fixtures.
(41) "Fixtures" means goods that have become so
related to particular real property that an interest in
them arises under real property law.

SB3696 - 91 - LRB103 37687 SPS 67814 b
(42) "General intangible" means any personal property,
including things in action, other than accounts, chattel
paper, commercial tort claims, deposit accounts,
documents, goods, instruments, investment property,
letter-of-credit rights, letters of credit, money, and
oil, gas, or other minerals before extraction. The term
includes controllable electronic records, payment
intangibles, and software.
(43) "Good faith" means honesty in fact and the
observance of reasonable commercial standards of fair
dealing.
(44) "Goods" means all things that are movable when a
security interest attaches. The term includes (i)
fixtures, (ii) standing timber that is to be cut and
removed under a conveyance or contract for sale, (iii) the
unborn young of animals, (iv) crops grown, growing, or to
be grown, even if the crops are produced on trees, vines,
or bushes, and (v) manufactured homes. The term also
includes a computer program embedded in goods and any
supporting information provided in connection with a
transaction relating to the program if (i) the program is
associated with the goods in such a manner that it
customarily is considered part of the goods, or (ii) by
becoming the owner of the goods, a person acquires a right
to use the program in connection with the goods. The term
does not include a computer program embedded in goods that

SB3696 - 92 - LRB103 37687 SPS 67814 b
consist solely of the medium in which the program is
embedded. The term also does not include accounts, chattel
paper, commercial tort claims, deposit accounts,
documents, general intangibles, instruments, investment
property, letter-of-credit rights, letters of credit,
money, or oil, gas, or other minerals before extraction.
(45) "Governmental unit" means a subdivision, agency,
department, county, parish, municipality, or other unit of
the government of the United States, a State, or a foreign
country. The term includes an organization having a
separate corporate existence if the organization is
eligible to issue debt on which interest is exempt from
income taxation under the laws of the United States.
(46) "Health-care-insurance receivable" means an
interest in or claim under a policy of insurance which is a
right to payment of a monetary obligation for health-care
goods or services provided.
(47) "Instrument" means a negotiable instrument or any
other writing that evidences a right to the payment of a
monetary obligation, is not itself a security agreement or
lease, and is of a type that in ordinary course of business
is transferred by delivery with any necessary indorsement
or assignment. The term does not include (i) investment
property, (ii) letters of credit, (iii) nonnegotiable
certificates of deposit, (iv) uncertificated certificates
of deposit, (v) nontransferable nontransferrable

SB3696 - 93 - LRB103 37687 SPS 67814 b
certificates of deposit, or (vi) 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 (vii) writings that evidence chattel paper.
(48) "Inventory" means goods, other than farm
products, which:
(A) are leased by a person as lessor;
(B) are held by a person for sale or lease or to be
furnished under a contract of service;
(C) are furnished by a person under a contract of
service; or
(D) consist of raw materials, work in process, or
materials used or consumed in a business.
(49) "Investment property" means a security, whether
certificated or uncertificated, security entitlement,
securities account, commodity contract, or commodity
account.
(50) "Jurisdiction of organization", with respect to a
registered organization, means the jurisdiction under
whose law the organization is formed or organized.
(51) "Letter-of-credit right" means a right to payment
or performance under a letter of credit, whether or not
the beneficiary has demanded or is at the time entitled to
demand payment or performance. The term does not include
the right of a beneficiary to demand payment or
performance under a letter of credit.

SB3696 - 94 - LRB103 37687 SPS 67814 b
(52) "Lien creditor" means:
(A) a creditor that has acquired a lien on the
property involved by attachment, levy, or the like;
(B) an assignee for benefit of creditors from the
time of assignment;
(C) a trustee in bankruptcy from the date of the
filing of the petition; or
(D) a receiver in equity from the time of
appointment.
(53) "Manufactured home" means a structure,
transportable in one or more sections, which, in the
traveling mode, is eight body feet or more in width or 40
body feet or more in length, or, when erected on site, is
320 or more square feet, and which is built on a permanent
chassis and designed to be used as a dwelling with or
without a permanent foundation when connected to the
required utilities, and includes the plumbing, heating,
air-conditioning, and electrical systems contained
therein. The term includes any structure that meets all of
the requirements of this paragraph except the size
requirements and with respect to which the manufacturer
voluntarily files a certification required by the United
States Secretary of Housing and Urban Development and
complies with the standards established under Title 42 of
the United States Code. The term "manufactured home" does
not include campers and recreational vehicles.

SB3696 - 95 - LRB103 37687 SPS 67814 b
(54) "Manufactured-home transaction" means a secured
transaction:
(A) that creates a purchase-money security
interest in a manufactured home, other than a
manufactured home held as inventory; or
(B) in which a manufactured home, other than a
manufactured home held as inventory, is the primary
collateral.
(54A) "Money" has the meaning in Section 1-201(b)(24),
but does not include (i) a deposit account or (ii) money in
an electronic form that cannot be subjected to control
under Section 9-105A.
(55) "Mortgage" means a consensual interest in real
property, including fixtures, which secures payment or
performance of an obligation.
(56) "New debtor" means a person that becomes bound as
debtor under Section 9-203(d) by a security agreement
previously entered into by another person.
(57) "New value" means (i) money, (ii) money's worth
in property, services, or new credit, or (iii) release by
a transferee of an interest in property previously
transferred to the transferee. The term does not include
an obligation substituted for another obligation.
(58) "Noncash proceeds" means proceeds other than cash
proceeds.
(59) "Obligor" means a person that, with respect to an

SB3696 - 96 - LRB103 37687 SPS 67814 b
obligation secured by a security interest in or an
agricultural lien on the collateral, (i) owes payment or
other performance of the obligation, (ii) has provided
property other than the collateral to secure payment or
other performance of the obligation, or (iii) is otherwise
accountable in whole or in part for payment or other
performance of the obligation. The term does not include
issuers or nominated persons under a letter of credit.
(60) "Original debtor", except as used in Section
9-310(c), means a person that, as debtor, entered into a
security agreement to which a new debtor has become bound
under Section 9-203(d).
(61) "Payment intangible" means a general intangible
under which the account debtor's principal obligation is a
monetary obligation. The term includes a controllable
payment intangible.
(62) "Person related to", with respect to an
individual, means:
(A) the spouse of the individual;
(B) a brother, brother-in-law, sister, or
sister-in-law of the individual;
(C) an ancestor or lineal descendant of the
individual or the individual's spouse; or
(D) any other relative, by blood or marriage, of
the individual or the individual's spouse who shares
the same home with the individual.

SB3696 - 97 - LRB103 37687 SPS 67814 b
(63) "Person related to", with respect to an
organization, means:
(A) a person directly or indirectly controlling,
controlled by, or under common control with the
organization;
(B) an officer or director of, or a person
performing similar functions with respect to, the
organization;
(C) an officer or director of, or a person
performing similar functions with respect to, a person
described in subparagraph (A);
(D) the spouse of an individual described in
subparagraph (A), (B), or (C); or
(E) an individual who is related by blood or
marriage to an individual described in subparagraph
(A), (B), (C), or (D) and shares the same home with the
individual.
(64) "Proceeds", except as used in Section 9-609(b),
means the following property:
(A) whatever is acquired upon the sale, lease,
license, exchange, or other disposition of collateral;
(B) whatever is collected on, or distributed on
account of, collateral;
(C) rights arising out of collateral;
(D) to the extent of the value of collateral,
claims arising out of the loss, nonconformity, or

SB3696 - 98 - LRB103 37687 SPS 67814 b
interference with the use of, defects or infringement
of rights in, or damage to, the collateral; or
(E) to the extent of the value of collateral and to
the extent payable to the debtor or the secured party,
insurance payable by reason of the loss or
nonconformity of, defects or infringement of rights
in, or damage to, the collateral.
(65) "Promissory note" means an instrument that
evidences a promise to pay a monetary obligation, does not
evidence an order to pay, and does not contain an
acknowledgment by a bank that the bank has received for
deposit a sum of money or funds.
(66) "Proposal" means a record signed authenticated by
a secured party which includes the terms on which the
secured party is willing to accept collateral in full or
partial satisfaction of the obligation it secures pursuant
to Sections 9-620, 9-621, and 9-622.
(67) "Public-finance transaction" means a secured
transaction in connection with which:
(A) debt securities are issued;
(B) all or a portion of the securities issued have
an initial stated maturity of at least 20 years; and
(C) the debtor, obligor, secured party, account
debtor or other person obligated on collateral,
assignor or assignee of a secured obligation, or
assignor or assignee of a security interest is a State

SB3696 - 99 - LRB103 37687 SPS 67814 b
or a governmental unit of a State.
(68) "Public organic record" means a record that is
available to the public for inspection and is:
(A) a record consisting of the record initially
filed with or issued by a State or the United States to
form or organize an organization and any record filed
with or issued by the State or the United States which
amends or restates the initial record;
(B) an organic record of a business trust
consisting of the record initially filed with a State
and any record filed with the State which amends or
restates the initial record, if a statute of the State
governing business trusts requires that the record be
filed with the State; or
(C) a record consisting of legislation enacted by
the legislature of a State or the Congress of the
United States which forms or organizes an
organization, any record amending the legislation, and
any record filed with or issued by the State or the
United States which amends or restates the name of the
organization.
(69) "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

SB3696 - 100 - LRB103 37687 SPS 67814 b
relieve the secured party from its obligation.
(70) "Record", except as used in "for record", "of
record", "record or legal title", and "record owner",
means information that is inscribed on a tangible medium
or which is stored in an electronic or other medium and is
retrievable in perceivable form.
(71) "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.
(72) "Secondary obligor" means an obligor to the
extent that:
(A) the obligor's obligation is secondary; or
(B) the obligor has a right of recourse with
respect to an obligation secured by collateral against
the debtor, another obligor, or property of either.
(73) "Secured party" means:
(A) a person in whose favor a security interest is
created or provided for under a security agreement,
whether or not any obligation to be secured is
outstanding;

SB3696 - 101 - LRB103 37687 SPS 67814 b
(B) a person that holds an agricultural lien;
(C) a consignor;
(D) a person to which accounts, chattel paper,
payment intangibles, or promissory notes have been
sold;
(E) a trustee, indenture trustee, agent,
collateral agent, or other representative in whose
favor a security interest or agricultural lien is
created or provided for; or
(F) a person that holds a security interest
arising under Section 2-401, 2-505, 2-711(3),
2A-508(5), 4-210, or 5-118.
(74) "Security agreement" means an agreement that
creates or provides for a security interest.
(75) (Reserved). "Send", in connection with a record
or notification, means:
(A) to deposit in the mail, deliver for
transmission, or transmit by any other usual means of
communication, with postage or cost of transmission
provided for, addressed to any address reasonable
under the circumstances; or
(B) to cause the record or notification to be
received within the time that it would have been
received if properly sent under subparagraph (A).
(76) "Software" means a computer program and any
supporting information provided in connection with a

SB3696 - 102 - LRB103 37687 SPS 67814 b
transaction relating to the program. The term does not
include a computer program that is included in the
definition of goods.
(77) "State" means a State of the United States, the
District of Columbia, Puerto Rico, the United States
Virgin Islands, or any territory or insular possession
subject to the jurisdiction of the United States.
(78) "Supporting obligation" means a letter-of-credit
right or secondary obligation that supports the payment or
performance of an account, chattel paper, a document, a
general intangible, an instrument, or investment property.
(79) (Reserved). "Tangible chattel paper" means
chattel paper evidenced by a record or records consisting
of information that is inscribed on a tangible medium.
(79A) "Tangible money" means money in a tangible form.
(80) "Termination statement" means an amendment of a
financing statement which:
(A) identifies, by its file number, the initial
financing statement to which it relates; and
(B) indicates either that it is a termination
statement or that the identified financing statement
is no longer effective.
(81) "Transmitting utility" means a person primarily
engaged in the business of:
(A) operating a railroad, subway, street railway,
or trolley bus;

SB3696 - 103 - LRB103 37687 SPS 67814 b
(B) transmitting communications electrically,
electromagnetically, or by light;
(C) transmitting goods by pipeline or sewer; or
(D) transmitting or producing and transmitting
electricity, steam, gas, or water.
(b) Definitions in other Articles. "Control" as provided
in Section 7-106 and the following definitions in other
Articles apply to this Article:
"Applicant". Section 5-102.
"Beneficiary". Section 5-102.
"Broker". Section 8-102.
"Certificated security". Section 8-102.
"Check". Section 3-104.
"Clearing corporation". Section 8-102.
"Contract for sale". Section 2-106.
"Controllable electronic record". Section 12-102.
"Customer". Section 4-104.
"Entitlement holder". Section 8-102.
"Financial asset". Section 8-102.
"Holder in due course". Section 3-302.
"Issuer" (with respect to a letter of credit or
letter-of-credit right). Section 5-102.
"Issuer" (with respect to a security). Section 8-201.
"Issuer" (with respect to documents of title). Section
7-102.
"Lease". Section 2A-103.

SB3696 - 104 - LRB103 37687 SPS 67814 b
"Lease agreement". Section 2A-103.
"Lease contract". Section 2A-103.
"Leasehold interest". Section 2A-103.
"Lessee". Section 2A-103.
"Lessee in ordinary course of business". Section 2A-103.
"Lessor". Section 2A-103.
"Lessor's residual interest". Section 2A-103.
"Letter of credit". Section 5-102.
"Merchant". Section 2-104.
"Negotiable instrument". Section 3-104.
"Nominated person". Section 5-102.
"Note". Section 3-104.
"Proceeds of a letter of credit". Section 5-114.
"Protected purchaser". Section 8-303.
"Prove". Section 3-103.
"Qualifying purchaser". Section 12-102.
"Sale". Section 2-106.
"Securities account". Section 8-501.
"Securities intermediary". Section 8-102.
"Security". Section 8-102.
"Security certificate". Section 8-102.
"Security entitlement". Section 8-102.
"Uncertificated security". Section 8-102.
(c) Article 1 definitions and principles. Article 1
contains general definitions and principles of construction
and interpretation applicable throughout this Article.

SB3696 - 105 - LRB103 37687 SPS 67814 b
(Source: P.A. 97-1034, eff. 7-1-13; 98-749, eff. 7-16-14.)
(810 ILCS 5/9-104) (from Ch. 26, par. 9-104)
Sec. 9-104. Control of deposit account.
(a) Requirements for control. 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
a signed an authenticated 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.
(b) Debtor's right to direct disposition. A secured party
that has satisfied subsection (a) has control, even if the
debtor retains the right to direct the disposition of funds
from the deposit account.

SB3696 - 106 - LRB103 37687 SPS 67814 b
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-105) (from Ch. 26, par. 9-105)
Sec. 9-105. Control of electronic copy of record
evidencing chattel paper.
(a) General rule: control of electronic copy of record
evidencing chattel paper. A purchaser has control of an
authoritative electronic copy of a record evidencing chattel
paper if a system employed for evidencing the assignment of
interests in the chattel paper reliably establishes the
purchaser as the person to which the authoritative electronic
copy was assigned.
(b) Single authoritative copy. A system satisfies
subsection (a) if the record or records evidencing the chattel
paper are created, stored, and assigned in 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 purchaser as
the assignee of the record or records;
(3) the authoritative copy is communicated to and
maintained by the 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 purchaser;

SB3696 - 107 - LRB103 37687 SPS 67814 b
(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) One or more authoritative copies. 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 readily to identify each
electronic copy as either an authoritative copy or a
nonauthoritative copy;
(2) enables the purchaser readily to identify itself
in any way, including by name, identifying number,
cryptographic key, office, or account number, as the
assignee of the authoritative electronic copy; and
(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) Meaning of exclusive. Subject to subsection (e), a

SB3696 - 108 - LRB103 37687 SPS 67814 b
power is exclusive under subsection (c)(3)(A) and (B) even if:
(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) When power not shared with another person. A power of a
purchaser is not shared with another person under subsection
(d)(2) and the purchaser's power is not exclusive if:
(1) the purchaser can exercise the power only if the
power also is exercised by the other person; and
(2) the other person:
(A) can 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) Presumption of exclusivity of certain powers. If a
purchaser has the powers specified in subsection (c)(3)(A) and
(B), the powers are presumed to be exclusive.
(g) Obtaining control through another person. 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

SB3696 - 109 - LRB103 37687 SPS 67814 b
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.
(a) General rule: Control of electronic chattel paper. A
secured party has control of electronic chattel paper if a
system employed for evidencing the transfer of interests in
the chattel paper reliably establishes the secured party as
the person to which the chattel paper was assigned.
(b) Specific facts giving control. A system satisfies
subsection (a) if the record or records comprising 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 as the assignee of the record or records;
(3) the authoritative copy is communicated to and
maintained by the secured party or its designated
custodian;
(4) copies or amendments that add or change an
identified assignee of the authoritative copy can be made

SB3696 - 110 - LRB103 37687 SPS 67814 b
only with the consent of the secured party;
(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.
(Source: P.A. 97-1034, eff. 7-1-13.)
(810 ILCS 5/9-105A new)
Sec. 9-105A. Control of electronic money.
(a) General rule: control of electronic money. A person
has 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

SB3696 - 111 - LRB103 37687 SPS 67814 b
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 readily to identify itself in any way,
including by name, identifying number, cryptographic key,
office, or account number, as having the powers under
paragraph (1).
(b) Meaning of exclusive. Subject to subsection (c), a
power is exclusive under subsection (a)(1)(B)(i) and (ii) even
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 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) When power not shared with another person. A power of a
person is not shared with another person under subsection
(b)(2) and the person's power is not exclusive if:
(1) the person can exercise the power only if the
power also is exercised by the other person; and
(2) the other person:
(A) can exercise the power without exercise of the

SB3696 - 112 - LRB103 37687 SPS 67814 b
power by the person; or
(B) is the transferor to the person of an interest
in the electronic money.
(d) Presumption of exclusivity of certain powers. If a
person has the powers specified in subsection (a)(1)(B)(i) and
(ii), the powers are presumed to be exclusive.
(e) Control through another person. A person has 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.
(810 ILCS 5/9-107A new)
Sec. 9-107A. Control of controllable electronic record,
controllable account, or controllable payment intangible.
(a) Control under Section 12-105. A secured party has
control of a controllable electronic record as provided in
Section 12-105.
(b) Control of controllable account and controllable
payment intangible. A secured party has control of a
controllable account or controllable payment intangible if the

SB3696 - 113 - LRB103 37687 SPS 67814 b
secured party has control of the controllable electronic
record that evidences the controllable account or controllable
payment intangible.
(810 ILCS 5/9-107B new)
Sec. 9-107B. No requirement to acknowledge or confirm; no
duties.
(a) No requirement to acknowledge. A person that has
control under Section 9-104, 9-105, or 9-105A is not required
to acknowledge that it has control on behalf of another
person.
(b) No duties or confirmation. If a person acknowledges
that it has or will obtain control on behalf of another person,
unless the person otherwise agrees or law other than this
Article otherwise provides, the person does not owe any duty
to the other person and is not required to confirm the
acknowledgment to any other person.
(810 ILCS 5/9-203) (from Ch. 26, par. 9-203)
Sec. 9-203. Attachment and enforceability of security
interest; proceeds; supporting obligations; formal requisites.
(a) Attachment. A security interest attaches to collateral
when it becomes enforceable against the debtor with respect to
the collateral, unless an agreement expressly postpones the
time of attachment.
(b) Enforceability. Except as otherwise provided in

SB3696 - 114 - LRB103 37687 SPS 67814 b
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 signed authenticated a security
agreement that provides a description of the
collateral and, if the security interest covers timber
to be cut, a description of the land concerned;
(B) the collateral is not a certificated security
and is in the possession of the secured party under
Section 9-313 pursuant to the debtor's security
agreement;
(C) the collateral is a certificated security in
registered form and the security certificate has been
delivered to the secured party under Section 8-301
pursuant to the debtor's security agreement; or
(D) the collateral is controllable accounts,
controllable electronic records, controllable payment
intangibles, deposit accounts, electronic documents,
electronic money, electronic chattel paper, investment
property, or letter-of-credit rights, or electronic
documents, and the secured party has control under

SB3696 - 115 - LRB103 37687 SPS 67814 b
Section 7-106, 9-104, 9-105A, 9-105, 9-106, or 9-107,
or 9-107A pursuant to the debtor's security agreement;
or .
(E) the collateral is chattel paper and the
secured party has possession and control under Section
9-314A pursuant to the debtor's security agreement.
(c) Other UCC provisions. Subsection (b) is subject to
Section 4-210 on the security interest of a collecting bank,
Section 5-118 on the security interest of a letter-of-credit
issuer or nominated person, Section 9-110 on a security
interest arising under Article 2 or 2A, and Section 9-206 on
security interests in investment property.
(d) When person becomes bound by another person's security
agreement. A person becomes bound as debtor by a security
agreement entered into by another person if, by operation of
law other than this Article or by contract:
(1) the security agreement becomes effective to create
a security interest in the person's property; or
(2) the person becomes generally obligated for the
obligations of the other person, including the obligation
secured under the security agreement, and acquires or
succeeds to all or substantially all of the assets of the
other person.
(e) Effect of new debtor becoming bound. If a new debtor
becomes bound as debtor by a security agreement entered into
by another person:

SB3696 - 116 - LRB103 37687 SPS 67814 b
(1) the agreement satisfies subsection (b)(3) with
respect to existing or after-acquired property of the new
debtor to the extent the property is described in the
agreement; and
(2) another agreement is not necessary to make a
security interest in the property enforceable.
(f) Proceeds and supporting obligations. The attachment of
a security interest in collateral gives the secured party the
rights to proceeds provided by Section 9-315 and is also
attachment of a security interest in a supporting obligation
for the collateral.
(g) Lien securing right to payment. The attachment of a
security interest in a right to payment or performance secured
by a security interest or other lien on personal or real
property is also attachment of a security interest in the
security interest, mortgage, or other lien.
(h) Security entitlement carried in securities account.
The attachment of a security interest in a securities account
is also attachment of a security interest in the security
entitlements carried in the securities account.
(i) Commodity contracts carried in commodity account. The
attachment of a security interest in a commodity account is
also attachment of a security interest in the commodity
contracts carried in the commodity account.
(Source: P.A. 95-895, eff. 1-1-09.)

SB3696 - 117 - LRB103 37687 SPS 67814 b
(810 ILCS 5/9-204) (from Ch. 26, par. 9-204)
Sec. 9-204. After-acquired property; future advances.
(a) After-acquired collateral. Except as otherwise
provided in subsection (b), a security agreement may create or
provide for a security interest in after-acquired collateral.
(b) When after-acquired property clause not effective.
Subject to subsection (b.1), a 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 10 days after the secured party gives
value; or
(2) a commercial tort claim.
(b.1) Limitation on subsection (b). Subsection (b) does
not prevent a security interest from attaching:
(1) to consumer goods as proceeds under Section
9-315(a) or commingled goods under Section 9-336(c);
(2) to a commercial tort claim as proceeds under
Section 9-315(a); or
(3) under an after-acquired property clause to
property that is proceeds of consumer goods or a
commercial tort claim.
(c) Future advances and other value. A security agreement
may provide that collateral secures, or that accounts, chattel
paper, payment intangibles, or promissory notes are sold in

SB3696 - 118 - LRB103 37687 SPS 67814 b
connection with, future advances or other value, whether or
not the advances or value are given pursuant to commitment.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-207) (from Ch. 26, par. 9-207)
Sec. 9-207. Rights and duties of secured party having
possession or control of collateral.
(a) Duty of care when secured party in possession. Except
as otherwise provided in subsection (d), a secured party shall
use reasonable care in the custody and preservation of
collateral in the secured party's possession. In the case of
chattel paper or an instrument, reasonable care includes
taking necessary steps to preserve rights against prior
parties unless otherwise agreed.
(b) Expenses, risks, duties, and rights when secured party
in possession. Except as otherwise provided in subsection (d),
if a secured party has possession of collateral:
(1) reasonable expenses, including the cost of
insurance and payment of taxes or other charges, incurred
in the custody, preservation, use, or operation of the
collateral are chargeable to the debtor and are secured by
the collateral;
(2) the risk of accidental loss or damage is on the
debtor to the extent of a deficiency in any effective
insurance coverage;
(3) the secured party shall keep the collateral

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identifiable, but fungible collateral may be commingled;
and
(4) the secured party may use or operate the
collateral:
(A) for the purpose of preserving the collateral
or its value;
(B) as permitted by an order of a court having
competent jurisdiction; or
(C) except in the case of consumer goods, in the
manner and to the extent agreed by the debtor.
(c) Duties and rights when secured party in possession or
control. Except as otherwise provided in subsection (d), a
secured party having possession of collateral or control of
collateral under Section 7-106, 9-104, 9-105, 9-105A, 9-106,
or 9-107, or 9-107A:
(1) may hold as additional security any proceeds,
except money or funds, received from the collateral;
(2) shall apply money or funds received from the
collateral to reduce the secured obligation, unless
remitted to the debtor; and
(3) may create a security interest in the collateral.
(d) Buyer of certain rights to payment. If the secured
party is a buyer of accounts, chattel paper, payment
intangibles, or promissory notes or a consignor:
(1) subsection (a) does not apply unless the secured
party is entitled under an agreement:

SB3696 - 120 - LRB103 37687 SPS 67814 b
(A) to charge back uncollected collateral; or
(B) otherwise to full or limited recourse against
the debtor or a secondary obligor based on the
nonpayment or other default of an account debtor or
other obligor on the collateral; and
(2) subsections (b) and (c) do not apply.
(Source: P.A. 95-895, eff. 1-1-09.)
(810 ILCS 5/9-208) (from Ch. 26, par. 9-208)
Sec. 9-208. Additional duties of secured party having
control of collateral.
(a) Applicability of Section. This Section applies to
cases in which there is no outstanding secured obligation and
the secured party is not committed to make advances, incur
obligations, or otherwise give value.
(b) Duties of secured party after receiving demand from
debtor. Within 10 days after receiving a signed an
authenticated demand by the debtor:
(1) a secured party having control of a deposit
account under Section 9-104(a)(2) shall send to the bank
with which the deposit account is maintained a signed
record an authenticated statement that releases the bank
from any further obligation to comply with instructions
originated by the secured party;
(2) a secured party having control of a deposit
account under Section 9-104(a)(3) shall:

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(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 under Section 9-105 of an authoritative electronic
copy of a record evidencing chattel paper shall transfer
control of the electronic copy to the debtor or a person
designated by the debtor; a secured party, other than a
buyer, having control of electronic chattel paper under
Section 9-105 shall:
(A) communicate the authoritative copy of the
electronic chattel paper to the debtor or its
designated custodian;
(B) if the debtor designates a custodian that is
the designated custodian with which the authoritative
copy of the electronic chattel paper is maintained for
the secured party, communicate to the custodian an
authenticated record releasing the designated
custodian from any further obligation to comply with
instructions originated by the secured party and
instructing the custodian to comply with instructions
originated by the debtor; and
(C) take appropriate action to enable the debtor
or its designated custodian to make copies of or
revisions to the authoritative copy which add or

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change an identified assignee of the authoritative
copy without the consent of the secured party;
(4) a secured party having control of investment
property under Section 8-106(d)(2) or 9-106(b) shall send
to the securities intermediary or commodity intermediary
with which the security entitlement or commodity contract
is maintained a signed an authenticated record that
releases the securities intermediary or commodity
intermediary from any further obligation to comply with
entitlement orders or directions originated by the secured
party;
(5) a secured party having control of a
letter-of-credit right under Section 9-107 shall send to
each person having an unfulfilled obligation to pay or
deliver proceeds of the letter of credit to the secured
party a signed an authenticated release from any further
obligation to pay or deliver proceeds of the letter of
credit to the secured party; and
(6) a secured party having control under Section 7-106
of an authoritative electronic copy of an electronic
document of title shall transfer control of the electronic
copy to the debtor or a person designated by the debtor; a
secured party having control of an electronic document
shall:
(7) a secured party having control under Section
9-105A of electronic money shall transfer control of the

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electronic money to the debtor or a person designated by
the debtor; and
(8) a secured party having control under Section
12-105 of a controllable electronic record, other than a
buyer of a controllable account or controllable payment
intangible evidenced by the controllable electronic
record, shall transfer control of the controllable
electronic record to the debtor or a person designated by
the debtor.
(A) give control of the electronic document to the
debtor or its designated custodian;
(B) if the debtor designates a custodian that is
the designated custodian with which the authoritative
copy of the electronic document is maintained for the
secured party, communicate to the custodian an
authenticated record releasing the designated
custodian from any further obligation to comply with
instructions originated by the secured party and
instructing the custodian to comply with instructions
originated by the debtor; and
(C) take appropriate action to enable the debtor
or its designated custodian to make copies of or
revisions to the authoritative copy which add or
change an identified assignee of the authoritative
copy without the consent of the secured party.
(Source: P.A. 95-895, eff. 1-1-09.)

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(810 ILCS 5/9-209)
Sec. 9-209. Duties of secured party if account debtor has
been notified of assignment.
(a) Applicability of Section. Except as otherwise provided
in subsection (c), this Section applies if:
(1) there is no outstanding secured obligation; and
(2) the secured party is not committed to make
advances, incur obligations, or otherwise give value.
(b) Duties of secured party after receiving demand from
debtor. Within 10 days after receiving a signed an
authenticated demand by the debtor, a secured party shall send
to an account debtor that has received notification under
Section 9-406(a) or 12-106(b) of an assignment to the secured
party as assignee a signed under Section 9-406(a) an
authenticated record that releases the account debtor from any
further obligation to the secured party.
(c) Inapplicability to sales. This Section does not apply
to an assignment constituting the sale of an account, chattel
paper, or payment intangible.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-210)
Sec. 9-210. Request for accounting; request regarding list
of collateral or statement of account.
(a) Definitions. In this Section:

SB3696 - 125 - LRB103 37687 SPS 67814 b
(1) "Request" means a record of a type described in
paragraph (2), (3), or (4).
(2) "Request for an accounting" means a record signed
authenticated by a debtor requesting that the recipient
provide an accounting of the unpaid obligations secured by
collateral and reasonably identifying the transaction or
relationship that is the subject of the request.
(3) "Request regarding a list of collateral" means a
record signed authenticated by a debtor requesting that
the recipient approve or correct a list of what the debtor
believes to be the collateral securing an obligation and
reasonably identifying the transaction or relationship
that is the subject of the request.
(4) "Request regarding a statement of account" means a
record signed authenticated by a debtor requesting that
the recipient approve or correct a statement indicating
what the debtor believes to be the aggregate amount of
unpaid obligations secured by collateral as of a specified
date and reasonably identifying the transaction or
relationship that is the subject of the request.
(b) Duty to respond to requests. Subject to subsections
(c), (d), (e), and (f), a secured party, other than a buyer of
accounts, chattel paper, payment intangibles, or promissory
notes or a consignor, shall comply with a request within 14
days after receipt:
(1) in the case of a request for an accounting, by

SB3696 - 126 - LRB103 37687 SPS 67814 b
signing authenticating and sending to the debtor an
accounting; and
(2) in the case of a request regarding a list of
collateral or a request regarding a statement of account,
by signing authenticating and sending to the debtor an
approval or correction.
(c) Request regarding list of collateral; statement
concerning type of collateral. A secured party that claims a
security interest in all of a particular type of collateral
owned by the debtor may comply with a request regarding a list
of collateral by sending to the debtor a signed an
authenticated record including a statement to that effect
within 14 days after receipt.
(d) Request regarding list of collateral; no interest
claimed. A person that receives a request regarding a list of
collateral, claims no interest in the collateral when it
receives the request, and claimed an interest in the
collateral at an earlier time shall comply with the request
within 14 days after receipt by sending to the debtor a signed
an authenticated record:
(1) disclaiming any interest in the collateral; and
(2) if known to the recipient, providing the name and
mailing address of any assignee of or successor to the
recipient's interest in the collateral.
(e) Request for accounting or regarding statement of
account; no interest in obligation claimed. A person that

SB3696 - 127 - LRB103 37687 SPS 67814 b
receives a request for an accounting or a request regarding a
statement of account, claims no interest in the obligations
when it receives the request, and claimed an interest in the
obligations at an earlier time shall comply with the request
within 14 days after receipt by sending to the debtor a signed
an authenticated record:
(1) disclaiming any interest in the obligations; and
(2) if known to the recipient, providing the name and
mailing address of any assignee of or successor to the
recipient's interest in the obligations.
(f) Charges for responses. A debtor is entitled without
charge to one response to a request under this Section during
any six-month period. The secured party may require payment of
a charge not exceeding $25 for each additional response.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-301) (from Ch. 26, par. 9-301)
Sec. 9-301. Law governing perfection and priority of
security interests. Except as otherwise provided in Sections
9-303 through 9-306B 9-306.1, 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

SB3696 - 128 - LRB103 37687 SPS 67814 b
perfection or nonperfection, and the priority of a
security interest in collateral.
(2) While collateral is located in a jurisdiction, the
local law of that jurisdiction governs perfection, the
effect of perfection or nonperfection, and the priority of
a possessory security interest in that collateral.
(3) Except as otherwise provided in paragraph (4),
while tangible negotiable documents, goods, instruments,
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.
(Source: P.A. 95-895, eff. 1-1-09.)
(810 ILCS 5/9-304) (from Ch. 26, par. 9-304)
Sec. 9-304. Law governing perfection and priority of

SB3696 - 129 - LRB103 37687 SPS 67814 b
security interests in deposit accounts.
(a) Law of bank's jurisdiction governs. 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.
(b) Bank's jurisdiction. The following rules determine a
bank's jurisdiction for purposes of this Part:
(1) If an agreement between the bank and the debtor
governing the deposit account expressly provides that a
particular jurisdiction is the bank's jurisdiction for
purposes of this Part, this Article, or the Uniform
Commercial Code, that jurisdiction is the bank's
jurisdiction.
(2) If paragraph (1) does not apply and an agreement
between the bank and its customer governing the deposit
account expressly provides that the agreement is governed
by the law of a particular jurisdiction, that jurisdiction
is the bank's jurisdiction.
(3) If neither paragraph (1) nor paragraph (2) applies
and an agreement between the bank and its customer
governing the deposit account expressly provides that the
deposit account is maintained at an office in a particular
jurisdiction, that jurisdiction is the bank's
jurisdiction.

SB3696 - 130 - LRB103 37687 SPS 67814 b
(4) If none of the preceding paragraphs applies, the
bank's jurisdiction is the jurisdiction in which the
office identified in an account statement as the office
serving the customer's account is located.
(5) If none of the preceding paragraphs applies, the
bank's jurisdiction is the jurisdiction in which the chief
executive office of the bank is located.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-305) (from Ch. 26, par. 9-305)
Sec. 9-305. Law governing perfection and priority of
security interests in investment property.
(a) Governing law: general rules. 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 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 8-110(e) governs
perfection, the effect of perfection or nonperfection, and

SB3696 - 131 - LRB103 37687 SPS 67814 b
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.
(5) Paragraphs (2), (3), and (4) apply even if the
transaction does not bear any relation to the
jurisdiction.
(b) Commodity intermediary's jurisdiction. The following
rules determine a commodity intermediary's jurisdiction for
purposes of this Part:
(1) If an agreement between the commodity intermediary
and commodity customer governing the commodity account
expressly provides that a particular jurisdiction is the
commodity intermediary's jurisdiction for purposes of this
Part, this Article, or the Uniform Commercial Code, that
jurisdiction is the commodity intermediary's jurisdiction.
(2) If paragraph (1) does not apply and an agreement
between the commodity intermediary and commodity customer
governing the commodity account expressly provides that
the agreement is governed by the law of a particular
jurisdiction, that jurisdiction is the commodity
intermediary's jurisdiction.
(3) If neither paragraph (1) nor paragraph (2) applies
and an agreement between the commodity intermediary and

SB3696 - 132 - LRB103 37687 SPS 67814 b
commodity customer governing the commodity account
expressly provides that the commodity account is
maintained at an office in a particular jurisdiction, that
jurisdiction is the commodity intermediary's jurisdiction.
(4) If none of the preceding paragraphs applies, the
commodity intermediary's jurisdiction is the jurisdiction
in which the office identified in an account statement as
the office serving the commodity customer's account is
located.
(5) If none of the preceding paragraphs applies, the
commodity intermediary's jurisdiction is the jurisdiction
in which the chief executive office of the commodity
intermediary is located.
(c) When perfection governed by law of jurisdiction where
debtor located. The local law of the jurisdiction in which the
debtor is located governs:
(1) perfection of a security interest in investment
property by filing;
(2) automatic perfection of a security interest in
investment property created by a broker or securities
intermediary; and
(3) automatic perfection of a security interest in a
commodity contract or commodity account created by a
commodity intermediary.
(Source: P.A. 91-893, eff. 7-1-01.)

SB3696 - 133 - LRB103 37687 SPS 67814 b
(810 ILCS 5/9-306A new)
Sec. 9-306A. Law governing perfection and priority of
security interests in chattel paper.
(a) Chattel paper evidenced by authoritative electronic
copy. 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 governs perfection, the effect of
perfection or nonperfection, and the priority of a security
interest in the chattel paper, even if the transaction does
not bear any relation to the chattel paper's jurisdiction.
(b) Chattel paper's jurisdiction. The following rules
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 is the chattel paper's jurisdiction for
purposes of this part, this Article, or the Uniform
Commercial Code, that jurisdiction is 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 is the chattel

SB3696 - 134 - LRB103 37687 SPS 67814 b
paper's jurisdiction for purposes of this part, this
Article, or the Uniform Commercial Code, that jurisdiction
is 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 is governed by the law of a particular jurisdiction,
that jurisdiction is 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 is governed by the law of a particular
jurisdiction, that jurisdiction is the chattel paper's
jurisdiction.
(5) If paragraphs (1) through (4) do not apply, the
chattel paper's jurisdiction is the jurisdiction in which
the debtor is located.
(c) Chattel paper evidenced by authoritative tangible
copy. If an authoritative tangible copy of a record evidences
chattel paper and the chattel paper is not evidenced by an
authoritative electronic copy, while the authoritative
tangible copy of the record evidencing chattel paper is
located in a jurisdiction, the local law of that jurisdiction
governs:

SB3696 - 135 - LRB103 37687 SPS 67814 b
(1) perfection of a security interest in the chattel
paper by possession under Section 9-314A; and
(2) the effect of perfection or nonperfection and the
priority of a security interest in the chattel paper.
(d) When perfection governed by law of jurisdiction where
debtor located. The local law of the jurisdiction in which the
debtor is located governs perfection of a security interest in
chattel paper by filing.
(810 ILCS 5/9-306B new)
Sec. 9-306B. Law governing perfection and priority of
security interests in controllable accounts, controllable
electronic records, and controllable payment intangibles.
(a) Governing law: general rules. Except as provided in
subsection (b), the local law of the controllable electronic
record's jurisdiction specified in Section 12-107(c) and (d)
governs perfection, the effect of perfection or nonperfection,
and the priority of a security interest in a controllable
electronic record and a security interest in a controllable
account or controllable payment intangible evidenced by the
controllable electronic record.
(b) When perfection governed by law of jurisdiction where
debtor located. The local law of the jurisdiction in which the
debtor is located governs:
(1) perfection of a security interest in a
controllable account, controllable electronic record, or

SB3696 - 136 - LRB103 37687 SPS 67814 b
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.
(810 ILCS 5/9-310) (from Ch. 26, par. 9-310)
Sec. 9-310. When filing required to perfect security
interest or agricultural lien; security interests and
agricultural liens to which filing provisions do not apply.
(a) General rule: perfection by filing. Except as
otherwise provided in subsection (b) and Section 9-312(b), a
financing statement must be filed to perfect all security
interests and agricultural liens.
(b) Exceptions: filing not necessary. The filing of a
financing statement is not necessary to perfect a security
interest:
(1) that is perfected under Section 9-308(d), (e),
(f), or (g);
(2) that is perfected under Section 9-309 when it
attaches;
(3) in property subject to a statute, regulation, or
treaty described in Section 9-311(a);
(4) in goods in possession of a bailee which is
perfected under Section 9-312(d)(1) or (2);
(5) in certificated securities, documents, goods, or
instruments which is perfected without filing, control, or

SB3696 - 137 - LRB103 37687 SPS 67814 b
possession under Section 9-312(e), (f), or (g);
(6) in collateral in the secured party's possession
under Section 9-313;
(7) in a certificated security which is perfected by
delivery of the security certificate to the secured party
under Section 9-313;
(8) in controllable accounts, controllable electronic
records, controllable payment intangibles, deposit
accounts, electronic chattel paper, electronic documents,
investment property, letter-of-credit rights, or
beneficial interests in Illinois land trusts which is
perfected by control under Section 9-314;
(8.1) in chattel paper that is perfected by possession
and control under Section 9-314A;
(9) in proceeds which is perfected under Section
9-315; or
(10) that is perfected under Section 9-316.
(c) Assignment of perfected security interest. If a
secured party assigns a perfected security interest or
agricultural lien, a filing under this Article is not required
to continue the perfected status of the security interest
against creditors of and transferees from the original debtor.
(Source: P.A. 95-895, eff. 1-1-09.)
(810 ILCS 5/9-312) (from Ch. 26, par. 9-312)
Sec. 9-312. Perfection of security interests in chattel

SB3696 - 138 - LRB103 37687 SPS 67814 b
paper, controllable accounts, controllable electronic records,
controllable payment intangibles, deposit accounts, negotiable
documents, goods covered by documents, instruments, investment
property, letter-of-credit rights, and money; perfection by
permissive filing; temporary perfection without filing or
transfer of possession.
(a) Perfection by filing permitted. A security interest in
chattel paper, controllable accounts, controllable electronic
records, controllable payment intangibles, negotiable
documents, instruments, beneficial interests in Illinois land
trusts, or investment property, or negotiable documents may be
perfected by filing.
(b) Control or possession of certain collateral. Except as
otherwise provided in Section 9-315(c) and (d) for proceeds:
(1) a security interest in a deposit account may be
perfected only by control under Section 9-314;
(2) and except as otherwise provided in Section
9-308(d), a security interest in a letter-of-credit right
may be perfected only by control under Section 9-314; and
(3) a security interest in tangible money may be
perfected only by the secured party's taking possession
under Section 9-313; and .
(4) a security interest in electronic money may be
perfected only by control under Section 9-314.
(c) Goods covered by negotiable document. While goods are
in the possession of a bailee that has issued a negotiable

SB3696 - 139 - LRB103 37687 SPS 67814 b
document covering the goods:
(1) a security interest in the goods may be perfected
by perfecting a security interest in the document; and
(2) a security interest perfected in the document has
priority over any security interest that becomes perfected
in the goods by another method during that time.
(d) Goods covered by nonnegotiable document. While goods
are in the possession of a bailee that has issued a
nonnegotiable document covering the goods, a security interest
in the goods may be perfected by:
(1) issuance of a document in the name of the secured
party;
(2) the bailee's receipt of notification of the
secured party's interest; or
(3) filing as to the goods.
(e) Temporary perfection: new value. A security interest
in certificated securities, negotiable documents, or
instruments is perfected without filing or the taking of
possession or control for a period of 20 days from the time it
attaches to the extent that it arises for new value given under
a signed an authenticated security agreement.
(f) Temporary perfection: goods or documents made
available to debtor. A perfected security interest in a
negotiable document or goods in possession of a bailee, other
than one that has issued a negotiable document for the goods,
remains perfected for 20 days without filing if the secured

SB3696 - 140 - LRB103 37687 SPS 67814 b
party makes available to the debtor the goods or documents
representing the goods for the purpose of:
(1) ultimate sale or exchange; or
(2) loading, unloading, storing, shipping,
transshipping, manufacturing, processing, or otherwise
dealing with them in a manner preliminary to their sale or
exchange.
(g) Temporary perfection: delivery of security certificate
or instrument to debtor. A perfected security interest in a
certificated security or instrument remains perfected for 20
days without filing if the secured party delivers the security
certificate or instrument to the debtor for the purpose of:
(1) ultimate sale or exchange; or
(2) presentation, collection, enforcement, renewal, or
registration of transfer.
(h) Expiration of temporary perfection. After the 20-day
period specified in subsection (e), (f), or (g) expires,
perfection depends upon compliance with this Article.
(Source: P.A. 95-895, eff. 1-1-09.)
(810 ILCS 5/9-313) (from Ch. 26, par. 9-313)
Sec. 9-313. When possession by or delivery to secured
party perfects security interest without filing.
(a) Perfection by possession or delivery. Except as
otherwise provided in subsection (b), a secured party may
perfect a security interest in tangible negotiable documents,

SB3696 - 141 - LRB103 37687 SPS 67814 b
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 8-301.
(b) Goods covered by certificate of title. With respect to
goods covered by a certificate of title issued by this State, a
secured party may perfect a security interest in the goods by
taking possession of the goods only in the circumstances
described in Section 9-316(d).
(c) Collateral in possession of person other than debtor.
With respect to collateral other than certificated securities
and goods covered by a document, a secured party takes
possession of collateral in the possession of a person other
than the debtor, the secured party, or a lessee of the
collateral from the debtor in the ordinary course of the
debtor's business, when:
(1) the person in possession signs authenticates a
record acknowledging that it holds possession of the
collateral for the secured party's benefit; or
(2) the person takes possession of the collateral
after having signed authenticated a record acknowledging
that it will hold possession of the collateral for the
secured party's benefit.
(d) Time of perfection by possession; continuation of
perfection. If perfection of a security interest depends upon

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possession of the collateral by a secured party, perfection
occurs not no earlier than the time the secured party takes
possession and continues only while the secured party retains
possession.
(e) Time of perfection by delivery; continuation of
perfection. A security interest in a certificated security in
registered form is perfected by delivery when delivery of the
certificated security occurs under Section 8-301 and remains
perfected by delivery until the debtor obtains possession of
the security certificate.
(f) Acknowledgment not required. A person in possession of
collateral is not required to acknowledge that it holds
possession for a secured party's benefit.
(g) Effectiveness of acknowledgment; no duties or
confirmation. If a person acknowledges that it holds
possession for the secured party's benefit:
(1) the acknowledgment is effective under subsection
(c) or Section 8-301(a), even if the acknowledgment
violates the rights of a debtor; and
(2) unless the person otherwise agrees or law other
than this Article otherwise provides, the person does not
owe any duty to the secured party and is not required to
confirm the acknowledgment to another person.
(h) Secured party's delivery to person other than debtor.
A secured party having possession of collateral does not
relinquish possession by delivering the collateral to a person

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other than the debtor or a lessee of the collateral from the
debtor in the ordinary course of the debtor's business if the
person was instructed before the delivery or is instructed
contemporaneously with the delivery:
(1) to hold possession of the collateral for the
secured party's benefit; or
(2) to redeliver the collateral to the secured party.
(i) Effect of delivery under subsection (h); no duties or
confirmation. A secured party does not relinquish possession,
even if a delivery under subsection (h) violates the rights of
a debtor. A person to which collateral is delivered under
subsection (h) does not owe any duty to the secured party and
is not required to confirm the delivery to another person
unless the person otherwise agrees or law other than this
Article otherwise provides.
(Source: P.A. 95-895, eff. 1-1-09.)
(810 ILCS 5/9-314) (from Ch. 26, par. 9-314)
Sec. 9-314. Perfection by control.
(a) Perfection by control. A security interest in
controllable accounts, controllable electronic records,
controllable payment intangibles, deposit accounts, electronic
documents, electronic money, investment property, or
letter-of-credit rights investment property, deposit accounts,
electronic chattel paper, letter-of-credit rights, electronic
documents, or beneficial interests in Illinois land trusts may

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be perfected by control of the collateral under Section 7-106,
9-104, 9-105A 9-105, 9-106, 9-107, or 9-107.1, or 9-107A.
(b) Specified collateral: time of perfection by control;
continuation of perfection. A security interest in
controllable accounts, controllable electronic records,
controllable payment intangibles, deposit accounts, electronic
documents, electronic money, or letter-of-credit rights
deposit accounts, electronic chattel paper, letter-of-credit
rights, electronic documents, or beneficial interests in
Illinois land trusts is perfected by control under Section
7-106, 9-104, 9-105A, 9-105, 9-107, or 9-107.1, or 9-107A not
earlier than the time when the secured party obtains control
and remains perfected by control only while the secured party
retains control.
(c) Investment property: time of perfection by control;
continuation of perfection. A security interest in investment
property is perfected by control under Section 9-106 not
earlier than from the time the secured party obtains control
and remains perfected by control until:
(1) the secured party does not have control; and
(2) one of the following occurs:
(A) if the collateral is a certificated security,
the debtor has or acquires possession of the security
certificate;
(B) if the collateral is an uncertificated
security, the issuer has registered or registers the

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debtor as the registered owner; or
(C) if the collateral is a security entitlement,
the debtor is or becomes the entitlement holder.
(Source: P.A. 95-895, eff. 1-1-09.)
(810 ILCS 5/9-314A new)
Sec. 9-314A. Perfection by possession and control of
chattel paper.
(a) Perfection by possession and control. 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) Time of perfection; continuation of perfection. 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) Application of Section 9-313 to perfection by
possession of chattel paper. Section 9-313(c) and (f) through
(i) applies to perfection by possession of an authoritative
tangible copy of a record evidencing chattel paper.
(810 ILCS 5/9-316) (from Ch. 26, par. 9-316)
Sec. 9-316. Effect of change in governing law.

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(a) General rule: effect on perfection of change in
governing law. A security interest perfected pursuant to the
law of the jurisdiction designated in Section 9-301(1), or
9-305(c), 9-306A(d), or 9-306B(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.
(b) Security interest perfected or unperfected under law
of new jurisdiction. If a security interest described in
subsection (a) becomes perfected under the law of the other
jurisdiction before the earliest time or event described in
that subsection, it remains perfected thereafter. If the
security interest does not become perfected under the law of
the other jurisdiction before the earliest time or event, it
becomes unperfected and is deemed never to have been perfected
as against a purchaser of the collateral for value.
(c) Possessory security interest in collateral moved to
new jurisdiction. A possessory security interest in
collateral, other than goods covered by a certificate of title
and as-extracted collateral consisting of goods, remains
continuously perfected if:

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(1) the collateral is located in one jurisdiction and
subject to a security interest perfected under the law of
that jurisdiction;
(2) thereafter the collateral is brought into another
jurisdiction; and
(3) upon entry into the other jurisdiction, the
security interest is perfected under the law of the other
jurisdiction.
(d) Goods covered by certificate of title from this State.
Except as otherwise provided in subsection (e), a security
interest in goods covered by a certificate of title which is
perfected by any method under the law of another jurisdiction
when the goods become covered by a certificate of title from
this State remains perfected until the security interest would
have become unperfected under the law of the other
jurisdiction had the goods not become so covered.
(e) When subsection (d) security interest becomes
unperfected against purchasers. A security interest described
in subsection (d) becomes unperfected as against a purchaser
of the goods for value and is deemed never to have been
perfected as against a purchaser of the goods for value if the
applicable requirements for perfection under Section 9-311(b)
or 9-313 are not satisfied before the earlier of:
(1) the time the security interest would have become
unperfected under the law of the other jurisdiction had
the goods not become covered by a certificate of title

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from this State; or
(2) the expiration of four months after the goods had
become so covered.
(f) Change in jurisdiction of chattel paper, controllable
electronic record, bank, issuer, nominated person, securities
intermediary, or commodity intermediary. 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.
(g) Subsection (f) security interest perfected or
unperfected under law of new jurisdiction. If a security
interest described in subsection (f) becomes perfected under
the law of the other jurisdiction before the earlier of the
time or the end of the period described in that subsection, it
remains perfected thereafter. If the security interest does

SB3696 - 149 - LRB103 37687 SPS 67814 b
not become perfected under the law of the other jurisdiction
before the earlier of that time or the end of that period, it
becomes unperfected and is deemed never to have been perfected
as against a purchaser of the collateral for value.
(h) Effect on filed financing statement of change in
governing law. The following rules apply to collateral to
which a security interest attaches within four months after
the debtor changes its location to another jurisdiction:
(1) A financing statement filed before the change
pursuant to the law of the jurisdiction designated in
Section 9-301(1) or 9-305(c) is effective to perfect a
security interest in the collateral if the financing
statement would have been effective to perfect a security
interest in the collateral had the debtor not changed its
location.
(2) If a security interest perfected by a financing
statement that is effective under paragraph (1) becomes
perfected under the law of the other jurisdiction before
the earlier of the time the financing statement would have
become ineffective under the law of the jurisdiction
designated in Section 9-301(1) or 9-305(c) or the
expiration of the four-month period, it remains perfected
thereafter. If the security interest does not become
perfected under the law of the other jurisdiction before
the earlier time or event, it becomes unperfected and is
deemed never to have been perfected as against a purchaser

SB3696 - 150 - LRB103 37687 SPS 67814 b
of the collateral for value.
(i) Effect of change in governing law on financing
statement filed against original debtor. If a financing
statement naming an original debtor is filed pursuant to the
law of the jurisdiction designated in Section 9-301(1) or
9-305(c) and the new debtor is located in another
jurisdiction, the following rules apply:
(1) The financing statement is effective to perfect a
security interest in collateral acquired by the new debtor
before, and within four months after, the new debtor
becomes bound under Section 9-203(d), if the financing
statement would have been effective to perfect a security
interest in the collateral had the collateral been
acquired by the original debtor.
(2) A security interest perfected by the financing
statement and which becomes perfected under the law of the
other jurisdiction before the earlier of the time the
financing statement would have become ineffective under
the law of the jurisdiction designated in Section 9-301(1)
or 9-305(c) or the expiration of the four-month period
remains perfected thereafter. A security interest that is
perfected by the financing statement but which does not
become perfected under the law of the other jurisdiction
before the earlier time or event becomes unperfected and
is deemed never to have been perfected as against a
purchaser of the collateral for value.

SB3696 - 151 - LRB103 37687 SPS 67814 b
(Source: P.A. 97-1034, eff. 7-1-13.)
(810 ILCS 5/9-317) (from Ch. 26, par. 9-317)
Sec. 9-317. Interests that take priority over or take free
of security interest or agricultural lien.
(a) Conflicting security interests and rights of lien
creditors. A security interest or agricultural lien is
subordinate to the rights of:
(1) a person entitled to priority under Section 9-322;
and
(2) except as otherwise provided in subsection (e) or
(f), a person that becomes a lien creditor before the
earlier of the time:
(A) the security interest or agricultural lien is
perfected; or
(B) one of the conditions specified in Section
9-203(b)(3) is met and a financing statement covering
the collateral is filed.
(b) Buyers that receive delivery. Except as otherwise
provided in subsection (e), a buyer, other than a secured
party, of tangible chattel paper, tangible documents, goods,
instruments, tangible documents, or a certificated security
takes free of a security interest or agricultural lien if the
buyer gives value and receives delivery of the collateral
without knowledge of the security interest or agricultural
lien and before it is perfected.

SB3696 - 152 - LRB103 37687 SPS 67814 b
(c) Lessees that receive delivery. Except as otherwise
provided in subsection (e), a lessee of goods takes free of a
security interest or agricultural lien if the lessee gives
value and receives delivery of the collateral without
knowledge of the security interest or agricultural lien and
before it is perfected.
(d) Licensees and buyers of certain collateral. Subject to
subsections (g) through (j), a A licensee of a general
intangible or a buyer, other than a secured party, of
collateral other than electronic money tangible chattel paper,
tangible documents, goods, instruments, tangible documents, or
a certificated security takes free of a security interest if
the licensee or buyer gives value without knowledge of the
security interest and before it is perfected.
(e) Purchase-money security interest. Except as otherwise
provided in Sections 9-320 and 9-321, if a person files a
financing statement with respect to a purchase-money security
interest before or within 20 days after the debtor receives
delivery of the collateral, the security interest takes
priority over the rights of a buyer, lessee, or lien creditor
which arise between the time the security interest attaches
and the time of filing.
(f) Public deposits. An unperfected security interest
shall take priority over the rights of a lien creditor if (i)
the lien creditor is a trustee or receiver of a bank or acting
in furtherance of its supervisory authority over such bank and

SB3696 - 153 - LRB103 37687 SPS 67814 b
(ii) a security interest is granted by the bank to secure a
deposit of public funds with the bank or a repurchase
agreement with the bank pursuant to the Government Securities
Act of 1986, as amended.
(g) Buyers of chattel paper. 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 can be subjected to
control under Section 9-105, obtains control of each
authoritative electronic copy.
(h) Buyers of electronic documents. A buyer of an
electronic document takes free of a security interest if,
without knowledge of the security interest and before it is
perfected, the buyer gives value and, if each authoritative
electronic copy of the document can be subjected to control
under Section 7-106, obtains control of each authoritative
electronic copy.
(i) Buyers of controllable electronic records. 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.

SB3696 - 154 - LRB103 37687 SPS 67814 b
(j) Buyers of controllable accounts and controllable
payment intangibles. 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.
(Source: P.A. 97-1034, eff. 7-1-13.)
(810 ILCS 5/9-323)
Sec. 9-323. Future advances.
(a) When priority based on time of advance. Except as
otherwise provided in subsection (c), for purposes of
determining the priority of a perfected security interest
under Section 9-322(a)(1), perfection of the security interest
dates from the time an advance is made to the extent that the
security interest secures an advance that:
(1) is made while the security interest is perfected
only:
(A) under Section 9-309 when it attaches; or
(B) temporarily under Section 9-312(e), (f), or
(g); and
(2) is not made pursuant to a commitment entered into
before or while the security interest is perfected by a
method other than under Section 9-309 or 9-312(e), (f), or
(g).

SB3696 - 155 - LRB103 37687 SPS 67814 b
(b) Lien creditor. Except as otherwise provided in
subsection (c), a security interest is subordinate to the
rights of a person that becomes a lien creditor to the extent
that the security interest secures an advance made more than
45 days after the person becomes a lien creditor unless the
advance is made:
(1) without knowledge of the lien; or
(2) pursuant to a commitment entered into without
knowledge of the lien.
(c) Buyer of receivables. Subsections (a) and (b) do not
apply to a security interest held by a secured party that is a
buyer of accounts, chattel paper, payment intangibles, or
promissory notes or a consignor.
(d) Buyer of goods. 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) 45 days after the purchase.
(e) Advances made pursuant to commitment: priority of
buyer of goods. Subsection (d) does not apply if the advance is
made pursuant to a commitment entered into without knowledge
of the buyer's purchase and before the expiration of the
45-day period.
(f) Lessee of goods. Except as otherwise provided in

SB3696 - 156 - LRB103 37687 SPS 67814 b
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) 45 days after the lease contract becomes
enforceable.
(g) Advances made pursuant to commitment: priority of
lessee of goods. Subsection (f) does not apply if the advance
is made pursuant to a commitment entered into without
knowledge of the lease and before the expiration of the 45-day
period.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-324)
Sec. 9-324. Priority of purchase-money security interests.
(a) General rule: purchase-money priority. Except as
otherwise provided in subsection (g), a perfected
purchase-money security interest in goods other than inventory
or livestock has priority over a conflicting security interest
in the same goods, and, except as otherwise provided in
Section 9-327, a perfected security interest in its
identifiable proceeds also has priority, if the purchase-money
security interest is perfected when the debtor receives
possession of the collateral or within 20 days thereafter.

SB3696 - 157 - LRB103 37687 SPS 67814 b
(b) Inventory purchase-money priority. Subject to
subsection (c) and except as otherwise provided in subsection
(g), a perfected purchase-money security interest in inventory
has priority over a conflicting security interest in the same
inventory, has priority over a conflicting security interest
in chattel paper or an instrument constituting proceeds of the
inventory and in proceeds of the chattel paper, if so provided
in Section 9-330, and, except as otherwise provided in Section
9-327, also has priority in identifiable cash proceeds of the
inventory to the extent the identifiable cash proceeds are
received on or before the delivery of the inventory to a buyer,
if:
(1) the purchase-money security interest is perfected
when the debtor receives possession of the inventory;
(2) the purchase-money secured party sends a signed an
authenticated notification to the holder of the
conflicting security interest;
(3) the holder of the conflicting security interest
receives the notification within five years before the
debtor receives possession of the inventory; and
(4) the notification states that the person sending
the notification has or expects to acquire a
purchase-money security interest in inventory of the
debtor and describes the inventory.
(c) Holders of conflicting inventory security interests to
be notified. Subsections (b)(2) through (4) apply only if the

SB3696 - 158 - LRB103 37687 SPS 67814 b
holder of the conflicting security interest had filed a
financing statement covering the same types of inventory:
(1) if the purchase-money security interest is
perfected by filing, before the date of the filing; or
(2) if the purchase-money security interest is
temporarily perfected without filing or possession under
Section 9-312(f), before the beginning of the 20-day
period thereunder.
(d) Livestock purchase-money priority. Subject to
subsection (e) and except as otherwise provided in subsection
(g), a perfected purchase-money security interest in livestock
that are farm products has priority over a conflicting
security interest in the same livestock, and, except as
otherwise provided in Section 9-327, a perfected security
interest in their identifiable proceeds and identifiable
products in their unmanufactured states also has priority, if:
(1) the purchase-money security interest is perfected
when the debtor receives possession of the livestock;
(2) the purchase-money secured party sends a signed an
authenticated notification to the holder of the
conflicting security interest;
(3) the holder of the conflicting security interest
receives the notification within six months before the
debtor receives possession of the livestock; and
(4) the notification states that the person sending
the notification has or expects to acquire a

SB3696 - 159 - LRB103 37687 SPS 67814 b
purchase-money security interest in livestock of the
debtor and describes the livestock.
(e) Holders of conflicting livestock security interests to
be notified. Subsections (d)(2) through (4) apply only if the
holder of the conflicting security interest had filed a
financing statement covering the same types of livestock:
(1) if the purchase-money security interest is
perfected by filing, before the date of the filing; or
(2) if the purchase-money security interest is
temporarily perfected without filing or possession under
Section 9-312(f), before the beginning of the 20-day
period thereunder.
(f) Software purchase-money priority. Except as otherwise
provided in subsection (g), a perfected purchase-money
security interest in software has priority over a conflicting
security interest in the same collateral, and, except as
otherwise provided in Section 9-327, a perfected security
interest in its identifiable proceeds also has priority, to
the extent that the purchase-money security interest in the
goods in which the software was acquired for use has priority
in the goods and proceeds of the goods under this Section.
(g) Conflicting purchase-money security interests. If more
than one security interest qualifies for priority in the same
collateral under subsection (a), (b), (d), or (f):
(1) a security interest securing an obligation
incurred as all or part of the price of the collateral has

SB3696 - 160 - LRB103 37687 SPS 67814 b
priority over a security interest securing an obligation
incurred for value given to enable the debtor to acquire
rights in or the use of collateral; and
(2) in all other cases, Section 9-322(a) applies to
the qualifying security interests.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-326A new)
Sec. 9-326A. Priority of security interest in controllable
account, controllable electronic record, and controllable
payment intangible. A security interest in a controllable
account, controllable electronic record, or controllable
payment intangible held by a secured party having control of
the account, electronic record, or payment intangible has
priority over a conflicting security interest held by a
secured party that does not have control.
(810 ILCS 5/9-330)
Sec. 9-330. Priority of purchaser of chattel paper or
instrument.
(a) Purchaser's priority: security interest claimed merely
as proceeds. A purchaser of chattel paper has priority over a
security interest in the chattel paper which is claimed merely
as proceeds of inventory subject to a security interest if:
(1) in good faith and in the ordinary course of the
purchaser's business, the purchaser gives new value, and

SB3696 - 161 - LRB103 37687 SPS 67814 b
takes possession of each authoritative tangible copy of
the record evidencing the chattel paper, and or obtains
control under Section 9-105 of each authoritative
electronic copy of the record evidencing of the chattel
paper under Section 9-105; and
(2) the authoritative copies of the record evidencing
the chattel paper do chattel paper does not indicate that
the chattel paper it has been assigned to an identified
assignee other than the purchaser.
(b) Purchaser's priority: other security interests. A
purchaser of chattel paper has priority over a security
interest in the chattel paper which is claimed other than
merely as proceeds of inventory subject to a security interest
if the purchaser gives new value, and takes possession of each
authoritative tangible copy of the record evidencing the
chattel paper, and or obtains control under Section 9-105 of
each authoritative electronic copy of the record evidencing of
the chattel paper under Section 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.
(c) Chattel paper purchaser's priority in proceeds. Except
as otherwise provided in Section 9-327, a purchaser having
priority in chattel paper under subsection (a) or (b) also has
priority in proceeds of the chattel paper to the extent that:
(1) Section 9-322 provides for priority in the

SB3696 - 162 - LRB103 37687 SPS 67814 b
proceeds; or
(2) the proceeds consist of the specific goods covered
by the chattel paper or cash proceeds of the specific
goods, even if the purchaser's security interest in the
proceeds is unperfected.
(d) Instrument purchaser's priority. Except as otherwise
provided in Section 9-331(a), a purchaser of an instrument has
priority over a security interest in the instrument perfected
by a method other than possession if the purchaser gives value
and takes possession of the instrument in good faith and
without knowledge that the purchase violates the rights of the
secured party.
(e) Holder of purchase-money security interest gives new
value. For purposes of subsections (a) and (b), the holder of a
purchase-money security interest in inventory gives new value
for chattel paper constituting proceeds of the inventory.
(f) Indication of assignment gives knowledge. For purposes
of subsections (b) and (d), if the authoritative copies of the
record evidencing chattel paper or an instrument indicate
indicates that the chattel paper or instrument it 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.
(Source: P.A. 91-893, eff. 7-1-01.)

SB3696 - 163 - LRB103 37687 SPS 67814 b
(810 ILCS 5/9-331)
Sec. 9-331. Priority of rights of purchasers of
controllable accounts, controllable electronic records,
controllable payment intangibles, instruments, documents,
instruments, and securities under other Articles; priority of
interests in financial assets and security entitlements and
protection against assertion of claim under Articles Article 8
and 12.
(a) Rights under Articles 3, 7, and 8, and 12 not limited.
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
12.
(b) Protection under Articles Article 8 and 12. 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 12.
(c) Filing not notice. Filing under this Article does not
constitute notice of a claim or defense to the holders, or
purchasers, or persons described in subsections (a) and (b).
(Source: P.A. 91-893, eff. 7-1-01.)

SB3696 - 164 - LRB103 37687 SPS 67814 b
(810 ILCS 5/9-332)
Sec. 9-332. Transfer of tangible money; transfer of funds
from deposit account.
(a) Transferee of tangible money. A transferee of tangible
money takes the money free of a security interest if the
transferee receives possession of the money without acting
unless the transferee acts in collusion with the debtor in
violating the rights of the secured party.
(b) Transferee of funds from deposit account. A transferee
of funds from a deposit account takes the funds free of a
security interest in the deposit account if the transferee
receives the funds without acting unless the transferee acts
in collusion with the debtor in violating the rights of the
secured party.
(c) Transferee of electronic money. 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.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-334)
Sec. 9-334. Priority of security interests in fixtures and
crops.
(a) Security interest in fixtures under this Article. A

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security interest under this Article may be created in goods
that are fixtures or may continue in goods that become
fixtures. A security interest does not exist under this
Article in ordinary building materials incorporated into an
improvement on land.
(b) Security interest in fixtures under real-property law.
This Article does not prevent creation of an encumbrance upon
fixtures under real property law.
(c) General rule: subordination of security interest in
fixtures. In cases not governed by subsections (d) through
(h), a security interest in fixtures is subordinate to a
conflicting interest of an encumbrancer or owner of the
related real property other than the debtor.
(d) Fixtures purchase-money priority. Except as otherwise
provided in subsection (h), a perfected security interest in
fixtures has priority over a conflicting interest of an
encumbrancer or owner of the real property if the debtor has an
interest of record in or is in possession of the real property
and:
(1) the security interest is a purchase-money security
interest;
(2) the interest of the encumbrancer or owner arises
before the goods become fixtures; and
(3) the security interest is perfected by a fixture
filing before the goods become fixtures or within 20 days
thereafter.

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(e) Priority of security interest in fixtures over
interests in real property. A perfected security interest in
fixtures has priority over a conflicting interest of an
encumbrancer or owner of the real property if:
(1) the debtor has an interest of record in the real
property or is in possession of the real property and the
security interest:
(A) is perfected by a fixture filing before the
interest of the encumbrancer or owner is of record;
and
(B) has priority over any conflicting interest of
a predecessor in title of the encumbrancer or owner;
(2) before the goods become fixtures, the security
interest is perfected by any method permitted by this
Article and the fixtures are readily removable:
(A) factory or office machines;
(B) equipment that is not primarily used or leased
for use in the operation of the real property; or
(C) replacements of domestic appliances that are
consumer goods;
(3) the conflicting interest is a lien on the real
property obtained by legal or equitable proceedings after
the security interest was perfected by any method
permitted by this Article; or
(4) the security interest is:
(A) created in a manufactured home in a

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manufactured-home transaction; and
(B) perfected pursuant to a statute described in
Section 9-311(a)(2).
(f) Priority based on consent, disclaimer, or right to
remove. A security interest in fixtures, whether or not
perfected, has priority over a conflicting interest of an
encumbrancer or owner of the real property if:
(1) the encumbrancer or owner has, in a signed an
authenticated record, consented to the security interest
or disclaimed an interest in the goods as fixtures; or
(2) the debtor has a right to remove the goods as
against the encumbrancer or owner.
(g) Continuation of subsection (f)(2) priority. The
priority of the security interest under subsection (f)(2)
continues for a reasonable time if the debtor's right to
remove the goods as against the encumbrancer or owner
terminates.
(h) Priority of construction mortgage. A mortgage is a
construction mortgage to the extent that it secures an
obligation incurred for the construction of an improvement on
land, including the acquisition cost of the land, if a
recorded record of the mortgage so indicates. Except as
otherwise provided in subsections (e) and (f), a security
interest in fixtures is subordinate to a construction mortgage
if a record of the mortgage is recorded before the goods become
fixtures and the goods become fixtures before the completion

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of the construction. A mortgage has this priority to the same
extent as a construction mortgage to the extent that it is
given to refinance a construction mortgage.
(i) Priority of security interest in crops.
(1) Subject to Section 9-322(g), a perfected security
interest in crops growing on real property has priority
over:
(A) a conflicting interest of an encumbrancer or
owner of the real property; and
(B) the rights of a holder of an obligation
secured by a collateral assignment of beneficial
interest in a land trust, including rights by virtue
of an equitable lien.
(2) For purposes of this subsection:
(A) "Collateral assignment of beneficial interest"
means any pledge or assignment of the beneficial
interest in a land trust to a person to secure a debt
to other obligation.
(B) "Land trust" means any trust arrangement under
which the legal and equitable title to real estate is
held by a trustee, the interest of the beneficiary of
the trust is personal property, and the beneficiary or
any person designated in writing by the beneficiary
has (i) the exclusive power to direct or control the
trustee in dealing with the title to the trust
property, (ii) the exclusive control of the

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management, operation, renting, and selling of the
trust property, and (iii) the exclusive right to the
earnings, avails, and proceeds of trust property.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-341)
Sec. 9-341. Bank's rights and duties with respect to
deposit account. Except as otherwise provided in Section
9-340(c), and unless the bank otherwise agrees in a signed an
authenticated record, a bank's rights and duties with respect
to a deposit account maintained with the bank are not
terminated, suspended, or modified by:
(1) the creation, attachment, or perfection of a
security interest in the deposit account;
(2) the bank's knowledge of the security interest; or
(3) the bank's receipt of instructions from the
secured party.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-404) (from Ch. 26, par. 9-404)
Sec. 9-404. Rights acquired by assignee; claims and
defenses against assignee.
(a) Assignee's rights subject to terms, claims, and
defenses; exceptions. Unless an account debtor has made an
enforceable agreement not to assert defenses or claims, and
subject to subsections (b) through (e), the rights of an

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assignee are subject to:
(1) all terms of the agreement between the account
debtor and assignor and any defense or claim in recoupment
arising from the transaction that gave rise to the
contract; and
(2) any other defense or claim of the account debtor
against the assignor which accrues before the account
debtor receives a notification of the assignment signed
authenticated by the assignor or the assignee.
(b) Account debtor's claim reduces amount owed to
assignee. Subject to subsection (c) and except as otherwise
provided in subsection (d), the claim of an account debtor
against an assignor may be asserted against an assignee under
subsection (a) only to reduce the amount the account debtor
owes.
(c) Rule for individual under other law. This Section is
subject to law other than this Article which establishes a
different rule for an account debtor who is an individual and
who incurred the obligation primarily for personal, family, or
household purposes.
(d) Omission of required statement in consumer
transaction. In a consumer transaction, if a record evidences
the account debtor's obligation, law other than this Article
requires that the record include a statement to the effect
that the account debtor's recovery against an assignee with
respect to claims and defenses against the assignor may not

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exceed amounts paid by the account debtor under the record,
and the record does not include such a statement, the extent to
which a claim of an account debtor against the assignor may be
asserted against an assignee is determined as if the record
included such a statement.
(e) Inapplicability to health-care-insurance receivable.
This Section does not apply to an assignment of a
health-care-insurance receivable.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-406) (from Ch. 26, par. 9-406)
Sec. 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) Discharge of account debtor; effect of notification.
Subject to subsections (b) through (i) and (l), 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, signed
authenticated by the assignor or the assignee, that the amount
due or to become due has been assigned and that payment is to
be made to the assignee. After receipt of the notification,
the account debtor may discharge its obligation by paying the
assignee and may not discharge the obligation by paying the
assignor.

SB3696 - 172 - LRB103 37687 SPS 67814 b
(b) When notification ineffective. Subject to subsections
subsection (h) and (l), 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) Proof of assignment. Subject to subsections subsection
(h) and (l), 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,

SB3696 - 173 - LRB103 37687 SPS 67814 b
even if the account debtor has received a notification under
subsection (a).
(d) Term restricting assignment generally ineffective. In
this subsection, "promissory note" includes a negotiable
instrument that evidences chattel paper. Except as otherwise
provided in subsection (e) and Sections 2A-303 and 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) Inapplicability of subsection (d) to certain sales.
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 9-610 or an acceptance of collateral
under Section 9-620.

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(f) Legal restrictions on assignment generally
ineffective. Except as otherwise provided in Sections 2A-303
and 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) Subsection (b)(3) not waivable. Subject to subsections
subsection (h) and (l), an account debtor may not waive or vary
its option under subsection (b)(3).
(h) Rule for individual under other law. This Section is
subject to law other than this Article which establishes a
different rule for an account debtor who is an individual and
who incurred the obligation primarily for personal, family, or

SB3696 - 175 - LRB103 37687 SPS 67814 b
household purposes.
(i) Inapplicability to health-care-insurance receivable.
This Section does not apply to an assignment of a
health-care-insurance receivable.
(j) (Reserved).
(k) (Reserved).
(l) Inapplicability of certain subsections. Subsections
(a), (b), (c), and (g) do not apply to a controllable account
or controllable payment intangible.
(Source: P.A. 97-1034, eff. 7-1-13.)
(810 ILCS 5/9-408) (from Ch. 26, par. 9-408)
Sec. 9-408. Restrictions on assignment of promissory
notes, health-care-insurance receivables, and certain general
intangibles ineffective.
(a) Term restricting assignment generally ineffective.
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 relates to a health-care-insurance
receivable or a general intangible, including a contract,
permit, license, or franchise, and which term prohibits,
restricts, or requires the consent of the person obligated on
the promissory note or the account debtor to, the assignment
or transfer of, or creation, attachment, or perfection of a
security interest in, the promissory note,
health-care-insurance receivable, or general intangible, is

SB3696 - 176 - LRB103 37687 SPS 67814 b
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) Applicability of subsection (a) to sales of certain
rights to payment. 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 9-610 or an acceptance of collateral
under Section 9-620.
(c) Legal restrictions on assignment generally
ineffective. 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

SB3696 - 177 - LRB103 37687 SPS 67814 b
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) Limitation on ineffectiveness under subsections (a)
and (c). To the extent that a term in a promissory note or in
an agreement between an account debtor and a debtor which
relates to a health-care-insurance receivable or general
intangible or a rule of law, statute, or regulation described
in subsection (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

SB3696 - 178 - LRB103 37687 SPS 67814 b
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) "Promissory note". In this Section, "promissory note"
includes a negotiable instrument that evidences chattel paper.
(Source: P.A. 97-1034, eff. 7-1-13.)
(810 ILCS 5/9-509)
Sec. 9-509. Persons entitled to file a record.
(a) Person entitled to file record. A person may file an
initial financing statement, amendment that adds collateral
covered by a financing statement, or amendment that adds a
debtor to a financing statement only if:

SB3696 - 179 - LRB103 37687 SPS 67814 b
(1) the debtor authorizes the filing in a signed an
authenticated record or pursuant to subsection (b) or (c);
or
(2) the person holds an agricultural lien that has
become effective at the time of filing and the financing
statement covers only collateral in which the person holds
an agricultural lien.
(b) Security agreement as authorization. By signing
authenticating or becoming bound as debtor by a security
agreement, a debtor or new debtor authorizes the filing of an
initial financing statement, and an amendment, covering:
(1) the collateral described in the security
agreement; and
(2) property that becomes collateral under Section
9-315(a)(2), whether or not the security agreement
expressly covers proceeds.
(c) Acquisition of collateral as authorization. By
acquiring collateral in which a security interest or
agricultural lien continues under Section 9-315(a)(1), a
debtor authorizes the filing of an initial financing
statement, and an amendment, covering the collateral and
property that becomes collateral under Section 9-315(a)(2).
(d) Person entitled to file certain amendments. A person
may file an amendment other than an amendment that adds
collateral covered by a financing statement or an amendment
that adds a debtor to a financing statement only if:

SB3696 - 180 - LRB103 37687 SPS 67814 b
(1) the secured party of record authorizes the filing;
or
(2) the amendment is a termination statement for a
financing statement as to which the secured party of
record has failed to file or send a termination statement
as required by Section 9-513(a) or (c), the debtor
authorizes the filing, and the termination statement
indicates that the debtor authorized it to be filed.
(e) Multiple secured parties of record. If there is more
than one secured party of record for a financing statement,
each secured party of record may authorize the filing of an
amendment under subsection (d).
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-513)
Sec. 9-513. Termination statement.
(a) Consumer goods. A secured party shall cause the
secured party of record for a financing statement to file a
termination statement for the financing statement if the
financing statement covers consumer goods and:
(1) there is no obligation secured by the collateral
covered by the financing statement and no commitment to
make an advance, incur an obligation, or otherwise give
value; or
(2) the debtor did not authorize the filing of the
initial financing statement.

SB3696 - 181 - LRB103 37687 SPS 67814 b
(b) Time for compliance with subsection (a). To comply
with subsection (a), a secured party shall cause the secured
party of record to file the termination statement:
(1) within one month after there is no obligation
secured by the collateral covered by the financing
statement and no commitment to make an advance, incur an
obligation, or otherwise give value; or
(2) if earlier, within 20 days after the secured party
receives a signed an authenticated demand from a debtor.
(c) Other collateral. In cases not governed by subsection
(a), within 20 days after a secured party receives a signed an
authenticated demand from a debtor, the secured party shall
cause the secured party of record for a financing statement to
send to the debtor a termination statement for the financing
statement or file the termination statement in the filing
office if:
(1) except in the case of a financing statement
covering accounts or chattel paper that has been sold or
goods that are the subject of a consignment, there is no
obligation secured by the collateral covered by the
financing statement and no commitment to make an advance,
incur an obligation, or otherwise give value;
(2) the financing statement covers accounts or chattel
paper that has been sold but as to which the account debtor
or other person obligated has discharged its obligation;
(3) the financing statement covers goods that were the

SB3696 - 182 - LRB103 37687 SPS 67814 b
subject of a consignment to the debtor but are not in the
debtor's possession; or
(4) the debtor did not authorize the filing of the
initial financing statement.
(d) Effect of filing termination statement. Except as
otherwise provided in Section 9-510, upon the filing of a
termination statement with the filing office, the financing
statement to which the termination statement relates ceases to
be effective. Except as otherwise provided in Section 9-510,
for purposes of Sections 9-519(g), 9-522(a), and 9-523(c) the
filing with the filing office of a termination statement
relating to a financing statement that indicates that the
debtor is a transmitting utility also causes the effectiveness
of the financing statement to lapse.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-601)
Sec. 9-601. Rights after default; judicial enforcement;
consignor or buyer of accounts, chattel paper, payment
intangibles, or promissory notes.
(a) Rights of secured party after default. After default,
a secured party has the rights provided in this Part and,
except as otherwise provided in Section 9-602, those provided
by agreement of the parties. A secured party:
(1) may reduce a claim to judgment, foreclose, or
otherwise enforce the claim, security interest, or

SB3696 - 183 - LRB103 37687 SPS 67814 b
agricultural lien by any available judicial procedure; and
(2) if the collateral is documents, may proceed either
as to the documents or as to the goods they cover.
(b) Rights and duties of secured party in possession or
control. A secured party in possession of collateral or
control of collateral under Section 7-106, 9-104, 9-105,
9-105A, 9-106, or 9-107, or 9-107A has the rights and duties
provided in Section 9-207.
(c) Rights cumulative; simultaneous exercise. The rights
under subsections (a) and (b) are cumulative and may be
exercised simultaneously.
(d) Rights of debtor and obligor. Except as otherwise
provided in subsection (g) and Section 9-605, after default, a
debtor and an obligor have the rights provided in this Part and
by agreement of the parties.
(e) Lien of levy after judgment. If a secured party has
reduced its claim to judgment, the lien of any levy that may be
made upon the collateral by virtue of a judgment relates back
to the earliest of:
(1) the date of perfection of the security interest or
agricultural lien in the collateral;
(2) the date of filing a financing statement covering
the collateral; or
(3) any date specified in a statute under which the
agricultural lien was created.
(f) Execution sale. A sale pursuant to a judgment is a

SB3696 - 184 - LRB103 37687 SPS 67814 b
foreclosure of the security interest or agricultural lien by
judicial procedure within the meaning of this Section. A
secured party may purchase at the sale and thereafter hold the
collateral free of any other requirements of this Article.
(g) Consignor or buyer of certain rights to payment.
Except as otherwise provided in Section 9-607(c), this Part
imposes no duties upon a secured party that is a consignor or
is a buyer of accounts, chattel paper, payment intangibles, or
promissory notes.
(Source: P.A. 95-895, eff. 1-1-09.)
(810 ILCS 5/9-605)
Sec. 9-605. Unknown debtor or secondary obligor.
(a) In general: No duty owed by secured party. Except as
provided in subsection (b), a 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.

SB3696 - 185 - LRB103 37687 SPS 67814 b
(b) Exception: Secured party owes duty to debtor or
obligor. 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.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-608)
Sec. 9-608. Application of proceeds of collection or
enforcement; liability for deficiency and right to surplus.
(a) Application of proceeds, surplus, and deficiency if
obligation secured. If a security interest or agricultural
lien secures payment or performance of an obligation, the
following rules apply:
(1) A secured party shall apply or pay over for
application the cash proceeds of collection or enforcement
under Section 9-607 in the following order to:
(A) the reasonable expenses of collection and

SB3696 - 186 - LRB103 37687 SPS 67814 b
enforcement and, to the extent provided for by
agreement and not prohibited by law, reasonable
attorney's fees and legal expenses incurred by the
secured party;
(B) the satisfaction of obligations secured by the
security interest or agricultural lien under which the
collection or enforcement is made; and
(C) the satisfaction of obligations secured by any
subordinate security interest in or other lien on the
collateral subject to the security interest or
agricultural lien under which the collection or
enforcement is made if the secured party receives a
signed an authenticated demand for proceeds before
distribution of the proceeds is completed.
(2) If requested by a secured party, a holder of a
subordinate security interest or other lien shall furnish
reasonable proof of the interest or lien within a
reasonable time. Unless the holder complies, the secured
party need not comply with the holder's demand under
paragraph (1)(C).
(3) A secured party need not apply or pay over for
application noncash proceeds of collection and enforcement
under Section 9-607 unless the failure to do so would be
commercially unreasonable. A secured party that applies or
pays over for application noncash proceeds shall do so in
a commercially reasonable manner.

SB3696 - 187 - LRB103 37687 SPS 67814 b
(4) A secured party shall account to and pay a debtor
for any surplus, and the obligor is liable for any
deficiency.
(b) No surplus or deficiency in sales of certain rights to
payment. If the underlying transaction is a sale of accounts,
chattel paper, payment intangibles, or promissory notes, the
debtor is not entitled to any surplus, and the obligor is not
liable for any deficiency.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-611)
Sec. 9-611. Notification before disposition of collateral.
(a) "Notification date"." In this Section, "notification
date" means the earlier of the date on which:
(1) a secured party sends to the debtor and any
secondary obligor a signed an authenticated notification
of disposition; or
(2) the debtor and any secondary obligor waive the
right to notification.
(b) Notification of disposition required. Except as
otherwise provided in subsection (d), a secured party that
disposes of collateral under Section 9-610 shall send to the
persons specified in subsection (c) a reasonable signed
authenticated notification of disposition.
(c) Persons to be notified. To comply with subsection (b),
the secured party shall send a signed an authenticated

SB3696 - 188 - LRB103 37687 SPS 67814 b
notification of disposition to:
(1) the debtor;
(2) any secondary obligor; and
(3) if the collateral is other than consumer goods:
(A) any other person from which the secured party
has received, before the notification date, a signed
an authenticated notification of a claim of an
interest in the collateral;
(B) any other secured party or lienholder that, 10
days before the notification date, held a security
interest in or other lien on the collateral perfected
by the filing of a financing statement that:
(i) identified the collateral;
(ii) was indexed under the debtor's name as of
that date; and
(iii) was filed in the office in which to file
a financing statement against the debtor covering
the collateral as of that date; and
(C) any other secured party that, 10 days before
the notification date, held a security interest in the
collateral perfected by compliance with a statute,
regulation, or treaty described in Section 9-311(a).
(d) Subsection (b) inapplicable: perishable collateral;
recognized market. Subsection (b) does not apply if the
collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market.

SB3696 - 189 - LRB103 37687 SPS 67814 b
(e) Compliance with subsection (c)(3)(B). A secured party
complies with the requirement for notification prescribed by
subsection (c)(3)(B) if:
(1) not later than 20 days or earlier than 30 days
before the notification date, the secured party requests,
in a commercially reasonable manner, information
concerning financing statements indexed under the debtor's
name in the office indicated in subsection (c)(3)(B); and
(2) before the notification date, the secured party:
(A) did not receive a response to the request for
information; or
(B) received a response to the request for
information and sent a signed an authenticated
notification of disposition to each secured party or
other lienholder named in that response whose
financing statement covered the collateral.
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-613)
Sec. 9-613. Contents and form of notification before
disposition of collateral: general.
(a) Contents and form of notification. 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;

SB3696 - 190 - LRB103 37687 SPS 67814 b
(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 is accompanied by
or combined other notification or 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 9-614(a)(4) 9-614(4), when completed
in accordance with the instructions in subsection (b) and
Section 9-614(b), each provides sufficient information:

SB3696 - 191 - LRB103 37687 SPS 67814 b
NOTIFICATION OF DISPOSITION OF COLLATERAL
To: (Name of debtor, obligor, or other person to which the
notification is sent)
From: (Name, address, and telephone number of secured party)
{1} Name of any debtor that is not an addressee: (Name of
each debtor)
{2} We will sell (describe collateral) (to the highest
qualified bidder) at public sale. A sale could include a lease
or license. The sale will be held as follows:
(Date)
(Time)
(Place)
{3} We will sell (describe collateral) at private sale
sometime after (date). A sale could include a lease or
license.
{4} You are entitled to an accounting of the unpaid
indebtedness secured by the property that we intend to sell
or, as applicable, lease or license.
{5} If you request an accounting you must pay a charge of $
(amount).
{6} You may request an accounting by calling us at
(telephone number).
[End of Form]
(b) Instructions for form of notification. The following
instructions apply to the form of notification in subsection
(a)(5):

SB3696 - 192 - LRB103 37687 SPS 67814 b
(1) The instructions in this subsection refer to the
numbers in braces before items in the form of notification
in subsection (a)(5). Do not include the numbers or braces
in the notification. The numbers and braces 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}.
(5) Include and complete item {5} only if the sender
will charge the recipient for an accounting.
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)

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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).
(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-614)
Sec. 9-614. Contents and form of notification before
disposition of collateral: consumer-goods transaction.
(a) Contents and form of notification. In a consumer-goods
transaction, the following rules apply:
(1) A notification of disposition must provide the
following information:

SB3696 - 194 - LRB103 37687 SPS 67814 b
(A) the information specified in Section
9-613(a)(1) 9-613(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 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 contents of a notification providing
substantially the information specified in paragraph (1)
are sufficient, even if the notification:
(A) is accompanied by or combined with other
notifications;
(B) includes information not specified by that
paragraph; or
(C) includes minor errors that are not seriously
misleading.
(4) The following form of notification, when completed
in accordance with the instructions in subsection (b),
provides sufficient information:
NOTICE OF OUR PLAN TO SELL PROPERTY

SB3696 - 195 - LRB103 37687 SPS 67814 b
(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

SB3696 - 196 - LRB103 37687 SPS 67814 b
us, {6} call us at (telephone number) (or) (write us at
(secured party's address)) (or contact us by (description of
electronic communication method)) {7} and request (a written
explanation) (a written explanation or an explanation in
(description of electronic record)) (an explanation in
(description of electronic record)).
{8} We will charge you $ (amount) for the explanation if we
sent you another written explanation of the amount you owe us
within the last six months.
{9} If you need more information about the sale (call us at
(telephone number)) (or) (write us at (secured party's
address)) (or contact us by (description of electronic
communication method)).
{10} We are sending this notice to the following other
people who have an interest in (describe collateral) or who
owe money under your agreement:
(Names of all other debtors and obligors, if any)
[End of Form]
(b) Instructions for form of notification. The following
instructions apply to the form of notification in subsection
(a)(3):
(1) The instructions in this subsection refer to the
numbers in braces before items in the form of notification
in subsection (a)(3). Do not include the numbers or braces
in the notification. The numbers and braces are used only
for the purpose of these instructions.

SB3696 - 197 - LRB103 37687 SPS 67814 b
(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 will 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

SB3696 - 198 - LRB103 37687 SPS 67814 b
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.
(9) If item {10} does not apply, insert "None" after
"agreement:".
............. (Name and address of secured party)
............. (Date)
NOTICE OF OUR PLAN TO SELL PROPERTY
...................................................... (Name an
d address of any obligor who is also a debtor) Subject: .................................. (Identification of Tra
nsaction) We have
your ..................... (describe collateral), because you br
oke promises in our agreement. For a public disposition: We will sell ....................... (describe collater
al) at public sale. A sale could include a lease or license. The sale will be held as follows: Date: ................................ Time: ................................ Place: ...............................
. You may attend the sale and bring bidders
if you want. For a private disposition:
We will sel
l ........................... (describe collateral) at p
rivate sale sometime after .................... (date). A sa
le could include a lease or license. The money that we get from the sale (after p
aying our costs) will reduce the amount you owe. If we get
less money than you owe, you ............ (will or will n
ot, as applicable) still owe us the difference. If we g
et more money than you owe, you will get the extra money, unles
s we must pay it to someone else. You can get the property back at a
ny time before we sell it by paying us the full amoun
t 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 amoun
t that you owe us, you may call us at .................. (telephone numbe
r) 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 th
e 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 addre

SB3696 - 200 - LRB103 37687 SPS 67814 b
ss). We
are sending this notice to the following other people who
have an interest ...................... (describe collateral) or who o
we money under your agreement: .........................................
........ (Names of a
ll other debtors and obligors, if any) (5) A notification in the form of paragraph (4) is suf
ficient, even if it includes errors in information not required by paragraph (1). (6) If a notification under
this Section is not in the form of paragraph (4), law other than this Article dete
rmines the effect of including information not required b
y paragraph (1).(Source: P.A. 91-893, eff. 7-1-01.) (810 ILCS 5/9-6
15) Sec. 9-615. Applicat
ion of proceeds of disposition; liability for deficien
cy and right to surplus. (
a) Application of proceeds. A secured party shall apply o
r pay over for application the cash proceeds of disposi
tion in the following order to: (1) the reasonable expenses of retaking,
holding, preparing for disposition, processing, and dispos
ing, and, to the extent provided for by agreement an

SB3696 - 201 - LRB103 37687 SPS 67814 b
d not prohibited by law, reasonable attorney's fees and legal
expenses incurred by the secured party; (2) the satisfaction of obligations secured by the security interest
or agricultural lien under which the disposition is made; (3) the satisfaction of obligations secured by
any subordinate security interest in or other subord
inate lien on the collateral if: (A) the secured p
arty receives from the holder of the subordinate secu
rity interest or other lien a signed an authenticated demand for proceeds before distribution of the proce
eds is completed; and (B)
in a case in which a consignor has an interest in the
collateral, the subordinate security interest or other lien i
s senior to the interest of the consignor; and (4) a secured party that is a consignor
of the collateral if the secured party receives from the cons
ignor a signed an authenticated demand for proceeds
before distribution of the proceeds is completed. (b) Proof of subordinate interest. If requested
by a secured party, a holder of a subordinate security in
terest or other lien shall furnish reasonable proof of the inte
rest or lien within a reasonable time. Unless the holder d
oes so, the secured party need not comply with the holde
r's demand under subsection (a)(3). (c) Ap

SB3696 - 202 - LRB103 37687 SPS 67814 b
plication of noncash proceeds. A secured party need not ap
ply or pay over for application noncash proceeds of dispo
sition under this Section unless the failure to do so would
be commercially unreasonable. A secured party that appl
ies or pays over for application noncash proceeds shall d
o so in a commercially reasonable manner.
(d) Surplus or deficiency if obligation sec
ured. If the security interest under which a disposition is made secur
es payment or performance of an obligation, after making th
e payments and applications required by subsection (a) and per
mitted by subsection (c): (1) unless subsection (a)
(4) requires the secured party to apply or pay over cash proceeds to a consignor, the s
ecured party shall account to and pay a debtor for any surplus; and
(2) the obligor is liable for
any deficiency. (e) No surplus or defici
ency in sales of certain rights to payment. If the underlying
transaction is a sale of accounts, chattel paper, payme
nt intangibles, or promissory notes: (1) the debtor is not entitled to any surplus; and (2) the obligor is not l
iable for any deficiency. (f) Calculation of surplus or deficiency in dispo
sition to person related to secured party. The surp
lus or deficiency following a disposition is calculat
ed based on the amount of proceeds that would have been
realized in a disposition complying with this Part and de

SB3696 - 203 - LRB103 37687 SPS 67814 b
scribed in subsection (f)(2) of this Section to a trans
feree other than the secured party, a person related to
the secured party, or a secondary obligor if: (1) the trans
feree in the disposition is the secured party, a perso
n related to the secured party, or a secondary obligor; and (2) the amount of proceeds of
the disposition is significantly below the range of proceeds t
hat would have been received from a complying disposition by
a forced sale without reserve to a willing buyer other than the secured
party, a person related to the secured party, or a sec
ondary obligor. (g) Cash proceeds re
ceived by junior secured party. A secured party that rec
eives cash proceeds of a disposition in good faith and wit
hout knowledge that the receipt violates the rights of the holder of a
security interest or other lien that is not subordinate to the
security interest or agricultural lien under which the disposition
is made: (1) takes the cash proceeds free of the security interest or ot
her lien; (2) is not obligated to apply the proc
eeds of the disposition to the satisfaction of obligations secured by the security inter
est or other lien; and (3) is not obligated to account to or pay the holder
of the security interest or other lien for any surplus.(Source: P.A. 91-893, eff. 7-1-01.) (810 ILCS 5
/9-616) Sec

SB3696 - 204 - LRB103 37687 SPS 67814 b
. 9-616. Explanation of
calculation of surplus or deficiency. (a) Definitions. In this Section: (1) "Explanation" means a
record writing that: (A) states whether
a surplus or deficiency is owed and the amount of the
surplus, if applicable; (B) states, if applicable, that future
debits, credits, charges, including additional credi
t service charges or interest, reb
ates, and expenses may affect the amount of the surplus or d
eficiency; (C
) provides a telephone number or mailing address from which the de
btor or consumer obligor may obtain additional information concerning the transaction and from which such
person may request the amount of the d
eficiency and further information regarding how the se
cured party calculated the surplus or deficiency
; and (D) at the sender's option, the information set forth in subs
ection (c). (2) "Request" means a record: (A) signed authenticated by a debtor or consumer obli
gor; (B) requesting that t
he recipient provide information of how it calculated th

SB3696 - 205 - LRB103 37687 SPS 67814 b
e surplus or deficiency; and (C) sent a
fter disposition of the collateral under Section 9-610.
(b) Explanation of calculation. In a consumer-goods tra
nsaction in which the debtor is entitled to a surplus or a consumer obli
gor is liable for a deficiency under Section 9-6
15, the secured party shall: (1) send an explanation to the debtor or
consumer obligor, as applicable, after the disposition and:
(A) before or when t
he secured party accounts to the debtor and pays a
ny surplus or first makes written demand in a record on the c
onsumer obligor after the disposition for payment of the deficiency, other than in i
nstances in which such demand is made by a third-party d
ebt collector covered by the Fair Debt Collection Practic
es Act; and (B)
within 14 days after receipt of a request made by
the debtor or consumer obligor within one year after the secured party has gi
ven an explanation under this Section or notice to such debtor or consumer obligor under Section 9-614 of this Article; or (2) in the case of a consumer obligor who is liable f
or a deficiency, within 14 days after receipt of a request, send to the consumer obligor a record waiving the secured par
ty's right to a deficiency. (c) Required in
formation for response to request. To comply with subsection (a)(1)(B)
a request, an expla
nation the secured party must

SB3696 - 206 - LRB103 37687 SPS 67814 b
provide a response in writing which include
s the following information in
the following order: (1) the aggregate amount of obliga
tions 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 recei
ves possession of the collateral after default, not more
than 35 days before the secured party takes or receives possess
ion; or (B) if the
secured party takes or receives possession of the coll
ateral before default or does not take possession of the
collateral, not more than 35 days before the dispo
sition; (2) the amount
of proceeds of the disposition; (3) the aggregate amount of the obligations after d
educting 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, pro
cessing, and disposing of the collateral, and attorney's fees secured
by the collateral which are known to the secured party a
nd relate to the current disposition; (5) the amount, in the aggregate or by type, a

SB3696 - 207 - LRB103 37687 SPS 67814 b
nd types of credits, including rebates of interest or credit se
rvice charges, to which the obligo
r is known to be entitled and which are not refl
ected in the amount in paragraph (1); and (6) the amount of th
e surplus or deficiency. (d) Substantial compliance. A particular phrasing o
f the explanation or response to a request is
not required. An explanation or a response to a request
complying substantially with the
requirements of this Section is sufficient even if it is: (1) accompanied by or c
ombined with other notifications; (2) includes information not specified by this Section
; (3) includes minor erro
rs that are not seriously misleading; or (4) includes erro
rs in information not required by this Section. (e) Charges for responses. A debtor or cons
umer obligor is entitled without charge to one response to a request under this Sect
ion during any six-month period in which the secured party did not send to the debtor or consumer obligor an exp
lanation pursuant to subsection (b)(1). The secured party may require payment of a charge not exce
eding $25 for each additional response.(Source: P.A. 91-893, eff. 7-1-0
1.) (810 ILCS 5/9-619) Sec. 9-619. Transfer of record or legal title. (a) "Transfer statement"." In this Section, "transfer statement" means a reco
rd signed authenticated by a secured party
stating: (1) that the deb
tor has defaulted in connection with an ob
ligation secured by specified collateral; (2) that the secured party has exe
rcised its post-default remedies with respect to t
he collateral; (3) that, b
y reason of the exercise, a transferee has acquired the rights of the
debtor in the collateral; and
(4) the name and mailing address of the secured p
arty, debtor, and transferee. (b) Effect of transfer statement. A
transfer statement entitles the transferee to the transfer of record of
all rights of the debtor in the collateral specifie
d in the statement in any official filing, r
ecording, registration, or certificate-of-title s
ystem covering the collateral. If a transfer statement is
presented with the applicable fee and request form to
the official or office responsible for maintaining the sys
tem, the official or office shall: (1) accept the transfer statement; (2) promptly amend its records to r
eflect the transfer; and
(3) if applicable, issue a new appropriate certificate of title in the name of the transferee. (c) Transfer not a disposition; no relief of secured party's duties
. A transfer of the record or legal title to collateral to a secured party under subsection
(b) or otherwise is not of itself a disposition of co
llateral under this Article and does not of its
elf relieve the secured party of its duties under this A
rticle.(Source: P.A. 91-893, eff. 7-1-01.) (810 ILCS 5/9-620) Sec. 9-62
0. Acceptance of
collateral in full or partial satisfaction of obligation;
compulsory disposition of collateral. (a) Conditions to acceptance in satisfaction. Except as otherwise provided in subsection (g), a secured
party may accept collateral in full or partial satisfac
tion of the obligation it secures only if: (1) the d
ebtor consents to the acceptance under subsection (c); (2) the secured par
ty does not receive, within the time set forth in
subsection (d), a notification of objec
tion to the proposal signed authenticated by: (A) a person to which the secured party was req
uired to send a proposal under Section 9-621; or (B) any other per
son, other than the debtor, holding an interest in the collater

SB3696 - 210 - LRB103 37687 SPS 67814 b
al subordinate to the security interest that is the s
ubject of the proposal; (3) if the collateral is consumer goods, the c
ollateral is not in the possession of the debtor when the debtor cons
ents to the acceptance; and (4) subsection (e) does not r
equire the secured party to dispose of the
collateral or the debtor waives the requirement pursuant to Section 9
-624. (b) Purported acceptance ineffective. A purported or
apparent acceptance of collateral under this Section is in
effective unless: (1)
the secured party consents to the acceptance in
a signed an authenticated record or sends a proposal to the debtor; and (2) the conditions of subsection (a)
are met. (c) Debtor's consent. For purpo
ses of this Section: (1) a debtor consents to an acceptance of collateral in partial satisfaction of the obligation it
secures only if the debtor agrees to
the terms of the acceptance in a record signed authenticated after def
ault; and (2) a d
ebtor consents to an acceptance of collateral in full satisfacti
on of the obligation it secures only if the debtor agrees to th
e terms of the acceptance in a record signed authentic
ated after default or the secured party: (A) sends to the debtor after default a proposal that is un
conditional or subject only to a condition tha

SB3696 - 211 - LRB103 37687 SPS 67814 b
t collateral not in the possession of the secured party b
e preserved or maintained; (B) in the proposal, proposes to accept collate
ral in full satisfaction of the obligation it secures; and (C) does not recei
ve a notification of objection signed aut
henticated by the debtor within 20 days aft
er the proposal is sent. (d) Effectiveness of
notification. To be effective under subsection (a)(2), a notification
of objection must be received by the secured party: (1) in the case of a p
erson to which the prop
osal was sent pursuant to Section 9-621, within 2
0 days after notification was sent to that person; and (2) in other cases: (A) within 20 days after the last n
otification was sent pursuant to Section 9-621; or (B) if a notification
was not sent, before the debtor consents
to the acceptance under subsection (c). (e) Mandatory disposition of consumer goods
. A secured party that has taken possession of collateral shall dispose of the collate
ral pursuant to Section 9-610 within the time specif
ied in subsection (f) if: (
1) 60 percent of the cash price has been paid
in the case of a purchase-money security interest in consumer goods; or (2) 60 percent of the princi
pal amount of the obligation secured has been paid in the c
ase of a non-purchase-money security interest in consumer goods.
(f) Compliance with mandato
ry disposition requirement. To comply with subsection (e),
the secured party shall dispose of the collateral: (1) within 90 days af
ter taking possession;
or (2) within any longer period to which the debtor and all secondary obl
igors have agreed in an agreement to that effect entered into and signed authenticated after default. (g) No partial satisfaction in consumer transactio
n. In a consumer transaction, a secured party may not acce
pt collateral in partial satisfaction of the obligati
on it secures.(Source: P.A. 91-893,
eff. 7-1-01.) (810 ILCS 5/9-621)
Sec. 9-621. Notification of proposal to accept collate
ral. (a) Persons to wh
ich proposal to be sent. A secured party that desires to
accept collateral in full or partial satisfaction of the ob
ligation it secures shall send its proposal to: (1) any person from which the secured party has receiv
ed, before the debtor consented to the acceptance, a signed an authenticated notification of

SB3696 - 213 - LRB103 37687 SPS 67814 b
a claim of an interest in the collatera
l; (2) any other secured pa
rty or lienholder that, 10 days before the debtor conse
nted to the acceptance, held a security interest in or other lien
on the collateral perfected by the filing of a financing st
atement that: (A) identified the collateral;
(B) was indexed under the debtor'
s name as of that date; and
(C) was filed in the
office or offices in which to file a financing state
ment against the debtor covering the collateral as of th
at date; and (3) any oth
er secured party that, 10 days before the debtor consented to the a
cceptance, held a security interest in the collateral perfected by compliance with a statute, regulation, or
treaty described in Section 9-311(a). (b) Proposal to be sen
t to secondary obligor in partial satisfaction. A secured party that desires to accept coll
ateral in partial satisfaction of the obligation it
secures shall send its proposal to any secondary obligor
in addition to the persons described in subsection (a).(Source: P.A. 91-893, eff. 7-1-01.) (810 ILCS 5/9-624)
Sec. 9-624. Waiver. (a) Waiver of disposition notification. A d

SB3696 - 214 - LRB103 37687 SPS 67814 b
ebtor or secondary obligor may waive the right to notification of disposition of collater
al under Section 9-611 only by an agreement to t
hat effect entered into and signed authenticated after default. (b) Waiver
of mandatory disposition. A debtor may waive the right to require disposition of coll
ateral under Section 9-620(e) only by an agreement to that effect entered into and signed authenticated after default. (c) Wa
iver of redemption right. A debtor or secondary obligor may waive the right to redeem colla
teral under Section 9-623 only by an agreement to that effect entered into a
nd signed authenticated
after default.(Source: P.A. 91-893, eff. 7-1-01.) (810 ILCS 5/9-628) Sec. 9-62
8. Nonliability and limitation
on liability of secured party; liability of second
ary obligor. (a) Lim
itation of liability to debtor or obligor. Subject
to subsection (f), unless 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 pe
rson: (1) the secured party is not liable to the person, or to a secu
red party or lienholder that has filed a financing statement
against the person, for failure to co
mply with this Article; and (2) the secured party's failure to comply with th
is Article does not affect the liability of the person for a deficiency. (b) Limitation of liability to debtor, obligor, another secured party, or
lienholder. Subject to subsection (f), a A secured party is not liable because of its status as secu
red party: (1) to a p
erson that is a debtor or obligor, unless t
he 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 secu
red 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 identi
ty of the person. (c) Limitation of liabilit
y if reasonable belief that transaction not a consumer
-goods transaction or consumer transaction. A secured
party is not liable to any person, and a person's liability for a deficiency is not affe
cted, because of any act or omission arising out of the secur
ed party's reasonable belief that a transaction is not a consum
er-goods transaction or a consumer transaction
or that goods are not consumer goods, if the secured par
ty's belief is based on its reasonable reliance on:
(1) a debtor's representation concerning the purpos

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e for which collateral was to be used, acquired, or h
eld; or (2) an obligor's repr
esentation concerning the purp
ose for which a secured obligation was incurred. (d) Limitation of liability for statutory damages. A secur
ed party is not liable to any person under Section 9-625(c
)(2) for its failure to comply with Section 9-616. (e) Limitation of multiple liability for
statutory damages. A secured party is not liable under Section
9-625(c)(2) more than once with respect to any one s
ecured obligation.
(f) Exception: Limitation of liability under subsections (a) and (b) does not apply. Subsections
(a) and (b) do not apply to limit the liability of a secured party
to a person if, at the time the secured party obtains con
trol of collateral that is a controllable account, controll
able electronic record, or controllable payment intangible
or at the time the security interest attaches to the collat
eral, whichever is later: (1) the person is a debtor or obligor
; and (2) the secured party k
nows that the information in subsection (b)(1)(A), (B), or (C) relating to the person is not prov
ided by the collateral, a record attached to or logica
lly associated with the collateral, or the system in which the collateral is recorded. (Source: P.A. 91-893, eff. 7-1-01.) (810 ILCS 5/Art. 11A heading) ARTICLE 11A 12 EFFECTIVE DATE AND TRANSITION AMENDATORY ACT OF 1987
(810 ILCS 5/11A-101) Sec. 11A-101 12-101. Effect
ive Date. This amendatory Act of 1
987 shall take effect on January 1, 1988.(
Source: P.A. 85-997.) (810 ILCS 5/11A-102) Sec. 11A-102 12-102. Transition to Amendatory
Act of 1987. (1) Tran
sactions validly entered into after July 1, 1962 and before Jan
uary 1, 1988 and which were subject to the provisions of the "U
niform Commercial Code", approved July 31, 1961, as amend
ed, and which would be subject to this amendatory Act
of 1987 if they had been entered into after December 31, 1987
and the rights, duties and interest flowing fr
om such transactions remain valid after the latter date,
and may be terminated, completed, consummated or enforced
as required or permitted by this amendatory Act of 1987. Securi
ty interests arising out of such transactions which are per
fected when this amendatory Act of 1987 becomes effective sh
all remain perfected until they lapse as provided in this ame
ndatory Act of 1987, and may be continued as permitted by

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this amendatory Act of 1987. (
2) The persons shown on the books of the issuer as the hold
ers of uncertificated securities outst
anding when this amendatory Act of 1987 becomes effec
tive shall be deemed to be the regis
tered owners thereof. Prior to the 90th day after this ame
ndatory Act of 1987 takes effect, the issuer of any uncertificated securit
y outstanding when this amendatory Act of 1987 takes effec
t shall send to the registered owner a written statement contain
ing: (a) A description of the issue of which the uncertificated secu
rity is a part; (b) The number of shares or o
ther units owned by the registered owner; (c) The name and address and (if k
nown to the issuer) any taxpayer identification number of t
he registered owner; (d) A notation
of any liens or restrictions of the issuer and any adverse c
laims (as to which the issuer has a duty under Section 8-403(4)) to which the uncertificated se
curity is or may be subject at the time when the statement is
prepared or a statement that there are no such liens, re
strictions or adverse claims; and (e) Th
e date the statement was prepared. Statement
s sent pursuant to this subsection shall be signed by or on be
half of the issuer; shall be identified as "initial transact
ion statement"; and shall be deemed to be initial transa
ction statements for the purposes of Article 8 as amended by

SB3696 - 219 - LRB103 37687 SPS 67814 b
this amendatory Act of 1987. (3) If a
security interest in an uncertificated security outstanding p
rior to January 1, 1988, is perfected or has priority as to a
ll persons or as to certain persons when this amendatory Act of
1987 takes effect by virtue of the previous filing of a financ
ing statement, and if other acts would be required for
the perfection or priority of the security interest against tho
se persons under this amendatory Act of 1987,
the perfection and priority rights of the security interest s
hall continue and shall lapse on the date provided by the "Unifo
rm Commercial Code", approved July 31, 1961, as amended prior t
o this amendatory Act of 1987, (whether or not a cont
inuation statement is filed with respect to such security inte
rest) unless the security interest is perfected in accordanc
e with this amendatory Act of 1987.
(4) If an issuer's lien or restriction on an uncertificated sec
urity outstanding prior to January 1, 1988, or a term of such
a security is valid and effective against all persons or agains
t certain persons when this amendatory Act of 1987 takes eff
ect, and if the notation of such lien, restriction or term on
an initial transaction statement would be required for its va
lidity or effectiveness against those persons und
er this amendatory Act of 1987, such lien, restriction or ter
m shall remain valid and effective until the earlier of (i) the
time when an initial transaction statement is sent by the
issuer to the registered owner (after which the validity and e

SB3696 - 220 - LRB103 37687 SPS 67814 b
ffectiveness of the lien, restriction or term shall be govern
ed by this amendatory Act of 1987), or (ii) 3 years from th
e effective date of this amendatory Act of 1987. If an initial
transaction statement regarding an uncertificated securit
y outstanding on the effective date of this amendatory Act of 1987 is not sent to the regist
ered owner thereof within 3 years after that date, any issuer's lien required to be noted there
on shall cease to be valid, and any restriction or term required to
be noted thereon shall cease to be effective except as to those persons against whom an unnoted restriction
or term would be effective under Article 8 as amended by this amendatory Act of 1987.(Source: P.A. 85-997.) (810 ILCS 5/Art. 12 heading new) ARTICLE 12 CONTROLLABLE ELECTRONI
C RECORDS (8
10 ILCS 5/12-101 new) Sec. 12-101. Title.
This Article may be cited as Uniform Commercial Code--Controllable Electronic Records. (810 ILCS 5/12-102 new) Sec. 12-102. Definitions. (a) In this Article:
(1) "Controllable electronic record" means a
record stored in an electronic medium that can be

SB3696 - 221 - LRB103 37687 SPS 67814 b
subjected to control under Section 12-105. The term d
oes not include a controllable account, a controllable pa
yment intangible, a deposit account, an electronic copy o
f a record evidencing chattel paper, an electronic document of title, e
lectronic money, investment property, or a transferable record. (2) "
Qualifying purchaser" means a purchaser of a controllable electronic rec
ord or an interest in a controllable electronic record
that obtains control of the controllable electronic record for val
ue, in good faith, and without notice of a claim of a property ri
ght in the controllable electronic record. (3) "Transferable recor
d" has the meaning provided for that term in: (A) Sect
ion 201(a)(1) of the Electronic Signatures in Global and
National Commerce Act, 15 U.S.C. Sectio
n 7021(a)(1), as amended; or
(B) Section 16(a) of the Uniform Elect
ronic Transactions Act.
(4) "Value" has the meaning provided in
Section 3-303(a), as if refere
nces in that subsection to an "instrument" were references to
a controllable account, controllable electronic record, or
controllable payment intangible. (b) Definitions in Article 9. The definitions in
Article 9 of "account debtor", "controllable account", "controllable payment intangible"

SB3696 - 222 - LRB103 37687 SPS 67814 b
, "chattel paper", "deposit account", "electronic money", and "investment property" apply to this Article. (c) Article 1 defi
nitions and principles. Article 1 contains general definitions a
nd principles of construction and interpretation applic
able throughout this Article. (810 ILCS 5
/12-103 new) Sec. 12-103. Relation to Article 9 and co
nsumer laws. (a) Article 9 governs in case of conflict. If there is conflic
t between this Article and Article 9, Article 9 governs. (b) Applicable consumer law and other laws. A transaction subject to this Article is subject to any applicable rule
of law that establishes a different rule for consumers and the Consumer Installment Loan Act, the Pre
datory Loan Prevention Act, and the Consumer Fraud and Deceptive B
usiness Practices Act. (810 ILCS 5/12-104 new) Sec. 12-104. Rights in controllable account, controllable electro
nic record, and controllable payment intangible. (a) Applicability of Section to controll
able account and controllable payment intangible. This Sec
tion applies to the acquisition and purchase of rights in a con
trollable account or controllable payment intangible, inclu
ding the rights and benefits under subsections (c), (d), (e

SB3696 - 223 - LRB103 37687 SPS 67814 b
), (g), and (h) of a purchaser and qualifying purchaser, in t
he same manner this Section applies to a control
lable electronic record. (b)
Control of controllable account and controllable payment
intangible. To determine whether a purchaser of a control
lable account or a controllable payment intangible is a
qualifying purchaser, the purchaser ob
tains control of the account or payment intangible if it obtains co
ntrol of the controllable electronic record that evidences
the account or payment intangible. (c) Applicability of other law to acq
uisition of rights. Except as provided in this Section, law o
ther than this Article determines whether a person acquire
s a right in a controllable electronic
record and the right the person acquires. (d) Shelter principle and purchase of limited intere
st. A purchaser of a controllable electronic record acquires a
ll rights in the controllable electr
onic record that the transferor had or had power to transfer, excep
t that a purchaser of a limited interest in a controllable ele
ctronic record acquires rights only to the extent of the inter
est purchased. (e) Righ
ts of qualifying purchaser. A qualifying purchaser acquires i
ts rights in the controllable electronic record free of a
claim of a property right in the controllable electronic record
. (f) Limitation of rights of qualifying pur

SB3696 - 224 - LRB103 37687 SPS 67814 b
chaser in other property. Except as provided in subsections (a) and (
e) for a controllable account and a controllable payment i
ntangible or law other than this Article, a qualifying pur
chaser takes a right to payment, right to performance, or other
interest in property evidenced by the controllable electronic
record subject to a claim of a property right in the r
ight to payment, right to performance, or other interest in p
roperty. (g) No-actio
n protection for qualifying purchaser. An action may not be asse
rted against a qualifying purchaser based on both a purchase by the qualifying purchaser of a con
trollable electronic record and a claim of a property right in another controllable elect
ronic record, whether the action is framed in conversion, replevin, constructive trust, equitable lien, or other theory. (h) Fi
ling not notice. Filing of a financing statement under Article
9 is not notice of a claim of a property right in a contr
ollable electronic record. (810 ILCS 5/12-105 new
) Sec. 12-105. Control of controllabl
e electronic record. (a) General rule: control of controllable electronic record. A person has co
ntrol of a controllable electronic record if the electronic record, a
record attached to or logically associated
with the electronic record, or a system in which the electronic record is
recorded:
(1) gives the person: (A) power to avail itself of
substantially all the benefit from the elect
ronic record; and (B) exclusive
power, subject to subsection (b), to: (i) prevent others from av
ailing themselves of substantially all the benef
it from the electronic record; and (ii) transfer control
of the electronic record to another person or cause another pers
on to obtain control of another controllable electronic record
as a result of the transfer of the electron
ic record; and (2) enables the person readily to identify itself i
n any way, including by name, identifying number, cryp
tographic key, office, or account number, as having the po
wers specified in paragraph (1). (b) Meaning of exclusive. Subject to su
bsection (c), a power is exclusive under subsection (a)(1)(B)(i) and (ii) eve
n if: (1) the controllable electro
nic record, a record attached to or logically associated with the ele
ctronic 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 modificat
ion of benefits afforded by the electronic record; or (2) the power is shared with another person. (c) When power not shared with another person.
A power of a person is not shared with another person under su
bsection (b)(2) and the person's power is not exclusive if: (
1) the person can exercise the power only if
the power also is exercised by the other person; and
(2) the other person: (A) can exercise the power
without exercise of the power by the person; or (B) is the transferor to the per
son of an interest in the controllable electronic record or a
controllable account or controllable payment intangible
evidenced by the controllable electronic record. (d) Presumption of exclusivity of c
ertain powers. If a person has the powers specified in sub
section (a)(1)(B)(i) and (ii), the powers are presumed to be
exclusive. (e) Contr
ol through another person. A person has co
ntrol of a controllable electronic record if another person, other
than the transferor to the person of an interest in th
e controllable electronic record or a controllable account or controlla
ble payment intangible evidenced by the controllable electroni
c record: (1) has control of the electronic record and acknowledges that it has c
ontrol on behalf of the person; or (2) obtains control of the electronic re
cord after having acknowledged that it will obtain control
of the electronic record on behalf of the person. (f) No requirement to acknowledge. A
person that has control under this Section is not required to acknowledge that it has control on behalf
of another person. (g) No duties or confirmation. I
f a person acknowledges that it has or will obtain control on behalf of another person, unless the person otherwise agre
es or law other than this Article or Article 9 otherwise provides, the person does not ow
e any duty to the other person and is not required to confirm the
acknowledgment to any other person. (810 ILCS 5/12-106 new) Se
c. 12-106. Discharge of account debtor on controllable account or controllable pay
ment intangible. (a) Discharge of account debtor. An account debtor o
n a controllable account or controll
able payment intangible may discharge its obligation by payi
ng: (1) the person having control of the controllable electronic r
ecord that evidences the controllable account or controllable
payment intangible; or (2) except as provided in subsection (b), a person th
at formerly had control of the controllable electronic record. (b) Content and effect of notification. Subject to su

SB3696 - 228 - LRB103 37687 SPS 67814 b
bsection (d), the account debtor may not discharge its obligation by pay
ing a person that formerly had control of the controllable electron
ic record if the account debtor receives a notific
ation that: (1) is signed by a person that formerly had co
ntrol or the person to which control was transferred; (2) reasonably iden
tifies the controllable account or controllable payment intangible; (3) notifies the a
ccount debtor that control of the controllable electronic record that evi
dences the controllable account or controllable payment intangi
ble was transferred; (4) identifies the transferee, in any reasonabl
e way, including by name, identifying number, cryptographic
key, office, or account number; and (5) provides a commercially reasonable method by which the a
ccount debtor is to pay the transferee. (c) Discharge fol
lowing effective notification. After receipt of a notification t
hat complies with subsection (b), the account debtor m
ay discharge its obligation by paying in accordance
with the notification and may not discharge the obligation
by paying a person that formerly had control. (d) When notification ineffec
tive. Subject to subsection (h), notification is ineffective under subsection (b
): (1) unles
s, before the notification is sent, the account debto

SB3696 - 229 - LRB103 37687 SPS 67814 b
r and the person that, at that time, had control of t
he controllable electronic record that evidences the co
ntrollable account or controllable payment intangible agree i
n 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 t
he 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 t
o:
(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 o
ne person. (e) Proof of
transfer of control. Subject to subsection (h), if requested
by the account debtor, the person giving the
notification under subsection (b) seasonably shall furnish reasona
ble proof, using the method in the agreement referred to in
subsection (d)(1), that control of the controllable electron
ic record has been transferred. Unless the person complie
s with the request, the account debtor may discharge its obligation
by paying a person that formerly had control, even if the account debt

SB3696 - 230 - LRB103 37687 SPS 67814 b
or has received a notification under subsection (b).
(f) What constitutes reasonable proof. A person
furnishes reasonable proof under subsection (e) tha
t control has been transferred if the person demonstrates, usi
ng the method in the agreement referred to in subsection (d)(1), th
at the transferee has the power to: (1) avail itself of substanti
ally 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 parag
raphs (1) and (2) to another person. (g) Rights not waivable. Subject to subsection (h), an account debtor ma
y not waive or vary its rights under subsections (d)(1) and (e) or its option under subse
ction (d)(3). (h) Rule for individual under other law. This Section is subject to law other than th
is Article that establishes a different rule for an account debt
or who is an individual and who incurred the obligation pri
marily for personal, family, or household purposes. (810 ILCS 5/12-107 new) Sec. 12
-107. Governing law. (a) Governing law: general rule. Except as provide
d in subsection (b), the local law of a controllable electronic record's jurisdiction gover
ns a matter covered by this Article. (b) Governing law: Section 12-106. For a cont
rollable electronic record that evidences a controllable account or cont
rollable payment intangible, the local law of the controllable electro
nic record's jurisdiction governs a matter covered by Sect
ion 12-106 unless an effective agreement deter
mines that the local law of another jurisdiction governs.
(c) Controllable elec
tronic record's jurisdiction. The following rules det
ermine a controllable electronic record's jurisdictio
n under this Section: (1) If the controllable electronic record, or
a record attached to or logically associated with the con
trollable electronic record and readily available for re
view, expressly provides that a particular jurisdiction is
the controllable electronic record's jurisdiction for
purposes of this Article or the Uniform Commercial Code, t
hat jurisdiction is the controllable electronic record's jurisdiction. (2) If paragraph (1) does not appl
y and the rules of the system in which the controllable ele
ctronic record is recorded are readily available for r
eview and expressly provide that a particular juris
diction is the controllable electronic record's juri
sdiction for purposes of this Article or the Uniform Co

SB3696 - 232 - LRB103 37687 SPS 67814 b
mmercial Code, that jurisdiction is 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 availab
le for review, expressly provides that the controllable elec
tronic record is governed by the law of a particul
ar jurisdiction, that jurisdiction is the controllable electronic record's jurisdictio
n. (4) If par
agraphs (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 expres
sly provide that the controllable electronic record or the
system is governed by the law of a particular jurisdiction, th
at jurisdiction is the controllable electronic record's jurisdi
ction. (5)
If paragraphs (1) through (4) do not apply, the controllabl
e electronic record's jurisdiction is the District of Col
umbia. (d) Applicability of A
rticle 12. If subsection (c)(5) applies and Article 12 is not i
n effect in the District of Columbia without material modifica
tion, the governing law for a matter covered by this Artic
le is the law of the District of Columbia as though Article 12
were in effect in the District of Columbia without material modi
fication. In this subsection, "Article 12" means Article 12

SB3696 - 233 - LRB103 37687 SPS 67814 b
of Uniform Commercial Code Amendments (2022)
. (e) Relation of matter or transaction to controllable e
lectronic record's jurisdiction not necessary. To the extent subs
ections (a) and (b) provide that the local law of the controll
able electronic record's jurisdiction governs a matter covered by this Article, that law governs even if the
matter or a transaction to which the matter relates does not bear any relation to the controllab
le electronic record's jurisdiction. (f) Rights of purchasers determined at time of purchase. The rights acquired under Se
ction 12-104 by a purchaser or qualifying purchaser are governed by the law applicable under this Section at the time of purc
hase. (810 ILCS 5/Art. 12A head
ing new) ARTICLE 12A TRANSITIONAL PROVISIONS FOR UNIFORM
COMMERCIAL CODE AMENDMENTS OF THE 103RD GENERA
L ASSEMBLY (810 ILCS 5/Art. 12A Pt. 1 heading new) PART 1 GENERAL PROVISIONS AND DEFINITIONS (810 ILCS 5/12A-101 new
) Sec. 12A-101. Title. This Article may
be cited as Transitional Provisions for Uniform Commercial Code Amend
ments of the 103rd General Assembly. (810 ILCS

SB3696 - 234 - LRB103 37687 SPS 67814 b
5/12A-102 new) Sec. 12A-102.
Definiti
ons. (a)
In this Article:
(1) "Adjustment date" means July
1, 2025, or the date that is one year after the effective
date of this amendatory Act of the 103rd General Assembly, wh
ichever is later.
(2) "Article 12" means Article 12 of the Uniform Commercial C
ode. (3) "Article 12 property" means a
controllable account, controllable electronic record, or controllable payment intangible. (b) Definitions in other Articles. The follo
wing definitions in other Articles of the Uniform Commercial Code apply to this A
rticle. "Controllable ac
count". Section 9-102. "Controllable electronic record". Section 12-102. "Controllable payment intan
gible". Section 9-102. "Electronic money". Section 9-
102. "Financing statement"
. Section 9-102. (c) Article 1 definitions and principles. Articl
e 1 contains general definitions and principles of construction and interpretation applica
ble throughout this Article. (810 ILCS 5/Art. 12A Pt. 2 heading new) PART 2 GENERAL TRANSITIONAL

SB3696 - 235 - LRB103 37687 SPS 67814 b
PROVISION
(810 ILCS 5/12A-201 new)
Sec. 12A-201. Saving clause. Except as provided in Part 3, a transaction validly entered into before the effective date of this amen
datory Act of the 103rd General Assembly and the rights, duties, and interests flowing from the transa
ction remain valid thereafter and may be terminated, completed,
consummated, or enforced as required or permitted by law other than the Uniform Commercial Code or, if applicable, the Uni
form Commercial Code, as though this amendatory Act of the 103rd General Assembly had not
taken effect. (810 ILCS 5/Art. 12A Pt. 3 heading new) PART 3 TRANSITIONAL PROVISIONS F
OR ARTICLES 9 AND 12 (810 ILCS 5/12A-3
01 new)
Sec. 12A-301. Saving clause. (a) Pre-effective-date transacti
on, lien, or interest. Except as provided in this Part, Article 9 as amended by this amendato
ry Act of the 103rd General Assembly and Article 12 apply to a transa
ction, lien, or other interest in property, even if the t
ransaction, lien, or interest was entered into, created
, or acquired before the effective date of this amend

SB3696 - 236 - LRB103 37687 SPS 67814 b
atory Act of the 103rd General Assembly. (b) Continuing validity. Exc
ept as provided in subsection (c) and Sections 12A-302 through 12A-306: (1) a transaction, lien
, or interest in property that was validly entered into,
created, or transferred before the effective date of this
amendatory Act of the 103rd General Assembly and was n
ot governed by the Uniform Commercial Code, but would be subject to
Article 9 as amended by this amendatory Act of the 103rd Gen
eral Assembly or Article 12 if it had been entered i
nto, created, or transferred on or after the effective dat
e of this amendatory Act of the 103rd General Assembly,
including the rights, duties, and interests flowing from th
e transaction, lien, or interest, re
mains valid on and after the effective date of this amendatory Act of the 103rd
General Assembly; and (2) the transaction, lien, or interest ma
y be terminated, completed, consummated, and enforced as required or permitted by this amendatory Act of the
103rd General Assembly or by the law that would apply if this amendatory Act of the 103rd
General Assembly had not taken effect. (c) Pre-effective-date proceeding.
This amendatory Act of the 103rd General Assembly
does not affect an action, case, or proceeding commenced bef
ore the effective date of this amendatory Act of the 10
3rd General Assembly. (810 ILCS 5/12A-302 new) Sec. 12A-302. Security interest perfected before effe
ctive date. (a) Continuing perfection: perfection requirements satisfied. A security interest that
is enforceable and perfected immediately before the effective da
te of this amendatory Act of the 103rd General Assembl
y is a perfected security interest under this amendatory Ac
t of the 103rd General Assembly if, on the effective date of th
is amendatory Act of the 103rd General Assembly, the requirem
ents for enforceability and perfection under this amendatory Ac
t of the 103rd General Assembly are satisfied without furt
her action. (b) Continuing perfection: enfo
rceability or perfection requirements not satisfied. If a security int
erest is enforceable and perfected immediately before the
effective date of this amendatory Act of the 103rd Ge
neral Assembly, but the requirements for enforceabil
ity or perfection under this amendatory Act of the 103rd
General Assembly are not satisfied on the effective date of t
his amendatory Act of the 103rd General Assembly,
the security interest: (1) is a perfected security interest unt
il the earlier of the time perfection would have ceased unde
r the law in effect immediately before the effective date of
this amendatory Act of the 103rd General Assembly or the

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adjustment date;
(2) remains enforceable thereafter only if the security interest satisfies t
he requirements for enforceability under Section 9-203, as amended by this amendator
y Act of the 103rd General Assembly, before the adjustment date; and
(3) remains perfected thereafter only if the requirements for perfection under this amend
atory Act of the 103rd General Assembly are satisfied before
the time specified in paragraph (1). (8
10 ILCS 5/12A-303 new)
Sec. 12A-303. Security interest unperfect
ed before effective date.
A security interest that is enforceable imm
ediately before the effective date of this amendatory Act
of the 103rd General Assembly but is unperfected at that t
ime: (1) remains an enforceable security interest until the adjust
ment date; (2) re
mains enforceable thereafter if the security interest
becomes enforceable under Section 9-203
, as amended by this amendatory Act of the 103rd
General Assembly, on the effective date of this amendatory Act of the 103rd
General Assembly or before the adjustment date; and (3) becomes per
fected: (

SB3696 - 239 - LRB103 37687 SPS 67814 b
A) without further action, on the effective date of this amendatory Act of the 103rd Gener
al Assembly if the requirements for perfection under this amendatory Act of the 103rd General Assembly are satisfie
d before or at that time; or (B) when the requirements for perfection are satis
fied if the requirements are satisfied after that time. (8
10 ILCS 5/12A-304 new) Sec. 12A-304
. Effectivene
ss of actions taken before effective date. (a) Pre-effectiv
e-date action; attachment and perfection before adjustme
nt date. If action, other than the filing of a financing
statement, is taken before the effective date of this amendat
ory Act of the 103rd General Assembly and the action would
have resulted in perfection of the security interest ha
d the security interest become enforceable before the effective d
ate of this amendatory Act of the 103rd General Assembly, the action is effect
ive to perfect a security interest that attaches under this am
endatory Act of the 103rd General Assembly before the adjustme
nt date. An attached security interest becomes unperfected on
the adjustment date unless the security interest becomes a pe
rfected security interest under this amendatory Act of the 10
3rd General Assembly before the adjustment date. (b) Pre-effective-date filing. The f
iling of a financing statement before the effective date of th

SB3696 - 240 - LRB103 37687 SPS 67814 b
is amendatory Act of the 103rd General Assembly is e
ffective to perfect a security interest on the effective date o
f this amendatory Act of the 103rd General Assembly to th
e extent the filing would satisfy the requirements for perfecti
on under this amendatory Act of the 103rd General Assembly. (c) Pre-eff
ective-date enforceability action. The taking of an action before the effective date
of this amendatory Act of the 103rd General Assembly is sufficient for the enforceability of a security interest on the effective d
ate of this amendatory Act of the 103rd General Assembly if the act
ion would satisfy the requirements for enforceability under
this amendatory Act of the 103rd General Assembly. (810 ILCS 5/12A-305 new)
Sec.
12A-305.
Priority. (a) Determination of priority. Subject to subsections (b) a
nd (c), this amendatory Act of the 103
rd General Assembly determines the priority of conflicting clai
ms to collateral. (b)
Established priorities. Subject to subsection (c), if the pri
orities of claims to collateral were established before the e
ffective date of this amendatory Act of the 103rd General Asse
mbly, Article 9 as in effect before the effective date of
this amendatory Act of the 103rd General Assembly determines p
riority. (c) Determin
ation of certain priorities on adjustment date. On the adjustment date, to the

SB3696 - 241 - LRB103 37687 SPS 67814 b
extent the priorities determined by Article 9 as amended by this amendatory Act of the 103
rd General Assembly modify the priorities established before the effective date of this amendatory Act of the 103rd Gen
eral Assembly, the priorities of claims to Article 12 property and el
ectronic money established before the effective date of this amenda
tory Act of the 103rd General Assembly cease to apply. (810 ILCS 5/12A-306 new) Sec. 12A-
306. Priority of
claims when priority rules of Article 9 do not apply. (a) Deter
mination of priority. Subject to subsections (b) and
(c), Article 12 determines the priority of conflicting claims
to Article 12 property when the priority rules of Articl
e 9 as amended by this amendatory Act of the 103r
d General Assembly do not apply. (b) Established priorities. Subject to subsection (c),
when the priority rules of Article 9 as amended by this amenda
tory Act of the 103rd General Assembly do not apply and the pri
orities of claims to Article 12 property were established bef
ore the effective date of this amendatory Act of the 103rd Gen
eral Assembly, law other than Article 12 determines prior
ity. (c) Determina
tion of certain priorities on adjustment date. When the priorit
y rules of Article 9 as amended by this amendatory Act of the 103rd General Assembly do not apply, to the extent the pr

SB3696 - 242 - LRB103 37687 SPS 67814 b
iorities determined by this amendatory Act of the 103rd General Assembly modify the priorities established bef
ore the effective date of this amendatory Act of the 1

SB3696 - 243 - LRB103 37687 SPS 67814 b
03rd General Assemb
ly, the priorities of claims to Article 12 property established b
efore the effective date of this amendatory Act of the 103rd General Assembly cease to apply on the adjustment d
ate. Section 9
9. Effective date. Th
is Act takes effect January 1, 2025.
205 ILCS 657/5
810 ILCS 5/1-
201 from Ch. 26, par. 1-201
810 ILCS 5/1-
204 from Ch. 26, par. 1-204
810 ILCS 5/1-
301
810 ILCS 5/1-306
810 ILCS 5/2-102 from Ch. 26, par. 2-102
810 ILCS 5/2-106 from Ch. 26, par. 2-106
810 ILCS 5/2-201 from Ch. 26, par. 2-201
810 ILCS 5/2-202 from Ch. 26, par. 2-202
810 ILCS 5/2-203 from Ch. 26, par. 2-203
810 ILCS 5/2-205 from Ch. 26, par. 2-205
810 ILCS 5/2-209 from Ch. 26, par. 2-209
810 ILCS 5/2A-102 from Ch. 26, par. 2A-102
810 ILCS 5/2A-103 from Ch. 26, par. 2A-103
810 ILCS 5/2A-107 from Ch. 26, par. 2A-107
810 ILCS 5/2A-201 from Ch. 26, par. 2A-201
810 ILCS 5/2A-202 from Ch. 26, par. 2A-202
810 ILCS 5/2A-203 from Ch. 26, par. 2A-203
810 ILCS 5/2A-205 from Ch. 26, par. 2A-205
810 ILCS 5/2A-208 from Ch. 26, par. 2A-208
810 ILCS 5/3-104 from Ch. 26, par. 3-104
810 ILCS 5/3-105 from Ch. 26, par. 3-105
810 ILCS 5/3-401 from Ch. 26, par. 3-401
810 ILCS 5/3-604 from Ch. 26, par. 3-604
810 ILCS 5/4A-103 from Ch. 26, par. 4A-103
810 ILCS 5/4A-201 from Ch. 26, par. 4A-201
810 ILCS 5/4A-202 from Ch. 26, par. 4A-202
810 ILCS 5/4A-203 from Ch. 26, par. 4A-203
810 ILCS 5/4A-207 from Ch. 26, par. 4A-207
810 ILCS 5/4A-208 from Ch. 26, par. 4A-208
810 ILCS 5/4A-210 from Ch. 26, par. 4A-210
810 ILCS 5/4A-211 from Ch. 26, par. 4A-211
810 ILCS 5/4A-305 from Ch. 26, par
. 4A-305
810 ILCS 5/5-104 from Ch. 26, pa
r. 5-104
810 ILCS 5/5-116 from Ch. 26, pa
r. 5-116
810 ILCS 5/7-102 from Ch. 26, pa
r. 7-102
810 ILCS 5/7-
106
810 ILCS 5/8-102 from Ch. 26, pa
r. 8-102
810 ILCS 5/8-103 from Ch. 26, pa
r. 8-103
810 ILCS 5/8-106 from Ch. 26, pa
r. 8-106
810 ILCS 5/8-110
810 ILCS 5/8-303 from Ch. 26, par. 8-303
810 ILCS 5/9-102 from Ch. 26, par. 9-102
810 ILCS 5/9-104 from Ch. 26, par. 9-104
810 ILCS 5/9-105 from Ch. 26, par. 9-105
810 ILCS 5/9-105A new
810 ILCS 5/9-107A new
810 ILCS 5/9-107B new
810 ILCS 5/9-203 from Ch. 26, pa
r. 9-203
810 ILCS 5/9-
204 from Ch. 26, par. 9-204
810 ILCS 5/9-
207 from Ch. 26, par. 9-207
810 ILCS 5/9-
208 from Ch. 26, par. 9-208
810 ILCS 5/9-
209
810 ILCS 5/9-210
810 ILCS 5/9-301 from Ch. 26, par. 9-301
810 ILCS 5/9-304 from Ch. 26, par. 9-304
810 ILCS 5/9-305 from Ch. 26, par. 9-305
810 ILCS 5/9-306A new
810 ILCS 5/9-306B new
810 ILCS 5/9-310 from Ch. 26, par. 9-310
810 ILCS 5/9-312 from Ch. 26, par. 9-312
810 ILCS 5/9-313 from Ch. 26, par. 9-313
810 ILCS 5/9-314 from Ch. 26, par. 9-314
810 ILCS 5/9-314A new
810 ILCS 5/9-316 from Ch. 26, pa
r. 9-316
810 ILCS 5/9-
317 from Ch. 26, par. 9-317
810 ILCS 5/9-323
810 ILCS 5/9-324
810 ILCS 5/9-326A new
810 ILCS 5/9-330
810 ILCS 5/9-331
810 ILCS 5/9-332
810 ILCS 5/9-
334
810 ILCS 5/9-
341
810 ILCS 5/9-
404 from Ch. 26, par. 9-404
810 ILCS 5/9-406 from Ch. 2
6, par. 9-406
810 ILCS 5/9-408 from Ch. 26, par. 9-408
810 ILCS 5/9-509
810 ILCS 5/9-513
810 ILCS 5/9-601
810 ILCS 5/9-605
810 ILCS 5/9-608
810 ILCS 5/9-611
810 ILCS 5/9-613
810 ILCS 5/9-614
810 ILCS 5/9-615
810 ILCS 5/9-616
810 ILCS 5/9-619
810 ILCS 5/9-620
810 ILCS 5/
9-621
810 ILCS 5/9-624
810 ILCS 5/9-628
81
0 ILCS 5/Art. 11A heading
81
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