Bill Text: NY A10579 | 2023-2024 | General Assembly | Introduced
Bill Title: Incorporates the 2022 Uniform Law Commission recommended amendments to the Uniform Commercial Code to provide for emerging technologies; addresses emerging technologies, providing updated rules for commercial transactions involving virtual currencies, distributed ledger technologies (including blockchain), artificial intelligence, and other technological developments.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-06-20 - referred to judiciary [A10579 Detail]
Download: New_York-2023-A10579-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 10579 IN ASSEMBLY June 20, 2024 ___________ Introduced by COMMITTEE ON RULES -- (at request of M. of A. Bores) -- read once and referred to the Committee on Judiciary AN ACT to amend the uniform commercial code, in relation to addressing emerging technologies The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Paragraphs 10, 15, 21, 24, 27, 36 and 37 of subsection (b) 2 of section 1--201 of the uniform commercial code, as added by chapter 3 505 of the laws of 2014, are amended and a new paragraph 16-a is added 4 to read as follows: 5 (10) "Conspicuous", with reference to a term, means so written, 6 displayed, or presented that, based on the totality of the circum- 7 stances, a reasonable person against which it is to operate ought to 8 have noticed it. Whether a term is "conspicuous" or not is a decision 9 for the court. 10 (15) "Delivery", with respect to an electronic document of title means 11 voluntary transfer of control and with respect to an instrument, a 12 tangible document of title, or an authoritative tangible copy of a 13 record evidencing chattel paper, means voluntary transfer of possession. 14 (16-a) "Electronic" means relating to technology having electrical, 15 digital, magnetic, wireless, optical, electromagnetic, or similar capa- 16 bilities. 17 (21) "Holder" means: 18 (A) the person in possession of a negotiable instrument that is paya- 19 ble either to bearer or to an identified person that is the person in 20 possession; or 21 (B) the person in possession of a negotiable tangible document of 22 title if the goods are deliverable either to bearer or to the order of 23 the person in possession; or 24 (C) the person in control, other than pursuant to Section 7--106(g), 25 of a negotiable electronic document of title. 26 (24) "Money" means a medium of exchange that is currently authorized 27 or adopted by a domestic or foreign government. The term includes a 28 monetary unit of account established by an intergovernmental organiza- EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD11556-03-4A. 10579 2 1 tion or by agreement between two or more countries. The term does not 2 include an electronic record that is a medium of exchange recorded and 3 transferable in a system that existed and operated for the medium of 4 exchange before the medium of exchange was authorized or adopted by the 5 government. 6 (27) "Person" means an individual, corporation, business trust, 7 estate, trust, partnership, limited liability company, association, 8 joint venture, government, governmental subdivision, agency, [or instru-9mentality, public corporation,] or any other legal or commercial entity. 10 The term includes a protected series, however denominated, of an entity 11 if the protected series is established under law other than this act 12 that limits, or limits if conditions specified under the law are satis- 13 fied, the ability of a creditor of the entity or of any other protected 14 series of the entity to satisfy a claim from assets of the protected 15 series. 16 (36) "Send", in connection with a [writing,] record[, or notice] or 17 notification means: 18 (A) to deposit in the mail [or], deliver for transmission, or transmit 19 by any other usual means of communication with postage or cost of trans- 20 mission provided for [and properly], addressed [and, in the case of an21instrument, to an address specified thereon or otherwise agreed, or if22there be none] to any address reasonable under the circumstances; or 23 (B) [in any other way] to cause the record or notification to be 24 received [any record or notice] within the time it would have [arrived] 25 been received if properly sent pursuant to subparagraph (A). 26 (37) ["Signed" includes using any symbol executed or adopted with27present intention to adopt or accept a writing.] "Sign" means, with 28 present intent to authenticate or adopt a record: 29 (A) execute or adopt a tangible symbol; or 30 (B) attach to or logically associate with the record an electronic 31 symbol, sound, or process. 32 "Signed, "signing", and "signature" have corresponding meanings. 33 § 2. Section 1--204 of the uniform commercial code, as added by chap- 34 ter 505 of the laws of 2014, is amended to read as follows: 35 Section 1--204. Value. 36 Except as otherwise provided in articles 3, 4, [and] 5, and 12 of this 37 act a person gives value for rights if the person acquires them: 38 (a) in return for a binding commitment to extend credit or for the 39 extension of immediately available credit, whether or not drawn upon and 40 whether or not a charge-back is provided for in the event of difficul- 41 ties in collection; 42 (b) as security for, or in total or partial satisfaction of, a preex- 43 isting claim; 44 (c) by accepting delivery under a preexisting contract for purchase; 45 or 46 (d) in return for any consideration sufficient to support a simple 47 contract. 48 § 3. Subsection (c) of section 1--301 of the uniform commercial code, 49 as added by chapter 505 of the laws of 2014, is amended to read as 50 follows: 51 (c) If one of the following provisions of this act specifies the 52 applicable law, that provision governs and a contrary agreement is 53 effective only to the extent permitted by the law so specified: 54 (1) Section 2--402; 55 (2) Sections 2-A--105 and 2-A--106; 56 (3) Section 4--102;A. 10579 3 1 (4) Section 4-A--507; 2 (5) Section 5--116; 3 (6) Section 8--110; [and] 4 (7) Sections 9--301 through 9--307; and 5 (8) Section 12--107. 6 § 4. Section 1--306 of the uniform commercial code, as added by chap- 7 ter 505 of the laws of 2014, is amended to read as follows: 8 Section 1--306. Waiver or Renunciation of Claim or Right After Breach. 9 A claim or right arising out of an alleged breach may be discharged in 10 whole or in part without consideration by agreement of the aggrieved 11 party in [an authenticated] a signed record. 12 § 5. Section 2--102 of the uniform commercial code is amended to read 13 as follows: 14 Section 2--102. Scope; Certain Security and Other Transactions Excluded 15 From This Article. 16 (1) Unless the context otherwise requires, and except as provided in 17 subsection (3), this Article applies to transactions in goods[; it does18not apply to any transaction which although in the form of an uncondi-19tional contract to sell or present sale is intended to operate only as a20security transaction nor does this Article impair or repeal any statute21regulating sales to consumers, farmers or other specified classes of22buyers], it applies to the extent provided in subsection (2). 23 (2) In a hybrid transaction: 24 (a) If the sale-of-goods aspects do not predominate, only the 25 provisions of this Article which relate primarily to the sale-of-goods 26 aspects of the transaction apply, and the provisions that relate prima- 27 rily to the transaction as a whole do not apply. 28 (b) If the sale-of-goods aspects predominate, this Article applies to 29 the transaction but does not preclude application in appropriate circum- 30 stances of other law to aspects of the transaction which do not relate 31 to the sale of goods. 32 (3) This Article does not: 33 (a) apply to a transaction that, even though in the form of an uncon- 34 ditional contract to sell or present sale, operates only to create a 35 security interest; or 36 (b) impair or repeal a statute regulating sales to consumers, farmers, 37 or other specified classes of buyers. 38 § 6. Section 2--106 of the uniform commercial code is amended to read 39 as follows: 40 Section 2--106. Definitions. "Contract"; "Agreement"; "Contract for 41 Sale"; "Sale"; "Present Sale"; "Conforming" to 42 Contract; "Termination"; "Cancellation"; "Hybrid Tran- 43 saction". 44 (1) In this Article, unless the context otherwise requires, "contract" 45 and "agreement" are limited to those relating to the present or future 46 sale of goods. "Contract for sale" includes both a present sale of goods 47 and a contract to sell goods at a future time. A "sale" consists in the 48 passing of title from the seller to the buyer for a price (Section 49 2--401). A "present sale" means a sale which is accomplished by the 50 making of the contract. 51 (2) Goods or conduct including any part of a performance are "conform- 52 ing" or conform to the contract when they are in accordance with the 53 obligations under the contract. 54 (3) "Termination" occurs when either party pursuant to a power created 55 by agreement or law puts an end to the contract otherwise than for its 56 breach. On "termination" all obligations which are still executory onA. 10579 4 1 both sides are discharged but any right based on prior breach or 2 performance survives. 3 (4) "Cancellation" occurs when either party puts an end to the 4 contract for breach by the other and its effect is the same as that of 5 "termination" except that the cancelling party also retains any remedy 6 for breach of the whole contract or any unperformed balance. 7 (5) "Hybrid transaction" means a single transaction involving a sale 8 of goods and: 9 (a) the provision of services; 10 (b) a lease of other goods; or 11 (c) a sale, lease, or license of property other than goods. 12 § 7. Subsections 1 and 2 of section 2--201 of the uniform commercial 13 code are amended to read as follows: 14 (1) Except as otherwise provided in this section a contract for the 15 sale of goods for the price of $500 or more is not enforceable by way of 16 action or defense unless there is [some writing] a record sufficient to 17 indicate that a contract for sale has been made between the parties and 18 signed by the party against whom enforcement is sought or by [his] the 19 party's authorized agent or broker. A writing is not insufficient 20 because it omits or incorrectly states a term agreed upon but the 21 contract is not enforceable under this [paragraph] subsection beyond the 22 quantity of goods shown in [such writing] the record. 23 (2) Between merchants if within a reasonable time a [writing] record 24 in confirmation of the contract and sufficient against the sender is 25 received and the party receiving it has reason to know its contents, it 26 satisfies the requirements of subsection (1) against [such] the party 27 unless written notice in a record of objection to its contents is given 28 within ten days after it is received. 29 § 8. Section 2--202 of the uniform commercial code, as amended by 30 chapter 505 of the laws of 2014, is amended to read as follows: 31 Section 2--202. Final Written Expression: Parol or Extrinsic Evidence. 32 Terms with respect to which the confirmatory memoranda of the parties 33 agree or which are otherwise set forth in a [writing] record intended by 34 the parties as a final expression of their agreement with respect to 35 such terms as are included therein may not be contradicted by evidence 36 of any prior agreement or of a contemporaneous oral agreement but may be 37 explained or supplemented 38 (a) by course of performance, course of dealing, or usage of trade 39 (Section 1--303); and 40 (b) by evidence of consistent additional terms unless the court finds 41 the [writing] record to have been intended also as a complete and exclu- 42 sive statement of the terms of the agreement. 43 § 9. Section 2--203 of the uniform commercial code is amended to read 44 as follows: 45 Section 2--203. Seals Inoperative. 46 The affixing of a seal to a [writing] record evidencing a contract for 47 sale or an offer to buy or sell goods does not constitute the [writing] 48 record a sealed instrument and the law with respect to sealed instru- 49 ments does not apply to such a contract or offer. 50 § 10. Section 2--205 of the uniform commercial code is amended to read 51 as follows: 52 Section 2--205. Firm Offers. 53 An offer by a merchant to buy or sell goods in a signed [writing] 54 record which by its terms gives assurance that it will be held open is 55 not revocable, for lack of consideration, during the time stated or if 56 no time is stated for a reasonable time, but in no event may such periodA. 10579 5 1 of irrevocability exceed three months; but any such term of assurance on 2 a form supplied by the offeree must be separately signed by the offeror. 3 § 11. Subsection 2 of section 2--209 of the uniform commercial code is 4 amended to read as follows: 5 (2) A signed agreement which excludes modification or rescission 6 except by a signed writing or other signed record cannot be otherwise 7 modified or rescinded, but except as between merchants such a require- 8 ment on a form supplied by the merchant must be separately signed by the 9 other party. 10 § 12. Section 2-A-102 of the uniform commercial code, as added by 11 chapter 114 of the laws of 1994, is amended to read as follows: 12 Section 2-A-102. Scope. 13 (1) This Article applies to any transaction, regardless of form, that 14 creates a lease and, in the case of a hybrid lease, it applies to the 15 extent provided in subsection (2). 16 (2) In a hybrid lease: 17 (a) if the lease-of-goods aspects do not predominate: 18 (i) only the provisions of this article which relate primarily to the 19 lease-of-goods aspects of the transaction apply, and the provisions that 20 relate primarily to the transaction as a whole do not apply; 21 (ii) Section 2-A-209 applies if the lease is a finance lease; and 22 (iii) Section 2-A-407 applies to the promises of the lessee in a 23 finance lease to the extent the promises are consideration for the right 24 to possession and use of the leased goods; and 25 (b) if the lease-of-goods aspects predominate, this Article applies to 26 the transaction, but does not preclude application in appropriate 27 circumstances of other law to aspects of the lease which do not relate 28 to the lease of goods. 29 § 13. Subsection 1 of section 2-A-103 of the uniform commercial code 30 is amended by adding a new paragraph (h-1) to read as follows: 31 (h-1) "Hybrid lease" means a single transaction involving a lease of 32 goods and: 33 (i) the provision of services; 34 (ii) a sale of other goods; or 35 (iii) a sale, lease, or license of property other than goods. 36 § 14. Section 2-A-107 of the uniform commercial code, as added by 37 chapter 114 of the laws of 1994, is amended to read as follows: 38 Section 2-A-107. Waiver or Renunciation of Claim or Right After Default. 39 Any claim or right arising out of an alleged default or breach of 40 warranty may be discharged in whole or in part without consideration by 41 a [written] waiver or renunciation in a signed [and] record delivered by 42 the aggrieved party. 43 § 15. Subsections 1, 3 and 5 of section 2-A-201 of the uniform commer- 44 cial code, as added by chapter 114 of the laws of 1994, are amended to 45 read as follows: 46 (1) A lease contract is not enforceable by way of action or defense 47 unless: 48 (a) the total payments to be made under the lease contract, 49 excluding payments for options to renew or buy, are less than 50 $1,000; or 51 (b) there is a [writing] record, signed by the party against whom 52 enforcement is sought or by that party's authorized agent, 53 sufficient to indicate that a lease contract has been made 54 between the parties and to describe the goods leased and the 55 lease term.A. 10579 6 1 (3) A [writing] record is not insufficient because it omits or incor- 2 rectly states a term agreed upon, but the lease contract is not enforce- 3 able under subsection (1)(b) beyond the lease term and the quantity of 4 goods shown in the [writing] record. 5 (5) The lease term under a lease contract referred to in subsection 6 (4) is: 7 (a) if there is a [writing] record signed by the party against 8 whom enforcement is sought or by that party's authorized 9 agent specifying the lease term, the term so specified; 10 (b) if the party against whom enforcement is sought admits in 11 that party's pleading, testimony, or otherwise in court a 12 lease term, the term so admitted; or 13 (c) a reasonable lease term. 14 § 16. Section 2-A-202 of the uniform commercial code, as added by 15 chapter 114 of the laws of 1994, is amended to read as follows: 16 Section 2-A-202. Final Written Expression: Parol or Extrinsic Evidence. 17 Terms with respect to which the confirmatory memoranda of the parties 18 agree or which are otherwise set forth in a [writing] record intended by 19 the parties as a final expression of their agreement with respect to 20 such terms as are included therein may not be contradicted by evidence 21 of any prior agreement or of a contemporaneous oral agreement but may be 22 explained or supplemented: 23 (a) by course of dealing or usage of trade or by course of 24 performance; and 25 (b) by evidence of consistent additional terms unless the court 26 finds the [writing] record to have been intended also as a 27 complete and exclusive statement of the terms of the agree- 28 ment. 29 § 17. Section 2-A-203 of the uniform commercial code, as added by 30 chapter 114 of the laws of 1994, is amended to read as follows: 31 Section 2-A-203. Seals Inoperative. 32 The affixing of a seal to a [writing] record evidencing a lease 33 contract or an offer to enter into a lease contract does not render the 34 [writing] record a sealed instrument and the law with respect to sealed 35 instruments does not apply to the lease contract or offer. 36 § 18. Section 2-A-205 of the uniform commercial code, as added by 37 chapter 114 of the laws of 1994, is amended to read as follows: 38 Section 2-A-205. Firm Offers. 39 An offer by a merchant to lease goods to or from another person in a 40 signed [writing] record that by its terms gives assurance it will be 41 held open is not revocable, for lack of consideration, during the time 42 stated or, if no time is stated, for a reasonable time, but in no event 43 may the period of irrevocability exceed three months. Any such term of 44 assurance on a form supplied by the offeree must be separately signed by 45 the offeror. 46 § 19. Subsection 2 of section 2-A-208 of the uniform commercial code, 47 as added by chapter 114 of the laws of 1994, is amended to read as 48 follows: 49 (2) A signed lease agreement that excludes modification or rescission 50 except by a signed [writing] record may not be otherwise modified or 51 rescinded, but, except as between merchants, such a requirement on a 52 form supplied by a merchant must be separately signed by the other 53 party. 54 § 20. Paragraph (a) of subsection 1 of section 3--102 of the uniform 55 commercial code is amended to read as follows: 56 (a) "Issue" means:A. 10579 7 1 (i) the first delivery of an instrument to a holder or a 2 remitter; or 3 (ii) if agreed by the payee, the first transmission by the 4 drawer to the payee of an image of an item and information 5 derived from the item that enables the depositary bank to 6 collect the item by transferring or presenting under federal 7 law an electronic check. 8 § 21. Paragraph (g) of subsection 1 of section 3--112 of the uniform 9 commercial code is amended and two new paragraphs (h) and (i) are added 10 to read as follows: 11 (g) a statement in a draft drawn in a set of parts (Section 12 3--801) to the effect that the order is effective only if no 13 other part has been honored[.]; or 14 (h) a term that specifies the law that governs the promise or 15 order; or 16 (i) an undertaking to resolve in a specified forum a dispute 17 concerning the promise or order. 18 § 22. Section 3--605 of the uniform commercial code is amended by 19 adding a new subsection 3 to read as follows: 20 (3) The obligation of a party to pay a check is not discharged solely 21 by destruction of the check in connection with a process in which infor- 22 mation is extracted from the check and an image of the check is made 23 and, subsequently, the information and image are transmitted for 24 payment. 25 § 23. Paragraph (a) of subsection 1 of section 4-A-103 of the uniform 26 commercial code, as amended by chapter 208 of the laws of 1990, is 27 amended to read as follows: 28 (a) "Payment order" means an instruction of a sender to a receiv- 29 ing bank, transmitted orally[, electronically,] or in [writ-30ing] a record, to pay, or to cause another bank to pay, a 31 fixed or determinable amount of money to a beneficiary if: 32 (i) the instruction does not state a condition to payment to 33 the beneficiary other than time of payment, 34 (ii) the receiving bank is to be reimbursed by debiting an 35 account of, or otherwise receiving payment from, the 36 sender, and 37 (iii) the instruction is transmitted by the sender directly to 38 the receiving bank or to an agent, funds transfer system, 39 or communication system for transmittal to the receiving 40 bank. 41 § 24. Section 4-A-201 of the uniform commercial code, as added by 42 chapter 208 of the laws of 1990, is amended to read as follows: 43 Section 4-A-201. Security Procedure. 44 "Security procedure" means a procedure established by agreement of a 45 customer and a receiving bank for the purpose of (1) verifying that a 46 payment order or communication amending or cancelling a payment order is 47 that of the customer, or (2) detecting error in the transmission or the 48 content of the payment order or communication. A security procedure may 49 impose an obligation on the receiving bank or the customer and may 50 require the use of algorithms or other codes, identifying words [or], 51 numbers, symbols, sounds, biometrics, encryption, callback procedures, 52 or similar security devices. Comparison of a signature on a payment 53 order or communication with an authorized specimen signature of the 54 customer or requiring a payment order to be sent from a known email 55 address, IP address, or telephone number is not by itself a security 56 procedure.A. 10579 8 1 § 25. Subsections 2 and 3 of section 4-A-202 of the uniform commercial 2 code, as added by chapter 208 of the laws of 1990, are amended to read 3 as follows: 4 (2) If a bank and its customer have agreed that the authenticity of 5 payment orders issued to the bank in the name of the customer as sender 6 will be verified pursuant to a security procedure, a payment order 7 received by the receiving bank is effective as the order of the custom- 8 er, whether or not authorized, if (a) the security procedure is a 9 commercially reasonable method of providing security against unauthor- 10 ized payment orders, and (b) the bank proves that it accepted the 11 payment order in good faith and in compliance with the bank's obli- 12 gations under the security procedure and any [written] agreement or 13 instruction of the customer, evidenced by a record, restricting accept- 14 ance of payment orders issued in the name of the customer. The bank is 15 not required to follow an instruction that violates [a written] an 16 agreement with the customer, evidenced by a record, or notice of which 17 is not received at a time and in a manner affording the bank a reason- 18 able opportunity to act on it before the payment order is accepted. 19 (3) Commercial reasonableness of a security procedure is a question of 20 law to be determined by considering the wishes of the customer expressed 21 to the bank, the circumstances of the customer known to the bank, 22 including the size, type, and frequency of payment orders normally 23 issued by the customer to the bank, alternative security procedures 24 offered to the customer, and security procedures in general use by 25 customers and receiving banks similarly situated. A security procedure 26 is deemed to be commercially reasonable if (a) the security procedure 27 was chosen by the customer after the bank offered, and the customer 28 refused, a security procedure that was commercially reasonable for that 29 customer, and (b) the customer expressly agreed in [writing] a record to 30 be bound by any payment order, whether or not authorized, issued in its 31 name and accepted by the bank in compliance with the bank's obligations 32 under the security procedure chosen by the customer. 33 § 26. Subsection 1 of section 4-A-203 of the uniform commercial code, 34 as added by chapter 208 of the laws of 1990, is amended to read as 35 follows: 36 (1) If an accepted payment order is not, under subsection (1) of 37 Section 4-A-202, an authorized order of a customer identified as sender, 38 but is effective as an order of the customer pursuant to subsection (2) 39 of Section 4-A-202, the following rules apply: 40 (a) By express [written] agreement evidenced by a record, the 41 receiving bank may limit the extent to which it is entitled 42 to enforce or retain payment of the payment order. 43 (b) The receiving bank is not entitled to enforce or retain 44 payment of the payment order if the customer proves that the 45 order was not caused, directly or indirectly, by a person (i) 46 entrusted at any time with duties to act for the customer 47 with respect to payment orders or the security procedure, or 48 (ii) who obtained access to transmitting facilities of the 49 customer or who obtained, from a source controlled by the 50 customer and without authority of the receiving bank, infor- 51 mation facilitating breach of the security procedure, regard- 52 less of how the information was obtained or whether the 53 customer was at fault. Information includes any access 54 device, computer software, or the like.A. 10579 9 1 § 27. Subsection 3 of section 4-A-207 of the uniform commercial code, 2 as added by chapter 208 of the laws of 1990, is amended to read as 3 follows: 4 (3) If (i) a payment order described in subsection (2) is accepted, 5 (ii) the originator's payment order described the beneficiary inconsist- 6 ently by name and number, and (iii) the beneficiary's bank pays the 7 person identified by number as permitted by paragraph (a) of subsection 8 (2), the following rules apply: 9 (a) If the originator is a bank, the originator is obliged to pay 10 its order. 11 (b) If the originator is not a bank and proves that the person 12 identified by number was not entitled to receive payment from 13 the originator, the originator is not obliged to pay its 14 order unless the originator's bank proves that the origina- 15 tor, before acceptance of the originator's order, had notice 16 that payment of a payment order issued by the originator 17 might be made by the beneficiary's bank on the basis of an 18 identifying or bank account number even if it identifies a 19 person different from the named beneficiary. Proof of notice 20 may be made by any admissible evidence. The originator's bank 21 satisfies the burden of proof if it proves that the origina- 22 tor, before the payment order was accepted, signed a [writ-23ing] record stating the information to which the notice 24 relates. 25 § 28. Paragraph (b) of subsection 2 of section 4-A-208 of the uniform 26 commercial code, as added by chapter 208 of the laws of 1990, is amended 27 to read as follows: 28 (b) If the sender is not a bank and the receiving bank proves 29 that the sender, before the payment order was accepted, had 30 notice that the receiving bank might rely on the number as 31 the proper identification of the intermediary or benefici- 32 ary's bank even if it identifies a person different from the 33 bank identified by name, the rights and obligations of the 34 sender and the receiving bank are governed by paragraph (a) 35 of subsection (2), as though the sender were a bank. Proof of 36 notice may be made by any admissible evidence. The receiving 37 bank satisfies the burden of proof if it proves that the 38 sender, before the payment order was accepted, signed a 39 [writing] record stating the information to which the notice 40 relates. 41 § 29. Subsection 1 of section 4-A-210 of the uniform commercial code, 42 as added by chapter 208 of the laws of 1990, is amended to read as 43 follows: 44 (1) A payment order is rejected by the receiving bank by a notice of 45 rejection transmitted to the sender orally, [electronically,] or in 46 [writing] a record. A notice of rejection need not use any particular 47 words and is sufficient if it indicates that the receiving bank is 48 rejecting the order or will not execute or pay the order. Rejection is 49 effective when the notice is given if transmission is by a means that is 50 reasonable in the circumstances. If notice of rejection is given by a 51 means that is not reasonable, rejection is effective when the notice is 52 received. If an agreement of the sender and receiving bank establishes 53 the means to be used to reject a payment order, (i) any means complying 54 with the agreement is reasonable and (ii) any means not complying is not 55 reasonable unless no significant delay in receipt of the notice resulted 56 from the use of the noncomplying means.A. 10579 10 1 § 30. Subsection 1 of section 4-A-211 of the uniform commercial code, 2 as added by chapter 208 of the laws of 1990, is amended to read as 3 follows: 4 (1) A communication of the sender of a payment order cancelling or 5 amending the order may be transmitted to the receiving bank orally[,6electronically,] or in [writing] a record. If a security procedure is in 7 effect between the sender and the receiving bank, the communication is 8 not effective to cancel or amend the order unless the communication is 9 verified pursuant to the security procedure or the bank agrees to the 10 cancellation or amendment. 11 § 31. Subsections 3 and 4 of section 4-A-305 of the uniform commercial 12 code, as added by chapter 208 of the laws of 1990, are amended to read 13 as follows: 14 (3) In addition to the amounts payable under subsections (1) and (2), 15 damages, including consequential damages, are recoverable to the extent 16 provided in an express [written] agreement of the receiving bank, 17 evidenced by a record. 18 (4) If a receiving bank fails to execute a payment order it was 19 obliged by express agreement to execute, the receiving bank is liable to 20 the sender for its expenses in the transaction and for incidental 21 expenses and interest losses resulting from the failure to execute. 22 Additional damages, including consequential damages, are recoverable to 23 the extent provided in an express [written] agreement of the receiving 24 bank, evidenced by a record, but are not otherwise recoverable. 25 § 32. Section 5--104 of the uniform commercial code, as added by chap- 26 ter 471 of the laws of 2000, is amended to read as follows: 27 Section 5--104. Formal requirements. 28 A letter of credit, confirmation, advice, transfer, amendment, or 29 cancellation may be issued in any form that is a signed record [and is30authenticated:31(a) by a signature, or32(b) in accordance with the agreement of the parties or the standard33practice referred to in subsection (e) of section 5--108]. 34 § 33. Section 5--116 of the uniform commercial code, as added by chap- 35 ter 471 of the laws of 2000, is amended to read as follows: 36 Section 5--116. Choice of law and forum. 37 (a) The liability of an issuer, nominated person, or adviser for 38 action or omission is governed by the law of the jurisdiction chosen by 39 an agreement in the form of a record signed [or otherwise authenticated] 40 by the affected parties [in the manner provided in section 5--104] or by 41 a provision in the person's letter of credit, confirmation, or other 42 undertaking. The jurisdiction whose law is chosen need not bear any 43 relation to the transaction. 44 (b) Unless subsection (a) of this section applies, the liability of an 45 issuer, nominated person, or adviser for action or omission is governed 46 by the law of the jurisdiction in which the person is located. The 47 person is considered to be located at the address indicated in the 48 person's undertaking. If more than one address is indicated, the person 49 is considered to be located at the address from which the person's 50 undertaking was issued. For the purpose of jurisdiction, choice of law, 51 and recognition of interbranch letters of credit, but not enforcement of 52 a judgement, all branches of a bank are considered separate juridical 53 entities and a bank is considered to be located at the place where its 54 relevant branch is considered to be located under [this] subsection (c). 55 (c) A branch of a bank is considered to be located at the address 56 indicated in the branch's undertaking. If more than one address isA. 10579 11 1 indicated, the branch is considered to be located at the address from 2 which the undertaking was issued. 3 (d) Except as otherwise provided in this subsection, the liability of 4 an issuer, nominated person, or adviser is governed by any rules of 5 custom or practice, such as the uniform customs and practice for docu- 6 mentary credits, to which the letter of credit, confirmation, or other 7 undertaking is expressly made subject. If (1) this article would govern 8 the liability of an issuer, nominated person, or adviser under 9 subsection (a) or (b) of this section, (2) the relevant undertaking 10 incorporates rules of custom or practice, and (3) there is conflict 11 between this article and those rules as applied to that undertaking, 12 those rules govern except to the extent of any conflict with the nonvar- 13 iable provisions specified in subsection (c) of section 5--103. 14 [(d)] (e) If there is conflict between this article and article 3, 4, 15 4-A or 9, this article governs. 16 [(e)] (f) The forum for settling disputes arising out of an undertak- 17 ing within this article may be chosen in the manner and with the binding 18 effect that governing law may be chosen in accordance with subsection 19 (a) of this section. 20 § 34. Paragraph 11 of subsection (a) of section 7--102 of the uniform 21 commercial code, as added by chapter 505 of the laws of 2014, is amended 22 to read as follows: 23 (11) ["Sign" means, with present intent to authenticate or adopt a24record:25(A) to execute or adopt a tangible symbol; or26(B) to attach to or logically associate with the record an electronic27sound, symbol, or process] Reserved. 28 § 35. Section 7--106 of the uniform commercial code, as added by chap- 29 ter 505 of the laws of 2014, is amended to read as follows: 30 Section 7--106. Control of Electronic Document of Title. 31 (a) A person has control of an electronic document of title if a 32 system employed for evidencing the transfer of interests in the elec- 33 tronic document reliably establishes that person as the person to which 34 the electronic document was issued or transferred. 35 (b) A system satisfies subsection (a), and a person [is deemed to36have] has control of an electronic document of title, if the document is 37 created, stored and [assigned] transferred in [such] a manner that: 38 (1) a single authoritative copy of the document exists which is 39 unique, identifiable, and, except as otherwise provided in paragraphs 40 (4), (5), and (6), unalterable; 41 (2) the authoritative copy identifies the person asserting control as: 42 (A) the person to which the document was issued; or 43 (B) if the authoritative copy indicates that the document has been 44 transferred, the person to which the document was most recently trans- 45 ferred; 46 (3) the authoritative copy is communicated to and maintained by the 47 person asserting control or its designated custodian; 48 (4) copies or amendments that add or change an identified [assignee] 49 transferee of the authoritative copy can be made only with the consent 50 of the person asserting control; 51 (5) each copy of the authoritative copy and any copy of a copy is 52 readily identifiable as a copy that is not the authoritative copy; and 53 (6) any amendment of the authoritative copy is readily identifiable as 54 authorized or unauthorized. 55 (c) A system satisfies subsection (a), and a person has control of an 56 electronic document of title, if an authoritative electronic copy of theA. 10579 12 1 document, a record attached to or logically associated with the elec- 2 tronic copy, or a system in which the electronic copy is recorded: 3 (1) enables the person readily to identify each electronic copy as 4 either an authoritative copy or a nonauthoritative copy; 5 (2) enables the person readily to identify itself in any way, includ- 6 ing by name, identifying number, cryptographic key, office, or account 7 number, as the person to which each authoritative electronic copy was 8 issued or transferred; and 9 (3) gives the person exclusive power, subject to subsection (d), to: 10 (A) prevent others from adding or changing the person to which each 11 authoritative electronic copy has been issued or transferred; and 12 (B) transfer control of each authoritative electronic copy. 13 (d) Subject to subsection (e), a power is exclusive under subsection 14 (c) (3) (A) even if: 15 (1) the authoritative electronic copy, a record attached to or 16 logically associated with the authoritative electronic copy, or a system 17 in which the authoritative electronic copy is recorded limits the use of 18 the document of title or has a protocol that is programmed to cause a 19 change, including a transfer or loss of control; or 20 (2) the power is shared with another person. 21 (e) A power of a person is not shared with another person under 22 subsection (d) (2) and the person's power is not exclusive if: 23 (1) the person can exercise the power only if the power also is exer- 24 cised by the other person; and 25 (2) the other person: 26 (A) can exercise the power without exercise of the power by the 27 person; or 28 (B) is the transferor to the person of an interest in the document of 29 title. 30 (f) If a person has the powers specified in subsection (c) (3) (A) and 31 (B), the powers are presumed to be exclusive. 32 (g) A person has control of an electronic document of title if another 33 person, other than the transferor to the person of an interest in the 34 document: 35 (1) has control of the document and acknowledges that it has control 36 on behalf of the person; or 37 (2) obtains control of the document after having acknowledged that it 38 will obtain control of the document on behalf of the person. 39 (h) A person that has control under this section is not required to 40 acknowledge that it has control on behalf of another person. 41 (i) If a person acknowledges that it has or will obtain control on 42 behalf of another person, unless the person otherwise agrees or law 43 other than this article or Article 9 otherwise provides, the person does 44 not owe any duty to the other person and is not required to confirm the 45 acknowledgment to any other person. 46 § 36. Paragraph 6 of subsection (a) of section 8--102 of the uniform 47 commercial code, as added by chapter 566 of the laws of 1997, is amended 48 to read as follows: 49 (6) "Communicate" means to: 50 (i) send a signed [writing] record; or 51 (ii) transmit information by any mechanism agreed upon by 52 the persons transmitting and receiving the information. 53 § 37. Subsections (b) and (e) of section 8--102 of the uniform commer- 54 cial code, subsection (b) as added by chapter 566 of the laws of 1997 55 and subsection (e) as added by chapter 84 of the laws of 2001, are 56 amended to read as follows:A. 10579 13 1 (b) Other definitions applying to this Article and the sections in 2 which they appear are: 3 "Appropriate person". Section 8--107. 4 "Control". Section 8--106. 5 "Controllable account". Section 9--102. 6 "Controllable electronic record". Section 12--102. 7 "Controllable payment intangible". Section 9--102. 8 "Delivery". Section 8--301. 9 "Investment company security". Section 8--103. 10 "Issuer". Section 8--201. 11 "Overissue". Section 8--210. 12 "Protected purchaser". Section 8--303. 13 "Securities account". Section 8--501. 14 (e) The following definitions in Article 9 apply to this article: 15 Cooperative interest Section [9--102(a)(27-b)] 16 9--102(a)(27-d) 17 Cooperative organization Section [9--102(a)(27-c)] 18 9--102(a)(27-e) 19 Cooperative record Section [9--102(a)(27-e)] 20 9--102(a)(27-g) 21 § 38. Section 8--103 of the uniform commercial code is amended by 22 adding a new subsection (i) to read as follows: 23 (i) A controllable account, controllable electronic record, or 24 controllable payment intangible is not a financial asset unless Section 25 8--102(a)(9)(iii) applies. 26 § 39. Subsection (d) of section 8--106 of the uniform commercial code, 27 as amended by chapter 84 of the laws of 2001, is amended and two new 28 subsections (j) and (k) are added to read as follows: 29 (d) A purchaser has "control" of a security entitlement if: 30 (1) the purchaser becomes the entitlement holder; 31 (2) the securities intermediary has agreed that it will comply 32 with entitlement orders originated by the purchaser without 33 further consent by the entitlement holder; or 34 (3) another person, other than the transferor to the purchaser of 35 an interest in the security entitlement: 36 (A) has control of the security entitlement on behalf of the 37 purchaser or, having previously acquired control of the secu- 38 rity entitlement, acknowledges that it has control on behalf 39 of the purchaser[.]; 40 (B) has control of the security entitlement and acknowledges that 41 it has control on behalf of the purchaser; or 42 (C) obtains control of the security entitlement after having 43 acknowledged that it will obtain control of the security 44 entitlement on behalf of the purchaser. 45 (j) A person that has control under this section is not required to 46 acknowledge that it has control on behalf of a purchaser. 47 (k) If a person acknowledges that it has or will obtain control on 48 behalf of a purchaser, unless the person otherwise agrees or law other 49 than this article or Article 9 otherwise provides, the person does not 50 owe any duty to the purchaser and is not required to confirm the 51 acknowledgment to any other person. 52 § 40. Section 8--110 of the uniform commercial code is amended by 53 adding a new subsection (g) to read as follows: 54 (g) The local law of the issuer's jurisdiction or the securities 55 intermediary's jurisdiction governs a matter or transaction specified inA. 10579 14 1 subsection (a) or (b) even if the matter or transaction does not bear 2 any relation to the jurisdiction. 3 § 41. Subsection (b) of section 8--303 of the uniform commercial code, 4 as added by chapter 566 of the laws of 1997, is amended to read as 5 follows: 6 (b) [In addition to acquiring the rights of a purchaser, a] A 7 protected purchaser also acquires its interest in the security free of 8 any adverse claim. 9 § 42. Paragraphs 2, 3, 4, 7, 11, 27-a, 27-b, 27-c, 27-d, 27-e, 27-f, 10 31, 42, 47, 61, 66, 66-a, 75 and 79 of subsection (a) of section 9--102 11 of the uniform commercial code, as amended by chapter 505 of the laws of 12 2014, are amended, and five new paragraphs 7-a, 7-b, 31-a, 54-a and 79-a 13 are added to read as follows: 14 (2) "Account", except as used in "account for", means a right to 15 payment of a monetary obligation, whether or not earned by 16 performance, (i) for property that has been or is to be sold, 17 leased, licensed, assigned, or otherwise disposed of, (ii) 18 for services rendered or to be rendered, (iii) for a policy 19 of insurance issued or to be issued, (iv) for a secondary 20 obligation incurred or to be incurred, (v) for energy 21 provided or to be provided, (vi) for the use or hire of a 22 vessel under a charter or other contract, (vii) arising out 23 of the use of a credit or charge card or information 24 contained on or for use with the card, or (viii) as winnings 25 in a lottery or other game of chance operated or sponsored by 26 a state, governmental unit of a State, or person licensed or 27 authorized to operate the game by a State or governmental 28 unit of a State. The term includes health-care-insurance 29 receivables. The term does not include (i) [rights to payment30evidenced by] chattel paper [or an instrument], (ii) commer- 31 cial tort claims, (iii) deposit accounts, (iv) investment 32 property, (v) letter-of-credit rights or letters of credit, 33 or (vi) rights to payment for money or funds advanced or 34 sold, other than rights arising out of the use of a credit or 35 charge card or information contained on or for use with the 36 card. 37 (3) "Account debtor" means a person obligated on an account, 38 chattel paper, or general intangible. The term does not 39 include persons obligated to pay a negotiable instrument, 40 even if the instrument [constitutes part of] evidences chat- 41 tel paper. 42 (4) "Accounting", except as used in "accounting for", means a 43 record: 44 (A) [authenticated] signed by a secured party; 45 (B) indicating the aggregate unpaid secured obligations as of 46 a date not more than 35 days earlier or 35 days later 47 than the date of the record; and 48 (C) identifying the components of the obligations in reason- 49 able detail. 50 (7) ["Authenticate" means:51(A) to sign; or52(B) with present intent to adopt or accept a record, to53attach to or logically associate with the record an elec-54tronic sound, symbol, or process] Reserved. 55 (7-a) "Assignee", except as used in "assignee for benefit of 56 creditors", means a person (A) in whose favor a securi-A. 10579 15 1 ty interest that secures an obligation is created or 2 provided for under a security agreement, whether or not 3 the obligation is outstanding or (B) to which an account, 4 chattel paper, payment intangible, or promissory note has 5 been sold. The term includes a person to which a security 6 interest has been transferred by a secured party. 7 (7-b) "Assignor" means a person that (A) under a security 8 agreement creates or provides for a security interest that 9 secures an obligation or (B) sells an account, chattel paper, 10 payment intangible, or promissory note. The term includes a 11 secured party that has transferred a security interest to 12 another person. 13 (11) "Chattel paper" means [a record or records that evidence14both a monetary obligation and a security interest in specif-15ic goods, a security interest in specific goods and software16used in the goods, a security interest in specific goods and17license of software used in the goods, a lease of specific18goods, or a lease of specific goods and license of software19used in the goods. In this paragraph, "monetary obligation"20means a monetary obligation secured by the goods or owed21under a lease of the goods and includes a monetary obligation22with respect to software used in the goods. The term does not23include (i) charters or other contracts involving the use or24hire of a vessel or (ii) records that evidence a right to25payment arising out of the use of a credit or charge card or26information contained on or for use with the card. If a tran-27saction is evidenced by records that include an instrument or28series of instruments, the group of records taken together29constitutes chattel paper.]; 30 (A) a right to payment of a monetary obligation secured by 31 specific goods, if the right to payment and security 32 agreement are evidenced by a record; or 33 (B) a right to payment of a monetary obligation owed by a 34 lessee under a lease agreement with respect to specific 35 goods and a monetary obligation owed by the lessee in 36 connection with the transaction giving rise to the lease, 37 if: 38 (i) the right to payment and lease agreement are evidenced by 39 a record; and 40 (ii) the predominant purpose of the transaction giving rise 41 to the lease was to give the lessee the right to 42 possession and use of the goods; but 43 (C) does not include a right to payment arising out of a 44 charter or other contract involving the use or hire of a 45 vessel or a right to payment arising out of the use of a 46 credit or charge card or information contained on or for 47 use with the card. 48 (27-a) "Controllable account" means an account evidenced by a 49 controllable electronic record that provides that the 50 account debtor undertakes to pay the person that has 51 control under Section 12--105 of the controllable elec- 52 tronic record. 53 (27-b) "Controllable payment intangible" means a payment intangi- 54 ble evidenced by a controllable electronic record that 55 provides that the account debtor undertakes to pay theA. 10579 16 1 person that has control under Section 12--105 of the 2 controllable electronic record. 3 (27-c) "Cooperative addendum" means a record that satisfies 4 Section 9--502(e). 5 [(27-b)] (27-d) "Cooperative interest" means an ownership inter- 6 est in a cooperative organization, which interest, when 7 created, is coupled with possessory rights of a proprie- 8 tary nature in identified physical space belonging to the 9 cooperative organization. A subsequent termination of the 10 possessory rights shall not cause an ownership interest to 11 cease being a cooperative interest. 12 [(27-c)] (27-e) "Cooperative organization" means an organization 13 which has as its principal asset an interest in real prop- 14 erty in this state and in which organization all ownership 15 interests are cooperative interests. 16 [(27-d)] (27-f) "Cooperative organization security interest" 17 means a security interest which is in a cooperative inter- 18 est, is in favor of the cooperative organization, is 19 created by the cooperative record, and secures only obli- 20 gations incident to ownership of that cooperative inter- 21 est. 22 [(27-e)] (27-g) "Cooperative record" means those records which, 23 as a whole, evidence cooperative interests and define the 24 mutual rights and obligations of the owners of the cooper- 25 ative interests and the cooperative organization. 26 [(27-f)] (27-h) "Cooperative unit" means the physical space asso- 27 ciated with a cooperative interest. 28 (31) ["Electronic chattel paper" means chattel paper evidenced by29a record or records consisting of information stored in an30electronic medium.] Reserved 31 (31-a) "Electronic money" means money in an electronic form. 32 (42) "General intangible" means any personal property, including 33 things in action, other than accounts, chattel paper, 34 commercial tort claims, deposit accounts, documents, goods, 35 instruments, investment property, letter-of-credit rights, 36 letters of credit, money, and oil, gas, or other minerals 37 before extraction. The term includes controllable electronic 38 records, payment intangibles and software. 39 (47) "Instrument" means a negotiable instrument or any other 40 writing that evidences a right to the payment of a monetary 41 obligation, is not itself a security agreement or lease, and 42 is of a type that in ordinary course of business is trans- 43 ferred by delivery with any necessary indorsement or assign- 44 ment. The term does not include (i) investment property, 45 (ii) letters of credit, [or] (iii) writings that evidence a 46 right to payment arising out of the use of a credit or 47 charge card or information contained on or for use with the 48 card, or (iv) writings that evidence chattel paper. 49 (54-a) "Money" has the same meaning as in Section 1--201(b)(24), 50 but does not include (A) a deposit account or (B) money in 51 an electronic form that cannot be subjected to control under 52 Section 9-105A. 53 (61) "Payment intangible" means a general intangible under which 54 the account debtor's principal obligation is a monetary 55 obligation. The term includes a controllable payment intan- 56 gible.A. 10579 17 1 (66) "Proposal" means a record [authenticated] signed by a 2 secured party which includes the terms on which the secured 3 party is willing to accept collateral in full or partial 4 satisfaction of the obligation it secures pursuant to 5 Sections 9--620, 9--621, and 9--622. 6 (66-a) "Prove" with respect to a fact means to meet the burden of 7 establishing the fact (Section [1-201(8)] 1--201(b)(8)). 8 (75) ["Send", in connection with a record or notification,9means:10(A) to deposit in the mail, deliver for transmission, or11transmit by any other usual means of communication, with12postage or cost of transmission provided for, addressed13to any address reasonable under the circumstances; or14(B) to cause the record or notification to be received within15the time that it would have been received if properly16sent under subparagraph (A).] Reserved. 17 (79) ["Tangible chattel paper" means chattel paper evidenced by18a record or records consisting of information that is19inscribed on a tangible medium.] Reserved. 20 (79-a) "Tangible money" means money in a tangible form. 21 § 43. Subsection (b) of section 9--102 of the uniform commercial code 22 is amended by adding three new definitions Controllable electronic 23 record, Protected purchaser and Qualifying purchaser in alphabetical 24 order to read as follows: 25 "Controllable electronic record" Section 12--102. 26 "Protected purchaser" Section 8--303. 27 "Qualifying purchaser" Section 12--102. 28 § 44. Paragraphs 2 and 5 of subsection (a) of section 9--104 of the 29 uniform commercial code, as amended by chapter 505 of the laws of 2014, 30 are amended to read as follows: 31 (2) the debtor, secured party, and bank have agreed in [an32authenticated] a signed record that the bank will comply with 33 instructions originated by the secured party directing dispo- 34 sition of the funds in the deposit account without further 35 consent by the debtor; 36 (5) another person, other than the debtor: 37 (A) has control of the deposit account and acknowledges that it has 38 control on behalf of the secured party [or, having previously acquired]; 39 or 40 (B) obtains control of the deposit account[, acknowledges] after 41 having acknowledged that it [has] will obtain control of the deposit 42 account on behalf of the secured party. 43 § 45. Section 9--105 of the uniform commercial code, as added by chap- 44 ter 84 of the laws of 2001, is amended to read as follows: 45 Section 9--105. Control of Electronic Copy of Record Evidencing Chattel 46 Paper. 47 [A secured party has control of electronic chattel paper if the record48or records comprising the chattel paper are created, stored, and49assigned in such a manner that:] 50 (a) General rule: control of electronic copy of record evidencing 51 chattel paper. A purchaser has control of an authoritative electronic 52 copy of a record evidencing chattel paper if a system employed for 53 evidencing the assignment of interests in the chattel paper reliablyA. 10579 18 1 establishes the purchaser as the person to which the authoritative elec- 2 tronic copy was assigned. 3 (b) Single authoritative copy. A system satisfies subsection (a) if 4 the record or records evidencing the chattel paper are created, stored, 5 and assigned in a manner that: 6 (1) a single authoritative copy of the record or records exists 7 which is unique, identifiable and, except as otherwise 8 provided in paragraphs (4), (5), and (6), unalterable; 9 (2) the authoritative copy identifies the secured party as the 10 assignee of the record or records; 11 (3) the authoritative copy is communicated to and maintained by 12 the secured party or its designated custodian; 13 (4) copies or revisions that add or change an identified assignee 14 of the authoritative copy can be made only with the partic- 15 ipation of the secured party; 16 (5) each copy of the authoritative copy and any copy of a copy is 17 readily identifiable as a copy that is not the authoritative 18 copy; and 19 (6) any revision of the authoritative copy is readily identifi- 20 able as an authorized or unauthorized revision. 21 (c) One or more authoritative copies. A system satisfies subsection 22 (a), and a purchaser has control of an authoritative electronic copy of 23 a record evidencing chattel paper, if the electronic copy, a record 24 attached to or logically associated with the electronic copy, or a 25 system in which the electronic copy is recorded: 26 (1) enables the purchaser readily to identify each electronic copy as 27 either an authoritative copy or a nonauthoritative copy; 28 (2) enables the purchaser readily to identify itself in any way, 29 including by name, identifying number, cryptographic key, office, or 30 account number, as the assignee of the authoritative electronic copy; 31 and 32 (3) gives the purchaser exclusive power, subject to subsection (d), 33 to: 34 (A) prevent others from adding or changing an identified assignee of 35 the authoritative electronic copy; and 36 (B) transfer control of the authoritative electronic copy. 37 (d) Meaning of exclusive. Subject to subsection (e), a power is exclu- 38 sive under subsection (c)(3)(A) and (B) even if: 39 (1) the authoritative electronic copy, a record attached to or 40 logically associated with the authoritative electronic copy, or a system 41 in which the authoritative electronic copy is recorded limits the use of 42 the authoritative electronic copy or has a protocol programmed to cause 43 a change, including a transfer or loss of control; or 44 (2) the power is shared with another person. 45 (e) When power not shared with another person. A power of a purchaser 46 is not shared with another person under subsection (d)(2) and the 47 purchaser's power is not exclusive if: 48 (1) the purchaser can exercise the power only if the power also is 49 exercised by the other person; and 50 (2) the other person: 51 (A) can exercise the power without exercise of the power by the 52 purchaser; or 53 (B) is the transferor to the purchaser of an interest in the chattel 54 paper.A. 10579 19 1 (f) Presumption of exclusivity of certain powers. If a purchaser has 2 the powers specified in subsection (c)(3)(A) and (B), the powers are 3 presumed to be exclusive. 4 (g) Obtaining control through another person. A purchaser has control 5 of an authoritative electronic copy of a record evidencing chattel paper 6 if another person, other than the transferor to the purchaser of an 7 interest in the chattel paper: 8 (1) has control of the authoritative electronic copy and acknowledges 9 that it has control on behalf of the purchaser; or 10 (2) obtains control of the authoritative electronic copy after having 11 acknowledged that it will obtain control of the electronic copy on 12 behalf of the purchaser. 13 § 46. The uniform commercial code is amended by adding three new 14 sections 9--105A, 9--107A and 9--107B to read as follows: 15 Section 9--105A. Control of Electronic Money. 16 (a) General rule: control of electronic money. A person has control 17 of electronic money if: 18 (1) the electronic money, a record attached to or logically associated 19 with the electronic money, or a system in which the electronic money is 20 recorded gives the person: 21 (A) power to avail itself of substantially all the benefit from the 22 electronic money; and 23 (B) exclusive power, subject to subsection (b), to: 24 (i) prevent others from availing themselves of substantially all the 25 benefit from the electronic money; and 26 (ii) transfer control of the electronic money to another person or 27 cause another person to obtain control of other electronic money as a 28 result of the transfer of the electronic money; and 29 (2) the electronic money, a record attached to or logically associated 30 with the electronic money, or a system in which the electronic money is 31 recorded enables the person readily to identify itself in any way, 32 including by name, identifying number, cryptographic key, office, or 33 account number, as having the powers under paragraph (1). 34 (b) Meaning of exclusive. Subject to subsection (c), a power is 35 exclusive under subsection (a)(1)(B)(i) and (ii) even if: 36 (1) the electronic money, a record attached to or logically associated 37 with the electronic money, or a system in which the electronic money is 38 recorded limits the use of the electronic money or has a protocol 39 programmed to cause a change, including a transfer or loss of control; 40 or 41 (2) the power is shared with another person. 42 (c) When power not shared with another person. A power of a person is 43 not shared with another person under subsection (b)(2) and the person's 44 power is not exclusive if: 45 (1) the person can exercise the power only if the power also is exer- 46 cised by the other person; and 47 (2) the other person: 48 (A) can exercise the power without exercise of the power by the 49 person; or 50 (B) is the transferor to the person of an interest in the electronic 51 money. 52 (d) Presumption of exclusivity of certain powers. If a person has the 53 powers specified in subsection (a)(1)(B)(i) and (ii), the powers are 54 presumed to be exclusive.A. 10579 20 1 (e) Control through another person. A person has control of electron- 2 ic money if another person, other than the transferor to the person of 3 an interest in the electronic money: 4 (1) has control of the electronic money and acknowledges that it has 5 control on behalf of the person; or 6 (2) obtains control of the electronic money after having acknowledged 7 that it will obtain control of the electronic money on behalf of the 8 person. 9 Section 9--107A. Control of Controllable Electronic Record, Controllable 10 Account, or Controllable Payment Intangible. 11 (a) Control under Section 12--105. A secured party has control of a 12 controllable electronic record as provided in Section 12--105. 13 (b) Control of controllable account and controllable payment intangi- 14 ble. A secured party has control of a controllable account or control- 15 lable payment intangible if the secured party has control of the 16 controllable electronic record that evidences the controllable account 17 or controllable payment intangible. 18 Section 9--107B. No Requirement to Acknowledge or Confirm; No Duties. 19 (a) No requirement to acknowledge. A person that has control under 20 Section 9--104, 9--105, or 9--105A is not required to acknowledge that 21 it has control on behalf of another person. 22 (b) No duties or confirmation. If a person acknowledges that it has or 23 will obtain control on behalf of another person, unless the person 24 otherwise agrees or law other than this article otherwise provides, the 25 person does not owe any duty to the other person and is not required to 26 confirm the acknowledgment to any other person. 27 § 47. Subsection (b) of section 9--203 of the uniform commercial code, 28 as added by chapter 84 of the laws of 2001 and subparagraph (D) of para- 29 graph 3 as amended by chapter 505 of the laws of 2014, is amended to 30 read as follows: 31 (b) Enforceability. Except as otherwise provided in subsections (c) 32 through (i), a security interest is enforceable against the debtor and 33 third parties with respect to the collateral only if: 34 (1) value has been given; 35 (2) the debtor has rights in the collateral or the power to 36 transfer rights in the collateral to a secured party; and 37 (3) one of the following conditions is met: 38 (A) the debtor has [authenticated] signed a security agree- 39 ment that provides a description of the collateral and, 40 if the security interest covers timber to be cut, a 41 description of the land concerned; 42 (B) the collateral is not a certificated security and is in 43 the possession of the secured party under Section 9--313 44 pursuant to the debtor's security agreement; 45 (C) the collateral is a certificated security in registered 46 form and the security certificate has been delivered to 47 the secured party under Section 8--301 pursuant to the 48 debtor's security agreement; [or] 49 (D) the collateral is controllable accounts, controllable 50 electronic records, controllable payment intangibles, 51 deposit accounts, electronic [chattel paper] documents, 52 electronic money, investment property[,] or letter-of- 53 credit rights, [or electronic documents,] and the secured 54 party has control under Section 7--106, 9--104, 9--105, 55 9--105A, 9--106, [or] 9--107, or 9--107A pursuant to the 56 debtor's security agreement; orA. 10579 21 1 (E) the collateral is chattel paper and the secured party has 2 possession and control under Section 9--314A pursuant to 3 the debtor's security agreement. 4 § 48. Subsection (b) of section 9--204 of the uniform commercial code, 5 as added by chapter 84 of the laws of 2001, is amended and a new 6 subsection (b-1) is added to read as follows: 7 (b) When after-acquired property clause not effective. [A] Subject to 8 subsection (b-1), a security interest does not attach under a term 9 constituting an after-acquired property clause to: 10 (1) consumer goods, other than an accession when given as addi- 11 tional security, unless the debtor acquires rights in them 12 within 10 days after the secured party gives value; or 13 (2) a commercial tort claim. 14 (b-1) Limitation on subsection (b). Subsection (b) does not prevent a 15 security interest from attaching: 16 (1) to consumer goods as proceeds under Section 9--315(a) or 17 commingled goods under Section 9--336(c); 18 (2) to a commercial tort claim as proceeds under Section 19 9--315(a); or 20 (3) under an after-acquired property clause to property that is 21 proceeds of consumer goods or a commercial tort claim. 22 § 49. Subsection (c) of section 9--207 of the uniform commercial code, 23 as amended by chapter 505 of the laws of 2014, is amended to read as 24 follows: 25 (c) Duties and rights when secured party in possession or control. 26 Except as otherwise provided in subsection (d), a secured party having 27 possession of collateral or control of collateral under Section 7--106, 28 9--104, 9--105, 9--105A, 9--106, [or] 9--107, or 9--107A: 29 (1) may hold as additional security any proceeds, except money or 30 funds, received from the collateral; 31 (2) shall apply money or funds received from the collateral to 32 reduce the secured obligation, unless remitted to the debtor; 33 and 34 (3) may create a security interest in the collateral. 35 § 50. Subsection (b) of section 9--208 of the uniform commercial code, 36 as added by chapter 84 of the laws of 2001, paragraphs 4 and 5 as 37 amended and paragraph 6 as added by chapter 505 of the laws of 2014, is 38 amended to read as follows: 39 (b) Duties of secured party after receiving demand from debtor. Within 40 10 days after receiving [an authenticated] a signed demand by the 41 debtor: 42 (1) a secured party having control of a deposit account under 43 Section 9--104(a)(2) shall send to the bank with which the 44 deposit account is maintained [an authenticated statement] a 45 signed record that releases the bank from any further obli- 46 gation to comply with instructions originated by the secured 47 party; 48 (2) a secured party having control of a deposit account under 49 Section 9--104(a)(3) shall: 50 (A) pay the debtor the balance on deposit in the deposit 51 account; or 52 (B) transfer the balance on deposit into a deposit account in 53 the debtor's name; 54 (3) a secured party, other than a buyer, having control [of elec-55tronic chattel paper] under Section 9--105 [shall:A. 10579 22 1(A) communicate the authoritative copy of the electronic2chattel paper to the debtor or its designated custodian;3(B) if the debtor designates a custodian that is the desig-4nated custodian with which the authoritative copy of the5electronic chattel paper is maintained for the secured6party, communicate to the custodian an authenticated7record releasing the designated custodian from any8further obligation to comply with instructions originated9by the secured party and instructing the custodian to10comply with instructions originated by the debtor; and11(C) take appropriate action to enable the debtor or its12designated custodian to make copies of or revisions to13the authoritative copy which add or change an identified14assignee of the authoritative copy without the consent of15the secured party] of an authoritative electronic copy of 16 a record evidencing chattel paper shall transfer control 17 of the electronic copy to debtor or a person designated 18 by the debtor; 19 (4) a secured party having control of investment property under 20 Section 8--106(d)(2) or 9--106(b) shall send to the securi- 21 ties intermediary or commodity intermediary with which the 22 security entitlement or commodity contract is maintained [an23authenticated] a signed record that releases the securities 24 intermediary or commodity intermediary from any further obli- 25 gation to comply with entitlement orders or directions origi- 26 nated by the secured party; 27 (5) a secured party having control of a letter-of-credit right 28 under Section 9--107 shall send to each person having an 29 unfulfilled obligation to pay or deliver proceeds of the 30 letter-of-credit to the secured party [an authenticated] a 31 signed release from any further obligation to pay or deliver 32 proceeds of the letter-of-credit to the secured party; [and] 33 (6) a secured party having control [of an electronic document34shall:35(A) give control of the electronic document to the debtor or36its designated custodian;37(B) if the debtor designates a custodian that is the desig-38nated custodian with which the authoritative copy of the39electronic document is maintained for the secured party,40communicate to the custodian an authenticated record41releasing the designated custodian from any further obli-42gation to comply with instructions originated by the43secured party and instructing the custodian to comply44with instructions originated by the debtor; and45(C) take appropriate action to enable the debtor or its46designated custodian to make copies of or revisions to47the authoritative copy which add or change an identified48assignee of the authoritative copy without the consent of49the secured party] under Section 7--106 of an authori- 50 tative electronic copy of an electronic document of title 51 shall transfer control of the electronic copy to the 52 debtor or a person designated by the debtor; 53 (7) a secured party having control under Section 9--105A of 54 electronic money shall transfer control of the electronic 55 money to the debtor or a person designated by the debtor; 56 andA. 10579 23 1 (8) a secured party having control under Section 12--105 of a 2 controllable electronic record, other than a buyer of a 3 controllable account or controllable payment intangible 4 evidenced by the controllable electronic record, shall 5 transfer control of the controllable electronic record to 6 the debtor or a person designated by the debtor. 7 § 51. Subsection (b) of section 9--209 of the uniform commercial code, 8 as added by chapter 84 of the laws of 2001, is amended to read as 9 follows: 10 (b) Duties of secured party after receiving demand from debtor. Within 11 10 days after receiving [an authenticated] a signed demand by the 12 debtor, a secured party shall send to an account debtor that has 13 received notification under Section 9--406(a) or 12--106(b) of an 14 assignment to the secured party as assignee [under Section 9--406(a) an15authenticated] a signed record that releases the account debtor from any 16 further obligation to the secured party. 17 § 52. Section 9--210 of the uniform commercial code, as added by chap- 18 ter 84 of the laws of 2001, is amended to read as follows: 19 Section 9--210. Request for Accounting; Request Regarding List of Colla- 20 teral or Statement of Account. 21 (a) Definitions in this section: 22 (1) "Request" means a record of a type described in paragraph 23 (2), (3), or (4). 24 (2) "Request for an accounting" means a record [authenticated] 25 signed by a debtor requesting that the recipient provide an 26 accounting of the unpaid obligations secured by collateral 27 and reasonably identifying the transaction or relationship 28 that is the subject of the request. 29 (3) "Request regarding a list of collateral" means a record 30 [authenticated] signed by a debtor requesting that the recip- 31 ient approve or correct a list of what the debtor believes to 32 be the collateral securing an obligation and reasonably iden- 33 tifying the transaction or relationship that is the subject 34 of the request. 35 (4) "Request regarding a statement of account" means a record 36 [authenticated] signed by a debtor requesting that the recip- 37 ient approve or correct a statement indicating what the 38 debtor believes to be the aggregate amount of unpaid obli- 39 gations secured by collateral as of a specified date and 40 reasonably identifying the transaction or relationship that 41 is the subject of the request. 42 (b) Duty to respond to requests. Subject to subsections (c), (d), (e), 43 and (f), a secured party, other than a buyer of accounts, chattel paper, 44 payment intangibles, or promissory notes or a consignor, shall comply 45 with a request within 14 days after receipt: 46 (1) in the case of a request for an accounting, by [authenticat-47ing] signing and sending to the debtor an accounting; and 48 (2) in the case of a request regarding a list of collateral or a 49 request regarding a statement of account, by [authenticating] 50 signing and sending to the debtor an approval or correction. 51 (c) Request regarding list of collateral; statement concerning type of 52 collateral. A secured party that claims a security interest in all of a 53 particular type of collateral owned by the debtor may comply with a 54 request regarding a list of collateral by sending to the debtor [an55authenticated] a signed record including a statement to that effect 56 within 14 days after receipt.A. 10579 24 1 (d) Request regarding list of collateral; no interest claimed. A 2 person that receives a request regarding a list of collateral, claims no 3 interest in the collateral when it receives the request, and claimed an 4 interest in the collateral at an earlier time shall comply with the 5 request within 14 days after receipt by sending to the debtor [an6authenticated] a signed record: 7 (1) disclaiming any interest in the collateral; and 8 (2) if known to the recipient, providing the name and mailing 9 address of any assignee of or successor to the recipient's 10 interest in the collateral. 11 (e) Request for accounting or regarding statement of account; no 12 interest in obligation claimed. A person that receives a request for an 13 accounting or a request regarding a statement of account, claims no 14 interest in the obligations when it receives the request, and claimed an 15 interest in the obligations at an earlier time shall comply with the 16 request within 14 days after receipt by sending to the debtor [an17authenticated] a signed record: 18 (1) disclaiming any interest in the obligations; and 19 (2) if known to the recipient, providing the name and mailing 20 address of any assignee of or successor to the recipient's 21 interest in the obligations. 22 (f) Charges for responses. A debtor is entitled without charge to one 23 response to a request under this section during any six-month period. 24 The secured party may require payment of a charge not exceeding $25 for 25 each additional response. 26 § 53. The opening paragraph and subsection (c) of section 9--301 of 27 the uniform commercial code, the opening paragraph as added by chapter 28 84 of the laws of 2001 and subsection (c) as amended by chapter 505 of 29 the laws of 2014, are amended to read as follows: 30 Except as otherwise provided in Sections 9--303 through [9--306] 31 9-306B, the following rules determine the law governing perfection, the 32 effect of perfection or nonperfection, and the priority of a security 33 interest in collateral: 34 (c) Except as otherwise provided in subsection (d), while [tangible] 35 negotiable tangible documents, goods, instruments, [money,] or tangible 36 [chattel paper] money is located in a jurisdiction, the local law of 37 that jurisdiction governs: 38 (1) perfection of a security interest in the goods by filing a 39 fixture filing; 40 (2) perfection of a security interest in timber to be cut; and 41 (3) the effect of perfection or nonperfection and the priority of 42 a nonpossessory security interest in the collateral. 43 § 54. Subsection (a) of section 9--304 of the uniform commercial code, 44 as added by chapter 84 of the laws of 2001, is amended to read as 45 follows: 46 (a) Law of bank's jurisdiction governs. The local law of a bank's 47 jurisdiction governs perfection, the effect of perfection or nonper- 48 fection, and the priority of a security interest in a deposit account 49 maintained with that bank even if the transaction does not bear any 50 relation to the bank's jurisdiction. 51 § 55. Subsection (a) of section 9--305 of the uniform commercial code 52 is amended by adding a new paragraph 5 to read as follows: 53 (5) Paragraphs (2), (3), and (4) apply even if the transaction does 54 not bear any relation to the jurisdiction. 55 § 56. The uniform commercial code is amended by adding two new 56 sections 9-306A and 9-306B to read as follows:A. 10579 25 1 Section 9-306A. Law Governing Perfection and Priority of Security Inter- 2 ests in Chattel Paper. 3 (a) Chattel paper evidenced by authoritative electronic copy. Except 4 as provided in subsection (d), if chattel paper is evidenced only by an 5 authoritative electronic copy of the chattel paper or is evidenced by an 6 authoritative electronic copy and an authoritative tangible copy, the 7 local law of the chattel paper's jurisdiction governs perfection, the 8 effect of perfection or nonperfection, and the priority of a security 9 interest in the chattel paper, even if the transaction does not bear any 10 relation to the chattel paper's jurisdiction. 11 (b) Chattel paper's jurisdiction. The following rules determine the 12 chattel paper's jurisdiction under this section: 13 (1) If the authoritative electronic copy of the record evidencing 14 chattel paper, or a record attached to or logically associated with the 15 electronic copy and readily available for review, expressly provides 16 that a particular jurisdiction is the chattel paper's jurisdiction for 17 purposes of this part, this article, or this code, that jurisdiction is 18 the chattel paper's jurisdiction. 19 (2) If paragraph (1) does not apply and the rules of the system in 20 which the authoritative electronic copy is recorded are readily avail- 21 able for review and expressly provide that a particular jurisdiction is 22 the chattel paper's jurisdiction for purposes of this part, this arti- 23 cle, or this code, that jurisdiction is the chattel paper's jurisdic- 24 tion. 25 (3) If paragraphs (1) and (2) do not apply and the authoritative elec- 26 tronic copy, or a record attached to or logically associated with the 27 electronic copy and readily available for review, expressly provides 28 that the chattel paper is governed by the law of a particular jurisdic- 29 tion, that jurisdiction is the chattel paper's jurisdiction. 30 (4) If paragraphs (1), (2) and (3) do not apply and the rules of the 31 system in which the authoritative electronic copy is recorded are readi- 32 ly available for review and expressly provide that the chattel paper or 33 the system is governed by the law of a particular jurisdiction, that 34 jurisdiction is the chattel paper's jurisdiction. 35 (5) If paragraphs (1) through (4) do not apply, the chattel paper's 36 jurisdiction is the jurisdiction in which the debtor is located. 37 (c) Chattel paper evidenced by authoritative tangible copy. If an 38 authoritative tangible copy of a record evidences chattel paper and the 39 chattel paper is not evidenced by an authoritative electronic copy, 40 while the authoritative tangible copy of the record evidencing chattel 41 paper is located in a jurisdiction, the local law of that jurisdiction 42 governs: 43 (1) perfection of a security interest in the chattel paper by 44 possession under Section 9--314A; and 45 (2) the effect of perfection or nonperfection and the priority of a 46 security interest in the chattel paper. 47 (d) When perfection governed by law of jurisdiction where debtor 48 located. The local law of the jurisdiction in which the debtor is 49 located governs perfection of a security interest in chattel paper by 50 filing. 51 Section 9-306B. Law Governing Perfection and Priority of Security Inter- 52 ests in Controllable Accounts, Controllable Electron- 53 ic Records, and Controllable Payment Intangibles. 54 (a) Governing law: general rules. Except as provided in subsection 55 (b), the local law of the controllable electronic record's jurisdiction 56 specified in Section 12--107(c) and (d) governs perfection, the effectA. 10579 26 1 of perfection or nonperfection, and the priority of a security interest 2 in a controllable electronic record and a security interest in a 3 controllable account or controllable payment intangible evidenced by the 4 controllable electronic record. 5 (b) When perfection governed by law of jurisdiction where debtor 6 located. The local law of the jurisdiction in which the debtor is 7 located governs: 8 (1) perfection of a security interest in a controllable account, 9 controllable electronic record, or controllable payment intangible by 10 filing; and 11 (2) automatic perfection of a security interest in a controllable 12 payment intangible created by a sale of the controllable payment intan- 13 gible. 14 § 57. Paragraph 8 of subsection (b) of section 9--310 of the uniform 15 commercial code, as amended by chapter 505 of the laws of 2014, is 16 amended and a new paragraph 8-a is added to read as follows: 17 (8) in controllable accounts, controllable electronic records, 18 controllable payment intangibles, deposit accounts, [elec-19tronic chattel paper,] electronic documents, investment prop- 20 erty, or letter-of-credit rights which is perfected by 21 control under Section 9--314; 22 (8-a) in chattel paper which is perfected by possession and 23 control under Section 9--314A; 24 § 58. The section heading and subsections (a), (b) and (e) of section 25 9--312 of the uniform commercial code, the section heading and 26 subsections (a) and (b) as added by chapter 84 of the laws of 2001, and 27 subsection (e) as amended by chapter 505 of the laws of 2014, are 28 amended to read as follows: 29 Perfection of Security Interests in Chattel Paper, Controllable 30 Accounts, Controllable Electronic Records, Controlla- 31 ble Payment Intangibles, Deposit Accounts, Documents, 32 Goods Covered by Documents, Instruments, Investment 33 Property, Letter-of-credit Rights, and Money; 34 Perfection by Permissive Filing; Temporary Perfection 35 Without Filing or Transfer of Possession. 36 (a) Perfection by filing permitted. A security interest in chattel 37 paper, [negotiable documents,] controllable accounts, controllable elec- 38 tronic records, controllable payment intangibles, instruments, [or] 39 investment property, or negotiable documents may be perfected by filing. 40 (b) Control or possession of certain collateral. Except as otherwise 41 provided in Section 9--315(c) and (d) for proceeds: 42 (1) a security interest in a deposit account may be perfected 43 only by control under Section 9--314; 44 (2) and except as otherwise provided in Section 9--308(d), a 45 security interest in a letter-of-credit right may be 46 perfected only by control under Section 9--314; [and] 47 (3) a security interest in tangible money may be perfected only 48 by the secured party's taking possession under Section 49 9--313; and 50 (4) a security interest in electronic money may be 51 perfected only by control under Section 9--314. 52 (e) Temporary perfection: new value. A security interest in certif- 53 icated securities, negotiable documents, or instruments is perfected 54 without filing or the taking of possession or control for a period of 20 55 days from the time it attaches to the extent that it arises for new 56 value given under [an authenticated] a signed security agreement.A. 10579 27 1 § 59. Subsections (a), (c) and (d) of section 9--313 of the uniform 2 commercial code, subsection (a) as amended by chapter 505 of the laws of 3 2014, and subsections (c) and (d) as added by chapter 84 of the laws of 4 2001, are amended to read as follows: 5 (a) Perfection by possession or delivery. Except as otherwise provided 6 in subsection (b), a secured party may perfect a security interest in 7 [tangible] goods, instruments, negotiable tangible documents, [goods,8instruments, money,] or tangible [chattel paper] money by taking 9 possession of the collateral. A secured party may perfect a security 10 interest in certificated securities by taking delivery of the certif- 11 icated securities under Section 8--301. 12 (c) Collateral in possession of person other than debtor. With respect 13 to collateral other than certificated securities and goods covered by a 14 document, a secured party takes possession of collateral in the 15 possession of a person other than the debtor, the secured party, or a 16 lessee of the collateral from the debtor in the ordinary course of the 17 debtor's business, when: 18 (1) the person in possession [authenticates] signs a record 19 acknowledging that it holds possession of the collateral for 20 the secured party's benefit; or 21 (2) the person takes possession of the collateral after having 22 [authenticated] signed a record acknowledging that it will 23 hold possession of the collateral for the secured party's 24 benefit. 25 (d) Time of perfection by possession; continuation of perfection. If 26 perfection of a security interest depends upon possession of the collat- 27 eral by a secured party, perfection occurs [no] not earlier than the 28 time the secured party takes possession and continues only while the 29 secured party retains possession. 30 § 60. Section 9--314 of the uniform commercial code, as added by chap- 31 ter 84 of the laws of 2001, subsections (a) and (b) as amended by chap- 32 ter 505 of the laws of 2014, is amended to read as follows: 33 Section 9--314. Perfection by Control. 34 (a) Perfection by control. A security interest in controllable 35 accounts, controllable electronic records, controllable payment intangi- 36 bles, deposit accounts, electronic documents, electronic money, invest- 37 ment property, [deposit accounts,] or letter-of-credit rights, [elec-38tronic chattel paper, or electronic documents] may be perfected by 39 control of the collateral under Section 7--106, 9--104, [9--105] 40 9--105A, 9--106, [or] 9--107 or 9--107A. 41 (b) Specified collateral: time of perfection by control; continuation 42 of perfection. A security interest in controllable accounts, controlla- 43 ble electronic records, controllable payment intangibles, deposit 44 accounts, electronic [chattel paper] documents, electronic money, or 45 letter-of-credit rights[, or electronic documents] is perfected by 46 control under Section 7--106, 9--104, [9--105] 9--105A, [or] 9--107, or 47 9--107A not earlier than the time when the secured party obtains control 48 and remains perfected by control only while the secured party retains 49 control. 50 (c) Investment property: time of perfection by control; continuation 51 of perfection. A security interest in investment property is perfected 52 by control under Section 9--106 [from] not earlier than the time the 53 secured party obtains control and remains perfected by control until: 54 (1) the secured party does not have control; and 55 (2) one of the following occurs:A. 10579 28 1 (A) if the collateral is a certificated security, the debtor 2 has or acquires possession of the security certificate; 3 (B) if the collateral is an uncertificated security, the 4 issuer has registered or registers the debtor as the 5 registered owner; or 6 (C) if the collateral is a security entitlement, the debtor 7 is or becomes the entitlement holder. 8 (d) Cooperative interests. Subsections (a) through (c) do not apply to 9 cooperative interests. 10 § 61. The uniform commercial code is amended by adding a new section 11 9-314A to read as follows: 12 Section 9-314A. Perfection by Possession and Control of Chattel Paper. 13 (a) Perfection by possession and control. A secured party may perfect 14 a security interest in chattel paper by taking possession of each 15 authoritative tangible copy of the record evidencing the chattel paper 16 and obtaining control of each authoritative electronic copy of the elec- 17 tronic record evidencing the chattel paper. 18 (b) Time of perfection; continuation of perfection. A security inter- 19 est is perfected under subsection (a) not earlier than the time the 20 secured party takes possession and obtains control and remains perfected 21 under subsection (a) only while the secured party retains possession and 22 control. 23 (c) Application of Section 9--313 to perfection by possession of chat- 24 tel paper. Section 9--313(c) and (f) through (i) applies to perfection 25 by possession of an authoritative tangible copy of a record evidencing 26 chattel paper. 27 § 62. Subsections (a) and (f) of section 9--316 of the uniform commer- 28 cial code, as added by chapter 84 of the laws of 2001, are amended to 29 read as follows: 30 (a) General rule: effect on perfection of change in governing law. A 31 security interest perfected pursuant to the law of the jurisdiction 32 designated in Section 9--301(a) [or], 9--305(c), 9-306A(d), or 9-306B(b) 33 remains perfected until the earliest of: 34 (1) the time perfection would have ceased under the law of that 35 jurisdiction; 36 (2) the expiration of four months after a change of the debtor's 37 location to another jurisdiction; or 38 (3) the expiration of one year after a transfer of collateral to 39 a person that thereby becomes a debtor and is located in 40 another jurisdiction. 41 (f) Change in jurisdiction of chattel paper, controllable electronic 42 record, bank, issuer, nominated person, securities intermediary, or 43 commodity intermediary. A security interest in chattel paper, controlla- 44 ble accounts, controllable electronic records, controllable payment 45 intangibles, deposit accounts, letter-of-credit rights, or investment 46 property which is perfected under the law of the chattel paper's juris- 47 diction, the controllable electronic record's jurisdiction, the bank's 48 jurisdiction, the issuer's jurisdiction, a nominated person's jurisdic- 49 tion, the securities intermediary's jurisdiction, or the commodity 50 intermediary's jurisdiction, as applicable, remains perfected until the 51 earlier of: 52 (1) the time the security interest would have become unperfected 53 under the law of that jurisdiction; or 54 (2) the expiration of four months after a change of the applica- 55 ble jurisdiction to another jurisdiction.A. 10579 29 1 § 63. Subsections (b) and (d) of section 9--317 of the uniform commer- 2 cial code, as amended by chapter 505 of the laws of 2014, are amended 3 and four new subsections (f), (g), (h) and (i) are added to read as 4 follows: 5 (b) Buyers that receive delivery. Except as otherwise provided in 6 subsection (e), a buyer, other than a secured party, of [tangible chat-7tel paper] goods, instruments, tangible documents, [goods, instruments,] 8 or a certificated security takes free of a security interest or agricul- 9 tural lien if the buyer gives value and receives delivery of the collat- 10 eral without knowledge of the security interest or agricultural lien and 11 before it is perfected. 12 (d) Licensees and buyers of certain collateral. [A] Subject to 13 subsections (f) through (i), a licensee of a general intangible or a 14 buyer, other than a secured party, of [accounts,] collateral other than 15 electronic [chattel paper] money, [electronic documents, general intan-16gibles, or investment property other than] goods, instruments, intangi- 17 ble documents or a certificated security takes free of a security inter- 18 est if the licensee or buyer gives value without knowledge of the 19 security interest and before it is perfected. 20 (f) Buyers of chattel paper. A buyer, other than a secured party, of 21 chattel paper takes free of a security interest if, without knowledge of 22 the security interest and before it is perfected, the buyer gives value 23 and: 24 (1) receives delivery of each authoritative tangible copy of the 25 record evidencing the chattel paper; and 26 (2) if each authoritative electronic copy of the record evidencing the 27 chattel paper can be subjected to control under Section 9--105, obtains 28 control of each authoritative electronic copy. 29 (g) Buyers of electronic documents. A buyer of an electronic document 30 takes free of a security interest if, without knowledge of the security 31 interest and before it is perfected, the buyer gives value and, if each 32 authoritative electronic copy of the document can be subjected to 33 control under Section 7--106, obtains control of each authoritative 34 electronic copy. 35 (h) Buyers of controllable electronic records. A buyer of a control- 36 lable electronic record takes free of a security interest if, without 37 knowledge of the security interest and before it is perfected, the buyer 38 gives value and obtains control of the controllable electronic record. 39 (i) Buyers of controllable accounts and controllable payment intangi- 40 bles. A buyer, other than a secured party, of a controllable account or 41 a controllable payment intangible takes free of a security interest if, 42 without knowledge of the security interest and before it is perfected, 43 the buyer gives value and obtains control of the controllable account or 44 controllable payment intangible. 45 § 64. Subsections (d) and (f) of section 9--323 of the uniform commer- 46 cial code, as added by chapter 84 of the laws of 2001, are amended to 47 read as follows: 48 (d) Buyer of goods. Except as otherwise provided in subsection (e), a 49 buyer of goods [other than a buyer in ordinary course of business] takes 50 free of a security interest to the extent that it secures advances made 51 after the earlier of: 52 (1) the time the secured party acquires knowledge of the buyer's 53 purchase; or 54 (2) 45 days after the purchase. 55 (f) Lessee of goods. Except as otherwise provided in subsection (g), a 56 lessee of goods[, other than a lessee in ordinary course of business,]A. 10579 30 1 takes the leasehold interest free of a security interest to the extent 2 that it secures advances made after the earlier of: 3 (1) the time the secured party acquires knowledge of the lease; 4 or 5 (2) 45 days after the lease contract becomes enforceable. 6 § 65. Subsections (b) and (d) of section 9--324 of the uniform commer- 7 cial code, as added by chapter 84 of the laws of 2001, are amended to 8 read as follows: 9 (b) Inventory purchase-money priority. Subject to subsection (c) and 10 except as otherwise provided in subsection (g), a perfected purchase-mo- 11 ney security interest in inventory has priority over a conflicting secu- 12 rity interest in the same inventory, has priority over a conflicting 13 security interest in chattel paper or an instrument constituting 14 proceeds of the inventory and in proceeds of the chattel paper, if so 15 provided in Section 9--330, and, except as otherwise provided in Section 16 9--327, also has priority in identifiable cash proceeds of the inventory 17 to the extent the identifiable cash proceeds are received on or before 18 the delivery of the inventory to a buyer, if: 19 (1) the purchase-money security interest is perfected when the 20 debtor receives possession of the inventory; 21 (2) the purchase-money secured party sends [an authenticated] a 22 signed notification to the holder of the conflicting security 23 interest; 24 (3) the holder of the conflicting security interest receives the 25 notification within five years before the debtor receives 26 possession of the inventory; and 27 (4) the notification states that the person sending the notifica- 28 tion has or expects to acquire a purchase-money security 29 interest in inventory of the debtor and describes the inven- 30 tory. 31 (d) Livestock purchase-money priority. Subject to subsection (e) and 32 except as otherwise provided in subsection (g), a perfected purchase-mo- 33 ney security interest in livestock that are farm products has priority 34 over a conflicting security interest in the same livestock, and, except 35 as otherwise provided in Section 9--327, a perfected security interest 36 in their identifiable proceeds and identifiable products in their unman- 37 ufactured states also has priority, if: 38 (1) the purchase-money security interest is perfected when the 39 debtor receives possession of the livestock; 40 (2) the purchase-money secured party sends [an authenticated] a 41 signed notification to the holder of the conflicting security 42 interest; 43 (3) the holder of the conflicting security interest receives the 44 notification within six months before the debtor receives 45 possession of the livestock; and 46 (4) the notification states that the person sending the notifica- 47 tion has or expects to acquire a purchase-money security 48 interest in livestock of the debtor and describes the live- 49 stock. 50 § 66. The uniform commercial code is amended by adding a new section 51 9-326A to read as follows: 52 Section 9-326A. Priority of Security Interest in Controllable Account, 53 Controllable Electronic Record, and Controllable 54 Payment Intangible. 55 A security interest in a controllable account, controllable electronic 56 record, or controllable payment intangible held by a secured partyA. 10579 31 1 having control of the account, electronic record, or payment intangible 2 has priority over a conflicting security interest held by a secured 3 party that does not have control. 4 § 67. Subsections (a), (b) and (f) of section 9--330 of the uniform 5 commercial code, as added by chapter 84 of the laws of 2001, are amended 6 to read as follows: 7 (a) Purchaser's priority: security interest claimed merely as 8 proceeds. A purchaser of chattel paper has priority over a security 9 interest in the chattel paper which is claimed merely as proceeds of 10 inventory subject to a security interest if: 11 (1) in good faith and in the ordinary course of the purchaser's 12 business, the purchaser gives new value [and], takes 13 possession of [the chattel paper or obtains control of] each 14 authoritative tangible copy of the record evidencing the 15 chattel paper, and obtains control under Section 9--105 of 16 each authoritative electronic copy of the record evidencing 17 the chattel paper; and 18 (2) the authoritative copies of the record evidencing the chattel 19 paper [does] do not indicate that [it] the chattel paper has 20 been assigned to an identified assignee other than the 21 purchaser. 22 (b) Purchaser's priority: other security interests. A purchaser of 23 chattel paper has priority over a security interest in the chattel paper 24 which is claimed other than merely as proceeds of inventory subject to a 25 security interest if the purchaser gives new value [and], takes 26 possession of each authoritative tangible copy of the record evidencing 27 the chattel paper [or], and obtains control [of the chattel paper] under 28 Section 9--105 of each authoritative electronic copy of the record 29 evidencing the chattel paper in good faith, in the ordinary course of 30 the purchaser's business, and without knowledge that the purchase 31 violates the rights of the secured party. 32 (f) Indication of assignment gives knowledge. For purposes of 33 subsections (b) and (d), if the authoritative copies of the record 34 evidencing chattel paper or an instrument [indicates] indicate that [it] 35 the chattel paper or instrument has been assigned to an identified 36 secured party other than the purchaser, a purchaser of the chattel paper 37 or instrument has knowledge that the purchase violates the rights of the 38 secured party. 39 § 68. Section 9--331 of the uniform commercial code, as added by chap- 40 ter 84 of the laws of 2001, is amended to read as follows: 41 Section 9--331. Priority of Rights of Purchasers of Controllable 42 Accounts, Controllable Electronic Records, Controlla- 43 ble Payment Intangibles, Documents, Instruments, 44 [Documents,] and Securities under Other Articles; 45 Priority of Interests in Financial Assets and Security 46 Entitlements and Protection Against Assertion of Claim 47 under [Article] Articles 8 and 12. 48 (a) Rights under Articles 3, 7, [and] 8, and 12 not limited. This 49 article does not limit the rights of a holder in due course of a negoti- 50 able instrument, a holder to which a negotiable document of title has 51 been duly negotiated, [or a] protected purchaser of a security, or a 52 qualifying purchaser of a controllable account, controllable electronic 53 record, or controllable payment intangible. These holders or purchasers 54 take priority over an earlier security interest, even if perfected, to 55 the extent provided in Articles 3, 7, [and] 8, and 12.A. 10579 32 1 (b) Protection under [Article] Articles 8 and 12. This article does 2 not limit the rights of or impose liability on a person to the extent 3 that the person is protected against the assertion of a claim under 4 Article 8 or 12. 5 (c) Filing not notice. Filing under this article does not constitute 6 notice of a claim or defense to the holders, or purchasers, or persons 7 described in subsections (a) and (b). 8 (d) Section not applicable to cooperative interests. Subsections (a), 9 (b), and (c) do not apply to cooperative interests. 10 § 69. Section 9--332 of the uniform commercial code, as added by 11 chapter 84 of the laws of 2001, is amended to read as follows: 12 Section 9--332. Transfer of Money; Transfer of Funds from Deposit 13 Account. 14 (a) Transferee of tangible money. A transferee of tangible money 15 takes the money free of a security interest [unless] if the transferee 16 [acts] receives possession of the money without acting in collusion with 17 the debtor in violating the rights of the secured party. 18 (b) Transferee of funds from deposit account. A transferee of funds 19 from a deposit account takes the funds free of a security interest in 20 the deposit account [unless] if the transferee [acts] receives the funds 21 without acting in collusion with the debtor in violating the rights of 22 the secured party. 23 (c) Transferee of electronic money. A transferee of electronic money 24 takes the money free of a security interest if the transferee obtains 25 control of the money without acting in collusion with the debtor in 26 violating the rights of the secured party. 27 § 70. Subsection (f) of section 9--334 of the uniform commercial code, 28 as added by chapter 84 of the laws of 2001, is amended to read as 29 follows: 30 (f) Priority based on consent, disclaimer, or right to remove. A secu- 31 rity interest in fixtures, whether or not perfected, has priority over a 32 conflicting interest of an encumbrancer or owner of the real property 33 if: 34 (1) the encumbrancer or owner has, in [an authenticated] a signed 35 record, consented to the security interest or disclaimed an 36 interest in the goods as fixtures; or 37 (2) the debtor has a right to remove the goods as against the 38 encumbrancer or owner. 39 § 71. Section 9--341 of the uniform commercial code, as added by chap- 40 ter 84 of the laws of 2001, is amended to read as follows: 41 Section 9--341. Bank's Rights and Duties with Respect to Deposit 42 Account. 43 Except as otherwise provided in Section 9--340 (c), and unless the 44 bank otherwise agrees in [an authenticated] a signed record, a bank's 45 rights and duties with respect to a deposit account maintained with the 46 bank are not terminated, suspended, or modified by: 47 (a) the creation, attachment, or perfection of a security inter- 48 est in the deposit account; 49 (b) the bank's knowledge of the security interest; or 50 (c) the bank's receipt of instructions from the secured party. 51 § 72. Paragraph 2 of subsection (a) of section 9--404 of the uniform 52 commercial code, as added by chapter 84 of the laws of 2001, is amended 53 to read as follows: 54 (2) any other defense or claim of the account debtor against the 55 assignor which accrues before the account debtor receives aA. 10579 33 1 notification of the assignment [authenticated] signed by the 2 assignor or the assignee. 3 § 73. Section 9--406 of the uniform commercial code, as added by chap- 4 ter 84 of the laws of 2001, is amended to read as follows: 5 Section 9--406. Discharge of Account Debtor; Notification of Assignment; 6 Identification and Proof of Assignment; Restrictions 7 on Assignment of Accounts, Chattel Paper, Payment 8 Intangibles, and Promissory Notes Ineffective. 9 (a) Discharge of account debtor; effect of notification. Subject to 10 subsections (b) through [(h)] (i), an account debtor on an account, 11 chattel paper, or a payment intangible may discharge its obligation by 12 paying the assignor until, but not after, the account debtor receives a 13 notification, [authenticated] signed by the assignor or the assignee, 14 that the amount due or to become due has been assigned and that payment 15 is to be made to the assignee. After receipt of the notification, the 16 account debtor may discharge its obligation by paying the assignee and 17 may not discharge the obligation by paying the assignor. 18 (b) When notification ineffective. Subject to [subsection] subsections 19 (g) and (i), notification is ineffective under subsection (a): 20 (1) if it does not reasonably identify the rights assigned; 21 (2) to the extent that an agreement between an account debtor and 22 a seller of a payment intangible limits the account debtor's 23 duty to pay a person other than the seller and the limitation 24 is effective under law other than this article; or 25 (3) at the option of an account debtor, if the notification noti- 26 fies the account debtor to make less than the full amount of 27 any installment or other periodic payment to the assignee, 28 even if: 29 (A) only a portion of the account, chattel paper, or payment 30 intangible has been assigned to that assignee; 31 (B) a portion has been assigned to another assignee; or 32 (C) the account debtor knows that the assignment to that 33 assignee is limited. 34 (c) Proof of assignment. Subject to [subsection] subsections (g) and 35 (i), if requested by the account debtor, an assignee shall seasonably 36 furnish reasonable proof that the assignment has been made. Unless the 37 assignee complies, the account debtor may discharge its obligation by 38 paying the assignor, even if the account debtor has received a notifica- 39 tion under subsection (a). 40 (d) Term restricting assignment generally ineffective. For purposes of 41 this subsection, "promissory note" includes a negotiable instrument that 42 evidences chattel paper. Except as otherwise provided in subsection (e) 43 and Sections 2-A-303 and 9--407, and subject to subsection (g), a term 44 in an agreement between an account debtor and an assignor or in a prom- 45 issory note is ineffective to the extent that it: 46 (1) prohibits, restricts, or requires the consent of the account 47 debtor or person obligated on the promissory note to the 48 assignment or transfer of, or the creation, attachment, 49 perfection, or enforcement of a security interest in, the 50 account, chattel paper, payment intangible, or promissory 51 note; or 52 (2) provides that the assignment or transfer or the creation, 53 attachment, perfection, or enforcement of the security inter- 54 est may give rise to a default, breach, right of recoupment, 55 claim, defense, termination, right of termination, or remedyA. 10579 34 1 under the account, chattel paper, payment intangible, or 2 promissory note. 3 (e) Inapplicability of subsection (d) to certain sales. Subsection (d) 4 does not apply to the sale of a payment intangible or promissory note. 5 (f) Subsection (b)(3) not waivable. Subject to [subsection] 6 subsections (g) and (i), an account debtor may not waive or vary its 7 option under subsection (b)(3). 8 (g) Rule for individual under other law. This section is subject to a 9 rule of law, statute, rule or regulation other than this article which 10 establishes a different rule for an account debtor who is an individual 11 and who incurred the obligation primarily for personal, family, or 12 household purposes. 13 (h) Inapplicability. This section does not apply to: 14 (1) an assignment of a health care insurance receivable to the 15 extent such assignment conflicts with other law or the 16 parties have otherwise agreed in writing that such receivable 17 is non-assignable, 18 (2) a claim or right to receive compensation for injuries or 19 sickness as described in 26 U.S.C. § 104(a)(1) and (2), as 20 amended from time to time, or 21 (3) a claim or right to receive benefits under a special needs 22 trust as described in 42 U.S.C. § 1396p (d)(4), as amended 23 from time to time. 24 (i) Inapplicability of certain subsections. Subsections (a), 25 (b), (c) and (f) do not apply to a controllable account or 26 controllable payment intandible. 27 § 74. Section 9--408 of the uniform commercial code is amended by 28 adding a new subsection (e) to read as follows: 29 (e) "Promissory note". In this section, "promissory note" includes a 30 negotiable instrument that evidences chattel paper. 31 § 75. Paragraph 1 of subsection (a) and the opening paragraph of 32 subsection (b) of section 9--509 of the uniform commercial code, as 33 added by chapter 84 of the laws of 2001, are amended to read as follows: 34 (1) the debtor authorizes the filing in [an authenticated] a 35 signed record or pursuant to subsection (b) or (c); or 36 By [authenticating] signing or becoming bound as debtor by a security 37 agreement, a debtor or new debtor authorizes the filing of an initial 38 financing statement, and an amendment, covering: 39 § 76. Paragraph 2 of subsection (b) and the opening paragraph of 40 subsection (c) of section 9--513 of the uniform commercial code, as 41 added by chapter 84 of the laws of 2001, are amended to read as follows: 42 (2) if earlier, within 20 days after the secured party receives 43 [an authenticated] a signed demand from a debtor. 44 In cases not governed by subsection (a), within 20 days after a 45 secured party receives [an authenticated] a signed demand from a debtor, 46 the secured party shall cause the secured party of record for a financ- 47 ing statement to send to the debtor a termination statement for the 48 financing statement or file the termination statement in the filing 49 office if: 50 § 77. Subsection (b) of section 9--601 of the uniform commercial code, 51 as amended by chapter 505 of the laws of 2014, is amended to read as 52 follows: 53 (b) Rights and duties of secured party in possession or control. A 54 secured party in possession of collateral or control of collateral under 55 Section 7--106, 9--104, 9--105, 9--105A, 9--106, [or] 9--107, or 9--107A 56 has the rights and duties provided in Section 9--207.A. 10579 35 1 § 78. Section 9--605 of the uniform commercial code, as added by chap- 2 ter 84 of the laws of 2001, is amended to read as follows: 3 Section 9--605. Unknown Debtor or Secondary Obligor. 4 [A] (a) In general: No duty owed by secured party. Except as 5 provided in subsection (b), a secured party does not owe a duty based on 6 its status as secured party: 7 [(a)] (1) to a person that is a debtor or obligor, unless the secured 8 party knows: 9 [(1)] (A) that the person is a debtor or obligor; 10 [(2)] (B) the identity of the person; and 11 [(3)] (C) how to communicate with the person; or 12 [(b)] (2) to a secured party or lienholder that has filed a financing 13 statement against a person, unless the secured party knows: 14 [(1)] (A) that the person is a debtor; and 15 [(2)] (B) the identity of the person. 16 (b) Exception: Secured party owes duty to debtor or obligor. A 17 secured party owes a duty based on its status as a secured party to a 18 person if, at the time the secured party obtains control of collateral 19 that is a controllable account, controllable electronic record, or 20 controllable payment intangible or at the time the security interest 21 attaches to the collateral, whichever is later: 22 (1) the person is a debtor or obligor; and 23 (2) the secured party knows that the information in subsection 24 (a)(1)(A), (B), or (C) relating to the person is not provided by the 25 collateral, a record attached to or logically associated with the colla- 26 teral, or the system in which the collateral is recorded. 27 § 79. Subparagraph (C) of paragraph 1 of subsection (a) of section 28 9--608 of the uniform commercial code, as added by chapter 84 of the 29 laws of 2001, is amended to read as follows: 30 (C) the satisfaction of obligations secured by any subordi- 31 nate security interest in or other lien on the collateral 32 subject to the security interest or agricultural lien 33 under which the collection or enforcement is made if the 34 secured party receives [an authenticated] a signed demand 35 for proceeds before distribution of the proceeds is 36 completed. 37 § 80. Subsections (a), (b), (c) and (e) of section 9--611 of the 38 uniform commercial code, as added by chapter 84 of the laws of 2001, are 39 amended to read as follows: 40 (a) "Notification date." In this section, "notification date" means 41 the earlier of the date on which: 42 (1) a secured party sends to the debtor and any secondary obligor 43 [an authenticated] a signed notification of disposition; or 44 (2) the debtor and any secondary obligor waive the right to 45 notification. 46 (b) Notification of disposition required. Except as otherwise provided 47 in subsection (d), a secured party that disposes of collateral under 48 Section 9--610 shall send to the persons specified in subsection (c) a 49 reasonable [authenticated] signed notification of disposition. 50 (c) Persons to be notified. To comply with subsection (b), the secured 51 party shall send [an authenticated] a signed notification of disposition 52 to: 53 (1) the debtor; 54 (2) any secondary obligor; and 55 (3) if the collateral is other than consumer goods:A. 10579 36 1 (A) any other person from which the secured party has 2 received, before the notification date, [an authenticat-3ed] a signed notification of a claim of an interest in 4 the collateral; 5 (B) any other secured party or lienholder that, 10 days 6 before the notification date, held a security interest in 7 or other lien on the collateral perfected by the filing 8 of a financing statement that: 9 (i) identified the collateral; 10 (ii) was indexed under the debtor's name as of that date; 11 and 12 (iii) was filed in the office in which to file a financ- 13 ing statement against the debtor covering the 14 collateral as of that date; and 15 (C) any other secured party that, 10 days before the notifi- 16 cation date, held a security interest in the collateral 17 perfected by compliance with a statute, regulation, or 18 treaty described in Section 9--311(a). 19 (e) Compliance with subsection (c) (3) (B). A secured party complies 20 with the requirement for notification prescribed by subsection (c) 21 (3) (B) if: 22 (1) not later than twenty days or earlier than thirty days before 23 the notification date, the secured party requests, in a 24 commercially reasonable manner, information concerning 25 financing statements indexed under the debtor's name in the 26 office indicated in subsection (c) (3) (B); and 27 (2) before the notification date, the secured party: 28 (A) did not receive a response to the request for informa- 29 tion; or 30 (B) received a response to the request for information and 31 sent [an authenticated] a signed notification of disposi- 32 tion to each secured party or other lienholder named in 33 that response whose financing statement covered the 34 collateral. 35 § 81. Section 9--613 of the uniform commercial code, as added by chap- 36 ter 84 of the laws of 2001, is amended to read as follows: 37 Section 9--613. Contents and Form of Notification Before Disposition of 38 Collateral: General. 39 (a) Contents and form of notification. Except in a consumer-goods 40 transaction, the following rules apply: 41 [(a)] (1) The contents of a notification of disposition are suffi- 42 cient if the notification: 43 [(1)] (A) describes the debtor and the secured party; 44 [(2)] (B) describes the collateral that is the subject of the 45 intended disposition; 46 [(3)] (C) states the method of intended disposition; 47 [(4)] (D) states that the debtor is entitled to an accounting of 48 the unpaid indebtedness and states the charge, if any, for an 49 accounting; and 50 [(5)] (E) states the time and place of a public disposition or 51 the time after which any other disposition is to be made. 52 [(b)] (2) Whether the contents of a notification that lacks any of 53 the information specified in subsection (a) are nevertheless sufficient 54 is a question of fact.A. 10579 37 1 [(c)] (3) The contents of a notification providing substantially the 2 information specified in subsection (a) are sufficient, even if the 3 notification includes: 4 [(1)] (A) information not specified by subsection (a); or 5 [(2)] (B) minor errors that are not seriously misleading. 6 [(d)] (4) A particular phrasing of the notification is not required. 7 [(e)] (5) The following form of notification and the form appearing 8 in Section [9--614(c)] 9--614(a)(3), when completed in accordance with 9 the instructions in subsection (b) and Section 9--614(b), each provides 10 sufficient information: 11 NOTIFICATION OF DISPOSITION OF COLLATERAL 12 To: (Name of debtor, obligor, or other person to which the notifica- 13 tion is sent) 14 From: (Name, address, and telephone number of secured party) 15 [Name of Debtor(s): (Include only if debtor(s) are not an addressee)16(For a public disposition:)17We will sell (or lease or license, as applicable) the (describe colla-18teral) (to the highest qualified bidder) in public as follows:19Day and Date: ____________________20Time: ____________________21Place: ____________________22(For a private disposition:)23We will sell (or lease or license, as applicable) the (describe colla-24teral) privately sometime after (day and date).25You are entitled to an accounting of the unpaid indebtedness secured26by the property that we intend to sell (or lease or license, as applica-27ble) (for a charge of $ ). You may request an accounting by calling us28at (telephone number).] 29 {1} Name of any debtor that is not an addressee: (Name of each 30 debtor) 31 {2} We will sell (describe collateral) (to the highest qualified 32 bidder) at public sale. A sale could include a lease or license. The 33 sale will be held as follows: 34 (Date) 35 (Time) 36 (Place) 37 {3} We will sell (describe collateral) at private sale sometime after 38 (date). A sale could include a lease or license. 39 {4} You are entitled to an accounting of the unpaid indebtedness 40 secured by the property that we intend to sell or, as applicable, lease 41 or license. 42 {5} If you request an accounting you must pay a charge of $ (amount). 43 {6} You may request an accounting by calling us at (telephone number). 44 (End of Form) 45 (b) Instructions for form of notification. The following instructions 46 apply to the form of notification in subsection (a)(5):A. 10579 38 1 (1) The instructions in this subsection refer to the numbers in braces 2 before items in the form of notification in subsection (a)(5). Do not 3 include the numbers or braces in the notification. The numbers and 4 braces are used only for the purpose of these instructions. 5 (2) Include and complete subsection (a)(5) item {1} only if there is a 6 debtor that is not an addressee of the notification and list the name or 7 names. 8 (3) Include and complete either item {2}, if the notification relates 9 to a public disposition of the collateral, or item {3}, if the notifica- 10 tion relates to a private disposition of the collateral. If item {2} is 11 included, include the words "to the highest qualified bidder" only if 12 applicable. 13 (4) Include and complete items {4} and {6}. 14 (5) Include and complete item {5} only if the sender will charge the 15 recipient for an accounting. 16 § 82. Section 9--614 of the uniform commercial code, as added by chap- 17 ter 84 of the laws of 2001, is amended to read as follows: 18 Section 9--614. Contents and Form of Notification Before Disposition of 19 Collateral: Consumer-goods Transaction. 20 (a) Contents and form of notification. In a consumer-goods trans- 21 action, the following rules apply: 22 [(a)](1) A notification of disposition must provide the following 23 information: 24 [(1)](A) the information specified in Section 9--613(a); 25 [(2)](B) a description of any liability for a deficiency of the 26 person to which the notification is sent; 27 [(3)](C) a telephone number from which the amount that must be 28 paid to the secured party to redeem the collateral under 29 Section 9--623 is available; and 30 [(4)](D) a telephone number or mailing address from which addi- 31 tional information concerning the disposition and the obli- 32 gation secured is available. 33 [(b)](2) A particular phrasing of the notification is not required. 34 [(c)](3) The following form of notification, when completed in accord- 35 ance with the instructions in subsection (b), provides sufficient infor- 36 mation: 37 (Name and address of secured party) 38 (Date) 39 NOTICE OF OUR PLAN TO SELL PROPERTY 40 (Name and address of any obligor who is also a debtor) 41 Subject: (Identification of Transaction) 42 We have your (describe collateral), because you broke promises in our 43 agreement. 44 [(For a public disposition:)] 45 {1} We will sell (describe collateral) at public sale. A sale could 46 include a lease or license. The sale will be held as follows: 47 Date: ____________________ 48 Time: ____________________ 49 Place: ____________________ 50 You may attend the sale and bring bidders if you want. 51 [(For a private disposition:)] 52 {2} We will sell (describe collateral) at private sale sometime after 53 (date). A sale could include a lease or license. 54 {3} The money that we get from the sale [(], after paying our 55 costs[)], will reduce the amount you owe. If we get less money than you 56 owe, you (will or will not, as applicable) still owe us the difference.A. 10579 39 1 If we get more money than you owe, you will get the extra money, unless 2 we must pay it to someone else. 3 {4} You can get the property back at any time before we sell it by 4 paying us the full amount you owe [(], not just the past due 5 payments[)], including our expenses. To learn the exact amount you must 6 pay, call us at (telephone number). 7 {5} If you want us to explain to you in writing or in (description of 8 electronic record) (description of electronic record) how we have 9 figured the amount that you owe us, [you may] {6} call us at (telephone 10 number) [(]or write us at (secured party's address)[)] or contact us by 11 (description of electronic communication method) {7} and request a writ- 12 ten explanation or an explanation in (description of electronic record) 13 an explanation in (description of electronic record). 14 [(]{8} We will charge you $ (amount) for the explanation if we sent 15 you another written explanation of the amount you owe us within the last 16 six months.[)] 17 {9} If you need more information about the sale call us at (telephone 18 number) [(]or write us at (secured party's address)[,] or contact us by 19 (description of electronic communication method). 20 {10} We are sending this notice to the following other people who have 21 an interest in (describe collateral) or who owe money under your agree- 22 ment: 23 (Names of all other debtors and obligors, if any) 24 (End of Form) 25 [(d)](4) A notification in the form of [subsection (c)] paragraph (3) 26 is sufficient, even if additional information appears at the end of the 27 form. 28 [(e)](5) A notification in the form of [subsection (c)] paragraph (3) 29 is sufficient, even if it includes errors in information not required by 30 [subsection (a)] paragraph (3), unless the error is misleading with 31 respect to rights arising under this article. 32 [(f)](6) If a notification under this section is not in the form of 33 [subsection (c)] paragraph (3), law other than this article determines 34 the effect of including information not required by [subsection (a)] 35 paragraph (3). 36 (b) Instructions for form of notification. The following instructions 37 apply to the form of notification in subsection (a)(3): 38 (1) The instructions in this subsection refer to the numbers in braces 39 before items in the form of notification in subsection (a)(3). Do not 40 include the numbers or braces in the notification. The numbers and brac- 41 es are used only for the purpose of these instructions. 42 (2) Include and complete either item {1}, if the notification relates 43 to a public disposition of the collateral, or item {2}, if the notifica- 44 tion relates to a private disposition of the collateral. 45 (3) Include and complete items {3}, {4}, {5}, {6}, and {7}. 46 (4) In item {5}, include and complete any one of the three alternative 47 methods for the explanation--writing, writing or electronic record, or 48 electronic record. 49 (5) In item {6}, include the telephone number. In addition, the sender 50 may include and complete either or both of the two additional alterna- 51 tive methods of communication--writing or electronic communication-for 52 the recipient of the notification to communicate with the sender. 53 Neither of the two additional methods of communication is required to be 54 included.A. 10579 40 1 (6) In item {7}, include and complete the method or methods for the 2 explanation--writing, writing or electronic record, or electronic 3 record--included in item {5}. 4 (7) Include and complete item {8} only if a written explanation is 5 included in item {5} as a method for communicating the explanation and 6 the sender will charge the recipient for another written explanation. 7 (8) In item {9}, include either the telephone number or the address or 8 both the telephone number and the address. In addition, the sender may 9 include and complete the additional method of communication--electronic 10 communication--for the recipient of the notification to communicate with 11 the sender. The additional method of electronic communication is not 12 required to be included. 13 (9) If item {10} does not apply, insert "None" after "agreement:". 14 § 83. Paragraphs 3 and 4 of subsection (a) of section 9--615 of the 15 uniform commercial code, as added by chapter 84 of the laws of 2001, are 16 amended to read as follows: 17 (3) the satisfaction of obligations secured by any subordinate 18 security interest in or other subordinate lien on the collat- 19 eral if: 20 (A) the secured party receives from the holder of the subor- 21 dinate security interest or other lien [an authenticated] 22 a signed demand for proceeds before distribution of the 23 proceeds is completed; and 24 (B) in a case in which a consignor has an interest in the 25 collateral, the subordinate security interest or other 26 lien is senior to the interest of the consignor; and 27 (4) a secured party that is a consignor of the collateral if the 28 secured party receives from the consignor [an authenticated] 29 a signed demand for proceeds before distribution of the 30 proceeds is completed. 31 § 84. Subsections (a) and (b) and the opening paragraph of subsection 32 (c) of section 9--616 of the uniform commercial code, as added by chap- 33 ter 84 of the laws of 2001, are amended to read as follows: 34 (a) Definitions. In this section: 35 (1) "Explanation" means a [writing] record that: 36 (A) states the amount of the surplus or deficiency; 37 (B) provides an explanation in accordance with subsection (c) 38 of how the secured party calculated the surplus or defi- 39 ciency; 40 (C) states, if applicable, that future debits, credits, 41 charges, including additional credit service charges or 42 interest, rebates, and expenses may affect the amount of 43 the surplus or deficiency; and 44 (D) provides a telephone number or mailing address from which 45 additional information concerning the transaction is 46 available. 47 (2) "Request" means a record: 48 (A) [authenticated] signed by a debtor or consumer obligor; 49 (B) requesting that the recipient provide an explanation; and 50 (C) sent after disposition of the collateral under Section 51 9--610. 52 (b) Explanation of calculation. In a consumer-goods transaction in 53 which the debtor is entitled to a surplus or a consumer obligor is 54 liable for a deficiency under Section 9--615, the secured party shall: 55 (1) send an explanation to the debtor or consumer obligor, as 56 applicable, after the disposition and:A. 10579 41 1 (A) before or when the secured party accounts to the debtor 2 and pays any surplus or first makes [written] demand in a 3 record on the consumer obligor after the disposition for 4 payment of the deficiency; and 5 (B) within fourteen days after receipt of a request; or 6 (2) in the case of a consumer obligor who is liable for a defi- 7 ciency, within fourteen days after receipt of a request, send 8 to the consumer obligor a record waiving the secured party's 9 right to a deficiency. 10 To comply with subsection (a)(1)(B), [a writing] an explanation 11 must provide the following information in the following 12 order: 13 § 85. The opening paragraph of subsection (a) of section 9--619 of the 14 uniform commercial code, as added by chapter 84 of the laws of 2001, is 15 amended to read as follows: 16 In this section, "transfer statement" means a record [authenticated] 17 signed by a secured party stating: 18 § 86. The uniform commercial code is amended by adding a new article 19 12 to read as follows: 20 ARTICLE 12 21 CONTROLLABLE ELECTRONIC RECORDS 22 Section 12--101. Short title. 23 This article may be cited as Uniform Commercial Code--Controllable 24 Electronic Records. 25 Section 12--102. Definitions. 26 (a) In this article: 27 (1) "Controllable electronic record" means a record stored in an elec- 28 tronic medium that can be subjected to control under Section 12-105. The 29 term does not include a controllable account, a controllable payment 30 intangible, a deposit account, an electronic copy of a record evidencing 31 chattel paper, an electronic document of title, electronic money, 32 investment property, or a transferable record. 33 (2) "Qualifying purchaser" means a purchaser of a controllable elec- 34 tronic record or an interest in a controllable electronic record that 35 obtains control of the controllable electronic record for value, in good 36 faith, and without notice of a claim of a property right in the control- 37 lable electronic record. In the case of a controllable electronic record 38 that would be a "draft" or a "note", as those terms are defined in 39 Section 3--104, if the controllable electronic record were a signed 40 writing, Section 3--304(7) applies to the determination of whether a 41 purchaser obtains control of the controllable electronic record without 42 notice of a claim of a property right in it as if the reference in that 43 subsection to "the instrument" referred to the controllable electronic 44 record. The preceding sentence applies even if the controllable elec- 45 tronic record contains a term by which an obligor or account debtor on 46 the controllable account or controllable payment intangible evidenced by 47 the controllable electronic record waives or agrees not to assert 48 against an assignee of the controllable electronic record any claim or 49 defense that the obligor or account debtor may have against the assig- 50 nor. 51 (3) "Transferable record" means an electronic record that either: 52 (A) is a "transferable record" under Section 201(a)(1) of the Elec- 53 tronic Signatures in Global and National Commerce Act, 15 U.S.C. 54 Section 7021(a)(1), as amended; or,A. 10579 42 1 (B) is governed by the law of any State that has enacted or adopted 2 the Uniform Electronic Transactions Act substantially as approved and 3 recommended for enactment in all the States by the National Conference 4 of Commissioners on Uniform State Laws in 1999 and is a "transferable 5 record" under Section 16(a) of that Act. 6 (4) "Value" has the meaning provided in Section 3-303(a), as if refer- 7 ences in that subsection to an "instrument" were references to a 8 controllable account, controllable electronic record, or controllable 9 payment intangible. 10 (b) Definitions in other articles. The following definitions in other 11 articles apply to this article: 12 (1) The definitions in Article 9 of "account debtor", "controllable 13 account", "controllable payment intangible", "chattel paper", "deposit 14 account", "electronic money", and "investment property" apply to this 15 article. 16 (2) Article 1 contains general definitions and principles of 17 construction and interpretation applicable throughout this article. 18 Section 12--103. Relation to Article 9 and Consumer Laws. 19 (a) Article 9 governs in case of conflict. If there is conflict 20 between this article and Article 9, Article 9 governs. 21 (b) Applicable consumer law and other laws. A transaction subject to 22 this article is subject to any applicable rule of law that establishes a 23 different rule for consumers, including Article 22-A of the General 24 Business Law and chapter 5 of title 20 of the New York City Administra- 25 tive Code. 26 (c) Enforceability or effectiveness. If an electronic record is a 27 controllable electronic record under this article, Section 307.2 of the 28 Electronic Signatures and Records Act (State Technology Law 301 et seq.) 29 shall not impair the enforceability or effectiveness of such electronic 30 record under this article nor shall such Act cause such controllable 31 electronic record to be governed by Article 3 rather than this article, 32 except to the extent the electronic record expressly provides otherwise 33 or was created prior to the effective date of this article. 34 Section 12--104. Rights in Controllable Account, Controllable Electronic 35 Record, and Controllable Payment Intangible. 36 (a) Applicability of section to controllable account and controllable 37 payment intangible. This section applies to the acquisition and 38 purchase of rights in a controllable account or controllable payment 39 intangible, including the rights and benefits under subsections (c), 40 (d), (e), (g), and (h) of a purchaser and qualifying purchaser, in the 41 same manner this section applies to a controllable electronic record. 42 (b) Control of controllable account and controllable payment intangi- 43 ble. To determine whether a purchaser of a controllable account or a 44 controllable payment intangible is a qualifying purchaser, the purchaser 45 obtains control of the account or payment intangible if it obtains 46 control of the controllable electronic record that evidences the account 47 or payment intangible. 48 (c) Applicability of other law to acquisition of rights. Except as 49 provided in this section, law other than this article determines whether 50 a person acquires a right in a controllable electronic record and the 51 right the person acquires. 52 (d) Shelter principle and purchase of limited interest. A purchaser of 53 a controllable electronic record acquires all rights in the controllable 54 electronic record that the transferor had or had power to transfer, 55 except that a purchaser of a limited interest in a controllable elec-A. 10579 43 1 tronic record acquires rights only to the extent of the interest 2 purchased. 3 (e) Rights of qualifying purchaser. A qualifying purchaser acquires 4 its rights in the controllable electronic record free of a claim of a 5 property right in the controllable electronic record. 6 (f) Limitation of rights of qualifying purchaser in other property. 7 Except as provided in subsections (a) and (e) for a controllable account 8 and a controllable payment intangible or law other than this article, a 9 qualifying purchaser takes a right to payment, right to performance, or 10 other interest in property evidenced by the controllable electronic 11 record subject to a claim of a property right in the right to payment, 12 right to performance, or other interest in property. 13 (g) No-action protection for qualifying purchaser. An action may not 14 be asserted against a qualifying purchaser based on both a purchase by 15 the qualifying purchaser of a controllable electronic record and a claim 16 of a property right in another controllable electronic record, whether 17 the action is framed in conversion, replevin, constructive trust, equi- 18 table lien, or other theory. 19 (h) Filing not notice. Filing of a financing statement under Article 9 20 is not notice of a claim of a property right in a controllable electron- 21 ic record. 22 Section 12--105. Control of Controllable Electronic Record. 23 (a) General rule: control of controllable electronic record. A person 24 has control of a controllable electronic record if the electronic 25 record, a record attached to or logically associated with the electronic 26 record, or a system in which the electronic record is recorded: 27 (1) gives the person: 28 (A) power to avail itself of substantially all the benefit from the 29 electronic record; and 30 (B) exclusive power, subject to subsection (b), to: 31 (i) prevent others from availing themselves of substantially all the 32 benefit from the electronic record; and 33 (ii) transfer control of the electronic record to another person or 34 cause another person to obtain control of another controllable electron- 35 ic record as a result of the transfer of the electronic record; and 36 (2) enables the person readily to identify itself in any way, includ- 37 ing by name, identifying number, cryptographic key, office, or account 38 number, as having the powers specified in paragraph (1). 39 (b) Meaning of exclusive. Subject to subsection (c), a power is exclu- 40 sive under subsection (a)(1)(B)(i) and (ii) even if: 41 (1) the controllable electronic record, a record attached to or 42 logically associated with the electronic record, or a system in which 43 the electronic record is recorded limits the use of the electronic 44 record or has a protocol programmed to cause a change, including a 45 transfer or loss of control or a modification of benefits afforded by 46 the electronic record; or 47 (2) the power is shared with another person. 48 (c) When power not shared with another person. A power of a person is 49 not shared with another person under subsection (b)(2) and the person's 50 power is not exclusive if: 51 (1) the person can exercise the power only if the power also is exer- 52 cised by the other person; and 53 (2) the other person: 54 (A) can exercise the power without exercise of the power by the 55 person; orA. 10579 44 1 (B) is the transferor to the person of an interest in the controllable 2 electronic record or a controllable account or controllable payment 3 intangible evidenced by the controllable electronic record. 4 (d) Presumption of exclusivity of certain powers. If a person has the 5 powers specified in subsection (a)(1)(B)(i) and (ii), the powers are 6 presumed to be exclusive. 7 (e) Control through another person. A person has control of a control- 8 lable electronic record if another person, other than the transferor to 9 the person of an interest in the controllable electronic record or a 10 controllable account or controllable payment intangible evidenced by the 11 controllable electronic record: 12 (1) has control of the electronic record and acknowledges that it has 13 control on behalf of the person; or 14 (2) obtains control of the electronic record after having acknowledged 15 that it will obtain control of the electronic record on behalf of the 16 person. 17 (f) No requirement to acknowledge. A person that has control under 18 this section is not required to acknowledge that it has control on 19 behalf of another person. 20 (g) No duties or confirmation. If a person acknowledges that it has or 21 will obtain control on behalf of another person, unless the person 22 otherwise agrees or law other than this article or Article 9 otherwise 23 provides, the person does not owe any duty to the other person and is 24 not required to confirm the acknowledgment to any other person. 25 Section 12--106. Discharge of Account Debtor on Controllable Account or 26 Controllable Payment Intangible. 27 (a) Discharge of account debtor. An account debtor on a controllable 28 account or controllable payment intangible may discharge its obligation 29 by paying: 30 (1) the person having control of the controllable electronic record 31 that evidences the controllable account or controllable payment intangi- 32 ble; or 33 (2) except as provided in subsection (b), a person that formerly had 34 control of the controllable electronic record. 35 (b) Content and effect of notification. Subject to subsection (d), the 36 account debtor may not discharge its obligation by paying a person that 37 formerly had control of the controllable electronic record if the 38 account debtor receives a notification that: 39 (1) is signed by a person that formerly had control or the person to 40 which control was transferred; 41 (2) reasonably identifies the controllable account or controllable 42 payment intangible; 43 (3) notifies the account debtor that control of the controllable elec- 44 tronic record that evidences the controllable account or controllable 45 payment intangible was transferred; 46 (4) identifies the transferee, in any reasonable way, including by 47 name, identifying number, cryptographic key, office, or account number; 48 and 49 (5) provides a commercially reasonable method by which the account 50 debtor is to pay the transferee. 51 (c) Discharge following effective notification. After receipt of a 52 notification that complies with subsection (b), the account debtor may 53 discharge its obligation by paying in accordance with the notification 54 and may not discharge the obligation by paying a person that formerly 55 had control.A. 10579 45 1 (d) When notification ineffective. Subject to subsection (h), notifi- 2 cation is ineffective under subsection (b): 3 (1) unless, before the notification is sent, the account debtor and 4 the person that, at that time, had control of the controllable electron- 5 ic record that evidences the controllable account or controllable 6 payment intangible agree in a signed record to a commercially reasonable 7 method by which a person may furnish reasonable proof that control has 8 been transferred; 9 (2) to the extent an agreement between the account debtor and seller 10 of a payment intangible limits the account debtor's duty to pay a person 11 other than the seller and the limitation is effective under law other 12 than this article; or 13 (3) at the option of the account debtor, if the notification notifies 14 the account debtor to: 15 (A) divide a payment; 16 (B) make less than the full amount of an installment or other periodic 17 payment; or 18 (C) pay any part of a payment by more than one method or to more than 19 one person. 20 (e) Proof of transfer of control. Subject to subsection (h), if 21 requested by the account debtor, the person giving the notification 22 under subsection (b) seasonably shall furnish reasonable proof, using 23 the method in the agreement referred to in subsection (d)(1), that 24 control of the controllable electronic record has been transferred. 25 Unless the person complies with the request, the account debtor may 26 discharge its obligation by paying a person that formerly had control, 27 even if the account debtor has received a notification under subsection 28 (b). 29 (f) What constitutes reasonable proof. A person furnishes reasonable 30 proof under subsection (e) that control has been transferred if the 31 person demonstrates, using the method in the agreement referred to in 32 subsection (d)(1), that the transferee has the power to: 33 (1) avail itself of substantially all the benefit from the controlla- 34 ble electronic record; 35 (2) prevent others from availing themselves of substantially all the 36 benefit from the controllable electronic record; and 37 (3) transfer the powers specified in paragraphs (1) and (2) to another 38 person. 39 (g) Rights not waivable. Subject to subsection (h), an account debtor 40 may not waive or vary its rights under subsections (d)(1) and (e) or its 41 option under subsection (d)(3). 42 (h) Rule for individual under other law. This section is subject to 43 law other than this article which establishes a different rule for an 44 account debtor who is an individual and who incurred the obligation 45 primarily for personal, family, or household purposes. 46 Section 12--107. Governing Law. 47 (a) Governing law: general rule. Except as provided in subsection (b), 48 the local law of a controllable electronic record's jurisdiction governs 49 a matter covered by this article. 50 (b) Governing law: Section 12--106. For a controllable electronic 51 record that evidences a controllable account or controllable payment 52 intangible, the local law of the controllable electronic record's juris- 53 diction governs a matter covered by Section 12--106 unless an effective 54 agreement determines that the local law of another jurisdiction governs.A. 10579 46 1 (c) Controllable electronic record's jurisdiction. The following rules 2 determine a controllable electronic record's jurisdiction under this 3 section: 4 (1) If the controllable electronic record, or a record attached to or 5 logically associated with the controllable electronic record and readily 6 available for review, expressly provides that a particular jurisdiction 7 is the controllable electronic record's jurisdiction for purposes of 8 this article, that jurisdiction is the controllable electronic record's 9 jurisdiction. 10 (2) If paragraph (1) does not apply and the rules of the system in 11 which the controllable electronic record is recorded are readily avail- 12 able for review and expressly provide that a particular jurisdiction is 13 the controllable electronic record's jurisdiction for purposes of this 14 article, that jurisdiction is the controllable electronic record's 15 jurisdiction. 16 (3) If paragraphs (1) and (2) do not apply and the controllable elec- 17 tronic record, or a record attached to or logically associated with the 18 controllable electronic record and readily available for review, 19 expressly provides that the controllable electronic record is governed 20 by the law of a particular jurisdiction, that jurisdiction is the 21 controllable electronic record's jurisdiction. 22 (4) If paragraphs (1), (2), and (3) do not apply and the rules of the 23 system in which the controllable electronic record is recorded are read- 24 ily available for review and expressly provide that the controllable 25 electronic record or the system is governed by the law of a particular 26 jurisdiction, that jurisdiction is the controllable electronic record's 27 jurisdiction. 28 (5) If paragraphs (1) through (4) do not apply, the controllable elec- 29 tronic record's jurisdiction is the District of Columbia. 30 (d) Applicability of Article 12. If subsection (c)(5) applies and 31 Article 12 is not in effect in the District of Columbia without material 32 modification, the governing law for a matter covered by this article is 33 the law of the District of Columbia as though Article 12 were in effect 34 in the District of Columbia without material modification. In this 35 subsection, "Article 12" means Article 12 of Uniform Commercial Code 36 Amendments (2022). 37 (e) Relation of matter or transaction to controllable electronic 38 record's jurisdiction not necessary. To the extent subsections (a) and 39 (b) provide that the local law of the controllable electronic record's 40 jurisdiction governs a matter covered by this article, that law governs 41 even if the matter or a transaction to which the matter relates does not 42 bear any relation to the controllable electronic record's jurisdiction. 43 (f) Rights of purchasers determined at time of purchase. The rights 44 acquired under Section 12--104 by a purchaser or qualifying purchaser 45 are governed by the law applicable under this section at the time of 46 purchase. 47 § 87. The uniform commercial code is amended by adding a new article 48 12-A to read as follows: 49 ARTICLE 12-A 50 TRANSITIONAL PROVISIONS FOR UNIFORM COMMERCIAL 51 CODE AMENDMENTS 52 PART 1 53 GENERAL PROVISIONS AND DEFINITIONSA. 10579 47 1 Section 12-A-101. Title. This article may be cited as Transitional 2 Provisions for the 2024 Uniform Commercial Code 3 Amendments. 4 Section 12-A-102. Definitions. 5 (a) Article A Definitions. In this article: 6 (1) "Adjustment date" means July 1, 2025, or the date that is one year 7 after the effective date of this article, whichever is later. 8 (2) "Article 12" means Article 12 of this code. 9 (3) "Article 12 property" means a controllable account, controllable 10 electronic record, or controllable payment intangible. 11 (b) Definitions in other articles. The following definitions in other 12 articles of this code apply to this article. 13 "Controllable account". Section 9--102. 14 "Controllable electronic record". Section 12--102. 15 "Controllable payment intangible". Section 9--102. 16 "Electronic money". Section 9--102. 17 "Financing statement". Section 9--102. 18 (c) Article 1 definitions and principles. Article 1 contains general 19 definitions and principles of construction and interpretation applicable 20 throughout this article. 21 PART 2 22 GENERAL TRANSITIONAL PROVISION 23 Section 12-A-201. Saving Clause. 24 Except as provided in Part 3, a transaction validly entered into 25 before the effective date of this article and the rights, duties, and 26 interests flowing from the transaction remain valid thereafter and may 27 be terminated, completed, consummated, or enforced as required or 28 permitted by law other than this article or, if applicable, this arti- 29 cle, as though this article had not taken effect. 30 PART 3 31 TRANSITIONAL PROVISIONS FOR ARTICLES 9 AND 12 32 Section 12-A-301. Saving Clause. 33 (a) Pre-effective-date transaction, lien, or interest. Except as 34 provided in this part, Article 9 as amended by a chapter of the laws of 35 two thousand twenty-four adding this article and Article 12 apply to a 36 transaction, lien, or other interest in property, even if the trans- 37 action, lien, or interest was entered into, created, or acquired before 38 the effective date of this article. 39 (b) Continuing validity. Except as provided in subsection (c) and 40 Sections 12-A-302 through 12-A-306: 41 (1) a transaction, lien, or interest in property that was validly 42 entered into, created, or transferred before the effective date of this 43 article and was not governed by this article, but would be subject to 44 Article 9 as amended by a chapter of the laws of two thousand twenty- 45 four adding this article or Article 12 if it had been entered into, 46 created, or transferred on or after the effective date of this article, 47 including the rights, duties, and interests flowing from the trans- 48 action, lien, or interest, remains valid on and after the effective date 49 of this article; and 50 (2) the transaction, lien, or interest may be terminated, completed, 51 consummated, and enforced as required or permitted by this code or by 52 the law that would apply if this article had not taken effect.A. 10579 48 1 (c) Pre-effective-date proceeding. This code does not affect an 2 action, case, or proceeding commenced before the effective date of this 3 article. 4 Section 12-A-302. Security Interest Perfected Before Effective Date. 5 (a) Continuing perfection: perfection requirements satisfied. A secu- 6 rity interest that is enforceable and perfected immediately before the 7 effective date of this article is a perfected security interest under 8 this article if, on the effective date of this article, the requirements 9 for enforceability and perfection under this article are satisfied with- 10 out further action. 11 (b) Continuing perfection: enforceability or perfection requirements 12 not satisfied. If a security interest is enforceable and perfected imme- 13 diately before the effective date of this article, but the requirements 14 for enforceability or perfection under this article are not satisfied on 15 the effective date of this article, the security interest: 16 (1) is a perfected security interest until the earlier of the time 17 perfection would have ceased under the law in effect immediately before 18 the effective date of this article or the adjustment date; 19 (2) remains enforceable thereafter only if the security interest 20 satisfies the requirements for enforceability under Section 9--203, as 21 amended by a chapter of the laws of two thousand twenty-four adding this 22 article before the adjustment date; and 23 (3) remains perfected thereafter only if the requirements for 24 perfection under this article are satisfied before the time specified in 25 paragraph (1). 26 Section 12-A-303. Security Interest Unperfected Before Effective Date. 27 A security interest that is enforceable immediately before the effec- 28 tive date of this article but is unperfected at that time: 29 (1) remains an enforceable security interest until the adjustment 30 date; 31 (2) remains enforceable thereafter if the security interest becomes 32 enforceable under Section 9--203, as amended by a chapter of the laws of 33 two thousand twenty-four that added this article, on the effective date 34 of this article or before the adjustment date; and 35 (3) becomes perfected: 36 (A) without further action, on the effective date of this article if 37 the requirements for perfection under this article are satisfied before 38 or at that time; or 39 (B) when the requirements for perfection are satisfied if the require- 40 ments are satisfied after that time. 41 Section 12-A-304. Effectiveness of Actions Taken Before Effective Date. 42 (a) Pre-effective-date action; attachment and perfection before 43 adjustment date. If action, other than the filing of a financing state- 44 ment, is taken before the effective date of this article and the action 45 would have resulted in perfection of the security interest had the secu- 46 rity interest become enforceable before the effective date of this arti- 47 cle, the action is effective to perfect a security interest that 48 attaches under this article before the adjustment date. An attached 49 security interest becomes unperfected on the adjustment date unless the 50 security interest becomes a perfected security interest under this arti- 51 cle before the adjustment date. 52 (b) Pre-effective-date filing. The filing of a financing statement 53 before the effective date of this article is effective to perfect a 54 security interest on the effective date of this article to the extent 55 the filing would satisfy the requirements for perfection under this 56 article.A. 10579 49 1 (c) Pre-effective-date enforceability action. The taking of an action 2 before the effective date of this article is sufficient for the enforce- 3 ability of a security interest on the effective date of this article if 4 the action would satisfy the requirements for enforceability under this 5 article. 6 Section 12-A-305. Priority. 7 (a) Determination of priority. Subject to subsections (b) and (c), 8 this code determines the priority of conflicting claims to collateral. 9 (b) Established priorities. Subject to subsection (c), if the priori- 10 ties of claims to collateral were established before the effective date 11 of this article, Article 9 as in effect before the effective date of a 12 chapter of the laws of two thousand twenty-four that added this article 13 determines priority. 14 (c) Determination of certain priorities on adjustment date. On the 15 adjustment date, to the extent the priorities determined by Article 9 as 16 amended by this code modify the priorities established before the effec- 17 tive date of a chapter of the laws of two thousand twenty-four that 18 added this article, the priorities of claims to Article 12 property and 19 electronic money established before the effective date of this article 20 cease to apply. 21 Section 12-A-306. Priority of Claims When Priority Rules of Article 9 Do 22 Not Apply. 23 (a) Determination of priority. Subject to subsections (b) and (c), 24 Article 12 determines the priority of conflicting claims to Article 12 25 property when the priority rules of Article 9 as amended by this article 26 do not apply. 27 (b) Established priorities. Subject to subsection (c), when the prior- 28 ity rules of Article 9 as amended by a chapter of the laws of two thou- 29 sand twenty-four that added this article do not apply and the priorities 30 of claims to Article 12 property were established before the effective 31 date of this article, law other than Article 12 determines priority. 32 (c) Determination of certain priorities on adjustment date. When the 33 priority rules of Article 9 as amended by this article do not apply, to 34 the extent the priorities determined by this code modify the priorities 35 established before the effective date this article, the priorities of 36 claims to Article 12 property established before the effective date of 37 this article cease to apply on the adjustment date. 38 § 88. This act shall take effect on the one hundred eightieth day 39 after it shall have become a law.
