HB-5082, As Passed Senate, March 27, 2012
SUBSTITUTE FOR
HOUSE BILL NO. 5082
A bill to amend 1962 PA 174, entitled
"Uniform commercial code,"
by amending sections 1201, 2103, 2104, 2310, 2323, 2401, 2503,
2505, 2506, 2509, 2605, 2705, 2A103, 2A514, 2A526, 4104, 4210,
7101, 7102, 7103, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206,
7207, 7208, 7209, 7210, 7301, 7302, 7303, 7304, 7305, 7307, 7308,
7309, 7401, 7402, 7403, 7404, 7501, 7502, 7503, 7504, 7505, 7506,
7507, 7508, 7509, 7601, 7602, 7603, 8103, 9102, 9203, 9207, 9208,
9301, 9310, 9312, 9313, 9314, 9317, 9338, and 9601 (MCL 440.1201,
440.2103, 440.2104, 440.2310, 440.2323, 440.2401, 440.2503,
440.2505, 440.2506, 440.2509, 440.2605, 440.2705, 440.2803,
440.2964, 440.2976, 440.4104, 440.4210, 440.7101, 440.7102,
440.7103, 440.7104, 440.7105, 440.7201, 440.7202, 440.7203,
440.7204, 440.7205, 440.7206, 440.7207, 440.7208, 440.7209,
440.7210, 440.7301, 440.7302, 440.7303, 440.7304, 440.7305,
440.7307, 440.7308, 440.7309, 440.7401, 440.7402, 440.7403,
440.7404, 440.7501, 440.7502, 440.7503, 440.7504, 440.7505,
440.7506, 440.7507, 440.7508, 440.7509, 440.7601, 440.7602,
440.7603, 440.8103, 440.9102, 440.9203, 440.9207, 440.9208,
440.9301, 440.9310, 440.9312, 440.9313, 440.9314, 440.9317,
440.9338, and 440.9601), sections 1201, 2103, 2A103, 4210, 7503,
8103, 9102, 9203, 9207, 9208, 9301, 9310, 9312, 9313, 9314, and
9317 as amended and sections 9338 and 9601 as added by 2000 PA
348, sections 2A514 and 2A526 as added by 1992 PA 101, and
section 4104 as amended by 1998 PA 278, and by adding section
7106 and part 7.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 1201. (1) Unless the context otherwise requires, words
2 or phrases defined in this section, or in the additional
3 definitions contained in other articles of this act that apply to
4 particular articles or parts of this act, have the meanings
5 stated.
6
(2) Subject to additional definitions
contained in the
7 subsequent other articles of this act which are applicable to
8 specific that apply
to particular articles or parts of this
act,
9 and unless the context otherwise requires, as used in this act:
10 (a) (1) "Action" in the sense of a
judicial proceeding
11 includes recoupment, counterclaim, setoff, suit in equity, and
12 any other proceedings in which rights are determined.
13 (b) (2) "Aggrieved party" means a
party entitled to resort
14 to a remedy.
1 (c) (3) "Agreement", as distinguished from contract as
2 defined in subdivision (l), means the bargain of the parties in
3 fact, as found in their language or by implication from other
4 circumstances, including course of performance, course of
5 dealing, or usage of trade or course of performance as provided
6 in this act (sections 1205 and 2208) section 1303. Whether an
7 agreement has legal consequences is determined by the provisions
8 of this act, if applicable; otherwise by the law of contracts
9 (section 1103). (Compare "Contract".)
10 (d) (4) "Bank" means any a person
engaged in the business of
11 banking and includes a savings bank, savings and loan
12 association, credit union, and trust company.
13 (e) (5) "Bearer"
means the a person in
control of a
14 negotiable electronic document of title or a person in possession
15 of an instrument, a negotiable tangible document of title, or a
16 certificated security payable to bearer or indorsed in blank.
17 (f) (6) "Bill
of lading" means a document of
title
18 evidencing the receipt of goods for shipment issued by a person
19 engaged in the business of directly or indirectly transporting or
20 forwarding goods. , and includes an airbill. "Airbill" means
a
21 document serving for air transportation as a bill of lading does
22 for marine or rail transportation, and includes an air
23 consignment note or air waybill.The term does not include a
24 warehouse receipt.
25 (g) (7) "Branch" includes a separately
incorporated foreign
26 branch of a bank.
27 (h) (8) "Burden of establishing"
a fact " means
the burden
1 of persuading the triers trier of fact that the
existence of the
2 fact is more probable than its nonexistence.
3 (i) (9) "Buyer in ordinary course of
business" means a
4 person that buys goods in good faith, without knowledge that the
5 sale violates the rights of another person in the good goods,
and
6 in the ordinary course from a person, other than a pawnbroker, in
7 the business of selling goods of that kind. A person buys goods
8 in the ordinary course if the sale to the person comports with
9 the usual or customary practices in the kind of business in which
10 the seller is engaged or with the seller's own usual or customary
11 practices. A person that sells oil, gas, or other minerals at the
12 wellhead or minehead is a person in the business of selling goods
13 of that kind. A buyer in ordinary course of business may buy for
14 cash, by exchange of other property, or on secured or unsecured
15 credit, and may acquire goods or documents of title under a
16 preexisting contract for sale. Only a buyer that takes possession
17 of the goods or has a right to recover the goods from the seller
18 under article 2 may be a buyer in ordinary course of business. A
19 The term does not include a person that acquires goods in a
20 transfer in bulk or as security for or in total or partial
21 satisfaction of a money debt. is not a buyer in ordinary course
22 of business.
23 (j) (10) "Conspicuous", :
A term or clause is conspicuous
24 when it is with
reference to a term, means so written, displayed,
25
or presented that a reasonable person
against whom which it is to
26 operate ought to have noticed it. A printed heading in capitals
27 (as: non-negotiable bill of lading) is conspicuous. Language in
1 the body of a form is "conspicuous" if it is in larger or
other
2 contrasting type or color. But in a telegram any stated term is
3 "conspicuous". Whether
a term or clause is "conspicuous" or not
4 is for a decision by for the court. Conspicuous terms include any
5 of the following:
6 (i) A heading in capitals equal to or greater in size than
7 the surrounding text, or in contrasting type, font, or color to
8 surrounding text of the same or lesser size.
9 (ii) Language in the body of a record or display in larger
10 type than the surrounding text, or in contrasting type, font, or
11 color to surrounding text of the same size, or set off from
12 surrounding text of the same size by symbols or other marks that
13 call attention to the language.
14 (k) "Consumer" means an individual who enters into a
15 transaction primarily for personal, family, or household
16 purposes.
17 (l) (11) "Contract", as distinguished from agreement as
18 defined in subdivision (c), means the total legal obligation
19 which that results from the parties' agreement as affected
20
determined by this act and any other
applicable rules of law as
21
supplemented by any other applicable laws.
(Compare "Agreement".)
22 (m) (12) "Creditor" includes a general
creditor, a secured
23 creditor, a lien creditor, and any representative of creditors,
24 including an assignee for the benefit of creditors, a trustee in
25 bankruptcy, a receiver in equity, and an executor or
26 administrator of an insolvent debtor's or assignor's estate.
27 (n) (13) "Defendant" includes a person
in the position of
1 defendant in a cross action or counterclaim, cross-claim, or
2 third-party claim.
3 (o) (14) "Delivery" with means either of the following:
4 (i) With respect to an electronic document of title, a
5 voluntary transfer of control.
6
(ii) With respect
to instruments, documents an
instrument,
7
document of title, or chattel
paper, or certificated securities
8 means a voluntary transfer of possession.
9 (p) (15) "Document
of title" includes bill of lading, dock
10 warrant, dock receipt, warehouse receipt, or order for the
11 delivery of goods, and also any other document which means a
12 record that in the regular course of business or financing is
13 treated as adequately evidencing that the person in possession of
14 it or control of the
record is entitled to receive, control,
15 hold, and dispose of the document record and the goods it the
16
record covers .
To be a document of title a document must purport
17 to be issued by or addressed to a bailee and purport to cover
18 goods in the bailee's possession which are either identified or
19 are fungible portions of an identified mass. and that purports to
20 be issued by or addressed to a bailee and to cover goods in the
21 bailee's possession which are either identified or are fungible
22 portions of an identified mass. The term includes a bill of
23 lading, transport document, dock warrant, dock receipt, warehouse
24 receipt, and order for delivery of goods. "Electronic document of
25 title" means a document of title evidenced by a record consisting
26 of information stored in an electronic medium. "Tangible document
27 of title" means a document of title evidenced by a record
1 consisting of information that is inscribed on a tangible medium.
2 (q) (16) "Fault" means wrongful
act, omission, or breach. a
3 default, breach, or wrongful act or omission.
4 (17) "Fungible" with respect to goods or securities
means
5 goods or securities of which any unit is, by nature or usage of
6 trade, the equivalent of any other like unit. Goods which are not
7 fungible shall be deemed fungible for the purposes of this act to
8 the extent that under a particular agreement or document unlike
9 units are treated as equivalents.
10 (r) "Fungible goods" means either of the following:
11 (i) Goods of which any unit, by nature or usage of trade, is
12 the equivalent of any other like unit.
13 (ii) Goods that by agreement are treated as equivalent.
14 (s) (18) "Genuine" means free of
forgery or counterfeiting.
15 (t) (19) "Good faith", means
honesty in fact in the conduct
16 or transaction concerned. except
as otherwise provided in article
17 5, means honesty in fact and the observance of reasonable
18 commercial standards of fair dealing.
19 (u) (20) "Holder" ,
with respect to a negotiable instrument,
20 means the person in possession if the instrument is payable to
21 bearer or, in the case of an instrument payable to an identified
22 person, if the identified person is in possession. Holder, with
23 respect to a document of title, means the person in possession if
24 the goods are deliverable to bearer or to the order of the person
25 in possession.means
any of the following:
26 (i) A person in possession of a negotiable instrument that is
27 payable either to bearer or to an identified person that is the
1 person in possession.
2 (ii) A person in possession of a negotiable tangible document
3 of title if the goods are deliverable either to bearer or to the
4 order of the person in possession.
5 (iii) A person in control of a negotiable electronic document
6 of title.
7 (21) To "honor" is to pay or to accept and pay, or
where a
8 credit so engages to purchase or discount a draft complying with
9 the terms of the credit.
10 (v) (22) "Insolvency proceedings"
includes any an assignment
11 for the benefit of creditors or other proceedings proceeding
12 intended to liquidate or rehabilitate the estate of the person
13 involved.
14 (23) A person is "insolvent" who either has ceased to
pay
15 his or her debts in the ordinary course of business or cannot pay
16 his or her debts as they become due or is insolvent within the
17 meaning of the federal bankruptcy law.
18 (w) "Insolvent" means any of the following:
19 (i) Having generally ceased to pay debts in the ordinary
20 course of business other than as a result of a bona fide dispute.
21 (ii) Being unable to pay debts as they become due.
22 (iii) Being insolvent within the meaning of federal bankruptcy
23 law.
24 (x) (24) "Money" means a medium of
exchange authorized or
25 adopted by a domestic or foreign government. and
The term
26 includes a monetary unit of account established by an
27 intergovernmental organization or by agreement between 2 or more
1 nations. countries.
2 (25) A person has "notice" of a fact when he or she has
3 actual knowledge of it; he or she has received a notice or
4 notification of it; or from all the facts and circumstances known
5 to him or her at the time in question he or she has reason to
6 know that it exists. A person "knows" or has
"knowledge" of a
7 fact when he or she has actual knowledge of it. "Discover" or
8 "learn" or a word or phrase of similar import refers to
knowledge
9 rather than to reason to know. The time and circumstances under
10 which a notice or notification may cease to be effective are not
11 determined by this act.
12 (26) A person "notifies" or "gives" a notice
or notification
13 to another by taking such steps as may be reasonably required to
14 inform the other in ordinary course whether or not such other
15 actually comes to know of it. A person "receives" a notice or
16 notification when 1 of the following occurs:
17 (a) It comes to his or her attention.
18 (b) It is duly delivered at the place of business through
19 which the contract was made or at any other place held out by him
20 or her as the place for receipt of such communications.
21 (27) Notice, knowledge, or a notice or notification received
22 by an organization is effective for a particular transaction from
23 the time when it is brought to the attention of the individual
24 conducting that transaction, and in any event from the time when
25 it would have been brought to the individual's attention if the
26 organization had exercised due diligence. An organization
27 exercises due diligence if it maintains reasonable routines for
1 communicating significant information to the person conducting
2 the transaction and there is reasonable compliance with the
3 routines. Due diligence does not require an individual acting for
4 the organization to communicate information unless such
5 communication is part of his or her regular duties or unless he
6 or she has reason to know of the transaction and that the
7 transaction would be materially affected by the information.
8 (y) (28) "Organization" includes a
corporation, government,
9 or governmental subdivision or agency, business trust, estate,
10 trust, partnership or association, 2 or more persons having a
11 joint or common interest, or any other legal or commercial
12 entity.means a person
other than an individual.
13 (z) (29) "Party", as distinct from
"third party", means a
14 person who that has engaged in a transaction or made an agreement
15 within subject to this act.
16 (30) "Person" includes an individual or an organization
(see
17 section 1102).
18 (31) "Presumption" or "presumed" means that
the trier of
19 fact must find the existence of the fact presumed unless and
20 until evidence is introduced which would support a finding of its
21 nonexistence.
22 (aa) "Person" means an individual, corporation, business
23 trust, estate, trust, partnership, limited liability company,
24 association, joint venture, government, governmental subdivision,
25 agency, or instrumentality, public corporation, or any other
26 legal or commercial entity.
27 (bb) "Present value" means the amount as of a date certain
1 of 1 or more sums payable in the future, discounted to the date
2 certain by use of either an interest rate specified by the
3 parties if that rate is not manifestly unreasonable at the time
4 the transaction is entered into or, if an interest rate is not so
5 specified, a commercially reasonable rate that takes into account
6 the facts and circumstances at the time the transaction is
7 entered into.
8 (cc) (32) "Purchase" includes means taking
by sale, lease,
9 discount, negotiation, mortgage, pledge, lien, security interest,
10 issue or reissue, gift, or any other voluntary transaction
11 creating an interest in property.
12 (dd) (33) "Purchaser" means a person who
that takes by
13 purchase.
14 (ee) "Record" means information that is inscribed on a
15 tangible medium or that is stored in an electronic or other
16 medium and is retrievable in perceivable form.
17 (ff) (34) "Remedy" means any remedial
right to which an
18 aggrieved party is entitled with or without resort to a tribunal.
19 (gg) (35) "Representative" includes means a person empowered
20 to act for another, including an agent, an officer of a
21 corporation or association, and a trustee, executor, or
22 administrator of an estate., or any other person empowered to act
23 for another.
24 (hh) (36) "Rights" "Right" includes remedies.remedy.
25 (ii) (37) "Security interest" means an
interest in personal
26 property or fixtures which secures payment or performance of an
27 obligation. The term also includes any interest of a consignor
1 and a buyer of an account accounts, chattel paper, a
payment
2 intangible, or a promissory note in a transaction that is subject
3 to article 9. The term does not include the special property
4 interest of a buyer of goods on identification of those goods to
5 a contract for sale under section 2401, is not a "security
6 interest", but a buyer
may also acquire a "security interest" by
7 complying with article 9. Except as otherwise provided in section
8 2505, the right of a seller or lessor of goods under article 2 or
9 2A to retain or acquire possession of the goods is not a
10 "security interest", but a seller or lessor may also acquire a
11 "security interest" by complying with article 9. The retention or
12 reservation of title by a seller of goods notwithstanding
13 shipment or delivery to the buyer (section 2401) under section
14 2401 is limited in effect to a reservation of a "security
15 interest". Whether a transaction in the form of a lease creates a
16 lease or security interest
is determined by the facts of each
17 case; however, a transaction creates a security interest if the
18 consideration the lessee is to pay the lessor for the right to
19 possession and use of the goods is an obligation for the term of
20 the lease not subject to termination by the lessee, and any of
21 the following:under
section 1203.
22 (a) The original term of the lease is equal to or greater
23 than the remaining economic life of the goods.
24 (b) The lessee is bound to renew the lease for the remaining
25 economic life of the goods or is bound to become the owner of the
26 goods.
27 (c) The lessee has an option to renew the lease for the
1 remaining economic life of the goods for no additional
2 consideration or nominal additional consideration upon compliance
3 with the lease agreement.
4 (d) The lessee has an option to become the owner of the
5 goods for no additional consideration or nominal additional
6 consideration upon compliance with the lease agreement.
7 A transaction does not create a security interest merely
8 because it provides any of the following:
9 (a) The present value of the consideration the lessee is
10 obligated to pay the lessor for the right to possession and use
11 of the goods is substantially equal to or is greater than the
12 fair market value of the goods at the time the lease is entered
13 into.
14 (b) The lessee assumes risk of loss of the goods, or agrees
15 to pay taxes, insurance, filing, recording, or registration fees,
16 or service or maintenance costs with respect to the goods.
17 (c) The lessee has an option to renew the lease or to become
18 the owner of the goods.
19 (d) The lessee has an option to renew the lease for a fixed
20 rent that is equal to or greater than the reasonably predictable
21 fair market rent for the use of the goods for the term of the
22 renewal at the time the option is to be performed.
23 (e) The lessee has an option to become the owner of the
24 goods for a fixed price that is equal to or greater than the
25 reasonably predictable fair market value of the goods at the time
26 the option is to be performed.
27 As used in this subsection:
1 (a) Additional consideration is not nominal if when the
2 option to renew the lease is granted to the lessee the rent is
3 stated to be the fair market rent for the use of the goods for
4 the term of the renewal determined at the time the option is to
5 be performed, or when the option to become the owner of the goods
6 is granted to the lessee, the price is stated to be the fair
7 market value of the goods determined at the time the option is to
8 be performed. Additional consideration is nominal if it is less
9 than the lessee's reasonably predictable cost of performing under
10 the lease agreement if the option is not exercised.
11 (b) "Present value" means the amount as of a date
certain of
12 1 or more sums payable in the future, discounted to the date
13 certain. The discount is determined by the interest rate
14 specified by the parties if the rate is not manifestly
15 unreasonable at the time the transaction is entered into;
16 otherwise, the discount is determined by a commercially
17 reasonable rate that takes into account the facts and
18 circumstances of each case at the time the transaction was
19 entered into.
20 (c) "Reasonably predictable" and "remaining
economic life of
21 the goods" are to be determined with reference to the facts and
22 circumstances at the time the transaction is entered into.
23 (jj) (38) "Send"
in connection with any a writing,
record,
24 or notice means to deposit in the mail or deliver for
25 transmission by any other usual means of communication with
26 postage or cost of transmission provided for and properly
27 addressed and in the case of an instrument to an address
1 specified thereon or otherwise agreed, or if there be none to any
2 address reasonable under the circumstances. The receipt of any
3 writing or notice within the time at which it would have arrived,
4 if properly sent, has the effect of a proper sending.any of the
5 following:
6 (i) To deposit in the mail or deliver for transmission by any
7 other usual means of communication with postage or cost of
8 transmission provided for and properly addressed and, in the case
9 of an instrument, to an address specified on the instrument or
10 otherwise agreed, or if there is not an address specified or
11 agreed, to any address reasonable under the circumstances.
12 (ii) In any other way to cause to be received any record or
13 notice within the time it would have arrived if properly sent.
14 (kk) (39) "Signed" includes any symbol
executed or adopted
15 by a party with present intention to authenticate a writing,
16 including a carbon copy of his or her signature.adopt or accept a
17 writing.
18 (40) "Surety" includes guarantor.
19 (41) "Telegram" includes a message transmitted by
radio,
20 teletype, cable, any mechanical method of transmission, or the
21 like.
22 (ll) "State" means a state of the United States, the District
23 of Columbia, Puerto Rico, the United States Virgin Islands, or
24 any territory or insular possession subject to the jurisdiction
25 of the United States.
26 (mm) "Surety" includes a guarantor or other secondary
27 obligor.
1 (nn) (42) "Term" means that a portion
of an agreement which
2 that relates to a particular matter.
3 (oo) (43) "Unauthorized "
signature means one signature"
4 means a signature made without actual, implied, or apparent
5 authority. and The
term includes a forgery.
6 (44) "Value". Except as otherwise provided with respect
to
7 negotiable instruments and bank collections (sections 3303, 4208,
8 and 4209) a person gives "value" for rights if the person
9 acquires them:
10 (a) In return for a binding commitment to extend credit or
11 for the extension of immediately available credit whether or not
12 drawn upon and whether or not a charge-back is provided for in
13 the event of difficulties in collection; or
14 (b) As security for or in total or partial satisfaction of a
15 preexisting claim; or
16 (c) By accepting delivery pursuant to a preexisting contract
17 for purchase; or
18 (d) Generally, in return for any consideration sufficient to
19 support a simple contract.
20 (pp) (45) "Warehouse receipt" means a receipt
document of
21 title issued by a person engaged in the business of storing goods
22 for hire.
23 (qq) (46) "Written" or
"writing" includes printing,
24 typewriting, or any other intentional reduction to tangible form.
25 Sec. 2103. (1) In this article unless the context otherwise
26 requires:
27 (a) "Buyer" means a person who buys or contracts to buy
1 goods.
2 (b) "Good faith" in the case of a merchant means
honesty in
3 fact and the observance of reasonable commercial standards of
4 fair dealing in the trade.
5 (b) (c) "Receipt" of goods means
taking physical possession
6 of them.
7 (c) (d) "Seller" means a person who
sells or contracts to
8 sell goods.
9 (2) Other definitions applying to this article or to
10 specified parts thereof, and the sections in which they appear
11 are:
|
12 |
"Acceptance". |
Section 2606. |
|
13 |
"Banker's credit". |
Section 2325. |
|
14 |
"Between merchants". |
Section 2104. |
|
15 |
"Cancellation". |
Section 2106(4). |
|
16 |
"Commercial unit". |
Section 2105. |
|
17 |
"Confirmed credit". |
Section 2325. |
|
18 |
"Conforming to contract". |
Section 2106. |
|
19 |
"Contract for sale". |
Section 2106. |
|
20 |
"Cover". |
Section 2712. |
|
21 |
"Entrusting". |
Section 2403. |
|
22 |
"Financing agency". |
Section 2104. |
|
23 |
"Future goods". |
Section 2105. |
|
24 |
"Goods". |
Section 2105. |
|
25 |
"Identification". |
Section 2501. |
|
26 |
"Installment contract". |
Section 2612. |
|
27 |
"Letter of credit". |
Section 2325. |
|
28 |
"Lot". |
Section 2105. |
|
1 |
"Merchant". |
Section 2104. |
|
2 |
"Overseas". |
Section 2323. |
|
3 |
"Person in position of seller". |
Section 2707. |
|
4 |
"Present sale". |
Section 2106. |
|
5 |
"Sale". |
Section 2106. |
|
6 |
"Sale on approval". |
Section 2326. |
|
7 |
"Sale or return". |
Section 2326. |
|
8 |
"Termination". |
Section 2106. |
9 (3) The "Control"
as provided in section 7106 and the
10 following definitions in other articles apply to this article:
|
11 |
"Check". |
Section 3104. |
|
12 |
"Consignee". |
Section 7102. |
|
13 |
"Consignor". |
Section 7102. |
|
14 |
"Consumer goods". |
Section 9102. |
|
15 |
"Dishonor". |
Section 3502. |
|
16 |
"Draft". |
Section 3104. |
17 (4) In addition, article 1 contains general definitions and
18 principles of construction and interpretation applicable
19 throughout this article.
20 Sec. 2104. (1) "Merchant" means a person who that deals
in
21 goods of the kind or otherwise by his the person's occupation
22 holds himself itself
out as having knowledge or skill
peculiar to
23 the practices or goods involved in the transaction or to whom
24 such which that knowledge or skill may be attributed by his the
25 person's employment of an agent or broker or other intermediary
26 who by his the
person's occupation holds himself itself out
as
27 having such that knowledge or skill.
1 (2) "Financing agency" means a bank, finance company, or
2 other person who that
in the ordinary course of business
makes
3 advances against goods or documents of title or who that by
4 arrangement with either the seller or the buyer intervenes in
5 ordinary course to make or collect payment due or claimed under
6 the contract for sale, as by purchasing or paying the sellers
7 draft or making advances against it or by merely taking it for
8 collection whether or not documents of title accompany or are
9 associated with the draft. "Financing agency" includes also a
10 bank or other person who that similarly intervenes
between
11 persons who that are in the position of seller and buyer in
12 respect to the goods under
( section 2707. ).
13 (3) "Between merchants" means in any transaction with
14 respect to which both parties are chargeable with the knowledge
15 or skill of merchants.
16 Sec. 2310. Unless otherwise agreed, all of the following
17 apply:
18 (a) payment Payment
is due at the time and place at which
19 the buyer is to receive the goods even though if the
place of
20 shipment is the place of delivery. ; and
21 (b) if If the seller is authorized to send the goods, he
the
22 seller may ship them under reservation, and may tender the
23 documents of title, but the buyer may inspect the goods after
24 their arrival before payment is due unless such that inspection
25 is inconsistent with the terms of the contract pursuant to (
26 section 2513. ); and
27 (c) if If delivery is authorized and made by way of
1 documents of title otherwise than by subsection subdivision (b),
2 then payment is due at regardless
of where the goods are to be
3 received at 1 of the following times, as applicable:
4 (i) At the time and place at which the buyer is to receive
5
delivery of the tangible documents. regardless
of where the goods
6 are to be received; and
7 (ii) At the time the buyer is to receive delivery of the
8 electronic documents and at the seller's place of business or if
9 none, the seller's residence.
10 (d) where If
the seller is required or authorized to
ship
11 the goods on credit, the credit period runs from the time of
12 shipment but postdating the invoice or delaying its dispatch will
13 correspondingly delay the starting of the credit period.
14 Sec. 2323. (1) Where the If a contract contemplates
overseas
15 shipment and contains a term C.I.F. or C. & F. or F.O.B. vessel,
16 the seller unless otherwise agreed must obtain a negotiable bill
17 of lading stating that the goods have been loaded on board or, in
18 the case of a term C.I.F. or C. & F., received for shipment.
19 (2) Where in a case within In connection with a contract
20
subject to subsection (1), if a
tangible bill of lading has been
21 is issued in a set of parts, unless otherwise agreed if the
22 documents are not to be sent from abroad the buyer may demand
23 tender of the full set; otherwise only one part of the bill of
24 lading need must be tendered. Even if the agreement expressly
25 requires a full set, both of the following apply:
26 (a) due Due tender of a single part is acceptable within the
27 provisions of this article on concerning cure of improper
1 delivery (subsection (1) of section 2508); and under section
2 2508(1).
3 (b) even though the Even if a full set is
demanded, if the
4 documents are sent from abroad the person tendering an incomplete
5 set may nevertheless require payment upon furnishing an indemnity
6 which the buyer in good faith deems adequate.
7 (3) A shipment by water or by air or a contract
8 contemplating such shipment is "overseas" insofar as by usage of
9 trade or agreement it is subject to the commercial, financing, or
10 shipping practices characteristic of international deep water
11 commerce.
12 Sec. 2401. Each provision of this article with regard to the
13 rights, obligations, and remedies of the seller, the buyer,
14 purchasers, or other third parties applies irrespective of title
15 to the goods except where the provisions refers to such the
16 title. Insofar as In
situations that are
not covered by the other
17 provisions of this article and matters concerning title become
18 material, the following rules apply:
19 (a) (1) Title
to goods cannot pass under a contract for sale
20 prior to before their identification to the contract under (
21 section 2501, ), and
unless otherwise explicitly agreed the buyer
22 acquires by their identification a special property as limited by
23 this act. Any retention or reservation by the seller of the title
24 (property) in goods shipped or delivered to the buyer is limited
25 in effect to a reservation of a security interest. Subject to
26 these provisions and to the provisions of the article on secured
27 transactions ( article 9, ),
title to goods passes from the
1 seller to the buyer in any manner and on any conditions
2 explicitly agreed on by the parties.
3 (b) (2) Unless
otherwise explicitly agreed title passes to
4 the buyer at the time and place at which the seller completes his
5 its performance with reference to the physical delivery of the
6 goods, despite any reservation of a security interest and even
7 though if a document of title is to be delivered at a different
8 time or place. ; and in In particular and despite
any reservation
9 of a security interest by the bill of lading, both of the
10 following apply:
11 (i) (a) Unless subparagraph (ii) applies, if the contract
12 requires or authorizes the seller to send the goods to the buyer
13 but does not require him the seller to deliver them
at
14 destination, title passes to the buyer at the time and place of
15 shipment. ; but
16 (ii) (b) if If the
contract requires delivery at destination,
17 title passes on tender there.
18 (c) (3) Unless
otherwise explicitly agreed where delivery is
19 to be made without moving the goods, 1 of the following applies:
20 (i) (a) if If the
seller is to deliver a tangible document of
21 title, title passes at the time when and the place where he the
22
seller delivers such documents; or the document of title.
23 (ii) If the seller is to deliver an electronic document of
24 title, title passes when the seller delivers the document.
25 (iii) (b) if If the
goods are at the time of contracting
26 already identified and no documents of title are to be delivered,
27 title passes at the time and place of contracting.
1 (d) (4) A
rejection or other refusal by the buyer to receive
2 or retain the goods, whether or not justified, or a justified
3 revocation of acceptance revests title to the goods in the
4 seller. Such revesting Revesting
of title under this subdivision
5 occurs by operation of law and is not a "sale".
6 Sec. 2503. (1) Tender of delivery requires that the seller
7 put and hold conforming goods at the buyer's disposition and give
8 the buyer any notification reasonably necessary to enable him the
9 buyer to take delivery. The manner, time, and place for tender
10 are determined by the agreement and this article, and in
11 particular all of the following apply:
12 (a) tender Tender
must be at a reasonable hour, and if it
is
13
a tender of goods, they
the goods must be kept available for the
14 period reasonably necessary to enable the buyer to take
15 possession. ; but
16 (b) unless Unless
otherwise agreed, the
buyer must furnish
17 facilities reasonably suited to the receipt of the goods.
18 (2) Where the case is within the next section respecting If
19 section 2504 applies to a shipment, tender requires that the
20 seller comply with its provisions that section.
21 (3) Where the If
a seller is required to deliver at a
22 particular destination, tender requires that he the seller comply
23 with subsection (1) and also, in any appropriate case if
24 appropriate, tender documents as described in subsections (4) and
25 (5). of this section.
26 (4) Where If
goods are in the possession of a bailee
and are
27 to be delivered without being moved, both of the following apply:
1 (a) Except as provided in subdivision (b), tender requires
2 that the seller either tender a negotiable document of title
3 covering such the goods or procure acknowledgment by the bailee
4 of the buyer's right to possession of the goods. ;
but
5 (b) tender Tender
to the buyer of a non-negotiable
6
nonnegotiable document of title or of a
written direction to
7 record directing the bailee to deliver is sufficient tender
8 unless the buyer seasonally objects, and except as otherwise
9 provided in article 9, receipt by the bailee of notification of
10 the buyer's rights fixes those rights as against the bailee and
11 all third persons. ; but However,
risk of loss of the goods and
12 of any failure by the bailee to honor the non-negotiable
13 nonnegotiable document of title or to obey the direction remains
14 on the seller until the buyer has had a reasonable time to
15 present the document or direction, and a refusal by the bailee to
16 honor the document or to obey the direction defeats the tender.
17 (5) Where Both
of the following apply if the contract
18 requires the seller to deliver documents:
19 (a) he The
seller must tender all such the documents
in
20 correct form, except as provided in this article section 2323(2)
21 with respect to bills of lading in a set. (subsection (2) of
22 section 2323); and
23 (b) tender Tender
through customary banking channels is
24 sufficient and dishonor of a draft accompanying or associated
25 with the documents constitutes nonacceptance or rejection.
26 Sec. 2505. (1) Where the Both of the following apply if a
27 seller has identified goods to the a contract
by or before
1 shipment:
2 (a) his The
seller's procurement of a negotiable
bill of
3 lading to his the
seller's own order or otherwise
reserves in him
4
the seller a security interest in the
goods. His The seller's
5 procurement of the bill to the order of a financing agency or of
6 the buyer indicates in addition only the seller's expectation of
7 transferring that interest to the person named.
8 (b) a non-negotiable A nonnegotiable bill of
lading to
9 himself or his the
seller or the seller's nominee reserves
10 possession of the goods as security. but However, except
in a
11 case of conditional delivery (subsection (2) of section 2507) a
12 non-negotiable under section
2507(2), a nonnegotiable bill of
13 lading naming the buyer as consignee reserves no does not reserve
14
a security interest even though if the
seller retains possession
15 or control of the bill of lading.
16 (2) When If
a shipment by the a seller
with reservation of a
17 security interest is in violation of the contract for sale, it
18 constitutes an improper contract for transportation within the
19 preceding section 2504 but
impairs neither it does
not impair the
20 rights given to the buyer by shipment and identification of the
21 goods to the contract nor or impair the seller's
powers as a
22 holder of a negotiable document of title.
23 Sec. 2506. (1) A financing agency by paying or purchasing
24 for value a draft which that
relates to a shipment of goods
25 acquires to the extent of the payment or purchase and in addition
26 to its own rights under the draft and any document of title
27 securing it any rights of the shipper in the goods including the
1 right to stop delivery and the shipper's right to have the draft
2 honored by the buyer.
3 (2) The right to reimbursement of a financing agency which
4 that has in good faith honored or purchased the draft under
5 commitment to or authority from the buyer is not impaired by
6 subsequent discovery of defects with reference to any relevant
7 document which was apparently regular. on its face.
8 Sec. 2509. (1) Where the The following apply if a contract
9 requires or authorizes the seller to ship the goods by carrier:
10 (a) if it If
the contract does not require him the seller to
11 deliver them the
goods at a particular destination, the
risk of
12 loss passes to the buyer when the goods are duly delivered to the
13 carrier even though if the shipment is under reservation under (
14 section 2505. ); but
15 (b) if it If
the contract does require him the seller to
16 deliver them the
goods at a particular destination and
the goods
17 are there duly tendered to
the buyer at that destination while in
18 the possession of the carrier, the risk of loss passes to the
19 buyer when the goods are there duly so tendered as to enable at
20 that destination in a manner that enables the buyer to take
21 delivery.
22 (2) Where the If
goods are held by a bailee to be
delivered
23 without being moved, the risk of loss passes to the buyer when 1
24 of the following occurs:
25 (a) on his receipt The buyer receives possession or control
26 of a negotiable document of title covering the goods. ;
or
27 (b) on acknowledgment by the The bailee
provides
1 acknowledgement of the buyer's right to possession of the goods.
2 ; or
3 (c) after his receipt of a non-negotiable The buyer receives
4 possession or control of a nonnegotiable document of title or
5 other written direction to deliver in a record, as provided in
6 subsection (4)(b) of section
2503 2503(4)(b).
7 (3) In any case not within If subsection (1) or (2) does not
8
apply, the risk of loss passes to the
buyer on his the buyer's
9 receipt of the goods if the seller is a merchant. ;
otherwise
10 Otherwise, the risk of loss passes to the buyer on tender of
11 delivery.
12 (4) The provisions of this section are subject to contrary
13 agreement of the parties and to the provisions of this article
14
section 2327 on sale on approval (section
2327) and section 2510
15 on effect of breach on risk of loss. (section 2510).
16 Sec. 2605. (1) The A buyer's failure to state in
connection
17 with rejection a particular defect which that is
ascertainable by
18 reasonable inspection precludes him the buyer from relying on the
19 unstated defect to justify rejection or to establish breach if
20 either of the following applies:
21 (a) where the The
seller could have cured it the defect if
22
the buyer stated the defect seasonably. ; or
23 (b) between Between
merchants, when if the
seller has after
24 rejection made makes
a request in writing for a full and final
25 written statement of all defects on which the buyer proposes to
26 rely.
27 (2) Payment against documents made without reservation of
1 rights precludes recovery of the payment for defects apparent on
2 the face of in the documents.
3 Sec. 2705. (1) The A seller may stop delivery
of goods in
4 the possession of a carrier or other bailee when he if the seller
5 discovers the buyer to be insolvent under ( section 2702
) and
6 may stop delivery of carload, truckload, planeload, or larger
7 shipments of express or freight when if the
buyer repudiates or
8 fails to make a payment due before delivery or if for any other
9 reason the seller has a right to withhold or reclaim the goods.
10 (2) As against such a buyer described in subsection (1), the
11 seller may stop delivery until 1 of the following occurs:
12 (a) receipt Receipt
of the goods by the buyer. ;
or
13 (b) acknowledgment Acknowledgement to the buyer
by any a
14 bailee of the goods except a carrier that the bailee holds the
15 goods for the buyer. ; or
16 (c) such An acknowledgment to the buyer by a carrier by
17 reshipment or as warehouseman; or a warehouse that the carrier
18 holds the goods for the buyer.
19 (d) negotiation Negotiation
to the buyer of any a negotiable
20 document of title covering the goods.
21 (3) (3)(a) To stop delivery the All of the following must be
22 met to stop delivery under this section:
23
(a) The seller must so notify
the bailee so as to enable the
24 bailee by reasonable diligence to prevent delivery of the goods.
25 (b) After such notification under subdivision (a), the
26 bailee must hold and deliver the goods according to the
27 directions of the seller but the seller is liable to the bailee
1 for any ensuing charges or damages.
2 (c) If a negotiable document of title has been issued for
3 goods, the bailee is not obliged to obey a notification to stop
4 until surrender of possession or control of the document.
5 (d) A carrier who that
has issued a non-negotiable
6 nonnegotiable bill of lading is not obliged to obey a
7 notification to stop received from a person other than the
8 consignor.
9 Sec. 2A103. (1) In this article unless the context otherwise
10 requires:
11 (a) "Buyer in ordinary course of business" means a person
12 who in good faith and without knowledge that the sale to him or
13 her is in violation of the ownership rights or security interest
14 or leasehold interest of a third party in the goods buys in
15 ordinary course from a person in the business of selling goods of
16 that kind. but The
term does not include a pawnbroker.
"Buying"
17 may be for cash or by exchange of other property or on secured or
18 unsecured credit and includes receiving acquiring goods or
19 documents of title under a pre-existing contract for sale but
20 does not include a transfer in bulk or as security for or in
21 total or partial satisfaction of a money debt.
22 (b) "Cancellation" occurs when either party puts an end to
23 the lease contract for default by the other party.
24 (c) "Commercial unit" means such a unit of goods
as that by
25 commercial usage is a single whole for purposes of lease and
26 division of which materially impairs its character or value on
27 the market or in use. A commercial unit may be a single article,
1 as a machine, or a set of articles, as a suite of furniture or a
2 line of machinery, or a quantity, as a gross or carload, or any
3 other unit treated in use or in the relevant market as a single
4 whole.
5 (d) "Conforming" means goods or performance under a lease
6 contract that are in accordance with the obligations under the
7 lease contract.
8 (e) "Consumer lease" means a lease that a lessor regularly
9 engaged in the business of leasing or selling makes to a lessee
10 who is an individual and who takes under the lease primarily for
11 a personal, family, or household purpose, if the total payments
12 to be made under the lease contract, excluding payments for
13 options to renew or buy, do not exceed $25,000.00.
14 (f) "Fault" means wrongful act, omission, breach, or
15 default.
16 (g) "Finance lease" means a lease with respect to which all
17 of the following apply:
18 (i) The lessor does not select, manufacture, or supply the
19 goods.
20 (ii) The lessor acquires the goods or the right to possession
21 and use of the goods in connection with the lease.
22 (iii) One of the following occurs:
23 (A) The lessee receives a copy of the contract by which the
24 lessor acquired the goods or the right to possession and use of
25 the goods before signing the lease contract.
26 (B) The lessee's approval of the contract by which the
27 lessor acquired the goods or the right to possession and use of
1 the goods is a condition to effectiveness of the lease contract.
2 (C) The lessee, before signing the lease contract, receives
3 an accurate and complete statement designating the promises and
4 warranties, and any disclaimers of warranties, limitations or
5 modifications of remedies, or liquidated damages, including those
6 of a third party, such as the manufacturer of the goods, provided
7 to the lessor by the person supplying the goods in connection
8 with or as part of the contract by which the lessor acquired the
9 goods or the right to possession and use of the goods.
10 (D) If the lease is not a consumer lease, the lessor, before
11 the lessee signs the lease contract, informs the lessee in
12 writing of the following:
13 (I) The identity of the person supplying the goods to the
14 lessor, unless the lessee has selected that person and directed
15 the lessor to acquire the goods or the right to possession and
16 use of the goods from that person.
17 (II) The lessee is entitled under this article to the
18 promises and warranties, including those of any third party,
19 provided to the lessor by the person supplying the goods in
20 connection with or as part of the contract by which the lessor
21 acquired the goods or the right to possession and use of the
22 goods.
23 (III) The lessee may communicate with the person supplying
24 the goods to the lessor and receive an accurate and complete
25 statement of those promises and warranties, including any
26 disclaimers and limitations of them or of remedies.
27 (h) "Goods" means all things that are movable at the time of
1 identification to the lease contract, or are fixtures under (
2 section 2A309, ), but
the term does not include money, documents,
3 instruments, accounts, chattel paper, general intangibles, or
4 minerals or the like, including oil and gas, before extraction.
5 The term also includes the unborn young of animals.
6 (i) "Installment lease contract" means a lease contract that
7 authorizes or requires the delivery of goods in separate lots to
8 be separately accepted, even though the lease contract contains a
9 clause "each delivery is a separate lease" or its equivalent.
10 (j) "Lease" means a transfer of the right to possession and
11 use of goods for a term in return for consideration, but a sale,
12 including a sale on approval or a sale or return, or retention or
13 creation of a security interest is not a lease. Unless the
14 context clearly indicates otherwise, the term includes a
15 sublease.
16 (k) "Lease agreement" means the bargain, with respect to the
17 lease, of the lessor and the lessee in fact as found in their
18 language or by implication from other circumstances including
19 course of dealing or usage of trade or course of performance as
20 provided in this article. Unless the context clearly indicates
21 otherwise, the term includes a sublease agreement.
22 (l) "Lease contract" means the total legal obligation that
23 results from the lease agreement as affected by this article and
24 any other applicable rules of law. Unless the context clearly
25 indicates otherwise, the term includes a sublease contract.
26 (m) "Leasehold interest" means the interest of the lessor or
27 the lessee under a lease contract.
1 (n) "Lessee" means a person who acquires the right to
2 possession and use of goods under a lease. Unless the context
3 clearly indicates otherwise, the term includes a sublessee.
4 (o) "Lessee in ordinary course of business" means a person
5 who in good faith and without knowledge that the lease to him or
6 her is in violation of the ownership rights or security interest
7 or leasehold interest of a third party in the goods leases in
8 ordinary course from a person in the business of selling or
9 leasing goods of that kind but does not include a pawnbroker.
10 "Leasing" may be for cash or by exchange of other property or on
11 secured or unsecured credit and includes receiving acquiring
12 goods or documents of title under a pre-existing lease contract
13 but does not include a transfer in bulk or as security for or in
14 total or partial satisfaction of a money debt.
15 (p) "Lessor" means a person who transfers the right to
16 possession and use of goods under a lease. Unless the context
17 clearly indicates otherwise, the term includes a sublessor.
18 (q) "Lessor's residual interest" means the lessor's interest
19 in the goods after expiration, termination, or cancellation of
20 the lease contract.
21 (r) "Lien" means a charge against or interest in goods to
22 secure payment of a debt or performance of an obligation, but the
23 term does not include a security interest.
24 (s) "Lot" means a parcel or a single article that is the
25 subject matter of a separate lease or delivery, whether or not it
26 is sufficient to perform the lease contract.
27 (t) "Merchant lessee" means a lessee that is a merchant with
1 respect to goods of the kind subject to the lease.
2 (u) "Present value" means the amount as of a date certain of
3 1 or more sums payable in the future, discounted to the date
4 certain. The discount is determined by the interest rate
5 specified by the parties if the rate was not manifestly
6 unreasonable at the time the transaction was entered into;
7 otherwise, the discount is determined by a commercially
8 reasonable rate that takes into account the facts and
9 circumstances of each case at the time the transaction was
10 entered into.
11 (v) "Purchase" includes taking by sale, lease, mortgage,
12 security interest, pledge, gift, or any other voluntary
13 transaction creating an interest in goods.
14 (w) "Sublease" means a lease of goods the right to
15 possession and use of which was acquired by the lessor as a
16 lessee under an existing lease.
17 (x) "Supplier" means a person from whom a lessor buys or
18 leases goods to be leased under a finance lease.
19 (y) "Supply contract" means a contract under which a lessor
20 buys or leases goods to be leased.
21 (z) "Termination" occurs when either party pursuant to a
22 power created by agreement or law puts an end to the lease
23 contract otherwise than for default.
24 (2) Other definitions applying to this article and the
25 sections in which they appear are:
|
26 |
"Accessions". |
Section
|
|
1 |
"Construction mortgage". |
Section
|
|
2 |
"Encumbrance". |
Section
|
|
3 |
"Fixtures". |
Section
|
|
4 |
"Fixture filing". |
Section
|
|
5 |
"Purchase money lease". |
Section
|
6 (3) The following definitions in other articles apply to
7 this article:
|
8 |
"Account". |
Section
|
|
9 |
"Between merchants". |
Section
|
|
10 |
"Buyer". |
Section
|
|
11 |
"Chattel paper". |
Section
|
|
12 |
"Consumer goods". |
Section
|
|
13 |
"Document". |
Section
|
|
14 |
"Entrusting". |
Section
|
|
15 |
"General intangible". |
Section
|
|
16 |
"Good faith". |
Section
|
|
17 |
"Instrument". |
Section
|
|
18 |
"Merchant". |
Section
|
|
19 |
"Mortgage". |
Section
|
|
20 |
"Pursuant to commitment". |
Section
|
|
21 |
"Receipt". |
Section
|
|
22 |
"Sale". |
Section
|
|
23 |
"Sale on approval". |
Section 2326. |
|
24 |
"Sale or return". |
Section 2326. |
|
25 |
"Seller". |
Section
|
26 (4) In addition, article 1 contains general definitions and
27 principles of construction and interpretation applicable
28 throughout this article.
1 Sec. 2A514. (1) In rejecting goods, a lessee's failure to
2 state a particular defect that is ascertainable by reasonable
3 inspection precludes the lessee from relying on the defect to
4 justify rejection or to establish default (i) if either of the
5 following applies:
6 (a) If, stated seasonably, the lessor or the supplier could
7 have cured it, or (ii)
between the defect.
8 (b) Between merchants, if the lessor or the supplier after
9 rejection has made a request in writing for a full and final
10 written statement of all defects on which the lessee proposes to
11 rely.
12 (2) A lessee's failure to reserve rights when paying rent or
13 other consideration against documents precludes recovery of the
14 payment for defects apparent on the face of in the
documents.
15 Sec. 2A526. (1) A lessor may stop delivery of goods in the
16 possession of a carrier or other bailee if the lessor discovers
17 the lessee to be is
insolvent and may stop delivery of
carload,
18 truckload, planeload, or larger shipments of express or freight
19 if the lessee repudiates or fails to make a payment due before
20 delivery, whether for rent, security, or otherwise under the
21 lease contract, or for any other reason the lessor has a right to
22 withhold or take possession of the goods.
23 (2) In pursuing its remedies under subsection (1), the
24 lessor may stop delivery until 1 of the following occurs:
25 (a) Receipt of the goods by the lessee.
26 (b) Acknowledgment to the lessee by any bailee of the goods,
27 except a carrier, that the bailee holds the goods for the lessee.
1 (c) An acknowledgment to the lessee by a carrier via
2 reshipment or as warehouseperson a warehouse.
3 (3) To stop delivery
under this section, a lessor shall so
4 notify the bailee so as to enable the bailee by reasonable
5 diligence to prevent delivery of the goods.
6 (4) After notification under subsection (3), the bailee
7 shall hold and deliver the goods according to the directions of
8 the lessor, but the lessor is liable to the bailee for any
9 ensuing charges or damages.
10 (5) A carrier who has issued a nonnegotiable bill of lading
11 is not obliged to obey a notification to stop received from a
12 person other than the consignor.
13 Sec. 4104. (1) As used in this article unless the context
14 otherwise requires:
15 (a) "Account" means any depositor credit account with a
16 bank, including a demand, time, savings, passbook, share draft,
17 or like account, other than an account evidenced by a certificate
18 of deposit.
19 (b) "Afternoon" means the period of a day between noon and
20 midnight.
21 (c) "Banking day" means the part of a day on which a bank is
22 open to the public for carrying on substantially all of its
23 banking functions.
24 (d) "Clearing-house" means an association of banks or other
25 payors regularly clearing items.
26 (e) "Customer" means any person having an account with a
27 bank or for whom a bank has agreed to collect items, including a
1 bank that maintains an account at another bank.
2 (f) "Documentary draft" means a draft to be presented for
3 acceptance or payment if specified documents, certificated
4 securities , as
defined in ( section 8102
) or instructions for
5 uncertificated securities as
defined in ( section 8102,
), or
6 other certificates, statements, or the like are to be received by
7 the drawee or other payor before acceptance or payment of the
8 draft.
9 (g) "Draft" means a draft as defined in section 3104 or an
10 item, other than an instrument, that is an order.
11 (h) "Drawee" means a person ordered in a draft to make
12 payment.
13 (i) "Item" means an instrument or a promise or order to pay
14 money handled by a bank for collection or pay. The term does not
15 include a payment order governed by article 2a or a credit or
16 debit card slip.
17 (j) "Midnight deadline" with respect to a bank is midnight
18 on its next banking day following the banking day on which it
19 receives the relevant item or notice or from which the time for
20 taking action commences to run, whichever is later.
21 (k) "Settle" means to pay in cash, by clearing-house
22 settlement, in a charge or credit or by remittance, or otherwise
23 as agreed. A settlement may be either provisional or final.
24 (l) "Suspends payments" with respect to a bank means that it
25 has been closed by order of the supervisory authorities, that a
26 public officer has been appointed to take it over or that it
27 ceases or refuses to make payments in the ordinary course of
1 business.
2 (2) Other definitions applying to this article and the
3 sections in which they appear are:
|
4 |
"Agreement for electronic presentment". Section 4110. |
|
5 |
"Bank". Section 4105. |
|
6 |
"Collecting bank". Section 4105. |
|
7 |
"Depositary bank". Section 4105. |
|
8 |
"Intermediary bank". Section 4105. |
|
9 |
"Payor bank". Section 4105. |
|
10 |
"Presenting bank". Section 4105. |
|
11 |
"Presentment notice". Section 4110. |
12 (3) The "Control"
as provided in section 7106 and the
13 following definitions in other articles apply to this article:
|
14 |
"Acceptance". Section 3409. |
|
15 |
"Alteration". Section 3409. |
|
16 |
"Certificate of deposit". Section 3104. |
|
17 |
"Cashier's check". Section 3104. |
|
18 |
"Certified check". Section 3409. |
|
19 |
"Check". Section 3104. |
|
20 |
"Draft". Section 3104. |
|
21 |
|
|
22 |
"Holder in due course". Section 3302. |
|
23 |
"Instrument". Section 3104. |
|
24 |
"Notice of dishonor". Section 3503. |
|
25 |
"Order". Section 3103. |
|
26 |
"Ordinary care". Section 3103. |
|
27 |
"Person entitled to enforce". Section 3301. |
|
1 |
"Presentment". Section 3501. |
|
2 |
"Promise". Section 3103. |
|
3 |
"Prove". Section 3103. |
|
4 |
"Teller's check". Section 3104. |
|
5 |
"Unauthorized signature". Section 3403. |
6 (4) In addition, article 1 contains general definitions and
7 principles of construction and interpretation applicable
8 throughout this article.
9 Sec. 4210. (1) A collecting bank has a security interest in
10 an item and any accompanying documents or the proceeds of any of
11 the following:
12 (a) In case of If
an item is deposited in an account, to
the
13 extent to which credit given for the item has been withdrawn or
14 applied.
15 (b) In case of If
an item for which it has given credit is
16 available for withdrawal as of right, to the extent of the credit
17 given whether or not the credit is drawn upon and whether or not
18 there is a right of charge-back.
19 (c) If it makes an advance on or against the item.
20 (2) If credit given for several items received at one time
21 or pursuant to a single agreement is withdrawn or applied in part
22 the security interest remains upon all the items, any
23 accompanying documents or the proceeds of either. For the purpose
24 of this section, credits first given are first withdrawn.
25 (3) Receipt by a collecting bank of a final settlement for
26 an item is a realization on its security interest in the item,
27 accompanying documents and proceeds. So long as the bank does not
1 receive final settlement for the item or give up possession of
2 the item or possession or control of the accompanying documents
3 for purposes other than collection, the security interest
4 continues to that extent and is subject to article 9 except for
5 the following:
6 (a) No A security agreement is not necessary to make the
7 security interest enforceable under
( section 9203(2)(c)(i). ).
8 (b) No A filing is not
required to perfect the security
9 interest.
10 (c) The security interest has priority over conflicting
11 perfected security interests in the item, accompanying documents,
12 or proceeds.
13 Sec. 7101. This article shall be known and may be cited as
14 "uniform commercial code—documents of title".
15 Sec. 7102. (1) In As
used in this article, unless the
16 context otherwise requires:
17 (a) "Bailee" means the a person
who that by a warehouse
18 receipt, bill of lading, or other document of title acknowledges
19 possession of goods and contracts to deliver them.
20 (b) "Carrier" means a person that issues a bill of lading.
21 (c) (b) "Consignee"
means the a person named in a bill of
22
lading to whom which or
to whose order the bill promises
23 delivery.
24 (d) (c) "Consignor"
means the a person named in a bill of
25
lading as the person from whom which the
goods have been received
26 for shipment.
27 (e) (d) "Delivery
order" means a written record
that
1 contains an order to deliver goods directed to a warehouseman,
2 carrier, or other person who that in
the ordinary course of
3 business issues warehouse receipts or bills of lading.
4 (e) "Document" means document of title as defined in
the
5 general definitions in article 1 (section 1201).
6 (f) "Good faith" means honesty in fact and the observance of
7 reasonable commercial standards of fair dealing.
8 (g) (f) "Goods"
means all things which that
are treated as
9 movable for the purposes of a contract of for storage
or
10 transportation.
11 (h) (g) "Issuer"
means a bailee who that issues a document
12 except that in relation to of
title or, in the case of an
13 unaccepted delivery order, it means the person who that orders
14 the possessor of goods to deliver. Issuer The term includes
any
15 person for whom which
an agent or employee purports to act in
16 issuing a document if the agent or employee has real or apparent
17 authority to issue documents, notwithstanding that even if the
18 issuer received no did
not receive any goods, or
that the goods
19 were misdescribed, or that in any other respect the agent or
20 employee violated his the
issuer's instructions.
21 (h) "Warehouseman" is a person engaged in the business
of
22 storing goods for hire.
23 (i) "Person entitled under the document" means the holder,
24 in the case of a negotiable document of title, or the person to
25 which delivery of the goods is to be made by the terms of, or
26 pursuant to instructions in a record under, a nonnegotiable
27 document of title.
1 (j) "Record" means information that is inscribed on a
2 tangible medium or that is stored in an electronic or other
3 medium and is retrievable in perceivable form.
4 (k) "Sign" means any of the following, with present intent
5 to authenticate or adopt a record:
6 (i) To execute or adopt a tangible symbol.
7 (ii) To attach to or logically associate with the record an
8 electronic sound, symbol, or process.
9 (l) "Shipper" means a person that enters into a contract of
10 transportation with a carrier.
11 (m) "Warehouse" means a person engaged in the business of
12 storing goods for hire.
13 (2) Other definitions applying to this article or to
14 specified parts thereof, and the sections in which they appear
15 are:
|
16 |
|
|
17 |
|
18 (3) Definitions in other articles applying to this article
19 and the sections in which they appear are:
|
20 |
|
|
21 |
|
|
22 |
|
23 (2) All of the following definitions from other articles
24 apply to this article:
1 (a) "Contract for sale" as defined in section 2106.
2 (b) "Lessee in the ordinary course of business" as defined
3 in section 2A103.
4 (c) "Receipt of goods" as defined in section 2103.
5 (3) (4) In addition article Article 1
contains general
6 definitions and principles of construction and interpretation
7 applicable throughout this article.
8 Sec. 7103. (1) To the extent that any treaty or statute of
9 the United States, regulatory statute of this state or tariff,
10 classification or regulation filed or issued pursuant thereto is
11 applicable, the provisions of this article are subject thereto.
12 This article is subject to any treaty or statute of the United
13 States or regulatory statute of this state to the extent the
14 treaty, statute, or regulatory statute is applicable.
15 (2) This article does not modify or repeal any law
16 prescribing the form or content of a document of title or the
17 services or facilities to be afforded by a bailee, or otherwise
18 regulating a bailee's business in respects not specifically
19 treated in this article. However, violation of such a law does
20 not affect the status of a document of title that otherwise is
21 within the definition of a document of title.
22 (3) This act modifies, limits, and supersedes the electronic
23 signatures in the global and national commerce act, 15 USC 7001
24 to 7031, but does not modify, limit, or supersede 15 USC 7001(a)
25 or authorize electronic delivery of any of the notices described
26 in 15 USC 7003(b).
27 (4) To the extent there is a conflict between the uniform
1 electronic transactions act, 2000 PA 305, MCL 450.831 to 450.849,
2 and this article, this article governs.
3 Sec. 7104. (1) A warehouse receipt, bill of lading or other
4 document of title is negotiable Except as otherwise provided in
5 subsection (3), a document of title is negotiable if by its terms
6 the goods are to be delivered to bearer or to the order of a
7 named person.
8 (a) if by its terms the goods are to be delivered to bearer
9 or to the order of a named person; or
10 (b) where recognized in overseas trade, if it runs to a
11 named person or assigns.
12 (2) Any other A
document of title other than one described
13
in subsection (1) is non-negotiable nonnegotiable. A bill of
14 lading in which it is stated that states that the goods
are
15 consigned to a named person is not made negotiable by a provision
16 that the goods are to be delivered only against a written an
17 order in a record signed by the same or another named person.
18 (3) A document of title is nonnegotiable if, at the time it
19 is issued, the document has a conspicuous legend, however
20 expressed, that it is nonnegotiable.
21 Sec. 7105. (1) The omission from either part 2 or part 3 of
22 this article of a provision corresponding to a provision made in
23 the other part does not imply that a corresponding rule of law is
24 not applicable. Upon
request of a person entitled under an
25 electronic document of title, the issuer of the electronic
26 document may issue a tangible document of title as a substitute
27 for the electronic document if both of the following are met:
1 (a) The person entitled under the electronic document
2 surrenders control of the document to the issuer.
3 (b) The tangible document when issued contains a statement
4 that it is issued in substitution for the electronic document.
5 (2) All of the following apply upon issuance of a tangible
6 document of title in substitution for an electronic document of
7 title in accordance with subsection (1):
8 (a) The electronic document ceases to have any effect or
9 validity.
10 (b) The person that procured issuance of the tangible
11 document warrants to all subsequent persons entitled under the
12 tangible document that the warrantor was a person entitled under
13 the electronic document when the warrantor surrendered control of
14 the electronic document to the issuer.
15 (3) Upon request of a person entitled under a tangible
16 document of title, the issuer of the tangible document may issue
17 an electronic document of title as a substitute for the tangible
18 document if both of the following are met:
19 (a) The person entitled under the tangible document
20 surrenders possession of the document to the issuer.
21 (b) The electronic document when issued contains a statement
22 that it is issued in substitution for the tangible document.
23 (4) All of the following apply upon issuance of an
24 electronic document of title in substitution for a tangible
25 document of title in accordance with subsection (3):
26 (a) The tangible document ceases to have any effect or
27 validity.
1 (b) The person that procured issuance of the electronic
2 document warrants to all subsequent persons entitled under the
3 electronic document that the warrantor was a person entitled
4 under the tangible document when the warrantor surrendered
5 possession of the tangible document to the issuer.
6 Sec. 7106. (1) A person has control of an electronic
7 document of title if a system employed for evidencing the
8 transfer of interests in the electronic document reliably
9 establishes that person as the person to which the electronic
10 document was issued or transferred.
11 (2) A system satisfies subsection (1), and a person is
12 considered to have control of an electronic document of title, if
13 the document is created, stored, and assigned in a manner that
14 meets all of the following:
15 (a) A single authoritative copy of the document exists that
16 is unique, identifiable, and, except as otherwise provided in
17 subdivisions (d), (e), and (f), unalterable.
18 (b) The authoritative copy described in subdivision (a)
19 identifies the person asserting control as 1 of the following:
20 (i) The person to which the document was issued.
21 (ii) If the authoritative copy indicates that the document
22 has been transferred, the person to which the document was most
23 recently transferred.
24 (c) The authoritative copy described in subdivision (a) is
25 communicated to and maintained by the person asserting control or
26 its designated custodian.
27 (d) Copies or amendments that add or change an identified
1 assignee of the authoritative copy described in subdivision (a)
2 can be made only with the consent of the person asserting
3 control.
4 (e) Each copy of the authoritative copy described in
5 subdivision (a) and any copy of a copy is readily identifiable as
6 a copy that is not the authoritative copy.
7 (f) Any amendment of the authoritative copy described in
8 subdivision (a) is readily identifiable as authorized or
9 unauthorized.
10 Sec. 7201. (1) A warehouse receipt may be issued by any
11 warehouseman warehouse.
12 (2) Where goods including If distilled spirits, and
13 agricultural commodities, or any other goods are stored under a
14 statute requiring a bond against withdrawal or a license for the
15 issuance of receipts in the nature of warehouse receipts, a
16 receipt issued for the goods has like effect as is considered to
17
be a warehouse receipt even though if issued
by a person who that
18 is the owner of the goods and is not a warehouseman warehouse.
19 Sec. 7202. (1) A warehouse receipt need not be in any
20 particular form.
21 (2) Unless a warehouse receipt embodies within its written
22 or printed terms provides
for each of the following, the
23 warehouseman warehouse
is liable for damages caused by the
24 omission to a person injured
thereby by its omission:
25 (a) A statement of the location of the warehouse where the
26 goods are stored. ;
27 (b) the The date of issue of the receipt. ;
1 (c) the consecutive number The unique identification code of
2 the receipt. ;
3 (d) a A statement whether the goods received will be
4 delivered to the bearer, to a specified named person,
or to a
5 specified named person or his its order. ;
6 (e) the The rate of storage and handling charges, except
7 that where unless goods are stored under a field warehousing
8 arrangement, in which case a statement of that fact is sufficient
9 on a non-negotiable nonnegotiable
receipt. ;
10 (f) a A description of the goods or of the packages
11 containing them. ;
12 (g) the The signature of the warehouseman, which may be made
13 by his authorized agent; warehouse
or its agent.
14 (h) if If the receipt is issued for goods of which that the
15 warehouseman is owner warehouse
owners, either solely, or
16 jointly, or in common with others, the fact of such a statement
17
of the fact of that ownership. ;
and
18 (i) a A statement of the amount of advances made and of
19 liabilities incurred for which the warehouseman warehouse claims
20 a lien or security interest, (section 7209). If unless the
21 precise amount of such advances made or of such liabilities
22 incurred, is, at the time of the issue of the receipt,
is unknown
23 to the warehouseman warehouse
or to his its agent
who issues it
24 that issued the receipt, in which case a statement of the fact
25 that advances have been made or liabilities incurred and the
26 purpose thereof of
the advances or liabilities is
sufficient.
27 (3) A warehouseman warehouse may insert in his
its receipt
1 any other terms which that are not contrary to the
provisions of
2 this act and do not impair his its obligation of delivery under (
3 section 7403 ) or his
its duty of care under ( section 7204.
).
4 Any contrary provisions shall be is ineffective.
5 Sec. 7203. A party to or purchaser for value in good faith
6 of a document of title, other than a bill of lading, relying
in
7 either case that
relies upon the description therein of
the goods
8 in the document may recover from the issuer damages caused by the
9 non-receipt nonreceipt
or misdescription of the goods, except
to
10 the extent that the any
of the following apply:
11 (a) The document conspicuously indicates that the issuer
12 does not know whether all
or any part or all of the goods
in fact
13 were received or conform to the description, as where such as a
14 case in which the description is in terms of marks or labels or
15 kind, quantity, or condition, or the receipt or description is
16 qualified by "contents, condition, and quality unknown", "said to
17 contain", or the like, if such indication be words of similar
18
import, if the indication is true. ,
or the
19
(b) The party or purchaser otherwise
has notice of the
20 nonreceipt or misdescription.
21 Sec. 7204. (1) A warehouseman warehouse is liable for
22 damages for loss of or injury to the goods caused by his its
23 failure to exercise such care in with regard
to them as the goods
24
that a reasonably careful man person would
exercise under like
25
similar circumstances. but
unless Unless otherwise agreed, he the
26
warehouse is not liable for damages which
that could not have
27 been avoided by the exercise of such that care.
1 (2) Damages may be limited by a term in the a warehouse
2 receipt or storage agreement limiting the amount of liability in
3 case of loss or damage , and setting forth a specific liability
4 per article or item, or value per unit of weight, beyond which
5 the warehouseman shall not be liable; provided, however, that
6 such liability may on written beyond which the warehouse is not
7 liable. Such a limitation is not effective with respect to the
8 warehouse's liability for conversion to its own use. On request
9 of the bailor in a record
at the time of signing such the storage
10 agreement or within a reasonable time after receipt of the
11 warehouse receipt, the warehouse's liability may be increased on
12 part or all of the goods thereunder, in which covered by the
13 storage agreement or the warehouse receipt. In this event,
14 increased rates may be charged based on such increased valuation,
15 but that no such increase shall be permitted contrary to a lawful
16 limitation of liability contained in the warehouseman's tariff,
17 if any. No such limitation is effective with respect to the
18 warehouseman's liability for conversion to his own use an
19 increased valuation of the goods.
20 (3) Reasonable provisions as to the time and manner of
21 presenting claims and instituting commencing actions based on
the
22 bailment may be included in the warehouse receipt or tariff
23 storage agreement.
24 Sec. 7205. A buyer in the ordinary course of business of
25 fungible goods sold and delivered by a warehouseman who warehouse
26
that is also in the business of buying
and selling such those
27 goods takes the goods free of any claim under a warehouse receipt
1 even though it if
the receipt is negotiable and has been duly
2 negotiated.
3 Sec. 7206. (1) A warehouseman may on notifying warehouse, by
4 giving notice to the person on whose account the goods are held
5 and any other person known to claim an interest in the goods, may
6 require payment of any charges and removal of the goods from the
7 warehouse at the termination of the period of storage fixed by
8 the document , of
title or, if no a period
is not fixed, within a
9 stated period not less than 30 days after the notification
10 warehouse gives notice. If the goods are not removed before the
11 date specified in the notification notice,
the warehouseman
12
warehouse may sell them in
accordance with the provisions of the
13 section on enforcement of a warehouseman's lien (section 7210)
14 pursuant to section 7210.
15 (2) If a warehouseman warehouse in good faith
believes that
16 the goods are about to
deteriorate or decline in value to less
17 than the amount of his its
lien within the time prescribed
18
provided in subsection (1) for
notification, advertisement and
19 sale and section 7210, the warehouseman warehouse may specify in
20 the notification notice
given under subsection (1) any
reasonable
21 shorter time for removal of the goods and, in case if the
goods
22 are not removed, may sell them at public sale held not less than
23 1 week after a single advertisement or posting.
24 (3) If, as a result of a quality or condition of the goods
25 of which the warehouseman had no warehouse did not have notice
at
26 the time of deposit, the goods are a hazard to other property, or
27 to the warehouse or to the
warehouse facilities, or other
1 persons, the warehouseman warehouse may sell the goods
at public
2 or private sale without advertisement or posting on reasonable
3 notification to all persons known to claim an interest in the
4 goods. If the warehouseman warehouse, after a
reasonable effort,
5 is unable to sell the goods, he it
may dispose of them in any
6 lawful manner and shall incur no does not incur liability by
7 reason of such that
disposition.
8 (4) The warehouseman must A warehouse shall deliver
the
9 goods to any person entitled to them under this article upon due
10 demand made at any time prior to before sale or other
disposition
11 under this section.
12 (5) The warehouseman A warehouse may satisfy his
its lien
13 from the proceeds of any sale or disposition under this section
14 but must shall hold the balance for delivery on the demand of any
15 person to whom he which
the warehouse would have been bound to
16 deliver the goods.
17 Sec. 7207. (1) Unless the warehouse receipt provides
18 otherwise, provides, a warehouseman must a warehouse shall keep
19 separate the goods covered by each receipt so as to permit at all
20 times identification and delivery of those goods. except
that
21 However, different lots of fungible goods may be commingled.
22 (2) Fungible If
different lots of fungible goods so are
23 commingled, the goods are owned in common by the persons entitled
24 thereto and the warehouseman warehouse is severally
liable to
25 each owner for that owner's share. Where If, because
of
26 overissue, a mass of fungible goods is insufficient to meet all
27 the receipts which the warehouseman warehouse has issued against
1 it, the persons entitled include all holders to whom which
2 overissued receipts have been duly negotiated.
3 Sec. 7208. Where If
a blank in a negotiable tangible
4 warehouse receipt has been filled in without authority, a good
5
faith purchaser for value and without
notice of the want lack
6 of authority may treat the insertion as authorized. Any other
7 unauthorized alteration leaves any tangible or electronic
8 warehouse receipt enforceable against the issuer according to its
9 original tenor.
10 Sec. 7209. (1) A warehouseman warehouse has a lien against
11 the bailor on the goods covered by a warehouse receipt or storage
12
agreement or on the proceeds thereof
of those goods in his its
13 possession for charges for storage or transportation, (
including
14 demurrage and terminal charges,
), insurance, labor, or other
15 charges, present or future, in relation to the goods, and for
16 expenses necessary for preservation of the goods or reasonably
17 incurred in their sale pursuant to law. If the person on whose
18 account the goods are held is liable for like similar charges
or
19 expenses in relation to other goods whenever deposited and it is
20 stated in the receipt warehouse
receipt or storage agreement that
21 a lien is claimed for charges and expenses in relation to other
22 goods, the warehouseman warehouse
also has a lien against him the
23 goods covered by the warehouse receipt or storage agreement or on
24
the proceeds of those goods in its possession for such those
25 charges and expenses, whether or not the other goods have been
26 delivered by the warehouseman. But warehouse. However, as against
27 a person to whom which
a negotiable warehouse receipt is duly
1 negotiated, a warehouseman's warehouse's lien is limited to
2 charges in an amount or at a rate specified on in the
warehouse
3 receipt or, if no charges are so specified, then
to a reasonable
4 charge for storage of the specific goods covered by the receipt
5 subsequent to the date of the receipt.
6 (2) The warehouseman A warehouse may also reserve
a security
7 interest against the bailor for a the maximum amount specified
on
8 the receipt for charges other than those specified in subsection
9 (1), such as for money advanced and interest. Such a The security
10 interest is governed by the article 9. on
secured transactions
11 (article 9).
12 (3) A warehouseman's warehouse's lien for charges
and
13 expenses under subsection (1) or a security interest under
14 subsection (2) is also effective against any person who that so
15 entrusted the bailor with possession of the goods that a pledge
16 of them by him the
bailor to a good faith purchaser for
value
17 would have been valid. but However,
the lien or security interest
18 is not effective against a person as to whom the document confers
19 no right in the goods covered by it under section 7503. that
20 before issuance of a document of title had a legal interest or a
21 perfected security interest in the goods and that did not do any
22 of the following:
23 (a) Deliver or entrust the goods or any document of title
24 covering the goods to the bailor or the bailor's nominee with any
25 of the following:
26 (i) Actual or apparent authority to ship, store, or sell.
27 (ii) Power to obtain delivery under section 7403.
1 (iii) Power of disposition under section 2403, 2A304(2),
2 2A305(2), 9320, or 9321 or other statute or rule of law.
3 (b) Acquiesce in the procurement by the bailor or its
4 nominee of any document.
5 (4) A warehouse's lien on household goods for charges and
6 expenses in relation to the goods under subsection (1) is also
7 effective against all persons if the depositor was the legal
8 possessor of the goods at the time of deposit. As used in this
9 subsection, "household goods" means furniture, furnishings, or
10 personal effects used by the depositor in a dwelling.
11 (5) (4) A warehouseman
warehouse loses
his its lien on any
12 goods which he that
it voluntarily delivers or which he
13 unjustifiably refuses to deliver.
14 Sec. 7210. (1) Except as otherwise provided in subsection
15 (2), a warehouseman's warehouse's
lien may be enforced by public
16 or private sale of the goods, in bloc bulk or in parcels
17
packages, at any time or place and on
any terms which that are
18 commercially reasonable, after notifying all persons known to
19 claim an interest in the goods. Such The notification
must
20 include a statement of the amount due, the nature of the proposed
21 sale, and the time and place of any public sale. The fact that a
22 better price could have been obtained by a sale at a different
23 time or in a different method different from that selected
by the
24 warehouseman warehouse
is not of itself sufficient to
establish
25 that the sale was not made in a commercially reasonable manner.
26 If the warehouseman either A
warehouse sells in a commercially
27 reasonable manner if the warehouse sells the goods in the usual
1 manner in any recognized market therefor, or if he for the goods,
2 sells at the price current in such that market
at the time of his
3
the sale, or if he has otherwise
sold sells in conformity with
4 commercially reasonable practices among dealers in the type of
5 goods sold. , he has sold in a commercially reasonable manner. A
6 sale of more goods than apparently necessary to be offered to
7 insure ensure satisfaction of the obligation is not commercially
8 reasonable, except in cases covered by the preceding sentence.
9 (2) A warehouseman's warehouse may enforce its lien
on
10 goods, other than goods stored by a merchant in the course
of his
11
its business, may
be enforced only as follows only
if the
12 following requirements are satisfied:
13 (a) All persons known to claim an interest in the goods must
14 be notified.
15 (b) The notification must be delivered in person or sent by
16 registered or certified letter to the last known address of any
17 person to be notified.
18 (c) The notification must include an itemized statement of
19 the claim, a description of the goods subject to the lien, a
20 demand for payment within a specified time not less than 10 days
21 after receipt of the notification, and a conspicuous statement
22 that unless the claim is paid within that time the goods will be
23 advertised for sale and sold by auction at a specified time and
24 place.
25 (c) (d) The
sale must conform to the terms of the
26 notification.
27 (d) (e) The
sale must be held at the nearest suitable place
1 to that where the goods are held or stored.
2 (e) (f) After
the expiration of the time given in the
3 notification, an advertisement of the sale must be published once
4 a week for 2 weeks consecutively in a newspaper of general
5 circulation where the sale is to be held. The advertisement must
6 include a description of the goods, the name of the person on
7 whose account they the
goods are being held, and the time and
8 place of the sale. The sale must take place at least 15 days
9 after the first publication. If there is no newspaper of general
10 circulation where the sale is to be held, the advertisement must
11 be posted at least 10 days before the sale in not less fewer than
12 6 conspicuous places in the neighborhood of the proposed sale.
13 (3) Before any sale pursuant to this section, any person
14 claiming a right in the goods may pay the amount necessary to
15 satisfy the lien and the reasonable expenses incurred under in
16
complying with this section. In that
event, the goods must may
17 not be sold , but
must be retained by the warehouseman warehouse
18 subject to the terms of the receipt and this article.
19 (4) The warehouseman A warehouse may buy at any
public sale
20 held pursuant to this section.
21 (5) A purchaser in good faith of goods sold to enforce a
22 warehouseman's warehouse's
lien takes the goods free of any
23 rights of persons against whom which the lien was valid,
despite
24
the warehouse's noncompliance by the
warehouseman with the
25 requirements of this
section.
26 (6) The warehouseman A warehouse may satisfy his
its lien
27 from the proceeds of any sale pursuant to this section but must
1 shall hold the balance, if any, for delivery on demand to any
2 person to whom he which
the warehouse would have been bound to
3 deliver the goods.
4 (7) The rights provided by this section shall be are in
5 addition to all other rights allowed by law to a creditor against
6 his a debtor.
7 (8) Where If
a lien is on goods stored by a merchant
in the
8 course of his its business, the lien may be enforced in
9 accordance with either subsection (1) or (2).
10 (9) The warehouseman A warehouse is liable for
damages
11 caused by failure to comply with the requirements for sale under
12 this section and, in case of willful violation, is liable for
13 conversion.
14 Sec. 7301. (1) A consignee of a non-negotiable nonnegotiable
15 bill who of lading
which has given value in good faith, or a
16 holder to whom which
a negotiable bill has been duly
negotiated,
17 relying in either case upon the description therein of
the goods
18 , in the bill or upon the date therein shown in the bill, may
19 recover from the issuer damages caused by the misdating of the
20 bill or the nonreceipt or misdescription of the goods, except to
21 the extent that the document bill indicates that the
issuer does
22 not know whether any part or all of the goods in fact were
23 received or conform to the description, such as where in a case
24 in which the description is in terms of marks or labels or kind,
25 quantity, or condition or the receipt or description is qualified
26 by "contents or condition of contents of packages unknown", "said
27 to contain", "shipper's weight, load, and
count", or the like
1
words of similar import, if such that indication
be is true.
2 (2) When All
of the following apply if goods are
loaded by
3 an the issuer who is a common carrier, the of a bill of lading:
4
(a) The issuer must shall count
the packages of goods if
5 package freight shipped
in packages and ascertain the kind and
6 quantity if shipped in bulk. freight. In such cases
7 (b) Words such as "shipper's weight, load, and count", or
8 other words of similar import indicating that the description was
9 made by the shipper are ineffective except as to freight goods
10 concealed by in packages.
11 (3) When bulk freight is If bulk goods are loaded by
a
12 shipper who that makes available to the issuer of a bill of
13
lading adequate facilities for weighing
such freight, an issuer
14 who is a common carrier must those goods, the issuer shall
15 ascertain the kind and quantity within a reasonable time after
16 receiving the written shipper's
request of the shipper in a
17
record to do so. In such cases that case, "shipper's weight" or
18 other words of like
purport similar import are ineffective.
19 (4) The issuer may by inserting of a bill of lading, by
20 including in the bill the words "shipper's weight, load, and
21 count", or other words of like purport similar import, may
22 indicate that the goods were loaded by the shipper, ;
and, if
23 such that statement be is true, the
issuer shall is not be liable
24 for damages caused by the improper loading. But their However,
25 omission of those words does not imply liability for such damages
26 caused by improper loading.
27 (5) The shipper shall be deemed to have guaranteed to the A
1 shipper guarantees to an issuer the accuracy at the time of
2 shipment of the description, marks, labels, number, kind,
3 quantity, condition, and weight, as furnished by him; the
4 shipper, and the shipper shall indemnify the issuer against
5 damage caused by inaccuracies in such those particulars.
The This
6 right of the issuer to such indemnity shall in no way does not
7 limit his the
issuer's responsibility and or liability
under the
8 contract of carriage to any person other than the shipper.
9 Sec. 7302. (1) The issuer of a through bill of lading or
10 other document of title embodying an undertaking to be performed
11 in part by persons a
person acting as its agents or by
connecting
12 carriers agent or by
a performing carrier, is liable to anyone
13 any person entitled to recover on the bill or other document for
14 any breach by such the
other persons or by a connecting person or
15 the performing carrier of its obligation under the bill or other
16 document. but However,
to the extent that the bill or other
17 document covers an undertaking to be performed overseas or in
18 territory not contiguous to the continental United States or an
19 undertaking including matters other than transportation, this
20 liability for breach by the other person or the performing
21 carrier may be varied by agreement of the parties.
22 (2) Where If
goods covered by a through bill of
lading or
23 other document of title embodying an undertaking to be performed
24 in part by persons a
person other than the issuer are
received by
25 any such that person, he the person is subject, with
respect to
26 his its own performance while the goods are in his its
27 possession, to the obligation of the issuer. His The person's
1 obligation is discharged by delivery of the goods to another such
2 person pursuant to the bill
or other document , and does not
3 include liability for breach by any other such persons person or
4 by the issuer.
5 (3) The issuer of such a through bill of lading or
other
6 document shall be of
title described in subsection (1) is
7 entitled to recover all
of the following from the connecting
8
performing carrier, or such
other person in possession of the
9 goods when the breach of the obligation under the bill or other
10 document occurred: , the
11
(a) The amount it may be required
to pay to anyone any
12
person entitled to recover on the bill or other document therefor
13 for the breach, as may be evidenced by any receipt, judgment, or
14 transcript thereof, and the of judgment.
15
(b) The amount of any expense
reasonably incurred by it the
16
issuer in defending any action brought
by anyone commenced by any
17
person entitled to recover on the bill or other document therefor
18 for the breach.
19 Sec. 7303. (1) Unless the bill of lading otherwise provides,
20 the a carrier may deliver the goods to a person or
destination
21 other than that stated in the bill or may otherwise dispose of
22 the goods, without liability for misdelivery, on instructions
23 from any of the following:
24 (a) the The holder of a negotiable bill. ;
or
25 (b) the The consignor on a non-negotiable nonnegotiable
26 bill, notwithstanding even if the consignee has given contrary
27 instructions. from the consignee; or
1 (c) the The consignee on a non-negotiable nonnegotiable bill
2 in the absence of contrary instructions from the consignor, if
3 the goods have arrived at the billed destination or if the
4 consignee is in possession of the tangible bill ; or in
control
5 of the electronic bill.
6 (d) the The consignee on a non-negotiable nonnegotiable
7 bill, if he the consignee is entitled as
against the consignor to
8 dispose of them the
goods.
9 (2) Unless such instructions described in subsection (1) are
10 noted on included in a negotiable bill of lading, a person to
11 whom which the bill is duly negotiated can may hold
the bailee
12 according to the original terms.
13 Sec. 7304. (1) Except where as customary in overseas
14
international transportation, a tangible bill
of lading must may
15 not be issued in a set of parts. The issuer is liable for damages
16 caused by violation of this subsection.
17 (2) Where If
a tangible bill of lading is
lawfully drawn
18
issued in a set of parts, each of which
is numbered and contains
19 an identification code and is expressed to be valid only if the
20 goods have not been delivered against any other part, the whole
21 of the parts constitutes 1 bill.
22 (3) Where If
a tangible negotiable bill of
lading is
23 lawfully issued in a set of parts and different parts are
24 negotiated to different persons, the title of the holder to whom
25 which the first due negotiation is made prevails as to both the
26 document of title and the goods even though if any
later holder
27 may have received the goods from the carrier in good faith and
1 discharged the carrier's obligation by surrender of his
2 surrendering its part.
3 (4) Any A person who that negotiates or transfers
a single
4 part of a tangible bill of lading drawn issued in
a set is liable
5 to holders of that part as if it were the whole set.
6 (5) The bailee is obliged to shall deliver
in accordance
7 with part 4 of this article against the first presented part of
a
8
tangible bill of lading lawfully drawn
issued in a set. Such
9 delivery Delivery in
this manner discharges the bailee's
10 obligation on the whole bill.
11 Sec. 7305. (1) Instead of issuing a bill of lading to the
12 consignor at the place of shipment, a carrier, may
at the request
13 of the consignor, may procure the bill to be issued at
14 destination or at any other place designated in the request.
15 (2) Upon request of anyone any person entitled as
against
16 the a carrier to control the goods while in transit and on
17 surrender of possession or control of any outstanding bill of
18 lading or other receipt covering such the goods,
the issuer,
19 subject to section 7105, may procure a substitute bill to be
20 issued at any place designated in the request.
21 Sec. 7307. (1) A carrier has a lien on the goods covered by
22 a bill of lading or on the proceeds of those goods in its
23
possession for charges subsequent to
after the date of its the
24
carrier's receipt of the goods for
storage or transportation, (
25 including demurrage and terminal charges, ) and for expenses
26 necessary for preservation of the goods incident to their
27 transportation or reasonably incurred in their sale pursuant to
1 law. But However, against a purchaser for value of a negotiable
2 bill of lading, a carrier's lien is limited to charges stated in
3 the bill or the applicable tariffs , or, if no charges are
4 stated, then to a reasonable charge.
5 (2) A lien for charges and expenses under subsection (1) on
6 goods which that the carrier was required by law to receive for
7 transportation is effective against the consignor or any person
8 entitled to the goods unless the carrier had notice that the
9 consignor lacked authority to subject the goods to such those
10 charges and expenses. Any other lien under subsection (1) is
11 effective against the consignor and any person who that permitted
12 the bailor to have control or possession of the goods unless the
13 carrier had notice that the bailor lacked such authority.
14 (3) A carrier loses his its lien on any goods which
he that
15
it voluntarily delivers or which he unjustifiably
refuses to
16 deliver.
17 Sec. 7308. (1) A carrier's lien on goods may be enforced by
18 public or private sale of the goods, in bloc bulk or
in parcels
19
packages, at any time or place and on
any terms which that are
20 commercially reasonable, after notifying all persons known to
21 claim an interest in the goods. Such The notification
must
22 include a statement of the amount due, the nature of the proposed
23 sale, and the time and place of any public sale. The fact that a
24 better price could have been obtained by a sale at a different
25 time or in a method different method from that selected by the
26 carrier is not of itself sufficient to establish that the sale
27 was not made in a commercially reasonable manner. If The carrier
1 sells goods in a commercially reasonable manner if the carrier
2 either sells the goods in
the usual manner in any recognized
3 market therefor or if he for that type of goods, sells
at the
4 price current in such that
market at the time of his the sale, or
5 if he has otherwise sold
sells in conformity with commercially
6 reasonable practices among dealers in the type of goods sold. he
7 has sold in a commercially reasonable manner. A sale of more
8 goods than apparently necessary to be offered to ensure
9 satisfaction of the obligation is not commercially reasonable
10 except in cases covered by the preceding sentence.
11 (2) Before any sale pursuant to this section, any person
12 claiming a right in the goods may pay the amount necessary to
13 satisfy the lien and the reasonable expenses incurred under in
14
complying with this section. In that
event, the goods must may
15 not be sold , but
must be retained by the carrier subject to the
16 terms of the bill of lading and this article.
17 (3) The A carrier may buy at any public sale pursuant to
18 this section.
19 (4) A purchaser in good faith of goods sold to enforce a
20 carrier's lien takes the goods free of any rights of persons
21 against whom which
the lien was valid, despite the carrier's
22 noncompliance by the carrier with the requirements of this
23 section.
24 (5) The A carrier may satisfy his its lien
from the proceeds
25 of any sale pursuant to this section but must shall hold
the
26 balance, if any, for delivery on demand to any person to whom he
27 which the carrier would have been bound to deliver the goods.
1 (6) The rights provided by this section shall be are in
2 addition to all other rights allowed by law to a creditor against
3 his a debtor.
4 (7) A carrier's lien may be enforced in accordance with
5 pursuant to either subsection (1) or the procedure set forth in
6 subsection (2) of section 7210
7210(2).
7 (8) The A carrier is liable for damages caused by failure to
8 comply with the requirements for sale under this section and, in
9 case of willful violation, is liable for conversion.
10 Sec. 7309. (1) A carrier who that issues
a bill of lading,
11 whether negotiable or non-negotiable must nonnegotiable, shall
12 exercise the degree of care in relation to the goods which a
13 reasonably careful man person
would exercise under like similar
14 circumstances. This subsection does not repeal or change any law
15
affect any statute, regulation, or rule
of law which that imposes
16 liability upon a common carrier for damages not caused by its
17 negligence.
18 (2) Damages may be limited by a provision term in the bill
19 of lading or in a transportation agreement that the carrier's
20 liability shall may
not exceed a value stated in the document
21 bill or transportation agreement if the carrier's rates are
22 dependent upon value and the consignor by the carrier's tariff is
23 afforded an opportunity to declare a higher value or a value as
24 lawfully provided in the tariff, or where no tariff is filed he
25 is otherwise and the
consignor is advised of such the
26 opportunity. ; but no However, such a limitation
is not effective
27 with respect to the carrier's liability for conversion to its own
1 use.
2 (3) Reasonable provisions as to the time and manner of
3 presenting claims and instituting commencing actions based on
the
4 shipment may be included in a bill of lading or tariff a
5 transportation agreement.
6 Sec. 7401. The obligations imposed by this article on an
7 issuer apply to a document of title regardless of the fact that
8 even if any of the following apply:
9 (a) the The document may does not comply with the
10 requirements of this article or of any other law statute, rule,
11 or regulation regarding its issue issuance, form, or
content. ;
12 or
13 (b) the The issuer may have violated laws regulating the
14 conduct of his its
business. ; or
15 (c) the The goods covered by the document were owned by the
16 bailee at the time when
the document was issued. ;
or
17 (d) the The person issuing the document does not come within
18 the definition of warehouseman if it is not a warehouse but the
19 document purports to be a warehouse receipt.
20 Sec. 7402. Neither a A duplicate nor or any
other document
21 of title purporting to cover goods already represented by an
22 outstanding document of the same issuer confers does not confer
23 any right in the goods, except as provided in the case of
24 tangible bills of lading in a set of parts, overissue of
25 documents for fungible goods, and substitutes for lost, stolen,
26 or destroyed documents, or substitute documents issued pursuant
27
to section 7105. But the The issuer
is liable for damages caused
1 by his its overissue or failure to identify a duplicate
document
2 as such by a conspicuous
notation. on its face.
3 Sec. 7403. (1) The A bailee must shall deliver
the goods to
4 a person entitled under the a document who of title if the person
5 complies with subsections (2) and (3), unless and to the extent
6 that the bailee establishes any of the following:
7 (a) Delivery of the goods to a person whose receipt was
8 rightful as against the claimant. ;
9 (b) Damages to or delay, loss, or destruction of the goods
10 for which the bailee is not liable. ;
11 (c) Previous sale or other disposition of the goods in
12 lawful enforcement of a lien or on warehouseman's a warehouse's
13 lawful termination of storage.
;
14 (d) The exercise by a seller of his its right to stop
15 delivery pursuant to section 2705 or by a lessor of its right to
16 stop delivery pursuant to the provisions of the article on sales
17 (section 2705);
section 2A526.
18 (e) A diversion, reconsignment, or other disposition
19 pursuant to the provisions of this article ( section 7303. )
or
20 tariff regulating such right;
21 (f) Release, satisfaction, or any other fact affording a
22 personal defense against the claimant. ;
23 (g) Any other lawful excuse.
24 (2) A person claiming goods covered by a document of title
25 must shall satisfy the bailee's lien where if the
bailee so
26 requests or where if
the bailee is prohibited by law from
27 delivering the goods until the charges are paid.
1 (3) Unless the a
person claiming the goods is one a person
2 against whom which
the document confers no of title does not
3
confer a right under section 7503(1), he
must surrender for
4 cancellation or notation of partial deliveries both of the
5 following apply:
6 (a) The person claiming under a document shall surrender
7 possession or control of any outstanding negotiable document
8 covering the goods , and the bailee must for cancellation or
9 indication of partial deliveries.
10 (b) The bailee shall cancel the document or conspicuously
11 note indicate in the
document the partial delivery thereon
or be
12
or the bailee is liable to any person
to whom which the document
13 is duly negotiated.
14 (4) "Person entitled under the document" means holder
in the
15 case of a negotiable document, or the person to whom delivery is
16 to be made by the terms of or pursuant to written instructions
17 under a non-negotiable document.
18 Sec. 7404. A bailee who that in good faith including
19 observance of reasonable commercial standards has received goods
20 and delivered or otherwise disposed of them the goods according
21 to the terms of the a
document of title or pursuant to this
22 article is not liable therefor. This rule applies even though the
23 for the goods even if any of the following apply:
24
(a) The person from whom he which the bailee received the
25 goods had no did
not have authority to procure the
document or to
26 dispose of the goods. and even though the person to whom he
27
(b) The person to which the
bailee delivered the goods had
1 no did not have authority to receive them the goods.
2 Sec. 7501. (1) A All
of the following rules apply to a
3 negotiable tangible document of title: running
4 (a) If the document's original terms run to the order of a
5 named person, the
document is negotiated by his the named
6
person's indorsement and delivery.
After his the named
person's
7 indorsement in blank or to bearer, any person can may negotiate
8 it the document by delivery alone.
9 (2)(a) A negotiable document of title is also negotiated by
10 delivery alone when by its original terms it runs to bearer;
11 (b) If the document''s original terms run to bearer, it is
12 negotiated by delivery alone.
13 (c) (b) When a document running If the document's original
14 terms run to the order of a named person and it is delivered to
15 him the named person,
the effect is the same as if the
document
16 had been negotiated.
17 (d) (3) Negotiation
of a negotiable the document of title
18 after it has been indorsed to a specified named person
requires
19 indorsement by the special indorsee as well as named person and
20 delivery.
21 (e) (4) A negotiable
document of title is " duly negotiated
22 " when if it is negotiated in the manner stated in this section
23
subsection to a holder who that purchases
it in good faith,
24 without notice of any defense against or claim to it on the part
25 of any person, and for value, unless it is established that the
26 negotiation is not in the regular course of business or financing
27 or involves receiving the document in settlement or payment of a
1 money monetary obligation.
2 (2) All of the following rules apply to a negotiable
3 electronic document of title:
4 (a) If the document's original terms run to the order of a
5 named person or to bearer, the document is negotiated by delivery
6 of the document to another person. Indorsement by the named
7 person is not required to negotiate the document.
8 (b) If the document's original terms run to the order of a
9 named person and the named person has control of the document,
10 the effect is the same as if the document had been negotiated.
11 (c) A document is duly negotiated if it is negotiated in the
12 manner stated in this subsection to a holder that purchases it in
13 good faith, without notice of any defense against or claim to it
14 on the part of any person, and for value, unless it is
15 established that the negotiation is not in the regular course of
16 business or financing or involves taking delivery of the document
17 in settlement or payment of a monetary obligation.
18 (3) (5) Indorsement
of a non-negotiable nonnegotiable
19 document neither makes it negotiable nor adds to the transferee's
20 rights.
21 (4) (6) The
naming in a negotiable bill of a person to be
22 notified of the arrival of the goods does not limit the
23 negotiability of the bill nor or constitute notice to a
purchaser
24 thereof of the bill of any interest of such that person
in the
25 goods.
26 Sec. 7502. (1) Subject to the following section and to the
27 provisions of section 7205 on fungible goods sections 7205 and
1
7503, a holder to whom which a
negotiable document of title has
2 been is duly negotiated acquires thereby all of the following:
3 (a) Title to the document.
;
4 (b) Title to the goods.
;
5 (c) All rights accruing under the law of agency or estoppel,
6 including rights to goods delivered to the bailee after the
7 document was issued. ; and
8 (d) The direct obligation of the issuer to hold or deliver
9 the goods according to the terms of the document free of any
10 defense or claim by him the
issuer except those arising under the
11 terms of the document or under this article. In However, in the
12 case of a delivery order, the bailee's obligation accrues only
13 upon the bailee's acceptance of the delivery order and the
14 obligation acquired by the holder is that the issuer and any
15 indorser will procure the acceptance of the bailee.
16 (2) Subject to the following section 7503,
title and rights
17 so acquired by due negotiation are not defeated by any stoppage
18 of the goods represented by the document of title or by surrender
19 of such the goods by the bailee , and are not impaired even
20 though the if any of
the following occur:
21 (a) The due negotiation or any prior due negotiation
22 constituted a breach of duty. or even though any
23
(b) Any person has been deprived
of possession of the a
24 negotiable tangible document or control of a negotiable
25 electronic document by misrepresentation, fraud, accident,
26 mistake, duress, loss, theft, or conversion. , or even though a
27 (c) A previous sale or other transfer of the goods or
1 document has been made to a third person.
2 Sec. 7503. (1) A document of title confers no right in goods
3 against a person who that
before issuance of the document had a
4 legal interest or a perfected security interest in them and who
5
the goods and that did neither not do any of the following:
6 (a) Delivered or entrusted them Deliver or entrust the goods
7 or any document of title covering them the goods to the bailor or
8 his or her nominee with actual any of the following:
9
(i) Actual or
apparent authority to ship, store, or sell. or
10 with power
11
(ii) Power to
obtain delivery under this article ( section
12 7403. ) or with power
13
(iii) Power of
disposition under this act (sections 2403 and
14 9320) section 2403,
2A304(2), 2A305(2), 9320, or 9321(3) or
other
15 statute or rule of law.
16 (b) Acquiesced Acquiesce
in the procurement by the bailor or
17 his or her its nominee of any document. of
title.
18 (2) Title to goods based upon an unaccepted delivery order
19 is subject to the rights of anyone to whom any person to which a
20 negotiable warehouse receipt or bill of lading covering the goods
21 has been duly negotiated. Such a title may be defeated under the
22 next section 7504 to
the same extent as the rights of the issuer
23 or a transferee from the issuer.
24 (3) Title to goods based upon a bill of lading issued to a
25 freight forwarder is subject to the rights of anyone to whom any
26 person to which a bill issued by the freight forwarder is duly
27 negotiated. ; but However,
delivery by the carrier in accordance
1 with part 4 of this article pursuant to its own bill of lading
2 discharges the carrier's obligation to deliver.
3 Sec. 7504. (1) A transferee of a document of title, whether
4 negotiable or non-negotiable nonnegotiable, to whom which the
5 document has been delivered but not duly negotiated, acquires the
6 title and rights which his that its transferor had or
had actual
7 authority to convey.
8 (2) In the case of a non-negotiable transfer of a
9 nonnegotiable document of title, until but not after the bailee
10 receives notification notice
of the transfer, the rights of the
11 transferee may be defeated by any of the following:
12 (a) by By those creditors of the transferor who which could
13 treat the sale transfer
as void under section 2402 ; or
2A308.
14 (b) by By a buyer from the transferor in ordinary course of
15 business if the bailee has delivered the goods to the buyer or
16 received notification of his the buyer's rights. ;
or
17 (c) By a lessee from the transferor in ordinary course of
18 business if the bailee has delivered the goods to the lessee or
19 received notification of the lessee's rights.
20 (d) (c) as As
against the bailee, by
good-faith dealings of
21 the bailee with the transferor.
22 (3) A diversion or other change of shipping instructions by
23 the consignor in a non-negotiable nonnegotiable bill of lading
24 which causes the bailee not to deliver the goods to the consignee
25 defeats the consignee's title to the goods if they the goods have
26 been delivered to a buyer in ordinary course of business or a
27 leasee in ordinary course of business and, in any event, defeats
1 the consignee's rights against the bailee.
2 (4) Delivery of the
goods pursuant to a non-negotiable
3 nonnegotiable document of title may be stopped by a seller under
4 section 2705 , and or
a lessor under section 2A526, subject
to
5 the requirement requirements
of due notification there provided
6
in those sections. A bailee honoring
that honors the seller's or
7 lessor's instructions is entitled to be indemnified by the seller
8 or lessor against any resulting loss or expense.
9 Sec. 7505. The indorsement of a tangible document of title
10 issued by a bailee does not make the indorser liable for any
11 default by the bailee or by previous indorsers.
12 Sec. 7506. The transferee of a negotiable tangible document
13 of title has a specifically enforceable right to have his its
14 transferor supply any necessary indorsement, but the transfer
15 becomes a negotiation only as of the time the indorsement is
16 supplied.
17 Sec. 7507. Where If
a person negotiates or transfers
18 delivers a document of title for value, otherwise than as a mere
19 intermediary under the next following section 7508,
then unless
20 otherwise agreed, he warrants to his immediate purchaser only the
21 transferor, in addition to any warranty made in selling or
22 leasing the goods, warrants to its immediate purchaser only the
23 following:
24 (a) that That
the document is genuine. ;
and
25 (b) that he has no That the transferor does not have
26 knowledge of any fact which that would impair its the document's
27 validity or worth. ; and
1 (c) that his That
the negotiation or transfer delivery is
2 rightful and fully effective with respect to the title to the
3 document and the goods it represents.
4 Sec. 7508. A collecting bank or other intermediary known to
5 be entrusted with documents of title on behalf of another or with
6 collection of a draft or other claim against delivery of
7 documents warrants by such the delivery of the
documents only its
8 own good faith and authority
. This rule applies even though the
9 even if the collecting bank or other intermediary has purchased
10 or made advances against the claim or draft to be collected.
11 Sec. 7509. The question whether Whether a
document of title
12 is adequate to fulfill the obligations of a contract for sale, a
13 contract for lease, or the conditions of a letter of credit is
14 governed by the articles on sales (article 2) and on letters of
15 credit (article 5) determined
by article 2, 2A, or 5.
16 Sec. 7601. (1) If a document has been of title is lost,
17 stolen, or destroyed, a court may order delivery of the goods or
18 issuance of a substitute document and the bailee may without
19 liability to any person comply with such the order.
If the
20 document was negotiable, the claimant must post security approved
21 by the court to indemnify any person who may suffer loss as a
22 result of nonsurrender of the document a court may not order
23 delivery of the goods or issuance of a substitute document
24 without the claimant's posting security unless it finds that any
25 person that may suffer loss as a result of nonsurrender of
26 possession or control of the document is adequately protected
27
against the loss. If the document was not
negotiable, such
1 security may be required at the discretion of the court
2 nonnegotiable, the court may require security. The court may also
3 in its discretion order
payment of the bailee's reasonable costs
4 and counsel fees attorney
fees in any action under this
5 subsection.
6 (2) A bailee who without that, without a court order,
7 delivers goods to a person claiming under a missing negotiable
8 document of title is liable to any person injured thereby, and if
9
by that delivery. If the delivery is
not in good faith, becomes
10 the bailee is liable for conversion. Delivery in good faith is
11 not conversion if made in accordance with a filed classification
12 or tariff or, where no classification or tariff is filed, if the
13 claimant posts security with the bailee in an amount at least
14 double the value of the goods at the time of posting to indemnify
15 any person injured by the delivery who which files
a notice of
16 claim within 1 year after the delivery.
17 Sec. 7602. Except where the document Unless a document of
18 title was originally issued upon delivery of the goods by a
19 person who had no that
did not have power to dispose of them, no
20 lien attaches a lien
does not attach by virtue of any
judicial
21 process to goods in the possession of a bailee for which a
22 negotiable document of title is outstanding unless the document
23 be possession or
control of the document is first
surrendered to
24 the bailee or its the
document's negotiation is enjoined. ,
and
25 the bailee shall The
bailee may not be compelled to deliver
the
26 goods pursuant to process until possession or control of the
27 document is surrendered to him or impounded by the bailee or to
1 the court. One who purchases A purchaser of the document
for
2 value without notice of the process or injunction takes free of
3 the lien imposed by judicial process.
4 Sec. 7603. If more than one 1 person claims title to or
5 possession of the goods, the bailee is excused from delivery
6 until he the
bailee has had a reasonable time to
ascertain the
7 validity of the adverse claims or to bring an action to compel
8 all claimants to interplead and may compel such interpleader,
9 commence an action for interpleader. The bailee may assert an
10 interpleader either in defending an action for nondelivery of the
11 goods , or by
original action. , whichever is appropriate.
12 PART 7
13 MISCELLANEOUS PROVISIONS
14 Sec. 7701. (1) The amendatory act that added this section
15 applies to a document of title that is issued or a bailment that
16 arises on or after the effective date of that amendatory act.
17 (2) The amendatory act that added this section does not
18 apply to a document of title that is issued or a bailment that
19 arises before the effective date of that amendatory act even if
20 the document of title or bailment would be subject to that
21 amendatory act if the document of title had been issued or
22 bailment had arisen on or after the effective date of that
23 amendatory act.
24 (3) The amendatory act that added this section does not
25 apply to a right of action that has accrued before the effective
26 date of that amendatory act.
27 Sec. 7702. A document of title issued or a bailment that
1 arises before the effective date of the amendatory act that added
2 this section and the rights, obligations, and interests flowing
3 from that document or bailment are governed by any statute
4 amended or repealed by that amendatory act as if amendment or
5 repeal had not occurred and may be terminated, completed,
6 consummated, or enforced under that statute.
7 Sec. 8103. (1) A share or similar equity interest issued by
8 a corporation, business trust, joint stock company, or similar
9 entity is a security.
10 (2) An investment company security is a security.
11 "Investment company security" means a share or similar equity
12 interest issued by an entity that is registered as an investment
13 company under the federal investment company laws, an interest in
14 a unit investment trust that is so registered, or a face-amount
15 certificate issued by a face-amount certificate company that is
16 so registered. Investment company security does not include an
17 insurance policy or endowment policy or annuity contract issued
18 by an insurance company.
19 (3) An interest in a partnership or limited liability
20 company is not a security unless it is dealt in or traded on
21 securities exchanges or in securities markets, its terms
22 expressly provide that it is a security governed by this article,
23 or it is an investment company security. However, an interest in
24 a partnership or limited liability company is a financial asset
25 if it is held in a securities account.
26 (4) A writing that is a security certificate is governed by
27 this article and not by article 3, even though it also meets the
1 requirements of that article. However, a negotiable instrument
2 governed by article 3 is a financial asset if it is held in a
3 securities account.
4 (5) An option or similar obligation issued by a clearing
5 corporation to its participants is not a security, but is a
6 financial asset.
7 (6) A commodity contract, as defined in section 9102(1)(o),
8 is not a security or a financial asset.
9 (7) A document of title is not a financial asset unless
10 section 8102(1)(i)(iii) applies.
11 Sec. 9102. (1) As used in this article:
12 (a) "Accession" means goods that are physically united with
13 other goods in such a manner that the identity of the original
14 goods is not lost.
15 (b) "Account", except as used in "account for", means a
16 right to payment of a monetary obligation, whether or not earned
17 by performance, for property that has been or is to be sold,
18 leased, licensed, assigned, or otherwise disposed of, for
19 services rendered or to be rendered, for a policy of insurance
20 issued or to be issued, for a secondary obligation incurred or to
21 be incurred, for energy provided or to be provided, for the use
22 or hire of a vessel under a charter or other contract, arising
23 out of the use of a credit or charge card or information
24 contained on or for use with the card, or as winnings in a
25 lottery or other game of chance operated or sponsored by a state,
26 governmental unit of a state, or person licensed or authorized to
27 operate the game by a state or governmental unit of a state. The
1 term includes health-care-insurance receivables. The term does
2 not include rights to payment evidenced by chattel paper or an
3 instrument, commercial tort claims, deposit accounts, investment
4 property, letter-of-credit rights or letters of credit, or rights
5 to payment for money or funds advanced or sold, other than rights
6 arising out of the use of a credit or charge card or information
7 contained on or for use with the card.
8 (c) "Account debtor" means a person obligated on an account,
9 chattel paper, or general intangible. The term does not include
10 persons obligated to pay a negotiable instrument, even if the
11 instrument constitutes part of chattel paper.
12 (d) "Accounting", except as used in "accounting for", means
13 a record that meets all of the following requirements:
14 (i) Authenticated by a secured party.
15 (ii) Indicating the aggregate unpaid secured obligations as
16 of a date not more than 35 days earlier or 35 days later than the
17 date of the record.
18 (iii) Identifying the components of the obligations in
19 reasonable detail.
20 (e) "Agricultural lien" means an interest, other than a
21 security interest, in farm products that meets all of the
22 following requirements:
23 (i) The interest secures payment or performance of an
24 obligation for 1 or more of the following:
25 (A) Goods or services furnished in connection with a
26 debtor's farming operation.
27 (B) Rent on real property leased by a debtor in connection
1 with its farming operation.
2 (ii) The interest is created by statute in favor of a person
3 that did 1 or more of the following:
4 (A) In the ordinary course of its business furnished goods
5 or services to a debtor in connection with a debtor's farming
6 operation.
7 (B) Leased real property to a debtor in connection with the
8 debtor's farming operation.
9 (iii) The effectiveness of the interest does not depend on the
10 person's possession of the personal property.
11 (f) "As-extracted collateral" means 1 or more of the
12 following:
13 (i) Oil, gas, or other minerals that are subject to a
14 security interest that is created by a debtor having an interest
15 in the minerals before extraction and attaches to the minerals as
16 extracted.
17 (ii) Accounts arising out of the sale at the wellhead or
18 minehead of oil, gas, or other minerals in which the debtor had
19 an interest before extraction.
20 (g) "Authenticate" means 1 either of
the following:
21 (i) To sign.
22 (ii) To execute or
otherwise adopt a symbol, or encrypt or
23 similarly process a record in whole or in part, with the present
24 intent of the authenticating person to identify the person and
25 adopt or accept a record.With
present intent to adopt or accept a
26 record, to attach to or logically associate with the record an
27 electronic sound, symbol, or process.
1 (h) "Bank" means an organization that is engaged in the
2 business of banking. The term includes savings banks, savings and
3 loan associations, credit unions, and trust companies.
4 (i) "Cash proceeds" means proceeds that are money, checks,
5 deposit accounts, or the like.
6 (j) "Certificate of title" means a certificate of title with
7 respect to which a statute provides for the security interest in
8 question to be indicated on the certificate as a condition or
9 result of the security interest's obtaining priority over the
10 rights of a lien creditor with respect to the collateral. The
11 term includes another record maintained as an alternative to a
12 certificate of title by the governmental unit that issues
13 certificates of title if a statute permits the security interest
14 in question to be indicated on the record as a condition or
15 result of the security interest's obtaining priority over the
16 rights of a lien creditor with respect to the collateral.
17 (k) "Chattel paper" means a record or records that evidence
18 both a monetary obligation and a security interest in specific
19 goods, a security interest in specific goods and software used in
20 the goods, a security interest in specific goods and license of
21 software used in the goods, a lease of specific goods, or a lease
22 of specific goods and license of software used in the goods. As
23 used in this subdivision, "monetary obligation" means a monetary
24 obligation secured by the goods or owed under a lease of the
25 goods and includes a monetary obligation with respect to software
26 used in the goods. The term does not include charters or other
27 contracts involving the use or hire of a vessel, or records that
1 evidence a right to payment arising out of the use of a credit or
2 charge card or information contained on or for use with the card.
3 If a transaction is evidenced by records that include an
4 instrument or series of instruments, the group of records taken
5 together constitutes chattel paper.
6 (l) "Collateral" means the property subject to a security
7 interest or agricultural lien. The term includes 1 or more of the
8 following:
9 (i) Proceeds to which a security interest attaches.
10 (ii) Accounts, chattel paper, payment intangibles, and
11 promissory notes that have been sold.
12 (iii) Goods that are the subject of a consignment.
13 (m) "Commercial tort claim" means a claim arising in tort
14 with respect to which 1 of the following applies:
15 (i) The claimant is an organization.
16 (ii) The claimant is an individual and the claim arose in the
17 course of the claimant's business or profession and does not
18 include damages arising out of personal injury to or the death of
19 an individual.
20 (n) "Commodity account" means an account maintained by a
21 commodity intermediary in which a commodity contract is carried
22 for a commodity customer.
23 (o) "Commodity contract" means a commodity futures contract,
24 an option on a commodity futures contract, a commodity option, or
25 another contract if the contract or option is 1 of the following:
26 (i) Traded on or subject to the rules of a board of trade
27 that has been designated as a contract market for such a contract
1 pursuant to federal commodities laws.
2 (ii) Traded on a foreign commodity board of trade, exchange,
3 or market, and is carried on the books of a commodity
4 intermediary for a commodity customer.
5 (p) "Commodity customer" means a person for which a
6 commodity intermediary carries a commodity contract on its books.
7 (q) "Commodity intermediary" means 1 of the following:
8 (i) A person that is registered as a futures commission
9 merchant under federal commodities law.
10 (ii) A person that in the ordinary course of its business
11 provides clearance or settlement services for a board of trade
12 that has been designated as a contract market pursuant to federal
13 commodities law.
14 (r) "Communicate" means 1 or more of the following:
15 (i) To send a written or other tangible record.
16 (ii) To transmit a record by any means agreed upon by the
17 persons sending and receiving the record.
18 (iii) In the case of transmission of a record to or by a
19 filing office, to transmit a record by any means prescribed by
20 filing-office rule.
21 (s) "Consignee" means a merchant to which goods are
22 delivered in a consignment.
23 (t) "Consignment" means a transaction, regardless of its
24 form, in which a person delivers goods to a merchant for the
25 purpose of sale and that meets all of the following:
26 (i) The merchant deals in goods of that kind under a name
27 other than the name of the person making delivery, is not an
1 auctioneer, and is not generally known by its creditors to be
2 substantially engaged in selling the goods of others.
3 (ii) With respect to each delivery, the aggregate value of
4 the goods is $1,000.00 or more at the time of delivery.
5 (iii) The goods are not consumer goods immediately before
6 delivery.
7 (iv) The transaction does not create a security interest that
8 secures an obligation.
9 (u) "Consignor" means a person that delivers goods to a
10 consignee in a consignment.
11 (v) "Consumer debtor" means a debtor in a consumer
12 transaction.
13 (w) "Consumer goods" means goods that are used or bought for
14 use primarily for personal, family, or household purposes.
15 (x) "Consumer-goods transaction" means a consumer
16 transaction in which an individual incurs an obligation primarily
17 for personal, family, or household purposes and a security
18 interest in consumer goods secures the obligation.
19 (y) "Consumer obligor" means an obligor who is an individual
20 and who incurred the obligation as part of a transaction entered
21 into primarily for personal, family, or household purposes.
22 (z) "Consumer transaction" means a transaction in which an
23 individual incurs an obligation primarily for personal, family,
24 or household purposes, a security interest secures the
25 obligation, and the collateral is held or acquired primarily for
26 personal, family, or household purposes. The term includes
27 consumer-goods transactions.
1 (aa) "Continuation statement" means an amendment of a
2 financing statement which identifies, by its file number, the
3 initial financing statement to which it relates and indicates
4 that it is a continuation statement for, or that it is filed to
5 continue the effectiveness of, the identified financing
6 statement.
7 (bb) "Debtor" means 1 of the following:
8 (i) A person having an interest, other than a security
9 interest or other lien, in the collateral, whether or not the
10 person is an obligor.
11 (ii) A seller of accounts, chattel paper, payment
12 intangibles, or promissory notes.
13 (iii) A consignee.
14 (cc) "Deposit account" means a demand, time, savings,
15 passbook, or similar account maintained with a bank. The term
16 does not include investment property or accounts evidenced by an
17 instrument.
18 (dd) "Document" means a document of title or a receipt of
19 the type described in section 7201(2).
20 (ee) "Electronic chattel paper" means chattel paper
21 evidenced by a record or records consisting of information stored
22 in an electronic medium.
23 (ff) "Encumbrance" means a right, other than an ownership
24 interest, in real property. The term includes mortgages and other
25 liens on real property.
26 (gg) "Equipment" means goods other than inventory, farm
27 products, or consumer goods.
1 (hh) "Farm products" means goods, other than standing
2 timber, with respect to which the debtor is engaged in a farming
3 operation and which are 1 of the following:
4 (i) Crops grown, growing, or to be grown, including crops
5 produced on trees, vines, and bushes, and aquatic goods produced
6 in aquacultural operations.
7 (ii) Livestock, born or unborn, including aquatic goods
8 produced in aquacultural operations.
9 (iii) Supplies used or produced in a farming operation.
10 (iv) Products of crops or livestock in their unmanufactured
11 states.
12 (ii) "Farming operation" means raising, cultivating,
13 propagating, fattening, grazing, or any other farming, livestock,
14 or aquacultural operation.
15 (jj) "File number" means the number assigned to an initial
16 financing statement pursuant to section 9519(1).
17 (kk) "Filing office" means an office designated in section
18 9501 as the place to file a financing statement.
19 (ll) "Filing-office rule" means a rule adopted pursuant to
20 section 9526.
21 (mm) "Financing statement" means a record or records
22 composed of an initial financing statement and any filed record
23 relating to the initial financing statement.
24 (nn) "Fixture filing" means the filing of a financing
25 statement covering goods that are or are to become fixtures and
26 satisfying section 9502(1) and (2). The term includes the filing
27 of a financing statement covering goods of a transmitting utility
1 which are or are to become fixtures.
2 (oo) "Fixtures" means goods that have become so related to
3 particular real property that an interest in them arises under
4 real property law.
5 (pp) "General intangible" means any personal property,
6 including things in action, other than accounts, chattel paper,
7 commercial tort claims, deposit accounts, documents, goods,
8 instruments, investment property, letter-of-credit rights,
9 letters of credit, money, and oil, gas, or other minerals before
10 extraction. The term includes payment intangibles and software.
11 (qq) "Good faith" means honesty in fact and the
observance
12 of reasonable commercial standards of fair dealing.
13 (qq) (rr) "Goods" means all things that
are movable when a
14 security interest attaches. The term includes fixtures, standing
15 timber that is to be cut and removed under a conveyance or
16 contract for sale, the unborn young of animals, crops grown,
17 growing, or to be grown, even if the crops are produced on trees,
18 vines, or bushes, and manufactured homes. The term also includes
19 a computer program embedded in goods and any supporting
20 information provided in connection with a transaction relating to
21 the program if the program is associated with the goods in such a
22 manner that it customarily is considered part of the goods, or by
23 becoming the owner of the goods, a person acquires a right to use
24 the program in connection with the goods. The term does not
25 include a computer program embedded in goods that consist solely
26 of the medium in which the program is embedded. The term also
27 does not include accounts, chattel paper, commercial tort claims,
1 deposit accounts, documents, general intangibles, instruments,
2 investment property, letter-of-credit rights, letters of credit,
3 money, or oil, gas, or other minerals before extraction.
4 (rr) (ss) "Governmental unit" means a
subdivision, agency,
5 department, county, parish, municipality, or other unit of the
6 government of the United States, a state, or a foreign country.
7 The term includes an organization having a separate corporate
8 existence if the organization is eligible to issue debt on which
9 interest is exempt from income taxation under the laws of the
10 United States.
11 (ss) (tt) "Health-care-insurance
receivable" means an
12 interest in or claim under a policy of insurance which is a right
13 to payment of a monetary obligation for health-care goods or
14 services provided.
15 (tt) (uu) "Instrument" means a
negotiable instrument or any
16 other writing that evidences a right to the payment of a monetary
17 obligation, is not itself a security agreement or lease, and is
18 of a type that in ordinary course of business is transferred by
19 delivery with any necessary indorsement or assignment. The term
20 does not include investment property, letters of credit, or
21 writings that evidence a right to payment arising out of the use
22 of a credit or charge card or information contained on or for use
23 with the card.
24 (uu) (vv) "Inventory" means goods,
other than farm products,
25 that meet 1 of the following:
26 (i) Are leased by a person as lessor.
27 (ii) Are held by a person for sale or lease or to be
1 furnished under a contract of service.
2 (iii) Are furnished by a person under a contract of service.
3 (iv) Consist of raw materials, work in process, or materials
4 used or consumed in a business.
5 (vv) (ww) "Investment property" means a
security, whether
6 certificated or uncertificated, security entitlement, securities
7 account, commodity contract, or commodity account.
8 (ww) (xx) "Jurisdiction of
organization", with respect to a
9 registered organization, means the jurisdiction under whose law
10 the organization is formed or organized.
11 (xx) (yy) "Letter-of-credit right"
means a right to payment
12 or performance under a letter of credit, whether or not the
13 beneficiary has demanded or is at the time entitled to demand
14 payment or performance. The term does not include the right of a
15 beneficiary to demand payment or performance under a letter of
16 credit.
17 (yy) (zz) "Lien creditor" means 1 or
more of the following:
18 (i) A creditor that has acquired a lien on the property
19 involved by attachment, levy, or the like.
20 (ii) An assignee for benefit of creditors from the time of
21 assignment.
22 (iii) A trustee in bankruptcy from the date of the filing of
23 the petition.
24 (iv) A receiver in equity from the time of appointment.
25 (zz) (aaa) "Manufactured home" means a
structure,
26 transportable in 1 or more sections, which, in the traveling
27 mode, is 8 body feet or more in width or 40 body feet or more in
1 length, or when erected on site, is 320 or more square feet, and
2 which is built on a permanent chassis and designed to be used as
3 a dwelling with or without a permanent foundation when connected
4 to the required utilities, and includes the plumbing, heating,
5 air-conditioning, and electrical systems contained therein. The
6 term includes any structure that meets all of the requirements of
7 this paragraph except the size requirements and with respect to
8 which the manufacturer voluntarily files a certification required
9 by the secretary of the department of housing and urban
10 development and complies with the standards established under
11 title 42 of the United States Code.
12 (aaa) (bbb) "Manufactured-home
transaction" means a secured
13 transaction that creates a purchase-money security interest in a
14 manufactured home, other than a manufactured home held as
15 inventory, or in which a manufactured home, other than a
16 manufactured home held as inventory, is the primary collateral.
17 (bbb) (ccc) "Mortgage" means a
consensual interest in real
18 property, including fixtures, which secures payment or
19 performance of an obligation.
20 (ccc) (ddd) "New debtor" means a person
that becomes bound
21 as debtor under section 9203(4) by a security agreement
22 previously entered into by another person.
23 (ddd) (eee) "New value" means money,
money's worth in
24 property, services, or new credit, or release by a transferee of
25 an interest in property previously transferred to the transferee.
26 The term does not include an obligation substituted for another
27 obligation.
1 (eee) (fff) "Noncash proceeds" means
proceeds other than
2 cash proceeds.
3 (fff) (ggg) "Obligor" means a person
that, with respect to
4 an obligation secured by a security interest in or an
5 agricultural lien on the collateral, owes payment or other
6 performance of the obligation, has provided property other than
7 the collateral to secure payment or other performance of the
8 obligation, or is otherwise accountable in whole or in part for
9 payment or other performance of the obligation. The term does not
10 include issuers or nominated persons under a letter of credit.
11 (ggg) (hhh) "Original debtor" means,
except as used in
12 section 9310(3), a person that, as debtor, entered into a
13 security agreement to which a new debtor has become bound under
14 section 9203(4).
15 (hhh) (iii) "Payment intangible" means a
general intangible
16 under which the account debtor's principal obligation is a
17 monetary obligation.
18 (iii) (jjj) "Person related to", with
respect to an
19 individual, means 1 or more of the following:
20 (i) The spouse of the individual.
21 (ii) A brother, brother-in-law, sister, or sister-in-law of
22 the individual.
23 (iii) An ancestor or lineal descendant of the individual or
24 the individual's spouse.
25 (iv) Any other relative, by blood or marriage, of the
26 individual or the individual's spouse who shares the same home
27 with the individual.
1 (jjj) (kkk) "Person related to", with
respect to an
2 organization, means 1 or more of the following:
3 (i) A person directly or indirectly controlling, controlled
4 by, or under common control with the organization.
5 (ii) An officer or director of, or a person performing
6 similar functions with respect to, the organization.
7 (iii) An officer or director of, or a person performing
8 similar functions with respect to, a person described in
9 subparagraph (i).
10 (iv) The spouse of an individual described in subparagraph
11 (i), (ii), or (iii).
12 (v) An individual who is related by blood or marriage to an
13 individual described in subparagraph (i), (ii), (iii), or (iv) and
14 shares the same home with the individual.
15 (kkk) (lll) "Proceeds" means, except as used in
section
16 9609(2), 1 or more of the following property:
17 (i) Whatever is acquired upon the sale, lease, license,
18 exchange, or other disposition of collateral.
19 (ii) Whatever is collected on, or distributed on account of,
20 collateral.
21 (iii) Rights arising out of collateral.
22 (iv) To the extent of the value of collateral, claims arising
23 out of the loss, nonconformity, or interference with the use of,
24 defects or infringement of rights in, or damage to, the
25 collateral.
26 (v) To the extent of the value of collateral and to the
27 extent payable to the debtor or the secured party, insurance
1 payable by reason of the loss or nonconformity of, defects or
2 infringement of rights in, or damage to, the collateral.
3 (lll) (mmm) "Promissory
note" means an instrument that
4 evidences a promise to pay a monetary obligation, does not
5 evidence an order to pay, and does not contain an acknowledgment
6 by a bank that the bank has received for deposit a sum of money
7 or funds.
8 (mmm) (nnn) "Proposal" means a record
authenticated by a
9 secured party which includes the terms on which the secured party
10 is willing to accept collateral in full or partial satisfaction
11 of the obligation it secures pursuant to sections 9620, 9621, and
12 9622.
13 (nnn) "Public organic record" means a record that is
14 available to the public for inspection and is any of the
15 following:
16 (i) A record consisting of the record initially filed with or
17 issued by a state or the United States to form or organize an
18 organization and any record filed with or issued by the state or
19 the United States which amends or restates the initial record.
20 (ii) An organic record of a business trust consisting of the
21 record initially filed with a state and any record filed with the
22 state which amends or restates the initial record, if a statute
23 of the state governing business trusts requires that the record
24 be filed with the state.
25 (iii) A record consisting of legislation enacted by the
26 legislature of a state or the congress of the United States which
27 forms or organizes an organization, any record amending the
1 legislation, and any record filed with or issued by the state or
2 the United States which amends or restates the name of the
3 organization.
4 (ooo) "Pursuant to commitment", with respect to an advance
5 made or other value given by a secured party, means pursuant to
6 the secured party's obligation, whether or not a subsequent event
7 of default or other event not within the secured party's control
8 has relieved or may relieve the secured party from its
9 obligation.
10 (ppp) "Record", except as used in "for record", "of record",
11 "record or legal title", and "record owner", means information
12 that is inscribed on a tangible medium or which is stored in an
13 electronic or other medium and is retrievable in perceivable
14 form.
15 (qqq) "Registered organization" means an organization
16 organized solely under the law of a single state or the United
17 States and as to which the state or the United States must
18 maintain a public record showing the organization to have been
19 organized.by the
filing of a public organic record with, the
20 issuance of a public organic record by, or the enactment of
21 legislation by the state or the United States. The term includes
22 a business trust that is formed or organized under the law of a
23 single state if a statute of the state governing business trusts
24 requires that the business trust's organic record be filed with
25 the state.
26 (rrr) "Secondary obligor" means an obligor to the extent
27 that the obligor's obligation is secondary or the obligor has a
1 right of recourse with respect to an obligation secured by
2 collateral against the debtor, another obligor, or property of
3 either.
4 (sss) "Secured party" means 1 or more of the following:
5 (i) A person in whose favor a security interest is created or
6 provided for under a security agreement, whether or not any
7 obligation to be secured is outstanding.
8 (ii) A person that holds an agricultural lien.
9 (iii) A consignor.
10 (iv) A person to which accounts, chattel paper, payment
11 intangibles, or promissory notes have been sold.
12 (v) A trustee, indenture trustee, agent, collateral agent,
13 or other representative in whose favor a security interest or
14 agricultural lien is created or provided for.
15 (vi) A person that holds a security interest arising under
16 section 2401, 2505, 2711(3), 2A508(5), 4210, or 5118.
17 (ttt) "Security agreement" means an agreement that creates
18 or provides for a security interest.
19 (uuu) "Send", in connection with a record or notification,
20 means 1 of the following:
21 (i) To deposit in the mail, deliver for transmission, or
22 transmit by any other usual means of communication, with postage
23 or cost of transmission provided for, addressed to any address
24 reasonable under the circumstances.
25 (ii) To cause the record or notification to be received
26 within the time that it would have been received if properly sent
27 under subparagraph (i).
1 (vvv) "Software" means a computer program and any supporting
2 information provided in connection with a transaction relating to
3 the program. The term does not include a computer program that is
4 included in the definition of goods.
5 (www) "State" means a state of the United States, the
6 District of Columbia, Puerto Rico, the United States Virgin
7 Islands, or any territory or insular possession subject to the
8 jurisdiction of the United States.
9 (xxx) "Supporting obligation" means a letter-of-credit right
10 or secondary obligation that supports the payment or performance
11 of an account, chattel paper, a document, a general intangible,
12 an instrument, or investment property.
13 (yyy) "Tangible chattel paper" means chattel paper evidenced
14 by a record or records consisting of information that is
15 inscribed on a tangible medium.
16 (zzz) "Termination statement" means an amendment of a
17 financing statement that identifies, by its file number, the
18 initial financing statement to which it relates and indicates
19 either that it is a termination statement or that the identified
20 financing statement is no longer effective.
21 (aaaa) "Transmitting utility" means a person primarily
22 engaged in the business of 1 of the following:
23 (i) Operating a railroad, subway, street railway, or trolley
24 bus.
25 (ii) Transmitting communications electrically,
26 electromagnetically, or by light.
27 (iii) Transmitting goods by pipeline or sewer.
1 (iv) Transmitting or producing and transmitting electricity,
2 steam, gas, or water.
3 (2) The "Control"
as provided in section 7106 and the
4 following definitions in other articles apply to this article:
|
5 |
"Applicant" |
Section 5102 |
|
6 |
"Beneficiary" |
Section 5102 |
|
7 |
"Broker" |
Section 8102 |
|
8 |
"Certificated security" |
Section 8102 |
|
9 |
"Check" |
Section 3104 |
|
10 |
"Clearing corporation" |
Section 8102 |
|
11 |
"Contract for sale" |
Section 2106 |
|
12 |
"Customer" |
Section 4104 |
|
13 |
"Entitlement holder" |
Section 8102 |
|
14 |
"Financial asset" |
Section 8102 |
|
15 |
"Holder in due course" |
Section 3302 |
|
16 |
"Issuer" (with respect to a document |
|
|
17 |
of title) |
Section 7102 |
|
18 |
"Issuer" (with respect to a letter |
|
|
19 |
of credit or letter-of-credit right) |
Section 5102 |
|
20 |
"Issuer" (with respect to a security) |
Section 8201 |
|
21 |
"Lease" |
Section 2A103 |
|
22 |
"Lease agreement" |
Section 2A103 |
|
23 |
"Lease contract" |
Section 2A103 |
|
24 |
"Leasehold interest" |
Section 2A103 |
|
25 |
"Lessee" |
Section 2A103 |
|
26 |
"Lessee in ordinary course of business" |
Section 2A103 |
|
27 |
"Lessor" |
Section 2A103 |
|
28 |
"Lessor's residual interest" |
Section 2A103 |
|
29 |
"Letter of credit" |
Section 5102 |
|
30 |
"Merchant" |
Section 2104 |
|
1 |
"Negotiable instrument" |
Section 3104 |
|
2 |
"Nominated person" |
Section 5102 |
|
3 |
"Note" |
Section 3104 |
|
4 |
"Proceeds of a letter of credit" |
Section 5114 |
|
5 |
"Prove" |
Section 3103 |
|
6 |
"Sale" |
Section 2106 |
|
7 |
"Securities account" |
Section 8501 |
|
8 |
"Securities intermediary" |
Section 8102 |
|
9 |
"Security" |
Section 8102 |
|
10 |
"Security certificate" |
Section 8102 |
|
11 |
"Security entitlement" |
Section 8102 |
|
12 |
"Uncertificated security" |
Section 8102. |
13 (3) Article 1 contains general definitions and principles of
14 construction and interpretation applicable throughout this
15 article.
16 Sec. 9203. (1) A security interest attaches to collateral
17 when it becomes enforceable against the debtor with respect to
18 the collateral, unless an agreement expressly postpones the time
19 of attachment.
20 (2) Except as otherwise provided in subsections (3) through
21 (9), a security interest is enforceable against the debtor and
22 third parties with respect to the collateral only if all of the
23 following are met:
24 (a) Value has been given.
25 (b) The debtor has rights in the collateral or the power to
26 transfer rights in the collateral to a secured party.
27 (c) One or more of the following conditions are met:
28 (i) The debtor has authenticated a security agreement that
1 provides a description of the collateral and, if the security
2 interest covers timber to be cut, a description of the land
3 concerned.
4 (ii) The collateral is not a certificated security and is in
5 the possession of the secured party under section 9313 pursuant
6 to the debtor's security agreement.
7 (iii) The collateral is a certificated security in registered
8 form and the security certificate has been delivered to the
9 secured party under section 8301 pursuant to the debtor's
10 security agreement.
11 (iv) The collateral is deposit accounts, electronic chattel
12 paper, investment property, or letter-of-credit rights, or
13 electronic documents, and the secured party has control under
14 section 7106, 9104, 9105, 9106, or 9107 pursuant to the debtor's
15 security agreement.
16 (3) Subsection (2) is subject to section 4210 on the
17 security interest of a collecting bank, section 5118 on the
18 security interest of a letter-of-credit issuer or nominated
19 person, section 9110 on a security interest arising under article
20 2 or 2A, and section 9206 on security interests in investment
21 property.
22 (4) A person becomes bound as debtor by a security agreement
23 entered into by another person if, by operation of law other than
24 this article or by contract, either of the following occurs:
25 (a) The security agreement becomes effective to create a
26 security interest in the person's property.
27 (b) The person becomes generally obligated for the
1 obligations of the other person, including the obligation secured
2 under the security agreement, and acquires or succeeds to all or
3 substantially all of the assets of the other person.
4 (5) If a new debtor becomes bound as debtor by a security
5 agreement entered into by another person, the agreement satisfies
6 subsection (2)(c) with respect to existing or after-acquired
7 property of the new debtor to the extent the property is
8 described in the agreement, and another agreement is not
9 necessary to make a security interest in the property
10 enforceable.
11 (6) The attachment of a security interest in collateral
12 gives the secured party the rights to proceeds provided by
13 section 9315 and is also attachment of a security interest in a
14 supporting obligation for the collateral.
15 (7) The attachment of a security interest in a right to
16 payment or performance secured by a security interest or other
17 lien on personal or real property is also attachment of a
18 security interest in the security interest, mortgage, or other
19 lien.
20 (8) The attachment of a security interest in a securities
21 account is also attachment of a security interest in the security
22 entitlements carried in the securities account.
23 (9) The attachment of a security interest in a commodity
24 account is also attachment of a security interest in the
25 commodity contracts carried in the commodity account.
26 Sec. 9207. (1) Except as otherwise provided in subsection
27 (4), a secured party shall use reasonable care in the custody and
1 preservation of collateral in the secured party's possession. In
2 the case of chattel paper or an instrument, reasonable care
3 includes taking necessary steps to preserve rights against prior
4 parties unless otherwise agreed.
5 (2) Except as otherwise provided in subsection (4), if a
6 secured party has possession of collateral all of the following
7 apply:
8 (a) Reasonable expenses, including the cost of insurance and
9 payment of taxes or other charges, incurred in the custody,
10 preservation, use, or operation of the collateral are chargeable
11 to the debtor and are secured by the collateral.
12 (b) The risk of accidental loss or damage is on the debtor
13 to the extent of a deficiency in any effective insurance
14 coverage.
15 (c) The secured party shall keep the collateral
16 identifiable, but fungible collateral may be commingled.
17 (d) The secured party may use or operate the collateral for
18 the purpose of preserving the collateral or its value; as
19 permitted by an order of a court having competent jurisdiction;
20 or except in the case of consumer goods, in the manner and to the
21 extent agreed by the debtor.
22 (3) Except as otherwise provided in subsection (4), a
23 secured party having possession of collateral or control of
24 collateral under section 7106, 9104, 9105, 9106, or 9107 may hold
25 as additional security any proceeds, except money or funds,
26 received from the collateral, shall apply money or funds received
27 from the collateral to reduce the secured obligation unless
1 remitted to the debtor, and may create a security interest in the
2 collateral.
3 (4) If the secured party is a buyer of accounts, chattel
4 paper, payment intangibles, or promissory notes or a consignor,
5 subsections (2) and (3) do not apply, and subsection (1) does not
6 apply unless the secured party is entitled under an agreement to
7 charge back uncollected collateral or otherwise to full or
8 limited recourse against the debtor or a secondary obligor based
9 on the nonpayment or other default of an account debtor or other
10 obligor on the collateral.
11 Sec. 9208. (1) This section applies to cases in which there
12 is no outstanding secured obligation and the secured party is not
13 committed to make advances, incur obligations, or otherwise give
14 value.
15 (2) Within 10 days after receiving an authenticated demand
16 by the debtor, a secured party shall do all of the following that
17 apply to the secured party:
18 (a) A secured party having control of a deposit account
19 under section 9104(1)(b) shall send to the bank with which the
20 deposit account is maintained an authenticated statement that
21 releases the bank from any further obligation to comply with
22 instructions originated by the secured party.
23 (b) A secured party having control of a deposit account
24 under section 9104(1)(c) shall pay the debtor the balance on
25 deposit in the deposit account or transfer the balance on deposit
26 into a deposit account in the debtor's name.
27 (c) A secured party, other than a buyer, having control of
1 electronic chattel paper under section 9105 shall do all of the
2 following:
3 (i) Communicate the authoritative copy of the electronic
4 chattel paper to the debtor or its designated custodian.
5 (ii) If the debtor designates a custodian that is the
6 designated custodian with which the authoritative copy of the
7 electronic chattel paper is maintained for the secured party,
8 communicate to the custodian an authenticated record releasing
9 the designated custodian from any further obligation to comply
10 with instructions originated by the secured party and instructing
11 the custodian to comply with instructions originated by the
12 debtor.
13 (iii) Take appropriate action to enable the debtor or its
14 designated custodian to make copies of or revisions to the
15 authoritative copy that add or change an identified assignee of
16 the authoritative copy without the consent of the secured party.
17 (d) A secured party having control of investment property
18 under section 8106(4)(b) or section 9106(2) shall send to the
19 securities intermediary or commodity intermediary with which the
20 security entitlement or commodity contract is maintained an
21 authenticated record that releases the securities intermediary or
22 commodity intermediary from any further obligation to comply with
23 entitlement orders or directions originated by the secured party.
24 (e) A secured party having control of a letter-of-credit
25 right under section 9107 shall send to each person having an
26 unfulfilled obligation to pay or deliver proceeds of the letter
27 of credit to the secured party an authenticated release from any
1 further obligation to pay or deliver proceeds of the letter of
2 credit to the secured party.
3 (f) A secured party having control of an electronic document
4 shall do all of the following:
5 (i) Give control of the electronic document to the debtor or
6 its designated custodian.
7 (ii) If the debtor designates a custodian that is the
8 designated custodian with which the authoritative copy of the
9 electronic document is maintained for the secured party,
10 communicate to the custodian an authenticated record releasing
11 the designated custodian from any further obligation to comply
12 with instructions originated by the secured party and instructing
13 the custodian to comply with instructions originated by the
14 debtor.
15 (iii) Take appropriate action to enable the debtor or its
16 designated custodian to make copies of or revisions to the
17 authoritative copy which add or change an identified assignee of
18 the authoritative copy without the consent of the secured party.
19 Sec. 9301. Except as otherwise provided in sections 9303
20 through 9306, the following rules determine the law governing
21 perfection, the effect of perfection or nonperfection, and the
22 priority of a security interest in collateral:
23 (a) Except as otherwise provided in this section, while a
24 debtor is located in a jurisdiction, the local law of that
25 jurisdiction governs perfection, the effect of perfection or
26 nonperfection, and the priority of a security interest in
27 collateral.
1 (b) While collateral is located in a jurisdiction, the local
2 law of that jurisdiction governs perfection, the effect of
3 perfection or nonperfection, and the priority of a possessory
4 security interest in that collateral.
5 (c) Except as otherwise provided in subdivision (d), while
6 tangible negotiable documents, goods, instruments, money, or
7 tangible chattel paper is located in a jurisdiction, the local
8 law of that jurisdiction governs perfection of a security
9 interest in the goods by filing a fixture filing, perfection of a
10 security interest in timber to be cut, and the effect of
11 perfection or nonperfection and the priority of a nonpossessory
12 security interest in the collateral.
13 (d) The local law of the jurisdiction in which the wellhead
14 or minehead is located governs perfection, the effect of
15 perfection or nonperfection, and the priority of a security
16 interest in as-extracted collateral.
17 Sec. 9310. (1) Except as otherwise provided in subsection
18 (2) and section 9312(2), a financing statement must be filed to
19 perfect all security interests and agricultural liens.
20 (2) The filing of a financing statement is not necessary to
21 perfect 1 or more of the following:
22 (a) A security interest that is perfected under section
23 9308(4), (5), (6), or (7).
24 (b) A security interest that is perfected under section 9309
25 when it attaches.
26 (c) A security interest in property subject to a statute,
27 regulation, or treaty described in section 9311(1).
1 (d) A security interest in goods in possession of a bailee
2 that is perfected under section 9312(4)(a) or (b).
3 (e) A security interest in certificated securities,
4 documents, goods, or instruments that is perfected without
5 filing, control, or possession under section 9312(5), (6), or
6 (7).
7 (f) A security interest in collateral in the secured party's
8 possession under section 9313.
9 (g) A security interest in a certificated security that is
10 perfected by delivery of the security certificate to the secured
11 party under section 9313.
12 (h) A security interest in deposit accounts, electronic
13 chattel paper, electronic documents, investment property, or
14 letter-of-credit rights that is perfected by control under
15 section 9314.
16 (i) A security interest in proceeds that is perfected under
17 section 9315.
18 (j) A security interest that is perfected under section
19 9316.
20 (3) If a secured party assigns a perfected security interest
21 or agricultural lien, a filing under this article is not required
22 to continue the perfected status of the security interest against
23 creditors of and transferees from the original debtor.
24 Sec. 9312. (1) A security interest in chattel paper,
25 negotiable documents, instruments, or investment property may be
26 perfected by filing.
27 (2) Except as otherwise provided in section 9315(3) and (4)
1 for proceeds, a security interest in a deposit account, a letter-
2 of-credit right, or money may be perfected only as follows:
3 (a) A security interest in a deposit account may be
4 perfected only by control under section 9314.
5 (b) Except as otherwise provided in section 9308(4), a
6 security interest in a letter-of-credit right may be perfected
7 only by control under section 9314.
8 (c) A security interest in money may be perfected only by
9 the secured party's taking possession under section 9313.
10 (3) While goods are in the possession of a bailee that has
11 issued a negotiable document covering the goods, a security
12 interest in the goods may be perfected by perfecting a security
13 interest in the document, and a security interest perfected in
14 the document has priority over any security interest that becomes
15 perfected in the goods by another method during that time.
16 (4) While goods are in the possession of a bailee that has
17 issued a nonnegotiable document covering the goods, a security
18 interest in the goods may be perfected by 1 or more of the
19 following:
20 (a) Issuance of a document in the name of the secured party.
21 (b) The bailee's receipt of notification of the secured
22 party's interest.
23 (c) Filing as to the goods.
24 (5) A security interest in certificated securities,
25 negotiable documents, or instruments is perfected without filing
26 or the taking of possession or control for a period of 20 days
27 from the time it attaches to the extent that it arises for new
1 value given under an authenticated security agreement.
2 (6) A perfected security interest in a negotiable document
3 or goods in possession of a bailee, other than one that has
4 issued a negotiable document for the goods, remains perfected for
5 20 days without filing if the secured party makes available to
6 the debtor the goods or documents representing the goods for the
7 purpose of ultimate sale or exchange, or for the purpose of
8 loading, unloading, storing, shipping, transshipping,
9 manufacturing, processing, or otherwise dealing with them in a
10 manner preliminary to their sale or exchange:
11 (7) A perfected security interest in a certificated security
12 or instrument remains perfected for 20 days without filing if the
13 secured party delivers the security certificate or instrument to
14 the debtor for the purpose of ultimate sale or exchange or for
15 the purpose of presentation, collection, enforcement, renewal, or
16 registration of transfer.
17 (8) After the 20-day period specified in subsection (5),
18 (6), or (7) expires, perfection depends upon compliance with this
19 article.
20 Sec. 9313. (1) Except as otherwise provided in subsection
21 (2), a secured party may perfect a security interest in tangible
22 negotiable documents, goods, instruments, money, or tangible
23 chattel paper by taking possession of the collateral. A secured
24 party may perfect a security interest in certificated securities
25 by taking delivery of the certificated securities under section
26 8301.
27 (2) With respect to goods covered by a certificate of title
1 issued by this state, a secured party may perfect a security
2 interest in the goods by taking possession of the goods only in
3 the circumstances described in section 9316(5).
4 (3) With respect to collateral other than certificated
5 securities and goods covered by a document, a secured party takes
6 possession of collateral in the possession of a person other than
7 the debtor, the secured party, or a lessee of the collateral from
8 the debtor in the ordinary course of the debtor's business, when
9 the person in possession authenticates a record acknowledging
10 that it holds possession of the collateral for the secured
11 party's benefit, or the person takes possession of the collateral
12 after having authenticated a record acknowledging that it will
13 hold possession of collateral for the secured party's benefit.
14 (4) If the perfection of a security interest depends upon
15 possession of the collateral by a secured party, perfection
16 occurs no earlier than the time the secured party takes
17 possession and continues only while the secured party retains
18 possession.
19 (5) A security interest in a certificated security in
20 registered form is perfected by delivery when delivery of the
21 certificated security occurs under section 8301 and remains
22 perfected by delivery until the debtor obtains possession of the
23 security certificate.
24 (6) A person in possession of collateral is not required to
25 acknowledge that it holds possession for a secured party's
26 benefit.
27 (7) If a person acknowledges that it holds possession for
1 the secured party's benefit, the acknowledgment is effective
2 under subsection (3) or section 8301(1), even if the
3 acknowledgment violates the rights of a debtor, and unless the
4 person otherwise agrees or law other than this article otherwise
5 provides, the person does not owe any duty to the secured party
6 and is not required to confirm the acknowledgment to another
7 person.
8 (8) A secured party having possession of collateral does not
9 relinquish possession by delivering the collateral to a person
10 other than the debtor or a lessee of the collateral from the
11 debtor in the ordinary course of the debtor's business if the
12 person was instructed before the delivery or is instructed
13 contemporaneously with the delivery to hold possession of the
14 collateral for the secured party's benefit, or to redeliver the
15 collateral to the secured party.
16 (9) A secured party does not relinquish possession, even if
17 a delivery under subsection (8) violates the rights of a debtor.
18 A person to which collateral is delivered under subsection (8)
19 does not owe any duty to the secured party and is not required to
20 confirm the delivery to another person unless the person
21 otherwise agrees or law other than this article otherwise
22 provides.
23 Sec. 9314. (1) A security interest in investment property,
24 deposit accounts, letter-of-credit rights, or electronic chattel
25 paper, or electronic documents may be perfected by control of the
26 collateral under section 7106, 9104, 9105, 9106, or 9107.
27 (2) A security interest in deposit accounts, electronic
1 chattel paper, or letter-of-credit rights, or electronic
2 documents is perfected by control under section 7106, 9104, 9105,
3 or 9107 when the secured party obtains control and remains
4 perfected by control only while the secured party retains
5 control.
6 (3) A security interest in investment property is perfected
7 by control under section 9106 from the time the secured party
8 obtains control and remains perfected by control until both of
9 the following occur:
10 (a) The secured party does not have control.
11 (b) One of the following occurs:
12 (i) If the collateral is a certificated security, the debtor
13 has or acquires possession of the security certificate.
14 (ii) If the collateral is an uncertificated security, the
15 issuer has registered or registers the debtor as the registered
16 owner.
17 (iii) If the collateral is a security entitlement, the debtor
18 is or becomes the entitlement holder.
19 Sec. 9317. (1) A security interest or agricultural lien is
20 subordinate to the rights of 1 or more of the following:
21 (a) A person entitled to priority under section 9322.
22 (b) Except as otherwise provided in subsection (5), a person
23 that becomes a lien creditor before the earlier of the following:
24 (i) The time the security interest or agricultural lien is
25 perfected.
26 (ii) The time 1 of the conditions specified in section
27 9203(2)(c) is met and a financing statement covering the
1 collateral is filed.
2 (2) Except as otherwise provided in subsection (5), a buyer,
3 other than a secured party, of tangible chattel paper, tangible
4 documents, goods, instruments, or a certificated security
5 certificate takes free of a
security interest or agricultural
6 lien if the buyer gives value and receives delivery of the
7 collateral without knowledge of the security interest or
8 agricultural lien and before it is perfected.
9 (3) Except as otherwise provided in subsection (5), a lessee
10 of goods takes free of a security interest or agricultural lien
11 if the lessee gives value and receives delivery of the collateral
12 without knowledge of the security interest or agricultural lien
13 and before it is perfected.
14 (4) A licensee of a general intangible or a buyer, other
15 than a secured party, of accounts, electronic chattel paper,
16 general intangibles, or investment property other than collateral
17 other than tangible chattel paper, tangible documents, goods,
18 instruments, or a certificated security takes free of a security
19 interest if the licensee or buyer gives value without knowledge
20 of the security interest and before it is perfected.
21 (5) Except as otherwise provided in sections 9320 and 9321,
22 if a person files a financing statement with respect to a
23 purchase-money security interest before or within 20 days after
24 the debtor receives delivery of the collateral, the security
25 interest takes priority over the rights of a buyer, lessee, or
26 lien creditor that arise between the time the security interest
27 attaches and the time of filing.
1 Sec. 9338. If a security interest or agricultural lien is
2 perfected by a filed financing statement providing information
3 described in section 9516(2)(e) that is incorrect at the time the
4 financing statement is filed, all of the following apply:
5 (a) The security interest or agricultural lien is
6 subordinate to a conflicting perfected security interest in the
7 collateral to the extent that the holder of the conflicting
8 security interest gives value in reasonable reliance upon the
9 incorrect information.
10 (b) A purchaser, other than a secured party, of the
11 collateral takes free of the security interest or agricultural
12 lien to the extent that, in reasonable reliance upon the
13 incorrect information, the purchaser gives value and, in the case
14 of tangible chattel paper, tangible documents, goods,
15 instruments, or a security certificate, receives delivery of the
16 collateral.
17 Sec. 9601. (1) After default, a secured party has the rights
18 provided in this part and, except as otherwise provided in
19 section 9602, those provided by agreement of the parties. A
20 secured party may do 1 or more of the following:
21 (a) May reduce a claim to judgment, foreclose, or otherwise
22 enforce the claim, security interest, or agricultural lien by any
23 available judicial procedure.
24 (b) If the collateral is documents, may proceed either as to
25 the documents or as to the goods they cover.
26 (2) A secured party in possession of collateral or control
27 of collateral under section 7106, 9104, 9105, 9106, or 9107 has
1 the rights and duties provided in section 9207.
2 (3) The rights under subsections (1) and (2) are cumulative
3 and may be exercised simultaneously.
4 (4) Except as otherwise provided in subsection (7) and
5 section 9605, after default, a debtor and an obligor have the
6 rights provided in this part and by agreement of the parties.
7 (5) If a secured party has reduced its claim to judgment,
8 the lien of any levy that may be made upon the collateral by
9 virtue of an execution based upon the judgment relates back to
10 the earliest of the following:
11 (a) The date of perfection of the security interest or
12 agricultural lien in the collateral.
13 (b) The date of filing a financing statement covering the
14 collateral.
15 (c) Any date specified in a statute under which the
16 agricultural lien was created.
17 (6) A sale pursuant to an execution is a foreclosure of the
18 security interest or agricultural lien by judicial procedure
19 within the meaning of this section. A secured party may purchase
20 at the sale and thereafter hold the collateral free of any other
21 requirements of this article.
22 (7) Except as otherwise provided in section 9607(3), this
23 part imposes no duties upon a secured party that is a consignor
24 or is a buyer of accounts, chattel paper, payment intangibles, or
25 promissory notes.
26 Enacting section 1. This amendatory act takes effect July 1,
27 2013.
1 Enacting section 2. This amendatory act does not take effect
2 unless all of the following bills of the 96th Legislature are
3 enacted into law:
4 (a) House Bill No. 5081.
5 (b) House Bill No. 5083.