2024 Pa. Act 41 | Pennsylvania Act 2024-41 — UNIFORM COMMERCIAL CODE (13 PA.C.S.) AND DECEDENTS, ESTATES AND FIDUCIARIES CODE (20 PA.C.S.) - OMNIBUS AMENDMENTS

Act text

UNIFORM COMMERCIAL CODE (13 PA.C.S.) AND DECEDENTS, ESTATES AND FIDUCIARIES CODE (20 PA.C.S.) - OMNIBUS AMENDMENTS
	Act of Jul. 1, 2024, P.L. 450, No. 41	Cl. 13

Session of 2024

No. 2024-41

SB 1084

AN ACT

Amending Titles 13 (Commercial Code) and 20 (Decedents, Estates and Fiduciaries) of the Pennsylvania Consolidated Statutes, extensively revising the Uniform Commercial Code to accommodate emerging technologies utilized in commercial transactions:

In general provisions:

Further providing for general definitions, for value, for territorial applicability and parties' power to choose applicable law and for waiver or renunciation of claim or right after breach.

In sales:

Further providing for scope and certain security and other transactions excluded from division, for definitions of "contract," "agreement," "contract for sale," "sale," "present sale," "conforming" to contract, "termination" and "cancellation," for formal requirements and statute of frauds, for final written expression and parol or extrinsic evidence, for seals inoperative, for firm offers and for modification, rescission and waiver.

In leases:

Further providing for scope, for definitions and index of definitions, for waiver or renunciation of claim or right after default, for statute of frauds, for final written expression and parol or extrinsic evidence, for seals inoperative, for firm offers, for modification, rescission and waiver and for exclusion or modification of warranties.

In negotiable instruments:

Further providing for negotiable instrument, for issue of instrument, for signature and for discharge by cancellation or renunciation.

In funds transfers:

Further providing for payment order and definitions, for security procedure, for authorized and verified payment orders, for unenforceability of certain verified payment orders, for misdescription of beneficiary, for misdescription of intermediary bank or beneficiary's bank, for rejection of payment order, for cancellation and amendment of payment order and for liability for late or improper execution or failure to execute payment order.

In letters of credit:

Further providing for formal requirements and for choice of law and forum.

In warehouse receipts, bills of lading and other documents of title:

Further providing for definitions and index of definitions and for control of electronic document of title.

In investment securities:

Further providing for definitions, for rules for determining whether certain obligations and interests are securities or financial assets, for control, for applicability and choice of law and for protected purchaser.

In secured transactions:

Further providing for definitions and index of definitions, for control of deposit account and for control of electronic chattel paper.

Providing for control of controllable electronic record, controllable account or controllable payment intangible.

Further providing for attachment and enforceability of security interest, proceeds, supporting obligations and formal requisites, for after-acquired property and future advances, for rights and duties of secured party having possession or control of collateral, for additional duties of secured party having control of collateral, for duties of secured party if account debtor has been notified of assignment, for request for accounting and request regarding list of collateral or statement of account, for law governing perfection and priority of security interests, for law governing perfection and priority of security interests in deposit accounts and for law governing perfection and priority of security interests in investment property.

Providing for law governing perfection and priority of security interests in chattel paper and for law governing perfection and priority of security interests in controllable accounts, controllable electronic records and controllable payment intangibles.

Further providing for when filing required to perfect security interest or agricultural lien and security interests and agricultural liens to which filing provisions do not apply, for perfection of security interests in chattel paper, deposit accounts, documents, goods covered by documents, instruments, investment property, letter-of-credit rights and money, perfection by permissive filing and temporary perfection without filing or transfer of possession, for when possession by or delivery to secured party perfects security interest without filing and for perfection by control.

Providing for perfection by possession and control of chattel paper.

Further providing for effect of change in governing law, for interests which take priority over or take free of security interest or agricultural lien, for priorities among conflicting security interests in and agricultural liens on same collateral, for future advances and for priority of purchase-money security interests.

Providing for priority of security interest in controllable account, controllable electronic record and controllable payment intangible.

Further providing for priority of purchaser of chattel paper or instrument, for priority of rights of purchasers of instruments, documents and securities under other divisions, priority of interests in financial assets and security entitlements under Division 8, for transfer of money and transfer of funds from deposit account, for priority of security interests in fixtures and crops, for bank's rights and duties with respect to deposit account, for rights acquired by assignee and claims and defenses against assignee, for discharge of account debtor, notification of assignment, identification and proof of assignment, restrictions on assignment of accounts, chattel paper, payment intangibles and promissory notes ineffective, for restrictions on assignment of promissory notes, health-care-insurance receivables and certain general intangibles ineffective, for persons entitled to file a record, for termination statement, for rights after default, judicial enforcement and consignor or buyer of accounts, chattel paper, payment intangibles or promissory notes, for unknown debtor or secondary obligor, for application of proceeds of collection or enforcement and liability for deficiency and right to surplus, for notification before disposition of collateral, for contents and form of notification before disposition of collateral, general, for contents and form of notification before disposition of collateral, consumer-goods transaction, for application of proceeds of disposition and liability for deficiency and right to surplus, for explanation of calculation of surplus or deficiency, for transfer of record or legal title, for acceptance of collateral in full or partial satisfaction of obligation and compulsory disposition of collateral, for notification of proposal to accept collateral, for waiver and for nonliability and limitation on liability of secured party and liability of secondary obligor.

In controllable electronic records:

Providing for short title of division, for definitions, for relation to Division 9 and consumer laws, for rights in controllable account, controllable electronic record and controllable payment intangible, for control of controllable electronic record, for discharge of account debtor on controllable account or controllable payment intangible and for governing law.

Providing for transition.

In decedents, estates and fiduciaries, in powers of attorney:

Further providing for authority that requires specific and general grant of authority.

Making editorial changes.

The General Assembly of the Commonwealth of Pennsylvania hereby enacts as follows:

Section 1. The General Assembly finds and declares as follows:

(1) It is necessary to expand Title 13 of the Pennsylvania Consolidated Statutes to accommodate emerging technologies which affect commercial transactions.

(2) Expansion under paragraph (1) necessitates conforming amendments.

(3) Expansion under paragraph (1) requires coordinated transition into the complex statutory regulation of commercial law by the Commonwealth and other jurisdictions.

Section 2. Section 1201(b)(10), (15), (16.1), (21)(iii), (24), (27), (36) and (37) of Title 13 of the Pennsylvania Consolidated Statutes are amended and the subsection is amended by adding paragraphs to read:

§ 1201. General definitions.

(b) Definitions.--Subject to additional definitions contained in subsequent provisions of this title which are applicable to specific provisions of this title, the following words and phrases when used in this title shall have, unless the context clearly indicates otherwise, the meanings given to them in this subsection:

(10) "Conspicuous." With reference to a term, means so written, displayed or presented that , based on the totality of the circumstances, a reasonable person against which it is to operate ought to have noticed it. Whether a term is "conspicuous" or not is a decision for the court. [Conspicuous terms include the following:

(i) A heading in capitals equal to or greater in size than the surrounding text, or in contrasting type, font or color to the surrounding text of the same or lesser size.

(ii) Language in the body of a record or display in larger type than the surrounding text, in contrasting type, font or color to the surrounding text of the same size, or set off from surrounding text of the same size by symbols or other marks that call attention to the language.]

(15) "Delivery." With respect to an electronic document of title, means voluntary transfer of control and with respect to an instrument, a tangible document of title or an authoritative tangible copy of a record evidencing chattel paper, means voluntary transfer of possession.

[(16.1) "Electronic document of title." A document of title evidenced by a record consisting of information stored in an electronic medium.]

(16.2) "Electronic." Relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic or similar capabilities.

(16.3) "Electronic document of title." A document of title evidenced by a record consisting of information stored in an electronic medium.

(21) "Holder." As follows:

(iii) the person in control , other than under section 7106(g) (relating to control of electronic document of title), of a negotiable electronic document of title.

(24) "Money." A medium of exchange that is currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries. The term does not include a medium of exchange in an electronic form.

(27) "Person." Any individual; corporation; business trust; estate; trust; partnership; limited liability company; association; joint venture; government; governmental subdivision, agency or instrumentality, [public corporation;] or other legal or commercial entity. The term includes a protected series, however denominated, of an entity if the protected series is established under law other than this title which limits, or limits if conditions specified under that law are satisfied, the ability of a creditor of the entity or of any other protected series of the entity to satisfy a claim from assets of the protected series.

(36) "Send." In connection with a [writing,] record or [notice] notification :

(i) to deposit in the mail [or] , deliver for transmission or transmit by any other usual means of communication , [:

(A)] with postage or cost of transmission provided for[;

(B) properly addressed; and

(I) to an address specified thereon or otherwise agreed upon; or

(II) if no address is specified or agreed upon], and addressed to any address reasonable under the circumstances; or

(ii) [in any other way to cause to be received any record or notice within the time it would have arrived if properly sent.] to cause the record or notification to be received within the time it would have been received if properly sent under subparagraph (i).

(37) "Signed." [Includes using any symbol executed or adopted with present intention to adopt or accept a writing.] Means, with present intent to authenticate or adopt a record:

(i) execute or adopt a tangible symbol; or

(ii) attach to or logically associate with the record an electronic symbol, sound or process.

Section 3. Section 1204 introductory paragraph of Title 13 is amended to read:

§ 1204. Value.

Except as otherwise provided in Divisions 3 (relating to negotiable instruments), 4 (relating to bank deposits and collections) [and] , 5 (relating to letters of credit) and 12 (relating to controllable electronic records) , a person gives value for rights if the person acquires them:

Section 4. Section 1301(c) of Title 13 is amended by adding a paragraph to read:

§ 1301. Territorial applicability; parties' power to choose applicable law.

(c) Mandatory applicability of title.--If one of the following provisions of this title specifies the applicable law, that provision governs, and a contrary agreement is effective only to the extent permitted by the law so specified:

(8) Section 12107 (relating to governing law).

Section 5. Sections 1306 and 2102 of Title 13 are amended to read:

§ 1306. Waiver or renunciation of claim or right after breach.

A claim or right arising out of an alleged breach may be discharged in whole or in part without consideration by agreement of the aggrieved party in [an authenticated] a signed record.

§ 2102. Scope; certain security and other transactions excluded from division.

[Unless the context otherwise requires, this division applies to transactions in goods; it does not apply to any transaction which although in the form of an unconditional contract to sell or present sale is intended to operate only as a security transaction, nor does this division impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers.]

(a) Scope.--Unless the context otherwise requires, and except as provided in subsection (c), this division applies to transactions in goods and, in the case of a hybrid transaction, this division applies to the extent provided in subsection (b).

(b) Hybrid transactions.--In a hybrid transaction:

(1) If the sale-of-goods aspects do not predominate, only the provisions of this division which relate primarily to the sale-of-goods aspects of the transaction apply, and the provisions that relate primarily to the transaction as a whole do not apply.

(2) If the sale-of-goods aspects predominate, this division applies to the transaction but does not preclude application in appropriate circumstances of other law to aspects of the transaction which do not relate to the sale of goods.

(1) apply to a transaction which, even though in the form of an unconditional contract to sell or present sale, operates only to create a security interest; or

(2) impair or repeal a statute regulating sales to consumers, farmers or other specified classes of buyers.

Section 6. Section 2106 heading of Title 13 is amended and the section is amended by adding a subsection to read:

§ 2106. Definitions: "contract"; "agreement"; "contract for sale"; "sale"; "present sale"; "conforming" to contract; "termination"; ["cancellation."] "cancellation"; "hybrid transaction."

(e) "Hybrid transaction".--A single transaction involving a sale of goods and:

(1) the provision of services;

(2) a lease of other goods; or

(3) a sale, lease or license of property other than goods.

Section 7. Sections 2201(a) and (b), 2202 heading, introductory paragraph and (2), 2203, 2205, 2209(b) and 2A102 of Title 13 are amended to read:

§ 2201. Formal requirements; statute of frauds.

(a) General rule.--Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is [some writing] a record sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by [his] the party's authorized agent or broker. A [writing] record is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this subsection beyond the quantity of goods shown in [such writing] the record .

(b) Writing confirming contract between merchants.--Between merchants if within a reasonable time a [writing] record in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (a) against [such] the party unless [written] notice in a record of objection to its contents is given within ten days after it is received.

§ 2202. Final [written] expression: parol or extrinsic evidence.

Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a [writing] record intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:

(2) by evidence of consistent additional terms unless the court finds the [writing] record to have been intended also as a complete and exclusive statement of the terms of the agreement.

§ 2203. Seals inoperative.

The affixing of a seal to a [writing] record evidencing a contract for sale or an offer to buy or sell goods does not constitute the [writing] record a sealed instrument and the law with respect to sealed instruments does not apply to such a contract or offer.

§ 2205. Firm offers.

An offer by a merchant to buy or sell goods in a signed [writing] record which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

§ 2209. Modification, rescission and waiver.

(b) Writing excluding modification or rescission.--A signed agreement which excludes modification or rescission except by a signed writing or other signed record cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.

§ 2A102. Scope.

(a) Leases generally.-- This division applies to any transaction, regardless of form, that creates a lease[.] ; and, in the case of a hybrid lease, this division applies to the extent provided in subsection (b).

(b) Hybrid leases.--In a hybrid lease:

(1) if the lease-of-goods aspects do not predominate:

(i) only the provisions of this division which relate primarily to the lease-of-goods aspects of the transaction apply, and the provisions that relate primarily to the transaction as a whole do not apply;

(ii) section 2A209 (relating to lessee under finance lease as beneficiary of supply contract) applies if the lease is a finance lease; and

(iii) section 2A407 (relating to irrevocable promises: finance leases) applies to the promises of the lessee in a finance lease to the extent the promises are consideration for the right to possession and use of the leased goods; and

(2) if the lease-of-goods aspects predominate, this division applies to the transaction, but does not preclude application in appropriate circumstances of other law to aspects of the lease which do not relate to the lease of goods.

Section 8. Section 2A103(a) of Title 13 is amended by adding a definition to read:

§ 2A103. Definitions and index of definitions.

(a) Definitions.--The following words and phrases when used in this division shall have, unless the context clearly indicates otherwise, the meanings given to them in this subsection:

"Hybrid lease." A single transaction involving a lease of goods and:

(1) the provision of services;

(2) a sale of other goods; or

(3) a sale, lease or license of property other than goods.

Section 9. Sections 2A107, 2A201(a)(2), (c) and (e)(1), 2A202 heading, introductory paragraph and (2), 2A203, 2A205, 2A208(b), 2A214(a), 3104(a)(3), 3105(a), 3401 heading and (b), 3604, 4A103(a)(1) introductory paragraph, 4A201, 4A202(b)(2) and (c)(2), 4A203(a)(1), 4A207(c)(2), 4A208(b)(2), 4A210(a), 4A211(a), 4A305(c) and (d), 5104 and 5116 of Title 13 are amended to read:

§ 2A107. Waiver or renunciation of claim or right after default.

Any claim or right arising out of an alleged default or breach of warranty may be discharged in whole or in part without consideration by a [written] waiver or renunciation in a signed [and] record delivered by the aggrieved party.

§ 2A201. Statute of frauds.

(a) General rule.--A lease contract is not enforceable by way of action or defense unless:

(2) there is a [writing] record , signed by the party against whom enforcement is sought or by that party's authorized agent, sufficient to indicate that a lease contract has been made between the parties and to describe the goods leased and the lease term.

(c) Omitted or incorrectly stated terms.--A [writing] record is not insufficient because it omits or incorrectly states a term agreed upon, but the lease contract is not enforceable under subsection (a)(2) beyond the lease term and the quantity of goods shown in the [writing] record .

(e) Term of lease not satisfying general requirements.--The lease term under a lease contract referred to in subsection (d) is:

(1) if there is a [writing] record signed by the party against whom enforcement is sought or by that party's authorized agent specifying the lease term, the term so specified;

§ 2A202. Final [written] expression: parol or extrinsic evidence.

(2) by evidence of consistent additional terms unless the court finds the [writing] record to have been intended also as a complete and exclusive statement of the terms of the agreement.

§ 2A203. Seals inoperative.

The affixing of a seal to a [writing] record evidencing a lease contract or an offer to enter into a lease contract does not render the [writing] record a sealed instrument, and the law with respect to sealed instruments does not apply to the lease contract or offer.

§ 2A205. Firm offers.

An offer by a merchant to lease goods to or from another person in a signed [writing] record that by its terms gives assurance it will be held open is not revocable, for lack of consideration, during the time stated or, if no time is stated, for a reasonable time, but in no event may the period of irrevocability exceed three months. Any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

§ 2A208. Modification, rescission and waiver.

(b) Writing excluding modification or rescission.--A signed lease agreement that excludes modification or rescission except by a signed [writing] record may not be otherwise modified or rescinded, but, except as between merchants, such a requirement on a form supplied by a merchant must be separately signed by the other party.

§ 2A214. Exclusion or modification of warranties.

(a) Construction of words or conduct creating or limiting warranties.--Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit a warranty must be construed wherever reasonable as consistent with each other; but, subject to the provisions of section 2A202 (relating to final [written] expression: parol or extrinsic evidence), negation or limitation is inoperative to the extent that the construction is unreasonable.

§ 3104. Negotiable instrument.

(a) Definition of "negotiable instrument".--Except as provided in subsections (c) and (d), "negotiable instrument" means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

(3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain:

(i) an undertaking or power to give, maintain or protect collateral to secure payment;

(ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral; [or]

(iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor[.] ;

(iv) a term which specifies the law that governs the promise or order; or

(v) an undertaking to resolve in a specified forum a dispute concerning the promise or order.

§ 3105. Issue of instrument.

(a) Definition of "issue".--"Issue" means :

(1) the first delivery of an instrument by the maker or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person[.] ; or

(2) if agreed by the payee, the first transmission by the drawer to the payee of an image of an item and information derived from the item which enables the depositary bank to collect the item by transferring or presenting under Federal law an electronic check.

§ 3401. Signature necessary for liability on instrument .

[(b) Form of signature.--A signature may be made:

(1) manually or by means of a device or machine; and

(2) by the use of any name, including a trade or assumed name, or by a word, mark or symbol executed or adopted by a person with present intention to authenticate a writing.]

§ 3604. Discharge by cancellation or renunciation.

(a) Methods of discharge.--

(1) A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument:

[(1)] (i) by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation or cancellation of the instrument, cancellation or striking out of the party's signature or the addition of words to the instrument indicating discharge; or

[(2)] (ii) by agreeing not to sue or otherwise renouncing rights against the party by a signed writing.

(2) The obligation of a party to pay a check is not discharged solely by destruction of the check in connection with a process in which:

(i) information is extracted from the check, and an image of the check is made; and

(ii) subsequently, the information and image are transmitted for payment.

(b) Certain rights unaffected.--Cancellation or striking out of an indorsement pursuant to subsection (a) does not affect the status and rights of a party derived from the indorsement.

§ 4A103. Payment order; definitions.

(a) Definition of "payment order" and related terms.--The following words and phrases when used in this division shall have the meanings given to them in this subsection:

(1) "Payment order." An instruction of a sender to a receiving bank, transmitted orally[, electronically] or in [writing] a record , to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary if:

§ 4A201. Security procedure.

"Security procedure" means a procedure established by agreement of a customer and a receiving bank for the purpose of:

(1) verifying that a payment order or communication amending or canceling a payment order is that of the customer; or

(2) detecting error in the transmission or the content of the payment order or communication.

A security procedure may impose an obligation on the receiving bank or the customer and may require the use of algorithms or other codes, identifying words [or] , numbers, symbols, sounds, biometrics, encryption, callback procedures or similar security devices. Comparison of a signature on a payment order or communication with an authorized specimen signature of the customer or requiring a payment order to be sent from a known email address, IP address or telephone number is not by itself a security procedure.

§ 4A202. Authorized and verified payment orders.

(b) Verified payment order.--If a bank and its customer have agreed that the authenticity of payment orders issued to the bank in the name of the customer as sender will be verified pursuant to a security procedure, a payment order received by the receiving bank is effective as the order of the customer, whether or not authorized, if:

(2) the bank proves that it accepted the payment order in good faith and in compliance with the bank's obligations under the security procedure and any [written] agreement or instruction of the customer , evidenced by a record, restricting acceptance of payment orders issued in the name of the customer.

The bank is not required to follow an instruction that violates [a written] an agreement with the customer , evidenced by a record, or notice of which is not received at a time and in a manner affording the bank a reasonable opportunity to act on it before the payment order is accepted.

(c) Commercial reasonableness of security procedure.--Commercial reasonableness of a security procedure is a question of law to be determined by considering the wishes of the customer expressed to the bank, the circumstances of the customer known to the bank, including the size, type and frequency of payment orders normally issued by the customer to the bank, alternative security procedures offered to the customer and security procedures in general use by customers and receiving banks similarly situated. A security procedure is deemed to be commercially reasonable if:

(2) the customer expressly agreed in [writing] a record to be bound by any payment order, whether or not authorized, issued in its name and accepted by the bank in compliance with the bank's obligations under the security procedure chosen by the customer.

§ 4A203. Unenforceability of certain verified payment orders.

(a) General rule.--If an accepted payment order is not, under section 4A202(a) (relating to authorized and verified payment orders), an authorized order of a customer identified as sender, but is effective as an order of the customer pursuant to section 4A202(b), the following rules apply:

(1) By express [written] agreement evidenced by a record , the receiving bank may limit the extent to which it is entitled to enforce or retain payment of the payment order.

§ 4A207. Misdescription of beneficiary.

(c) Applicable rules when bank pays person identified by number.--If a payment order described in subsection (b) is accepted, the originator's payment order described the beneficiary inconsistently by name and number and the beneficiary's bank pays the person identified by number as permitted by subsection (b)(1), the following rules apply:

(2) If the originator is not a bank and proves that the person identified by number was not entitled to receive payment from the originator, the originator is not obliged to pay its order unless the originator's bank proves that the originator, before acceptance of the originator's order, had notice that payment of a payment order issued by the originator might be made by the beneficiary's bank on the basis of an identifying or bank account number even if it identifies a person different from the named beneficiary. Proof of notice may be made by any admissible evidence. The originator's bank satisfies the burden of proof if it proves that the originator, before the payment order was accepted, signed a [writing] record stating the information to which the notice relates.

§ 4A208. Misdescription of intermediary bank or beneficiary's bank.

(b) Identification by name and identifying number; identification of different persons.--This subsection applies to a payment order identifying an intermediary bank or the beneficiary's bank both by name and an identifying number if the name and number identify different persons:

(2) If the sender is not a bank and the receiving bank proves that the sender, before the payment order was accepted, had notice that the receiving bank might rely on the number as the proper identification of the intermediary or beneficiary's bank even if it identifies a person different from the bank identified by name, the rights and obligations of the sender and the receiving bank are governed by paragraph (1), as though the sender were a bank. Proof of notice may be made by any admissible evidence. The receiving bank satisfies the burden of proof if it proves that the sender, before the payment order was accepted, signed a [writing] record stating the information to which the notice relates.

§ 4A210. Rejection of payment order.

(a) Manner of rejection.--A payment order is rejected by the receiving bank by a notice of rejection transmitted to the sender orally[, electronically] or in [writing] a record . A notice of rejection need not use any particular words and is sufficient if it indicates that the receiving bank is rejecting the order or will not execute or pay the order. Rejection is effective when the notice is given if transmission is by a means that is reasonable in the circumstances. If notice of rejection is given by a means that is not reasonable, rejection is effective when the notice is received. If an agreement of the sender and receiving bank establishes the means to be used to reject a payment order, any means complying with the agreement is reasonable and any means not complying is not reasonable unless no significant delay in receipt of the notice resulted from the use of the noncomplying means.

§ 4A211. Cancellation and amendment of payment order.

(a) Communication.--A communication of the sender of a payment order canceling or amending the order may be transmitted to the receiving bank orally[, electronically] or in [writing] a record . If a security procedure is in effect between the sender and the receiving bank, the communication is not effective to cancel or amend the order unless the communication is verified pursuant to the security procedure or the bank agrees to the cancellation or amendment.

§ 4A305. Liability for late or improper execution or failure to execute payment order.

(c) Additional damages.--In addition to the amounts payable under subsections (a) and (b), damages, including consequential damages, are recoverable to the extent provided in an express [written] agreement of the receiving bank , evidenced by a record .

(d) Failure to execute payment order.--If a receiving bank fails to execute a payment order it was obliged by express agreement to execute, the receiving bank is liable to the sender for its expenses in the transaction and for incidental expenses and interest losses resulting from the failure to execute. Additional damages, including consequential damages, are recoverable to the extent provided in an express [written] agreement of the receiving bank , evidenced by a record , but are not otherwise recoverable.

§ 5104. Formal requirements.

A letter of credit, confirmation, advice, transfer, amendment or cancellation may be issued in any form that is a signed record . [and is authenticated:

(1) by a signature; or

(2) in accordance with the agreement of the parties or the standard practice referred to in section 5108(e) (relating to standard practice).]

§ 5116. Choice of law and forum.

(a) Express choice of law.--The liability of an issuer, nominated person or advisor for action or omission is governed by the law of the jurisdiction chosen by an agreement in the form of a record signed [or otherwise authenticated] by the affected parties [in the manner provided in section 5104 (relating to formal requirements)] or by a provision in the person's letter of credit, confirmation or other undertaking. The jurisdiction whose law is chosen need not bear any relation to the transaction.

(b) Governing law otherwise.--Unless subsection (a) applies, the liability of an issuer, nominated person or adviser for action or omission is governed by the law of the jurisdiction in which the person is located. The person is considered to be located at the address indicated in the person's undertaking. If more than one address is indicated, the person is considered to be located at the address from which the person's undertaking was issued.

(c) Bank branches.-- For the purpose of jurisdiction, choice of law and recognition of interbranch letters of credit, but not enforcement of a judgment, all branches of a bank are considered separate juridical entities, and a bank is considered to be located at the place where its relevant branch is considered to be located under [this] subsection (d) .

(d) Bank branch locations.--A branch of a bank is considered to be located at the address indicated in the branch's undertaking. If more than one address is indicated, the branch is considered to be located at the address from which the undertaking was issued.

[(c)] (e) Role of custom or practice.--Except as otherwise provided in this subsection, the liability of an issuer, nominated person or adviser is governed by any rules of custom or practice, such as the Uniform Customs and Practice for Documentary Credits, to which the letter of credit, confirmation or other undertaking is expressly made subject. If:

(1) this division would govern the liability of an issuer, nominated person or adviser under subsection (a) or (b);

(2) the relevant undertaking incorporates rules of custom or practice; and

(3) there is conflict between this division and those rules as applied to that undertaking;

those rules govern except to the extent of any conflict with the nonvariable provisions specified in section 5103(c) (relating to variation by agreement or undertaking).

[(d)] (f) Conflict with certain other divisions.--If there is conflict between this division and Division 3 (relating to negotiable instruments), 4 (relating to bank deposits and collections), 4A (relating to funds transfers) or 9 (relating to secured transactions), this division governs.

[(e)] (g) Forum.--The forum for settling disputes arising out of an undertaking within this division may be chosen in the manner and with the binding effect that governing law may be chosen in accordance with subsection (a).

Section 10. The definition of "sign" in section 7102(a) and subsection (b)(1) of Title 13 are amended to read:

§ 7102. Definitions and index of definitions.

(a) Division 7 definitions.--The following words and phrases when used in this division shall have, unless the context clearly indicates otherwise, the meanings given to them in this subsection:

["Sign." With present intent to authenticate or adopt a record:

(1) to execute or adopt a tangible symbol; or

(2) to attach to or logically associate with the record an electronic sound, symbol or process.]

(b) Definitions in other divisions.--Definitions in other divisions applying to this division and the sections in which they appear are:

(1) "Contract for sale." Section 2106 (relating to definitions: "contract"; "agreement"; "contract for sale"; "sale"; "present sale"; "conforming" to contract; "termination"; "cancellation" ; "hybrid transaction" ).

Section 11. Section 7106(b) introductory paragraph and (4) of Title 13 are amended and the section is amended by adding subsections to read:

§ 7106. Control of electronic document of title.

(b) Manner.--A system satisfies subsection (a) and a person [is deemed to have] has control of an electronic document of title if the document is created, stored and [assigned in such] transferred in a manner that:

(4) copies or amendments that add or change an identified [assignee] transferee of the authoritative copy can be made only with the consent of the person asserting control;

(c) Requirements.--A system satisfies subsection (a), and a person has control of an electronic document of title, if an authoritative electronic copy of the document, a record attached to or logically associated with the electronic copy or a system in which the electronic copy is recorded:

(1) enables the person readily to identify each electronic copy as either an authoritative copy or a nonauthoritative copy;

(2) enables the person readily to identify itself in any way, including by name, identifying number, cryptographic key, office or account number, as the person to whom or to which each authoritative electronic copy was issued or transferred; and

(3) gives the person exclusive power, subject to subsection (d), to:

(i) prevent others from adding or changing the person to whom or to which each authoritative electronic copy has been issued or transferred; and

(ii) transfer control of each authoritative electronic copy.

(d) Exclusive power.--Subject to subsection (e), a power is exclusive under subsection (c)(3) even if:

(1) the authoritative electronic copy, a record attached to or logically associated with the authoritative electronic copy or a system in which the authoritative electronic copy is recorded limits the use of the document of title or has a protocol that is programmed to cause a change, including a transfer or loss of control; or

(2) the power is shared with another person.

(e) Shared power.--A power of a person is not shared with another person under subsection (d)(2) and the person's power is not exclusive if:

(1) the person can exercise the power only if the power also is exercised by the other person; and

(2) the other person:

(i) can exercise the power without exercise of the power by the person; or

(ii) is the transferor to the person of an interest in the document of title.

(f) Presumption of exclusivity.--If a person has the powers specified in subsection (c)(3), the powers are presumed to be exclusive.

(g) Other parties.--A person has control of an electronic document of title if another person, other than the transferor to the person of an interest in the document:

(1) has control of the document and acknowledges that it has control on behalf of the person; or

(2) obtains control of the document after having acknowledged that it will obtain control of the document on behalf of the person.

(h) Acknowledgment not required.--A person that has control under this section is not required to acknowledge that it has control on behalf of another person.

(i) Duty to other parties.--If a person acknowledges that it has or will obtain control on behalf of another person, unless the person otherwise agrees or law other than this division or Division 9 (relating to secured transactions) otherwise provides, the person does not owe any duty to the other person and is not required to confirm the acknowledgment to any other person.

Section 12. Section 8102 heading, the definition of "communicate" in subsection (a) and subsection (b) of Title 13 are amended to read:

§ 8102. Definitions and index of definitions .

(a) Definitions.--The following words and phrases when used in this division shall have the meanings given to them in this subsection:

"Communicate." "Communicate" means to:

(1) send a signed [writing] record ; or

(2) transmit information by any mechanism agreed upon by the persons transmitting and receiving the information.

(b) Index of other definitions.--[Other] The following definitions applying [to] in this division and [the sections in which they appear] other divisions are:

"Appropriate person." Section 8107.

"Control." Section 8106.

"Controllable account." Section 9102.

"Controllable electronic record." Section 12102.

"Controllable payment intangible." Section 9102.

"Delivery." Section 8301.

"Investment company security." Section 8103.

"Issuer." Section 8201.

"Overissue." Section 8210.

"Protected purchaser." Section 8303.

"Securities account." Section 8501.

Section 13. Sections 8103(g) and 8106(d)(3) of Title 13 are amended and the sections are amended by adding subsections to read:

§ 8103. Rules for determining whether certain obligations and interests are securities or financial assets.

(g) [Financial asset] Documents of title .--A document of title, as defined in section 1201 (relating to general definitions), is not a financial asset unless paragraph (3) of the definition of "financial asset" in section 8102 (relating to definitions and index of definitions ) applies.

(h) Controllable accounts, controllable electronic records and controllable payment intangibles.--A controllable account, controllable electronic record or controllable payment intangible is not a financial asset unless the definition of "financial asset" in section 8102 applies.

§ 8106. Control.

(d) "Control" of security entitlement.--A purchaser has "control" of a security entitlement if:

(3) another person , other than the transferor to the purchaser of an interest in the security entitlement:

(i) has control of the security entitlement [on behalf of the purchaser or, having previously acquired control of the security entitlement,] and acknowledges that it has control on behalf of the purchaser[.] ; or

(ii) obtains control of the security entitlement after having acknowledged that it will obtain control of the security entitlement on behalf of the purchaser.

(h) Acknowledgment not required.--A person that has control under this section is not required to acknowledge that it has control on behalf of another person.

Section 14. Section 8110 of Title 13 is amended by adding a subsection to read:

§ 8110. Applicability; choice of law.

(g) When local law of issuer's or securities intermediary's jurisdiction governs.--The local law of the issuer's jurisdiction or the securities intermediary's jurisdiction governs a matter or transaction specified in subsection (a) or (b) even if the matter or transaction does not bear any relation to the jurisdiction.

Section 15. Section 8303(b) of Title 13 is amended to read:

§ 8303. Protected purchaser.

(b) Rights acquired by protected purchaser.--[In addition to acquiring the rights of a purchaser, a] A protected purchaser also acquires its interest in the security free of any adverse claim.

Section 16. The definitions of "account," "account debtor," "accounting," "authenticate," "chattel paper," "electronic chattel paper," "general intangible," "instrument," "payment intangible," "proposal," "send" and "tangible chattel paper" in section 9102(a) and subsection (b) of Title 13 are amended and subsection (a) is amended by adding definitions to read:

§ 9102. Definitions and index of definitions.

(a) Division 9 definitions.--The following words and phrases when used in this division shall have the meanings given to them in this subsection:

"Account."

(1) Except as used in "account for," "account statement," "account to," "commodity account," "customer's account," "deposit account," "on account of" and "statement of account," a right to payment of a monetary obligation, whether or not earned by performance:

(i) for property which has been or is to be sold, leased, licensed, assigned or otherwise disposed of;

(ii) for services rendered or to be rendered;

(iii) for a policy of insurance issued or to be issued;

(iv) for a secondary obligation incurred or to be incurred;

(v) for energy provided or to be provided;

(vi) for the use or hire of a vessel under a charter or other contract;

(vii) arising out of the use of a credit or charge card or information contained on or for use with the card; or

(viii) as winnings in a lottery or other game of chance operated or sponsored by a state, governmental unit of a state or person licensed or authorized to operate the game by a state or governmental unit of a state.

(2) The term includes controllable accounts and health-care-insurance receivables.

(3) The term does not include:

(i) [rights to payment evidenced by chattel paper or an instrument] chattel paper ;

(ii) commercial tort claims;

(iii) deposit accounts;

(iv) investment property;

(v) letter-of-credit right or letters of credit; [or]

(vi) rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card[.] ; or

(vii) rights to payment evidenced by an instrument.

"Account debtor." A person obligated on an account, chattel paper or general intangible. The term does not include persons obligated to pay a negotiable instrument even if the negotiable instrument [constitutes part of] evidences chattel paper.

"Accounting." Except as used in "accounting for," a record:

(1) [authenticated] signed by a secured party;

(2) indicating the aggregate unpaid secured obligations as of a date not more than 35 days earlier or 35 days later than the date of the record; and

(3) identifying the components of the obligations in reasonable detail.

"Assignee." Except as used in "assignee for benefit of creditors," a person:

(1) in whose favor a security interest that secures an obligation is created or provided for under a security agreement, whether or not the obligation is outstanding; or

(2) to which an account, chattel paper, payment intangible or promissory note has been sold.

The term includes a person to which a security interest has been transferred by a secured party.

"Assignor." A person that:

(1) under a security agreement creates or provides for a security interest that secures an obligation; or

(2) sells an account, chattel paper, payment intangible or promissory note.

The term includes a secured party that has transferred a security interest to another person.

["Authenticate." To:

(i) sign; or

(ii) with present intent to adopt or accept a record, attach to or logically associate with the record an electrical sound, symbol or process.]

"Chattel paper." [A record or records which evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods or a lease of specific goods and license of software used in the goods. In this definition, "monetary obligation" means a monetary obligation secured by the goods or owed under a lease of the goods and includes a monetary obligation with respect to software used in the goods. The term does not include charters or other contracts involving the use or hire of a vessel or records which evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card. If a transaction is evidenced by records that include an instrument or series of instruments, the group of records taken together constitutes chattel paper.] Either:

(1) a right to payment of a monetary obligation secured by specific goods, if the right to payment and security agreement are evidenced by a record; or

(2) a right to payment of a monetary obligation owed by a lessee under a lease agreement with respect to specific goods and a monetary obligation owed by the lessee in connection with the transaction giving rise to the lease, if:

(i) the right to payment and lease agreement are evidenced by a record; and

(ii) the predominant purpose of the transaction giving rise to the lease was to give the lessee the right to possession and use of the goods.

The term does not include a right to payment arising out of a charter or other contract involving the use or hire of a vessel or a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card.

"Controllable account." An account evidenced by a controllable electronic record that provides that the account debtor undertakes to pay the person that has control under section 12105 (relating to control of controllable electronic record) of the controllable electronic record.

"Controllable payment intangible." A payment intangible evidenced by a controllable electronic record that provides that the account debtor undertakes to pay the person that has control under section 12105 of the controllable electronic record.

["Electronic chattel paper." Chattel paper evidenced by a record consisting of information stored in an electronic medium.]

"General intangible." Any personal property, including things in action, other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money and oil, gas or other minerals before extraction. The term includes controllable electronic records, payment intangibles and software.

"Instrument." A negotiable instrument or any other writing which evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease and is of a type which in ordinary course of business is transferred by delivery with any necessary indorsement or assignment. The term does not include:

(1) investment property;

(2) letters of credit; [or]

(3) writings which evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card[.] ; or

(4) writings that evidence chattel paper.

"Money." Has the meaning in section 1201(b)(24) (relating to general definitions), but does not include a deposit account.

"Payment intangible." A general intangible under which the account debtor's principal obligation is a monetary obligation. The term includes a controllable payment intangible.

"Proposal." A record [authenticated] signed by a secured party which includes the terms on which the secured party is willing to accept collateral in full or partial satisfaction of the obligation it secures under sections 9620 (relating to acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral), 9621 (relating to notification of proposal to accept collateral) and 9622 (relating to effect of acceptance of collateral).

["Send." In connection with a record or notification:

(1) to deposit in the mail, deliver for transmission or transmit by any other usual means of communication, with postage or cost of transmission provided for, addressed to any address reasonable under the circumstances; or

(2) to cause the record or notification to be received within the time which it would have been received if properly sent under paragraph (1).]

["Tangible chattel paper." Chattel paper evidenced by a record or records consisting of information which is inscribed on a tangible medium.]

(b) Definitions in other divisions.--The following definitions in other divisions apply to this division:

"Applicant." Section 5102.

"Beneficiary." Section 5102.

"Broker." Section 8102.

"Certificated security." Section 8102.

"Check." Section 3104.

"Clearing corporation." Section 8102.

"Contract for sale." Section 2106.

"Control." With respect to a document of title, section 7106.

"Controllable electronic record." Section 12102.

"Customer." Section 4104.

"Entitlement holder." Section 8102.

"Financial asset." Section 8102.

"Holder in due course." Section 3302.

"Issuer." With respect to a letter of credit or letter-of-credit right, section 5102.

"Issuer." With respect to a document of title, section 7102.

"Issuer." With respect to a security, section 8201.

"Lease." Section 2A103.

"Lease agreement." Section 2A103.

"Lease contract." Section 2A103.

"Leasehold interest." Section 2A103.

"Lessee." Section 2A103.

"Lessee in ordinary course of business." Section 2A103.

"Lessor." Section 2A103.

"Lessor's residual interest." Section 2A103.

"Letter of credit." Section 5102.

"Merchant." Section 2104.

"Negotiable instrument." Section 3104.

"Nominated person." Section 5102.

"Note." Section 3104.

"Proceeds of a letter of credit." Section 5114.

"Protected purchaser." Section 8303.

"Prove." Section 3103.

"Qualifying purchaser." Section 12102.

"Sale." Section 2106.

"Securities account." Section 8501.

"Securities intermediary." Section 8102.

"Security." Section 8102.

"Security certificate." Section 8102.

"Security entitlement." Section 8102.

"Uncertificated security." Section 8102.

Section 17. Sections 9104(a) and 9105 of Title 13 are amended to read:

§ 9104. Control of deposit account.

(a) Requirements for control.--A secured party has control of a deposit account if:

(1) the secured party is the bank with which the deposit account is maintained;

(2) the debtor, secured party and bank have agreed in [an authenticated] a signed record that the bank will comply with instructions originated by the secured party directing disposition of the funds in the deposit account without further consent by the debtor; [or]

(3) the secured party becomes the bank's customer with respect to the deposit account[.] ; or

(4) another person, other than the debtor:

(i) has control of the deposit account and acknowledges that it has control on behalf of the secured party; or

(ii) obtains control of the deposit account after having acknowledged that it will obtain control of the deposit account on behalf of the secured party.

§ 9105. Control of electronic copy of record evidencing chattel paper.

(a) General rule; control of electronic copy of record evidencing chattel paper.--A [secured party] purchaser has control of [electronic] an authoritative electronic copy of a record evidencing chattel paper if a system employed for evidencing the [transfer] assignment of interests in the chattel paper reliably establishes the [secured party] purchaser as the person to which the [chattel paper] authoritative electronic copy was assigned.

(b) [Specific facts giving control] Single authoritative copy .--A system satisfies subsection (a) if the record or records [comprising] evidencing the chattel paper are created, stored and assigned in [such] a manner that:

(1) a single authoritative copy of the record or records exists which is unique, identifiable and, except as otherwise provided in paragraphs (4), (5) and (6), unalterable;

(2) the authoritative copy identifies the [secured party] purchaser as the assignee of the record or records;

(3) the authoritative copy is communicated to and maintained by the [secured party] purchaser or its designated custodian;

(4) copies or amendments which add or change an identified assignee of the authoritative copy can be made only with the consent of the [secured party] purchaser ;

(5) each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy [which] that is not the authoritative copy; and

(6) any amendment of the authoritative copy is readily identifiable as authorized or unauthorized.

(c) One or more authoritative copies.--A system satisfies subsection (a) and a purchaser has control of an authoritative electronic copy of a record evidencing chattel paper, if the electronic copy, a record attached to or logically associated with the electronic copy or a system in which the electronic copy is recorded:

(1) enables the purchaser readily to identify each electronic copy as either an authoritative copy or a nonauthoritative copy;

(2) enables the purchaser readily to identify itself in any way, including by name, identifying number, cryptographic key, office or account number, as the assignee of the authoritative electronic copy; and

(3) gives the purchaser exclusive power, subject to subsection (d), to:

(i) prevent others from adding or changing an identified assignee of the authoritative electronic copy; and

(ii) transfer control of the authoritative electronic copy.

(d) Meaning of exclusive.--Subject to subsection (e), a power is exclusive under subsection (c)(3) even if:

(1) the authoritative electronic copy, a record attached to or logically associated with the authoritative electronic copy or a system in which the authoritative electronic copy is recorded limits the use of the authoritative electronic copy or has a protocol programmed to cause a change, including a transfer or loss of control; or

(2) the power is shared with another person.

(e) When power not shared with another person.--A power of a purchaser is not shared with another person under subsection (d)(2) and the purchaser's power is not exclusive if:

(1) the purchaser can exercise the power only if the power also is exercised by the other person; and

(2) the other person:

(i) can exercise the power without exercise of the power by the purchaser; or

(ii) is the transferor to the purchaser of an interest in the chattel paper.

(f) Presumption of exclusivity of certain powers.--If a purchaser has the powers specified in subsection (c)(3), the powers are presumed to be exclusive.

(g) Obtaining control through another person.--A purchaser has control of an authoritative electronic copy of a record evidencing chattel paper if another person, other than the transferor to the purchaser of an interest in the chattel paper:

(1) has control of the authoritative electronic copy and acknowledges that it has control on behalf of the purchaser; or

(2) obtains control of the authoritative electronic copy after having acknowledged that it will obtain control of the electronic copy on behalf of the purchaser.

Section 18. Title 13 is amended by adding a section to read:

§ 9107.1. Control of controllable electronic record, controllable account or controllable payment intangible.

(a) Control under section 12105.--A secured party has control of a controllable electronic record as provided in section 12105 (relating to control of controllable electronic record).

(b) Control of controllable account and controllable payment intangible.--A secured party has control of a controllable account or controllable payment intangible if the secured party has control of the controllable electronic record that evidences the controllable account or controllable payment intangible.

Section 19. Section 9203(b)(3) of Title 13 is amended to read:

§ 9203. Attachment and enforceability of security interest; proceeds; supporting obligations; formal requisites.

(b) Enforceability.--Except as otherwise provided in subsections (c) through (i), a security interest is enforceable against the debtor and third parties with respect to the collateral only if all of the following apply:

(3) One of the following conditions is met:

(i) The debtor has [authenticated] signed a security agreement which provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned.

(ii) The collateral is not a certificated security and is in the possession of the secured party under section 9313 (relating to when possession by or delivery to secured party perfects security interest without filing) pursuant to the debtor's security agreement.

(iii) The collateral is a certificated security in registered form, and the security certificate has been delivered to the secured party under section 8301 (relating to delivery) pursuant to the debtor's security agreement.

(iv) The collateral is controllable accounts, controllable electronic records, controlled payment intangibles, deposit accounts, electronic [chattel paper,] documents, investment property[,] or letter-of-credit rights [or electronic documents,] and the secured party has control under section 7106 (relating to control of electronic document of title), 9104 (relating to control of deposit account), [9105 (relating to control of electronic chattel paper),] 9106 (relating to control of investment property) [or] , 9107 (relating to control of letter-of-credit right) or 9107.1 (relating to control of controllable electronic record, controllable account or controllable payment intangible) pursuant to the debtor's security agreement.

(v) The collateral is chattel paper and the secured party has possession and control under section 9314.1 (relating to perfection by possession and control of chattel paper) pursuant to the debtor's security agreement.

Section 20. Section 9204(b) of Title 13 is amended and the section is amended by adding a subsection to read:

§ 9204. After-acquired property; future advances.

(b) When after-acquired property clause not effective.--[A] Subject to subsection (b.1), a security interest does not attach under a term constituting an after-acquired property clause to:

(1) consumer goods, other than an accession when given as additional security, unless the debtor acquires rights in them within ten days after the secured party gives value; or

(2) a commercial tort claim.

(b.1) Limitation.--Subsection (b) does not prevent a security interest from attaching:

(1) to consumer goods as proceeds under section 9315(a) (relating to secured party's rights on disposition of collateral and in proceeds) or commingled goods under section 9336(c) (relating to commingled goods);

(2) to a commercial tort claim as proceeds under section 9315(a); or

(3) under an after-acquired property clause to property that is proceeds of consumer goods or a commercial tort claim.

Section 21. Sections 9207(c), 9208(b), 9209(b), 9210, 9301(c) and (e) and 9304(a) of Title 13 are amended to read:

§ 9207. Rights and duties of secured party having possession or control of collateral.

(c) Duties and rights when secured party in possession or control.--Except as otherwise provided in subsection (d), a secured party having possession of collateral or control of collateral under section 7106 (relating to control of electronic document of title), 9104 (relating to control of deposit account), 9105 (relating to control of electronic copy of record evidencing chattel paper), 9106 (relating to control of investment property) [or] , 9107 (relating to control of letter-of-credit right) or 9107.1 (relating to control of controllable electronic record, controllable account or controllable payment intangible) :

(1) may hold as additional security any proceeds, except money or funds, received from the collateral;

(2) shall apply money or funds received from the collateral to reduce the secured obligation unless remitted to the debtor; and

(3) may create a security interest in the collateral.

§ 9208. Additional duties of secured party having control of collateral.

(b) Duties of secured party after receiving demand from debtor.--Within ten days after receiving [an authenticated] a signed demand by the debtor:

(1) A secured party having control of a deposit account under section 9104(a)(2) (relating to control of deposit account) shall send to the bank with which the deposit account is maintained [an authenticated statement] a signed record which releases the bank from any further obligation to comply with instructions originated by the secured party.

(2) A secured party having control of a deposit account under section 9104(a)(3) shall:

(i) pay the debtor the balance on deposit in the deposit account; or

(ii) transfer the balance on deposit into a deposit account in the debtor's name.

(3) A secured party, other than a buyer, having control [of electronic chattel paper] under section 9105 (relating to control of electronic copy of record evidencing chattel paper) of an authoritative electronic copy of a record evidencing chattel paper shall[:

(i) communicate the authoritative copy of the electronic chattel paper to the debtor or its designated custodian;

(ii) if the debtor designates a custodian that is the designated custodian with whom or which the authoritative copy of the electronic chattel paper is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and

(iii) take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy which add or change an identified assignee of the authoritative copy without the consent of the secured party.] transfer control of the electronic copy to the debtor or a person designated by the debtor.

(4) A secured party having control of investment property under section 8106(d)(2) (relating to control of security entitlement) or 9106(b) (relating to control of commodity contract) shall send to the securities intermediary or commodity intermediary with which the security entitlement or commodity contract is maintained [an authenticated] a signed record which releases the securities intermediary or commodity intermediary from any further obligation to comply with entitlement orders or directions originated by the secured party.

(5) A secured party having control of a letter-of-credit right under section 9107 (relating to control of letter-of-credit right) shall send to each person having an unfulfilled obligation to pay or deliver proceeds of the letter of credit to the secured party [an authenticated] a signed release from any further obligation to pay or deliver proceeds of the letter of credit to the secured party.

(6) A secured party having control [of an electronic document shall:

(i) give control of the electronic document to the debtor or its designated custodian;

(ii) if the debtor designates a custodian that is the designated custodian with which the authoritative copy of the electronic document is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and

(iii) take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy which add or change an identified assignee of the authoritative copy without the consent of the secured party.] under section 7106 (relating to control of electronic document of title) of an authoritative electronic copy of an electronic document of title shall transfer control of the electronic copy to the debtor or a person designated by the debtor.

(7) A secured party having control under section 12105 (relating to control of controllable electronic record) of a controllable electronic record, other than a buyer of a controllable account or controllable payment intangible evidenced by the controllable electronic record, shall transfer control of the controllable electronic record to the debtor or a person designated by the debtor.

§ 9209. Duties of secured party if account debtor has been notified of assignment.

(b) Duties of secured party after receiving demand from debtor.--Within ten days after receiving [an authenticated] a signed demand by the debtor, a secured party shall send to an account debtor that has received notification under section 9406(a) (relating to discharge of account debtor ; notification of assignment; identification and proof of assignment; restrictions on assignment of accounts, chattel paper, payment intangibles and promissory notes ineffective ) or 12106(a) (relating to discharge of account debtor on controllable account or controllable payment intangible) of an assignment to the secured party as assignee [under section 9406(a) (relating to discharge of account debtor; effect of notification) an authenticated] a signed record which releases the account debtor from any further obligation to the secured party.

§ 9210. Request for accounting; request regarding list of collateral or statement of account.

(a) Definitions.--As used in this section, the following words and phrases shall have the meanings given to them in this subsection:

"Request." A:

(1) request for an accounting;

(2) request regarding a list of collateral; or

(3) request regarding a statement of account.

"Request for an accounting." A record [authenticated] signed by a debtor requesting that the recipient provide an accounting of the unpaid obligations secured by collateral and reasonably identifying the transaction or relationship which is the subject of the request.

"Request regarding a list of collateral." A record [authenticated] signed by a debtor requesting that the recipient approve or correct a list of what the debtor believes to be the collateral securing an obligation and reasonably identifying the transaction or relationship which is the subject of the request.

"Request regarding a statement of account." A record [authenticated] signed by a debtor requesting that the recipient approve or correct a statement indicating what the debtor believes to be the aggregate amount of unpaid obligations secured by collateral as of a specified date and reasonably identifying the transaction or relationship which is the subject of the request.

(b) Duty to respond to requests.--Subject to subsections (c), (d), (e) and (f), a secured party, other than a buyer of accounts, chattel paper, payment intangibles or promissory notes or a consignor, shall comply with a request within 14 days after receipt:

(1) in the case of a request for an accounting, by [authenticating] signing and sending to the debtor an accounting; and

(2) in the case of a request regarding a list of collateral or a request regarding a statement of account, by [authenticating] signing and sending to the debtor an approval or correction.

(c) Request regarding list of collateral; statement concerning type of collateral.--A secured party that claims a security interest in all of a particular type of collateral owned by the debtor may comply with a request regarding a list of collateral by sending to the debtor [an authenticated] a signed record including a statement to that effect within 14 days after receipt.

(d) Request regarding list of collateral; no interest claimed.--A person that receives a request regarding a list of collateral, claims no interest in the collateral when it receives the request and claimed an interest in the collateral at an earlier time shall comply with the request within 14 days after receipt by sending to the debtor [an authenticated] a signed record:

(1) disclaiming any interest in the collateral; and

(2) if known to the recipient, providing the name and mailing address of any assignee of or successor to the recipient's interest in the collateral.

(e) Request for accounting or regarding statement of account; no interest in obligation claimed.--A person that receives a request for an accounting or a request regarding a statement of account, claims no interest in the obligations when it receives the request and claimed an interest in the obligations at an earlier time shall comply with the request within 14 days after receipt by sending to the debtor [an authenticated] a signed record:

(1) disclaiming any interest in the obligations; and

(2) if known to the recipient, providing the name and mailing address of any assignee of or successor to the recipient's interest in the obligations.

(f) Charges for responses.--A debtor is entitled without charge to one response to a request under this section during any six-month period. The secured party may require payment of a charge not exceeding $25 for each additional response.

§ 9301. Law governing perfection and priority of security interests.

(c) Fixture filings, timber to be cut, priority of nonpossessory tangible personal property security interests; location of collateral.--Except as otherwise provided in subsection (d), while collateral is located in a jurisdiction, the local law of that jurisdiction governs:

(1) perfection of a security interest in goods by filing a fixture filing;

(2) perfection of a security interest in timber to be cut; and

(3) the effect of perfection or nonperfection and the priority of a nonpossessory security interest in tangible negotiable documents, goods, instruments[,] or money [or tangible chattel paper].

(e) Other exceptions.--The rules of this section are subject to:

(1) Section 9303 (relating to law governing perfection and priority of security interests in goods covered by certificate of title).

(2) Section 9304 (relating to law governing perfection and priority of security interests in deposit accounts).

(3) Section 9305 (relating to law governing perfection and priority of security interests in investment property).

(4) Section [9306] 9306.1 (relating to law governing perfection and priority of security interests in [letter-of-credit rights] chattel paper ).

§ 9304. Law governing perfection and priority of security interests in deposit accounts.

(a) Law of bank's jurisdiction governs.--The local law of a bank's jurisdiction governs perfection, the effect of perfection or nonperfection and the priority of a security interest in a deposit account maintained with that bank even if the transaction does not bear any relation to the bank's jurisdiction .

Section 22. Section 9305(a) of Title 13 is amended by adding a paragraph to read:

§ 9305. Law governing perfection and priority of security interests in investment property.

(a) Governing law; general rules.--Except as otherwise provided in subsection (c), the following rules apply:

(5) Paragraphs (2), (3) and (4) apply even if the transaction does not bear any relation to the jurisdiction.

Section 23. Title 13 is amended by adding sections to read:

§ 9306.1. Law governing perfection and priority of security interests in chattel paper.

(a) Chattel paper evidenced by authoritative electronic copy.--Except as provided in subsection (d), if chattel paper is evidenced only by an authoritative electronic copy of the chattel paper or is evidenced by an authoritative electronic copy and an authoritative tangible copy, the local law of the chattel paper's jurisdiction governs perfection, the effect of perfection or nonperfection and the priority of a security interest in the chattel paper, even if the transaction does not bear any relation to the chattel paper's jurisdiction.

(b) Chattel paper's jurisdiction.--The following rules determine the chattel paper's jurisdiction under this section:

(1) If the authoritative electronic copy of the record evidencing chattel paper, or a record attached to or logically associated with the electronic copy and readily available for review, expressly provides that a particular jurisdiction is the chattel paper's jurisdiction for purposes of this division or title, that jurisdiction is the chattel paper's jurisdiction.

(2) If paragraph (1) does not apply and the rules of the system in which the authoritative electronic copy is recorded are readily available for review and expressly provide that a particular jurisdiction is the chattel paper's jurisdiction for purposes of this division or title, that jurisdiction is the chattel paper's jurisdiction.

(3) If paragraphs (1) and (2) do not apply and the authoritative electronic copy, or a record attached to or logically associated with the electronic copy and readily available for review, expressly provides that the chattel paper is governed by the law of a particular jurisdiction, that jurisdiction is the chattel paper's jurisdiction.

(4) If paragraphs (1), (2) and (3) do not apply and the rules of the system in which the authoritative electronic copy is recorded are readily available for review and expressly provide that the chattel paper or the system is governed by the law of a particular jurisdiction, that jurisdiction is the chattel paper's jurisdiction.

(5) If paragraphs (1), (2), (3) and (4) do not apply, the chattel paper's jurisdiction is the jurisdiction in which the debtor is located.

(c) Chattel paper evidenced by authoritative tangible copy.--If an authoritative tangible copy of a record evidences chattel paper and the chattel paper is not evidenced by an authoritative electronic copy, while the authoritative tangible copy of the record evidencing chattel paper is located in a jurisdiction, the local law of that jurisdiction governs:

(1) Perfection of a security interest in the chattel paper by possession under section 9314.1 (relating to perfection by possession and control of chattel paper).

(2) The effect of perfection or nonperfection and the priority of a security interest in the chattel paper.

(d) When perfection governed by law of jurisdiction where debtor located.--The local law of the jurisdiction in which the debtor is located governs perfection of a security interest in chattel paper by filing.

§ 9306.2. Law governing perfection and priority of security interests in controllable accounts, controllable electronic records and controllable payment intangibles.

(a) General rule.--Except as provided in subsection (b), the local law of the controllable electronic record's jurisdiction specified in section 12107(c) and (d) (relating to governing law) governs perfection, the effect of perfection or nonperfection and the priority of a security interest in a controllable electronic record and a security interest in a controllable account or controllable payment intangible evidenced by the controllable electronic record.

(b) When perfection governed by law of jurisdiction where debtor located.--The local law of the jurisdiction in which the debtor is located governs:

(1) Perfection of a security interest in a controllable account, controllable electronic record or controllable payment intangible by filing.

(2) Automatic perfection of a security interest in a controllable payment intangible created by a sale of the controllable payment intangible.

Section 24. Section 9310(a) and (b)(4), (5) and (8) of Title 13 are amended and subsection (b) is amended by adding a paragraph to read:

§ 9310. When filing required to perfect security interest or agricultural lien; security interests and agricultural liens to which filing provisions do not apply.

(a) General rule: perfection by filing.--Except as otherwise provided in subsection (b) and section 9312(b) (relating to [control or possession of certain collateral] perfection of security interests in chattel paper, controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, documents, goods covered by documents, instruments, investment property, letter-of-credit rights and money; perfection by permissive filing; temporary perfection without filing or transfer of possession ), a financing statement must be filed to perfect all security interests and agricultural liens.

(b) Exceptions: filing not necessary.--The filing of a financing statement is not necessary to perfect a security interest:

(4) in goods in possession of a bailee which is perfected under section 9312(d)(1) or (2) [(relating to goods covered by nonnegotiable document)];

(5) in certificated securities, documents, goods or instruments which is perfected without filing, control or possession under section:

(i) 9312(e) [(relating to temporary perfection: new value)];

(ii) 9312(f) [(relating to temporary perfection: goods or documents made available to debtor)]; or

(iii) 9312(g) [(relating to temporary perfection: delivery of security certificate or instrument to debtor)];

(8) in controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, [electronic chattel paper,] electronic documents, investment property or letter-of-credit rights which is perfected by control under section 9314 (relating to perfection by control);

(8.1) in chattel paper which is perfected by possession and control under section 9314.1 (relating to perfection by possession and control of chattel paper);

Section 25. Sections 9312 heading, (a) and (e), 9313(a), (c) and (d) and 9314 of Title 13 are amended to read:

§ 9312. Perfection of security interests in chattel paper, controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, documents, goods covered by documents, instruments, investment property, letter-of-credit rights and money; perfection by permissive filing; temporary perfection without filing or transfer of possession.

(a) Perfection by filing permitted.--A security interest in chattel paper, [negotiable documents,] controllable accounts, controllable electronic records, controllable payment intangibles, instruments [or] , investment property or negotiable documents may be perfected by filing.

(e) Temporary perfection: new value.--A security interest in certificated securities, negotiable documents or instruments is perfected without filing or the taking of possession or control for a period of 20 days from the time it attaches to the extent that it arises for new value given under [an authenticated] a signed security agreement.

§ 9313. When possession by or delivery to secured party perfects security interest without filing.

(a) Perfection by possession or delivery.--Except as otherwise provided in subsection (b), a secured party may perfect a security interest in [tangible negotiable documents,] goods, instruments, negotiable tangible documents or money [or tangible chattel paper] by taking possession of the collateral. A secured party may perfect a security interest in certificated securities by taking delivery under section 8301 (relating to delivery).

(c) Collateral in possession of person other than debtor.--With respect to collateral other than certificated securities and goods covered by a document, a secured party takes possession of collateral in the possession of a person other than the debtor, the secured party or a lessee of the collateral from the debtor in the ordinary course of the debtor's business when:

(1) the person in possession [authenticates] signs a record acknowledging that the person holds possession of the collateral for the secured party's benefit; or

(2) the person takes possession of the collateral after having [authenticated] signed a record acknowledging that the person will hold possession of the collateral for the secured party's benefit.

(d) Time of perfection by possession; continuation of perfection.--If perfection of a security interest depends upon possession of the collateral by a secured party, perfection occurs [no] not earlier than the time the secured party takes possession and continues only while the secured party retains possession.

§ 9314. Perfection by control.

(a) Perfection by control.--A security interest in [investment property, deposit accounts, letter-of-credit rights, electronic chattel paper or electronic documents] controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, investment property or letter-of-credit rights may be perfected by control of the collateral under section 7106 (relating to control of electronic document of title), 9104 (relating to control of deposit account), [9105 (relating to control of electronic chattel paper),] 9106 (relating to control of investment property) [or] , 9107 (relating to control of letter-of-credit right) or 9107.1 (relating to control of controllable electronic record, controllable account or controllable payment intangible) .

(b) Specified collateral: time of perfection by control; continuation of perfection.--A security interest in [deposit accounts, electronic chattel paper, letter-of-credit rights or electronic documents] controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents or letter-of-credit rights is perfected by control under section 7106, 9104, [9105 or 9107 when] 9107 or 9107.1 not earlier than the time the secured party obtains control and remains perfected by control only while the secured party retains control.

(c) Investment property: time of perfection by control; continuation of perfection.--A security interest in investment property is perfected by control under section 9106 [from] not earlier than the time the secured party obtains control and remains perfected by control until both of the following paragraphs apply:

(1) The secured party does not have control.

(2) One of the following occurs:

(i) If the collateral is a certificated security, the debtor has or acquires possession of the security certificate.

(ii) If the collateral is an uncertificated security, the issuer has registered or registers the debtor as the registered owner.

(iii) If the collateral is a security entitlement, the debtor is or becomes the entitlement holder.

Section 26. Title 13 is amended by adding a section to read:

§ 9314.1. Perfection by possession and control of chattel paper.

(a) Perfection by possession and control.--A secured party may perfect a security interest in chattel paper by taking possession of each authoritative tangible copy of the record evidencing the chattel paper and obtaining control of each authoritative electronic copy of the electronic record evidencing the chattel paper.

(b) Time of perfection; continuation of perfection.--A security interest is perfected under subsection (a) not earlier than the time the secured party takes possession and obtains control and remains perfected under subsection (a) only while the secured party retains possession and control.

(c) Application of section 9313 to perfection by possession of chattel paper.--Section 9313(c), (f), (g), (h) and (i) (relating to when possession by or delivery to secured party perfects security interest without filing) applies to perfection by possession of an authoritative tangible copy of a record evidencing chattel paper.

Section 27. Section 9316(a) and (f) of Title 13 are amended to read:

§ 9316. Effect of change in governing law.

(a) General rule: effect on perfection of change in governing law.--A security interest perfected pursuant to the law of the jurisdiction designated in section 9301(a) (relating to general rule: location of debtor) [or] , 9305(c) (relating to when perfection governed by law of jurisdiction where debtor located) , 9306.1(d) (relating to law governing perfection and priority of security interests in chattel paper) or 9306.2(b) (relating to law governing perfection and priority of security interests in controllable accounts, controllable electronic records and controllable payment intangibles) remains perfected until the earliest of:

(1) the time perfection would have ceased under the law of that jurisdiction;

(2) the expiration of four months after a change of the debtor's location to another jurisdiction; or

(3) the expiration of one year after a transfer of collateral to a person that thereby becomes a debtor and is located in another jurisdiction.

(f) Change in jurisdiction of chattel paper, controllable electronic record, bank, issuer, nominated person, securities intermediary or commodity intermediary.--A security interest in chattel paper, controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, letter-of-credit rights or investment property which is perfected under the law of the chattel paper's jurisdiction, the controllable electronic record's jurisdiction, the bank's jurisdiction, the issuer's jurisdiction, a nominated person's jurisdiction, the securities intermediary's jurisdiction or the commodity intermediary's jurisdiction, as applicable, remains perfected until the earlier of:

(1) the time the security interest would have become unperfected under the law of that jurisdiction; or

(2) the expiration of four months after a change of the applicable jurisdiction to another jurisdiction.

Section 28. Section 9317(b) and (d) of Title 13 are amended and the section is amended by adding subsections to read:

§ 9317. Interests which take priority over or take free of security interest or agricultural lien.

(b) Buyers that receive delivery.--Except as otherwise provided in subsection (e), a buyer, other than a secured party, of [tangible chattel paper, tangible documents,] goods, instruments , tangible documents or a certificated security takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

(d) Licensees and buyers of certain collateral.--[A] Subject to subsections (f), (g), (h) and (i), a licensee of a general intangible or a buyer, other than a secured party, of collateral other than [tangible chattel paper, tangible documents,] goods, instruments , tangible documents or a certificated security takes free of a security interest if the licensee or buyer gives value without knowledge of the security interest and before it is perfected.

(f) Buyers of chattel paper.--A buyer, other than a secured party, of chattel paper takes free of a security interest if, without knowledge of the security interest and before it is perfected, the buyer gives value and:

(1) receives delivery of each authoritative tangible copy of the record evidencing the chattel paper; and

(2) if each authoritative electronic copy of the record evidencing the chattel paper can be subjected to control under section 9105 (relating to control of electronic copy of record evidencing chattel paper), obtains control of each authoritative electronic copy.

(g) Buyers of electronic documents.--A buyer of an electronic document takes free of a security interest if, without knowledge of the security interest and before it is perfected, the buyer gives value and, if each authoritative electronic copy of the document can be subjected to control under section 7106 (relating to control of electronic document of title), obtains control of each authoritative electronic copy.

(h) Buyers of controllable electronic records.--A buyer of a controllable electronic record takes free of a security interest if, without knowledge of the security interest and before it is perfected, the buyer gives value and obtains control of the controllable electronic record.

(i) Buyers of controllable accounts and controllable payment intangibles.--A buyer, other than a secured party, of a controllable account or a controllable payment intangible takes free of a security interest if, without knowledge of the security interest and before it is perfected, the buyer gives value and obtains control of the controllable account or controllable payment intangible.

Section 29. Sections 9322(c), 9323(a)(1)(ii), (d) and (f) and 9324(b), (c)(2) and (d) of Title 13 are amended to read:

§ 9322. Priorities among conflicting security interests in and agricultural liens on same collateral.

(c) Special priority rules: proceeds and supporting obligations.--Except as otherwise provided in subsection (f), a security interest in collateral which qualifies for priority over a conflicting security interest under section 9327 (relating to priority of security interests in deposit account), 9328 (relating to priority of security interests in investment property), 9329 (relating to priority of security interests in letter-of-credit right), 9330 (relating to priority of purchaser of chattel paper or instrument) or 9331 (relating to priority of rights of purchasers of [instruments, documents] controllable accounts, controllable electronic records, controllable payment intangibles, documents, instruments and securities under other divisions; priority of interests in financial assets and security entitlements and protection against assertion of claim under [Division 8] Divisions 8 and 12 ) also has priority over a conflicting security interest in all of the following:

(1) Any supporting obligation for the collateral.

(2) Proceeds of the collateral if:

(i) the security interest in proceeds is perfected;

(ii) the proceeds are cash proceeds or of the same type as the collateral; and

(iii) in the case of proceeds which are proceeds of proceeds, all intervening proceeds are:

(A) cash proceeds;

(B) proceeds of the same type as the collateral; or

§ 9323. Future advances.

(a) When priority based on time of advance.--Except as otherwise provided in subsection (c), for purposes of determining the priority of a perfected security interest under section 9322(a)(1) (relating to general priority rules), perfection of the security interest dates from the time an advance is made to the extent that the security interest secures an advance which:

(1) is made while the security interest is perfected only:

(ii) temporarily under any of the following sections:

(A) 9312(e) (relating to [temporary perfection: new value] perfection of security interests in chattel paper, controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, documents, goods covered by documents, instruments, investment property, letter-of-credit rights and money; perfection by permissive filing; temporary perfection without filing or transfer of possession );

(B) 9312(f) [(relating to temporary perfection: goods or documents made available to debtor)]; or

(d) Buyer of goods.--Except as otherwise provided in subsection (e), a buyer of goods [other than a buyer in ordinary course of business] takes free of a security interest to the extent that it secures advances made after the earlier of:

(1) the time the secured party acquires knowledge of the buyer's purchase; or

(2) 45 days after the purchase.

(f) Lessee of goods.--Except as otherwise provided in subsection (g), a lessee of goods[, other than a lessee in ordinary course of business,] takes the leasehold interest free of a security interest to the extent that it secures advances made after the earlier of:

(1) the time the secured party acquires knowledge of the lease; or

(2) 45 days after the lease contract becomes enforceable.

§ 9324. Priority of purchase-money security interests.

(b) Inventory purchase-money priority.--Subject to subsection (c) and except as otherwise provided in subsection (g), a perfected purchase-money security interest in inventory has priority over a conflicting security interest in the same inventory; has priority over a conflicting security interest in chattel paper or an instrument constituting proceeds of the inventory and in proceeds of the chattel paper if so provided in section 9330 (relating to priority of purchaser of chattel paper or instrument); and, except as otherwise provided in section 9327, also has priority in identifiable cash proceeds of the inventory to the extent the identifiable cash proceeds are received on or before the delivery of the inventory to a buyer, if:

(1) the purchase-money security interest is perfected when the debtor receives possession of the inventory;

(2) the purchase-money secured party sends [an authenticated] a signed notification to the holder of the conflicting security interest;

(3) the holder of the conflicting security interest receives the notification within five years before the debtor receives possession of the inventory; and

(4) the notification states that the person sending the notification has or expects to acquire a purchase-money security interest in inventory of the debtor and describes the inventory.

(c) Holders of conflicting inventory security interests to be notified.--Subsection (b)(2) through (4) apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory:

(2) if the purchase-money security interest is temporarily perfected without filing or possession under section 9312(f) (relating to [temporary perfection: goods or documents made available to debtor] perfection of security interests in chattel paper, controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, documents, goods covered by documents, instruments, investment property, letter-of-credit rights and money; perfection by permissive filing; temporary perfection without filing or transfer of possession ), before the beginning of the 20-day period thereunder.

(d) Livestock purchase-money priority.--Subject to subsection (e) and except as otherwise provided in subsection (g), a perfected purchase-money security interest in livestock which are farm products has priority over a conflicting security interest in the same livestock; and, except as otherwise provided in section 9327, a perfected security interest in their identifiable proceeds and identifiable products in their unmanufactured state also has priority, if:

(1) the purchase-money security interest is perfected when the debtor receives possession of the livestock;

(2) the purchase-money secured party sends [an authenticated] a signed notification to the holder of the conflicting security interest;

(3) the holder of the conflicting security interest receives the notification within six months before the debtor receives possession of the livestock; and

(4) the notification states that the person sending the notification has or expects to acquire a purchase-money security interest in livestock of the debtor and describes the livestock.

Section 30. Title 13 is amended by adding a section to read:

§ 9326.1. Priority of security interest in controllable account, controllable electronic record and controllable payment intangible.

A security interest in a controllable account, controllable electronic record or controllable payment intangible held by a secured party having control of the account, electronic record or payment intangible has priority over a conflicting security interest held by a secured party that does not have control.

Section 31. Sections 9330(a), (b), (d) and (f), 9331 heading, (a) and (b), 9332, 9334(f), 9341 and 9404(a)(2) of Title 13 are amended to read:

§ 9330. Priority of purchaser of chattel paper or instrument.

(a) Purchaser's priority: security interest claimed merely as proceeds.--A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed merely as proceeds of inventory subject to a security interest if:

(1) in good faith and in the ordinary course of the purchaser's business, the purchaser gives new value [and] , takes possession of each authoritative tangible copy of the record evidencing the chattel paper [or] and obtains control [of] under section 9105 (relating to control of electronic copy of record evidencing chattel paper) of each authoritative electronic copy of the record evidencing the chattel paper [under section 9105 (relating to control of electronic chattel paper)]; and

(2) the authoritative copies of the record evidencing the chattel paper [does] do not indicate that [it] the chattel paper has been assigned to an identified assignee other than the purchaser.

(b) Purchaser's priority: other security interests.--A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed other than merely as proceeds of inventory subject to a security interest if the purchaser gives new value [and] , takes possession of each authoritative tangible copy of the record evidencing the chattel paper [or] and obtains control [of] under section 9105 of each authoritative electronic copy of the record evidencing the chattel paper [under section 9105] in good faith, in the ordinary course of the purchaser's business and without knowledge that the purchase violates the rights of the secured party.

(d) Instrument purchaser's priority.--Except as otherwise provided in section 9331(a) (relating to priority of rights of purchasers of controllable accounts, controllable electronic records, controllable payment intangibles, documents, instruments and securities under other divisions; priority of interests in financial assets and security entitlements and protection against assertion of claim under Divisions [3, 7 and] 8 [not limited] and 12 ), a purchaser of an instrument has priority over a security interest in the instrument perfected by a method other than possession if the purchaser gives value and takes possession of the instrument in good faith and without knowledge that the purchase violates the rights of the secured party.

(f) Indication of assignment gives knowledge.--For purposes of subsections (b) and (d), if the authoritative copies of the record evidencing chattel paper or an instrument [indicates] indicate that [it] the chattel paper or instrument has been assigned to an identified secured party other than the purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase violates the rights of the secured party.

§ 9331. Priority of rights of purchasers of [instruments, documents] controllable accounts, controllable electronic records, controllable payment intangibles, documents, instruments and securities under other divisions; priority of interests in financial assets and security entitlements and protection against assertion of claim under [Division 8] Divisions 8 and 12 .

(a) Rights under Divisions 3, 7 [and] , 8 and 12 not limited.--This division does not limit the rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document of title has been duly negotiated [or] , a protected purchaser of a security or a qualifying purchaser of a controllable account, controllable electronic record or controllable payment intangible . These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in Divisions 3 (relating to negotiable instruments), 7 (relating to warehouse receipts, bills of lading and other documents of title) [and] , 8 (relating to investment securities) and 12 (relating to controllable electronic records) .

(b) Protection under [Division 8] Divisions 8 and 12 .--This division does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under Division 8 or 12 .

§ 9332. Transfer of money; transfer of funds from deposit account.

(a) Transferee of money.--A transferee of money takes the money free of a security interest [unless the transferee acts] if the transferee receives possession of the money without acting in collusion with the debtor in violating the rights of the secured party.

(b) Transferee of funds from deposit account.--A transferee of funds from a deposit account takes the funds free of a security interest in the deposit account [unless the transferee acts] if the transferee receives the funds without acting in collusion with the debtor in violating the rights of the secured party.

§ 9334. Priority of security interests in fixtures and crops.

(f) Priority based on consent, disclaimer or right to remove.--A security interest in fixtures, whether or not perfected, has priority over a conflicting interest of an encumbrancer or owner of the real property if:

(1) the encumbrancer or owner has, in [an authenticated] a signed record, consented to the security interest or disclaimed an interest in the goods as fixtures; or

(2) the debtor has a right to remove the goods as against the encumbrancer or owner.

§ 9341. Bank's rights and duties with respect to deposit account.

Except as otherwise provided in section 9340(c) (relating to when set-off ineffective) and unless the bank otherwise agrees in [an authenticated] a signed record, a bank's rights and duties with respect to a deposit account maintained with the bank are not terminated, suspended or modified by:

(1) the creation, attachment or perfection of a security interest in the deposit account;

(2) the bank's knowledge of the security interest; or

(3) the bank's receipt of instructions from the secured party.

§ 9404. Rights acquired by assignee; claims and defenses against assignee.

(a) Assignee's rights subject to terms, claims and defenses; exceptions.--Unless an account debtor has made an enforceable agreement not to assert defenses or claims, and subject to subsections (b) through (e), the rights of an assignee are subject to:

(2) any other defense or claim of the account debtor against the assignor which accrues before the account debtor receives a notification of the assignment [authenticated] signed by the assignor or the assignee.

Section 32. Section 9406(a), (b), (c), (d) and (g) of Title 13 are amended and the section is amended by adding subsections to read:

§ 9406. Discharge of account debtor; notification of assignment; identification and proof of assignment; restrictions on assignment of accounts, chattel paper, payment intangibles and promissory notes ineffective.

(a) Discharge of account debtor; effect of notification.--Subject to subsections (b) through (i) and (l) , an account debtor on an account, chattel paper or a payment intangible may discharge its obligation by paying the assignor until, but not after, the account debtor receives a notification, [authenticated] signed by the assignor or the assignee, that the amount due or to become due has been assigned and that payment is to be made to the assignee. After receipt of the notification, the account debtor may discharge its obligation by paying the assignee and may not discharge the obligation by paying the assignor.

(b) When notification ineffective.--Subject to [subsection (h)] subsections (h) and (l) , notification is ineffective under subsection (a):

(1) If it does not reasonably identify the rights assigned.

(2) To the extent that an agreement between an account debtor and a seller of a payment intangible limits the account debtor's duty to pay a person other than the seller and the limitation is effective under law other than this division.

(3) At the option of an account debtor, if the notification notifies the account debtor to make less than the full amount of any installment or other periodic payment to the assignee even if:

(i) only a portion of the account, chattel paper or payment intangible has been assigned to that assignee;

(ii) a portion has been assigned to another assignee; or

(iii) the account debtor knows that the assignment to that assignee is limited.

(c) Proof of assignment.--Subject to [subsection (h)] subsections (h) and (l) , if requested by the account debtor, an assignee shall seasonably furnish reasonable proof that the assignment has been made. Unless the assignee complies, the account debtor may discharge its obligation by paying the assignor even if the account debtor has received a notification under subsection (a).

(d) Term restricting assignment generally ineffective.-- In this subsection, "promissory note" includes a negotiable instrument that evidences chattel paper. Except as otherwise provided in subsections (e) and (j) and sections 2A303 (relating to alienability of party's interest under lease contract or of lessor's residual interest in goods; delegation of performance; transfer of rights) and 9407 (relating to restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest) and subject to subsection (h), a term in an agreement between an account debtor and an assignor or in a promissory note is ineffective to the extent that it:

(1) prohibits, restricts or requires the consent of the account debtor or person obligated on the promissory note to the assignment or transfer of, or the creation, attachment, perfection or enforcement of a security interest in, the account, chattel paper, payment intangible or promissory note; or

(2) provides that the assignment or transfer or the creation, attachment, perfection or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination or remedy under the account, chattel paper, payment intangible or promissory note.

(g) Subsection (b)(3) not waivable.--Subject to [subsection (h)] subsections (h) and (l) , an account debtor may not waive or vary its option under subsection (b)(3).

(k) (Reserved).

(l) Inapplicability of certain subsections.--Subsections (a), (b), (c) and (g) do not apply to a controllable account or controllable payment intangible.

Section 33. Section 9408 of Title 13 is amended by adding subsections to read:

§ 9408. Restrictions on assignment of promissory notes, health-care-insurance receivables and certain general intangibles ineffective.

(f) (Reserved).

(g) "Promissory note".--In this section, "promissory note" includes a negotiable instrument that evidences chattel paper.

Section 34. Sections 9509(a) and (b), 9513(b) and (c), 9601(b), 9605, 9608(a)(1), 9611(a), (b), (c) and (e), 9613, 9614, 9615(a), 9616(a), (b) and (c), 9619(a), 9620(a), (b), (c) and (f), 9621(a) and 9624 of Title 13 are amended to read:

§ 9509. Persons entitled to file a record.

(a) Person entitled to file record.--A person may file an initial financing statement, amendment which adds collateral covered by a financing statement or amendment which adds a debtor to a financing statement only if:

(1) the debtor authorizes the filing in [an authenticated] a signed record or pursuant to subsection (b) or (c); or

(2) the person holds an agricultural lien which has become effective at the time of filing and the financing statement covers only collateral in which the person holds an agricultural lien.

(b) Security agreement as authorization.--By [authenticating] signing or becoming bound as debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing statement and an amendment covering:

(1) the collateral described in the security agreement; and

(2) property which becomes collateral under section 9315(a)(2) (relating to secured party's rights on disposition of collateral and in proceeds), whether or not the security agreement expressly covers proceeds.

§ 9513. Termination statement.

(b) Time for compliance with subsection (a).--To comply with subsection (a), a secured party shall cause the secured party of record to file the termination statement:

(1) within one month after there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation or otherwise give value; or

(2) if earlier, within 20 days after the secured party receives [an authenticated] a signed demand from a debtor.

(c) Other collateral.--In cases not governed by subsection (a), within 20 days after a secured party receives [an authenticated] a signed demand from a debtor, the secured party shall cause the secured party of record for a financing statement to send to the debtor a termination statement for the financing statement or file the termination statement in the filing office if:

(1) except in the case of a financing statement covering accounts or chattel paper which has been sold or goods which are the subject of a consignment, there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation or otherwise give value;

(2) the financing statement covers accounts or chattel paper which has been sold but as to which the account debtor or other person obligated has discharged its obligation;

(3) the financing statement covers goods which were the subject of a consignment to the debtor but are not in the debtor's possession; or

(4) the debtor did not authorize the filing of the initial financing statement.

§ 9601. Rights after default; judicial enforcement; consignor or buyer of accounts, chattel paper, payment intangibles or promissory notes.

(b) Rights and duties of secured party in possession or control.--A secured party in possession of collateral or control of collateral under section 7106 (relating to control of electronic document of title), 9104 (relating to control of deposit account), 9105 (relating to control of electronic copy of record evidencing chattel paper), 9106 (relating to control of investment property) [or] , 9107 (relating to control of letter-of-credit right) or 9107.1 (relating to control of controllable electronic record, controllable account or controllable payment intangible) has the rights and duties provided in section 9207 (relating to rights and duties of secured party having possession or control of collateral).

§ 9605. Unknown debtor or secondary obligor.

[A] (a) In general: no duty owed by secured party.--Except as provided in subsection (b), a secured party does not owe a duty based on its status as secured party to any of the following:

(1) A person that is a debtor or obligor unless the secured party knows:

(i) that the person is a debtor or obligor;

(ii) the identity of the person; and

(iii) how to communicate with the person.

(2) A secured party or lienholder that has filed a financing statement against a person unless the secured party knows:

(i) that the person is a debtor; and

(ii) the identity of the person.

(b) Exception: secured party owes duty to debtor or obligor.--A secured party owes a duty based on its status as a secured party to a person if, at the time the secured party obtains control of collateral that is a controllable account, controllable electronic record or controllable payment intangible or at the time the security interest attaches to the collateral, whichever is later:

(1) the person is a debtor or obligor; and

(2) the secured party knows that the information in subsection (a)(1) relating to the person is not provided by the collateral, a record attached to or logically associated with the collateral or the system in which the collateral is recorded.

§ 9608. Application of proceeds of collection or enforcement; liability for deficiency and right to surplus.

(a) Application of proceeds, surplus and deficiency if obligation secured.--If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply:

(1) A secured party shall apply or pay over for application the cash proceeds of collection or enforcement under section 9607 (relating to collection and enforcement by secured party) in the following order to:

(i) the reasonable expenses of collection and enforcement and, to the extent provided for by agreement and not prohibited by law, reasonable attorney fees and legal expenses incurred by the secured party;

(ii) the satisfaction of obligations secured by the security interest or agricultural lien under which the collection or enforcement is made; and

(iii) the satisfaction of obligations secured by any subordinate security interest in or other lien on the collateral subject to the security interest or agricultural lien under which the collection or enforcement is made if the secured party receives [an authenticated] a signed demand for proceeds before distribution of the proceeds is completed.

§ 9611. Notification before disposition of collateral.

(a) Notification date.--As used in this section, the term "notification date" means the earlier of the date on which:

(1) a secured party sends to the debtor and any secondary obligor [an authenticated] a signed notification of disposition; or

(2) the debtor and any secondary obligor waive the right to notification.

(b) Notification of disposition required.--Except as otherwise provided in subsection (d), a secured party that disposes of collateral under section 9610 (relating to disposition of collateral after default) shall send to the persons specified in subsection (c) a reasonable [authenticated] signed notification of disposition.

(c) Persons to be notified.--To comply with subsection (b), the secured party shall send [an authenticated] a signed notification of disposition to all of the following:

(1) The debtor.

(2) Any secondary obligor.

(3) If the collateral is other than consumer goods, all of the following:

(i) Any other person from which the secured party has received, before the notification date, [an authenticated] a signed notification of a claim of an interest in the collateral.

(ii) Any other secured party or lienholder that, ten days before the notification date, held a security interest in or other lien on the collateral perfected by the filing of a financing statement which:

(A) identified the collateral;

(B) was indexed under the debtor's name as of that date; and

(C) was filed in the office in which to file a financing statement against the debtor covering the collateral as of that date.

(iii) Any other secured party that, ten days before the notification date, held a security interest in the collateral perfected by compliance with a statute, regulation or treaty described in section 9311(a) (relating to security interest subject to other law).

(e) Compliance with subsection (c)(3)(ii).--A secured party complies with the requirement for notification prescribed by subsection (c)(3)(ii) if both of the following paragraphs apply:

(1) Not later than 20 days or earlier than 30 days before the notification date, the secured party requests, in a commercially reasonable manner, information concerning financing statements indexed under the debtor's name in the office indicated in subsection (c)(3)(ii).

(2) Before the notification date, the secured party:

(i) did not receive a response to the request for information; or

(ii) received a response to the request for information and sent [an authenticated] a signed notification of disposition to each secured party or other lienholder named in that response whose financing statement covered the collateral.

§ 9613. Contents and form of notification before disposition of collateral: general.

(a) Contents and form of notification.-- Except in a consumer-goods transaction, the following rules apply:

(1) The contents of a notification of disposition are sufficient if the notification:

(i) describes the debtor and the secured party;

(ii) describes the collateral which is the subject of the intended disposition;

(iii) states the method of intended disposition;

(iv) states that the debtor is entitled to an accounting of the unpaid indebtedness and states the charge, if any, for an accounting; and

(v) states the time and place of a public disposition or the time after which any other disposition is to be made.

(2) Whether the contents of a notification which lacks any of the information specified in paragraph (1) are nevertheless sufficient is a question of fact.

(3) The contents of a notification providing substantially the information specified in paragraph (1) are sufficient even if the notification includes:

(i) information not specified by that paragraph; or

(ii) minor errors which are not seriously misleading.

(4) A particular phrasing of the notification is not required.

(5) The following form of notification and the form appearing in section [9614(3)] 9614(a)(3) (relating to contents and form of notification before disposition of collateral: consumer-goods transaction), when completed in accordance with the instructions in subsection (b) and section 9614(b) , each provides sufficient information:

NOTIFICATION OF DISPOSITION OF COLLATERAL

[To:______________________(Name of debtor, obligor or other person to which the notification is sent)

From:_____________________(Name, address and telephone number of secured party)

Name of Debtor(s):______________________(include only if debtor(s) are not an addressee)

(For a public disposition:)

We will sell (or lease or license, as applicable) the

______________________(describe collateral) (to the highest

qualified bidder) in public as follows:

Day and Date:_____________________

Time:_____________________

Place:_____________________

(For a private disposition:)

We will sell (or lease or license, as applicable) the

_____________________(describe collateral) privately

sometime after ________________________ (day and date).

You are entitled to an accounting of the unpaid

indebtedness secured by the property that we intend to sell

(or lease or license, as applicable) (for a charge of

$_______). You may request an accounting by calling us at

_____________________(telephone number).

(End of Form)]

To: (Name of debtor, obligor, or other person to which the notification is sent)

From: (Name, address, and telephone number of secured party)

{1} Name of any debtor that is not an addressee: (Name of each debtor)

{2} We will sell (describe collateral) (to the highest qualified bidder) at public sale. A sale could include a lease or license. The sale will be held as follows:

(Date)

(Time)

(Place)

{3} We will sell (describe collateral) at private sale sometime after (date). A sale could include a lease or license.

{4} You are entitled to an accounting of the unpaid indebtedness secured by the property that we intend to sell or, as applicable, lease or license.

{5} If you request an accounting you must pay a charge of $ (amount).

{6} You may request an accounting by calling us at (telephone number).

(End of Form)

(b) Instructions for form of notification.--The following instructions apply to the form of notification in subsection (a)(5):

(1) The instructions in this subsection refer to the numbers in braces before items in the form of notification in subsection (a)(5). Do not include the numbers or braces in the notification. The numbers and braces are used only for the purpose of these instructions.

(2) Include and complete item {1} only if there is a debtor that is not an addressee of the notification and list the name or names.

(3) Include and complete either item {2}, if the notification relates to a public disposition of the collateral, or item {3}, if the notification relates to a private disposition of the collateral. If item {2} is included, include the words "to the highest qualified bidder" only if applicable.

(4) Include and complete items {4} and {6}.

(5) Include and complete item {5} only if the sender will charge the recipient for an accounting.

§ 9614. Contents and form of notification before disposition of collateral: consumer-goods transaction.

(a) Contents and form of notification.-- In a consumer-goods transaction, the following rules apply:

(1) A notification of disposition must provide the following information:

(i) the information specified in section [9613(1)] 96 13(a)(1) (relating to contents and form of notification before disposition of collateral: general);

(ii) a description of any liability for a deficiency of the person to which the notification is sent;

(iii) a telephone number from which the amount which must be paid to the secured party to redeem the collateral under section 9623 (relating to right to redeem collateral) is available; and

(iv) a telephone number or mailing address from which additional information concerning the disposition and the obligation secured is available.

(2) A particular phrasing of the notification is not required.

(3) The following form of notification, when completed in accordance with the instructions in subsection (b) , provides sufficient information:

[_____________________ (Name and address of secured party)

_____________________ (Date)

NOTICE OF OUR PLAN TO SELL PROPERTY

_____________________ (Name and address of any obligor who is also a debtor)

Subject: ____________________ (Identification of transaction)

We have your ____________________ (describe collateral) because you broke promises in our agreement.

(For a public disposition:)

We will sell _____________________ (describe collateral) at public sale. A sale could include a lease or license. The sale will be held as follows:

Date:_________________

Time:_________________

Place:________________

You may attend the sale and bring bidders if you want.

(For a private disposition:)

We will sell __________________ (describe collateral) at private sale sometime after _______________ (date). A sale could include a lease or license. The money that we get from the sale (after paying our costs) will reduce the amount you owe. If we get less money than you owe, you (will or will not, as applicable) still owe us the difference. If we get more money than you owe, you will get the extra money unless we must pay it to someone else. You can get the property back at any time before we sell it by paying us the full amount you owe (not just the past due payments), including our expenses. To learn the exact amount you must pay, call us at ______________ (telephone number). If you want us to explain to you in writing how we have figured the amount that you owe us, you may call us at __________________ (telephone number) (or write us at ___________________ (secured party's address)) and request a written explanation. (We will charge you $ __________ for the explanation if we sent you another written explanation of the amount you owe us within the last six months.) If you need more information about the sale, call us at ________________ (telephone number) (or write us at ____________________ (secured party's address)). We are sending this notice to the following other people who have an interest in ______________________ (describe collateral) or who owe money under your agreement: __________________ (Names of all other debtors and obligors, if any)

(End of Form)

(4) A notification in the form of paragraph (3) is sufficient even if additional information appears at the end of the form.

(5) A notification in the form of paragraph (3) is sufficient even if it includes errors in information not required by paragraph (1) unless the error is misleading with respect to rights arising under this division.

(6) If a notification under this section is not in the form of paragraph (3), law other than this division determines the effect of including information not required by paragraph (1).]

(Name and address of secured party)

(Date)

NOTICE OF OUR PLAN TO SELL PROPERTY

(Name and address of any obligor who is also a debtor)

Subject: (Identify transaction)

We have your (describe collateral), because you broke promises in our agreement.

{1} We will sell (describe collateral) at public sale. A sale could include a lease or license. The sale will be held as follows:

(Date)

(Time)

(Place)

You may attend the sale and bring bidders if you want.

{2} We will sell (describe collateral) at private sale sometime after (date). A sale could include a lease or license.

{3} The money that we get from the sale, after paying our costs, will reduce the amount you owe. If we get less money than you owe, you (will or will not, as applicable) still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else.

{4} You can get the property back at any time before we sell it by paying us the full amount you owe, not just the past due payments, including our expenses. To learn the exact amount you must pay, call us at (telephone number).

{5} If you want us to explain to you in (writing) (writing or in (description of electronic record)) (description of electronic record) how we have figured the amount that you owe us, {6} call us at (telephone number) (or) (write us at (secured party's address)) (or contact us by (description of electronic communication method)) {7} and request (a written explanation) (a written explanation or an explanation in (description of electronic record)) (an explanation in (description of electronic record)).

{8} We will charge you $ (amount) for the explanation if we sent you another written explanation of the amount you owe us within the last six months.

{9} If you need more information about the sale (call us at (telephone number)) (or) (write us at (secured party's address)) (or contact us by (description of electronic communication method)).

{10} We are sending this notice to the following other people who have an interest in (describe collateral) or who owe money under your agreement:

(Names of all other debtors and obligors, if any)

(End of Form)

(b) Instructions for form of notification.--The following instructions apply to the form of notification in subsection (a)(3):

(1) The instructions in this subsection refer to the numbers in braces before items in the form of notification in subsection (a)(3). Do not include the numbers or braces in the notification. The numbers and braces are used only for the purpose of these instructions.

(2) Include and complete either item {1}, if the notification relates to a public disposition of the collateral, or item {2}, if the notification relates to a private disposition of the collateral.

(3) Include and complete items {3}, {4}, {5}, {6} and {7}.

(4) In item {5}, include and complete any one of the three alternative methods for the explanation--writing, writing or electronic record or electronic record.

(5) In item {6}, include the telephone number. In addition, the sender may include and complete either or both of the two additional alternative methods of communication--writing or electronic communication--for the recipient of the notification to communicate with the sender. Neither of the two additional methods of communication is required to be included.

(6) In item {7}, include and complete the method or methods for the explanation--writing, writing or electronic record or electronic record--included in item {5}.

(7) Include and complete item {8} only if a written explanation is included in item {5} as a method for communicating the explanation and the sender will charge the recipient for another written explanation.

(8) In item {9}, include either the telephone number or the address or both the telephone number and the address. In addition, the sender may include and complete the additional method of communication--electronic communication for the recipient of the notification to communicate with the sender. The additional method of electronic communication is not required to be included.

(9) If item {10} does not apply, insert "None" after "agreement:."

§ 9615. Application of proceeds of disposition; liability for deficiency and right to surplus.

(a) Application of proceeds.--A secured party shall apply or pay over for application the cash proceeds of disposition under section 9610 (relating to disposition of collateral after default) in the following order to:

(1) The reasonable expenses of retaking, holding, preparing for disposition, processing and disposing and, to the extent provided for by agreement and not prohibited by law, reasonable attorney fees and legal expenses incurred by the secured party.

(2) The satisfaction of obligations secured by the security interest or agricultural lien under which the disposition is made.

(3) The satisfaction of obligations secured by any subordinate security interest in or other subordinate lien on the collateral if:

(i) the secured party receives from the holder of the subordinate security interest or other lien [an authenticated] a signed demand for proceeds before distribution of the proceeds is completed; and

(ii) in a case in which a consignor has an interest in the collateral, the subordinate security interest or other lien is senior to the interest of the consignor.

(4) A secured party that is a consignor of the collateral if the secured party receives from the consignor [an authenticated] a signed demand for proceeds before distribution of the proceeds is completed.

§ 9616. Explanation of calculation of surplus or deficiency.

(a) Definitions.--As used in this section, the following words and phrases shall have the meanings given to them in this subsection:

"Explanation." A [writing] record which:

(1) states the amount of the surplus or deficiency;

(2) provides an explanation in accordance with subsection (c) of how the secured party calculated the surplus or deficiency;

(3) states, if applicable, that future debits, credits, charges, including additional credit service charges or interest, rebates and expenses may affect the amount of the surplus or deficiency; and

(4) provides a telephone number or mailing address from which additional information concerning the transaction is available.

"Request." A record:

(1) [authenticated] signed by a debtor or consumer obligor;

(2) requesting that the recipient provide an explanation; and

(3) sent after disposition of the collateral under section 9610 (relating to disposition of collateral after default).

(b) Explanation of calculation.--In a consumer-goods transaction in which the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under section 9615 (relating to application of proceeds of disposition; liability for deficiency and right to surplus), the secured party shall comply with one of the following paragraphs:

(1) Send an explanation to the debtor or consumer obligor, as applicable, after the disposition and:

(i) before or when the secured party accounts to the debtor and pays any surplus or first makes [written] demand in a record on the consumer obligor after the disposition for payment of the deficiency; and

(ii) within 14 days after receipt of a request.

(2) In the case of a consumer obligor who is liable for a deficiency, within 14 days after receipt of a request, send to the consumer obligor a record waiving the secured party's right to a deficiency.

(c) Required information.--To comply with paragraph (2) of the definition of the term "explanation" in subsection (a), [a writing] an explanation must provide the following information in the following order:

(1) The aggregate amount of obligations secured by the security interest under which the disposition was made and, if the amount reflects a rebate of unearned interest or credit service charge, an indication of that fact, calculated as of a specified date:

(i) if the secured party takes or receives possession of the collateral after default, not more than 35 days before the secured party takes or receives possession; or

(ii) if the secured party takes or receives possession of the collateral before default or does not take possession of the collateral, not more than 35 days before the disposition.

(2) The amount of proceeds of the disposition.

(3) The aggregate amount of the obligations after deducting the amount of proceeds.

(4) The amount, in the aggregate or by type, and types of expenses, including expenses of retaking, holding, preparing for disposition, processing and disposing of the collateral and attorney fees secured by the collateral which are known to the secured party and relate to the current disposition.

(5) The amount, in the aggregate or by type and types of credits, including rebates of interest or credit service charges, to which the obligor is known to be entitled and which are not reflected in the amount in paragraph (1).

(6) The amount of the surplus or deficiency.

§ 9619. Transfer of record or legal title.

(a) Transfer statement.--As used in this section, the term "transfer statement" means a record [authenticated] signed by a secured party stating:

(1) that the debtor has defaulted in connection with an obligation secured by specified collateral;

(2) that the secured party has exercised its postdefault remedies with respect to the collateral;

(3) that, by reason of the exercise, a transferee has acquired the rights of the debtor in the collateral; and

(4) the name and mailing address of the secured party, debtor and transferee.

§ 9620. Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral.

(a) Conditions to acceptance in satisfaction.--Except as otherwise provided in subsection (g), a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if all of the following paragraphs apply:

(1) The debtor consents to the acceptance under subsection (c).

(2) The secured party does not receive, within the time set forth in subsection (d), a notification of objection to the proposal [authenticated] signed by:

(i) a person to which the secured party was required to send a proposal under section 9621 (relating to notification of proposal to accept collateral); or

(ii) any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest which is the subject of the proposal.

(3) If the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance.

(4) Subsection (e) does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to section 9624 (relating to waiver).

(b) Purported acceptance ineffective.--A purported or apparent acceptance of collateral under this section is ineffective unless:

(1) the secured party consents to the acceptance in [an authenticated] a signed record or sends a proposal to the debtor; and

(2) the conditions of subsection (a) are met.

(1) A debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record [authenticated] signed after default.

(2) A debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record [authenticated] signed after default or the secured party:

(i) sends to the debtor after default a proposal which is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained;

(ii) in the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and

(iii) does not receive a notification of objection [authenticated] signed by the debtor within 20 days after the proposal is sent.

(f) Compliance with mandatory disposition requirement.--To comply with subsection (e), the secured party shall dispose of the collateral:

(1) within 90 days after taking possession; or

(2) within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and [authenticated] signed after default.

§ 9621. Notification of proposal to accept collateral.

(a) Persons to which proposal to be sent.--A secured party that desires to accept collateral in full or partial satisfaction of the obligation it secures shall send its proposal to all of the following:

(1) Any person from which the secured party has received, before the debtor consented to the acceptance, [an authenticated] a signed notification of a claim of an interest in the collateral.

(2) Any other secured party or lienholder that, ten days before the debtor consented to the acceptance, held a security interest in or other lien on the collateral perfected by the filing of a financing statement which:

(i) identified the collateral;

(ii) was indexed under the debtor's name as of that date; and

(iii) was filed in the office or offices in which to file a financing statement against the debtor covering the collateral as of that date.

(3) Any other secured party that, ten days before the debtor consented to the acceptance, held a security interest in the collateral perfected by compliance with a statute, regulation or treaty described in section 9311(a) (relating to security interest subject to other law).

§ 9624. Waiver.

(a) Waiver of disposition notification.--A debtor or secondary obligor may waive the right to notification of disposition of collateral under section 9611 (relating to notification before disposition of collateral) only by an agreement to that effect entered into and [authenticated] signed after default.

(b) Waiver of mandatory disposition.--A debtor may waive the right to require disposition of collateral under section 9620(e) (relating to mandatory disposition of consumer goods) only by an agreement to that effect entered into and [authenticated] signed after default.

(c) Waiver of redemption right.--Except in a consumer-goods transaction, a debtor or secondary obligor may waive the right to redeem collateral under section 9623 (relating to right to redeem collateral) only by an agreement to that effect entered into and [authenticated] signed after default.

Section 35. Section 9628(a) and (b) of Title 13 are amended and the section is amended by adding a subsection to read:

§ 9628. Nonliability and limitation on liability of secured party; liability of secondary obligor.

(a) Limitation of liability of secured party for noncompliance with division.--[Unless] Subject to subsection (f), unless a secured party knows that a person is a debtor or obligor, knows the identity of the person and knows how to communicate with the person:

(1) the secured party is not liable to the person or to a secured party or lienholder that has filed a financing statement against the person for failure to comply with this division; and

(2) the secured party's failure to comply with this division does not affect the liability of the person for a deficiency.

(b) Limitation of liability based on status as secured party.--[A] Subject to subsection (f), a secured party is not liable because of its status as secured party to any of the following:

(1) A person that is a debtor or obligor unless the secured party knows:

(i) that the person is a debtor or obligor;

(ii) the identity of the person; and

(iii) how to communicate with the person.

(2) A secured party or lienholder that has filed a financing statement against a person unless the secured party knows:

(i) that the person is a debtor; and

(ii) the identity of the person.

(f) Exception: limitation of liability under subsections (a) and (b) does not apply.--Subsections (a) and (b) do not apply to limit the liability of a secured party to a person if, at the time the secured party obtains control of collateral that is a controllable account, controllable electronic record or controllable payment intangible or at the time the security interest attaches to the collateral, whichever is later:

(1) the person is a debtor or obligor; and

(2) the secured party knows that the information in subsection (b)(1) relating to the person is not provided by the collateral, a record attached to or logically associated with the collateral or the system in which the collateral is recorded.

Section 36. Title 13 is amended by adding divisions to read:

DIVISION 12

CONTROLLABLE ELECTRONIC RECORDS

Chapter

121. General Provisions

123. (Reserved)

CHAPTER 121

GENERAL PROVISIONS

Sec.

12101. Short title of division.

12102. Definitions.

12103. Relation to Division 9 and consumer laws.

12104. Rights in controllable account, controllable electronic record and controllable payment intangible.

12105. Control of controllable electronic record.

12106. Discharge of account debtor on controllable account or controllable payment intangible.

12107. Governing law.

§ 12101. Short title of division.

This division may be cited as the Uniform Commercial Code - Controllable Electronic Records.

§ 12102. Definitions.

(a) Definitions.--In this division:

"Controllable electronic record" means a record stored in an electronic medium that can be subjected to control under section 12105 (relating to control of controllable electronic record). The term does not include a controllable account, a controllable payment intangible, a deposit account, an electronic copy of a record evidencing chattel paper, an electronic document of title, investment property, a transferable record or an electronic record that is currently authorized or adopted by a domestic or foreign government and is not a medium of exchange that was recorded and transferable in a system that existed and operated for the medium of exchange before the medium of exchange was authorized or adopted by a government.

"Qualifying purchaser" means a purchaser of a controllable electronic record or an interest in a controllable electronic record that obtains control of the controllable electronic record for value, in good faith, and without notice of a claim of a property right in the controllable electronic record.

"Transferable record" has the meaning provided for that term in:

(1) Section 201(a)(1) of the Electronic Signatures in Global and National Commerce Act (Public Law 106-229, 15 U.S.C. § 7021(a)(1)); or

(2) Section 312(f) of the act of December 16, 1999 (P.L.971, No.69), known as the Electronic Transactions Act.

"Value" has the meaning provided in section 3303(a) (relating to value and consideration), as if references in that subsection to an "instrument" were references to a controllable account, controllable electronic record or controllable payment intangible.

(b) Definitions in Division 9.--The definitions in Division 9 (relating to secured transactions) of "account debtor," "chattel paper," "controllable account," "controllable payment intangible," "deposit account" and "investment property" apply to this division.

(c) Definitions and principles in Division 1.--Division 1 (relating to general provisions) contains general definitions and principles of construction and interpretation applicable throughout this division.

§ 12103. Relation to Division 9 and consumer laws.

(a) Division 9 governs in case of conflict.--If there is conflict between this division and Division 9 (relating to secured transactions), Division 9 governs.

(b) Applicable consumer law and other laws.--A transaction subject to this division is subject to any applicable rule of law that establishes a different rule for consumers and the act of December 17, 1968 (P.L.1224, No.387), known as the Unfair Trade Practices and Consumer Protection Law.

§ 12104. Rights in controllable account, controllable electronic record and controllable payment intangible.

(a) Applicability of section to controllable account and controllable payment intangible.--This section applies to the acquisition and purchase of rights in a controllable account or controllable payment intangible, including the rights and benefits under subsections (c), (d), (e), (g) and (h) of a purchaser and qualifying purchaser, in the same manner this section applies to a controllable electronic record.

(b) Control of controllable account and controllable payment intangible.--To determine whether a purchaser of a controllable account or a controllable payment intangible is a qualifying purchaser, the purchaser obtains control of the account or payment intangible if the purchaser obtains control of the controllable electronic record that evidences the account or payment intangible.

(c) Applicability of other law to acquisition of rights.-- Except as provided in this section, law other than this division determines whether a person acquires a right in a controllable electronic record and the right the person acquires.

(d) Shelter principle and purchase of limited interest.--A purchaser of a controllable electronic record acquires all rights in the controllable electronic record that the transferor had or had power to transfer, except that a purchaser of a limited interest in a controllable electronic record acquires rights only to the extent of the interest purchased.

(e) Rights of qualifying purchaser.--A qualifying purchaser acquires its rights in the controllable electronic record free of a claim of a property right in the controllable electronic record.

(f) Limitation of rights of qualifying purchaser in other property.--Except as provided in subsections (a) and (e) for a controllable account and a controllable payment intangible or law other than this division, a qualifying purchaser takes a right to payment, right to performance or other interest in property evidenced by the controllable electronic record subject to a claim of a property right in the right to payment, right to performance or other interest in property.

(g) No-action protection for qualifying purchaser.--An action may not be asserted against a qualifying purchaser based on both a purchase by the qualifying purchaser of a controllable electronic record and a claim of a property right in another controllable electronic record, whether the action is framed in conversion, replevin, constructive trust, equitable lien or other theory.

(h) Filing not notice.--Filing of a financing statement under Division 9 (relating to secured transactions) is not notice of a claim of a property right in a controllable electronic record.

§ 12105. Control of controllable electronic record.

(a) General rule.--A person has control of a controllable electronic record if the electronic record, a record attached to or logically associated with the electronic record or a system in which the electronic record is recorded:

(1) gives the person:

(i) power to avail itself of substantially all the benefit from the electronic record; and

(ii) exclusive power, subject to subsection (b), to:

(A) prevent others from availing themselves of substantially all the benefit from the electronic record; and

(B) transfer control of the electronic record to another person or cause another person to obtain control of another controllable electronic record as a result of the transfer of the electronic record; and

(2) enables the person readily to identify itself in any way, including by name, identifying number, cryptographic key, office or account number, as having the powers specified in paragraph (1).

(b) Meaning of exclusive.--Subject to subsection (c), a power is exclusive under subsection (a)(1)(ii)(A) and (B) even if:

(1) the controllable electronic record, a record attached to or logically associated with the electronic record or a system in which the electronic record is recorded limits the use of the electronic record or has a protocol programmed to cause a change, including a transfer or loss of control or a modification of benefits afforded by the electronic record; or

(2) the power is shared with another person.

(c) When power not shared with another person.--A power of a person is not shared with another person under subsection (b)(2) and the person's power is not exclusive if:

(1) the person can exercise the power only if the power also is exercised by the other person; and

(2) the other person:

(i) can exercise the power without exercise of the power by the person; or

(ii) is the transferor to the person of an interest in the controllable electronic record or a controllable account or controllable payment intangible evidenced by the controllable electronic record.

(d) Presumption of exclusivity of certain powers.--If a person has the powers specified in subsection (a)(1)(ii)(A) and (B), the powers are presumed to be exclusive.

(e) Control through another person.--A person has control of a controllable electronic record if another person, other than the transferor to the person of an interest in the controllable electronic record or a controllable account or controllable payment intangible evidenced by the controllable electronic record:

(1) has control of the electronic record and acknowledges that it has control on behalf of the person; or

(2) obtains control of the electronic record after having acknowledged that it will obtain control of the electronic record on behalf of the person.

(f) No requirement to acknowledge.--A person that has control under this section is not required to acknowledge that it has control on behalf of another person.

(g) No duties or confirmation.--If a person acknowledges that it has or will obtain control on behalf of another person, unless the person otherwise agrees or law other than this division or Division 9 (relating to secured transactions) otherwise provides, the person does not owe any duty to the other person and is not required to confirm the acknowledgment to any other person.

§ 12106. Discharge of account debtor on controllable account or controllable payment intangible.

(a) Discharge of account debtor.--An account debtor on a controllable account or controllable payment intangible may discharge its obligation by paying:

(1) the person having control of the controllable electronic record that evidences the controllable account or controllable payment intangible; or

(2) except as provided in subsection (b), a person that formerly had control of the controllable electronic record.

(b) Content and effect of notification.--Subject to subsection (d), the account debtor may not discharge its obligation by paying a person that formerly had control of the controllable electronic record if the account debtor receives a notification that:

(1) is signed by a person that formerly had control or the person to which control was transferred;

(2) reasonably identifies the controllable account or controllable payment intangible;

(3) notifies the account debtor that control of the controllable electronic record that evidences the controllable account or controllable payment intangible was transferred;

(4) identifies the transferee, in any reasonable way, including by name, identifying number, cryptographic key, office or account number; and

(5) provides a commercially reasonable method by which the account debtor is to pay the transferee.

(c) Discharge following effective notification.--After receipt of a notification that complies with subsection (b), the account debtor may discharge its obligation by paying in accordance with the notification and may not discharge the obligation by paying a person that formerly had control.

(d) When notification ineffective.--Subject to subsection (h), notification is ineffective under subsection (b):

(1) unless, before the notification is sent, the account debtor and the person that, at that time, had control of the controllable electronic record that evidences the controllable account or controllable payment intangible agree in a signed record to a commercially reasonable method by which a person may furnish reasonable proof that control has been transferred;

(2) to the extent an agreement between the account debtor and seller of a payment intangible limits the account debtor's duty to pay a person other than the seller and the limitation is effective under law other than this division; or

(3) at the option of the account debtor, if the notification notifies the account debtor to:

(i) divide a payment;

(ii) make less than the full amount of an installment or other periodic payment; or

(iii) pay any part of a payment by more than one method or to more than one person.

(e) Proof of transfer of control.--Subject to subsection (h), if requested by the account debtor, the person giving the notification under subsection (b) seasonably shall furnish reasonable proof, using the method in the agreement referred to in subsection (d)(1), that control of the controllable electronic record has been transferred. Unless the person complies with the request, the account debtor may discharge its obligation by paying a person that formerly had control, even if the account debtor has received a notification under subsection (b).

(f) What constitutes reasonable proof.--A person furnishes reasonable proof under subsection (e) that control has been transferred if the person demonstrates, using the method in the agreement referred to in subsection (d)(1), that the transferee has the power to:

(1) avail itself of substantially all the benefit from the controllable electronic record;

(2) prevent others from availing themselves of substantially all the benefit from the controllable electronic record; and

(3) transfer the powers specified in paragraphs (1) and (2) to another person.

(g) Rights not waivable.--Subject to subsection (h), an account debtor may not waive or vary its rights under subsections (d)(1) and (e) or its option under subsection (d)(3).

(h) Rule for individual under other law.--This section is subject to law other than this division which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family or household purposes.

§ 12107. Governing law.

(a) General rule.--Except as provided in subsection (b), the local law of a controllable electronic record's jurisdiction governs a matter covered by this division.

(b) Exception.--For a controllable electronic record that evidences a controllable account or controllable payment intangible, the local law of the controllable electronic record's jurisdiction governs a matter covered by section 12106 (relating to discharge of account debtor on controllable account or controllable payment intangible) unless an effective agreement determines that the local law of another jurisdiction governs.

(c) Controllable electronic record's jurisdiction.--The following rules determine a controllable electronic record's jurisdiction under this section:

(1) If the controllable electronic record, or a record attached to or logically associated with the controllable electronic record and readily available for review, expressly provides that a particular jurisdiction is the controllable electronic record's jurisdiction for purposes of this division or title, that jurisdiction is the controllable electronic record's jurisdiction.

(2) If paragraph (1) does not apply and the rules of the system in which the controllable electronic record is recorded are readily available for review and expressly provide that a particular jurisdiction is the controllable electronic record's jurisdiction for purposes of this division or title, that jurisdiction is the controllable electronic record's jurisdiction.

(3) If paragraphs (1) and (2) do not apply and the controllable electronic record, or a record attached to or logically associated with the controllable electronic record and readily available for review, expressly provides that the controllable electronic record is governed by the law of a particular jurisdiction, that jurisdiction is the controllable electronic record's jurisdiction.

(4) If paragraphs (1), (2) and (3) do not apply and the rules of the system in which the controllable electronic record is recorded are readily available for review and expressly provide that the controllable electronic record or the system is governed by the law of a particular jurisdiction, that jurisdiction is the controllable electronic record's jurisdiction.

(5) If paragraphs (1), (2), (3) and (4) do not apply, the controllable electronic record's jurisdiction is the District of Columbia.

(d) Applicability of Article 12.--If subsection (c)(5) applies and Article 12 of Uniform Commercial Code Amendments (2022) is not in effect in the District of Columbia without material modification, the governing law for a matter covered by this division is the law of the District of Columbia as though Article 12 were in effect in the District of Columbia without material modification.

(e) Relation of matter or transaction to controllable electronic record's jurisdiction not necessary.--To the extent subsections (a) and (b) provide that the local law of the controllable electronic record's jurisdiction governs a matter covered by this division, that law governs even if the matter or a transaction to which the matter relates does not bear any relation to the controllable electronic record's jurisdiction.

(f) Rights of purchasers determined at time of purchase.--The rights acquired under section 12104 (relating to rights in controllable account, controllable electronic record and controllable payment intangible) by a purchaser or qualifying purchaser are governed by the law applicable under this section at the time of purchase.

CHAPTER 123

(Reserved)

DIVISION 91

TRANSITIONAL PROVISIONS

Chapter

911. Transitional Provisions for 2022 Amendments

CHAPTER 911

TRANSITIONAL PROVISIONS FOR 2022 AMENDMENTS

Subchapter

A. General Provisions and Definitions

B. General Transitional Provision

C. Transitional Provisions for Divisions 9 and 12

SUBCHAPTER A

GENERAL PROVISIONS AND DEFINITIONS

Sec.

91101. Short title of chapter.

91102. Definitions.

§ 91101. Short title of chapter.

This chapter may be cited as the Transitional Provisions for 2022 Amendments.

§ 91102. Definitions.

(a) Definitions.--In this chapter:

"Adjustment date" means July 1, 2025, or the date that is one year after the effective date of this section, whichever is later.

"Division 12 property" means a controllable account, controllable electronic record or controllable payment intangible.

(b) Definitions in other divisions.--The following definitions in other divisions of this title apply to this chapter.

"Controllable account." Section 9102 (relating to definitions and index of definitions).

"Controllable electronic record." Section 12102 (relating to definitions).

"Controllable payment intangible." Section 9102.

"Financing statement." Section 9102.

SUBCHAPTER B

GENERAL TRANSITIONAL PROVISION

Sec.

91121. Savings clause.

§ 91121. Savings clause.

Except as provided in Subchapter C (relating to transitional provisions for Divisions 9 and 12), a transaction validly entered into before the effective date of this section and the rights, duties and interests flowing from the transaction remain valid thereafter and may be terminated, completed, consummated or enforced as required or permitted by law other than this title or, if applicable, this title, as though this section had not taken effect.

SUBCHAPTER C

TRANSITIONAL PROVISIONS FOR DIVISIONS 9 AND 12

Sec.

91131. Savings clause.

91132. Security interest perfected before effective date.

91133. Security interest unperfected before effective date.

91134. Effectiveness of actions taken before effective date.

91135. Priority.

91136. Priority of claims when priority rules of Division 9 do not apply.

§ 91131. Savings clause.

(a) Pre-effective-date transaction, lien or interest.-- Except as provided in this subchapter, the amendments to Division 9 (relating to secured transactions) that take effect on the effective date of this section and Division 12 (relating to controllable electronic records) apply to a transaction, lien or other interest in property, even if the transaction, lien or interest was entered into, created or acquired before the effective date of this section.

(b) Continuing validity.--Except as provided in subsection (c) and sections 91132 (relating to security interest perfected before effective date), 91133 (relating to security interest unperfected before effective date), 91134 (relating to effectiveness of actions taken before effective date), 91135 (relating to priority) and 91136 (relating to priority of claims when priority rules of Division 9 do not apply):

(1) a transaction, lien or interest in property that was validly entered into, created or transferred before the effective date of this section and was not governed by this title, but would be subject to the amendments to Division 9 that take effect on the effective date of this section or Division 12 if it had been entered into, created or transferred on or after the effective date of this section, including the rights, duties and interests flowing from the transaction, lien or interest, remains valid on and after the effective date of this section; and

(2) the transaction, lien or interest may be terminated, completed, consummated and enforced as required or permitted by the act adding this chapter or by the law that would apply if the act adding this chapter had not taken effect.

(c) Pre-effective-date proceeding.--The act adding this chapter does not affect an action, case or proceeding commenced before the effective date of this section.

§ 91132. Security interest perfected before effective date.

(a) Continuing perfection; perfection requirements satisfied.--A security interest that is enforceable and perfected immediately before the effective date of this section is a perfected security interest under the act adding this chapter if, on the effective date of this section, the requirements for enforceability and perfection under the act adding this chapter are satisfied without further action.

(b) Continuing perfection; enforceability or perfection requirements not satisfied.--If a security interest is enforceable and perfected immediately before the effective date of this section, but the requirements for enforceability or perfection under the act adding this chapter are not satisfied on the effective date of this section, the security interest:

(1) is a perfected security interest until the earlier of the time perfection would have ceased under the law in effect immediately before the effective date of this section or the adjustment date;

(2) remains enforceable thereafter only if the security interest satisfies the requirements for enforceability under section 9203 (relating to attachment and enforceability of security interest; proceeds; supporting obligations; formal requisites), as amended by the act adding this chapter, before the adjustment date; and

(3) remains perfected thereafter only if the requirements for perfection under the act adding this chapter are satisfied before the time specified in paragraph (1).

§ 91133. Security interest unperfected before effective date.

A security interest that is enforceable immediately before the effective date of this section but is unperfected at that time:

(1) remains an enforceable security interest until the adjustment date;

(2) remains enforceable thereafter if the security interest becomes enforceable under section 9203 (relating to attachment and enforceability of security interest; proceeds; supporting obligations; formal requisites), as amended by the act adding this chapter, on the effective date of this section or before the adjustment date; and

(3) becomes perfected:

(i) without further action, on the effective date of this section if the requirements for perfection under the act adding this chapter are satisfied before or at that time; or

(ii) when the requirements for perfection are satisfied if the requirements are satisfied after that time.

§ 91134. Effectiveness of actions taken before effective date.

(a) Pre-effective-date action; attachment and perfection before adjustment date.--If action, other than the filing of a financing statement, is taken before the effective date of this section and the action would have resulted in perfection of the security interest had the security interest become enforceable before the effective date of this section, the action is effective to perfect a security interest that attaches under the act adding this chapter before the adjustment date. An attached security interest becomes unperfected on the adjustment date unless the security interest becomes a perfected security interest under the act adding this chapter before the adjustment date.

(b) Pre-effective-date filing.--The filing of a financing statement before the effective date of this section is effective to perfect a security interest on the effective date of this section to the extent the filing would satisfy the requirements for perfection under the act adding this chapter.

(c) Pre-effective-date enforceability action.--The taking of an action before the effective date of this section is sufficient for the enforceability of a security interest on the effective date of this section if the action would satisfy the requirements for enforceability under the act adding this chapter.

§ 91135. Priority.

(a) Determination of priority.--Subject to subsections (b) and (c), the act adding this chapter determines the priority of conflicting claims to collateral.

(b) Established priorities.--Subject to subsection (c), if the priorities of claims to collateral were established before the effective date of this section, Division 9 (relating to secured transactions) as in effect before the effective date of this section determines priority.

(c) Determination of certain priorities on adjustment date.--On the adjustment date, to the extent the priorities determined by Division 9 as amended by the act adding this chapter modify the priorities established before the effective date of this section, the priorities of claims to Division 12 (relating to controllable electronic records) property established before the effective date of this section cease to apply.

§ 91136. Priority of claims when priority rules of Division 9 do not apply.

(a) Determination of priority.--Subject to subsections (b) and (c), Division 12 (relating to controllable electronic records) determines the priority of conflicting claims to Division 12 property when the priority rules of Division 9 (relating to secured transactions) as amended by the act adding this chapter do not apply.

(b) Established priorities.--Subject to subsection (c), when the priority rules of Division 9 as amended by the act adding this chapter do not apply and the priorities of claims to Division 12 property were established before the effective date of this section, law other than Division 12 determines priority.

(c) Determination of certain priorities on adjustment date.--When the priority rules of Division 9 as amended by the act adding this chapter do not apply, to the extent the priorities determined by the act adding this chapter modify the priorities established before the effective date of this section, the priorities of claims to Division 12 property established before the effective date of this section cease to apply on the adjustment date.

Section 37. Section 5601.4(a)(9) of Title 20 is amended to read:

§ 5601.4. Authority that requires specific and general grant of authority.

(a) General rule.--An agent under a power of attorney may do the following on behalf of the principal or with the principal's property only if the power of attorney expressly grants the agent the authority and exercise of the authority is not otherwise prohibited by another agreement or instrument to which the authority or property is subject:

(9) Access the content of electronic communications [and digital assets of] sent or received by the principal. As used in this paragraph, the [following words and phrases shall have the meanings given to them in this paragraph unless the context clearly indicates otherwise:

"Digital asset." As defined in section 3902 (relating to definitions).

"Electronic communication." As defined in section 3902.] phrase "content of electronic communications" shall have the same meaning as "content of an electronic communication" as defined in section 3902 (relating to definitions).

Section 38. The amendment of 20 Pa.C.S. § 5601.4(a)(9) shall apply to a power of attorney executed on or after January 19, 2021.

Section 39. This act shall take effect in 60 days.

APPROVED--The 1st day of July, A.D. 2024.

JOSH SHAPIRO

Pennsylvania Act 2024-41 — UNIFORM COMMERCIAL CODE (13 PA.C.S.) AND DECEDENTS, ESTATES AND FIDUCIARIES CODE (20 PA.C.S.) - OMNIBUS AMENDMENTS

Act text

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